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Friday 12 April 2019
Twenty-Two Defendants Charged with Federal Drug Conspiracy and Related CrimesRead the Press Release
Defendants Allegedly Knew the Drugs They Sold Were Causing Overdoses
Baltimore, Maryland – A federal grand jury has returned a superseding indictment charging 22 defendants with participating in a drug conspiracy that allegedly distributed heroin, fentanyl, cocaine, and crack cocaine in Maryland and surrounding states, resulting in multiple overdoses, including five overdose deaths. According to the superseding indictment, the defendants possessed firearms in furtherance of their drug trafficking and purchased guns from customers in exchange for drugs. The superseding indictment was returned late on April 10, 2019, and unsealed yesterday.
The superseding indictment was announced by United States Attorney for the District of Maryland Robert K. Hur; Acting Special Agent in Charge Jennifer L. Moore of the Federal Bureau of Investigation, Baltimore Field Office; Assistant Special Agent in Charge Don A. Hibbert of the Drug Enforcement Administration, Baltimore District Office; Acting Chief Russell E. Hamill, III of the Montgomery County Police Department; and Commissioner Michael Harrison of the Baltimore Police Department.
“A supply chain that distributed opioids--including deadly fentanyl—throughout Maryland and in Virginia, West Virginia, and Pennsylvania, has been dismantled, and those charged with trafficking these poisons are now in federal custody,” said U.S. Attorney Robert K. Hur. “Drugs—especially opioids—are killing thousands of Marylanders a year. Federal, state, and local law enforcement are working together to reduce overdose deaths from fentanyl and from all opioids. Drug traffickers are on notice that dealing in fentanyl increases their odds of federal prosecution and federal time.”
"The FBI worked side-by-side with the Montgomery County and Rockville City Police Department and other federal, state and local partners to ensure we stopped these individuals from further distributing heroin, fentanyl, cocaine and crack cocaine in the region," said FBI Baltimore Acting Special Agent in Charge Jennifer L. Moore. "These dangerous drugs have a devastating effect on our communities and we will continue to work with our law enforcement partners to make Maryland a safer place."
According to the 23-count indictment, from 2016 to April 3, 2019, the defendants were members and associates of the Butler Drug Trafficking Organization (DTO) and distributed heroin, fentanyl, cocaine, and crack cocaine in Maryland, Virginia, West Virginia, and Pennsylvania. The indictment alleges that the members of the conspiracy conducted sales on a daily basis, operating in rotating shifts to ensure continuous availability. Members of the conspiracy allegedly used residences in and around Baltimore to process, cut, repackage, and prepare heroin, fentanyl, and cocaine base for distribution, and rotated the residences to minimize detection by law enforcement. The indictment alleges that in order to maximize their profits, the conspirators cut the heroin and crack cocaine with other substances, such as fentanyl and diphenhydramine (often found in sleeping pills).
As detailed in the superseding indictment, the defendants were aware that the drugs they distributed were causing overdoses. According to the superseding indictment, at least five overdose deaths are attributed to the distribution of drugs by members of the conspiracy, including the father of one of the conspirators.
According to the superseding indictment, members of the conspiracy possessed firearms in furtherance of their drug trafficking activities, sometimes purchasing firearms from drug customers and paying the customers with drugs in exchange for the firearms. In addition, the conspirators allegedly took steps to avoid detection by law enforcement, including: conducting counter-surveillance; rotating the use of vehicles and residences used to store narcotics; changing locations in Baltimore to conduct drug transactions; frequently changing cell phones; and using encrypted phone applications to prevent interception of drug-trafficking communications by law enforcement.
The following defendants are charged in the superseding indictment unsealed today:
Michael Bailey, age 30, of Winchester, Maryland;
Donte Bennett, a/k/a Tay, age 27, of Baltimore, Maryland;
Darlene Best, age 56, of Baltimore;
Gregory Butler, a/k/a Sags and Little Dick, age 28, of Baltimore;
Juawan Davis, a/k/a Fat Daddy, age 24, of Baltimore;
Timothy Downing, age 35, of Mount Airy, Maryland;
Edward Buddy Hall, a/k/a Gwar, age 54, of Baltimore;
Syed Hussain, age 25, of Virginia;
Ryan Johnson, age 26, of Montgomery County, Maryland;
Cindy Legard, age 31, of Bunker Hill, West Virginia;
Kareem Mack, a/k/a K Mack, age 29, of Baltimore;
Terrance Medley, a/k/a Mazzi, age 35, of Baltimore;
Russell Oliver, age 43, of Bunker Hill, West Virginia;
Davon Owens, a/k/a Gusto, age 31, of Baltimore;
Desmond Ringgold, a/k/a Worm and Fool, age 28, of Baltimore;
James Henry Roberts, a/k/a Bub, age 29, of Baltimore;
Tirrel Saunders, a/k/a Pretty, age 32, of Baltimore;
Gary Smith, age 20, of Virginia;
Ann Waugh-Hixon, age 48, of Berkeley County;
Laura Warner, age 36, of Berkeley County;
Emanuel Watkins, age 62, of Baltimore; and
John Wolfrey, age 39, of Berkeley County, West Virginia.Ten defendants face a maximum sentence of 40 years in prison, ten defendants face a maximum of life in prison, and two defendants face a maximum of 20 years in prison on the drug conspiracy charge. Legard, Hussain, Smith, Mack, Davis, Wolfrey, Bailey, Johnson, Warner, Waugh-Hixon, Owens, and Roberts also face a maximum sentence of 20 years in prison for possessing with intent to distribute heroin, crack cocaine, or fentanyl. Davis, Owens, Hall, Butler, Roberts, and Medley also face a mandatory minimum sentence of five years in prison, consecutive to any other sentence, and a maximum sentence of life in prison for possession of a firearm in relation to a drug trafficking crime. Finally, Owens, Hall, Butler, Roberts, and Medley face a maximum sentence of 10 years in prison for possession of a firearm and ammunition by a prohibited person.
Twenty-one defendants have been arrested. Eighteen of those defendants are detained, and two defendants have been released under the supervision of U.S. Pretrial Services. Emanuel Watkins is still being sought.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Robert K. Hur commended the FBI, the DEA, the Montgomery County and the Baltimore Police Department for their work in the investigation. Mr. Hur commended the U.S. Postal Inspection Service; the City of Rockville Police Department; the Baltimore County, Howard County, and Montgomery County Police Departments; the Frederick County Sheriff’s Office; the Maryland State Police; the West Virginia State Police; the Virginia State Police; the Warren County (VA) Sheriff’s Department; the Winchester (VA) and Front Royal (VA) Police Departments; and the Frederick County and Howard County State’s Attorney’s Offices. Mr. Hur thanked Assistant U.S. Attorneys Matthew DellaBetta and Michael Goldsticker, who are prosecuting this Organized Crime Drug Enforcement Task Force case.
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Towson Woman Sentenced to Eight Years in Federal Prison for Obtaining More Than $4.3 Million in an Advance Fee Fraud Scheme and for Evading TaxesRead the Press Release
Baltimore, Maryland – U.S. District Judge Richard D. Bennett today sentenced Lauren Montillo, age 47, of Towson, Maryland, to eight years in federal prison, followed by five years of supervised release, for conspiracy to commit wire fraud and for tax evasion. Judge Bennett also ordered Montillo to pay restitution of $4,060,284.79 to the victims of the scheme, and $276,240 to the Internal Revenue Service.
Montillo admitted that from 2010 through 2015, she and her co-conspirators sought at least $8.7 million in advance fees from foreign and United States victims, purporting to offer access to exotic bank financial instruments. Victims paid $4,342,540 in advance fees into Hong Kong bank accounts or attorney escrow accounts and received nothing in return. For tax years 2012 through 2014, Montillo reported no income other than $100, evading a substantial amount of income taxes.
The sentence was announced by United States Attorney for the District of Maryland Robert K. Hur; Acting Special Agent in Charge Jennifer L. Moore of the Federal Bureau of Investigation, Baltimore Field Office; and Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
According to her plea agreement and other court documents, Montillo and her co-conspirators created shell companies, with associated websites, email addresses, and bank accounts, which they used to perpetrate the fraud. Specifically, in February 2010, Montillo opened an account with GoDaddy, which provides web-hosting services. From 2010 to 2015, Montillo and other co-conspirators used GoDaddy to host websites for shell companies such as MLL Holdings, The Bussola Group, Worldwide Escrow Holdings, Ltd., International Insurance of Nebraska, Atlas Investment Bancorp, Entirety Capital, GPF Global, and Atlas-Gayle Trust. Each of these shell companies had associated email addresses, which Montillo and her co-conspirators opened and used.
Also in 2010, Montillo's father incorporated "Worldwide Escrow Holdings Limited" ("Worldwide Escrow") in Hong Kong and opened a bank account for Worldwide Escrow at the Hong Kong Shanghai Bank (HSBC), Hong Kong with Montillo as a signatory. Montillo’s father resigned from the company in April 2011. In March 2011, Montillo and a co-conspirator opened two more bank accounts in Hong Kong, the MLL Holdings and the Skywall bank accounts, also at HSBC. Montillo and her co-conspirators had on-line access to the Hong Kong bank accounts so that they could conduct banking transactions over the internet. In 2012, Montillo’s father also opened an escrow account in the name of his mother-in-law, a licensed attorney in Maryland who had stopped practicing law in approximately 2007. She was not aware that the escrow account had been opened in her name. The conspirators directed victims to wire-transfer their advance fees into the HSBC, Hong Kong bank accounts or the attorney escrow account.
Montillo’s co-conspirator, Eric Becker, was her former fiancé. Becker developed, and Montillo edited, websites for the various phony businesses, which purported to offer access to financial instruments, such as standby letters of credit, bank guarantees, bonds, or private placement trading platforms. Montillo and her co-conspirators had no access to any financial instruments. For example, Montillo and several co-conspirators obtained advance fee payments from a victim that would purportedly gain access to a private placement trading platform. The co-conspirators persuaded the victim, through several broker intermediaries, to send $1.7 million to a BB&T bank account in Florida. BB&T returned the funds to the victim. The victim, a Mexican national, was told that the funds were returned because the window had closed on the investment opportunity. Co-conspirators, including Montillo, then informed the victim, through his broker, that they could offer him a private placement trading platform in which he would receive profits and a charitable organization would use its portion of the profits to invest in its projects. The conspirators directed the victim to send his money to the Worldwide Escrow account at HSBC, Hong Kong. On May 8, 2012, the victim used his own and his family's funds to send $3,099,990 to the Worldwide Escrow Holdings account. The conspirators, including Montillo, moved more than $2 million of the funds to a bank account opened at Choice Bank in Belize.
To conceal the fraud and to reassure the victim and his brokers, co-conspirators including Montillo, created an insurance policy for a non-existent insurance company called International Insurance of Nebraska, which was back-stopped with a website hosted through Montillo's GoDaddy account. The insurance policy purported to show that the victim's investment funds would not be at risk because they were fully insured. In addition, co-conspirators, including Montillo, used her GoDaddy account to host the website “wweholdingsltd.com” to add an air of legitimacy to Worldwide Escrow. Both the insurance company and the private placement trading platform were bogus.
Over the next several years, Montillo and her co-conspirators continued with the advance fee scheme. The scheme had both foreign and U.S. victims. To protect her identity, Montillo frequently used the name “Kati Conti” in the frauds and used a “burner phone” so that after the scam was concluded, she could “go dark” and stop communicating with the victims. In all, the scheme sought at least $8.7 million from victims, and actually obtained $4,342,540.
For tax years 2012 through 2014, Montillo filed personal tax returns showing either no income or just $100 in income, and thus no income tax was owed. Montillo admitted that she was the signatory on bank accounts in the names of limited liability corporations into which victims' funds were wire transferred from Hong Kong, Choice Bank in Belize, the attorney escrow account, and other accounts controlled by co-conspirators. Montillo used the victim funds transferred to the limited liability accounts for living expenses. Montillo had no accounts in her own name. Montillo admitted that by failing to report her income for 2012 through 2014 to the Internal Revenue Service, she evaded a substantial amount of income taxes.
Three defendants were charged and sentenced in a related case in the Western District of Texas—James Edward Cox was sentenced to 78 months in prison and was ordered to pay $4,249,478 in restitution; and Kelly Ray Coronado and Gordon Richard Moscowitz were each sentenced to 46 months in prison sentence and were also ordered to pay restitution. Becker was indicted with Montillo but has since died. Montillo’s father died in 2016.
United States Attorney Robert K. Hur commended the FBI and IRS-CI for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorneys Joyce K. McDonald and Sean Delaney, who prosecuted the case.
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Three ex-employees of Blackfeet Tribe’s Head Start Program sentenced in theft, fraudRead the Press Release
GREAT FALLS—Three former employees who had management positions with the Blackfeet Tribe’s Head Start Program were sentenced on April 11 to months in prison for their roles in an overtime pay scheme that defrauded the children’s assistance program of an estimated $174,000, U.S. Attorney Kurt Alme said.
U.S. District Judge Brian M. Morris presided at the sentencings for Theresa Marie Calf Boss Ribs, 51, of Browning, Patrick H. Calf Boss Ribs, Jr., 44, of Heart Butte, and Denise L. Sharp, 60, of Browning.
The three defendants each pleaded guilty earlier to theft from an Indian tribal government receiving federal funding and to wire fraud.
Morris sentenced Theresa Marie Calf Boss Ribs, who was the payroll manager, to 8 months in prison, two years of supervised release and ordered $139,096 in restitution.
Morris sentenced Patrick H. Calf Boss Ribs, Jr., who was the nutrition manager/payroll clerk, to 9 months in prison, two years of supervised release and ordered $139,096 in restitution and a $25,122 forfeiture.
Morris sentenced Sharp, who was the personnel manager, to nine months in prison, two years of supervised release and ordered $139,096 in restitution and a $29,033 forfeiture.
U.S. Attorney Alme said, “I hope that the sentencings of three former managers of the Blackfeet Head Start program will deter others from stealing from federally funds intended to help tribal members. The theft of $174,000 hurt the children enrolled in Head Start by prohibiting the purchase of books, barring the ability to obtain teaching materials and cutting food nutrition programs for those who need it most. We will continue to prosecute these cases to ensure that federal funds are used for the needs of those intended.”
The Blackfeet Tribe operates the Head Start Program with funding from the U.S. Department of Health and Human Services. Head Start provides early childhood education and other services for low-income children and their families.
During a 15-month period, starting in April 2013, the defendants and others falsely claimed 5,850 hours of overtime and received more than $174,000 in overtime pay from the Head Start program. When the fraud was uncovered, two different firms audited the Blackfeet Head Start program. Both audits questioned the overtime claims, identifying them as “beyond necessary and reasonable” and lacking any supporting documentation.
The Blackfeet Tribe did its own internal review, agreed it could not justify the overtime claims and repaid HHS $250,620.29 for disallowed costs and other expenses.
After an on-site review of the program by government authorities from Washington, D.C., the defendants along with others met in a conference room. Despite not actually working the hours, everyone present in the room agreed to continue claiming overtime.
Theresa Calf Boss Ribs and Patrick H. Calf Boss Ribs, Jr. were in charge of monitoring the time cards. At the end of the pay period, individuals in the group would stop by to sign their time cards for the pay period. The time cards were already completed by the defendants and included false overtime hours.
