District of Utah
Press releases recorded for this federal judicial district.
Bliss Sentenced to 12 Months in Federal Prison After Efforts to Obstruct SEC Case Pending Against HimRead the Press Release
SALT LAKE CITY – Roger Stanley Bliss, age 57, of Bountiful, Utah, will serve 12 months and one day in federal prison for his efforts to corruptly influence and obstruct the administration of justice in a Securities and Exchange Commission case filed against him in U.S. District Court in Salt Lake City.
U.S. District Court Chief Judge David Nuffer imposed the sentence Monday morning. Judge Nuffer also ordered that the sentence be served consecutive to any sentence imposed in a related state criminal matter. Bliss will be on probation for 24 months when he completes his federal prison sentence.
Bliss was charged with obstruction of justice and false declaration before a Court of the United States in an indictment returned in August 2015. He pleaded guilty to both counts of the indictment in September. A co-defendant in the case, Kevin Carl Fortney, age 55, of Washington, Utah, was charged with one count of false declaration before a Court of the United States and one count of making a false statement to a federal agent. The case against Fortney is pending.
Federal prosecutors sought the indictment after U.S. District Judge Robert Shelby referred the case to their office requesting a criminal perjury and obstruction investigation be opened against Bliss and Fortney. Judge Shelby made the request following an evidentiary hearing in his court where it was proven that Bliss and Fortney violated his order freezing defendant Bliss’ assets and that they had made false declarations to the Court to conceal the conduct.
As a part of his guilty plea, Bliss admitted that he understood that the Court had issued an ordering freezing all of his assets and that assets purchased with funds from any bank account in his name were subject to that order. He admitted that he arranged to have a third party to whom he owed money, take control of a sailboat that had been purchased with funds from a bank account in his name and was subject to the Court’s order freezing his assets. Bliss admitted he transferred the sailboat so it could be liquidated by the third party and the proceeds used to reduce a debt he owed to the third party. He also admitted making a false statement while under oath as a part of a subsequent hearing. Bliss knew the declaration was not consistent with the facts when he made it, according to a statement made as a part of his guilty plea.
“The integrity of our judicial system is paramount in our civilized society. Those who attempt to obstruct the work of the Court by giving false testimony or who knowingly violate orders of the Court will face vigorous prosecution,” U.S. Attorney John W. Huber said today.
In a sentencing document filed in the criminal case prior to Monday’s hearing, Assistant U.S. Attorney Jacob Strain noted that protecting investors is a component of the SEC’s mission and it satisfies its mission through filing civil lawsuits in federal court. “The public’s deference to, respect for, and compliance with orders issued from the federal judiciary are vital to the SEC’s ability to perform its statutory mandates,” Strain wrote.
Asset freeze orders, like the one violated in the Bliss case, serve to prevent the unfair dissipation of assets and ensure the availability of funds for restitution to victims. “Bliss lacks the resources to repay the investor-victims of his Ponzi scheme. Bliss victimized them yet again by recruiting his brother-in-law, Kevin Fortney, to liquidate Bliss’ catamaran sailboat and then to lie about it to the Court and to investigators. Bliss deliberately violated Judge Shelby’s asset freeze order, recruited a co-conspirator to his cause, and then provided false and misleading information to influence the Court’s decision on the matter. Bliss circumvented the SEC’s efforts to protect investors,” Strain said in the sentencing document.
Grand Jury Returns Federal Indictment Charging Tremonton Man with Production and Possession of Child Pornography, Coercion and EnticementRead the Press Release
SALT LAKE CITY – A federal grand jury returned a three-count indictment Wednesday afternoon charging Jeremy Rose, age 38, of Tremonton, with production of child pornography, possession of child pornography, and coercion and enticement.
Rose was arrested Thursday morning and had an initial appearance late this afternoon before U.S. Magistrate Judge Evelyn Furse. The indictment was unsealed at the hearing. Rose was released on conditions of supervised release and will have electronic monitoring.
Rose, a former Tremonton police officer, was prosecuted in state court following an investigation by the Utah Internet Crimes Against Children task force. He was sentenced to 270 days in jail and 36 months of probation in November 2014. He was also ordered to register as a sex offender and complete 60 hours of community service.
Federal prosecutors sought a Department of Justice waiver which allowed them to pursue federal charges against Rose for the conduct. Because the prior prosecution left substantial federal interests unvindicated, Utah prosecutors received authorization to prosecute Rose.
“In consultation with the Department of Justice and after careful deliberation, we believe that a federal prosecution is warranted given the facts of this case,” John W. Huber, U.S. Attorney for Utah, said today. “There are areas of criminal law where we share concurrent jurisdiction with state prosecutors. Production and possession of child pornography is one of those areas. This is not a decision we made lightly. However, given the serious nature of the alleged crime, we presented the case to a grand jury this week and will proceed with a federal prosecution of Mr. Rose,” Huber said.
The first count of the indictment alleges that between the spring of 2012 and June 2013, the defendant knowingly induced, enticed and coerced a minor to engage in sexually explicit conduct for the purpose of producing visual depictions of the conduct. The second count of the indictment alleges possession of child pornography. The final count of the indictment alleges that Rose induced, enticed, and coerced an individual, who had not reached the age of 18, to engage in sexual activity for which a person can be charged with a criminal offense. The FBI has joined the investigation for the federal case.
The potential maximum penalty for production of child pornography is 30 years in prison with a minimum mandatory 15-year sentence. Possession of child pornography carries a maximum potential penalty of 10 years. The enticement and coercion count has a 30-year maximum sentence with a 10-year minimum mandatory sentence. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
Grand Jury Returns Indictment Charging Individual in Connection with Efforts to Purchase, Export 89 Sniper Rifles to BelarusRead the Press Release
SALT LAKE CITY – A federal grand jury in Salt Lake City returned an indictment late Wednesday afternoon charging Kolar Rahman Anees Ur Rahman, age 44, who was born in India and lives in the United Arab Emirates, with violations of federal law in connection with alleged efforts to purchase 89 Sako .308 caliber sniper rifles and have them exported from the United States to Belarus.
The charges in the four-count indictment include conspiracy to commit an offense against the United States, a violation of the Arms Export Control Act, smuggling goods from the United States, and money laundering. Rahman was arrested in early November in Chicago on a complaint filed in Utah. Following a removal proceeding in Chicago, he is being transferred to Salt Lake City by the U.S. Marshals Service. An initial appearance will be scheduled in Utah when he arrives.
According to the indictment, the Arms Export Control Act authorizes the President of the United States to control the export of defense articles and defense services from the United States. Unless a specific exception applies, the Act provides that no defense articles or defense services may be exported without a license for such export. It is the policy of the United States to deny licenses and other approvals for the export of defense articles and defense services destined for Belarus, as well as other countries subject to an arms embargo.
In November 2013, according to the indictment, a firearms manufacturer in Salt Lake City was contacted through email by someone identified as Individual A in the indictment regarding the purchase of 50 sniper rifles to be shipped to Belarus. The firearms manufacturer notified Individual A that the purchase and delivery would be impossible due to current trade sanctions and embargoes against Belarus. The firearms manufacturer subsequently informed a special agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) about the suspicious inquiry.
An HSI Salt Lake City undercover agent contacted Individual A by email. In those communications, Individual A reiterated his desire to procure sniper rifles in the United States for delivery to Belarus. From November 2013 through May 2015, negotiations between the undercover agent and Individual A did not result in a purchase. However, in May 2015, Individual A introduced the undercover agent to Rahman, designating Rahman as the principal broker for the procurement of the sniper rifles.
The indictment alleges that from May 2015 until November 2015, the defendant engaged in a conspiracy to purchase 89 sniper rifles in the United States and have them exported to Belarus without first obtaining licenses as required. In August 2015, Rahman and an undercover agent agreed that Rahman would make a first purchase of 10 sniper rifles and ammunition for approximately $66,285. No party to the transaction obtained export licenses for the rifles.
In September, according to the indictment, Rahman informed the undercover agent that the final contract with Belarus had been completed and sent the undercover agent a down payment of approximately $13,257 for 10 sniper rifles. Rahman agreed to pay the remaining balance once the rifles arrived in Belarus. He told the undercover agent not to include U.S. invoices with the shipment. Rahman requested that the sniper rifles be shipped by the most direct route possible to Belarus. According to the indictment, the undercover agent informed Rahman that the shipment route would be from the United States to South Africa, to Turkey and then to Belarus.
On Nov. 4, 2015, two undercover HSI agents met with an individual who identified himself as Kolar Rahman Anees Ur Rahman at a hotel near Chicago, according to the indictment. Rahman confirmed he was the same individual the agents had been negotiating with since May. Rahman, the indictment alleges, informed the agents that he understood the risk of illegally obtaining and shipping the sniper rifles to Belarus and that he desired to complete their business transaction as planned. Rahman and the agents discussed future purchases and shipments of the .308 caliber rifles to Belarus. Rahman was arrested by the agents in Chicago later that day.
The potential maximum penalty for conspiracy to commit an offense against the United States is up to five years in prison and a fine of $250,000. A violation of the Arms Export Control Act is 20 years in prison and a fine of $1 million. Smuggling goods from the United States has a potential penalty of 10 years in prison with a fine of $250,000. The money laundering count is punishable by up to 20 years in federal prison and a fine of $500,000.
Indictments are not findings of guilt. Individuals charged in an indictment are presumed innocent unless or until proven guilty in court.
Grand Jury Returns Indictment Alleging Man Made Bomb Threat at Sevier Valley Medical CenterRead the Press Release
SALT LAKE CITY – A federal grand jury returned a one-count indictment Wednesday afternoon charging Michael Sherman Morlang, age 26, of Payson with making a bomb threat to a hospital.
On the morning of Sept. 17, 2015, the Sevier Valley Medical Center in Richfield received a bomb threat. The hospital evacuated everyone possible and remained on lockdown for several hours. Individuals seeking emergency care, including patients in ambulances, had to be diverted to another hospital.
The indictment alleges Morlang called in the bomb threat, conveying information he knew to be false concerning an attempt being made to damage or destroy a building. The potential maximum penalty for the charge is 10 years in prison and a fine of $250,000. An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
Morlang is in custody in Idaho on an unrelated warrant. A federal arrest warrant will be issued following today’s indictment.
The Richfield Police Department, the Sevier County Sheriff’s Office, and the FBI have coordinated the investigation of the case. The case is being prosecuted by the U.S. Attorney’s Office in St. George.
Cruz Sentenced to 198 Months in Federal Prison After Pleading Guilty to Possession of MethamphetamineRead the Press Release
SALT LAKE CITY – Travis Javier Cruz, age 38, of the Salt Lake City area, who traveled to California in October 2014 to pick up 73.8 pounds of methamphetamine from a supplier destined for distribution in Salt Lake City, will serve 198 months in federal prison. Cruz pleaded guilty to possession of methamphetamine with intent to distribute in May.
U.S. District Court Judge Robert J. Shelby imposed the sentence last week in federal court. He also ordered Cruz to be on supervised release for 60 months after he finishes his prison sentence. Cruz also will forfeit three vehicles and $3,698 in U.S. currency.
As a part of the plea agreement reached with federal prosecutors, Cruz admitted that he traveled to the Orange County area of California on Oct. 28, 2014, to pick up a large quantity of methamphetamine for distribution in the Salt Lake City area. According to a complaint filed in the case, Cruz was already under surveillance by the FBI’s Safe Streets Task Force, in conjunction with the Salt Lake Unified Police Department, the Davis County Sheriff’s Office, and other law enforcement agencies prior to making the trip to California. Law enforcement agents believed that Cruz was running a major methamphetamine distribution ring in the Salt Lake Valley.
Cruz arrived at a hotel in Huntington Beach, where the narcotics transaction would take place, with approximately $300,000 in cash to pay for 70 pounds of narcotics. Cruz admitted meeting with a courier for the methamphetamine source of supply at the hotel on Oct. 28, 2014, and giving him $300,000.
The next day, according to the plea agreement, the courier returned to the hotel with five or six five-gallon buckets. He took the buckets into Cruz’s room. The buckets contained the methamphetamine Cruz planned to distribute in the Salt Lake City area. Cruz admitted that he and others packaged the methamphetamine into plastic wrap and mustard to transport it back to Salt Lake City. The narcotics were placed in a roller bag and two backpacks and loaded into the trunk of the Cruz’s car for transportation back to Salt Lake City.
Agents and officers, who had been conducting surveillance at the hotel, conducted a vehicle stop after the narcotics were loaded in the car. A dog alerted to the presence of narcotics in the trunk of the vehicle. Cruz admitted as a part of the plea agreement that the amount of narcotics recovered was approximately 73.8 pounds. On the same day, officers executed a federal search warrant at a storage unit in Utah and recovered approximately 1.5 pounds of methamphetamine. Cruz admitted it was his intent to distribute the methamphetamine in the Salt Lake City area.
Federal prosecutors argued for a sentence of 252 months in the case, pointing out that Cruz admitted he had made the trip to California for drugs on at least one other occasion and that evidence suggests he has done it on a number of occasions. “Indeed, one could extrapolate, based on the evidence, that Mr. Cruz is responsible for hundreds of pounds of methamphetamine distributed in the Salt Lake Valley. His actions have been seriously destructive to the community, and his sentence should reflect that seriousness,” they wrote in a sentencing memorandum filed in the case. Cruz also has previous criminal history including three convictions related to the operation of a clandestine lab.
“Mr. Cruz pleaded guilty to what appears to be his fourth narcotics trafficking offense. A substantial sentence is clearly warranted given his extensive criminal history as well as the large amount of methamphetamine trafficked in this case” prosecutors told the court.
Cruz was charged with conspiracy to distribute methamphetamine and possession of methamphetamine with intent to distribute in an indictment returned by a federal grand jury in November 2014.
Hansen Sentenced to 10 Years in Federal Prison for Possession of Child PorngraphyRead the Press Release
SALT LAKE CITY – A Salt Lake City man who admitted he had more than 600 images of child pornography in his possession, including images depicting young children being sexually assaulted by adults, has been sentenced to 10 years in federal prison.
Steven Seth Hansen, age 36, of Salt Lake City, who has a previous federal conviction for use of interstate facilities to transmit information about a minor, must also register as a sex offender, pay restitution in the case, and forfeit a phone and tablet.
As a part of a plea agreement reached with federal prosecutors, Hansen pleaded guilty to one count of possession of child pornography, which included a minimum mandatory sentence of 10 years in federal prison. U.S. District Court Judge Robert J. Shelby, who imposed the sentence last week, ordered Hansen to report to federal prison to begin serving his sentence on Jan. 15, 2016.
Law enforcement officers executed a search warrant at Hansen’s home in March, following up on tips from the National Center for Missing and Exploited Children. Agents and officers with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Utah Internet Crimes Against Children task force recovered a tablet and phone with child pornography images on them. Hansen was charged with receipt of child pornography and possession of child pornography in an indictment returned in March.
This case was investigated and prosecuted as a part of Utah Project Safe Childhood, an initiative targeting child sexual exploitation. Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.
Grand Jury Returns Indictment Charging Llewelyn with Embezzling Money from Programs Receiving Federal FundsRead the Press Release
SALT LAKE CITY – A grand jury returned a one-count indictment Tuesday afternoon charging Jason Thomas Llewelyn, age 45, of Helper, Utah, with theft from programs receiving federal funds.
The indictment alleges that from about Dec. 16, 2011, through about Aug. 19, 2015, Llewelyn, as an agent of Carbon County, embezzled money from grants given to the county and administered by the U.S. Department of Homeland Security. The county received a series of grants in excess of $10,000 beginning in August 2010 and continuing through September 2014.
According to the indictment, Llewelyn used the money to purchase hundreds of items for his houseboat and other personal interests. The indictment alleges he misapplied property worth at least $5,000.
Llewelyn will be issued a summons to appear in federal court for an initial appearance on the charge in the indictment. The potential maximum penalty for the charge is up to 10 years in prison and a fine of $250,000.
Indictments are not findings of guilt. Individuals charged in an indictment are presumed innocent unless or until proven guilty in court.
The case is being investigated by special agents of the FBI and prosecuted by the U.S. Attorney’s Office in Salt Lake City.
Kilgore Pleads Guilty to Three Counts of Conspiracy to Commit Health Care FraudRead the Press Release
SALT LAKE CITY – Jacob J. Kilgore, a former owner of a Salt Lake City durable medical equipment company, pleaded guilty in U.S. District Court late Monday afternoon to three counts of conspiracy to commit health care fraud as a part of Medicare fraud scheme involving power wheelchairs. The plea agreement includes a stipulated sentence of 60 months in federal prison, subject to acceptance by the court.
