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Newest first across public DOJ and U.S. Attorney press releases.
Wednesday 30 September 2020
Northern District of Alabama Announces Charges in Health Care Fraud Cases as Part of Nationwide Law Enforcement EffortRead the Press Release
BIRMINGHAM, Ala. – Seven individuals have been charged in the Northern District of Alabama with a $41 million health care fraud, drug distribution, and kickback conspiracy run out of Northern Alabama Pain Services (“NAPS”), a clinic owned and operated by the husband and wife. The announcements are part of a federal law enforcement effort to crack down on health care fraud nationwide.
U.S. Attorney Prim F. Escalona, FBI Special Agent in Charge Johnnie Sharp, Jr., Office of Inspector General of the U.S. Department of Health and Human Services Special Agent in Charge Derrick L. Jackson, Drug Enforcement Administration New Orleans Division Special Agent in Charge Brad L. Byerley, and IRS-Criminal Investigations Atlanta Field Division Special Agent in Charge James Dorsey made the announcement.
A 25-count indictment filed in U.S. District Court charges MARK MURPHY, 63, of Lewisburg, TN, and his wife JENNIFER MURPHY, 63, of Lewisburg, TN, for conspiring to use their medical practice, NAPS, to unlawfully distribute and dispense controlled substances, and indeed used controlled substances to grow and maintain a large patient population in order to profit from medically unnecessary services that Mark Murphy would order for those patients. Mark Murphy, Jennifer Murphy, BRIAN BOWMAN, 39, of Attalla, Ala., CHRISTIE ROLLINS a/k/a Christie Schneid, 49, of Petersburg, TN, MARK MURPHY, JR., 33, of Lewisburg, TN and WILLIE FRANK MURPHY, 67, of Lewisburg, TN, also conspired to and engaged in a scheme to pay and receive kickbacks and to defraud health care benefit programs out of at least $41,000,000 in payments for items and services that were medically unnecessary and, in some cases not provided. Such items and services included: (1) medical office visits, (2) durable medical equipment (“DME”), (3) urine drug screens (“UDS”), (4) high-reimbursing pharmaceuticals, and (5) nerve conduction studies. Finally, Jennifer Murphy used a purported charity to conceal receipt of illegal kickbacks and submitted false tax returns to conceal income received from the fraud.
A seventh co-conspirator, SHARON LUTRELL, 67, of Lewisburg, TN, who is also part of this conspiracy, has agreed to plead guilty to conspiracy to receive kickbacks. Lutrell has been charged separately by Information.
The announcements are part of a nationwide federal law enforcement effort to combat illegal prescription and/or distribution of opioids or that fall into more traditional categories of health care fraud include charges and guilty pleas involving more than 240 defendants who allegedly participated in schemes to submit more than $800 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were medically unnecessary and often never provided. According to court documents, in many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare. Also included are charges against medical professionals and others involved in the distribution of more than 30 million doses of opioids and other prescription narcotics.
FBI, HHS-OIG, IRS and DEA investigated the case. Anthony J. Burba, Trial Attorney, DOJ Fraud Section and Assistant U.S. Attorney Chinelo Dike-Minor are prosecuting the case.
An indictment is merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.
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.
Northampton County Man Charged with Defrauding Family and Friends Out of over $1 Million by Selling Them Worthless StockRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Robert McCabe, 76, of Bangor, PA, was charged by Information with multiple counts of securities fraud, mail fraud, and wire fraud in connection with an extensive fraudulent investment scheme.
According to court documents filed today, between September 2010 and July 2020, the defendant stole more than $1,000,000 from more than 50 family members and friends, including former fraternity brothers, by claiming that his company, McCabe Properties, Inc., owned close to two million shares of something he called “founders shares” of a well-known pharmaceutical company. He offered those “shares” to his victims by selling them a corresponding number of shares of McCabe Properties, Inc.
As alleged, McCabe sold this investment to his victims at a price of between $2.60 and $2.70 per share, which would have represented a significant discount over the actual share price for shares of the pharmaceutical company. In reality, however, McCabe Properties, Inc. had no assets whatsoever. The defendant spent the more than $1 million he took in from his victims, leaving them with nothing but worthless shares of McCabe Properties, Inc.
McCabe was able to deceive his victims over the span of the scheme by allegedly: (a) preparing and shipping to them shares of McCabe Properties, Inc. that purported to correspond to the number of shares of the pharmaceutical company; (b) falsely informing victim investors that their “founders shares” could only be sold once the pharmaceutical company was acquired by another company; (c) forwarding press releases, financial analysis reports, and news stories on the status of the pharmaceutical company to the victim investors; (d) falsely representing to clients that the nonexistent “founders shares” owned by McCabe Properties, Inc. had been purchased from a private venture capital firm that had ties to a known securities fraudster, making selling the “founders shares” problematic; and (e) communicating with clients by email and telephone and providing them with false reasons for an inability to sell the “founders shares.”
“As alleged, McCabe is a fraudster who promised something that he had no intention of delivering,” said U.S. Attorney McSwain. “Here, according to the Information, he exploited personal relationships with trusting members of his own family and circle of friends, repeatedly lying about the investment he sold to them. This type of financial fraud has devastating consequences for the victims and must be aggressively prosecuted and deterred at every turn.”
McCabe faces a maximum sentence of 420 years in prison, a three-year period of supervised release, a $10,000,000 fine, and a $2,100 special assessment.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael S. Lowe.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Newark Man Sentenced to 10 Years in Prison for Role in Conspiracy to Distribute Heroin and Crack CocaineRead the Press Release
NEWARK, N.J. – A Newark man was sentenced today to 120 months in prison for his role in a conspiracy to distribute heroin and crack cocaine, U.S. Attorney Craig Carpenito announced.
Cory Canzater, a/k/a, “Big C,” 47, of Newark, was previously found guilty of one count of conspiracy to distribute and possess with intent to distribute more than one kilogram of heroin and more than 28 grams of cocaine base, distribution of heroin and distribution of cocaine base. Canzater was convicted following a one-week trial before U.S. District Judge Kevin McNulty in Newark federal court, who imposed the sentence today by videoconference.
According to documents filed in this case and the evidence at trial:
Canzater engaged in a heroin and crack cocaine distribution conspiracy, led by Ahmad Johnson, a/k/a “OC,” 40, of Newark. Other members of the conspiracy included Maurice McPhatter, a/k/a “Ree,” Willie McPhatter, a/k/a “Roc,” Keith Henderson, and Sacha Negron, all of Newark. Canzater was a runner, who distributed narcotics for the Johnson drug trafficking organization.
Through the authorized interception of telephone calls and text messages, controlled purchases of heroin, the use of confidential sources of information, and other investigative means, law enforcement learned that Canzater was a member of a conspiracy led by Johnson, who was responsible for obtaining wholesale amounts of drugs, including heroin and cocaine, and processing and packaging the drugs for sale in and around Newark. During the September 2017 takedown of the organization, law enforcement conducted a series of search warrants and found over a kilogram of heroin, over 200 grams of crack cocaine, and over 150 grams of fentanyl.
Johnson pleaded guilty to a drug conspiracy and was sentenced on April 15, 2019, to 180 months in prison. Maurice McPhatter pleaded guilty to a drug conspiracy and was sentenced on May 15, 2020, to 120 months in prison. Willie McPhatter, Henderson, and Negron have all pleaded guilty to drug conspiracy charges and are awaiting sentencing.
This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF). The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
In addition to the prison term, Judge McNulty sentenced Canzater to five years of supervised release.
U.S. Attorney Carpenito credited special agents and officers with DEA’s High-Intensity Drug Trafficking Area (HIDTA) Group 1, under the direction of Special Agent in Charge Susan Gibson, with the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorneys Patricia Astorga and Ari B. Fontecchio of the U.S. Attorney’s Office in Newark.
Nevada man sentenced in methamphetamine trafficking caseRead the Press Release
BILLINGS—A Nevada man convicted of trafficking methamphetamine after an investigation in which he distributed the drug during an undercover purchase was sentenced today to five years in prison and four years of supervised release, U.S. Attorney Kurt Alme said.
After a two-day trial in November, a jury found Ryan McGuire, 39, of Mound House, Nevada, guilty of conspiracy to distribute meth and distribution of meth.
U.S. District Judge Susan P. Watters presided.
At trial, the prosecution presented evidence that DEA agents learned in May 2016 that a Billings woman, Angela Killen, was selling pills. In September 2016, an undercover agent met with Killen, who indicated she could introduce him to a source for meth. The agent purchased hydromorphone pills from Killen and paid a referral fee for Killen to introduce him to her meth source.
Later in September 2016, undercover agents returned to Killen’s residence and bought about 26 grams of meth from Killen and McGuire. McGuire pulled a package of meth from his jacket and passed it to Killen, who then gave it to one of the agents. The other agent paid Killen $2,200 for the meth. The investigation also showed that McGuire’s phone was in contact with Killen’s phone on the dates leading up to the meth deal as well as on the day of the transaction.
Killen was convicted in the investigation and sentenced to seven years in prison.
Assistant U.S. Attorney Cassady Adams prosecuted the case, which was investigated by the Drug Enforcement Administration.
This case is part of Project Safe Neighborhoods, a U.S. Department of Justice initiative to reduce violent crime. According to the FBI’s Uniform Crime Reports, violent crime in Montana increased by 36% from 2013 to 2018. Through PSN, federal, tribal, state and local law enforcement partners in Montana focus on violent crime driven by methamphetamine trafficking, armed robbers, firearms offenses and violent offenders with outstanding warrants.
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National health care fraud and opioid takedown results in charges against 345 defendants responsible for more than $6 billion in lossesRead the Press Release
BILLNGS — The U.S. Attorney's Office for the District of Montana, along with the U.S. Department of Justice, today announced historic national health care fraud and opioid enforcement actions as part of an investigation that includes the indictments of two Montana nurse practitioners accused of participating in a telemedicine scheme to defraud Medicare of almost $10 million.
Acting Assistant Attorney General Brian C. Rabbitt, of the Justice Department's Criminal Division, said the action involves 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals.
These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
“This nationwide enforcement operation is historic in both its size and scope, alleging billions of dollars in healthcare fraud across the country,” said Acting Assistant Attorney Rabbitt. “These cases hold accountable those medical professionals and others who have exploited health care benefit programs and patients for personal gain. The cooperative law enforcement actions announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of health care benefit programs, even amid a national health emergency.”
The largest amount of alleged fraud loss charged in connection with the cases announced today – $4.5 billion in allegedly false and fraudulent claims submitted by more than 86 criminal defendants in 19 judicial districts – relates to schemes involving telemedicine: the use of telecommunications to provide health care services remotely.
According to court documents, certain defendant telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. Durable medical equipment companies, genetic testing laboratories, and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes and submitted false and fraudulent claims to Medicare and other government insurers.
The continued focus on prosecuting health care fraud schemes involving telemedicine builds on the efforts and impact of the 2019 “Operation Brace Yourself” Telemedicine and Durable Medical Equipment Takedown, which resulted in an estimated cost avoidance of more than $1.5 billion in the amount paid by Medicare for orthotic braces in the 17 months following that takedown.
Two Montana indictments unsealed today separately charge nurse practitioners Mark Allen Hill, 54, of Edenburg, N.D., and whose address of record for participation in the Medicare program was Cut Bank, and Janae Nichole Harper, 33, of Kalispell and formerly of Billings, with conspiracy to commit health care fraud and health care fraud. Each defendant is accused of receiving money to sign unnecessary brace orders, often without ever talking to the Medicare beneficiary to determine whether the braces were medically necessary.
The indictment charging Hill alleges he signed fraudulent medical orders for braces resulting in more than $10 million in claims to Medicare, of which the government paid more than $5 million. Similarly, the indictment charging Harper alleges she signed fraudulent medical orders for braces resulting in more than $8 million in claims to Medicare, of which the government paid more than $4 million.
If convicted of the most serious crimes, Hill and Harper face a maximum 10 years in prison and a $250,000 fine. The indictments are merely accusations, and the defendants are presumed innocent until proven guilty. Arraignments for Hill and Harper are set for Oct. 27 in Great Falls before U.S. Magistrate Judge John T. Johnston. The cases are being prosecuted by Assistant U.S. Attorney Michael A. Kakuk and Robyn N. Pullio, trial attorney, Fraud Section, Criminal Division of the Justice Department. Pacer case reference numbers: 20-67 and 20-65.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
The following documents related to today’s announcement are available on the Criminal Division, Fraud Section’s Health Care Fraud Unit website through the following links:
- Graphics, Images and Resources: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/graphics-images-resources
- Case Descriptions: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/case-descriptions
- Court Documents: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/court-documents
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National Health Care Fraud and Opioid Takedown Results in Charges Against 345 Defendants Responsible for More than $6 Billion in Alleged Fraud LossesRead the Press Release
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division, Deputy Inspector General Gary Cantrell of the Department of Health and Human Services Office of Inspector General (HHS-OIG) and Assistant Administrator Tim McDermott of the Drug Enforcement Administration (DEA) today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals.
These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
“This nationwide enforcement operation is historic in both its size and scope, alleging billions of dollars in healthcare fraud across the country,” said Acting Assistant Attorney General Brian C. Rabbitt. “These cases hold accountable those medical professionals and others who have exploited health care benefit programs and patients for personal gain. The cooperative law enforcement actions announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of health care benefit programs, even amid a national health emergency.”
“Telemedicine can foster efficient, high-quality care when practiced appropriately and lawfully. Unfortunately, bad actors attempt to abuse telemedicine services and leverage aggressive marketing techniques to mislead beneficiaries about their health care needs and bill the government for illegitimate services,” said HHS Deputy Inspector General Gary Cantrell. “Unfortunately, audacious schemes such as these are prevalent and often harmful. Therefore, collaboration is critical in our fight against health care fraud. We will continue working with our law enforcement partners to hold accountable those who steal from federal health programs and protect the millions of beneficiaries who rely on them.”
“The FBI, together with our federal, state, and local partners, remains steadfast in our commitment to identify and root out health care fraud, no matter what form it takes,” said Assistant Director Calvin Shivers. “We will continue to work tirelessly to ensure public and private health care dollars are used as intended, to promote the health and safety of all Americans and safeguard continued access to critical health care services.”
“The opioid epidemic our country is battling is exacerbated when unscrupulous individuals seek to profit from people, in particular those confronting addiction.” said DEA Assistant Administrator Tim McDermott. “When doctors, pharmacists, and individuals exploit the weakness of a fellow human being in order to line their own pockets, DEA will use every tool at its disposal to stop and bring them to justice.”
Telemedicine Fraud Cases
The largest amount of alleged fraud loss charged in connection with the cases announced today – $4.5 billion in allegedly false and fraudulent claims submitted by more than 86 criminal defendants in 19 judicial districts – relates to schemes involving telemedicine: the use of telecommunications technology to provide health care services remotely. According to court documents, certain defendant telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. Durable medical equipment companies, genetic testing laboratories, and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes and submitted false and fraudulent claims to Medicare and other government insurers. In addition to the criminal charges announced today, CMS Center for Program Integrity separately announced that it has taken a record-breaking number of administrative actions related to telemedicine fraud, revoking the Medicare billing privileges of 256 additional medical professionals for their involvement in telemedicine schemes.
The continued focus on prosecuting health care fraud schemes involving telemedicine builds on the efforts and impact of the 2019 “Operation Brace Yourself” Telemedicine and Durable Medical Equipment Takedown, which resulted in an estimated cost avoidance of more than $1.5 billion in the amount paid by Medicare for orthotic braces in the 17 months following that takedown.
“Sober Homes” Cases
The “sober homes” cases announced today include charges against more than a dozen criminal defendants in connection with more than $845 million of allegedly false and fraudulent claims for tests and treatments for vulnerable patients seeking treatment for drug and/or alcohol addiction. The subjects of the charges include physicians, owners and operators of substance abuse treatment facilities, as well as patient recruiters (referred to in the industry as “body brokers”). These individuals are alleged to have participated in schemes involving the payment of illegal kickbacks and bribes for the referral of scores of patients to substance abuse treatment facilities; those patients were subjected to medically unnecessary drug testing – often billing thousands of dollars for a single test – and therapy sessions that were frequently not provided, and which resulted in millions of dollars of false and fraudulent claims being submitted to private insurers. Medical professionals also allegedly prescribed medically unnecessary controlled substances and other medications to these patients, sometimes to entice them to stay at the facility. The patients were then often discharged and admitted to other treatment facilities, or referred to other laboratories and clinics, in exchange for more kickbacks.
Cases Involving the Illegal Prescription and/or Distribution of Opioids And Cases Involving Traditional Health Care Fraud Schemes
The cases announced today involving the illegal prescription and/or distribution of opioids or that fall into more traditional categories of health care fraud include charges and guilty pleas involving more than 240 defendants who allegedly participated in schemes to submit more than $800 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were medically unnecessary and often never provided. According to court documents, in many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare. Also included are charges against medical professionals and others involved in the distribution of more than 30 million doses of opioids and other prescription narcotics.
National Rapid Response Strike Force
In connection with the nationwide enforcement action announced today, the Department of Justice also announced the creation of the National Rapid Response Strike Force of the Health Care Fraud Unit of the Criminal Division’s Fraud Section. The National Rapid Response Strike Force’s mission is to investigate and prosecute fraud cases involving major health care providers that operate in multiple jurisdictions, including major regional health care providers operating in the Criminal-Division-led Health Care Fraud Strike Forces throughout the United States. The National Rapid Response Strike Force led the telemedicine initiative and helped lead the sober homes cases included in today’s announcement.
Prior to the charges announced as part of today’s nationwide enforcement action and since its inception in March 2007, the Health Care Fraud Strike Force program had charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion.
A complaint, information or indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The following documents related to today’s announcement are available on the Criminal Division, Fraud Section’s Health Care Fraud Unit website through the following links:
- Graphics, Images and Resources: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/graphics-images-resources
- Case Descriptions: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/case-descriptions
- Court Documents: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/court-documents
National Health Care Fraud and Opioid Takedown Results in Charges Against 345 Defendants Responsible for More Than $6 Billion in Alleged Fraud Losses; San Diego Defendants ChargedRead the Press Release
Assistant U. S. Attorney Valerie Chu (619) 546-6750
NEWS RELEASE SUMMARY – September 30, 2020
SAN DIEGO – Federal officials today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals located in San Diego and across the country.
These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
In San Diego, the U.S. Attorney’s Office announced charges against defendants in several unrelated cases who collectively attempted to defraud Medicare of nearly $1 billion and Tricare of over $70 million. In addition, some defendants were charged with distributing fentanyl causing deaths in San Diego County.
“These frauds represent a staggering amount of theft to federal health programs, and ultimately the victims are every patient,” said U.S. Attorney Robert Brewer. “We will continue to investigate and prosecute these selfish criminals whose deplorable schemes drive healthcare costs sky high for everyone.” Brewer praised the federal agents and prosecutors who endeavor to expose these fraudsters and protect patients. Prosecutors who worked on these cases include Blanca Quintero, Valerie H. Chu, Mark Pletcher, Kevin Larsen, Josh Green, Drew Galvin, Paul Starita, Dylan Aste and Larry Casper.
