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17 December 2020
Leader of Drug Trafficking Organization Sentenced to 295 MonthsRead the Press Release
Indianapolis – Acting United States Attorney John E. Childress announced today that Cristian Gutierrez-Alvarez, 26, Michoacan, Mexico was sentenced to 295 months in federal prison today following his guilty plea to conspiracy to distribute controlled substances and possession of a firearm during and in furtherance of a drug trafficking offense, by U.S. District Judge James P. Hanlon.
“Drug dealing fuels the majority of violence and social devastation that is occurring in Indianapolis,” said Childress. “Those who choose to ignore our drug laws can expect to face the full force of federal prosecution by the U.S. Attorney’s Office. The impactful investigative work done by our federal, state and local partners is to be commended.”
In late February 2018, federal agents initiated an investigation into a drug trafficking organization led by Cristian Gutierrez-Alvarez. This organization distributed controlled substances in the Indianapolis and Medford, Oregon areas. This poly drug organization was distributing multi-pound quantities of heroin, methamphetamine, cocaine and marijuana from sources of supply in Mexico, California and Oregon.
On January 18, 2019, 15 federal search warrants from this investigation were executed. As a result, 25 federal arrests and multiple state arrests throughout Indiana and Oregon were made as well as the seizure of approximately nine pounds of methamphetamine, over a kilogram of heroin, fifteen ounces of cocaine, approximately forty pounds of marijuana, twenty firearms, approximately $20,000, and 15 vehicles.
This case was the result of an investigation by the Drug Enforcement Administration, Internal Revenue Service Criminal Investigation, Indianapolis Metropolitan Drug Task Force, and US Immigration and Customs Enforcement.
“The 295 month sentencing of Mr. Gutierrez-Alvarez was just and necessary for the fine citizens of Indianapolis and our surrounding communities,” said DEA Assistant Special Agent in Charge, Michael Gannon. “Individuals like Gutierrez-Alvarez must be held accountable for their actions, especially when they are dealing debilitating drugs, such as heroin, methamphetamine and cocaine. The DEA is committed to working with our federal, state, and local partners to investigate and arrest drug traffickers such as Gutierrez-Alvarez and keep our communities safe.”
According to Assistant U.S. Attorney Bradley A. Blackington, who prosecuted the case for the government, Gutierrez-Alvarez will be deported to Mexico following the completion of his prison sentence.
This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. 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.
In November of 2020, Acting United States Attorney John E. Childress renewed a Strategic Plan designed to shape and strengthen the District’s response to its most significant public safety challenges. This prosecution demonstrates the Office’s firm commitment to increase prosecution of transnational drug trafficking organizations affecting the District while reducing the supply of heroin and methamphetamine to the District.
Las Cruces man charged for making online threatsRead the Press Release
ALBUQUERQUE, N.M. – Dustin John Charles, 37, of Las Cruces, New Mexico, was charged in federal court today after an arrest for cyberstalking.
According to a criminal complaint, on April 29, Charles allegedly posted a photo of a Las Cruces police officer on Facebook and stated that he was having dreams of killing the officer. Charles allegedly sent a Facebook friend request to the officer. The officer noticed a Facebook post by Charles claiming to have captured a burglary suspect on camera. The post included a link to the photo of the officer that Charles allegedly had posted.
On Sept. 5, Charles allegedly sent an email to the New Mexico office of the American Civil Liberties Union (ACLU) that included a reference to killing the Las Cruces officer. The following day, Charles allegedly sent the ACLU a similarly threatening email.
On Nov. 30, in response to a Las Cruces Sun-News Facebook post regarding Las Cruces’ new Chief of Police, Charles allegedly replied indicating that he would be more likely to shoot a Las Cruces police officer than allow himself to be pulled over.
By federal law, the use of any interactive computer service to engage in conduct intended to harass or intimidate another person is a felony. If convicted, Charles faces up to five years in prison. A complaint is only an allegation. A defendant is presumed innocent unless and until proven guilty.
The FBI investigated this case in conjunction with the Las Cruces Police Department. Assistant U.S. Attorney Aaron O. Jordan is prosecuting the case.
Kansas Man Pleads Guilty in Government Contract Fraud SchemeRead the Press Release
KANSAS CITY, KAN. – A Kansas man pleaded guilty today to lying to a federal investigator who was looking into allegations of major program fraud, U.S. Attorney Stephen McAllister said.
Troy L. Bechtel, 51, Overland Park, Kan., pleaded guilty to one count of making a false statement to a federal investigator. In his plea, Bechtel admitted he lied during an investigation into allegations that United Medical Design Builders fraudulently received contracts from the Department of Defense through the Service-Disabled Veteran-Owned Small Business program. Bechtel was a project manager for the company.
Sentencing is set for March 18, 2021. Bechtel could face a penalty of up to five years in federal prison and a fine up to $250,000.
McAllister commended the Small Business Administration - Officer of Inspector General, General Services Administration - Office of Inspector General, Defense Criminal Investigative Service, the Army CID Major Procurement Fraud Unit and Assistant U.S. Attorney Tris Hunt for their work on the case.
KC Man Pleads Guilty to Meth Conspiracy, Faces 10 Years in PrisonRead the Press Release
JEFFERSON CITY, Mo. – A Kansas City, Missouri, man pleaded guilty in federal court today to his role in a conspiracy to distribute methamphetamine in Camden County, Missouri.
Stephen Joseph Sanchez, 35, pleaded guilty before U.S. Magistrate Judge Willie J. Epps Jr. to one count of conspiracy to distribute methamphetamine. Co-defendant Jo Marie Pollina, 37, of Kansas City, Mo. pleaded guilty to the same charge on June 30, 2020.
According to today’s plea agreement, Sanchez was arrested at a Camdenton hotel on Oct. 31, 2017. A police officer responded to a report of a man tampering with a motor vehicle in the hotel’s parking lot, and found Sanchez on the ground beside a sport utility vehicle when he arrived. Sanchez had a bag of marijuana and $8,225 in his pocket.
The officer entered the hotel and contacted Pollina, who told the officer she and Sanchez had traveled in a Dodge Dakota truck. As Pollina attempted to check out of the hotel, the officer seized the duffel bag and backpack that belonged to Sanchez. Pollina physically resisted giving the bags to the officer before he was able to wrest the bags from her. The officer was then contacted by the room attendant, who had found a glass smoking pipe in the hotel room. Pollina was placed under arrest.
The officer seized a bag of marijuana and a Taurus 9mm pistol from the truck. After obtaining a search warrant for Sanchez’s bags, the officer found a cellphone package that contained 158.4 grams of methamphetamine.
Under the terms of today’s plea agreement, the government and Sanchez jointly recommend a sentence of 10 years in federal prison without parole. Sanchez must also forfeit to the government $8,225 seized by law enforcement. Under federal statutes, Pollina is subject to a mandatory minimum sentence of five years in federal prison without parole. Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Lawrence E. Miller. It was investigated by the Camdenton, Mo., Police Department and the Drug Enforcement Administration.
Judge sentences armed carjacker three months after sentencing co-defendantRead the Press Release
ST. LOUIS, MO – United States District Judge Catherine D. Perry sentenced Terrance Brew to 104 months in prison today. The 24-year-old St. Louis, Missouri resident pleaded guilty to one count of carjacking and one count of brandishing a firearm in furtherance of a crime of violence. Judge Perry sentenced Daquan Sanders, Brew’s 20-year-old co-defendant, to 104 months in September.
On April 1, 2019, Brew and Sanders approached two people in a St. Louis County park. The victims were playing basketball within the park. Brew and Sanders, each armed with a firearm, approached the victims and demanded their belongings. One victim gave his cell phone and the other stated he had only his car keys.
While Sanders held the two victims at gunpoint, Brew reached into the victim’s pocket and removed his car keys. Brew and Sanders then fled the scene in the victim’s car.
Later that evening, St. Louis County Police located the carjacked vehicle. Brew was driving the vehicle and Sanders was in the front passenger seat. Police tried to perform a traffic stop, but Brew failed to pull over which resulted in a 15-mile police chase through St. Louis City.
The vehicle chase ended when Brew crashed into concrete barriers blocking a residential street to vehicular travel. Brew and Sanders then fled on foot and both were taken into custody.
The Federal Bureau of Investigation and the St. Louis County Police Department investigated this case. Assistant United States Attorney Jason Dunkel handled this case.
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Judge sentences St. Louis man for drug trafficking at Clinton-Peabody Housing ComplexRead the Press Release
ST. LOUIS, MO – United States District Judge Catherine D. Perry sentenced Demetrius Tyrese Johnson to 180 months in prison today. The 26-year-old St. Louis, Missouri resident pleaded guilty to one count of conspiracy to distribute fentanyl and one count of felon in possession of a firearm.
Johnson was involved in a conspiracy to distribute more than 400 grams of fentanyl centered on the Clinton-Peabody housing complex on the near south side of the City of St. Louis.
Between September 2014 and July 2018, Johnson acted as a distributor for drug customers seeking fentanyl in the St. Louis Metropolitan area. Johnson and other associates used various apartments within the Clinton-Peabody housing complex for purposes of storing and distributing fentanyl, among other things.
On July 18, 2018, investigators conducted a search warrant at Johnson’s residence. Inside Johnson’s bedroom, officers located a Glock 27, .40 caliber firearm with an extended magazine, an Anderson Arms AR-15 rifle and ammunition. Johnson knew he was a convicted felon prior to July 18, 2018.
This case was an Organized Crime Drug Enforcement Task Force (OCDETF) investigation by the St. Louis Metropolitan Police Department, the St. Louis Division of the FBI, the St. Louis Division of the DEA, the United States Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the United States Marshals Service and the St. Charles County Sheriff’s Department.
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Inmate at USP Lee Pleads Guilty to Unlawfully Possessing WeaponRead the Press Release
ABINGDON, Virginia - An inmate at the USP Lee in Jonesville, Virginia, pleaded guilty yesterday in U.S. District Court to unlawfully possessing a weapon inside the prison, Acting United States Attorney Daniel P. Bubar announced today.
Leonardo Acevedo-Vazquez, 28, pleaded guilty yesterday to one count of possessing contraband in a prison, that contraband being a weapon. Acevedo-Vazquez, who faces up to an additional five years in prison for his most recent offense, will be sentenced on March 15, 2021.
According to court documents, on January 19, 2020, a staff member at USP Lee observed Acevedo-Vazquez in his cell holding a metal object in his right hand. The metal object was a prison made weapon, approximately 6.5 inches long, sharpened to a point at one end with a handle made of white sheet material on the other end.
The investigation of the case was conducted by the Federal Bureau of Prisons. Special Assistant United States Attorney Steven J. Luckie prosecuted the case for the United States.
Hot Springs Man Sentenced to over 8 Years in Federal Prison for Child Pornography OffenseRead the Press Release
Hot Springs, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced today that Alejandro Aurioles, age 32, of Hot Springs, Arkansas, was sentenced today to 97 months in federal prison without the possibility of parole followed by 10 years of supervised release on one count of accessing the Internet with the intent to view child pornography. The Honorable Chief Judge Susan O. Hickey presided over the sentencing hearing in the United States District Court in Hot Springs.
According to court records, on October 26, 2018, detectives with the Hot Springs Police Department received a Cybertip report of child pornographic images being downloaded to a Hot Springs telephone number. Detectives traced the phone number back to a cell phone associated with Aurioles. On or about December 21, 2018, Aurioles was arrested on a state charge and admitted to Hot Springs detectives that he had downloaded images of child pornography using his cell phone and sold those images to others on two occasions. During a search of his two cellular phones, thousands of child pornography images and videos of child sexual abuse were forensically recovered.
Aurioles was indicted in March of 2019 and entered a guilty plea to a related case in September of 2019.
This case was investigated by the Hot Springs Police Department and the FBI. Assistant United States Attorneys Kim Harris and Ben Wulff prosecuted the case for the United States.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Home Depot to Pay $20,750,000 Penalty for Nationwide Failure to Follow Rules for Conducting Renovations Involving Lead PaintRead the Press Release
The U.S. Environmental Protection Agency (EPA) and the Department of Justice today announced a proposed nationwide settlement with Home Depot U.S.A. Inc. resolving alleged violations of the EPA’s Lead Renovation, Repair and Painting (RRP) Rule at home renovations performed by Home Depot’s contractors across the country. The States of Utah, Massachusetts, and Rhode Island, which have EPA-authorized RRP programs, are joining the United States in this action.
The settlement, in a consent decree lodged with the District Court for the Northern District of Georgia, requires Home Depot to implement a comprehensive, corporate-wide program to ensure that the firms and contractors it hires to perform work are certified and trained to use lead-safe work practices to avoid spreading lead dust and paint chips during home renovation activities. Home Depot will also pay a $20.75 million penalty, the highest civil penalty obtained to date for a settlement under the Toxic Substances Control Act. Of the $20.75 million penalty, $750,000 will be paid to Utah, $732,000 to Massachusetts, and $50,000 to Rhode Island.
“These were serious violations. The stiff penalty Home Depot will pay reflects the importance of using certified firms and contractors in older home renovations,” said Principal Deputy Assistant Attorney General Jonathan D. Brightbill of the Justice Department’s Environment and Natural Resources Division. “Contractors hired for most work in homes built prior to 1978, when lead based paint was in widespread use, must be certified. These contractors have the training to recognize and prevent the hazards that can be created when lead paint is disturbed.”
“Today’s settlement will significantly reduce children’s exposure to lead paint hazards,” said Susan Bodine, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Home Depot will implement system-wide changes to ensure that contractors who perform work in homes constructed before 1978 are EPA-certified and follow lead-safe practices. EPA expects all renovation companies to ensure their contractors follow these critical laws that protect public health.”
EPA discovered the alleged violations when investigating five customer complaints about Home Depot renovations (in Illinois, Maine, Michigan, Minnesota and Wisconsin), which showed Home Depot subcontracted work to firms that in some cases did not use lead-safe work practices, perform required post-renovation cleaning, provide the EPA-required lead-based paint pamphlets to occupants, or maintain records of compliance with the law.
EPA then conducted a comprehensive review of Home Depot’s records of renovations performed throughout the United States and identified hundreds of instances in which Home Depot sent uncertified firms to perform renovations that required certified and trained firms. In addition, EPA identified instances in which Home Depot failed to establish, retain, or provide compliance documentation showing that specific contractors had been certified by EPA, had been properly trained, and had used lead-safe work practices in projects performed in homes.
For the most serious violations addressed by the settlement, Home Depot offered its customers inspections using certified professionals and, if dust lead hazards were found, it performed specialized cleaning and verification.
Under the settlement, Home Depot will implement a company-wide program to ensure that the contractors it hires to perform work for its customers comply with the RRP Rule during renovations of homes built before 1978. To do this, Home Depot is implementing an electronic compliance system to verify that the contractors it hires are properly certified. Home Depot will also require its contractors to use a detailed checklist to document compliance and provide the completed checklist to the customer. The checklist will lead the contactors through the steps required for RRP Rule compliance. Home Depot will also conduct thousands of on-site inspections of work performed by its contractors to ensure they comply with lead-safe work practices. Home Depot must also investigate and respond to customer complaints. In instances where the contractor did not comply with Lead Safe Work practices Home Depot will perform an inspection for dust lead hazards and, if they are found, provide a specialized cleaning. EPA will monitor Home Depot’s responses to customer complaints.
In addition to the requirements related to its renovations, Home Depot will provide important information about following lead-safe work practices to its professional and do-it-yourself customers in its stores, on its website, on YouTube, and in workshops. The RRP Rule does not apply to do-it-yourself projects in your own home. However, the EPA recommends using the rule’s lead-safe work practices in your own home projects, so this important information will help families learn how to safely perform home improvement projects to protect themselves, and their children.
Residential lead-based paint use was banned in 1978 but still remains in many older homes and apartments across the country. Lead dust hazards can occur when lead paint deteriorates or is disrupted during home renovation and remodeling activities. Lead exposure can cause a range of health problems, from behavioral disorders and learning disabilities to seizures and death, putting young children at the greatest risk because their nervous systems are still developing. A blood lead test is the only way to determine if a child has a high lead level. Parents who think their child has been in contact with lead dust should contact their child's health care provider.
The consent decree is subject to a 30-day public comment period and final court approval. To view a copy of the consent decree and for information on how to submit a comment, visit www.justice.gov/enrd/Consent_Decrees.html.
