District of Utah

SALT LAKE CITY - A grand jury returned an indictment Wednesday afternoon charging Dominic Matthew Martinez, age 28, of Salt Lake City, and Jennifer Meradee Tryon, age 43, of Price, with a Nov. 26, 2013, armed robbery of Smith’s Food and Drug located at 1075 East Main Street in Price.

            The indictment also alleges they used a firearm during a crime of violence. Martinez is charged in the final count of the indictment with possession of a firearm and ammunition following a felony conviction.

            Martinez and Tryon are in state custody. A federal arrest warrant has been issued in the case.

            The potential maximum penalty for robbery under the federal Hobbs Act is 20 years in prison. Brandishing a firearm during a crime of violence carries a potential life sentence with a seven-year mandatory minimum sentence. Possession of a firearm by a restricted person has a potential 10-year sentence.

            The robbery occurred about 11 a.m. on Nov. 26. Surveillance footage of the robbery was obtained from the store along with other evidence. Martinez and Tryon were identified as suspects in the case after an investigation by the Price Police Department, the Utah Department of Public Safety, the ATF and the U.S. Marshals Service.

SALT LAKE CITY - A federal grand jury returned a four-count indictment Wednesday afternoon charging Jared Ehlers, age 35, of Moab, with violations of federal law in connection with the excavation and removal of a three-toed dinosaur track from the Hell’s Revenge area of the Sand Flats recreation. The land is administered by the U.S. Bureau of Land Management.

            A summons will be issued to Ehlers to appear in federal court.

            The first count of the indictment, removal of paleontological resources, alleges Ehlers knowingly excavated, removed, damaged or otherwise altered or defaced the three-toed dinosaur track, located on federal land. The potential maximum penalty for this count is five years in prison.

            Ehlers is charged with theft of government property in the second count of the indictment. The indictment alleges he took the dinosaur print, which was property of the United States, and converted it to his own use. The potential maximum penalty for this count is 10 years in prison.

            The third count of the indictment alleges depredation of government property. According to the indictment, Ehlers damaged property of the United States by excavating and altering paleontological resources. This count also carries a potential 10-year prison sentence,

            The final count of the indictment, destruction of evidence, alleges Ehlers tried to destroy or conceal the dinosaur track in an effort to obstruct or influence the investigation. The potential penalty for this count is 20 years in prison.

            The case is being investigated by BLM special agents and the Grand County Sheriff’s Office. The Utah Department of Public Safety also assisted in the case.

            An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

SALT LAKE CITY - A federal grand jury returned an indictment Wednesday charging Charles Fredrick McCusker, age 62, of Salt Lake City, a licensed Utah psychologist, with health care fraud and mail fraud in connection with a health care fraud scheme the indictment alleges caused federal and private benefit programs to pay more than $1.3 million for services not provided to patients. The indictment alleges the conduct occurred from around 2007 to around August 2013.

            The indictment, which includes 18 counts of health care fraud and 16 counts of mail fraud, follows a coordinated investigation by the FBI, the U.S. Health and Human Services’ Office of Inspector General, the Utah Insurance Fraud Division, the Utah Attorney General’s Office, and the U.S. Attorney’s Office. The indictment follows a state felony information filed on February 20, 2014, charging McCusker with 25 second degree felonies alleging identity fraud, insurance fraud, and pattern of unlawful conduct.

            According to the indictment, McCusker conducted business as Health Balance International and New Life Balance in Salt Lake City.

            The indictment alleges McCusker executed a scheme to defraud health care benefit programs by billing private insurers and government health care programs for services not provided to patients, resulting in payments to which he was not entitled.

            McCusker, the indictment alleges, obtained health insurance information from patients under the guise that he would bill health care benefit programs only for services actually provided. As further steps in the scheme to defraud, McCusker did not meet at all with some patients nor did he provide any follow up services. Despite that fact, the indictment alleges, McCusker fraudulently billed patients’ health care programs for services he did not provide.

            In other instances, McCusker met with a patient only once and provided no follow up services. Despite that fact, the indictment alleges, McCusker falsely billed the patients’ health care benefit programs for follow up services not provided. On other occasions, McCusker provided services to patients on several occasions but fraudulently billed these patients’ health care benefit programs for numerous additional services not provided.

            According to the indictment, McCusker fraudulently submitted claims to health care benefit programs seeking reimbursement for services he did not provide. Those claims were processed and paid by health care benefit programs.

            A summons will be issued to McCusker to appear in federal court. The potential maximum penalty for each count of health care fraud is 10 years and the penalty for each mail fraud count is 20 years.

            Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

SALT LAKE CITY - David Warren Evans, age 44, of Magna, Utah, convicted of a September 2013 armed robbery of a Wells Fargo Bank located at 1255 East Brickyard Road in Salt Lake City, will serve 84 months in federal prison. U.S. District Judge Tena Campbell imposed the sentence Wednesday afternoon.

            Judge Campbell also ordered Evans to be on supervised release for 60 months after he concludes his federal prison sentence. He also must pay $1,759 in restitution to Wells Fargo Bank.

            In a December plea agreement, Evans admitted that he entered the bank wearing a hooded black sweatshirt, black sunglasses, and a red bandana over his head. He handed the teller a note demanding cash. He held what appeared to be a black handgun so it was visible to the teller during the robbery. The teller complied with his demands.

            Evans also admitted he robbed a Wells Fargo Bank located at 4740 South 900 East in Murray in September 2013. He approached the teller and handed her a note that read: “This is a robbery, don’t make it a murder.” The teller complied with his demands.

            In addition to other evidence, still photos from the robberies were released to the media and members of the public and law enforcement officers identified Evans as robbery suspect.

            The case was investigated by the Utah Safe Streets Task Force, the FBI and Salt Lake City and Murray City Police Departments. It was prosecuted by the U.S. Attorney’s Office in Salt Lake City.

SALT LAKE CITY - A felony information filed in federal court Tuesday morning charges Daniel Joseph Carlton, age 66, of Salt Lake City, with credit union robbery in connection with a Jan. 10, 2014, robbery of Transwest Credit Union. The credit union is located at 39 West 2100 South, Salt Lake City.

            According to an information filed in Third District Court, Carlton handed a note to a teller at the credit union demanding money. The state charges will be dismissed now that federal charges have been filed. Stephen L. Nelson, a Deputy District Attorney and Special Assistant U.S. Attorney, will join federal prosecutors in handling the federal case.

            The potential maximum penalty for credit union robbery is 20 years in prison and a fine of $250,000. However, based on two previous convictions for bank robbery, Carlton appears to qualify as a career offender under federal sentencing guidelines and could be subject to an increased term of incarceration. He was on supervised release for two previous bank robberies at the time of the current alleged offense.

            "Bank robbery is a federal crime,” U.S. Attorney David B. Barlow said today. “The FBI, through its Safe Streets Task Force, and local law enforcement agencies are aggressively investigating every bank robbery. Anyone who commits a bank robbery is subject to prosecution in federal court, and, if convicted, faces significant federal sentences.”

            Barlow expressed appreciation for the investigative work being done by the FBI and members of its Safe Street Task Force, local law enforcement agencies, and county attorneys’ offices in investigating and prosecuting bank robberies in Utah.

            FBI Special Agent in Charge Mary F. Rook stated, "The FBI is committed to working with our state and local law enforcement partners to actively investigate and apprehend bank robbery suspects throughout the region. The Safe Streets Task Force is a great example of the positive impact we can achieve through coordination and collaboration with other agencies."

James Pearson Thain

            James Pearson Thain is in custody in Wyoming charged with a Jan. 29, 2014, robbery of Bank of the West in Casper, Wyo. According to the complaint, Thain displayed a handgun. A witness saw Thain and a female driver leave the bank and reported the information to law enforcement. Officers tried to initiate a traffic stop by the vehicle fled the area and was later involved in a crash. Officers found a revolver in the car with two rounds in the cylinder of the weapon. According to the complaint, Thain said the gun was for “cops, hero’s and tellers.”

            The FBI and U.S. Attorney’s Office in Utah believe Thain, who wore a fake moustache, large glasses, and a beanie hat during the Wyoming robbery, may be responsible for 11 robberies in Utah and are coordinating with the U.S. Attorney’s Office in Wyoming on the Thain case.

            Thain, who is 38, has previous bank robbery convictions in Utah.

Dustin Todd Byrd

            Dustin Todd Byrd, 36, of Salt Lake City, currently in custody in Ada County, Idaho, after an arrest on heroin trafficking, is suspected of four recent bank robberies in Utah. Federal prosecutors expect to present the case to a grand jury in early March.

David Warren Evens

            Sentencing is set for Wednesday at 2 p.m. for David Warren Evans, age 43, of Magna, who pleaded guilty in December to a Sept. 26, 2013, armed robbery of Wells Fargo Bank located at 1255 East Brickyard Road in Salt Lake City. U.S. District Judge Tena Campbell will impose the sentence. In a plea agreement, Evans admitted that he held what appeared to be a black handgun during the robbery that was visible to the teller.

            He also admitted that on Sept. 11, 2013, he robbed a Wells Fargo Bank at 4740 South 900 East. He admitted he approached the teller and handed her a note that said, “This is a robbery, don’t make it a murder.”

William and Michelle Parker

            William Joseph Parker, age 28, and Michelle Joyce Parker, 28, both of Tooele, are scheduled to be sentenced in April after each pleading guilty to one count of bank robbery.

            William Joseph Parker admitted that on Jan. 14, 2013, he robbed the Wells Fargo Bank in Magna. He admitted he walked into the bank with a note in hand that demanded money from both drawers, indicating he had a gun and would use violence.

            Michelle Joyce Parker admitted robbing a Wells Fargo Bank in Tooele on March 11, 2013.

            In addition to the two robberies included in the plea agreements, the Parkers also were charged with a Feb. 5, 2013, robbery of a Wells Fargo Bank in Murray.

            The Parkers were arrested after the March 11, 2013, robbery when an off-duty police officer took note of the car prior to the robbery and saw it fleeing the scene afterwards. He executed a traffic stop and found the defendants, the robbery note, and cash in the car – in addition to the couple’s two young children.

            As a part of their plea agreements, the Parkers agreed to pay restitution of $5,032 to Wells Fargo Bank for all charged robberies.

            Both face up to 20 years in federal prison when they are sentenced in April.

John Eugene Walker

            Sentencing is set for May 13, 2014, for John Eugene Walker, age 53, of South Salt Lake City, who pleaded guilty in December to two bank robberies.

            Walker admitted that he committed a May 3, 2013, robbery of U.S. Bank located at 888 East 4500 South in Salt Lake City while dressed as a construction worker and carrying a dark colored messenger style bag. He approached a teller counter and demand money. He put the money in his bag and left the bank.

            He also robbed a Zions Bank at 8955 South 700 East in Sandy on May 22, 2013, while dressed in women’s clothing and carrying a light blue purse. He put the money the teller gave him in the purse.

            Walker was arrested after bank employees followed him out of the bank and witnessed him getting into a dark green Toyota. The same witness saw a temporary tag on the vehicle. Surveillance photos of the robbery were released to the media and an employee from a car dealership contacted the Sandy Police after seeing news coverage of the robbery and told police officers she had recently sold a Toyota to an individual who matched the description of the suspect who robbed the Zions Bank.

            Walker faces up to 20 years in prison for each of the two bank robbery convictions. Prosecutors believe Walker may qualify for an increased sentence as a career offender under federal sentencing guidelines because of his criminal history.

James Carey

            James Carey, age 40, of Midvale was sentenced to 125 months in federal prison in June after pleading guilty to a Feb. 4, 2013, robbery of Chase Bank located at 1306 Woodland Avenue in Salt Lake City. Carey admitted he entered the bank and presented a note to a teller demanding $20,000 and stating that he had a gun. He brandished what appeared to be a handgun but was actually a BB gun. Carey admitted that the following day, when police tried to apprehend him, he engaged in a high speed chase. During the high speed chase, Carey threw a duffel bag and money out of the car. The chase ended after his tires were spiked and the police had executed a PIT maneuver. Carey refused to comply with officers’ commands and had to be forcibly restrained.

Mark Scott Bolinder

            Mark Scott Bolinder, age 44, of Salt Lake City, is serving a 38-month federal prison sentence after pleading guilty to a Sept. 21, 2013 robbery of Chase Bank located at 6275 South Highland Drive in Salt Lake City and a Sept 23, 2013, robbery of Zions Bank located at 1635 South Redwood Road in Salt Lake City. U.S. District Judge Robert Shelby imposed the sentence in January and ordered Bolinder to pay $2,929 in restitution to the two banks.

            The Unified Police Department and FBI investigated the robberies. Video surveillance photos from the robberies were released to the media and tips were received leading to Bolinder’s arrest.

More Than 16 Pounds Of Meth, 2.42 Pounds Of Heroin Found In Car

             SALT LAKE CITY - A federal grand jury returned an indictment Wednesday afternoon charging two individuals from the Los Angeles area with possession of methamphetamine with intent to distribute. Charged in the indictment are Miriam Machado, age 36, and Benito Urbina, age 33.

            Machado and Urbina were arrested Feb. 9, 2014, following a traffic stop by the Utah Highway Patrol in Salt Lake County. A Unified Police Department K-9 officer responded to the traffic stop which resulted in a positive indication of illegal narcotics in the vehicle. Upon further investigation, officers discovered a hidden compartment filled with numerous bags of an unknown substance that field tested positive for methamphetamine and heroin. According to a complaint filed in the case, the total weight of the meth was 16.1 pounds and the approximate weight of the heroin was 2.42 pounds.

            According to the complaint, during subsequent interviews, Machado and Urbina admitted transporting illegal contraband in the vehicle and being compensated for transporting the contraband from the Los Angeles area to Salt Lake City

            Machado’s 5-year-old daughter, who was in the car when the traffic stop was executed, was turned over to Child Protective Services.

