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Tuesday 12 March 2019
Redwood City Resident Sentenced to Seven Years in Prison for Drug and Weapons ChargesRead the Press Release
SAN FRANCISCO– Craig William Nitsche, II, was sentenced today to 84 months in prison for distributing methamphetamine and being a felon in possession of ammunition, announced United States Attorney David L. Anderson and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Rayfield Roundtree. The sentence was handed down by the Honorable Richard Seeborg, U.S. District Judge.
Nitsche, 35, of Redwood City, Calif., pleaded guilty to the charges on October 9, 2018. According to his plea agreement, Nitsche admitted that on July 30, 2018, he was driving a beige pickup truck without license plates in Redwood City. After Nitsche stopped at a gas station, law enforcement officers approached the car. As they approached, Nitsche pulled a black handgun from his pants pocket, raised the handgun, and then dropped it on the ground. The law enforcement officers took him into custody. Nitsche admitted that he knew he had one round chambered in the handgun and twelve additional rounds in the magazine, and that he had 27.1 grams of methamphetamine in the center console of his pickup truck. Nitsche also admitted he possessed the methamphetamine with the intent to distribute it by selling it to other people.
On August 21, 2018, a federal grand jury indicted Nitsche charging him with one count of being a felon in possession of ammunition, in violation of 18 U.S.C. § 922(g)(1); one count of being in possession with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(C); and one count of using or carrying a handgun in furtherance of his possession with intent to distribute methamphetamine, in violation of 18 U.S.C. § 924(c). Nitsche pleaded guilty to all three counts.
In addition to the prison term, Judge Seeborg ordered Nitsche to serve a three-year term of supervised release that will begin at the conclusion of his prison term.
Assistant U.S. Attorney Jonathan Lee is prosecuting the case with the assistance of Kimberly Richardson. The prosecution is the result of an investigation by the ATF, the San Mateo County Sheriff’s Department, and the San Mateo Vehicle Theft Task Force.
Puerto Rican Indicted in Payment Processing Fraud SchemeRead the Press Release
PITTSBURGH, PA - A resident of San Juan, Puerto Rico, has been indicted by a grand jury on charges of conspiracy to commit mail fraud, wire fraud, and bank fraud, United States Attorney Scott W. Brady announced today.
The one-count Indictment, returned on Feb. 19, named Lancelot De Montsegur, aka Patrice Berthome, 38, as the sole defendant.
According to the Indictment, De Montsegur was involved in a complex fraud that involved fraudulently processing credit card payments. The credit card companies will not allow their products and services to be used to pay for certain precluded activities, including the on-line sales of recreational and designer drugs, kratom, and CBD oil. De Montsegur participated in a conspiracy designed to conceal from the credit card companies the fact that De Montsegur and his co-conspirators used their products and services to pay for precluded activities and to subvert the internal controls the credit card companies had in place to detect and prevent this type of activity.
The fraud involved establishing shell corporations and web sites associated with the shell companies that falsely claimed that they sold a product other than designer drugs, kratom, or CBD oil. The conspirators then applied for PayPal, Stripe, Square, or merchant accounts from the credit card companies in the names of the shell corporations and the fake web sites. Once the accounts were established, they were used to process payments for designer drugs, kratom, or CBD oil. Additionally, the conspirators arranged for the credit card statements sent to the consumers to have the names of the shell corporations and telephone numbers. The conspirators set up a telephone bank to receive calls from customers questioning billings on their credit card statements, and the conspirators explained to the customers the true nature of the transactions in hopes of avoiding charge-backs that could cause the credit card companies to question the legitimacy of the transactions.
The law provides for a maximum total sentence of 30 years in prison, a fine of $1,000,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorneys Brendan T. Conway and Jeffrey R. Bengel are prosecuting this case on behalf of the government.
The Food and Drug Administration Office of Criminal Investigations and Homeland Security Investigations conducted the investigation leading to the Indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Prolific Dark Web Dealer of Carfentanil and Fentanyl ArrestedRead the Press Release
Geoffrey S. Berman, United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Philip R. Bartlett, the Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced today that RICHARD CASTRO, a/k/a “Chemsusa,” a/k/a “Chems_usa,” a/k/a “Chemical_usa,” and LUIS FERNANDEZ, have been charged with participating in a conspiracy to distribute carfentanil, fentanyl, and a fentanyl analogue over the “dark web,” including on AlphaBay and Dream Market. Fentanyl is a synthetic opioid that is significantly stronger than heroin, and carfentanil is a fentanyl analogue that is approximately 100 times stronger than fentanyl. CASTRO was arrested this morning in Windermere, Florida, and appeared before Magistrate Judge Leslie Hoffman in Orlando. FERNANDEZ was arrested this morning in the Bronx, New York, and is expected to be presented today before Chief U.S. Magistrate Judge Gabriel W. Gorenstein.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Fentanyl is a chief culprit in the opioid crisis and carfentanil is 100 times stronger than fentanyl. Carfentanil is intended to be a tranquilizer for large animals. These were two of the terrifying drugs that Richard Castro and Luis Fernandez allegedly distributed in large quantities, including over the dark web, where they thought they could hide. I want to thank our partners at the FBI, USPIS, and NYPD for bringing this dark web conspiracy to light.”
FBI Assistant Director William F. Sweeney Jr. said: “Carfentanil is 10,000 more times potent than morphine. Nothing that dangerous and potentially lethal should be in the hands of users who don’t know what they’re taking, and don’t realize how quickly it can kill someone. The FBI New York and our law enforcement partners use sophisticated methods to seek out these secret and well-hidden operations, to stop the deadly epidemic sweeping through our communities and country right now.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “The defendants allegedly thought they could use the mail to distribute deadly narcotics, specifically carfentanil and fentanyl, for their own profit, without concern for the communities they destroy. Their customers allegedly placed orders on the Dark Web, and encrypted email. As alleged, the defendants were counting on the anonymity of the Dark Web to conceal their crimes. Despite their best attempts at hiding their crimes, today they learned the price for using the mail to ship drugs – JUSTICE and possibly JAIL.”
NYPD Commissioner James P. O’Neill said: “As long as individuals – wherever they operate – are involved in narcotics trafficking, the NYPD and our partners will relentlessly work to stop the threat to public safety. Anyone who deals in illegal opioids should understand that the nation’s best investigators will stop at nothing to keep our community safe. I commend our colleagues at the Southern District of New York, and the investigators of the New York Office of the U.S. Postal Inspection Service, and the Joint Organized Crime Task Force for their work in this investigation.”
According to the allegations contained in the Complaint[1] charging RICHARD CASTRO and LUIS FERNANDEZ:
From at least in or about November 2015 through the present, CASTRO and FERNANDEZ conspired to distribute carfentanil, fentanyl, and phenyl fentanyl (an analogue of fentanyl). For most of this period, the conspiracy dealt drugs over the dark web, using the monikers “Chemsusa,” “Chems_usa,” and “Chemical_usa.” CASTRO was an operator of these online monikers and was paid in bitcoin. On one dark web marketplace, Dream Market, “Chemsusa” boasted that it had completed more than 3200 transactions on other dark web markets, including more than 1,800 on AlphaBay. The customer feedback for “Chemsusa” included, “Extremely potent and definitely the real Carf,” as well as “The Carfent is unbelievably well synthesized, keep up the amazing work.”
In June 2018, “Chems_usa” informed its customers that it was moving its business off dark net marketplaces and would accept purchase requests for narcotics only via encrypted email. To learn the off-market email address, “Chems_usa” required willing customers to pay a fee. An undercover law enforcement officer paid this fee, obtained the encrypted email address, and placed orders with CASTRO. CASTRO’s co-conspirator, FERNANDEZ, shipped narcotics on behalf of the conspiracy, including from New York City. From November 2018 to the present, at least 94 packages have been linked to this conspiracy; several of them have tested positive for carfentanil or fentanyl. All of these packages were shipped using USPS Priority Mail envelopes, and for most of them, the sender’s purported return address was a law office or a governmental entity.
CASTRO also laundered his narcotics proceeds, including by funneling more than approximately $1.77 million through bitcoin wallets of his, and by buying approximately 100 quadrillion Zimbabwe bank notes, among other valuables, which were shipped to his residence.
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RICHARD CASTRO, 36, of Windermere, Florida, and LUIS FERNANDEZ, 41, of the Bronx, New York, are each charged with one count of conspiracy to distribute and possess with the intent to distribute three controlled substances – carfentanil, phenyl fentanyl, and fentanyl – as well as one count of distributing these controlled substances via the Internet. Each of these counts carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. CASTRO is also charged with one count of laundering narcotics proceeds, which carries a maximum sentence of 20 years in prison. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Berman praised the FBI, USPIS, and NYPD for their outstanding work on the investigation. Mr. Berman also thanked the Internal Revenue Service and the Orange County, Florida Sheriff’s Office for their assistance in this investigation. He added that the investigation is continuing.
This matter is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Michael D. Neff, Aline R. Flodr, and Ryan B. Finkel are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
Pittsburgh Man Pleads Guilty to Drug ConspiracyRead the Press Release
PITTSBURGH - A resident of Pittsburgh, Pennsylvania, pleaded guilty in federal court for violating federal narcotics laws, United States Attorney Scott W. Brady announced today.
Mark Fisher, 40, pleaded guilty on March 6, 2019, to one count before United States District Judge David Stewart Cercone.
In connection with the guilty plea, the court was advised that from in and around April 2016, and continuing thereafter to in and around October 2016, Fisher conspired with others to distribute and possess with intent to distribute 28 grams or more of crack. During his plea colloquy, the defendant admitted that he obtained crack from a co-defendant on numerous occasions during the period of the conspiracy, and that on one occasion, he fled his vehicle, leaving five grams of crack on the floor, when law enforcement initiated a traffic stop.
With his guilty plea, the defendant is the last of nine co-defendants to admit guilt in connection with the Indictment returned on August 1, 2017.
Judge Cercone scheduled sentencing for July 23, 2019, at 1 p.m. The law provides for a term of imprisonment of not less than 5 and not more than 40 years, a fine not to exceed $5,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the prior criminal history of the defendant.
Assistant United States Attorney Eric G. Olshan is prosecuting this case on behalf of the government.
A federally administered Organized Crime and Drug Enforcement Task Force (OCDETF) conducted the investigation leading to the Indictment in this case. The task force is headed by the Drug Enforcement Administration and comprises members drawn from the Borough of Baldwin Police Department, McKees Rocks Police Department, Munhall Police Department, Allegheny County Sheriff’s Office, Pittsburgh Bureau of Police, and the Pennsylvania State Police. The Stowe Township Police Department also provided assistance in this investigation. The OCDETF program supplies critical federal funding and coordination that allows federal and state agencies to work together to successfully identify, investigate, and prosecute major interstate and international drug trafficking organizations and other criminal enterprises.
Pinellas Man Sentenced to Seven Years in Prison for Telemarketing ScamRead the Press Release
Tampa, FL – U.S. District Judge Virginia Hernandez Covington has sentenced Mark Boring (47, St. Petersburg) to seven years in federal prison for his role in a telemarketing scheme. As part of Boring’s sentence, the court also entered a money judgment of $75,000, the proceeds of the wire fraud conspiracy. In addition, Boring was directed to pay a total of $895,011.03 to victims of the scheme.
According to court records, from 2016 through at least 2018, Boring conspired with others to take money from victims throughout the United States who wanted to sell their timeshare properties or other parcels of land. Boring and others placed telephone calls to these victims impersonating real estate professionals. They misled the timeshare owners to believe the conspirators had identified buyers for the victims’ timeshares and other property. The conspirators further advised the victims that the timeshare and property sales could be completed if the victims made one or more advanced payments to the conspirators for various fees purportedly associated with the sales, such as closing costs, courier services, title searches, transfer fees, and legal fees. Once the victims agreed to pay the bogus fees, the conspirators directed the victims to send funds via wire transfers to one of the conspirators. That conspirator then withdrew the fraud proceeds and shared them with the others, based on each conspirator’s role in the fraudulent transaction. The conspirators often repeatedly re-contacted their victims and fraudulently advised them that additional fees were needed in order to complete the sales, and they continued to dupe the victims into sending bogus advanced fees until the victims either ran out of money or became aware of the scam.