Other Head Start workers told investigators they never saw Blackfeet Head Start personnel working late nights or on weekends. The program’s board chairman was unaware of the overtime claims and was unaware of any needs that would have justified the overtime claims by the defendants. Because of insufficient funds, he also had to identify necessary budget cuts.
Assistant U.S. Attorney Ryan Weldon prosecuted the case, which was investigated by the FBI and the U.S. Department of Health and Human Services’ Office of Inspector General.
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Thai National Sentenced to Prison Term for Attempting to Unlawfully Export Firearm Parts from the United States to ThailandRead the Press Release
WASHINGTON –Thai national Apichart Srivaranon 34, was sentenced today in the District of Columbia to 26 months in prison on federal charges of conspiracy to defraud the United States and to export defense articles from the United States to Thailand.
The announcement was made by U.S. Attorney for the District of Columbia Jessie K. Liu, U.S. Attorney for the District of Maryland Robert K. Hur, and Acting Special Agent in Charge Cardell T. Morant of the Baltimore Field Office of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
Srivaranon pleaded guilty to charges in both Maryland and the District of Columbia in January and March 2019, respectively, as required by his plea agreement in each District.
In the District of Columbia, he was sentenced today by the Honorable Reggie B. Walton. In Maryland, he was sentenced on April 11, 2018 by the Honorable George J. Hazel, who imposed a sentence of 26 months of incarceration and a forfeiture of $10,000. The sentences imposed in both cases will be served concurrently. Following his prison terms, Srivaranon will be deported from the United States and returned to Thailand.
Srivaranon admitted that between 2012 and 2014, he conspired with individuals in the United States and Thailand to obtain firearm parts in the United States that were listed on the United States Munitions List (USML) and then exported, and attempted to export, the firearm parts to Thailand without having first obtained the required license or written authorization from the Directorate of Defense Trade Controls, an office in the United States Department of State.
As detailed in his plea agreements, during the conspiracy, Srivaranon and his co-conspirators ordered firearms parts on the USML from U.S.-based firearms parts retailers and caused those firearms parts to ship to addresses in the United States where co-conspirators lived, visited, or conducted business. At the direction of Srivaranon and others, co-conspirators would then repackage the USML firearms parts in the United States; falsely label United States Postal Services Form 2976 and Customs Declarations CN 22 (sender’s declarations forms) by using fake names for return addresses; falsely declare the contents of the packages and understate their value; and then ship the USML firearms parts to Thailand via the U.S. mail and private shipping companies. This was done to conceal the prohibited exports from detection by the U.S. government.
In the District of Columbia cases, Srivaranon admitted that to facilitate the scheme, he and others deposited funds into co-conspirators’ bank accounts in Thailand. The funds were deposited in Thai Baht currency. The co-conspirators would then withdraw U.S. dollars from automatic teller machines in the United States, as payment for their participation in the scheme.
Srivaranon was arrested in Las Vegas, Nev. on January 22, 2018, after flying there from Thailand to attend a trade show unrelated to the charges in the case. He has been in custody since his arrest.
In announcing the sentences, U.S. Attorney Liu, U.S. Attorney Hur, and Acting Special Agent in Charge Morant commended the work of those who investigated the case from the HSI’s Baltimore Field Office. They also expressed appreciation for the efforts of those who worked on the case from the District of Columbia, including Assistant U.S. Attorney Frederick Yette and Trial Attorney Rebecca A. Caruso of the Justice Department’s Criminal Division. They also commended the work of Assistant U.S. Attorneys Kelly Hayes and Bryan Foreman, who handled the related prosecution in the District of Maryland.
Thai National Sentenced to over Two Years in Federal Prison for Conspiring to Unlawfully Export Firearms Parts from the United States to ThailandRead the Press Release
Greenbelt, Maryland – Thai national Apichart Srivaranon, 34 years old, was sentenced to 26 months in federal prison for a conspiracy to export arms and munitions, and for unlawfully exporting arms and munitions, specifically for exporting firearms parts from the United States to Thailand. U.S. District Judge George J. Hazel imposed the sentence on April 11, 2019, and also ordered Srivaranon to forfeit $10,000. Today, U.S. District Judge Reggie B. Walton for the District of Columbia sentenced Srivaranon to the same sentence for conspiracy to defraud the United States and to export defense articles from the United States to Thailand. The sentences will be served concurrently. Upon his release from prison, Srivaranon will be deported from the United States and returned to Thailand.
The sentences were announced by United States Attorney for the District of Maryland Robert K. Hur; United States Attorney for the District of Columbia Jessie K. Liu; and Acting Special Agent in Charge Cardell T. Morant of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Baltimore.
Srivaranon pleaded guilty to charges in both Maryland and the District of Columbia in January and March 2019, respectively, as required by his plea agreement in each District.
Srivaranon admitted that between 2012 and 2014, he conspired with individuals in the United States and Thailand to obtain firearms parts in the United States that were listed on the United States Munitions List (USML) and then exported, and attempted to export, the firearm parts to Thailand without having first obtained the required license or written authorization from the Directorate of Defense Trade Controls, an office in the United States Department of State.
As detailed in his plea agreements, during the conspiracy, Srivaranon and his co-conspirators ordered firearms parts on the USML from U.S.-based firearms parts retailers and caused those firearms parts to ship to addresses in the United States where co-conspirators lived, visited, or conducted business. At the direction of Srivaranon and others, co-conspirators would then repackage the USML firearms parts in the United States; falsely label United States Postal Services (“USPS”) Form 2976 and Customs Declarations CN 22 (sender’s declarations forms) by using fake names for return addresses; falsely declare the contents of the packages and understate their value; and then ship the USML firearms parts to Thailand via the USPS and private shipping companies. This was done to conceal the prohibited exports from detection by the U.S. government.
In his guilty plea to the District of Columbia charges, Srivaranon admitted that to facilitate the scheme, he and others deposited funds into co-conspirators’ bank accounts in Thailand. The funds were deposited in Thai Baht currency. The co-conspirators would then withdraw U.S. dollars from automatic teller machines (ATMs) in the United States, as payment for their participation in the scheme.
Srivaranon was arrested in Las Vegas, Nevada on January 22, 2018, after flying there from Thailand to attend a trade show unrelated to the charges in the case. He has been in custody since his arrest.
United States Attorneys Robert K. Hur and Jessie K. Liu commended HSI Baltimore for its work in this investigation. They also expressed appreciation for the efforts of those who worked on the case from the U.S. Attorney’s Offices, including Assistant U.S. Attorneys Kelly Hayes and Bryan Foreman, who handled the prosecution in the District of Maryland, and Assistant U.S. Attorney Frederick Yette and Trial Attorney Rebecca A. Caruso of the Money Laundering & Asset Recovery Section (formerly a Special Assistant U.S. Attorney with the District of Columbia), who handled the case in the District of Columbia.
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Test Taker in College Admissions Case Pleads GuiltyRead the Press Release
BOSTON – The test taker in the college admissions case pleaded guilty today in federal court in Boston in connection with accepting payments to cheat on the ACT and SAT exams, and other tests.
Mark Riddell, 36, of Palmetto, Fla., pleaded guilty to one count of conspiracy to commit mail fraud and honest services mail fraud and one count of conspiracy to commit money laundering. U.S. District Court Judge Nathaniel M. Gorton scheduled sentencing for July 18, 2019 at 3:00 p.m.
From 2011 through February 2019, Riddell conspired with William “Rick” Singer and others to cheat on college entrance exams in the United States and Canada. As part of the scheme, Riddell secretly took college entrance exams in place of students, or corrected the students’ answers after they had taken the exam.
In many cases, Singer facilitated the cheating by counseling his clients to seek extended time on the exams, including by having their children purport to have learning disabilities in order to obtain the required medical documentation. Once the extended time was granted, Singer instructed the clients to change the location of the exams to one of two test centers: a public high school in Houston, Texas, or a private college preparatory school in West Hollywood, Calif. Singer had established relationships at those locations with test administrators Niki Williams and Igor Dvorskiy, who allegedly accepted bribes of as much as $10,000 per test in order to facilitate the cheating scheme. Specifically, Williams and Dvorskiy allowed Riddell to take the exams in place of the students, to give the students the correct answers during the exams, or to correct the students’ answers after they completed the exams. Singer typically paid Riddell $10,000 for each test. Singer’s clients paid him between $15,000 and $75,000 per test, with the payments structured as purported donations to the KWF charity controlled by Singer. In many instances, the students taking the exams were unaware that their parents had arranged for the cheating.
On March 22, 2019, Singer pleaded guilty to racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the United States and obstruction of justice. He is scheduled to be sentenced on June 19, 2019, at 2:00 p.m. in Boston.
Updated information about this case can be found at https://www.justice.gov/usao-ma/investigations-college-admissions-and-testing-bribery-scheme.
The charge of conspiracy to commit mail fraud and honest services mail fraud provides for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charge of conspiracy to commit money laundering provides for a sentence of up to 20 years in prison, up to three years of supervised release, and a fine of not more than $500,000 or twice the value of the property involved in the money laundering. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, made the announcement today. Assistant U.S. Attorneys Eric S. Rosen, Justin D. O’Connell, Leslie A. Wright and Kristen A. Kearney of Lelling’s Securities and Financial Fraud Unit are prosecuting the case.
The details contained in the charging documents are allegations. The remaining defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Tax business owner charged with preparing and filing false tax returnsRead the Press Release
ATLANTA – Local tax business owner Thomas Holmes has been arraigned on federal charges of willfully preparing and filing federal income tax returns that fraudulently claimed hundreds of thousands of dollars in tax refunds.
“Citizens expect tax preparers like Holmes to accurately prepare and file their returns,” said U.S. Attorney Byung J. “BJay” Pak. “His alleged abuse of the tax system for financial gain undermines public confidence in the system. We have dedicated resources to combat this kind of theft, and we will aggressively prosecute those who believe they can file false tax returns, thereby cheating everyone else.”
“Holmes took advantage of his clients’ trust and lined his pockets with fraudulent tax refunds. If you use a return preparer to file your taxes, ask to review the tax return before it is filed with the IRS and ask for a copy of the filed tax return. If you become suspicious that your return preparer isn’t filing the correct information, report that return preparer to the IRS,” said Steve S. Bahhur, Acting Assistant Special Agent in Charge of IRS-CI, Atlanta Field Office.
According to U.S. Attorney Pak, the charges, and other information presented in court: Thomas Holmes ran a tax preparation business in Austell, Georgia called TKO Tax Pros. Between 2013 and 2017, Holmes, through TKO Tax Pros, prepared and filed thousands of federal income tax returns on behalf of clients. The indictment alleges that on many of those returns, Holmes willfully listed false information, such as false Schedule C business losses and false Schedule A itemized deductions, causing the tax returns to claim thousands of dollars in refunds that taxpayers were not entitled to. When the Internal Revenue Service (“IRS”) issued refunds to these taxpayers, Holmes allegedly kept a portion of the fraudulent refunds for himself and paid the balance to his clients. During the relevant time period, Holmes made hundreds of thousands of dollars for his tax preparation services.
Thomas Holmes, 41, of Austell, Georgia, was arraigned before U.S. Magistrate Judge Janet F. King. He was indicted by a federal grand jury on April 10, 2019 on 22 counts of willfully preparing and filing fraudulent federal income tax returns on behalf of eight individual taxpayers.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the Internal Revenue Service Criminal Investigation.
Assistant U.S. Attorney Annalise Peters is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
Tax Preparer and Two Employees Indicted on Fraud ChargesRead the Press Release
A tax preparer and two employees were indicted on charges related to the preparation and filing of false tax returns.
Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida, and Michael J. De Palma, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.
Olry Maurival, of West Palm Beach, Florida, Paula Pognon, also of West Palm Beach, Florida and Amos Regusme, of Felton, Delaware, have been indicted for conspiracy to defraud the United States, in violation of Title 18, United States Code, Section 371 (Case No. 19-80054-CR-Middlebrooks). Maurival and Pognon have also been indicted for aiding and assisting in the preparation of false tax returns, in violation of Title 26, United States Code, Section 7206(2) and Maurival has been indicted for filing false tax returns, in violation of Title 26, United States Code, Section 7206(1). Their initial appearances are scheduled for April 25, 2019, in West Palm Beach.
According to the allegations in the indictment, Maurival operated a tax preparation business where he, Pognon, and Regusme prepared taxes. From 2012 through 2015, they prepared and filed returns on which they claimed a variety of credits and deductions to which their clients were not entitled, including the Earned Income Credit, the Fuel Tax Credit, deductions for unreimbursed employee expenses, and deductions and credit for educational expenses. In addition, Maurival underreported his gross earnings from the operation of his tax business on his personal tax returns.
If convicted, the defendants face maximum possible statutory sentences of 5 years in prison, for the conspiracy. In addition, Maurival and Pognon face maximum possible statutory sentences of 3 years in prison on each of the other counts.
An indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty in a court of law.
U.S. Attorney Fajardo Orshan commended the investigative efforts of IRS-CI. This case is being prosecuted by Assistant U.S. Attorney Marc Osborne.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov.
Sunnyvale-Based Network Security Company Agrees to Pay $545,000 to Resolve False Claims Act AllegationsRead the Press Release
SAN FRANCISO –Sunnyvale-based Fortinet, Inc. has agreed to a settlement valued at $545,000 to resolve allegations it violated the False Claims Act by falsely representing its products were in compliance with the Trade Agreements Act (TAA), 19 U.S.C. § 2501 et seq., announced United States Attorney David L. Anderson; Defense Criminal Investigative Service (DCIS) Special Agent in Charge Bryan D. Denny; General Services Administration Office of the Inspector General (GSA-OIG), Western Field Office, Special Agent in Charge Theresa Quellhorst; Director of the U.S. Army Criminal Investigation Command’s (USACIDC) Major Procurement Fraud Unit Frank Robey; and Department of Homeland Security Office of Inspector General (DHS-OIG) Special Agent in Charge Amanda Thandi.
According to the settlement agreement made public today, Fortinet acknowledged that during the more than seven years between January of 2009 and the fall of 2016, a Fortinet employee responsible for supply chain management (the “Responsible Employee”) arranged to have labels on certain products altered to make the products appear to be compliant with the TAA. A portion of the products were resold through distributors and subsequent resellers to U.S. government end users.
“Today’s announcement illustrates the continuing commitment of the U.S. Attorney’s Office and our law enforcement partners to identify and prosecute fraudulent schemes relating to the sale of goods to the United States,” said U.S. Attorney Anderson.
“Contractors that supply the U.S. Government with Chinese-made technology will be pursued and held accountable when violating the Trade Agreement Act,” said DCIS Special Agent in Charge Denny. “The DCIS and its law enforcement partners are committed to combatting procurement fraud and cyber risk within U.S. Department of Defense programs.”
“This settlement displays the steadfast commitment of our agents and our federal law enforcement partners,” said USACIDC Director Robey. “This settlement is a clear signal to the supply community doing business with the Department of the Army—fraud will not be tolerated in any way, shape or form.”
“Contractors who undermine American trade interest and pose a security risk by selling unauthorized foreign-made devices to the United States will be held accountable,” said DHS-OIG Special Agent in Charge Thandi. “Contracting companies that conduct business with the federal government must uphold our trade laws; any misrepresentation during this process undercuts its integrity.”
