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Tuesday 20 April 2021
Three Brooklyn Residents Charged in Money Laundering Scheme with Stealing over $30 Million from Foreign BanksRead the Press Release
An indictment was unsealed earlier today in federal court in Brooklyn charging Val Cooper, Alex Levin and Garri Smith with money laundering conspiracy and conspiracy to violate the Travel Act in connection with their roles in a scheme to steal over $30 million in cash and other valuables from safe deposit boxes located at banks abroad, primarily in Eastern Europe. The defendants were arrested this morning and will be arraigned this afternoon before United States Magistrate Judge Robert M. Levy.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York Office (HSI); and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the arrests and charges.
“The defendants and their co-conspirators were allegedly part of a sophisticated network of criminals that used high-tech camera equipment to steal millions in cash and other valuables from victims who had tried to protect their property by using safe deposit boxes in foreign countries, and they then laundered the proceeds of their scheme through the United States financial system,” stated Acting United States Attorney Lesko. “This Office will hold accountable anyone who uses our financial system to commit fraud and theft here or abroad.” Mr. Lesko expressed his grateful appreciation to the European Union Agency for Law Enforcement Cooperation (Europol), and the governments of Azerbaijan, Latvia, Moldova, North Macedonia, Ukraine and Uzbekistan for their assistance in the investigation.
“The crimes we allege in this indictment read like something straight out of Hollywood fiction,” stated FBI Assistant Director-in-Charge Sweeney. “The thieves used sophisticated tools to thwart security systems at foreign banks and tried to cover their tracks by laundering money through U.S. banks. However, thanks to the outstanding work of our FBI Eurasian Organized Crime Task Force and our international partners, these criminals now face real federal charges and the possibility of real time in federal prison.”
“Using state of the art technology, these modern-day bank robbers allegedly exploited small, unsophisticated banks to gain access to safety deposit boxes and looted $30 million in other people’s cash and valuables. Cooper, Levin and Smith then used bank accounts located in the United States, to launder the proceeds of their illegal activities,” stated HSI Special Agent-in-Charge Fitzhugh. “HSI is proud to work along-side our domestic and international law enforcement partners, including the United States Attorney’s Office, EDNY, and will utilize our unique and broad authorities to bring to justice those who engage in criminal activity for their own financial gain. These defendants must now face our system of justice and answer to the allegations contained in the indictment.”
As set forth in the indictment and court filings, between March 2015 and October 2019, the defendants and their co-conspirators allegedly stole over $30 million in cash and other valuables from safe deposit boxes at banks in multiple foreign countries, including the Ukraine, Russia, North Macedonia, Moldova, Latvia, Uzbekistan and Azerbaijan. The co-conspirators targeted foreign banks that appeared to lack security features, including video surveillance cameras in certain areas. After a bank was selected, they rented safe deposit boxes at the location by posing as customers. The co-conspirators entered the safe deposit box rooms of the targeted banks and used sophisticated camera equipment, including borescopes that are typically used in medical procedures, to photograph the insides of locks of safe deposit boxes belonging to other individuals. Another co-conspirator used these photographs to create duplicate keys, and then other co-conspirators used the duplicate keys to open the victim safe deposit boxes in order to steal the contents, including currency, gold bars, jewelry and other property.
Cooper, the leader of the network, directed others, received stolen property and used his bank accounts in the United States to launder proceeds from the scheme. Levin used his bank accounts in the United States to purchase camera equipment used in some of the thefts and also to launder the proceeds. Smith committed some of the safe deposit box thefts himself, flying from the United States to foreign countries to steal property from victim safe deposit boxes at the targeted banks.
Earlier today, agents executed a search warrant at, among other places, Cooper’s residence. There, agents discovered, among other things, safe deposit box keys with no numbering on them, cash, jewelry and high-end handbags. Agents also searched a storage unit in Brooklyn controlled by Cooper and found a borescope and a safe deposit box lock.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of money laundering conspiracy, the defendants face up to 20 years’ imprisonment.
This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts and dismantles the highest-level money launderers and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Keith D. Edelman, Andrey Spektor and Joy Lurinsky are in charge of the prosecution, assisted by Assistant United States Attorney Brian D. Morris of the Office’s Asset Forfeiture Unit.
The Defendants:
VAL COOPER (also known as “Val Konon” and “Valeriy Kononenko”)
Age: 56
Brooklyn, New YorkALEX LEVIN
Age: 52
Brooklyn, New YorkGARRI SMITH (also known as “Igor Berk” and “Igor Berkovich”)
Age: 49
Brooklyn, New YorkE.D.N.Y. Docket No. 21-CR-208 (LDH)
Statement of Attorney General Merrick B. Garland on the Verdict in the Chauvin TrialRead the Press Release
U.S. Attorney General Merrick B. Garland's statement following the verdict in the state of Minnesota's trial of Derek Chauvin:
"The jury in the state trial of Derek Chauvin has fulfilled its civic duty and rendered a verdict convicting him on all counts. While the state’s prosecution was successful, I know that nothing can fill the void that the loved ones of George Floyd have felt since his death. The Justice Department has previously announced a federal civil rights investigation into the death of George Floyd. This investigation is ongoing."
Statement of Acting U.S. Attorney Juan Antonio Gonzalez on the Verdict in the Chauvin TrialRead the Press Release
MIAMI – Acting U.S. Attorney for the Southern District of Florida Juan Antonio Gonzalez's statement following the verdict in the state of Minnesota's trial of Derek Chauvin:
“Today, a Minneapolis jury found former police officer Derek Chauvin guilty of murdering George Floyd. While no verdict can bring Mr. Floyd back to his family, I pray that today's decision brings them a measure of peace and all people a renewed faith in our justice system. As Attorney General Merrick Garland recently announced, the Department of Justice's federal civil rights investigation into the death of George Floyd is ongoing. Also ongoing is the commitment of the U.S. Attorney's Office for the Southern District of Florida to strengthening trust between law enforcement and our community, holding all those who break civil rights laws accountable, and seeking justice on behalf of all victims.”
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St. Louis man pleads guilty to charges related to drug-trafficking ringRead the Press Release
ST. LOUIS – Darryl Lennell Moore, 32, of St. Louis Missouri, pleaded guilty to two counts of conspiracy to distribute and possess with the intent to distribute a controlled substance, one involving fentanyl, the other involving methamphetamine. Moore also pleaded guilty to an additional count of possession with the intent to distribute methamphetamine. Moore appeared, today, before United States District Court Judge Ronnie L. White.
Beginning in 2016, the Drug Enforcement Administration and St. Louis County Police Department were actively investigating the distribution of large quantities of fentanyl and crystal methamphetamine in the St. Louis Metropolitan Area. Moore conspired with members of the conspiracy to distribute and possess with intent to distribute more than 400 grams of fentanyl and more than 50 grams of almost pure methamphetamine.
At the height of the conspiracy, nine co-conspirators were involved and would distribute more than 20,000 doses of fentanyl per week. Distribution occurred using "runners" who also provided armed protection for the co-conspirators. Moore was primarily responsible for supplying the drugs for the conspiracy.
Judge White has set sentencing for July 22, 2021.
The St. Louis County Police Department and Drug Enforcement Administration investigated the case. Assistant United States Attorney Paul D’Agrosa is handling the case.
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Sioux City Woman Pleads Guilty to COVID-19 Related Unemployment FraudRead the Press Release
A Sioux City woman who stole government funds using a COVID-19 unemployment scheme pled guilty on April 20, 2021, in federal court in Sioux City.
Linda Bosquez, age 59, from Sioux City, Iowa, was convicted of theft of government funds. In a plea agreement, Bosquez admitted that from April 30, 2020 through July 22, 2020, she stole at least $24,235 from the United States Department of the Treasury.
Bosquez falsely claimed, in her name and those of others, unemployment benefits, through the States of Arizona, Georgia, Michigan, and Ohio, including benefits related to COVID-19 relief funds to which she was not entitled.
Bosquez received a total of at least 35 ACH credits (electronic deposits) for unemployment insurance claims (32 from Georgia, 1 from Michigan, 1 from Ohio, and 1 from Arizona). Bosquez made approximately 11 cash withdrawals following unemployment insurance credits, totaling approximately $27,299.30. Bosquez was receiving benefits from other states via ACH and prepaid cards in the names of other individuals, while she was also receiving Social Security Disability Insurance (SSDI) benefits.
The case was prosecuted by United States Attorney Ron Timmons and was investigated by the United States Department of Labor and the Office of Inspector General and the Federal Bureau of Investigation.
Rooting out COVID-19 fraud is a priority of the Department of Justice. On March 27, 2020, the President signed the CARES Act, which provides emergency assistance to individuals, families, and businesses affected by the COVID-19 pandemic, including increased unemployment benefits.
These prosecutions are an example of the Department of Justice’s strong commitment to combating fraud and criminal activity related to the COVID-19 pandemic. Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Sentencing for Bosquez will be before United States District Court Chief Judge Leonard T. Strand and will be set after a presentence report is prepared. Bosquez will remain free on bond pending sentencing. Bosquez faces a possible maximum sentence of 10 years’ imprisonment, a $250,000 fine, and three years of supervised release following any imprisonment.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 21-CR-4029.
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Shequille Carter Sentenced to Five Years in Prison for Federal Drug OffenseRead the Press Release
The Acting United States Attorney for the District of Vermont announced today that Shequille Carter, 28, was sentenced to 60 months in prison for possessing with intent to distribute heroin, fentanyl, and more than 28 grams of cocaine base. Chief Judge Geoffrey Crawford also ordered that Carter serve a four-year period of supervised release following the prison term.
According to court documents and evidence presented at trial, on August 21, 2019, Carter traveled with two others from the Burlington area to a St. Johnsbury residence linked to drug trafficking. After a brief stop at the residence, Carter and the others were driving back toward Burlington when a Vermont State Trooper stopped their car for a traffic infraction. A search of the car’s interior yielded approximately 290 bags of heroin laced with fentanyl and approximately 41 grams of crack cocaine. The drugs were recovered from a center console in the rear seat of the vehicle, where Carter had been sitting. Carter also had $3,071 in cash on his person. In Carter’s cellphone, investigators found text messages and other entries indicative of drug-trafficking, including messages arranging sales of heroin and cocaine. A federal jury in Rutland convicted Carter of this offense following a two-day trial in September of 2020.
At the time of Carter’s drug trafficking activity in Vermont, he was serving a term of supervised release following a prior federal conviction for conspiracy to distribute marijuana sustained in the Southern District of New York. Carter subsequently failed to appear for revocation proceedings in the Southern District of New York, and absconded supervision. On January 2, 2020, DEA agents located and arrested Carter in Burlington, Vermont. Carter faces additional proceedings in the Southern District of New York related to his supervised release violations.Acting United States Attorney Jonathan Ophardt commended the investigative efforts of the Drug Enforcement Administration (DEA), the Vermont State Police, the Burlington Police Department, and the assistance of the Vermont Drug Task Force.
Carter is represented by Assistant Federal Public Defender Elizabeth Quinn and Federal Public Defender Michael Desautels. The prosecutors are Assistant U.S. Attorneys Gregory Waples and Spencer Willig.Schenectady Woman Sentenced for Stealing More Than $95,000 in Social Security BenefitsRead the Press Release
ALBANY, NEW YORK – Jody Lyons, age 54, of Schenectady, New York, was sentenced on Friday to 2 years of probation for stealing Social Security benefits paid into her deceased mother’s bank account.
The announcement was made by Acting United States Attorney Antoinette T. Bacon and John F. Grasso, Special Agent in Charge of the Social Security Administration (SSA), Office of the Inspector General, New York Field Office.
As part of her earlier guilty plea, Lyons admitted that beginning in January 2015 (the month of her mother’s death), Lyons withdrew and spent Social Security benefits that continued to be deposited into her mother’s bank account until August 2018, when the SSA learned of the death and benefit payments ceased. Lyons also admitted that she withdrew and spent her mother’s Social Security benefits despite knowing that the benefits were intended for her mother, and that Lyons was not entitled to the money.
United States District Judge Mae A. D’Agostino also ordered Lyons to pay full restitution to the SSA in the amount of $95,961 and to complete 50 hours of community service.
This case was investigated by the SSA Office of the Inspector General and prosecuted by Special Assistant U.S. Attorney Adrian S. LaRochelle.
Rapid City Man Found Guilty of Fifteen Internet Crimes Against ChildrenRead the Press Release
Acting United States Attorney Dennis R. Holmes announced that Kyle Garret Soto, 34, of Rapid City, South Dakota, was convicted of five counts of Sexual Exploitation of a Minor, one count of Attempted Sexual Exploitation of a Minor, six counts of Enticement of a Minor Using the Internet, two counts of Receipt of Child Pornography, and one count of Possession of Child Pornography following a week-long federal jury trial held in U.S. District Court in Rapid City. The guilty verdicts were returned on April 16, 2021.
Between February 2014 and April 2018, Soto engaged in prolific sexual activity with numerous minors over the internet, including demanding, receiving, and sending pornographic images and videos. Soto threatened to distribute the minors’ images and videos online if they failed to comply with his ultimatums to provide him with additional pornographic items. Subsequent to his arrest in April 2018, forensic examination of Soto’s devices revealed hundreds of images of child pornography. Soto’s victims ranged in age from approximately 7 years old to 15 years old.