Gary Kinard previously pleaded guilty and was sentenced to 7 years and 11 months in federal prison for his role in the scheme. Martin Steele, Troy Cater, and David Bell have also pleaded guilty to participating in the scheme and are pending sentencing.
This case was investigated by the Federal Bureau of Investigation, the St. Petersburg Police Department, and the Florida Department of Law Enforcement. It is being prosecuted by Assistant United States Attorney Rachel K. Jones.
Page County Man Sentenced to Prison for CounterfeitingRead the Press Release
COUNCIL BLUFFS, Iowa - United States Attorney Marc Krickbaum announced on March 7, 2019, Alexander Sterling Potter Milledge, age 26, was sentenced by United States Senior District Court Judge Robert W. Pratt for Counterfeiting Federal Reserve Notes. Milledge was sentenced six months in prison, to be followed by a term of supervised release for two years.
In March 2018, Clarinda Police were called to Casey’s General Store regarding a patron that passed a counterfeit bill. Upon review of the surveillance tape, officers identified Alexander Milledge as the person who passed the counterfeit money. A search warrant was obtained for his residence and officers recovered numerous computers, printers, printer paper and approximately $35,000 in counterfeit Federal Reserve notes in different stages of manufacturing.
This case was investigated by Clarinda Police Department and the United States Secret Service. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Ohio Man Sentenced to 17.5 Years in Prison for Cocaine TraffickingRead the Press Release
PITTSBURGH – A former resident of Akron, Ohio, was sentenced in federal court last week for violating federal narcotics laws, United States Attorney Scott W. Brady announced today.
United States District Judge Reggie B. Walton sentenced Adolph Brown, 48, to serve 210 months (17.5 years) in prison following his conviction of possession with intent to distribute 500 grams or more of cocaine. Judge Walton previously found the defendant guilty at the conclusion of a bench trial on July 9, 2018.
According to the evidence presented at trial, on March 2, 2015, the defendant traveled from Akron, Ohio, to Farrell, Pennsylvania, for the purpose of completing a sale of approximately 722 grams of cocaine. En route to Farrell, law enforcement officers conducted a traffic stop of the vehicle in which Brown was traveling. A subsequent search resulted in the discovery of the cocaine concealed inside a children’s car seat in the back seat of the vehicle. Brown subsequently provided a voluntary statement, admitting that the cocaine was his and that he was on his way to sell the cocaine to a customer in Farrell.
At the time of the offense in this case, the defendant was awaiting sentencing in Summit County, Ohio, following his guilty plea to state heroin and cocaine trafficking charges.
Assistant United States Attorney Eric G. Olshan prosecuted this case on behalf of the government.
The Federal Bureau of Investigation conducted the investigation that led to the prosecution of Adolph Brown, with assistance from the Southwest Mercer County Regional Police Department, the Pennsylvania State Police, and the Pennsylvania Attorney General’s Office.
New York City Man Transported Heroin to Western PA for DistributionRead the Press Release
PITTSBURGH - A resident of New York, NY, pleaded guilty in federal court to a charge of conspiracy to distribute 100 grams or more of heroin, United States Attorney Scott W. Brady announced today.
Jose Ortega, 32, pleaded guilty to one count before United States District Judge Joy Flowers Conti.
In connection with the guilty plea, the court was advised that from in and around November 2016 through in and around February 2017, Ortega conspired with his codefendants, David Francis and William Rosario, to possess with intent to distribute and distribute 100 grams or more of heroin, which he transported from New York to the Western District of Pennsylvania.
Judge Conti scheduled sentencing for July 10, 2019, at 3:30 p.m. The law provides for a total sentence of not less than five and up to 40 years in prison, a fine of $5,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history of the defendant.
Pending sentencing, the court continued the defendant’s bond.
Assistant United States Attorney Tonya Sulia Goodman is prosecuting this case on behalf of the government.
The Drug Enforcement Administration, Monroeville Police Department, Stowe Township Police Department, Ingram Borough Police Department, Pennsylvania State Police, and Monaca Police Department conducted the investigation that led to the prosecution of Ortega.
New Orleans Man Sentenced for Heroin Conspiracy and Firearm Possession ChargesRead the Press Release
NEW ORLEANS – U.S. Attorney Peter G. Strasser announced that PATRICK SCHEXNAYDER, age 28, of New Orleans, was sentenced March 7, 2019 for heroin conspiracy and firearm possession charges.
According to court documents, SCHEXNAYDER conspired with others to possess with the intent to distribute 100 grams or more of heroin. In addition, on February 23, 2018, SCHEXNAYDER, a convicted felon, was in possession of a firearm.
U. S. District Court Judge Eldon E. Fallon sentenced SCHEXNAYDER to serve 60 months in prison, to be followed by three years of supervised release. Judge Fallon also imposed a $200 dollar special assessment.
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.
U. S. Attorney Strasser praised the work of the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the New Orleans Police Department Multi-Agency Gang Unit in investigating this matter. The case is being prosecuted by Assistant United States Attorneys Maria M. Carboni and Matthew R. Payne.
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New London Felon Admits to Trafficking Guns from Georgia to ConnecticutRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, today announced that QUADELL DANIELS, 32, of New London, pleaded guilty yesterday before U.S. District Judge Michael P. Shea in Hartford to one count of possession of a firearm by a convicted felon.
According to court documents and statements made in court, on July 20, 2017, members of the Connecticut Statewide Narcotics Task Force East and New London Police Department conducted a court-authorized search of a New London residence and seized a Beretta, Model BU9 Nano, 9mm pistol, and a Jimenez Arms, Model J.A. Nine, 9mm pistol. Subsequent investigation revealed that, in April 2017, Daniels and his girlfriend entered a pawn shop in Hinesville, Georgia. Daniels, who had provided cash to his girlfriend before entering the shop, selected two firearms for his girlfriend to purchase on his behalf. After his girlfriend completed the purchase, she provided the firearms to Daniels. Daniels transported the firearms to Connecticut.
In July 2017, Daniels and his girlfriend similarly purchased another five firearms at the same pawn shop, and they transported the guns to Connecticut.
Two of the seven firearms purchased by Daniels and his girlfriend were seized during the search of the New London residence on July 20, 2017.
In 2012, Daniels was convicted in Connecticut state court of attempted assault in the second degree, and possession of a firearm without a permit. It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.
Daniels was arrested on December 1, 2017.
Judge Shea scheduled sentencing for June 3, 2019, at which time Daniels faces a maximum term of imprisonment of 10 years.
Daniels is released on a $100,000 bond.
This matter is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Connecticut State Police Statewide Narcotics Task Force East and New London Police Department. The case is being prosecuted by Assistant U.S. Attorney Alina P. Reynolds.
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 neighborhoods safer for everyone.
New Hampshire Man Arrested for Possessing Firearm During Attempted Robbery of THC Products in Springfield, VermontRead the Press Release
The Office of the United States Attorney for the District of Vermont announced that Ira Flowers, 36, of Claremont, New Hampshire was arrested yesterday after having been indicted by a Vermont grand jury for possessing a 9mm semi-automatic pistol after having been convicted of multiple felonies. Flowers appeared before United States Magistrate Judge Andrea K. Johnston, in Concord, New Hampshire, and consented to his detention pending transfer to the District of Vermont.
According to court records, the charge in the Indictment stems from defendant Flowers’s possession of a firearm on January 6, 2019, at the Holiday Inn in Springfield, Vermont. Defendant Flowers and three others met in one of the hotel rooms to exchange thousands of dollars for tetrahydrocannabinol (THC)-infused products. During the meeting, Flowers brandished a 9mm pistol, and attempted to rob the seller of the THC products. A struggle ensued, and Flowers was stabbed in the neck, shot once in the leg (with the pistol he unlawfully possessed), and left in the hotel hallway bleeding profusely from his wounds. A search of the hotel room by the Vermont State Police resulted in the seizure of the 9mm pistol possessed by the defendant, as well as a single 9mm casing.
If convicted, Flowers faces a maximum of ten years of imprisonment, and a $250,000 fine. The actual sentence however, would be determined by the Court with guidance from the advisory Federal Sentencing Guidelines. The United States Attorney emphasizes that the charge in the complaint is merely an accusation, and that the defendant is presumed innocent unless and until he is proven guilty.
United States Attorney Christina Nolan commended the investigative efforts of the Vermont State Police, as well as the assistance of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). She stated: “Federal prosecutors in Vermont will show no tolerance for gun crime and violence in connection with the illicit drug trade, and prosecution of these crimes will remain the top priority of the U.S. Attorney’s Office. These principles apply with equal force to those who commit violent crime – such as robberies, burglaries, and gun offenses – in connection with the marijuana and THC trade.”
The United States is represented in this matter by Assistant U.S. Attorney Jonathan Ophardt. The defendant was represented in the District of New Hampshire by the Federal Public Defender.
Munhall Man Sentenced to 1.5 Years in Prison for Stealing Packages and Mail Items from Pittsburgh Apartment BuildingsRead the Press Release
PITTSBURGH, PA - A resident of Munhall, Pennsylvania, has been sentenced in federal court to 18 months’ imprisonment and a three-year term of supervised release, on his conviction of conspiracy and mail theft, United States Attorney Scott W. Brady announced today.
United States District Judge Cathy Bissoon imposed the sentence on Christopher Eric Carr, 46.
According to information presented to the court, from February through May of 2018, Carr, along with his co-defendant Ron Matthew Sharp, entered multiple apartment buildings in the Shadyside and North Oakland areas of Pittsburgh, and opened United States Postal Service packages or other mail items that were not addressed to them, stole packages, and stole items from within packages that had been left at authorized mail depositories. Defendants stole items from more than 40 victims, filling up trash bags, duffel bags, and backpacks with their loot. Defendants then provided items they had stolen from the mail, including gift cards, to others, who redeemed the gift cards at various locations, including Giant Eagle and GETGO. Defendants also re-sold, and instructed others to attempt to re-sell, items defendants had stolen from the mail.
Assistant United States Attorney Christy C. Wiegand prosecuted this case on behalf of the government.
The United States Postal Inspection Service and the United States Department of Homeland Security conducted the investigation leading to the successful prosecution of Christopher Carr.
Mizrahi-Tefahot Bank LTD. Admits Its Employees Helped U.S.Taxpayers Conceal Income and AssetsRead the Press Release
Mizrahi-Tefahot Bank Ltd., (Mizrahi-Tefahot) and its subsidiaries, United Mizrahi Bank (Switzerland) Ltd. (UMBS) and Mizrahi Tefahot Trust Company Ltd. (Mizrahi Trust Company), entered into a deferred prosecution agreement (DPA) with the Department of Justice filed today in the U.S. District Court for the Central District of California, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Department of Justice’s Tax Division, First Assistant United States Attorney Tracy L. Wilkison, and Chief Don Fort for Internal Revenue Service-Criminal Investigation. As part of the agreement, Mizrahi-Tefahot will pay $195 million to the United States.
Mizrahi-Tefahot is one of Israel’s largest banks, with more than 4,000 employees, and is publicly traded on the Tel-Aviv Stock Exchange. During the relevant period of criminal activity, Mizrahi-Tefahot had branches in Los Angeles, California, the Cayman Islands, and London, England. In 2014, the Cayman Islands branch surrendered its license and was closed. UMBS, a subsidiary of Mizrahi-Tefahot, had one branch in Zurich, Switzerland. Mizrahi Trust Company, a fully owned subsidiary of Mizrahi-Tefahot, operated under the regulatory authority of the Bank of Israel. Collectively, Mizrahi-Tefahot, UMBS, and Mizrahi Trust Company provided private banking, wealth management, and financial services to high-net-worth individuals and entities around the world, including U.S. citizens, resident aliens and permanent residents.