Further information about the settlement is available on EPA’s website at: https://www.epa.gov/enforcement/home-depot-settlement-information-sheet. To make a complaint about lead safe work practice violations, see EPA’s website link at:
https://www.epa.gov/lead/report-lead-based-paint-complaints-tips-and-violations.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Greenwood Man Charged Federally for Alleged $14 Million Fraud SchemeRead the Press Release
Indianapolis – Acting United States Attorney John E. Childress announced today that Daniel R. Fruits, 46, of Greenwood, Indiana, was charged by a federal grand jury for his alleged role in three separate fraud schemes, including a nearly $14 million fraud on an investor, an attempted mortgage fraud, and a vehicle title-washing scheme.
“This financial investor gave his hard-earned money to someone whom he thought he could trust,” said Childress. “Instead, the victim’s money ended up in the hands of a self-absorbed thief who only cared about his interests. Living a life of fraud is inexcusable and always comes to an end.”
The Indictment alleges that Fruits defrauded a Kentucky investor, who was also Fruits employer, out of nearly $14 million. In 2015, the investor founded a trucking company, Secure Transit, and hired Fruits to run it. Over the next four-and-a-half years, the investor would invest approximately $14 million in the business.
Throughout that time, Fruits repeatedly lied about the company’s financial health, who its customers were, and what the money invested was being used for. On multiple occasions, Fruits allegedly sent the investor fictitious customer sales contracts and falsified financial statements that reported inflated company profits. At the same time, Fruits allegedly asked the investor for additional investments, sometimes in the millions of dollars, purportedly for the purchase of trucks or other business expenses.
Fruits spent a significant portion of the money on his own personal purchases and payments. He allegedly spent approximately $880,000 to purchase a horse farm and his personal residence, $560,000 on an RV and trailer, over $111,000 on a Corvette, approximately $90,000 on three Rolex watches, approximately $55,000 on a horse, $33,000 on a horse trailer, $23,000 on payments for two Ferraris, and $30,000 on payments for two escorts.
In addition to the fraud on the investor, Fruits attempted to perpetrate a mortgage fraud scheme on Fifth Third Bank. Specifically, in late 2018, Fruits made false statements to Fifth Third Bank to secure a $432,000 mortgage. He twice submitted falsified paperwork purporting to show that loans from another bank had been paid off, when they had not been.
Finally, Fruits perpetrated a title-washing scheme to remove a bank’s lien from the title of a truck he purchased. He financed the truck with a loan from Ally Financial for over $69,000. Several months later, he sent the Indiana Bureau of Motor Vehicles a falsified letter purportedly from Ally Financial stating that the loan had been paid off and the lien should be released.
The loan had not been paid off and Ally Financial never wrote that letter. As a result, the BMV issued Fruits a free-and-clear title for the truck, which Fruits then sold for $48,000, without repaying the loan to Ally Financial.
This case was the result of an investigation by the Federal Bureau of Investigations, and Internal Revenue Service Criminal Investigation.
“This indictment sends a strong message that the FBI will aggressively investigate those who commit such extensive financial fraud and steal from their employer to pad their own pockets to fund a lavish lifestyle,” said FBI Indianapolis Special Agent in Charge Paul Keenan. “The FBI and our law enforcement partners will always pursue those who take advantage of others through illegal and criminal behavior.”
"The IRS enforces the nation's tax laws, but also takes particular interest in cases where someone, for their own personal benefit and greed, has taken what belongs to others,” said Acting Special Agent in Charge Tamera Cantu, of IRS Criminal Investigation, Chicago Field Office. “With our agent’s financial investigation expertise, we followed the money and helped to unravel the fraud and deceit conducted by Mr. Fruits. We are pleased with the successful resolution of this investigation due to the cooperative efforts of our law enforcement partner and the U.S. Attorney’s office in the Southern District of Indiana.”
An indictment is a set of allegations and is not itself evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
In November of 2020, Acting United States Attorney John E. Childress renewed a Strategic Plan designed to shape and strengthen the District’s response to its most significant public safety challenges. This prosecution demonstrates the Office’s firm commitment to prosecuting complex, long-running fraud schemes.
Greenville Man Indicted for Hurling an Object into a Window of the Federal Bankruptcy Court During ProtestsRead the Press Release
RALEIGH, N.C. – Alexander Pridgen, a Greenville man, was charged by Indictment for willfully damaging government property in Greenville during a demonstration over the death of George Floyd in Minneapolis, Minnesota, Robert J. Higdon, Jr., U.S. Attorney for the Eastern District of North Carolina announced.
According to the Indictment, on May 31, 2020, Alexander Pridgen joined a group of people who were peacefully protesting in Greenville, North Carolina. The group of peaceful protesters walked past the federal bankruptcy court, located at 150 Reade Circle, in Greenville, North Carolina. Without provocation, Pridgen picked up a brick or brick-like object and hurled it through a ground floor window of the bankruptcy court. Pridgen’s act of vandalism was captured on video by a peaceful protester, who was live streaming the event on Facebook.
Law enforcement officers were able to identify Pridgen because of his involvement in another act of vandalism committed at the Greenville Police Station later in the evening of May 31, 2020, which was captured on video surveillance.
The damage to the ground floor window at the Greenville bankruptcy court cost in excess of $1,000.
The single count charged in the indictment carries a statutory maximum potential penalty of 10 years in prison, and a maximum fine of $250,000.
Robert J. Higdon, Jr., U.S. Attorney for the Eastern District of North Carolina credited the United States Marshals Service and the Greenville Police Department with the investigation leading to Pridgen’s indictment. The government is represented by Assistant U.S. Attorney Evan Rikhye of the of the U.S. Attorney's Office’s Criminal Division.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
A copy of this press release is located on our website.
Grand Jury Indicts Kenmore Man on Multiple Charges of Production, Receipt and Possession of Child Pornography, and Sexual Enticement of A MinorRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051BUFFALO, N.Y. - U.S. Attorney James P. Kennedy, Jr. announced today that a federal grand jury has returned a 13-count indictment charging David Rubel, 38, of Kenmore, NY, with production, receipt, and possession of child pornography, sexual enticement of a minor, and transfer of obscene material to a minor. The charges carry a mandatory minimum penalty of 15 years in prison and a maximum of life in prison.
Assistant U.S. Attorney Meghan A. Tokash, who is handling the case, stated that according to the indictment and a previously filed complaint, a parent filed a report with the Town of Tonawanda Police Department, alleging that the defendant had been texting his daughter, who recently turned 16 years-old (Victim), and that some of the texts he observed were sexual in nature. The parent observed inappropriate images on his daughter’s cell phone within a text thread between the Victim and Rubel.
With the consent of the Victim’s father, a Town of Tonawanda Detective searched the cell phone and observed the text messages, some of which included sexual images. Investigators also searched the defendant’s cell phone and recovered sexual images, including two videos, that were also found on the Victim’s cell phone, within the string of text messages between Ruble and the Victim.
The defendant will be arraigned on the indictment on December 23, 2020, at 10:00 a.m. before U.S. Magistrate Judge Jeremiah J. McCarthy.
The indictment is the result of an investigation by the Town of Tonawanda Police Department, under the direction of Chief James P. Stauffiger, and the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Stephen Belongia.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
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Gang Member Sentenced to over 12 Years for Drug and Gun CrimesRead the Press Release
NEWPORT NEWS, Va. – A Hampton man was sentenced today to 12 1/2 years in prison for distributing crack cocaine and possessing a firearm in furtherance of his distribution of heroin.
According to court documents, Baron Thomas, 35, a member of the Rollin’ 20s gang, was engaged in the distribution of cocaine, cocaine base, heroin and marijuana in Hampton and elsewhere on the Virginia Peninsula. While Thomas was dealing these narcotics, he was frequently in possession of firearms. Thomas and his co-defendant, Julian Rashko, would also distribute heroin and other narcotics from Thomas’ residence in Hampton.
The case was investigated as part of the Organized Crime Drug Enforcement Task Forces (OCDETF), Operation Brim Reaper. The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to the federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations. The principle mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, and Brian Dugan, Special Agent in Charge of the FBI’s Norfolk Field Office, made the announcement after sentencing by U.S. District Judge Roderick C. Young.
Assistant U.S. Attorney Eric M. Hurt prosecuted the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 4:19-cr-80.
Government Contractor Admits Scheme to Inflate Costs on Federal Projects and Pays $11 Million to Resolve Criminal and Civil ProbesRead the Press Release
UPDATE
The SEBA Civil Settlement Agreement has been attached to this Press Release.
BURLINGTON – Schneider Electric Buildings Americas, Inc. (Schneider Electric), a nationwide provider of electricity solutions for buildings and data centers with its principal place of business in Carrollton, Texas, will pay $11 million to resolve criminal and civil investigations relating to kickbacks and overcharges on eight federally-funded energy savings performance contracts (ESPCs), the Department of Justice announced today. Under the contracts, Schneider Electric was to install a variety of energy saving upgrades such as solar panels, LED lighting, and insulation in federal buildings.
As part of the criminal resolution with the United States Attorney’s Office for the District of Vermont (USAOVT), Schneider Electric admitted that it fraudulently charged the Government nearly $1.7 million in design costs incurred on three ESPCs funded by the Department of the Navy (DON), General Services Administration (GSA), and Department of Agriculture (USDA) by disguising those costs and spreading them across un-related pricing components. Schneider Electric employees described this process as “burying” or “hiding” the costs. Schneider Electric specifically spread costs across various line items in these federal projects so that the agencies would pay the amounts without knowing they were design costs that Schneider Electric was prohibited from charging the Government. Schneider Electric admitted that its conduct constituted wire fraud in violation of 18 U.S.C. § 1343. Schneider Electric executed a non-prosecution agreement related to this conduct and agreed to pay nearly $1.7 million in criminal forfeiture.
Schneider Electric further admitted that former convicted Senior Project Manager Bhaskar Patel solicited and received over $2.5 million in kickbacks from various subcontractors who worked on ESPCs issued by the DON, Coast Guard, GSA, USDA, and Department of Veterans Affairs (VA). Schneider Electric admitted that this conduct violated the Anti-Kickback Act, 41 U.S.C. § 8707.
Schneider Electric is required by its agreement with the USAOVT to cooperate fully in any and all matters relating to relevant conduct for a period of three years, to report to the USAOVT any evidence or allegation of a violation of U.S. fraud, anti-corruption, procurement integrity, or anti-kickback laws, to implement and comply with an updated corporate compliance program, and to report annually to the USAOVT on remediation and implementation of its required compliance enhancements.
In the separate civil settlement announced today, Schneider Electric agreed to pay $9.3 million to resolve False Claims Act and Anti-Kickback Act liability for Patel’s kickback scheme and for including inflated estimates and improper costs in proposals, and overcharging federal agencies under the eight ESPCs.
“These cases are complex and challenging, and I commend the dogged work of our Assistant U.S. Attorneys and their law enforcement agency partners to ensure that Schneider Electric’s conduct was brought to light and that it was held to account,” said United States Attorney Christina E. Nolan. “I am proud that our small office not only successfully convicted Bhaskar Patel, but went further and unraveled Schneider Electric’s broader criminal scheme of fraudulently inflating costs to boost its profits and steal from taxpayers. In reaching this resolution, we considered that Schneider Electric terminated two employees involved in the schemes and overhauled its compliance program. We also considered the shortcomings of Schneider Electric’s cooperation and its failure to timely accept responsibility.”
“ESPC projects can only be successful where contractors are forthright and honest with federal agencies,” said Acting Attorney General Jeffrey Bossert Clark of the Justice Department’s Civil Division. “We will not tolerate attempts by contractors to mislead the government and line their own pockets at the expense of the very energy savings the government seeks to achieve.”
Michael Wiest, Special Agent in Charge of the Northeast Field Office of the Naval Criminal Investigative Service concurred, stating: “Fraud is not a victimless crime. It steals money from American taxpayers, damages the integrity of the Department of the Navy procurement process, degrades the readiness of the warfighter by compromising the quality of goods and services used to protect the nation, and squanders more money in the funding of criminal investigations which could have been avoided simply by individuals doing the right thing. NCIS will continue to work with our partner agencies to aggressively pursue those who perpetrate financial crimes.”
Similarly, USDA Office of Inspector General (OIG) Special Agent in Charge Bethanne M. Dinkins emphasized: “Participation in Government contracts should not involve contractors and their employees seeking financial gain to the detriment of the U.S. Government. Thanks to the hard work and tireless efforts of the investigative team, the interests and integrity of the United States and the procurement process throughout Government have been protected. The USDA Office of Inspector General appreciates the commitment of the Department of Justice and the cooperative efforts of our law enforcement partners. Our resources are well utilized when we work together to investigate those who unlawfully solicit and accept bribes and kickbacks and overcharge the U.S. Government. This resolution demonstrates that we are committed to holding contractors accountable when they choose to abuse the integrity of vital government programs designed to significantly reduce energy and operating costs and make progress toward meeting federal sustainability goals.”
Joseph Dattoria, GSA-OIG Special Agent in Charge, likewise highlighted the significance of this investigation, stating: “The GSA Office of Inspector General is committed to protecting the integrity of the GSA’s procurement process and programs. This resolution is a testament to that commitment, and should serve as a warning to other contractors who may consider engaging in similar conduct. We appreciate the collaborative efforts of the DOJ and our other law enforcement partners."
Finally, VA OIG Special Agent in Charge Christopher Algieri, Northeast Field Office, affirmed: “VA OIG is committed to protecting the integrity of energy savings performance contracts awarded by VA and other federal agencies. We appreciate the tireless efforts of the United States Attorney’s Office, the Civil Division, and our other law enforcement partners in rooting out this and other procurement fraud.”
The criminal investigation and resolution was handled by Assistant United States Attorneys Owen C.J. Foster and Michael P. Drescher of the United States Attorney’s Office for the District of Vermont. The civil investigation was jointly handled by the District of Vermont and Trial Attorneys Kelley Hauser and Alexandra Wilson of the Civil Division’s Commercial Litigation Branch (Fraud Section). The investigation was supported by the Offices of Inspector General for the VA, USDA and GSA, and the Navy Criminal Investigative Services. Schneider Electric was represented by Mark Goodman and David Sarratt of Debevoise & Plimpton LLP, and Michael Connolly, Michael Koenig, and Victoria Lane of Hinkley, Allen & Snyder LLP.
Except for the conduct admitted in connection with the criminal resolution, the civil claims resolved by the settlement are allegations only, and there has been no determination of liability as to such civil claims.
Non Prosecution Agreement (Schneider).pdfCorporate Compliance Program (Schneider).pdf
Statement of Facts (Schneider).pdf
SEBA Civil Settlement Agreement.pdfFour Defendants Facing Federal Charges After Fire Bombings of Police Vehicles:Read the Press Release
LITTLE ROCK— A federal investigation resulted in charges against four people for their alleged involvement in fire bombings of police vehicles in Little Rock and North Little Rock in August 2020. Cody Hiland, United States Attorney for the Eastern District of Arkansas, and Bureau of Alcohol, Tobacco, Firearms, and Explosives New Orleans Field Division Special Agent in Charge Kurt Thielhorn announced today’s arrests of Brittany Dawn Jeffrey, 31; Emily Nowlin, 27; Renea Goddard, 22; and Aline Espinosa-Villegas, 24; all of Little Rock.
According to the Criminal Complaint filed on December 14, 2020, numerous incidents of vandalism occurred after protests were held at local police stations earlier this year. On August 25, 2020, a large group of protestors held a demonstration at the Little Rock Police Department 12th Street Substation. The following morning, officers arriving for duty noticed that several police vehicles in their parking lot had punctured tires. Officers also saw two green glass bottles with fluid inside that smelled like gasoline. The bottles were examined and found to be consistent with improvised incendiary devices, commonly referred to as Molotov cocktails.
The Complaint explains that a Molotov cocktail is typically made by using a container filled with an ignitable liquid and placing a wick in the opening of the container. If the Molotov cocktail functions as designed, the container will break, spreading ignitable liquid, which will be lit by the flaming wick.
According to the Complaint, surveillance footage reflected that two individuals were moving near the parking lot after the protests, and a flaming object can be observed being launched into the parking lot area. Cooperating witnesses stated that the Molotov cocktails were assembled at Brittany Dawn Jeffrey’s residence.
The Complaint states that on August 28, 2020, an Arkansas State Police vehicle was vandalized and burned while stored in a fenced parking lot at Arkansas State Police Headquarters in Little Rock. One vehicle had been set on fire, one had been vandalized with spray paint, and several others had punctured tires. Investigators discovered a detonated Molotov cocktail made from a bottle of brandy.
Surveillance video from that incident shows three people entering the vehicle storage area wearing dark clothing and backpacks. The video shows them bending down in a motion consistent with slashing vehicle tires as well as throwing a lighted object into a police vehicle. The Complaint states that witnesses informed law enforcement that Renea Goddard, Emily Nowlin, and Aline Espinosa-Villegas were responsible for the incident. Federal search warrants were executed to obtain the locations of their cell phones, and cell site data confirmed that their cell phones were in the location of Arkansas State Police Headquarters on August 28, 2020.