The investigation was conducted by the South Dakota Internet Crimes Against Children Task Force, South Dakota Division of Criminal Investigation, Department of Homeland Security, Pennington County Sheriff’s Office, Rapid City Police Department, Rhode Island Internet Crimes Against Children Task Force, and the New Mexico Office of the Attorney General.
Assistant U.S. Attorneys Sarah Collins and Heather Sazama prosecuted the case.
Quad Cities Man Sentenced to 18 Years in Prison for Heroin Distribution Resulting in DeathRead the Press Release
ROCK ISLAND, Ill. – Chief U.S. District Judge Sara Darrow sentenced Ajayi Marcel McIntyre, 42, on April 13, 2021, to serve 18 years in federal prison for distribution of heroin in April 2018, that resulted in the death of an East Moline, Ill., man. According to court documents, the heroin McIntyre distributed on April 17, 2018, was subsequently given to Kyle Medinger, who used the heroin and died of a heroin overdose.
McIntyre pleaded guilty on Sept. 16, 2020, to two counts of distribution of heroin in Rock Island County. McIntyre has remained in the custody of the U.S. Marshals Service since he was charged in a federal indictment in June 2018.
Two individuals related to this incident, David Flores and Ashley Gengler, were charged in Rock Island County court.
The Moline Police Department; the Quad City Metropolitan Enforcement Group; and, the Milan Police Department conducted the investigation of the case. Assistant U.S. Attorney Jennifer L. Mathew prosecuted the case in cooperation with the Rock Island County State’s Attorney’s Office.
Powder Springs man indicted for laundering over two million dollars in proceeds from a Business Email Compromise schemeRead the Press Release
ATLANTA - Denis Onderi Makori has been indicted on charges relating to a business email compromise (BEC) scheme targeting a Pennsylvania university and allegedly defrauding it out of more than $2 million.
“Business email compromise schemes pose a severe risk of financial loss to public and private institutions alike,” said Acting U.S. Attorney Kurt R. Erskine. “In this case, Makori allegedly helped orchestrate a scheme that caused a university to transfer unknowingly over $2 million to bank accounts he controlled.”
“BEC schemes like this alleged one are a big reason why the Georgia Cyber Fraud Task Force, comprised of federal, state and local agencies, was launched in February,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “It takes a combination of education and our priority to investigate and prosecute these cases to make it a deterrent to those who contemplate committing these crimes.”
According to Acting U.S. Attorney Erskine, the indictment, and other information presented in court: Various individuals allegedly engaged in a fraudulent BEC scheme to cause a university located in Pennsylvania to send payments totaling more than $2 million via Automated Clearing House (ACH) to a bank account controlled by Makori, rather than to the intended beneficiary of such payments, a medical supply company based in Alpharetta, Georgia.
In furtherance of the scheme, a fraudulent email was allegedly sent to the university that purported to be from the medical supply company. The fraudulent email allegedly contained ACH payment instructions that directed the university to transfer payments to an account that purportedly belonged to the medical supply company. The university then transferred more than $2 million dollars to the bank account allegedly controlled by Makori. Then, Makori allegedly moved and laundered the funds between and among bank accounts associated with his logistics company, and then to bank accounts in Kenya, to himself, and to other persons associated with him.
Denis Onderi Makori, 34, of Powder Springs, Georgia, was indicted by a federal grand jury on April 20, 2021. Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the Federal Bureau of Investigation. U.S. Customs and Border Protection Chicago Field Office provided valuable assistance in this case.
Assistant U.S. Attorney Ryan M. Christian is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
Pleasant Hills Felon Indicted for Violating Federal Firearms and Narcotics LawsRead the Press Release
PITTSBURGH, PA – A resident of Pleasant Hills has been indicted by a federal grand jury in Pittsburgh on charges of violating federal firearms & narcotics laws, Acting United States Attorney Stephen R. Kaufman announced today.
The two-count Indictment named Marvin L. Sheppard III, age 27, as the sole defendant.
According to Indictment, on or about March 13, 2021, Marvin L. Sheppard III, a convicted felon, possessed a firearm and ammunition. Federal law prohibits a convicted felon from possessing a firearm or ammunition. On or about March 25, 2021. Sheppard possessed with the intent to distribute 10 grams or more of an analogue of fentanyl and a quantity of fentanyl.
At each count, the law provides for a maximum total sentence of not more than 10 years in prison, a fine of not more than $250,000.00 or both, for the firearm charge. For the drug charge, the law provides for a sentence of not less than 10 years in prison, a fine of not more than $10,000,000.00, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Barbara K. Doolittle is prosecuting this case on behalf of the government.
The Bureau of Alcohol, Tobacco, Firearms and Explosive and the Brentwood Borough Police Department conducted the investigation leading to the Indictment in this case. The case was brought as part of Project Safe Neighborhoods. Project Safe Neighborhoods (PSN) is the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Man Admits Conspiring to Export Firearms Parts from United States to Turkey and Republic of GeorgiaRead the Press Release
CAMDEN, N.J. – A Philadelphia man today admitted his role in a conspiracy to smuggle more than $200,000 worth of firearms parts out of the United States, Acting U.S. Attorney Rachael A. Honig announced.
Samet Doyduk, 35, pleaded guilty by videoconference before U.S. District Judge Robert B. Kugler to an information charging him with one count of conspiracy to violate the Arms Export Control Act and anti-smuggling laws.
According to the documents filed in this case and other cases and statements made in court:
Doyduk admitted that from November 2018 through March 2019, he and other conspirators agreed to ship firearms parts from the United States to Turkey and the Republic of Georgia. Doyduk and others used credit cards, Pay-Pal accounts, and other forms of payment to purchase firearms parts from suppliers in the United States. Doyduk and the other conspirators would then repackage the firearms parts, falsely label the contents of the package, and export the firearms parts to their customers in Turkey and the Republic of Georgia. To disguise their role in the conspiracy, the conspirators used aliases when sending the packages containing prohibited items. Upon receiving the firearms parts, the customers in Turkey and in the Republic of Georgia paid Doyduk and the other conspirators by international wire transfers or directly paid one of the conspirators in cash while that individual was in Turkey. The firearms parts included upper receivers, barrels, and magazines for several different types of Glock handguns, including Glocks in the following calibers: 9mm, .40 caliber, and .357 caliber.
The Arms Export Control Act prohibits the export of defense articles and defense services without first obtaining a license from the U.S. Department of State. Doyduk and others purchased and directed the unlawful exportation of more than $200,000 worth of defense articles from the United States to Turkey and the Republic of Georgia without the required export license.
The conspiracy charge to which Doyduk pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Aug. 23, 2021.
Acting U.S. Attorney Honig credited special agents of the U.S. Department of Homeland Security-Homeland Security Investigations (HSI), Cherry Hill Resident Agency, under the direction of Special Agent in Charge Jason J. Molina in Newark; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Damon Wood in Philadelphia, with the investigation leading to today’s guilty plea. She also thanked HSI agents in Ankara, Turkey and Frankfurt, Germany; U.S. Customs and Border Protection (CBP) and U.S. Postal Inspection Services, JFK airport, for their assistance.
The government is represented by Assistant U.S. Attorney Patrick C. Askin of the U.S. Attorney’s Office Criminal Division in Camden.
Palm Beach Tax Preparer Indicted for Tax FraudRead the Press Release
Miami, Florida – A Palm Beach County man appeared on Thursday, April 15, 2021, before Federal Magistrate Judge William Matthewman in West Palm Beach to face an indictment charging him with two counts of filing a false individual tax return for tax years 2014 and 2015; and one count of failing to file an individual tax return for tax year 2016.
According to the indictment, Kasali Opabola, Jr. of Palm Beach County, Florida, managed a tax return preparation organization FTP Tax Solutions, LLC. It is alleged that Opabola, Jr. falsely underreported the total income and gross receipts for FTP Tax Solutions, and that Opabola, Jr. knew that the total income and gross receipts were substantially greater than the reported amount.
If convicted of all counts, Opabola, Jr. faces up to 3 years of imprisonment as to Counts 1 and 2 and up to 1 year as to Count 3.
Juan Antonio Gonzalez, Acting United States Attorney for the Southern District of Florida and Tyler R. Hatcher, Acting Special Agent in Charge, Internal Revenue Service-Criminal Investigation, Miami Field Office made the announcement.
This case is being investigated by IRS-CI Miami. The case is being prosecuted by Assistant United States Attorney Robin Waugh.
An indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov, under case number 21-cr-80042.
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Oklahoma City Man Sentenced to Serve More Than Twenty-Four Years in Federal Prison for Child Sex TraffickingRead the Press Release
OKLAHOMA CITY – Last week, ROLANDO CIFUENTES-LOPEZ, 37, of Oklahoma City, was sentenced to serve more than 24 years in federal prison for child sex trafficking, announced Acting U.S. Attorney Robert J. Troester.
On November 20, 2019, Cifuentes-Lopez was stopped by the Oklahoma City Police Department and arrested by Homeland Security Investigations when it was determined he was undocumented and lacked legal status in the United States. On December 4, 2019, a federal grand jury returned a two-count Indictment against Cifuentes-Lopez, charging him with child sex trafficking of two children, aged 14 and 15. According to court documents, Cifuentes-Lopez recruited, obtained, harbored, and patronized the child victims, knowing they would be caused to engage in commercial sex acts. Cifuentes-Lopez owned the trailer where the two child victims lived and threatened to evict their family if he and other men were not provided with sex. He engaged in this conduct with one child between November 2016 and January 18, 2019, and with the second child between March 2018 and January 18, 2019.
On March 9, 2020, Cifuentes-Lopez pleaded guilty to both counts of child sex trafficking.
On April 16, 2021, U.S. District Judge Charles B. Goodwin sentenced Cifuentes-Lopez to serve 292 months in federal prison, followed by five years of supervised release. In addition, Judge Goodwin ordered Cifuentes-Lopez to pay $10,200 in special assessments and stated that restitution for the victims will be determined at a subsequent hearing. In imposing the sentence, Judge Goodwin noted that Cifuentes-Lopez had exerted undue influence over the children and had engaged in a pattern of prohibited sexual conduct.
Two other defendants in this investigation have already been sentenced, both for sex trafficking of the same children. On October 21, 2020, ERI LEONARDO CIFUENTES-LOPEZ, 42, of Oklahoma City, was sentenced to more than 24 years in prison, followed by five years of supervised release. On February 11, 2021, WILSON GRAMAJO-MALDONADO, 30, of Oklahoma City, was sentenced to 27 years in prison, followed by five year of supervised release. In addition to those terms of incarceration, Judge Goodwin ordered both Eri Cifuentes-Lopez and Gramajo-Maldonado to pay $5,100 in special assessments.
Upon their release from prison, all three men will be required to register as sex offenders.
"Sex trafficking of children is a horrendous crime that preys upon the most vulnerable in our society and steals their innocence," said Acting U.S. Attorney Troester. "Prosecuting those who exploit child victims rescues child victims from the abusive life of sex trafficking and helps them reclaim their lives. I commend the incredible work by the prosecutors, Federal Bureau of Investigation, Homeland Security Investigations, and Oklahoma City Police Department in holding accountable those who sell children for sex."
This case is the result of an investigation by the Federal Bureau of Investigation’s Oklahoma City Field Division, U.S. Homeland Security Investigations, and the Oklahoma City Police Department. Assistant U.S. Attorneys K. McKenzie Anderson and Mary E. Walters prosecuted the case.
This case is part of Project Safe Childhood, a nationwide initiative launched by the Department of Justice to combat child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the Child Exploitation and Obscenity Section of the Department of Justice, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Reference is made to public filings for more information.
Ocean County Man Admits Operating an Illegal Lottery and Filing False Tax ReturnRead the Press Release
NEWARK, N.J. – An Ocean County, New Jersey man today admitted operating an illegal lottery and failing to pay more than $65,000 in federal taxes on his earnings from the scheme, Acting U.S. Attorney Rachael A. Honig announced.
Edward O’Neill, 54, of Beachwood, New Jersey, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to an information charging him with one count of managing an illegal gambling business and one count of subscribing to a false tax return.
According to documents filed in this case and statements made in court:
Between 2014 and 2019, O’Neill managed an illegal lottery in Hudson County that was based on the New Jersey Lottery Commission’s Pick Six. Participants in the illegal lottery paid a $20 entry fee and selected six numbers between 1 and 49. The first participant in the illegal lottery to have all six of their numbers selected in the official Pick Six drawing won a cash prize. For each drawing of the illegal lottery, O’Neill collected entry fees and participants’ numbers and entered the numbers into ledgers, which included identifying information for each participant and the numbers each participant had selected. O’Neill monitored the numbers selected in the official Pick Six and, when there was a winner of the illegal lottery, caused the winning participant to be paid in cash.
According to the ledgers, each drawing of the illegal lottery included up to 8,000 participants and the cash prize for each drawing often exceeded $100,000. In exchange for operating and managing the illegal lottery, O’Neill kept for himself 10 percent of the winnings from each drawing. O’Neill admitted that he failed to account for approximately $250,000 in cash winnings from the illegal lottery on tax returns he filed with the IRS between 2014 and 2018, causing him to underpay his federal incomes taxes by $65,674.
The gambling charge to which O’Neill pleaded guilty carries a maximum penalty of five years in prison, while the subscribing to a false federal income tax return count is punishable by up to three years in prison. Both charges carry a potential fine of $250,000 or twice the gross gain or loss from the offenses, whichever is greater. Sentencing is scheduled for Aug. 25, 2021.