U.S. Attorney John W. Huber of the District of Utah, FBI Special Agent in Charge Eric K. Barnhart of the FBI’s Salt Lake City Field Office, Special Agent in Charge Gerald Roy of the U.S. Department of Health and Human Services Office of Inspector General; and Special Agent in Charge Janice M. Flores of the Defense Criminal Investigative Service’s (DCIS) Southwest Field Office announced the plea agreement.
Kilgore pleaded guilty to a three-count Felony Information filed Monday afternoon.
Kilgore, 36, of Fruit Heights, was the co-owner of and employed as the vice president, and later, president of Orbit Medical, a Utah- and Indiana-based national supplier of durable medical equipment that specialized in power wheelchairs. Orbit maintained three Utah offices in the Salt Lake City area. Kilgore acted as sales manager for Orbit’s western region sales territory which included offices in Utah, Arizona, Nevada, Idaho, Washington, and Oregon.
“In the United States Attorney’s Office, we take our professional obligations seriously and will not trade our integrity for any case. While upholding the highest ethical standards, my office will aggressively root out white collar fraud and hold law breakers accountable for the damage caused by their greed-driven actions,” United States Attorney John W. Huber said today.
“Less than a month after the court rejected his motions claiming prosecutorial misconduct, Mr. Kilgore has accepted responsibility for a multi-million-dollar fraud scheme. On October 8, 2015, Chief Judge David Nuffer denied the defense motion to dismiss and to disqualify the prosecution team, finding that the prosecution had not deliberately intruded into privileged attorney-client communications. Today, the defendant has voluntarily agreed to a five-year prison sentence for his criminal conduct and has chosen to abandon any further challenge to the court’s ruling against him. This development speaks volumes as to the denied claims that federal prosecutors were acting outside their ethical obligations,” Huber said.
As a part of the plea agreement, Kilgore admitted that he knew that Medicare required the company to maintain supporting medical record documentation, including the prescription from the treating physician, which supported the medical necessity of the power wheelchair supplied to the beneficiary and billed to Medicare. He admitted knowing that Medicare could request the supporting medical record documentation of a claim submitted by Orbit for review, and, if the documentation did not meet Medicare’s requirements, the claim could be denied.
Kilgore admitted that while at Orbit, he instructed inside and outside sales representatives in taking paperwork received from physicians and making changes to the paperwork – including revising, altering, modifying or replacing – in order to make it appear that beneficiaries qualified for Medicare coverage of a power wheelchair under false and fraudulent pretenses. This process was referred to at times as “chiseling.” Kilgore admitted that while he was at Orbit, he had computer software installed on computers used by sales representatives. That software enabled sales representatives to electronically “chisel” documents received from physician offices to make it appear that Medicare requirements were met. This process caused the submission of false and fraudulent claims to Medicare. Throughout the conspiracy, Kilgore admitted he enforced a sales quota of 10 power wheelchairs per month and at times, terminated sales representatives for failing to meet the quota.
As a part of his plea to three counts of conspiracy to commit health care fraud, Kilgore admitted that he and three individuals identified as unindicted co-conspirators 1, 2, and 3 submitted false claims to Medicare for power wheelchairs. He admitted that from April 2008 to around July 2010, he and UC1 submitted claims under fraudulent pretenses from Orbit to Medicare for more than $500,000. From around October 2006 to around June 2011, he and UC2 caused Orbit to submit fraudulent claims to Medicare resulting in reimbursements from Medicare of more than $679,909. From around 2009 to around August 2010, Kilgore and UC3 caused Orbit to submit fraudulent claims to Medicare resulting in reimbursements of more than $200,000. From around October 2006 to around June 2011, Kilgore and other sales reps caused Orbit to submit claims to Medicare for power wheelchairs under false and fraudulent pretenses resulting in reimbursements to Orbit.
“This guilty plea is the result of the diligent work and collaborative efforts of several agencies. We will continue to work with our law enforcement partners to investigate those who attempt to cheat the federal health care programs,” said Gerald Roy, Special Agent in Charge of Health and Human Services Office of Inspector General.
"This plea highlights the commitment of the Defense Criminal Investigative Service (DCIS) and its law enforcement partners to protect the integrity of federal health care programs, including the Department of Defense health care program known as TRICARE," said Special Agent in Charge Janice M. Flores of the DCIS Southwest Field Office. "DCIS aggressively investigates health care providers that defraud the DoD to preserve American taxpayer dollars intended to care for our warfighters, their family members and military retirees."
As a part of the plea agreement, Kilgore agreed to pay restitution in the case, including for victims of relevant conduct. Parties to the criminal case will try to resolve the amount of restitution through a stipulated agreement. If an agreement is not reached, a restitution hearing will be scheduled. He also agreed to a forfeiture money judgment in an amount to be determined by the court at sentencing. Sentencing is set for Jan. 27, 2016, at 2 p.m.
Additionally, former Orbit sales representatives Morgan Workman of Farmington, Utah; David Evans of South Jordan, Utah; and Hunter Hartman of Ladera Ranch, Calif., have each pleaded guilty to conspiring to commit health care fraud, based on the same alleged scheme to defraud Medicare. Sentencing for the three will be in February.
Defendant Gets 84 Months in Federal Prison for Using Personal Identifiers of Deceased Individuals to File Fraudulent Tax ReturnsRead the Press Release
SALT LAKE CITY – Moussa Sleiman Bitar, aka Justizego, age 36, a naturalized U.S. citizen who is also a citizen of Lebanon, will serve 84 months in federal prison after pleading guilty to wire fraud, aggravated identity theft, and false claims as a part of a scheme to use the personal identifiers of deceased individuals to file fraudulent tax returns.
U.S. District Court Judge David Nuffer also ordered Bitar to pay $843,561 in restitution and placed him on supervised release for 60 months following his prison sentence. The case against Bitar, investigated by special agents of IRS Criminal Investigation, the FBI, the U.S. Marshal’s Service, and the West Valley City Police Department, was unsealed at sentencing in U.S. District Court in Salt Lake City last week.
Bitar admitted that from about January 2013 until about July 2013, he obtained the names, addresses, social security numbers, and other personal identifiers of deceased individuals and used the information to file false and fraudulent tax returns. Based on these fraudulent tax returns, the IRS sent refunds to bank accounts under Bitar’s control and the control of other individuals working with him. Once the funds arrived, Bitar would withdraw the funds or have others working with him withdraw the funds or transfer the funds to him. Funds were moved through banks in Utah. Prosecutors believe Bitar operated the scheme from Lebanon and other countries using individuals in Utah and other locations.
According to court documents, on Jan. 22, 2013, Bitar transmitted an email with attachments containing personal identifiers of deceased individuals to be used to file a fraudulent tax return, including personal identifiers of L.T., a deceased individual. On about April 4, 2013, he caused a fraudulent 1040 tax return, in the name of L.T., to be filed with the IRS claiming a tax return in the amount of $1,004, which he received. The scheme was in violation of federal wire fraud, aggravated identity theft, and false claims laws.
“This significant federal prison sentence is appropriate for the egregious conduct committed by Mr. Bitar. Using the personal identifiers of deceased individuals to steal money from American taxpayers is graphic example of the continued willingness of identity thieves to do whatever they can to obtain money or property that doesn’t belong to them,” U.S. Attorney John W. Huber said today. “We recognize the outstanding work of the law enforcement agencies involved in this complex investigation.”
"Investigating refund fraud and identity theft is a priority for IRS Criminal Investigation," said John G. Collins, Special Agent in Charge of IRS Criminal Investigation in Utah. "Stealing identities and filing false tax returns is a serious crime that hurts innocent taxpayers and their families, especially those who have lost loved ones. This sentence should serve as a strong warning to those who are considering similar conduct. Law enforcement is serious about investigating these crimes and holding those who defraud the government accountable."
Bitar was charged in a federal indictment returned in June 18, 2014. He was arrested in the Canary Islands on June 26, 2014, on a request from the United States for a provisional arrest. A superseding indictment was returned on July 2, 2014. Bitar was turned over to U.S. Marshals custody after extradition proceedings, which he waived, and he was transported to the United States.
As a part of the plea agreement reached with Bitar in Utah, the U.S. Attorney’s Office for the District of Colorado will move to dismiss its indictment against Bitar as well as a supervised release violation. The U.S. Attorney’s Office in the Eastern District of Michigan also has agreed not to seek an indictment against Bitar for a similar fraud scheme, however, Bitar was ordered to pay restitution for claims made in Michigan.
Members of Drug Trafficking Organization Face Federal Indictment for Distribution of Marijuana in UtahRead the Press Release
SALT LAKE CITY – An alleged drug trafficking organization that sources say cultivated and acquired large amounts of marijuana in California for distribution in Utah since at least 2010 is under federal indictment this week in Salt Lake City. Using marijuana cultivated or acquired from other growers in California, the organization has been responsible for 100 pounds of marijuana distribution in Utah each month, court filings say.
An indictment returned Wednesday afternoon, following an Organized Crime Drug Enforcement Task Force investigation, charges Collin Drexel Armstrong, age 29, address unknown; Zachary Fitts Hoppe, age 31; Christopher Trey Benson, age 25; Robert Daniel Benson, age 54; and Deborah Ellis Benson aka Trinity Benson, age 54, all of Salt Lake City; and Jared Bryce Roth, age 33, address unknown, with conspiracy to distribute marijuana, possession of marijuana with intent to distribute, and conspiracy to commit money laundering. All six defendants are charged in the conspiracy count of the indictment. Armstrong and the Bensons are charged with possession with intent to distribute. Armstrong, Hoppe, and Christopher Trey, Robert Daniel, and Deborah Ellis Benson are charged in the money laundering count.
According to a complaint filed in the case, prosecutors and investigators obtained information about the alleged drug trafficking organization through another investigation. For several years, according to the complaint, large amounts of marijuana were cultivated or acquired in California and transported to Utah for distribution. The indictment alleges the conspiracy to distribute marijuana started no later than Jan. 1, 2010, and continued through at least Sept. 23, 2015.
The indictment also includes a notice of intent by federal prosecutors to seek criminal forfeiture $101,000 in currency seized from three defendants in the case; a 1968 Chevy Camaro; and six parcels of real property, constituting about 300 acres, in Laytonville, California.
Armstrong is in custody in California. All other defendants in the case were arrested on a complaint filed on Sept. 14 and have been released on conditions.
The maximum potential penalty for charges in the case is life in prison and a $5 million fine with a 10-year mandatory minimum sentence.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
The case is being prosecuted by Assistant U.S. Attorneys in Utah and investigated by special agents of IRS-Criminal Investigation and the DEA.
Grand Jury Returns Indictment Charging Layton Man with Impersonating Federal Officer to Get Vip TicketsRead the Press Release
SALT LAKE CITY – A federal grand jury returned a two-count indictment Wednesday afternoon charging Jonathon M. Wall, age 29, of Layton with impersonation of a federal officer in connection with an attempt to get VIP tickets to the Salt Lake Comic Con.
The indictment alleges Wall pretended to be a Special Agent of the Air Force Office of Special Investigations (AFOSI) and, in that pretended character, demanded VIP tickets to the event under the ruse that he was entering the VIP area to apprehend a wanted fugitive. Wall’s alleged conduct attracted the attention of a retired Salt Lake City police officer working security at the event. The security officer questioned Wall about AFOSI and what fugitive he was looking for. The security officer notified AFOSI special agents, who came to question Wall.
The indictment also alleges one count of making a false statement to a federal agent.
The maximum potential penalty for impersonating a federal officer is three years in prison. The penalty for making a false statement to a federal agent is five years in prison. Each count also includes a potential fine of $250,000. A summons will be issued to Wall to appear for an initial appearance on the charge.
Indictments are not findings of guilt. Individuals charged in indictments are innocent unless or until proven guilty in court.
Kane County Awarded Department of Justice Grant to Enhance Court Operations; Expand Court ServicesRead the Press Release
SALT LAKE CITY – The U.S. Department of Justice has awarded Kane County a $194,006 grant to implement or enhance local drug court programs. The funding is a part of the Bureau of Justice Assistance’s Adult Drug Court Discretionary Grant Program.
The Drug Court Discretionary Grant Program provides financial and technical assistance to states, state courts, local courts, units of local government, and Indian tribal governments to develop and implement treatment drug courts that effectively integrate substance abuse treatment, mandatory drug testing, sanctions and incentives, and transitional services in a judicially supervised court setting with jurisdiction over nonviolent, substance-abusing offenders.
“Using the authority of the court, drug court programs work to reduce crime by changing defendants’ drug-using behavior. Although there are common elements to many drug programs, each court and the stakeholders working with the court, can design a program that addresses its unique needs for participant eligibility and program requirements,” U.S. Attorney John W. Huber said today. “This substantial grant should be a big boost to Kane County’s efforts to expand its services, and I am pleased that county officials sought the assistance of the U.S. Department of Justice.”
Kane County will use the grant funds to establish new services for target populations not currently being served, enhance existing court operations, expand court services, and improve the quality or intensity of offender services. These services could include health care, including mental health services; educational, vocational and job training; and childcare or other family support services for each adult participant who requires such services.
Court Judgment Cancels Coal Lease for Utah MineRead the Press Release
SALT LAKE CITY – U.S. District Court Judge Dale A. Kimball has signed a judgment and order against a Utah coal mining company that cancels its federal coal lease and orders the company to pay more than $230,000 for past-due royalties and rental payments, United States Attorney John W. Huber announced today.
The judgment and order follows a stipulated agreement reached by the United States and Hidden Splendor Resources, Inc. (HSRI)
“It is imperative that energy companies operating on federal lands abide by the terms of the lease, post the necessary bonds, and pay the royalties and rentals due to American taxpayers,” Huber said.
The order issued by Kimball declares that HSRI violated the terms of its coal lease and a BLM Notice of Noncompliance by not posting a required bond. It cancels the coal lease for HSRI’s failure to comply with the lease terms and the Notice of Noncompliance that BLM had previously issued to it. And finally, the judgment requires HSRI to pay past-due royalties and rentals in the amount of $230,929.04 plus 1 percent interest until the date of the judgment and, thereafter, interest at the statutory rate until the debt is paid in full.
The U.S. Attorney’s Office in Utah originally filed a civil action against Hidden Splendor Resources on Dec. 29, 2014. Hidden Splendor Resources agreed to work with the United States on the stipulated judgment. The judgment was filed in July.
“This judgment stipulates that unpaid royalties dating back to 2012 and rental payments from 2009 through 2014 must be paid by Hidden Splendor Resources,” said Office of Natural Resources Revenue (ONRR) Director Greg Gould. “ONRR will remain vigilant in collecting every dollar due from energy production that occurs on Federal lands.”
Acting State Director for the Bureau of Land Management in Utah Jenna Whitlock said, “As the administrator of a number of coal leases in Utah, the Bureau of Land Management is committed to helping ensure that minerals are responsibly extracted from public lands. Despite the requirements of the coal lease and our Notice of Noncompliance, the company failed to post the required bond for important post-mining reclamation activities and it is appropriate to cancel their coal lease.”
Hidden Splendor Resources acquired the lease in March 2006 for the Horizon Mine, an underground coal mine located approximately 15 miles northwest of Price, Utah. The company failed to pay royalties from production in the “Horizon Mine” in February, April and July 2012, as well as associated rental payments from 2009 through 2014.
The United States Attorney’s Office acknowledged the cooperation of agencies involved in reaching the stipulated judgment, including the Office of Natural Resources Revenue, the Bureau of Land Management, and the Department of the Interior’s Solicitor’s Office.
The Office of Natural Resources Revenue and the Bureau of Land Management are part of the Department of the Interior. BLM is the leasing and inspection agency involved in onshore production on federal lands, while ONRR is responsible for collecting and disbursing revenues from energy production that occurs onshore on federal and American Indian lands and offshore in the Outer Continental Shelf. During Fiscal Year 2014, ONRR disbursed more than $13.4 billion to states, American Indian Tribes, individual Indian mineral owners, and to various federal accounts, including the U.S. Treasury, the Land and Water Conservation Fund, and the Reclamation Fund.
Utah Cities Get Department of Justice Grants to Support Police Departments, Serve CommunitiesRead the Press Release
SALT LAKE CITY – The Department of Justice has awarded grants to several Utah cities under the Edward Byrne Memorial Justice Assistance Grant (JAG) Program. The JAG Program is the primary provider of federal criminal justice funding to state and local jurisdictions and supports a range of program areas including law enforcement, prosecution and court programs, prevention and education programs, corrections and community corrections, drug treatment and enforcement, crime victim and witness initiatives, and planning, evaluation, and technology improvement programs.