“This settlement reflects the GSA OIG’s commitment to work with our law enforcement partners to aggressively investigate and prosecute those who seek to fraudulently sell products to the federal government that do not meet the standards set by law,” said GSA OIG Special Agent in Charge Theresa Quellhorst.
The TAA generally prohibits certain government contractors from purchasing products that are not entirely from, or “substantially transformed” in, the United States or certain designated countries. Fortinet sells network security devices, some of which may be sold through distributors and subsequent resellers to U.S. government end users. In this case, Fortinet acknowledged the Responsible Employee directed certain employees and contractors to change product labels so that no country of origin was listed, or to include the phrases “Designed in the United States and Canada,” or “Assembled in the United States.” Fortinet acknowledged that the Responsible Employee’s actions involved products sold to certain distributors that subsequently sold them to resellers, which in turn sold a portion of them to U.S. government end users. The Responsible Employee has since been terminated from employment with Fortinet.
To settle the allegations, Fortinet has agreed to pay $400,000 and to provide the United States Marine Corps with additional equipment valued at $145,000.
The lawsuit was filed by Yuxin “Jay” Fang under the qui tam provisions of the False Claims Act. Under the act, private citizens can bring suit on or behalf of the government for false claims and share in any recovery. The act also permits the United States to intervene in and take over a whistleblower suit, as was done here.
This matter was investigated by the U.S. Attorney’s Office of the Northern District of California, along with the DCIS, GSA-OIG, Air Force Office of Special Investigations, USACIDC, DHS-OIG, the Department of the Navy, and the Coast Guard Investigative Service. Fortinet cooperated in the government’s investigation, including by sharing the results of its internal investigation in this matter. The settlement reflects Fortinet’s cooperation with the government in this and other matters.
Assistant U.S. Attorney Ellen London is handling the case with the assistance of Garland He, Jacqui Hollar, and Tina Louie.
Sulphur resident pleads guilty to illegally possessing a shotgun and pistolRead the Press Release
LAKE CHARLES, La. – United States Attorney David C. Joseph announced that James Bergeron, 29, of Sulphur, Louisiana, pleaded guilty Thursday day before U.S. Magistrate Judge Kathleen Kay for possession of a firearm and ammunition by a convicted felon.
According to the guilty plea, law enforcement officers executed a search warrant on October 19, 2018 at Bergeron’s Sulphur residence where they found a Browning 12-gauge shotgun and a Ruger .380-caliber semi-automatic pistol. Bergeron, a convicted felon, was present at the time of the search and admitted to ownership and use of the firearms. He was convicted in federal court in the Eastern District of Texas on September 26, 2013 for bank robbery and in the 14th Judicial District Court, Calcasieu Parish, on August 25, 2017 for possession of Methamphetamine. Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of a firearm or ammunition.
Bergeron faces up to 10 years in prison, three years of supervised release and a $250,000 fine. The court set the sentencing date for July 9, 2019.
The ATF, Lake Charles Police Department and Calcasieu Parish Sheriff’s Office conducted the investigation. Supervisory Assistant U.S. Attorney Myers P. Namie is prosecuting the case.
Project Safe Neighborhoods (PSN) is the centerpiece of the Department of Justice’s violent crime reduction efforts. Project Safe Neighborhoods 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 reductions in crime.
Sudbury Man Sentenced to 15 Months in Prison for Flying Without a Valid Pilot’s LicenseRead the Press Release
The Office of the United States Attorney for the District of Vermont stated that Angelo Efthimiatos, 49, of Sudbury, Vermont, was sentenced yesterday to serve 15 months in prison followed by a year of supervised release following his conviction at trial in December 2018 of flying without a valid pilot’s license. The sentence will be served concurrently with an 18 month sentence from the Southern District of Iowa for violating terms of his prior federal supervised release. Efthimiatos, who has been in custody since April 2018, will receive credit for time served.
According to the indictment in the case and information presented at trial, just after midnight on April 10, 2018, Efthimiatos landed a small plane at the Rutland Regional Airport in North Clarendon, Vermont. The flight originated in Nantucket, Massachusetts. Efthimiatos was intercepted by federal agents at the airport and was arrested. He has been detained since that time. At the time of his arrest, Efthimiatos did not have a valid pilot’s license or “airman’s certificate” from the Federal Aviation Administration (FAA). His airman’s certificate had been revoked by the FAA as of July 1, 2014.
The United States Attorney’s Office recognized the hard work of Special Agents from the Drug Enforcement Agency and the Department of Transportation’s Office of Inspector General to support the investigation and trial. The FAA also provided extensive support during the case.
At trial, the government was represented by Assistant U.S. Attorneys Nicole Cate and Eugenia Cowles. Mr. Efthimiatos was represented by Craig S. Nolan, Esq. of Sheehy, Furlong, and Behm, P.C.
St. Thomas Resident Pleads Guilty to Failing to Register as a Sex OffenderRead the Press Release
St. Thomas, USVI –Jeffrey Cole, 57, of St. Thomas, pleaded guilty in District Court before Judge Curtis V. Gomez, to failing to register as a sex offender, United States Attorney Gretchen C.F. Shappert announced.
According to court records, Cole was convicted for voyeurism in the State of Ohio in 2009. He moved to the State of Georgia where he registered as a sex offender. Cole relocated to the Virgin Islands in 2018, and failed to register as required by law.
Under federal law, Cole faces a maximum sentence of 10 years in prison and a maximum fine of $250,000.
This case was investigated by the United States Marshal Service. It is being prosecuted by Assistant United States Attorney Everard E. Potter.
Six Remaining Cherry Hill Hillside Gang Members Plead Guilty to Federal Racketeering Conspiracy ChargesRead the Press Release
Baltimore, Maryland – On Thursday, April 11, 2019, six Baltimore men pleaded guilty to conspiracy to participate in a racketeering enterprise related to their activities as members of the violent Hillside gang that operated in the Cherry Hill neighborhood of Baltimore. As part of their plea agreements, the defendants admitted to participating in murders; attempted murders, robberies; and the distribution of narcotics. The following defendants pleaded guilty:
Keenan Lawson, a/k/a BlackFace, age 27;
Michael Evans, a/k/a Pee Wee, age 25;
Kevin Horsey, a/k/a What What, age 26;
Stevie Lawson, a/k/a GB, age 28;
Terrell Luster, a/k/a Relly, age 31; and
Caesar Rice, a/k/a Stinky, age 27.Thirteen other Hillside gang members have previously pleaded guilty to their participation in the racketeering conspiracy. Of those, eight have been sentenced to between 10 and 30 years in federal prison.
The guilty pleas were announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Rob Cekada of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Baltimore Field Division; Commissioner Michael Harrison of the Baltimore Police Department; and Baltimore City State’s Attorney Marilyn J. Mosby.
“These gang members brought terror and death to Baltimore’s Cherry Hill neighborhood with guns and drugs. Federal, state, and local law enforcement are committed to working together to target those responsible for the most violence in Baltimore City,” said U.S. Attorney Robert K. Hur. “These defendants admitted that they were part of an organized criminal enterprise with leaders and members who dealt drugs and committed violent crimes using guns. Now they face lengthy sentences in federal prison, where there is no parole—ever. I urge anyone who’s thinking of following these defendants’ example: Please, put down the guns and save a life—maybe even your own.”
“Identifying, investigating, and incarcerating the armed gunmen that menace Baltimore’s communities is ATF’s primary focus,” said ATF Baltimore Special Agent in Charge Rob Cekada. “ATF is determined to collaborate with our law enforcement partners in our plight to ensure Baltimore neighborhoods can be free of violence.”
According to their plea agreements, the defendants were members and associates of the Hillside Enterprise, which they knew distributed powder and crack cocaine, heroin, oxycodone, and marijuana, primarily in the Cherry Hill Shopping Center, in other locations throughout Cherry Hill, and in west and southwest Baltimore City. The members of the Hillside Enterprise used the proceeds of their narcotics sales to purchase firearms, to enrich themselves, and to further the activities of the organization, including narcotics trafficking. Hillside members used residences in and around Cherry Hill to cut and package drugs for distribution, primarily heroin, powder cocaine, and crack. These locations included a house at 453 Roundview Road and an apartment at 2300 Terra Firma Road in Cherry Hill. Only trusted members of the Hillside Enterprise were admitted to these locations while the drugs were being prepared for sale. In an effort to distinguish their narcotics, members used colored topped vials or colored the drugs with food coloring. All six defendants admitted that they distributed drugs as a member of Hillside, and on behalf of the gang. Stevie Lawson is also captured on video in the stash houses on at least 16 occasions between November 2014 and June 2015, preparing controlled substances for distribution.
Members of the Hillside Enterprise routinely carried firearms and committed acts of violence in furtherance of the organization’s activities, including robberies, shootings, beatings, murders, and other violence in order to intimidate others who would interfere with their narcotics trafficking. Acts of violence were also committed to discipline members within the Hillside Enterprise for transgressions, real or perceived, against the conspiracy.
Hillside members and associates have been in a long-running dispute with persons not part of the gang, including Up Da Hill (“UDH”), the Lakebrook Circle Boys, and others. Members and associates of Hillside have routinely engaged in acts of violence, including murder, directed at members of these rival organizations, or persons who happen to be located on territory controlled by these rival organizations. The defendants all knew that these acts of violence, including the homicides, were committed by Hillside members and associates, including murders committed by Terrell Luster and Keenan Lawson. For example, Luster, Horsey, Rice, Keenan Lawson and Evans all admitted that they participated in, or were present at shootings, generally of individuals whom they and their fellow Hillside members believed to be rival gang members.
As part of their plea agreements, all of the defendants have agreed with the government to recommend a sentence to the Court, with the recommendations ranging from 12 years to 23 years in federal prison. U.S. District Judge George L. Russell III has scheduled sentencing for Evans, Luster, Rice, and Horsey on July 12, 2019, and scheduled sentencing for Keenan and Stevie Lawson on July 19, 2019.
According to the ATF, a reward of $10,000 each is available for information leading to the arrest of the final two defendants in this case, fugitives Travis Eugene Alewine, a/k/a Sticks, age 27; and Deaven Raeshawn Cherry, a/k/a Gotti, age 32, both of Baltimore, who are charged federally with drug and racketeering conspiracies, including murders. They are actively being sought by ATF Baltimore Special Agents and the U.S. Marshals Service. They should be considered armed and dangerous. Law enforcement believes they are likely still in the counties near Baltimore City, if not within the city itself. Anyone with information should contact ATF at (888) ATF-TIPS, [email protected], text “ATFBAL” to 63975, or contact ATF via the mobile reportit® app.
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. Project Safe Neighborhoods (PSN) is the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.
United States Attorney Robert K. Hur commended the ATF, the Baltimore Police Department, and the Office of the State’s Attorney for Baltimore City for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorneys Patricia C. McLane and Michael C. Hanlon, who are prosecuting this Organized Crime Drug Enforcement Task Force case.
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Sioux Falls Man Sentenced for Possession of Firearms by a Prohibited PersonRead the Press Release
United States Attorney Ron Parsons announced that a Sioux Falls, South Dakota, man convicted of Possession of Firearms by a Prohibited Person was sentenced on April 5, 2019, by U.S. District Judge Karen E. Schreier.
Richard Joseph Long, Jr., age 45, was sentenced to 54 months in federal prison, 3 years of supervised release, and a special assessment to the Federal Crime Victims Fund in the amount of $100.
Long was indicted by a federal grand jury on April 4, 2018. He pled guilty on January 17, 2019.
The conviction stemmed from an incident on or about between November 20, 2017, and December 6, 2017, when Long broke into his father's home and stole firearms and other property. Long was caught attempting to sell one of the firearms to a pawnshop in Sioux Falls. The pawn business was aware of the items reported stolen and immediately contacted the police. Long was prohibited from possessing any guns because he had previously been convicted of a felony.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of its 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.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant U.S. Attorney Jeffrey C. Clapper prosecuted the case.
Long was immediately turned over to the custody of the U.S. Marshals Service.
Shreveport felon sentenced to 106 months in prison for drug, firearm chargesRead the Press Release
SHREVEPORT, La. – United States Attorney David C. Joseph announced today that Ellis Harp III, 44, of Shreveport, was sentenced by U.S. District Judge Elizabeth E. Foote to eight years and 10 months in prison for possession of cocaine with intent to distribute and possession of two firearms in furtherance of drug trafficking. Foote also sentenced Harp to five years of supervised release.
Law enforcement agents executed a search warrant on February 26, 2016 at Harp’s Earl Street residence in Shreveport and found 137.080 grams of powder cocaine, three sets of digital scales, a Ruger, model Super Blackhawk .44-caliber revolver and an Olympic Arms Inc. SGW & Safari Arms AR-15 in a shed on his property. Harp admitted to possessing the items located in the shed and admitted that he knew he was not allowed to possess a firearm or ammunition as a convicted felon. He was convicted in federal court in the Western District of Louisiana on September 16, 2010 for possession of a firearm by a felon. Harp pleaded guilty on November 29, 2018 for the current charges.
The ATF, DEA, Caddo Parish Sheriff’s Office and Shreveport Police Department conducted the investigation. Assistant U.S. Attorney Tennille M. Gilreath prosecuted the case.
Project Safe Neighborhoods (PSN) is the centerpiece of the Department of Justice’s violent crime reduction efforts. Project Safe Neighborhoods 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 reductions in crime.
San Antonio Man Pleads Guilty to Fraudulent Income Tax Return PreparationRead the Press Release
In San Antonio today, Richard Ortegon pleaded guilty to assisting in the preparation of a false U.S. Income Tax Returns which contained fraudulent deductions, announced U.S. Attorney John F. Bash and IRS-Criminal Investigation Special Agent in Charge Sarah Kull, Houston Field Office.
According to public records, the defendant owned and operated Aztec Tax Consulting Group, LLC and assisted clients in preparing their federal income tax returns. On the tax returns he prepared and submitted to the IRS, Ortegon admittedly included false Residential Energy Credits and inflated expenses on Schedule A and Schedule C forms. Specifically, on a client’s 2014 Individual Income Tax Return, Ortegon provided fraudulent figures--$8,092 in Residential Energy Credits and false expenses totaling $24,040. Ortegon further admitted that the total tax due and owing attributed to the false income tax returns he prepared is approximately $75,000.
“As we approach Monday’s deadline to file your taxes, remember: Intentionally falsifying your tax return is a serious federal crime,” stated U.S. Attorney Bash.
“Most return preparer businesses are operating to ensure taxpayers are reporting to the IRS correctly. Unfortunately, there are a few unscrupulous return preparers that violate their customers’ trust to benefit financially from the preparation and filing of false tax returns,” said IRS-Criminal Investigation Special Agent in Charge Kull. “IRS-Criminal Investigation is committed to identifying these individuals that are exploiting our tax system for their personal gain.”
Ortegon faces up to three years in federal prison and restitution to the IRS. Sentencing is scheduled for July 8, 2019.
Agents with the IRS—Criminal Investigation conducted this investigation. Assistant U.S. Attorney Sean O’Connell is prosecuting this case on behalf of the government.
Recycling Executive Sentenced to 3 Years in Prison for Scheming to Landfill and Re-Sell Potentially Hazardous WasteRead the Press Release
CHICAGO — A recycling executive has been sentenced to three years in federal prison for illegally landfilling potentially hazardous electronic waste as part of a scheme to re-sell the materials and avoid paying income taxes.