            The potential maximum penalty for possession of methamphetamine with intent to distribute 500 grams or more is up to life in prison with a minimum mandatory sentence of 10 years. Machado and Urbina, who are in federal custody pending resolution of the case, are scheduled for an initial appearance on the indictment Thursday at 10:30 a.m. in U.S. Magistrate Judge Dustin Pead’s courtroom.

            Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

            The case is being investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations special agents, the Utah Highway Patrol, and the Unified Police Department.

SALT LAKE CITY - Robert Watson, 54, and Marie Watson, 53, both of Pleasant View, Utah, were sentenced Wednesday in U.S. District Court in Salt Lake City for their role in a tax fraud scheme arising out of their operation of Teazers Sports Bar & Grill in Ogden, Utah.

            Robert Watson, who pleaded guilty in September to two counts of filing false tax returns, including one corporate return and one personal return, was sentenced to six months incarceration, 12 months of supervised release, and 500 hours of community service.  He was also ordered to pay restitution to the IRS in the amount of $39,629.

            Marie Watson, who pleaded guilty to one count of filing a false personal tax return, was sentenced to 36 months of probation, and 200 hours of community service.  She was ordered to pay $14,602 in restitution to the IRS.

            U.S. District Judge Clark Waddoups imposed the sentences.

            According to the indictment and other publicly filed documents, during the time the Watsons owned and operated Teazers, they failed to report substantial cash income on Teazers’ corporate returns and on their personal tax returns.  Teazers generated large amounts of cash income from entrance fees known as “cover charges” charged at the door of the bar and from other items in the bar such as pool tables and video games.  The Watsons deliberately hid this cash income from their tax preparer and caused tax returns to be filed with the IRS that understated their true income.

            This case was investigated by the IRS-CI Las Vegas Field Office and was prosecuted by Assistant U.S. Attorney Jason R. Burt for the District of Utah.

            SALT LAKE CITY -A Utah man was sentenced to serve 24 months in prison for his role in a bribery and fraud scheme involving federal procurement contracts, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow of the District of Utah.

            On Oct. 24, 2011, Jose Mendez, 52, of Farr West, Utah, pleaded guilty to conspiracy to commit bribery and procurement fraud, bribery, and procurement fraud. Mendez was charged in an October 2011 indictment, along with Sylvester Zugrav, 71, and Maria Zugrav, 67, owners of Atlas International Trading Company in Sarasota, Fla. The Zugravs were sentenced on Jan. 8, 2014.

            According to court documents, while Mendez worked as a procurement program manager for the U.S. Air Force at Hill Air Force Base in Ogden, Utah, he conspired to enrich himself and others by exchanging money and other things of value for non-public information and favorable treatment in the procurement process. Court records state that Mendez was offered approximately $1,240,500 in payments and other things of value throughout the course of the conspiracy. Mendez admitted that from approximately 2008 to August 2011, he received more than $185,000 in payments and other things of value, with promises of additional bribe payments if Atlas were to receive future contracts from the U.S. government.

            In return for the bribes offered and paid, Mendez admitted he gave Atlas and the Zugravs favorable treatment during the procurement process, including disclosing government budget and competitor bid information, which helped Atlas and the Zugravs in winning contracts.

            The case was investigated by the FBI and the Air Force Office of Special Investigations. The case was prosecuted by Trial Attorneys Marquest J. Meeks and Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Carlos A. Esqueda of the District of Utah.

SALT LAKE CITY - U.S. Attorney David B. Barlow announced Thursday that the District of Utah collected $4,613,846 in Fiscal Year (FY) 2013 related to criminal and civil actions. Of this amount, $2,321,772 was collected in criminal actions and $2,292,074 was collected in civil actions. The U.S. Attorney’s Office is responsible for enforcing and collecting civil and criminal debts owed to the United States and restitution owed to federal crime victims.

            The District of Utah also worked with other U.S. Attorneys’ Offices and components of the Department of Justice to collect an additional $212,138,108 in civil cases pursued jointly with these offices.

            The U.S. Attorney’s Office, working with partner agencies, deposited an additional $3,277,685 in asset forfeiture funds into the Department of Justice’s Asset Forfeiture Fund, which is used to restore funds to crime victims and for a variety of law enforcement purposes. The office also paid $253,498 in forfeited funds to crime victims for restitution and shared $645,447 with local law enforcement agencies who participated in the prosecution of federal cases. Asset forfeiture is an effective deterrent to crime and is used to disrupt and dismantle criminal organizations that attempt to profit from their unlawful activity and to restore property to crime victims.

            “We take our responsibility to recover funds for the federal treasury and for victims of federal crime very seriously. We will also continue to hold accountable those who seek to profit from their illegal activities,” U.S. Attorney Barlow said today.

            Attorney General Eric Holder announced on Thursday that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2013. The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and its main litigating divisions.

            “The Department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the taxpayer,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the Department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.

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

            The largest civil collections come from affirmative civil enforcements cases, in which the United States recovered government money lost to fraud, fire recovery, or other misconduct or collected fines imposed on individuals or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts are collected on behalf of federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration, and Department of Education.

 

            SALT LAKE CITY - A Florida man was sentenced to serve 15 months in prison, and his wife was sentenced to 24 months of probation, for their roles in a bribery and fraud scheme involving federal procurement contracts, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow of the District of Utah.

            On Feb. 26, 2013, Sylvester Zugrav, 70, of Sarasota, Fla., pleaded guilty to conspiracy to commit bribery and procurement fraud, and his wife, Maria Zugrav, 67, also of Sarasota, pleaded guilty to misprision of a felony related to her efforts to conceal the conspiracy.

            The Zugravs were charged in an October 2011 indictment along with Jose Mendez, 51, of Farr West, Utah. Mendez, a procurement program manager for the U.S. Air Force Foreign Materials Acquisition Support Office (FMASO) at Hill Air Force Base, in Ogden, Utah, was charged in the indictment with conspiracy, bribery and procurement fraud, and has since pleaded guilty to all charges and agreed to forfeit more than $180,000 he received as part of the bribery scheme. Sentencing for Mendez is scheduled for Jan. 29, 2014.

            According to court documents, the Zugravs owned Atlas International Trading Company, a business that contracted to provide foreign military materials to the U.S. government through FMASO.

            In his plea agreement, Sylvester Zugrav admitted that, from 2008 through August 2011, he gave Mendez more than $180,000 in bribe payments and offered Mendez more than $1 million in additional bribe payments contingent upon Atlas’s receipt of future contracts with FMASO. In exchange for Sylvester Zugrav’s bribe payments and offers, Mendez ensured that Atlas and Sylvester Zugrav received favorable treatment in connection with procurement contracts by, among other things, assisting Atlas in obtaining and maintaining procurement contracts; assisting Atlas in receiving payments on such contracts; and providing Atlas with contract bid or proposal information or source selection information before the award of procurement contracts. In her plea agreement, Maria Zugrav admitted that she was aware of Sylvester Zugrav’s bribe payments to Mendez and assisted with concealing the crime.

            According to court records, Sylvester Zugrav provided bribe payments to Mendez in three ways: cash payments via Federal Express to Mendez’s residential address; in-person payments of cash and other things of value; and electronic wire transfers to a bank account in Mexico opened by and in the name of Mendez’s cousin. Between November 2009 and August 2011, Sylvester Zugrav sent nine FedEx packages to Mendez’s home address. Each package contained $5,000 in cash, except the last package, which contained $3,000 and was seized by law enforcement. Maria Zugrav assisted her husband and Mendez’s bribe scheme by limiting cash withdrawals from Atlas’s bank account to not more than $5,000 to avoid scrutiny by banking officials and law enforcement.

            According to the plea documents, on multiple occasions when Sylvester Zugrav and Mendez traveled to the same location, Sylvester Zugrav would give Mendez cash payments and other things of value. From 2008 through August 2011, Sylvester Zugrav gave Mendez seven in-person cash payments ranging from $500 to $10,000 and purchased for him[?] a laptop computer and software package worth over $2,900.

            During the course of the corrupt scheme, Mendez opened a foreign bank account so that Sylvester Zugrav could pay Mendez larger bribe payments. Mendez asked his cousin in Mexico to open an account there. After the account was opened by Mendez’s cousin, Maria Zugrav made wire transfers to the bank account located in the name of Mendez’s cousin to avoid detection of the larger bribe payments by law enforcement. From 2008 through August 2011, Maria Zugrav sent to the Mexico account 10 wire transfers ranging from $350 to $26,700.

            Court records also describe additional steps taken to conceal the bribery scheme, including creating and using covert e-mail accounts, using encrypted documents, adopting false names and using code words. For instance, to avoid detection of their e-mail communications, Sylvester Zugrav and Mendez established e-mail accounts to be used only to communicate requests and offers for bribe payments. Sylvester Zugrav and Mendez also created password-protected documents for e-mail communications and used code words and false names. Within the encrypted documents, Mendez adopted the moniker “Chuco” and Sylvester Zugrav used the codename “Jugo.” They referred to cash as “literature.”

            The case was investigated by the FBI and the Air Force Office of Special Investigations. The case is being prosecuted by Trial Attorneys Marquest J. Meeks and Edward P. Sullivan of the Criminal Division’s Public Integrity Section, Assistant U.S. Attorney Carlos A. Esqueda of the District of Utah, and Trial Attorney Deborah Curtis of the National Security Division’s Counterespionage Section.

 

            SALT LAKE CITY - A federal grand jury returned an indictment Wednesday afternoon charging two Utah residents with conspiring to unlawfully import a rare white leucistic boa constrictor from Brazil into the United States for the purpose of breeding it with other boa constrictors and selling its offspring for a profit.

            Jeremy Stone, age 39, of Lindon, and his sister, Keri Ann Stone, age 34, of Midvale, are charged in the four-count indictment with conspiracy to unlawfully import the snake into the United States; unlawfully importing the snake into the country; transporting the snake knowing it was imported into the United States contrary to law; and making and submitting false records for wildlife imported into the United States.

            According to the indictment, Jeremy Stone is the owner of Jeremy Stone Reptiles, which is a business located in Lindon. In the course of its operations, Stone Reptiles bred and sold boa constrictors to customers in the United States and foreign countries.

            The international trade of boa constrictors is regulated under the Convention on International Trade in Endangered Species (CITES) through the Endangered Species Act. Regulations require that those exporting wildlife through CITES to, among other things, obtain a certificate of origin from the governmental authority in the exporting country showing that the specimen to be exported originated in the country that issued the certificate of origin. Additionally, the U.S. Fish and Wildlife Service (USFWS) requires that those exporting or importing wildlife disclose the country of origin for the imported specimen, the total monetary value of the specimen, and the source of the specimen – whether it was “wild caught” or “bred in captivity,” the indictment says.

            The indictment alleges that around December 2006, Jeremy Stone became aware of the existence of a rare white boa under the care of the Niteroi Zoo near Rio de Janeiro, Brazil. From 2007 until 2009, Stone sent thousands of dollars to the administrator of the zoo as payment for the white boa. The indictment alleges he knew that the boa was caught in the wild in Brazil and given to the zoo. He also knew that Brazil did not allow the export of wild-caught boa constrictors.

            The indictment alleges the Stones and others committed several overt acts in furtherance of the conspiracy to import the snake to the United States. For example, from 2007 to 2009, Jeremy Stone sent or had others send emails to the zoo administrator discussing how he could obtain the white boa and leave Brazil without obtaining the proper export permits from Brazil. These emails included photos demonstrating how the administrator should pack the white boa in her luggage. In January 2009, Jeremy Stone paid for travel for himself and Keri Ann Stone to travel to Brazil and meet with the zoo administrator to obtain the white boa.

            According to the indictment, a few days later the Stones attempted to leave Brazil on a cruise ship back to the United States, but they were denied permission to board the cruise ship because Kari Ann Stone appeared to be in the late months of pregnancy. They also attempted to board a flight to the United States. Airport security temporarily detained them upon finding that Keri Ann Stone was wearing a hollow, false pregnancy belly and brassiere. The indictment alleges they were testing airport security in Brazil.

            The indictment alleges the Stones ultimately transported the white boa from Brazil into Guyana where a veterinarian was used to generate a certificate of origin falsely claiming that the white boa had been caught in the wild in Guyana. With a certificate of origin from Guyana, Jeremy Stone was able to facilitate the export of the white boa with other snakes from Guyana to the United States. The indictment alleges Jeremy Stone caused a U.S. Fish and Wildlife Service form to state that the value of the shipment of snakes was $220 and that the shipped snakes, including the white boa, had been caught in the wild in Guyana. The snakes were cleared for entry into the United States based on the false information on the form on about Jan. 29, 2009. Travel was then facilitated from Miami to Stone Reptiles in Lindon.

            The indictment alleges Jeremy Stone bred the white boa with other boa constrictors at the business and sold the offspring for tens of thousands of dollars to buyers in the United States, Canada, and Italy, among other places.

            Summonses will be issued to Jeremy and Kari Ann Stone to appear for an arraignment in federal court. The maximum potential penalty for the conspiracy count is five years in prison. The potential penalty for importing merchandise contrary to law count is 20 years and submitting false information on a USFWS form carries a potential penalty of five years in federal prison.

            Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

 

            SALT LAKE CITY - Stanley J. Wardle, 65, of Spanish Fork, Utah, pleaded guilty Monday in U.S. District Court in Salt Lake City to nine counts of filing false claims for income tax refunds, the Justice Department and Internal Revenue Service (IRS) announced. Wardle, who was indicted on Feb. 15, 2012, is scheduled to be sentenced before U.S. District Judge Dee Benson on Feb. 27, 2014.

            According to the indictment, on or about Jan. 22, 2009, Wardle prepared and filed a false U.S. Individual Income Tax Return for the year 2008, in which he claimed a tax refund of $32,115. In addition, between Dec. 8, 2008 and May 13, 2009, he caused additional false claims for tax refunds to be made on behalf of others. In total, Wardle was involved in false claims for refunds totaling $653,884.

            Wardle faces a statutory maximum sentence of five years in prison and a fine of up to $250,000 or twice the gross gain or loss caused by the defendant for each false claim charge.