Among the cities receiving local solicitation grants this year are West Valley City, Layton, Sandy, Provo, Ogden, West Jordan, Salt Lake City, South Salt Lake City, and Murray. The Utah Commission on Crime and Juvenile Justice (CCJJ) received a JAG grant of $1,421,840 under the state solicitation portion of the grant program.
“This program allows cities to apply for grant funds to address local needs and to support a broad range of local initiatives. Our communities are using the funding to increase officer safety, build transparency between police officers and the communities they serve, and to reduce crime in our neighborhoods. Grant recipients are also using funds to target specific issues we face in Utah, such as prescription drug abuse, domestic violence, and gang violence,” U.S. Attorney for Utah John W. Huber said today. The grants are awarded through DOJ’s Bureau of Justice Assistance.
CCJJ will used its JAG funds to enhance statewide public safety services, support of the Utah Residential Substance Abuse Treatment (RSAT) program; and continue other evidence-based projects that support the juvenile justice system, among other things. CCJJ’s JAG priority areas include addressing gang prevention/education or enforcement, prescription drug abuse prevention/education or enforcement, sexual assault or domestic violence, mental health courts and problem solving courts.
West Valley City will receive $90,892 to purchase body cameras for officers. The goals of the grant funding include facilitating transparency and fostering relationships of trust between officers and citizens of the city.
Layton will receive $13,529 to purchase equipment to increase officer safety and to help provide effective service to city residents and Davis County.
Sandy will also use its $19,579 grant to buy equipment, including in-car video camera systems, to provide increased safety for officers and help reduce crime.
Provo will use its $22,532 grant to enhance officer safety and to protect residents of the city. Purchases will include upgrading computers and software. Funds also will be used to purchase Tasers.
Ogden intends to use its $56,117 grant to purchase body cameras and provide training as a part of the city’s participation in multi-jurisdictional law enforcement efforts.
West Jordan will receive $29,487 to purchase law enforcement equipment, including hand-held radios, to improve the capability of police officers.
Murray intends to use its award of $26,439 to purchase digital in-car cameras to improve the capabilities of first responders in the city.
South Salt Lake City will use its $27,963 grant to purchase body cameras for officers.
Salt Lake City will receive a grant of $291,397 to support the Salt Lake City Police Department’s Explorer Program and the Salt Lake Peer Court. The funding will be used to provide equipment and technology, training for civilians and sworn officers, and organizing enforcement and community overtime projects.
Taylorsville, awarded $29,916, will use its grant money to purchase bicycles, lasers, printers, first aid equipment, surveillance equipment, digital cameras, and safety supply handouts for presentations. The updated equipment will help improve neighborhoods security in Taylorsville.
Grand Jury Returns Indictment Charging Pair with Fraud, Money Laundering in Connection with Alleged Investment Fraud SchemeRead the Press Release
SALT LAKE CITY – A federal grand jury returned a 48-count indictment late Wednesday afternoon charging Wayne LeMar Palmer, age 60, and Julieann Martin, age 47, both of West Jordan, with wire fraud, mail fraud and money laundering in connection with an alleged investment fraud scheme that raised more than $140 million from more than 600 investors.
According to the indictment, Palmer established National Note of Utah (NNU) about Dec. 30, 1992. NNU was located in West Jordan. Palmer owned and operated NNU and made all business decisions, including decisions regarding the use of investor funds. Martin began working at NNU in about 1993. Among other duties, she functioned as a client relations manager, which allowed her to interact with many of NNU’s investors and gave her access to information about investors’ investments with NNU, the indictment alleges.
The indictment alleges NNU solicited and sold investments, generally in the form of fixed rate promissory notes at a rate of 12 percent per year. NNU purported to be in the business of purchasing existing real estate loans and funding new real estate loans. NNU supposedly used investor funds to purchase discounted mortgage notes and deeds of trust and to originate real estate loans at above-market rates. NNU engaged in a variety of other business activities during its existence in an effort to generate revenue, the indictment says, including acquiring and operating rental properties, developing properties it obtained through foreclosures, purchasing real estate for development, buying and operating a mint, and seeking to extract precious metals from previously processed mine tailings.
The indictment alleges Palmer and Martin recruited and retained investors using fraudulent and misleading statements. According to the indictment, Palmer traveled around the country to recruit individuals and entities to invest in NNU. Martin also had contact with potential and existing investors over the phone, in person, and by email communications. For some investors, Martin was their only contact with NNU.
The indictment alleges Palmer and Martin solicited investors with false and fraudulent statements, which included among others, that the investments were safe and guaranteed; NNU was profitable and generated sufficient income from its business operations to pay investors a 12 percent annual return; NNU’s business activities were generating 18 percent or more per year; investments in NNU were secured by real estate assets which exceeded NNU’s investor liabilities; and that NNU had a perfect payment record and had never been late on a single investor payment.
According to the indictment, Palmer and Martin did not tell investors that new investor funds were being used to make payments to older investors and to pay NNU operating expenses. They also were used to pay Palmer’s personal expenses, the indictment alleges.
They also did not tell investors that the vast majority of NNU investments were with affiliated entities Palmer controlled, rather than arms-length investments with third parties. They also did not disclose, among other things, that beginning around 2007, NNU and its affiliates had, on aggregate, reported net losses and negative equity every year and that NNU had insufficient operating revenues to pay investors and operating expenses.
Between 1995 and 2012, according to the indictment, Palmer and Martin raised more than $140 million from more than 600 investors. Many investors, the indictment alleges, lost all or part of their money invested in NNU. Some of the investors utilized self-directed retirement funds to make their investments. When investors complained about late or missing payments, Palmer and Martin typically did not disclose the true state of affairs at NNU but told investors to be patient and payments would be forthcoming.
The indictment includes 14 counts of wire fraud. Palmer is charged in each of the 14 counts and Martin is charged in 11 counts. Palmer is charged in all 17 counts of mail fraud included in the indictment and Martin is charged in nine counts. They are both charged in 17 counts of money laundering in the indictment.
The defendants will receive a summons to appear in federal court for an initial appearance on the charges. The potential maximum penalty for each count of wire and mail fraud is 20 years in prison. The money laundering counts in the indictment carry potential maximum sentences of 10 years in prison.
An indictment is not a finding of guilty. Individuals charged in indictments are presumed innocent unless or until proven guilty in a court.
The case is being prosecuted by the U.S. Attorney’s Office in Utah. Special agents of the FBI and IRS Criminal Investigation are investigating the case. The U.S. Department of Labor, Employee Benefits Security Administration has also contributed to the investigation.
Four Federal Indictments Unsealed Alleging Sex Trafficking of Children, Transportation of MinorsRead the Press Release
SALT LAKE CITY – Four indictments unsealed late Wednesday afternoon in U.S. District Court in Salt Lake City charge eight individuals with sex trafficking of children and other related violations of federal law. A federal grand jury returned the indictments July 21. Arrest warrants were executed Tuesday as a part of an investigation by the FBI and the Salt Lake City Police Department.
“Sex trafficking of children is a crime we take very seriously,” U.S. Attorney John W. Huber said today. “We appreciate the commitment and coordinated efforts of the FBI and the Salt Lake City Police Department in investigating these four cases. With the arrests made and the indictments unsealed, the criminal court process will now begin.”
Abiodu Damiloca Salankole, aka Case, age 20, last known address unavailable, is charged with two counts of sex trafficking of children in one indictment. The counts allege conduct involving two victims, both minors who had not attained the age of 18 years.
Gloire Seba, age 21, of Sandy and Kyle Jason Hale, age 21, of Riverton are charged in a nine-count indictment with sex trafficking of children, conspiracy to commit sex trafficking and transporting a minor for prostitution. This indictment involves four minor victims.
A third indictment charges Saquan Marcell Smith, age 23, and Raquel Consuela Knell, age 21, both of Salt Lake City, with four counts of sex trafficking of children and conspiracy to commit sex trafficking involving two minor victims.
Three individuals are charged with sex trafficking of children, conspiracy to commit sex trafficking, transportation with the intent to engage in criminal sexual activity, and transportation of a minor with intent to engage in criminal sexual activity in a nine-count indictment. Charged in this indictment are Ashley Nicole Poike, age 23, of Sandy; Hector Yordano Irizarry Castro, aka Jordan, age 24, of Salt Lake City; and Thomas Marte-Pena, aka Luigi, age 27, of Salt Lake City. This case involves one adult victim and two minor victims.
Some victims of the alleged crimes are included in more than one indictment.
Salt Lake City Interim Police Chief Mike Brown said these cases represent an important opportunity for state and federal law enforcement agencies to coordinate on investigating a serious crime. “Very few crimes are as serious as crimes against children," said Brown.
"Anytime we can disrupt that cycle of violence, it's a huge step in the right direction. I applaud our partnerships and the concerted effort made by everyone to get these alleged criminals off the street and away from future victims."
All of the defendants charged in the indictments had initial appearances in federal court Wednesday afternoon and entered pleas of not guilty to the charges. Knell and Kyle were released subject to supervision by the U.S. Probation Office. The other six defendants are in custody with several detention hearing set for Monday.
The potential maximum penalty for sex trafficking of children is life in federal prison with a 10-year mandatory minimum sentence. The potential penalty for conspiracy to commit sex trafficking has a penalty of any term of years or life. Transporting a minor for prostitution also carries a potential life sentence with a 10-year mandatory minimum sentence. Transportation with intent to engage in criminal sexual activity has a potential maximum sentence of 10 years.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
Clearfield Woman Pleads Guilty to Mail, Wire Fraud and Identity Theft in Embezzlement Schemes Involving Two EmployersRead the Press Release
SALT LAKE CITY – Teri Ann Jarvis, age 41, of Clearfield, charged in a federal indictment returned in February with mail fraud, aggravated identity theft, and wire fraud in connection with embezzlement schemes involving two employers, will serve 42 months in federal prison. Jarvis pleaded guilty Wednesday afternoon to one count of mail fraud, one count of wire fraud, and one count of aggravated identity theft.
U.S. District Court Judge Dale A. Kimball imposed the sentence. Kimball ordered Jarvis to pay $846,738.88 to Positive Power, LLC, and $42,958.04 to Bronco Fence Company. She will be allowed to self-surrender in January 2016 to begin serving her sentence.
According to the indictment, Jarvis was an employee of Positive Power, LLC, from October 2006 until around September 2013. Positive Power is based in Ogden and provides electrical contracting services. Jarvis’ duties at the company included assisting with the management of company bank accounts, credit cards, collectables, payables and other financial records. She was not authorized to sign checks or credit cards.
Jarvis was an employee of Bronco Fence Company in Kaysville from about March 2014 through about October 2014. The company specializes in fence, deck, and railing construction. Jarvis’ responsibilities at Bronco Fence included assisting with the management of the office, coordinating with a merchant services company for payment processing, and making accounting entries.
As a part of the plea agreement reached with federal prosecutors, Jarvis admitted that she devised a scheme to defraud her employers to get money. While working for Positive Power, she admitted she forged checks made payable to herself and to pay her mortgage, car payment, and personal credit card payment.
She also admitted that she used the alias Teri James in her employment application with Bronco Fence to conceal her identity and avoid detection of her previous embezzlement from Positive Power. While working for Bronco Fence, she provided false refund information to the merchant services company used by the business so that the merchant servicer processed the false refunds and transferred the money to her personal bank account. She admitted she offset the money she embezzled from Bronco Fence as “material expenses” in the company records. She admitted altering company financial accounts and records at both companies to conceal her embezzlement of $889,696.92 from the businesses.
“This unscrupulous defendant thought she had figured out a clever scheme to defraud her employers, steal company funds, and thwart the IRS,” said John G. Collins, IRS Criminal Investigation Special Agent in Charge of Utah. “IRS Criminal Investigation has made investigating identity theft a top priority and, together with our partners at the U.S. Attorney’s Office, will hold those who engage in similar behavior fully accountable.”
The case is being investigated by IRS Criminal Investigation special agents, the Weber County Sheriff’s Office, and the Kaysville Police Department and prosecuted by Assistant U.S. Attorneys in the U.S. Attorney’s Office in Salt Lake City.
Department of Justice Gives Grant to Utah to Support Substance Abuse Treatment for PrisonersRead the Press Release
SALT LAKE CITY – The U.S. Department of Justice’s Office of Justice Programs has awarded a $72,125 grant to the Utah Commission on Criminal and Juvenile Justice to support substance abuse treatment programs for prisoners.
The funding comes from the Residential Substance Abuse Treatment for State Prisoners Program. This program assists states and local governments in developing and implementing substance abuse treatment programs in state and local correctional and detention facilities and to create and maintain community-based aftercare services for offenders. The goal of the program is to break the cycle of drugs and violence by reducing the demand for, use, and trafficking of illegal drugs.
According to grant documents, Utah will use the funds to implement up to three types of programs, including residential, jail-based, and aftercare. At least 10 percent of the total state allocation this year will be made available to local correctional and detention facilities.
Grand Jury Returns Indictment Charging Pair with May Robberies of Check City, Smoke HouseRead the Press Release
SALT LAKE CITY – A federal grand jury returned a five-count indictment Wednesday charging Manmeet Singh Bhatia and Marc Conrad Kammerman with May 14, 2015, robberies of Check City located at 1295 East 3300 South and The Smoke Shop located at 2343 East 3300 South in Salt Lake County.
Bhatia, age 28, of South Jordan and Kammerman, age 41, of Murray, are charged with two counts of robbery, which are violations of the federal Hobbs Act. Kimmerman is also charged with two counts of using a firearm during the commission of a crime of violence and one count of felon in possession of a firearm.
Police officers responded to a robbery in progress at a Check City on 3300 South on May 14, a rainy night. By the time the officers arrived at the business, the alleged suspect had fled the scene. The victim of the robbery described a suspect wielding a black handgun. Later that night, a man walked into The Smoke House, also on 3300 South, a committed a robbery. A black handgun was also used during the commission of this robbery. A witness watched the alleged robber flee the store and get into the passenger side of a black car. The witness was also able to provide a partial license plate number.
Responding officers later observed a black car in a self-service car wash and identified items matching descriptions provided by witnesses at the two businesses. Kammerman, who is a convicted felon, was found in possession of a Beretta 9mm handgun.
The potential maximum penalty for a conviction of robbery under the Hobbs Act is 20 years in federal prison and a fine of $250,000. The potential maximum penalty for brandishing a firearm during the commission of a violent crime is life in prison with a mandatory minimum sentence of seven years. Possession of a firearm by a restricted person carries a potential 10-year sentence. Federal arrest warrants will be issued for the defendants.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
The case is being prosecuted by the U.S. Attorney’s Office and investigated by the FBI and the Unified Police Department.
New U.S. Attorney Announces Office Leadership ChangesRead the Press Release
SALT LAKE CITY – United States Attorney John W. Huber, who became U.S. Attorney for the District of Utah in mid-June after being nominated by President Obama and confirmed by the U.S. Senate, has announced his new office leadership team. The changes are effective immediately.
“The attorneys I have appointed to leadership positions in the office bring experience and sound judgment to their new responsibilities. They live in Utah neighborhoods and are committed to working with our local, state, and federal law enforcement partners to make communities safe for everyone,” Huber said.
“These changes will have immediate impact. For example, I have appointed veteran prosecutor Rob Lund as the new chief of our White Collar Section. For the past 10 years, drug cartel members have been looking over their shoulders because of Lund’s work in fighting narcotics traffickers. Now Ponzi scheme and white collar fraudsters in our state will do the same because of Lund’s dedication to bringing offenders to justice,” Huber said.
Diana Hagen, who joined the U.S. Attorney’s Office in 2001 and has been chief of the Appellate Section since 2006, will be First Assistant U.S. Attorney in the office. This is the top Assistant U.S. Attorney position in the office. Hagen has briefed hundreds of federal appeals and has personally argued more than 70 cases before the Tenth Circuit Court of Appeals. She was a member of the trial team that prosecuted Brian David Mitchell and Wanda Barzee for the kidnaping of Elizabeth Smart. She also has been active in local and federal bar associations and is the president-elect of Women Lawyers of Utah.
Andrew Choate will be Executive Assistant U.S. Attorney in the office. Choate joined the U.S. Attorney’s Office as a Special Assistant U.S. Attorney in 2010 and became an Assistant U.S. Attorney in June 2014. Prior to his new appointment, Choate worked in the office’s National Security Section as chief of the Immigration Crimes Unit and deputy section chief. He has been involved in the prosecution of several immigration fraud, national security, and domestic terrorism cases. Before joining the U.S. Attorney’s Office, he worked as Assistant Chief Counsel for the U.S. Department of Homeland Security in Salt Lake City.