BRIAN BRUNDAGE owned Intercon Solutions Inc. and EnviroGreen Processing LLC, which purported to recycle electronic waste on behalf of corporate and governmental clients. Brundage represented to the clients that the materials would be disassembled and recycled in an environmentally sound manner. In reality, from 2005 to 2016, Brundage caused thousands of tons of e-waste and other potentially hazardous materials to be landfilled, stockpiled, or re-sold at a profit to companies who shipped the materials overseas. Brundage evaded $743,984 in federal taxes by concealing the income he earned from re-selling the e-waste and from paying himself funds that he falsely recorded as Intercon business expenses. Brundage spent the purported expenses for his own personal benefit, including wages for a nanny and housekeeper, jewelry purchases, and payments to a casino in Hammond, Ind.
Brundage, 47, of Schererville, Ind., pleaded guilty last year to one count of wire fraud and one count of tax evasion. U.S. District Judge Joan Humphrey Lefkow on Thursday imposed the three-year prison sentence and ordered Brundage to pay more than $1.2 million in restitution to his victims.
The sentence was announced by John C. Kocoras, First Assistant United States Attorney for the Northern District of Illinois; Jennifer Lynn, Special Agent-in-Charge of the U.S. Environmental Protection Agency’s Criminal Investigation Division; Gabriel L. Grchan, Special Agent-in-Charge of the Chicago office of the Internal Revenue Service Criminal Investigation Division; James M. Gibbons, Special Agent-in-Charge of the Chicago office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and Jeffrey Ryan, Special Agent-in-Charge of the U.S. General Services Administration’s Office of Inspector General, Great Lakes Regional Investigations Office. The Hong Kong Environmental Protection Department provided valuable assistance in the investigation. The government was represented by Assistant U.S. Attorneys Sean J.B. Franzblau and Kelly Greening of the Northern District of Illinois, and Special Assistant U.S. Attorney Crissy Pellegrin of the EPA.
Brundage admitted in a plea agreement that he caused employees of Chicago Heights-based Intercon and Gary, Ind.-based EnviroGreen to sell some of the e-waste and other materials to vendors who Brundage knew would ship the materials overseas. Some of the materials contained Cathode Ray Tubes, which are glass video display components of computer and television monitors, and which contain potentially hazardous amounts of lead. Brundage admitted causing multiple tons of CRT glass and other potentially hazardous materials to be destroyed in environmentally unsafe ways and later landfilled.
“Improper management of cathode ray tubes can pose risk to human health and the environment, as they contain significant quantities of lead,” said Special Agent-in-Charge Lynn. “This case demonstrates that EPA and our law enforcement partners are committed to protecting the environment and ensuring that companies follow the law.”
“The GSA Office of Inspector General will aggressively pursue contractors who make false representations in order to obtain federal business,” said Special Agent-in-Charge Ryan.
“This sentence should serve as a reminder that HSI will continue to work with its federal, state and local partners to pursue offenders who endanger others by engaging in fraud and deceit,” said Special Agent-in-Charge Gibbons.
Real Estate Developer Indicted on Federal Bribery Charges in Connection with Northwest Side Redevelopment ProjectRead the Press Release
CHICAGO — A real estate developer has been indicted on federal bribery charges for allegedly steering private legal work to a Chicago alderman in an effort to influence and reward the alderman in connection with a permit and tax increment financing for a Northwest Side redevelopment project.
CHARLES CUI, 48, of Lake Forest, is charged with one count of federal program bribery, one count of making a false statement to the Federal Bureau of Investigation, and two counts of using interstate commerce to facilitate bribery and official misconduct. The indictment was returned Thursday in U.S. District Court in Chicago. Arraignment has not yet been scheduled.
The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI. The City of Chicago Inspector General’s Office provided valuable assistance. The government is represented by Assistant U.S. Attorneys Amarjeet Bhachu, Diane MacArthur, Matthew Kutcher, Sarah Streicker and Timothy Chapman.
According to the indictment, Cui was the managing member of a company that owned property in the 4900 block of West Irving Park Road in the Portage Park neighborhood of Chicago. In 2016, the Chicago City Council passed an ordinance that approved a redevelopment plan for the property and provided Cui’s company with $2 million in tax increment financing. The City Council’s Finance Committee, which was chaired by the 14th Ward alderman, had recommended passage of the ordinance. The property was located outside of the 14th Ward.
The following year, Cui submitted an application for a permit to use an existing sign at the property. The sign would be used to advertise a retailer that contracted with Cui’s company to operate a store at the site. After the Department of Planning and Development denied the application, Cui emailed the 14th Ward alderman, asking the alderman to “look into the matter,” the indictment states. Cui’s email stated that the retailer “really needs it, otherwise they will either cancel the lease, or ask for significant rent reduction,” according to the indictment. Cui, on behalf of his company, had previously entered into an agreement with the retailer that provided for the rent reduction if Cui’s company was unable to obtain the permit, according to the charges. Cui estimated that the reduction would cost his company a total of $750,000, the indictment states.
The indictment states that in August 2017, Cui sent an email to a real estate attorney who had represented Cui with respect to the property. In the email, Cui asked the attorney if the alderman, who in addition to the City Council position operated a private law firm specializing in contesting real estate tax assessments, could take over the property tax work for the property, stating, “I have TIF deal going with the City and he is the Chairman of Finance Committee. He handled [sic] his tax appeal business card to me, and I need his favor for my tif money. In addition, I need his help for my zoning etc for my project. He is a powerful broker in City Hall, and I need him now. I’ll transfer the case back to you after this year.”
Less than two weeks later, Cui signed a contingent fee agreement with the alderman’s law firm that provided for Cui to retain the firm to perform real estate tax work, the indictment states.
According to the indictment, the false statement charge pertains to Cui’s November 2018 interview with the FBI, during which Cui falsely stated that he hired the alderman’s law firm “just because he is a good tax appeal lawyer.”
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Federal program bribery is punishable by up to ten years in prison. The false statement charge carries a maximum penalty of five years in prison. Using interstate commerce to facilitate bribery and official misconduct is punishable by up to five years in prison. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.
Rapid City Man Charged with Firearm and Drug CrimesRead the Press Release
United States Attorney Ron Parsons announced that a Rapid City, South Dakota, man was charged in federal district court with Possession with Intent to Distribute a Controlled Substance and Possession of a Firearm by a Prohibited Person.
Dana Standing Bear, age 40, was indicted on March 19, 2019. He appeared before U.S. Magistrate Judge Daneta Wollmann and pleaded not guilty to the charges. The penalty upon conviction is a minimum of 5 years up to 40 years in federal prison and/or a $5,000,000 fine, a minimum of 4 years up to lifetime supervised release, and a $100 assessment to the Federal Crime Victims Fund. Restitution may also be ordered.
The charges relate to Standing Bear knowingly being in possession of two 9mm semi-automatic pistols as well as methamphetamine in February 2019 at Rapid City. The charges are merely an accusation and Standing Bear is presumed innocent until and unless proven guilty.
Drug trafficking is an inherently violent activity. Firearms are tools of the trade for drug dealers. It is common to find drug traffickers armed with guns in order to protect their illegal drug product and cash, and enforce their illegal operations.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of its 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 local communities to develop effective, locally-based strategies to reduce violent crime.
The investigation is being conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Rapid City Police Department. Assistant U.S. Attorney Ben Patterson is prosecuting the case.
Standing Bear was detained pending trial. A trial date has not been set.
Recent Tax Prosecutions Serve as a Reminder to Accurately File and Pay Taxes as the April 15 Deadline ApproachesRead the Press Release
Matthew D. Krueger, United States Attorney for the Eastern District of Wisconsin, issued a statement reminding all Wisconsin residents to file accurate federal income tax returns as the deadline for filing is Monday, April 15. Although the filing season is nearing the end, the U.S. Attorney’s Office and the Internal Revenue Service’s Criminal Investigation Division work year round to protect the integrity of our nation’s tax system by investigating and prosecuting individuals who violate the tax laws.
“The funding of our government—and the vital protection and services it renders—depends upon taxpayers voluntarily complying with the tax laws,” said U.S. Attorney Krueger. “The millions of taxpayers who pay their taxes accurately deserve to know that cheating on taxes will not be tolerated. The Department of Justice and the IRS are committed to prosecuting dishonest individuals who seek to hide income, claim false deductions, or engage in other schemes to avoid their tax obligations. These prosecutions send a clear warning: Federal prison awaits those who cheat on their taxes.”
“Taxpayers thinking about participating in fraudulent tax schemes, such as failing to report all forms of income or falsifying deductions should take a good look at the serious and detrimental consequences of taking the next step,” stated Special Agent in Charge Gabe Grchan of the IRS Criminal Investigation Division. “Those who might consider preparing false and fraudulent tax returns should be aware of the extremely negative consequences that could result in prison time, large tax bills, including substantial fines, interest and penalties.”
As the tax filing season winds down, the following prosecutions over the last four month in the Eastern District of Wisconsin serve as a warning against filing a false or fraudulent tax return, and as a reminder to be wary of any schemes that would falsify income or deductions.
Alma Ramirez, formerly of Green Bay, Wisconsin, was sentenced March 5, 2019 to four years in prison, and ordered to pay $301,370 in restitution. Ramirez, and others working with her and at her direction, prepared and filed more than 60 false federal income tax returns in the names of various individuals. These tax returns included false information concerning the taxpayer’s employment, wages, the amount of federal taxes that had been withheld from those wages, dependents, and the taxpayer’s eligibility for various tax credits. Ramirez also committed identity theft by illegally using the names and social security numbers of unwitting individuals to commit her fraud offense.
Randy Usow of Mequon, Wisconsin, owner and operator of Randy Usow Accounting was sentenced February 21, 2019, to 30 months in prison and ordered to pay more than $600,000 in restitution. From 2011 to 2015, Usow filed at least four false federal income tax returns, fraudulently seeking more than $800,000 in federal income that he diverted to himself.
Deily Veras of Newark, New Jersey, was sentenced December 13, 2018, to 52 months in prison for fraudulently obtaining over $2.7 million in tax refund checks. Veras was also ordered to pay $2,766,926.15 in restitution. Veras committed the theft by fraudulently obtaining the identities and Social Security Numbers (“SSNs”) primarily of Puerto Rican residents.
Karen Tompkins, of Milwaukee was the Manager of a Liberty Tax Service in Milwaukee and was sentenced March 25, 2019, to 12 months in federal prison and ordered to pay $384,528 in restitution. Tompkins and her co-conspirators artificially inflated tax filer’s claimed income, by inventing Schedule C business income for non-existent business, such as "hair braiding" or "dancing" businesses. They also claimed false W-2 income and Additional Child Tax Credits causing the IRS to pay out larger tax refunds than it otherwise would have. In return for these inflated tax refunds, Tompkins and her co-conspirators received kickbacks.
Susan Wenszell of Milwaukee was the president and owner of J. Wenszell Enterprises Inc., and pleaded guilty February 15, 2019 to failing to account for and pay federal payroll taxes to the IRS. From the second quarter of 2012 through fourth quarter of 2015, Wenszell withheld more than $1.2 million from employee wages but paid only $13,966.69 to the IRS. In addition, during the years 2010-2015, Wenszell failed to pay the employer’s share (or matching share) of payroll taxes that totaled almost $530,000.
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Pittsburgh Man Sentenced to 10 Years in Prison for Distributing Child PornographyRead the Press Release
PITTSBURGH - A resident of Pittsburgh, Pennsylvania, has been sentenced in federal court to a term of imprisonment of 10 years (120 months), to be followed by 10 years of supervised release, on his conviction of distribution of material depicting the sexual exploitation of a minor, United States Attorney Scott W. Brady announced today.
United States District Judge Cathy Bissoon imposed the sentence on Jeffrey E. Goehring, age 46.
According to information presented to the court, on July 3, 2016, Goehring uploaded approximately 13 images of child pornography to a Yahoo Flikr account. After investigators obtained a search warrant for Goehring’s residence, they discovered 111 videos and 862 images depicting child pornography on his electronic devices. Goehring admitted that he has had an addiction to pornography since the 1990s and that he has gradually switched to child pornography in the last 10 years.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Assistant United States Attorney Shanicka L. Kennedy prosecuted this case on behalf of the government.
The Federal Bureau of Investigation with assistance from the Allegheny County District Attorney’s Office conducted the investigation leading to the prosecution of this case.
Philadelphia Man Convicted of Narcotics Distribution, Weapons PossessionRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that James Williams, 32, of Philadelphia, PA was convicted today at trial of distribution of heroin, possession with intent to distribute heroin and crack cocaine, and illegal possession of a firearm by a felon.
The defendant and his co-defendant, “A.J.,” became romantically involved in April 2017, after which the defendant began to supply A.J. with heroin to sell to her regular customers located in Bristol, PA. The defendant and A.J. shared the proceeds. Williams also sold narcotics to other customers outside of his relationship with A.J.
On July 18, 2017 A.J. arranged to meet a man, who was actually a confidential informant (“CI”) working with the Bensalem Township Police Department, in a shopping center in Bensalem, PA to sell him heroin and crack cocaine. A.J. and the defendant arrived together in the defendant’s Ford Mustang, and the CI got into the back seat of the defendant’s car to purchase the narcotics. The defendant and A.J. were immediately arrested. Bensalem Township Police officers then found a loaded firearm and more narcotics locked in the glovebox, and more narcotics hidden in the trunk of the defendant’s car. Williams had a prior felony conviction which prohibited him from legally possessing a firearm.
“Drug distribution and gun violence are an epidemic in Philadelphia and the federal government is aggressively prosecuting both and getting dangerous criminals off the streets,” said U.S. Attorney McSwain. “We want to thank our law enforcement partners in this case, ATF and the Bensalem Township Police Department, for their hard work and dedication.”
“There is no place in our community for those who use firearms for violent, criminal purposes,” said Donald Robinson, Special Agent in Charge of ATF’s Philadelphia Field Division. “ATF will continue to work with our law enforcement partners at the federal, state, and local levels to ensure those individuals are brought to justice.”
The case was investigated by Bensalem Township Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) and is being prosecuted by Assistant United States Attorneys Timothy Stengel and Eric Henson.
Palm Beach County Resident Sentenced to Prison in connection with a $1.4 Million Insurance Fraud SchemeRead the Press Release
A Palm Beach County resident was sentenced to prison in connection with a $1.4 million dollar insurance fraud scheme.
Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida and Brian Swain, Special Agent in Charge, U.S. Secret Service (USSS), Miami Field Office, made the announcement.
Alexander Hartman, of Palm Beach County, pled guilty, on January 24, 2019, to four counts of wire fraud, in violation of Title 18, United States Code, Section 1343 (18-80236-CR-Rosenberg). On April 5, 2019, Hartman was sentenced by U.S. District Judge Robin L. Rosenberg to 33 months in prison, to be followed by three years of supervised release.
According to the court record, including the agreed upon factual proffer, Hartman was the sole owner and operator of Alexander Insurance Consultants (“AIC”). During the period of August 2014 through May 2017, Hartman, while operating as the insurance agent/broker of AIC, engaged in a fraudulent course of conduct aimed at enriching himself. Hartman submitted to Premium Assignment Corporation (“PAC”), via wire, false documentation in support of premium finance loans. Hartman falsely represented to PAC that Lloyds of London had issued insurance policies for companies, that these companies were using PAC’s financing services to finance their premium payments, and that AIC had brokered the contracts and was entitled to collect the premiums on behalf of the insured. None of the named companies were clients of AIC or Hartman and three of the companies did not exist.