            Assistant Attorney General Kathryn Keneally for the department’s Tax Division commended the special agents of IRS - Criminal Investigation who investigated the case, and Tax Division Trial Attorneys Michael Romano and Stuart Wexler, who prosecuted the case.

 

            SALT LAKE CITY - Jeffrey Charles Zander, age 58, a former tribal planner, general counsel and economic development and trust resources director for the Paiute Indian Tribe of Utah, will serve 68 months in federal prison. Zander was convicted of mail and wire fraud, money laundering, and willful failure to file tax returns following a week-long trial in U.S. District Court in March.

            U.S. District Judge David Nuffer, who imposed the sentence Wednesday, also ordered Zander to pay $202,543.92 in restitution. Zander will be allowed to self-surrender to begin serving his prison sentence.

            Zander was charged with two counts of mail fraud, two counts of wire fraud, one count of money laundering, and three counts of willful failure to file a tax return in a superseding indictment returned in February 2012.

            “Prosecuting white collar crime cases is a high priority for our office. This case is particularly egregious because it involves a person in a position of trust with the Paiute Tribe, who diverted funds intended to help the Tribe for his own personal use,” U.S. Attorney David B. Barlow said today.

            Zander began working for the Paiute Tribe around October 1998 as its tribal planner. About two years later, he became the Tribe’s economic development director and trust resources director. Around September 2007, Zander convinced the Tribe to hire him as general counsel when, in truth, he did not possess a license to practice law.

            Evidence presented at trial showed that beginning in 2005, Zander developed a scheme to divert more than $175,000 for his personal use that had been awarded to the Paiute Tribe through grant proposals the defendant had authored and assisted the tribe in applying for. The grants were awarded for Integrated Resource Management Plans (IRMP), which are long-term plans to balance the use of tribal resources between interests of residents of the reservation and revenue-generating uses of tribal lands. Zander told tribal leaders that he had hired companies in Salt Lake City, Las Vegas, and Provo to act as consultants or facilitators to assist with the creation of the IRMPs. Zander told the tribe that since he would be traveling to work with the consultants or facilitators, he could hand-deliver progress payment checks to the companies.

            Evidence at trial showed the companies were bogus – created by the defendant to facilitate the fraud. Zander created fictitious invoices from the companies, submitted them for payment from the Tribe, and then drove to different points between Provo, Utah, and Mesquite, Nevada to deposit the checks into his personal bank accounts. He also drafted quarterly reports for the Bureau of Indian Affairs to show that the money was being spent for facilitators and consultants when, in truth, he had converted grant funds for his own use.

            The scheme came to light when a transaction raised a red flag with a bank teller and, at about the same time, tribal leaders started to uncover the defendant’s deceit and misrepresentations. Evidence showed that invoices from all four companies were found on his work computer. Zander was fired from his tribal position and the case was turned over to the FBI.

            “This defendant devised a scheme that caused the Paiute Nation to suffer substantial financial losses over a period of many years. I appreciate the IRS Criminal Investigation Division, the FBI special agents, and the United States Attorney’s Office for their dedicated work on this case. I believe this investigation highlights law enforcement’s ongoing commitment to investigating and prosecuting criminal activity on Native American lands in Utah,” Mary F. Rook, Special Agent in Charge of the FBI in Salt Lake City said today.

            “This serves as a strong message to those in positions of trust who put greed over duty. All income is reportable including amounts you unlawfully obtain from others. Don't think using bogus entities and shell companies is going to conceal your activities from an agency with over 93 years of refining the art of following the money. Such acts will only serve to incriminate you more,” Paul Camacho, Special Agent in Charge of IRS Criminal Investigation, said.

            The case was prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by special agents of the FBI and the IRS Criminal Investigation Division.

 

            SALT LAKE CITY - John S. Dudley, age 59, of Sandy, who pleaded guilty to wire fraud in February in connection with a fraudulent investment scheme, will serve 60 months in federal prison. U.S. District Judge Robert J. Shelby, who imposed the sentence this week, also ordered Dudley to pay $6.8 million in restitution to victims of the fraud scheme.

            “Mr. Dudley's web of lies damaged or destroyed the financial future of more than a hundred victims,” David B. Barlow, U.S. Attorney for Utah, said today. “After serving his five-year term of incarceration, Mr. Dudley will be deported from the United States. These steps should help make sure that Mr. Dudley is not able to harm residents of Utah again.”

            Dudley was charged in a 17-count indictment returned in May 2011 in connection with what the indictment alleged was a scheme to induce individuals to invest money with him for use in various investment programs.

            The indictment alleged Dudley made a variety of representations to potential investors, including telling them they could expect monthly returns of 5-10 percent; that he had not suffered a trading loss since 1978; that investors’ funds would be used exclusively for investment purposes; that he had personally done very well in his investments and had never made less than 5 percent per month over the last 30 years; that investors’ money was backed by a “senior life settlement policy” that reduced or eliminated investors’ risk of loss; and that investing with him was an exclusive opportunity with only a limited number of investors allowed to invest with him at one time.

            As a part of the plea agreement reached with federal prosecutors, Dudley admitted he sent an e-mail to an individual, identified as U.A. in the plea agreement, with the subject line “Re: Castle Creek Bank Details.” He admitted that the e-mail was a part of his attempt to execute the fraud scheme by obtaining money under false representations. Investor U.A. is identified in the indictment as a Utah Department of Commerce’s Division of Securities investigator acting in an undercover capacity in the indictment.

            “The successful prosecution of John Dudley was a joint effort between federal and state agencies in addressing an egregious Ponzi scheme. Mr. Dudley’s victims, ranging from young adults to the elderly, funded a lavish lifestyle which included a $1.5 million home, luxury cars and exotic vacations. The FBI and its law enforcement partners are committed to investigating and prosecuting those who fund a luxurious lifestyle at the expense of hard-working, trusting investors. Some victims in these types of cases have their life savings tied up in fraudulent investments and never fully recover. We encourage the public to remain vigilant—check your investments; ask your investment manager hard questions; obtain timely investment updates and reports; and report suspected fraud to the FBI,” Mary Rook, Special Agent in Charge of the FBI in Salt Lake City, said today.

            “Mr. Dudley touted various investment programs, including a foreign exchange trading program, mining speculation, and European and domestic stock options. He then diverted the investors’ funds for his own personal benefit,” Paul Camacho, Special Agent in Charge of IRS Criminal Investigation, said today. “Investors, as we often see in our trusting community, became victims to Mr. Dudley’s scheme. Those who operate Ponzi schemes have mastered the ability to earn the trust and confidence of their victims, and these crimes are very personal. We urge the public to be cautious and diligent in deciding where to invest their hard-earned money,” Camacho said.

            The case is being prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by special agents and investigators of the FBI, IRS Criminal Investigation, and the Utah Department of Commerce.

 

            SALT LAKE CITY - Slade E. Barnett, Jr., age 48, of Camano Island, Washington, pleaded guilty in federal court Friday morning to introducing a pollutant into a sewer system that he knew would cause property damage. He faces up to three years in prison for the conviction. U.S. District Judge Tena Campbell set sentencing in the case for January 16, 2014.

            Barnett was charged with knowingly introducing a pollutant into a sewer system that he knew or should have known would cause property damage and making a false statement in a document in an indictment returned by a federal grand jury on July 11, 2012. At times relevant to the charges, Barnett was the principal agent for Denali Industries, LLC, in American Fork, Utah.

            Denali Industries, LLC, was located within the Lakeside Planned Industrial Park in American Fork. The building in which Denali did business had a trench drain that ran the length of the indoor shop. This trench, according to court documents, connected to a grease trap, which discharged into a gravity-fed sewer line that Lakeside owned. Through a series of pumps and lift stations, Lakeside’s pressurized sewer line connected into the gravity-fed sewer line that formed part of American Fork’s municipal sewer system. This sewer line of American Fork connected into the publicly owned treatment works of the Timpanogos Special Services District, according to the plea agreement.

            Barnett admitted that on three dates in March and June of 2008, he was the responsible corporate officer at Denali. He stipulated that he had knowledge that others working at Denali introduced pollutants such as waste vegetable oil and tallow, among other things, into the sewer system. He agreed that he reasonably should have known that these pollutants could cause damage to the sewer system’s pipes and lift-station pumps. Although he had the authority to stop these acts, he admitted he failed to do so. He acknowledged that the introduction of the pollutants into the sewer system knocked out the lift station pumps, which required their replacement on March 24, 2008, and June 4, 2008. On about June 25, 2008, these pollutants clogged approximately 300 feet of sewer system pipe, which required the evacuation and replacement of parts of the sewer system.

            As a part of the plea agreement, the United States and Barnett agreed that he should pay $15,000 in restitution for the damage his crimes caused to the sewer system.

            David B. Barlow, United States Attorney in Utah, said, “This is not a case about somebody putting a little bacon grease down the sink at their home. This case is about a business introducing enough waste vegetable oil and tallow into the sewer system to cause parts of it to fail on at least three occasions within a three-month period. When businesses jeopardize the sewer systems we all depend upon to keep us safe from disease, the Clean Water Act demands that we hold the leaders of these businesses personally accountable.”

            “Today’s plea sends a clear message to other potential violators that companies and their senior executives that fail to dispose of their wastes legally and in an environmentally sound manner will be held responsible for their crimes," said Jeffrey Martinez, Special Agent in Charge of EPA’s criminal enforcement program in Utah.

Charges Allege He Fired Several Rounds from a Handgun at the Synagogue

SALT LAKE CITY – A federal grand jury in Salt Lake City returned a four-count indictment Wednesday afternoon charging Macon Michael Openshaw, age 21, of Salt Lake City, with firearm charges and a civil rights violation relating to a bias-motivated attack at a local synagogue.

            The indictment was announced by the U.S. Department of Justice, U.S. Attorney for Utah David B. Barlow, and Mary Rook, Special Agent in Charge of the FBI in Salt Lake City.

            The indictment alleges that between Jan. 1, 2012 and April 30, 2012, Openshaw intentionally defaced and damaged the Congregation Kol Ami synagogue in Salt Lake City by firing several rounds from a Walther .22 caliber handgun at the building, breaking windows and damaging the window frame of the building. Openshaw allegedly performed these actions because of the religious character of the synagogue. This charge carries a statutory maximum sentence of 20 years imprisonment.

            The superseding indictment charges Openshaw with one count of using and carrying a firearm in relation to a crime of violence (potential 10-year mandatory minimum sentence), possession of a firearm with a removed, obliterated or altered serial number (up to five years) and possession of a firearm while subject to a protective order (up to 10 years.

            An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent unless proven guilty.

            The matter is being investigated by the Salt Lake City Division of the FBI and is being prosecuted by Assistant U.S. Attorney Carlos Esqueda of the U.S. Attorney’s Office for the District of Utah and Trial Attorney Nicholas Durham of the U.S. Department of Justice’s Civil Rights Division.

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            SALT LAKE CITY - A former owner of a Salt Lake City medical equipment supply company has been indicted and three former company employees have pleaded guilty for allegedly engaging in a $20 million Medicare fraud scheme.

            Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney David B. Barlow of the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office, Special Agent in Charge Gerry Roy of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Kansas City Regional Office, and Special Agent in Charge Janice M. Flores of the Defense Criminal Investigative Service’s (DCIS) Southwest Field Office made the announcement.

            Jacob Kilgore, 34, of Fruit Heights, Utah, was indicted in the District of Utah on three counts of health care fraud, three counts of false statements relating to health care matters, and three counts of wire fraud.

            According to court documents, Kilgore was the co-owner, vice president, and regional sales manager of Orbit Medical Inc. (Orbit), a durable medical equipment supplier located in Salt Lake City specializing in power wheelchairs. From approximately September 2008 through June 2011, Kilgore allegedly directed a scheme to defraud Medicare by submitting false and fraudulent claims to Medicare for power wheelchairs. Court documents allege that Kilgore and others falsified medical records – including power wheelchair prescriptions and chart notes obtained from physicians – to make it appear that beneficiaries qualified to receive power wheelchairs when they did not and that the claims otherwise met all Medicare requirements. Kilgore and others then used these falsified documents to support false and fraudulent claims from Orbit to Medicare.

            Additionally, former Orbit sales representatives Morgan Workman, 35, of Farmington, Utah; David Evans, 29, of South Jordan, Utah; and Hunter Hartman, 29, of Ladera Ranch, Calif., have each pleaded guilty to conspiring to commit health care fraud, based on the same alleged scheme to defraud Medicare. They are awaiting sentencing.

            The scheme allegedly resulted in more than $20 million in claims from Orbit to Medicare for power wheelchairs, of which Medicare paid more than $15 million.

            The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

            Kilgore is scheduled to make an initial appearance on the charges on Nov. 21, 2013, at 10:15 a.m. in U.S. Magistrate Judge Brooke Wells’ courtroom.

            The case was investigated by the FBI, HHS-OIG and DCIS. This case is being prosecuted by Assistant U.S. Attorney Mark Y. Hirata of the U.S. Attorney’s Office in Utah and DOJ Trial Attorney Niall M. O’Donnell of the Criminal Division’s Fraud Section.

Admitted She Embezzled $462,455.80 From Her Employer

SALT LAKE CITY – Monica Paris, age 31, of South Jordan, who pleaded guilty in February to one count of money laundering, will serve 30 months in federal prison. Judge Ted Stewart imposed the sentence in U.S. District Court in Salt Lake City Tuesday afternoon.

            Paris must report to the U.S. Bureau of Prisons on Nov. 5, 2013, to begin serving her sentence. She will be on supervised release for 36 months when she finishes her prison sentence. Judge Stewart also ordered her to pay full restitution of $462,455.80.

            In the plea agreement reached with federal prosecutors, Paris admitted she embezzled approximately $462,455.80 from Ultradent Products, Inc., her former employer. She used the funds she embezzled from her employer for personal expense.