“Today’s arrests send a message that violence targeted toward law enforcement will not be tolerated,” stated U.S. Attorney Hiland. “Breaking into a police compound and fire bombing a police vehicle with a homemade explosive device is clearly not a peaceful protest. Those who would target law enforcement with violent acts will not do so in the Eastern District of Arkansas without the full resources of the federal government being deployed to assist our state and local partners in bringing those responsible to justice. They will be prosecuted to the fullest extent of the law.”
“We worked methodically on each of the scenes, collecting evidence, interviewing witnesses, and following leads to help us solve these cases,” said ATF New Orleans Field Division Special Agent in Charge Kurt Thielhorn. “We were able to narrow in on particular individuals who we identified responsible for the law enforcement vehicle fires in the Little Rock area. We appreciate the assistance the public was able to provide in order to bring these individuals to justice.”
The charges in today’s unsealed Complaint include malicious destruction of property belonging to an entity receiving federal funding, conspiracy to commit those acts, and possession of a destructive device.
The defendants arrested today will appear before U.S. Magistrate Judge Joe J. Volpe at 4:00 p.m. this afternoon for their initial appearance. The investigation was conducted by ATF, Arkansas State Police, North Little Rock Police Department, and Little Rock Police Department. The case is being prosecuted by Assistant United States Attorney Stacy Williams.
A complaint contains only allegations. Defendants are presumed innocent unless and until proven guilty.
# # #
This news release, as well as additional information about the office of the
United States Attorney for the Eastern District of Arkansas, is available online at
https://www.justice.gov/edar
Twitter:
@EDARNEWS
ComplaintFour Charged with Covid-19 FraudRead the Press Release
PHOENIX, Ariz. – Today, the United States Attorney’s Office made public a complaint against Celestine Coletta Strong, 44, of Phoenix, Arizona; Jawuan Polk, 35, of Portland, Oregon; Patrick Earl Lewis, 45, residence unknown; and Ty’zhaun Marqui Lewis, 23, of Phoenix, Arizona with charges including conspiracy, wire fraud, and money laundering in connection with fraudulent Paycheck Protection Program (PPP) loan applications.
“PPP loans have been essential to the survival of small businesses during the pandemic,” said United States Attorney Michael Bailey. “It is reprehensible that some people would choose to take advantage of the program to fraudulently fill their own pockets rather than leaving that money for those who truly need it.”
According to the complaint, Strong, Polk, P. Lewis and T. Lewis devised a scheme to fraudulently obtain loans from the CARES Act Paycheck Protection Program (PPP), a program designed to help small businesses meet their payroll obligations during the COVID-19 pandemic. According to the complaint, the four conspired to submit loan applications with falsified employee and wage information, fake bank statements, and other false information in an attempt to obtain 15 different loans totaling more than $3.5 million in loan proceeds. They fraudulently obtained approximately $450,000 in proceeds before the scheme was interrupted. Some of the proceeds were used to purchase a luxury Mercedes E400, which was also seized.
“Homeland Security Investigations (HSI) along with our government and private sector partners are committed to protecting the American public against those who willingly attempt to defraud the government for financial gain,” said Scott Brown, special agent in charge for the HSI Phoenix Office. “We will continue to use our broad legal authorities and longstanding partnerships to disrupt, investigate and bring to justice those who seek to exploit and benefit from the COVID-19 pandemic.”
“The Treasury Inspector General for Tax Administration will aggressively pursue those who endeavor to defraud taxpayer-funded Coronavirus Aid, Relief, and Economic Security Act programs, which were established to provide assistance to American business owners during these unprecedented times,” said J. Russell George, Treasury Inspector General for Tax Administration. “We appreciate the efforts of the U.S. Department Justice and our law enforcement partners in this effort.”
United States Attorney Michael Bailey and Arizona Attorney General Mark Brnovich launched the COVID-19 Fraud Task Force in April 2020, leveraging the resources and expertise of more than twenty different federal and state agencies to combat fraud schemes arising out of the COVID-19 pandemic. The investigation referenced above was conducted by Homeland Security Investigations with assistance from the Treasury Inspector General for Tax Administration and the Small Business Administration Office of the Inspector General. The prosecution is being handled by Assistant U.S. Attorney Kevin M. Rapp.
A conviction for wire fraud carries a maximum penalty of twenty years of imprisonment, a $250,000 fine, or both. A conviction for money laundering carries a maximum penalty of ten years of imprisonment, a $250,000 fine, or both.
A criminal complaint is simply the method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.
ComplaintCASE NUMBERS: 2:20-mj-05300-DMF
RELEASE NUMBER: 2020-112_PPP Loan Fraud# # #
For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.Former United States Postal Service employee pleads guilty to stealing cash and gift cards from the mailRead the Press Release
ATLANTA – Former Postal employee Markeyta McAllister pleaded guilty to Obstruction of United States Mail for stealing cash and gift cards from more than 15 letters.
“While most U.S. Postal Service employees serve Americans with integrity and honesty – McAllister did not,” said U.S. Attorney Byung J. “BJay” Pak. “By opening peoples’ mail to steal money and gift cards, McAllister betrayed both the citizens she supposedly served and the reputation of her fellow employees.”
“The majority of postal employees are hard-working public servants dedicated to moving mail to its proper destination,” U.S. Postal Service Office of Inspector General Special Agent in Charge Imari R. Niles said. “Unfortunately, McAllister decided to betray the public’s trust and steal from postal customers. This plea demonstrates that USPS OIG special agents take these cases seriously, and that postal employees who steal mail are throwing away their careers and could end up in jail.”
According to U.S. Attorney Pak, the charges and other information presented in court: From July 7, 2014 to December 3, 2019, McAllister served as a mail-processing clerk assigned to sort mail deliverable to Duluth, Georgia at a postal facility in the Atlanta-metropolitan area. As a United States Postal Service employee, McAllister pledged to “preserve and protect the security of all mail in [her] custody from unauthorized opening, inspection, tampering, delay, reading of the contents or covers, or other unauthorized acts.” Furthermore, McAllister attested that she “fully underst[ood] that it is a crime, punishable by fine or imprisonment, or both, to knowingly or willfully obstruct or delay the mail, or to steal or attempt to steal mail of any kind.”
Despite swearing to preserve and protect the integrity of the United States postal system, McAllister effected a scheme to open mailed letters and to steal prepaid/gift cards and cash from within those letters. For example, from September to October 2019:
- McAllister stole a $200 prepaid Visa card from a letter addressed to a resident of Duluth, Georgia and on October 3, 2019, McAllister used the gift card;
- McAllister stole a $150 prepaid Visa card from a letter addressed to a resident of Duluth Georgia and McAllister used the gift card; and
- McAllister stole a $25 prepaid Visa card from a letter addressed to a resident of Duluth, Georgia and video surveillance footage depicts McAllister using the card at a Kroger Store in Jefferson, Georgia.
In total, as a U.S. Postal Service employee, McAllister stole cash and prepaid/gift cards from at least 15 letters in 2019.
On December 3, 2019, McAllister gave federal law enforcement officers a recorded statement where she admitted to stealing prepaid/gift cards from the mail.
From McAllister's vehicle, federal agents recovered: (a) two gift card sleeves, (b) three prepaid cards, (c) several store receipts for purchases made with prepaid/gift cards, and (d) two opened envelopes not addressed to McAllister.
On November 23, 2020, McAllister, 30, of Jefferson, Georgia, was charged via criminal information with Obstruction of U.S. Mail. McAllister pleaded guilty to that charge on December 17, 2020.
U.S. Postal Service – Office of Inspector General is investigating the case.
Assistant U.S. Attorney Jeffrey W. Davis 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.
- McAllister stole a $200 prepaid Visa card from a letter addressed to a resident of Duluth, Georgia and on October 3, 2019, McAllister used the gift card;
Former Nomura RMBS Trader Who Defrauded Customers is SentencedRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that MICHAEL GRAMINS, 38, of North Carolina, was sentenced today by U.S. District Judge Robert N. Chatigny to two years of probation, the first six months of which Gramins must spend in home confinement, for defrauding mortgage-backed securities customers of Nomura Securities International, where he was employed. Judge Chatigny also ordered Gramins to perform 300 hours of community service.
Pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the court proceeding occurred via videoconference.
According to the evidence presented during his trial, Gramins was an Executive Director on the Residential Mortgage Backed Securities (“RMBS”) Desk at Nomura Securities International (“Nomura”) in New York where he principally oversaw Nomura’s trading of bonds composed of sub-prime and option ARM loans. Between 2009 and 2013, Gramins and others defrauded customers of Nomura by fraudulently inflating the purchase price at which Nomura could buy a RMBS bond to induce their victim-customers to pay a higher price for the bond, and by fraudulently deflating the price at which Nomura could sell a RMBS bond to induce their victim-customers to sell bonds at cheaper prices, causing Nomura to profit illegally. Gramins trained subordinates to lie to customers, provided them with the language to use in deceiving customers, and encouraged them to engage in the practice.
The victims of this scheme included hedge funds, insurance companies, and asset managers from Connecticut and elsewhere.
On June 15, 2017, a jury found Gramins guilty of one count of conspiracy to commit securities and wire fraud, and not guilty of one count of securities fraud and five counts of wire fraud. The jury could not reach a verdict as to one count of securities fraud and one count of wire fraud.
In a settlement announced by the U.S. Securities and Exchange Commission in July 2019, Nomura agreed to pay approximately $25 million in restitution to customers for its failure to adequately supervise traders in mortgage-backed securities, and an additional $1.5 million in penalties.
This matter has been investigated by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Federal Bureau of Investigation, the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, and the Federal Housing Finance Agency’s Office of Inspector General.
The case is being prosecuted by Assistant U.S. Attorneys David Novick and Heather Cherry.
Former Medical Director of Suboxone Manufacturer Indivior Sentenced in Connection with Drug Safety ClaimsRead the Press Release
Timothy Baxter, the former medical director of Indivior PLC, was sentenced today in federal court in Abingdon, Virginia, to six months of home detention and 100 hours of community service in connection with the company’s marketing of an opioid drug.
Baxter pleaded guilty in August 2020 to a one-count misdemeanor Information related to Indivior’s false and misleading representations to the Massachusetts Medicaid program (MassHealth) regarding Suboxone, a drug approved for recovering opioid addicts to avoid or reduce withdrawal symptoms. In connection with his guilty plea to causing the introduction into interstate commerce of misbranded drugs under the Federal Food, Drug, and Cosmetic Act, Baxter admitted that he failed to prevent Indivior from sending false and misleading information to MassHealth related to the relative safety of Suboxone Film, a version of Suboxone, around children.
“In this administration, the Department of Justice has augmented its important and ongoing drug enforcement efforts with a series of new initiatives targeted at illegal conduct involving prescription opioid drugs,” said Deputy Attorney General Jeffrey A. Rosen. “The Department’s multi-pronged prosecution of Indivior’s unlawful promotion of Suboxone is a prime example of how to combat this crisis through diverse strategies. The net effect of the Department’s Indivior-related cases will bolster ongoing efforts to punish criminal conduct in the opioid space, deter further criminal conduct among opioid manufacturers and their top executives, and contribute significantly to the Department’s objective to stem the tide of this epidemic.”
“When Timothy Baxter failed to ensure Indivior provided honest and accurate information to a state Medicaid program about Suboxone, it resulted in overstated safety claims and criminal conduct,” said Acting U.S. Attorney Daniel P. Bubar. “Baxter’s failure was especially egregious, given his role in the company as global medical director. Today’s sentence ought to be a deterrent to other pharmaceutical executives against providing anything less than truthful information about their products. We could not have done this case without the hard work of and cooperation with the Virginia Attorney General’s Office and our federal partners, for which we are incredibly grateful.”
“The Opioid crisis continues to be a critical public health issue with the toll of addiction—in lost lives and broken families—affecting every community in America. Addressing this crisis is one of the FDA’s highest priorities,” said FDA Commissioner Stephen M. Hahn, M.D. “Medication-assisted treatments incorporating drugs like Indivior’s Suboxone, in combination with counseling and behavioral therapy, are an important tool in combating opioid use disorder but can quickly become part of the problem if not used responsibly. When companies and their leadership provide misleading information about relative product benefits, they can ultimately risk more misuse, abuse, diversion, and accidental exposure to opioid drugs as well as make treatment more difficult to obtain for those suffering from this crisis. We will continue to work with the Department of Justice to investigate and hold accountable those who devise and participate in schemes to the detriment of the public health.”
According to court documents, Baxter helped oversee Indivior’s efforts in 2012 to secure formulary coverage for Suboxone Film from MassHealth. Indivior employees devised a strategy to win preferred drug status for Suboxone Film and counteract a non-opioid competitor MassHealth was considering for opioid-addiction treatment. A certain Indivior employee subsequently shared false and misleading safety information with MassHealth officials about Suboxone Film’s risk of accidental pediatric exposure. Baxter failed to prevent this course of conduct carried out by an employee under his supervision. Two months after receiving that false and misleading information, MassHealth announced it would provide access to Suboxone Film for Medicaid patients with children under the age of six.
Indivior’s former CEO, Shaun Thaxter, was sentenced in October 2020 to six months in prison and a $600,000 criminal fine and forfeiture after he pleaded guilty to the same charge. U.S. District Court Judge James P. Jones of the Western District of Virginia handed down the sentences for both Baxter and Thaxter. The cases follow corporate criminal and civil resolutions announced by the Department earlier this year. In total, payments made by Indivior Solutions and its parent companies, Indivior Inc. and Indivior plc, along with payments made under a 2019 resolution with Indivior’s former parent, Reckitt Benckiser Group plc, will exceed $2 billion. That amount represents the second-largest monetary resolution obtained by the Department of Justice in a case involving an opioid drug.
The criminal case against Indivior was prosecuted by the U.S. Attorney’s Office for the Western District of Virginia; the Department of Justice Civil Division’s Commercial Litigation Branch; the Department of Justice Civil Division’s Consumer Protection Branch; the Virginia Medicaid Fraud Control Unit of the Office of the Virginia Attorney General; and the Federal Trade Commission. This matter was investigated by the Virginia Attorney General’s Medicaid Fraud Control Unit; FDA’s Office of Criminal Investigation; the United States Postal Service Office of Inspector General; and the Department of Health and Human Services Office of Inspector General.
The joint effort advances the goals of the Department’s Prescription Interdiction & Litigation (PIL) Task Force to deploy all available criminal, civil, and regulatory tools to hold opioid manufacturers accountable for unlawful practices and to ensure that prescription opioid products are marketed truthfully.
For more information about the U.S. Attorney’s Office for the Western District of Virginia, visit its website at https://www.justice.gov/usao-wdva. Additional information about the Consumer Protection Branch and the Civil Fraud Section and their enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch and http://www.justice.gov/civil/fraud-section. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
Former Medical Director of Suboxone Manufacturer Indivior Sentenced in Connection with Drug Safety ClaimsRead the Press Release
ABINGDON, Virginia - Timothy Baxter, the former medical director of Indivior PLC, was sentenced today in federal court in Abingdon, Virginia, to six months home detention, 100 hours of community service, and a $100,000 criminal fine in connection with the company’s marketing of an opioid drug.
Baxter pleaded guilty in August 2020 to a one-count misdemeanor Information related to Indivior’s false and misleading representations to the Massachusetts Medicaid program (MassHealth) regarding Suboxone, a drug approved for recovering opioid addicts to avoid or reduce withdrawal symptoms. In connection with his guilty plea to causing the introduction into interstate commerce of misbranded drugs under the Federal Food, Drug, and Cosmetic Act, Baxter admitted that he failed to prevent Indivior from sending false and misleading information to MassHealth related to the relative safety of Suboxone Film, a version of Suboxone, around children.
“In this administration, the Department of Justice has augmented its important and ongoing drug enforcement efforts with a series of new initiatives targeted at illegal conduct involving prescription opioid drugs,” said Deputy Attorney General Jeffrey A. Rosen. “The Department’s multi-pronged prosecution of Indivior’s unlawful promotion of Suboxone is a prime example of how to combat this crisis through diverse strategies. The net effect of the Department’s Indivior-related cases will bolster ongoing efforts to punish criminal conduct in the opioid space, deter further criminal conduct among opioid manufacturers and their top executives, and contribute significantly to the Department’s objective to stem the tide of this epidemic.”