“Mizrahi-Tefahot’s admission of guilt and agreement with the United States to pay significant penalties and pay over the fees earned from knowingly assisting tax evading Americans reflects the continuing efforts of the Tax Division to end the criminal role of international financial institutions in perpetuating offshore tax fraud,” said Principal Deputy Assistant Attorney General Zuckerman. “A financial institution is not a faceless entity, but is the embodiment of the acts of its bankers, relationship managers and all employees. When a bank’s employees, at any level, facilitate U.S. tax fraud, the bank facilitates tax fraud and will be held responsible.”
“For over a decade, this Israeli bank, through its employees, engaged in conduct designed to hide its clients’ funds so they could avoid paying U.S. income taxes,” said First Assistant United States Attorney Tracy L. Wilkison, “Mizrahi-Tefahot solicited customers in Los Angeles and other U.S. cities to open offshore accounts with the hope they would never be linked to the American clients. As a result of this criminal conduct, the bank will surrender fees it earned, repay the United States for lost tax revenue, and pay a substantial fine.”
“Today’s announcement sends a clear message that banks, who promote the use of offshore tax schemes against the United States, will be held accountable and face substantial fines and penalties,” said Don Fort, Chief, IRS-Criminal Investigation. “Any financial institution – no matter where it operates – will be held accountable if it helps U.S. residents dodge their tax responsibilities. This agreement with Mizrahi-Tefahot is the latest notice to American taxpayers, who might flout the law, that we can and will uncover your hidden assets.”
In the DPA and related court documents, Mizrahi-Tefahot admitted that from 2002 until 2012 the actions of its bankers, relationship managers, and other employees defrauded the United States and specifically the Internal Revenue Service (IRS) with respect to taxes by conspiring with U.S. taxpayer-customers and others. Mizrahi-Tefahot employees’ acts of opening and maintaining bank accounts in Israel and elsewhere around the world and violating Mizrahi-Tefahot’s Qualified Intermediary Agreement (QI Agreement) with the IRS enabled U.S. taxpayers to hide income and assets from the IRS.
According to the filed statement of facts and the DPA, these employees took steps to assist U.S. customers in concealing their ownership and control of assets and funds held at Mizrahi-Tefahot, Mizrahi Trust Company and UMBS, which enabled those U.S. customer-taxpayers to evade their U.S. tax obligations, including:
- Assisting and referring U.S. customers to professionals to open and maintain accounts at Mizrahi-Tefahot and UMBS in the names of pseudonyms, code names, Mizrahi Trust, and foreign nominee entities in offshore locations, such as St. Kitts and Nevis (Nevis), Liberia, Turks & Caicos, and the British Virgin Islands (BVI), and thereby enabling those U.S. taxpayers to conceal their beneficial ownership in the accounts and maintain undeclared accounts;
- Opening customer accounts at Mizrahi-Tefahot and UMBS for known U.S. customers using non-U.S. forms of identification, and failing to maintain copies of required identification and account opening documents;
- Opening and maintaining foreign nominee bank accounts for certain U.S. clients holding U.S. securities, enabling those U.S. taxpayers to evade U.S reporting requirements on securities’ earnings in violation of Mizrahi-Tefahot’s QI Agreement with the IRS;
- Entering into “hold mail” agreements with U.S. customers whereby Mizrahi-Tefahot and UMBS employees held bank statements and other account-related mail in their offices in Israel and Switzerland, and by doing so enabling documents reflecting the existence of the offshore accounts to remain outside the U.S.;
- Until 2008, providing U.S. customers at Mizrahi-Tefahot’s Los Angeles branch use of their funds held in offshore Mizrahi-Tefahot and UMBS accounts (pledge accounts) through back-to-back loans, while excluding any record of the offshore pledge account at its Los Angeles branch to take advantage of Israeli and Swiss privacy laws and prevent disclosure of the funds to U.S tax authorities;
- Failing to adhere to the requirements of Mizrahi-Tefahot’s QI Agreement by (i) permitting U.S. customers who refused to provide the bank with the proper IRS Forms W-8BEN and/or W-9 to continue trading in accounts holding U.S. securities, (ii) transferring assets to foreign entity accounts controlled by U.S. customers to avoid the proper QI reporting requirements, and (iii) failing to timely address compliance deficiencies in U.S. customer accounts holding U.S. securities; and
- Until 2008, periodically sending “Roving Representatives,” to the United States to solicit new customers and to meet with existing U.S. customers in Los Angeles, California, New York, and other locations in the U.S. for the purposes of opening accounts and surreptitiously reviewing and managing existing customers’ offshore accounts.
According to the terms of the DPA, Mizrahi-Tefahot, UMBS, and Mizrahi Trust Company will cooperate fully, subject to applicable laws and regulations, with the United States, the IRS, and other U.S. authorities. The DPA provides that Mizrahi-Tefahot will ensure that all of its overseas branches and other companies under its control that provide financial services to customers covered by the Foreign Account Tax Compliance Act, 26 U.S.C. §§ 1471-1474 (FATCA), will continue to implement and maintain an effective program of internal controls with respect to compliance with FATCA in their affiliates and subsidiaries. The DPA also requires Mizrahi-Tefahot and its subsidiaries affirmatively to disclose certain material information it may later uncover regarding U.S.-related accounts, as well as to disclose certain information consistent with the Department’s Swiss Bank Program with respect to accounts closed between Jan. 1, 2009, and October 2017. Under the DPA, prosecution against the bank for conspiracy will be deferred for an initial period of two years to allow Mizrahi-Tefahot, UMBS, and Mizrahi Trust Company to comply with the DPA’s terms.
The $195 million payment consists of: 1) restitution in the amount of $53 million, representing the approximate unpaid pecuniary loss to the United States as a result of the criminal conduct; 2) disgorgement in the amount of $24 million, representing the approximate gross fees paid to the bank by U.S. taxpayers with undeclared accounts at the bank from 2002 through 2012; and 3) a fine of $118 million.
This agreement marks the second time an Israeli bank has admitted to similar criminal conduct. In December 2014, the Bank Leumi Group entered into a DPA with the Department of Justice admitting that it conspired to aid and assist U.S. taxpayers to prepare and present false tax returns to the IRS by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.
Principal Deputy Assistant Attorney General Zuckerman, First Assistant United States Attorney Wilkison and Chief Fort commended special agents of IRS-Criminal Investigation, who investigated this case, and Western Criminal Enforcement Section Chief Larry J. Wszalek and Trial Attorneys Melissa S. Grinberg and Lisa L. Bellamy of the Tax Division, who prosecuted this case. Principal Deputy Assistant Attorney General Zuckerman also thanked the United States Attorney’s Office for the Central District of California for their substantial assistance.
Michigan woman admits to role in a drug distribution operation in Monongalia CountyRead the Press Release
CLARKSBURG, WEST VIRGINIA –Marsawn Daggins, of Southfield, Michigan, has admitted to her involvement in a heroin, oxycodone, and cocaine distribution operation, United States Attorney Bill Powell announced.
Daggins, age 35, pled guilty to one count of “Unlawful Use of Communication Facility.” Daggins admitted to using a phone to further a drug distribution operation in April 2018 in Monongalia County.Daggins faces up to four years incarceration and a fine of up to $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Zelda E. Wesley is prosecuting the case on behalf of the government. The Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Mon Metro Drug & Violent Crimes Task Force, a HIDTA-funded initiative, investigated. The United States Marshal Service assisted.
The investigation was funded in part by the federal Organized Crime Drug Enforcement Task Force Program (OCDETF). The OCDETF program supplies critical federal funding and coordination that allows federal and state agencies to work together to successfully identify, investigate, and prosecute major interstate and international drug trafficking organizations and other criminal enterprises.
U.S. Magistrate Judge Michael John Aloi presided.
Mexican Nationals Plead Guilty to Illegal Firearms, MarijuanaRead the Press Release
KANSAS CITY, Mo. – Two Mexican nationals have pleaded guilty in federal court to illegally possessing firearms after police officers interrupted them shooting handguns in their backyard.
Juan Carlos Cuevas-Alvarez, 33, a citizen of Mexico unlawfully residing in Kansas City, Mo., pleaded guilty before U.S. District Judge Gary A. Fenner on Monday, March 11, 2019, to being an illegal alien in possession of firearms and to possessing marijuana to distribute. Co-defendant Nestor K. Rodriguez, 27, also a citizen of Mexico unlawfully residing in Kansas City, Mo., pleaded guilty on Feb. 27, 2019, to being an illegal alien in possession of firearms.
Kansas City, Mo., police officers were dispatched in response to a report of gunshots to the residence shared by Cuevas-Alvarez, Rodriguez and a third person at about 4:24 a.m. on Aug. 5, 2018. When officers arrived at the residence, they heard gunshots coming from behind the residence. Cuevas-Alvarez admitted that he shot two to three full magazines worth of ammunition in the backyard of the residence. Rodriguez admitted that he shot a fully loaded magazine of ammunition at a beer bottle in the backyard of the residence.
When officers searched the residence, they found a Cobray 9mm pistol, a Walther .380-caliber handgun, and a Sig Saur 9mm pistol. Officers also found $35,289 in cash and approximately 26 pounds (11.79 kilograms) of marijuana, which was contained in several individually wrapped and heat-sealed plastic bags inside of two black trash bags.
Under federal statutes, Cuevas-Alvarez is subject to a sentence of up to 15 years in federal prison without parole. Rodriguez is subject to a sentence of up to 10 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of these defendants will be determined by the court based on the advisory sentencing guidelines and other statutory factors. Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Rudolph R. Rhodes IV. It was investigated by the Kansas City, Mo., Police Department and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
Massachusetts Man Sentenced to 30 Months for Illegally Attempting to Buy Guns in HooksettRead the Press Release
CONCORD - Jose Rafael Soriano, 28, of Lynn, Massachusetts, was sentenced to 30 months in prison for aiding another in an illegal effort to purchase firearms, United States Attorney Scott W. Murray announced.
According to court documents and statements made during the prosecution of the case, on July 15, 2015, Soriano, and three friends, Michael Younge, Adrian Aleman and Tasha Gardner, visited a federally licensed firearms dealer in Hooksett, New Hampshire. Of the four, only Gardner was legally eligible to buy handguns. Soriano and Younge, with Aleman’s help, solicited Gardner to buy two handguns on their behalf. Gardner agreed to assist and attempted to purchase the two guns for Soriano and Younge. In connection with that attempt, Gardner filled out a form legally required for all intrastate over-the-counter handgun purchases on which she falsely certified that she was the “actual purchaser” of the two handguns, when she was really attempting to buy them for Soriano and Younge. The store never transferred the firearms because its employees became suspicious and declined to complete the transaction.
All of the individuals involved in this crime pleaded guilty. On July 30, 2017, Younge was sentenced to serve five years in prison. On March 13, 2017, Gardner was sentenced to three years of probation. On April 7, 2017, Aleman was sentenced to two years of probation.
Soriano previously pleaded guilty on October 12, 2018.
“In order to keep our communities safe, it is vital to keep guns out of the hands of criminals, said U.S. Attorney Murray. “Those who illegally possess firearms present a real danger to public safety. We will continue to be aggressive in our efforts to prevent criminals from obtaining guns and to prosecute those who illegally buy guns for criminals.”
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives with assistance from the Manchester Police Department. The case was prosecuted by Assistant United States Attorney Debra M. Walsh.
This case was prosecuted as part of Project Safe Neighborhoods, a national initiative undertaken by the U.S. Department of Justice to reduce gun crime in America through, among other things, community outreach and vigorous prosecution of firearms offenses.
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Massachusetts Man Sentenced to 2½ Years for Firearm OffensesRead the Press Release
Portland, Maine: United States Attorney Halsey B. Frank announced that Jonathan Lara, 29, of Lynn, Massachusetts, was sentenced today in U.S. District Court by Judge George Z. Singal to 2½ years in prison and three years of supervised release for possessing a firearm after having been convicted of felony offenses and while being an unlawful user of heroin. He pled guilty on November 27, 2018.