Acting U.S. Attorney Honig credited special agents of the U.S. Attorney’s Office, under the direction of Supervisory Special Agent Thomas Mahoney; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez; and special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Sean Farrell of the U.S. Attorney’s Office’s Special Prosecutions Division.
North Bend Man Arrested and Charged with Sexually Exploiting a Child, Additional Potential Victims SoughtRead the Press Release
PORTLAND, Ore.—Acting U.S. Attorney Scott Erik Asphaug announced today that a North Bend, Oregon, man has been charged with sexually exploiting a minor female victim.
On April 15, 2021, a federal grand jury in Eugene returned a three-count indictment charging Shannon Stacey Weatherbee, 47, with sexual exploitation of children.
According to the indictment, beginning around July 2017, Weatherbee is alleged to have knowingly coerced a minor female to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct. These visual depictions were transmitted online.
On April 16, 2021, investigators arrested Weatherbee while executing a search warrant on his North Bend residence.
Weatherbee made his initial appearance in federal court today before a U.S. Magistrate Judge. He was arraigned, pleaded not guilty, and ordered detained pending a jury trial scheduled to begin on June 22, 2021.
This case is being investigated by the FBI with assistance from the North Bend Police Department. It is being prosecuted by Jeffrey S. Sweet, Assistant U.S. Attorney for the District of Oregon.
Anyone who has information about possible crimes committed by Weatherbee, or the physical or online exploitation of any children, are encouraged to call the FBI at (503) 224-4181 or submit a tip online at tips.fbi.gov.
If a child discloses an incident that did happen to him or her, or that they observed happen to someone else, the parent should not ask the child detailed questions about the incident. Instead, please contact your local law enforcement agency or the FBI immediately.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
An indictment is only an accusation of a crime, and a defendant is presumed innocent unless and until proven guilty.
Member of Narcotics Conspiracy Sentenced to More Than Three Years in Federal PrisonRead the Press Release
Tampa, Florida – U.S. District Judge Mary S. Scriven today sentenced Kris Ralf Salvi (27, Tampa) to three years and four months in federal prison for conspiracy to distribute and possess with the intent to distribute fentanyl.
Salvi had pleaded guilty on January 21, 2021. In September 2020, Salvi and nine others were charged in this case. The remaining cases are pending.
According to court documents, between April 14 and May 27, 2020, Salvi purchased two ounces of fentanyl from one of his co-defendants across a series of four transactions.
This case was investigated by the Drug Enforcement Administration, the United States Postal Inspection Service, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Tampa Police Department, the Florida Highway Patrol, and the Hillsborough County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney Charlie D. Connally.
This investigation is also the result of the Organized Crime Drug Enforcement Task Force (OCDETF) program. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
Massachusetts Eye and Ear Agrees to Pay $2.6 Million to Resolve False Claims Act AllegationsRead the Press Release
BOSTON – Massachusetts Eye and Ear Infirmary, Massachusetts Eye and Ear Associates, Inc., and the Foundation of the Massachusetts Eye and Ear Infirmary, Inc. (collectively “Massachusetts Eye and Ear”) have agreed to pay $2.678 million to resolve allegations that they violated the False Claims Act.
Massachusetts Eye and Ear provides inpatient and outpatient services to patients with a range of ailments involving the eye, ear, nose and throat. Over an eight-year period, Massachusetts Eye and Ear improperly billed federal health care programs for certain office visits, defrauding the United States of more than a million dollars.
“When health care providers submit improper claims to Medicare and Medicaid, they do two bad things: they unjustly enrich themselves, and they drain money needed for legitimate patient care,” said Acting United States Attorney Nathaniel R. Mendell. “This settlement punishes bad billing and helps safeguard government health care programs from fraud, waste and abuse.”
“Our federal healthcare system relies on the basic premise that providers abide by the rules and bill properly, and the American taxpayers who fund the Medicare and Medicaid programs deserve nothing less,” said Phillip Coyne, Special Agent in Charge, Office of the Inspector General of the U.S. Department of Health and Human Services. “Today’s announcement demonstrates our continued and unwavering commitment to rooting out false claims that threaten the integrity of our healthcare system.”
“Mass Eye and Ear received more than a million dollars from fraudulently billing federal healthcare programs over the course of eight years, undermining the integrity of our healthcare system, and increasing the financial burden on hard-working taxpayers,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “We would like to thank the patient who had the courage to come forward with allegations of illegal conduct, and we’d like to encourage others to do the same because standing up for what’s right and safeguarding taxpayer dollars is critical, given that every year, the submission of false claims to the government costs taxpayers billions.”
The United States contends that between Jan. 1, 2012 and Feb. 1, 2020, Massachusetts Eye and Ear regularly submitted claims to Medicare and MassHealth—Massachusetts’s Medicaid program—for office visits at which physicians performed certain medical procedures, specifically, nasal endoscopies and laryngoscopies. Medicare and MassHealth do not permit billing for such office visits in addition to billing for the procedures, except under special circumstances that were not present here. As a result of the illegal conduct, Massachusetts Eye and Ear obtained reimbursements to which it was not entitled.
The False Claims Act settlement resolves allegations originally brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties, known as relators, to bring suit on behalf of the government and to share in any recovery. In connection with today’s announced settlement, the relator will receive 15 percent of the recovery.
Acting U.S. Attorney Mendell, HHS-OIG SAC Coyne and FBI Boston SAC Bonavolonta made the announcement today. Assistant U.S. Attorneys Steven Sharobem and Charles Weinograd of Mendell’s Affirmative Civil Enforcement Unit handled the matter.
Manchester Woman Pleads Guilty to Participating in Drug Trafficking ConspiracyRead the Press Release
CONCORD – Melissa Gazaway, 33, of Manchester, pleaded guilty in federal court to conspiracy to distribute, and possess with intent to distribute, fentanyl and crack cocaine, Acting United States Attorney John J. Farley announced today.
According to court documents and statements made in court, in the spring of 2020, investigators received information from confidential sources that Gazaway and her co-defendants, Jovan and Chrystal Callaghan, were selling crack cocaine and fentanyl from their residence in Manchester. Law enforcement officers learned that Gazaway and Chrystal Callaghan would travel to New York to purchase crack cocaine. On three separate occasions, officers conducted lawful traffic stops of their vehicle returning from New York and seized over 300 grams of crack cocaine. In late 2020, confidential sources conducted six controlled purchases of fentanyl and crack cocaine from the three co-defendants.
On December 24, 2020, investigators executed a search warrant at the residence and seized over one kilogram of fentanyl and a firearm, along with large amounts of cash and drug use and packaging materials.
Jovan and Chrystal Callaghan previously pleaded guilty and are scheduled to be sentenced on July 6, 2021.
Gazaway is scheduled to be sentenced on August 9, 2021.
“Drug trafficking continues to threaten public health and safety in communities throughout New Hampshire,” said Acting U.S. Attorney Farley. “In order to protect the citizens of the Granite State, we are working closely with our law enforcement partners to stop the flow of illegal drugs into New Hampshire. Today’s conviction is another example of our efforts to target the drug dealers who seek to profit from the sale of fentanyl and other dangerous drugs.”
This matter was investigated by the Drug Enforcement Administration, the New Hampshire State Police, the Manchester Police Department, and the Nashua Police Department. The case is being prosecuted by Assistant U.S. Attorney Georgiana L. MacDonald.
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Madison County man charged with making online threats to kill individuals connected with abortion services non-profitRead the Press Release
COLUMBUS, Ohio – A federal grand jury has charged James David Hampton, 40, of London, Ohio, with 10 counts of making online threats to individuals connected with a non-profit organization whose mission is to help people access safe abortions.
According to the indictment, on Aug. 26, 2020, Hampton searched “Abortion Support Network” on Facebook and commented on the ASN page, in part, “we kill scum like you…we follow you…we stalk you…then we kill you” and “there will be no pity when I myself stand over your cowering body as you beg and weep for your own life…just before I cut your throat.”
Hampton allegedly added, “we know where you live..your routines..we kidnap your kind…we torture you for information.”
The indictment details that Hampton allegedly made 10 separate, explicit threats to individuals online.
Hampton appeared in federal court today to be arraigned on the indictment charges.
Transmitting threats in interstate communication is a federal crime punishable by up to five years in prison.
Vipal J. Patel, Acting United States Attorney for the Southern District of Ohio; and Chris Hoffman, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, announced the charges. Assistant Deputy Criminal Chief Jessica W. Knight is representing the United States in this case.
An indictment is merely an allegation, and the defendant is presumed innocent unless proven guilty in a court of law.
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Logan County Man Sentenced to 10 Years in Federal Prison for Drug Trafficking and Illegal Possession of A FirearmRead the Press Release
BOWLING GREEN, KY. – Chief United States District Judge Greg Stivers yesterday sentenced Kenneth S. Embry, age 34, to 120 months’ imprisonment, followed by five years of supervised release, announced Michael A. Bennett, Acting United States Attorney for the Western District of Kentucky. Embry pled guilty to the charges of Possession with the Intent to Distribute Methamphetamine and Possession of a Firearm by a Prohibited Person on February 2, 2021. There is no parole in the federal system.
“I appreciate and commend the outstanding work of the South Central Kentucky Drug Task Force and HSI in this case,” said Acting U.S. Attorney Bennett. “The task force officers and federal agents assigned to the case, working together with AUSA Yurchisin, ensured a successful prosecution which resulted in the removal of a dangerous individual from the Western District of Kentucky.”
In the plea agreement, Embry admitted that on April 2, 2020, he knowingly possessed with the intent to distribute, greater than fifty (50) grams of actual methamphetamine. He also admitted that he knowingly possessed a firearm, identified as a Colt .380 semiautomatic pistol and ammunition, after having previously been convicted of the felony offense of Possession of a Controlled Substance-1st Degree, Second Offense, on or about October 29, 2019, in Logan County Circuit Court.
The case was prosecuted by Assistant United States Attorney Mark J. Yurchisin II of the United States Attorney’s Bowling Green Branch Office. The investigation was conducted by the South Central Kentucky Drug Task Force and Homeland Security Investigations (HSI).
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La Crosse Felon Sentenced to 51 Months for Possessing GunRead the Press Release
MADISON, WIS. – Timothy M. O’Shea, Acting United States Attorney for the Western District of Wisconsin, announced that Martin Curlee, 39, La Crosse, Wisconsin, was sentenced today by Chief U.S. District Judge James Peterson to 51 months in federal prison for being a felon in possession of a firearm. Curlee pleaded guilty to this charge on January 7, 2021.
On October 8, 2020, La Crosse police were called to respond to Curlee walking around with a loaded 9mm pistol in his hand. When contacted by officers, he threw the gun on the ground. Curlee admitted to being a felon and knew that he should not have the gun, but claimed it was for protection. Officers noted that Curlee appeared paranoid and thought that he was going to get shot in the jail.
At sentencing, Judge Peterson said that Curlee had a substantial criminal history and noted that his mental health issues were exacerbated by drug abuse. Judge Peterson found that Curlee posed a danger because he chose to arm himself against imagined threats, therefore protection of the community was the number one goal in the sentence. Because of that, Judge Peterson determined that a longer period of incarceration was appropriate and also imposed the maximum 3-year term of supervised release.
The charge against Curlee was the result of an investigation conducted by the La Crosse Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The prosecution of the case has been handled by Assistant U.S. Attorney Corey Stephan.
This case has been brought as part of Project Safe Neighborhoods (PSN), the U.S. Justice Department’s program to reduce violent crime. The PSN approach emphasizes coordination between state and federal prosecutors and all levels of law enforcement to address gun crime, especially felons illegally possessing firearms and ammunition and violent and drug crimes that involve the use of firearms.
Kansas City Man Sentenced to Prison for Gun and Drug ChargesRead the Press Release
COUNCIL BLUFFS, IA – On April 19, 2021, United States District Court Chief Judge John A. Jarvey sentenced D'Ante Decarl Dirks, age 26, of Kansas City, Missouri, to 132 months in prison for distributing methamphetamine, carrying a firearm in relation to drug trafficking and knowingly in possession of a firearm as a felon announced Acting United States Attorney Richard D. Westphal. Dirks was ordered to serve four years of supervised release to follow his prison term and pay $300 to the Crime Victims’ Fund. There is no parole in the federal system.
On July 7, 2020, the Iowa State Patrol conducted a traffic stop on a car driven by Dirks. As the Trooper attempted to issue a citation, Dirks sped off. In an effort to elude law enforcement, Dirks drove in excess of 100 mph, drove into oncoming traffic, and passed on the shoulder of the highway until he was forced into a ditch in rural Mills County. Dirks ran from the scene and threw a loaded handgun into a nearby cornfield.
A search of the car Dirks was driving located marijuana, synthetic marijuana, powder cocaine and cocaine base (crack cocaine). Further investigation revealed Dirks intended to sell the drugs found in the car. Dirks pleaded guilty on December 4, 2020, to the gun and drug charges.
This investigation was conducted by the Iowa State Patrol, Mills County Sheriff’s Office, and Iowa Division of Narcotics Enforcement. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Iowa Drug Traffickers Sentenced to Federal PrisonRead the Press Release
COUNCIL BLUFFS, IA – On April 19, 2021, United States District Court Chief Judge John A. Jarvey sentenced Jessica Joy Martinez, age 31, of Carroll, to 120 months in prison; Shaun Lee Walker, age 40, of Council Bluffs, to 135 months in prison; and Jonathan Samuel Dings, age 28, of Glidden, to 160 months in prison for Conspiracy to Distribute Methamphetamine announced Acting United States Attorney Richard D. Westphal. Each defendant was ordered to serve five years of supervised release to follow their prison terms and pay $100 to the Crime Victims’ Fund. There is no parole in the federal system.