“When Timothy Baxter failed to ensure Indivior provided honest and accurate information to a state Medicaid program about Suboxone, it resulted in overstated safety claims and criminal conduct,” said Acting United States Attorney Daniel P. Bubar. “Baxter’s failure was especially egregious, given his role in the company as global medical director. Today’s sentence ought to be a deterrent to other pharmaceutical executives against providing anything less than truthful information about their products. We could not have done this case without the hard work of and cooperation with the Virginia Attorney General’s Office and our federal partners, for which we are incredibly grateful.”
According to court documents, Baxter helped oversee Indivior’s efforts in 2012 to secure formulary coverage for Suboxone Film from MassHealth. Indivior employees devised a strategy to win preferred drug status for Suboxone Film and counteract a non-opioid competitor MassHealth was considering for opioid-addiction treatment. A certain Indivior employee subsequently shared false and misleading safety information with MassHealth officials about Suboxone Film’s risk of accidental pediatric exposure. Baxter failed to prevent this course of conduct carried out by an employee under his supervision. Two months after receiving that false and misleading information, MassHealth announced it would provide access to Suboxone Film for Medicaid patients with children under the age of six.
Indivior’s former CEO, Shaun Thaxter, was sentenced in October 2020 to six months in prison and a $600,000 criminal fine and forfeiture after he pleaded guilty to the same charge. U.S. District Court Judge James P. Jones of the Western District of Virginia handed down the sentences for both Baxter and Thaxter. The cases follow corporate criminal and civil resolutions announced by the Department earlier this year. In total, payments made by Indivior Solutions and its parent companies, Indivior Inc. and Indivior plc, along with payments made under a 2019 resolution with Indivior’s former parent, Reckitt Benckiser Group plc, will exceed $2 billion.
“Sadly, we continue to feel the devastating effects of the opioid crisis in communities across the Commonwealth,” said Attorney General Mark Herring. “Opioid manufacturers and their leadership must be held accountable for the role that they played in creating and prolonging this epidemic by putting profits over people. I want to thank my Medicaid Fraud Control Unit, as well as our local, state, and federal partners for all of their hard work and collaboration on this important case.”
“Opioid addiction is a serious public health crisis in the United States and the FDA is continuing to take steps to combat and address this significant issue. When companies and their leadership provide misleading information about the benefits of their products, it undermines efforts to provide affordable treatment, especially to those suffering from opioid addiction,” said Catherine Hermsen, Assistant Commissioner of the FDA’s Office of Criminal Investigations. “We will continue to investigate and work to protect against those whose schemes jeopardize public health and put Americans at risk.”
“The U.S. Postal Service spends billions of dollars per year in workers compensation / health care related costs, most of which are legitimate,” said U.S. Postal Service Office of Inspector General Special Agent in Charge Kenneth Cleevely, Eastern Area Field Office. “However, when corporations, medical providers, pharmacies, and other organizations choose to flout the rules and profit illegally, special agents with the USPS OIG will work with our law enforcement partners to hold them responsible. To report fraud or other criminal activity involving the Postal Service, contact our special agents at www.uspsoig.govor 888-USPS-OIG.”
The criminal cases against Baxter, Thaxter, and Indivior were prosecuted by attorneys from the U.S. Attorney’s Office for the Western District of Virginia, Department of Justice’s Civil Division, Virginia Attorney General’s Medicaid Fraud Control Unit, and Federal Trade Commission including Albert P. Mayer, Randy Ramseyer, Kristin L. Gray, Joseph S. Hall, Janine M. Myatt, Garth W. Huston, Carol Wallack, Charles J. Biro, and Matthew J. Lash. The investigation was handled by the FDA’s Office of Criminal Investigations; Virginia Medicaid Fraud Control Unit; United States Postal Service - Office of Inspector General; and U.S. Department of Health and Human Services - Office of Inspector General.
For more information about the U.S. Attorney’s Office for the Western District of Virginia, visit its website at https://www.justice.gov/usao-wdva. Additional information about the Consumer Protection Branch and the Civil Fraud Section and their enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch and http://www.justice.gov/civil/fraud-section. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
Former Louisville Investment Advisor Sentenced to 8 Years in Federal PrisonRead the Press Release
LOUISVILLE, Ky. – A former registered broker and financial advisor who defrauded multiple investors has been sentenced to 97 months, 3 years supervised release, and a SPA of $1,000 by U.S. District Senior Judge Charles R. Simpson III.
“Trust was the victim in this case; trust in the defendant who portrayed himself as a family member and stole millions, in our financial system, and in other human beings,” said U.S. Attorney Russell Coleman. “Thanks, however, to a diligent career prosecutor and solid work by the FBI, my hope is that our system of justice can help the victims regain some of that lost trust.”
Christopher Hibbard, 44, of Louisville, Kentucky, was initially indicted in November of 2018 with one count of investment fraud and nine counts of wire fraud. He pleaded guilty on June 30, 2020 to the charges.
According to a plea agreement, on or about February 9, 2007, and December 20, 2008, Hibbard made dozens of wire transfers from the brokerage account of a Louisville resident in the total amount of $1,226,995. Hibbard admitted to agents of the Federal Bureau of Investigation (FBI) that he had misappropriated and used a substantial portion of the client’s monies for his own personal use. After nearly exhausting the funds in the account, Hibbard presented the client with fraudulent brokerage statements that were used to lull the client into believing the account contained as much as $4 million.
In addition, between January 10, 2011, and December 20, 2017, Hibbard initiated over 300 unauthorized ACH transfers by wire in interstate commerce from client accounts under his management to an American Express account controlled by Hibbard. Hibbard caused the transfers to be made without the knowledge, permission, or other authorization of the account holder(s) thereby misappropriating and embezzling more than $3 million in client monies and using the funds for personal expenditures. In order to effectuate his scheme to defraud, the Defendant engaged in unauthorized trading and liquidation of clients' investments, made unauthorized withdrawals from client annuity accounts, and committed acts of forgery.
Hibbard was a broker registered with three different securities firms between 2004 and 2018. Based upon his violation of securities laws, effective May 2018, the Financial Regulatory Authority suspended Hibbard permanently from associating with any FINRA member in any capacity.
The case was prosecuted by Assistant United States Attorney Marisa J. Ford. The investigation was conducted by the Federal Bureau of Investigation (FBI).
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Former DoD Employee Sentenced for Violently Assaulting Two Neighbors While Living OverseasRead the Press Release
An Oklahoma City, Oklahoma, man was sentenced today to 60 months in prison followed by three years of supervised release in the Western District of Oklahoma for assaulting two neighbors inside their apartment in Okinawa, Japan, while working for the U.S. Armed Forces overseas as a civilian engineer.
Brendan Rowin Figuly, 31, was sentenced by U.S. District Judge Bernard M. Jones for two counts of assault resulting in serious bodily injury.
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Timothy J. Downing of the Western District of Oklahoma, and Air Force Office of Special Investigations Commander Brigadier General Terry L. Bullard, made the announcement.
According to admissions during the plea hearing, Figuly was living in Okinawa, Japan, and working for the U.S. Armed Forces as a civilian engineer at Kadena Air Force Base. On April 11, 2020, Figuly was living in a multi-unit apartment building off-base. That afternoon, he entered the apartment of a female neighbor, E.M., armed with a box cutter knife, and demanded to know the whereabouts of their landlord. Figuly stated he wanted to kill the landlord, but instead attacked E.M., strangling her until she fell unconscious, cutting her fingers with a knife, and striking her in the face with a baking dish. When she regained consciousness, E.M. fled to her apartment balcony, and Figuly pursued her, breaking the balcony door in the process. E.M.’s husband J.M. then entered the apartment, at which point Figuly threatened to kill J.M. Figuly also assaulted J.M. with the box cutter knife, before J.M. and a neighbor could subdue him.
The investigation was conducted by the U.S. Air Force Office of Special Investigations. The prosecution was handled by Trial Attorney Mona Sahaf of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Jason Harley of the Western District of Oklahoma.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Former California Unemployment Office Worker Charged in Scheme to Steal Hundreds of Thousands of Dollars in Pandemic Unemployment AidRead the Press Release
Assistant U. S. Attorney Stephen H. Wong (619) 546-9464
NEWS RELEASE SUMMARY – December 17, 2020
SAN DIEGO – A former contract employee with California’s Employment Development Department, which administers the state’s unemployment insurance program, was charged in federal court today with fraud and identity theft in connection with a scheme to steal hundreds of thousands of dollars in pandemic unemployment aid.
Nyika Gomez, 40, of San Diego, was arrested at her home yesterday and charged in a criminal complaint unsealed today. She made her first appearance in federal court at 2 p.m. today before U.S. Magistrate Judge Karen S. Crawford.
According to the complaint, Gomez conspired with her boyfriend, a prisoner serving a term of 94 years to life at California State Prison, Sacramento for murder, to submit fraudulent pandemic unemployment insurance claims for California state prisoners and out-of-state residents whose identifying information was stolen.
Gomez’s job at the Employment Development Department (EDD) involved assisting unemployed Californians to qualify for benefits. As alleged in the complaint, she used her training and expertise to defraud that very program in a scheme designed to generate hundreds of thousands of dollars in stolen benefits.
As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, Congress provided new unemployment benefits for those affected by the COVID-19 pandemic who would not otherwise qualify for unemployment insurance.
According to the criminal complaint, in July 2020, Gomez was employed by an EDD contractor as a Call Center Agent where she helped individuals process their unemployment insurance claims. In that position, Gomez received training in EDD’s procedures and regulations and she had access to confidential information regarding EDD’s unemployment insurance program.
The complaint said Gomez used that knowledge to submit fraudulent unemployment insurance claims using personal identifying information (PII) she acquired from California prisoners, with help from her inmate boyfriend. With his help, she was also able to purchase stolen PII from out-of-state residents, which she used to submit additional fraudulent unemployment claims.
Gomez arranged for the stolen benefits – paid out in the form of a debit card – to be mailed directly to her residence, or to the residence of someone working with her. Gomez returned some of the proceeds to the prison inmates by transferring money to their prison accounts.
In the statement of facts submitted for the criminal complaint, agents describe how they obtained video surveillance recordings of Gomez using the fraudulently obtained debit cards at bank ATM machines. For example, the photo below is a screen-capture from an ATM video taken on July 23, 2020. Gomez is withdrawing $1,000 on a debit card issued to a California prison inmate.
According to the complaint, the following video screen-captures depict the defendant while using EDD-issued debit cards she obtained through fraud:
Below is a screen-capture of Gomez withdrawing $1,000 from an ATM issued to a California Prison Inmate on July 23, 2020.
In this screen-capture from a drive through ATM taken on July 20, 2020, Gomez is withdrawing $500 from a debit card issued to a California prison inmate.
In this screen capture from a drive-through ATM taken on August 13, 2020, Gomez is withdrawing $300 from a debit card issued to a California prison inmate.
The charges are the product of an investigation jointly undertaken by the U.S. Department of Labor, Office of the Inspector General (DOL-OIG), the California Employment Development Department Office of Investigations (EDD OI), United States Postal Inspection Service (USPIS), and Homeland Security Investigations (HSI). Investigators initiated an investigation after noting several unemployment insurance benefit claims originating from Gomez’s own computer and using her own residence as the claimant’s address. Investigators also obtained consensually monitored recorded calls between Gomez and her boyfriend discussing the scheme and supplying Gomez with PII of prison inmates. A court-authorized search of Gomez residence also revealed that she possessed, and was using, two of the debit cards that were issued for claims by prison inmates.
“Pandemic unemployment insurance programs are a critical part of our safety net designed to support hardworking citizens who are suffering during this unprecedented time,” said U.S. Attorney Brewer. “Fraud related to COVID-19 is particularly disturbing as it exploits a national crisis for personal gain.”
Brewer praised prosecutor Stephen Wong and agents from U.S. Department of Labor, Office of the Inspector General Office of Investigations-Labor Racketeering & Fraud; California Employment Development Department Office of Investigations; California Department of Corrections and Rehabilitation-Investigative Services Unit; United States Postal Inspection Service and Homeland Security Investigations for their excellent work on this case.
If you think you are a victim of COVID-19 fraud, immediately report it the FBI (visit ic3.gov, tips.fbi.gov, or call 1-800-CALL-FBI or the San Diego FBI at 858-320-1800).
In addition, the public is urged to report suspected fraud schemes related to COVID-19 by calling the National Center for Disaster Fraud hotline (1-866-720-5721) or by e-mailing the NCDF at [email protected].
DEFENDANT Case Number 20-MJ-5356-KSC
Nyika Renada Gomez Age: 40 San Diego, CA
SUMMARY OF CHARGES
Counts 1 through 9: Title 18, United States Code, section 1343 (wire fraud)
Maximum penalty: Twenty years in prison; fine; penalty assessment
Counts 10 through 12: Title 18, United States Code, section 1028A; (aggravated identity theft)
Maximum penalty: Two-year mandatory-minimum in prison, consecutive to any prison term imposed for Counts 1 through 9.
AGENCY
U.S. Department of Labor, Office of the Inspector General (DOL-OIG) Office of Investigations-Labor Racketeering & Fraud
California Employment Development Department Office of Investigations (EDD OI)
California Department of Corrections and Rehabilitation-Investigative Services Unit (CDCR-ISU)
United States Postal Inspection Service (USPIS)
Homeland Security Investigations (HSI)
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Former CCAD supervisors convicted of falsifying helicopter blade test recordsRead the Press Release
CORPUS CHRISTI, Texas – Two local man have admitted they falsified testing records of aircraft parts intended to be installed on Black Hawk helicopters, announced U.S. Attorney Ryan K. Patrick.
Samuel Escareno, 56, Robstown, entered his plea today, while Albert Flores, 59, Corpus Christi, pleaded guilty Oct. 29.
Flores and Escareno are both former supervisors at the Corpus Christi Army Depot (CCAD). At their respective pleas, they admitted they aided, abetted, counseled, commanded and induced others to make false entries and certifications related to UH-60 Black Hawk helicopter main rotor blade dynamic balance data sheets. As a result, nonconforming rotor blades appeared to meet specifications.
CCAD employees altered test sheets to make nonconforming blades appear to operate within specifications rather than return the blades to the shop for alteration or remanufacture. Because of the scheme, a total of 262 main rotor blades that failed to operate within specifications were shipped to Department of Defense installations worldwide between Jan. 7, 2012, and Oct. 7, 2014. These were to be installed on UH-60 Black Hawk helicopters.
Flores served as the CCAD Blade Division’s supervisor. Escareno was the team leader during this period. Following the discovery of the scheme, both were terminated.
CCAD employees that worked under Flores said he told them to manipulate dynamic balance data sheets. The operators understood that if testing revealed a blade did not meet specifications for "slope” or “load," they were expected to manipulate the testing data sheet rather than send the blade back to the shop for alterations. Some operators reported that Flores occasionally altered testing data sheets himself and then gave them back for their signature and certification.
While serving as team leader, Escareno personally altered at least 30 testing data sheets and falsely certified the blades as operating within specifications. When the shop was busy, operators would give Escareno the data sheets for failing blades who would then alter them indicating passing. Escareno then gave the altered sheet back to the operators to certify.
"Today's plea agreement is further evidence of the unwavering commitment between the US Army Criminal Investigations Division and the U.S. Attorney's Office to seek accountability and justice for anyone whose actions may result in harm to our Nation's most precious resource, the United States Warfighter," said Special Agent in Charge Ray A. Rayos of US Army CID - Major Procurement Fraud Unit (MPFU).
U.S. District Judge Nelva Gonzales will sentence Flores on Jan. 27, 2021, while Escareno is set for March 17, 2021. Both men face a sentence of up to 10 years in federal prison and a possible $250,000 maximum fine.
U.S. Army CID-MPFU conducted the investigation. Assistant U.S. Attorney Robert D. Thorpe Jr. is prosecuting the case.
Foreign National Arrested at Pensacola International Airport Sentenced to Federal Prison for National Security OffensesRead the Press Release
PENSACOLA, FLORIDA – United States Attorney Lawrence Keefe, of the Northern District of Florida, today announced that Colin Fisher, a citizen of the United Kingdom, was sentenced to two and a half years in federal prison on charges related to his attempt to export power generating equipment to Iran. He was also fined $5000. Fisher was arrested by federal agents earlier this year when he arrived at the Pensacola airport from the United Arab Emirates in order to complete the illegal transaction and obtain equipment for a buyer in Iran.
Fisher pled guilty in September to violating the International Emergency Economic Powers Act (“IEEPA”) and attempted smuggling. Between 2017 and the time of his arrest in August, Fisher, 45, worked to violate the Iranian embargo by attempting to export a Solar Mars 90 S turbine core engine and parts from the United States for delivery to an end user in Iran. This included participating in fraudulent invoicing and using coded language with conspirators to communicate about the illegal transactions. Despite these efforts, law enforcement authorities discovered the plan and were able to seize the turbine before its transatlantic journey to the end user, a conspirator in Iran who is linked to an Iranian energy company. The turbine, which was valued at half a million dollars, could have been used to provide energy to the oil fields of Iran.