According to court records, in August 2017, Lara’s Lewiston hotel room was searched. Agents and officers seized controlled substances, a handgun and $3,873. Lara was prohibited from possessing the handgun because in 2009, he had been convicted in Massachusetts of felony larceny from a person and armed robbery and because he had been a daily user of heroin for years.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, in conjunction with the Maine Drug Enforcement Agency and the Auburn and Lewiston Police Departments.
Massachusetts Man Pleads Guilty to Fentanyl Trafficking and Illegal Reentry after DeportationRead the Press Release
CONCORD - Leonardo Aybar, 35, formerly of Lawrence, Massachusetts, pleaded guilty in federal court to participating in a fentanyl trafficking conspiracy and illegally reentering the United States, United States Attorney Scott W. Murray announced today.
According to court documents and statements made in court, from December of 2016 through February of 2017, Aybar conspired with Emmanuel Encarnacion, also formerly from Lawrence, to sell approximately 95 grams of fentanyl to an undercover New Hampshire State Police detective inside the Rockingham Mall in Salem, New Hampshire.
At the time of the offense, Aybar was unlawfully in the United States. He previously had been deported to the Dominican Republic in 2010.
Aybar is scheduled to be sentenced on June 25, 2019. Aybar is subject to potential deportation to the Dominican Republic after he completes his prison sentence. Co-conspirator Encarnacion previously was sentenced to 60 months in federal prison.
“Those who unlawfully distribute fentanyl in New Hampshire should understand that they will be prosecuted aggressively,” said U.S. Attorney Murray. “In order to protect the safety of our community, we will work closely with all of our law enforcement partners to identify, prosecute, and incarcerate those who bring this deadly substance into the Granite State.”
This matter was investigated by the Immigration and Customs Enforcement's Homeland Security Investigations, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the New Hampshire State Police. The case is being prosecuted by Assistant U.S. Attorney Jennifer Cole Davis.
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Manchester Man Sentenced to 147 months for Drug Trafficking and Firearms OffensesRead the Press Release
LONDON, Ky. – Jason A. Cottongim, 39, of Manchester, Kentucky, was sentenced yesterday, to 147 months in federal prison, by United States District Judge Robert E. Wier, for possession with the intent to distribute Xanax, being a felon in possession of firearms, and using firearms in furtherance of drug trafficking. Judge Wier also ordered Cottongim forfeit $16,148 in cash, two firearms, and ammunition.
On April 26, 2018, Cottongim was discovered in the Save-a-lot parking lot in Manchester, armed with a loaded Smith & Wesson pistol in his pocket and a loaded semi-automatic M-11 at his feet. After rendering a hoax explosive device safe, law enforcement officers seized over 319 Xanax pills, $16,148 in cash, digital scales, distribution baggies, and ammunition from the vehicle.
Cottongim entered a guilty plea to all the charges, during his trial, in November of 2018. Under federal law, Cottongim must serve 85 percent of his prison sentence; and upon his release, he will be under the supervision of the United States Probation Office for five years.
Robert M. Duncan, Jr., United States Attorney for the Eastern District of Kentucky; Stuart Lowrey, Special Agent in Charge ATF; Chris Fultz, Chief Manchester Police Department; Richard Sanders, Commissioner of the Kentucky State Police; and Patrick Robinson, Clay County Sheriff; jointly made the announcement.
The investigation was conducted by the ATF, Manchester Police Department, KSP, and the Clay County Sheriff’s Office. The United States was represented by Assistant United States Attorney Jenna E. Reed.
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.
Man Who Distributed over 17 Pounds of Meth Sentenced to More Than 10 Years in Federal PrisonRead the Press Release
A man who distributed more than 17 pounds of ice methamphetamine was sentenced on March 7, 2018, to more than ten years in federal prison.
Justin Lee Branon, age 35, from Clemons, Iowa, received the prison term after an August 1, 2018 guilty plea to conspiracy to distribute methamphetamine. Evidence during the case established that Branon received meth in pound or multiple pound quantities and distributed it throughout the Waterloo area.
Branon was sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade. Branon was sentenced to 126 months’ imprisonment. He must also serve a five-year term of supervised release after the prison term. There is no parole in the federal system. Branon is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Lisa C. Williams and was investigated as part of the Organized Crime Drug Enforcement Task Force (OCDETF) program of the United States Department of Justice through a cooperative effort of Federal Bureau of Investigation, Iowa Division of Narcotics Enforcement, Tri-County Drug Enforcement Task Force (Waterloo Police Department; Cedar Falls Police Department; Waverly Police Department; Bremer County Sheriff’s Office; Black Hawk County Sheriff’s Office; LaPorte City Police Department; Evansdale Police Department; Hudson Police Department), Mid Iowa Drug Task Force (Marshalltown Police Department; Marshall County Sheriff’s Office; Tama County), and Dubuque Drug Task Force (Dubuque Police Department; Dubuque County Sheriff’s Office).
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 17-cr-2002.
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Lumber Liquidators Enters into Corporate Resolution for Securities Fraud and Agrees to Pay $33 Million PenaltyRead the Press Release
Lumber Liquidators Holdings Inc. (Lumber Liquidators) has agreed to pay a total penalty of $33 million for filing a materially false and misleading statement to investors regarding the sale of its laminate flooring from China to its customers in the United States.
Lumber Liquidators, a public corporation headquartered in Toano, Virginia, and one of the largest retailers of flooring products in the United States, entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today in the Eastern District of Virginia charging the company with securities fraud. The case was primarily focused on the fact that Lumber Liquidators knowingly filed a false and misleading statement to investors broadly denying the allegations featured in a March 2015 episode of 60 Minutes, and affirming that the company complied with California Air Resources Board (CARB) regulations.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney G. Zachary Terwilliger of the Eastern District of Virginia, Special Agent in Charge David W. Archey of the FBI’s Richmond Field Office, Special Agent in Charge Kelly R. Jackson of IRS-Criminal Investigation (IRS-CI) Washington, D.C. Field Office and Inspector in Charge Peter R. Rendina of the U.S. Postal Inspection Service Washington Division, made the announcement.
“Lumber Liquidators lied to investors and to the public about its compliance with formaldehyde regulations for the flooring it sold – all to protect its stock price,” said Assistant Attorney General Benczkowski. “False and misleading financial reports undermine the integrity of our securities markets and harm investors. The Department and our law enforcement partners are committed to doing everything we can to ensure that those who commit securities fraud are held accountable.”
“This resolution holds Lumber Liquidators accountable for misleading the investing public,” said U.S. Attorney Terwilliger. “It also recognizes that the company has cooperated with the government's investigation, completely replaced its senior executive team, and installed experienced executives who have displayed a commitment to building an ethical corporate culture. We will continue to ensure that market participants can trust information communicated by public companies when making investment decisions. My thanks to our prosecutorial team and our investigative partners for their outstanding work on this case.”
“This penalty should serve as a warning to other corporations who seek to mislead investors,” said FBI Special Agent in Charge Archey. “FBI Richmond is grateful for the commitment to this case of its partners at the U.S. Attorney’s Office, the Justice Department’s Fraud Section, the IRS Criminal Investigation and the U.S. Postal Inspection Service.”
“Lumber Liquidators knowingly deceived the shareholders they were entrusted to serve,” said IRS-CI Special Agent in Charge Jackson. “IRS-CI will continue to work diligently with our federal law enforcement partners to ensure that the punishment for such crimes matches the seriousness of the offense.”
“Those seeking to maximize profits while misleading investors should expect to pay a heavy price,” said U.S. Postal Inspector in Charge Rendina. “The U.S. Postal Inspection Service has investigated these kind of deceptive practices for years to protect investors and the integrity of the market place. Postal Inspectors work tirelessly to identify and hold accountable any company who uses the U.S. mail to defraud American citizens.”
According to court documents filed as part of the DPA, Lumber Liquidators was subject to various laws that regulated the chemicals used in wood products, including laminate flooring. Specifically, CARB enforced limits on formaldehyde emissions from composite wood products. In September 2013, CARB announced that it intended to use deconstructive testing to determine whether finished flooring products contained CARB compliant cores. In 2013 and 2014, CARB informed Lumber Liquidators that flooring samples collected from its California stores failed deconstructive testing for formaldehyde emissions. Lumber Liquidators’ own deconstructive tests of the same products yielded similar results.
Also in 2014, foreign and domestic flooring suppliers alerted Lumber Liquidators of CARB compliance concerns related to the company’s Chinese laminate products. In February 2014, Lumber Liquidators’ Chinese laminate suppliers requested a price increase citing concerns about the increased cost of CARB compliant cores and their ability to pass deconstructive testing for formaldehyde emissions. Approximately one month later, a U.S. laminate supplier informed Lumber Liquidators that it tested a Chinese laminate sample purchased from one of Lumber Liquidators’ stores in the United States and that the sample emitted high levels of formaldehyde. Lumber Liquidators took only limited steps to determine the validity of the suppliers’ concerns, and instead sought to generate support for its position that deconstructive testing was not a valid test method, the company admitted.
To that end, Lumber Liquidators visited two Chinese laminate suppliers in August 2014 to collect and test samples. While collecting samples from Supplier A, a then-Lumber Liquidators employee noticed a pallet of laminate flooring that factory workers indicated was Lumber Liquidators’ product, but the label on the pallet indicated that it contained non-CARB compliant cores. The former employee took samples from this suspect pallet for testing along with other samples manufactured in his and other employees’ presence. Laboratory A later provided Lumber Liquidators with test results that undermined the company’s criticisms of deconstructive testing. All but one of the products manufactured in front of the Lumber Liquidators employees passed deconstructive testing. But the samples from the suspect pallet, manufactured before employees arrived, failed deconstructive testing.
Lumber Liquidators representatives again visited Supplier A in September 2014 and January 2015. Following these visits, Lumber Liquidators concluded that Supplier A had numerous recordkeeping anomalies, refused to implement CARB-related corrective action requests made by the company, and could not reliably demonstrate that its laminate flooring contained CARB compliant cores. Accordingly, in January 2015, the company’s former senior management team decided to discontinue its relationship with Supplier A due to CARB compliance concerns. Nevertheless, that same day, Lumber Liquidators admitted it ordered more laminate flooring from Supplier A.
In Fall 2014, Lumber Liquidators learned that the CBS news program, 60 Minutes, also retained Laboratory A to conduct deconstructive testing of Lumber Liquidators’ products. Shortly thereafter, Laboratory A secretly notified Lumber Liquidators that the deconstructive tests commissioned by 60 Minutes yielded significant test failures. The lab then allowed a former Lumber Liquidators employee to review and take pictures of these test results. In December 2014, the lab owner told former Lumber Liquidators employees that a high deconstructive test failure was a strong indicator that the product was not CARB compliant, the company admitted.
On Feb. 25, 2015, Lumber Liquidators learned that 60 Minutes obtained undercover videos from three of its Chinese laminate suppliers, including Supplier A, in which the suppliers admitted that the laminates they made for Lumber Liquidators were not CARB compliant. Lumber Liquidators’ former senior management team retained outside counsel from Law Firm B to interview the suppliers in the undercover videos. On Feb. 28, 2015, Law Firm B informed former Lumber Liquidators executives that it recorded one person from each of the three factories in the undercover videos saying that the product they sold Lumber Liquidators was CARB compliant. Nevertheless, Law Firm B told these former executives that they had limited confidence in the suppliers’ statements because, among other things, a former Lumber Liquidators inspector alleged that suppliers offered bribes to him and other company employees, the company admitted.
On March 1, 2015, 60 Minutes aired a segment alleging that laminate flooring sold by Lumber Liquidators in the United States did not meet CARB emission standards for formaldehyde. The episode featured the undercover videos and test results previously shown to Lumber Liquidators.
