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29 August 2019
New Hampshire man sentenced for bank fraudRead the Press Release
WHEELING, WEST VIRGINIA - Kelvin L. Potter, of Dover, New Hampshire, was sentenced today to 40 hours in U.S. Marshal custody and five years of supervised release for bank fraud, United States Attorney Bill Powell announced.
Potter, age 38, pled guilty to one count of “Bank Fraud” in September 2017. Potter admitted to transferring money from an account at Chase Bank belonging to Velco, Inc., which holds the business account of Vocelli Pizza in Wheeling, without authorization. The crime occurred in May 2015.
The judge ordered a money judgment of $45,000. Potter was also ordered to pay restitution in the amounts of $1,598.76 to Velco Inc. and $68,399.73 to JP Morgan Chase Bank.
Assistant U.S. Attorney Jarod J. Douglas prosecuted the case on behalf of the government. The Federal Bureau of Investigation investigated.
U.S. District Judge John Preston Bailey presided.
Multi-Convicted Felon Sentenced to 16 Years in Federal Prison on Gun, Ammunition ChargesRead the Press Release
Ocala, Florida – Senior United States District Judge James D. Whittemore has sentenced Winyontis Quavari Gordon (29, Ocala) to 16 years in federal prison for possessing a firearm and ammunition as a convicted felon. Gordon had pleaded guilty on May 16, 2019.
According to court documents, on July 5, 2018, detectives from the Ocala Police Department attempted to arrest Gordon on an outstanding state warrant. Upon seeing the approaching detectives, Gordon exited the driver’s side of a parked car and fled on foot. Following a brief chase, the detectives took Gordon into custody and discovered a loaded .45 caliber handgun on the driver’s seat of the car, where Gordon had been sitting. During a subsequent interview with law enforcement, Gordon admitted that he had possessed the loaded firearm and repeatedly told the agent, “I’ll take that charge.” He also admitted to having an assault rifle in the trunk of the car.
A records check confirmed that Gordon had prior state felony convictions for aggravated battery with a firearm, possession of a firearm by a convicted felon, domestic battery by strangulation, and felony battery. These felony convictions prohibit Gordon from lawfully possessing a firearm or ammunition under federal law. They also qualified Gordon for an enhanced sentence as an Armed Career Criminal.
The City of Ocala Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives jointly investigated this case. It was prosecuted by Assistant United States Attorney Robert E. Bodnar, Jr.
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.
Montana Native Women’s Coalition Board ex-chairwoman charged with fraud in embezzlement of grant moneyRead the Press Release
BILLNGS—The former chairwoman of the Montana Native Women’s Coalition was arraigned today on charges in a 10-count indictment accusing her, and the Coalition’s ex-treasurer, of stealing federal grant funds to make unapproved trips to Las Vegas and to receive other unauthorized benefits, U.S. Attorney Kurt Alme said.
Meredith McConnell, 50, of Busby, pleaded not guilty to seven counts charging her with theft from a program receiving federal funding, wire fraud, fraudulent travel claims and misprision of felony. McConnell was the Coalition’s chairwoman and the executive director of Healing Hearts.
Co-defendant Barbara Mary Daychief, 43, of Browning, the Coalition’s former treasurer, pleaded not guilty on Aug. 13 to six counts.
U.S. Magistrate Judge Timothy J. Cavan presided and released McConnell pending further proceedings.
If convicted of the most serious crime, McConnell faces a maximum 20 years in prison, a $250,000 fine and three years of supervised release.
The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.
The indictment accuses McConnell and Daychief of stealing from Lame Deer-based coalition from about August 2017 until March 2018. The Coalition’s purpose is to help Native American victims of domestic and sexual violence. In addition, the Coalition brings together Native American leaders and state representatives who administer state and federal funds for domestic violence and programming to improve resources for Native women and tribal programs.
The Coalition receives funding from the U.S. Department of Justice’s Office on Violence Against Women, which provides grants for victim services. From October 2017 to September 2018, the OVW awarded the Coalition $318,008 in federal funds.
In March 2017, the Coalition’s previous executive director, Toni Louise Plummer-Alvernaz, pleaded guilty to fraud for stealing from the Coalition. Plummer-Alvernaz was sentenced to one year and one day in federal prison and ordered to pay $246,024 restitution.
Two months later, the First Nations Development Institute held a two-day training for the Coalition in Billings, where it taught board members, including McConnell and Daychief, about conflicts of interest, whistleblower policies, code of ethics and financial oversight. The Coalition also received a special condition about reporting fraud in its September 2017 award package.
The indictment alleges McConnell and Daychief committed travel fraud, received travel payments on non-approved trips, including to Las Vegas, received and authorized double-payment for “days in service,” authorized unapproved construction projects and took other benefits they were not entitled to receive.
Assistant U.S. Attorneys Ryan Weldon and Bryan Dake are prosecuting the case, which was investigated by the Department of Justice Office of the Inspector General.
Pacer case reference. 19-90. The case may be monitored through the U.S. District Court calendar and the PACER system. To establish a PACER account, please go to, http://www.pacer.gov/register.html. To access the district court’s calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.
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Monroe County Man Guilty of Sex TraffickingRead the Press Release
SCRANTON—The United States Attorney’s Office for the Middle District of Pennsylvania announced that William Battle, age 28, of Stroudsburg, Pennsylvania, pleaded guilty on August 28, 2019, before U.S. District Court Judge Malachy E. Mannion, to participating in a sex trafficking conspiracy that involved using threats and coercion to force women to engage in prostitution in the Monroe County area between 2011 and June 2015.
According to United States Attorney David J. Freed, Battle, who also used the street name of “Buck,” admitted to being a member of the Black P-Stones, a street gang that engaged in sex trafficking and drug trafficking in the Stroudsburg area and the state of Maine. Members of the conspiracy, including Battle, advertised prostitutes on websites, transported the prostitutes, and rented hotel and motel rooms for the purpose of having the women engage in commercial sex acts with customers.
The prostitutes were threatened, physically assaulted, and provided drugs, including heroin, by members of the conspiracy to persuade them to engage or continue to engage in prostitution. Virtually all of the money earned by the prostitutes was turned over to the gang leaders, and the prostitutes were compensated with illegal drugs.
Judge Mannion ordered a pre-sentence investigation to be completed. Sentencing for Battle will be scheduled at a later date. Battle remains in custody pending sentencing.
The case was prosecuted by the Federal Bureau of Investigation, the Pennsylvania State Police, local police in the state of Maine, the Monroe County District Attorney’s Office, and local police in Monroe County. Assistant U.S. Attorneys Francis P. Sempa and Phillip Caraballo prosecuted the case.
This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF). OCDETF is a joint federal, state, and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.
This case was also brought as part of a district wide initiative to combat the nationwide epidemic regarding the use and distribution of heroin. Led by the United States Attorney’s Office, the Heroin Initiative targets heroin traffickers operating in the Middle District of Pennsylvania and is part of a coordinated effort among federal, state and local law enforcement agencies to locate, apprehend, and prosecute individuals who commit heroin related offenses.
This case is also a 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.
The maximum penalty under federal law for this offenses is life imprisonment, 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.
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Monongalia County man admits to sex offender registry violationRead the Press Release
CLARKSBURG, WEST VIRGINIA – Earnest Parrie Dille, of Morgantown, West Virginia, ahas admitted to failing to register as a sex offender, United States Attorney Bill Powell announced.
Dille, age 63, pled guilty to one count of “Failure to Update Sex Offender Registration.” Dille, a person required to register as a sex offender, is accused of traveling from Idaho to West Virginia without updating his sex offender registration from January 2018 to April 2019.
Dille faces up to 10 years incarceration and a fine of up to $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
This case is prosecuted as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys’ Offices, 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 identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.
Assistant U.S. Attorney Sarah E. Wagner is prosecuting the case on behalf of the government. The United States Marshal Service investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Mexican Nationals Charged with Marijuana Cultivation in Sierra National Forest in Madera CountyRead the Press Release
FRESNO, Calif. — A federal grand jury returned a three-count indictment today against Lester Eduardo Cardenas-Flores, 23, and Luis Madrigal-Reyes, 36, illegal aliens from Mexico, charging them with conspiring to manufacture, distribute, and possess with intent to distribute marijuana, manufacturing marijuana, and damaging public lands and natural resources, U.S. Attorney McGregor W. Scott announced.
According to court documents, law enforcement officers located over 1,000 marijuana plants in the Dutch Oven Creek area of the Sierra National Forest in Madera County. Both defendants were found in a processing area near growing marijuana plants and fled when law enforcement officers arrived to investigate.
The marijuana cultivation operation caused significant damage to the land and natural resources. Highly toxic, illegal pesticides, including carbofuran, were found at the site.
This case is the product of an investigation by the U.S. Forest Service with assistance from the California National Guard, California Department of Justice’s Campaign Against Marijuana Planting (CAMP), and Madera County Sheriff’s Office. Assistant U.S. Attorney Karen A. Escobar is prosecuting the case.
If convicted of the drug conspiracy and manufacturing offense, the defendants face a mandatory minimum statutory penalty of 10 years in prison and a maximum penalty of life in prison, as well as a $10 million fine. The environmental charge carries a maximum statutory penalty of 10 years in prison and a fine of up to $250,000. In addition, both men may be liable for restitution to the U.S. Forest Service for damage sustained to the land and natural resources as a result of the cultivation activities. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Marion County Convicted Felon Pleads Guilty to Federal Firearm OffenseRead the Press Release
Ocala, Florida – Travis Antwan Yates (31, Anthony) today pleaded guilty to possessing a firearm and ammunition as a convicted felon. He faces a maximum penalty of 10 years in federal prison. Yates had been indicted on August 14, 2019.
According to court documents, on June 27, 2019, Yates was driving a vehicle with a suspended driver license. During a traffic stop, a canine unit alerted to the presence of illegal drugs inside the car. When officers searched the vehicle, they located a black bag containing cocaine, a loaded handgun, a digital scale, a black cotton ski mask, several pair of black gloves, and Yates’s wallet. Yates admitted that these items belonged to him and that he cannot lawfully possess firearms because he is a convicted felon. A records check subsequently confirmed that Yates has two prior state burglary convictions from 2011.
This case was jointly investigated by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the City of Ocala Police Department. It is being prosecuted by Assistant United States Attorney Robert E. Bodnar, Jr.
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.
Man Sentenced to Seven Years for Possession of a Firearm in Furtherance of a Drug Trafficking OffenseRead the Press Release
RALEIGH – United States Attorney Robert J. Higdon, Jr. announced that in federal court, United States District Judge James C. Dever III sentenced AKEEM TERON FLOOD, 27, of Durham, North Carolina, to 84 months’ imprisonment, followed by a 5 year term of supervised released.
On December 19, 2018, FLOOD was named in a four-count Indictment and, on April, 2019, FLOOD pled guilty to Count Four, Possession of a Firearm in Furtherance of a Drug Trafficking Crime.
In April 2018, Raleigh Police Department (RPD) conducted a controlled purchase of cocaine base (crack) from FLOOD outside his residence in Raleigh. A search warrant was subsequently obtained and executed at FLOOD’s residence in Raleigh on April 21, 2018. The search resulted in the seizure of more than 150 grams of marijuana, more than 22 grams of cocaine, drug paraphernalia, over $5,500 in U.S. currency, ammunition, and a loaded .380 caliber pistol.
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. Since 2017 the United States Department of Justice has reinvigorated the PSN program and has targeted 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.
That effort has been implemented through the Take Back North Carolina Initiative of the United States Attorney’s Office for the Eastern District of North Carolina. This initiative emphasizes the regional assignment of federal prosecutors to work with law enforcement and District Attorney’s Offices in those communities on a sustained basis to reduce the violent crime rate, drug trafficking, and crimes against law enforcement. For more information about this initiative click here: https://www.justice.gov/usao-ednc/tbnc.
The investigation of this case was conducted by the Raleigh Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Assistant United States Attorney Bryan M. Stephany prosecuted the case for the government.
Man Sentenced in Drug Trafficking ConspiracyRead the Press Release
RICHMOND, Va. – A Drewryville man was sentenced today to three years in prison for his role in a multi-kilograms cocaine ring in Emporia.