            Paris worked at Ultradent, a privately-owned Utah corporation involved in the production and distribution of dental products, from 1997 until her termination around February 2012. Her last position at the company was assistant to the director of major accounts.

            According to court documents, as a part of her job duties, Paris was responsible for purchasing promotional materials used by Ultradent. The standard practice at the company involved Paris purchasing the items using her personal credit card and then seeking reimbursement for charges she incurred on the company’s behalf.

            As a part of her plea agreement, Paris admitted that beginning around August 2010 and continuing through February 2012, she fraudulently submitted expense reports for personal reimbursement payments for items she never actually purchased. She then fraudulently approved the expense reports on behalf of Ultradent and directed that the reimbursement payments be sent to her personal bank account. She also admitted that she fraudulently claimed that personal items she purchased at Sam’s Club, including large amounts of pre-paid credit cards, were company expenses for which she sought reimbursement payments. Using her Sam’s Club membership, she admitted she bought personal items using the credit cards of two other company employees. She then submitted the purchases for reimbursement and created false invoices to show that the purchases were for company expenses.

            Paris admitted that in August 2011, she sent a check for $10,891.29 to her credit union as payment for a car loan. She admitted she knew that the funds she transferred were stolen from her employer. Judge Stewart also signed a forfeiture order in the case ordering Paris to forfeit a 2007 Mazda vehicle, finding that there was a nexus between the car and her money laundering offense.

            The case is being prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by special agents of IRS Criminal Investigation.

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Received Around $49 million from Investors; Paid About $37 million in Ponzi Payments

SALT LAKE CITY – Kenneth Case Tebbs, age 42, of South Jordan, will spend 78 months in federal prison after pleading guilty to one count of wire fraud in connection with a real estate investment scheme. U.S. District Judge David Sam imposed the sentence Monday afternoon in U.S. District Court in Salt Lake City.

            Judge Sam scheduled an Oct. 10, 2013, hearing to resolve restitution issues in the case. Tebbs must report to the U.S. Bureau of Prisons to begin serving his sentence on Oct. 28, 2013. He will be on supervised release for 36 months when he finishes his prison sentence.

            According to a sentencing memorandum filed by the U.S. Attorney’s Office, buying and selling residential properties and undeveloped lots was a hot and profitable investment during Utah’s real estate boom from 2004 to 2007. Starting in 2005, Tebbs through his two companies, Twin Peaks Financial and MNK Investments, attempted to take advantage of the boom by promising significant annual returns of 18 percent plus origination points ranging from 1 to 5 percent to investors. However, federal prosecutors say his business plan exceeded economic reality and beginning in 2006, the investment plan quickly migrated to a Ponzi scheme which could only be sustained through soliciting more investors.

            In a plea agreement reached with federal prosecutors, Tebbs admitted that in 2006, he expanded Twin Peaks’ business to focus on the purchase and acquisition of large subdivision projects of approximately 20 lots. At this point, Tebbs claims he began to lose control of the business. Money that was needed to fund these larger projects quickly exceeded Twin Peaks’ incoming cash flow. He admitted deciding that the way to sustain Twin Peaks’ business operations was through the infusion of new investor money. He also admitted recognizing that Twin Peaks could not continue to sustain its ongoing purchases or larger projects. Consequently, the number of investors quickly exceeded the number of investment properties under Twin Peaks’ ownership and control. To keep the business going through new investments, Tebbs admitted he began falsifying and forging recording stamps on old trust deeds and provided new investors with “new” trust deeds, knowing that multiple investors were now secured by the same property.

            As the Ponzi scheme progressed, Tebbs admitted knowing that the total amount of new investor funds used to pay old investors far exceeded any cash flow stemming from the Twin Peaks properties.

            “It’s difficult to know what was going through the defendant’s mind as he continuously lied to investors about the soundness of rolling over their investments and returns, knowing full well their investments were not even worth the paper on which fabricated trust deeds were printed and provided to investors,” Assistant U.S. Attorney Mark Y. Hirata wrote in the sentencing memorandum. “The defendant’s excuse of losing control of the business, while convenient, cannot mask his irrefutable knowledge of a failing business, bereft of profits, and his unmistakeable efforts to exploit investors willing to part with their hard-earned money, inheritances, and retirements so that they too could take advantage of the defendant’s genius in cornering Utah’s real estate market.”

            Hirata argued for a sentence of 78 months given the egregious nature and circumstances of the Tebbs’ Ponzi scheme.

            According to the plea agreement, Tebbs accepted money from investors ranging in amounts from $15,000 to as much as $11.3 million. During the fraud period, he admitted receiving approximately $49 million from investors and paying out approximately $37 million in Ponzi payments.

            The case is being prosecuted by the U.S. Attorney’s Office in Utah and investigated by the FBI.

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Indictment Alleges He Solicited About $10 million From More Than 50 Individuals

SALT LAKE CITY – A federal grand jury returned a 32-count indictment Wednesday afternoon charging Edmund Edward Wilson, age 69, of St. George, Utah, with wire fraud, conspiracy to commit wire fraud, and money laundering in connection with what the indictment alleges was a real estate investment scheme he ran through his company, Fountain Group of Companies of Utah, Inc.

            According to the indictment, Wilson was president, owner, and director of Fountain Group, with its principal place of business in St. George. Through Fountain Group, Wilson purported to provide financing for real estate development projects throughout the United States. He conducted business by, among other things, entering into contracts with individuals he called “investors” who had real estate development projects and having those investors wire money into his Fountain Group account.

            The indictment alleges that beginning in 2005 and continuing to around 2012, Wilson falsely represented to investors that his company could provide financing for real estate development projects for an advance fee of either $80,000 or $150,000 through an investment program he called “Substitution of Collateral Program.” The indictment alleges Wilson made misrepresentations to investors about the program., including that Wilson could obtain financing for their project within 15 to 180 days and that the program was so profitable that Fountain Group could provide development project financing that would be entirely “forgiven” within 18 months, although the borrower would then owe income taxes on the forgiven debt. In return, these investors would give Wilson a stake in the development project.

            According to the indictment, when investors called Wilson to ask why they had not received funding for their projects within the time promised, Wilson falsely represented to investors that he needed additional money to cover various unforeseen fees and expenses, and that once these costs were paid, funds would be released for the development projects.

            The indictment alleges Wilson failed to disclose to investors that he never provided any funding for any development project through his Substitution of Collateral Program and that he used a significant portion of the advanced fees for his personal benefit.

            Later in the scheme, Wilson falsely represented to investors who had already invested in his program and to new potential investors that he could arrange financing of their development projects through his wealthy partner in Asia known as “the General.” In exchange for an investment of $80,000 to $150,000, investors would receive a forgivable loan for their real estate development project. The loan would come from “the General” who had access to millions of dollars in U.S. currency set aside for investment projects in the United States.

            According to the indictment, Wilson represented that he and “the General” had partnered with the Department of Justice and the FBI to bring the U.S. currency from China back into the United States as a type of “unofficial stimulus package.” To release the funds back into the United States, certain taxes and fees had to be paid in China where the funds were being held.

            Again, Wilson failed to disclose to investors that he had never provided any funding for any development project through his foreign investment program and that he used a significant portion of the advanced fees for his personal benefit.

            The indictment alleges 19 counts of wire fraud and attempt and conspiracy to commit wire fraud and 13 counts of money laundering. The potential maximum penalty for each wire fraud count is 20 years in prison. Each count of money laundering carries a potential penalty of 10 years in prison.

            A summons will be issued to Wilson to appear in federal court in Salt Lake City on Oct. 16, 2013, at 10 a.m. before U.S. Magistrate Judge Evelyn J. Furse.

            Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

            The case is being investigated by special agents of the FBI and IRS Criminal Investigations. It is being prosecuted by the U.S. Attorney’s Office in Utah.

(Follow the U.S. Attorney’s Office on Twitter @DUTnews)

 

            SALT LAKE CITY – Husband and wife Robert Watson, 54, and Marie Watson, 52, pleaded guilty in federal court in Salt Lake City in connection with a tax fraud scheme arising out of their operation of the Teazers Sports Bar & Grill in Ogden, Utah.

            U.S. Attorney David B. Barlow for the District of Utah and Special Agent in Charge Paul A. Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI) Las Vegas Field Office made the announcement.

            Robert Watson pleaded guilty Wednesday to two counts of filing false tax returns – one a corporate return and one a personal return. He faces a maximum penalty of three years in prison and a fine of $100,000. Marie Watson pleaded guilty to one count of filing a false personal tax return and also faces a maximum penalty of three years in prison and a fine of $100,000. The Watsons will be sentenced on Jan. 10, 2014.

            According to the indictment and other publicly filed documents, during the time the Watsons owned and operated Teazers, they failed to report substantial cash income on Teazers’ corporate returns and on their personal tax returns. Teazers generated large amounts of cash income from entrance fees known as “cover charges” charged at the door of the bar and from other items in the bar such as pool tables and video games. The Watsons deliberately hid this cash income from their tax preparer and caused tax returns to be filed with the IRS that grossly understated their true income.

            The Watsons’ guilty pleas involved false returns arising out of this scheme for tax year 2007. According to the publicly filed plea documents, Robert Watson could owe the IRS as much as $221,290 in back taxes, and Marie Watson could owe as much as $114,942. The final amount owed to the IRS will be determined at sentencing.

            This case is being investigated by the IRS-CI Las Vegas Field Office. The case is being prosecuted by Assistant U.S. Attorney Jason R. Burt for the District of Utah.

Other Counts Allege Firearms, Drug Violations

SALT LAKE CITY – A federal grand jury returned an indictment Thursday morning charging Roberto Miramontes Roman, age 41, a citizen of Mexico, with intentionally killing Millard County Deputy Sheriff Josie Greathouse Fox while she was engaged in the performance of her official duties.

            The indictment alleges that Roman, during the commission of, in furtherance of, and while attempting to avoid apprehension, prosecution, and service of a prison sentence for a felony drug violation, intentionally killed Deputy Fox on Jan. 5, 2010.

            The first six counts of the indictment allege distribution of methamphetamine (three counts); possession of a firearm in furtherance of a drug trafficking crime (one count); and carrying a firearm(s) during and in relation to a drug trafficking crime (two counts).

            Roman also faces one count of use, carry and discharge of a firearm in relation to a crime of violence. This count of the indictment relates to the alleged use of an AK-47 in the shooting death of Deputy Fox.

            Two counts of the indictment allege Roman was restricted from possessing firearms under federal law because of a conviction of a crime punishable by imprisonment for a term exceeding one year and his illegal status in the country. The final count of the indictment alleges Roman, who was deported from the United States around Sept. 23, 2005, illegally re-entered the country.

            The potential maximum penalty for each count of distribution of methamphetamine is 20 years in prison, although prosecutors intend to file a notice of intent to seek an increase in the statutory maximum to 30 years.

            The four firearm counts related to the possession of a firearm in furtherance of a drug trafficking offense and the use, carry, and discharge of a firearm during the commission of a drug trafficking offense or a violent crime carry potential penalties of life in prison. The mandatory minimum for possession of a firearm in further a drug trafficking crime and carrying a firearm during and in relation to a drug trafficking crime are also five-year mandatory minimums. The mandatory-minimum for the discharge of a firearm during and in relation to a crime of violence is 10 years. Each conviction following the first one is a mandatory minimum of 25 years. Any of these sentences must run consecutively to any other sentence of imprisonment on other counts.

            The potential penalty for each count of possession of a firearm by a restricted person and re-entering the country after a previous deportation is 20 years.

            The potential maximum penalty for the count alleging intentionally killing a local law enforcement officer engaged in the performance of official duties in this case is life in prison with a statutory mandatory minimum sentence of 20 years.

            Federal prosecutors anticipate Roman will be scheduled for arraignment on the charges in the next few weeks. He is currently serving a state prison 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 the U.S. Attorney’s Office in Utah and investigated by the ATF. U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) also has contributed to the case.

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Ogden, Sandy, and St. George Get Funding

SALT LAKE CITY – The U.S. Department of Justice has awarded Edward Bryne Memorial Justice Assistance Grants (JAG) to Ogden, Sandy, and St. George to support law enforcement programs in the three cities.

            JAG funding allows states and local governments to support a broad range of activities to prevent crime based on their own local needs. Grant funds can be used for local initiatives, technical assistance, training, personnel, equipment, supplies, contractual support and information systems for criminal justice programs. Funds can be used in a variety of program areas, including law enforcement; prosecution and court programs; prevention and education; corrections; drug treatment and enforcement programs; planning, evaluation, and technology improvement programs; and crime victim and witness programs (other than compensation).

            Ogden received a $60,064 grant. Ogden will use the funds for crime reduction programs, technology, training, and specialty units addressing gangs and drugs. Specifically, the city will use the grant to support police overtime, training, and to purchase equipment and software.

            Sandy received a $24,285 grant. Sandy will use the funds to purchase duty handguns, patrol bicycles, mobile data terminals, in-car computer printers, and a dual monitor computer. The goal of Sandy’s project is to reduce crime, prevent violence and meet public safety needs.

            St. George received a $13,869 grant to support technology upgrades. Funds will be used to purchase a computer server, wireless access hardware, digital video download management software, and digital mobile video camera systems for patrol vehicles to increase efficiency within the police department.

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            ST. GEORGE, UT – Paul Ashton, age 34, of St. George, Utah, who pleaded guilty to kidnapping and discharging a firearm in connection with the October 2010 kidnapping and death of Bradley Eitner, was sentenced to life plus 10 years Tuesday morning in U.S. District Court in St. George. U.S. District Judge Ted Stewart imposed the sentence.

            Ashton pleaded guilty to the charges in May. Ashton admitted that he aided and abetted in the kidnapping of Eitner on Oct. 31, 2010. Ashton admitted he transported the victim from Utah to Arizona where he was killed. Ashton also admitted he aided and abetted in the use and discharge of a firearm during the kidnapping. Eitner was 43 at the time of his death.