Hartman defrauded PAC of approximately $1.4 million when he submitted false insurance obligations and used non-existent clients for which he sought premium financing.
U.S. Attorney Fajardo Orshan commended the investigative efforts of the USSS in this matter. This case was prosecuted by Assistant U.S. Attorney Robin Waugh.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov.
Owner of Woodbridge Group and Two Former Directors Charged with $1.3 Billion Investment Fraud (Ponzi) Scheme Involving 10k VictimsRead the Press Release
The owner of Woodbridge Group of Companies LLC and two former directors of investments have been charged criminally, in the Southern District of Florida, with orchestrating a massive investment fraud (Ponzi) scheme.
Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Michael J. De Palma, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Ronald L. Rubin, Commissioner, Florida Office of Financial Regulation (OFR), made the announcement.
Robert Shapiro, 61, of Sherman Oaks, California, Dane R. Roseman, a/k/a “Dayne Roseman,” 35, of Encino, California, and Ivan Acevedo, 42, of Chatsworth, California, were charged, by an indictment out of the Southern District of Florida that was unsealed today, with conspiracy to commit mail and wire fraud and substantive mail fraud counts (Case No. 19-20178-CR-Altonaga/Goodman). Shapiro and Roseman were also charged with substantive wire fraud counts. In addition, Shapiro was charged with conspiracy to commit money laundering and evasion of payment of federal income taxes. Shapiro, Roseman and Acevedo were arrested today in California and had their initial appearances before a U.S. Magistrate Judge in the Central District of California. Shapiro was ordered to be detained in prison. Roseman and Acevedo were ordered to appear in the Southern District Florida for their arraignment. An arraignment date has not yet been scheduled.
According to the indictment, the owner of Woodbridge Group of Companies LLC (Woodbridge) Shapiro, and his former Directors of Investments, Acevedo and Roseman, orchestrated a massive Ponzi scheme through the business. They ran their scheme through Woodbridge offices located throughout the United States, including Boca Raton, Florida and Sherman Oaks, California. The conspiracy ran from July 2012 to December 2017, and involved material misrepresentations and material omissions to investors in the sale of Woodbridge investments. Through telephone and in-person conversations, emails and website displays, Shapiro, Acevedo, Roseman and their co-conspirators promoted speculative and fraudulent securities to potential investors, targeting elderly investors who had Individual Retirement Accounts (IRAs). Shapiro hired sales agents to solicit potential investors from the Woodbridge “phone room” that Roseman and Acevedo managed. The phone room functioned as a “boiler room,” and featured high-pressure sales tactics, deception, material misrepresentations, and investor manipulation. Through telemarketing, Woodbridge sales agents contacted potential investors located throughout the United States, and solicited, offered, and sold Woodbridge investments to them. For the fraud-based investments, the defendants and their co-conspirators’ main business model was to solicit money from investors and, in exchange, issue investors promissory notes reflecting purported loans to Woodbridge that paid monthly interest and matured in twelve to eighteen months. The defendants claimed that the investments were tied to real property owned by third-party property owners.
The indictment alleges that Shapiro, Acevedo, Roseman and their co-conspirators, made and caused others to make materially false and fraudulent statements to induce investors to provide money, such as, that Woodbridge investments were “low risk,” “simpler,” “safe” and “conservative;” that Woodbridge was profitable, but in reality new Woodbridge investor money was used to pay prior Woodbridge investors, and that third-party affiliates were property owners, when in fact Shapiro owned nearly all of the real property at the center of every investment product offered by Woodbridge.
According to the indictment, Shapiro took approximately $35 million in investor money for his benefit, spending millions on personal expenditures, such as $3.1 million for chartering private planes and travel, $6.7 million on a personal home, $2.6 million on home improvements, $1.8 million on personal income taxes, $1.4 million to his ex-wife, and over $672,000 on luxury automobiles.
The indictment further alleges that Shapiro caused most of the Woodbridge companies to file Chapter 11 bankruptcy, which caused investors to suffer substantial losses, as they were owed close to $1 billion in principal.
At least 2,600 of these investor victims invested their retirement savings, totaling approximately $400 million.
According to information presented to the court, search warrants related to the indictment were executed today in California.
The U.S. Securities and Exchange Commission (SEC) filed parallel civil enforcement actions against Acevedo and Roseman related to the Ponzi scheme.
An indictment contains allegations. Every defendant is presumed innocent unless and until proven guilty in a court of law.
U.S. Attorney Fajardo Orshan commended the investigative efforts of the FBI, IRS-CI and OFR in this matter. She thanked the SEC Miami Regional Office and the U.S. Attorney’s Office for the Central District of California for their assistance. This case is being prosecuted by Assistant U. S. Attorneys Roger Cruz and Michael Sherwin.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov.
New York City Man Pleads Guilty to Distributing Crack Cocaine and Fentanyl in PlattsburghRead the Press Release
ALBANY, NEW YORK – Stephen Jacques-Scott, age 33, of New York City, pled guilty yesterday to trafficking crack cocaine and fentanyl from New York City to Plattsburgh.
The announcement was made by United States Attorney Grant C. Jaquith, Special Agent in Charge Ray Donovan, U.S. Drug Enforcement Administration (DEA), New York Division, and Plattsburgh City Police Chief Levi J. Ritter.
Jacques-Scott pled guilty to two counts of distribution of a controlled substance and one count of conspiracy to possess with intent to distribute and to distribute a controlled substance.
Jacques-Scott admitted that on May 11, 2017, he distributed approximately 33.5 grams of crack cocaine, and that on May 15, 2017, he distributed approximately 27.9 grams of crack cocaine and approximately 14.5 grams of fentanyl ,in Plattsburgh. On May 18, 2017, Jacques-Scott was pulled over while travelling to Plattsburgh and police found approximately 27.9 grams of crack cocaine hidden on him that he intended to distribute in Plattsburgh. Jacques-Scott has been in custody since his arrest on May 18, 2017.
As a result of his conviction, Jacques-Scott faces at least 10 years and up to life in prison, when he is sentenced by Senior United States District Judge Frederick J. Scullin, Jr. on August 14, 2019. A defendant’s sentence is imposed by a judge based on the particular statutes the defendant is charged with violating, the U.S. Sentencing Guidelines, and other factors.
This case was investigated by the DEA and the Plattsburgh City Police Department, and is being prosecuted by Assistant U.S. Attorney Douglas Collyer.
Monroe resident pleads guilty to possessing two unregistered shotgunsRead the Press Release
MONROE, La. – United States Attorney David C. Joseph announced that Nelson Bell Jr., 51, of Monroe, pleaded guilty Tuesday before U.S. District Judge Terry Doughty for possessing two unregistered shotguns.
According to the guilty plea, Monroe Police went to Bell’s home on October 23, 2017 in response to a complaint. The officers determined that Bell had fired a gun in the living room, hitting a couch across from where his wife was sitting, and then went outside and fired a shot into the air. Officers found an ejected shell from the firearm on the living room floor and two shotguns, an Ithaca shotgun, Model 37, 12 gauge and a Browning shotgun, Model Light Twelve 12 gauge. Law enforcement agents measured the barrels of both shotguns and found they measured less than 18 inches in length, the minimum length required by law. Bell admitted to possessing the firearms and that he was aware they were not registered as required by law. Under federal law, shotguns with barrels shorter than 18 inches must be registered.
Bell faces up to 10 years in prison, three years of supervised release and a $250,000 fine. Doughty set the sentencing date for September 4, 2019.
The ATF and the Monroe Police Department conducted the investigation. Assistant U.S. Attorney Tennille M. Gilreath is prosecuting the case.
Project Safe Neighborhoods (PSN) is the centerpiece of the Department of Justice’s violent crime reduction efforts. Project Safe Neighborhoods 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.
Mississippi Man Pleads Guilty to Federal Hate Crime for CrossburningRead the Press Release
The Department of Justice today announced that Louie Bernard Revette pleaded guilty to federal charges related to his commission of a crossburning on Oct. 24, 2017, in Seminary, Mississippi. Specifically, Revette, 37, pleaded guilty to one count of interference with housing rights, a federal civil rights violation, and one count of using fire during the commission of a federal felony.
“The defendant’s racially motivated actions sought to threaten and intimidate the peaceful residents of this community,” said Assistant Attorney Eric Dreiband of the Civil Rights Division. “The Department of Justice will not tolerate abhorrent and hateful acts of intimidation, and we will continue to prosecute anyone who commits a hate crime to the fullest extent of the law.”
"Terrorizing our neighbors and entire communities based on race is a federal crime that will be vigorously prosecuted by this office. I applaud our law enforcement for quickly investigating and bringing this defendant to justice. There is no place in our state or our country for this type of hatred, and we will not tolerate individuals making others live in fear because of the color of their skin," said U. S. Attorney Mike Hurst for the Southern District of Mississippi.
“While wounds are still healing from Mississippi’s past, incidents such as this only serve as setbacks and should be fully condemned in every community,” said Special Agent in Charge of the FBI in Mississippi Christopher Freeze. “The FBI stands firm that those who commit these reprehensible crimes will be aggressively investigated and prosecuted.”
In his plea, Revette admitted that he traveled to what he knew to be a predominantly African-American residential area of Seminary, Mississippi. Revette admitted that he left the area, later recruiting a co-conspirator to build a cross to burn near the home of a juvenile victim identified as M.H. Revette and the co-conspirator constructed the cross using materials from in and around Revette’s residence, placed the cross near M.H.’s home, and lit it on fire. Revette further admitted that he built and burned the cross to threaten, frighten, and intimidate M.H. and other African-American residents because of their race and color, and because those individuals lived in and occupied residences in that area of Seminary, Mississippi. Revette acknowledged that he knew burning crosses have historically been used to threaten, frighten, and intimidate African-Americans.
Revette faces a maximum total sentence of 20 years in prison and a $500,000 fine on the two charges. Sentencing has been scheduled for Aug. 20.
This case was investigated by the FBI Jackson Division’s Hattiesburg Resident Agency. Assistant U.S. Attorney Candace Gregory Mayberry for the Southern District of Mississippi and Trial Attorney Julia Gegenheimer from the Justice Department’s Civil Rights Division are prosecuting the case.
For more information about DOJ’s work to combat and prevent hate crimes, visit www.justice.gov/hatecrimes: a one-stop portal with links to DOJ hate crimes resources for law enforcement, media, researchers, victims, advocacy groups, and other organizations and individuals.
Minnesota Man Charged with Possession of a Firearm by a FelonRead the Press Release
United States Attorney Ron Parsons announced that a Minnesota man has been indicted by a federal grand jury for Possession of a Firearm by a Felon.
Mark Schmidt, age 54, was indicted on January 23, 2019. He appeared before U.S. Magistrate Judge Mark A. Moreno on April 4, 2019, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 10 years in federal prison and/or a $250,000 fine, up to 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The Indictment alleges that on or about December 5, 2018, Schmidt, a convicted felon, knowingly possessed a Smith & Wesson, model 28 Highway Patrolman, .357 Magnum caliber, double-action revolver and twenty-three rounds of Blazer brand, .357 Magnum caliber ammunition.
The charge is merely an accusation and Schmidt is presumed innocent until and unless proven guilty.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
The investigation is being conducted by the Northern Plains Safe Trails Drug Enforcement Task Force. Assistant U.S. Attorney Cameron J. Cook is prosecuting the case.
Schmidt was released on bond pending trial. A trial date has not been set.
Members of Ouachita Parish methamphetamine distribution ring plead guiltyRead the Press Release
MONROE, La. – United States Attorney David C. Joseph announced that Matthew A. Beaudion, 30, and Jessica N. Davis, 34, both of Monroe, entered guilty pleas Wednesday before U.S. Magistrate Judge Karen Hayes for conspiring to distribute methamphetamine in Ouachita Parish.
According to the guilty pleas, Beaudion, Davis and co-defendant Justin D. Jenkins, 34, of Rayville, Louisiana, traveled to Houston, Texas, on August 14, 2017 so that Beaudion could purchase methamphetamine with plans to distribute it to Davis and other persons. Beaudion paid Jenkins to drive because he had a valid driver’s license. After returning to Monroe on August 15, 2017, law enforcement agents stopped the vehicle, and discovered 690.5 grams of methamphetamine hidden under the dashboard of the vehicle behind the radio.
The defendants face not less than 10 years in prison, at least five years of supervised release and a $10 million fine. Jenkins pleaded guilty to the conspiracy count on January 24, 2018. All three defendants are scheduled to be sentenced July 31, 2019.
The DEA and the Ouachita Parish Sheriff’s Office participated in the investigation. Assistant U.S. Attorney Seth D. Reeg is prosecuting the case.
Medicare Advantage Provider to Pay $30 Million to Settle Alleged Overpayment of Medicare Advantage FundsRead the Press Release
Sutter Health LLC, a California-based healthcare services provider, and several affiliated entities, Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter Gould Medical Foundation, and Sutter Medical Foundation, have agreed to pay $30 million to resolve allegations that the affiliated entities submitted inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans, which resulted in the plans and providers being overpaid, the Justice Department announced today. Sutter Health is headquartered in Sacramento, California.
“The Medicare Advantage Program provides benefits to a significant portion of federal health care beneficiaries,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will help ensure that accurate information is supplied to the Medicare Advantage Program by plans and providers, and to pursue appropriate remedies when it is not.”
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed healthcare insurance plans called Medicare Advantage Plans (“MA Plans”) that are owned and operated by private Medicare Advantage Organizations (“MAOs”). MA Plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans. The Centers for Medicare and Medicaid Services (“CMS”), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the health status of each plan beneficiary. The adjustments are commonly referred to as “risk scores.” In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.
Sutter Health, a non-profit public benefit corporation that provides healthcare services through its affiliates, including hospitals and medical foundations, contracted with certain MAOs to provide healthcare services to California beneficiaries enrolled in the MAOs’ MA Plans. In exchange, Sutter received a share of the payments that the MAOs received from CMS for the beneficiaries under Sutter’s care.
Sutter submitted diagnoses to the MAOs for the MA Plan enrollees that they treated. The MAOs, in turn, submitted the diagnosis codes to CMS from the beneficiaries’ medical encounters, such as office visits and hospital stays. The diagnosis codes were used in CMS’ calculation of a risk score for each beneficiary.
The settlement announced today resolves allegations that Sutter and its affiliates submitted unsupported diagnosis codes for certain patient encounters of beneficiaries under their care. These unsupported diagnosis scores inflated the risk scores of these beneficiaries, resulting in the MAO plans being overpaid.
Earlier this month, the government filed a complaint against Sutter and a separate affiliated entity, Palo Alto Medical Foundation, alleging that they violated the False Claims Act by knowingly submitting unsupported diagnosis scores. That case is captioned United States ex rel. Ormsby v. Sutter Health, et al., Case No. 15-CV-01062-JD (N.D. Cal.), and is still ongoing.
“Misrepresenting patients’ risk results in higher payments and wasted Medicare funds,” said Steven J. Ryan, Special Agent in Charge with the Office of Inspector General for the U.S. Department of Health and Human Services. “With some one-third of people in Medicare now enrolled in managed care Advantage plans, large health systems such as Sutter can expect a thorough investigation of claimed enrollees’ health status.”