According to court documents, George Wyche, 47, entered into a conspiracy in Emporia to distribute cocaine from 2015 to 2017. Through significant efforts, including surveillance, agents of the FBI and state law enforcement learned that Wyche, Powell, and others were involved in a large-scale drug trafficking conspiracy and that Powell regularly sold cocaine to Wyche for years. As part of the plea agreement, Wyche admitted that he should be held accountable for over 600 grams of cocaine.
The case was investigated by the FBI’s Richmond Area Violent Enterprises Task Force, as part of the Organized Crime Drug Enforcement Task Force’s (OCDETF), Operation Bulls Eye. The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations. 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.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, and David W. Archey, Special Agent in Charge of the FBI’s Richmond Field Office, made the announcement after sentencing by Senior U.S. District Judge Robert E. Payne. Assistant U.S. Attorney Peter S. Duffey prosecuted the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 3:19-cr-14.
Man Sentenced for Lying on Farm Loan ApplicationRead the Press Release
MADISON, WIS. -- Scott C. Blader, United States Attorney for the Western District of Wisconsin, announced that Henry Berg, 42, formerly of Arcadia, Wisconsin, and currently of Geneva, Illinois, was sentenced today by U.S. District Judge James D. Peterson to one year and one day in federal prison for lying on a farm loan application. He was also sentenced to four years of supervised release following incarceration.
On May 2, 2019, Berg pleaded guilty to knowingly making a false statement for the purpose of influencing an Agricultural Credit Association, Badgerland Financial ACA (now Compeer Financial), in connection with a $650,000 agricultural loan.
Berg failed to disclose certain debts on his 2015 loan application, and also misrepresented to the bank that he had obtained crop insurance. Once he defaulted on the loan, Badgerland learned that Berg did not farm in 2015 and had disposed of the collateral he had pledged in connection with the loan. Badgerland also learned that Berg sub-leased his land and sold farming-related items to another farmer, for which the defendant received compensation that he did not disclose or turn over to Badgerland.
Because Berg’s Badgerland loan was partially guaranteed by the Department of Agriculture’s Farm Service Agency, the federal government suffered a loss of $596,036.30. Badgerland suffered a loss of $53,963.70. Berg was ordered to pay restitution.
The charge against Berg was the result of an investigation conducted by the U.S. Department of Agriculture Office of Inspector General and the Federal Bureau of Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney Meredith P. Duchemin.
Man Sentenced for Involvement in Methamphetamine Drug ConspiracyRead the Press Release
RALEIGH – United States Attorney Robert J. Higdon, Jr. announced that today in federal court, United States District Judge James C. Dever III sentenced BRANDON DUWAYNE WRIGHT, 33, of High Point, North Carolina, to 300 months imprisonment, followed by 5 years of supervised release.
WRIGHT was named in an indictment filed on August 28, 2018 charging him with conspiracy to distribute and possess with the intent to distribute fifty grams or more of methamphetamine; and distribution and possession with intent to distribute fifty grams or more of methamphetamine. On May 14, 2019, WRIGHT was convicted of both charges after a jury trial.
According to the investigation, WRIGHT traveled from Atlanta, Georgia to Greenville, North Carolina to deliver five kilograms of crystal methamphetamine hidden inside two large dog food bags and a box of laundry detergent. WRIGHT met a cooperator in a parking lot of a Walmart in Greenville, North Carolina and provided what WRIGHT described as groceries to the cooperator. After receiving the dog food bags, law enforcement immediately noticed the packages had previously been opened as they were resealed with clear plastic tape.
The prosecution of WRIGHT was a part of an Organized Crime and Drug Enforcement Task Force Operation (OCDETF) targeting drug traffickers in Greenville, North Carolina. This case is part of the United States Attorney’s Office’s Take Back North Carolina Initiative. This initiative emphasizes the regional assignment of federal prosecutors to work with law enforcement and District Attorney’s Offices on a sustained basis in those communities to reduce the violent crime rate, drug trafficking, and crimes against law enforcement.
Investigation of this enforcement operation was conducted by the Greenville Regional Drug Task Force consisting of the Greenville Police Department, Drug Enforcement Administration (DEA), Winterville Police Department, East Carolina University Police Department, and North Carolina State Bureau of Investigation. Assistant United States Attorney Dena King represented the government.
Man Pleads Guilty to Producing Child PornographyRead the Press Release
NORFOLK, Va. – A Franklin man pleaded guilty today to producing child pornography.
According to court documents, Quinton Thomas Myrick, 25, met an 11 year-old girl online in December 2018. Myrick convinced the girl to produce child pornography and send it to him, and she complied. When Myrick suspected the 11 year-old was talking to other boys, he posted the child pornography on the girl’s social media account. Myrick also produced child pornography with a second minor victim, a 17 year-old girl. When Myrick became angry with her, Myrick also posted her videos on social media.
Myrick pleaded guilty to production of child pornography and faces a mandatory minimum of 15 years and a maximum of 30 years in prison when sentenced on December 11. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the 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.justice.gov/psc.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, and Michael K. Lamonea, Assistant Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Norfolk, and Robert Porti, Deputy Chief of Franklin Police, made the announcement after U.S. Magistrate Judge Douglas E. Miller accepted the plea. Assistant U.S. Attorney Elizabeth M. Yusi is prosecuting the case.
The Columbus Police Department provided significant assistance during this investigation.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:19-cr-91.
Man Charged with Misuse of a Social Security NumberRead the Press Release
NEW ORLEANS, LOUISIANA – LUIS FELIPE PALAFOX-ALVAREZ (PALAFOX-ALVAREZ), age 25, a citizen of Mexico, was charged on Wednesday, August 28, 2019 in federal court in a one-count Bill of Information with misuse of a Social Security Number.
PALAFOX-ALVAREZ faces a maximum term of imprisonment of not more than five years, a fine of $250,000.00, and a mandatory special assessment of $100.00. Additionally, PALAFOX-ALVAREZ is subject to a period of supervised release after imprisonment of up to one year.
According to the Bill of Information, on or about August 14, 2019, PALAFOX-ALVAREZ, for the purpose of obtaining employment and for other purposes, knowingly and with intent to deceive, did falsely represent that a Social Security Number not issued to him, was assigned to him; all in violation of Title 42, United States Code, Section 408(a)(7)(B).
U.S. Attorney Peter G. Strasser praised the work of the United States Department of Homeland Security, Immigration and Customs Enforcement, United States Border Patrol and the Office of the Inspector General, Social Security Administration in investigating this matter. Assistant United States Attorney Julia K. Evans is in charge of the prosecution.
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Man Charged with Misuse of a Social Security NumberRead the Press Release
NEW ORLEANS, LOUISIANA – ALVARO JOSE MEZA-GONZALEZ (MEZA-GONZALEZ), age 38, a citizen of Nicaragua, was charged on Wednesday, August 28, 2019 in federal court in a one-count Bill of Information with misuse of a Social Security Number.
MEZA-GONZALEZ faces a maximum term of imprisonment of not more than five years, a fine of $250,000.00, and a mandatory special assessment of $100.00. Additionally, MEZA-GONZALEZ is subject to a period of supervised release after imprisonment of up to one year.
According to the Bill of Information, on or about August 14, 2019, MEZA-GONZALEZ, for the purpose of obtaining employment and for other purposes, knowingly and with intent to deceive, did falsely represent that a Social Security Number not issued to him, was assigned to him; all in violation of Title 42, United States Code, Section 408(a)(7)(B).
U.S. Attorney Peter G. Strasser praised the work of the United States Department of Homeland Security, Immigration and Customs Enforcement, United States Border Patrol and the Office of the Inspector General, Social Security Administration in investigating this matter. Assistant United States Attorney Julia K. Evans is in charge of the prosecution.
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Mahoning County man charged in federal court with making threats against Jewish Community Center in YoungstownRead the Press Release
A Mahoning County man was charged in federal court with making threats against a Jewish community center in Youngstown.
James P. Reardon, 20, of New Middletown, was charged in U.S. District Court with one count of transmitting threatening communications via interstate commerce. The investigation is ongoing.
According to the criminal complaint filed in the case:
New Middletown police contacted the FBI on August 16, 2019, after being made aware of a video posted on Instagram page by user “ira_seamus.” The video depicted Reardon holding an assault rifle. It began with Reardon stating “(expletive) a life.” He then held the rifle in multiple firing positions with audio of gunshots and sound effects of sirens and people screaming added into the background, according to the complaint.
The video also had a caption that stated: “ira_seamus Police identified the Youngstown Jewish Family Community shooter as local white nationalist Seamus O'Rearedon". The video is shown to be tagged at the Jewish Community Center of Youngstown, according to the complaint.
New Middletown police officers showed federal agents on August 16, 2019, other videos in which Reardon was depicted, including: a National Geographic documentary in which Reardon was at the "Unite the Right" rally in Charlottesville, Virginia in August 2017 and an Instagram video posted by Reardon in which he discharges two rounds of ammunition into a cover of a video while making a remark about “Jewish media.”
Members of law enforcement executed a search warrant at Reardon’s residence later that day. Upon entering the basement, investigators observed several firearms and clothing articles that were observed in Reardon’s Instagram video postings, including: an MP-40 sub-machine gun like the one depicted in the video; an AR-15 assault rifle; numerous Nazi World War II propaganda posters; a rifle bayonet; a Hitler Youth Knife; and vintage U.S. military equipment, according to the complaint.
Reardon pulled up to the residence while officers were executing the search warrant and was arrested without incident.
“The Constitution affords citizens many rights, but it does not allow people to threaten others with violence,” U.S. Attorney Justin Herdman said. “Law enforcement will continue to work together to thwart those who threaten people based on their religion, race or national origin. We don’t go to war with people who break the law, we arrest them and send them to prison.”
“In today's environment, shootings in public places, churches and schools have occurred too often,” said FBI Special Agent in Charge Eric B. Smith. “Law enforcement must react swiftly to threats of violence. This defendant’s video demonstrated that he had access to weapons and he posed a threat to a Jewish community center. Law enforcement cannot wait to see if a shooting is going to occur, law enforcement must act quickly within the confines of the law to disrupt any potential violent act. The public is reminded -- if you see something, say something.”
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
This case was investigated by the Federal Bureau of Investigation, the Mahoning Valley Violent Crimes Task Force and the New Middletown Police Department. It is being prosecuted by Assistant U.S. Attorneys David Toepfer and Yasmine Makridis.
A charge is only an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
MS-13 Gang Member Pleads Guilty in Connection with Gang-Related AssaultRead the Press Release
ALEXANDRIA, Va. – An MS-13 gang member pleaded guilty today for his role and participation in a violent gang-related assault of a victim with multiple bats.
“The reasons for this callous and violent crime were as senseless as the brutality of the assault itself,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “For several minutes, Rivera and other members and associates of MS-13, savagely beat the victim with baseball bats within inches of his life to instill fear in members of the community and enforce MS-13’s warped code of violence and rules. Our investigation and prosecution of this case should send a clear message that law enforcement will not stand by as MS-13 attempts to terrorize our community, and that those involved in the violent acts of MS-13 will be prosecuted.”
Marlon Edgardo Huezo Rivera, aka “Oscuro”, 19, of Falls Church, a member or associate of the Chilangueras clique of MS-13 in Northern Virginia, is the final charged defendant to plead guilty in this case.
According to court documents, Rivera conspired with several other members and associates of MS-13 to lure the victim to James Lee Park in Falls Church so that they could assault the victim. Rivera and other members and associates of MS-13 believed the victim was cooperating with law enforcement, falsely representing himself as a member of MS-13, and disparaging the Silvas clique of MS-13. After luring the victim to the park under false pretenses, Rivera, and approximately a dozen other members and associates of MS-13, beat the victim with bats, fists, and feet for approximately three minutes. As a result of the beating, the victim suffered multiple broken limbs and was hospitalized for several days.