The next morning, March 2, 2015, the New York Stock Exchange halted trading of the company’s stock, with the expectation that Lumber Liquidators intended to issue a statement responding to the 60 Minutes episode. Later that morning, Lumber Liquidators, through its employees, knowingly filed a false and misleading Securities and Exchange Commission (SEC) Form 8-K broadly denying the allegations in the 60 Minutes episode and affirming Lumber Liquidators complied with CARB regulations, the company admitted. Specifically, Lumber Liquidators omitted material facts from investors, including CARB’s investigation of the company’s Chinese laminate products; its own deconstructive test results; the company’s decision to discontinue sourcing from Supplier A due to CARB compliance concerns; and evidence that undermined the suppliers’ statements that all products provided to Lumber Liquidators were CARB compliant.
Pursuant to its agreement with the Department of Justice, Lumber Liquidators agreed to pay a total criminal penalty of $33 million to the United States, including a criminal fine of approximately $19 million, and approximately $14 million in forfeiture. This amount represents the company’s net profits from the sale of 100 percent of its Chinese laminate from approximately Jan. 16, 2015 through May 7, 2015.
Lumber Liquidators also agreed to implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. Under the DPA, prosecution of the company for securities fraud will be deferred for an initial period of three years to allow Lumber Liquidators to demonstrate good conduct.
The SEC announced a separate settlement with Lumber Liquidators in connection with related, parallel proceedings. Under the terms of its resolution with the SEC, Lumber Liquidators agreed to a total of $6,097,298.42 in disgorgement of profits and prejudgment interest. The Department of Justice agreed to credit the amount paid to the SEC in disgorgement as part of its agreement. Thus, the combined total amount of criminal and regulatory penalties paid by Lumber Liquidators will be $33 million.
This penalty reflects the nature and seriousness of the conduct, as well as Lumber Liquidators’ ongoing cooperation with the United States and the company’s extensive efforts at remediation. Among other remedial efforts, Lumber Liquidators suspended the sale of all laminate flooring from China in May 2015; offered consumers in-home testing for already installed flooring; and implemented new policies and procedures regarding compliance with CARB emission standards and other environmental regulations, sourcing of flooring products, financial reporting and internal controls. The employees involved in wrongdoing either were terminated or resigned from Lumber Liquidators, and the company replaced its executive management team with experienced executives who have displayed a commitment to building an ethical corporate culture.
Trial Attorney Cory E. Jacobs of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Katherine Lee Martin and Uzo E. Asonye of the Eastern District of Virginia prosecuted the case.
The Criminal Division’s Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country.
Lumber Liquidators Agrees to $33 Million Penalty for Securities FraudRead the Press Release
RICHMOND, Va. – Lumber Liquidators Holdings, Inc. has agreed to pay a total penalty of $33 million for filing a materially false and misleading statement to investors regarding the sale of its laminate flooring from China to its customers in the United States.
“This resolution holds Lumber Liquidators accountable for misleading the investing public,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “It also recognizes that the company has cooperated with the government's investigation, completely replaced its senior executive team, and installed experienced executives who have displayed a commitment to building an ethical corporate culture. We will continue to ensure that market participants can trust information communicated by public companies when making investment decisions. My thanks to our prosecutorial team and our investigative partners for their outstanding work on this case.”
Lumber Liquidators, a public corporation headquartered in Toano and one of the largest retailers of flooring products in the United States, entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today charging the company with securities fraud. The case was primarily focused on the fact that Lumber Liquidators knowingly filed a false and misleading statement to investors broadly denying the allegations featured in a March 2015 episode of 60 Minutes, and affirming that the company complied with California Air Resources Board (CARB) regulations.
“Lumber Liquidators lied to investors and to the public about its compliance with formaldehyde regulations for the flooring it sold – all to protect its stock price,” said Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division. “False and misleading financial reports undermine the integrity of our securities markets and harm investors. The Department and our law enforcement partners are committed to doing everything we can to ensure that those who commit securities fraud are held accountable.”
According to court documents filed as part of the DPA, Lumber Liquidators was subject to various laws that regulated the chemicals used in wood products, including laminate flooring. Specifically, CARB enforced limits on formaldehyde emissions from composite wood products. In September 2013, CARB announced that it intended to use deconstructive testing to determine whether finished flooring products contained CARB compliant cores. In 2013 and 2014, CARB informed Lumber Liquidators that flooring samples collected from its California stores failed deconstructive testing for formaldehyde emissions. Lumber Liquidators own deconstructive tests of the same products yielded similar results.
“This penalty should serve as a warning to other corporations who seek to mislead investors,” said David W. Archey, Special Agent in Charge of the FBI’s Richmond Field Office. “FBI Richmond is grateful for the commitment to this case of its partners at the U.S. Attorney’s Office, the Justice Department’s Fraud Section, IRS Criminal Investigations and the U.S. Postal Inspection Service.”
Also in 2014, foreign and domestic flooring suppliers alerted Lumber Liquidators of CARB compliance concerns related to the company’s Chinese laminate products. In February 2014, Lumber Liquidators’ Chinese laminate suppliers requested a price increase citing concerns about the increased cost of CARB compliant cores and their ability to pass deconstructive testing for formaldehyde emissions. Approximately one month later, a United States laminate supplier informed Lumber Liquidators that it tested a Chinese laminate sample purchased from one of Lumber Liquidators’ stores in the United States and that the sample emitted high levels of formaldehyde. Lumber Liquidators took only limited steps to determine the validity of the suppliers’ concerns, and instead sought to generate support for its position that deconstructive testing was not a valid test method.
“Lumber Liquidators knowingly deceived the shareholders they were entrusted to serve,” said Kelly R. Jackson, Special Agent in Charge of IRS-Criminal Investigation (IRS-CI) Washington, D.C. Field Office. “IRS-CI will continue to work diligently with our federal law enforcement partners to ensure that the punishment for such crimes matches the seriousness of the offense.”
To that end, Lumber Liquidators visited two Chinese laminate suppliers in August 2014 to collect and test samples. While collecting samples from Supplier A, a former Lumber Liquidators employee noticed a pallet of laminate flooring that factory workers indicated was Lumber Liquidators’ product, but the label on the pallet indicated that it contained non-CARB compliant cores. The former employee took samples from this suspect pallet for testing along with other samples manufactured in his and other employees’ presence. Laboratory A later provided Lumber Liquidators with test results that undermined the company’s criticisms of deconstructive testing. All but one of the products manufactured in front of the Lumber Liquidators’ employees passed deconstructive testing. But the samples from the suspect pallet, manufactured before employees arrived, failed deconstructive testing.
“Those seeking to maximize profits while misleading investors should expect to pay a heavy price,” said Peter R. Rendina, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service. “The U.S. Postal Inspection Service has investigated these kinds of deceptive practices for years to protect investors and the integrity of the marketplace. Postal Inspectors work tirelessly to identify and hold accountable any company who uses the U.S. mail to defraud American citizens.”
Lumber Liquidators again visited Supplier A in September 2014 and January 2015. Following these visits, Lumber Liquidators concluded that Supplier A had numerous recordkeeping anomalies, refused to implement CARB-related corrective action requests made by the company, and could not reliably demonstrate that its laminate flooring contained CARB compliant cores. Accordingly, in January 2015, the company’s former senior management team decided to discontinue its relationship with Supplier A due to CARB compliance concerns. Nevertheless, that same day, Lumber Liquidators ordered more laminate flooring from Supplier A.
In Fall 2014, Lumber Liquidators learned that the CBS news program, 60 Minutes, also retained Laboratory A to conduct deconstructive testing of Lumber Liquidators’ products. Shortly thereafter, Laboratory A secretly notified Lumber Liquidators that the deconstructive tests commissioned by 60 Minutes yielded significant test failures. The lab then allowed a former Lumber Liquidators employee to review and take pictures of these test results. In December 2014, the lab owner told former Lumber Liquidators employees that a high deconstructive test failure was a strong indicator that the product was not CARB compliant.
On Feb. 25, 2015, Lumber Liquidators learned that 60 Minutes obtained undercover videos from three of its Chinese laminate suppliers, including Supplier A, in which the suppliers admitted that the laminates they made for Lumber Liquidators were not CARB compliant. Lumber Liquidators’ former senior management team retained outside counsel from Law Firm B to interview the suppliers in the undercover videos. On Feb. 28, 2015, Law Firm B informed former Lumber Liquidators executives that it recorded one person from each of the three factories in the undercover videos saying that the product they sold Lumber Liquidators was CARB compliant. Nevertheless, Law Firm B told these former executives that they had limited confidence in the suppliers’ statements because, among other things, a former Lumber Liquidators inspector alleged that suppliers offered bribes to him and other company employees.
On March 1, 2015, 60 Minutes aired a segment alleging that laminate flooring sold by Lumber Liquidators in the United States did not meet CARB emission standards for formaldehyde. The episode featured the undercover videos and test results previously shown to Lumber Liquidators.
The next morning, March 2, 2015, the New York Stock Exchange halted trading of the company’s stock, with the expectation that Lumber Liquidators intended to issue a statement responding to the 60 Minutes episode. Later that morning, Lumber Liquidators, through its employees, knowingly filed a false and misleading SEC Form 8-K broadly denying the allegations in the 60 Minutes episode and affirming Lumber Liquidators complied with CARB regulations. Specifically, Lumber Liquidators omitted material facts from investors, including: CARB’s investigation of the company’s Chinese laminate products; its own deconstructive test results; the company’s decision to discontinue sourcing from Supplier A due to CARB compliance concerns; and evidence that undermined the suppliers’ statements that all products provided to Lumber Liquidators were CARB compliant.
Pursuant to its agreement with the Department of Justice, Lumber Liquidators agreed to pay a total criminal penalty of $33 million to the United States, including a criminal fine of approximately $19 million, and approximately $14 million in forfeiture. This amount represents the company’s net profits from the sale of 100 percent of its Chinese laminate from on or about Jan. 16, 2015 through on or about May 7, 2015.
Lumber Liquidators also agreed to implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. Under the DPA, prosecution of the company for securities fraud will be deferred for an initial period of three years to allow Lumber Liquidators to demonstrate good conduct.
The U.S. Securities and Exchange Commission (SEC) announced a separate settlement with Lumber Liquidators in connection with related parallel proceedings. Under the terms of its resolution with the SEC, Lumber Liquidators agreed to a total of $6,097,298.42 in disgorgement of profits and prejudgment interest. The Department of Justice agreed to credit the amount paid to the SEC in disgorgement as part of its agreement. Thus, the combined total amount of criminal and regulatory penalties paid by Lumber Liquidators will be $33 million.
This penalty reflects the nature and seriousness of the conduct, as well as Lumber Liquidators’ ongoing cooperation with the United States and the company’s extensive efforts at remediation. Among other remedial efforts, Lumber Liquidators suspended the sale of all laminate flooring from China in May 2015; offered consumers in-home testing for already installed flooring; and implemented new policies and procedures regarding compliance with California Air Resources Board (CARB) emission standards and other environmental regulations, sourcing of flooring products, financial reporting and internal controls. The employees involved in wrongdoing either were terminated or resigned from Lumber Liquidators, and the company replaced its executive management team with experienced executives who have displayed a commitment to building an ethical corporate culture.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia; David W. Archey, Special Agent in Charge of the FBI’s Richmond Field Office; Kelly R. Jackson, Special Agent in Charge, Washington, D.C. Field Office, IRS-Criminal Investigation (IRS-CI), and Peter R. Rendina, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service, made the announcement. Assistant U.S. Attorneys Katherine Lee Martin and Uzo Asonye, and Trial Attorney Cory E. Jacobs of the Criminal Division’s Fraud Section are prosecuting 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 is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. X:XX-cr-XXX.
Leader in the Black Guerilla Family Gang Sentenced to 35 Years in Federal Prison for Racketeering Conspiracy, Including Authorizing MurderRead the Press Release
Baltimore, Maryland – Chief U.S. District Judge James K. Bredar sentenced Shawn Thomas, a/k/a Bucky, age 38, of Baltimore, Maryland, today to 35 years in federal prison for participating in a racketeering conspiracy, as a leader in the Black Guerilla Family (BGF) gang.