“The Iranian embargo is directly related to the national security of the United States, and by attempting to evade that embargo Fisher and his fellow conspirators placed this nation directly at risk,” U.S. Attorney Keefe said. “It’s appalling to think that someone would place personal financial gain above the safety of the nation, but this case shows we will pursue and punish those who try.”
When Fisher was arrested on August 7, 2020, he had arrived at the Pensacola International Airport to meet with individuals he believed would help him finalize the illicit transaction. Instead, he was met by agents from the U.S. Department of Commerce and the Federal Bureau of Investigation, who took him into custody. When he completes his prison sentence, Fisher will be removed from the United States.
“American law enforcement remains relentless in our efforts to protect the national security of this country,” said Rachel L. Rojas, Special Agent in Charge of the FBI Jacksonville Division. “This case proves our continued commitment to pursue anyone who acts as an agent of the Iranian government in the United States. The FBI is proud to support our partners at the Department of Commerce – Bureau of Industry and Security and we are thankful for the support of the U.S. Attorney’s Office for the Northern District of Florida throughout this investigation.”
James Meharg, CEO and president of Turbine Resources International, LLC, in Pensacola, was previously convicted of conspiring with Fisher to export the turbine and parts from the United States to an Iranian recipient, in violation of the Iranian Transactions and Sanctions Regulations. Meharg is currently serving a 3½-year sentence in federal prison.
Assistant United States Attorney David L. Goldberg prosecuted the case following a joint investigation by the United States Department of Commerce’s Bureau of Industry and Security along with the Federal Bureau of Investigation.
The United States Attorney’s Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. To access public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the U.S. Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
Press Release - U.S. v. FisherFlorida Woman Sentenced for Sex Trafficking of a MinorRead the Press Release
RALEIGH, N.C. – United States Attorney Robert J. Higdon, Jr. announced that today in federal court, Chief United States District Judge Terrence Boyle sentenced Sydney Crandon, age 24, of Orlando, Florida to 133 months imprisonment followed by a term of 5 years supervised release.
Crandon was named in an Indictment filed July 31, 2019 for Sex Trafficking of a Minor. On July 23, 2020 she entered a plea of guilty to that charge.
In June, 2017 Crandon reached out to a minor child, age 14, and encouraged the child to join Crandon in engaging in prostitution in the Raleigh area. Crandon sent an uber to the child’s residence to take the child to a local hotel. Once at the hotel, Crandon photographed the child in the hotel room for her online prostitution advertisement. Crandon set up multiple clients for the child to meet to engage in sexual activities. Over two days Crandon prostituted the child from two different hotels in Raleigh.
“The key word in this announcement is ‘child,’ stated Robert J. Higdon, Jr., United States Attorney for the Eastern District of North Carolina. “This defendant enticed, lured, and sexually exploited a ‘child,’ one of our most vulnerable citizens and one of our most valuable resources. She stole the child’s innocence, sacrificed her future and risked her life for gratification and profit. And we are gratified by the Court’s sentence and the strong message it sends to the defendant and others who would do the same thing to other children among us.”
This investigation was conducted by the Raleigh Police Department, the Durham Police Department and the Federal Bureau of Investigation. Assistant United States Attorneys Erin Blondel and Charity Wilson represented the government.
This case was part of the Project Safe Childhood initiative, a national program aimed at ensuring that criminals exploiting children are effectively prosecuted by making full use of all available law enforcement resources at every level. For more information about this important national project, Project Safe Childhood, go to www.projectsafechildhood.gov.
A copy of this press release is located on our website. 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-00296-BO.
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The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Florida Man Pleads Guilty to Wire Fraud Conspiracy Based on Exploitation of USPS’s Informed Delivery SystemRead the Press Release
BOSTON – A Florida man pleaded guilty today in federal court in Boston in connection with the fraudulent abuse of the U.S. Postal Service’s (USPS) Informed Delivery electronic notification system.
Fred Alcius, 28, of Lauderhill, Fla., pleaded guilty to one count of conspiracy to commit wire fraud and two counts of aggravated identity theft. U.S. District Court Judge Indira Talwani scheduled sentencing for March 26, 2021.
In June 2019, Alcius was indicted along with co-defendant Lucson Appolon, who previously pleaded guilty and was sentenced to two years in prison. Co-conspirators Peter Belony and Kevens Louis were previously sentenced to 24 and 27 months in prison, respectively.
Informed Delivery is a free electronic notification service provided by the USPS that gives residential and P.O. Box customers the ability to digitally preview their incoming mail and manage their packages.
The defendants accessed victims’ personal identifying information, including names, Social Security numbers, dates of birth, and addresses on the “dark web” and then used the information to open credit cards in the victims’ names. The defendants then subscribed to Informed Delivery using the victims’ personal identifying information and a fraudulent email address created to track the delivery of credit cards to the victims’ residential mailboxes. The defendants subsequently intercepted the credit cards at the victims’ mailboxes before the victims could receive them and used those credit cards at ATMs and to purchase gift cards and other items for resale at Apple and Walmart, among other retail establishments. The defendants traveled to states up and down the East Coast in furtherance of the fraud, including Maine and Massachusetts.
The charge of conspiracy to commit wire fraud carries a sentence of up to 20 years in prison, up to three years of supervised release and a fine of up to $250,000. The charge of aggravated identity theft carries a mandatory minimum sentence of two years in prison, to be served consecutive to any other sentence imposed, one year of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Joseph W. Cronin, Inspector in Charge of the U.S. Postal Inspection Service made the announcement today. Assistant U.S. Attorney Mackenzie A. Queenin of Lelling’s Securities, Financial & Cyber Fraud Unit is prosecuting the case.
Federal Grand Jury Charges Six with Conspiracy to Kidnap the Governor of MichiganRead the Press Release
GRAND RAPIDS, MICHIGAN — United States Attorney Andrew Birge announced today that a federal grand jury has indicted six men on a charge of conspiracy to kidnap the Governor of Michigan, Gretchen Whitmer. Adam Fox, Barry Croft, Ty Garbin, Kaleb Franks, Daniel Harris and Brandon Caserta each face up to life in prison if convicted. Fox, Garbin, Franks, Harris, and Caserta are residents of Michigan. Croft is a resident of Delaware. The six were previously charged by complaint, but under the United States Constitution, the government must present such a felony case to a grand jury and obtain an indictment to proceed with the prosecution.
The investigation is ongoing. FBI agents of the Detroit Field Office and other members of their Joint Terrorism Task Force, including the Michigan State Police, are conducting the investigation. FBI agents and JTTF members in the Baltimore and Milwaukee Field Offices of the FBI are also involved. The U.S. Attorney’s Office for the Western District of Michigan is prosecuting the federal charges. U.S. Attorney’s Offices in the Eastern District of Michigan, Western District of Wisconsin, and Delaware have assisted.
The charges in an indictment are merely accusations, and a defendant is presumed innocent until and unless proven guilty in a court of law.
A copy of the indictment is included in this link .###
Federal Grand Jury B Indictments Announced for DecemberRead the Press Release
United States Attorney Trent Shores today announced the results of the December 2020 Federal Grand Jury B.
The following individuals have been charged with violations of United States law in indictments returned by the Grand Jury. The return of an indictment is a method of informing a defendant of alleged violations of federal law, which must be proven in a court of law beyond a reasonable doubt to overcome a defendant’s presumption of innocence.
Austin Lee Blaine Gingras, Savannah Mae Down O'Banion. Firearms Conspiracy; Assault With a Dangerous Weapon in Indian Country. Gingras, 26, and O’Banion, 23, both of Broken Arrow, are charged for conspiring together to possess and brandish a firearm in relation to a crime of violence. Within a two-month span, these individuals were found brandishing a firearm on four different occasions after four different altercations, including: pointing a firearm at a group of individuals, shooting a round into the air at a bar, shooting into the home of an individual after he refused to let O’Banion inside, and firing into a group of people at the Hex House from their car and striking a victim. Aside from the conspiracy charge, Gingras and O’Banion are being charged for assault with a dangerous weapon after shooting into a victim’s home on Sept. 27 and after striking another victim in the drive by shooting on Oct. 24. The FBI, Tulsa Police Department, Broken Arrow Police Department, and Sapulpa Police Department are the investigative agencies.
Hector Manuel Hernandez. Murder-Second Degree in Indian Country. Hernandez, 36, of Tulsa is charged with second degree murder. On November 26, 2019, Hernandez was allegedly driving while intoxicated. He crashed his vehicle into another and then fled the scene. While attempting to flee the scene of the first collision, he directly crashed into another vehicle, killing the driver. The FBI and Broken Arrow Police Department are the investigative agencies.
Dustin Kyle Marris. Felon in Possession of a Firearm and Ammunition; Possession of Methamphetamine With Intent to Distribute; Carrying a Firearm During and in Relation to a Drug Trafficking Crime. Marris, 32, of Okemah, is charged with being a felon in possession of a Taurus .45 caliber semi-automatic pistol and ammunition. Marris is a 4-time convicted felon. Further, Marris is being charged with intentionally possessing methamphetamine with the intent to distribute and carrying a firearm during this alleged drug trafficking crime. The Bureau of Alcohol, Tobacco, Firearms and Explosives and Claremore Police Department are the investigative agencies.
Marris was also charged recently in the Eastern District of Oklahoma with assault with intent to commit murder in Indian Country; assault with a deadly weapon with intent to do bodily harm in Indian Country; use, carry, brandish and discharge of a firearms during and in relation to a crime of violence; possession with intent to distribute methamphetamine; and felon in possession of a firearm.
Makita Auie McClish Felon in Possession of a Firearm and Ammunition; Possession of Methamphetamine With Intent to Distribute; Possession of a Firearm in Furtherance of a Drug Trafficking Crime. McClish, 33, of Tulsa, is charged with being a felon in possession of a Kel-Tec P-32, .32 caliber pistol and ammunition. Further, McClish is not only being charged with possession with intent to distribute methamphetamine, but also for doing so while possessing a firearm. U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Tulsa Police Department are the investigative agencies.
Joshua Kaleb Moles. Obstructing, Delaying, and Affecting Commerce by Robbery; Robbery in Indian Country. Moles, 31, of Sand Springs, is charged with robbing the Cowboy Corner convenience store in Jenks, threatening store employees with a hand gun in the process. The FBI and Tulsa Police Department are the investigative agencies.
Brittany Michelle Russell. Robbery in Indian Country. Russell, 27, of Tulsa, is charged with robbery after she allegedly used force and violence to steal a cell phone, car keys, a debit card, cash, and a driver’s license from the victim. The FBI and Tulsa Police Department are the investigative agencies.
Marilyn Elaine White. Distribution of Methamphetamine. White, 53, of Okmulgee, is charged with intentionally distributing methamphetamine. The Oklahoma Bureau of Narcotics and Dangerous Drugs and the Drug Enforcement Administration are the investigative agencies.
Federal Court Orders North Carolina Pharmacy, Pharmacy Owner, and Pharmacist-in-Charge to Pay More Than $1 Million and to Cease Dispensing Opioids or Other Controlled SubstancesRead the Press Release
RALEIGH, N.C. – A federal court in the Eastern District of North Carolina entered a consent judgment and injunction requiring a North Carolina pharmacy, Seashore Drugs, Inc., its owner John D. Waggett, and its pharmacist-in-charge Billy W. King II, to pay $1,050,000.00 in civil penalties and to cease dispensing opioids or other controlled substances, the Department of Justice announced.
The consent order resolves a complaint filed by the United States alleging that Seashore Drugs, Waggett, and King repeatedly filled prescriptions for opioids and other controlled substances in violation of the Controlled Substances Act. The United States alleged that, for years, defendants ignored well-known “red flags” of drug diversion and drug-seeking behavior when filling prescriptions for controlled substances. These prescriptions often involved well-known, highly addictive, and highly abused painkillers such as oxycodone, hydrocodone, and methadone, along with other “potentiator” drugs—drugs that heighten the euphoric effects of opioids, like carisoprodol (i.e., Soma) and alprazolam (i.e., Xanax).
“The Department of Justice continues to use all tools at its disposal to combat the opioid crisis,” said Acting Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Civil Division. “Reports indicate that COVID-19 has exacerbated many of the opioid crisis’s underlying causes. As a result, the Civil Division, DEA, and other law enforcement partners have redoubled efforts to ensure that pharmacies that fail to uphold their obligation to dispense controlled substances lawfully will be held accountable.”
“Opioid addiction and abuse have devastated communities across our nation, and eastern North Carolina is no exception,” said Robert J. Higdon, Jr., U.S. Attorney for the Eastern District of North Carolina. “As the last line of defense between these dangerously addictive substances and our communities, pharmacists and pharmacies play a critical role in stemming the tide of the opioid epidemic. Seashore, Waggett, and King ignored that responsibility and, instead, made matters worse. Today’s order demonstrates our office’s continued, unwavering commitment to hold responsible all who had a role to play in this crisis — from distributors, to prescribers, to the pharmacies who ultimately put the pills in patients’ hands.”
“These pharmacists abandoned their code of ethics,” said Robert J. Murphy, Special Agent in Charge of the DEA. “If diversion of controlled substances is suspected, pharmacists must investigate and resolve any red flags before filling a prescription. These steps are necessary to comply with the law and to protect patient health. We will not hesitate to use all federal resources necessary to ensure that members of the health care industry follow the law.”
As alleged in the complaint, which included several patient examples, many prescriptions raised multiple red flags, but Seashore Drugs, Waggett, and King failed to take the required steps to resolve those red flags and ensure the prescriptions’ legitimacy before filling them. The red flags allegedly ignored by Seashore Drugs, Waggett, and King were numerous and included, among others:
- Combinations of controlled substances that were highly unlikely to serve a legitimate medical purpose and/or were known “cocktails” favored by drug abusers, including numerous “cocktails” written by a physician whose prescribing privileges ultimately were suspended by the North Carolina Medical Board for improper opioid prescribing;
- Extremely high doses of opioids dispensed for years on end, including high-dose opioid prescriptions written by a prescriber located in another state hundreds of miles away and written for members of the same family; and
- Repeated early fills of prescriptions allowing individuals, over time, to receive many extra doses of opioids and other controlled substances.
As set forth in the complaint, this conduct led Seashore to develop a reputation in the local pharmacy community as a place that filled prescriptions other pharmacies refused. And within the pharmacy, King often filled prescriptions for customers his own pharmacists, no longer on shift, previously refused to fill. As a result, Seashore attracted drug seekers, including individuals with histories of prescription-drug and illicit-drug abuse. Seashore staff even reported to King that individuals were exchanging recently dispensed drugs on the bench outside the pharmacy, but King took no action. Multiple customers who filled opioid prescriptions at Seashore died from prescription-drug overdoses within days after Seashore dispensed their pills.
The defendants have not admitted the allegations in the complaint, but the parties agreed to resolve the case without further litigation. The court adopted the parties’ agreement and entered a consent order that, among other things:
- Permanently prohibits Waggett from dispensing opioids or other controlled substances;
- Prohibits King from dispensing Schedule II controlled substances, including most opioids, for 180 days and then requires King to submit to further DEA monitoring for 3 years; and
- Permanently prohibits Waggett and King from serving as a manager, owner, operator, or pharmacist-in-charge of any entity, including a pharmacy that administers, dispenses, or distributes controlled substances.
The investigation and prosecution of this case were a joint effort by the U.S. Attorney’s Office for the Eastern District of North Carolina, the Consumer Protection Branch of the U.S. Department of Justice and the U.S. Drug, Enforcement Administration. Assistant U.S. Attorneys C. Michael Anderson and John E. Harris of the U.S. Attorney’s Office for the Eastern District of North Carolina and Trial Attorney James W. Harlow of the Civil Division’s Consumer Protection Branch represented the United States. Additional investigatory assistance was provided by the U.S. Department of Health and Human Services’ Office of Inspector General and the North Carolina Board of Pharmacy.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch.
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The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
- Combinations of controlled substances that were highly unlikely to serve a legitimate medical purpose and/or were known “cocktails” favored by drug abusers, including numerous “cocktails” written by a physician whose prescribing privileges ultimately were suspended by the North Carolina Medical Board for improper opioid prescribing;
Essex County Man Sentenced to 24 Months in Prison for Possession with Intent to Distribute HeroinRead the Press Release
TRENTON, N.J. – An Essex County, New Jersey man was sentenced today to 24 months in prison today for possession with the intent to distribute heroin, U.S. Attorney Craig Carpenito announced.