“MS-13 members like Rivera cause horrific violence and terrorize our community. This investigation shows that the FBI Washington Field Office and our law enforcement partners will not stop investigating and prosecuting those who seek to harm our community in engage in criminal gang activity,” said Timothy M. Dunham, Special Agent in Charge of the FBI’s Washington Field Office Criminal Division. “I would like to thank the FBI Special Agents that investigated this case, the prosecutors, and our local partners who are actively engaged in disrupting and dismantling MS-13 in order to combat these senseless crimes."
Rivera pleaded guilty to assault with a dangerous weapon in aid of racketeering activity and faces a maximum penalty of 20 years in prison when sentenced on November 22. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
The case was also investigated as part of the Organized Crime Drug Enforcement Task Force’s (OCDETF) Operation Rusty Gate. The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations. 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.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, Timothy M. Dunham, Special Agent in Charge, Criminal Division, FBI Washington Field Office, and Colonel Edwin C. Roessler Jr., Fairfax County Chief of Police, made the announcement after Senior U.S. District Judge T.S. Ellis III accepted the plea. Assistant U.S. Attorneys Nicholas U. Murphy II and Cristina Stam, and Trial Attorney Shauna Hale of the Criminal Division’s Organized Crime and Gang Section are prosecuting the case.
This matter was investigated by the FBI WFO’s Safe Streets/HIDTA Task Force – Northern Virginia which is composed of FBI Agents along with Task Force Officers from the Fairfax County Police, the Prince William County Police, the Loudoun County Sheriff’s Office, Leesburg Police Department, the Alexandria City Police, Fairfax City Police, Vienna Police Department, Herndon Police Department, and the Fauquier County Sheriff’s Office, along with Agents from the Department of Homeland Security, Homeland Security Investigations and ATF. The mission of this task force is to identify, investigate, disrupt and dismantle the most egregious and violent gangs operating in the Capital Region to include members of MS-13, a transnational street gang, known for its acts of violence.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:19-cr-129.
Louisiana Physician’s Assistant Sentenced to Prison for Scheme to Unlawfully Distribute Controlled SubstancesRead the Press Release
A Baton Rouge, Louisiana-based physician’s assistant was sentenced to seven years in prison today for his role in a scheme to unlawfully distribute prescriptions for thousands of oxycodone pills.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Brandon J. Fremin of the Middle District of Louisiana, Special Agent in Charge Stephen G. Azzam of the U.S. Drug Enforcement Administration (DEA)’s New Orleans Field Division, Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Dallas Field Office and Acting Special Agent in Charge Anthony T. Riedlinger of the FBI’s New Orleans Field Office made the announcement.
Christopher William Armstrong, 45, of Prairieville, Louisiana, was sentenced by U.S. District Judge John W. deGravelles of the Middle District of Louisiana, who also ordered Armstrong to serve three years of supervised release and forfeit $168,000. In November 2018, Armstrong pleaded guilty to one count of an indictment charging him with conspiracy to distribute oxycodone, a Schedule II controlled substance.
Armstrong was a licensed physician’s assistant employed by Louisiana Spine & Sports LLC, a pain management clinic located in Baton Rouge, from approximately August 2004 through January 2014. As part of his guilty plea, Armstrong admitted that he logged into the clinic’s computer system and, without authorization, created fraudulent prescriptions for controlled substances such as oxycodone. He then printed the fraudulent prescriptions and either forged the signatures of the clinic’s physicians on the prescriptions or caused those physicians to unknowingly sign the prescriptions. Armstrong further admitted that he distributed the fraudulent prescriptions to co-conspirators, whom he instructed to fill the prescriptions at pharmacies and return the controlled substances to him in exchange for cash payments. Armstrong admitted that in an effort to conceal the scheme, he deleted records of the fraudulent prescriptions from the clinic’s computer system. As part of his plea, Armstrong admitted that from approximately May 2009 through March 2014, he fraudulently generated prescriptions for at least 40,470 oxycodone pills.
The case was investigated by the DEA, HHS-OIG and the FBI, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Louisiana, with assistance from the East Baton Rouge District Attorney’s Office. Trial Attorney Justin M. Woodard of the Fraud Section and Assistant U.S. Attorney Demetrius D. Sumner of the Middle District of Louisiana are prosecuting the case.
The Medicare Fraud Strike Force is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Louisiana Physician’s Assistant Sentenced to Prison for Scheme to Unlawfully Distribute Controlled SubstancesRead the Press Release
BATON ROUGE – A Baton Rouge, Louisiana-based physician’s assistant was sentenced to seven years in prison today for his role in a scheme to unlawfully distribute prescriptions for thousands of oxycodone pills.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Brandon J. Fremin of the Middle District of Louisiana, Special Agent in Charge Stephen G. Azzam of the U.S. Drug Enforcement Administration (DEA)’s New Orleans Field Division, Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Dallas Field Office and Acting Special Agent in Charge Anthony T. Riedlinger of the FBI’s New Orleans Field Office made the announcement.
Christopher William Armstrong, 45, of Prairieville, Louisiana, was sentenced by U.S. District Judge John W. deGravelles of the Middle District of Louisiana, who also ordered Armstrong to serve three years of supervised release and forfeit $168,000. In November 2018, Armstrong pleaded guilty to one count of an indictment charging him with conspiracy to distribute oxycodone, a Schedule II controlled substance.
Armstrong was a licensed physician’s assistant employed by Louisiana Spine & Sports LLC, a pain management clinic located in Baton Rouge, from approximately August 2004 through January 2014. As part of his guilty plea, Armstrong admitted that he logged into the clinic’s computer system and, without authorization, created fraudulent prescriptions for controlled substances such as oxycodone. He then printed the fraudulent prescriptions and either forged the signatures of the clinic’s physicians on the prescriptions or caused those physicians to unknowingly sign the prescriptions. Armstrong further admitted that he distributed the fraudulent prescriptions to co-conspirators, whom he instructed to fill the prescriptions at pharmacies and return the controlled substances to him in exchange for cash payments. Armstrong admitted that in an effort to conceal the scheme, he deleted records of the fraudulent prescriptions from the clinic’s computer system. As part of his plea, Armstrong admitted that from approximately May 2009 through March 2014, he fraudulently generated prescriptions for at least 40,470 oxycodone pills.
The case was investigated by the DEA, HHS-OIG and the FBI, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Louisiana, with assistance from the East Baton Rouge District Attorney’s Office. Trial Attorney Justin M. Woodard of the Fraud Section and Assistant U.S. Attorney Demetrius D. Sumner of the Middle District of Louisiana are prosecuting the case.
The Medicare Fraud Strike Force is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Lodi Man Sentenced to 7 Years for Posting Child Pornography in Internet ChatroomRead the Press Release
MADISON, WIS. – Scott C. Blader, United States Attorney for the Western District of Wisconsin, announced that Matthew Bulovsky, 25, Lodi, Wisconsin, was sentenced today by U.S. District Judge James Peterson to seven years in prison for distributing child pornography. This term of imprisonment is to be followed by 10 years of supervised release. Bulovsky pleaded guilty to this offense on May 15, 2019.
During the course of a child exploitation investigation, law enforcement officers determined that Bulovsky had posted numerous images and videos depicting children engaged in sexually explicit conduct into an internet chatroom.
At the time of the offense in this case, Bulovsky was out on bond in a state case that included allegations that he possessed child pornography. In sentencing the defendant, Judge Peterson noted that Bulovsky was a danger to the public because his compulsion to use child pornography was well engrained.
The charge against Bulovsky was the result of an investigation conducted by the FBI’s Child Exploitation and Human Trafficking Task Force, consisting of the Milwaukee Police Department, Milwaukee County Sheriff’s Department, Sheboygan County Sheriff’s Department, and West Allis Police Department; the Wisconsin Department of Justice Division of Criminal Investigation; and the Dane County Sheriff’s Office. The prosecution of the case has been handled by Assistant U.S. Attorney Elizabeth Altman.
Lincoln Man Sentenced for Possession with Intent to Distribute Methamphetamine and MarijuanaRead the Press Release
United States Attorney Joe Kelly announced that Herbert B. Kinchen, 40, of Lincoln, was sentenced today to 21 years and 10 months, (262 months), in federal prison by Senior United States District Judge Richard G. Kopf for possession with intent to distribute 500 grams or more of methamphetamine mixture and unspecified amounts of marijuana and cocaine. Following the prison term, Kinchen will serve five years on supervised release.
On June 13, 2018, the Lincoln/Lancaster County Drug Task Force executed a search warrant at Kinchen’s Lincoln residence. During the search, officers found approximately 2 ½ pounds of methamphetamine, 2 ½ pounds of marijuana and suspected cocaine along with a loaded revolver and $3,000 in cash. Kinchen and his co-defendant, Vanessa D. Pinkney, were contacted by officers as they approached the residence while the search was being conducted. Kinchen claimed ownership of all the drugs in the residence.
Pinkney was sentenced in April of 2019 to 10 years in prison.
This case was investigated by the Lincoln/Lancaster County Drug Task Force.
Levittown Man Sentenced for Trafficking Protected TurtlesRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that David Sommers, 64, of Levittown, PA was sentenced to six months’ imprisonment, three years’ supervised release including six months’ home detention, and $250,000 restitution by United States District Judge Anita B. Brody for trafficking protected turtles.
From November 2011 until October 2017, the defendant poached thousands of protected diamondback terrapins and their eggs from coastal marshes in New Jersey and illegally sold the turtles. A grand jury indicted Sommers on July 10, 2018 for his criminal conduct involving the sale, export, and false-labeling of packages containing protected diamondback terrapins. On February 4, 2019, Sommers pleaded guilty to false-labeling of packages containing protected diamondback terrapins.
During the sentencing hearing, the government offered evidence that the total market value of the defendant’s sales figures and inventory of poached wildlife was worth well over $550,000.
“The defendant had a simple business plan: poach protected turtles and their eggs from their natural habitat, advertise them for sale online and then illegally ship them to customers by concealing the actual contents of the packages,” said U.S. Attorney McSwain. “Sommers represented himself as a legitimate reptile breeder, when he was in fact endangering the lives of these animals and breaking the law. Thanks to our partners at the New Jersey Division of Fish and Wildlife and the United States Postal Inspection Service, this defendant will be held responsible for his actions.”
“Sommers used a sham business to shamelessly mask an illegal trade in threatened and protected species,” said Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division. “The Justice Department and our law enforcement partners will safeguard our nation’s natural resources and biodiversity and prosecute wildlife traffickers to the fullest extent of the law.”
Diamondback terrapins (Malaclemys terrapin) are a semi-aquatic species of turtle native to brackish waters in eastern and southern United States. They are not found in the wild in Pennsylvania, where Sommers resided, but have a dwindling habitat range in neighboring New Jersey. The terrapins are prized in the reptile pet trade for their unique, diamond-shaped shell markings. The turtles are protected under New Jersey law and by an international treaty, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
The United States, Canada, and approximately 181 other countries are signatories to CITES, which provides a mechanism for regulating international trade in species whose continued survival is threatened by such trade. Due to declining populations, CITES listed the diamondback terrapin as threatened in 2013, and New Jersey banned collecting, possessing, and transporting them in 2016.
This case was investigated by the United States Fish and Wildlife Service with assistance from the New Jersey Division of Fish and Wildlife. It is being prosecuted by Assistant United States Attorney Joan E. Burnes and trial attorney Ryan Connors of the Justice Department’s Environmental Crimes Section.
Largest Federal Heroin and Fentanyl-Laced Seizure in Delaware HistoryRead the Press Release
WILMINGTON, Del. – David C. Weiss, United States Attorney for the District of Delaware, unsealed two criminal complaints today charging two men with drug trafficking offenses in Delaware. Both men are detained pending further proceedings.
According to statements at the press conference and court documents, Julian Rivera-Villa, age 56, and Ricardo Perez-Guillen, age 40, of Gloucester City, New Jersey were charged in federal court in Wilmington last week in connection with sales of fentanyl-laced fake Oxycodone pills in Delaware. Perez-Guillen was arrested after selling a kilogram of heroin and 600 fake Oxycodone pills containing fentanyl in New Castle, Delaware. Rivera-Villa was arrested outside the residence he shared with Perez-Guillen in Gloucester City, New Jersey. A subsequent search of that residence yielded approximately 7 additional kilograms of heroin; 3 kilograms of cocaine; 14,000 fake Oxycodone pills that tested positive for the presence of fentanyl and over $28,000 in cash. Law enforcement also seized another 2 kilograms of heroin from a car registered to Perez-Guillen. Those kilograms of heroin were hidden in traps located behind the car’s rear seats.