The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Northern District of California, and HHS-OIG.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Medicare Advantage Provider to Pay $30 Million to Settle Alleged Overpayment of Medicare Advantage FundsRead the Press Release
SAN FRANCISCO – Sutter Health LLC, a California-based healthcare services provider, and several affiliated entities, Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter Gould Medical Foundation, and Sutter Medical Foundation, have agreed to pay $30 million to resolve allegations that the affiliated entities submitted inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans, which resulted in the plans and providers being overpaid, the Justice Department announced today. Sutter Health is headquartered in Sacramento, California.
“The Medicare Advantage Program provides benefits to a significant portion of federal health care beneficiaries,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will help ensure that accurate information is supplied to the Medicare Advantage Program by plans and providers, and to pursue appropriate remedies when it is not.”
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed healthcare insurance plans called Medicare Advantage Plans (“MA Plans”) that are owned and operated by private Medicare Advantage Organizations (“MAOs”). MA Plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans. The Centers for Medicare and Medicaid Services (“CMS”), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the health status of each plan beneficiary. The adjustments are commonly referred to as “risk scores.” In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.Sutter Health, a non-profit public benefit corporation that provides healthcare services through its affiliates, including hospitals and medical foundations, contracted with certain MAOs to provide healthcare services to California beneficiaries enrolled in the MAOs’ MA Plans. In exchange, Sutter received a share of the payments that the MAOs received from CMS for the beneficiaries under Sutter’s care.
Sutter submitted diagnoses to the MAOs for the MA Plan enrollees that they treated. The MAOs, in turn, submitted the diagnosis codes to CMS from the beneficiaries’ medical encounters, such as office visits and hospital stays. The diagnosis codes were used in CMS’ calculation of a risk score for each beneficiary.
The settlement announced today resolves allegations that Sutter and its affiliates submitted unsupported diagnosis codes for certain patient encounters of beneficiaries under their care. These unsupported diagnosis scores inflated the risk scores of these beneficiaries, resulting in the MAO plans being overpaid.
In March 2019, the government filed a separate complaint against Sutter and its affiliated entity, Palo Alto Medical Foundation, alleging that they violated the False Claims Act by knowingly submitting unsupported diagnosis scores. That case is captioned United States ex rel. Ormsby v. Sutter Health, et al., Case No. 15-CV-01062-JD (N.D. Cal.), and is still ongoing.
“Misrepresenting patients’ risk results in higher payments and wasted Medicare funds,” said Steven J. Ryan, Special Agent in Charge with the Office of Inspector General for the U.S. Department of Health and Human Services. “With some one-third of people in Medicare now enrolled in managed care Advantage plans, large health systems such as Sutter can expect a thorough investigation of claimed enrollees’ health status.”
The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Northern District of California, and HHS-OIG.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.This matter is being handled by Assistant United States Attorney Kimberly Friday and U.S. Department of Justice Trial Attorney Olga Yevtukhova, with assistance from Jonathan Birch and Tina Louie.
Man Who Pretended to Be Blind Sentenced to Year in Prison After Collecting Nearly $1.3 Million in Veterans Affairs DisabilityRead the Press Release
DENVER -- Mike Rodolfo Blea, of Northglenn, Colorado, was sentenced Wednesday by Senior U.S. District Court Judge Wiley Daniel to serve twelve months in prison, followed by three years on supervised release for defrauding the U.S. Department of Veterans Affairs (VA) out of nearly $1.3 million by pretending to be blind. Blea must also pay $1,273,180.44 in restitution to the agency. The announcement was made today by U.S. Attorney Jason Dunn. Blea appeared at the hearing free on bond. He was ordered by Judge Daniel to report to a Bureau of Prison Facility once designated.
According to the stipulated facts in the plea agreement, Blea was a Vietnam Veteran who began receiving VA disability payments in 1969 for a visual impairment. He did in fact have a minor visual impairment due to macular holes in his retinas, however at least by 1983 he began exaggerating how bad his eyesight was, with the result being that the VA was paying him 100% disabled rate when in fact his true rating was probably 10%. While the VA thought Blea was blind, he was deliberately getting eye exams outside the VA system that showed his vision was correctible to 20/30 in one eye and 20/40 in another. In fact, Blea had a driver’s license and drove regularly without any noticeable difficulties.
“Justice may be blind, but Mr. Blea isn’t,” said U.S. Attorney Jason Dunn. “He will now have a year in federal prison to think about his actions and see a better way going forward.”
Gregg Hirstein, Special Agent in Charge, VA Office of the Inspector General, said, “The Department of Veterans Affairs Office of Inspector General is committed to bringing justice to those who illegally enrich themselves at the expense of VA programs intended to help our nation’s disabled veterans. This case should serve as a deterrent to those who would seek to defraud the VA.”
Blea was charged by information on August 8, 2018, and pleaded guilty to a single count of concealment of a material fact on December 19, 2018. He was sentenced Wednesday, April 10, 2019.
This case was investigated by the VA’s Office of the Inspector General and prosecuted by Special Assistant U.S. Attorney Dan Burrows.
Lincoln Man Sentenced to 40 Years in Federal Prison for His Role in Six Armed RobberiesRead the Press Release
United States Attorney Joe Kelly announced that Shawn Brooks, age 27, of Lincoln, Nebraska, was sentenced to 40 years in federal prison today by Chief United States District Judge John M. Gerrard. There is no parole in the federal system. In addition to the 480 months of imprisonment, Brooks will be placed on 8 years of supervised release when he finishes his sentence, and he will be required to pay $2,271 in restitution to all six victims of his crimes. Brooks was convicted by a federal jury of thirteen counts of robbery and gun charges on January 10, 2019.
Brooks was found guilty of one count of conspiracy to commit robbery; five counts of interference with commerce by robbery; one count of bank robbery; and six counts of possessing a firearm in furtherance of a crime of violence. The jury also found that Brooks should receive a sentence enhancement on three of the firearms count. Brooks received two sentence enhancements for brandishing a firearm and one sentence enhancement for discharging a firearm during and in furtherance of a bank robbery. Brooks faced up to life in prison following the jury’s verdict.
Evidence presented at trial showed that between November 29, 2016, and December 30, 2016, Brooks and his co-defendant, Marcus Remus, robbed one bank and five convenience stores, all in Lincoln. In three of those robberies, Brooks brandished a firearm at employees of the businesses. At the bank robbery, he also fired the weapon multiple times in the direction of bank employees. Remus shot one of the gas station clerks in their final robbery at a convenience store on December 30, 2016.
This case was investigated by the Lincoln Police Department and the Federal Bureau of Investigation.
Lawrence Man Charged with Fentanyl TraffickingRead the Press Release
BOSTON – A Lawrence man was charged Wednesday, April 10, 2019, in federal court in Boston in connection with drug trafficking activities involving fentanyl.
Robinson Guzman, 38, was indicted on three counts of distribution of, and possession with intent to distribute, fentanyl; one count of distribution of, and possession with intent to distribute, more than 40 grams of fentanyl; and one count of possession with intent to distribute more than 40 grams of fentanyl. Guzman was previously charged by criminal complaint and arrested on March 19, 2019. He has been in custody since.
According to court documents, between November 2018 and March 2019, prior to his arrest, Guzman engaged in 10 separate drug sales of fentanyl powder and pills, containing either Oxycodone or fentanyl, to an undercover law enforcement agent.
The charges of distribution of, and possession with intent to distribute, fentanyl each provide for a sentence of no greater than 20 years in prison, a minimum of three years of supervised release and a fine of up to $1 million; the charges involving more than 40 grams of fentanyl carry a mandatory minimum sentence of five years and up to 40 years in prison, a minimum of four years of supervised release, and a fine of up to $5 million. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Brian D. Boyle, Special Agent in Charge of the Drug Enforcement Administration, New England Field Division, made the announcement today. Valuable assistance was provided by the Methuen, Lawrence, and Melrose Police Departments. Assistant U.S. Attorney Stephen W. Hassink of Lelling’s Narcotics and Money Laundering Unit is prosecuting the case.
The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Lawrence Keefe Takes the Oath of Office as United States Attorney for the Northern District of FloridaRead the Press Release
COLIN HACKLEY PHOTO TALLAHASSEE, FLA.-Lawrence Keefe, second from left, is joined by his wife Dr. Lynn Keefe and sons Robert, John, and Patrick, right, as he takes the Oath of Office as the United States Attorney for the Northern District of Florida from Mark Walker, left, Chief United States District Judge on April 12, 2019.TALLAHASSEE, FLORIDA – This afternoon, U.S. Attorney Lawrence Keefe took the oath of office in an official investiture ceremony, joined by staff from the U.S. Attorney’s Office; federal, state, and local law enforcement agency heads; Congress members; Judiciary members; Florida cabinet members; city and county government members; distinguished guests; and family.
The Honorable Mark E. Walker, Chief United States District Judge, presided over the ceremony. Three of U.S. Attorney Keefe’s longtime friends, mentors, and colleagues participated in the ceremony. U.S. Attorney Keefe met Phillip S. Dingle, who gave the invocation, and J. Rex Farrior III, who led the Pledge of Allegiance, in law school at the University of Florida. Benjamin H. Hill III, who hired U.S. Attorney Keefe after graduation at his Tampa-based law firm, gave the keynote address.
U.S. Attorney Keefe gave a special message to each group present at the investiture about his core beliefs of hard work, integrity, and treating everyone with respect, no matter their station in life. He quoted from Sir Winston Churchill: “To each there comes in their lifetime a special moment when they are figuratively tapped on the shoulder and offered the chance to do a very special thing, unique to them and fitted to their talents. What a tragedy if that moment finds them unprepared or unqualified for that which could have been their finest hour.” The full text of U.S. Attorney Keefe’s remarks as drafted are attached, as well as a photo and copy of the program.
As the 41st U.S. Attorney for the Northern District of Florida, U.S. Attorney Keefe is the top-ranking federal law enforcement official in the district, which includes Florida’s 23 panhandle counties, from Escambia in the west to Alachua in the east. The district has offices in Pensacola, Panama City, Tallahassee, and Gainesville. The office is responsible for prosecuting federal crimes in the district, including crimes related to terrorism, public corruption, child exploitation, human trafficking, financial fraud, health care fraud, firearms, and narcotics. The office also defends the United States in civil cases and collects debts owed to the United States. For more information about U.S. Attorney Keefe’s appointment and experience, click here.
The United States Attorney's Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. To access available public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
Law Enforcement Dismantle Drug Ring Operating in AshevilleRead the Press Release
ASHEVILLE, N.C. – United States Attorney Andrew Murray announced today that law enforcement have dismantled a drug ring operating in Asheville, charging eight of its members with drug conspiracy and drug and firearm-related offenses. The 35-count criminal indictment was returned by the federal grand jury on April 2, 2019, and was unsealed today.
The two-year joint federal, state and local investigation aimed at reducing drug distribution and drug related criminal activity and increasing community safety in Buncombe County. The indictment alleges that the drug ring operated in Asheville and trafficked heroin, cocaine, crack cocaine, methamphetamine, prescription drugs and other narcotics. Over the course of the investigation, law enforcement seized drugs, 12 firearms and ammunition, and $153,674 in cash.
“The federal charges against the eight defendants are the result of a joint law enforcement investigation targeting an area of Asheville that has been plagued by drug trafficking and drug-related criminal activity,” said U.S. Attorney Murray. “The danger and violence that drugs and guns create in our local communities erode our citizens’ ability to live peaceful lives. I want to thank our law enforcement partners for working together to identify individuals who threaten the safety and stability of our neighborhood streets.”
“Today, we have removed dangerous criminals from the Buncombe County community. These poly-drug traffickers will no longer be able to deliver deadly doses of poison to this community. This investigation was a success because of the great working relationship that DEA has with its federal, state, local counterparts and the U.S. Attorney’s Office,” said Robert J. Murphy, Special Agent in Charge of the DEA Atlanta Field Division, which oversees North Carolina.
"The Asheville Police Department is committed to bettering the lives of the residents of Asheville,” said Interim Chief Wade Wood, of the Asheville Police Department. “This joint operation addressed an area of our city that has seen an increase in violence and drug-related activity over the course of the past year. Federal and local partnerships are critical in addressing such criminal networks, and I would like to thank the United States Attorney’s Office and the DEA for their continued support and efforts.”
The eight defendants named in the indictment are each charged with conspiracy to distribute and to possess with intent to distribute heroin, cocaine, crack cocaine, marijuana, Oxycodone, Adderrall, and Xanax, and related possession and distribution charges. They are:
- Prophet Karim Hadialim Allah, 47, of Leicester, North Carolina.
- Rodney Dejuan Allison, 43, of Asheville.
- William Luther Downs, Jr., 26, of Asheville.
- Harry James Odum, 57, of Asheville.
- Derrick Maurice Perry, 25, of Asheville.
- Teresa Day Shuping, 47, of Hickory, North Carolina.
- Elliot Norris Smith, 25, of Atlanta, Georgia.
- Jeffrey Allen Wright, 41, of Leicester.
In addition to the drug conspiracy charges, Allison, Downs, Perry, Smith and Wright are also charged with firearms related offenses. (See chart below for federal charges and penalties for each defendant).
Five defendants are in custody. Federal arrest warrants have been issued against Perry, Smith and Shuping.
The charges contained in the indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
In making today’s announcement, U.S. Attorney Murray thanked the Drug Enforcement Administration, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations, the Asheville Police Department, the Buncombe County Anti-Crime Task Force, the Buncombe County Sheriff’s Office, the Black Mountain Police Department, and the Wilkes County Sheriff’s Office for leading the investigation. U.S. Attorney Murray also thanked the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, and the North Carolina State Bureau of Investigation for their assistance in this case.
Assistant U.S. Attorney Thomas Kent, of the U.S. Attorney’s Office in Asheville, is leading the prosecution.
This case has been brought as part of Project Safe Neighborhoods (PSN), the U.S. Justice Department’s program to reduce violent crime. The PSN approach emphasizes coordination between state and federal prosecutors and all levels of law enforcement to address gun crime, especially felons illegally possessing firearms and ammunition and violent and drug crimes that involve the use of firearms.
Lake Charles man pleads guilty to illegal firearm possession following police chaseRead the Press Release
LAKE CHARLES, La. – United States Attorney David C. Joseph announced that a Lake Charles man pleaded guilty in federal court on Monday to illegally possessing a firearm after leading Lake Charles police officers on a vehicle pursuit that ended in a crash.
Dane Darbonne, 29, pleaded guilty before U.S. Magistrate Judge Kathleen Kay to being a felon in possession of a firearm. According to the guilty plea, Darbonne purchased a Savage Model 110 caliber, 30-06 rifle from another individual on August 10, 2018. The day after taking possession of the firearm, Darbonne led Lake Charles police in a vehicle pursuit. Darbonne crashed the car during the pursuit and fled the scene. Officers recovered the rifle from the vehicle Darbonne was driving. Darbonne is a felon who was previously convicted for possession of a firearm in a firearm free zone, assault by drive-by-shooting, attempted manslaughter, possession of a firearm by a convicted felon and possession of cocaine. Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of a firearm or ammunition.
Darbonne faces up to 10 years in prison, three years of supervised release and a $250,000 fine.
The ATF and the Lake Charles Police Department conducted the investigation. Assistant U.S. Attorney Dominic Rossetti is prosecuting the case.
Project Safe Neighborhoods (PSN) is the centerpiece of the Department of Justice’s violent crime reduction efforts. Project Safe Neighborhoods 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.