Richie Santiago, 47, of Newark, previously pleaded guilty before U.S. District Court Judge William J. Martini in Newark federal court to one count of possession with the intent to distribute heroin. Judge Martini imposed the sentence by videoconference today.
According to documents filed in this case and statements made in court:
On at least four occasions between February 19, 2019 and March 27, 2019, Santiago sold quantities of heroin, at times laced with fentanyl, to an undercover law enforcement officer at locations in Newark and West Orange, New Jersey.
In addition to the prison term, Judge Martini sentenced Santiago to three years of supervised release.
U.S. Attorney Craig Carpenito credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Charlie J. Patterson, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Anthony P. Torntore, of the Cybercrime Unit in Newark.
Defense counsel: K. Anthony Thomas Esq., Assistant Federal Public Defender, Newark
Essex County Man Admits Participating in Armed Robbery Spree Spanning Multiple Counties in Northern and Central New JerseyRead the Press Release
NEWARK, N.J. – Meshach Whagar, 31, of Newark, N.J., admitted today to participating in a string of convenience store robberies that took place across New Jersey in November and December 2017, U.S. Attorney Craig Carpenito announced.
Whagar pleaded guilty by videoconference before United States District Judge Kevin McNulty to a superseding information charging him with one count of conspiracy to commit Hobbs Act robbery, nine substantive counts of Hobbs Act robbery, and one count of using a firearm during a crime of violence. Whagar’s co-defendant, Tione Davis, 38, of East Orange, N.J., previously pleaded guilty to federal charges relating to the armed robbery spree.
According to documents filed in this case and statements made in court:
Davis and Whagar committed a string of 20 armed robberies of convenience stores and gas stations that took place throughout New Jersey between November and December 2017, including locations in Essex, Middlesex, Morris, Bergen, Union, Hudson, and Passaic Counties. During those robberies, Davis, while wearing dark clothing and hiding his face with masks or scarves, brandished a handgun and demanded money from store clerks. After stealing cash from the stores, Davis fled with Whagar, who acted as the getaway driver.
Before being apprehended, the defendants led law enforcement on a high-speed vehicle pursuit in Morris County. Among the items found in the vehicle defendants used in the chase were two handguns matching the description of those Davis used during the robberies.The Hobbs Act charges each carry a maximum penalty of 20 years in prison. The charge of brandishing a firearm during a crime of violence carries a maximum penalty of life in prison and a mandatory minimum sentence of seven years in prison. Each count also carries a maximum fine of $250,000 or twice the gross gain or loss from the offense. Sentencing is scheduled for April 28, 2021.
U.S. Attorney Carpenito credited 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. He also thanked the Morris, Union, Middlesex, Hudson, Passaic, Bergen, and Essex County Prosecutor’s Offices, as well as the Morris Plains, Springfield, Middlesex, Lodi, Roselle Park, Rahway, Parsippany, Rockaway, Mahwah, Elmwood Park, Bayonne, West Orange, East Brunswick, South River, Edison, Hoboken, Union, Clark, Kearny, Clifton, and Maplewood Police Departments for their work on this case.
The government is represented by Assistant U.S. Attorney Heather Suchorsky of the Economic Crimes Unit.
Defense counsel for Whagar: James Plaisted, Esq., Hackensack, N.J.
Defense counsel for Davis: Nabil Kassem, Esq., Clifton, N.J.Eighth Circuit Reverses Tax Court in Case Involving Statute of Limitations and Bona Fide ResidencyRead the Press Release
The Eighth Circuit Court of Appeals issued a published opinion on Tuesday, Dec. 15, 2020, holding for the government in a case involving the statute of limitations on assessment in the context of bona fide residency in the U.S. Virgin Islands (USVI), announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
In Coffey v. Commissioner, No. 18-3256, the Eighth Circuit Court of Appeals reversed the decision of the U.S. Tax Court that the IRS’s determinations were barred by the statute of limitations on assessment. Taxpayers owned a profitable publishing enterprise that ostensibly relocated to the USVI, and Judith Coffey claimed to be a USVI resident thereafter. The couple filed joint tax returns with the Virgin Islands Bureau of Internal Revenue (VIBIR), but not with the IRS. The VIBIR sent the first two pages of the Coffeys’ returns to the IRS as part of its normal process to claim “cover over” funds (i.e., tax revenue) from the U.S. Treasury. Disputing taxpayers’ assertion that they were bona fide residents of the USVI, the IRS conducted an audit and sent them notices of deficiency determining over $2 million in taxes and penalties. In an opinion with a concurring and dissenting set of judges, the Tax Court held that the deficiency notices were time-barred because the pages that the VIBIR sent to the IRS constituted filed “returns” that started the limitations period. The Eighth Circuit reversed the Tax Court and confirmed the long-standing principle that the statute of limitations begins only when a return is filed. Because the taxpayers did not comply with the requirements to file returns with the IRS, the statute of limitations never began to run.
Although the Eighth Circuit’s opinion is focused on the statute of limitations issue, the Tax Division and the IRS will use all available legal processes to challenge improper attempts to avoid or evade U.S. income tax by unlawfully misrepresenting a taxpayer’s residence, regardless of where such residence is claimed. See e.g., IRS Notice 2004-45.
Principal Deputy Assistant Attorney General Zuckerman thanked Tax Division attorneys Judith Hagley and Francesca Ugolini and former Tax Division attorneys Gilbert Rothenberg and Richard Caldarone, who handled the case on appeal for the government, as well as IRS attorneys Michael Berwind, James Hartford, and Randel Eager Jr., who litigated the case in the Tax Court.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Eastern Idaho Methamphetamine Dealer Sentenced to over 17 Years in Federal PrisonRead the Press Release
POCATELLO – Richard A. Burns, 37, of St. Anthony, Idaho, was sentenced in U.S. District Court to 210 months in federal prison for possession with intent to distribute methamphetamine, U.S. Attorney Bart M. Davis announced today. U.S. District Judge B. Lynn Winmill also ordered Burns to serve five years of supervised release following his prison sentence. Burns pleaded guilty to the charge on December 4, 2019.
According to court records, on May 11, 2019, an Idaho State Police trooper stopped Burns and a co-defendant on the interstate in Pocatello. While the trooper spoke with the co-defendant, Burns’ got into the driver's seat and fled, taking police on a high-speed chase. Ultimately, Burns crashed the car in Blackfoot and escaped on foot. Officers searched the vehicle and found over three pounds of methamphetamine located in a bag under the front passenger floorboard. Additionally, officers found two loaded 9mm handguns in the car.
Officers later apprehended Burns on June 5, 2019, after Idaho State Police detectives located him traveling to Boise. Officers spiked Burns’ vehicle near Carey, Idaho. After searching Burns’ car, officers found almost a pound of methamphetamine; along with digital scales, clean plastic baggies, a drug ledger, and a 9mm pistol. Burns later confessed to dealing drugs throughout Idaho.
This case was investigated by the Idaho State Police, Drug Enforcement Administration, Bannock County Sheriff’s Office, Blackfoot Police Department, Bingham County Sheriff’s Office, Bonneville County Sherriff’s Office, and Idaho Falls Police Department.
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The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Darkweb Drug Trafficker Arrested in Operation DisrupTor Pleads GuiltyRead the Press Release
A darkweb cocaine and heroin trafficker has pleaded guilty to drug conspiracy, announced U.S. Attorney for the Northern District of Texas.
Aaron Brewer - a 39-year-old charged under Operation DisrupTor, a coordinated international effort to disrupt opioid trafficking on the Darknet – pleaded guilty Thursday to conspiracy to possess with intent to distribute a controlled substance.
“Drug traffickers often believe the anonymity of the darknet will shield them from criminal prosecution. This prosecution proves that’s not the case,” said U.S. Attorney Erin Nealy Cox. “The Northern District of Texas is committed to finding and stopping dealers wherever they are – whether that’s on the streets or in the dark crevasses of the internet.”
“Stopping the flow of drugs into our communities is of utmost importance, having seen the devastation they bring,” said Thomas Noyes, Inspector in Charge of the U.S. Postal Inspection Service Fort Worth Division. “While criminals exploit technology in an effort to stay hidden, Postal Inspectors will spare no effort in their mission to protect the U.S. Mail, the Postal Service and its customers. We will continue to find, and bring to justice, individuals like this, and we thank the U.S. Attorney’s Office and F.B.I. for their significant work.”
According to plea papers, Mr. Brewer admitted he created darkweb market vendor accounts in order to sell cocaine, heroin, and other controlled substances online.
Mr. Brewer’s customers paid him in cryptocurrency, typically bitcoin, and frequently used aliases for shipping. After receiving payment, Mr. Brewer used the U.S. Mail and other shipping services to transmit controlled substances to customers in North Texas and across the country.
In March 2020, law enforcement discovered a ledger linking controlled substances orders with tracking numbers inside his apartment.
Mr. Brewer later admitted that over an 11-monthe period, he dealt more than 4,000 grams of cocaine and more than 80 grams of black tar heroin, then used the more than $50,000 in proceeds of the illegal activity to pay his mortgage.
He now faces up to 20 years in federal prison. As part of his plea agreement, he agreed to forfeit a property in Plano, Texas to the government.
The U.S. Postal Inspection Service and the Federal Bureau of Investigation’s Dallas Field Office conducted the investigation. Assistant U.S. Attorney Sid Mody is prosecuting the case.
DEA Investigation in Chapel Hill Area Uncovers Large-Scale Drug RingRead the Press Release
GREENSBORO, N.C. – Twenty-one people face federal charges as a result of a lengthy investigation into the sale of narcotics on or near college campuses in North Carolina. The drug trafficking investigation, conducted by a United States Drug Enforcement Administration (DEA) task force and the Orange County Sheriff’s Office, revealed drug activity involving members of several fraternal organizations at universities in the state. Matthew G.T. Martin, United States Attorney for the Middle District of North Carolina, Robert J. Murphy, Special Agent in Charge of the Atlanta Field Division of the DEA, and Charles S. Blackwood, Sheriff of Orange County, North Carolina, held a press conference today to discuss the investigation.
While working a drug case several years ago, the Orange County Sheriff’s Office received information about the sale of illegal drugs on the campus of the University of North Carolina at Chapel Hill (UNC). In November 2018, agents and officers assigned to the DEA’s Raleigh District Office initiated an investigation into the distribution of cocaine hydrochloride and other illegal drugs in the Chapel Hill area. It became clear early in the investigation that illegal drug distribution occurred at or near some UNC fraternal organization properties. Court filings to date specifically allege illegal drug activity involving the UNC chapters of Phi Gamma Delta, Kappa Sigma, and Beta Theta Pi occurring between 2017 and the spring of 2020.
Over the course of several years, the drug ring funneled over a thousand pounds of marijuana, several hundred kilograms of cocaine, and significant quantities of other drugs into these college campuses. Estimates of the total drug proceeds are not presently available, but they exceeded 1.5 million dollars.
According to documents filed in court, investigators utilized information from cooperating sources and cooperating defendants, and investigative methods such as controlled purchases, undercover purchases, financial investigation, surveillance, and analysis of electronic devices. Ultimately, investigators discovered that individuals were shipping cocaine from California via the U.S. Postal Service (USPS) and transporting marihuana by motor vehicle. Involved parties shipped bulk cash proceeds from illegal drug transactions through the USPS. Other proceeds, estimated to be approximately 1.3 million dollars, transferred hands through financial institutions utilizing money orders, Western Union, and mobile payment applications.
One primary supplier was the first person charged as a result of the investigation, FRANCISCO JAVIER OCHOA, JR., age 27, of Turlock, CA, who was indicted in November 2019 for conspiracy to distribute 5 kilograms or more of cocaine and conspiracy to distribute 100 kilograms or more of marijuana. According to documents filed in court, from March 2017 until March 22, 2019, OCHOA supplied approximately 200 pounds of marihuana and two kilograms of cocaine weekly to a cooperating defendant in Orange County. Law enforcement operations at locations associated with the subject in Carrboro and Hillsborough resulted in seizure of 148.75 pounds of marihuana, 442 grams of cocaine, 189 Xanax pills, steroids, human growth hormone, other narcotics, and approximately $27,775.00 in U.S. currency. The investigation revealed that payment for drugs was made using Venmo and by sending cash through the U.S. mail. OCHOA pleaded guilty to the indictment On November 24, 2020, he was sentenced to 73 months imprisonment, 5 years of supervised release, and ordered to pay a $250,000 forfeiture judgment.
The distribution of hard drugs was pervasive in and around certain fraternities. Illustrations of the type of activity, taken from court documents, include:
A cooperating defendant (CD2) described regularly supplying cocaine to “Chase” (later identified as defendant Charles Poindexter), who sold only to fraternity members. CD2 said he felt safe doing so because most transactions took place at the Phi Gamma Delta fraternity house behind closed doors. CD2 also stated that most drug transactions occurred around fraternity events, and bigger events required larger amounts of narcotics. In an interview, Poindexter admitted to purchasing cocaine, marihuana, and “molly” (MDMA) from CD2, and stated that all 22 members of his fraternity pledge class “went in” to purchase an ounce of cocaine for spring break in his sophomore year.
Another cooperating defendant (CD1) identified CD2 as his source for marihuana, Xanax, and cocaine, which CD1 distributed at the Kappa Sigma fraternity house to Kappa Sigma members, associates, and members of other fraternities. CD1 also told investigators that defendant David Bayha was selling marihuana from his room at the Kappa Sigma house, and that Bayha posted marihuana prices to the UNC Kappa Sigma GroupMe thread. In May 2020, an undercover investigator purchased 1/8-ounce of marihuana for $35 from Bayha outside the Kappa Sigma house. Another cooperator (CD5) was introduced to members of the Kappa Sigma fraternity by a friend and attended functions at the Kappa Sigma house. CD5 told investigators s/he witnessed “habitual” drug use there.
Cooperating sources of information and cooperating defendants also identified JASON SHUANG XU as a subordinate drug distributor to CD2. XU obtained one-half ounce quantities of cocaine hydrochloride (cocaine) from CD2 every two weeks during the school semesters at UNC-Chapel Hill in 2017 and 2018. CD2 utilized XU as an intermediary for the distribution of cocaine, psilocybin (mushrooms), and alprazolam (Xanax) at the Kappa Sigma Fraternity. XU is a member of this fraternity, and he provided illegal drugs to other fraternity members for distribution. A search of XU’s iCloud account revealed text messaging threads with CD2 and others, as well as photographs of cocaine, marihuana, marihuana use, and cocaine use.
Cooperating sources and cooperating defendants identified AMBER JANNA JOHNSON as a subordinate cocaine distributor to CD2. JOHNSON began supplying a cooperating source (CS) with one-half ounce quantities of cocaine every six (6) weeks from 2016 until 2018. JOHNSON introduced the CS to CD2 in 2018. The CS began obtaining one-ounce quantities of cocaine from CD1. In 2019, JOHNSON introduced the CS to a second cocaine supplier who provided cocaine to the CS until the spring of 2020. CD2 advised the DEA that JOHNSON, a student at Duke University, distributed cocaine to students at Duke and to fraternity members from UNC-Chapel Hill. CD2 supplied JOHNSON with ounce-quantities of cocaine for distribution on both campuses. It appears JOHNSON obtained and distributed at least 200 grams, but less than 300 grams of cocaine, from August 2017 through March 2019.
CD2 identified JASON BLAKE NITSOS as a subordinate cocaine distributor, and advised that NITSOS sold the cocaine to members of the Eta Chapter of the Beta Theta Pi Fraternity at UNC-Chapel Hill. Between October 2017 and March 2019, NITSOS paid CD2 approximately $15,000.00 for cocaine in 32 Venmo transactions. Fifteen of the transactions occurred over the Internet Protocol address located at the Beta Theta Pi fraternity house on the campus of UNC-Chapel Hill.
Court documents also link the trafficking of controlled substances to other college towns. In the summer of 2020, a cooperating defendant (CD) identified an Appalachian State University (ASU) student and member of the Delta Chi fraternity member in Boone as a known distributor of controlled substances to ASU students. In August 2020, the subject of CD’s allegations, Kyle Beckner, sold 1,000 dosage units of LSD to CD for $3,000 in the parking lot of a Chapel Hill restaurant. In October 2019, investigators made a controlled purchase of one ounce of cocaine from another ASU student, Devin McDonald, after McDonald was identified by a cooperating source as someone who distributed cocaine to other ASU students. Other defendants charged as a result of the investigation lived in Charlotte and Wilmington.