The arrests and drug seizures are the result of a long-term investigation into fentanyl and heroin trafficking in Delaware by the Drug Enforcement Administration’s (“DEA”) Wilmington Resident Office Tactical Diversion Squad and High Intensity Drug Trafficking Area (“HIDTA”) Group 41. The estimated street value of the seized drugs is in excess of $1 million.
U.S. Attorney Weiss noted that this was the largest federal seizure of heroin and fake Oxycodone pills by Delaware law enforcement in recent memory, stating: “Thousands of fentanyl-laced pills and over 1.4 million doses of heroin have been taken out of the hands of those who would seek to profit from illegally distributing these poisons to our communities. Fake Oxycodone pills such as those seized here are especially dangerous, because the pills actually contain fentanyl, a dangerous—and potentially deadly—synthetic opioid.”
Both Rivera-Villa and Perez-Guillen are charged with distribution of fentanyl and face a maximum of 20 years in prison and a $1,000,000 fine. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
The DEA’s Tactical Diversion Squad and HIDTA Group 41 are comprised of investigators from Middletown Police Department, Newark Police Department, New Castle County Police Department, Delaware Alcohol & Tobacco Enforcement, Delaware State Police, Maryland State Police, Wilmington Police Department, Delaware Probation and Parole, Newport Police Department, and the University of Delaware Police Department. The case is being prosecuted by Assistant United States Attorney Alexander Ibrahim.
The DEA and the U.S. Attorney’s Office for the District of Delaware also wish to thank Homeland Security Investigations, Immigrations & Customs Enforcement, Camden, New Jersey DEA-HIDTA, and the Camden County Sherriff’s SERT team for their assistance.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the District of Delaware. Related court documents and information is located on the website of the District Court for the District of Delaware or on PACER by searching for Case Nos 19-MJ-231 and 19-MJ-232.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Lafayette Man Charged in Criminal ComplaintRead the Press Release
HAMMOND- Geoffrey Martin, 37, of Lafayette, Indiana, was charged in a criminal complaint with distribution of methamphetamine and with possession with intent to distribute methamphetamine within 1,000 feet of an elementary school, announced U.S. Attorney Kirsch.
The criminal complaint alleges that Martin distributed approximately 7 grams of methamphetamine in Rensselaer on August 20, 2019. On August 28, 2019, law enforcement executed a search warrant on his Lafayette residence and recovered an additional 129 gross grams of methamphetamine from a vehicle in the driveway of Martin’s residence, which is located less than 1,000 feet from Vinton Elementary School.
U.S. Attorney Kirsch said, “Illegal drug use damages communities of all sizes. Joint operations and partnerships with our Federal, State and Local law enforcement agencies to investigate and prosecute those who promote these illegal activities will continue."
The United States Attorney’s Office emphasizes that a criminal complaint is merely an allegation and that all persons are presumed innocent until, and unless proven guilty in court.
If convicted, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
This case is being investigated by the Drug Enforcement Administration, Lafayette Drug Task Force, Jasper County Drug Task Force, and White County Drug Task Force. This case is being prosecuted by Assistant United States Attorney Nicholas J. Padilla.
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Kirkwood Man Sentenced to 12 years for Possession of Child PornographyRead the Press Release
St. Louis, MO – Christopher Helm, 30, of Kirkwood, MO, was sentenced to 12 years in federal prison and lifetime supervised release for Possession of Child Pornography. Helm appeared before United States District Judge Ronnie L. White.
According to court documents, officers of the Kirkwood Police Department searched Helm’s apartment after learning he had been arrested in St. Clair, Missouri for statutory rape. Helm’s electronics revealed over 9000 images of child pornography.
Helm pled on May 22, 2019 to one count of possession of child pornography. Helm also pled in St. Clair County Court, Missouri on March 5, 2018 for the same conduct and was sentenced to a total of eight years in state prison. Both sentences will run concurrent.
The Kirkwood Police Department, the Federal Bureau of Investigation and the Regional Computer Crimes Education and Enforcement Group investigated the case. Assistant U.S. Attorney Colleen Lang is handling the case for the U.S. Attorney’s Office.
Julio Najera Receives 12 Years in Federal PrisonRead the Press Release
WILMINGTON — United States Attorney Robert J. Higdon, Jr. announced that in federal court, Chief United States District Judge Terrence Boyle sentenced JULIO NAJERA, 25, of Sampson County to 144 months’ imprisonment, followed by 5 years of supervised release.
A federal grand jury sitting in the Eastern District of North Carolina returned a three-count Indictment against NAJERA on December 12, 2018, charging him with conspiracy to distribute and possess with the intent to distribute fifty grams or more of methamphetamine, distribution of fifty grams or more of methamphetamine and possession with intent to distribute fifty grams or more of methamphetamine. NAJERA pled guilty to all three counts on April 10, 2019.
On the morning of November 9, 2017, law enforcement officials with the Sampson County Sheriff’s Office conducted a controlled purchase of approximately 57 grams of crystal methamphetamine from NAJERA at NAJERA’s residence in Sampson County. Later that morning, law enforcement executed a search warrant of NAJERA’s residence. During the course of the search, law enforcement found an additional 283 grams of crystal methamphetamine, drug paraphernalia and $3,979 in U.S. Currency from the earlier controlled purchase.
This is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF). This case is part of a Drug Enforcement Administration (DEA) OCDETF operation “Fall of the House of Usher” with cooperation from the Sampson County Sheriff’s Office and Duplin County Sheriff’s Office. This investigation is focused on a drug trafficking organization operating in the Sampson and Duplin County areas of North Carolina.
This case is also part of the Take Back North Carolina Initiative of The United States Attorney’s Office for the Eastern District of North Carolina. This initiative emphasizes the regional assignment of federal prosecutors to work with law enforcement and District Attorney’s Offices on a sustained basis in those communities to reduce the violent crime rate, drug trafficking, and crimes against law enforcement.
The investigation of this case was conducted by the DEA, Sampson County Sheriff’s Office and Duplin County Sheriff’s Office. Special Assistant United States Attorney Murphy Averitt prosecuted the case on behalf of the government.
Judge Sentences Federal Inmate to 15 More Months in Prison for Possessing Prescription DrugsRead the Press Release
JOHNSTOWN, Pa. – An inmate at the Federal Correctional Institution in Loretto, Pa. pleaded guilty in federal court in Johnstown to a charge of possession of a prohibited object in prison, and immediately following, was sentenced to 15 months in prison, consecutive to the current prison term he is serving out of the Middle District of North Carolina, and three years’ supervised release, United States Attorney Scott W. Brady announced today.
Bryan Wade Smith, 29, pleaded guilty to the indictment before United States District Judge Kim R. Gibson.
In connection with the guilty plea, on October 3, 2018, Smith possessed a quantity of Buprenorphine.
Assistant United States Attorney Maureen Sheehan-Balchon prosecuted this case on behalf of the government.
Mr. Brady commended the Laurel Highlands Resident Agency of the Federal Bureau of Investigation and the Federal Correctional Institution, Special Investigative Staff, for the investigation leading to the successful prosecution of Smith.
Iranian Businessman Pleads Guilty to Conspiracy to Violate U.S. Sanctions by Exporting Carbon Fiber from the United States to IranRead the Press Release
Behzad Pourghannad pleaded guilty today to participating in a conspiracy to export carbon fiber from the United States to Iran between 2008 and 2013.
“Pourghannad was in Iran while he worked to obtain carbon fiber from the United States contrary to U.S. law,” said Assistant Attorney General John C. Demers for National Security. “He may have believed he was out of U.S. law enforcement’s reach, but thanks in part to assistance from the German government, which extradited him, this case is now another example of the Department’s ability to hold Iran’s illicit procurement agents accountable, regardless of where they work.”
Manhattan U.S. Attorney Geoffrey S. Berman said: “Behzad Pourghannad has now admitted that he conspired to circumvent repeatedly U.S. export controls on carbon fiber, a substance with numerous military and aerospace applications. Together with the FBI, the Commerce Department, and all of our law enforcement partners, we will continue to protect our national security.”
According to the allegations contained in the indictment and statements made at Pourghannad’s guilty plea:
Between 2008 and July 2013, Pourghannad and his two codefendants, Ali Reza Shokri and Farzin Faridmanesh lived and worked in Iran. During that period, they worked together to obtain carbon fiber from the United States and surreptitiously export it to Iran via third countries. In particular, Shokri worked to procure many tons of carbon fiber from the United States; Pourghannad agreed to serve as the financial guarantor for large carbon fiber transactions; and Faridmanesh agreed to serve as the trans-shipper. Carbon fiber has a wide variety of uses, including in missiles, aerospace engineering and gas centrifuges that enrich uranium.
In or about late 2007 and early 2008, Shokri and a Turkey-based co-conspirator (CC-2) successfully arranged for the illegal export and transshipment of carbon fiber from the United States to an Iranian company associated with Shokri (Iranian Company-1). Specifically, CC-2 contacted a United States supplier of carbon fiber, who in turn enlisted a third individual (Individual-1) for assistance with the transaction. Through Individual-1, CC-2 purchased carbon fiber from the United States supplier and arranged for the shipment of the carbon fiber from the United States, through Europe and Dubai, United Arab Emirates, to Iranian Company-1, operated by Shokri, in Iran.
In or about May 2009, Pourghannad and Shokri attempted to arrange another illegal purchase and transshipment of carbon fiber from the United States to Iran. Specifically, Individual-1 returned a signed contract to Pourghannad for Shokri’s purchase of a large quantity of carbon fiber. Individual-1 then purchased the carbon fiber from a United States supplier and arranged for the carbon fiber to be exported from the United States to a third country (Country-1), en route to Iran. Country-1 authorities, however, interdicted the carbon fiber shipment before it could be trans-shipped to Iran.
In or about 2013, Pourghannad, Shokri, and Faridmanesh again attempted to illegally procure and export carbon fiber from the United States to Iran. In the 2013 transaction, Shokri and Pourghannad negotiated with Individual-1 for the purchase and trans-shipment to Iran of more than five tons of carbon fiber. Faridmanesh and Pourghannad further agreed with Individual-1 that the carbon fiber would be trans-shipped from the United States to Iran through Tbilisi, Georgia, with Faridmanesh to serve as the trans-shipper. Faridmanesh specifically instructed Individual-1 to change the shipping labels on the carbon fiber to reference “acrylic” or “polyester,” rather than “carbon fiber.” Pourghannad provided Individual-1 with the bank guarantee that was to serve as surety for a portion of the carbon fiber. In or about June 2013, Individual-1 informed Pourghannad , Shokri and Faridmanesh that the carbon fiber would soon be shipped from New York, New York, and that Individual-1 would replace the carbon fiber labels with shipping labels referencing “acrylic” to evade U.S. export controls.
No one involved in these transactions obtained permission from the U.S. Department of Treasury, Office of Foreign Assets Control, to export the carbon fiber from the United States.
Pourghannad , 65, who is an Iranian citizen, pled guilty to one count of conspiracy to violate the International Emergency Economic Powers Act, which carries a maximum sentence of 20 years in prison. He will be sentenced by Judge Briccetti on Dec. 13, 2019.
Shokri and Faridmanesh remain at liberty.
Assistant Attorney General Demers and U.S. Attorney Berman praised the outstanding investigative work of the FBI and the U.S. Department of Commerce, and thanked the U.S. Department of Justice’s National Security Division and Office of International Affairs, the U.S. Marshals Service, Homeland Security Investigations and Immigration and Customs Enforcement for their assistance. The Office of International Affairs of the Justice Department’s Criminal Division provided significant support with the defendant’s extradition.
This case is being handled by the Office’s Terrorism and International Narcotics Unit, with assistance from the Counterintelligence and Export Control Section of the National Security Division. Assistant United States Attorney Gillian Grossman is in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and Shokri and Faridmanesh are presumed innocent unless and until proven guilty.