“These cases demonstrate our commitment to pursuing medical providers, suppliers and others who insist on placing profits before patients,” said Timothy B. DeFrancesca, Special Agent in Charge, Office of the Inspector General for the U.S. Department of Health and Human Services. “We will continue to root out fraud, waste, and abuse in federal healthcare programs and hold accountable people who brazenly steal from the vital programs.”
“The FBI, together with our federal, state, and local partners, remains steadfast in our commitment to uncover and investigate health care fraud, no matter what form it takes,” said Suzanne Turner, Special Agent in Charge of the FBI's San Diego Field Office. “Our agents will continue this important work to ensure public and private health care dollars are used as intended, to promote the health and safety of all Americans and safeguard continued access to critical health care services.”
U.S. Attorney Brewer announced the following charges in San Diego as part of the national takedown:
- United States v. Burruss, et. al. On September 29, 2020, Charles A. Burruss and Ardalaan “Armani” Adams were charged with conspiracy to commit wire fraud for participating in a massive scheme to pay kickbacks for referrals of Medicare patients, then bill Medicare for Durable Medical Equipment (“DME”) sent to those patients, who had not been examined by a physician, and who generally did not need, and many times did not want, the equipment. According to the charging documents, the defendants created a network of over 30 DME companies in the names of straw and nominee owners, to increase their profits and avoid scrutiny and audits from Medicare that could occur if the same companies submitted hundreds or thousands of bills for similar DME products in a short period of time. The United States alleges that the Medicare beneficiaries were often harassed by telemarketers through multiple phone calls per day, to accept back, knee, wrist, and other braces covered by Medicare. Because they were paid by the brace, the telemarketers used fast-talking, high-pressure tactics to “upsell” patients (although the patients actually paid nothing for the braces, not even the required co-pays) to consent to receiving multiple products, up to a goal of what was called the “iron man kit” – back brace, neck brace, shoulder brace, two knee braces, two ankle braces, and two wrist braces. Marketing companies purchased those patient names, then paid telemedicine doctors to sign prescriptions and issue cut-and-paste justifications for patients they hadn’t examined and had rarely spoken with. The DME companies owned or managed by Burruss and Adams paid for the referral of these Medicare patients, generally between $250 and $380 for each referral of brace for a Medicare patient, in violation of the Anti-Kickback Statute. All told, Burruss and Adams, through their more than 30 different DME companies, submitted bills topping $871 million, and received a whopping $424,648,137 in payment for supplying the mostly-unneeded braces. While Medicare was the primary target of the fraud, bills were submitted to Tricare, Civilian Health and Medical Program of the Department of Veterans Affairs (“CHAMPVA”), and Medi-Cal as well. DME companies associated with Burruss and Adams submitted claims for over 181,218 Medicare beneficiaries nationwide, including 11,312 elderly or disabled residents of California. The defendants have also been charged in the District of New Jersey and the Middle District of Florida for related conduct.
- United States v. Bell, et al. On September 18, 2020, father-and-son duo Anthony Duane Bell Sr. and Anthony Duane Bell Jr. were indicted for conspiracy to commit wire fraud for participating in a huge scheme to pay kickbacks for referrals of Medicare patients, then bill Medicare for Durable Medical Equipment (“DME”) sent to those patients, who had not been examined by a physician, and who generally did not need, and many times did not want, the equipment. Through their companies, Universal Medical Solutions, the Bells paid between $250 and $380 for each referral of brace for a Medicare patient, in violation of the Anti-Kickback Statute, in order to submit thousands of dollars in bills for the DME to Medicare, in violation of the health care fraud statutes, according to the indictment. Through just their single company, the Bells submitted over $49 million in bills to Medicare in less than two years. They also perpetuated their business model to increase their own profits by providing funds and the necessary contacts and introductions to set up other DME companies, and encouraging those DME companies to pay unlawful kickbacks by purchasing completed doctors’ orders – all so that they could obtain a “revenue share” (that is, a portion of the payments that those other DME companies received from Medicare). As a further deceptive aspect of their scheme, the defendants lied to Medicare about the ownership and control over their company, and Bell Jr. told multiple lies to the FBI when interviewed about the company in April 2019.
- United States v. Collins, et. al. On June 9, 2020, Jimmy Collins, Ashley Collins, Kyle Adams, Daniel Castro, and Jeremy Syto were indicted for health care fraud and paying and receiving kickbacks for Tricare referrals for their efforts to supply expensive compound medications to beneficiaries covered by Tricare, the health care benefit program for military service members and their dependents. Jimmy and Ashley Collins, a husband-and-wife team, allegedly created a multi-level-marketing network, paying marketing representatives to recruit Tricare beneficiaries at military bases such as Twenty-nine Palms and Miramar by paying them hundreds of dollars to sign up to receive the worthless compound creams. If those service members recruited additional Tricare beneficiaries, they received a portion of the TRICARE reimbursement that resulted. Doctors in Tennessee, who had never examined nor spoken with their purported patients, issued hundreds of prescriptions for these pharmaceuticals to the San Diego soldiers and sailors. The average price of these compounded drugs was $14,510.33 apiece. The conspiring pharmacies submitted over $65 million in bills to Tricare for these drugs, which most beneficiaries did not need and which many simply threw into the trash. With their ill-gotten gains, Jimmy and Ashley Collins purchased an $8 million yacht and farm equipment, which has been forfeited. Former U.S. Marines Adams and Castro, and U.S. Navy service member Syto, have pleaded guilty, admitting their participation in the Tricare fraud and kickback scheme. Each admitted to having received over $100,000 in kickbacks for receiving the worthless creams and for recruiting other service members into the scheme.
- United States v. Green, et. al. On June 29, 2020, Melinda Green and Ron Green were indicted for health care fraud and paying kickbacks for Tricare referrals for their efforts to supply expensive compound creams to beneficiaries covered by Tricare, the health care benefit program for military service members and their dependents. Though neither defendant is a pharmacist, they concocted compounds with the highest-priced ingredients in order to maximize the reimbursement from Tricare, then pushed their marketing representatives to pay doctors and clinics to prescribe these compounds that were supposedly customized for a patient’s individual needs. Through their companies, NHS Pharma and NHS Pharma Sales, they submitted over $4.5 million in bills to Tricare for these compounds, which beneficiaries did not need. The defendants are next due in court on January 8, 2021 at 11:00am.
The following cases were included in today’s takedown figures, but have been previously announced by this office:
- United States v. Matthews. On August 24, 2020, Donald Joseph Matthews, the former Vice President of Market Development for local genetics company Proove Biosciences, Inc., pleaded guilty to participating in a conspiracy to pay kickbacks to doctors for referring Medicare patients to Proove for genetic tests. To paper-over the illegal kickback scheme, the payments were disguised as compensation to doctors for participating in a clinical research study, although no study existed and doctors were told to fabricate the number of “hours” they worked on the study, when in reality they were being paid for each patient referred to Proove. Proove submitted more than $45 million in claims to Medicare for tests procured by the unlawful kickbacks and received approximately $21 million in unlawful payments.
https://www.justice.gov/usao-sdca/pr/vp-genetics-company-pleads-guilty-paying-physicians-sham-clinical-research-fees-part-21
- In re Progenity. On July 21, 2020, the United States reached a settlement with San Diego-based research laboratory Progenity, Inc., in which the company agreed to pay $49 million to resolve claims that it had defrauded Tricare, Medicare, and state health care benefit programs by knowingly using the incorrect code to bill for genetic testing that would otherwise not have been covered by those programs.
https://www.justice.gov/usao-sdca/pr/san-diego-laboratory-admits-fraudulent-tricare-billing-agrees-pay-49-million
- Dr. Prakash Bhatia. On April 30, 2020, local psychiatrist Dr. Prakash Bhatia agreed to pay $145,000 to resolve allegations that he overprescribed opioids, including fentanyl, hydromorphone, morphine, methadone, oxycodone, and oxymorphone, in violation of the civil provisions of the Controlled Substance Act. The United States’ allegations included that Dr. Bhatia inappropriately prescribed opioids along with benzodiazepines and/or muscle relaxants to the same patients, combinations known to increase the risk of abuse, addiction, and overdose.
https://www.justice.gov/usao-sdca/pr/san-diego-psychiatrist-pays-145000-resolve-opioid-overprescribing-investigation
In addition, in light of the ongoing opioid epidemic and an alarming increase in fentanyl overdose deaths within the Southern District, the U.S. Attorney’s Office continues to aggressively prosecute those responsible for illegally distributing fentanyl and other opioids that cause death irrespective of the defendant’s place in the chain of distribution of such deadly drugs.
- United States v. Garcia. On May 20, 2020, Lorenzo Anthony Garcia was indicted for distributing fentanyl that resulted in the death of a 15-year old high school junior who was a member of his school varsity football team. https://www.justice.gov/usao-sdca/pr/law-enforcement-issues-public-safety-warning-about-extreme-danger-fentanyl
- United States v. Davis. On August 18, 2020, Perry Edward Davis was indicted for distributing fentanyl and cocaine resulting the death of a 25-year old victim. The charges followed after three people overdosed and collapsed within minutes of each other outside of a local cocktail bar. Two females were revived by paramedics but the male victim did not survive.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
Some of the cases listed above are part of the joint FBI and HHS Operation Rubber Stamp and the 2020 Telemedicine takedown, which was coordinated by The National Rapid Response Strikeforce of the Health Care Fraud Unit of the Criminal Division Fraud Section. The Telemedicine takedown involves charges and guilty pleas in connection with widespread telemedicine schemes involving over $4 billion in false billing. The focus on telemedicine fraud builds on the 2019 telemedicine and durable medical equipment takedown ("Operation Brace Yourself"), which resulted in an estimated cost avoidance of over $1.5 billion in the amount paid by Medicare for orthotic braces in the seventeen months since the takedown, preserving the Medicare trust fund for legitimate medical care. In addition, CMS/CPI separately announced today that it took the largest number of adverse administrative actions resulting from a single administrative health care fraud investigative initiative in history in revoking the Medicare billing privileges of 256 additional medical professionals for their involvement in telemedicine schemes.
For further information about the national takedown, see https://www.justice.gov/opa/pr/national-health-care-fraud-and-opioid-takedown-results-charges-against-345-defendants.
DEFENDANTS Case Number 202980-WQH
Charles A. Burruss, 51, San Diego, CA
Ardalaan “Armani” Adams, 33, San Diego, CA
SUMMARY OF CHARGES
Conspiracy to Commit Wire Fraud – Title 18, U.S.C., 1349
Maximum penalty: Twenty years in prison and $500,000 fine, or twice the pecuniary gain / loss
AGENCIES
Federal Bureau of Investigation
US. Department of Health and Human Services, Office of Inspector General
DEFENDANTS Case Number 202887-WQH
Anthony Duane Bell Sr., 52, El Cajon, CA
Anthony Duane Bell Jr., 30, Los Angeles, CA
SUMMARY OF CHARGES
Conspiracy to Commit Health Care Fraud and Pay Kickbacks – Title 18, U.S.C., 371
Maximum penalty: Five years in prison and $500,000 fine
Health Care Fraud – Title 18, U.S.C., 1347
Maximum penalty: Ten years in prison and $500,000 fine, or twice the pecuniary gain / loss
Unlawful Remuneration – Title 42, U.S.C., 1320d-7b(b)
Maximum penalty: Four years in prison and $500,000 fine, or twice the pecuniary gain / loss
False statement to Government – Title 18, U.S.C., 1001
Maximum Penalty: Five years in prison and $250,000 fine
AGENCIES
Federal Bureau of Investigation
US. Department of Health and Human Services, Office of Inspector General
DEFENDANTS Case Number 18CR432-JLS
Jimmy Collins, 56, Tennessee
Ashley Collins, 34, Tennessee
Kyle Adams, 33, Texas
Daniel Casto, 32, Illinois
Jeremy Syto, 27, California
SUMMARY OF CHARGES
Conspiracy to Commit Health Care Fraud – Title 18, U.S.C., 1349
Maximum penalty: Ten years in prison and $500,000 fine
Conspiracy to Pay and Receive Illegal Remunerations – Title 18, U.S.C., 371
Maximum penalty: Five years in prison and $500,000 fine
Receive Illegal Remunerations – Title 42, U.S.C., 1320a-7b(b)(1)
Maximum penalty: Four years in prison and $500,000 fine
Pay Illegal Remunerations – Title 42, U.S.C., 1320a-7b(b)(2)
Maximum penalty: Four years in prison and $500,000 fine
AGENCIES
Defense Criminal Investigative Service
Federal Bureau of Investigation
DEFENDANTS Case Number 18CR432-JLS
Melinda Green, 59, Escondido, CA and Windermere, FL
Ronald Green, 66, Escondido, CA and Windermere, FL
SUMMARY OF CHARGES
Conspiracy to Commit Health Care Fraud and Pay Kickbacks – Title 18, U.S.C., 371
Maximum penalty: Five years in prison and $500,000 fine
Unlawful Remuneration – Title 42, U.S.C., 1320d-7b(b)
Maximum Penalty: Four years in prison and $500,000 fine, or twice the pecuniary gain / loss
AGENCY
Defense Criminal Investigative Service
DEFENDANT Case Number 20CR1222-GPC
Lorenzo Anthony Garcia, 21, Brawley, CA
SUMMARY OF CHARGES
Manufacture, distribute, or possess with intent to manufacture, distribute, or dispense a controlled substance resulting in death or serious bodily injury – Title 21, U.S.C., Section 841(a)(1), (b)(1)(C)
Maximum Penalty: Mandatory minimum 20 years in prison, Maximum life in prison
AGENCY
Drug Enforcement Administration
DEFENDANT Case Number 20CR2500-LAB
Perry Edward Davis, 44, San Diego, CA
SUMMARY OF CHARGES
Manufacture, distribute, or possess with intent to manufacture, distribute, or dispense a controlled substance resulting in death or serious bodily injury – Title 21, U.S.C., Section 841(a)(1), (b)(1)(C)
Maximum Penalty: Mandatory minimum 20 years in prison, Maximum life in prison
AGENCIES
Drug Enforcement Administration
El Cajon Police Department
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
- United States v. Burruss, et. al. On September 29, 2020, Charles A. Burruss and Ardalaan “Armani” Adams were charged with conspiracy to commit wire fraud for participating in a massive scheme to pay kickbacks for referrals of Medicare patients, then bill Medicare for Durable Medical Equipment (“DME”) sent to those patients, who had not been examined by a physician, and who generally did not need, and many times did not want, the equipment. According to the charging documents, the defendants created a network of over 30 DME companies in the names of straw and nominee owners, to increase their profits and avoid scrutiny and audits from Medicare that could occur if the same companies submitted hundreds or thousands of bills for similar DME products in a short period of time. The United States alleges that the Medicare beneficiaries were often harassed by telemarketers through multiple phone calls per day, to accept back, knee, wrist, and other braces covered by Medicare. Because they were paid by the brace, the telemarketers used fast-talking, high-pressure tactics to “upsell” patients (although the patients actually paid nothing for the braces, not even the required co-pays) to consent to receiving multiple products, up to a goal of what was called the “iron man kit” – back brace, neck brace, shoulder brace, two knee braces, two ankle braces, and two wrist braces. Marketing companies purchased those patient names, then paid telemedicine doctors to sign prescriptions and issue cut-and-paste justifications for patients they hadn’t examined and had rarely spoken with. The DME companies owned or managed by Burruss and Adams paid for the referral of these Medicare patients, generally between $250 and $380 for each referral of brace for a Medicare patient, in violation of the Anti-Kickback Statute. All told, Burruss and Adams, through their more than 30 different DME companies, submitted bills topping $871 million, and received a whopping $424,648,137 in payment for supplying the mostly-unneeded braces. While Medicare was the primary target of the fraud, bills were submitted to Tricare, Civilian Health and Medical Program of the Department of Veterans Affairs (“CHAMPVA”), and Medi-Cal as well. DME companies associated with Burruss and Adams submitted claims for over 181,218 Medicare beneficiaries nationwide, including 11,312 elderly or disabled residents of California. The defendants have also been charged in the District of New Jersey and the Middle District of Florida for related conduct.
National Health Care Fraud and Opioid Takedown Results in Largest Enforcement Action in Department of Justice HistoryRead the Press Release
WASHINGTON – Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division, Deputy Inspector General Gary Cantrell of the Department of Health and Human Services Office of Inspector General (HHS-OIG) and Assistant Administrator Tim McDermott of the Drug Enforcement Administration (DEA) today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses, and other licensed medical professionals.
These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
Prior to the charges announced as part of today’s nationwide enforcement action and since its inception in March 2007, the Health Care Fraud Strike Force program had charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion.
The Middle District of Florida (MDFL) is playing a significant role in today’s historic announcement. Collaborative efforts among federal, state, and local partners have resulting in charges against 19 defendants in the MDFL.
“Patients place their lives in the hands of medical professionals every day,” said U.S. Attorney Maria Chapa Lopez for the Middle District of Florida. In doing so, they rely upon the oath that they will put forth their best efforts to do no harm. Not only is fraud and abuse of healthcare programs illegal, but they compromise the standard of care and the public trust. We will continue to aggressively investigate these claims and hold those who violate the law accountable by all means.”
"The FBI and its law enforcement partners are determined to expose those who commit healthcare fraud." said Special Agent in Charge of FBI Tampa Division Michael F. McPherson. "We are all victims of this crime when federal healthcare programs that taxpayers fund are cheated."
“We will continue to hold medical professionals accountable for the great responsibility with which they have been entrusted, said Omar Pérez Aybar, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General. “There are no shortcuts when it comes to patient care.”
David Spilker, Special Agent in Charge at the VA Office of Inspector General stated, “The continued oversight of medical professionals who provide community care to veterans—our nation’s heroes—safeguards the integrity of VA’s healthcare programs. The VA OIG will continue to work with our law enforcement partners to hold providers who fraudulently bill CHAMPVA responsible for their unlawful conduct.”
"Unfettered greed erodes public trust, stifles our economy, and hurts hard-working Americans," stated Special Agent in Charge Brian Payne of IRS Criminal Investigation's Tampa Field Office. "Working with our law enforcement partners, we will fervently employ our unique financial investigative skills to lead the fight against white collar crime."
HEALTH CARE FRAUD CASES
The MDFL health care fraud cases included in today’s announcement involve charges brought against 12 defendants for health care fraud and violations of the federal Anti-Kickback statute. These defendants have been charged with submitting hundreds of millions of dollars in false and fraudulent claims to Medicare and other federal health care programs and employing abusive schemes that often involved telemedicine.
All of the MDFL cases described in this section are being investigated by various agencies, including the U.S. Department of Health and Human Services–Office of Inspector General, the Federal Bureau of Investigation, the Department of Veterans Affairs–Office of Inspector General, and the Internal Revenue Service Criminal Investigation.