The sentence was 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; Acting Special Agent in Charge Jennifer L. Moore of the Federal Bureau of Investigation, Baltimore Field Office; Commissioner Michael Harrison of the Baltimore Police Department; and Baltimore City State’s Attorney Marilyn J. Mosby.
United States Attorney Robert K. Hur stated, “All too often, guns and drugs go hand in hand—and both are killers. Shawn Thomas’ sentencing today ensures that he will not be able to bring either to the Greenmount Avenue community he once controlled for a very long time. We are committed to working with our law enforcement partners to get guns and drugs off of our streets and to reduce violent crime in our neighborhoods.”
According to his plea agreement, from prior to 2010 through February 22, 2018, Thomas was employed by and associated with the BGF gang. BGF is a nationwide gang operating in prisons and in cities throughout the United States, including in Baltimore. BGF is involved in criminal activity including murder, robbery, extortion, drug trafficking, obstruction of justice, and witness intimidation.
BGF organizes its members into “regimes” or “bubbles” corresponding to particular regions or neighborhoods in Baltimore City and other Maryland communities. Each bubble reports to a bush member or bushman, who controls larger swaths of territory on behalf of BGF. Bush members are elder statesmen of BGF and maintain inter-bubble discipline and settle disputes among the various bubbles operating in the territory that the bush member controls.
Thomas admitted that he was a high-ranking member of BGF, controlling a regime in the 2700 block of Greenmount Avenue in North Baltimore. During the course of the conspiracy, Thomas obtained narcotics, including crack cocaine, which he distributed through BGF-controlled open-air drug shops. Thomas also collected gang dues for BGF.
As detailed in Thomas’ plea agreement, on December 9, 2016, Thomas ordered another BGF member to murder Keith Ramsey, a Bloods gang member, as part of an ongoing dispute between the two gangs.
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 FBI, 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 James T. Wallner and Clinton J. Fuchs, who prosecuted this Organized Crime Drug Enforcement Task Force case.
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Justice Department Reaches Agreement with Harris County, Texas, to Ensure Polling Place Accessibility for Voters with DisabilitiesRead the Press Release
The Justice Department today reached an agreement with Harris County, Texas, to resolve its lawsuit in the Southern District of Texas alleging that Harris County violated Title II of the Americans with Disabilities Act (ADA) by failing to provide an accessible voting program to voters with disabilities, including accessible polling places. Harris County’s voting program—the third largest in the country—includes over 750 polling places. The Justice Department’s complaint alleges that many polling places in Harris County have architectural barriers—such as steep ramps, gaps in sidewalks and walkways, and locked gates along the route barring pedestrian access—that make them inaccessible to voters with mobility and vision disabilities.
“Every eligible voter with a disability must have an equal opportunity to vote in person at his or her local polling place,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “This fundamental right secures participation in our democracy and it must not be diminished or restricted by barriers to access.”
“The announcement today demonstrates my office’s continued commitment to enforcing all federal civil rights laws, including the ADA,” said U.S. Attorney Ryan K. Patrick. “I commend Harris County for its decision to enter into this agreement in order to achieve our shared goal of making polling places accessible to all eligible voters.”
Under the agreement, Harris County will create and implement policies, practices, and procedures to bring its voting program into compliance with the ADA. These policies, practices and procedures include: creating an effective system for selecting accessible facilities for polling places; surveying polling place facilities to identify accessibility barriers; procuring and implementing temporary accessibility remedies, such as mats or ramps, during elections; and providing effective curbside voting. Harris County will also conduct accessibility surveys of nearly two-thirds of its polling places. In addition, Harris County will hire subject matter experts to provide technical assistance and training to the County’s staff, vendors, and election officials on how to provide accessible polling places, as well as to provide reports to the parties on the County’s progress in complying with the agreement.
This settlement is part of the Department’s ADA Voting Initiative, which focuses on protecting the voting rights of individuals with disabilities. A hallmark of the ADA Voting Initiative is its collaboration with jurisdictions to increase accessibility at polling places. Through this Initiative, the Department has surveyed more than 1,600 polling places and increased polling place accessibility in more than 35 jurisdictions, including Chicago, Illinois; Hidalgo County, Texas; Cumberland County, Pennsylvania; and Coconino County, Arizona.
Those interested in finding out more about this settlement or the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov. ADA complaints may be filed online at http://www.ada.gov/complaint/.
Justice Department Reaches Agreement with Harris County to Ensure Polling Place Accessibility for Voters with DisabilitiesRead the Press Release
HOUSTON – The Justice Department today reached an agreement with Harris County to resolve its lawsuit alleging that Harris County violated Title II of the Americans with Disabilities Act (ADA) by failing to provide an accessible voting program to voters with disabilities, including accessible polling places. Harris County’s voting program - the third largest in the country - includes over 750 polling places. The Justice Department’s complaint alleges that many polling places in Harris County have architectural barriers - such as steep ramps, gaps in sidewalks and walkways and locked gates along the route barring pedestrian access - that make them inaccessible to voters with mobility and vision disabilities.
“Every eligible voter with a disability must have an equal opportunity to vote in person at his or her local polling place,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “This fundamental right secures participation in our democracy and it must not be diminished or restricted by barriers to access.”
“The announcement today demonstrates my office’s continued commitment to enforcing all federal civil rights laws, including the ADA,” said U.S. Attorney Ryan K. Patrick. “I commend Harris County for its decision to enter into this agreement in order to achieve our shared goal of making polling places accessible to all eligible voters.”
Under the agreement, Harris County will create and implement policies, practices and procedures to bring its voting program into compliance with the ADA. These policies, practices and procedures include: creating an effective system for selecting accessible facilities for polling places; surveying polling place facilities to identify accessibility barriers; procuring and implementing temporary accessibility remedies, such as mats or ramps, during elections; and providing effective curbside voting. Harris County will also conduct accessibility surveys of nearly two-thirds of its polling places. In addition, Harris County will hire subject matter experts to provide technical assistance and training to the County’s staff, vendors and election officials on how to provide accessible polling places, as well as to provide reports to the parties on the County’s progress in complying with the agreement.
This settlement is part of the Department’s ADA Voting Initiative, which focuses on protecting the voting rights of individuals with disabilities. A hallmark of the ADA Voting Initiative is its collaboration with jurisdictions to increase accessibility at polling places. Through this Initiative, the Department has surveyed more than 1,600 polling places and increased polling place accessibility in more than 35 jurisdictions, including Chicago, Illinois; Hidalgo County, Texas; Cumberland County, Pennsylvania; and Coconino County, Arizona.
Those interested in finding out more about this settlement or the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov. ADA complaints may be filed online at http://www.ada.gov/complaint/.
Jury Convicts Two Men of Heroin Trafficking ConspiracyRead the Press Release
NEWPORT NEWS, Va. – A federal jury convicted two men late yesterday on charges of conspiracy to distribute heroin, crack cocaine, and fentanyl, and possession with intent to distribute heroin.
“Armed drug traffickers pose serious threats to the safety of our communities,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “The tactical acumen and flexible execution demonstrated by the joint task force in this case is testament to its keen leadership and depth of experience. Through quick thinking, decisive action and fluid coordination, a simple surveillance operation suddenly escalated into an unexpected but successful vehicle interdiction and drug trafficking arrest. This investigation and prosecution would not have been possible absent the critical partnerships we have formed with our local and federal law enforcement partners. My thanks to Homeland Security Investigations, and the Hampton and Newport News Police Departments for their outstanding work on this case.”
According to court records and evidence presented at trial, Terrence Dennis 37, of Norfolk, and Michael Guess, 36, of Newport News, caught the attention of law enforcement when they walked into an ongoing surveillance operation by a Homeland Security Investigations Task Force. After the tactical decision was made to observe Guess (driver) and Dennis (passenger), Guess failed to obey a stop sign, and agents attempted a traffic stop for the minor infraction. Guess accelerated and led the task force on a dangerous high-speed pursuit through Hampton and Newport News while his co-conspirator Dennis threw a loaded firearm and 33 grams of heroin out of the passenger window. Once detained, additional controlled substances and evidence of narcotics distribution was seized. The loaded firearm and heroin jettisoned during the chase were also recovered.
“Narcotics. Guns. A high-speed chase. This case had all the makings of a suspenseful movie plot. Unfortunately, it wasn’t part of a fictional storyline; it is the grim reality our agents and task force officers face right here in Hampton Roads,” said Michael K. Lamonea, Assistant Special Agent in Charge of Homeland Security Investigations’ Norfolk and Richmond offices. “I commend the task force for its quick actions. The arrests of these two individuals helped law enforcement remove lethal narcotics, as well as a firearm from our community.”
This case is part of Project Safe Neighborhoods (PSN), which is the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.
Dennis, who was also convicted of being a felon in possession of a firearm, faces a mandatory minimum sentence of five years to life imprisonment consecutive to any additional sentence imposed for his multiple convictions when sentenced on June 19. Guess faces a maximum penalty of 20 years in prison when sentenced on June 20. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, Michael K. Lamonea, Assistant Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Norfolk, Terry L. Sult, Chief of Hampton Police Division, and Steve R. Drew, Chief of Newport News Police, made the announcement after Chief U.S. District Judge Mark S. Davis accepted the verdict. Assistant U.S. Attorneys Howard J. Zlotnick and Peter G. Osyf are prosecuting 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 is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 4:18-cr-72.
Jacksonville Man Sentenced to 20 Years for Distributing Child Sex Abuse Videos over the InternetRead the Press Release
Jacksonville, Florida – United States District Judge Brian J. Davis has sentenced Pryce Elijah Demars (25, Jacksonville) to 20 years in federal prison for distributing child pornography over the internet. Demars had pleaded guilty on May 25, 2018. As part of his sentence, Demars must also serve a lifetime term of supervised release and register as a sex offender.
Demars was arrested on November 15, 2017, and has been in custody since that day.
According to court documents, as well as evidence and testimony introduced during Demars’s sentencing hearing, FBI agents and other officers executed a federal search warrant at Demars’s residence in Jacksonville on November 15, 2017, in connection with an online child exploitation investigation. From August 3, 2016, through April 12, 2017, Demars had distributed videos depicting young children being sexually abused over the internet. He admitted, among other things, that he had searched for child pornography on the internet, downloaded it, and distributed it to another individual in exchange for $800-$1,000 and several video games.
FBI agents were also able to identify a minor child whom Demars had sexually molested on several occasions. Demars also had offered to take explicit photos of the child and had introduced the child to another individual, over the internet, to further victimize the child through online sexual exploitation.
“Investigating child abuse and exploitation is among the most important work in the FBI,” said Charles P. Spencer, Special Agent in Charge of the FBI Jacksonville Division. “This case represents both our relentless pursuit of predators who seek to harm innocent children, and steadfast determination to ensure they are sentenced to the maximum punishment possible under law.”
This case was investigated by the Federal Bureau of Investigation in Jacksonville, Plano (Texas), and Springfield (Illinois), and the Jacksonville Sheriff’s Office. It was prosecuted by Assistant United States Attorney D. Rodney Brown.
It is another case brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Hudson County, New Jersey, Man Admits Distributing Child PornographyRead the Press Release
NEWARK, N.J. – A Hudson County, New Jersey, man today admitted distributing images of child sexual abuse, U.S. Attorney Craig Carpenito announced.
Todd Walsh, 41, of Hoboken, New Jersey, pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to an information charging him with one count of distributing child pornography.
According to documents filed in this case and statements made in court:
From September 2016 through November 2017, undercover officers accessed an Internet-based video conferencing application and observed that a user, identified as Walsh, used the application to display images of child sexual abuse, including images of prepubescent children, to other users of the application.
The count of distributing child pornography to which Walsh pleaded guilty carries a mandatory minimum sentence of five years in prison, a maximum potential penalty of 20 years in prison, and a $250,000 fine. Sentencing is scheduled for June 25, 2019.
U.S. Attorney Craig Carpenito credited special agents of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Brian Michael, with the investigation leading to today’s guilty plea. He also thanked the Hudson County Prosecutor’s Office and the Hoboken Police Department for their work on this case.