            Eitner’s body was discovered March 11, 2011, and an autopsy was performed March 14, 2011, by the Coconino County, Arizona, medical examiner. The medical examiner determined that the cause of Eitner’s death was blunt force head trauma and a single penetrating, gunshot wound of the head. The manner of death was homicide.

            As a part of the plea agreement, federal prosecutors recommended that the statutory mandatory minimum sentence of life in prison be imposed for the kidnapping resulting in death count and that the statutory minimum sentence of 10 years be imposed for the firearm count. Federal prosecutors also recommended that the 10-year penalty for the firearm count be served consecutive to the life sentence.

            The case was prosecuted by Assistant U.S. Attorneys in the Utah U.S. Attorney’s Office and investigated by the FBI.

Utah Department of Public Safety Also Gets Forensic Science Grant

SALT LAKE CITY – The U.S. Department of Justice has awarded Edward Bryne Memorial Justice Assistance Grants (JAG) to Murray and West Jordan to support law enforcement efforts in the two cities.

            JAG funding allows states and local governments to support a broad range of activities to prevent crime based on their own state and local needs. Grant funds can be used for state and local initiatives, technical assistance, training, personnel, equipment, supplies, contractual support and information systems for criminal justice programs. The funds can be used in a variety of program areas, including law enforcement; prosecution and court programs; prevention and education; corrections; drug treatment and enforcement programs; planning, evaluation, and technology improvement programs; and crime victim and witness programs (other than compensation).

            Murray received a $32,595 grant from DOJ’s Bureau of Justice Assistance. Murray will use the funds to purchase law enforcement equipment for police vehicles.

            West Jordan received a $34,538 grant. West Jordan will use the funds for training and law enforcement equipment.

            DOJ’s National Institute of Justice has awarded a $59,427 grant to the Utah Department of Public Safety as a part of this year’s Paul Coverdell Forensic Science Improvement Grants Program. Coverdell funds are to be used to improve the quality and timeliness of forensic science and medical examiner services and to eliminate backlogs in the analysis of forensic evidence, including controlled substances, firearms examinations, forensic pathology, latent prints, questioned documents, toxicology and trace evidence.

 

            SALT LAKE CITY – Robert Andres, 62, an investment manager based in Houston, pleaded guilty Wednesday afternoon in federal court in Salt Lake City for his role in a $72 million investment fraud scheme.

            Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney David B. Barlow for the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office, and Special Agent in Charge Paul A. Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI) Las Vegas Field Office made the announcement.

            Andres pleaded guilty to one count of wire fraud. He faces a maximum penalty of 20 years in prison and a fine of $250,000 when he is sentenced on Jan. 7, 2014.

            According to the indictment and other publicly filed documents, Andres operated Winsome Investment Trust, an investment entity, and served as its sole manager, attorney and trustee. From October 2005 until at least January 2011, Andres recruited investors for Winsome by misrepresenting Winsome’s assets and asset allocation and the way in which funds were invested.

            Between October 2005 and April 2007, Andres raised more than $39 million from Winsome investors by disseminating false and misleading Winsome balance sheets and by representing to investors that Andres would invest all of their funds in a trading program or a mostly automated trading business.

            According to publicly filed documents, between April 2007 and January 2011, Andres used false and misleading information to raise an additional $32 million from new investors. Furthermore, Andres failed to disclose that new investors’ funds would 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 misappropriated approximately $2.2 million in investor proceeds 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 Las Vegas Field Office. The department thanks the Commodity Futures Trading Commission and the Securities and Exchange Commission for their 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 for the District of Utah.

Defendant Has Previous Federal Conviction for Voluntary Manslaughter

SALT LAKE CITY – Gregory Chauncy Checora, age 36, of Fort Duchesne, Utah, will serve 57 months in federal prison for possession of a firearm following a felony conviction.  U.S. District Judge Tena Campbell imposed the sentence Thursday in U.S. District Court.  Checora, who is an enrolled member of the Ute Indian Tribe, will be on supervised release for 36 months when he finishes his prison sentence.

            Checora pleaded guilty to the firearm charge in May.  He admitted that between June 20-30, 2012, he had an EAA Witness .40 caliber handgun in his possession. As a convicted felon, federal law prohibits Checora from possessing a firearm.

            Checora was convicted of voluntary manslaughter in U.S. District Court in October 1997.  According to a plea agreement in that case, Checora and three others killed Benjie Murray during a July 1996 incident that occurred in what is known as the “Little Chicago” subdivision of Fort Duchesne within the boundaries of the Uintah-Ouray Reservation. 

            Criminal history is a factor in determining sentences in federal court.  The manslaughter conviction, which is a crime of violence, was one factor Judge Campbell used in imposing a sentence at the high end of the sentencing guidelines.  Checora also has a history of gang involvement. 

Firearms Taken During Storage Unit Burglary

SALT LAKE CITY – A federal grand jury returned a two-count indictment Wednesday morning charging five individuals with possession of 31 stolen firearms.  The firearms were taken during a December 2012 burglary at a storage unit on Redwood Road in Salt Lake City.  The five, who have prior felony convictions, also are charged with possession of firearms by a restricted person.

            Charged in the indictment are Todd Shawn Cook, age 38, of West Bountiful; John Trenton Boren, age 40, of Salt Lake City; John David Hobbs, age 30, and Robert Lee Biggs, age 49, both of West Valley City; and Kenneth Richard Cahoon, age 38, of Centerville. 

            Several agencies participated in the investigation, including the ATF, Salt Lake City Police, Grantsville Police, the Bountiful Police Department, and the Davis County Metro Narcotics Unit, among others.  The case is being prosecuted as a part of Utah Project Safe Neighborhoods, an initiative targeting gun violence and gang activity in Utah.

            According to a complaint filed in the case, officers from the Salt Lake City Police Department responded to the Diamond Storage facility on Redwood Road on Jan. 10, 2013, to investigate the burglary of a unit. The lock on the unit had been cut and items taken from the storage unit.  The exact date of the burglary was unknown at that time.

            The complaint alleges that approximately one week earlier, on Jan. 2, 2013, Biggs was  arrested for possessing a stolen vehicle and seven firearms which, given his status as a convicted felon, were illegal for him to have.  The seven firearms were later identified as being among the firearms stolen from the Diamond Storage unit.  As the investigation continued, law enforcement officers developed evidence they believe shows that Boren, Hobbs, and Cook were involved in the burglary and Cahoon and Biggs subsequently had possession of some of the stolen firearms. 

            Investigators also confirmed that Hobbs rented a unit at Diamond Storage that was approximately one building away from the burglarized unit.  Records from the storage facility also showed that Hobbs accessed the property on Dec. 20, 2012.

            The potential penalty for each count in the indictment is up to 10 years in prison and a $250,000 fine. The five defendants are in custody.  Boren has a detention hearing Thursday at 10:30 a.m. before U.S. Magistrate Judge Paul Warner. Hobbs has a detention hearing Thursday at 2 p.m., also before Magistrate Judge Warner.

            Indictments are not findings of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

Funding will Support Initiatives in Taylorsville, Layton, and South Salt Lake City

SALT LAKE CITY – The U.S. Department of Justice’s Office of Justice Programs has awarded Edward Bryne Memorial Justice Assistance Grants (JAG) to three Utah communities.

            JAG funding allows states and local governments to support a broad range of activities to prevent crime based on their own state and local needs.  Grant funds can be used for state and local initiatives, technical assistance, training, personnel, equipment, supplies, contractual support and information systems for criminal justice programs.  The funds can be used in a variety of program areas, including law enforcement; prosecution and court programs; prevention and education; corrections; drug treatment and enforcement programs; planning, evaluation, and technology improvement programs; and crime victim and witness programs (other than compensation).

            Taylorsville received a $33,782 grant, which will be used to purchase equipment and pay overtime in support of several law enforcement programs.  The goal of Taylorsville’s effort is to increase pedestrian safety, improve security within the community, and improve the functionality of equipment patrol officers are relying on.

            South Salt Lake City received a grant of $31,354, which will be used to help create a professional uniform work environment with updated technology and to increase efficiency for its law enforcement officers.

            Layton received a $16,945 grant to help fund multi-media trial presentation equipment to be used in court.

 

            SALT LAKE CITY –  April J. Rampton, 42, formerly of Heber City, Utah, was sentenced Thursday to 21 months in prison for filing false claims for income tax refunds.  U.S. District Judge Dee Benson also ordered Rampton to pay $230,678.36 in restitution to the IRS and to serve three years of supervised release upon her release from prison. 

            Rampton was convicted at trial in December 2012 of nine counts of filing false claims for refund.  According to the indictment and the proof at trial, in July 2011, Rampton filed a false individual income tax return, based on false Forms 1099-OID, which sought a refund of more than $225,000.  On these false Forms 1099-OID, Rampton listed items of debt, such as her home mortgage and credit cards, as if the bank or loan holder had withheld the entire amount of her debt as a federal income tax payment.  Rampton received a refund check from the IRS, photocopied the check, and showed it to friends and family members. Rampton then began preparing returns for friends, family members, acquaintances and strangers, all using false Forms 1099-OID that sought tax refunds corresponding to their debts.

            This case was investigated by IRS-Criminal Investigation and prosecuted by Trial Attorneys Michael Romano and Stuart Wexler of the Justice Department’s Tax Division. 

 

            SALT LAKE CITY – You answer your phone this week to hear a caller tell you that you failed to appear on a summons for jury duty in federal court in Salt Lake City. The caller, who identifies himself using a variation of the name of the clerk of the court, tells you that a warrant will be issued for your arrest. 

            The caller, who is talking to you late in the afternoon, says you have until 5 p.m. to put more than $400 on a MoneyPak card (a reloadable debit card available at many retail stores) and call him back with the MoneyPak serial number to avoid being arrested.

            Frightened at the thought of officers putting handcuffs on you at work, you get the MoneyPak and call the person back to give him the serial number.  Before you realize what has happened, your money and the scammer are gone into a world of untraceable deception.

               Utahns are being targeted by this scheme this week .

            Law enforcement agencies and other consumer protection groups say there has been a significant increase in schemes where fraudsters try to collect payments using a MoneyPak. When the serial number of the card is given to someone or falls into the hands of a scammer, they have instant access to your money and can drain the money from your card. Unlike a credit card, the transaction is untraceable and cannot be reversed or challenged.  The best advice, consumer advocates say, is to never give a MoneyPak serial number to anyone you don’t know. 

            U.S. District Court officials say none of the individuals who reported receiving these calls were actually called for jury duty, something these individuals could have discovered had they called the court when they received the initial call, as some individuals have done. 

            Individuals who are called for jury duty receive a summons to appear in the mail or by e-mail.  If they fail to appear for jury duty, a court official will contact them to determine why they failed to appear.  Individuals are never fined for non-appearance without receiving an order from the court directing them to appear before the judge, the opportunity to explain their non-appearance to the judge, and a written order from the court setting the amount of the fine.  Most importantly, payment of a fine is never demanded by a telephone call.

            U.S. Attorney David Barlow encourages Utahns to be on guard for fraud schemes involving the use of MoneyPaks.  “Don’t give the serial number to someone you don’t know and to anyone calling you.  Our best advice is to hang up and call the agency or business yourself.  As we are seeing with the individuals who were solicited as a part of the jury-duty scheme, those who called the court were able to quickly discover that the call was fraudulent. While there are legitimate uses for these cards, if you are not cautious you end up giving your money to fraudsters.”  

            "Scammers are constantly dreaming up new ways to take your money,” warned Francine A. Giani, Executive Director of the Utah Department of Commerce,  "Always be very cautious if someone demands you pay a fine or a fee by wire transfer or by placing funds on a MoneyPak debit card.  If you are unsure, check with the brick and mortar location of the government agency by phone or in person before responding to any financial demands made over the phone."  

Funding will Support Several Local Initiatives

SALT LAKE CITY – The U.S. Department of Justice’s Office of Justice Programs has awarded a $1,619,555 Edward Bryne Memorial Justice Assistance Grant (JAG) to the Utah Commission on Criminal and Juvenile Justice.

            JAG funding allows states and units of local government to support a broad range of activities to prevent and control crime based on their own state and local needs.  Grant funds can be used for state and local initiatives, technical assistance, training, personnel, equipment, supplies, contractual support and information systems for criminal justice programs.

            The Utah Commission on Criminal and Juvenile Justice will use the JAG funds to enhance statewide public safety services, support evidence-based projects, support of the Utah Residential Substance Abuse Treatment (RSAT) program; and continue evidence-based projects that support the juvenile justice system.  Utah JAG priority areas include gang prevention, education or enforcement; prescription drug abuse prevention, education or enforcement; sexual assault or domestic violence; mental health and problem solving courts; the needs of law enforcement, prosecution or county corrections; and programs that address alternatives to incarceration.

Ordered to Pay Almost $2 million in Restitution; Victims of Scheme Include Students and Mortgage Lenders

SALT LAKE CITY – Keith Nelson Cook, age 57, of Emmett, Idaho, who pleaded guilty in March to three counts of mail fraud; three counts of wire fraud; and one count of money laundering in connection with a scheme to defraud students and mortgage lenders, will spend 36 months in federal prison.  Cook is a former resident of Layton and Salt Lake County.

            U.S. District Judge Richard J. Shelby imposed the sentence Monday afternoon in U.S. District Court.  Cook was ordered to pay $1,905,651.68 in restitution to victims of his fraud scheme.  He will be on supervised release for 36 months after he completes his prison sentence.

            From 2006 through 2011, Cook controlled a number of companies, including Avalon Group; Avalon Management Group LLC; White Mountain Management, Inc.; TNA Resource Consulting, LLC; The Turnberry Group; and Desert Management Group.  As a part of a plea agreement reached with federal prosecutors, Cook admitted he devised a scheme to use these  entities to obtain money and property from students and mortgage lenders.  