In September 2020, Charles Burruss (51, San Diego, CA) and Ardalaan “Armani” Adams (33, San Diego, CA) were charged with conspiracy for defrauding Medicare through the submission of medically unnecessary durable medical equipment (“DME”) claims. According to court documents, Adams and Burruss paid millions in kickbacks and bribes to acquire the DME claims, which had been generated using aggressive telemarketing strategies in concert with fraudulent telemedicine involving bribed doctors who rarely spoke to the beneficiaries. During the conspiracy, Burruss, Adams, and their conspirators submitted the illegal DME claims to Medicare and other programs through a conglomerate of fraudulently established DME companies; at least 22 of those fraudulent companies were located in the MDFL. Through the MDFL companies, the conspirators submitted more than $343 million in illegal DME claims to Medicare and to the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA), resulting in over $180 million in payments. The defendants have also been charged in related cases in the Southern District of California and the District of New Jersey. Each defendant faces a collective maximum penalty of 25 years’ imprisonment, if imposed consecutively, for the pending charges. The MDFL case is being prosecuted by Assistant United States Attorney Kristen Fiore.
On July 31, 2020, Richard Epstein (28, Aurora, CO) and Michael Nolan (47, Tampa, FL) each pleaded guilty, in separate cases, to conspiracy to commit health care fraud for defrauding Medicare through the submission of medically unnecessary claims for DME and cancer genetic testing (“CGx testing”). According to court documents, during the conspiracy, Epstein and Nolan ran a telemarketing company in Tampa known as REMN Management, LLC, that targeted the elderly to generate thousands of medically unnecessary orders for DME and CGx testing. The two men also created and operated Comprehensive Telcare, LLC (“CompTel”), a “telemedicine” company through which they illegally bribed medical practitioners to sign the orders regardless of medical necessity. They then illegally sold the signed orders to client-conspirators for submission to Medicare. The conspiracy resulted in the submission of at least $134 million in fraudulent claims to Medicare and other federal health benefit programs, resulting in approximately $29 million in payments. The defendants are each facing a maximum penalty of 10 years in federal prison. The cases are being prosecuted by Assistant United States Attorney Kristen Fiore and Trial Attorney Gary A. Winters of the DOJ Criminal Division’s Fraud Section.
Paul Savastano (49, Lake Worth, FL), who conspired with Epstein and Nolan, also pleaded guilty on July 31, 2020, to health care fraud conspiracy. Savastano’s role in the conspiracy was that of a broker who oversaw CompTel’s illegal delivery of thousands of the signed orders to Medicare-enrolled DME supply companies, including at least five DME companies secretly controlled by Patsy Truglia (charged separately). For his part, Savastano received a percentage of the bribes as his fee. He is facing a maximum penalty of 10 years in federal prison. The case is being prosecuted by Assistant United States Attorney Kristen Fiore.
In June 2020, Dr. Jonathan Michael Rouffe (47, Boca Raton, FL) and Dr. Richard Davidson (41, Delray Beach, FL) pleaded guilty in separate cases to conspiracy to commit health care fraud. Each faces a maximum penalty of 10 years in federal prison. According to court documents, Rouffe, Davidson, and other conspirators secretly controlled conglomerates of fraudulently established DME supply companies. During the conspiracies, the companies submitted more than $31 million in illegal DME claims to Medicare and the CHAMPVA, resulting in over $16 million in payments. The conspirators paid millions in kickbacks and bribes to acquire illegally signed doctors’ orders for DME from so-called “marketers,” who, for their part, had generated the signed doctors’ orders using aggressive telemarketing strategies in concert with fraudulent telemedicine involving bribed doctors. The cases are being prosecuted by Assistant United States Attorney Kristen A. Fiore. Additional details can be found in press release.
In August 2020, Sajid “Jay” Geronimo (41, Buena Park, CA) was charged with conspiracy to commit health care fraud. According to court documents, Geronimo owned a telemarketing company known as Cure Healthcare, Inc. that targeted the Medicare-aged population using offshore call centers that employed aggressive tactics to generate orders for DME supply companies. Cure then packaged this information into the format of doctors’ orders and bribed doctors for their signatures. Once signed, Cure sold the illegally signed doctors’ orders to client-conspirators as support for fraudulent claims submitted to Medicare and CHAMPVA, receiving more than $12 million for these illegal sales. Geronimo is facing a maximum penalty of 10 years in federal prison. The case is being prosecuted by Assistant United States Attorney Kristen A. Fiore.
On September 4, 2020, Samuel Friedman (45, Land O’ Lakes, FL) was sentenced to four years in federal prison for conspiracy to commit health care fraud. According to court documents, through his telemarketing company SKF Enterprises, LLC, Friedman targeted the Medicare-aged population using offshore call centers that employed aggressive tactics to generate orders for DME. SKF then packaged this information into the format of doctors’ orders and bribed doctors for their signatures. Once signed, SKF sold the fraudulently signed doctors’ orders to client-conspirators as support for fraudulent claims submitted to Medicare and CHAMPVA, receiving more than $3.4 million for these illegal sales. Forfeiture was ordered against his interests in real property and a bank account containing nearly $475,000. Restitution was ordered in the amount of $3.42 million. The case was prosecuted by Assistant United States Attorney Kristen A. Fiore. Additional details can be found in press release.
In September 2020, Christopher Ryan Helfrich (30, Tampa, FL) was charged with conspiracy to commit health care fraud. According to court documents, Helfrich and his conspirators owned a telemarketing operation known as A2B Insurance Solutions LLC. Helfrich also wholly owned another telemarketing company, CRH Holdings, LLC. Through these enterprises, Helfrich and his conspirators targeted the Medicare-aged population using offshore call centers that employed aggressive tactics to generate orders for DME. They then packaged this information into the format of doctors’ orders and bribed doctors for their signatures. Once signed, the conspirators sold the fraudulently signed doctors’ orders to client-conspirators as support for fraudulent claims submitted to Medicare and CHAMPVA, receiving more than $2.2 million for these illegal sales. The case is being prosecuted by Assistant United States Attorney Kristen A. Fiore and DOJ Trial Attorney Catherine Wagner of the Criminal Division’s Fraud Section.
Patsy Truglia (52, Parkland, FL) and Ruth Bianca Fernandez (37, Lauderhill, FL) were charged in a 13-count indictment alleging a conspiracy to defraud Medicare and to commit health care fraud, submit false statements to Medicare, and violate the federal Anti-Kickback statute, as well as other related charges. The indictment was unsealed with the defendants’ arrests on September 9, 2020. According to the indictment, Truglia and Fernandez conspired to create and submit fraudulent claims to Medicare for medically unnecessary DME, using aggressive telemarketing that targeted Medicare beneficiaries, bogus telemedicine encounters, and signed doctors’ orders secured using illegal bribes and kickbacks. Through the conspiracy, Truglia and Fernandez caused the submission of approximately $25 million of fraudulent claims to Medicare and other federal health care programs, including CHAMPVA, resulting in payments of approximately $10 million from the programs. The case was charged by Assistant U.S. Attorney Kristen Fiore and is being prosecuted by Assistant U.S. Attorney Jay G. Trezevant.
OPIOID FRAUD AND ABUSE DETECTION UNIT CASES
Additional MDFL cases included in today’s announcement involve charges brought against 7 defendants who are being prosecuted by the MDFL Opioid Fraud and Abuse Detection Unit (“OPFAD”), a Department of Justice program created to help combat the devastating opioid crisis that is ravaging families and communities across America and to prosecute individuals who have contributed to the opioid epidemic. OPFAD specifically focuses on opioid-related fraud and abuse by medical and health care professionals who have contributed to the prescription opioid epidemic.
Richard De La Cruz (55, Jacksonville, FL) pleaded guilty and was sentenced on August 25, 2020, to five years’ probation for making false statements relating to health care matters in connection with writing opioid prescriptions. De La Cruz was also ordered to pay restitution and $42,450 in forfeiture. According to court documents, De La Cruz, a Florida-licensed doctor, failed to conduct in-person evaluations with patients before prescribing opiates, as required by Florida law, and concealed such, when he worked for a Kentucky company that provided in-home primary care for patients. This case was investigated by the HHS-OIG. The case was prosecuted by Assistant U.S. Attorneys Kelley Howard Allen and Greg Pizzo. Additional details can be found in press release.
Hong Truong (60, Dunedin, FL), a licensed pharmacist, pleaded guilty to one count of distributing and dispensing a controlled substance outside the scope of professional practice.She was sentenced on September 23, 2020, to 30 months in federal prison, fined $500,000, and ordered to forfeit $766,819 in illegal drug proceeds. According to court documents, Truong owned and operated HP Pharmacy in Pinellas Park, where she dispensed Schedule II controlled substance prescriptions outside the usual course of professional practice, that were not issued for a legitimate medical purpose, and without resolving several red flags. Truong and the pharmacy tech she employed, Jessica Evans (34, St. Petersburg, Florida), falsely noted on the back of many prescriptions that the prescription had been verified with the prescriber’s office, when such was not the case. Evans also pleaded guilty for her role in filling the illegal opiate prescriptions and was sentenced on August 27, 2020, to 25 months in federal prison. Also charged in connection with filling false prescriptions at HP Pharmacy were Lucretia Mullan (35, St. Petersburg, FL) and Patrice Jackson (37, Bradenton, FL) who were sentenced last summer to federal prison terms of 20 months and 70 months, respectively. This case is being investigated by the Drug Enforcement Administration. The case was prosecuted by Assistant U.S. Attorneys Kelley Howard Allen and Greg Pizzo. Additional details can be found in press release.
Steven Chun (57, Sarasota, FL) and Daniel Tondre (50, Tampa, FL) were charged in a 16-count indictment unsealed on September 16, 2020. According to the indictment, Chun owned and operated a Sarasota pain management practice where he prescribed Subsys, a highly addictive and expensive fentanyl spray, to his patients in return for kickbacks paid by the manufacturer, Insys Therapeutics. Insys employed Tondre to work as a pharmaceutical sales representative for Chun’s territory. Through Tondre, Insys paid more than $275,000 in kickbacks to Chun in the form of sham speaker fees and other benefits in return for Chun prescribing higher and larger quantities of Subsys. This case is being investigated by the FBI, HHS-OIG, and the Defense Criminal Investigation Service. It is being prosecuted by Assistant U.S. Attorney Kelley Howard-Allen. Additional details can be found in press release.
An information or indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.
NXIVM Executive Board Member Clare Bronfman Sentenced to 81 Months in Prison for Identity Theft and Immigration OffensesRead the Press Release
Clare Bronfman, a high-ranking member of Nxivm’s Executive Board, was sentenced by United States District Judge Nicholas G. Garaufis today in federal court in Brooklyn to 81 months’ imprisonment for conspiracy to conceal and harbor aliens for financial gain and fraudulent use of personal identification information. Bronfman pleaded guilty in April 2019 and pursuant to her plea agreement forfeited $6 million. The Court also imposed a fine of $500,000 and restitution to be paid to victim “Jane Doe 12” in the amount of $96,605.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the sentence.
“Defendant Bronfman twisted our immigration system to serve a reprehensible agenda, and engaged in flagrant fraud to the detriment of her victims and in the service of a corrupt endeavor,” stated Acting United States Attorney DuCharme. “With today’s sentence, she has been held accountable for her crimes.”
Mr. DuCharme extended his appreciation to the Department of Homeland Security, Homeland Security Investigations, the New York State Police and the United States Attorney’s Office for the Northern District of New York for their assistance during the investigation and prosecution.
“Today, Clare Bronfman is the first of many to be sentenced for the crimes she committed in furtherance of Nxivm’s objectives. While her fate in no way removes the trauma Nxivm’s victims will likely continue to suffer, it does highlight the government’s efforts to bring to justice all of those involved in a series of illegal acts carried out for the benefit of this organization. She recently wrote to the judge telling him that Nxivm and Keith Raniere had changed her life for the better. She will now have more than six years behind bars to contemplate that sentiment, and decide once and for all if it’s as easy to accept as she once believed it to be,” stated FBI Assistant Director-in-Charge Sweeney.
“IRS-CI specializes in financial investigations where following the money much of the time is a result of greed,” stated IRS-CI Special Agent-in-Charge Larsen. “Defendant Bronfman is now paying the price for her behavior that reached a depraved level beyond just financial greed.”
Between October 2015 and January 2018, Bronfman recruited individuals into Nxivm-affiliated organizations and then sought to obtain visas or other immigration status for them based on false or fraudulent representations. Bronfman recruited one woman from Mexico (“Jane Doe 12”) to work for a fitness-related Nxivm-affiliated company. Bronfman then submitted documents purporting to hire Jane Doe 12 as a management consultant with a salary of $3,600 per month in order to secure a work visa for her, but Bronfman paid Jane Doe 12 only approximately $4,000 over the course of more than a year for her work. In response to Jane Doe 12’s pleas to be paid a living wage, Bronfman told Jane Doe 12 she would have to “earn” her visa by doing additional uncompensated work.
After the death of one of Raniere’s partners, Bronfman participated in a scheme to assist Raniere in fraudulently using the partner’s credit card information to keep money and assets out of Raniere’s name to evade paying income tax and his creditors or their judgments against him.
Five of Bronfman’s co-defendants were previously convicted on various charges and are awaiting sentencing. On June 19, 2019, Keith Raniere was convicted after a jury trial of racketeering and racketeering conspiracy, sex trafficking, attempted sex trafficking and sex trafficking conspiracy, forced labor conspiracy and wire fraud conspiracy. On March 12, 2019, Nancy Salzman, Nxivm’s president and co-founder, pleaded guilty to racketeering conspiracy. On March 25, 2019, Lauren Salzman, a first-line “master” in DOS, a secret society within Nxivm with levels of women “slaves” headed by “masters,” pleaded guilty to racketeering and racketeering conspiracy. On April 8, 2019, Allison Mack, another first-line “master” in DOS, pleaded guilty to racketeering and racketeering conspiracy. On April 19, 2019, Kathy Russell, a bookkeeper for Nxivm, pleaded guilty to visa fraud.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Tanya Hajjar and Mark J. Lesko are in charge of the prosecution. Assistant United States Attorney Karin Orenstein of the Office’s Civil Division is handling forfeiture matters.
The Defendant:
CLARE BRONFMAN
Age: 41
Clifton Park, New YorkE.D.N.Y. Docket No. 18-CR-204 (S-2) (NGG)
Montreal Man Pleads Guilty to Conspiring to Import a Controlled SubstanceRead the Press Release
ALBANY, NEW YORK – Mihale Leventis, a/k/a “Rookie,” a/k/a “Big Mike,” age 44, of Montreal, Quebec, pled guilty yesterday to conspiring to import marijuana into the United States.
The announcement was made by Acting United States Attorney Antoinette T. Bacon and Special Agent in Charge Ray Donovan, U.S. Drug Enforcement Administration (DEA), New York Division.
As part of his guilty plea, Leventis admitted that from 2007 to 2009, he worked with a drug trafficking organization operating in Quebec, the Northern District of New York, and elsewhere to smuggle large quantities of marijuana from Canada into the United States for distribution to the organization’s customers. Leventis admitted that he coordinated the movement of marijuana from the organization’s suppliers in Canada to the U.S.-Canadian border so that it could be smuggled into the United States, and that he kept track of the organization’s proceeds.
Leventis’s guilty plea follows his extradition from Canada.
United States District Judge Mae A. D’Agostino will sentence Leventis on December 17, 2020. He faces up to 20 years in prison, and a fine up to $1 million. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.
This case was investigated by the DEA and is being prosecuted by Assistant U.S. Attorney Katherine Kopita. Leventis was extradited to the United States with assistance from the Department of Justice’s Office of International Affairs.
Milwaukee Corporation Established to Provide Jobs to Blind or Visually-Impaired Individuals Agrees to Pay $1.9 Million to Resolve Allegations It Violated the False Claims Act and Anti-Kickback ActRead the Press Release
United States Attorney Matthew D. Krueger announced today that Industries for the Blind and Visually Impaired, Inc., (IBI) has agreed to pay more than $1.9 million to resolve allegations that it violated the False Claims Act and Anti-Kickback Act in connection with certain federal contracts set aside to employ blind or visually-impaired workers.
IBI was established to increase employment and training opportunities for persons who are blind or visually-impaired. Headquartered in West Allis, Wisconsin, IBI receives set-aside contracts from federal agencies under the federal government’s AbilityOne Program. In exchange, IBI agrees to give jobs to workers who are blind or visually-impaired and comply with other contractual requirements.
The settlement resolves allegations that, between 2009 and 2018, IBI misrepresented to the U.S. AbilityOne Commission when requesting set-aside contracts for furniture design and installation services that it would maintain a 3:1 blind-to-sighted ratio of employees, and that furniture designers and sales representatives working for IBI took impermissible payments and gifts from manufacturers on certain contracts. It also resolves claims that IBI improperly subcontracted a set-aside contract for screen-printed clothing to an entity that did not generally use blind labor.
“AbilityOne contractors have a duty to follow the law and meet their important commitments to employ workers who are blind or severely disabled,” said Acting Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Civil Division. “This settlement demonstrates our continuing vigilance to ensure that those receiving set-aside contracts under the AbilityOne Program comply with the conditions of their awards.”
The AbilityOne Commission operates under the authority of the Javits-Wagner-O’Day Act, which was passed in 1971 to increase employment and training opportunities for persons who are blind or visually-impaired, or who have disabilities so severe that they are otherwise unable to work at competitive employment. More than 400 companies participate in the AbilityOne Program and receive set-aside federal contracts in exchange for employing approximately 45,000 people who are blind or have severe disabilities.
“By its conduct, IBI thwarted the AbilityOne Program’s goal of increasing employment and training opportunities for persons who are blind or visually-impaired,” said U.S. Attorney Matthew D. Krueger for the Eastern District of Wisconsin. “This settlement reflects our office’s continuing efforts to combat violations of the False Claims Act and protect federal programs.”
“We are committed to preserving the integrity of the AbilityOne program. False claims on the program exclude blind and significantly disabled workers from opportunities and hinders law-abiding AbilityOne contractors,” said Thomas K. Lehrich, Inspector General of the U.S. AbilityOne Commission. “Working with DOJ and our partners, the Office of Inspector General protects the confidence and public trust in the largest employment program in the nation of blind and significantly disabled workers.”
“The conduct at issue in this case undermined the core purpose of the AbilityOne program -- to provide jobs for the blind and disabled. The settlement reflects our commitment to protect the integrity of the program and hold companies accountable for attempts to subvert it,” said Carol F. Ochoa, Inspector General for the General Services Administration (GSA).
The settlement with IBI resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States. Accordingly, the whistleblower will receive a share of the settlement. The lawsuit is captioned United States ex rel. Inzeo v. Industries for the Blind, Inc., 15-cv-996, in the United States District Court for the Eastern District of Wisconsin. The claims resolved by the settlement are allegations only; IBI does not admit liability for the allegations.
The settlement also resolves conduct that IBI investigated and disclosed to the United States concerning the receipt of gifts and money by its furniture designers and sales representatives that was not alleged in the whistleblower complaint. It received credit in the settlement for its disclosure, cooperation, and remediation efforts in connection with this conduct.
Assistant United States Attorney Lisa Yun and Attorney Jennifer Chorpening of the Civil Frauds Section represented the government in this matter. The settlement was the result of a coordinated effort among the U.S. Attorney’s Office for the Eastern District of Wisconsin and the Commercial Litigation Branch of the Justice Department’s Civil Division, with assistance from GSA’s Office of Inspector General, the U.S. Army Criminal Investigative Command, the Air Force Office of Special Investigations, the Defense Contract Audit Agency, the AbilityOne Office of the Inspector General, and the U.S. Department of the Interior Office of Inspector General.