Iranian Businessman Pleads Guilty to Conspiracy to Violate U.S. Sanctions by Exporting Carbon Fiber from the United States to IranRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, the Assistant Attorney General for National Security, announced that BEHZAD POURGHANNAD pled guilty today to participating in a conspiracy to export carbon fiber from the United States to Iran between 2008 and 2013.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Behzad Pourghannad has now admitted that he conspired to circumvent repeatedly U.S. export controls on carbon fiber, a substance with numerous military and aerospace applications. Together with the FBI, the Commerce Department, and all of our law enforcement partners, we will continue to protect our national security.”
Assistant Attorney General John C. Demers said: “Pourghannad was in Iran while he worked to obtain carbon fiber from the United States contrary to U.S. law. He may have believed he was out of U.S. law enforcement’s reach, but thanks in part to assistance from the German government, which extradited him, this case is now another example of the Department’s ability to hold Iran’s illicit procurement agents accountable, regardless of where they work.”
According to the allegations contained in the Indictment and statements made at POURGHANNAD’s guilty plea[1]:
Between 2008 and July 2013, POURGHANNAD and his two codefendants, Ali Reza Shokri and Farzin Faridmanesh, lived and worked in Iran. During that period, they worked together to obtain carbon fiber from the United States and surreptitiously export it to Iran via third countries. In particular, Shokri worked to procure many tons of carbon fiber from the United States; POURGHANNAD agreed to serve as the financial guarantor for large carbon fiber transactions; and Faridmanesh agreed to serve as the trans-shipper. Carbon fiber has a wide variety of uses, including in missiles, aerospace engineering, and gas centrifuges that enrich uranium.
In or about late 2007 and early 2008, Shokri and a Turkey-based co-conspirator (“CC-2”) successfully arranged for the illegal export and transshipment of carbon fiber from the United States to an Iranian company associated with Shokri (“Iranian Company-1”). Specifically, CC-2 contacted a United States supplier of carbon fiber, who in turn enlisted a third individual (“Individual-1”) for assistance with the transaction. Through Individual-1, CC-2 purchased carbon fiber from the United States supplier and arranged for the shipment of the carbon fiber from the United States, through Europe and Dubai, United Arab Emirates, to Iranian Company-1, operated by Shokri, in Iran.
In or about May 2009, POURGHANNAD and Shokri attempted to arrange another illegal purchase and transshipment of carbon fiber from the United States to Iran. Specifically, Individual-1 returned a signed contract to POURGHANNAD for Shokri’s purchase of a large quantity of carbon fiber. Individual-1 then purchased the carbon fiber from a United States supplier and arranged for the carbon fiber to be exported from the United States to a third country (“Country-1”), en route to Iran. Country-1 authorities, however, interdicted the carbon fiber shipment before it could be trans-shipped to Iran.
In or about 2013, POURGHANNAD, Shokri, and Faridmanesh again attempted to illegally procure and export carbon fiber from the United States to Iran. In the 2013 transaction, Shokri and POURGHANNAD negotiated with Individual-1 for the purchase and trans-shipment to Iran of more than five tons of carbon fiber. Faridmanesh and POURGHANNAD further agreed with Individual-1 that the carbon fiber would be trans-shipped from the United States to Iran through Tbilisi, Georgia, with Faridmanesh to serve as the trans-shipper. Faridmanesh specifically instructed Individual-1 to change the shipping labels on the carbon fiber to reference “acrylic” or “polyester,” rather than “carbon fiber.” POURGHANNAD provided Individual-1 with the bank guarantee that was to serve as surety for a portion of the carbon fiber. In or about June 2013, Individual-1 informed POURGHANNAD, Shokri, and Faridmanesh that the carbon fiber would soon be shipped from New York, New York, and that Individual-1 would replace the carbon fiber labels with shipping labels referencing “acrylic” to evade U.S. export controls.
No one involved in these transactions obtained permission from the U.S. Department of Treasury, Office of Foreign Assets Control, to export the carbon fiber from the United States.
* * *
POURGHANNAD, 65, who is an Iranian citizen, pled guilty to one count of conspiracy to violate the International Emergency Economic Powers Act, which carries a maximum sentence of 20 years in prison. He will be sentenced by Judge Briccetti on December 13, 2019.
Shokri and Faridmanesh remain at liberty.
Mr. Berman praised the outstanding investigative work of the FBI and the U.S. Department of Commerce, Office of Export Enforcement, New York Field Office. Mr. Berman also thanked the U.S. Department of Justice’s National Security Division and Office of International Affairs, the U.S. Marshals Service, Homeland Security Investigations, and Immigration and Customs Enforcement for their assistance.
This case is being handled by the Office’s Terrorism and International Narcotics Unit, with assistance from the Counterintelligence and Export Control Section of the National Security Division. Assistant United States Attorney Gillian Grossman is in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and Shokri and Faridmanesh are presumed innocent unless and until proven guilty.
[1] The descriptions set forth below of conduct by co-defendants Ali Reza Shokri and Farzin Faridmanesh, constitute only allegations, and every fact described should be treated as an allegation with respect to Shokri and Faridmanesh.
Illegal possession of gun sends Billings man to prisonRead the Press Release
BILLINGS—Jermaine David Richardson, a Billings resident who admitted possessing a semi-automatic pistol while having been convicted of a felony, was sentenced today to four years in prison and three years of supervised release, U.S. Attorney Kurt Alme said.
Richardson, 25, pleaded guilty in April to being a felon in possession of a firearm.
U.S District Judge Susan P. Watters presided.
Evidence presented by the prosecution in court records said that in January 2018, a Billings Police Department detective received a video showing Richardson with what appeared to be a black pistol in his hand while in the hallway of a Billings hotel. Richardson refers to the pistol as a Hi-Point. Five months later, police officers saw a stolen vehicle parked in front of Richardson’s residence and were aware that Richardson was prohibited from possessing a firearm because of a felony conviction in Illinois. Police officers ultimately executed a search warrant on Richardson’s residence and seized a .45-caliber semi-automatic Hi-Point pistol from his bedroom.
Assistant U.S. Attorney Brendan McCarthy prosecuted the case, which was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The case is part of Project Safe Neighborhoods (PSN), which is the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.
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Honduran Man Sentenced to Prison for Illegally Reentering the United States After Being Deported in 2017Read the Press Release
A man who illegally returned to the United States after being deported was sentenced today to eight months in federal prison.
Cesar Hernandez-Lopez, age 29, a citizen of Honduras illegally present in the United States and residing in Muscatine, Iowa, received the prison term after a May 24, 2019, guilty plea to one count of illegal reentry into the United States after having been convicted of an aggravated felony.
At the guilty plea, Hernandez-Lopez admitted he had previously been deported from the United States in May 2017 and illegally reentered the United States without the permission of the United States government. Hernandez-Lopez was found by immigration agents in April 2019 at a traffic stop in Cedar County, Iowa.
Hernandez-Lopez was deported after being convicted in September 2016 of possession of a firearm by an illegal alien, an aggravated felony, in the United States District Court for the Southern District of Mississippi. In that case, law enforcement officers found a loaded handgun during the execution of a search warrant under the mattress in Hernandez-Lopez’s bedroom.
Hernandez-Lopez was sentenced in Cedar Rapids by United States District Court Judge C.J. Williams. Hernandez-Lopez was sentenced to eight months’ imprisonment. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Hernandez-Lopez is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Daniel C. Tvedt and investigated by Department of Homeland Security, Immigration and Customs Enforcement, Enforcement and Removal Operations.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 19-CR-39.
Follow us on Twitter @USAO_NDIA.
Haverhill Man Sentenced to 63 Months for Heroin TraffickingRead the Press Release
CONCORD – United States Attorney Scott W. Murray announced today that Samuel F. Baez, 37, of Haverhill, Massachusetts was sentenced to 63 months in federal prison for distributing heroin and possessing heroin with intent to distribute.
According to court documents and statements made in court, between January 10, 2016 and May 6, 2016, an undercover New Hampshire State Police Trooper made five controlled purchases of heroin from Baez at retail stores in Plaistow, New Hampshire. The defendant brought a young child with him to at least two of the transactions. When the New Hampshire State Police arrested Baez on June 29, 2016, he was in possession of a distributable amount of heroin. In total, investigators obtained approximately 100 grams of heroin from Baez during the investigation.
Baez previously pleaded guilty on July 2, 2018.
“Interstate drug trafficking makes lethal substances available for purchase on the streets of New Hampshire,” said U.S. Attorney Murray. “This trade has had a devastating impact on the health and safety of our citizens. In order to protect the public, we will continue to work closely with the New Hampshire State Police and all of our law enforcement partners to identify, arrest, and incarcerate those who bring heroin and other deadly drugs into the Granite State.”
This matter was investigated by the New Hampshire State Police. The case was prosecuted by Assistant U.S. Attorney Jennifer Davis.
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German National Charged with Traveling to United States to Engage in Illicit Sexual Conduct with A MinorRead the Press Release
OAKLAND– Adam Soboll has been charged with traveling to the United States with the intent to engage in illicit sexual conduct with a minor, announced United States Attorney David L. Anderson and U.S. Homeland Security Investigations (HSI) San Francisco Special Agent in Charge Tatum King. Soboll was arrested in Brentwood, Calif., on August 25, 2019, and charged by complaint on August 28, 2019.
According to the complaint, Soboll, 31, of Germany, identified himself as a fifth grade teacher in Germany. The complaint alleges Soboll met the then-14-year-old minor online in October 2018, and communicated with the minor from Germany using Snapchat and online gaming platforms, as well as over other messaging applications.
In January 2019, Soboll began discussing the possibility of visiting the minor in Brentwood, Calif. Soboll and the minor discussed where he should stay in the area and the various forms of sexual conduct in which they would engage when he arrived.
On July 31, 2019, Soboll traveled from Europe to the United States. Soboll stayed at a hotel in Brentwood, Calif. Soboll engaged in sexual conduct with the minor at the hotel. On August 25, 2019, police responded to the hotel following a report from the minor’s mother and arrested Soboll.
Soboll is charged with traveling with the intent to engage in illicit sexual conduct, in violation of 18 U.S.C. § 2423(b).
A complaint merely alleges that crimes have been committed, and all defendants, including Soboll, are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum statutory sentence of 30 years. Further, additional terms of supervised release, fines, and restitution may be ordered; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Defendant made an initial federal court appearance this morning before the Honorable Donna M. Ryu, U.S. Magistrate Judge. Magistrate Judge Ryu ordered the defendant detained pending further proceedings. His next court appearance is scheduled for September 4, 2019, before the Honorable Kandis A. Westmore, U.S. Magistrate Judge, for a detention hearing.
The case is being prosecuted by Assistant U.S. Attorney Samantha Schott. The case is being investigated by HSI, the Contra Costa District Attorney’s Office, and the Brentwood Police Department.
Georgia Woman Sentenced to 14 Years for Trafficking Large Amounts of Methamphetamine into the Middle District of FloridaRead the Press Release
Orlando, Florida – U.S. District Judge Roy B. Dalton, Jr. today sentenced Barbara Caylor-Hernandez (48, Dalton, Georgia) to 14 years in federal prison for conspiring to possess with the intent to distribute methamphetamine.
Caylor-Hernandez had pleaded guilty on January 9, 2019.
According to court documents, in April 2017, the FBI, and later the DEA, started an investigation into the drug trafficking organizations (DTO) that supplied motorcycle clubs operating in the Middle District of Florida with distribution amounts of methamphetamine. To date, 21 individuals have either pleaded or been found guilty as a result of the joint investigation.
As a result of this investigation, law enforcement learned that Caylor-Hernandez was one of the leaders of a DTO that was distributing kilogram amounts of methamphetamine from Georgia to other DTOs and individuals located in central Florida. Members of the Caylor-Hernandez DTO transported methamphetamine from Georgia to various cities in central Florida, including St. Augustine, Holly Hill, and Daytona Beach, for further distribution.