On January 10, 2020, Carroll County law enforcement served a search warrant on Dings’ residence in Glidden. While conducting the search, law enforcement learned Martinez and Walker planned to supply Dings – that day – with approximately a pound of methamphetamine they obtained from Omaha, Nebraska. Dings was to sell the methamphetamine in Carroll and Audubon Counties. Law enforcement attempted to intercept the load car containing the methamphetamine that was driven by Walker with Martinez as a passenger, in Audubon, which resulted in a pursuit occurring before Walker and Martinez were arrested.
This investigation was conducted by the Carroll County Sheriff’s Office, Audubon County Sheriff’s Office, Audubon Police Department, Iowa State Patrol, Iowa Division of Narcotics Enforcement and the Drug Enforcement Agency. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Houma Man Indicted for Violation of the Federal Gun Control ActRead the Press Release
NEW ORLEANS, LA – JUDE LEBOEUF, age 24, a resident of Houma, with previous felony convictions, was charged on April 16, 2021 in a one-count indictment by a Federal Grand Jury for possessing a firearm and ammunition while being a convicted felon, announced U.S. Attorney Duane A. Evans.
LEBOEUF has 9 previous felony convictions out of Terrebonne Parish, including charges for possession with intent to distribute narcotics and possession of a bomb.
If convicted, LEBOEUF faces a maximum term of imprisonment of ten (10) years, a fine of up to $250,000.00, and up to three (3) years of supervised release following any term of imprisonment.
U.S. Attorney Evans reiterated that an indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
The case was investigated by the Houma Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case is being prosecuted by Assistant U.S. Attorney Mike Trummel.
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Hospital researcher sentenced to prison for conspiring to steal trade secrets, sell to ChinaRead the Press Release
press_release.pdfCOLUMBUS, Ohio – A former Dublin, Ohio man was sentenced to 33 months in prison for conspiring to steal exosome-related trade secrets concerning the research, identification and treatment of a range of pediatric medical conditions.
Yu Zhou, 51, pleaded guilty in December 2020 to stealing scientific trade secrets related to exosomes and exosome isolation from Nationwide Children’s Hospital’s Research Institute for his own personal financial gain. Zhou also conspired to commit wire fraud.
“Yu Zhou sought to exploit U.S. taxpayer dollars intended to fund critical, life-saving research at Nationwide Children’s Hospital through the whole-sale theft of their trade secrets,” said Assistant Attorney General John C. Demers for the Justice Department’s National Security Division. “Zhou’s greed was encouraged and enabled by a series of Chinese Government programs which incentivize thievery in an attempt to supplement China’s own research and development goals on the back of American ingenuity and investment. This successful prosecution should serve as a warning to anyone who seeks to profit from pilfering hard-earned U.S. trade secrets.”
“Yu Zhou willingly took part in the Chinese Government’s long-term efforts to steal American intellectual property,” said Acting U.S. Attorney Vipal J. Patel for the Southern District of Ohio. “Zhou and his wife executed a scheme over the course of several years to set up businesses in China, steal American research, and profit from doing so. The couple deserves the time it received in federal prison.”
According to court documents, Zhou and his co-conspirator and wife, Li Chen, 48, worked in separate medical research labs at the Research Institute for 10 years each (Zhou from 2007 until 2017 and Chen from 2008 until 2018). They pleaded guilty to conspiring to steal at least five trade secrets related to exosome research from Nationwide Children’s Hospital. Chen was sentenced in February to 30 months in prison for her role in the scheme.
Exosomes play a key role in the research, identification and treatment of a range of medical conditions, including necrotizing enterocolitis (a condition found in premature babies), liver fibrosis and liver cancer.
Court documents detail that Zhou and Chen conspired to steal and then monetize one of the trade secrets by creating and selling exosome “isolation kits.” Zhou’s research at Nationwide Children’s included a novel isolation method in which exosomes could be isolated from samples as small as one drop of blood. This method was vital to the research being conducted in Zhou’s lab – because necrotizing enterocolitis is a condition found primarily in premature babies, only small amounts of fluid can safely be taken from them.
Zhou and Chen started a company in China to sell the kits.
The defendants received benefits from the Chinese government, including the State Administration of Foreign Expert Affairs and the National Natural Science Foundation of China. Zhou and Chen were also part of application processes related to multiple Chinese government programs, including talent plans, a method used by China to transfer foreign research and technology to the Chinese government.
As part of their convictions, the couple will forfeit approximately $1.45 million, 500,000 shares of common stock of Avalon GloboCare Corp. and 400 shares of common stock of GenExosome Technologies Inc. They were also ordered to pay $2.6 million in restitution.
Chen and Zhou were arrested in California in July 2019 and their case was unsealed in August 2019 when they appeared in federal court in Columbus.
Acting U.S. Attorney Vipal J. Patel for the Southern District of Ohio; Assistant Attorney General John C. Demers for the National Security Division; and Special Agent in Charge Chris Hoffman of the FBI's Cincinnati Division announced the sentence imposed today by U.S. District Judge Sarah D. Morrison.
National Security Division Trial Attorney Matthew J. McKenzie, Assistant U.S. Attorneys S. Courter Shimeall, Peter K. Glenn-Applegate, and Special Assistant U.S. Attorney J. Michael Marous are representing the United States in this case.
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Hospital Researcher Sentenced to Prison for Conspiring to Steal Trade Secrets and Sell to ChinaRead the Press Release
WASHINGTON – An Ohio man was sentenced yesterday to 33 months in prison for conspiring to steal exosome-related trade secrets concerning the research, identification and treatment of a range of pediatric medical conditions.
Yu Zhou, 51, of Dublin, Ohio, pleaded guilty in December 2020 to stealing scientific trade secrets related to exosomes and exosome isolation from Nationwide Children’s Hospital’s Research Institute for his own personal financial gain. Zhou also conspired to commit wire fraud.
“Yu Zhou sought to exploit U.S. taxpayer dollars intended to fund critical, life-saving research at Nationwide Children’s Hospital through the whole-sale theft of their trade secrets,” said Assistant Attorney General John C. Demers for the Justice Department’s National Security Division. “Zhou’s greed was encouraged and enabled by a series of Chinese Government programs which incentivize thievery in an attempt to supplement China’s own research and development goals on the back of American ingenuity and investment. This successful prosecution should serve as a warning to anyone who seeks to profit from pilfering hard-earned U.S. trade secrets.”
“Yu Zhou willingly took part in the Chinese Government’s long-term efforts to steal American intellectual property,” said Acting U.S. Attorney Vipal J. Patel for the Southern District of Ohio. “Zhou and his wife executed a scheme over the course of several years to set up businesses in China, steal American research, and profit from doing so. The couple deserves the time it received in federal prison.”
According to court documents, Zhou and his co-conspirator and wife, Li Chen, 48, worked in separate medical research labs at the Research Institute for 10 years each (Zhou from 2007 until 2017 and Chen from 2008 until 2018). They pleaded guilty to conspiring to steal at least five trade secrets related to exosome research from Nationwide Children’s Hospital. Chen was sentenced in February to 30 months in prison for her role in the scheme.
Exosomes play a key role in the research, identification and treatment of a range of medical conditions, including necrotizing enterocolitis (a condition found in premature babies), liver fibrosis and liver cancer.
Court documents detail that Zhou and Chen conspired to steal and then monetize one of the trade secrets by creating and selling exosome “isolation kits.” Zhou’s research at Nationwide Children’s included a novel isolation method in which exosomes could be isolated from samples as small as one drop of blood. This method was vital to the research being conducted in Zhou’s lab – because necrotizing enterocolitis is a condition found primarily in premature babies, only small amounts of fluid can safely be taken from them.
Zhou and Chen started a company in China to sell the kits.
The defendants received benefits from the Chinese government, including the State Administration of Foreign Expert Affairs and the National Natural Science Foundation of China. Zhou and Chen were also part of application processes related to multiple Chinese government programs, including talent plans, a method used by China to transfer foreign research and technology to the Chinese government.
As part of their convictions, the couple will forfeit approximately $1.45 million, 500,000 shares of common stock of Avalon GloboCare Corp. and 400 shares of common stock of GenExosome Technologies Inc. They were also ordered to pay $2.6 million in restitution.
Chen and Zhou were arrested in California in July 2019 and their case was unsealed in August 2019 when they appeared in federal court in Columbus.
Acting U.S. Attorney Vipal J. Patel for the Southern District of Ohio; Assistant Attorney General John C. Demers for the National Security Division; and Special Agent in Charge Chris Hoffman of the FBI's Cincinnati Division announced the sentence imposed today by U.S. District Judge Sarah D. Morrison.
National Security Division Trial Attorney Matthew J. McKenzie, Assistant U.S. Attorneys S. Courter Shimeall, Peter K. Glenn-Applegate, and Special Assistant U.S. Attorney J. Michael Marous are representing the United States in this case.
Goldsboro Gang Leader Sentenced to 18 Years in Federal Prison for Crystal Methamphetamine TraffickingRead the Press Release
RALEIGH, N.C. – A Goldsboro man was sentenced today to 216 months in prison for Conspiracy to Distribute and Possess with the Intent to Distribute 50 Grams or More of Methamphetamine and Distribution of 50 Grams or More of Methamphetamine, as well as Aiding and Abetting.
According to court documents, Tierea Demon Atkins, a/k/a “Red Dot,” 24, a local leader of the Bloods gang in Goldsboro, was responsible for the distribution of over 22 kilograms of crystal methamphetamine between May 2018 and February 2020. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) and began by conducting controlled purchases of crystal methamphetamine from individuals supplied by Atkins. Several of the controlled purchases took place at a residence on East Pine Street in Goldsboro, which was a known hub of operations for Atkins’ drug trafficking organization. ATF then arranged for controlled purchases of methamphetamine directly from Atkins and his co-defendants. The investigation revealed that Atkins worked closely with Alexander Rickey Shaw, Jr., a/k/a “Ruger Red,” who was previously sentenced to 204 months’ imprisonment for his role in the methamphetamine trafficking.
The investigation was part of an Organized Crime Drug Enforcement Task Force (OCDETF) Operation, Carolina’s Ice Fall, which targeted large-scale methamphetamine dealers operating in and around Goldsboro. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks. To date, Operation Carolina’s Ice Fall has resulted in the prosecutions of 26 individuals for their role in methamphetamine distribution and other crimes.
G. Norman Acker, III, Acting U.S. Attorney for the Eastern District of North Carolina made the announcement after sentencing by U.S. District Judge James C. Dever III. The ATF, in conjunction with the Goldsboro Police Department, the Drug Enforcement Administration (“DEA”), and the Wayne County Sheriff’s Office, investigated the case and Assistant U.S. Attorney Laura S. Howard prosecuted the case.
Related court documents and information can be found on the website of the U.S. District Court for the Eastern District of North Carolina or on PACER by searching for Case No. 5:19-CR-355-D.
Four Philadelphians Charged with Sex Trafficking of MinorsRead the Press Release
PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that John Adams, 41, Mercedes Hampton-Devero, 28, Malachai Kendall, 20, and Chukuw Ossai, 31, all of Philadelphia, PA, were arrested and charged in two separate Indictments with sex trafficking of minors. Kendall was also charged with both production and distribution of child pornography, and Adams was also charged with tampering with evidence in a federal investigation.
According to publicly filed court documents, Adams, whose self-professed nickname was “Captain Save-A-Hoe,” along with co-defendants Hampton-Devero and Kendall, trafficked two minors during approximately three weeks in January of 2020 from multiple locations in Philadelphia. The defendants allegedly used their cell phones to post advertisements of the victims on a website which is known to be used for advertising sexual services for a fee, directed the minors to participate in commercial sex acts, and took a portion of the proceeds on each occasion. During this time, Kendall also allegedly used his cell phone to record one of the minors performing oral sex on him and then sent the video to the minor victim. Also according to court documents, Adams and Kendall each coerced the minors into having sex with them on multiple occasions, and Hampton-Devero instructed one of the minor victims to record commercial sex acts on her cell phone for Devero to post online to attract more sex buyers. When the minors were rescued and Adams learned he was under investigation by the FBI, he allegedly wiped his cell phone clean of all incriminating evidence.
In a separate Indictment, Ossai is charged with the sex trafficking of a minor in late January 2020. According to public filings, Ossai trafficked one minor, took her to a lingerie store where he picked out lingerie for her, posted an advertisement of her on a website used to advertise sexual services for a fee, and harbored her in a hotel room in Lester, PA. As charged, Ossai drove the minor victim to a housing project in Philadelphia for her to engage in a commercial sex act, and he attempted to have sex with her himself. The minor was rescued from Ossai’s vehicle after he was pulled over in Tinicum Township.
“The crimes alleged in these Indictments will have a devastating and long-lasting impact on these minor victims,” said Acting U.S. Attorney Williams. “We will continue to work collectively with our law enforcement partners to investigate and prosecute these destructive crimes against vulnerable children.”
If convicted, each defendant faces a maximum possible sentence of life imprisonment.