Robert Lunnen has been named chief of the Criminal Division in the office. The Criminal Division is one of three divisions in the office. Lunnen joined the U.S. Attorney’s Office in 2002 after working in the Narcotics and Dangerous Drug Section at the U.S. Department of Justice. As a part of that position, Lunnen served for three years as the Judicial Attaché for DOJ in Bogota, Columbia. Lunnen later served for more than three years as the Judicial Attaché in Kabul, Afghanistan, where he was the senior DOJ official in Afghanistan, directing the Department’s Rule of Law reform program.
David Backman, who has been an Assistant U.S. Attorney for 13 years, will be deputy chief of the Criminal Division. He previously worked in the office’s Violent Crime Section and also served as Executive Assistant U.S. Attorney in the office. Backman clerked for U.S. District Court Judge Dee Benson prior to joining the office.
Jared Bennett will continue as chief of the Civil Division in the office and Dan Price will continue as deputy chief of that division.
Karin Fojtik, who has been an Assistant U.S. Attorney in the office since 2004, will be chief of the Violent Crime Section. Fojtik clerked for former U.S. District Court Judge Paul Cassell. She also was an Assistant Utah Attorney General and an assistant prosecutor in Salt Lake City and Sandy. Drew Yeates, who has been in the office for more than seven years, will be the deputy chief of the Violent Crime Section. Yeates was a deputy district attorney and an assistant city prosecutor in Utah prior to joining the office. He also has been Project Safe Neighborhoods Coordinator in the U.S. Attorney’s Office.
Robert Lund will be moving from chief of the Narcotics Section and the Organized Crime Drug Enforcement Task Force (OCDETF) in the office, a position he has had since 2007, to chief of the White Collar Section. Lund joined the U.S. Attorney’s Office in 2001 after working as a state prosecutor and private attorney. Lund is a judge advocate in the Army National Guard and teaches trial advocacy at the University of Utah law school.
Taking over as chief of the Narcotics Section and OCDETF will be Vernon Stejskal. Stejskal was an Assistant Utah Attorney General and Special Assistant U.S. Attorney from 2002 to 2012 and was assigned to the DEA Metro Narcotics Task Force. He became an Assistant U.S. Attorney in 2012 and has been working in the Narcotics Section.
Elizabethanne Stevens, who joined the Utah office in 1995 after working in the Criminal Division’s Fraud Section at the Department of Justice, will be chief of the Appellate Section in the office. Stevens has been working in the Appellate Section since 2005. Prior to joining the Appellate Section, Stevens was chief of the White Collar Section. Jeannette Swent, who has been an AUSA in the office since 1995 and has served as Civil Appellate Coordinator since 1997, will be deputy chief of the Appellate Section. Swent was chief of the office’s Civil Division for several years.
Alicia H. Cook, who joined the U.S. Attorney’s Office in October 2012 after working as a Deputy District Attorney for Salt Lake County for about 12 years, will continue as chief of the National Security Section in the office. Richard Daynes, who has been an Assistant U.S. Attorney for more than 13 years, has been appointed deputy chief of the National Security Section. Daynes has been chief of the Identity Theft Unit in the office and co-chairs the Utah Identity Theft Task Force. He was previously chief of the Asset Forfeiture Section in the office.
Tyler Murray will continue as chief of the Asset Forfeiture Section in the office. Murray joined the office in September 2008 as a member of the Affirmative Civil Enforcement section of the Civil Division where he focused on wildfire recovery litigation. He transferred to the Asset Forfeiture Section in 2012.
Roy Resident Pleads Guilty to Robbery, Firearms Violation; Plea Agreement Includes 180-Month Prison SentenceRead the Press Release
SALT LAKE CITY – Justin Andrew Adams, age 32, of Roy, charged in a federal indictment returned in November 2014 with three Weber County robberies and three firearms violations, pleaded guilty in U.S. District Court Friday morning to one robbery and one firearms violation.
Adams admitted that he committed an Oct. 30, 2014, robbery of a Walmart located at 4848 South 900 West in Riverdale. He admitted he threatened to shoot the cashier during the robbery. He also admitted that on the same day, he was in possession of an unregistered short-barrel rifle.
The plea agreement executed Friday morning includes a recommended sentence of 180 months in federal prison to be followed by 36 months of supervised release. Adams is scheduled to be sentenced Sept. 8, 2015, at 2:30 p.m. by U.S. District Judge Robert J. Shelby.
In addition to the Walmart robbery in Riverdale, Adams was also charged with an Oct. 24, 2014, robbery of the Walgreens Pharmacy located at 1208 Washington Boulevard in Ogden and an Oct. 26, 2014, robbery of a Walmart located at 1710 East Skyline Drive in South Ogden. He also was charged with using a firearm during a crime of violence and possession of a firearm by a restricted person. Although these charges will be dismissed at sentencing, the plea agreement includes a stipulated agreement that this relevant conduct can be considered as a part of the facts the Court takes into consideration in sentencing Adams.
Adams was arrested by police officers responding to the Riverdale Walmart robbery.
The case is being prosecuted by the U.S. Attorney’s Office in Utah. The FBI, the ATF, the Weber County Sheriff’s Office and police departments in Ogden, South Ogden, and Riverdale contributed to the investigation.
Highland Resident Pleads Guilty to Securities Fraud in Connection with HelpMed, Inc., A Company He OwnedRead the Press Release
SALT LAKE CITY – Ryan Lynn Cook, age 35, of Highland, Utah, pleaded guilty Thursday morning in federal court to one count of securities fraud in connection with an investment scheme involving his company, HelpMed, Inc.
Cook was president and owner of HelpMed, a Utah company organized in April 2011 in Utah. He represented to potential investors that HelpMed provided medical recruiting services for medical facilities to hire temporary doctors and other medical providers.
According to a Felony Information filed Wednesday, Cook represented to potential investors that he was willing to sell a 10 percent ownership interest in his company through the issuance of company stock in exchange for $2 million. The Felony Information alleges that starting around February 2015 and continuing to May 11, 2015, Cook devised a scheme to defraud investors and took steps to execute the scheme through the use of materially false representations.
As a part of the his guilty plea Thursday, Cook admitted that he represented to investors that HelpMed earned approximately $3.8 million in revenue in January and February 2015, when in fact, HelpMed had no revenue. He represented there were more than 12,000 health care providers in HelpMed’s system ready to be connected with hospitals and clinics, when in fact, the system contained approximately 100 health care providers. He also represented there were more than 8,000 hospitals and clinics in the company’s system, when in fact, the system contained about five hospitals.
He also represented to potential investors that HelpMed’s software developer had signed a non-disclosure agreement with a senior official from the Department of Labor and was being paid $40,000 per month on the agreement, when in fact, there was no such agreement.
As a part of the plea agreement, Cook admitted sending an email in early March to potential investors containing an untrue statement of material facts with willful intent to defraud them saying, “We are continuing to grow more clients everyday so as jobs get filled new ones come in as hospital systems now have to use us to remain competitive . . . At our current rate we will hit more than 11,000 provider openings this year.”
Documents filed in court allege Cook directly solicited two investors and received approximately $2 million from about five individuals who invested in his scheme.
According to a complaint filed in the case, investors demanded Cook provide them access to HelpMed’s server. Once they obtained server access, associates of the investors determined there were not thousands of hospitals and doctors in the system, but only a few hospitals and a few dozen doctors.
According to the complaint, an investor confronted Cook about the lack of purported clients. Cook claimed the data had been moved from the server. Cook also told the investor that FBI agents had shown up at his door, that his office had been bugged and that his cell phone had been tapped by the federal government.
Cook was arrested on a federal warrant after a May 11, 2015, incident in the west desert. Cook drove to the west desert and called one of his investor victims claiming he was being followed, a person identified in the complaint as the “Software Developer” had been kidnapped by the government, and that the government had stolen his truck. Later, Cook asked the investor to come out to the west desert and take his (Cook’s) gun from him or he was going to do something drastic, according to the complaint. The investor called 911 and Cook was subsequently arrested.
As part of the plea agreement executed in court Thursday morning, federal prosecutors and Cook agreed to recommend the court impose a 24-month sentence to be followed by two years of supervised release. Cook agreed to pay restitution in the amount of $1,974,250 to the victims in the case. He also agreed to forfeit a 2015 Lexus RC; cash seized from a bank account; and real property located in Highland, Utah, in addition to a money judgment of $1,974,250. He acknowledged that the money, car, and property were proceeds of illegal conduct or helped to facilitate illegal conduct.
U.S. Magistrate Judge Dustin Pead, who presided at the change of plea hearing, set sentencing in the case for Sept. 9, 2015, at 2:30 p.m.
The case is being prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by the FBI.
United States Repatriates Seven Boa Constrictors to BrazilRead the Press Release
WASHINGTON – Seven boa constrictors seized in connection with an illegal wildlife smuggling scheme have been returned to the government of Brazil, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney John W. Huber of the District of Utah.
“This case exhibited many of the hallmarks that make illegal wildlife trafficking a growing international scourge, including actors motivated by greed who illegally smuggled rare and precious wildlife across international boundaries,” said Assistant Attorney General Caldwell. “The return of the precious snakes to Brazil brings to an end this years-long international saga, and serves as an example of our commitment to working with law enforcement partners in Brazil and elsewhere to combat transnational crime.”
“The successful prosecution of Mr. Stone and the recovery and repatriation of the offspring from this rare and valuable leucistic boa constrictor are due to the exceptional cooperation between the United States and Brazilian authorities,” said U.S. Attorney Huber. “The illegal wildlife trade threatens the survival of many threatened and endangered species and Mr. Stone’s conviction in this case demonstrates our resolve to prosecute those who engage in such activities.”
The seven boa constrictors are the offspring of a rare and extremely valuable white (leucistic) boa constrictor known as “Lucy” or “Diamond Princess” that was found in the Niterói district of Rio de Janerio in 2006. Because of its rarity, Brazilian authorities housed the white boa at the Niterói Zoo, a private foundation that rescued and rehabilitated injured wild animals. In January 2009, Jeremy Stone, a Utah-based collector, breeder and seller of reptiles, traveled to Brazil, secured possession of the snake and unlawfully returned with it back to the United States.
After learning that Stone was marketing snakes bred from a rare white boa, the Brazilian government requested assistance from the United States in securing the return of the leucistic boa and any offspring. Thereafter, pursuant to a mutual legal assistance treaty, federal investigators obtained a warrant authorizing the seizure of the snake and any offspring from Stone’s property in Utah. In executing the warrant, agents from the FBI learned that the leucistic boa constrictor had died. Agents turned the offspring over to the U.S. Marshals Service, which delivered the eight surviving offspring to the Hogle Zoo in Salt Lake City. One of the snakes died shortly thereafter.
In July 2014, Stone pleaded guilty plea to unlawfully transporting wildlife into the United States. As part of his plea agreement, Stone agreed to forfeit the boa’s offspring to the United States.
In October 2014, the government of Brazil filed a petition asserting its ownership of the white boa and its offspring because it had been caught in the Brazilian wild. Thereafter, the United States asked the court to amend the preliminary order of forfeiture to recognize Brazil’s claim to the snakes. In February 2015, the court entered a final order of forfeiture awarding the white boa’s seven surviving offspring to the government of Brazil.
The Criminal Division’s Asset Forfeiture and Money Laundering Section and Office of International Affairs, as well as the U.S. Attorney’s Office of the District of Utah and the FBI, worked jointly with the government of Brazil to secure the repatriation of the seven offspring.
John W. Huber Sworn in as United States AttorneyRead the Press Release
SALT LAKE CITY – In a short ceremony Monday morning, John W. Huber was sworn in as the United States Attorney for the District of Utah.
U.S. District Court Senior Judge Dee Benson administered the oath of office at a ceremony at the federal courthouse in Salt Lake City. A public investiture ceremony will be held later this summer.
Huber, age 47, has more than 10 years of experience in the U.S. Attorney’s Office where he has prosecuted cases ranging from violent gang and gun crime to domestic and international terrorism. He has served as a member of the office’s leadership team as the National Security Section chief, Executive Assistant U.S. Attorney, and most recently as Acting First Assistant U.S. Attorney.
The U.S. Attorney’s Office currently has about 85 employees located in Salt Lake City and a branch office in St. George. There are 94 U.S. Attorneys’ Offices in the country. The U.S. Attorney’s Office in Utah covers the entire state.
“I have committed my career to public service. I view the honor of serving as U.S. Attorney as my greatest opportunity thus far to help keep our communities safe. Building on Utah’s tradition for smart, cooperative law enforcement, I will work with law enforcement agencies, community leaders, and others to protect our national security interests, combat violent crime, expose financial fraud, and protect vulnerable victims,” Huber said today.
Huber was nominated by President Barack Obama to be the United States Attorney for Utah on Feb. 4, 2015, and confirmed by the United States Senate Wednesday. The appointment is for four years. Carlie Christensen has been the interim U.S. Attorney for Utah since David Barlow resigned in July 2014 to go into private practice.
A University of Utah graduate, Huber is a career prosecutor with broad experience in Utah’s state and federal trial courts. He was a Weber County deputy county attorney. He also worked for West Valley City for eight years, including a five-year term as Chief City Prosecutor.
Huggins Sentenced to 27 Months in Federal Prison for Possession of an Unregistered Destructive DeviceRead the Press Release
SALT LAKE CITY – John Huggins, 48, of Tremonton, Utah, who pleaded guilty in February to possession of an unregistered destructive device, was sentenced to 27 months in federal prison Thursday afternoon in U.S. District Court in Salt Lake City.
According to the plea agreement, Huggins admitted that in July 2014 he possessed a partially assembled explosive device. He also agreed that he had the knowledge and the materials necessary, including an explosive substance, to readily assemble the device into a functioning explosive device.
Huggins was charged with possession of an unregistered destructive device; possession of an explosive by a restricted person; and unlawful distribution of information relating to the manufacture and use of explosives or destructive devices in an indictment returned in July 2014. The indictment followed an investigation by members of the FBI’s Joint Terrorism Task Force, the Utah Department of Public Safety, and the Tremonton Police Department.
According to a sentencing memorandum filed by federal prosecutors, law enforcement officers received information from a confidential informant that Huggins was planning to use explosives to target the Tremonton Police Department. The FBI then made contact with the defendant through another confidential informant. This confidential informant met with the defendant and purchased a thumb drive containing references on how to start and train militias, and how to produce explosives. An undercover agent, posing as a representative of an anti-government militia group, was introduced to the defendant and told Huggins he was looking for someone who could make explosives and train people in his group. Huggins responded affirmatively that he could do that, according to the sentencing memorandum. Huggins described what he could do and expressed an extreme dislike of law enforcement based on prior interactions with police officers.
During a second meeting with the undercover agent, Huggins went to great lengths to convince the undercover agent that he could build explosives capable of killing people. The defendant offered to come and train the undercover agent’s group for a month for a fee. Huggins also presented and sold a notebook to the undercover agent. The notebook included drawings detailing explosives production and writings on topics such as explosive theory and how to produce different types of explosives.
“The defendant was a skilled and motivated explosives expert who was willing to train and manufacture explosives for an anti-government militia group,” prosecutors wrote in the sentencing memorandum.
Huggins was arrested in July 2014. According to court filings, he admitted that he was meeting with a man be believed to be a member of a militia extremist group. He admitted that although he did not provide the undercover agent with an explosive device at their meeting, he did have an inert explosive device in his trailer that he planned to show the undercover agent. He admitted that the device would need to be loaded first to become a bomb, but that all of the necessary components to fully assemble the explosive device were at his residence.
A further search of the defendant’s trailer yielded notebooks containing what appeared to be a diary with entries ranging from anti-government ideology to a system to watch and track police officers.
U.S. District Judge David Nuffer also ordered Huggins to serve 36 months of supervised release at the conclusion of his prison sentence. Federal prosecutors dismissed two counts from the indictment at Thursday’s sentencing hearing as a part of the plea agreement reached with Huggins.
Utah Man Sentenced to Prison for Filing $1.5 Million in False Claims for Tax Refunds and Presenting Fictitious Financial Instruments to the U.S. GovernmentRead the Press Release
SALT LAKE CITY – A Sandy, Utah, resident was sentenced Tuesday in U.S. District Court in Salt Lake City, Utah, to serve two years in prison for tax evasion, filing false claims for federal income tax refunds, and filing fictitious financial obligations with the U.S. government, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Paul Ben Zaccardi was also ordered to pay restitution to the Internal Revenue Service (IRS) and to serve a four-year term of supervised release upon his release from prison.