The government is represented by Assistant U.S. Attorney Ailyn Abin of the U.S. Attorney’s Office in Newark.
Defense counsel: Saverio Viggiano Esq., Assistant Federal Public Defender, Newark
Harrison County woman admits to role in methamphetamine distribution operationRead the Press Release
CLARKSBURG, WEST VIRGINIA –Brittany Miles, of Clarksburg, West Virginia, has admitted to her role in a methamphetamine distribution operation, United States Attorney Bill Powell announced.
Miles, age 29, pled guilty to one count of “Possession with Intent to Distribute Methamphetamine.” Miles admitted to having methamphetamine in February 2018 in Harrison County.Miles faces up to 20 years incarceration and a fine of up to $1,000,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Zelda E. Wesley is prosecuting the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Greater Harrison Drug & Violent Crimes Task Force, a HIDTA-funded initiative, investigated. The United States Marshal Service assisted.
The investigation was funded in part by the federal Organized Crime Drug Enforcement Task Force Program (OCDETF). The OCDETF program supplies critical federal funding and coordination that allows federal and state agencies to work together to successfully identify, investigate, and prosecute major interstate and international drug trafficking organizations and other criminal enterprises.
U.S. Magistrate Judge Michael John Aloi presided.
Guatemalan Man Sentenced to Prison for Illegally Reentering the United States After Prior DeportationRead the Press Release
A man who illegally returned to the United States after being deported was sentenced today to almost four months in federal prison.
Victor Morales-Suar, age 42, a citizen of Guatemala illegally present in the United States and residing in Marshalltown, Iowa, received the prison term after a January 16, 2019, guilty plea to one count of illegal reentry into the United States.
At the guilty plea, Morales-Suar admitted he had previously been deported from the United States in June 2003 and illegally reentered the United States without the permission of the United States government. Morales-Suar was deported after he was found to be working at a meat packing plant in South Sioux City, Nebraska, under a fake name and using fraudulent identification documents.
In November 2018, Morales-Suar was found by immigration agents after he was detained by the Meskwaki Nation Police Department in Tama, Iowa, after Morales-Suar attempted to enter the Meskwaki Casino using a fraudulent identification card.
Morales-Suar was sentenced in Cedar Rapids by United States District Court Judge C. J. Williams. Morales-Suar was sentenced to 112 days’ imprisonment. He must also serve a one-year term of supervised release after the prison term. There is no parole in the federal system.
Morales-Suar is being held in the United States Marshal’s custody until he can be turned over to immigration officials.
The case was prosecuted by Assistant United States Attorney Daniel C. Tvedt and investigated by Department of Homeland Security, Immigration and Customs Enforcement, Enforcement and Removal Operations.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 18-CR-0116.
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Georgia Woman Arrested for Conspiring to Provide Material Support to ISISRead the Press Release
Kim Anh Vo, a.k.a. “F@ng,” a.k.a. “SyxxZMC,” a.k.a. “Zozo,” a.k.a. “Miss.Bones,” a.k.a. “Sage Pi,” a.k.a. “Kitty Lee,” was arrested this morning in Hephzibah, Georgia. Vo was charged by a criminal Complaint with conspiring to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization. Vo is expected to be presented later today before Magistrate Judge Brian K. Epps in Augusta, Georgia, federal court.
Assistant Attorney General John C. Demers for National Security, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, Assistant Director-in-Charge William F. Sweeney Jr. of the FBI New York Field Office and Commissioner James P. O’Neill of the Police Department for the City of New York (NYPD) made the announcement.
As alleged in the criminal Complaint, unsealed today:
In April 2016, Vo joined the United Cyber Caliphate (UCC), an online group that pledged allegiance to ISIS and committed to carrying out online attacks and cyber intrusions against Americans. Since that time, the UCC and its sub-groups have disseminated ISIS propaganda online, including “kill lists,” which listed the names of individuals – for example, soldiers in the United States Armed Forces and members of the State Department – whom the group instructed their followers to kill. For example, on or about April 21, 2016, the UCC posted online the names, addresses, and other personal identifying information of approximately 3,602 individuals in the New York City area and included a message that stated: “List of most important citizens of #New York and #Brooklyn and some other cities . . . We Want them #Dead.”
Between April 2016 and May 2017, Vo worked on behalf of the UCC to recruit others to join the group and assist with the group’s hacking efforts. Between January and February 2017, Vo recruited other individuals – including a minor residing in Norway – to create online content in support of ISIS, including a video (Video-1) threating a non-profit organization based in New York, New York, which was formed to find and combat the online promotion of extremist ideologies. Video-1 contained messages such as, “You messed with the Islamic State, SO EXPECT US SOON,” followed by a scene displaying a photograph of the organization’s chief executive officer and former U.S. Ambassador (CEO), along with the words: “[CEO], we will get you.”
On or about April 2, 2017, the UCC posted online a kill list containing the names and personal identifying information of over 8,000 individuals, along with a links to another video (Video-2). Video-2 displayed messages stating, in part: “We have a message to the people of the U.S., and most importantly, your president Trump: Know that we continue to wage war against you, know that your counter attacks only makes stronger. The UCC will start a new step in this war against you. . . .” and “We will release a list with over 8000 names, addresses, and email addresses, of those who fight against the US. Or live amongst the kuffar. Kill them wherever you find them!” In subsequent scenes, Video-2 contains what appears to be a graphic depiction of the decapitation of a kneeling man.
* * *
Vo, 20, of Georgia, is charged with one count of conspiring to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Demers and Mr. Berman praised the outstanding efforts of the FBI New York Field Office, New York Joint Terrorism Task Force, and Atlanta Field Office’s Augusta Resident Agency. Mr. Demers and Mr. Berman also thanked the United States Attorney’s Office for the Southern District of Georgia.
This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Shawn G. Crowley, Sidhardha Kamaraju, and Jane Kim are in charge of the prosecution, with assistance from Trial Attorney Elisabeth Poteat of the Counterterrorism Section.
The charges contained in the Complaint are merely
Georgia Woman Arrested for Conspiring to Provide Material Support to IsisRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced that KIM ANH VO, a/k/a “F@ng,” a/k/a “SyxxZMC,” a/k/a “Zozo,” a/k/a “Miss.Bones,” a/k/a “Sage Pi,” a/k/a “Kitty Lee,” was arrested this morning in Hephzibah, Georgia. VO was charged by a criminal Complaint with conspiring to provide material support to the Islamic State of Iraq and al-Sham (“ISIS” or the “Islamic State”), a designated foreign terrorist organization. VO is expected to be presented later today before Magistrate Judge Brian K. Epps in Augusta, Georgia, federal court.
As alleged in the criminal Complaint,[1] unsealed today:
In April 2016, VO joined the United Cyber Caliphate (the “UCC”), an online group that pledged allegiance to ISIS and committed to carrying out online attacks and cyber intrusions against Americans. Since that time, the UCC and its sub-groups have disseminated ISIS propaganda online, including “kill lists,” which listed the names of individuals – for example, soldiers in the United States Armed Forces and members of the State Department – whom the group instructed their followers to kill. For example, on or about April 21, 2016, the UCC posted online the names, addresses, and other personal identifying information of approximately 3,602 individuals in the New York City area and included a message that stated: “List of most important citizens of #New York and #Brooklyn and some other cities . . . We Want them #Dead.”
Between April 2016 and May 2017, VO worked on behalf of the UCC to recruit others to join the group and assist with the group’s hacking efforts. Between January and February 2017, VO recruited other individuals – including a minor residing in Norway – to create online content in support of ISIS, including a video (“Video-1”) threating a non-profit organization based in New York, New York, which was formed to find and combat the online promotion of extremist ideologies. Video-1 contained messages such as, “You messed with the Islamic State, SO EXPECT US SOON,” followed by a scene displaying a photograph of the organization’s chief executive officer and former U.S. Ambassador (the “CEO”), along with the words: “[CEO], we will get you.”
On or about April 2, 2017, the UCC posted online a kill list containing the names and personal identifying information of over 8,000 individuals, along with links to another video (“Video-2”). Video-2 displayed messages stating, in part: “We have a message to the people of the U.S., and most importantly, your president Trump: Know that we continue to wage war against you, know that your counter attacks only makes stronger. The UCC will start a new step in this war against you. . . .” and “We will release a list with over 8000 names, addresses, and email addresses, of those who fight against the US. Or live amongst the kuffar. Kill them wherever you find them!” In subsequent scenes, Video-2 contains what appears to be a graphic depiction of the decapitation of a kneeling man.
* * *
VO, 20, of Georgia, is charged with one count of conspiring to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Berman praised the outstanding efforts of the FBI New York Field Office, New York Joint Terrorism Task Force, and Atlanta Field Office’s Augusta Resident Agency. Mr. Berman also thanked the United States Attorney’s Office for the Southern District of Georgia and the Counterterrorism Section of the Department of Justice’s National Security Division.
This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Shawn G. Crowley, Sidhardha Kamaraju, and Jane Kim are in charge of the prosecution, with assistance from Trial Attorney Elisabeth Poteat of the Counterterrorism Section.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below are only allegations, and every fact described should be treated as an allegation.
Gadsden County Tax Preparer Charged with Wire Fraud, Identity Theft, and Aiding in Preparing False Tax ReturnsRead the Press Release
TALLAHASSEE, FLORIDA – John Jean-Gilles, 33, of Midway, was arraigned on Friday, March 8, 2019, in the U.S. District Court in Tallahassee after a federal grand jury returned an indictment charging him with 27 counts of aiding in preparing false tax returns, four counts of wire fraud, and aggravated identify theft. The indictment was announced by Lawrence Keefe, United States Attorney for the Northern District of Florida.
The indictment alleges that Jean-Gilles was the sole managing member and owner of USA Tax and Multi-Services, LLC, a tax preparation business in Tallahassee. Jean-Gilles caused the preparation of federal income tax returns, which falsely reported the taxpayer’s income, withholding, credits, and the refund due for the tax years 2012-2015. The indictment also alleges that he used the social security number and preparer tax identification number of another individual without proper authority.
The maximum penalty for aiding in preparing false tax returns is three years in prison. The maximum penalty for wire fraud is 20 years in prison. Jean-Gilles faces a 2-year mandatory minimum prison sentence for aggravated identity theft consecutive to any other sentence imposed. The trial is scheduled for April 15, 2019, at 8:15 a.m. at the United States Courthouse in Tallahassee.
This case resulted from an investigation by the Internal Revenue Service – Criminal Investigation and the Gadsden County Sheriff’s Office. Assistant United States Attorney Gary Milligan is prosecuting the case.
An indictment is merely an allegation by a grand jury that a defendant has committed a violation of federal criminal law and is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the government’s burden to prove guilt beyond a reasonable doubt at trial.
The United States Attorney’s Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. To access public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
Fugitive from the District of Colorado arrested in the Republic of GeorgiaRead the Press Release
DENVER – Mr. Karen Nikolyan, age 35, and a citizen of Armenia, was arrested this weekend at the Tbilisi airport in the Republic of Georgia after flying from Istanbul, Turkey, announced United States Attorney Jason R. Dunn. Nikolyan had been a fugitive since 2008, when he fled the District of Colorado after he pleaded guilty to bank fraud in federal court. He was arrested in the Republic of Georgia by local authorities with support from United States federal law enforcement.
On June 6, 2007, Nikolyan was indicted by a federal grand jury in Denver for a bank fraud scheme. In that case, beginning on April 11, 2007, and continuing through May 11, 2007, the defendant devised a scheme of making, in a short period of time and before liens were of record, multiple applications for home equity in a condominium owned by the defendant located in Aurora, Colorado. A total of 7 financial institutions were defrauded by over $600,000. On March 19, 2008, he pleaded guilty and was free on bond awaiting sentencing. He was scheduled to be sentenced on December 16, 2008. Nikolyan failed to appear for his sentencing hearing. Instead he fled the country. Thanks to the work of the U.S. Secret Service, FBI and other agencies, Nikolyan was found as he made reservations to fly from Turkey to the Republic of Georgia.