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.
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Michigan Man Pleads Guilty to Federal Firearm OffensesRead the Press Release
BOSTON – A Michigan man pleaded guilty yesterday in federal court in Springfield to firearm charges.
William Scott, 31, pleaded guilty to an Information charging him with receipt and possession of unregistered firearms, making a false statement or representation with respect to information required to be kept by a federal firearms licensee, and making false entries in, failing to make appropriate entries in, and failing to properly maintain records as required. U.S. District Court Judge Mark D. Mastroianni scheduled sentencing for Feb. 1, 2021.
Scott, who worked for Dark Horse Gunsmithing in South Hadley, Mass. at the time of these offenses, received and possessed a machinegun which was not registered in the National Firearms Registration and Transfer Record as required by the National Firearm Act. In addition, on April 12, 2016 and July 20, 2016, Scott made a false statement or representation with respect to information required to be kept by a federal firearms licensee. Scott also made false entries in, failed to make appropriate entries in, and failed to properly maintain records as required of a federal firearms licensee.
The charge of receipt and possession of an unregistered firearm provides for a sentence up to 10 years in prison, three years of supervised release and a fine of up to $250,000. The charge of making a false statement or representation with respect to information required to be kept by a federal firearms licensee provides for a sentence of up to five years in prison, three years of supervised release and a fine of up to $250,000. The charge of making false entries in, failing to make appropriate entries in, and failing to properly maintain records as required provides for a sentence of up to one year in prison, one year of supervised release and a fine of up to $100,000. 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 Kelly Brady, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division made the announcement. Assistant U.S. Attorney Catherine G. Curley of Lelling’s Springfield Branch Office is prosecuting the case.
Mexican National Convicted of Firearm and Drug ChargesRead the Press Release
United States Attorney Joe Kelly announced that Jose Mena-Valdez, 36, of Mexico, was convicted on September 30, 2020, following a jury trial before Senior United States District Judge Joseph F. Bataillon of possession with intent to distribute fifty grams or more of methamphetamine and possession of a firearm in furtherance of a drug trafficking offense. Sentencing for Mena-Valdez is scheduled for January 4, 2021. Mena-Valdez is facing a term of imprisonment of at least five years to life on the drug charge and a mandatory consecutive term of imprisonment of at least five years for the firearm charge. There is no parole in the federal system.
At trial, Omaha Police officers testified that on October 30, 2018, they stopped Mena-Valdez after observing several traffic violations. Mena-Valdez was alone in the vehicle. When making contact with Mena-Valdez, the officers smelled a strong odor of alcohol and observed an open container containing alcohol. During a search of the vehicle, half a pound of methamphetamine was located on the passenger side floorboard and a stolen firearm was located between the passenger seat and the center console. The jury watched video and audio recordings of the encounter that were taken from body and cruiser cameras.
In addition to the testimony of the officers, a Nebraska Public Service Laboratory technologist, based out of the University of Nebraska Medical Center, testified to the identification, purity, and weight of the methamphetamine.
This case was investigated by the Omaha Police Department as part of Project Safe Neighborhood. Project Safe Neighborhood is a national initiative of the Department of Justice that was announced in 2001 to reduce and prevent violent crime and make the nation’s neighborhoods safer.
Meth dealer handed 25-year prison sentenceRead the Press Release
CORPUS CHRISTI, Texas – Two Corpus Christi residents have been ordered to federal prison following their convictions of trafficking meth, announced U.S. Attorney Ryan K. Patrick.
Scott Winterberg Jr., 26, and Brianna Sanchez, 23, pleaded guilty March 4.
Today, U.S. District Judge David S. Morales ordered Winterberg to serve a 300-month sentence for the drug conspiracy charge, while Sanchez received 102 months for her respective role. Each will also serve five years of supervised release following their sentences.
Between September and December 2019, Winterberg and Sanchez were involved in a conspiracy to possess with intent to distribute meth. They utilized social media to market and sell narcotics and made multiple meth sales to undercover law enforcement.
On Dec. 17, 2019, Winterberg led law enforcement on a high speed chase after they had attempted to initiate a traffic stop of his vehicle. It lasted over 20 minutes and exceeded speeds of 120 mph. Upon his arrest, authorities discovered he was in possession of a handgun, ammunition and cocaine.
Sanchez and Winterberg both admitted they were trafficking meth. Sanchez further acknowledged they sold over 20 ounces each month from August through November 2019.
Both have been and will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The Drug Enforcement Administration; Bureau of Alcohol, Tobacco, Firearms and Explosives; Corpus Christi Police Department and Texas Department of Public Safety conducted the investigation. Assistant U.S. Attorney David M. Paxton is prosecuting the case.
Matalolo Sentenced to 18 Months in Prison for Possessing Firearm While Subject to Domestic Violence Protective OrderRead the Press Release
ST. GEORGE, UT – Rashaan Mamao Matalolo of St. George, Utah, will spend 18 months in federal prison after pleading guilty to one count of possession of a firearm while subject to a domestic violence protective order. Under federal law, individuals subject to a domestic violence protective order are prohibited from possessing a firearm. U.S. District Judge David Nuffer imposed the sentence Wednesday morning in federal court in St. George.
Matalolo, 25, pleaded guilty to the charge in a Felony Information at a hearing in July before U.S. Magistrate Judge Paul Kohler. He admitted that he possessed a Smith & Wesson .40 caliber pistol on May 8, 2020. He also stipulated that he knew he was subject to domestic violence protective order that prohibited him from possessing firearms.
“Cases that allow us to get firearms out of the hands of domestic violence abusers are always a priority. Law enforcement officers around the state are watching for such violations and refer the cases to us. If anyone knows of someone in possession of a firearm while subject to a domestic violence protective order, please reach out to your local police department,” U.S. Attorney John W. Huber said today.
“This is critically important as we work to protect victims of domestic violence during this time of COVID-19. Many stressors are exacerbated during the pandemic, including isolation and financial strain. Victims are in danger if they are isolated with an abuser or fear retaliation if they separate from the abuser,” Huber said. “With these types of prosecutions, we have a valuable tool to help protect victims.”
Matalolo came to the attention of officers with the St. George Police Department about 12:15 a.m. on May 8, 2020. Officers made contact with three individuals, including Matalolo, in the parking lot of the Clarion Suites in St. George. According to a complaint filed in the case, officers smelled the odor of marijuana and observed that an underage individual had an open can of beer.
An officer observed a handgun holstered on the side of a fanny pack Matalolo was wearing on his hips. As officers attempted to detain the three individuals, Matalolo fled on foot. An officer chasing him observed him drop the fanny pack and the firearm on the ground. Matalolo was able to escape and was not apprehended by officers that day.
Officers found the firearm Matalolo dropped. It did not contain ammunition and was later determined to be stolen. The gun holster was still attached to the fanny pack. Officers found identification documents belonging to Matalolo inside the fanny pack. Officers determined that Matalolo is subject to a valid protective order. He was arrested May 24, 2020, on an unrelated drug offense and booked into the Washington County jail.
The case is being prosecuted by Assistant U.S. Attorneys in the St. George Office of the U.S. Attorney’s Office in Utah. Officers with the St. George Police Department and special agents of the DEA are investigating the case.
Malvern Man Sentenced to 10 Years in Federal Prison for Firearms PossessionRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced that James Rhodes, age 35, was sentenced today to 120 months in federal prison, followed by three 3 years of supervised release for being a Felon in Possession of a Firearm. The Honorable Timothy L. Brooks presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court records, on or about December 9, 2019, Rhodes, having previously been convicted of a felony offense, was arrested for shoplifting and found to possess methamphetamine. During the investigation investigators learned that Rhodes had been staying at a hotel and that additional methamphetamine and a firearm were located in the hotel room. Investigators were able to verify that Rhodes had rented a room at a hotel in Bentonville, Arkansas. A search of the room resulted in Investigators locating a loaded handgun.
A federal grand jury indicted Rhodes in January 2020, and he entered a guilty plea in May 2020.
This case was prosecuted as a part of the Department of Justice=s Project Safe Neighborhoods Initiative, which is aimed at reducing gun and gang violence, deterring illegal possession of firearms and improving the safety of residents in the Western District of Arkansas. Participants in the initiative include federal, state and local law enforcement agencies.
This case was investigated by the Rogers Police Department, the Drug Enforcement Administration and the Bureau of Alcohol, Fire, Tobacco, and Explosives (ATF). Assistant United States Attorney Amy Driver prosecuted the case for the United States.
Largest Health Care Fraud and Opioid Enforcement Action in Department of Justice History Results in Charges Against 345 Defendants Responsible for More than $6 Billion in Alleged Fraud LossesRead the Press Release
BEAUMONT, Texas – The Department of Justice Criminal Division today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including the Eastern District of Texas. In conjunction with the takedown, CMS Center for Program Integrity announced that it has taken a record-breaking number of administrative actions related to telemedicine fraud, revoking the Medicare billing privileges of 256 additional medical professionals for their involvement in telemedicine schemes.
These defendants—more than 100 doctors, nurses and other licensed medical professionals—have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
“The nationwide actions announced today demonstrate the Department of Justice’s commitment to combating health care fraud,” said U.S. Attorney Stephen J. Cox. “The Eastern District of Texas applauds the efforts of our law enforcement partners and commits to continued collaboration in order to hold accountable those who steal from federal health care programs and to protect the beneficiaries who rely on them.”
Telemedicine Fraud Cases
The largest amount of alleged fraud loss charged in connection with the cases announced today – $4.5 billion in allegedly false and fraudulent claims submitted by more than 86 criminal defendants in 19 judicial districts – relates to schemes involving telemedicine: the use of telecommunications technology to provide health care services remotely. According to court documents, certain defendant telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. Durable medical equipment companies, genetic testing laboratories, and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes and submitted false and fraudulent claims to Medicare and other government insurers.
The continued focus on prosecuting health care fraud schemes involving telemedicine builds on the efforts and impact of the 2019 “Operation Brace Yourself” Telemedicine and Durable Medical Equipment Takedown, which resulted in an estimated cost avoidance of more than $1.5 billion in the amount paid by Medicare for orthotic braces in the 17 months following that takedown.
Four of the individual defendants have been indicted in the Eastern District of Texas for conspiring to commit illegal remunerations in violation of the Anti-Kickback Statute.
Steven Churchill, 34, of Boca Raton, Florida, Samson Solomon, 22, of West Palm Beach, Florida, David Warren, 49, of Boca Raton, Florida, and Daniel Stadtman, 66, of Allen, Texas, were indicted by a federal grand jury on September 9, 2020.
According to the indictment, the defendants are alleged to have conspired to pay and receive kickbacks in exchange for physicians’ orders from purported telemedicine companies. The physicians’ orders were used to submit claims for payment to federal health care programs. The conspirators obtained patient information, including protected health information and personally identifiable information, used the information to create fictitious physicians’ orders, and sold the physicians’ order to each other and to other durable medical equipment providers. Within approximately eight months, the defendants collectively obtained more the $2.9 million in proceeds from the scheme.
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by federally-funded programs, including Medicare, Medicaid, and TRICARE.
If convicted, they each face up to 5 years in federal prison. It is important to note that an indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, U.S. Department of the Treasury, Internal Revenue Service, Criminal Investigation, and the U.S. Department of Defense, Office of Inspector General, Defense Criminal Investigative Service. It was prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and Adrian Garcia.
Cases Involving the Illegal Prescription and/or Distribution of Opioids and Cases Involving Traditional Health Care Fraud Schemes
The cases announced today involving the illegal prescription and/or distribution of opioids or that fall into more traditional categories of health care fraud include charges and guilty pleas involving more than 240 defendants who allegedly participated in schemes to submit more than $800 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were medically unnecessary and often never provided.
According to court documents, in many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare. Also included are charges against medical professionals and others involved in the distribution of more than 30 million doses of opioids and other prescription narcotics.
In another case that is part of today’s takedown, on June 16, 2020, a registered nurse pleaded guilty to recklessly endangering Texarkana, Texas, patients by stealing fentanyl. Clifford Russell Harris, a 38-year-old Bowie County man, pleaded guilty to tampering with a consumer product.
According to information presented in court, Harris, who was a registered nurse at the time, broke into the secure drug storage at Healthcare Express in Texarkana, Texas, and tempered with the vials of fentanyl being stored there. Specifically, Harris extracted the fentanyl from the vials and refilled the vials with another liquid. Harris then returned the vials to the drug stock where they were available for administration to patients. Because the vials were labeled as fentanyl but did not contain fentanyl, Harris placed patients in danger of death or bodily injury. Harris admitted that he had acted with reckless disregard of the danger to patients and that his actions manifested an extreme indifference to that risk. Harris was prosecuted by Assistant U.S. Attorney Jonathan R. Hornok and is awaiting sentencing.
The following documents related to today’s announcement are available on the Criminal Division, Fraud Section’s Health Care Fraud Unit website through the following links:
- Graphics, Images and Resources: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/graphics-images-resources
- Case Descriptions: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/case-descriptions
Court Documents: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/court-documents
Lake Mary Woman Sentenced to Federal Prison for Stealing More Than $470,000Read the Press Release
Orlando, Florida – U.S. District Judge Carlos E. Mendoza has sentenced Kathryn Smith (58, Lake Mary) to 12 months and 1 day in federal prison for wire fraud. In addition, Smith was ordered to pay $472,765.95 in restitution.
Smith had pleaded guilty on July 7, 2020.
According to court documents, Smith worked at a title insurance company. From December 2012 to May 2019, she embezzled $472,765.95 from the company. Smith stole the funds by using her access to the title insurer’s bank accounts to transfer funds into accounts for which she had control. She also wrote checks to herself without authorization. In addition, Smith used funds from the title insurer to pay her personal credit card bills, insurance for her adult child, and other miscellaneous personal expenses.
This case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorneys Amanda Daniels and Roger B. Handberg.
Lackawanna County Man Charged with Drug TraffickingRead the Press Release
SCRANTON - The United States Attorney’s Office for the Middle District of Pennsylvania announced that Jean Quinones, age 25, of Scranton, of Pennsylvania, was indicted on September 29, 2020, by a federal grand jury for drug trafficking.
According to United States Attorney David J. Freed, the indictment charges Quinones with attempt to possess with intent to distribute in excess of 500 grams of cocaine on September 4, 2020.
The investigation was conducted by the Department of Homeland Security, United States Postal Inspectors, United States Customs and Border Patrol and the Scranton Police Department. Assistant United States Attorney Robert J. O’Hara is prosecuting the case.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
Under federal law, the drug trafficking offense carries a mandatory minimum sentence of five years in prison, up to a maximum sentence of forty years in prison, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
This case is also part of Project Safe Neighborhoods (PSN), a program that has been historically successful in bringing together all levels of law enforcement to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local and tribal enforcement and the local community to develop effective, locally-based strategies to reduce crime.
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Kansas City Man to Federal Prison for Iowa Meth ConspiracyRead the Press Release
Jason Clark, 47, from Kansas City, KS, pled guilty and was sentenced on September 23, 2020, to more than 10 years in federal prison for conspiring to distribute methamphetamine.
Evidence at the hearing showed that Clark was involved in a distribution conspiracy that included more than 50 grams of methamphetamine. On or about May 18, 2019, in Woodbury County, Iowa, law enforcement conducted a traffic stop of Clark. During the traffic stop, officers observed a loaded handgun magazine in the vehicle. A subsequent pat-down of Clark revealed a knife in his pocket. Officers seized roughly a half-pound of methamphetamine from Clark’s vehicle.
Clark was sentenced in Sioux City by United States District Court Chief Judge Leonard T. Strand. Clark was sentenced to 128 months’ imprisonment. He must also serve a 5-year term of supervised release after the prison term. There is no parole in the federal system. Clark is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Special Assistant United States Attorney Patrick T. Greenwood and investigated by Tri-State Drug Task Force based in Sioux City, Iowa, that consists of law enforcement personnel from the Drug Enforcement Administration; Sioux City, Iowa, Police Department; Homeland Security Investigations; Woodbury County Sheriff’s Office; South Sioux City, Nebraska, Police Department; Nebraska State Patrol; Iowa National Guard; Iowa Division of Narcotics Enforcement; United States Marshals Service; South Dakota Division of Criminal Investigation; and Woodbury County Attorney’s Office.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 20-4002. Follow us on Twitter @USAO_NDIA.
Kanawha County Man Pleads Guilty to Federal Drug ConspiracyRead the Press Release
CHARLESTON, W.Va. – A Kanawha County man pled guilty to participating in a drug conspiracy, announced United States Attorney Mike Stuart. Sammy Joe Fragale, II, aka “Bubby Fragale,” 38, of Montgomery, pled guilty to conspiracy to distribute methamphetamine. Fragale is one of 14 defendants charged as a result of a long-term investigation known as “Second Wave,” which dismantled a poly-drug network operating in Kanawha and Fayette Counties.
“Fragale’s conviction is a result of the “Second Wave” investigation,” said United States Attorney Mike Stuart. “The collaborative efforts of our law enforcement partners took more than a dozen drug dealers off the streets that were peddling poisons in Kanawha and Fayette Counties.”
Fragale admitted that he conspired with his father, Sammy Joe Fragale, Sr. to distribute methamphetamine to a DEA informant in August 2020. On several occasions, Fragale “fronted” quantities of methamphetamine to the informant and agreed to accept payment on a later date. On August 21, 2020, Fragale accepted payment from the informant for a transaction that occurred on August 18, 2020. Fragale then returned the money to the informant and directed him to deliver the money to his father at a location in St. Albans. After the transaction was completed, Fragale Sr. was stopped by a St. Albans police officer and found to be in possession of the money along with other controlled substances.
Fragale faces up to 20 years in prison when he is sentenced on January 5, 2021. Fragale Sr. has been charged by criminal complaint with conspiracy to distribute methamphetamine. That complaint remains pending, and the charges against him are mere allegations. He is presumed innocent until convicted by guilty plea or by jury verdict.
The Drug Enforcement Administration (DEA), the St. Albans Police Department, and the Federal Bureau of Investigation (FBI) conducted the investigation. Senior United States District Judge David A. Faber presided over the hearing.
The Organized Crime Drug Enforcement Task Force (OCDETF) is an independent component of the U.S. Department of Justice. Established in 1982, OCDETF is the keystone of the Attorney General’s strategy to reduce the availability of illicit narcotics throughout the United States using a prosecutor-led, multi-agency approach to combat transnational organized crime. OCDETF agents and prosecutors nationwide handle complex investigations and prosecutions of the highest-level drug traffickers, money launderers, and other priority transnational criminal organizations that threaten the citizens of the United States. OCDETF facilitates joint operations by focusing its partner agencies on priority targets, by managing and coordinating multi-agency efforts, and by leveraging intelligence across multiple investigative platforms.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia. Related court documents and information can be found on PACER by searching for Case No. 2:20-cr-00176.