Justice Department Honors Nashville Man with Special Courage AwardRead the Press Release
WASHINGTON – The Justice Department today presented James Shaw Jr. of Nashville, Tennessee, the Special Courage Award during the annual National Crime Victims’ Service Awards ceremony in Washington, D.C. This honor is awarded to victims or survivors who exhibit exceptional perseverance and determination in dealing with his or her own victimization, or who acted bravely to prevent victimization.
“Risking his own life, Mr. Shaw acted swiftly and bravely after a gunman killed four people early one morning at a diner, saving the lives of many others. He then followed up his courageous action by delivering comfort and aid to wounded and traumatized victims,” said Attorney General William P. Barr. “None of us knows how we would react in such a dangerous situation, but we can all be inspired by Mr. Shaw’s selflessness.”
On April 22, 2018, Shaw, an electrical technician, was eating at a restaurant when a gunman opened fire on the patrons. Despite being grazed by a bullet, a Nashville police spokesman said “Mr. Shaw saved, obviously, many lives in his heroic action.” Later, he visited wounded victims in the hospital and helped support them in their recovery.
“The trauma of those who experience a violent crime is deep and real, and their restoration to physical and emotional health can be long and difficult,” said Office of Justice Programs Principal Deputy Assistant Attorney General Matt M. Dummermuth. “But Mr. Shaw encourages us as individuals and as a nation to strive to meet the needs of those struggling in the aftermath of crime.”
The Department’s Office for Victims of Crime, a component of OJP, leads communities across the country in observing National Crime Victims’ Rights Week and hosts an annual award ceremony. President Reagan proclaimed the first Victims’ Rights Week in 1981, calling for greater sensitivity to the rights and needs of victims. This year’s observance takes place April 7-13, with the theme “Honoring Our Past. Creating Hope for the Future.”
The Office of Justice Programs, directed by Principal Deputy Assistant Attorney General Matt M. Dummermuth, provides federal leadership, grants and resources to improve the nation’s capacity to prevent and reduce crime, assist victims and enhance the rule of law by strengthening the criminal justice system. More information about OJP and its components can be found at www.ojp.gov.
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Jury Finds Local Businessman Guilty of Fraud in Bidding for D.C. Government ContractsRead the Press Release
WASHINGTON – Keith Forney, 60, of Clinton, Md., has been found guilty by a jury of fraud and other charges related to his fraudulently obtaining preferences for his company, Forney Enterprises, Inc. (FEI), in bidding for District of Columbia government contracts.
The announcement was made by U.S. Attorney Jessie K. Liu, Nancy McNamara, Assistant Director in Charge of the FBI’s Washington Field Office, and District of Columbia Inspector General Daniel W. Lucas.
Forney was found guilty of three counts of fraud, two counts of perjury, and one count of corrupt election practices. The verdict was returned on April 11, 2019, following a trial in the Superior Court of the District of Columbia. The Honorable Michael O’Keefe scheduled sentencing for June 24, 2019. Forney faces a maximum sentence of three years in prison for the fraud counts, ten years for the perjury counts, and five years for corrupt election practices.
Forney was previously found guilty on April 1, 2019, in a bench trial before Judge O’Keefe, of 11 counts of making illegal campaign contributions. The maximum sentence for each of these counts is six months in prison.
According to the government’s evidence, FEI was a business located in the District of Columbia. The District government had a preference program for local businesses when bidding for D.C. government contracts. The Department of Small and Local Business Development (DSLBD) certified that local businesses were eligible for preferences in certain categories. One of the categories was as a resident-owned business (ROB). The ROB category was worth five preference points, meaning that a bid was evaluated as if it was 5% less than the actual bid amount. On average, FEI bid for 15-30 government contracts per year using the ROB preference points. All of the contracts were worth over $1 million.
In 2012, 2014, and 2016, Forney submitted applications to DSLBD listing an address in the District of Columbia as his residence in order to obtain the ROB preference points. Forney never lived at the address. He had purchased the property in 2005 when it was being leased to a tenant. Forney continued to rent the property out while using the address for the ROB designation. Forney also obtained a D.C. driver’s license and a D.C. voter registration with the address of the rental property. He then submitted these documents to DSLBD to make it appear that he lived there. Forney applied for his D.C. voter registration in July 2007. He certified on the application that he was not registered to vote in any other jurisdiction when in fact he was registered to vote in Maryland. Forney continued to vote in Maryland after registering to vote in D.C. and did not cancel his Maryland registration until 2015. Forney also obtained Maryland and D.C. driver’s licenses on the same day.
The evidence at trial on the campaign finance charges established that Forney made the maximum allowable donations as an individual and on behalf of FEI to three candidates running for the D.C. council. Forney then directed associates to make personal contributions to these same candidates. Forney used FEI funds to reimburse the associates for the contributions.
This case was investigated by the FBI’s Washington Field Office and the District of Columbia Office of the Inspector General. It is being prosecuted by Assistant U.S. Attorneys Anthony Saler and Andrea Duvall. Assistance was provided by Assistant U.S. Attorney Daniel Lenerz, Financial Analyst: Bryan J. Snitselaar. Paralegal Specialists: C. Rosalind Pressley, Joshua Fein, and Amanda Rohde; former Paralegal Specialists Toni Anne Donato and Kristy Penny, and former Criminal Investigator Juan Juarez.
Jury Convicts Reno Felon of Unlawful Possession of A FirearmRead the Press Release
RENO, Nev. – A jury sitting in northern Nevada convicted a felon of a federal firearm violation, announced U.S. Attorney Nicholas A. Trutanich for the District of Nevada.
Clifton James Jackson, 55, of Reno, was found guilty of felon in possession of a firearm. He has a prior conviction for felon in possession of a firearm in Nevada. United States District Judge Howard D. McKibben scheduled a sentencing hearing on July 10, 2019.
According to court documents and evidence introduced at trial, in December 2018, a deputy with the Washoe County Sheriff’s Office responded to a 911 call reporting a man holding a handgun while walking towards a business. Gunshots were also reported by the caller. As responding law enforcement officers located and pursued a truck driven by the suspect, the deputy observed an object being thrown from the truck. When additional units arrived on scene, Jackson and a juvenile were arrested. A subsequent search of the truck and the area where the object had been thrown revealed a 7.65mm semi-automatic pistol and a box of .32 caliber ammunition. A records check of the recovered firearm revealed that it had been stolen in Plumas County, California in May 2018.
The maximum penalty is 10 years in prison and a $250,000 fine.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Washoe County Sheriff’s Office. Assistant U.S. Attorneys Megan Rachow and Randy St. Clair are prosecuting the case.
To report a tip about a stolen firearm contact the ATF at 1-888-ATF-TIPS (1-888-283-3473).
This case was brought as part of Project Safe Neighborhoods (PSN), a nationwide program by the Department of Justice that has been historically successful in bringing together all levels of law enforcement to reduce violent crime and make our neighborhoods safer for everyone. The Department has made turning the tide of rising violent crime in America a top priority. In October 2017, as part of a series of actions to address this crime trend, the Department announced the reinvigoration of PSN. For more information about PSN, visit www.justice.gov/usao-nv.
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Justice Department Closes Review into the Death of Aaron BaileyRead the Press Release
Indianapolis – Josh J. Minkler, the United States Attorney, announced today that the independent federal review into the fatal shooting of Indianapolis resident Aaron Bailey on June 29, 2017, found insufficient evidence to support federal criminal civil rights charges against the Indianapolis Metropolitan Police Department officers involved in the shooting.
Federal authorities conducted a comprehensive and independent review of all evidence gathered during multiple investigations and proceedings relating to the shooting. These materials included, among other things, the Indianapolis Metropolitan Police Department homicide investigation, the investigation and report of the appointed state special prosecutor, the proceedings before the Indianapolis Civilian Police Merit Board, and the independent investigation of the Federal Bureau of Investigation.
Based on this review, career federal prosecutors determined that there is insufficient evidence to prove any violation of the applicable federal criminal civil rights statute, 18 U.S.C. § 242. Under this statute, the government would have to prove beyond a reasonable doubt that one or both of the officers involved in the shooting deprived Mr. Bailey of a constitutionally protected right, and that the officer did so willfully. To prove the constitutional violation, the government would have to show that the officer used force that was objectively unreasonable based on all of the surrounding circumstances. Moreover, the law requires that this determination allow for the fact that law enforcement officers are often forced to make split-second judgments in circumstances that are tense, uncertain, and rapidly evolving, and also requires that an officer’s force be judged without the benefit and added perspective of hindsight.
To prove that an officer-involved shooting violated 18 U.S.C. § 242, the government also would have to prove beyond a reasonable doubt that the officer acted willfully, meaning that the officer knew that his actions were unlawful and he acted with the specific intent to do something the law forbids. Even negligence, mistake, and bad judgment are insufficient to establish a criminal violation.
Based on a determination that the evidence in this case is insufficient to meet the high legal standard set by the law, the United States Attorney’s Office, in consultation with the Civil Rights Division of the Department of Justice, has closed this matter without prosecution.
The United States Attorney’s Office for the Southern District of Indiana, the Civil Rights Division, and the Federal Bureau of Investigation are committed to investigating allegations of excessive force by law enforcement officers, and will continue to devote the resources required to ensure that all serious allegations of civil rights violations are thoroughly examined. The Department will aggressively prosecute criminal civil rights violations whenever there is sufficient evidence to do so and justice requires.
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Inmates at USP Big Sandy Convicted of Assault with a Dangerous WeaponRead the Press Release
LONDON, Ky. – Eric “Big E” Flores, 38, of San Angelo, Texas, and Salomon Martinez, 44, of Eagle Pass, Texas, were convicted by a federal jury yesterday of Assault of a Federal Inmate with a Dangerous Weapon.
The proof at trial established that the Defendants were members of the MEXIKANEMI, Texas Mexican Mafia, and participated in the assault of an Arizona Mexican Mafia member. On June 17, 2018, within United States Penitentiary (USP) Big Sandy, in Inez, Kentucky, the Defendants repeatedly stabbed the victim, in his back, leg, and arm, with shanks. In addition to multiple stab wounds, the victim also sustained a fractured left scapula.
Two co-defendants, Rodney “Joker” Galindo, 38, of Odessa, Texas, and Michael “Taz” Morin, 52, of Austin, Texas, fellow MEXIKANEMI members, pled guilty in March to the attempted murder of another Arizona Mexican Mafia member. The second victim suffered a hematoma in the right frontal lobe, depressed skull fracture, midline shift, and extra-axial hemorrhages. The two assaults happened simultaneously, within a cell block, on June 17, 2018.
Galindo and Morin face up to twenty-five years in prison. Flores and Martinez face up to ten years in prison.
Robert M. Duncan, Jr., United States Attorney for the Eastern District of Kentucky and Hector Joyner, Warden of USP Big Sandy, jointly made the announcement. The investigation was conducted by the USP Big Sandy Special Investigative Services Office. The United States was represented by Assistant United States Attorney Jenna E. Reed.
Informational: Federal Court arraignmentsRead the Press Release
The U.S. Attorney’s Office announced that the following persons were arraigned or appeared this week before U.S. Magistrate judges on indictments handed down by the Grand Jury or on criminal complaints. The charging documents are merely accusations and defendants are presumed innocent until proven guilty:
Appearing in Billings before U.S. Magistrate Judge Timothy J. Cavan and pleading not guilty on April 11 was:
JOSEPH MATTHEW BALLANTYNE, 60, on charges of failure to register as a sex offender. If convicted of the most serious charge, Ballantyne faces a maximum 10 years in prison, a $250,000 fine and five years to life of supervised release. Ballantyne was detained. The case was investigated by the U.S. Marshals Service. Pacer case reference. 19-42.
Appearing in Great Falls before U.S. Magistrate Judge John T. Johnston and pleading not guilty on April 11 was:
JAMES SNELL, 42, of Fort Belknap, on a 14-count indictment charging him with abusive sexual contact, sexual exploitation of a child and aggravated sexual abuse. If convicted of the most serious crime, Snell faces a minimum mandatory 30 years to life in prison, a $250,000 fine and from five years to life of supervised release. Snell was detained. The case was investigated by the FBI. Pacer case reference. 19-20.
Appearing in Great Falls before U.S. Magistrate Judge Jeremiah C. Lynch and pleading not guilty on April 9 was:
GREGORY GEORGE DENNY, 46, of Great Falls, on charges of possession with intent to distribute methamphetamine, possession of a firearm in furtherance of a drug trafficking crime and felon in possession of a firearm. If convicted of the most serious crime, Denny faces a minimum mandatory five years to 40 years in prison, a $5 million fine and five years of supervised release. Denny was detained. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and Homeland Security Investigations. Pacer case reference. 18-24.
KENNETH SKUNKCAP, 62, of Browning, on charges of assault resulting in substantial injury to dating partner. If convicted of the most serious crime, Skunkcap faces a maximum five years in prison, a $250,000 fine and three years of supervised release. Skunkcap was detained. The case was investigated by the FBI. Pacer case reference. 19-22.
MARLIN LAYNE BULL CALF, 21, of Browning, on charges of strangulation. If convicted of the most serious crime, Bull Calf faces a maximum 10 years in prison, a $250,000 fine and three years of supervised release. Bull Calf was detained. The case was investigated by the Bureau of Indian Affairs. Pacer case reference. 19-21.
Appearing in Missoula before U.S. Magistrate Judge Jeremiah C. Lynch and pleading not guilty on April 8 was:
JENNIFER LYNN FOLEY, 32, of Missoula, on charges of conspiracy to possess methamphetamine with intent to distribute, possession with intent to distribute meth and possession of a firearm during drug trafficking crime. Foley was detained. If convicted of the most serious crime, Foley faces a minimum mandatory 10 years to life in prison, a $10 million fine and a minimum five years of supervised release. Pacer case reference. 19-20.
If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system.
To establish a PACER account, which will allow you to review documents filed in the case, 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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Illegal Alien Sentenced for Sexually Exploiting Women in Northern VirginiaRead the Press Release
ALEXANDRIA, Va. – An El Salvadoran man who is in the United States illegally was sentenced today to over two years in prison for running an illegal commercial sex business that catered to the Hispanic community in Northern Virginia.
“Bonilla-Hernandez profited from the sexual exploitation of women who found themselves in difficult and vulnerable places,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “The tears, pain, and mental anguish expressed by the victims in this case is heartbreaking. Additionally, this case is yet another example of an individual who is here in the United States illegally and committing serious crimes. Human trafficking and the sexual exploitation of individuals remains a priority of this office and we will continue to investigate and prosecute these serious crimes that inflict mental, emotional, and physical harm on the victims involved.”
According to court documents, over the past three years, Luis Bonilla-Hernandez, 33, and co-conspirator, Eliazar Duran Mota, 23, of Herndon, ran the illegal business out of their homes in Sterling and Herndon. The women who were exploited were Hispanic, spoke little-to-no English, and found themselves struggling financially in the United States. Bonilla-Hernandez and Duran Mota took advantage of the difficult situations the victims had found themselves in and sought to sexually exploit them for financial profit.