“No one is above the law, including college students and fraternity members at elite universities. This serious drug trafficking is destructive and reckless, and many lives have been ruined,” said U.S. Attorney Martin. “This investigation reveals that the fraternity culture at these universities is dangerous. University administrators and national chapters cannot turn a blind eye to the impact on these students and the environment on their respective college campuses. The drug culture feeds many other problems on campus and in our society. University administrators must take a stand and put a stop to it.”
“College communities should be a safe haven for young adults to obtain a higher education, not a place where illegal drugs are easily accessible,” said DEA SAC Murphy. “These fraternity members’ drug trafficking crimes contributed to a toxic and dangerous environment on these college campuses. The arrest of these drug traffickers makes these college campuses and their respective communities safer. DEA and its law enforcement partners will continue to strive to ensure these college campuses remain a safe environment charged with educating the best and brightest so they may become future leaders of our country. These arrests are a shining example how success can be achieved through spirited law enforcement cooperation.”
Between July and December, 2020, twenty additional defendants have been charged.
In an indictment returned on July 27, 2020, the grand jury charged the following defendants with conspiracy to distribute cocaine and conspiracy to distribute marijuana:
- ANDREW BOYLAN GADDY, age 24, of Carrboro, NC;
- TRAVIS MICHAEL EVANS, age 27, of Hillsborough, NC;
- DANE LAMBERT SIMON, age 23, of Durham, NC;
- BRIANHA NICOLE HASKELL, age 24, of Hillsborough, NC; and
- MARIELA ZAVALA MENDOZA, aka Maria Ochoa, age 25, of Turlock, CA.
In other indictments returned in July, October, and December, 2020, the grand jury charged each of the following defendants with conspiracy to distribute cocaine:
- ZACHRE CHASEN ABERCROMBIE, age 27, of Charlotte, NC;
- AMBER JANA JOHNSON, age 24, of Carrboro, NC;
- JOHN FREDERICK HOLLOWAY, age 23, of Carrboro, NC;
- DEVIN JAMES McDONALD, age 23, of Kill Devil Hills, NC;
- JASON BLAKE NITSOS, age 24, of Greensboro, NC;
- DEVON ANTHONY PICKERING, age 35, of Charlotte, NC;
- EDISON TORRES ROBLES, aka Fransisco Gallego Mandez Rodriguez, age 26, of Durham, NC; and
- JASON SHUANG XU, age 23, of Apex, NC.
Seven additional defendants were individually charged in October and December, 2020, with a variety of offenses:
- CHANDLER DAVID ANDERSON, age 27, of Wilmington, NC, faces charges of conspiracy to distribute cocaine and marihuana.
- DAVIS LINDSEY BAYHA, age 21, of Chapel Hill, NC, faces charges of conspiracy to distribute marihuana; use of a communication facility to facilitate a drug felony; and distribution of a controlled substance within 1000 feet of a public or private college or university.
- KYLE PARRISH BECKNER, age 22, of Boone, NC, is charged with distribution of LSD and use of a communication facility to facilitate a drug felony.
- BERNARD ALEKSANDER BUKOWSKI, age 24, of Raleigh, NC, faces one count of conspiracy to distribute cocaine and one count of possession with intent to distribute cocaine.
- CHARLES CLEVEAU POINDEXTER aka Chase Poindexter, age 23, and JACKSON ALEXANDER NORRIS, age 22, of Chapel Hill, NC, are each charged with conspiracy to distribute cocaine; use of a communication facility to facilitate a drug felony; and distribution of a controlled substance within 1000 feet of a public or private college or university.
- CHRISTOPHER ANTONIO REYES, age 26, of Greensboro, NC, is charged with conspiracy to distribute 100 kilograms or more of marihuana.
The defendants indicted for conspiracy to distribute cocaine and conspiracy to distribute marijuana face terms of imprisonment ranging from not less than 10 years and not more than life, not less than 5 years and not more than 40 years, and not more than 20 years, with fines of up to $10,000,000, $5,000,000, $1,000,000, respectively, or both, and terms of supervised release of at least 3 to 5 years, or more. The other charges carry lesser terms of imprisonment, fines, or both, and supervised release.
The charges are merely allegations, and each defendant is presumed innocent unless and until proven guilty.
Orange County Sheriff Charles Blackwood said, “I am proud of the work my deputy did on this task force, and I am thankful for our partnership with the DEA. Task forces such as this provide our Sheriff’s Office with the resources and equipment needed to conduct these protracted cases and achieve the type of results seen in this case. The amount of illegal narcotics being sold and used in this case was not only astonishing; it also reflected a very serious public health crisis. We worked this case in an effort to save lives. We also wanted to protect the honor and integrity of the University of North Carolina and other institutions of higher learning. This investigation and the prosecution of those involved in the drug trade on university campuses should send a clear message that such activities will not be tolerated.”
In addition to OCHOA, the following defendants pleaded guilty to one or more charges against them and are scheduled to be sentenced in 2021:
GADDY – sentencing 3/24/21
EVANS – sentencing 2/17/21
SIMON – sentencing 3/24/21
HASKELL – sentencing 3/30/21
PICKERING – sentencing 2/20/21
NITSOS – sentencing 3/19/21
XU – sentencing 3/19/21
The case is being investigated by the Orange County Sheriff’s Office and the U.S. Drug Enforcement Administration (DEA). Law enforcement partners in Orange County and on UNC’s campus provided assistance during the investigation.
The investigation continues, and more charges are possible. Anyone with additional information is asked to call the DEA Raleigh District Office at 919-790-3004.
This other law enforcement activity is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. 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.
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D.C. Tax Return Preparer Sentenced to Prison for Preparing False Tax ReturnRead the Press Release
A D.C. tax return preparer was sentenced to 24 months in prison today following her guilty plea in February 2020 for aiding and assisting in the preparation of a false tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
According to court documents and statements made in court, Renita Jenifer of District Heights, Maryland, operated a tax return preparation business in D.C. between 2013 and 2016 under the name RAJen Business Tax Service (RAJen). Through RAJen, Jenifer prepared false tax returns for clients claiming fraudulent and inflated itemized deductions, including charitable contributions and unreimbursed employee expenses. Jenifer also prepared returns that reported fraudulent and inflated business expenses. By including these false items, Jenifer’s clients received tax refunds from the IRS in excess of what they were entitled to receive.
In 2016, after IRS-Criminal Investigation executed a search warrant at RAJen’s office in D.C. and revoked Jenifer’s Electronic Filing Identification Number (EFIN), expelling her from the IRS’s e-file program, Jenifer operated a new business in Maryland called DS Professional Tax Service LLC (DS Pro). Jenifer used the name of a different individual to obtain an EFIN for DS Pro, and she listed this individual’s name on tax returns she prepared instead of her own name. As she had done at RAJen, Jenifer prepared false tax returns for clients of DS Pro. In 2018, Jenifer moved this new business to D.C. and continued to prepare false tax returns for clients.
In addition to filing false tax returns for clients of RAJen and DS Pro, Jenifer filed false income tax returns for herself for the years 2013 and 2014, on which she failed to report all of the income generated by her business. Jenifer also did not file income tax returns for herself for the years 2017 and 2018, despite earning income from her operation of DSPro. Jenifer’s conduct caused a loss to the government of $373,090.
In addition to the term of imprisonment, U.S. District Judge Ketanji Brown Jackson ordered Jenifer to serve one year of supervised release and to pay $357,819 in restitution to the IRS.
Principal Deputy Assistant Attorney General Zuckerman thanked special agents of IRS-Criminal Investigation and the D.C. Office of Tax and Revenue, who conducted the investigation, and Trial Attorneys Melissa Siskind and William Guappone of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
Council Bluffs Man Sentenced to Prison for Firearm OffenseRead the Press Release
COUNCIL BLUFFS, Iowa - United States Attorney Marc Krickbaum announced on December 15, 2020, John Randall Parson, age 37, of Council Bluffs, was sentenced by United States District Court Chief Judge John A. Jarvey to 51 months in prison to be followed by three years of supervised release for felon in possession of a firearm and ammunition. Parson was also ordered to pay a $100 special assessment to the Crime Victims’ Fund. Parson pleaded guilty to the offense on July 24, 2020.
The investigation was conducted by the Council Bluffs Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Convicted Child Sex Offender Sentenced to 18 Years in Federal Prison for Child Sexual Exploitation Crimes He Committed while on ProbationRead the Press Release
PITTSBURGH – A former resident of McKeesport, Pennsylvania, has been sentenced in federal court to 18 years’ imprisonment, to be followed by 20 years’ supervised release on his conviction of coercion and enticement of a minor to engage in illegal sexual activity and possession of child pornography, United States Attorney Scott W. Brady announced today.
Senior United States District Judge Nora Barry Fischer imposed the sentence on Scott Payne, age 33, formerly of McKeesport, Pennsylvania.
According to information presented to the court, on June 10, 2017, Payne, while pretending to be a teenage female, engaged in an Internet conversation with a 12 year-old male using a chatting application known as "KIK", during which Payne persuaded the minor victim to produce and share still images and videos of the minor engaging in sex acts. The court was further informed that evidence established that Payne engaged in similar communications with a 15 year-old male in New Jersey and a 16 year-old male in Louisiana, and was in possession of sexually explicit photographs and videos of the three minor victims when law enforcement agents executed a search warrant at his residence on June 19, 2017. Payne has a 2012 conviction involving sexual abuse of children and possession of child pornography for which he was serving a term of probation at the time of his arrest and for which he was required to register as a Megan’s Law sex offender.
Assistant United States Attorney Carolyn J. Bloch prosecuted this case on behalf of the government.
United States Attorney Brady commended the Federal Bureau of Investigation, the Western Pennsylvania Crimes Against Children Task Force, and the Bloomfield, New Jersey Police Department for the investigation leading to the successful prosecution of Payne. 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. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals, who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Clearview Man Pleads Guilty to Murder in Indian CountryRead the Press Release
MUSKOGEE, OKLAHOMA – The United States Attorney’s Office for the Eastern District of Oklahoma announced that Tommy Ryan Gouge, age 41, of Clearview, Oklahoma entered a guilty plea to Murder In Indian Country - Second Degree, in violation of Title 18, United States Code, Sections 1111(a), 1151 and 1153, punishable by any term of years up to life imprisonment, a fine up to $250,000.00, or both.
The Information alleged that on or about February 14, 2020, within the Eastern District of Oklahoma, in Indian Country, the defendant, an Indian, willfully, deliberately, maliciously and with malice aforethought, did unlawfully kill the victim with an edged weapon and a blunt object.
The charges arose from an investigation by the Okemah Police Department, the Okfuskee County Sheriff’s Office, and the Federal Bureau of Investigation.
The Honorable Kimberly E. West, U.S. Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, accepted the plea and ordered the completion of a presentence investigation report.
Assistant United States Attorney Ben Gifford represented the United States.
California Man Sentenced to Prison for Marijuana OffenseRead the Press Release
COUNCIL BLUFFS, Iowa - United States Attorney Marc Krickbaum announced on December 15, 2020, Dmitry Alexander Borisov, age 35, was sentenced by United States District Court Chief Judge John A. Jarvey to 60 months in prison for possession with intent to distribute marijuana. Borisov was ordered to serve four years of supervised release to follow his prison term and pay a $100 special assessment to the Crime Victims’ Fund. Borisov pleaded guilty to the offense on August 21, 2020.
On January 1, 2020, Borisov was driving a rental truck on Interstate 80. He was stopped for speeding by the Council Bluffs Police. While issuing a citation, a police dog alerted to the presence of a controlled substance in Borisov’s vehicle. Law enforcement discovered that the truck contained over 1,200 pounds of marijuana.
The investigation was conducted by the Council Bluffs Police Department and the Southwest Iowa Narcotics Enforcement Task Force. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Butler Resident Sentenced to Prison for Dealing Multiple DrugsRead the Press Release
PITTSBURGH – Ricardo Glenn was sentenced to 57 months in prison for conspiring to distribute fentanyl, acetyl fentanyl, heroin, cocaine, and crack cocaine, United States Attorney Scott W. Brady announced today.
Glenn, age 28, formerly of Butler and Philadelphia, was sentenced by United States District Judge Robert J. Colville. Judge Colville ordered that Glenn serve three years of supervised release following his prison term.
Glenn moved to Butler County from Philadelphia and distributed fentanyl, heroin, and cocaine for a Butler-based drug-trafficking crew. Glenn did so on a nearly daily basis for months in 2019 and 2020. He was under court supervision at the time, following a 2018 firearm conviction and county-jail sentence in Philadelphia.
Assistant United States Attorneys Yvonne M. Saadi and Craig W. Haller prosecuted this case on behalf of the United States.
The Pennsylvania State Police, the Federal Bureau of Investigation, and the Butler County District Attorney’s Drug Task Force led the investigation leading to the conviction and sentence in this case.
Buffalo Woman Sentenced for Conspiring with A Former Local Doctor to Illegally Distribute Controlled SubstancesRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051BUFFALO, N.Y.--U.S. Attorney James P. Kennedy, Jr. announced today that Laura Ricotta, 29, of Buffalo, who was convicted of conspiring to possess with intent to distribute, and distributing, oxycodone, hydrocodone, and amphetamine, was sentenced to time served (approximately 15 months) by U.S. District Judge Lawrence J. Vilardo.
Assistant U.S. Attorneys Timothy C. Lynch and Joshua Violanti, who handled the case, stated that between April 2015 and February 2018, the defendant conspired with co-defendant Dr. James T. Keefe, and others to sell oxycodone, hydrocodone, and amphetamine, all Schedule II controlled substances. Ricotta met Dr. Keefe, who was a New York State licensed physician and a DEA Registrant authorized to issue prescriptions for Schedule II and Schedule IV controlled substances, through her boyfriend, co-defendant Benjamin Rivera. The defendant has known Dr. Keefe for nearly five years and during this time, Dr. Keefe was active user of cocaine, Adderall, and prescription opiates. In April 2015, Dr. Keefe reached out and asked Ricotta to allow him to issue prescriptions in her name and the defendant agreed.
Between April 20, 2015, and February 20, 2018, Ricotta was issued 15 prescriptions in her own name by Dr. Keefe for Schedule II and Schedule IV controlled substances. The defendant also used the names and personal information of six relatives and associates to receive 26 fraudulent prescriptions. Neither Ricotta nor any of her relatives or associates were patients of Dr. Keefe, and none of the relatives and associates knew their information was being used.
Co-defendants Dr. Keefe and Rivera were previously convicted and are awaiting sentencing.
The sentencing is the result of an investigation by the Drug Enforcement Administration, under the direction of Special Agent-in-Charge Ray Donovan.
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Biogen Agrees to Pay $22 Million to Resolve Allegations that it Paid Kickbacks Through Two Co-Pay FoundationsRead the Press Release
BOSTON – Cambridge-based pharmaceutical company Biogen Inc. has agreed to pay $22 million to resolve allegations that it violated the False Claims Act by illegally using two foundations, Chronic Disease Fund (CDF) and The Assistance Fund (TAF), as conduits to pay the Medicare co-pays for patients taking Biogen’s multiple sclerosis (MS) drugs, Avonex and Tysabri.
Advanced Care Scripts (ACS), a specialty pharmacy that performed services for Biogen, has agreed to pay $1.4 million to resolve allegations that it conspired with Biogen to enable Biogen to use CDF and TAF as conduits for Biogen to pay Medicare co-pays for Avonex and Tysabri patients.
In separate settlements in late 2019, CDF paid $2 million and TAF paid $4 million to resolve allegations concerning their respective roles in enabling certain pharmaceutical companies to pay kickbacks to Medicare patients.
When a Medicare beneficiary obtains a prescription drug covered by Medicare Part D, the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or deductible (collectively, co-pays). Congress included co-pay requirements in these programs, in part, to encourage market forces to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration – which involves money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs.
As part of today’s settlements, the government alleged that Biogen, acting with ACS’s help, used CDF and TAF, each of which claimed status as a nonprofit organization for tax purposes, as conduits to pay the co-pay obligations of thousands of Medicare patients taking Avonex and Tysabri. According to the government’s allegations, Biogen used CDF and TAF, which Biogen paid, to cover Avonex and Tysabri patients’ co-pays to induce those patients’ Medicare-reimbursed purchases of the drugs.
The government specifically alleges that in 2011, Biogen identified Medicare-eligible Avonex patients in Biogen’s free drug program, and arranged for ACS to transfer those patients from the Biogen free drug program to CDF, so that CDF could cover those patients’ Medicare co-pays and the patients’ purchases of Avonex would generate Medicare revenue for Biogen. Biogen then paid CDF, and ACS promptly sent CDF batch files of co-pay assistance applications for Medicare-eligible Avonex patients who had been receiving the free drug from Biogen. CDF subsequently approved most of those applications and covered the costs of those patients’ Medicare co-pays for Avonex.