These cases were investigated by the Federal Bureau of Investigation, with assistance from the Tinicum Township Police Department and the Philadelphia Police Department, and are being prosecuted by Assistant United States Attorney Erica Kivitz.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former Supervisory U.S. Border Patrol Agent sentenced to 15 years in federal prison for production of child pornographyRead the Press Release
ALBUQUERQUE, N.M. – Jason Christopher Davis, 48, of Las Cruces, New Mexico, was sentenced in federal court on April 7 to 15 years in prison for production of child pornography. Davis pleaded guilty on Oct. 3, 2018.
According to Davis’ guilty plea and other court records, on May 17, 2015, Davis produced a pornographic video of a five-year-old child and uploaded the video onto his laptop computer. At the time of the offense, Davis was employed as a Supervisory U.S. Border Patrol Agent.
Upon his release from prison, Davis will be subject to 20 years of supervised release and will be required to register as a sex offender.
The Las Cruces office of Homeland Security Investigations, the Office of Inspector General of the U.S. Department of Homeland Security, and the Las Cruces Police Department investigated this case with assistance from the Office of Professional Responsibility of the U.S. Customs and Border Protection, the Management Inquiry Team of the U.S. Border Patrol, the FBI, and the New Mexico Attorney General’s Office.
Assistant U.S. Attorney Marisa A. Ong prosecuted the case as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice (DOJ) to combat sexual exploitation and abuse. Led by United States Attorneys’ Offices and DOJ’s Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For information about Project Safe Childhood, please visit justice.gov/psc. Individuals with information relating to suspected child predators and suspected child abuse are encouraged to contact the Children’s Advocacy Center at (575) 526-3437 or Homeland Security Investigations at 1-866-DHS-2-ICE.
The case also was brought as a part of the New Mexico Internet Crimes Against Children (ICAC) Task Force’s mission, which is to locate, track, and capture Internet child sexual predators and Internet child pornographers in New Mexico. There are 86 federal, state and local law enforcement agencies associated with the New Mexico ICAC Task Force, which is funded by a grant administered by the New Mexico Attorney General’s Office. Anyone with information relating to suspected child predators and suspected child abuse is encouraged to contact federal or local law enforcement.
Former Inmate Admits Role in Scheme to use Drones to Smuggle Contraband into Fort Dix Federal PrisonRead the Press Release
NEWARK, N.J. – A Hudson County, New Jersey, man today admitted participating in a conspiracy to use drones to smuggle contraband, including cell phones and tobacco, into the federal correctional facility at Fort Dix, and to possessing heroin and fentanyl with the intent to distribute, Acting U.S. Attorney Rachael A. Honig announced.
Jason Arteaga-Loayza, aka “Juice,” 30, of Jersey City, New Jersey, a former inmate at Fort Dix, pleaded guilty by videoconference before U.S. District Judge Susan D. Wigenton to one count of conspiracy to defraud the U.S. Bureau of Prisons and one count of possession of heroin and fentanyl with the intent to distribute. Arteaga-Loayza, who was on federal supervised release at the time of the offenses, also pleaded guilty to violating the terms of his supervised release.
Three other men, Adrian Goolcharran, aka “Adrian Ahoda,” aka “Adrian Ajoda,” aka “Adrian Ajodha;” Nicolo Denichilo; and Johansel Moronta also have been charged with participating in the scheme to use drones to smuggle contraband into Fort Dix prison.
According to the documents filed in this case:
Arteaga-Loayza, an inmate at Fort Dix from June 2017 to September 2018, participated in multiple drone deliveries of contraband into Fort Dix after his release from prison. Between October 2018 and June 2019, Arteaga-Loayza arranged for Goolcharran, with Denichilo’s assistance, to fly drones over Fort Dix and drop packages of contraband into the prison, where it was sold to inmates for a profit. The packages that Arteaga-Loayza smuggled in included cell phones, cell phone accessories, tobacco, weight loss supplements, eyeglasses, and various other items. Arteaga-Loayza, with Moronta’s assistance inside of the prison, took inmate requests for specific items of contraband and oversaw the collection of payments. Arteaga-Loayza also collected contraband for upcoming drone drops and stored it at his residence in Jersey City.
Arteaga-Loayza and his conspirators took various steps to prevent BOP officials from detecting and intercepting the contraband. They planned drone drops during the late evening hours or overnight when the drones were less likely to be seen. Goolcharran, the drone pilot, with Denichilo’s assistance, flew the drones from concealed positions in the woods surrounding the prison. The lights on the drones were covered with tape to make it more difficult for prison officials to spot the drones.
Arteaga-Loayza and his conspirators used cell phones, including contraband phones concealed within the prison, to coordinate the drone drops. A contraband cell phone used by Moronta, who was an inmate at Fort Dix, contained text messages with Arteaga-Loayza about the collection of profits from the sale of the contraband inside of the prison. In one exchange, Moronta messaged Arteaga-Loayza about an inmate, “Ok so I am tell him 10 phones and 100 baco [i.e. tobacco] he has to pay 10 bands and 500 on each phone?” Arteaga-Loayza responded, “And well even give him an ounce of weed tell him.” One of Arteaga-Loayza’s cell phones contained messages between him and Goolcharran coordinating drone drops. For example, in April 2019, Arteaga-Loayza sent Goolcharran marked-up aerial photos of Fort Dix to show Goolcharran where to drop the contraband. In another exchange, Arteaga-Loayza sent Goolcharran a message asking, “U think that u cud do something 2m.” Goolcharran replied, “2m too windy 20mph.”
During a search of Arteaga-Loayza’s residence on June 27, 2019, agents found a kitchen closet containing packages of empty cell phone boxes, including a package with empty cell phone boxes that had been shipped to Arteaga-Loayza the day before a drone drop on Oct. 30, 2018, cell phone chargers, empty boxes of SIM cards, and several cell phones. The kitchen closet also contained a Bugler tobacco box, consistent with the tobacco recovered in earlier drone drops. Arteaga-Loayza also had a suitcase in his bedroom that contained his driver’s license, 20 packets of Suboxone Sublingual Film, a prescription opiate, and a plastic bag containing over 21 grams of a substance containing heroin and fentanyl. Following the search of his home, Arteaga-Loayza moved and did not inform his probation officer of his whereabouts.
Arteaga-Loayza faces a maximum penalty of five years in prison and maximum fine of $250,000 for the conspiracy count, and 20 years in prison and a $1 million fine for the narcotics count. Arteaga-Loayza also faces a maximum penalty of two years in prison for violating the terms of his supervised release. Sentencing is scheduled for Sept. 9, 2021.
Acting U.S. Attorney Honig credited agents of the U.S. Department of Justice Office of the Inspector General, Cyber Investigations Office, under the direction of Special Agent in Charge Keith A. Bonanno; Detachment 307, Office of Special Investigations, Department of the Air Force, under the direction of Special Agent Nick Kaplan; and the U.S. Department of Transportation Office of Inspector General, Northeast Region, under the direction of Acting Special Agent in Charge Daniel Helzner, with the investigation leading to the charges.
She also thanked Federal Bureau of Prisons personnel at Fort Dix, under the direction of Warden Lamine N’Diaye; special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; special agents of the U.S. Attorney’s Office, under the direction of Supervisory Special Agent Thomas J. Mahoney; and officers with the Pemberton Borough Police Department, under the direction of Chief Edward Hunter; Pemberton Township Police Department, under the direction of Chief David King; and Chesterfield Township Police Department, under the direction of Chief Kyle Wilson, for their assistance.
The government is represented by Assistant U.S. Attorneys Cari Fais and Jeffrey J. Manis of the Office’s Special Prosecutions Division in Newark.
The charges and allegations contained in the criminal complaints issued against the remaining defendants are merely accusations, and they are presumed innocent unless and until proven guilty.
Five Defendants Involved in SWGA Meth Trafficking Wiretap Case Plead GuiltyRead the Press Release
ALBANY, Ga.– Five defendants involved in the distribution of up to 13 kilograms of methamphetamine in southwest Georgia have pleaded guilty to their crimes in federal court, said Peter D. Leary, the Acting U.S. Attorney for the Middle District of Georgia.
On Monday, April 19, Xavier Jordan, 32, of Cairo, Georgia, pleaded guilty to possession with intent to distribute methamphetamine. Tobias Sanders, 31, of Cairo, Georgia, pleaded guilty to pleaded guilty to one count conspiracy to possess with intent to distribute methamphetamine. On Thursday, April 15, R. Kevin Barrineau, 47, of Cairo, Georgia, pleaded guilty to one count conspiracy to possess with intent to distribute controlled substances. Joseph “Bae Bae” Jones, 31, of Cairo, Georgia, pleaded guilty to one count conspiracy to possess with intent to distribute controlled substances. On July 7, 2020, Phil Grim, 44, of Cairo, pleaded guilty to one count conspiracy to possess with intent to distribute controlled substances. All defendants entered their pleas before U.S. District Judge Leslie Gardner. All five defendants face a mandatory minimum of ten years to a maximum of life imprisonment to be followed by a minimum of five years of supervised release and a $10,000,000 fine. There is no parole in the federal system.
“Drug traffickers who distribute large quantities of methamphetamine in the Middle District of Georgia face steep federal prison sentences,” said Acting U.S. Attorney Leary. “I want to commend the GBI for conducting this significant investigation into methamphetamine trafficking in southwest Georgia and working to protect our communities from this poison.”
“The pleas of these defendants are the direct result of the effective partnership between our local, state and federal agencies. We will work tirelessly together to hold accountable drug dealers supplying our neighborhoods with poison. The GBI is dedicated to thoroughly investigating these crimes to lead to successful prosecution,” said GBI Director Vic Reynolds.
GBI agents conducted a wiretap investigation into the drug distribution activities of Jones, beginning in March 2019. The investigation revealed that Jones and his co-defendants were engaged in the distribution of methamphetamine in southwest Georgia. According to Jones’ signed plea agreement, the investigation into his methamphetamine distribution activities began when a police report was filed on December 13, 2017, with the Cairo Police Department about the kidnapping of Jones, Sanders and another individual. From that investigation, and subsequent video and undercover surveillance of Jones and co-defendants, law enforcement learned that Jones was a major methamphetamine supplier operating in Cairo.
Jones was taken into custody following a search of his residence on Alison Drive in Cairo on June 12, 2019. Inside the home, agents found a quantity of methamphetamine floating in the toilet and in the sewage line, $13,323 in cash, two handguns, digital scales and 16 cellular phones. In addition, written ledgers describing various transactions amounting to the distribution of 13 kilograms of methamphetamine were discovered in Jones’ vehicle. Co-defendant Jordan, acting under Jones’ direction as a courier and under surveillance, was arrested in possession of 1,850 grams of 98% pure methamphetamine on May 5, 2019. Co-defendant Grim was captured under surveillance purchasing quantities of methamphetamine from Jones and admitted in his signed plea agreement to seeing four to five pounds of methamphetamine during one encounter with Jones at his Alison Drive residence. Co-defendant Sanders was taken into custody following a June 12, 2019 search of his Marshall Street, Thomasville, Georgia, residence where agents found a quantity of methamphetamine, digital scales, two handguns and $1,923 in cash. In addition, Sanders was listed as a recipient of methamphetamine in Jones’ ledger book. Co-defendant Barrineau was intercepted in wiretaps purchasing quantities of methamphetamine from Jones.
The case was investigated by GBI. Assistant U.S. Attorney Leah E. McEwen prosecuted the case for the Government. Questions can be directed to Pamela Lightsey, Public Information Officer, United States Attorney’s Office, at (478) 621-2603 or Melissa Hodges, Public Affairs Director (Contractor), United States Attorney’s Office, at (478) 765-2362.
First Engineer of International Commercial Cargo Tanker Convicted of Falsifying Records and Obstructing Justice in Scheme to Dump Oily Bilge in International WatersRead the Press Release
OAKLAND – A federal jury convicted Gilbert Fajardo Dela Cruz of aiding and abetting an environmental crime and obstruction of justice in connection with the intentional dumping in February of 2019 of oily bilge water from a commercial tanker, announced Acting United States Attorney Stephanie M. Hinds and U.S. Coast Guard Investigative Service Special Agent in Charge Kelly S. Hoyle. The verdict follows a two-week trial before the Honorable Jon S. Tigar, U.S. District Judge.
“The crew members of the Zao Galaxy dumped oily bilge water into the ocean and then tried to cover up the environmental damage by submitting bogus paperwork to the United States Coast Guard," said Acting U.S. Attorney Hinds. "As First Assistant Engineer of an ocean-going commercial tankship, Gilbert Dela Cruz was charged with ensuring the crew would follow the rules, not try to circumvent them. This verdict will serve as a reminder that there are stiff penalties for those who try to violate federal and international rules designed to protect our precious natural resources from polluters.”
In January of 2019, Dela Cruz, 38, a Philippine national, was the First Engineer of the M/T Zao Galaxy (Zao Galaxy), a 16,408 gross-ton, ocean-going oil tankship when it traveled from the Philippines to Richmond, Calif. The Zao Galaxy was operated by Dela Cruz’s employer, Unix Line PTE Ltd. (Unix), a Singapore-domiciled company. The Zao Galaxy, like all such large oil tanker vessels, generates “oily bilge water” when traveling. Typically, oily bilge water is collected, stored, and processed to separate the water from the oil and other wastes using a pollution prevention control device known as an Oil Water Separator and an oil-sensing device known as an Oil Content Meter. Only after passing through an Oily Water Separator that limits the amount of oil in water may oily bilge water be discharged overboard.