As part of the conspiracy, one of the members of the Caylor-Hernandez DTO distributed methamphetamine to members of the Pagans and Thunderguard Motorcycle Gangs. Georgia Highway Patrol troopers arrested Caylor-Hernandez on May 9, 2018, after she was found in a vehicle with approximately 3.8 kilograms of methamphetamine.
This case was investigated by the FBI, the DEA, the Volusia Bureau of Investigation, the Volusia County Sheriff’s Office, and the Daytona Beach Police Department. It was prosecuted by Assistant United States Attorney Sean P. Shecter.
Georgia Man Pleads Guilty to Heroin TraffickingRead the Press Release
Gulfport, Miss. – Eric Estudillo-Carrazco, 28, of Norcross, Georgia, pled guilty yesterday before U.S. District Judge Sul Ozerden to conspiracy to possess with intent to distribute one kilogram or more of heroin, 400 grams or more of fentanyl and 5 kilograms or more of cocaine, announced U.S. Attorney Mike Hurst and Jere T. Miles, Special Agent in Charge of Immigration and Customs Enforcement’s Homeland Security Investigations in New Orleans.
On November 6, 2018, Estudillo-Carrazco and two co-defendants arrived in Gulfport to sell heroin to a confidential informant. They claimed to have ten kilograms of heroin hidden in a compartment of their vehicle. All three were arrested shortly thereafter. The substance was eventually tested and found to contain nine kilograms of heroin and one kilogram of fentanyl.
That amount of fentanyl is enough to kill half a million people.
Estudillo-Carrazco will be sentenced by Judge Ozerden on November 27, 2019, and faces a maximum penalty of life in prison and a $10,000,000 fine.
Co-defendant Pablo Vega-Ontanon pled guilty and will be sentenced on September 23, 2019. He faces a maximum penalty of life in prison and a $10,000,000 fine.
Co-defendant Eder Ortega-Cassarubias pled guilty and was sentenced by Judge Ozerden on June 26, 2019, to 127 months in prison followed by five years of supervised release.
The case was investigated by Homeland Security Investigations and prosecuted by Assistant U.S. Attorney John Meynardie.
Fort Wayne Woman Sentenced to 156 Months in PrisonRead the Press Release
FORT WAYNE- Bronte Milton, 27, of Fort Wayne, Indiana was sentenced by U.S. District Court Chief Judge Theresa Springmann after pleading guilty to possession with intent to distribute methamphetamine, fentanyl, and crack cocaine along with possession of a firearm in furtherance of a drug trafficking crime, announced U.S. Attorney Thomas L. Kirsch II.
Milton was sentenced to a total of 156 months in prison followed by 4 years of supervised release.
According to documents in this case, Milton was dealing drugs and operating a drug distribution house in Fort Wayne from October of 2017 through March of 2018. In March of 2018, law enforcement officers served a search warrant at her drug house and located several loaded firearms and distribution quantities of fentanyl, methamphetamine, and crack cocaine.
This case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives with the assistance of the Fort Wayne Police Department and the Indiana State Police. This case was handled by Assistant United States Attorneys Stacey R. Speith and Anthony Geller.
Fort Wayne Man Sentenced to 168 Months in PrisonRead the Press Release
FORT WAYNE- Joshua Ferguson, 34, of Fort Wayne, Indiana was sentenced by U.S. District Court Judge Holly Brady after pleading guilty to maintaining a drug-involved premises and possessing a firearm in furtherance of a drug trafficking crime, announced U.S. Attorney Thomas L. Kirsch II.
Ferguson was sentenced to 168 months in prison, followed by 2 years of supervised release.
According to documents filed in this case, in June of 2018, a search warrant was sought and executed for his residence based on an investigation which revealed Ferguson dealing methamphetamine and possessing illegal firearms. Ferguson was not home at the time of the search but his vehicle was later located and stopped by police. During the stop, law enforcement recovered methamphetamine and marijuana as well a digital scale and plastic baggies that are commonly used to package narcotics. A handgun was also found in the vehicle which Ferguson admitted he had for protection during drug dealing.
This case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives with the assistance of the Indiana State Police and Fort Wayne Police Department. This case was handled by Assistant United States Attorney Anthony Geller.
Fort Dodge Man Sentenced to Federal Prison for Meth and Gun ConvictionRead the Press Release
A man who conspired to distribute methamphetamine and possessed firearms illegally was sentenced August 23, 2019, to more than 17 years in federal prison.
Tate Owen Steburg, 48, from Fort Dodge, Iowa, received the prison term after a March 6, 2019, guilty plea to conspiracy to distribute methamphetamine and illegally possessing a firearm. Steburg had previously been convicted of two felony drug trafficking convictions in the Iowa District Court.
At the plea hearing, Steburg admitted that from about 2017 through February 2018, he was involved in a conspiracy that distributed more than 11 pounds of methamphetamine in the Fort Dodge area. Evidence at the plea hearing also showed that in two separate transactions in January 2018, Steburg sold about four ounces of methamphetamine; and on another occasion sold a firearm to an individual cooperating with law enforcement. It was later determined that the firearm had been stolen in a Calhoun County, Iowa, burglary/arson case.
Steburg was sentenced in Sioux City by United States District Court Chief Judge Leonard T. Strand. Steburg was sentenced to 208 months’ imprisonment. He must also serve a 10-year term of supervised release after the prison term. There is no parole in the federal system. Steburg is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by the Iowa Division of Narcotics Enforcement, Fort Dodge Police Department, Webster County Sheriff’s Office, Iowa State Patrol and Iowa Division of Criminalistics Investigation.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 18-3013. Follow us on Twitter @USAO_NDIA.
Fort Dodge Man Convicted of Meth ConspiracyRead the Press Release
A man who conspired to distribute methamphetamine was convicted by a jury today after a three-day trial in federal court in Sioux City.
Timothy Wunder, age 44, from Fort Dodge, Iowa, was convicted of conspiracy to distribute methamphetamine. The verdict was returned this morning following about 3 hours of jury deliberations. Wunder was previously convicted of conspiracy to manufacture and distribute 50 grams or more of methamphetamine and possession of a firearm in furtherance of drug trafficking, in the United States District Court for the Northern District of Iowa, in 2002.
The evidence at trial showed that from about February 2017 through March 2018, Wunder and others conspired to distribute more than 50 grams of actual (pure) methamphetamine. A number of witnesses testified at trial as to their involvement in obtaining methamphetamine from Wunder for personal use as well as further distribution. Also evidence at trial showed that during the time period for the conspiracy, Wunder sold small quantities of methamphetamine to several workers at Liguria Foods in Humboldt, Iowa, where Wunder worked.
Sentencing before United States District Court Chief Judge Leonard T. Strand will be set after a presentence report is prepared. Wunder remains in custody of the United States Marshal pending sentencing. Wunder faces a mandatory minimum sentence of 15 years’ imprisonment and a possible maximum sentence of life imprisonment, a $20,000,000 fine, and at least ten years of supervised release following any imprisonment.
The case is being prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by the Iowa Department of Narcotics Enforcement, Wright County Sheriff’s Office, Humboldt County Sheriff’s Office, Fort Dodge Police Department, Eagle Grove Police Department, and Iowa Division of Criminalistics Investigation.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 18-3026. Follow us on Twitter @USAO_NDIA.
Former St. Tammany Parish Sheriff Jack Strain Charged in 16-Count Indictment for Kickback and Bribery Scheme Involving Contract for Privatization of Work Release Program in St. Tammany ParishRead the Press Release
NEW ORLEANS – U.S. Attorney Peter G. Strasser announced that RODNEY J. STRAIN (a/k/a Jack Strain), age 56, from Abita Springs, Louisiana, was charged today by a federal grand jury in a 16-count Indictment with conspiracy to commit honest services wire fraud, soliciting a bribe, and offering a bribe in violation of 18 U.S.C. ' 371 (Count 1), honest services wire fraud, in violation of Title 18, United States Code, Sections 1343, 1346, 2 (Counts 2-13), and soliciting and receiving bribes, in violation of Title 18, United States Code, Section 666(a)(1)(B) (Counts 14-16) for his role in the privatization and operation of a work release program that operated in Slidell, Louisiana between 2013 and 2016.
According to court documents, STRAIN, who was the Sheriff of St. Tammany Parish from about 1996 to 2016, discussed with his two close associates and St. Tammany Parish Sheriff’s Office employees, David Hanson and Clifford “Skip” Keen, about Hanson and Keen becoming owners of a work release program in Slidell, Louisiana that STRAIN had decided to privatize. Because STPSO rules prohibited employees from “participating in a transaction in which he has a personal substantial economic interest of which he may be reasonably expected to know involving the governmental entity,” Hanson and Keen would have had to resign from STPSO if they wanted to assume ownership and control of the Slidell work release program. Consequently, STRAIN, Hanson, and Keen discussed ways to allow Hanson and Keen to maintain their employment and still profit from the Slidell work release program. Ultimately, STRAIN, Hanson and Keen agreed to make Keen’s adult son (J.K.) and Hanson’s adult daughter (B.H.) owners of the Slidell work release program, with the understanding that J.K. and B.H. would funnel much of the profits to Hanson and Keen. Hanson and Keen agreed to give regular payoffs to STRAIN and his selected family members from the funds they received. This understanding was based partly on STRAIN having previously required Keen to kickback to STRAIN half of the money Keen earned from a previous work release program.
STRAIN, Hanson, and Keen agreed that they needed to find another individual to actually operate the Slidell work release program because J.K. and B.H. lacked the education, training, experience, and funding to do so. They decided on an individual referred to in the indictment as “Person 2,” to whom Hanson presented a series of conditions. They mandated that J.K. and B.H. would each own forty-five (45) percent of the Slidell work release program and would each receive forty-five (45) percent of the profits, while Person 2 would only own ten (10) percent, receive ten (10) percent of the profits, and receive a salary. Person 2 would be responsible operating the Slidell work release program and for providing the capital necessary to initiate the program. On or about May 1, 2013, J.K., B.H., and Person 2 entered into an operating agreement that created St. Tammany Workforce Solutions, LLC, in which J.K. and B.H. each had a forty-five percent ownership interest and Person 2 had only a ten percent ownership interest.
On June 4, 2013, STRAIN entered into a cooperative endeavor agreement (“privatization agreement”) on behalf of STPSO with St. Tammany Workforce Solutions, LLC, a corporation designed to operate the Slidell work release program. Although J.K. and B.H. were merely straw owners who neither operated, oversaw, or administered the Slidell work release program, Person 2 was required to pay J.K. and B.H. salaries in addition to their ownership disbursements. Person 2 was also directed to pay a younger relative of STRAIN’s, referred to in the indictment as “Person 3,” who was also an employee at STPSO, approximately $30,000 per year for a no-show job at the Slidell work release program.
During the time St. Tammany Workforce Solutions, LLC operated the Slidell work release program, J.K. and B.H. received at least $1,195,000 from St. Tammany Workforce Solutions, LLC in the form of ownership disbursements, salary payments, and occasional lump sum miscellaneous payments. J.K. and B.H. converted the majority of the money they received from St. Tammany Workforce Solutions, LLC to cash, much of which they transferred to their fathers, Keen and Hanson.
Additionally, STRAIN, Hanson, and Keen understood that STRAIN would receive payoffs from Hanson and Keen in exchange for STRAIN’s conferring the right to operate the Slidell work release program on St. Tammany Workforce Solutions, LLC. The payoffs took multiple forms. First, through B.H. and J.K, Hanson and Keen, each gave STRAIN regular cash payments of at least approximately $1,000 from the monies they received from St. Tammany Workforce Solutions LLC. Second, as part of the scheme, Hanson arranged for STRAIN’s son, referred to as “Person 1,” to receive a check for $4,000 as a kickback. Third, with monies from St. Tammany Workforce Solutions, LLC, STRAIN received $2,500 in campaign funds. Fourth, with the knowledge and approval of STRAIN, St. Tammany Workforce Solutions reimbursed Hanson and Keen for personal costs incurred during trips and vacations, including trips they took with Strain.