The government further alleges that in 2012, Biogen identified Medicare-eligible Tysabri patients in Biogen’s free drug program, and arranged for ACS to transfer those patients from the Biogen free drug program to TAF, so that TAF could cover those patients’ Medicare co-pays and the patients’ purchases of Tysabri would generate Medicare revenue for Biogen. Biogen made payments to TAF in the second and third quarters of 2012, and each time ACS then transferred to TAF batch files of co-pay assistance applications for Medicare-eligible patients who had been receiving the free drug from Biogen. TAF subsequently paid most or all those patients’ Medicare co-pays for Tysabri. The government further alleges that, in 2013, in much the same fashion, Biogen worked with ACS again to transition Medicare-eligible Tysabri patients out of Biogen’s free drug program to CDF, which Biogen paid so that CDF would cover those patients’ Medicare co-pays for Tysabri and Biogen would receive the resulting Medicare reimbursement revenue.
“Biogen coordinated with ACS to game the system, time its payments, and direct its money to cover co-pay costs for patients using its drugs,” said First Assistant United States Attorney Nathaniel R. Mendell. “By using co-pay foundations this way – as a conduit to pay for co-pays for Biogen patients – Biogen violated the anti-kickback statute and undermined Medicare’s co-pay structure, which Congress designed to safeguard against inflated drug prices. We commend ACS for resolving this matter expeditiously and Biogen for resolving this matter on a cooperative basis.”
“The resolution announced today, like prior settlements concerning similar misconduct, demonstrates the government’s commitment to hold accountable companies that pay kickbacks to undermine important constraints on rising drug costs,” said Acting Assistant Attorney Jeffrey Bossert Clark of the Department of Justice’s Civil Division. “Drug companies that illegally manipulate charitable patient assistance programs to subsidize copays for their own products will be held accountable.”
“Kickback schemes can undermine our healthcare system and lead to higher costs for the Medicare program,” said Phillip Coyne, Special Agent in Charge, Office of the Inspector General of the Department of Health and Human Service’s Boston Regional Office. “We will continue to hold pharmaceutical companies and specialty pharmacies accountable if they work together to subvert the charitable donation process and violate the prohibition on the payment of kickbacks.”
“Biogen tried to unfairly boost its bottom line by working with Advanced Care Scripts to bill Medicare for those who were already receiving their drug for free, undermining Medicare’s co-pay structure which was set up to safeguard against inflated drug prices,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “Kickback schemes like this one undermine our healthcare system, can compromise medical decisions, and waste taxpayer dollars. The FBI will continue to work with our partners to hold accountable those who conspire to disguise kickbacks as charitable contributions, at the expense of the Medicare program.”
Since 2017 the U.S. Attorney’s Office has collected over $1 billion from eleven pharmaceutical companies that allegedly used third-party foundations as conduits to pay kickbacks. The Department also has reached settlements with four foundations, as well with ACS concerning its relationship with a different pharmaceutical company.
The False Claims Act settlements resolve allegations originally brought in lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties 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 approximately $3.96 million of the recovery.
First Assistant U.S. Attorney Mendell, Acting Assistant Attorney General Clark, HHS-OIG SAC Coyne, and Boston FBI SAC Bonavolanta made the announcement today. The matter was handled by Assistant U.S. Attorneys Abraham R. George, Evan Panich and Gregg Shapiro of Lelling’s Affirmative Civil Enforcement Unit, with assistance from Trial Attorneys Augie Ripa and Sarah Arni of the Department of Justice’s Civil Division.
Biogen Agrees to Pay $22 Million to Resolve Alleged False Claims Act Liability for Paying KickbacksRead the Press Release
Pharmaceutical company Biogen, Inc. (Biogen), based in Cambridge, Massachusetts, has agreed to pay $22 million to resolve claims that it violated the False Claims Act by illegally using foundations as a conduit to pay the copays of Medicare patients taking Biogen’s multiple sclerosis drugs, Avonex and Tysabri, the Justice Department announced today.
When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively “copays”). Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.
“The resolution announced today, like prior settlements concerning similar misconduct, demonstrates the government’s commitment to hold accountable companies that pay kickbacks to undermine important constraints on rising drug costs,” said Acting Assistant Attorney Jeffrey Bossert Clark of the Department of Justice’s Civil Division. “Drug companies that illegally manipulate charitable patient assistance programs to subsidize copays for their own products will be held accountable.”
“Biogen coordinated with ACS to game the foundation system by timing its payments to two foundations with its transfer of financially needy free drug patients, all so that Biogen could obtain significant financial rewards,” said First Assistant United States Attorney Nathaniel R. Mendell. “By treating the foundations simply as conduits to pay the co-pays of its own patients, Biogen violated the anti-kickback statute and undermined Medicare’s co-pay structure, which Congress intended as a safeguard against inflated drug prices. We commend ACS for resolving this matter expeditiously and Biogen for resolving this matter on a cooperative basis.”
“Kickback schemes can undermine our healthcare system and lead to higher costs for the Medicare program,” said Phillip Coyne, Special Agent in Charge, Office of the Inspector General of the Department of Health and Human Service’s Boston Regional Office. “We will continue to hold pharmaceutical companies and specialty pharmacies accountable if they work together to subvert the charitable donation process and violate the prohibition on the payment of kickbacks.”
Under the Anti-Kickback Statute, a pharmaceutical company is prohibited from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value— to induce Medicare patients to purchase the company’s drugs. This prohibition extends to the payment of patients’ copay obligations.
Biogen sells Avonex and Tysabri, which are approved for treatment of multiple sclerosis. The government alleged that Biogen engaged in a prohibited kickback scheme by using two foundations, which claim 501(c)(3) status for tax purposes, as conduits to pay the copay obligations of Medicare patients to induce those patients to purchase Medicare-reimbursed Avonex and Tysabri prescriptions. As part of the scheme, Biogen identified for its vendor, Advanced Care Scripts (ACS), certain patients in Biogen’s Avonex or Tysabri free drug program. Biogen then worked with ACS to transfer these patients to the foundations, which received contemporaneous payments from Biogen and then covered the costs of Medicare copays for most or all of these patients. Medicare paid the remaining portion of the patients’ Avonex or Tysabri claims. The government alleged that Biogen engaged in this conduct in the first quarter of 2011 for certain Avonex patients, and in the second and third quarters of 2012 and 2013 for certain Tysabri patients.
The allegations resolved by the settlement were originally raised in a case filed under the whistleblower, or qui tam, provision of the False Claims Act. The act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The act also permits the government to intervene in such actions, as the government did in this action. The whistleblower will receive approximately $3,960,000 of the settlement.
In a separate settlement announced today, ACS has agreed to pay $1.4 million to resolve its role in the above-referenced conduct.
The government’s resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
The investigation was conducted by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Massachusetts, in conjunction with the Department of Health and Human Services, Office of Inspector General and the Federal Bureau of Investigation. The lawsuit is captioned United States ex rel. Nee vs. Biogen et. al., Case No. 17-CV-10192-MLW (D. Mass.).
The claims resolved by the settlement are allegations only; there has been no determination of liability.
Bernalillo man faces robbery chargesRead the Press Release
ALBUQUERQUE, N.M. – Kellam Nichols, 36, of Bernalillo, New Mexico, was charged in federal court on Dec. 10 with Hobbs Act robbery and attempted Hobbs Act robbery. Nichols will remain in custody pending trial.
According to a criminal complaint, on Dec. 5, 2017, Nichols allegedly entered a KFC restaurant, demanded money and threatened an employee. Nichols allegedly took money from the register and fled in a blue, two-door car.
Three days later, Nichols allegedly entered a Starbucks, walked behind the counter and grabbed an employee from behind. The startled employee screamed, attracting the attention of another employee, and Nichols allegedly fled the store in a blue, two-door car. Nichols then allegedly proceeded to and entered a Walgreens Pharmacy in the same shopping center. Nichols reportedly jumped the counter and demanded money. Nichols then allegedly left the store with money from the register.
An officer located Nichols’ vehicle and attempted a traffic stop. Nichols allegedly fled at a high rate of speed before crashing into a vehicle stopped at an intersection.
A complaint is only an allegation. A defendant is presumed innocent unless and until proven guilty. If convicted, Nichols faces up to 20 years in prison.
The FBI Violent Crimes Task Force investigated this case in conjunction with the Bernalillo Police Department and the Santa Ana Police Department. Assistant U.S. Attorney Presiliano Torrez is prosecuting the case.
Bellevue Man Sentenced for Fraud Related to Operation of Website Selling Counterfeit DrugsRead the Press Release
United States Attorney Joe Kelly announced that Karl H. Goss, 72, of Bellevue, Nebraska, was sentenced on December 16, 2020 in federal court in Omaha for Wire Fraud. Senior United States District Judge Joseph F. Bataillon sentenced Gross to one year and one day imprisonment. There is no parole in the federal system. After his release from prison, he will begin a 3-year term of supervised release. Gross was also fined $10,000.
Gross operated an online business known as Amerisave from 2007 until 2016. Amerisave defrauded customers by marketing and selling misbranded and unapproved prescription medications or drugs. Advertising on the Amerisave website represented that medications and/or drugs received by customers were United States Food and Drug Administration (FDA) approved drugs or manufactured in facilities which were FDA-approved or FDA-inspected facilities. The drugs, however, were not FDA-approved or FDA-inspected facilities. In order for customers to pay for their drugs from Amerisave, Amerisave communicated with customers via e-mail, facsimile and phone, and customers paid with credit cards. Amerisave had more than $2 million in sales in the time Gross operated it. To obtain foreign drugs, Gross, doing business as Amerisave, paid the foreign drug distributors via wire transfer. The funds were wired from First National Bank of Omaha to banks outside the United States. There were no identified victims in this case.
“American consumers rely on FDA oversight to ensure the safety and effectiveness of their prescription drugs. Selling misbranded and unapproved prescription drugs online that falsely claim to be FDA-approved puts consumers’ health at risk,” said Special Agent in Charge Charles L. Grinstead, FDA Office of Criminal Investigations Kansas City Field Office. “We will continue to investigate and bring to justice those who attempt to jeopardize public health and seek profit from potentially dangerous products.”
This case was investigated by the Food and Drug Administration Office of Criminal Investigations.
Bartell Drug chain settles allegations it filled invalid prescriptionsRead the Press Release
Seattle – The U.S. Department of Justice and Bartell Drug Inc., today resolved allegations that, between July 2016 and August 2020, the pharmacy chain filled invalid prescriptions in violation of the Controlled Substances Act, announced U.S. Attorney Brian T. Moran. Under the terms of the settlement, Bartell Drug will pay the government an $800,000 fine. Bartell Drug fully cooperated in the investigation.
“For many, the descent into opioid abuse begins with improper prescriptions. That’s why it is critical that our pharmacists serve as a check to keep the public safe,” said U.S. Attorney Moran. “This case is a wake-up call for pharmacists to make sure they are responsibly scrutinizing each and every prescription.”
According to the facts in the settlement agreement, some 400 prescriptions were written by four medical professionals whose licenses to practice had been suspended or otherwise restricted by the Washington Medical Commission. Bartell Drug Inc., allegedly failed to implement fully a computer system so that the physicians’ licensing could be verified automatically by pharmacists, and some Bartell pharmacists failed to conduct individual licensing checks, which resulted in Bartell Drugs filling invalid prescriptions for controlled substances. Some of the prescriptions were written by medical professionals who had been publicly sanctioned and even indicted for violations of federal law.
“These actions are a breach of trust, compromising the health, safety and overall well-being of the public our health professionals are sworn to protect,” said DEA Special Agent in Charge Frank Tarentino. “All DEA registrants are held to a higher standard with the responsibility of performing their due diligence in the safe prescribing and dispensing of controlled substances.”
“In our country’s fierce battle to curb the devastating opioid epidemic, pharmacies and other health care providers must be part of the solution, not the problem,” said Special Agent in Charge Steven J. Ryan of HHS-OIG. “We will continue to work closely with our law enforcement partners to ensure health care professionals appropriately dispense controlled substances.”
In the settlement agreement, Bartell does not admit any wrongdoing or liability, and the government maintains that its allegations are well founded. The fine will be paid by Bartell Drug and has no impact on the sale of Bartell Drug to Rite Aid Corporation.
The case was settled by Assistant United States Attorneys Kayla Stahman and Ashley Burns.
Arkansas Man Charged with Fentanyl TraffickingRead the Press Release
KANSAS CITY, Mo. – A Fort Smith, Arkansas, man was charged in federal court today with fentanyl trafficking after law enforcement officers found seven pounds of fentanyl in his backpack when he arrived at a Kansas City, Missouri, bus station.
Daniel Bonilla, 26, was charged with possessing fentanyl with the intent to distribute in a criminal complaint filed in the U.S. District Court in Kansas City, Mo.
According to an affidavit filed in support of today’s federal criminal complaint, a police service dog indicated the presence of illegal drugs in the luggage stored underneath a bus at a local bus station on Wednesday, Dec. 16. When Bonilla picked up the luggage, a Kansas City police detective contacted him for questioning. Bonilla was acting suspiciously, the affidavit says, and a police service dog indicated the presence of illegal drugs in a backpack he was carrying. When a detective searched the backpack, he found three packages that contained a total of seven pounds of fentanyl.
The charge contained in this complaint is simply an accusation, and not evidence of guilt. Evidence supporting the charge must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Jeffrey Q. McCarther and Special Assistant U.S. Attorney Maureen Brackett. It was investigated by the Kansas City Interdiction Task Force.
All Four Plead Guilty in Staged Automobile Accident Resulting in $4.7 Million SettlementRead the Press Release
NEW ORLEANS, LOUISIANA – United States Attorney Peter G. Strasser announced that ANTHONY ROBINSON (“A. ROBINSON”), age 67; AUDREY HARRIS (“HARRIS”), age 53; JERRY SCHAFFER (“SCHAFFER”), age 66; and KEISHIRA ROBINSON (“K. ROBINSON”), age 26, of New Orleans, Louisiana entered a plea of guilty today to Conspiracy to Commit Mail Fraud, in violation of Title 18, United States Code, Section 371, arising out of their involvement in a staged automobile accident that occurred on October 13, 2015.
According to today’s guilty plea, A. ROBINSON, HARRIS, SCHAFFER, and K. ROBINSON intentionally collided with a tractor-trailer in the area of Alvar Street and France Road in New Orleans. Roderick Hickman (“Hickman”), who pled guilty to a previous indictment charging him and 10 others with staging automobile accidents, was driving A. ROBINSON’s vehicle at the time of this accident. Hickman intentionally struck a tractor-trailer owned and operated by C.R. England, and then was picked up from the collision site by Damian Labeaud (“Labeaud”), who has also pled guilty to a previous indictment as part of this investigation. After the accident, A. ROBINSON, who had been in Labeaud’s vehicle at the time of the accident, then got behind the wheel of his own vehicle to make it appear that he had been driving at the time of the staged accident. A. ROBINSON falsely reported to the NOPD that he had been driving and that the tractor-trailer had struck his vehicle.
According to documents filed in federal court, all four defendants were referred to an attorney who paid Labeaud for staging this accident, among others. All of the defendants were treated by doctors and healthcare providers at the direction of their attorneys, and A. ROBINSON, HARRIS, and SCHAFFER underwent surgeries. In total, in July 2019, the victim trucking and insurance company paid out approximately $4.7 million for the fraudulent claims associated with this staged accident.
Today’s guilty pleas bring the total number of defendants who have tendered guilty pleas in this federal probe into the staging of accidents with tractor-trailers to fifteen (15). A total of thirty-three (33) defendants, including one personal injury attorney, have been charged thus far.
A. ROBINSON, HARRIS, SCHAFFER, and K. ROBINSON face a maximum sentence of five (5) years imprisonment, a fine of $250,000.00 or twice the gross gain to the defendant or twice the gross loss to any person of the offense under Title 18, United States Code, Section 3571 and a mandatory special assessment of $100.00. After any term of imprisonment that may be imposed, A. ROBINSON, HARRIS, SCHAFFER, and K. ROBINSON also face a term of supervised release of up to (3) three years.
Sentencing in this matter is scheduled for March 31, 2021 at 2:00 pm, before U.S. District Judge Ivan L.R. Lemelle.
The U.S. Attorney’s Office would also like to acknowledge the assistance of the Federal Bureau of Investigation, Louisiana State Police, and the Metropolitan Crime Commission with this matter. The prosecution of this case is being handled by Assistant U.S. Attorney Shirin Hakimzadeh, Brian M. Klebba, Supervisor of the Financial Crimes Unit, Assistant U.S. Attorney Maria Carboni, and Assistant U.S. Attorney Edward Rivera.