On February 11, 2019, United States Coast Guard examiners boarded the Zao Galaxy while it was moored in Richmond to conduct an examination. During the examination, a crewmember passed a note to an examiner requesting a meeting after the inspection so that the crewmember could “tell something” about a “magic pipe” and “damage [to the] marine environment.” After the inspection and a follow-up investigation, Unix ultimately admitted that a ship officer directed crew members to discharge oily bilge water overboard, using a configuration of drums, flexible pipes, and flanges to bypass the vessel’s oil water separator. On February 26, 2020, the company admitted the discharges were done knowingly and that they were not recorded in the Zao Galaxy’s oil record book when it was presented to the U.S. Coast Guard during the vessel’s inspection. Unix pleaded guilty to one count of violating the Act to Prevent Pollution from Ships. On March 20, 2020, Judge Tigar sentenced Unix to pay a fine of $1,650,000.00, placed Unix on probation for a period of four years, and ordered the company to implement a comprehensive Environmental Compliance Plan as a special condition of probation.
Notwithstanding these admissions, Dela Cruz denied responsibility for the environmental crimes and went to trial. In finding Dela Cruz guilty, the jury concluded Dela Cruz aided and abetted a violation of the Act to Prevent Pollution from Ships by causing the captain of the Zao Galaxy to maintain an inaccurate oil record book and that he also committed obstruction of justice.According to the evidence presented at trial, in preparation for a Coast Guard inspection in Richmond, California, Dela Cruz ordered a lower level employee who worked as his assistant to dump oily waste from the ship’s engine room directly into the ocean using a “magic pipe.” Dela Cruz then worked to conceal the dumping by not recording the movement or discharge of oily waste in the ship’s oil record book, which he was responsible for. Dela Cruz ordered that certain pieces of equipment be repainted and the “magic pipe” be hidden to avoid Coast Guard detection. During the Coast Guard’s inspection, Dela Cruz told his assistant who had dumped the oily waste overboard not to throw him “under the bus” and that they needed to get their stories straight for the Coast Guard.
A federal grand jury indicted Dela Cruz on October 24, 2019, charging him with one count of violating the Act to Prevent Pollution from Ships, in violation of 33 U.S.C. § 1908(a); one count of obstruction of justice, in violation of 18 U.S.C § 1519, and one count of obstruction of an agency proceeding, in violation of 18 U.S.C. § 1505. The jury found Dela Cruz guilty of all three counts. Dela Cruz faces a maximum of six years’ imprisonment and $250,000 for and three years of supervised release for the pollution count, 20 years’ imprisonment and $250,000 for the obstruction of justice count, and five years of imprisonment and $250,000 for the obstruction of the agency proceedings count. The court may also order an additional term of supervised release, restitution, and fines; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Judge Tigar ordered Dela Cruz released on bond pending sentencing and scheduled the sentencing for June 11, 2021, at 9:30 a.m.
Assistant U.S. Attorneys Katherine Lloyd-Lovett and Noah Stern are prosecuting the case with assistance from Kay Konopaske. The prosecution is the result of an investigation by the United States Coast Guard Sector San Francisco and the Coast Guard Investigative Service.
Fintech CEO Pleads Guilty to Multiple Fraud Schemes, Including $7 Million COVID-19 Pandemic Loan Fraud and Securities FraudRead the Press Release
Audrey Strauss, United States Attorney for the Southern District of New York, announced today that SHENG-WEN CHENG, a/k/a “Justin Cheng,” a/k/a “Justin Jung,” pled guilty to major fraud against the United States, bank fraud, securities fraud, and wire fraud in connection with multiple fraud schemes he perpetrated. Specifically, CHENG engaged in a scheme to fraudulently obtain over $7 million in Government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic. CHENG also solicited and obtained investments in Alchemy Coin Technology Limited and related companies controlled by CHENG through materially false and misleading statements and omissions. Finally, CHENG fraudulently obtained due diligence fees from various start-up companies as part of an advance fee scheme. CHENG pled guilty today before U.S. District Judge Alison J. Nathan and is scheduled to be sentenced on August 3, 2021, at 3:00 p.m.
U.S. Attorney Audrey Strauss said: “As he admitted, Sheng-Wen Cheng fraudulently applied for over $7 million in government-guaranteed loans under programs designed to provide relief for small businesses financially struggling in the COVID pandemic. Cheng lied to the SBA and several banks about ownership of his companies, the number of people employed, and how any loan proceeds would be applied, using forged and fraudulent documents in the process. Cheng spent much of the money on personal luxury items. In addition, Cheng committed securities fraud by lying to investors in his blockchain-based peer-to-peer lending platform, and wire fraud by engaging in an advance fee scheme. Now Cheng awaits sentencing for his multitude of crimes.”
According to the Complaint, Information, and other documents filed in Manhattan federal court:
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of hundreds of billions of dollars in forgivable loans to small businesses for job retention and certain other expenses through the SBA’s Paycheck Protection Program (“PPP”). Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and their average payroll costs. The CARES Act also expanded the separate Economic Injury Disaster Loan (“EIDL”) Program, which provided small businesses with low-interest loans that can provide vital economic support to help overcome the temporary loss of revenue they are experiencing due to COVID-19.
CHENG, a Taiwanese national who entered the United States on a student visa, is a self-proclaimed “serial entrepreneur” who earned a Bachelor’s Degree from Pennsylvania State University (“Penn State”). From at least in or about April 2020 through at least on or about August 13, 2020, CHENG used the identity of other individuals to submit online applications to the SBA and at least five financial institutions for a total of over $7 million in government-guaranteed loans through the SBA’s PPP and EIDL Program for several companies controlled by CHENG, namely Alchemy Finance, Inc., Alchemy Guarantor LLC d/b/a “Celer Offer,” Celeri Network, Inc., Celeri Treasury LLC, and Wynston York LLC (collectively, the “Cheng Companies”). In connection with these loan applications, CHENG represented, among other things, that other individuals were the sole owners of the Cheng Companies and that the Cheng Companies together had over 200 employees and paid a total of approximately $1.5 million in wages to those employees on a monthly basis. In fact, however, the Cheng Companies appear to have had a total of no more than 14 employees.
In order to support the false representations in the loan applications about the number of employees at and the wages paid by the Cheng Companies, CHENG submitted fraudulent and doctored tax records that were never actually filed with the IRS and payroll records containing the forged electronic signature of a payroll company employee. CHENG also submitted a payroll summary for one of his companies that listed the names of more than 90 purported employees, several of whom are current or former athletes, artists, actors, or public figures. For example, the list of purported employee names included a co-anchor on “Good Morning America,” a former National Football League player, and a prominent former Penn State football coach who is now deceased.
Based on the fraudulent PPP loan applications submitted by CHENG, a total of more than $3.7 million in PPP loans were approved for the Cheng Companies and approximately $2.8 million in PPP loan proceeds were deposited into bank accounts solely controlled by CHENG. Instead of using the PPP loan proceeds for payroll costs, mortgage interest, rent, and/or utilities for the purported Cheng Companies as required by the PPP, CHENG transferred over $1 million abroad, withdrew approximately $360,000 in cash and/or cashier’s checks, and spent at least approximately $279,000 in PPP loan proceeds on personal expenses. These personal expenses included the purchase of an 18-carat gold Rolex watch for approximately $40,000, rent and move-in fees for a $17,000 per month luxury condominium used by CHENG, approximately $50,000 of furnishings for the condominium, a portion of the purchase of a 2020 S560X4 Mercedes, and purchases totaling approximately $37,000 at Louis Vuitton, Chanel, Burberry, Gucci, Christian Louboutin, and Yves Saint Laurent.
In addition to the COVID-19 pandemic loan fraud described above, from at least in or about 2017 through at least in or about 2019, CHENG committed securities fraud by soliciting and obtaining investments in Alchemy Coin Technology Limited and related companies (“Alchemy Coin”) controlled by CHENG. These investments were obtained through materially false and misleading statements and omissions regarding Alchemy Coin’s access to capital, use of investor proceeds, the product readiness of its purported blockchain-based peer-to-peer lending platform, and the registration of its tokens as part of an initial coin offering.
Finally, from at least in or about 2018 through at least in or about 2019, CHENG committed wire fraud by fraudulently obtaining due diligence fees from various start-up companies as part of an advance fee scheme through materially false and misleading statements regarding the purpose and refundability of the fees and his interest and ability to make investments in the start-up companies.
* * *
CHENG, 24 of New York, New York, pled guilty to one count of bank fraud, which carries a maximum sentence of 30 years in prison; one count of securities fraud and one count of wire fraud, which each carry a maximum sentence of 20 years in prison; and one count of major fraud against the United States, which carries a maximum sentence of 10 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Ms. Strauss praised the investigative work of the Federal Bureau of Investigation, the Office of the Inspector General of the U.S. Small Business Administration, and the Internal Revenue Service Criminal Investigation. Ms. Strauss also thanked the United States Securities and Exchange Commission, U.S. Customs and Border Protection, and the New York State Department of Labor for their assistance.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Sagar K. Ravi is in charge of the prosecution.
Eastern District of Texas Commemorates the 40th Anniversary of National Crime Victims’ Rights WeekRead the Press Release
BEAUMONT, Texas – The U.S. Attorney’s Office for the Eastern District of Texas joins communities nationwide in commemorating the 40th anniversary of National Crime Victims’ Rights Week (NCVRW) from April 18–24, 2021. This year’s theme, Support Victims. Build Trust. Engage Communities, emphasizes the importance of leveraging community support to help victims of crime.
“The faces of crime victims are those of our families, friends, neighbors, and community members,” said Acting U.S. Attorney Nicholas J. Ganjei. “The Eastern District of Texas is committed to upholding victims’ rights as we work to protect the safety of our communities and pursue equal justice under the law. Now is the time to redouble our efforts so that fewer Americans become victims of crime.”
NCVRW is a time to renew a commitment to serving victims of crime, acknowledge achievements made in the victim services field, and remember crime victims and survivors. For more information about this year’s NCVRW and how to assist victims in your community, please visit the NCVRW website (https://ovc.ojp.gov/program/national-crime-victims-rights-week/overview).
The Justice Department’s Office for Victims of Crime (OVC) leads communities throughout the country in their annual observances of NCVRW, during which victim advocacy organizations, community groups, and state, local, and tribal agencies traditionally host rallies, candlelight vigils, and other events to raise awareness of victims’ rights and services. For additional information about visit OVC’s efforts, please visit www.ovc.ojp.gov.
Dominican National Arrested for Fentanyl TraffickingRead the Press Release
BOSTON – A Dominican national was arrested yesterday on charges of fentanyl trafficking.
Junior Baez Sanchez, 28, was indicted on two counts of distributing more than 40 grams of fentanyl. He was detained following an initial appearance today before U.S. Magistrate Judge Jennifer C. Boal pending a detention hearing scheduled for April 26, 2021.
According to the indictment, Baez Sanchez distributed more than 40 grams of fentanyl in Chelsea on June 2, 2020 and in Malden on July 15, 2020.
The charge of distributing more than 40 grams of fentanyl provides for a mandatory minimum sentence of five years and up to 40 years in prison, a minimum of four years and up to a lifetime of supervised release and a fine of up to $5 million. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
Acting United States Attorney Nathaniel R. Mendell; Kelly D. Brady, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; and William S. Walker, Acting Special Agent in Charge of Homeland Security Investigations in Boston made the announcement today. Special assistance was provided by the Middlesex County Sheriff’s Office and Massachusetts State Police. Assistant U.S. Attorney Charles Dell’Anno of Mendell’s Major Crimes Unit is prosecuting the case.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Department of Justice Commemorates National Crime Victims’ Rights WeekRead the Press Release
CEDAR RAPIDS, IA – The Department of Justice’s Office for Victims of Crime (“OVC”) and the United States Attorney Offices for the Northern and Southern Districts of Iowa will join communities nationwide in observing National Crime Victims’ Rights Week and celebrating victims’ rights, protections and services. This year’s observance takes place April 18-24 and is the 40th anniversary of National Crime Victims’ Rights Week.
OVC leads communities throughout the country in their annual observances of NCVRW by promoting victims’ rights and honoring crime victims and those who advocate on their behalf. This year’s theme - Support Victims. Build Trust. Engage Communities. - celebrates the contributions that we all can make toward building trust in our community’s capacity to support the healing journeys of crime victims. Trust is collective as well as individual, so we are honoring both the individual victims in our community and the groups engaged in building networks of understanding and support.
In Iowa, Acting United States Attorneys Sean Berry and Richard Westphal announced winners for five awards based on their service to victims in Iowa. In the Northern District of Iowa, the following award was announced:
- The Award for Excellence in Victim Services is presented to Cinnamon Mawdsley from the Kossuth County Attorney’s office. Ms. Mawdsley has worked as the Kossuth County Victim/Witness Coordinator for seventeen years. She has demonstrated a passion for assisting crime victims and survivors through the criminal justice process. Ms. Mawdsley also provides victim assistance training to her colleagues. Ms. Mawdsley’s great work has been recognized by the victims she supports, her co-workers in the Kossuth County Attorney’s Office, and law enforcement organizations and other allied professionals.
“For nearly two decades, Cinnamon Mawdsley has dedicated countless hours to serving crime victims and survivors,” said Acting United States Attorney Berry. “In doing so, she has set a high standard for assisting victims during a difficult process. Her work has impacted hundreds of victims, law enforcement officers, and community members.”