STRAIN, Hanson, Keen, and others attempted to conceal the scheme by, among other things: (a) hiding Hanson’s and Keen’s involvement in and benefits from the Slidell work release program; (b) excluding from the cooperative endeavor agreement the fact that STRAIN would receive cash bribes and other financial compensation in exchange for signing the cooperative endeavor agreement; and (c) providing most of the money to STRAIN in the form of cash.
Hanson and Keen were charged for their roles in the scheme in November 2018. They pleaded guilty on February 27, 2019, and are currently awaiting sentencing before United States District Judge Ivan L.R. Lemelle.
If convicted, STRAIN faces a maximum term of imprisonment of five years for Count 1, twenty years for each of Counts 2 through 13, and ten years for each of Counts 14 through 16. He also faces, per count, a fine of up to $250,000, three years supervised release after imprisonment, and a mandatory $100 special assessment per count.
U. S. Attorney Strasser reiterated that an Indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
U.S. Attorney Strasser praised the work of the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division and thanks the Metropolitan Crime Commission for its assistance. Assistant United States Attorneys Jordan Ginsberg, Supervisor of the Public Corruption Unit, and Elizabeth Privitera, Supervisor of the Violent Crime Unit, are in charge of the prosecution.
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Former Navy Petty Officer Pleads Guilty to Receipt of Child PornographyRead the Press Release
NEW ORLEANS, LOUISIANA – DON EDWARD PANNELL, II (“PANNELL”), age 32, of Harvey, Louisiana, entered a plea of guilty on Tuesday, August 27, 2019 to Receipt of Child Pornography, announced United States Attorney Peter G. Strasser.
The case against Petty Officer 2nd Class DON EDWARD PANNELL, II developed because of an undercover child exploitation investigation conducted by special agents with the U.S. Department of Homeland Security, Homeland Security Investigations (“HSI”). At the time of this investigation, PANNELL was a Petty Officer 2nd Class in the U.S. Navy assigned to Fleet Readiness Center Mid-Atlantic Detachment, New Orleans. On April 2, 2018, HSI special agents along with special agents with the Naval Criminal Investigative Service and the Louisiana Bureau of Investigation seized electronic evidence from PANNELL’s Harvey apartment and took PANNELL into custody. According to documents filed in federal court, HSI computer forensic examiners located over 1,000 images and 125 videos depicting the sexual victimization of children on the defendant’s homebuilt tower computer. The images and videos depicted pre-pubescent girls, including toddlers, engaged in sexual acts with adults.
PANNELL faces a mandatory minimum penalty of five (5) years imprisonment up to twenty (20) years, followed by up to a life term of supervised release, and a $250,000.00 fine. In addition, PANNELL will be required to register as a sex offender pursuant to the Sex Offender Registration and Notification Act.
U.S. District Judge Greg G. Guidry will sentence PANNELL on December 17, 2019.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
U.S. Attorney Strasser praised the work of the U.S. Department of Homeland Security, Homeland Security Investigations, the Naval Criminal Investigative Service, and the Louisiana Bureau of Investigation in investigating this matter. The prosecution of this case is being handled by Project Safe Childhood Coordinator and Supervisor of Financial Crimes Unit, Assistant U.S. Attorney Brian M. Klebba.
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Former NASA contractor employee convicted for substituting foreign materials for domestic materials to be used by NASARead the Press Release
Orlando, Florida – United States Attorney Maria Chapa Lopez announces that a federal jury today found Jonathan Hipps (34, Warner Robins, Georgia) guilty of mail fraud, concealment of material facts from a federal agency, and providing a false document to a federal agency. Hipps faces a maximum penalty of 40 years in federal prison. His sentencing hearing is scheduled for December 4, 2019. Hipps had been indicted on January 16, 2019.
According to evidence presented at trial, Hipps was an employee at STAT Industry, Inc., a company that provided parts and materials to the aerospace industry, including NASA. In the summer of 2014, Hipps handled a contract that required STAT to provide steel rods for use in support of NASA’s Space Launch System/Orion project at Kennedy Space Center. The contract required that the steel rods originate from the United States. During the procurement, Hipps received steel rods originating from India. Instead of replacing the rods with materials from the United States, Hipps used a box cutter to cut off all of the labels from the shipment indicating that the rods were made in India, thus making them to appear that they had originated from the United States. Hipps then shipped the steel rods to the Kennedy Space Center with a certification falsely certifying that the steel rods conformed to all of NASA’s requirements.
“The NASA Office of Inspector General will continue to aggressively investigate those who undermine and defraud NASA efforts to build the SLS launch vehicle and it’s systems,” said Special Agent in Charge John Corbett, Central Field Office. “This jury verdict serves as a staunch reminder that such conduct will not be tolerated. The NASA OIG applauds the efforts of the entire investigative and prosecution team during this investigation, and we look forward to our continued cooperation with our law enforcement partners in the pursuit of justice.”
This case was investigated by the NASA Office of Inspector General and the Air Force Office of Special Investigations. It is being prosecuted by Assistant United States Attorney Vincent S. Chiu.
Former Memphis Attorney Charged in Scheme to Defraud ClientsRead the Press Release
Memphis, TN – A federal grand jury returned an indictment against Memphis attorney Michael Constantine Skouteris, 49. U.S. Attorney D. Michael Dunavant announced today.
The seven-count indictment alleges that between 2011 and January 2016, Skouteris engaged in a scheme to defraud his clients by settling cases without notifying his clients and forging their endorsements on the settlement checks made jointly payable to him and the client. Skouteris would then deposit the checks into bank accounts he maintained at Suntrust Bank and First Tennessee Bank. According to the indictment, Skouteris fraudulently obtained in excess of $600,000 during the course of the scheme.
Skouteris faces a maximum penalty of 30 years imprisonment, a fine of $1,000,000 and five years supervised release as to each count.
U.S. Attorney D. Michael Dunavant said, "Licensed attorneys who steal from their clients betray the trust of that fiduciary relationship, and are a threat to the public. This indictment exposes that breach of trust, and will hopefully achieve justice by recovering restitution for the victims and reminding the legal community of the high standards of their profession."
This case was investigated by the Federal Bureau of Investigation.
Assistant U.S. Attorney Carroll L. André III is prosecuting this case on the government’s behalf.
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Former Linn County Attorney Sentenced for Thefts of Public PropertyRead the Press Release
KANSAS CITY, KAN. – The former Linn County Attorney was sentenced today to a year and a day in prison for stealing $75,000 worth of electronics and equipment that belonged to the county, U.S. Attorney Stephen McAllister said. In addition, the defendant was ordered to pay $75,000 in restitution and a fine totaling $11,000.
John Sutherland, 69, Mound City, who served as county attorney for approximately 20 years before leaving the job in January 2017, pleaded guilty to one count of mail fraud and one count of lying to federal investigators. The crimes took place from sometime prior to January 2009 until Sutherland left office.
“The defendant abused the public trust,” McAllister said. “He used his elected position as county attorney to steal more than $75,000 from the Linn County taxpayers who had placed their trust in him as the county’s top law enforcement official. According to the U.S. Census Bureau, there were approximately 9,750 people in Linn County in 2018. The median household income was $46,576. That means the defendant stole property worth far more than most Linn County residents earn in a year.”
According to the government’s sentencing memo, the defendant had the county pay for seven cellular phones that were not used to conduct county business.
In his plea, Sutherland admitted that on Feb. 6, 2019, FBI agents found 13 items stolen from Linn County when they searched Sutherland’s office at the Wyandotte County District Attorney’s Office. At the time, Sutherland was working as an Assistant District Attorney. One of the items was a stolen Apple laptop computer.
When FBI agents interviewed him, Sutherland denied any wrongdoing and made other false statements. For instance, he claimed that an Apple TV 64 GB video-streaming device the county purchased for about $220 had been destroyed. FBI agents found the device intact at Sutherland’s residence.
In his plea agreement, Sutherland agreed to surrender his license to practice law.
McAllister commended the FBI, the Kansas Bureau of Investigation, Assistant U.S. Attorney Tris Hunt and Assistant U.S. Attorney Chris Oakley for their work on the case. McAllister assisted with the prosecution of the case.
Former Government Consultant Pleads Guilty to Bribery and Fraud SchemeRead the Press Release
WASHINGTON – John Woods, a consultant and independent contractor for a company that did business with the District of Columbia Department of Human Resources, pled guilty to charges that he paid more than $140,000 in bribes to a former D.C. government employee and that he stole payments on city contracts that should have gone to his employer.
John Woods, 57, of Sterling, Va., pleaded guilty on August 23 to one count of wire fraud in the U.S. District Court for the District of Columbia. As part of his guilty plea, Woods agreed to pay restitution to the victim in the amount of $564,910.23. The Honorable Dabney L. Friedrich scheduled sentencing for December 16, 2019.
The announcement was made by U.S. Attorney Jessie K. Liu, Timothy M. Dunham, Special Agent in Charge, Criminal Division, FBI Washington Field Office, and District of Columbia Inspector General Daniel W. Lucas.
According to the statement of offense submitted at the plea hearing, Woods worked as a consultant for a firm identified in the court documents as “Company A.” The firm had agreements with the District of Columbia Department of Human Resources (DCHR) to provide organizational skills training courses and human resources consulting to various D.C. government agencies. Woods was Company A’s main point of contact with DCHR and handled the submission of invoices.
According to the statement of offense, beginning in April 2013, and continuing through August 2017, Woods schemed to defraud “Company A” and the D.C. government.
As noted in the statement of offense, between April 2013 and February 2015, Woods stole $214,910 in D.C. government checks that were issued to “Company A.” Beginning in March 2015, Woods began usurping “Company A’s” role under the contracts by purposefully failing to submit Company A’s invoice to DCHR for payment. This led Company A to believe the D.C. government was negligent in paying its invoices, and Company A stopped seeking to perform work under its agreements with DCHR. Woods then secretly performed the agreements without Company A’s knowledge by hiring and retaining contractors to provide the necessary work to DCHR and by submitting fraudulent invoices to DCHR, purportedly on behalf of Company A, for payment under the agreements. DCHR would then issue payments in the form of D.C. government checks made payable to Company A, which Woods deposited into a bank account he controlled. In all, according to the statement of offense, Woods fraudulently deposited approximately 27 checks issued by the D.C. government to “Company A”, totaling approximately $1,040,023, from March 2015 through August 2017.
According to the statement of offense, in order to keep his scheme in place, Woods paid more than $140,000 in bribes to Latasha Moore, then a DCHR employee. As a resource allocation analyst for DCHR, Moore was the main point of contact for “Company A” and in a position to ensure that no complaints or suspicions about the contracts reached others in the government. For example, Moore failed to report problems that arose while Woods was managing the work, including complaints of contractors arriving late, leaving early or failing to show up at all for training.
Moore, 38, of Washington, D.C., pled guilty on Oct. 11, 2018, to a federal bribery charge. She is awaiting sentencing.
This case was investigated by the FBI’s Washington Field Office and Office of the Inspector General of the District of Columbia.
In announcing the plea, U.S. Attorney Liu commended the work of Assistant U.S. Attorney Michael Marando, who prosecuted the case.
Former Cottage Grove Police Officer Pleads Guilty to Stealing Methamphetamine from Evidence LockerRead the Press Release
EUGENE, Ore.—Phillip Allan Beach, 49, of Cottage Grove, Oregon, pleaded guilty today to one count of acquiring or obtaining a controlled substance by misrepresentation, fraud, forgery, deception of subterfuge.
According to court documents, in May 2015, an evidence coordinator at the Cottage Grove Police Department (CGPD) reported to their supervisor that Beach accessed the department’s evidence locker more frequently than other officers and seemed to do so for no apparent purpose. The coordinator said that Beach would repeatedly access the same evidence bag. A CGPD commander later examined the bag and observed that it was open and two plastic bags inside containing several ounces of methamphetamine crystals had been sliced open.
In June 2015, CGPD began an investigation of Beach’s conduct and placed two hidden cameras inside the evidence locker. On June 11, 2015, Beach was recorded on video entering the locker without signing the evidence log and accessing the evidence bag previously examined by the commander. The video shows Beach taking a small plastic baggie from his pants pocket and using it to take a small portion of meth from the evidence bag. Investigators later weighed the evidence bag and found a 7.3 gram reduction in weight.