Follow us on Twitter: SDWVNews and USAttyStuart
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KC Man Sentenced to 20 Years for Illegal Firearms Following Gunfight, Fatal CollisionRead the Press Release
KANSAS CITY, Mo. – A Kansas City, Missouri, man was sentenced in federal court today for illegally possessing firearms following a three-vehicle collision in which he struck and killed another motorist while fleeing from a gunfight.
Keith L. Carnes, 31, was sentenced by U.S. District Judge Greg Kays to 20 years in federal prison without parole.
On Nov. 5, 2019, Carnes was found guilty at trial of one count of being a felon in possession of a firearm and two counts of being an unlawful user of a controlled substance in possession of a firearm.
On Aug. 30, 2016, Carnes was in a gunfight near the 3600 block of Wabash Avenue in Kansas City, Mo. During the gunfight, his handgun jammed and he was shot numerous times. Carnes, who was high on marijuana, cocaine, and phencyclidine, fled the area of the gunfight at speeds exceeding 100 miles per hour and ran a red light, crashing into a pickup truck, which led to a multiple vehicle accident.
Kansas City police officers responded to the accident at the intersection of 63rd Street and Prospect Avenue. Three vehicles were involved in the accident, including a 2008 Pontiac G6 driven by Carnes. Video evidence introduced during the trial demonstrated that the Pontiac, which had multiple bullet holes in the driver’s side doors, was traveling southbound on Prospect Avenue at a high rate of speed and failed to stop for the red traffic signal. The Pontiac struck a Dodge Ram, which was westbound on 63rd Street, killing the 24-year-old driver and causing it to strike a Nissan Quest and a pole on the southwest corner of the intersection.
Carnes, who had blood on his t-shirt, told officers, “I have been shot, I know I have been shot.” Police officers broke a window in the Pontiac so they could reach Carnes and provide medical assistance. Officers saw a bag of marijuana and a Bersa Thunder .380-caliber semi-automatic handgun on the driver’s side floorboard. The handgun had blood on it. Carnes was transported by emergency medical service to an area hospital for treatment. According to court documents, lab reports from the hospital confirmed that Carnes had marijuana, cocaine and phencyclidine in his system. The driver of the Dodge Ram was transported to an area hospital where he was pronounced dead.
Evidence introduced during the trial indicated Carnes had used the same Bersa Thunder .380-caliber semi-automatic handgun in a shooting on Aug. 16, 2016, in the 3600 block of Wabash Avenue. The victim of that shooting positively identified Carnes in a photographic lineup as the person who fired four shots at him. Officers recovered shell casings from the scene of the shooting and a forensics expert later confirmed they were fired by the same firearm found in Carnes’ vehicle on Aug. 30, 2016.
Carnes had also been arrested for driving while intoxicated following a traffic stop on Feb. 10, 2013. Kansas City police officers stopped Carnes, who was driving a Jeep Liberty, when radar indicated Carnes was driving 54 miles per hour in a 35-miles-per-hour zone. Officers, who smelled a strong odor of marijuana in the vehicle, found a loaded Glock .45-caliber pistol in Carnes’ waistband.
While being detained without bond and awaiting trial, according to court documents, Carnes assaulted a corrections officer.
Under federal law, it is illegal for anyone who has been convicted of a felony, or who is an unlawful user of a controlled substance, to be in possession of any firearm or ammunition. Carnes has prior felony convictions for an assault in which he shot two persons and for possession of a controlled substance.
This case was prosecuted by Assistant U.S. Attorneys Trey Alford and Sean T. Foley. It was investigated by the Kansas City, Mo., Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Project Safe Neighborhoods
The U.S. Attorney’s Office is partnering with federal, state, and local law enforcement to specifically identify criminals responsible for significant violent crime in the Western District of Missouri. A centerpiece of this effort is Project Safe Neighborhoods, a program that brings together all levels of law enforcement to reduce violent crime and make neighborhoods safer for everyone. Project Safe Neighborhoods is an evidence-based program that identifies the most pressing violent crime problems in the community and develops comprehensive solutions to address them. As part of this strategy, Project Safe Neighborhoods focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.KC Man Sentenced to 20 Years for Drug Trafficking, Illegal FirearmRead the Press Release
KANSAS CITY, Mo. – A Kansas City, Missouri, man was sentenced in federal court today for drug trafficking and illegally possessing a firearm.
Paris B. Young, 49, was sentenced by U.S. District Judge Greg Kays to 20 years in federal prison without parole.
On Feb. 12, 2020, Young was found guilty at trial of possessing crack cocaine with the intent to distribute, possessing a firearm in furtherance of a drug-trafficking crime, being a felon in possession of a firearm, and possessing a firearm with an obliterated serial number.
Kansas City, Mo., police officers stopped Young on June 16, 2018, because he failed to signal while making a turn at the intersection of 41st and Garfield Avenue in Kansas City. Young, who was driving a maroon BMW 650i, was seen making furtive movements by leaning towards the center console of the vehicle and placing items inside the center console. Young opened his car door and got out of the vehicle; he refused to listen to multiple commands by the officers to get back into the vehicle. While speaking with the officers, Young suddenly pushed off of one officer and began to run. The officer grabbed Young’s shirt and Young was immediately taken into custody.
Officers searched Young’s car and found a Taurus .45-caliber revolver, with an obliterated serial number, underneath the driver’s seat. The revolver was loaded with three .45-caliber Colt rounds of ammunition and two 410 shotgun shells in the cylinder. Officers also found a large plastic bag that contained 46 individually wrapped bags of crack cocaine, with a total weight of 12.49 grams, and 4.38 grams of marijuana in the center console of the vehicle.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Young has prior felony convictions for murder, armed criminal action, possessing a controlled substance, and two prior felony convictions for distributing a controlled substance.
This case was prosecuted by Assistant U.S. Attorneys Jeffrey Q. McCarther and Sean T. Foley. It was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Kansas City, Mo., Police Department.
Project Safe Neighborhoods
The U.S. Attorney’s Office is partnering with federal, state, and local law enforcement to specifically identify criminals responsible for significant violent crime in the Western District of Missouri. A centerpiece of this effort is Project Safe Neighborhoods, a program that brings together all levels of law enforcement to reduce violent crime and make neighborhoods safer for everyone. Project Safe Neighborhoods is an evidence-based program that identifies the most pressing violent crime problems in the community and develops comprehensive solutions to address them. As part of this strategy, Project Safe Neighborhoods focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.Justice Department settles sexual harassment lawsuit against Cincinnati landlordRead the Press Release
CINCINNATI – U.S. Attorney David M. DeVillers announced today that landlord John Klosterman and his wife, Susan Klosterman, will pay $177,500 total to resolve a Fair Housing Act lawsuit alleging that John Klosterman sexually harassed female tenants since at least 2013 at the 55 residential properties the couple owned in Sedamsville.
“In this settlement, Klosterman acknowledges that the United States has evidence he sexually harassed tenants on multiple occasions,” said U.S. Attorney David M. DeVillers. “He’s being held accountable under the Fair Housing Act and will pay more than $167,000 to victims of his heinous conduct.”
The defendants acknowledged in the settlement that, if this case had gone to trial, the United States was prepared to introduce the following evidence:
- sworn deposition testimony from John Klosterman acknowledging that, on multiple occasions, he engaged in inappropriate sexual communications with his female tenants and prospective tenants, made comments about the physical appearances of his female tenants and prospective tenants, sent pictures of a naked male statue to his female tenants, and offered to send to his female tenants, and requested that his female tenants send to him, sexual photographs;
- sworn deposition testimony from John Klosterman admitting that he offered to pay an “allowance” to a female tenant in exchange for engaging in a sexual relationship with him; and
- text messages and recordings of phone calls in which John Klosterman made sexual comments to female tenants and prospective female tenants.
According to the complaint filed in 2018, Klosterman engaged in unwanted sexual touching, offered to reduce rent and overlook or excuse late or unpaid rent in exchange for sex. He evicted or threatened to evict female tenants who objected to or refused sexual advances. Klosterman also entered the homes of female tenants without their consent and otherwise monitored their daily activities with cameras directed at their units.
Under the settlement, which still must be approved by the court, the Klostermans will pay $167,125 in damages to former tenants who were harmed by John Klosterman’s harassment, $7,875 to another plaintiff in the lawsuit, and a $2,500 civil penalty to the United States. The consent order also bars the defendants from participating in the rental or management of residential properties in the future.
The United States’ lawsuit was pursued jointly with the Justice Department’s Civil Rights Division. The Civil Rights Division enforces the Fair Housing Act, which prohibits discrimination in housing based on race, color religion, national origin, sex disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt.
Individuals can report sexual harassment or other forms of housing discrimination by calling the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, e-mailing the Justice Department at [email protected], or submitting a report online.
David M. DeVillers, United States Attorney for the Southern District of Ohio, and Assistant Attorney General Eric Dreiband for the Civil Rights Division announced the settlement agreement filed in federal court today. Deputy Civil Chief Matthew Horwitz is representing the United States in this case.
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Justice Department Settles Sexual Harassment Lawsuit Against Cincinnati, Ohio LandlordRead the Press Release
The Justice Department today announced that landlord John Klosterman and his wife, Susan Klosterman, will pay $177,500 to resolve a Fair Housing Act lawsuit alleging that John Klosterman sexually harassed female tenants since at least 2013 at residential properties the couple owned in Cincinnati, Ohio.
Under the settlement, which still must be approved by the court, the Klostermans will pay $167,125 in damages to former tenants who were harmed by John Klosterman’s harassment, $7,875 to another plaintiff in the lawsuit, and a $2,500 civil penalty to the United States. The consent order also bars the defendants from participating in the rental or management of residential properties in the future.
“Sexual harassment of women in their homes is indecent, destructive, and illegal,” said Assistant Attorney General Eric Dreiband for the Civil Rights Division. “The Fair Housing Act protects the right of women and their families to live in peace and security and without the fear that deviant people will intimidate and bully them for sexual favors. This department will continue tirelessly to pursue landlords and others who abuse their authority by preying upon vulnerable women.”
“In this settlement, Klosterman acknowledges that the United States has evidence he sexually harassed tenants on multiple occasions,” said U.S. Attorney David M. DeVillers for the Southern District of Ohio. “He’s being held accountable under the Fair Housing Act and will pay more than $167,000 to victims of his heinous conduct.”
The complaint, filed in 2018, alleged that John Klosterman sexually harassed female tenants at the rental properties since at least 2013. According to the complaint, he engaged in harassment that included, among other things, making unwelcome sexual advances and comments, sending unwanted sexual text messages and photos, engaging in unwanted sexual touching, offering to reduce rent and overlooking or excusing late or unpaid rent in exchange for sex, evicting or threatening to evict female tenants who objected to or refused sexual advances, and entering the homes of female tenants without their consent and otherwise monitoring their daily activities with cameras directed at their units.
The defendants acknowledged in the settlement that, if this case had gone to trial, the United States was prepared to introduce the following evidence: (a) sworn deposition testimony from John Klosterman acknowledging that, on multiple occasions, he engaged in inappropriate sexual communications with his female tenants and prospective tenants, made comments about the physical appearances of his female tenants and prospective tenants, sent pictures of a naked male statue to his female tenants, and offered to send to his female tenants, and requested that his female tenants send to him, sexual photographs; (b) sworn deposition testimony from John Klosterman admitting that he offered to pay an “allowance” to a female tenant in exchange for engaging in a sexual relationship with him; and (c) text messages and recordings of phone calls in which John Klosterman made sexual comments to female tenants and prospective female tenants.
The Justice Department’s Sexual Harassment in Housing Initiative is an effort to combat sexual harassment in housing led by the Civil Rights Division, in coordination with U.S. Attorney’s Offices across the country. The Attorney General recently reaffirmed this commitment by directing the Justice Department to deploy all available enforcement tools against anyone who tries to capitalize on the COVID-19 crisis by sexually harassing people in need of housing. The goal of the department’s initiative is to address sexual harassment by landlords, property managers, maintenance workers, loan officers, or other people who have control over housing. As part of the initiative, the Justice Department developed a public service announcement and formed a joint task force with HUD to combat sexual harassment in housing. Since launching the Initiative in October 2017, the Department of Justice has filed 18 lawsuits alleging sexual harassment in housing. Since January 2017, the Justice Department has filed or settled 23 cases alleging sexual harassment in housing and has recovered over $2.9 million for victims of such harassment.
The Justice Department’s Civil Rights Division enforces the Fair Housing Act, which prohibits discrimination in housing based on race, color, religion, national origin, sex disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt. Individuals can report sexual harassment or other forms of housing discrimination by calling the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, e-mailing the Justice Department at [email protected], or submitting a report online. Individuals can also report such discrimination by contacting HUD at 1-800-669-9777 or filing a complaint online.
Justice Department Files Housing Discrimination Lawsuit Against Staten Island, New York Rental Agent and Real Estate AgencyRead the Press Release
The Department of Justice announced today that it has filed a lawsuit against Village Realty of Staten Island Ltd. and Denis Donovan, a sales and former rental agent at Village Realty, alleging discrimination against African Americans in violation of the Fair Housing Act when offering housing units for rent. The lawsuit is based on the results of testing conducted by the department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices.
The complaint, filed in the U.S. District Court for the Eastern District of New York, alleges that Donovan discriminated against prospective renters on the basis of race by treating African Americans who inquired about available rental units differently and less favorably than similarly-situated white persons. According to the complaint, Donovan told African-American testers about fewer rental units than white testers, offered white testers rental discounts and opportunities to inspect units that were not offered to African-American testers, generally offered African-American testers units only in racially mixed neighborhoods while offering white testers units in both overwhelmingly white and racially mixed neighborhoods, and made more encouraging comments to white testers about available rental units. The lawsuit alleges that Village Realty is legally responsible for Donovan’s alleged discrimination because Donovan worked as Village Realty’s rental agent.
“Freedom for Americans means that people can live peacefully in our nation without regard to their race, ancestry, sex, and other protected traits,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The United States and its laws forbid segregation in which people are judged, divided, and harmed because of the color of their skin. Race never should be a factor that determines where someone can live. No one should have their housing choices limited, whether by explicit refusals to rent on the basis of race, or more subtle differences in the way home seekers are treated when they ask about available properties. Whether obvious or less apparent, race discrimination in the rental housing market is intolerable. The Department of Justice is committed to enforcement of the Fair Housing Act to ensure that people have equal access to rental housing, and equal treatment when seeking rental housing, regardless of race, including by uncovering hidden discrimination through our Fair Housing Testing Program.”
“The U.S. Attorney’s Office has been, and always will be, dedicated to protecting the rights established by the Fair Housing Act, which demands that individuals and families of all races, colors and nationalities are treated fairly when they want to buy or rent a home,” said Acting U.S. Attorney Seth D. DuCharme. “Today’s lawsuit reinforces this Office’s commitment to eliminating discrimination in housing.”
The lawsuit seeks monetary damages to compensate victims, civil penalties against the defendants to vindicate the public interest, and a court order barring future discrimination.
Individuals who believe they may have experienced discrimination at Village Realty or believe they may have information relevant to this case should contact the Department of Justice toll-free at 1-800-896-7743, by email at [email protected], or by submitting a report online.
The Justice Department’s Civil Rights Division enforces the federal Fair Housing Act, which prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the department’s fair housing enforcement can be found at www.justice.gov/fairhousing.
Justice Department Announces $1.2 Million Dollar Settlement of Title VII Intentional Race Discrimination and Retaliation Lawsuit Involving Law Enforcement Victims in MarylandRead the Press Release
The Justice Department announced today that it has reached a settlement with the Worcester County Sheriff, in his official capacity (currently Matthew Crisafulli, formerly Reggie Mason), and the state of Maryland, resolving allegations that a former staff member was subjected to a racially hostile work environment and that he and others who supported him were retaliated against after he complained about the racial discrimination. The Justice Department also announced the settlement of related retaliation claims filed against Pocomoke City, Maryland that were resolved on Dec. 4, 2019.
“Subjecting a law enforcement officer to egregious racial slurs and epithets, then retaliating against him and others who supported him for reporting the misconduct, strikes at the heart of the race discrimination prohibitions that Congress enacted when it passed Title VII of the Civil Rights Act of 1964,” said Assistant Attorney General for Civil Rights Eric S. Dreiband. “The police officers who were the victims of this unlawful race discrimination and retaliation will benefit from this agreement, and the Justice Department will continue vigorously to enforce Title VII to preserve the right of all citizens, including the brave men and women who serve in law enforcement, to work with dignity and respect and without regard to the color of their skin.”
The United States’ complaint in intervention, filed on Dec. 1, 2016, alleged that former Pocomoke City Police Officer Franklin Savage was subjected to a racially hostile work environment, which included repeated racial epithets and other racially-charged acts of harassment, while on assignment to the Criminal Enforcement Team, a multijurisdictional drug enforcement unit operated through the Worcester County Sheriff’s Office. The United States also alleged that Savage’s complaints about racial harassment resulted in a series of retaliatory actions against him by the State of Maryland, through the Worcester County Sheriff’s Office, and by Pocomoke City, culminating in the termination of his employment. The complaint further alleged that Pocomoke City retaliated against two other officers — former Pocomoke City Police Chief Kelvin Sewell and former Pocomoke City Police Lieutenant Lynell Green — for supporting Savage in the course of his complaints. Pocomoke City eventually terminated Chief Sewell’s employment.
Under the terms of a Dec. 4, 2019 consent decree with Pocomoke City and the newly-announced consent decree with the Worcester County Sheriff and the state of Maryland (which is subject to court approval), Pocomoke City and the Worcester County Sheriff’s Office must review and revise their existing anti-discrimination policies and procedures and implement effective policies to protect employees from discrimination on the basis of race and retaliation. These resolutions further require Pocomoke City and the Worcester County Sheriff’s Office to develop effective policies that ensure employees understand how to report potentially discriminatory or retaliatory behavior and that supervisory staff understands its responsibility to report such complaints through the appropriate investigatory process. Pocomoke City agreed to pay a total of $1,101,003.00 to the former officers to resolve all claims against it. The Worcester County Sheriff, in his official capacity, and the State of Maryland agreed to pay an additional $100,000.00 to Savage, in resolution of his claims against those employers.
All three former law enforcement officials filed charges of discrimination with the U.S. Equal Employment Opportunity Commission’s (EEOC) Baltimore Field Office. The EEOC investigated the charges and found that there was a reasonable basis to believe that violations of Title VII had occurred. After unsuccessful conciliation efforts by the EEOC, the charges were referred by the EEOC to the Department of Justice. The former officers filed suit and the United States intervened in their suit. More information about the EEOC’s jurisdiction is available on its website at www.eeoc.gov.
Attorneys assigned to the Employment Litigation Section of the Civil Rights Division represented the United States in this matter. The full and fair enforcement of Title VII is a top priority of the Justice Department’s Employment Litigation Section of the Civil Rights Division. Additional information about the Civil Rights Division and the jurisdiction of the Employment Litigation Section is available on its websites at www.justice.gov/crt/ and https://www.justice.gov/crt/employment-litigation-section.