In the Southern District of Iowa, the following awards were announced:
- The Law Enforcement Victim Services Award is presented to
-Investigator Brady Carney of the Des Moines Police Department,
Investigator Carney’s tireless work to help multiple victims in a large-scale sex trafficking investigation was critical to supporting federal charges. His relentless efforts have not only provided evidence to support prosecution, but also invaluable assistance to victims from all over the country.
-Investigator Michael Sieren of the Ottumwa Police Department, Throughout his career, Investigator Sieren’s fierce dedication to holding violent offenders accountable was outmatched only by his unwavering concern for protecting victim’s safety. The Ottumwa community is a safer, better place as the result of Investigator Sieren’s perseverance and compassion.
-Detective Erin Costanzo of the Des Moines Police Department, As a member of the DART (Domestic Abuse Resource Team) at the Des Moines Police Department since 2006, Detective Costanzo is on the front lines of domestic abuses cases. She has regularly provided follow up investigation for state criminal prosecutions, while at the same time providing valuable access to resources and support for victims. Because of her commitment, countless victims have found a lifeline to safer and happier lives.
- The award for Excellence in Victim Services is awarded to Nicole Norton/Victim Witness Coordinator at the Story County Attorney’s Office. In their time of need, Nicole Norton has selflessly provided vital assistance to Story County victims, specifically victims of violent crime and sexual abuse. Her empathy, compassion, and willingness to go the extra mile has clearly made a difference in countless victims’ lives, and the successful prosecution of the involved criminal offenders.
“These awards proudly recognize the exceptional efforts of four individuals providing assistance to federal and state victims in the Southern District of Iowa,” said Acting United States Attorney Westphal. “Advocacy for the rights and safety of victims is a cogent reminder of the long-term human impact of these crimes. The service of these four individuals, and other state and federal victim advocates, are a vital component of our criminal justice system.”
Ronald Reagan proclaimed the first Victims’ Rights Week in 1981, putting crime victims' rights, needs, and concerns in a prominent spot on the American agenda. He also established the President's Task Force on Victims of Crime, which laid the groundwork for a national network of services and legal safeguards for crime victims.
For more information on how to create your own public campaigns to raise awareness about crime victims’ rights online and at events throughout the year, please visit: https://www.ovc.ojp.gov/
Davenport Man Sentenced to Federal Prison for Firearm ChargeRead the Press Release
DAVENPORT, Iowa — On Monday, April 19, 2021, United States District Court Judge Stephanie M. Rose sentenced Detavion Marques Levi, age 24, of Davenport, to 52 months in prison for Felon in Possession of Firearm announced Acting United States Attorney Richard D. Westphal. Levi was ordered to serve three years of supervised release to follow his prison term as well as pay $100 to the Crime Victims’ Fund.
The investigation of Levi began in June 2020 when law enforcement officials executed a search warrant on a hotel room related to a stolen vehicle. Upon search of the room, officers located Levi, a previously convicted felon, another individual, marijuana, keys to the stolen car, and a loaded firearm. Levi initially denied possessing the firearm, but then claimed he briefly handled the gun before police arrived. Levi’s fingerprint was subsequently found on the loaded magazine of the firearm. Officers located additional evidence that Levi had been dealing marijuana and been in possession of other firearms. Levi was under federal supervision for a prior gun conviction at the time of this offense.
This matter was investigated by the Bettendorf Police Department, the Davenport Police Department, and the Iowa Division of Criminal Investigations. This case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
DEA Announces April 24, 2021 Prescription Drug Take Back DayRead the Press Release
Acting United States Attorney Ellison C. Travis announces support of DEA’s 11th Annual Prescription Drug Take Back Day to be held on April 24, 2021. The National Prescription Drug Take Back Day is a bi-annual event that aims to provide a safe, convenient, and responsible means of disposing of prescription drugs, while also educating the general public about the potential for abuse of medications. This service is free and anonymous, no questions asked.
Per new, official CDC numbers, opioid overdose deaths have increased during the pandemic (May 2019-May 2020). Rates of prescription drug abuse in the United States are alarmingly high, as are the number of accidental poisonings and overdoses due to these drugs. Studies show that a majority of abused prescription drugs are obtained from family and friends, including from the home medicine cabinet.
DEA and its partners will collect tablets, capsules, patches, and other solid forms. Liquids, including intravenous solutions, syringes and other sharps, and illegal drugs will not be accepted. DEA will continue to accept vaping devices and cartridges at any of its drop off locations, as long as the lithium batteries are removed.
In addition to DEA’s National Prescription Drug Take Back Day, prescription drugs can be disposed of at any of the 11,000 authorized collectors at any time throughout the year. For more information, visit: https://apps2.deadiversion.usdoj.gov/pubdispsearch/spring/main?execution=e1s1.
Participating in the next DEA Take Back Day on Saturday, April 24, simply means cleaning out your medicine cabinet or anywhere you keep unused, unwanted or expired medications and dropping them off at your nearest collection site. You can learn more about the event and find a collection site at takebackday.dea.gov or call 800-882-9539.
DEA Announces 20th National Prescription Drug Take Back DayRead the Press Release
BIRMINGHAM, Ala. – United States Attorney Prim F. Escalona announces support of DEA’s 20th National Prescription Drug Take Back Day to be held on April 24, 2021. Take Back Day is a bi-annual event that aims to provide a safe, convenient, and responsible means of disposing of prescription drugs, while also educating the public about the potential for abuse of medications.
DEA’s October 2020 Take Back Day brought in a record-high amount of expired, unused prescription medications, with the public turning in close to 500 tons of unwanted drugs. Over the 10-year span of Take Back Day, DEA has brought in more than 6,800 tons of prescription drugs.
According to the Centers for Disease Control and Prevention, the U.S. has seen an increase in overdose deaths during the COVID-19 pandemic, with 87,200 Americans dying as a result of a drug overdose in a one-year period (Sept. 1, 2019 to Sept. 1, 2020), the most ever recorded in a 12-month period. The increase in drug overdose deaths appeared to begin prior to the COVID-19 health emergency, accelerating significantly during the first months of the pandemic.
“Let’s do our part to protect our loved ones by disposing of those unused, unwanted or expired prescription drugs in our possession,” U.S. Attorney Escalona said. “It is the easiest and most effective thing we can do to combat the national opioid epidemic.”
“The rate of prescription drug abuse in the United States is alarmingly high, as are the number of accidental poisonings and overdoses due to these drugs, said DEA Special Agent in Charge Brad Byerley. “Unfortunately, these prescription drugs are most often obtained from friends and family, who leave them in home medicine cabinets. Helping people dispose of potentially harmful prescription drugs is just one way DEA is working to reduce the addiction rates and overdose deaths plaguing this country. Please do your part to keep these drugs off the streets and help spread awareness in your community.”
The public can drop off potentially dangerous prescription medications at collection sites which will adhere to local COVID-19 guidelines and regulations in order to maintain the safety of all participants and local law enforcement.
DEA and its partners will collect tablets, capsules, patches, and other solid forms of prescription drugs. Liquids (including intravenous solutions), syringes and other sharp objects, and illegal drugs will not be accepted. DEA will continue to accept vaping devices and cartridges at its drop off locations provided lithium batteries are removed.
Learn more about the event at www.deatakeback.com, or by calling 800-882-9539.
DEA and U.S. Attorney’s Offices Throughout New York Promote National Prescription Drug Take Back DayRead the Press Release
NEW YORK – With opioid overdose deaths increasing during the pandemic, the Drug Enforcement Administration is holding its 20th Take Back Day on Saturday, April 24th. DEA’s October 2020 Take Back Day brought in a record-high amount of expired, unused prescription medications, with the public turning in close to 500 tons of unwanted drugs. Over the 10-year span of Take Back Day, DEA has brought in more than 6,800 tons of prescription drugs. With studies indicating a majority of abused prescription drugs come from family and friends, including from home medicine cabinets, clearing out unused medicine is essential.
According to the Centers for Disease Control and Prevention, the U.S. has seen an increase in overdose deaths during the COVID-19 pandemic, with 87,200 Americans dying as a result of a drug overdose in a one-year period (Sept. 1, 2019 to Sept. 1, 2020), the most ever recorded in a 12-month period. The increase in drug overdose deaths appeared to begin prior to the COVID-19 health emergency, accelerating significantly during the first months of the pandemic.
DEA Special Agent in Charge Ray Donovan said, “This past year was a stark reminder that public health is a priority, and while DEA is focused on enforcement we also provide important tools to stop drug abuse before it starts,” said. “Programs like Take Back Day make it easy for families to remove unused threats of abuse in their homes while encouraging discussion about the tragic dangers associated with opioid use and misuse.”
“Just as we were beginning to make great strides, we have seen a tragic increase in the number of, not only opioid overdoses, but also deaths during this global pandemic,” stated U.S. Attorney James P. Kennedy, Jr., of the Western District of New York. “The pandemic has resulted in many people spending more time alone, distanced from loved ones and friends making this year’s National Prescription Drug Take Back Day that much more important. Removing old or unused prescription medications from our medicine cabinets just might help to prevent an overdose or to reduce the chances of creating a future opioid user.”
Acting United States Attorney Antoinette T. Bacon said, “On Take Back Day, DEA makes our communities safer by collecting unneeded prescription drugs. I urge every adult to take advantage of this safe, convenient and anonymous way to empty their medicine cabinets of unused medication that could be misused by a loved one.”
“Through Drug Take Back Day, we are reminded of the ways in which the alarming opioid epidemic has exposed the hidden dangers and potential abuses of prescription drugs,” stated Acting U.S. Attorney Mark J. Lesko. “The U. S. Attorney’s Office for the Eastern District of New York is proud to be part of DEA’s mission to end prescription drug abuse and we encourage all residents to dispose of unused and expired medicines at official disposal locations.”
Audrey Strauss, U.S. Attorney for the Southern District of New York, said: “We wholeheartedly support the DEA’s Drug Take Back Day, and we encourage anyone with expired or unused prescription medications to take advantage of this program. By disposing of dangerous and potentially lethal substances safely, you can possibly prevent a tragedy.”
“It’s important to keep our own homes safe by regularly cleaning out medicine cabinets and any other areas where we store our pharmaceuticals,” said DEA Acting Administrator D. Christopher Evans. “Bringing unused or expired medications to a local collection site for safe disposal helps protect your loved ones and the environment.”
The public can drop off potentially dangerous prescription medications at collection sites which will adhere to local COVID-19 guidelines and regulations in order to maintain the safety of all participants and local law enforcement.
DEA and its partners will collect tablets, capsules, patches, and other solid forms of prescription drugs. Liquids (including intravenous solutions), syringes and other sharps, and illegal drugs will not be accepted. DEA will continue to accept vaping devices and cartridges at its drop off locations provided lithium batteries are removed.
Helping people dispose of potentially harmful prescription drugs is just one way DEA is working to reduce addiction and stem overdose deaths.
Learn more about the event at www.deatakeback.com, or by calling 800-882-9539.
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Connecticut Nursing Home Operator Sentenced to Prison for Embezzlement and Tax OffensesRead the Press Release
Leonard C Boyle, Acting United States Attorney for the District of Connecticut, announced that CHAIM STERN, 72, of Flushing, New York, was sentenced today by U.S. District Judge Janet C. Hall in New Haven to 30 months of imprisonment, followed by three years of supervised release, for embezzlement and tax offenses related to his operation of nursing homes in Bridgeport and Waterbury.
According to court documents and statements made in court, Stern was the principal operator of the Bridgeport Health Care Center (“BHCC”), Bridgeport Manor, and the Rosegarden Health and Rehabilitation Center LLC (“Rosegarden”) in Waterbury, which were privately owned nursing and rehabilitation facilities. Between approximately 2011 and 2018, Stern stole approximately $4.1 million from the BHCC Pension Plan, over which he was the trustee, principally by diverting the money to a purported charity, called Em Kol Chai, which Stern controlled, as well as to himself and other entities. Also, in approximately February 2015, Stern misapplied $305,608.06 from BHCC Health Plan by diverting the money from a stop-loss insurance plan that was intended to pay for an employee health claim, and instead used it for other purposes, including Em Kol Chai, the operation of the BHCC, and for Stern’s personal use.
Stern also failed to pay millions of dollars in other health insurance claims that he was obliged to pay on behalf of his employees, resulting in many cases in debt collection action against employees by the health care providers.
In addition, from at least January 2017 through March 2018, Stern failed to, and caused BHCC and Rosegarden to fail to, pay over employment taxes it collected from BHCC and Rosegarden employees. Also, from January 2017 through June 2018, Stern failed to, and caused BHCC and Rosegarden to fail to, pay BHCC and Rosegarden’s share of employment taxes. The total tax loss resulting from Stern’s conduct is $4,356,409.85.
On January 15, 2020, Stern pleaded guilty to one count of theft or embezzlement from an employee benefit plan, one count of theft or embezzlement in connection with healthcare, and one count of willful failure to pay tax.
Stern has already made approximately $4.1 million in criminal restitution to Pension Plan, along with some lost interest as agreed upon in a related civil case. Judge Hall ordered Stern to pay restitution to participants in the Health Plan with unpaid claims, to the extent that the $2.5 million already paid by Stern and his insurance company in the related civil action do not cover all of those claims. A third-party claims administrator is currently attempting to settle all of those outstanding health claims.
Finally, Stern also has agreed to pay approximately $2.4 million in restitution to the IRS, representing the tax withholdings Stern took from employees but did not pay over to the IRS.
Stern, who is released on a $500,000 bond, is required to report to prison on May 26, 2021.