            According to the plea agreement, Cook, or individuals working under his direction, recruited students willing to pay a fee to be coached in the art of investing in real estate at a profit.  During this recruitment effort, Cook hired people to mass market the real estate program opportunity by phone.  During the calls, individuals acting at Cook’s direction made one or more fraudulent statements, including telling students that he was a nationally recognized real estate expert who had made millions of dollars syndicating apartment and commercial properties in California; telling them that he was looking for students to become a part of his “Success Team” and guaranteeing that the student’s participation in his program would result in either doubling the student’s income or a gain of $50,000 during the first year of participation, among many other things.

            Cook concealed the fact that he had felony convictions in Utah for fraud and in California for grand theft.

            Cook solicited payments of between $15,000 and $30,000 from prospective students, and also received the students’ financial and credit information in order for them to become part of the Success Team.  Cook admitted that after accepting the application fees, he immediately began ignoring certain students and refused to take their telephone calls or talk to them.  He refused to provide the promised coaching and diverted the $15,000 to $30,000 application fees for those dropped students for his own unauthorized business or personal use. According to the plea agreement, Cook solicited $427,500 from students.

            Cook admitted that he induced certain students to become straw buyers of residences in Salt Lake County, causing the purchase and sale of a number of residential properties.  He represented to the straw buyers that they would not have to make a down payment or invest any money of their own to buy the home; that the straw buyer would have no financial risk from the transaction and would have no obligation to make loan payments, among other things.  Likewise, a number of misrepresentations were made to mortgage lenders.

            Cook’s entities made payments on the properties to give the mortgage lenders the false impression that the loans were preforming appropriately.  However, at some point he stopped making payments on the loans, leaving the straw buyers with mortgages they did not have the ability to repay and mortgage lenders with significant losses on the non-performing loans.  The total loss amount incurred by the straw buyers and the mortgage lenders in the scheme was $1,905,651.68.

            Cook admitted that he used the proceeds of the straw purchase scheme to pay personal expenses and to meet ongoing expenses related to his entities.  For instance, in June 2007, he transferred or withdrew $70,500 from a business-account to purchase a cashier’s check.

 

           SALT LAKE CITY – Michael Lawrence O’Donnell, age 63, of Pleasant Grove, Utah, who admitted he distributed prescription pharmaceutical drugs he obtained in Europe to healthcare professionals around the United States without a license, will serve a year and a day in federal prison. U.S. District Judge David Nuffer imposed the sentence Wednesday afternoon in Salt Lake City.

            In a plea agreement reached with federal prosecutors, O’Donnell admitted that between October 2005 and March 2007 he engaged in the wholesale distribution of prescription drugs, including Botox, Zometa, Gemzar, and Aranesp.  At the time he was distributing the drugs around the United States, O’Donnell admitted that he did not possess a license from the State of Utah to engage in the wholesale distribution of the drugs.

            According to the indictment in the case, prescription drug manufacturers generally distribute products to doctors, pharmacists, and hospitals through licensed wholesale distributors. A prescription drug may have been purchased and distributed by several licensed wholesale distributors before it is delivered to a doctor, pharmacy, or hospital.  Some wholesale distributors obtained prescription drugs from questionable, and often unlicensed, sources that sell the drug for prices significantly below the average wholesale price of the drug.  Those sources may also have purchased stolen, counterfeit, sub-potent, unapproved, expired, or otherwise unlawful drugs.

            To prevent the distribution of stolen, counterfeit, sub-potent, unapproved, expired or otherwise unlawful drugs, Congress enacted the Prescription Drug Marketing Act (PDMA).  The Act prohibits individuals from engaging in the wholesale distribution of prescription drugs in a particular state unless the individual is licensed by the state to do so.

            “The defendant’s efforts to obtain foreign, unapproved prescription drugs from the United Kingdom and distribute them from Utah to health care practitioners throughout the United States defrauds the health care practitioners who purchased and administered the drugs, the end-user patients who were given the drugs, and the government and private insurance companies who reimbursed the health care professionals for the drugs, which were not what they were purported to be – that is, drugs distributed under federal law that met or exceeded U.S. pharmacy standards,” U.S. Attorney David B. Barlow said today.

            “Unlicensed wholesalers, who import prescription drugs into the United States and further distribute them, introduce potentially substandard treatments into the stream of commerce, which, in turn, create potential health risks to the ultimate consumers of those drugs,” said Patrick Holland, Special Agent in Charge of FDA’s Office of Criminal Investigations Kansas City Office.  “Protection of the pharmaceutical supply chain remains among our highest priorities, and we at FDA’s Office of Criminal Investigations will continue to partner with the Department of Justice and our law enforcement counterparts to vigorously investigate supply-chain issues.”

            The indictment alleged that O’Donnell owned and operated several businesses that represented themselves as medicine wholesalers. As a part of his business, O’Donnell secured wholesale quantities of prescription pharmaceutical drugs from his related company, GHRX, located in the United Kingdom.  GHRX obtained these pharmaceuticals from unknown sources throughout the world.  O’Donnell received orders for prescription pharmaceutical drugs that had been placed through Clinical Care Pharmacy and Concord Drug Store, internet web sites that held themselves out to be and functioned as internet-based pharmacies.

            The internet pharmacy web sites represented that their prices were competitive or lower than prices for comparable drugs available through other pharmacies and that their products were approved by United States and Canadian regulators and that their purported brand-name and generic prescription pharmaceutical drugs were equivalent to, or exceeded, North American standards.

            Contrary to those representations, the indictment alleged, the prescription drugs offered through these internet pharmacy web sites were not, in fact, approved by the FDA for introduction and use in the United States. The pharmaceutical drugs were shipped by employees of O’Donnell to health care providers throughout the United States using nondescript boxes and false return addresses to conceal the actual originating shipping location.

           He pleaded guilty to a count in the indictment that charged him with shipping Botox from Utah to a health care provider in New York in July 2006.

Case Filed as a Part of Utah Identity Theft Task Force Initiative

SALT LAKE CITY – Two individuals have been charged in a federal complaint with using credit cards stolen from a Riverton woman’s wallet.  The wallet was taken from her car while it was parked in the garage at her home on June 24, 2013. The complaint alleges the pair used the credit cards to make about $1,037.23 in purchases at Sportsman’s Warehouse in Midvale and a Nike Store in West Jordan.

            Jason Oler Kettler, age 35, of Magna, and Chaunte Marie Thompson, age 31, of Salt Lake City, who are charged in the complaint with one count of using an unauthorized access device (credit card), are scheduled to make an initial appearance on the charges at 3 p.m. Wednesday before U.S. Magistrate Judge Evelyn J. Furse.

            According to the complaint, the victim of the theft, identified in the document as J.B., contacted the Unified Police Department on June 24, 2013, to report that an unknown individual entered her residential garage in Riverton and stole her wallet from her parked car.  J.B. had video footage of the burglary.

            A UPD officer reviewed the footage and observed a red passenger car with a sun roof pull into the drive way.  A single white male exited the car and entered the garage.  The male was observed coming and going from the garage to his vehicle several times.   A few minutes later, he backed out of the drive way and left.

            Two days later, J.B. reported to police that three of the credit cards in her stolen wallet had been used without her authorization on the day of the burglary.  One was used at Sportsman’s Warehouse in Midvale to make a purchase of $493.49.  Two others were used at the Nike Store in West Jordan to make purchases of $341.85 and $201.89.  Officers worked with the stores to obtain video of the transactions and other information about the purchases.

            According to the complaint, on July 2, 2013, after reviewing video surveillance tapes from several sources and receiving numerous tips in the case, a UPD detective was able to identify Kettler and Thompson as suspects in the case by matching their driver’s licenses and prior booking photos to the suspects in the videos.

            This case is being investigated by the Utah Identity Theft Task Force, which is comprised of federal, state, and local law enforcement agencies working together to investigate identity theft related crimes throughout the State of Utah.  The Salt Lake District Attorney’s Office and the U.S. Attorney’s Office will continue to coordinate efforts as the investigation continues.

            Complaints are not findings of guilt.  Individuals charged in complaints are presumed innocent unless or until proven guilty in court.  The potential maximum penalty for one count of access device fraud is 10 years in federal prison and a fine of $250,000.

Sentence Includes $1,331,075.36 in Restitution to Victims

SALT LAKE CITY –  Patrick Merrill Brody, age 47, of Salt Lake City, who pleaded guilty in May to wire fraud and money laundering in connection with a real estate investment scheme, will serve 41 months in federal prison. 

            U.S. District Judge Robert J. Shelby, who imposed the sentence Thursday in federal court, also ordered Brody to pay restitution of $1,331,075.36 to victims in the case and serve 36 months of supervised release when his prison sentence concludes.

            Brody was charged with conspiracy, mail and wire fraud, and money laundering in a nine-count indictment returned by a federal grand jury in October 2012.  The indictment alleged Brody and his wife, Laura Ann Roser, operated Art Intellect, Inc., a Utah corporation doing business as Mason Hill.  The business had offices in Salt Lake City and Cape Coral, Florida. Mason Hill solicited and sold investments in real estate properties.  It offered potential clients an option for investing in rental residential properties in several states.  Mason Hill offered to sell investors rental properties at a low price, repair and rehabilitate them if necessary, find renters for the properties, collect rent, and maintain and manage the properties for the benefit of the investors.

            The indictment alleged that once received, investors’ funds were comingled with other investors’ money, used to purchase properties for earlier investors, and used to pay operating expenses of Mason Hill as well as personal expenses for the defendants – among other things.  In some instances, investors’ money was used to make Ponzi payments to earlier investors. 

            As a part of a plea agreement reached with federal prosecutors, Brody admitted that from April 2009 through early 2011 he made important business decisions for the company, hired and instructed employees, and directed the use of company proceeds.

            Brody admitted that the company ultimately began operating a scheme that obtained money or property through fraudulent representations or promises.  The fraudulent representations were made with the intent to induce clients to make investment payments to Mason Hill.  Funds invested through the scheme were converted to personal use by Brody, which deprived the company of the capital necessary to complete real estate transactions as promised.  Many of the clients, who invested in the scheme, did not receive any property or any other thing of value in return for their investment payments, and did not receive a refund of their payments.

            Roser pleaded guilty in June to a one-count Misdemeanor Information charging her with inducing or attempting to induce the purchase and sale of a security without being registered as a broker-dealer with the U.S. Securities and Exchange Commission and without being associated with a broker-dealer registered with the Commission, but in doing so, the defendant had no knowledge of such registration requirement.  Roser is scheduled to be sentenced Aug. 22, 2013, at 2 p.m. in Judge Shelby’s courtroom.

            The case is being prosecuted by the U.S. Attorney’s Office and investigated by special agents of the FBI and IRS Criminal Investigation.

 Indictment follows arrests, search warrants in St. George last month

SALT LAKE CITY – A federal grand jury returned an indictment Tuesday charging 14 individuals with conspiracy to distribute spice in connection with a nationwide law enforcement operation targeting synthetic drug trafficking organizations.  Nine defendants are also charged with money laundering in the indictment, which includes one conspiracy count and 10 counts of money laundering. 

            The indictment also includes a notice of intent to seek the forfeiture real property located in Hurricane, Heber City, and Spanish Fork; funds from several bank accounts; money orders; and vehicles. 

            Charged in the Utah indictment are Brian Merrill, age 28, of Hurricane; Joshua Davis, age 37, of Hurricane; Buck Andersen, age 33, of St. George; Joseph Givogre, age 42, of Washington; Gary Jolley, age 58, of St. George; Alicia Brandom, age 31, of Hurricane; Curtis McOsker, age 40, of Las Vegas, a former resident of Santa Clara; Malin Pavelka, age 34, of St. George; Jennifer Barlow, age 22, of St. George; Richard Lewis, age 61, of St. George; David Flores, age 32, of West Jordan;  James Hardwick, age 27, of South Jordan; David Carter, age 33, of Spanish Fork; and Becky Young, age 36, of West Jordan.

            The Utah case is a part of “Project Synergy,” a national initiative which includes cases led by DEA, U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI); IRS-Criminal Investigation; and the FBI. The operation was announced in late June.

            The investigation in Utah started when Illinois law enforcement officers, conducting a Spice investigation connected to a chain of smoke shops, found 9,644 packets of Spice which appeared to have been shipped to Illinois from St. George.  The Spice packets were marketed under brands called “Gods of Spice” and “Blue Heaven.”  Based on the information from Illinois officials, federal, state, and local law enforcement agencies in the St. George area, including the DEA, IRS-Criminal Investigation, HSI, BLM, the Washington County Drug Task Force, the Washington County Sheriff’s Office, the St. George Police Department, and the Hurricane Police Department launched an investigation.

            Independent of the investigation launched by the information from Illinois, HSI agents seized two packages of Spice chemicals coming into the country to co-conspirators in the case, including a shipment from China.    

            The indictment alleges that from about March 2011 through about June 2013, the defendants conspired with each other and with other persons to distribute spice.  The money laundering counts charge several of the defendants with engaging in monetary transactions involving property derived from an unlawful activity – which in this case is conspiracy to unlawfully distribute a controlled substance.

            Davis, Carter, Givogre, and Flores are in custody. Andersen, Hardwick, and Jolley have been in custody since their arrest, but were released following a detention hearing Monday afternoon.  Merrill, Brandom, Pavelka, Barlow, Lewis, and Young were released on conditions of supervised release following their arrest last month.  McOsker has not been arrested.   

            Defendants in the case are scheduled for an arraignment on the indictment on Aug. 5, 2013, at 1:30 p.m. before U.S. Magistrate Judge Robert T. Braithwaite in St. George. The potential maximum penalty for the conspiracy count is 20 years in federal prison and a fine of $1 million.  Each count of money laundering carries a potential 10-year penalty and a fine of $250,000.

            Indictments are not findings of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

 

        SALT LAKE CITY – Richard R. Whatley, a former owner of Alliance Staffing Management Inc. (ASM), was sentenced to 51 months in prison Thursday for willfully failing to account for and pay over employment taxes. Whatley was also ordered to pay $541,513.61 in restitution to the IRS. U.S. District Judge David Nuffer imposed the sentence.