Judge sentences man pleading guilty to skimming crimesRead the Press Release
ST. LOUIS, MO – United States District Judge Audrey G. Fleissig sentenced Jorge Alexander Betances, Jr., on Tuesday, to 28 months in prison. The 24-year-old Philadelphia, Pennsylvania resident previously pleaded guilty to possession of device-making equipment.
According to court documents, on April 22, 2019, the defendant was pulled over by a Drug Enforcement Administration Task Force Officer with Phelps County Sheriff’s Department for a traffic violation while travelling on Interstate 44. A search of the defendant’s vehicle revealed numerous different components of credit card device making equipment – including skimming devices, a card encoding device, gas pump-style locks and security seals, and plastic card stock (some blank and some printed with banking information on them). In addition, law enforcement discovered inside the vehicle tools that could be used to install credit card skimmer devices on gas pumps. Finally, law enforcement discovered more than 3,572 counterfeit or unauthorized access devices, including in the form of physical credit cards and in electronic form on the defendant’s digital devices.
“Payment card skimming devices continue to be installed inside gas pumps throughout the nation, said Thomas Landry, Special Agent in Charge, United States Secret Service St. Louis Field Office. “Skimmers are designed to covertly steal payment card information from unknowing victims when they purchase fuel at the pump. To protect yourself:
- Make sure the gas pump panel is closed and doesn’t show signs of tampering
- Run your card as a credit rather than a debit
- Go inside to pay or utilize mobile app/cardless payment systems
- Use gas pumps near the front of the store and be aware of your surroundings
- Check your accounts and report fraud to your bank immediately”
The Phelps County Sheriff’s Department and the United States Secret Service investigated the case. Assistant United States Attorney Kyle T. Bateman prosecuted the case for the United States Attorney’s Office.
Judge sentences armed St. Louis drug dealer for narcotics distribution and firearms related offensesRead the Press Release
ST. LOUIS, MO – United States District Judge Ronnie L. White sentenced, Tuesday, Monte Evans to 80 months in prison. The 38-year-old St. Louis resident pleaded guilty to possession with intent to distribute cocaine base and heroin and possessing a firearm in furtherance of a drug trafficking crime.
On April 25, 2019, officers from the St. Louis Metropolitan Police Department were patrolling in the 1300 block of Montclair Avenue when they saw Evans participate in a drug deal. Officers, still in the patrol car, approached Evans and he started acting suspicious. Officer stopped the car and got out and Evans ran.
Officers chased Evans and caught Evans when he slipped on wet grass. Officers did a pat-down, of Evans, and found a stolen Glock 27 semi-automatic pistol. Officers also found a firearms holster on his belt. During a search of Evans, police found 12.05 grams of heroin and 8.65 grams of crack. Officers arrested Evans.
On May 30, 2019, SLMPD officers saw Evans operating a car without a front license plate. Officers learned the car was registered to Evans, and that Evans had multiple active felony warrants. Officers performed a lawful traffic stop. While talking with Evans, officer smelled marijuana and searched the vehicle.
Officers discovered a satchel containing 3.06 grams of heroin, .39 grams of methamphetamine, 66.42 grams of marijuana, and a Glock 27 semi-automatic pistol loaded pistol with 13 rounds in the magazine.
St. Louis Metropolitan Police Department Officers investigated the case. Assistant United States Attorney Jason Dunkel prosecuted the case for the United States Attorney’s Office.
Janitor at Local High School Pleads Guilty to Attempting to Produce Child Pornography in Secretly Filming Students in Girls’ Locker RoomRead the Press Release
Jacksonville, Florida – Jason Brian Goff (44, Starke) has pleaded guilty to attempted production of child pornography. He faces a minimum mandatory penalty of 15 years, and up to 30 years, in federal prison. A sentencing date has not yet been set.
According to the
plea agreement , in August 2019, two 14-year-old Clay High School students reported that they had seen what they believed was a camera lens, concealed within a locked gym locker, in the Clay High School girls’ locker room. When school administrators unlocked the locker, they discovered a cellphone taped to the side wall of the locker with the lens pointed out of a pre-fabricated hole.A forensic analysis of the phone yielded a video, lasting 30 minutes, which had been filmed from a window looking into the locker room where female students were captured changing clothes. At the end of the video, the phone had been panned down to show the identification badge of Clay High School Custodian Jason Goff.
Homeland Security Investigations (HSI) and the Clay County Sheriff’s Office arrested Goff on September 13, 2019. Goff later admitted that he had tried filming girls in the locker room at least three times from different vantage points.
Forensic analyses of other electronic devices belonging to Goff revealed additional images from the girls’ high school locker room and a collection of child pornography, to include a video and images of adults sexually abusing children of various ages, including images of infants.
This case was investigated by the Clay County Sheriff’s Office and Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Kelly S. Karase.
It is another case 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.
International Sex Tourist and Child Exploiter Arrested After Trip to PhilippinesRead the Press Release
PLANO, Texas – A Lake Kiowa, Texas man has been arrested and charged with international child exploitation crimes in the Eastern District of Texas announced U.S. Attorney Stephen J. Cox today.
David Woods, 68, of Lake Kiowa, Cooke County, Texas has been charged in an indictment returned by a grand jury with coercing and enticing a minor to engage in illegal sexual activity and engaging in illicit sexual conduct in foreign places. Woods has entered “not guilty” pleas to the charges.
Woods came to the attention of authorities in July 2019 when he was encountered by members of Customs and Border Protection at the Dallas-Fort Worth International Airport as he returned to the United States from a months-long trip to the Philippines. Agents with Homeland Security Investigations initiated an investigation, which revealed that Woods has used a cell phone, laptop, and a social media application to persuade, induce, entice, and coerce a minor female victim in the Philippines to engage in sex acts, film those acts, and send the images and videos to him. Agents also discovered that Woods engaged in sex acts with the same child victim after traveling to the Philippines in 2019. Woods was arrested on September 25, 2020 at the George Bush International Airport in Houston, Texas as he arrived on a flight from the Philippines.
If convicted, Woods faces a minimum of 10 years and up to life in federal prison.
This case is being brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case is being investigated by Homeland Security Investigations-Dallas, with assistance from Customs and Border Protection in Houston, Dallas, and Honolulu, HSI-Philippines, and the National Center for Missing and Exploited Children. The case is being prosecuted by Assistant U.S. Attorney Marisa J. Miller.
It is important to note that an indictment or arrest should not be considered as evidence of guilt and that all persons charged with a crime are presumed innocent until proven guilty beyond a reasonable doubt.
Honolulu man charged with possession of chemical weapon and unregistered destructive deviceRead the Press Release
HONOLULU – Ethan Sandomire, 20, a resident of Honolulu, Hawaii, was indicted by a federal grand jury today with possessing and attempting to possess a chemical weapon, and possessing an unregistered destructive device.
According to the indictment and other court documents, between approximately December 2019 and March 2020, Sandomire conducted extensive research into explosives, explosive devices, chemical and biological weapons, and related topics, and wrote privately about his plans for explosive and chemical attacks in and around Honolulu, Hawaii.
In early 2020, Sandomire ordered the materials to make a destructive device from multiple online vendors, which were then delivered to his residence. At or around the time of Sandomire’s arrest on March 29, 2020, the FBI seized the items that Sandomire had ordered online from a separate location, including, among other things: approximately 30 pounds of aluminum powder, approximately 30 pounds of ultra-pure potassium perchlorate, approximately 45 pounds of potassium perchlorate, and multiple ignition systems, wireless firing systems, and victim-initiated tripwire systems.
On February 24, 2020, Sandomire went to a hardware store in Honolulu and purchased items that, when combined, create chlorine gas, a toxic chemical. That same day, Sandomire searched the internet multiple times for the blueprints and floor plans of a large residential apartment building centrally located in Honolulu, Hawaii (“Building A”). Building A has approximately 450 residential apartment units, several commercial units, and a multi-level grocery store.
Two days later, on February 26, 2020, Sandomire visited Building A in person. Security camera footage showed Sandomire waiting outside the main lobby for someone to exit, then walking into the lobby before the doors closed, and taking the elevator to the sixth-floor parking area. He took pictures on his cellphone of structural support columns inside the parking garage that is located below Building A’s outdoor recreational area and lap pool. He also took pictures of a storage area and large air vents coming out of an air handler that serves a 16,000 square-foot space elsewhere in Building A.
Sandomire returned to Building A’s main lobby and asked for copies of the building’s floor plans from the front desk staff, which the staff member did not provide. He also visited the building developer’s office and took photographs of a physical model of Building A.
Sandomire’s personal computer contained a desktop note entitled “destroy [Building A]” by using chemicals and explosives, among other thing, and numerous folders with extensive research into explosives, chemical weapons, biological weapons, improvised munitions, and similar topics. Some of the folders were entitled “building demolition,” “my attack plan,” “explosives,” and “bio warfare.” The folders contained digital versions of approximately 54 books about explosives and related topics. Sandomire’s computer also contained an instructional document titled “Advanced Chemical Weapons Design and Manufacture,” with the subtitle “Chemicals that Kill in 30 Seconds or your Money Back.”
The charges filed today include one count of Possession of a chemical weapon, which carries a maximum statutory penalty of life imprisonment and a fine of not more than $250,000, and one count of Possession of an unregistered destructive device, which carries a maximum statutory penalty of 10 years’ imprisonment and a fine of not more than $10,000.
In announcing the charges, U.S. Attorney for the District of Hawaii, Kenji M. Price stated “My office will use the tools at its disposal to protect the community from those who possess destructive devices and chemical weapons. These kinds of cases underscore the importance of vigilant action by law enforcement to protect the public from the acquisition and use of materials that can cause devastating harm to our communities. This is the second case this year brought by my office that involves a violation of the federal chemical weapons statute, and we will continue to vigorously pursue, and bring to justice, those who endanger our communities by violating this law.”
“It is our priority at the FBI to keep the citizens of Hawaii and the United States safe and to ensure that individuals like Ethan Sandomire are stopped before they terrorize our communities. Even though Sandomire went to great lengths to obtain the knowledge and the materials to construct a chemical weapon and an explosive device, the men and women of the Honolulu FBI disrupted his evil intentions before he could cause harm. Today’s indictment is an example of the FBI's commitment of making Hawaii a safer place for all,” said Federal Bureau of Investigation Special Agent in Charge Eli S. Miranda.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case is being investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Marc A. Wallenstein with the assistance of the Department of Justice’s National Security Division.
Hawaii CEO Charged with COVID-Relief FraudRead the Press Release
A Hawaii man has been taken into custody on allegations he fraudulently obtained more than $12.8 million in Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney Kenji M. Price of the District of Hawaii.
Martin Kao, 47, of Honolulu, Hawaii, was charged in a federal criminal complaint, unsealed today, filed in the District of Hawaii with two counts of bank fraud and five counts of money laundering. Kao will make his initial appearance Thursday at 9:30 HST before U.S. District Court Judge Kenneth J. Mansfield.
The complaint alleges that Kao, as Chief Executive Officer of Navatek LLC (now known as Martin Defense Group LLC), submitted at least two fraudulent PPP loan applications. In sum, Kao received approximately $12.8 million in PPP funds, over $2 million of which he transferred to his own personal accounts. According to the charges, Kao falsely inflated the number of employees on the loan application and falsely certified that the applicant and its affiliates would not receive, and had not received, another PPP loan.
The CARES Act is a federal law enacted March 29. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief the CARES Act provides is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
A federal criminal complaint is merely an accusation. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by IRS-Criminal Investigation and the SBA’s Office of Inspector General. Trial Attorney Tom Tynan of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Craig Nolan for the District of Hawaii are prosecuting the case.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
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.
Hartford Man Sentenced to 5 Years in Prison for Distributing Fentanyl and CrackRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that YASIL SANTOS, also known as “Lilo,” 25, of Hartford, was sentenced today by U.S. District Judge Vanessa L. Bryant in Hartford to 60 months of imprisonment, followed by four years of supervised release, for distributing fentanyl and crack cocaine.
According to court documents and statements made in court, this matter stems from an investigation conducted by the FBI’s Northern Connecticut Violent Crimes Gang Task Force and Hartford Police Department’s Vice and Narcotics Division into the trafficking of narcotics and associated violence in Hartford’s South End by members and associates of the Almighty Latin Kings Nation (“Latin Kings”). The investigation, which included court-authorized wiretaps, physical surveillance and controlled purchases of narcotics, revealed that two members of the Latin Kings operated separate drug trafficking organizations that distributed fentanyl, heroin, cocaine and crack cocaine. The organizations used multiple locations to process, package, store and distribute narcotics, and possessed firearms in furtherance of their drug trafficking activities.
Nelson Ferry led one of the drug trafficking organizations. Ferry, with the assistance of Santos and others, processed and packaged heroin/fentanyl at his East Hartford residence, and he operated a “trap house” at 149 Wethersfield Avenue in Hartford as a distribution point for drug customers. Santos worked with Ferry to distribute heroin/fentanyl and crack cocaine from the Wethersfield Avenue trap house.
Santos has been detained since his arrest on July 24, 2018. On September 24, 2019, he pleaded guilty to one count of conspiracy to possess with intent to distribute, 40 grams or more of fentanyl and 28 grams or more of cocaine base (“crack”).
Santos’ criminal history includes two state convictions for firearm offenses.
Ferry pleaded guilty to related charges and, on February 26, 2020, was sentenced to 87 months of imprisonment.
This matter is being investigated by the FBI’s Northern Connecticut Gang Task Force and the Hartford Police Department. The Task Force includes members of the Hartford Police Department, East Hartford Police Department, Connecticut State Police and Connecticut Department of Correction. The Hartford Police Department’s Vice and Narcotics Division and Shooting Task Force have provided valuable assistance to the investigation.
The case is being prosecuted by Assistant U.S. Attorney Brian P. Leaming.
Hartford Man Involved in Cocaine Trafficking Ring Sentenced to 30 Months in Federal PrisonRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that HECTOR LUNA, 32, of Hartford, was sentenced today by U.S. District Judge Vanessa L. Bryant in Hartford to 30 months of imprisonment, followed by four years of supervised release, for his role in a cocaine trafficking ring.
According to court documents and statements made in court, this matter stems from an investigation conducted by the Drug Enforcement Administration’s Hartford Task Force and the U.S. Postal Inspection Service into a drug trafficking organization that was receiving shipments of cocaine from Puerto Rico and California, and distributing the drug in and around Hartford. The investigation revealed that a U.S. Postal Service letter carrier was facilitating the shipment of parcels containing kilograms of cocaine through the USPS to addresses that were on his delivery route in Hartford. The letter carrier distributed cocaine to his own drug customers, and also delivered parcels to other large-scale cocaine traffickers in the Hartford area. Luna received parcels of cocaine from the letter carrier and delivered them to other co-conspirators.
Luna was arrested on May 21, 2019. On June 4, 2019, a grand jury in Hartford returned an indictment charging Luna and 18 co-defendants with conspiracy to distribute cocaine and related offenses. On November 17, 2020, Luna pleaded guilty to one count of conspiracy to distribute and to possess with intent to distribute cocaine.
Luna, who is released on a $100,000 bond, is required to report to prison on November 11, 2020.
The Drug Enforcement Administration’s Hartford Task Force includes personnel from the DEA Hartford Resident Office and the Bristol, Hartford, East Hartford, Manchester, New Britain, Rocky Hill, Wethersfield, Windsor Locks and Willimantic Police Departments.
This case is being prosecuted by Assistant U.S. Attorney Geoffrey M. Stone.
Harrison County Man Seeks to Pump up Wallet Through Unlawful Distribution of Anabolic Steroids, Gets Benched by PoliceRead the Press Release
MARSHALL, Texas – A 53-year-old Hallsville, Texas, man has pleaded guilty to a federal drug trafficking violation in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.
Tony Goss pleaded guilty to an Information charging him with possession with intent to distribute anabolic steroids today before U.S. Magistrate Judge Roy S. Payne.
According to information presented in court, on August 22, 2019, state and federal law enforcement agents executed a search warrant at 107 Community Blvd, Suite #5, Longview, Texas, which was a commercial property leased by Goss. Agents ultimately recovered approximately 5,493 pills or tablets containing anabolic steroids, approximately 4,192 grams of anabolic steroid powder and, approximately 2,960 milliliters of liquid anabolic steroids. Anabolic steroids are a Schedule III controlled substance. Goss admitted that he possessed all the anabolic steroids with the intent to distribute them for commercial profit. Goss further admitted that he was personally responsible for the distribution of, and possessed with intent to distribute, at least 176,585 dosage units of anabolic steroids, which he distributed through mass-marketing via the internet.
Goss acknowledged that he received $459,285.25 in proceeds from his sale of steroids, and that he used some of those funds to purchase seven firearms and a 2016 Ford F-350. Goss agreed to forfeit to the government all the money he received from selling steroids, as well as all property he purchased with steroid proceeds.
Under the applicable federal statutes, Goss faces up to 10 years in federal prison. The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.
This case was investigated by the Hallsville Police Department and the U.S. Drug Enforcement Administration and prosecuted by Assistant U.S. Attorney Jim Noble.
Grand Jury Indicts Registered Sex Offender on Child Pornography ChargesRead the Press Release
PROVIDENCE – A registered sex offender convicted in 2014 of possessing child pornography was indicted today by a federal grand jury on two counts of distribution and one count of possession of child pornography, announced United States Attorney Aaron L. Weisman, Superintendent of the Rhode Island State Police Colonel James M. Manni, and Homeland Security Investigations Acting Special Agent in Charge Michael S. Shea.
If convicted, Thomas Andreozzi, 59, of North Providence, faces a minimum term of incarceration of 10 years in federal prison.
According to court documents, it is alleged that in May 2020, Andreozzi uploaded images depicting child pornography while communicating with a person online. It is alleged that Andreozzi also boasted, “I have lots of young stuff” and “I have little girls.”
Andreozzi was arrested at his home in July by members of the Rhode Island State Police Internet Crimes Against Children (ICAC) Task Force. As Task Force agents and officers approached Andreozzi’s residence, he allegedly fled inside his apartment and refused law enforcement commands to open the door. After forcing their way into Andreozzi’s apartment, agents and officers immediately seized a cell phone from Andreozzi’s hand and another on a nearby table. It is alleged that the phone in Andreozzi’s hand was opened to an online electronic media storage service. Numerous files of child pornography were allegedly observed by law enforcement.
A federal indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.
Distribution of child pornography is punishable by statutory penalties of 15-30 years imprisonment to be followed by up to lifetime supervised release. Possession and accessing child pornography with intent to view is punishable by statutory penalties of 10-20 years imprisonment to be followed by up to lifetime supervised release.
The case is being prosecuted by Assistant U.S. Attorney John P. McAdams.
The Rhode Island ICAC Task Force is comprised of members of the Rhode Island State Police Computer Crimes Unit along with detectives from the Warwick Police Department, Cranston Police Department, Newport Police Department, East Providence Police Department, Pawtucket Police Department, Bristol Police Department, North Kingstown Police Department, Woonsocket Police Department, and Homeland Security Investigations.
United States Attorney Aaron L. Weisman thanks the FBI and the Winnebago County Sherriff’s Department in Winnebago County, Wisconsin for their assistance in the investigation of this matter.