“Pursuing and prosecuting individuals who refuse to comply with our nation’s tax laws and take affirmative steps to evade their obligations remains a top priority of the Tax Division,” said Acting Assistant Attorney General Ciraolo. “Tuesday’s sentence reflects what awaits those who engage in such criminal conduct.”
“Yesterday’s sentencing of Paul Zaccardi again emphasizes the Internal Revenue Service and DOJ Tax Division’s aggressive pursuit of those who use fraudulent methods in an attempt to corrupt our nation’s tax system,” said Special Agent in Charge John Collins of the IRS Criminal Investigation’s Las Vegas Field Office. “Honest taxpayers have been reassured today that no one is above the law–especially when the integrity of the tax administration is at stake.”
On Oct. 29, 2014, Zaccardi pleaded guilty to the offenses charged in the superseding indictment, including one count of tax evasion, five counts of filing false claims for income tax refunds and three counts of filing fictitious obligations. According to the superseding indictment and court documents, in April 2004, Zaccardi embarked on a scheme to evade the payment of his federal income taxes. As part of that scheme and to avoid federal tax levies, Zaccardi transferred title to his residence to a nominee entity that he formed called Saved by Grace Christian Fellowship and caused his business receipts to be deposited into his wife’s bank account.
Zaccardi also presented five separate false tax returns to the IRS falsely claiming tax refunds totaling more than $1.5 million. In addition, from June 2008 to October 2011, Zaccardi presented three separate fictitious financial instruments to the IRS, U.S. Department of the Treasury and the U.S. District Court of the District of Utah for a combined total of $605 million, to purportedly pay his federal income tax liabilities.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS Criminal Investigation, who investigated the case, and Trial Attorneys Stuart Wexler and Ryan Raybould of the Tax Division, who prosecuted the case. She also thanked the U.S. Attorney’s Office of the District of Utah for their substantial assistance.
Additional information about the Tax Division’s national Tax Defier Initiative and its enforcements efforts in this area may be found on the division’s website. Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Investigation Web site at http://www.ustreas.gov/irs/ci/.
Durable Medical Equipment Suppliers to Pay $7.5 Million to Resolve False Claims Act AllegationsRead the Press Release
SALT LAKE CITY – Orbit Medical Inc. and Rehab Medical Inc. will pay $7.5 million to resolve allegations that Orbit submitted false claims to federal health care programs for power wheelchairs and accessories, the Justice Department announced today. Orbit Medical and Rehab Medical, a partial successor of Orbit, are durable medical equipment suppliers based in Salt Lake City, Utah and Indianapolis, Indiana, respectively.
“Power wheelchair suppliers must bill federal healthcare programs accurately and honestly to ensure that federal dollars are used for individuals who truly need these mobility devices,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “The Justice Department is committed to pursuing those who seek to abuse taxpayer-funded programs.”
“The resolution of this case helps to restore funds taken from the Medicare trust fund through the use of falsified records and billings,” said U.S. Attorney Carlie Christensen of the District of Utah. “Taxpayers’ dollars paid for power wheelchairs not legitimately prescribed by a physician. Health care fraud is aggressively prosecuted in Utah and every effort is made to restore government funds taken through such conduct.”
Medicare pays for power wheelchairs for beneficiaries who cannot perform activities of daily living in their home using other mobility-assistance equipment, such as a cane, walker or power scooter. To qualify for reimbursement, a physician must conduct a face-to-face examination of the beneficiary and provide the supplier with a written prescription for a power wheelchair within 45 days of such an encounter, along with documentation that supports the medical necessity of the device. The prescription must be completed by the physician who performed the exam and must include the beneficiary’s name, the exam date, the diagnoses and conditions the wheelchair is expected to accommodate, the length of need and the physician’s signature.
The settlement with Orbit Medical and Rehab Medical resolves allegations that Orbit sales representatives knowingly altered physician prescriptions and supporting documentation to get Orbit’s power wheelchair and accessory claims paid by Medicare, the Federal Employees Health Benefits Plan and the Defense Health Agency. In particular, the government alleged that Orbit sales representatives changed or added dates to physician prescriptions and chart notes to falsely document that the prescription was sent to the supplier within 45 days of the face-to-face beneficiary exam; changed the physician prescription to falsely establish medical necessity for the power wheelchair or accessory; created or altered chart notes and other documents to falsely establish the medical necessity of the power wheelchair or accessory; forged physician signatures on prescriptions and chart notes; and added facsimile stamps to supporting documentation to make it appear as though the physician’s office had sent the documents to Orbit.
“Wheelchair schemes such as this divert Medicare funds meant to pay for legitimate health care, including providing wheelchairs for patients who have a genuine medical need for such equipment,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Our agency will continue to investigate those who attempt to cheat federal health care programs.”
The allegations resolved by the settlement with Orbit and Rehab were filed under the False Claims Act by two former Orbit employees, Dustin Clyde and Tyler Jackson. Under the Act, a private party can sue for false claims on behalf of the government and share in any recovery. Clyde and Jackson will receive approximately $1.5 million. The whistleblowers’ suit also named as a defendant Jake Kilgore, the former vice president and sales manager at Orbit Medical for the Western region of the United States. The United States intervened in that aspect of the suit on April 2, 2014, and today’s settlement does not resolve the pending claims against Kilgore. Separately, on Oct. 23, 2013, a federal grand jury in Utah indicted Kilgore on three counts of health care fraud, three counts of false statements related to health care and three counts of wire fraud.
Today’s settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
This case was a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the District of Utah, HHS-OIG, the FBI, the Office of Personnel Management and the Defense Health Agency. The lawsuit is captioned United States ex rel. Clyde et al. v. Orbit Medical et al., No. 2:10-CV-00297 (D. Utah).
The claims settled by the government are allegations only; there has been no determination of liability.
Ogden Man Sentenced to 150-Months in Federal Prison After Shooting at Special Deputy U.S. MarshalsRead the Press Release
SALT LAKE CITY – Lorenzo Puentes, age 38, of Ogden, pleaded guilty in federal court in Salt Lake City Thursday to assault on a federal officer with a dangerous weapon and discharging a firearm during a crime of violence.
U.S. District Judge Dee Benson accepted the guilty pleas and imposed a sentence of 150 months, including 30 months for the assault conviction and 120 months for discharging the firearm during a crime of violence, to run consecutively to each other. Puentes will be on supervised release for 60 months following the completion of his federal prison sentence. There is no parole in the federal prison system. As a special condition of his supervised release, he was ordered not to have any contact with any member or associate of a criminal street gang or prison gang either in person, by mail, by phone, by e-mail, by third party; or any other means.
Deputy United States Marshals were conducting surveillance at a residence in Ogden, Utah, on the evening of Nov. 4, 2014. Puentes, who had an outstanding no-bail arrest warrant for a weapons violation, was believed to be at the residence. During the evening, Puentes stepped outside of the residence to smoke a cigarette. He encountered three Special Deputy United States Marshals who verbally identified themselves as police officers. They are local police officers assigned to the U.S. Marshal Service’s Violent Fugitive Apprehension Strike Team.
Puentes raised his right arm, pointed a handgun at the deputies, and discharged one round toward the deputies. He then turned and ran from the officers. Deputies pursued Puentes approximately one block down the street and took him into custody. A bullet hole was located in a fence directly behind where the deputies were standing at the time of the gunshot. Law enforcement officers recovered the firearm in a nearby driveway the next morning.
“This incident demonstrates the danger that our task force officers face each day. I am proud of their bravery and their service to our community,” James A. Thompson, U.S. Marshal for the District of Utah, said today.
As a part of his plea agreement Thursday, Puentes admitted that he forcibly assaulted the three Special Deputy U.S. Marshals while they were engaged in their official duties. He admitted pointing the handgun toward them and firing a shot in their direction.
A federal grand jury returned an indictment charging Puentes with the two counts in November.
Tax Fraud Promoters Sentenced to Prison for Conspiring to Defraud Internal Revenue ServiceRead the Press Release
SALT LAKE CITY – A Midvale, Utah, man and a Henderson, Nevada, woman were sentenced Wednesday afternoon in U.S. District Court in Salt Lake City for tax crimes, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Carlie Christensen of the District of Utah.
Gerrit Timmerman III, 73, of Midvale, was sentenced to 48 months in prison to be followed by three years of supervised release. Carol Jean Sing, 75, of Henderson, was sentenced to 36 months in prison to be followed by three years of supervised release. In February 2015, Timmerman and Sing were convicted at trial by a federal jury of conspiracy to defraud the United States related to their promotion of a tax fraud scheme.
“Combatting abusive tax schemes remains one of the Tax Division’s highest priorities, and these sentences are the result of our continued efforts to pursue and prosecute fraudulent promoters to the fullest extent of the law,” said Acting Assistant Attorney General Ciraolo. “We will continue to work with our law enforcement partners at the IRS and in the U.S. Attorney’s Offices to identify and dismantle these criminal enterprises and in doing so, protect the American public and the U.S. Treasury.”
“Individuals who enrich themselves by promoting tax avoidance schemes and assisting others in evading state and federal taxes are defrauding American taxpayers,” said U.S. Attorney Christensen. “They should expect to be prosecuted, convicted and sentenced to federal prison for this conduct, as these sentences demonstrate.”
According to the evidence introduced at trial, between April 23, 2004, and March 5, 2007, Timmerman and Sing conspired to defraud the United States by marketing “corporations sole” as part of their scheme to evade the assessment and payment of federal income taxes. Timmerman and Sing falsely told their clients that corporations sole were exempt from United States income tax laws, had no obligation to file tax returns and had no obligation to apply for tax exempt status. They further claimed that individuals could render their own income non-taxable by assigning it to the corporation sole, could draw a tax-free stipend from their corporation sole, and could render property immune from IRS collection activity by transferring property to the corporation sole.
According to evidence presented at trial, Sing used Trioid International Group Inc. as a resident agent for corporations sole and other business entities for their clients. Sing and Timmerman also utilized a website to list the tax benefits of corporations sole and to post articles about the supposed tax benefits of corporations sole. At the same time, Timmerman was actively assisting others in evading their state and federal income tax liabilities and recommended the corporation sole to his clients as another way to impair the IRS. Both defendants referred customers to one another and paid each other referral fees.
“Yesterday’s sentencing of Gerrit Timmerman and Carol Sing should send a clear message: schemes to evade the payment of taxes are a violation of the federal tax laws and the consequences of such schemes can and will result in jail time,” said Special Agent in Charge John G. Collins of IRS-Criminal Investigation in Utah. “The Internal Revenue Service, in partnership with the U.S. Attorney’s Office and the Tax Division, will continue the aggressive pursuit of those who use fraudulent methods in an attempt to corrupt our nation's tax system. Honest taxpayers have been reassured today that no one is above the law -- especially when the integrity of tax administration is at stake.”
A corporation sole is a form of incorporation allowed by some states, primarily for use by religious leaders to hold title to property. Several states, including Utah and Nevada, have disallowed the creation of new corporations sole. The IRS has publicized the fact that corporations sole have been abused by promoters in Revenue Ruling 2004-27, and has even included corporations sole on their “dirty dozen” tax scams in prior years.
Assistant Attorney General Ciraolo and U.S. Attorney Christensen commended the special agents of IRS–Criminal Investigation, who investigated this case, as well as Trial Attorneys Dennis R. Kihm and Andrea A. Kafka of the Tax Division, who prosecuted the case.
Cruz Pleads Guilty to Possession of Methamphetamine; Admits 73.8 Pounds of Meth Were Destined for Distribution in Salt Lake CityRead the Press Release
SALT LAKE CITY – Travis Javier Cruz, age 38, of the Salt Lake City area, who traveled to California in October to pick up 73.8 pounds of methamphetamine from a supplier destined for distribution in Salt Lake City, pleaded guilty to possession of methamphetamine with intent to distribute in U.S. District Court Wednesday morning.
As a part of the plea agreement reached with federal prosecutors, Cruz admitted that he traveled to the Orange County area of California on Oct. 28, 2014, to pick up a large quantity of methamphetamine for distribution in the Salt Lake City area. According to a complaint filed in the case, Cruz was already under surveillance by the FBI’s Safe Streets Task Force, in conjunction with the Salt Lake Unified Police Department, the Davis County Sheriff’s Office, and other law enforcement agencies prior to making the trip to California.
Cruz arrived at a hotel in Huntington Beach, where the narcotics transaction would take place, with approximately $300,000 in cash to pay for 70 pounds of narcotics. Cruz admitted meeting with a courier for the methamphetamine source of supply at the hotel on Oct. 28, 2014, and giving him $300,000.
The next day, according to the plea agreement, the courier returned to the hotel with five or six five-gallon buckets. He took the buckets into Cruz’s room. The buckets contained the methamphetamine Cruz planned to distribute in the Salt Lake City area. Cruz admitted that he and others packaged the methamphetamine into plastic wrap and mustard to transport it back to Salt Lake City. The narcotics were placed in a roller bag and two backpacks and loaded into the trunk of the Cruz’s car for transportation back to Salt Lake City.
Agents and officers, who had been conducting surveillance at the hotel, conducted a vehicle stop after the narcotics were loaded in the car. A dog alerted to the presence of narcotics in the trunk of the vehicle. Cruz admitted as a part of the plea agreement that the amount of narcotics recovered was approximately 73.8 pounds.
On the same day, officers executed a federal search warrant at a storage unit in Salt Lake City and recovered approximately 1.5 pounds of methamphetamine. Cruz admitted it was his intent to distribute the methamphetamine in the Salt Lake City area.
As a part of the plea agreement, Cruz agreed to forfeit vehicles and cash used to facilitate the criminal conduct.
Sentencing is set for Aug. 4, 2014, in U.S. District Judge Robert J. Shelby’s courtroom. Federal prosecutors agreed in the plea agreement to recommend that Cruz be sentenced at the mid-range level of the federal sentencing guidelines in the case, as determined by the court. He faces a 10-year minimum mandatory sentence in the case.
Cruz was charged with conspiracy to distribute methamphetamine and possession of methamphetamine with intent to distribute in an indictment returned by a federal grand jury in November.
Olshen Pleads Guilty to Mail Fraud, Money Laundering in Connection with Fraud Scheme Involving Sports DrinkRead the Press Release
SALT LAKE CITY – Randy Olshen, age 52, of Newport Beach, Calif., indicted by a federal grand jury in September on charges of mail fraud, wire fraud, and money laundering in connection with an investment fraud scheme, entered guilty pleas to money laundering and wire fraud Friday in federal court. At times relevant to the charges in the case, Olshen maintained a residence in Summit County, Utah.
Olshen was one of the founders and president of an entity known as Innovative Health Solutions, LLC (IHS), organized in 2008. IHS specialized in manufacturing and selling sports hydration drinks designed to boost energy and stamina. Olshen, in an effort to promote the growth of IHS, sought investors and made representations to encourage investments in the company.
As a part of the plea agreement reached with federal prosecutors, Olshen admitted that beginning around 2009 and continuing until about February 2013, he devised a scheme to get money and property from IHS investors through materially false representations and the omissions of material facts. He also admitted he diverted portions of the invested funds for purposes not disclosed to or authorized by investors.
For example, Olshen admitted in the plea agreement that he represented to victim investors that IHS had approximately $1.1 million in sales in 2009, when it had approximately $98,275 in sales in 2009. He represented that IHS had projected sales of more than $28 million in sales in 2012, when it had approximately $579,239 in sales in 2012. He also represented that the company had large receivable accounts with various national chains such as Costco, Rite Aid, CVS, and Food Lion. In fact, no such large receivable accounts were owed to IHS.
Olshen admitted he created two sets of IHS accounting records, one that accurately represented company finances and one that was provided to investors and potential investors; fabricated paperwork, such as sales records, to support his misrepresentations regarding the growth of IHS; failed to make numerous payments to creditors; paid a portion of investor funds to others as commissions for obtaining investments for IHS; that he personally declared Chapter 7 bankruptcy around October 18, 2011; and that he used IHS funds for his own personal benefit and expenses in excess of his reported salary. He concealed these material facts from investors as a part of his fraud scheme.
The loss to IHS victim investors resulting from his scheme is approximately $7 million. A final figure will be determined at sentencing. There are more than 50 victims.
The plea agreement includes a recommended sentence of 54 months in federal prison and 36 months of supervised release at the conclusion of the prison term. The sentence is subject to the approval of the court. Sentencing in the case is set for July 29, 2015, at 2:30 p.m.
The case is being investigated by special agents of the FBI, IRS Criminal Investigation, and the Utah Division of Securities. It is being prosecuted by the U.S. Attorney’s Office in Salt Lake City.