            In January 2010, a federal grand jury charged Whatley, a resident of Salt Lake County according to the indictment, with five counts of willfully failing to account for and pay over employment taxes, relating to three different employee leasing companies that he allegedly operated and controlled between the years 2001 and 2006 in Salt Lake City and American Fork.  The employee leasing companies included American Employment Group Inc., ASM and Intermountain Consulting Group Inc. The tax loss associated with Whatley's criminal conduct during these years totaled more than $2.3 million. Whatley pleaded guilty in January 2013 to one of the charged counts.

            According to the plea agreement, during the 2002 through 2004 tax years, Whatley held an ownership interest in and had the ability to control the finances of ASM, an employee leasing company. Whatley's control included determining the amount of employment taxes that had to be paid over to the IRS and the authority to decide which bills would be paid and which bills would not be paid. As charged in the superseding indictment, in the fourth tax quarter of 2003, Whatley caused the collection of employment taxes from ASM's employees' wages and then willfully failed to pay over $541,513 for the employees' portion of employment taxes to the IRS.

            The case was investigated by special agents of IRS - Criminal Investigation and was prosecuted by Trial Attorneys Christopher J. Maietta and Stuart A. Wexler of the Justice Department's Tax Division.

            More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax.

 

        SALT LAKE CITY – A three-count complaint unsealed Thursday morning in federal court in Salt Lake City charges a Provo, Utah, man with violations of federal firearms laws in connection with an FBI criminal investigation that started in November.

        Keith Max Pierce, age 34, who was arrested Wednesday morning in Provo, is charged with failure to register as a dealer and manufacturer; illegal possession of machine guns; and possession of a firearm with an obliterated serial number. He had an initial appearance on the charges Thursday morning before U.S. Magistrate Judge Brooke C. Wells.  Federal prosecutors are seeking detention.  Magistrate Judge Wells scheduled a detention hearing for Monday at 9:30 a.m.

        According to an affidavit filed with the complaint, the investigation of Pierce started in November after Pierce made statements to an FBI source regarding bombing the Internal Revenue Service in Provo, the Provo Police Department, and a court building. Pierce also discussed access he had to fully automatic weapons.

        The complaint alleges that during the course of the investigation, Pierce made a deal to make one fully automatic AR-15 firearm for an FBI undercover agent. The complaint alleges that in late May, Pierce delivered one modified AR-15 fully automatic firearm with an obliterated serial number to the FBI agent. ATF testing of the firearm concluded that it is a machine gun that is not registered to Pierce in the National Firearms Registration and Transfer Record.  Possession of the firearm is a violation of federal law.

        The potential maximum penalty for each count in the complaint is 10 years in prison and a fine of $250,000.

        Complaints are not findings of guilt.  Individuals charged in a complaint are presumed innocent unless or until proven guilty in court.

        The case is being prosecuted by the U.S. Attorney’s Office in Utah.  The case is being investigated by agents and officers from agencies involved in the FBI’s Joint Terrorism Task Force, the ATF, Federal Protective Services, the Utah Department of Public Safety, and the U.S. Treasury Inspector General for Tax Administration.

        In another FBI JTTF case, a July 1, 2014, trial date has been set in federal court in Idaho for Fazliddin Kurbanov, age 30, of Boise.  Kurbanov was arrested in May on federal terrorism charges filed in Boise and Salt Lake City.  The U.S. Attorney’s Office in Idaho is proceeding with its case first.  Kurbanov will be transferred to Utah to face one count of distribution of information relating to explosives, destructive devices, and weapons of mass destruction at the conclusion of the prosecution in Idaho.

 

        SALT LAKE CITY – Gina D. Salayandia, age 45, of West Point, Utah, pleaded guilty this week in federal court to assisting as many as 15 individuals in filing false federal tax returns using exemptions and credits they were not legally entitled to claim.  The individual returns were filed for the years 2006 through 2011.

        Salayandia has been a self-employed tax return preparer since at least 1999.  Her business is based in Hooper, Utah. 

        Salayandia, who waived indictment, was charged with one count of aiding and assisting in the filing of false tax returns in a Felony Information filed in April.  She pleaded guilty to the charge Wednesday before U.S. Magistrate Judge Dustin Pead.

        As a part of the plea agreement, Salayandia admitted that on about Jan. 21, 2011, an individual identified as M.M. in court documents approached her to prepare her 2010 tax returns.  Salayandia admitted that while she was preparing M.M.’s tax return, she informed her that her tax situation would improve through exemptions and credits if she claimed certain additional dependents on her tax return.  Salayandia admitted she knew that M.M. was not legally entitled to claim additional dependents.  She also admitted knowing that M. M. was not entitled to claim the child tax credit for additional dependents because they were not U.S. citizens, U.S. nationals, or residents of the United States. She admitted knowing that she assisted in preparing falsely stated tax exemptions and credits on the tax form knowing it was not legal under Internal Revenue code.

        She stipulated in the plea agreement that the total tax loss in scheme is $211,600.

        Sentencing in the case is set for Sept. 4, 2013, before U.S. District Judge Clark Waddoups.  The potential maximum penalty for the conviction is three years in prison, a fine of $250,000, and a one-year term of supervised release. 

 

            SALT LAKE CITY – A federal grand jury in Salt Lake City returned an indictment Wednesday charging Paul Ben Zaccardi, a resident of Sandy, Utah, with five counts of presenting false, fictitious and fraudulent claims to the United States, and three counts of passing fictitious obligations.

            According to the indictment, on or about Aug. 20, 2008, Zaccardi submitted five false claims to the United States by filing income tax returns for the years 1996 through 2000, seeking refunds to which he was not entitled.  Altogether, Zaccardi sought refunds totaling $1,510,251.  The indictment further charges that Zaccardi submitted fictitious obligations to the United States that purported to pay his tax debts.  The first of these was submitted in July 2008 and claimed to be valued at $5,000,000; the second and third were submitted in November of 2009 and claimed to be valued at $300,000,000 each. 

            An indictment is not a finding of guilt.  Individuals charged in indictments are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Zaccardi faces a maximum of 100 years in prison. 

            The case is being investigated by IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Michael Romano and Stuart Wexler.        

 

        SALT LAKE CITY –   A federal grand jury in Salt Lake City returned a superseding indictment  Wednesday charging Dick Reid Jenkins, a resident of Heber City, Utah, with 18 counts of presenting false, fictitious and fraudulent claims to the United States and one count of passing a fictitious obligation.

        According to the superseding indictment, in September 2008, Jenkins filed a false 2007 income tax return for himself which claimed an income tax refund of $402,920. Then, in October 2008, Jenkins filed a false amended 2004 income tax return, which claimed an income tax refund of $434,261. Both false claims were based on the use of false Form 1099-OID, Original Issue Discount. In addition to his own false returns, from September 2008 through February 2009, Jenkins caused 16 other false federal income tax returns to be filed on behalf of other individuals. These other false tax returns also used false Forms 1099-OID and claimed federal income tax refunds totaling $8,407,623. The indictment further alleges that Jenkins was licensed by the state of Utah as a certified public accountant at all times relevant to these charges.

       Additionally, according to the superseding indictment, on June 30, 2008, Jenkins passed and presented a false and fictitious financial instrument to the U.S. Department of the Treasury in the amount of $300,000,000.

       An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent until proven guilty.  If convicted, Jenkins faces a statutory maximum penalty of 25 years in prison for each count of submitting fictitious obligations to the United States and five years in prison for each count of presenting false, fictitious, and fraudulent claims to the United States.

       The case is being investigated by IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Stuart Wexler and Michael Romano.

 

Utah case is a part of Project Synergy, a nationwide initiative
targeting synthetic drug trafficking organizations

        ST. GEORGE, UT – A federal complaint unsealed Wednesday morning in St. George, Utah, charges 14 individuals in St. George and Salt Lake City with conspiracy to distribute spice.  The charges arise from an investigation that started in December when Illinois officials discovered packets of spice which appeared to be shipped from St. George to Illinois smoke shops. The charges were announced at a press conference Wednesday afternoon in St. George.

        The Utah case is a part of “Project Synergy,” a nationwide enforcement operation targeting designer drug trafficking organizations.  Nationwide, more than 300 federal and state search warrants and 150 arrest warrants were executed Wednesday morning with enforcement actions in 33 states.  These series of enforcement actions included retailers, wholesalers, and manufacturers. Project Synergy was coordinated by DEA’s Special Operations Division working with the DEA Office of Diversion Control.  The national initiative includes cases led by DEA, U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI); IRS-Criminal Investigation; and the FBI. 

       In addition to the complaint in the Utah case, 43 seizure warrants and one civil forfeiture complaint were filed this week.  Law enforcement officers executed 21 search warrants. Agencies involved in the Utah investigation include DEA, IRS-Criminal Investigation, HSI, BLM, the Washington County Drug Task Force, the Washington County Sheriff’s Office, the St. George Police Department, and the Hurricane Police Department.  

        Illinois officers, conducting a Spice investigation connected to a chain of smoke shops, contacted DEA agents in St. George when searches executed as a part of their investigation turned up 9,644 packets of Spice which appeared to have been shipped to Illinois from St. George.  The Spice packets were marketed under brands called “Gods of Spice” and “Blue Heaven.” 

        Based on the information from Illinois officials, federal, state, and local law enforcement agencies in the St. George area launched an investigation.  According to the complaint, the investigation shows that beginning in about March 2011, a group of co-conspirators in St. George and Salt Lake City began manufacturing large amounts of illegal Spice in Washington County and distributing it primarily to smoke shops around the United States using commercial couriers such as FedEx and UPS. These smoke shops, in turn, sell the Spice to individual customers.  As an example, according to the complaint, the Illinois investigation showed that illegal Spice comprised about 90 percent of the smoke shops’ sales.  It also showed that the smoke shops were obtaining nearly all of their Spice from the Washington County organization.

       Since April 1, 2011, the Utah co-conspirators have distributed roughly 2,652 pounds of finished Spice product.   

       Independent of the investigation launched by the information from Illinois, HSI agents seized two packages of Spice chemicals coming into the country to co-conspirators in the case, including a shipment from China.    

        “Often, when we talk about drug investigations in Utah, we are talking about drugs that are manufactured and shipped into Utah from other countries.  Today’s complaint alleges co-conspirators in St. George, Utah, were involved in the manufacturing and distribution of drugs that were then shipped to states around the country,” U.S. Attorney David B. Barlow said today. “These synthetic drugs are illegal and dangerous.  Those who use them have no idea what they are putting into their body or what chemicals have been used to manufacture them. The availability of these drugs, often sold in false and misleading packaging, makes them more dangerous.  Those who use them may believe that if they can purchase them at a store or online, they must be legal and safe.  They are neither, and those who manufacture or distribute these drugs in Utah will face prosecution.” 

        Charged in the complaint are Brian Merrill, age 27; Joshua Davis, age 37; Buck Andersen, age 33; Joseph Givogre, age 42; Gary Jolley, age 58; Alicia Brandom, age 31; Curtis McOsker, age 40; Malin Pavelka, age 34; Jennifer Barlow, age 22; and Richard Lewis, age 61; all of the St. George area.  Defendants in the complaint from the Salt Lake City area are David Flores, age 32;  James Hardwick, age 27; David Carter, age unknown; and Becky Young, age 36.

        "Today DEA and our partners cut the head off of the snake. By decimating this massive drug distribution ring in St. George, we have stopped a constant flow of Spice to retailers in over 20 cities across the United States," said DEA Rocky Mountain Division Special Agent in Charge Barbra Roach.

        “What hasn’t changed since Al Capone and Mickey Cohen is the effectiveness of IRS Criminal in relentlessly following the money trail to topple criminal enterprises.  In this case, our financial sleuthing showed over $12 million in alleged proceeds deposited in and transferred between various accounts,” said Paul Camacho, Special Agent in Charge of the IRS Las Vegas Field Office. 

        “This is another major blow to an illicit industry that masquerades as being safe and legal,” said Kumar Kibble, Special Agent in Charge of HSI Denver, who oversees Utah investigations. “HSI is committed to working with our law enforcement partners to bring the synthetic drug industry to its knees.”

        The complaint alleges Merrill, Davis, Andersen, Flores, Hardwick, Givogre, and Jolley were the organizational leaders. Among other things, they obtained the raw chemicals and materials, employed other people, organized the distribution of the finished products, and laundered money.  The complaint alleges the other individuals were employed by the leaders or otherwise assisted in the manufacturing and distribution of Spice and in laundering money.

       According to the complaint, the leaders of this alleged drug-trafficking organization used corporations registered in Utah and Nevada which gave legitimacy to business transactions such as renting warehouses, shipping packages, receiving wire transfers, and depositing and withdrawing cash.  Eight corporations are referenced in the complaint, including GOS  Distributing, LLC; BH Wholesale; PFM Wholesale; DVS Wholesale; GRS Distributing; Zodiac Mortgage; Zodiac Companies Corp.; and Bad Habitz.  Various defendants, including Davis, Merrill, Andersen, Givogre, Jolley, Flores, and Hardwick are listed as operators of the corporations.

        According to the complaint, investigators learned that Spice was being manufactured at a warehouse in Hurricane.  In late March, the Washington County Drug Task Force executed a search warrant at a residence in Santa Clara.  Merrill signed the rental agreement for the residence, which was occupied by McOsker and Brandom.  Inside the residence, officers found several items which they believe co-conspirators were utilizing to manufacture Spice, including four 50-gallon barrels of Ethanol 200, a binding agent; more than 300 kilograms of Damiana, a plant material; and seven bags containing white powder believed to be Spice chemicals. 

        In the days following the search of the residence in Santa Clara, the complaint alleges Davis and Merrill began removing large amounts of documents and other material from the Hurricane warehouse. Law enforcement officers followed Davis to the Washington County Landfill where they were able to recover evidence of the conspiracy to distribute Spice, including Gods of Spice packaging, bottles of flavoring, an operating agreement for Gods of Spice showing Andersen, Flores, and Davis as each 33 percent owners; hundreds of invoices; payroll summaries; and customer invoices.