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Georgia Woman Sentenced to Prison for Fraud Scheme that Used Homeless People to Cash Stolen ChecksRead the Press Release
ERIE, Pa. - A former resident of Lithonia, Georgia, has been sentenced in federal court to 42 months in jail on her conviction of conspiracy to commit wire and bank fraud, United States Attorney Scott W. Brady announced today. Restitution will be determined at a later date.
United States District Judge Susan Paradise Baxter imposed the sentence on Jasmine Nicole Carter, 31.
According to information presented to the court, Carter and a co-defendant engaged in a years long scheme where they stole checks from the mail and used homeless individuals with valid identification to cash the checks. The defendants removed the legitimate names from the checks and replaced them with the homeless persons’ names. They then kept the bulk of the money obtained and paid a nominal amount to the check cashers. Carter and her co-defendant were caught with a typewriter that was found, after a forensic examination, to contain over 130 different names, all of which were traced to the fraudulent scheme.
Prior to imposing sentence, Judge Baxter noted the complexity of the scheme and the fact that Carter and her co-defendant traveled around the country perpetuating the fraud.
Assistant United States Attorney Christian A. Trabold prosecuted this case on behalf of the government.
United States Attorney Brady commended the Federal Bureau of Investigation, the Pennsylvania State Police, the Erie Police Department and the Millcreek Police Department for the investigation leading to the successful prosecution of Carter.
Four Central Florida Men Sentenced to Prison for Firearms Offenses Involving Weapons Trafficking to Puerto RicoRead the Press Release
Orlando, FL – U.S. District Judge Carlos E. Mendoza has sentenced Anthony Kenty Soto-Lopes (39, Orlando) to 11 years and 3 months in federal prison for aiding and abetting the making of a false statement to a licensed firearms dealer, and possessing a firearm as a convicted felon. In January 2020, Judge Mendoza also sentenced Soto-Lopes’s three co-defendants to federal prison terms: Misael Adorno-Ortega (25, Orange City) to 7 years for aiding and abetting the making of a false statement to a licensed firearms dealer and possessing a firearm as a convicted felon; Ivan Jomar Melendez-Ortiz (24, Orlando) to 37 months for making a false statement to a licensed firearms dealer; and Jose Gonzalez-Rodriguez (34, Davenport) to 8 months for making false statements to a licensed firearms dealer. All four men had previously pleaded guilty to the charges.
According to court documents, in October 2018, Soto-Lopes and Adorno-Ortega agreed to assist each other in acquiring firearms and shipping them to purchasers in Puerto Rico. Because they were previously convicted felons, Soto-Lopes and Adorno-Ortega could not purchase the firearms themselves. Instead, they recruited straw purchasers, including Melendez-Ortiz and Gonzalez-Rodriguez, to purchase firearms for them. Between October 2018 and June 2019, Soto-Lopes and Adorno-Ortega had the straw purchasers buy approximately 49 firearms from various firearms dealers in Central Florida. Melendez-Ortiz and Gonzalez-Rodriguez lied on the forms that they submitted to the firearms dealers by indicating that they were purchasing the firearms for their own use, when in fact they were purchasing the firearms for Soto-Lopes and Adorno-Ortega. Soto-Lopes and Adorno-Ortega then shipped the firearms to purchasers in Puerto Rico. Many of the firearms were AK-style firearms with high-capacity magazines.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives. It was prosecuted by Assistant United States Attorney Chauncey A. Bratt.
This is another case prosecuted as part of the Department of Justice’s “Project Safe Neighborhoods” Program (PSN), which is a nationwide, crime reduction strategy aimed at decreasing violent crime in communities. It involves a comprehensive approach to public safety — one that includes investigating and prosecuting crimes, along with prevention and reentry efforts. In the Middle District of Florida, U.S. Attorney Maria Chapa Lopez coordinates PSN efforts in cooperation with various federal, state, and local law enforcement officials.
Four Alleged Stock Defrauders from Georgia, New York and Texas Indicted for “Pump and Dump” Scheme Involving Three Public CompaniesRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Ricardo Richardson, 50, of Buford, GA; John Scott Watkins, 54, of Canton, GA; Gary B. Wolff, 78, an attorney from New York, NY; and Edward Heil, 71, an accountant from Pearland, TX; were arrested and charged by Indictment with conspiracy, wire fraud, and securities fraud in connection with what is commonly referred to as a ”pump and dump” scheme.
The Indictment alleges that the defendants and others sought to generate illegal proceeds by manipulating the stock of three public companies: AI Document Services, Inc. (ticker symbol AIDC), Creative Edge Nutrition, Inc. (ticker symbol FITX), and Interactive Health Network (ticker symbol IGRW). This manipulative activity was designed to make it falsely appear that trading in those stocks was the result of free and fair market forces, and to conceal the activity from the U.S. Securities and Exchange Commission (the “SEC”).
The Indictment further alleges that, among other things, the defendants planned and took various fraudulent actions, including disguising their share ownership in these companies, paying large bribes to stockbrokers for prearranged purchases of AIDC, FITX, and IGRW stock on behalf of the brokers’ unknowing customers, hiring promoters to distribute misleading email newsletters regarding these companies to numerous potential investors throughout the United States, and causing the public companies to issue nationwide press releases to conceal the manipulative activity. The schemers intended to generate at least $15 million in proceeds from this scheme, which was implemented from mid-2014 through approximately February 2016, when the SEC suspended trading in these stocks.
Court documents also reveal that the defendants and their co-schemers had worked together on previous stock deals, and each performed different roles in the scheme. Watkins himself explained that he was on the stock side of the deals, and Richardson much of the negotiating. Wolff and Heil, in turn, supplied the public companies that the schemers used in the manipulations and assisted with some of the paperwork. As alleged, all of the defendants owned or controlled a substantial number of shares of AIDC, FITX, and IGRW stock and were prepared to sell them at a large profit into the manipulated markets to unsuspecting investors.
“Pump and dump stock schemes have real victims: those who play by the rules and save and invest in the markets,” said U.S. Attorney McSwain. “Market manipulation also causes generalized harm to the markets and to our economy because it erodes public trust that the markets are free and fair. Thanks to the excellent work of the FBI, SEC, and prosecutors from my Office, these four defendants will now face the consequences of their alleged actions.”
“The defendants allegedly employed fraud and misinformation in an attempt to boost these companies’ stocks,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Their ‘business model’ was nothing but a classic pump and dump scheme from which they sought to handsomely profit. The FBI will continue to investigate and shut down such illegal activity, to protect both the public and the integrity of our financial markets.”
If convicted, the defendants each face a maximum possible sentence of 65 years in prison, 3 years of supervised release, a $10,500,000 fine, and a $400 special assessment.
The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Judy Smith and Patrick J. Murray. The U.S. Attorney’s Office also acknowledges the substantial assistance provided by the U.S. Securities and Exchange Commission, Philadelphia Regional Office in this investigation.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former Union Official Pleads Guilty to ForgeryRead the Press Release
NEW ORLEANS, LOUISIANA – United States Attorney Peter G. Strasser announced today that MATTHEW CUOMO, age 55, of Kansas City, Missouri, pleaded guilty to Forgery, in violation of Title 18, United States Code, Section 513, before United States District Judge Lance M. Africk today. CUOMO faces a maximum sentence of ten years imprisonment, followed by three years of supervised release, a $250,000 fine, and a mandatory special assessment of $100. Sentencing is set for January 27, 2021.
CUOMO was the former president of a local labor union for employees of the Transportation Security Administration (TSA) and worked at multiple airports in Louisiana and Mississippi. An audit in 2017 revealed that union funds were missing, and a subsequent investigation revealed that CUOMO forged checks from the union’s bank account and used union funds for personal expenses. CUOMO forged approximately 50 checks, resulting in a loss of $15,000 to the local union.
U.S. Attorney Strasser praised the work of the United States Department of Labor and the Transportation Security Administration for their investigation in this case. The prosecution is being handled by Assistant United States Attorney Myles Ranier.
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Former New York City Money Transfer Agent Sentenced to 36 Months’ Imprisonment on Fraud ChargesRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced that a native of Nigeria who became a naturalized U.S. Citizen, Cyprian Ngbadi, age 63, of New York City, was sentenced to 36 months’ imprisonment by United States District Court Judge Christopher C. Conner on charges that he conspired to commit mail fraud, wire fraud and money laundering between 2007 and 2009. Ngbadi was also ordered to pay $435,664 restitution to 194 victims.
According to United States Attorney David J. Freed, Ngbadi and six codefendants perpetrated a scheme to defraud dozens of individuals, some of whom were senior citizens residing in the Middle District of Pennsylvania, out of hundreds of thousands of dollars on a variety of mass marketing fraud schemes, including but not limited to bogus sweepstakes scams, loan schemes, employment opportunity scams, person in need schemes, and internet purchase scams.
Between 2007 and 2009 Ngbadi owned and/or operated two MoneyGram and Western Union outlets, “Rockaway Business Center” and “Neighborhood Express Payment,” in the greater Queens, New York area. Mass marketing fraudsters used Ngbadi to convert fraud induced money transfers from victims into cash and to distribute the proceeds to other co-conspirators, some of whom resided in Canada and Nigeria. For his role in the conspiracy Ngbadi kept approximately 10% of the proceeds.
Western Union and MoneyGram determined in 2008 that Ngbadi, who was then doing business as Rockaway Business Center, was complicit in consumer fraud and money laundering activities and, as a result, both companies terminated their money transfer agreements with him. Undeterred, with the unwitting assistance of a straw party, Ngbadi opened new Western Union and MoneyGram outlets under the name of “Neighborhood Express Payment” in New York. Thereafter, Ngbadi continued to cash out and launder additional money transfers sent by consumer fraud victims until Western Union and MoneyGram finally terminated Neighborhood Express Payment’s operations in 2009.
Ngbadi was arrested on February 8, 2019, upon his arrival in New York City on a flight from Nigeria where Ngbadi has been residing for the past five years.
The case was investigated by the Harrisburg Office of the United States Postal Inspection Service. Assistant United States Attorney Kim Douglas Daniel prosecuted the case.
The United States Attorney and United States Postal Inspectors remind all citizens that they should never make an advance payment of any kind on the promise of a sweepstakes prize, loan or grant.
Indictments are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines, and could include a term of supervisory release following imprisonment, and a fine.
Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Former International UAW President Dennis Williams Pleads Guilty to Conspiring to Embezzle Union FundsRead the Press Release
Dennis Williams, the former President of the international United Auto Workers union, pleaded guilty today to conspiring with other UAW officials to embezzle UAW funds announced U.S. Attorney Matthew Schneider.
Joining in the announcement were Irene Lindow, Special Agent in Charge of the U.S. Department of Labor – Office of Inspector General, Steven M. D’Antuono, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation, Sarah Kull, Special Agent in Charge of the Detroit, Michigan office of the Internal Revenue Service – Criminal Investigations, and Thomas Murray, District Director, U.S. Department of Labor – Office of Labor-Management Standards.
Dennis Williams, 67, of Corona, California, pleaded guilty before United States District Judge Paul Borman to charges of conspiring with former UAW President Gary Jones and other senior UAW officials to embezzle UAW dues money between 2010 and September 2019.
Between June 2014 and June 2018, Williams served as the President of the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (“UAW”). The UAW represents over 400,000 active members and over 580,000 retired members in more than 600 local unions across the United States. Prior to serving as UAW President, Williams was the Secretary-Treasurer of the UAW from June 2010 through June 2014.
During the guilty plea hearing today, Williams admitted that he had conspired with at least six other senior UAW officials in a multi-year conspiracy to embezzle money from the UAW for the personal benefit of himself and other senior UAW officials. UAW officials concealed hundreds of thousands of dollars in personal expenditures in the cost of UAW conferences held in Palm Springs, California, Coronado, California, and Missouri. Between 2010 and 2018, former UAW President and co-defendant Gary Jones and other UAW officials submitted fraudulent expense forms seeking reimbursement from the UAW’s Detroit headquarters for expenditures supposedly incurred in connection with UAW leadership and training conferences. In truth, however, Williams and his co-conspirators used the conferences to conceal the hundreds of thousands of dollars in UAW funds spent on lavish entertainment and personal spending for the conspirators.
As part of his guilty plea, Williams admitted the he and other senior UAW officials used UAW money to pay for personal expenses, including multi-month long stays at private villas in Palm Springs, cigars, golfing apparel, green fees at golf courses, and high-end liquor and meals. During the course of the conspiracy, while Williams was UAW President, co-conspirators Gary Jones, Vance Pearson, and others provided themselves and Williams with thousands of dollars in such personal items.
Based on the charge of conspiring to embezzle union funds, Williams faces a maximum of five years in prison and a fine of up to $250,000.
As part of his guilty plea, Williams has agreed to forfeit a custom-made set of Titleist golf clubs and various golf clothing and equipment seized from Williams during an August 2019 search of his residence. In addition, Williams has agreed to pay taxes to the Internal Revenue Service on embezzled items that he personally received.
Williams is the fifteenth defendant convicted in connection with the ongoing criminal investigation into corruption within the UAW or relating to illegal payoffs to UAW officials by FCA executives. The following other individuals have already pleaded guilty to their participation in the scheme and have been sentenced: former FCA Vice President for Employee Relations Alphons Iacobelli (66 months in prison), former FCA Financial Analyst Jerome Durden (15 months in prison), former Director of FCA’s Employee Relations Department Michael Brown (12 months in prison), former senior UAW officials Virdell King (60 days in prison), Keith Mickens (12 months in prison), Nancy A. Johnson (12 months in prison), Monica Morgan, the widow of UAW Vice President General Holiefield (18 months in prison), former UAW Vice President Norwood Jewell (15 months in prison), and former senior UAW official Michael Grimes (28 moths). In addition, the following UAW officials have pleaded guilty and are awaiting sentencing: former UAW President Gary Jones, former UAW Vice President Joseph Ashton, former senior UAW official Jeffrey “Paycheck” Pietrzyk, former UAW Region 5 Director UAW Board member Vance Pearson, and former UAW Midwest CAP President Edward “Nick” Robinson.
U.S. Attorney Schneider commended the outstanding work of the Internal Revenue Service – Criminal Investigations, the U.S. Department of Labor – Office of Labor-Management Standards and Office of Inspector General, and the Federal Bureau of Investigation in conducting a comprehensive criminal investigation into labor corruption activities involving a vital sector of the local and national economy.
“Former UAW President Dennis Williams has accepted responsibility for his conduct and, in that way, has contributed to our efforts with the union’s current leadership towards reforming the UAW to better serve its members and their families,” said United States Attorney Matthew Schneider. “Today’s conviction demonstrates that we will continue our drive forward to provide ethical and honest leadership for the UAW’s membership.”
“Today’s conviction is another step towards combatting corruption within the UAW. Williams conspired with other senior UAW officials to embezzle over $1 million in union funds. Williams spent the embezzled funds on extravagant meals, liquor, golf, and travel for personal enrichment. We will continue to work with our law enforcement partners to investigate corrupt union officials who betray the union members they are entrusted to represent,” stated Irene Lindow, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
“Years of fraud and corruption by the UAW’s elected officials continue to be exposed through the diligent and collaborative work of law enforcement,” said Steven M. D’Antuono, Special Agent in Charge of the FBI in Detroit. “As I have often said, the hard-working men and women of the UAW deserve so much better. It is my sincere hope that the convictions obtained over the course of this investigation have begun the process of ensuring honest leadership takes the helm of one of the most important labor unions in this country.”
“Today’s guilty plea further illustrates the systemic corruption at the UAW’s highest levels,” said Internal Revenue Service – Criminal Investigation Special Agent in Charge, Sarah Kull. “IRS-CI is committed to prosecuting anyone who illegally diverts funds from the UAW.”
“Dennis Williams’ guilty plea today shows that instead of fulfilling his fiduciary duty to his fellow union members, Williams chose to betray their trust and embezzle hundreds of thousands of dollars from the UAW for the personal benefit of himself and other high-ranking UAW officers,” said Thomas Murray, District Director, U.S. Department of Labor, Office of Labor-Management Standards. “OLMS will continue to work with its fellow law enforcement partners and the U.S. Attorney’s Office to remove corrupt union officers and other officials within the UAW International Union.”
The case is being prosecuted by Assistant U.S. Attorneys David A. Gardey, Steven Cares, and Adriana Dydell.
Former Company Vice President/Chief Financial Officer pleads guilty for stealing approximately $800,000 in company fundsRead the Press Release
ST. LOUIS, MO –Lynese Cargill (also known as Lynese Hoffman), 51, formerly of St. Louis County, Missouri, pled guilty to three counts of wire fraud related to her former position as vice president and chief financial officer of Common Ground Public Relations, Inc. Cargill appeared today before U.S. District Judge Audrey Fleissig who accepted her pleas and set sentencing for January 6, 2021.
According to the Information and Plea Agreement, the defendant, Lynese Cargill ("Cargill), was one of the two founders of Common Ground, and served as the firm’s Vice President and Chief Financial Officer. Beginning in or about 2008 and continuing through in or about March 31, 2020, Cargill devised, and knowingly participated in a scheme to defraud and obtain money from Common Ground by means of materially false and fraudulent pretenses, representations, and promises in the total amount of $785,615.25.
Cargill issued 80 unauthorized bank checks to herself written on Common Ground’s bank account totaling $198,980.23. In order to conceal this aspect of her fraudulent scheme, Cargill made false and misleading entries in the internal financial and accounting records of Common Ground, purporting to make these unauthorized bank checks appear to be legitimate when, in fact, she knew they were not.
Cargill was issued both a Citibank MasterCard credit card and an American Express credit card by Common Ground to be used to pay for legitimate company expenses, such as necessary travel and other business expenses. Cargill used both of her company issued credit cards to make personal purchases, unrelated to the legitimate business and operations of Common Ground. Cargill's unauthorized credit card charges were for such personal expenses as airfare, hotels, automobiles, clothing, cosmetics, medi-spas, restaurants and miscellaneous retail purchases. These company issued credit card purchases were done by Cargill without the knowledge and authority of Common Ground. During the period of her fraudulent scheme, Cargill made approximately 2,841 unauthorized company issued MasterCard credit card purchases for personal use items and expenses, totaling approximately $351,748.42, and an additional approximately 1,166 unauthorized company issued American Express credit card purchases for personal use items and expenses, totaling approximately $190,200.66.
Cargill applied for and obtained 2 different $1,000,000 life insurance policies, but instead of naming Common Ground as the sole beneficiary, as required under the shareholder agreement, Cargill named her then husband, B.H., as the sole beneficiary on both policies. Cargill then made premium payments on both policies, totaling $5,244.00, with funds from Common Ground’s bank accounts.
Cargill also used Common Ground bank funds to pay for charges on three of her personal credit cards totaling approximately $38,516.94. None of these charges which were paid for with Common Ground funds were authorized by Common Ground, and they were not for the legitimate business or operations of Common Ground.
In order to conceal her fraudulent scheme, Cargill moved funds between Common Ground bank accounts to falsely inflate the balance of the firm’s operating account when she provided financial updates to the president and chief executive officer of the firm. In furtherance of her scheme, Cargill caused unauthorized wire transfers to be made from Common Ground’s bank account to make payments on her personal credit card charges.