Each week, Bonilla-Hernandez and Duran Mota would obtain a woman to work for a week at a time. During interviews with the women they described their bodies being sore and exhausted from the 10 to 20 commercial sex encounters they had per day. They described enduring verbal abuse and threats to their physical safety from the customers. They discussed being required to turn all of their money over to Bonilla-Hernandez and Duran Mota, and continuing to work out of fear that they would not get their portion of the money at the end of the week. After a woman worked for a week, Bonilla-Hernandez and Duran Mota would switch out their “inventory” by obtaining a new woman from Union Station to work throughout Northern Virginia.
When law enforcement executed a search warrant on Bonilla Hernandez’s house, they recovered evidence of the scheme and over $14,000 in cash.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, Matthew J. DeSarno, Special Agent in Charge, Criminal Division, FBI Washington Field Office, Michael L. Chapman, Loudoun County Sheriff, and Colonel Edwin C. Roessler Jr., Fairfax County Chief of Police, made the announcement after sentencing by Senior U.S. District Judge T.S. Ellis III. Assistant U.S. Attorney Maureen C. Cain 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. 1:19-cr-26.
Hartford Man Charged with Committing 7 Robberies and a Carjacking Last SummerRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, and Brian C. Turner, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, today announced that a grand jury sitting in Hartford has returned a superseding indictment charging ARNO SMITH, 56, of Hartford, with committing seven robberies and a carjacking last summer.
On November 6, 2018, the grand jury returned a one-count indictment alleging that, on July 26, 2018, Smith used threats of violence to steal a 2006 Honda Accord from a victim in Hartford.
An eight-count superseding indictment, which was returned on April 3, adds seven counts of interference with commerce by robbery and alleges that Smith robbed the Price Chopper supermarket located at 121 Farmington Avenue in Bristol on July 27; the Price Chopper supermarket located at 410 Queen Street in Southington on September 4; the U-Haul Moving and Storage located at 755 Capitol Avenue in Hartford on September 5; the Home Depot located at 55 Granby Street in Bloomfield on September 15; the Lowe’s Home Improvement located at 31 Buckland Hills Drive in South Windsor on September 16; the Days Inn located at 185 Ella Grasso Turnpike in Windsor Locks on September 18, and the U-Haul Moving and Storage located at 3197 Main Street in Hartford on September 19.
Smith has been detained since September 20, 2018, when he was arrested on related state charges.
The charge of carjacking carries a maximum term of imprisonment of 15 years, and the charge of interference with commerce by robbery carries a maximum term of imprisonment of 20 years on each count.
U.S. Attorney Durham stressed that an indictment is not evidence of guilt. Charges are only allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Federal Bureau of Investigation’s Northern Connecticut Violent Crimes Task Force and the Hartford, Bristol, Southington, Bloomfield, South Windsor, Windsor Locks, Farmington and West Hartford Police Departments. The case is being prosecuted by Assistant U.S. Attorney Michael J. Gustafson.
This prosecution has been brought through Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make neighborhoods safer for everyone.
Greenwood Man Sentenced to 10 Years in Federal Prison for Murder for Hire with Hate Crime EnhancementRead the Press Release
Columbia, South Carolina ---- United States Attorney Sherri A. Lydon announced today that Brandon Cory Lecroy, age 26, of Greenwood, South Carolina, was sentenced to ten years in the Federal Bureau of Prisons after pleading guilty to murder for hire. United States District Judge Bruce Howe Hendricks of Charleston sentenced Lecroy to the statutory maximum for the offense, followed by three years of court-ordered supervision. There is no parole in the federal system.
Evidence presented to the court established that the Federal Bureau of Investigation received information that Lecroy had contacted a white supremacist organization to seek assistance with the murder of his African American neighbor. The FBI was able to direct Lecroy to an undercover agent, who posed as a hitman to determine if Lecroy was serious about causing harm to his neighbor. On March 20, 2018, via a recorded telephone conversation, Lecroy made an arrangement with the undercover agent to pay for the murder of his neighbor. During the phone call, Lecroy told the agent “$500 and he’s a ghost.” In other words, Lecroy offered to pay $500 for the death of his neighbor. In the same conversation, Lecroy also made a request to put a “flaming cross” in the front yard and have the neighbor hung from a tree. Lecroy also made statements about taking over the neighbor’s property once the murder was accomplished.
On April 9, 2018, Lecroy met with the undercover agent in Greenwood. During this meeting, Lecroy pointed out the neighbor’s residence and discussed future targets he wanted killed or maimed. Lecroy also provided the agent with a $100 cash down payment. After the exchange of funds, law enforcement officers descended on the scene and arrested Lecroy without incident.
The case was investigated by agents with the Federal Bureau of Investigation. Assistant United States Attorney Bill Watkins of the Greenville office prosecuted the case.
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Georgia Man Charged with Failure to Register as a Sex OffenderRead the Press Release
NEW ORLEANS - U.S. Attorney Peter Strasser announced that JAMES A. MOORE, age 31, of Atlanta, Georgia was charged yesterday by grand jury indictment with one count of failure to register as a sex offender under the federal Sex Offender Registration and Notification Act (SORNA).
If convicted, MOORE faces a maximum term of 10 years in prison and a $250,000.00 fine. He also would have to be sentenced to a term of supervised release of between 5 years and life.
U.S. Attorney Strasser reiterated that the 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 United States Marshals Service, the New Orleans Police Department, the Orleans Parish Sheriff’s Office, the Louisiana State Police, and the Fulton County Sheriff’s Office of Atlanta, Georgia in this matter. He also extended his thanks to the Orleans Parish District Attorney’s Office for their assistance. Assistant United States Attorney Spiro G. Latsis is in charge of the prosecution.
General Electric Agrees to Pay $1.5 Billion Penalty for Alleged Misrepresentations Concerning Subprime Loans Included in Residential Mortgage-Backed SecuritiesRead the Press Release
The Department of Justice today announced that General Electric (GE) will pay a civil penalty of $1.5 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to resolve claims involving subprime residential mortgage loans originated by WMC Mortgage (WMC), a GE subsidiary. WMC, GE, and their affiliates allegedly misrepresented the quality of WMC’s loans and the extent of WMC’s internal quality and fraud controls in connection with the marketing and sale of residential mortgage-backed securities (RMBS). FIRREA authorizes the federal government to seek civil penalties for violations of various predicate criminal offenses, including wire and mail fraud where the violation affects a federally insured financial institution.
“The financial system counts on originators, which are in the best position to know the true condition of their mortgage loans, to make accurate and complete representations about their products. The failure to disclose material deficiencies in those loans contributed to the financial crisis,” said Assistant Attorney General Jody Hunt. “As today’s resolution demonstrates, the Department of Justice will continue to employ FIRREA as a powerful tool for protecting our financial markets against fraud.”
General Electric Capital Corporation (GECC), then the financial services unit of GE, acquired WMC, a subprime residential mortgage loan originator, in 2004. WMC originated more than $65 billion dollars in mortgage loans between 2005 and 2007. WMC sold the vast majority of its loans to investment banks, which, in turn, issued and sold RMBS backed by WMC loans to investors. The United States alleged that a majority of the mortgage loans WMC originated and sold for inclusion in RMBS in 2005-2007 did not comply with WMC’s representations about the loans, and that certain of WMC’s representations were reviewed by, approved by, or made with the knowledge of personnel from GE or GECC. Investors, including federally insured financial institutions, suffered billions of dollars in losses as a result of WMC’s fraudulent origination and sale of loans for inclusion in RMBS.
In particular, the United States alleged that in 2005-2007, WMC attempted to increase its profits and meet profit goals by increasing originations. WMC loan analysts responsible for underwriting mortgage loans were encouraged to approve loans in order to meet volume targets, even where the loan applications did not meet the criteria outlined in WMC’s published underwriting guidelines, and received additional compensation based on the number of mortgages they approved. At the same time, there were significant deficiencies with respect to WMC’s quality control, which was viewed by some as an impediment to volume. In 2005, a WMC quality control manager described his department as a “toothless tiger” with inadequate resources and no authority to prevent the approval or sale of loans his department had determined were fraudulent or otherwise defective. By late third quarter 2006, managers responsible for quality control and risk management at WMC and GECC had expressed concerns that WMC’s quality and fraud controls were so lax that WMC received more mortgage applications containing fraud or other defects than its competitors. As a member of GE’s Corporate Audit Staff (CAS) involved in audits of WMC observed in April 2007, WMC “jacked up volume without controls.”
The United States alleged that the investment banks that purchased WMC’s loans declined to buy certain mortgage loans that WMC attempted to sell due to defects in the loan file or suspected fraud. When it declined, or “kicked out” a loan, the potential purchaser typically notified WMC of its reasons for rejecting the file, including the defects identified. WMC’s general practice was to re-offer certain kicked loans to a second potential purchaser for inclusion in RMBS without disclosing that the mortgage had previously been rejected or the reasons why the first potential purchaser concluded the mortgage had defects.
The United States alleged that by late 2005 and early 2006, investment banks were kicking out more of WMC’s loans than ever, and investors in RMBS backed by WMC loans raised concerns about the quality of loans originated by WMC because WMC borrowers were failing to repay their loans at unexpectedly high rates. WMC also began receiving increased numbers of requests from investment banks to buy back, or repurchase, loans. In March 2006, WMC reviewed a representative sample of the 1,276 loans it had repurchased in 2005, and concluded that 78 percent of the loan files reviewed contained at least one piece of false information. The results of this review were shared with WMC’s senior executive team and discussed on multiple occasions with personnel from GECC.
The United States alleged that in fall 2006, GECC took control over the strategic direction of WMC. Even in the face of increasing repurchase demands, kick-outs, and concerns about WMC’s underwriting quality, WMC continued selling its loans and making false representations about their qualities and attributes. GECC became closely involved in WMC’s whole loan sales and provided WMC with input and direction on how to sell off WMC’s remaining loans. Beginning in 2007, GECC also assumed control over WMC’s ability to grant repurchase requests.
The investigation of WMC, GE, and GECC and this settlement were handled by the Civil Division’s Commercial Litigation Branch, with assistance from the San Francisco Field Office of the Federal Bureau of Investigation. The claims resolved by this settlement are allegations only, and there has been no admission of liability.
Gallup Woman Sentenced to 78 Months for Assaulting VictimRead the Press Release
PHOENIX– On April 8, 2019, Seraphina Charley, 30, of Church Rock, NM, a member of the Navajo Nation, was sentenced by District Judge Steven P. Logan to 78 months’ imprisonment. After a four-day trial, Charley was found guilty by a jury of assault with a dangerous weapon, assault resulting in serious bodily injury and making false statements to a government agency.
In March 2018, Charley intentionally struck her then boyfriend, also a member of the Navajo Nation, in the back of the head with a piece of metal rebar. During the investigation, Charley lied about her identity and created a false story that unknown males assaulted the victim. Due to the assault, the victim suffered permanent brain damage affecting his ability to walk and remember.
The Navajo Nation Criminal Investigations and the Federal Bureau of Investigation conducted the investigation. The prosecution was handled by Kiyoko Patterson and Dimitra Sampson, Assistant U.S. Attorneys, District of Arizona, Phoenix.
CASE NUMBER: CR-18-8135-PCT-SPL
RELEASE NUMBER: 2019-050_Charley
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
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Fraudster and Identity Thief who Used the Personal and Account Information of AT&T Customers to Purchase Apple iPhones Sentenced to Four Years in Federal PrisonRead the Press Release
Greenbelt, Maryland – U.S. District Judge Paula Xinis today sentenced Alonia Anderson Perkins, age 42, of Tampa, Florida, to four years in federal prison, followed by three years of supervised release, for conspiracy to commit wire fraud and for aggravated identity theft, in connection with a scheme to fraudulently obtain and charge the costs of upgraded Apple iPhones against true AT&T customers. Judge Xinis also ordered Perkins to pay restitution of $6,500.
Co-defendant Toni Ann Bobet, age 30, of New York, New York, pleaded guilty to her role in the scheme on April 11, 2019, just a few days before she was scheduled to go to trial.
The sentence and guilty plea were announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Matthew S. Miller of the United States Secret Service - Washington Field Office; and Acting Chief Russell E. Hamill, III of the Montgomery County Police Department.
According to their plea agreements, Perkins, Bobet, and co-defendant Celeste Nyleen Carmona, age 23, of New York, New York, conspired to obtain, charge, and finance the costs of upgraded Apple iPhones against true AT&T customers’ accounts. The defendants admitted that they used stolen account information, telephone upgrade eligibility, and personal identifying information of actual AT&T Mobility customers to obtain the iPhones, which Bobet then provided to her co-conspirators in New York City.
Specifically, in July 2015 and April 2016, respectively, Bobet recruited Carmona and Perkins into the scheme. In May 2016, Bobet drove Perkins and Carmona from New York City to Apple Stores located in Maryland and elsewhere to obtain Apple iPhones for resale. For example, on May 16, 2016, Bobet provided Perkins and Carmona with fraudulent identification cards that contained the stolen personal information of victim AT&T customers, but bore the photographs of Perkins and Carmona, as well as counterfeit credit and debit cards in the victim customers’ names. Bobet obtained the stolen identity information from her co-conspirators in New York City. Bobet drove Perkins and Carmona to the Apple Store located at The Mall in Columbia, Maryland. Perkins and Carmona entered the Apple stores while Bobet remained in the car. Perkins and Carmona each posing as a victim customer, purchased an Apple iPhone on the victim customers’ accounts. Bobet then drove Perkins and Carmona to Westfield Montgomery Mall in Bethesda. Carmona, posing as a victim customer purchased two more iPhones on the account of that customer. Perkins attempted to purchase an iPhone on the account of a fourth victim customer, but that customer’s account reflected a past due balance of $100, and Perkins was unable to upgrade any lines on that victim’s account until the balance was paid. Perkins abandoned the transaction and left the store, while Carmona completed her transaction.
Police responded to the Westfield Mall and located Bobet’s vehicle in the parking lot. Bobet attempted to leave, but law enforcement stopped the vehicle. Bobet, Perkins, and Carmona were taken into custody and transported to police headquarters. A search of Bobet recovered two cellular phones which contained AT&T account information and personal identifying information of at least 20 individuals. Bobet’s vehicle was seized and a search warrant for the vehicle was obtained. Law enforcement recovered a laptop, a tablet, counterfeit identification cards, credit and debit cards, and a black duffle bag containing the four fraudulently obtained Apple iPhones.
AT&T records also showed that during the timeframe of the conspiracy, the name of Alonia Perkins was fraudulently added to four AT&T accounts in Florida and that three of these victims’ accounts had their billing addresses changed to Perkins’ address in Florida. The records also showed that Perkins later financed at least six Apple iPhones against the four victim customers’ accounts. AT&T records further showed that the name Nyleen C. Carmona, or derivatives of that name, were added to 24 victims’ accounts, and Carmona later financed at least 46 Apple iPhones against the victims’ accounts.
Bobet and Carmona admitted that during the time of their participation in the conspiracy at least $95,001 and $40,001 in losses, respectively, were foreseeable to them.
Bobet and Carmona face a maximum sentence of 20 years in prison for the wire fraud conspiracy, and a mandatory sentence of two years in prison, consecutive to any other sentence imposed, for aggravated identity theft. Judge Xinis has scheduled sentencing for Bobet on July 11, 2019 at 1:00 p.m. and for Carmona on December 10, 2019 at 11:30 a.m.
United States Attorney Robert K. Hur praised the U.S. Secret Service and the Montgomery County Police Department’s Economic Crimes Task Force and Electronic Crimes Unit for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorney Jennifer R. Sykes, who prosecuted the case.
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