Justice Department Files Federal Lawsuit Against Park City Business for ViolatingRead the Press Release
SALT LAKE CITY – The Justice Department’s Civil Rights Division and U.S Attorney Carlie Christensen of the District of Utah announced today the filing of a complaint in U.S. District Court in Salt Lake City against Veteran’s Trading Company (VTC), a business with headquarters in Park City, Utah.
The complaint alleges the business violated the employment rights of Naval Reserve Captain Paul M. Costello under the Uniformed Services Employment and Reemployment Rights Act (USERRA). Costello is a Navy veteran with a disability who has served his country as an F-18 fighter pilot. He has served as a member of the United States Naval Reserve since 1997.
According to the complaint, filed by the United States on Costello’s behalf, Costello’s military service was a motivating factor in VTC’s decisions to deny his request for re-employment and, ultimately, to terminate his employment. The United States claims that both actions by VTC violated Costello’s USERRA rights.
“Members of our National Guard and Reserves make many sacrifices, including spending months or years away from their jobs and families,” said U.S. Attorney Christensen. “When our service members are deployed in the service of our country, they are entitled to retain their civilian employment and to the protections of federal law that prevent them from being subject to discrimination based upon their military obligations. We are filing suit today, on behalf of Captain Costello, a member of the U.S. Naval Reserve, to ensure that he does not lose his rights while he was protecting ours.”
The complaint alleges that in July 2013, VTC fired Costello from his job as company President due to his military service and subsequently denied Costello’s application for reemployment following his active military duty in September 2013. On April 30, 2015, VTC pre-emptively filed its own suit against Costello in Utah state court claiming that he was inappropriately remunerated for his service to the company while he was on military leave; despite the fact that while he was on military he took personal leave in order to preside over company meetings. In addition to filing its federal complaint, the United States removed the employer’s action from state court to federal court.
“The brave men and women who serve in our Armed Forces should never have to fear losing their job while they’re deployed overseas,” said Acting Associate Attorney General Stuart F. Delery. “That’s why the Department of Justice is committed to protecting the employment rights of service members and we will continue to devote time and resources to hold bad actors accountable.”
“Captain Costello served our nation honorably, and USERRA guarantees his right to re-employment upon his return from service,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “Through the department’s newly created Service Members and Veterans Initiative, we will continue to build on our strong ties with federal partners and continue using every tool at our disposal to protect the rights of the men and women who serve in our Armed Forces.”
USERRA protects the rights of uniformed service members to retain their civilian employment following absences due to military service obligations, and proved that service members cannot be discriminated against because of their military obligations.
The lawsuit filed by the United States seeks damages equal to the amount of Costello’s lost wages and other benefits caused by VTC’s failure to comply with USERRA and a dismissal of VTC’s complaint. It also seeks an order requiring VTC to return Costello’s ownership and distribution shares and pay him all amounts that were distributed to shareholders between June 9, 2013, and the date of judgment. The lawsuit seeks an order requiring VTC to pay for all litigation fees related to the court action.
Costello initially filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated this matter and, after resolution failed, referred it to the Justice Department’s Civil Rights Division, Employment Litigation Section. This lawsuit followed as a collaborative initiative between the Civil Rights Division and the U.S. Attorney’s Office for the District of Utah. The Department of Justice has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s Web sites at http://www.usdoj.gov/crt/emp and http://www.servicemembers.gov, as well as on the Labor Department’s website at http://www.dol.gov/vets/programs/userra/main.htm.
10-Count Indictment Unsealed Charging Eight Individuals with Conspiracy to Distribute, Possession of Synthetic CannabinoidsRead the Press Release
SALT LAKE CITY – A federal indictment unsealed Thursday afternoon charges eight individuals with conspiracy to distribute XLR-11, a synthetic cannabinoid commonly known as spice; possession of spice with intent to distribute; and conspiracy to commit money laundering. The indictment was returned by a grand jury Wednesday afternoon.
Charged in the indictment are Issa Haig Babikyan, age 51, of Carlsbad, Calif.; Michael Suliman Haig Babikyan, age 25, of Murray; Fahad Ali Khalil, age 24, of Murray; Ammar Ibrahim Alobaidi, age 35, of Midvale; Yaser Saeed Majeed Al-Najjar, age 46, of Murray; Joseph Lara Paez, age 39, of Fresno, Calif.; Tiffany Nicole Velo, age 32, of Fresno; and Hanan Saeed, age 43, of Salt Lake City.
The case is being investigated by two FBI task forces, the Safe Streets Task Force and the Wasatch Range Task Force. Member agencies involved in the task forces are the FBI, Salt Lake City, West Valley City, West Jordan and Sandy City police departments; the Utah Highway Patrol, the Utah Department of Public Safety, the Utah Department of Corrections; and the Unified Police Department.
The first count of the indictment charges seven defendants with conspiracy to distribute spice from at least Jan. 31, 2015, through April 29, 2015. Counts two through nine charge various defendants in the case with possession of spice with intent to distribute. Count 10 of the indictment charges Khalil and Saeed with conspiracy to commit money laundering, alleging they conducted transactions involving the proceeds of a specified unlawful activity and that the transactions were designed to conceal and disguise the nature, location, source, ownership, and control of the proceeds of the unlawful activity.
Spice is a mixture of herbs and spices that is typically sprayed with a synthetic compound similar to THC, the psychoactive ingredients in marijuana, according to a DEA Drug Fact Sheet. However, spice is commonly more potent than organic marijuana and the dose can be irregular due to a lack of quality control in the manufacturing process. Spice is commonly purchased in; tobacco shops, various retail outlets, and over the Internet. It is often marketed as incense or “fake weed.” Purchasing over the Internet or from a smoke shop can be dangerous because it is not usually known where the products come from or what amount of chemical is on the organic material.
Issa Haig Babikyan and Michael Suliman Haig Babikyan were arrested Thursday in California and had initial appearances in federal court. Khalil, Alobaidi, Al-Najjar, Velo and Seed were arrested in Utah and will have initial appearances Friday at 1 p.m. in U.S. Magistrate Judge Brooke C. Wells’ courtroom. Paez remains a fugitive in California.
Several firearms, vehicles, and cash were seized during the execution of the arrest warrants Thursday. Approximately 2,000 pounds of spice were seized during a two-month period of the investigation.
The potential maximum penalty for each of the nine drug counts alleged in the indictment is 20 years and a $1 million fine. Conspiracy to commit money laundering carries a potential 20 year prison sentence. The fine for the money laundering count is up to $500,000 or two times the dollar amount of the property involved in the alleged money laundering transaction.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
Two Charged with Transporting 5,820 Pairs of Shoes from Oregon to Utah in Stolen TruckRead the Press Release
SALT LAKE CITY – Two individuals stopped by law enforcement officers in Utah following an attempt to locate a stolen truck request from law enforcement authorities in Multnomah County, Oregon, were indicted by a federal grand jury in Utah Wednesday afternoon.
Juan Carlos Andino-Mejia, age 24, of Los Angeles, a citizen of Honduras, and Marlon Emilio Vasquez-Garcia, age 45, of Los Angeles, a citizen of El Salvador, are charged with one count of interstate transportation of stolen property and one count of re-entering the country after a previous deportation. The indictment alleges the two transported 5,820 pairs of Keen Shoes with a value of more than $5,000 from Multnomah County, Ore., to Box Elder County, Utah.
The shoes were in the truck when it was reported stolen from a trucking company in Oregon, on March 23, 2015. The trucking company notified law enforcement authorities that a GPS on the truck indicated it was at a truck stop in Box Elder County, Utah. The Utah Highway Patrol, Box Elder County Sheriff’s Office, and the Tremonton City Police were involved in stopping the truck and conducting the investigation. ICE Enforcement and Removal officers also contributed to the investigation.
Andino-Meja and Vasquez-Garcia, who have used a variety of names, have had multiple deportations from the United States. They face up to 10 years in prison if convicted of interstate transportation of stolen goods and up to 10 years in prison for re-entering the country after a previous deportation. An initial appearance on the charges will be scheduled for the pair.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
West Jordan Woman Sentenced Following Conviction for Using Identifiers of Deceased Individuals to Get Tax ReturnsRead the Press Release
SALT LAKE CITY – Jacquelin Boyd, aka Jacquelyn Boyd, age 37, of West Jordan, who pled guilty in January to making a false claim to the IRS, has been sentenced to a year in federal prison. U.S. District Judge Tena Campbell imposed the sentence Wednesday afternoon.
Judge Campbell also ordered Boyd to serve 36 months of supervised release when she finishes her prison sentence. She must pay $32,243 in restitution to the IRS.
As a part of a plea agreement reached in the case, Boyd admitted that from May 2, 2012, through about Oct. 13, 2012, she worked with others to obtain the names, addresses, social security numbers and other personal identifiers of deceased individuals and used the information to file false and fraudulent tax returns with the IRS.
Boyd admitted that she created false records of employers, wages, and Utah addresses to submit with the returns. She directed that the refunds, based on the fraudulent information, be deposited to various bank accounts under her control. She withdrew the money after it was deposited in the accounts. She pled guilty to a count involving a false tax return filed on Oct. 13, 2012, in the name of A.B., who is deceased. A return of $2,444 was mailed to Boyd.
“Individuals thinking about stealing identities and participating in tax fraud including filing false tax returns should stop and look at the consequences,” stated John Collins, IRS Criminal Investigation Special Agent in Charge of Utah. “These consequences include going to prison, being branded a convicted felon for the rest of their lives, and paying back all the taxes owed plus steep penalties and interest. It’s not worth it.”
Schanze Pleads Guilty as Charged in Misdemeanor Information; Convicted of Using Aircraft to Harass Wildlife and Pursuing A Migratory BirdRead the Press Release
SALT LAKE CITY – Dell Schanze, age 45, of American Fork, Utah, pled guilty to using an aircraft to harass wildlife and pursuing a migratory bird in U.S. District Court in Salt Lake City Friday afternoon. There was no plea agreement, and federal prosecutors made no concessions to Schanze as a part of his guilty plea to both counts of the Misdemeanor Information.
U.S. District Judge Dee Benson took the plea and imposed a sentence of one year of court probation. Schanze will forfeit an orange parasail as a substitute asset for the paraglider involved in the illegal conduct. Judge Benson also ordered him not to land a paraglider in a federally-designated Wilderness Area or in any area closed to motorized access by a federal agency.
“The protection of Utah’s wildlife should be important to all of us. Mr. Schanze used his motorized paraglider to harass an owl to the point of exhaustion and then kicked it. His actions showed utter disregard for this protected bird,” U.S. Attorney Carlie Christensen said Friday afternoon.
Schanze was charged in a Misdemeanor Information filed in late October following an investigation by the U.S. Fish and Wildlife Service. Count one of the Information alleged that Schanze violated the Airborne Hunting Act by using a motorized paraglider to harass the owl during an incident in February or March of 2011. Count two of the charging document alleged Schanze used a motorized paraglider to harass the barn owl, a violation of the Migratory Bird Treaty Act.
The Rocky Mountain Information Network assisted the U.S. Fish and Wildlife Service in the investigation. The case was prosecuted by Assistant U.S. Attorneys in the Utah U.S. Attorney’s Office.
Cache Valley Cancer Treatment and Research Clinic Pleads Guilty to Misdemeanor Information Involving Receipt and Delivery of Misbranded DrugsRead the Press Release
SALT LAKE CITY – Cache Valley Cancer Treatment and Research Clinic, a cancer treatment clinic located in Logan, pled guilty in U.S. District Court Tuesday afternoon to receipt of misbranded drugs and delivery for sale. The Misdemeanor Information charging the clinic was filed March 31, 2015. The clinic is owned and operated by Dr. Ali Ben-Jacob, a resident of Utah and an oncologist.
U.S. Magistrate Judge Dustin Pead imposed a six-month term of probation for the Clinic at Tuesday’s hearing. The clinic also must pay a fine of $175,000 and a forfeiture money judgment of $775,000.
According to court documents filed in the case, from about September 2009 to about September 2011, the Clinic received misbranded prescription oncology drugs from Quality Specialty Products (QSP) in Winnipeg, Manitoba, Canada. The drugs were “misbranded” because they came from a foreign drug establishment and were not listed annually with the U.S. Food and Drug Administration (FDA) by the foreign drug establishment as being manufactured for commercial distribution in the United States. The drugs included Abraxane, Aloxi, Gemzar, Anzemet, Camptosar, Eloxatin, Faslodex, Herceptin, Mabthera, Neupogen, Taxotere, Velcade, and Zometa.
Over the two year period, the Clinic paid in excess of $3.6 million for these prescription drugs which had not been listed by the FDA as being manufactured for commercial distribution in the United States. Approximately one-half of these prescription drugs were reimbursed by federal government programs, including Medicare, Tricare, and the Federal Employees Health Benefits Program. The Clinic resolved a civil claim with the Department of Justice brought on behalf of the FDA and federal government programs.
Prosecutors say there was no evidence uncovered during the course of the investigation establishing patient harm from the use of the drugs from QSP or that the drugs were counterfeit. The Clinic stopped ordering and using the misbranded drugs before it was contacted by government investigators.
“The doctor did not, however, advise his patients that he was using misbranded drugs obtained from a supplier outside the United States,” U.S. Attorney Carlie Christensen said today. “The FDA rules are in place to protect the safety and integrity of prescription medications used in the United States. Prosecuting these kinds of cases minimizes the chances of patients receiving unsafe medicine and ensures that government and private insurance programs are paying for approved drugs.”
“The FDA protects consumers by ensuring that they receive FDA-approved safe and effective drugs,” said Catherine A. Hermsen, Special Agent in Charge, Kansas City Field Office, FDA’s Office of Criminal Investigations. “We will continue to pursue individuals and corporations who place the public health at risk when they bypass this protective system.”
The case was investigated by FDA’s Office of Criminal Investigations, with the assistance of the U.S. Department of Health and Human Services – Office of Inspector General’s Office of Investigations; the U.S. Department of Defense’s Defense Criminal Investigative Services; and the U.S. Office of Personnel Management. In at least six related cases, QSP delivered similar unapproved, misbranded cancer treatment prescription drugs to physicians and practices in other areas in the United States. These cases were successfully prosecuted, in conjunction with FDA’s Office of Criminal Investigations.
Former FBI Special Agent Sentenced to 10 Years in Prison for Bribery and Obstruction SchemeRead the Press Release
Co-Conspirators Sentenced to 24 Months and 13 Months in Prison for Their Roles
SALT LAKE CITY – A former FBI special agent was sentenced today to 10 years in prison and ordered to forfeit $70,000 for soliciting and accepting bribes to obstruct a Utah federal grand jury investigation into an alleged kickback scheme involving a defense contractor, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carlie Christensen of the District of Utah and Justice Department Inspector General Michael E. Horowitz.
“FBI agents—like all federal law enforcement—must be above reproach, but former Special Agent Lustyik sold his badge and position of public trust to the highest bidder,” said Assistant Attorney General Caldwell. “This sentence serves as a stark reminder that no one is above the law. Corrupt officials who break the law and breach their oaths will be prosecuted and sent to prison, even if they come from within the ranks of federal law enforcement.”
“These three defendants attempted to thwart a significant criminal investigation in Utah,” said U.S. Attorney Christensen. “Two of these defendants were entrusted with protecting our citizens and upholding the law. Their conduct, in particular, stands in stark contrast to the integrity and sacrifice of the men and women in our military and law enforcement ranks and their sentences today send a powerful message that no one is above the law.”
“Today’s sentencings represent important steps toward justice in this case,” said Inspector General Horowitz. “Department of Justice employees and their associates must be held accountable when they abuse their authority and betray the public’s trust.”
Robert G. Lustyik Jr., 52, of Sleepy Hollow, New York, a 24-year veteran of the FBI, pleaded guilty to all charges in an 11-count indictment on Sept. 29, 2014. Specifically, Lustyik pleaded guilty to conspiracy to commit bribery and obstruction, eight counts of honest services wire fraud, obstruction of a grand jury investigation and obstruction of an agency proceeding.
Lustyik’s co-defendants, Michael L. Taylor, 54, of Harvard, Massachusetts, and Johannes W. Thaler, 51, of New Fairfield, Connecticut, were also sentenced today to 24 months in prison and 13 months in prison, respectively, for their roles in this scheme. Thaler was also ordered to forfeit $70,000, joint and several with Lustyik. U.S. District Senior Judge Tena Campbell of the District of Utah imposed all three sentences.