Cargill faces a potential statutory maximum sentence as to each count of wire fraud of twenty years’ imprisonment, and a fine of $250,000. The Court is required to consider the United States Sentencing Commission guidelines in sentencing defendant.
The Federal Bureau of Investigation investigated this case. Assistant U.S. Attorney Hal Goldsmith is handling the case for the U.S. Attorney’s Office.
Former CEO and CFO of Temporary Staffing Company Charged in Manhattan Federal Court with Scheme to Defraud Bank and Investors of More Than $500 Million by Fraudulently Boosting RevenuesRead the Press Release
Audrey Strauss, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment in Manhattan federal court charging LOUIS LLUBERES, a/k/a “Luis Lluberes,” MOISES LLUBERES, MARIA AGUILAR, a/k/a “Maria Hewitt,” and MARIA LOPEZ with conspiracy to commit wire and bank fraud, wire fraud, bank fraud, and conspiracy to commit money laundering stemming from their years-long scheme to fraudulently boost the revenues of their temporary staffing company (“Company-1”) and launder funds through a series of shell companies before mischaracterizing the money as collections from customers. The scheme allowed Company-1 to fraudulently obtain more than $500 million on its line of credit from a U.S. bank (“Bank-1”) and supported the sale of Company-1 to a group of investors (the “Investor Group”) at a grossly inflated price. LOUIS LLUBERES, MOISES LLUBERES, AGUILAR, and LOPEZ were arrested this morning in the Middle District of Florida, and will be presented this afternoon in that district. The case is assigned to U.S. District Judge Vernon S. Broderick.
Acting U.S. Attorney Audrey Strauss said: “Louis Lluberes, founder and former CEO of a temporary staffing company, and his three co-defendants, allegedly schemed to inflate the company’s receivables, thereby making the company appear far more profitable than it was. As alleged, they were thus able to fraudulently exceed their bank’s credit limit, borrowing over $500 million, and ultimately sold the company at a vastly inflated price. Thanks to the assistance of the FBI, Lluberes and his co-defendants now face multiple federal fraud charges.”
FBI Assistant Director William F. Sweeney Jr. said: "Today's indictment details an alleged multimillion-dollar scheme in which the defendants fraudulently borrowed money from a major financial institution, funneled the money from a revolving line of credit through a series of shell companies, and dumped it back into the company, falsely representing those funds as business proceeds. They later manipulated the books by creating fraudulent invoices to boost the perceived value of the company before its sale to a private equity firm. These charges serve to remind everyone that illegal business dealings will be faced with intense scrutiny."
According to the Indictment unsealed today in Manhattan federal court:[1]
LOUIS LLUBERES founded Company-1 in 1995 and served as Company-1’s chief executive officer until March 2020. Company-1 served as a staffing company, supplying other businesses with temporary and permanent labor. MOISES LLUBERES, LOUIS LLUBERES’s brother, served as Company-1’s chief financial officer. AGUILAR, MOISES LLUBERES’s romantic partner, and LOPEZ, LOUIS LLUBERES’s daughter, served in Company-1’s accounting department.
Company-1 had established a revolving line of credit with Bank-1. Under the terms of the line of credit, Company-1 could only borrow up to a designated ratio of Company-1’s eligible accounts receivable (the “Borrowing Base”). By its terms, invoices that had gone more than 90 or 120 days without being paid were no longer eligible to be considered as part of Company-1’s Borrowing Base. Officials at Company-1, including MOISES LLUBERES and LOPEZ, were required to submit weekly financial reports to Bank-1, which included information on Company-1’s sales and collections, among other items, that allowed Bank-1 representatives to calculate Company-1’s Borrowing Base.
Beginning in or about 2017, after losing significant business from major clients, the defendants began creating fraudulent invoices (the “Fictitious Receivables”). The Fictitious Receivables, which were recorded on Company-1’s books, created the appearance that Company-1 was engaged in more business and would be receiving more client payments than was the reality. All told, the defendants created more than 2,000 Fictitious Receivables. LOPEZ was responsible for recording the vast majority of Fictitious Receivables onto Company-1’s books.
Thus, by inflating Company-1’s Borrowing Base through the creation of Fictitious Receivables, Company-1 and the defendants were able to borrow more than $520 million from Bank-1. Company-1 was not actually entitled to borrow these funds.
In order to perpetuate their fraud, the defendants utilized two shell companies (“Shell-1”) and (“Shell-2”) to launder Company-1 funds before transferring those funds back to Company-1 and mischaracterizing those funds as client collection payments.
Between in or about September 2017 and in or about March 2020, Company-1 accounts transferred approximately $120 million in funds obtained from Company-1’s line of credit with Bank-1 to Shell-1’s bank account. During the same time period, Shell-1 transferred approximately $119 million to Shell-2, constituting approximately 90% of all funds received by Shell-2. And, during the same time frame, Shell-2 transferred approximately $129 million to Company-1’s collections account, where the defendants disguised the funds as client payments on outstanding invoices.
Once the misappropriated funds had been returned to Company-1’s collections account, LOPEZ and others applied those funds against aging accounts receivable, including the Fictitious Receivables. This allowed Company-1 to maintain its Borrowing Base and continue borrowing from Bank-1.
Beginning in or about 2017, the Investor Group initiated negotiations to acquire Company-1, and the Investor Group executed an agreement to purchase Company-1 (the “Purchase Agreement”) in May 2018. In connection with the Purchase Agreement, LOUIS LLUBERES certified that financial records relied upon by the Investor Group and incorporated into the Purchase Agreement, including Company-1’s accounts receivable, were accurate and legitimate. In reality, as reviewed by forensic accountants retained by Company-1, these records included approximately $56 million in Fictitious Receivables, which resulted in the Investor Group overvaluing Company-1’s enterprise value by approximately 430%.
LOUIS LLUBERES was paid approximately $11.3 million on the day the Investor Group acquired Company-1. LOUIS LLUBERES also received an additional approximately $6.2 million based, in part, on fraudulent representations to the Investor Group and Company-1. In total, LOUIS LLUBERES made at least $17.5 million from the sale of Company-1 (the “Acquisition Payments”).
LOUIS LLUBERES transferred at least approximately $716,000 in the Acquisition Payments to MOISES LLUBERES and at least approximately $45,000 in the Acquisition Payments to LOPEZ. The defendants further used the Acquisition Payments to acquire homes in Florida, Punta Cana in the Dominican Republic, precious metals, and other personal items. LOUIS LLUBERES also transferred Acquisition Payments funds to a Tex-Mex restaurant operated by LOUIS LLUBERES and MOISES LLUBERES in the Dominican Republic.
In or about March 2020, Company-1 learned of LOUIS LLUBERES and MOISES LLUBERES’s fraud when an attorney retained by the brothers wrote a letter, dated March 30, 2020, disclosing “excessive billing” to Company-1’s customers in order to increase Company-1’s sales and allow Company-1 to draw more from its line of credit than Company-1 would otherwise be entitled to. AGUILAR closed Shell-2’s bank account the same day that the LLUBERES brothers’ attorney submitted the letter to Company-1. Company-1 fired the defendants after it was alerted to the fraudulent scheme.
LOUIS LLUBERES, 58, of Windermere, Florida; MOISES LLUBERES, 56, of Winter Grove, Florida; AGUILAR, 37, of Winter Grove, Florida; and LOPEZ, 37, of Orlando, Florida, are charged with (1) conspiring to commit wire and bank fraud, which carries a maximum sentence of 30 years in prison; (2) wire fraud, which carries a maximum sentence of 30 years in prison; (3) bank fraud, which carries a maximum sentence of 30 years in prison; and (4) conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
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Ms. Strauss praised the investigative work of the FBI.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Daniel G. Nessim are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Florida Man Sentenced in Drug Proceeds Money Laundering CaseRead the Press Release
HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced that on September 29, 2020, Michael Sean Riley, age 52, of Ocala, Florida, was sentenced to 72 months’ imprisonment and ordered to forfeit up to $800,000, by United States District Court Judge Christopher C. Conner for his role in a money laundering conspiracy involving $800,000 in drug proceeds.
According to United States Attorney David J. Freed, Michael Riley arranged with John T. Oiler to rent a storage unit in Baltimore and travel to Pennsylvania to take possession of more than $800,000 of cash drug proceeds Michael Riley skimmed from a larger load of cash. Oiler took the vast majority of those proceeds and stored them in the rented unit in Baltimore. Michael Riley then contacted his cousin, Timothy Riley, then a Narcotics Agent of the PA Attorney General’s Office Bureau of Narcotics Investigations Mobile Street Crimes Unit, and turned over the rest of the cash proceeds to him and other agents from the Mobile Street Crimes Unit. Michael Riley paid Timothy Riley three cash payments totaling $48,000 which Timothy Riley subsequently laundered. Oiler and Michael Riley each netted about $400,000 of the proceeds and each conducted numerous financial transactions with the cash drug proceeds.
Coconspirator Timothy B. Riley was sentenced to 36 months’ imprisonment and conspirator John T. Oiler was sentenced to 30 months’ imprisonment.
The case was investigated by the Harrisburg Offices of the Federal Bureau of Investigation and Internal Revenue Service – Criminal Investigation, with the full assistance of the Pennsylvania Office of Attorney General. Assistant U.S. Attorneys James T. Clancy and Carlo Marchioli prosecuted the case.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
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Five People Charged in Connection with Interstate Gun Trafficking ConspiracyRead the Press Release
TRENTON, N.J. – Three New Jersey men and a man and woman from Florida have been charged with conspiring to illegally sell firearms, including handguns and a semi-automatic rifle, in and around Monmouth County, U.S. Attorney Craig Carpenito announced today.
Enrique Quijada, 23, a/k/a “El Enano 13,” a/k/a “Kike,” of Freehold, New Jersey; Manuel Espinosa-Ozoria, 30, a/k/a “Chino,” of Bartow, Florida; his brother, Waldin Espinosa-Ozoria, 31, a/k/a “Manin,” of Freehold, New Jersey; Javier Rodriguez-Valpais, 31, a/k/a “Broly,” of Morganville, New Jersey; and Jacquelyn Dejesus, 41, of Bartow, Florida, are each charged by criminal complaint with one count of conspiracy to engage in the business of unlicensed firearms dealing. Manuel Espinosa-Ozoria and Rodriguez-Valpais are each additionally charged with one count of possession of a firearm by a convicted felon. Manuel Espinosa-Ozoria and Dejesus are also charged with one count of unlawfully selling a firearm to an individual that they knew did not reside in their state of residence, namely Florida.
Quijada, Rodriguez-Valpais and Dejesus were arrested today are scheduled to appear by videoconference before U.S. Magistrate Judge Zahid N. Quraishi. Manuel Espinosa-Ozoria and Waldin Espinosa-Ozoria remain at large,
According to documents filed in this case and statements made in court:
From May 2020 through September 2020, Manuel Espinosa-Ozoria, Waldin Espinosa-Ozoria, Quijada, Rodriguez-Valpais, and Dejesus were members of a gun trafficking conspiracy that spanned from Florida to New Jersey. Dejesus allegedly assisted Manuel Espinosa-Ozoria – the alleged leader of the conspiracy – by acting as a “straw purchaser” of firearms in Florida. Manuel Espinosa-Ozoria and Dejesus then transported the firearms from Florida to Monmouth County, where Manuel Espinosa-Ozoria, assisted by Waldin Espinosa-Ozoria and Rodriguez-Valpais, allegedly sold the firearms to an individual working at the direction and supervision of the FBI. In addition, Rodriguez-Valpais allegedly sold a .223 caliber semi-automatic rifle to Quijada, who, in turn, allegedly sold the rifle to an individual working at the direction and supervision of the FBI.
The counts of conspiracy to engage in the business of unlicensed firearms dealing and unlawfully selling a firearm to an unlicensed resident of another state each carry a maximum potential penalty of five years in prison and a $250,000 fine. The counts of possession of a firearm by a convicted felon carry a maximum penalty of 10 years in prison and a $250,000 fine.
U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, under the direction of Special Agent in Charge George M. Crouch Jr., with the investigation leading to the charges and arrest. He also thanked the FBI Tampa Division, the ATF Newark and Tampa Field Divisions, and the Freehold Borough, New Jersey, Police Department for their assistance in the investigation.
This case is part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws. Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce gun violence; enhances coordination of federal, state, local and tribal authorities in investigating and prosecuting gun crimes; improves information sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensured that federal resources are directed at the criminals posing the greatest threat to our communities. For more information about Project Guardian, please see: https://www.justice.gov/projectguardian .
The government is represented by Assistant U.S. Attorney Ian D. Brater of the U.S. Attorney’s Office’s Criminal Division in Trenton.
The charges and allegations contained in the complaints are merely accusations and the defendants are presumed innocent unless and until proven guilty.
Feds Charge Man Who Victimized Good Samaritan at Mammoth Cave National ParkRead the Press Release
BOWLING GREEN, Ky. – A Kentucky man who stole a truck and drug the vehicle’s owner alongside the vehicle has been charged federally, announced U.S. Attorney Russell Coleman.
“Our National Parks are to be places of respite from the outside world; not violent crime,” said U.S. Attorney Russell Coleman. “Violate their sanctity by victimizing other visitors and be prepared to face swift federal charges and ultimately federal prison.”
Dusty G. Westmoreland, 30, of, Summershade, Kentucky, has been charged with Robbery under 18 United States Code 2111.
According to the criminal complaint, a motor vehicle accident occurred resulting in a fire at Mammoth Cave Parkway and Brownsville Road, within the boundaries of Mammoth Cave National Park. A witness to the accident stopped to see if anyone was inside the burning vehicle. Westmoreland entered the witness’s Ford F-150 truck. The witness opened the driver side door attempting to stop Westmoreland from stealing the vehicle. A struggle ensued, with Westmoreland striking the victim and dragging him down the side of the road, resulting in injuries to the victim.
A maintenance employee of the park saw the Ford truck a short time later stopped on the side of the road in the park, and Westmoreland standing beside the truck. On-duty park rangers and the Kentucky State Police took Westmoreland into custody at gunpoint.
If convicted at trial, the maximum sentence for Robbery within the special maritime and territorial jurisdiction of the United States is not more than fifteen years.
A federal complaint is a written statement of the essential facts of the offense charged and must be made under oath before a United States Magistrate Judge. The charge set forth in a complaint is merely an accusation and the defendant is presumed innocent until proven guilty.
Assistant United States Attorney Mark Yurchisin of the U.S. Attorney’s Bowling Green Branch Office is prosecuting the case. The case is being investigated by the National Park Service park rangers with assistance from the Kentucky State Police.
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Federal agencies make drug trafficking ring-related arrests in St. Louis and PhoenixRead the Press Release
ST. LOUIS, MO - The Drug Enforcement Administration, United States Marshals Service and Homeland Security Investigations arrested 10 people Tuesday, including seven in the St. Louis area and three in Phoenix, on charges that include conspiracy to distribute cocaine, methamphetamine, and marijuana. Defendants are expected to be presented in federal court today. Among those charged were:
- Teresa Mejia-Palacios, 31, of St. Louis City;
- Reyman Ordonez Colmenero, 39, of Phoenix, AZ;
- Rafael Leon-Barradas, 37, of St. Louis City;
- Ramon Perez-Alonso, 36, of Collinsville, IL;
- Gavino Pelayo Echevarria, 28, of St. Louis City;
- Omar Ramirez-Villanos, 28, of St. Louis County;
- Luis Alonso Gomez-Celaya, 36, of St. Louis City;
- Cindy Hinojo-Ruiz Ramos, 45, of St. Louis City;
- Norma Leticia Rivera-Hernandez, 33, of Phoenix, AZ; and
- Vanessa Eliserio, 33, of Phoenix, AZ
The previously sealed indictment of August 5, 2020, includes the following charges: (1) Leon-Barradas, Perez-Alonso, Ramirez-Villanos, Gomez-Celaya, and Hinoja-Ruiz Ramos are charged with conspiracy to distribute cocaine; (2) Mejia-Palacios and Echevarria are charged with conspiracy to distribute more than 50 grams of actual methamphetamine; and (3) Colmenero and Rivera-Hernandez, and Eliserio are charged with conspiracy to distribute marijuana.
The indictment charges Echevarria with possession of a firearm in furtherance of a drug trafficking crime. Leon-Barradas is also charged with illegal reentry in to the United States after having been previously removed to Mexico. Gomez-Celaya is further charged with illegal reentry into the United States after having been previously removed to Honduras.
“This investigation shows that drug trafficking organizations have networks that extend across the country, and that DEA investigators, along with our federal partners of FBI, HSI and the Marshals, will follow those connections wherever they go,” said Special Agent in Charge William J. Callahan, head of the Drug Enforcement Administration St. Louis Division. “With multiple arrests like in this case, the goal is to destroy the network and stop these organizations from peddling their poison in the streets of St. Louis.”
This case is being investigated by the following law enforcement agencies: The Drug Enforcement Administration, the Federal Bureau of Investigation, Homeland Security Investigations and the United States Marshals Service.
As is always the case, charges set forth in the indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
These arrests were made as part of Operation Legend. Operation Legend was launched in Kansas City, Mo., on July 8, 2020, and expanded to Chicago and Albuquerque on July 22, 2020; to Cleveland, Detroit, and Milwaukee on July 29, 2020; to St. Louis and Memphis on Aug. 6, 2020; and to Indianapolis on Aug. 14, 2020. As part of Operation Legend, Attorney General Barr has directed federal agents from the FBI, U.S. Marshals Service, DEA and ATF to surge resources to these cities to help state and local officials fighting violent crime. The Department of Homeland Security is also contributing agents to these efforts in St. Louis.
Fayette County Man Pleads Guilty to Attempted Enticement of a MinorRead the Press Release
CHARLESTON, W.Va. – A Panamanian man residing in Ansted pled guilty to a sex offense involving a minor, announced United States Attorney Mike Stuart. Eugene Enrique Torres, 43, pled guilty to attempted enticement of a minor.
“Horribly Horrific. Now this Panamanian man faces up to life in prison. Predators like Torres pose a significant threat to West Virginia children,” said United States Attorney Mike Stuart. “We are fortunate to work hand in hand with the FBI’s Child Exploitation and Human Trafficking Task Force to keep our children safe.”
Torres admitted that in June 2020 he contacted a woman on Craigslist who identified herself as a mother who would allow him to have sex with her children in exchange for money. During the conversation, Torres arranged to have the woman travel from Beckley to a hotel in Fayetteville with an 11-year-old girl the woman stated was her daughter. Torres would then pay approximately $250 in order to engage in oral sex and sexual intercourse with the child. After he met with the purported mother at the hotel, Torres was arrested on his way to meet the child.
Torres faces up to life in prison when sentenced on January 6, 2021. As a result of the conviction, Torres will have to register as a sex offender and may be subject to removal from the United States.
The FBI Child Exploitation and Human Trafficking Task Force conducted the investigation. Senior United States District Judge David A. Faber presided over the hearing. Assistant United States Attorney Jennifer Rada Herrald is handling the prosecution.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative of the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorney’s 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 those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia. Related court documents and information can be found on PACER by searching for Case No. 2:20-cr-00177.
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