This matter was investigated by the U.S. Department of Labor – Office of Inspector General, U.S. Department of Labor – Employee Benefits Security Administration, Boston Regional Office, and Internal Revenue Service – Criminal Investigation Division. The case was prosecuted by Assistant U.S. Attorneys David E. Novick and Neeraj N. Patel.
Chichester Man Sentenced to 21 Months for Fentanyl TraffickingRead the Press Release
CONCORD - Travis Dunn, 31, of Chichester, was sentenced on Monday to 21 months in federal prison for distribution of fentanyl, Acting United States Attorney John J. Farley announced today.
According to court documents and statements made in court, on August 27, 2019, Dunn aided and abetted two co-defendants by driving them to Lawrence, Massachusetts to pick up drugs for redistribution in New Hampshire. On the return trip, the co-defendants sold fentanyl to an individual who was cooperating with Nashua Police detectives. Immediately following the drug deal, detectives arrested Dunn and the co-defendants.
Dunn previously pleaded guilty on November 19, 2020. Dunn’s codefendants also have pleaded guilty. Michael Briand, 29, of Bow, was sentenced to 22 months on December 8, 2020. Megan Judd, 27, of Bow, pleaded guilty on November 30, 2020 and was sentenced to time served.
“Fentanyl traffickers endanger our citizens and communities by peddling an extremely dangerous and addictive drug,” said Acting U.S. Attorney Farley. “Through Operation SOS, we are protecting public safety by identifying and prosecuting the drug dealers who sell fentanyl in Nashua and other communities in Hillsborough County.”
This matter was investigated by the Nashua Police Department. The case was prosecuted by Assistant U.S. Attorney Joachim H. Barth.
This case is part of Operation Synthetic Opioid Surge (S.O.S.). In July of 2018, Attorney General Jeff Sessions announced the creation of S.O.S., which is being implemented in the District of New Hampshire and nine other federal districts. The goal of S.O.S. is to combat the large number of overdoses and deaths associated with fentanyl and other synthetic opioids. In New Hampshire, the U.S. Attorney’s Office is focusing its efforts on prosecuting synthetic opioid trafficking cases arising in Hillsborough County, which includes Manchester and Nashua.
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Canadian National Sentenced to One Year Imprisonment After Pleading Guilty for Operating Fraudulent Ticket ScamRead the Press Release
NEW ORLEANS – U.S. Attorney Duane A. Evans announced that JOSEPH GATT, age 75, a citizen of Canada and Malta, was sentenced today by United States District Judge Greg G. Guidry to one year of imprisonment followed by three years of supervised release and payment of a $100 special assessment fee, after pleading guilty to one count of wire fraud for operating a long-term fraudulent ticket scam targeting multiple New Orleans residents. GATT was previously arrested on July 26, 2020, in Los Angeles, California, while trying to reenter the country. Although GATT was indicted in June 2018, the ten-count indictment against him was unsealed only after GATT was taken into custody. Judge Guidry also ordered GATT to repay his victims more than $95,000; he is also subject to deportation.
According to court documents, between about 2009 and October 2014, GATT resided in the New Orleans area. He purported to sell tickets to spectator professional sporting events, including Union of European Associations (UEFA) Champions League and Federation Internationale De Futbol Association (FIFA) World Cup matches. Specifically, GATT falsely claimed to have connections with FIFA and, through those connections, could purchase tickets to World Cup games at or below face value before the tickets went on sale to the general public. GATT sought investors for his fraudulent business enterprise in which he claimed to be able to purchase World Cup tickets at face value and then sell them at a higher price to individuals and groups who wished to attend the games. GATT recruited individuals, including Investors A, B, and C, to enter into a fraudulent business arrangement in which they would give him money to purchase tickets and then split the resulting profits. In total, Investors A, B, and C gave GATT over $95,000. In fact, GATT used the money for personal purchases.
When confronted, GATT wrote investors checks, ostensibly as repayment for the investments, when he knew that the account on which the checks were drawn had insufficient funds to cover the checks. GATT took other steps to disguise his scheme, make his enterprise appear legitimate, conceal the true purpose of his scheme, and dissuade Investors from reporting GATT to law enforcement authorities, including blaming his failure to repay the investors on delays caused by financial institutions and GATT himself having been defrauded.
U.S. Attorney Evans praised the work of the United States Department of Homeland Security – Homeland Security Investigations in investigating this matter. Assistant United States Attorney Jordan Ginsberg, Chief of the Public Corruption Unit, was charge of the prosecution.
Camden County Man Arrested for Wire FraudRead the Press Release
CAMDEN, N.J. – A Camden County, New Jersey, man was arrested by federal agents today on charges of wire fraud, Acting U.S. Attorney Rachael A. Honig announced.
Frank N. Tobolsky, 59, of Cherry Hill, New Jersey, is charged by indictment with eight counts of wire fraud in connection with a fraudulent investment scheme. He will be arraigned today before U.S. Magistrate Judge Ann Marie Donio in Camden federal court.
According to documents filed in this case and statements made in court:
Beginning in 2013, Tobolsky raised money from a victim, purportedly as an investment that would loan money to season ticket holders who owned seat licenses for a professional sports team in Philadelphia, Pennsylvania. The seat licenses would be used as collateral to secure the loans. The victim sent Tobolsky approximately $2.4 million to invest in the purported business venture. The money was not used for loans to season ticket holders. Instead, Tobolsky used a substantial portion on personal expenses.
The charges of wire fraud each carry a maximum penalty of 20 years in prison and a maximum fine of $250,000, or twice the gross loss to any victim or gain to Tobolsky, whichever is greater.
Acting U.S. Attorney Honig credited inspectors of the U.S. Postal Inspection Service, Philadelphia Division, under the direction of Inspector in Charge Damon Wood, with the investigation leading to the charges. She also thanked the U.S. Attorney’s Office for the District of Delaware for assisting the investigation.
The government is represented by Assistant U.S. Attorney Jeffrey Bender and Special Assistant U.S. Attorney John Crockett of the U.S. Attorney’s Office in Camden.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Cahokia Man Heads to Federal Prison for Identity Theft SchemeRead the Press Release
Cahokia, Ill. – Isaac Sanders, age 40, of Cahokia, Illinois, has been sentenced to serve 12 months
and a day in federal prison for conspiracy to commit mail fraud and aggravated identity theft.
Sanders previously pleaded guilty to the charges in December 2020.
Sanders and his co-conspirator, Tamecia Buckley, used the stolen identities and social
security numbers of real people to open utility accounts for electric and gas services at Sanders’
properties. The victims did not live there and did not consent to the scheme. The bills all came to
Sanders’ address, so the victims had no way of knowing the financial damage being wrought in their
names. After bills went unpaid, and services were shut down again, Sanders would simply pay Buckley
to open a new account using a different stolen identity.All told, Sanders stole, used, and discarded the identities of six different people from 2014 to
2017. On one occasion, Sanders called the utility company pretending to be the son of one victim
and falsely claimed the victim was in the hospital.In addition to his term of imprisonment, Sanders was ordered to pay a $1,000 fine and full
restitution in the amount of $5,213.83. His sentence also includes a three-year term of supervised
release. For her roles in this and other fraud-and-identity-theft schemes, Buckley was prosecuted
separately and received a 75-month prison sentence.The investigation was conducted by the United States Postal Inspection Service.
Brockton Tax Preparer Sentenced for Tax FraudRead the Press Release
BOSTON – The owner of a tax preparation business in Brockton was sentenced today for preparing false tax returns for others as well as filing a false tax return for himself.
Jose Miguel Spinola, 51, was sentenced by U.S. Senior District Court Judge Rya W. Zobel to two years of probation, with the first six months in home detention and ordered to pay restitution of $284,917. In December 2020, Spinola pleaded guilty to two counts of preparing false tax returns and one count of filing a false tax return.
On numerous occasions between 2014 and 2017, Spinola prepared and filed income tax returns for clients that contained false, inflated and incorrect information. Spinola added inflated and ineligible expenses to his clients’ Schedule A deductions for medical and dental expenses and unreimbursed employee business expenses, including claimed meals and entertainment, business miles and work apparel. By inflating Schedule A deductions, Spinola decreased his clients’ taxable income and effectively increased the clients’ tax refunds. Spinola informed his clients of the total tax refund they would receive from the IRS without telling the clients about the false, inflated or ineligible expenses Spinola deducted.
Acting United States Attorney Nathaniel R. Mendell and Ramsey E. Covington, Acting Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston made the announcement today. Assistant U.S. Attorney Sara Miron Bloom of Mendell’s Securities, Financial & Cyber Fraud Unit prosecuted the case.
Belmond Man Pleads Guilty to Meth ConspiracyRead the Press Release
A man who received methamphetamine by mail for redistribution pled guilty April 16, 2021, in federal court in Sioux City.
Rafael Perez-Mercado, 29, from Belmond, Iowa, was convicted of conspiracy to distribute methamphetamine and possession with intent to distribute methamphetamine. During the investigation, it was also determined that Perez-Mercado was in the United States illegally.
At the plea hearing, Perez-Mercado admitted that between on or about September 2020 and continuing to on or about October 22, 2020, he and others were responsible for the distribution of over ten pounds of methamphetamine in the Wright County area. On October 8, 2020, law enforcement intercepted a package from Mexico destined to be ultimately delivered to Perez-Mercado. On October 22, 2020, law enforcement made a controlled delivery of the package to Perez-Mercado’s residence. Perez-Mercado was captured while exiting the rear of his residence as a law enforcement agent attempted to make contact with him at the front door. Law enforcement seized nine 1-pound packages of methamphetamine from a bag dropped by Perez-Mercado as he attempted to flee from the agents. Later that same day, during the execution of a search warrant at Perez-Mercado’s residence, law enforcement seized two 1-pound packages of methamphetamine from inside a statute delivered to Perez-Mercado. Law enforcement also found evidence of methamphetamine smuggling in Perez-Mercado’s garage.
Sentencing before United States District Court Chief Judge Leonard T. Strand will be set after a presentence report is prepared. Perez-Mercado remains in custody of the United States Marshal pending sentencing. Perez-Mercado faces a mandatory minimum sentence of 10 years’ imprisonment and a possible maximum sentence of life imprisonment, a $10,000,000 fine, and at least 5 years of supervised release following any imprisonment.
The case is being prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by Iowa Division of Narcotics Enforcement, Wright County Sheriff’s Office, Iowa DCI, Homeland Security Investigations/ICE, and Eagle Grove Police Department.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 20-3047.
Follow us on Twitter @USAO_NDIA.
Austin Man Indicted for Robbing Pawn Shop at GunpointRead the Press Release
In Austin today, a federal grand jury charged Joe Quinonez, age 32, of Austin with armed robbery in violation of the Hobbs Act and a federal firearms charge, announced U.S. Attorney Ashley C. Hoff and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Fred J. Milanowski, Houston Division.
According to the indictment, Quinonez is charged with one count of violating the Hobbs Act or interfering with commerce by threats of violence. The indictment alleges that on January 2, 2021, Quinonez entered a Cash America Pawn store in Austin and brandished a firearm at two persons in the store while robbing the store of firearms. In addition, the indictment charges Quinonez with discharging a firearm during the robbery.
Quinonez was arrested by officers of the Austin Police Department on January 6, 2021 and has remained in police custody. Quinonez will be remanded into federal custody for his initial appearance next week.
This case is part of Operation Undaunted, a program which draws on the partnerships among federal, state and local law enforcement coupled with prosecution authorities to tackle violent crime and protect the communities of central and west Texas.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.
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Atlanta tax preparer charged with filing fraudulent tax returnsRead the Press Release
ATLANTA - Jean Samuel Gai has been arraigned on federal charges of aiding the filing of a false tax return. At the time, Gai was on probation in Georgia for similar tax-related offenses.
“At a time when he was already on probation for a prior tax-related charge, Gai’s allegedly returned to filing false tax returns,” said Acting U.S. Attorney Kurt R. Erskine. “It is important to check a tax professional’s background before engaging him or her to assist with filing any tax returns.”
“Often in these types of schemes, the taxpayers fall victim to leaning on the trust of their return preparers,” said IRS-Criminal Investigation Special Agent in Charge James E. Dorsey. “The charges in this case show our seriousness in holding return preparers accountable for abusing their trusted positions to fraudulently gain more client funds. Taxpayers are strongly encouraged to review their return and ask questions in order to avoid falling victim to dishonest return preparers.”
According to Acting U.S. Attorney Erskine, the charges, and other information presented in court: Gai owned and operated N.C.E. Financial Services Incorporated, a tax return business that had two locations: one in Atlanta, Georgia and the other in Riverdale, Georgia. For the 2014 through 2018 tax years, Gai prepared and filed false income tax returns for his clients that allegedly claimed false Schedule C items, false W-2 wages, and false earned income tax credits to obtain refunds that his clients were not entitled to. Gai then allegedly kept most of the fraudulent refunds for his own use. The total loss associated with Gai’s fraud is estimated at more than $600,000.
In November 2013, Gai was convicted of first-degree forgery related to stealing and cashing tax refund checks issued by the State of Georgia. Gai was sentenced to 10 years’ probation for that offense and thus was on probation at the time he allegedly committed the current federal offenses.
Jean Samuel Gai, 45, of Atlanta, Georgia, was arraigned on April 6, 2021, before U.S. Magistrate Judge Catherine M. Salinas. Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the Internal Revenue Service Criminal Investigation.
Assistant U.S. Attorney Russell Phillips is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.