        The complaint outlines investigative tools used during the investigation to track the activities of the alleged co-conspirators, including business records seized through trash collections; monitoring of package shipments; surveillance; and search warrants. For example, from July 2012 through October 2012, the complaint alleges Davis, Andersen, and Merrill shipped hundreds of FedEx packages to smoke shops located in California, Florida, Iowa, Idaho, Illinois, Maine, Michigan, North Carolina, Nevada, New York, Oklahoma, Virginia, and Washington using company names GOS, PFM, and BHW.  During the same time period, Jolley, using Zodiac Company, sent hundreds of packages to smoke shops in Alabama, Florida, Georgia, Illinois, Maine, Minnesota, Missouri, North Carolina, and Washington.  

        The complaint alleges that Merrill, Davis, and Andersen have deposited more than $5,640,728 in suspected drug proceeds into bank accounts under their control from April 2011 through March 2013.  Hardwick and Flores have deposited more than $3,556,615 in suspected drug proceeds into bank accounts under their control from April 2011 through March 2013, the complaint alleges.  Jolley, who the complaint identifies as a redistributor for Merrill, Davis, and Andersen, has deposited more than $2,418,263 in suspected drug proceeds in bank accounts under his control.

        The potential maximum penalty for a conviction of conspiracy to distribute a controlled substance is 20 years in federal prison. Initial appearances for defendants arrested in St. George will be at 1:30 p.m. Thursday.  

       Complaints are not findings of guilt.  Individuals charged in complaints are presumed innocent unless or until proven guilty in court.

(In addition to the PIO contacts listed above, questions for IRS-CI can be directed to Supervisory Special Agent Jared Halper at 801-318-6634.  The HSI media contact is Andrew Munoz who can be reached at 206-442-1450.)    

 

        SALT LAKE CITY – A federal grand jury in Salt Lake City returned an indictment Wednesday afternoon charging Dick Reid Jenkins, a resident of Heber City, Utah with 18 counts of presenting false claims to the United States.

        According to the indictment, in September 2008, Jenkins filed a false 2007 income tax return for himself which claimed an income tax refund of $402,920.  Then, in October 2008, Jenkins filed a false amended 2004 income tax return, which claimed an income tax refund of $434,261.  Both false claims were based on the use of false Form 1099-OID, Original Issue Discount.  In addition to his own false returns, from September 2008 through February 2009, Jenkins caused sixteen other false federal income tax returns to be filed on behalf of other individuals.  These other false tax returns also used false Form 1099-OID and claimed federal income tax refunds totaling $8,407,623.  The indictment further alleges that Jenkins was licensed by the state of Utah as a Certified Public Accountant at all times relevant to these charges.

        An indictment is not a finding of guilt.  Individuals charged in indictments are presumed innocent until proven guilty.  

        The case is being investigated by IRS-Criminal Investigation and is being prosecuted by U.S. Department of Justice Tax Division Trial Attorneys Stuart Wexler and Michael Romano. 

 

Ordered to Pay More Than $11 Million in Restitution to Victims

            SALT LAKE CITY – Emilee Peterson Buckley, age 39, of Salt Lake City, will serve five years in federal prison after pleading guilty to three counts of wire fraud in connection with an investment fraud scheme she operated as the owner of Calypso Financial, LLC in Salt Lake City.

            U.S. District Judge Dee Benson imposed the sentence Friday. As a part of the sentencing hearing, Judge Benson ordered Buckley to pay $11,272, 908.74 in restitution in the case.  Buckley, who pleaded guilty to all charges in an indictment returned in 2010, will be allowed to self-surrender to begin serving her prison sentence.

            As a part of the plea agreement, Buckley admitted that from January 2007 through October 2007, she devised a scheme to get money from investors through false and misleading representations.  She said she knew that her companies were making little, if any, money and had significant outstanding monthly financial obligations and debts of about $500,000.  She admitted knowing that the only way Calypso could continue to meet its monthly financial obligations was through debt financing.

            Despite Calypso’s negative financial situation, she represented to investors that Calypso was successful and making money from its business activities, which included residential properties, real estate developments, central Utah property with valuable water rights, a precious metals mine, and foreign trading platforms in Hong Kong, Europe, and elsewhere.

            She told investors that based on Calypso’s success, she could provide them with monthly returns ranging from 4 to 15 percent per month.  She also admitted providing investors with a balance sheet which reflected Calypso had a net worth in excess of $60 million and she told investors that Calypso’s assets were more than sufficient to pay them back and make them whole in the event its business went bad.

            Buckley concealed from investors the fact that much of their investment would be used to make interest payments to or to pay off older investors, commonly known as Ponzi payments.  Throughout the fraud period, she accepted money from investors ranging in amounts from $100,000 to as much as $3.5 million.

            The case was prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by special agents of the FBI with assistance from the Securities and Exchange Commission (SEC).

 

          SALT LAKE CITY – A four-day jury trial has been scheduled for August for two individuals charged in connection with three smoke shop robberies in West Valley City and Midvale in May. 

            Dean Salvidor Sainsbury, age 25, of Taylorsville and Kenedi Francis Sarafolean, age 22, of Murray, were indicted by a federal grand jury on three counts of robbery, including a May 10, 2013, robbery of the One Stop Smoke Shop located at 4645 South 4000 West in West Valley City; a May 11, 2013, robbery of Smokey’s Discount Cigarettes located at 3500 South 3630 West in West Valley City; and a May 13, 2013, robbery of Smokeland, located at 7948 South State Street in Midvale.

            The indictment, returned by a grand jury in May, also alleges that a firearm was brandished during each of the robberies.  Sainsbury and Sarafolean, who have previous felony convictions, also are charged with illegally possessing a firearm.

            The case is being investigated by the FBI-sponsored Valley Police Alliance Safe Streets Task Force.

            Indictments are not findings of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court. Sainsbury and Sarafolean are in federal custody and have entered not guilty pleas to the charges.  The trial begins Aug. 12, 2013, in U.S. District Judge Dale A. Kimball’s courtroom.

            The potential maximum penalty for each of the three robbery counts (violations of the federal Hobbs Act) is up to 20 years in prison.  Possessing a firearm following a felony conviction carries a potential penalty of 10 years.  The first count of brandishing a firearm during a crime of violence carries a minimum-mandatory sentence of seven years.  Each subsequent conviction is an additional 25 years. The minimum-mandatory sentences run consecutive (stack) and are imposed in addition to any sentences imposed for other counts of conviction.

 

Sentence Includes Order to Pay $986,073.03 in Restitution to Business 

            SALT LAKE CITY – David Merrill, age 42, of Salt Lake City will serve 21 months in federal prison after pleading guilty to money laundering in connection with a scheme to divert money from High Street Funding, where he worked from 2006 through 2011, to his personal accounts.

U.S. District Judge Robert J. Shelby also ordered Merrill to pay $986,073.03 in restitution to the business and imposed 36 months of supervised release following the completion of the prison sentence.

According to a Felony Information filed in the case, the business is a privately-owned equipment leasing company in Utah.   It enters into equipment leasing agreements with client businesses, leasing equipment based on monthly payments.

As a part of a plea agreement with federal prosecutors, Merrill admitted that during the course of performing his job duties at the leasing business, he directed approximately $1 million in client payments to his accounts at various banks in Utah. He admitted the activity was unknown to his employer and done without the employer’s authorization.

The case was prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by special agents of IRS Criminal Investigation.

 

Charges Allege She Used Identification Documents Belonging to Others to Withdraw Money or Attempt to Withdraw Money From Bank Accounts

            SALT LAKE CITY – A grand jury returned a 16-count indictment Wednesday afternoon charging Alisha Turnbow, age 32, of Taylorsville with bank fraud and aggravated identity theft in connection with an alleged identity fraud scheme involving three financial institutions and the unlawfully obtained identities of four individuals.

            The indictment alleges Turnbow used stolen identification documents to make or attempt to make withdrawals using the accounts of other individuals on 12 occasions at Zions Bank, Chase Bank, and America First Credit Union. In some instances, she attempted to cash checks by presenting fraudulently signed checks drawn on accounts belonging to other people.

            For example, the indictment alleges that on Jan. 24, 2013, Turnbow attempted to withdraw $2,300 from a Zions Bank account using the identification of another person. The next day, she used the identification of another person to make $4,500 in withdrawals at three America First Credit Union branches. On Jan. 31, 2013, she attempted to cash a $2,000 check at Chase Bank. The conduct alleged in the indictment took place from about Jan. 24, 2013, through at least Feb. 8, 2013. 

            Turnbow is charged with 12 counts of bank fraud in the indictment.  The potential maximum penalty for each count of bank fraud is 30 years in federal prison and a fine of up to $1 million. The indictment also includes four counts of aggravated identity theft.  Each identity theft count carries a potential two-year minimum mandatory sentence and a fine of up to $250,000.

            The indictment also seeks the forfeiture of $1,900 in cash the defendant had in her possession at the time of her arrest.  The indictment alleges the money constitutes proceeds from criminal conduct.

            The case is being prosecuted as a part of efforts by the Utah Identity Theft Task Force. 

            “Identity theft cases routinely involve transactions from several jurisdictions. Bringing them together in a single federal prosecution is an efficient use of resources in these times of tight budgets,” said U.S. Attorney David B. Barlow. “Combining the transactions into a single case also helps demonstrate the scope and impact of the alleged conduct.”    

            Turnbow is in state custody.  A federal warrant will be issued for her arrest and an initial appearance will be scheduled for her in federal court.

            Indictments are not findings of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

 Pleas Include 36-Month Sentencing Recommendation;Forfeiture of Assets

SALT LAKE CITY – Kelly Dean Harvey, age 50, of West Jordan, pleaded guilty to charges in two separate indictments in federal court Wednesday. Harvey was charged in one indictment in connection with efforts he made to introduce a misbranded drug into interstate commerce. The second case involved conspiracies to import ephedrine into the United States and launder money.

The plea agreements resolving both cases were executed during a hearing before U.S. Magistrate Judge Evelyn Furse. Each plea agreement includes a recommendation to the court that Harvey be sentenced to 36 months in federal prison and that the sentences run concurrently. As a part of the misbranded drug case, Harvey has agreed to forfeit funds from several financial accounts; an insurance policy; and two Roth IRA accounts.

Sentencing in the cases is set for Aug. 14, 2013, at 2:30 p.m. before U.S. District Judge David Nuffer.

The Ephedrine Case

Harvey pleaded guilty to one count of conspiracy to import and importation of ephedrine and one count of conspiracy to commit money laundering in the ephedrine case.

He admitted that between Aug. 1, 2007, and April 2011, he conspired with co-defendants Mashesh Kumar Bisht and Jorge Eduardo Campos to transport shipments containing ephedrine from India into the United States. He admitted knowing that the shipments he was arranging contained ephedrine and that the importation of ephedrine violated federal laws.

He also admitted he worked with Bisht and Campos to transfer funds from the United States to India to pay for the ephedrine and that he conducted financial transactions in a way designed to conceal the nature, location, source, ownership and control of the funds, which were proceeds of an unlawful activity.

One of the co-defendants, Jorge Campos, has pleaded guilty and his sentencing is pending. The second co-defendant, Bisht, is in India and has not been arrested.

This case, which is being prosecuted by the U.S. Attorney’s Office, is being investigated by special agents of the U.S. Immigration and Custom Enforcement’s (ICE) Homeland Security Investigations and IRS Criminal Investigation.

The Fraud/Misbranded Drug Case

Harvey admitted to conspiring with two others to manufacture and distribute male sexual enhancement and erectile dysfunction products (“ED drugs”) under false pretenses and with the intent to hide and conceal from the FDA the use of an active ingredient which was subject to FDA regulation. The ED drugs, distributed and marketed by Harvey, a Michigan distributor (an unindicted co-conspirator), and others contained a synthetic ingredient imported from China similar to sildenafil citrate, the active ingredient in Viagra. Harvey purchased the ingredient through a Chinese broker (an unindicted co-conspirator). As distributed and sold, the drugs were misbranded in the following respects: (1) they were identified as “dietary supplements,” which they were not; (2) they were identified as “100 % natural,” which they were not; and (3) they did not identify the active ingredient imported from China on labels or in instructions.

Harvey pleaded guilty Wednesday to conspiracy, wire fraud, mail fraud and concealment money laundering in connection with this case and agreed to forfeiture totaling about $512,731.75.

This case is being prosecuted by the U.S. Attorney’s Office and investigated by special agents of FDA’s Office of Criminal Investigations.

SALT LAKE CITY -- Paul Ernest Sellors, age 69, of Saint Anthony, Minnesota, charged with using a counterfeit seal of a United States Court in an indictment returned by a federal grand jury in Denver, Colorado, was arrested Wednesday in Saint Anthony..

Sellors was taken into custody without incident by members of the FBI’s Minneapolis Joint Terrorism Task Force. A federal magistrate judge in Denver issued a warrant for his arrest on May 1, 2013, after he failed to appear for an initial appearance on the charges in the indictment.

The indictment, filed in April, alleges Sellors and a co-defendant, Ronald Roy Hoddenpyle, age 70, of Colorado Springs, Colorado, used a forged and counterfeit seal of the “United States of America, District Court, District of Minnesota,” to authenticate fraudulent documents, including an order to set trial by jury, an order of custody, and orders to reschedule jury trials. Sellors and Hoddenpyle are charged with four counts of using a counterfeit seal of a United States Court in the indictment.

A five-day jury trial for Hoddenpyle has been set for July 15, 2013, before U.S. District Judge Christine M. Arguello in federal court in Denver. Hoddenpyle is in custody.

Sellors had an initial appearance in Minneapolis Wednesday. A detention and identity hearing has been scheduled for 2:30 p.m. CDT Thursday.

The case against Sellors and Hoddenpyle is being prosecuted in Denver by Assistant U.S. Attorneys from the District of Utah. The case is being investigated by special agents of the FBI and the U.S. Treasury Inspector General for Tax Administration and the U.S. Marshals Service.