Lustyik and Thaler both pleaded guilty for their involvement in a similar bribery scheme in the Southern District of New York. Thaler was sentenced to 30 months in prison in that case, and will serve the two sentences consecutively. Lustyik is scheduled to be sentenced on April 30, 2015, in the Southern District of New York.
According to court documents, from October 2011 to September 2012, Lustyik and Thaler conspired to use Lustyik’s official position as an FBI counterintelligence special agent to obstruct a criminal investigation into Taylor, a businessman who owned and operated American International Security Corporation. Taylor was under investigation for allegedly paying kickbacks to obtain a series of contracts from the Department of Defense worth approximately $54 million. Taylor promised Lustyik and Thaler that, in exchange for their help, he would provide them cash and multimillion dollar business contracts. In an email message, Taylor told the two men, “I’ll make you guys more money than you can believe, provided they don’t think I’m a bad guy and put me in jail.”
According to court documents, Lustyik attempted to obstruct the investigation into Taylor by identifying Taylor as an official FBI confidential source in an effort to persuade the FBI, the Justice Department and the prosecutors and law enforcement agents in Utah that Taylor’s usefulness to the government outweighed the government’s interest in prosecuting him. Indeed, Lustyik emphasized that indicting Taylor would threaten the nation’s security. Lustyik also sought to take steps to directly intervene in the investigation by interviewing key witnesses.
According to court documents, the defendants boasted about the success of their scheme. In one email message, Lustyik wrote to Taylor, “The rate this is going. I will be indicted way before u ever are !!” Lustyik wrote separately to Thaler, “I can leave [the FBI] in June. But I’m afraid to if [Taylor] gets indicted n I’m not an agent I’m no help. Has he mentioned giving me‐u a salary?”
Taylor admitted at his plea hearing that, as part of this conspiracy, he offered Lustyik a six-figure salary and a share of the proceeds from various multi-million dollar business deals he was pursuing. Acknowledging this, Lustyik wrote to Taylor, “Let’s just get Utah over with and get stinking rich,” to which Taylor replied, “Getting stinking rick [sic], we are well on the way with that so I have the ball.”
The investigation was conducted by the U.S. Department of Justice Office of Inspector General. The case was prosecuted by Deputy Chief Peter Koski and Trial Attorney Maria Lerner of the Criminal Division’s Public Integrity Section and Trial Attorney Ann Marie Blaylock of the Criminal Division’s Asset Forfeiture and Money Laundering Section. Trial Attorney Scott Ferber of the National Security Division’s Counterespionage Section also assisted in the prosecution.
Drage Convicted of Tax Charges Following Three-Week Trial in Federal CourtRead the Press Release
SALT LAKE CITY - Nathan Whitney Drage, age 56, a Salt Lake City attorney, was convicted of one count of conspiracy to impair and impede the IRS and three counts of willful failure to file a tax return, following a three-week trial in federal court in Salt Lake City. A jury returned the verdict late Tuesday night.
The case was investigated by special agents of IRS Investigation. The SEC and the Financial Industry Regulatory Authority (FINRA) also contributed to the case.
Evidence at trial showed that Drage and other business partners worked together to acquire vast amounts of stock and then exercise control of the stock through nominees to hide their control. Drage and others then caused thousands of shares of stock to be sold generating millions of dollars. Drage and other business partners took steps to hide and conceal from the IRS who owned the stock, who should report the stock sale, who got the money from the stock sale, and whether the stock sale resulted in a tax.
Evidence at trial showed Drage and others obtained control of public shell companies by acquiring stock in those shells through entities they controlled. Drage prepared and filed misleading and deceptive SEC filings for each of the public shells which hid and concealed his and others control of and beneficial ownership of the stock in those shells. Once control was obtained over the shell, Drage and others recruited nominees, primarily friends and acquaintances, to serve as officers or directors of those shells.
Evidence at trial showed Drage prepared corporate resolutions which facilitated the issuance of public shell stock to their controlled entities. Nominees knew nothing about the companies for which they were signing corporate resolutions. Nominees knew nothing about the financial and operational information contained in the SEC filings and simply signed the paperwork Drage prepared for them. The public shell was merged with a private company, often leaving Drage and others with free-trading shares post-merger.
Drage and others deposited more than $25 million in stock sale disbursements from brokerage accounts to 34 bank accounts in the names of controlled entities and individuals. They also made numerous transfers among the accounts. Drage and others agreed to set up these accounts, mix stock sales proceeds among them, pull from those accounts to pay for personal expenditures. They concealed from the IRS who got the money from the stock sale and whether the stock sale resulted in a tax.
Drage controlled two attorney trust accounts. For the eight years of the conspiracy, Drage commingled his stock sale proceeds with others’ stock sale proceeds. He also took money from client trust accounts, as well as other accounts, to pay for private school for his children, mortgage payments totaling $189,000, payments to his wife totaling $668,545, and payments to himself totaling $144,000 – among other expenses.
Drage also was convicted of failing to file corporate tax returns for three years. He failed to file a 2004 corporate return despite having $1,668,061 in gross reportable stock sales. He did not file a 2005 corporate return despite $2,748,633 in gross reportable stock sales. In 2006, Drage did not file a corporate return despite $26,691 in gross reportable stock sales.
U.S. District Judge David Sam set sentencing in the case for June 1, 2015, at 3 p.m. The felony count of conspiracy to impair and impede the IRS count carries a potential maximum penalty of five years in federal prison and a fine of $250,000. Willful failure to file a tax return is a misdemeanor punishable by up to a year in prison and a fine of $100,000, together with the cost of prosecution.
Utah Resident Sentenced for Tax Evasion and Filing a False ReturnRead the Press Release
SALT LAKE CITY - Jon Telford McBride of Kaysville, Utah, was sentenced Monday afternoon in U.S. District Court in Salt Lake City to 27 months in prison to be followed by three years of supervised release. He also was ordered to pay $174,684 in restitution.
McBride was convicted of three counts of tax evasion and one count of filing a false federal income tax return following a jury trial in September, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.
“In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe,” said John G. Collins, IRS Criminal Investigation Special Agent in Charge of Utah. “Taxpayers deserve our vigilance in the investigation and prosecution of those who choose to file false tax returns and try to evade paying the taxes they owe. This sentence should send a clear message; schemes to evade the payment of taxes are a violation of the federal tax laws and the consequences of such schemes can and will result in jail time.”
The evidence at trial established that McBride prepared and filed a false individual federal income tax return for the year 2005. He failed to report approximately $109,785 in gross income that he received during the 2005 tax year. McBride also willfully attempted to evade his federal income taxes for the 2006, 2007 and 2009 tax years by failing to file an individual federal income tax return, filing a false tax return where he underreported his income by more than $300,000, and filing a false tax return that reported zero income. McBride also used several nominees to hide and conceal his ownership in property and partnerships to keep those assets out of the reach of the Internal Revenue Service (IRS).
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Brent Ward of the Justice Department’s Criminal Division and Andrea Kafka of the Tax Division, who prosecuted the case. Acting Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office for the District of Utah for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Indictment Unsealed Charging Six Individuals as a Part of Alleged CC Brown Home Loan Modification Services SchemeRead the Press Release
SALT LAKE CITY - A 40-count federal indictment unsealed late Thursday afternoon in U.S. District Court in Salt Lake City charges six individuals with violations of federal law in what the indictment alleges was a scheme to market and sell home loan modification services to distressed homeowners trying to save their homes from foreclosure following the financial crisis of 2008. Investigators believe the alleged scheme involved more than 10,000 victims in nearly every state in the country with losses of more than $33 million.
Charged in the indictment are Chad Gettel, age 39, of Salt Lake City, John McCall, age 43, of Park City, Noemi Lozano aka Noemi Sayama, age 24, of San Diego, Sheridan Black, age 66, of South Jordan, James Scott Creasey, age 36, of Riverton, and Jeremiah Barrett, age 33, of Bountiful. Charges in the indictment include conspiracy, mail fraud, wire fraud, telemarketing fraud, conspiracy to commit money laundering, and money laundering.
"The defendants in this case allegedly represented that CC Brown was a business comprised of successful lawyers who targeted individual homeowners with the false promise of quality legal representation and legitimate loan modifications. Their scheme allegedly took advantage of these vulnerable homeowners who were desperate to secure some financial relief and save their homes, but ended up in even deeper financial trouble. The indictment makes clear that anyone contemplating similar crimes will be investigated and prosecuted and warns potential victims to be extremely cautious before paying fees to anyone offering financial rescue,” U.S. Attorney Carlie Christensen said today.
The indictment alleges that the object of the conspiracy for the defendants was to market and sell loan modification services using false and fraudulent pretenses to obtain money from customers and to enrich themselves.
According to allegations in the indictment, Gettel and Lozano started their loan modification business in July 2009 and set up CC Brown Law LLC. They hired attorneys to create the false impression that their loan modification business was a law firm. According to the indictment, attorneys provided little to no actual legal services for individual customers, while misrepresenting to the public that the attorneys were providing the core legal services for which the customers were paying. In fact, the indictment alleges, non-attorney “processors” and telemarketers working for them performed most if not all of the work for customers seeking loan modifications.
In August 2009, according to allegations in the indictment, Gettel obtained information about homeowners who were delinquent on their mortgage payments, and hired third parties, including a telemarketing center in California, to market his loan modification business to these homeowners. Telemarketers pitched CC Brown using false and misleading statements Gettel provided them, including statements that CC Brown had a 90 percent success rate in obtaining loan modifications; offering a money back guarantee on obtaining a successful loan modification; and that CC Brown’s attorneys would provide the loan modification work.
Other misleading statements the defendants caused telemarketers to make to customers included that loan modifications typically occurred in four months; that their attorneys had over 100 years combined experience in real estate law; and that they had obtained over 6,000 successful loan modifications and averaged 300-400 successful loan modifications per month. Customers relied on these misleading and fraudulent statements in purchasing the services of the loan modification businesses, the indictment alleges. Gettel and McCall eventually instructed the telemarketers to sign up every potential customer who called regardless of whether the customer qualified for a home loan modification.
Gettel hired McCall around January 2010. Around April 2010, Gettel and McCall created in-house teams of telemarketers in Utah. Black and Barrett joined CC Brown to work in the Utah telemarketing center. Creasey joined CC Brown in early 2011. Black, Barrett, and Creasey eventually managed or supervised the Utah-based telemarketing operation, the indictment alleges.
Complaints to state and federal agencies in Utah and other states reflected a pattern of fraudulent conduct. Customers would go for months without knowing the status of their loan modification, and those who were already in default continued to receive letters and phone calls from the lender or debt collector. In some instances, customers lost their homes to foreclosure while still waiting for word on their loan modification from CC Brown.
The case is being investigated by special agents of the U.S. Treasury’s Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); IRS Criminal Investigation; the FBI; Office of Inspector General Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau; and the Federal Housing Finance Agency-Office of Inspector General.
“These individuals are accused of using the banner of a law firm to defraud more than 10,000 struggling homeowners residing in nearly every state out of more than $33 million. SIGTARP and our law enforcement partners are shutting down mortgage modification fraud— a reprehensible crime that preys upon struggling homeowners who are seeking help from the Home Affordable Modification Program (HAMP) because they are desperate to save their homes from foreclosure and keep a roof over their families’ heads.” said Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
“Taking advantage of desperate homeowners is a deplorable act. Fraudulent loan modification schemes, which raise false hopes with phony promises of legal representation, take advantage of struggling homeowners willing to do almost anything to save their homes. Individuals committing loan modification fraud profit from that desperation,” Mary Rook, Special Agent in Charge of the FBI said.
“The indictments of the individuals alleged to have committed this fraudulent loan modification scheme should serve as a continued warning to anyone contemplating this type of fraud that their actions will be fully investigated and vigorously prosecuted,” stated John G. Collins, Special Agent in Charge of Utah for IRS Criminal Investigation.
“Along with our law enforcement partners, we are committed to ensuring that individuals who fraudulently undermine key government programs intended to support consumers of financial services are held accountable to the fullest extent of the law,” said Mark Bialek, Inspector General of the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau.”
“This alleged scheme was complex and callous in its attempt to prey on those in need. Our office, along with our law enforcement partners, will continue to combat the fraud that victimizes troubled families, and Fannie Mae and Freddie Mac,” Federal Housing Finance Agency-Office of Inspector General Special Agent in Charge Barry McLaughlin stated.
Arrests warrants were executed Thursday. Gettel, McCall, Black, Creasey and Barrett were arrested in Utah. An initial appearance for these defendants is set for Friday at 3 p.m. before U.S. Magistrate Judge Evelyn Furse. Lozano was arrested in Los Angeles, where she had an initial appearance Thursday afternoon. She was released on a $50,000 security bond and must wear an ankle monitor. She was ordered to appear in federal court in Salt Lake City on March 19.Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
The potential maximum penalties for the counts charged in the indictment include up to 30 years for each count of conspiracy, mail fraud and wire fraud; a term of up to 10 years for the telemarketing fraud allegation; up to 20 years for conspiracy to commit money laundering; and up to 10 years for each count of money laundering. Gettel is charged in all 40 counts of the indictment. McCall is charged in counts 1-5 and 7-40 (39 counts). Lozano is charged in counts 1 and 6. Creasey is charged in count 1 and counts 14-17 (5 counts). Barrett is charged in count 1 and counts 18-22 (6 counts) and Black is charged in count 1 and counts 23-29 (8 counts).
If you have information regarding C.C. Brown and related entities, or individuals identified in the indictment, please contact the FBI at 1-877-236-8947. Please select option 2, case update.
For further information regarding this matter, please go online at http://www.fbi.gov/stats-services/victim_assistance/c.c.-brown-company-loan-modifications
Grand Jury Returns 15-Count Indictment Charging Deyoung with Mail Fraud in Connection with Fraud SchemeRead the Press Release
Indictment Alleges He Misappropriated More Than $24 Million In Funds From More Than 5,000 CustomersSALT LAKE CITY - A federal grand jury returned an indictment Wednesday afternoon charging Curtis Lynn DeYoung, age 58, of Draper, Utah, who acted as president and Chief Executive Officer of American Pensions Services (APS) with 15 counts of mail fraud. The indictment alleges DeYoung misappropriated more than $24 million from the accounts of more than 5,000 customers without their knowledge or consent.
U.S. Attorney for Utah Carlie Christensen and FBI Special Agent in Charge Mary Rook announced the indictment this afternoon.
APS was a Utah corporation formed around 1983. It acted as a third-party administrator for self-directed individual retirement accounts. These investments followed a self-directed account structure in accordance with the IRS code, granting beneficiaries broad discretion over investment decisions. According to the indictment, as a third-party administrator, neither APS nor DeYoung had discretionary authority or control over the APS customer funds. APS was responsible only to disburse funds as directed by the beneficiaries.
According to the indictment, beginning in 1998 and continuing until April 2014, DeYoung devised a scheme to defraud and obtain money from APS customers through the use of false and fraudulent representations, promises, and omission of material facts. The indictment alleges DeYoung misappropriated the funds of more than 5,000 APS customers held in two of the three APS bank accounts known as the “Master Trust” accounts which comingled all APS customer cash, including cash deposited into customer IRA accounts and cash generated from customer IRA investments.
The indictment alleges DeYoung used the misappropriated funds from the Master Trust accounts to make personal high-risk, unsecured investments. DeYoung misappropriated the money without notifying APS customers, knowing that the money did not belong to him and that he was using it for purposes not authorized by APS customers, the indictment charges.
According to the indictment, around Oct. 31, 2009, DeYoung made a false accounting entry in APS records in the amount of $24,789,313.65 to conceal the fact that he misappropriated these funds. DeYoung continued to solicit new customers to engage APS as a third-party administrator and concealed the fact that the total cash balances in customer accounts did not equal the amount of cash available in the APS Master Trust accounts because he had misappropriated more than $24 million dollars, the indictment alleges.
In an effort to conceal his scheme, beginning in 1998 and continuing until January 2014, DeYoung mailed false APS account statements to all APS customers that contained inflated cash balances. These inflated cash balances did not equal the amount of cash actually available in the APS Master Trust accounts. The indictment alleges DeYoung knew that APS customers would rely on these statements in determining the value of their APS accounts.
The indictment also includes a notice of intent to seek forfeiture of a sum of money equal to the value of the proceeds of the scheme to defraud, which is approximately $24,789,313.65, upon conviction of any offense in the indictment.
The potential maximum penalty for each count of mail fraud in the indictment is 20 years in prison and a fine of $250,000. A summons will be issued to DeYoung to appear in federal court for an arraignment.