Beach faces a maximum sentence of four years in prison, a $250,000 fine and one year of supervised release. He will be sentenced on November 26, 2019 before U.S. District Court Judge Michael J. McShane.
This case was investigated by the FBI, Oregon State Police and CGPD. It is being prosecuted by the U.S. Attorney’s Office – District of Oregon.
Former Controller Sentenced to Two Years in Federal Prison for Stealing over $750,000Read the Press Release
Orlando, Florida – Senior U.S. District Judge G. Kendall Sharp has sentenced Jeffrey McKinney (62, Minneola) to two years in federal prison for wire fraud. McKinney was also ordered to serve two years of supervised release and to pay $828,894.25 in restitution.
McKinney had pleaded guilty on May 16, 2019.
According to court documents, McKinney is a Certified Public Accountant and was the Controller of a local business. In addition to serving as the Controller, McKinney was responsible for moving funds between various accounts held by the business and one of its executives. For more than 18 months, McKinney used his position to embezzle over $750,000 from those accounts on 12 different occasions. To cover up his thefts, McKinney falsified check stubs, moved money between accounts to hide what he had stolen, and provided the executive with reports that inflated the amount of money that remained in the executive’s accounts.
This case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Roger B. Handberg.
Former Clovis Pastor Indicted for Wire FraudRead the Press Release
FRESNO, Calif. — Sherman Smith, 73, of Monterey, was indicted today on seven counts of wire fraud, U.S. Attorney McGregor W. Scott announced.
According to court documents, Smith was the executive pastor of a church in Clovis. Smith allegedly induced investors, including church congregants, to give money to the church by representing that the money would be used to finance a real estate development project for the benefit of the church. Smith made appeals from the pulpit, via email, and in person for monies to pay off the church’s mortgage and fund an income-generating development.
Smith collected cash, checks, and rolled-over retirement accounts to fund the church’s project, but he did not disclose to investors that he used the money for personal expenses, to operate a publishing business, and to invest in foreign ventures. Smith allegedly defrauded investors of more than $2 million.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorney Laura D. Withers is prosecuting the case.
If convicted, Smith faces a maximum statutory penalty of 20 years in prison. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Former Chief Financial Officer Sentenced to Prison for Embezzling Money from Two Area BusinessesRead the Press Release
DAYTON – Sandy Green, of Fairborn, was sentenced in U.S. District Court to 48 months in prison for wire fraud as part of a scheme to defraud her previous employers.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, and Yvonne A. DiCristoforo, Special Agent in Charge, U.S. Secret Service, announced the sentence imposed yesterday afternoon by U.S. District Judge Walter H. Rice.
According to court documents, Green was a bookkeeper at a Dayton business from May to November 2017. Green made fraudulent credit card returns without a corresponding legitimate purchase, causing company money to be paid into personal bank accounts belonging to Green and her family members.
Additionally, from April 2017 until March 2018, Green was the Chief Financial Officer for a second victim business in the Dayton area. Green again defrauded the company, this time transferring money from the business’s credit union into bank accounts controlled by Green and her family members. She attempted to disguise receiving the money by falsely listing other individuals and entities as the payee.
In total, Green embezzled more than $150,000 from the two companies. As part of her sentence, she was ordered to pay approximately $173,000 in restitution to the two companies.
Green pleaded guilty in August 2018 to two counts of wire fraud.
U.S. Attorney Glassman commended the investigation of this case by the Secret Service and Assistant United States Attorneys Andrew J. Hunt and SaMee Harden, who are representing the United States in this case.
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Former CEO of Live Well Financial Charged in $140 Million Bond Fraud SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of MICHAEL HILD, the founder, former chief executive officer, and controlling shareholder in Live Well Financial, Inc. (“Live Well”). HILD’s arrest was in connection with a scheme, from in or about September 2015 through in or about May 2019, to fraudulently inflate the value of a portfolio of bonds owned by Live Well in order to induce various securities dealers and at least one financial institution into loaning more money to Live Well – through repurchase (“repo”) agreements and collateralized loans – than they otherwise would have had they known the actual value of Live Well’s bond portfolio. The scheme allowed Live Well to grow its bond portfolio exponentially, from approximately 20 bonds with a stated value of $50 million in 2014 to approximately 50 bonds with a stated value of $500 million by the end of 2016. In May 2019, in conjunction with an effort to wind down the company, Live Well wrote down the value of its portfolio by approximately $141 million.
In addition, Mr. Berman announced today the unsealing of charges against ERIC ROHR, the former chief financial officer at Live Well, and DARREN STUMBERGER, the former head trader at Live Well, for their participation in the scheme. Both ROHR and STUMBERGER have pled guilty and are cooperating with the Government.
HILD was arrested in Richmond, Virginia, this morning. HILD will be presented and arraigned later today in the United States District Court for the Eastern District of Virginia. HILD’s case is assigned to United States District Judge Ronnie Abrams. ROHR’s case is assigned to United States District Judge Edgardo Ramos, and STUMBERGER’s case is assigned to United States District Judge J. Paul Oetken.
On August 28, 2019, the Government obtained a post-indictment restraining order restraining assets – including various real properties and business interests in the Richmond area – owned directly or indirectly by HILD and, as alleged, purchased with proceeds of the scheme.
Manhattan U.S. Attorney Geoffrey S. Berman said: “As alleged, Michael Hild orchestrated a scheme to deceive Live Well’s lenders by fraudulently inflating the value of its mortgage-backed bonds by over $140 million. This allegedly enabled Live Well to borrow money well over the value of the collateral it put up. In turn, Hild used these ill-gotten funds to gain control of the company and increase his own compensation by nearly 700 per cent, while exposing lenders cumulatively to $65 million in unsecured loans to the company, which is now in bankruptcy.”
FBI Assistant Director William F. Sweeney Jr. said: “As CEO of Live Well Financial Inc., Hild allegedly inflated the true value of the company’s bond portfolio and used this false information to obtain loans the company otherwise would not have been able to obtain. The dealers and financial institution that lent the money are now in the possession of bonds that don’t hold the value promised as collateral. The FBI is committed to working with our law enforcement partners to ensure this type of behavior ceases to exist.”
In a separate action, the Securities and Exchange Commission (“SEC”) filed civil charges against HILD.
As alleged in the Indictment unsealed today in Manhattan federal court and other public court documents:[1]
Live Well’s Bond Portfolio and Repurchase Agreements
Live Well was a Richmond, Virginia-based company that originated, serviced, and securitized government-guaranteed reverse mortgages known as Home Equity Conversion Mortgages (“HECMs”). In or about 2014, Live Well acquired a portfolio of approximately 20 bonds, each entitling the holder to receive a portion of the interest payments, but not the principal payments, from a particular pool of reverse mortgages (“HECM IO bonds.”). Live Well purchased the HECM IO bond portfolio for approximately $50 million. At the same time that Live Well purchased the HECM IO bond portfolio, HILD established within Live Well a New York City-based trading desk to manage and grow Live Well’s bond portfolio. STUMBERGER supervised the trading desk.
Live Well financed the acquisition and growth of its bond portfolio through a series of loans in which Live Well used its bond portfolio as collateral. The majority of Live Well’s lenders were securities dealers whose lending arrangements with Live Well were structured as bond repurchase agreements, also known as “repo agreements.” A repo agreement is a short-term loan in which both parties agree to the sale and future repurchase of an asset within a specified contract period. The seller sells the asset to the lender with a promise to buy it back at a specific date and at a price that includes an interest payment. Functionally, a repo agreement is a collateralized loan in which title of the collateral is transferred to the lender. When the loan is repaid by the borrower, the collateral is returned to the borrower through a repurchase. Additionally, at least one of Live Well’s lenders was an FDIC-insured bank, and its lending arrangement with Live Well was structured as a secured loan, with certain bonds held as collateral by a third-party custodian.
The Scheme to Mismark the Bond Portfolio
Live Well’s financing agreements with all but one of the lenders required that any bond that Live Well sought to borrow against be priced by a third-party pricing source in order to determine the market value of the bond as of the measurement date. The lenders then used the value of the bond, minus 10% to 20%, generally, to determine the amount of money to lend Live Well.
The lenders generally relied on a particular widely utilized subscription service (the “Pricing Service”) to price various securities. In or about September 2014, HILD, ROHR, STUMBERGER, and their co-conspirators embarked on a scheme to cause the Pricing Service to publish valuations for the bonds that far exceeded actual market prices. By doing so, the conspirators induced the lenders to extend credit to Live Well far in excess of the prices for which the bonds could be sold in the market. The inflated prices were based on a set of market assumptions that the conspirators called “Scenario 14.”
HILD was aware that if the lenders had known that the Pricing Service was publishing bond prices that did not reflect fair value (meaning the price at which a lender could sell the bond in the market if necessary to recoup its capital), they would have refused to use those prices in determining how much money to loan to Live Well. To prevent the Pricing Service and the lenders from learning that the prices did not reflect market value, HILD directed ROHR, STUMBERGER, and others to take steps to conceal their provision of inflated marks to the Pricing Service. Ultimately, due to the asset overvaluation and the purchase of additional bonds using the capital generated by the scheme, Live Well grew the purported value of its bond portfolio to $500 million by December 2016.
In addition to using the liquidity generated by the scheme to expand Live Well’s bond portfolio, in or about September 2016, HILD used $18 million generated from the repo lenders to buy out the preferred stockholders in Live Well. The elimination of the preferred stockholders gave HILD exclusive control of the company and allowed him to substantially increase his personal compensation. Accordingly, HILD’s compensation jumped from approximately $1.4 million in 2015, to approximately $5 million in 2016, approximately $9.7 million in 2017, and over $8 million in 2018.
In or about late 2018, ROHR resigned as chief financial officer of Live Well. In or about May 2019, the company’s interim chief financial officer informed HILD that he would not sign the company’s interim financial statements because he believed that the company’s carrying value for the HECM IO bond portfolio was significantly overstated. On or about May 4, 2019, Live Well announced that it would cease operations and unwind. After the announcement of Live Well’s closing, Live Well’s interim chief financial officer provided a balance sheet to Live Well’s lenders showing that Live Well had reduced the value of its bond portfolio by approximately $141 million. As of May 31, 2019, the debt Live Well owed to its lenders on the bond portfolio exceeded the portfolio’s carrying value by approximately $65 million.
On June 10, 2019, three of Live Well’s lenders filed a Chapter 7 petition for involuntary bankruptcy against Live Well in the United States Bankruptcy Court for the District of Delaware. See In re Live Well Financial, Inc., 19-11317 (LSS). On or about July 1, 2019, the bankruptcy court appointed a trustee for Live Well.
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HILD, 44, of Richmond, Virginia, is charged with five counts: one count of conspiracy to commit securities fraud; one count of conspiracy to commit wire and bank fraud; one count of securities fraud; one count of wire fraud; and one count of bank fraud. Count One carries a maximum sentence of five years in prison, Counts Two, Four, and Five each carry a maximum sentence of 30 years in prison, and Count Three carries a maximum sentence of 20 years in prison. The charges also contain a maximum fine of $5 million, or twice the gross gain or loss from the offense.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Berman praised the investigative work of the FBI and also thanked the SEC and the Department of Housing and Urban Development, Office of the Inspector General for their assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jordan Estes and Scott Hartman are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is 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.
Felon Sentenced for Possessing a Stolen FirearmRead the Press Release
St. Louis, MO –Torion Caston, 29, of Ferguson, was sentenced to 36 months in prison for being a felon in possession of a firearm. He appeared before Federal District Judge John A. Ross.
According to court documents, on February 20, 2019, a Berkeley Police Officer observed Caston driving a Jeep Cherokee. Caston exited the vehicle. When he did, the officer attempted to speak to Caston. Caston then fled the scene. The officer observed a loaded Glock semi-automatic 9mm pistol on the floorboard of the Jeep. Caston later admitted he was a convicted felon and had possessed the stolen firearm.
The Berkeley Police Department investigated the case. United States Attorney Tom Mehan is handling the case for the U.S. Attorney's Office.