The case is being investigated by special agents of the FBI and prosecuted by Assistant U.S. Attorneys in the U.S. Attorney’s Office in Salt Lake City.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
Clearfield Woman Charged with Mail, Wire Fraud and Identity Theft in Embezzlement Schemes Involving Two EmployersRead the Press Release
Indictment Alleges She Embezzled About $885,657.56SALT LAKE CITY - A federal grand jury returned a 10-count indictment late Wednesday afternoon charging Teri Ann Jarvis, aka Teri James, aka Teri Jaris, age 41, of Clearfield with mail and wire fraud in connection with embezzlement schemes involving two employers. She also faces one count of aggravated identify theft.
The indictment alleges Jarvis embezzled approximately $885,657.56 from at least two employers and diverted the money for her own use.
According to the indictment, Jarvis was an employee of Positive Power, LLC, from about October 2006 until around September 2013. Positive Power is based in Ogden and provides electrical contracting services. Jarvis’ duties at the company included assisting with the management of company bank accounts, credit cards, collectables, payables and other financial records. She was not authorized to sign checks or credit cards.
Jarvis was an employee of Bronco Fence Company in Kaysville from about March 2014 through about October 2014. The company specializes in fence, deck, and railing construction. Jarvis’ responsibilities at Bronco Fence included assisting with the management of the office, coordinating with a merchant services company for payment processing, and making accounting entries.
The indictment alleges that beginning around 2008 and continuing to September 2014, Jarvis devised a scheme to obtain money from her employers using a variety of means. The indictment alleges she forged Positive Power company checks made payable to herself, her mortgage company, to pay for a car loan, and to her personal credit card. According to the indictment, Jarvis attributed fictitious expenses to closed or terminated work orders to conceal her embezzlement from the company and to avoid detection.
The indictment alleges that Jarvis used the alias Teri James in her employment application with Bronco fence to conceal her identity and avoid detection of her previous embezzlement from Positive Power.
According to the indictment, Jarvis provided false refund information to the merchant services company used by Bronco Fence so that the merchant servicer processed the false refunds and transferred money to Jarvis’ personal bank account. The indictment alleges Jarvis offset the money she embezzled from Bronco Fence as “material expenses” in the company records.
Jarvis altered company financial accounts to conceal her embezzlement of company funds from both of her employers.
The indictment charges four counts of mail fraud, five counts of wire fraud, and one count of aggravated identity theft. The potential maximum penalty for each count of wire and mail fraud is 20 years in federal prison and a fine of $250,000. The aggravated identity theft count carries a mandatory minimum two-year sentence.
A summons will be issued to Jarvis to appear in federal court in Salt Lake City on the charges in the indictment. An indictment is not a finding of guilt. Individuals charged in an indictment are presumed innocent unless or until convicted of the charges in court.
The case is being investigated by IRS Criminal Investigation special agents, the Weber County Sheriff’s Office, and the Kaysville Police Department and prosecuted by Assistant U.S. Attorneys in the U.S. Attorney’s Office in Salt Lake City.
Tax Fraud Promoters Convicted in Conspiracy to Defraud the Internal Revenue ServiceRead the Press Release
SALT LAKE CITY - A Midvale, Utah, man and a Henderson, Nevada, woman were convicted by a jury late Thursday afternoon in the U.S. District Court in Salt Lake City of tax crimes, announced U.S. Attorney Carlie Christensen of the District of Utah and Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Gerrit Timmerman, of Midvale, and Carol Jean Sing, of Henderson, were convicted of conspiracy to defraud the United States related to their promotion of a tax fraud scheme.
According to the evidence introduced at trial, between April 23, 2004, and March 5, 2007, Timmerman and Sing conspired to defraud the United States by marketing “corporations sole” as part of their scheme to evade the assessment and payment of federal income taxes. Timmerman and Sing falsely told their clients that corporations sole were exempt from United States income tax laws, had no obligation to file tax returns and had no obligation to apply for tax exempt status. They further claimed that individuals could render their own income non-taxable by assigning it to the corporation sole, could draw a tax-free stipend from their corporation sole, and could render property immune from Internal Revenue Service (IRS) collection activity by transferring property to the corporation sole.
According to evidence presented at trial, Sing used Trioid International Group Inc. as a resident agent for corporations sole and other business entities for their clients. Sing and Timmerman also utilized a website to list the tax benefits of corporations sole and to post articles about the supposed tax benefits of corporations sole. At the same time, Timmerman was actively assisting others in evading their state and federal income tax liabilities, and recommended the corporation sole to his clients as another way to impair the IRS. Both defendants referred customers to one another and paid each other referral fees.
A corporation sole is a form of incorporation allowed by some states, primarily for use by religious leaders to hold title to property. Several states, including Utah in 2004 and Nevada in 2009, have disallowed the creation of new corporations sole. The IRS has publicized the fact that corporations sole have been abused by promoters in Revenue Ruling 2004-27, and even included corporations sole on their “dirty dozen” tax scams in 2004.
“Individuals who enrich themselves by promoting tax avoidance schemes and assist others in evading state and federal taxes are defrauding American taxpayers,” said U.S. Attorney Christensen. “They should expect to be prosecuted and convicted for this conduct, as this verdict demonstrates.”
“Yesterday’s convictions send a clear message that individuals who willfully violate our nation’s tax laws through the promotion of abusive tax schemes and the creation of sham entities will be investigated and prosecuted to the fullest extent of the law,” said Principal Deputy Acting Assistant Attorney General Ciraolo. “The Tax Division is committed to working with its law enforcement partners to disrupt and dismantle these criminal enterprises.”
“Designing tax shelter transactions intended to conceal the true facts from the IRS isn't tax planning; it's criminal activity,” said Special Agent in Charge John G. Collins of IRS-Criminal Investigation in Utah. “This verdict reinforces our commitment to every American taxpayer to identify and prosecute those who devise illegal tax shelters under the guise of religion or charities to assist their clients in evading their tax obligations.”
Sentencing is scheduled for May 20. Sing and Timmerman each face a statutory maximum sentence of five years in prison and a fine of $250,000.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Christensen commended the special agents of IRS–Criminal Investigation who investigated this case, as well as Trial Attorneys Dennis R. Kihm and Andrea A. Kafka of the Tax Division, who are prosecuting the case.
Andrews Pleads Guilty to Production of Child Pornography; Plea Agreement Includes Stipulated 25-Year SentenceRead the Press Release
ST. GEORGE - Brenton Andrews, age 27, of St. George, pled guilty Tuesday in U.S. District Court in St. George to one count of production of child pornography. Andrews admitted that he persuaded a child under the age of 18 to engage in sexually explicit conduct which he recorded.
The plea agreement includes an agreed upon sentence of 25 years in federal prison. The prison sentence will be followed by a term of supervised release of not less than 20 years. The sentencing agreement is subject to the approval of U.S. District Judge Ted Stewart, who will impose sentencing in the case on July 7, 2015, at 10 a.m. in St. George.
Andrews was charged with one count of production of child pornography in a Felony Information filed in December following an investigation by the St. George Police Department and U.S. Immigrations and Customs Enforcement’s Homeland Security Investigations special agents.
According to the plea agreement, Andrews made video recordings of the child while the child was nude and produced lewd images of the child.
As a part of the plea agreement, Andrews agreed to forfeit a laptop computer, other computer equipment, and photographs, videos and other visual depictions.
State charges involving alleged conduct with the child are pending.
West Valley Man Sentenced to 151 Months in Federal Prison After Pleading Guilty to Enticing Minor to Engage in Illegal Sexual Activity and Distribution of Child PornographyRead the Press Release
SALT LAKE CITY - Robert Samuel Stark, age 48, of West Valley City will serve a 151-month federal prison sentence for coercion and enticement of a minor for illegal sexual activity and distribution of child pornography. U.S. District Judge Clark Waddoups imposed the sentence in federal court last week.
As a part of a plea agreement reached with federal prosecutors, Stark admitted that in August 2013, he engaged in online communications with Victim A, a 15-year-old female. During those communications, he requested and obtained sexually explicit images of Victim A. He also admitted that he met with Victim A and engaged in sexual activity.
Stark also admitted that in November 2013 and continuing into December 2013, he used the online social network Chathour to communicate with an undercover officer in Colorado who he believed to be a 14-year-old girl. Stark admitted that he asked the undercover officer he believed to be a 14-year-old girl to send sexually explicit images to him. Stark sent sexually explicit images of Victim A to the undercover officer.
The case started with an undercover investigation conducted by the Gilpin County Sheriff’s Office in Colorado. The investigation led Colorado officers to Stark and a referral was made to the Unified Police Department. The FBI also participated in the investigation. A UPD detective was able to identify the 15-year-old victim in the case. Law enforcement officers arrested Stark at Sugarhouse Park on Dec. 13, 2013. Stark came to the park expecting to meet Victim A and another 14-year-old girl for the purposes of engaging in illegal sexual activity.
Stark must forfeit an iPhone, a laptop computer, and a DVD player and memory card. Federal prosecutors sought forfeiture of the items that were used in the commission of the felony offenses.
West Jordan Woman Pleads Guilty to Using the Personal Identifiers of Deceased Individuals to Get Tax ReturnsRead the Press Release
SALT LAKE CITY - Jacquelin Boyd, aka Jacquelyn Boyd, age 37, of West Jordan, entered a guilty plea to making a false claim to the IRS in U.S. District Court Friday afternoon. Boyd admitted that from May 2, 2012, through about Oct. 13, 2012, she worked with others to obtain the names, addresses, social security numbers and other personal identifiers of deceased individuals and used the information to file false and fraudulent tax returns with the IRS.
Boyd admitted that she created false records of employers, wages, and Utah addresses to submit with the returns. She directed that the refunds, based on the fraudulent information, be deposited to various bank accounts under her control. She withdrew the money after it was deposited in the accounts.
She pled guilty to a count involving a false tax return filed on Oct. 13, 2012, in the name of A.B., who is deceased. A return of $2,444 was mailed to Boyd.
“IRS Criminal Investigation, along with our law enforcement partners and the United States Attorney's Office, continue to do our part in protecting the integrity of the tax system and those individuals whose identities were stolen, as well as recovering any monetary loss against the U.S. Treasury”, stated John G. Collins, IRS Criminal Investigation Special Agent in Charge of Utah.
The plea agreement includes a recommendation for a sentence of one year and a day, which is subject to court approval. Boyd also agreed to pay $32,243 in restitution to the IRS.
A scheduling hearing has been set for April 15, 2015, at 2:30 p.m., in Judge Tena Campbell’s courtroom.
Houston Investment Manager Sentenced to 56 Months in Prison for Orchestrating $72 Million Ponzi SchemeRead the Press Release
SALT LAKE CITY - A Houston investment manager was sentenced late Wednesday afternoon to 56 months in prison for orchestrating a $72 million investment fraud scheme resulting in approximately $40 million in losses to investors. U.S. District Judge Robert J. Shelby imposed the sentence in federal court in Salt Lake City.
Robert Andres, 63, of Houston, Texas, pleaded guilty on Aug. 22, 2013, to wire fraud. In addition to the prison sentence, Judge Robert J. Shelby also ordered Andres to pay more than $3.2 million in restitution.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Carlie Christensen of the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office and Special Agent in Charge John Collins of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Las Vegas Field Office made the announcement.
According to admissions made in connection with his guilty plea, between October 2005 and 2011, Andres recruited investors for Winsome Investment Trust, where he served as the sole manager, attorney and trustee, by misrepresenting Winsome’s assets, asset allocation and the manner in which investor funds were invested. Indeed, between October 2005 and April 2007, Andres raised more than $39 million by disseminating false and misleading balance sheets and representing that he would invest all of the investors’ funds in a trading program or mostly automated trading business.
Also according to Andres’ admissions, he intentionally failed to disclose to potential investors that their money would actually be used to pay earlier investors. In addition, Andres used new investor funds to make purported “profit” payments to earlier investors to create the false impression that Winsome was profitable. During this period, Andres also misappropriated approximately $2.2 million in investor money for personal use, including hotel bills and living expenses.
This case was investigated by the FBI’s Salt Lake City Field Office and IRS-CI’s Las Vegas Field Office. The Commodity Futures Trading Commission and the Securities and Exchange Commission also provided assistance in the investigation. The case is being prosecuted by Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jason R. Burt and Mark Y. Hirata of the District of Utah.
California Investment Manager Sentenced to 225 Months in Prison for $33 Million Fraud SchemeRead the Press Release
SALT LAKE CITY - A California investment manager was sentenced late Wednesday afternoon to 225 months in prison for orchestrating a $33 million Ponzi scheme resulting in $15.2 million in losses to investors. U.S. District Judge Robert J. Shelby imposed the sentence in federal court in Salt Lake City.
Robert L. Holloway, 57, of San Diego, California, was found guilty on Aug. 5, 2014, after a seven-day jury trial, of four counts of wire fraud and one count of making a false income tax return. In addition to the prison sentence, Judge Shelby also ordered Holloway to pay $15.2 million in restitution.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Carlie Christensen of the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office and Special Agent in Charge John Collins of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Las Vegas Field Office made the announcement.
Evidence presented at trial established that Holloway served as the chief executive officer and managing partner of US Ventures LC between May 2005 and April 2007. From October 2005 until at least April 2007, Holloway recruited investors by making false representations, including that US Ventures used proprietary trading software that was consistently profitable, that US Ventures generated returns of 0.8 percent per trading day and that US Ventures would retain a 30 percent share of investors’ profits as a management fee.
The evidence also showed that Holloway generated and distributed reports to investors showing false daily returns on their investments. Indeed, between October 2005 and April 2007, contrary to the returns shown on the false reports, US Ventures lost more than $10 million in trading, and the “profit” figures on the investor reports were entirely fabricated. US Ventures raised more than $33 million from investors for its purported trading activities.
Evidence at trial further demonstrated that Holloway and US Ventures made “profit distributions” to investors from funds solicited from new investors, and that Holloway misappropriated investors’ funds for a variety of personal expenses, including supporting his then-wife’s eBay business, and purchasing hundreds of thousands of dollars of jewelry. During 2006 alone, Holloway diverted more than $1.2 million in investor funds to a “business” account that he used as a personal account. During that same year, Holloway falsely claimed a gross income of only $27,500 on his personal tax return.
The case was investigated by the FBI’s Salt Lake City Field Office and the IRS-CI’s Las Vegas Field Office. The Commodity Futures Trading Commission and the Securities and Exchange Commission also provided assistance in the investigation. This case was prosecuted by Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jason R. Burt of the District of Utah.
Utah County Man Faces January Trial Date on Federal Charges of Possession of 42 Stolen Firearms, Stealing Firearms from a Federal Firearms LicenseeRead the Press Release
SALT LAKE CITY - A Jan. 26, 2015, trial date has been set in U.S. District Court for Shawn Phillip Hansen, age 32, of Pleasant Grove, Utah, who has been charged in an indictment with stealing 42 firearms from a Federal Firearms Licensee (FFL) in Springville. Hansen was an employee of the FFL at the time the alleged thefts took place.
Hansen was charged in a two-count indictment returned in November. The first count of the indictment alleges that beginning on an unknown date and continuing through Sept. 24, 2014, Hansen had 42 stolen firearms in his possession. The second count of the indictment charges him with stealing the firearms from the FFL.
The 42 firearms include a variety of rifles, revolvers, pistols, handguns, and shotguns, including two Taurus International .410 caliber revolvers; two Winchester rifles; six Colt pistols; three U.S.A. Military Surplus .30-06 rifles; and two Browning shotguns. The estimated value of the stolen firearms is around $100,000.
The case came to law enforcement’s attention after the owner of the business determined that a firearm was missing from his inventory. Further investigation identified 42 missing firearms. The case is being investigated by the Springville Police Department and special agents of the ATF.
According to Acting U.S. Attorney Carlie Christensen, the case is being prosecuted federally as a part of the Utah Project Safe Neighborhood (PSN) initiative. PSN, which includes partnerships between local, state and federal police officers and prosecutors, is designed to create safer neighborhoods through a sustained reduction in crime associated with gang and gun violence.
“As the result of hard work by Springville detectives and agents from the Federal Bureau of Alcohol, Tobacco and Firearms, led by Springville Detective Jeff Ellsworth, over 40 weapons have been recovered and removed from the streets of Springville. Removing stolen guns from the streets reduces crime in our community, makes the dealer who had the guns stolen whole, and increases the safety of our citizens. We are pleased the U.S. Attorney’s Office is working with us to keep our communities safe,” Springville Police Chief K. Scott Finlayson said today.
The potential maximum penalty for each count in the indictment is 10 years in prison and a fine of $250,000. Hansen was released with conditions following an initial appearance on the charges.
An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.