“Today’s arrest is due to the tireless work of our law enforcement partners at the Secret Service and the FBI, as well as our prosecutors and those at main justice,” said United States Attorney Jason Dunn. “We commend their hard work and long memory, ensuring that justice will be served after 11 years.”
The FBI’s Office of the Legal Attaché in Georgia and the Department of Justice’s Office of International Affairs (OIA) worked quickly to obtain a “Joint Declaration On Extradition” between the Republic of Georgia and the United States, and OIA submitted a request for provisional arrest. Now that Nikolyan has been arrested, the two countries are working on extraditing Nikolyan to the United States to face the sentencing hearing from which he fled.
This matter was investigated with the U.S. Secret Service. The FBI and other law enforcement agencies assisted in the investigation and location of the defendant. AUSA Bob Brown is prosecuting the defendant.
Four South Carolina Men Sentenced for International Wildlife SmugglingRead the Press Release
Columbia, South Carolina --- United States Attorney Sherri A. Lydon announced today that Steven Verren Baker, 38, of Holly Hill, South Carolina, was sentenced to 27 months in federal prison after pleading guilty to participating in a Conspiracy to Smuggle Wildlife. Senior United States District Judge Joseph F. Anderson, Jr., of Columbia, imposed the sentence and ordered Baker to forfeit $263,225.00 in proceeds.
On February 27, 2019, Joseph Logan Brooks, 29, formerly of Holly Hill, was sentenced to five months incarceration and five months home confinement for his participation in the conspiracy. Likewise, on March 1, 2019, fellow conspirator Matthew Tyler Fischer, 26, of Holly Hill, was sentenced to six months home confinement and two years’ probation. William Fischer, age 48, of Harleyville, South Carolina, was sentenced to two years’ probation and ordered to pay a $1,000 fine for a misdemeanor Wildlife Trafficking violation. All three participated in or facilitated Baker’s efforts.
Matthew Harrison Kail, age 30, of Pomona Park, Florida, and William Thomas Gangemi, age 26, of Freehold, New Jersey, have both pleaded guilty and are awaiting sentencing.
Evidence presented previously established that Baker was the ringleader of an international syndicate of wildlife smugglers exchanging turtles protected by international agreements back and forth between the United States and China. The activity took place from January through June 2016. Baker obtained protected turtles from Hong Kong to distribute here in the United States, and he shipped protected turtles from the United States to Asia.
The transactions were set up using the Facebook text messaging feature. Shipments were made internationally through the United States Postal Service. Several packages were intercepted entering the United States at John F. Kennedy International Airport.
The United States Fish and Wildlife Service, the United States Postal Inspection Service, and the South Carolina Department of Natural Resources investigated the case. Assistant United States Attorney Winston David Holliday, Jr., of the Columbia office is prosecuting the case.
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Forty-year federal prison sentence for Serial armed robberRead the Press Release
INDIANAPOLIS - United States Attorney Josh J. Minkler announced the sentencing of Kevin Ingram, 29, following his conviction in federal court for four armed robberies of Indianapolis area businesses. U.S. District Judge Tanya Walton Pratt sentenced Ingram to 496 months (40½ years) in federal prison.
“Indianapolis is a safer place with Kevin Ingram behind bars,” Minkler said. “He was a dangerous man who lived a life of lawlessness and violence. This sentence reflects the gravity of his choices throughout his life, culminating in threatening to shoot multiple women over the course of four armed robberies in our community. It also reflects this Office’s commitment to bringing the full weight of federal law enforcement brought to bear on those who choose to terrorize our community with violence.”
Following a trial in November 2018, a federal jury convicted Ingram of robbing four Indianapolis stores at gunpoint in an eight-day crime spree in October 2017. Two of the stores were beauty salons, where Ingram stuck a semi-automatic pistol in the faces and backs of two store workers and two customers. He demanded cash and threatened to shoot if they did not comply. The other two stores Ingram robbed were larger retail stores, which Ingram robbed in the middle of the afternoon, with the stores full of patrons, including children. All of those he threatened and robbed were women, and the jury heard testimony from each of them.
Ingram coerced his girlfriend to participate in one of the robberies. She testified at trial that he choked her and pointed a gun at her as she resisted him in the parking lot outside one of the salons. She ultimately went inside with him, taking money from the register while he held the store at gunpoint. At the time, she was six months pregnant with his child.
These robberies were part of lengthy criminal record that included multiple violent felonies. Ingram had eight juvenile adjudications before turning 17, including auto theft (twice) and battery resulting in bodily injury. At 17, he robbed a woman at gunpoint, for which he was convicted as an adult. After four years in prison, he committed another crime just three months later. Within less than a year, Ingram had robbed two more women in Indianapolis. After several more years in prison, he again continued committing crimes, including multiple offenses involving drugs and guns, before committing the October 2017 robberies.
Before being apprehended in this case, though, Ingram fled to Houston, Texas. Evidence was presented at sentencing that, while in Houston, Ingram robbed several more women at knifepoint, including a pregnant woman. Ingram still has active arrest warrants from there.
According to Assistant United States Attorneys Nick Linder and Lawrence Hilton, who prosecuted the case for the government, Ingram will serve at least 35 years of his sentence, even with good time credit. He must also repay the $3,125 he stole during the four robberies.
This case was investigated by the Federal Bureau of Investigation. “This sentence should provide some comfort to Mr. Ingram’s victims whose lives were forever changed by his criminal and traumatizing actions,” said Grant Mendenhall, Special Agent in Charge of the FBI's Indianapolis Division. “The 40-years he received is also a testament to the hard work and dedication of our agents and law enforcement partners who worked hand in hand to ensure Mr. Ingram no longer poses a threat to the communities he terrorized.”
In October 2017, United States Attorney Josh J. Minkler announced a Strategic Plan designed to shape and strengthen the District’s response to its most significant public safety challenges. This prosecution demonstrates the Office’s firm commitment to prosecuting those who commit violent crimes involving firearms. (See United States Attorney’s Office, Southern District of Indiana Strategic Plan, Strategic Objective 2.3.)
Former Pittsburgh Police Officer Pleads Guilty to Lying to FBI AgentsRead the Press Release
PITTSBURGH, PA – A former City of Pittsburgh Police Officer and resident of Allegheny County pleaded guilty in federal court to charges of making false statements to government agents, United States Attorney Scott W. Brady announced today.
Antoine Cain, 49, of Pittsburgh, Pennsylvania, pleaded guilty to two counts of making false statements to government agents before Senior United States District Judge Arthur J. Schwab.
In connection with the guilty plea, the court was advised that during the course of a federal investigation pertaining to an armed bank robbery that occurred on January 8, 2018 at the Citizens Bank in Crafton, PA, federal agents interviewed Cain, who was at the time a 25-year veteran police officer for the City of Pittsburgh. Through the course of their investigation, federal agents learned that Mr. Cain had been involved in a seven-year, on-again, off-again, relationship with a woman identified as Melissa Kane. Federal investigators had identified Melissa Kane as the mother of the lead suspect in the Citizens Bank armed robbery, Brent Richards.
The court was further advised that federal agents interviewed Cain on July 27, 2018, and July 31, 2018, wherein he made false statements to government agents. Namely, Cain told federal agents during both of these interviews that he did not know the identity of the individual who had robbed the Citizens Bank, when in fact he did. On September 18, 2018, federal agents spoke once again with Cain and advised Cain that their investigation revealed additional information indicating that Cain knew who robbed the Citizens Bank.
Cain was asked once again if he had any information regarding the identity of the bank robber, to which Cain admitted, during this interview, that he did. During this interview Cain explained to law enforcement that Brent Richards, who Cain knew through his relationship with Melissa Kane, had committed the Citizens Bank armed robbery. Cain further admitted that Brent Richards told him that he had "hit" a bank, which Cain understood to mean that Brent Richards had committed a bank robbery, and Melissa Kane told him that Brent Richards had robbed the Citizens Bank, wearing a mask and using a bb gun and that Brent Richards had been covered up so law enforcement could not prove that it was Brent Richards who had robbed the bank.
Judge Arthur J. Schwab scheduled sentencing for July 2, 2019 at 11 a.m. The law provides for a total sentence of not more than five years in prison, a fine of not more than $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorneys Rebecca L. Silinski and Eric G. Olshan are prosecuting this case on behalf of the government.
The Federal Bureau of Investigation conducted the investigation that led to the prosecution of Antoine Cain.
Former Pittsburgh Man Sentenced to 4 Years for Possessing 2 Stolen Firearms while on Parole for CarjackingRead the Press Release
PITTSBURGH, PA – A former resident of Pittsburgh, Pennsylvania was sentenced in federal court to 48 months in prison and three years of supervised release for possession of a firearm by a convicted felon, United States Attorney Scott W. Brady announced today.
United States District Judge Cathy Bissoon imposed the sentence on LaRon Hollaman, 29. Judge Bissoon also required that this sentence must be served consecutive to any state parole violation.
The court was advised that on May 6, 2017, a Robinson Police Officer observed Hollaman engage in suspicious drug activity in the parking lot of the Hilltop Inn. The officer then followed Hollaman to a nearby GetGo gas station where he approached the defendant to investigate further. When asked for his license and registration, Hollaman told the officer, "I just did six up at State," referring to his prior conviction. Hollaman continued to tell the officer, "There are two guns loaded underneath the front passenger seat." Hollaman was removed from the car and handcuffed. Police then recovered two loaded Glock firearms, which were reported stolen out of the City of Pittsburgh. At the time of his arrest, Hollaman was on Pennsylvania State parole for committing a carjacking and two separate illegal firearms possession charges.
This case was brought as part of Project Safe Neighborhoods (PSN), 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.
Assistant United States Attorney Timothy Lanni is prosecuting this case on behalf of the government.
The Drug Enforcement Agency, Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Robinson Police Department conducted the investigation that led to the guilty plea and sentence in this case.
Former Miles City athletic trainer admits coercion, enticement chargesRead the Press Release
MISSOULA – Former high school athletic trainer James E. “Doc” Jensen, Jr., of Miles City, today admitted charges that he coerced or enticed multiple minors into sexual activity, U.S. Attorney Kurt Alme announced.
Jensen, 79, pleaded guilty to coercion and enticement. There was no plea agreement.
Chief U.S. District Judge Dana L. Christensen presided. Sentencing is set for July 30 in Billings. Jensen is detained.
Jensen faces a maximum 15 years in prison, a $250,000 fine and three years of supervised release.
Prosecutors said evidence would show Jensen obtained information from the Internet to develop a so-called “Program” that he used to coerce minor male student-athletes into sexual activity saying it would increase their physical performance. Jensen also used the telephone to contact victims about “The Program.”
Jensen, who was an athletic trainer at the Custer County District High School in Miles City from the 1970s to about 1998, knew that the student athletes were minors. Victim interviews would confirm that Jensen engaged in this conduct until at least 1999 and after his association with Custer County District High School.
Jensen admitted in a September 2018 interview the basic tenants of “The Program,” saying he got information for its administration from the Internet and had applied it to hundreds of minor children.
A relative of Jensen also told law enforcement about seeing apparent computer print-outs of “The Program” among Jensen’s possessions. Another witness told law enforcement about seeing Jensen online and deceptively attempting to contact minor children, particularly boys, by creating a false identity. Internet searches on Jensen’s computer were consistent with sexual interest in children.
Assistant U.S. Attorneys Zeno Baucus and Bryan Dake prosecuted the case, which was investigated by the FBI and Montana Division of Criminal Investigation.
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Former Lee's Summit Police Officer Pleads Guilty to Armed Bank RobberyRead the Press Release
KANSAS CITY, Mo. – A former Lee’s Summit, Mo., police officer who led officers on a 100-miles-per-hour vehicle pursuit pleaded guilty in federal court today to armed bank robbery.
Richard W. Hagerty, 35, of Independence, Mo., pleaded guilty before U.S. District Judge Roseann Ketchmark to one count of armed bank robbery and one count of brandishing a firearm during a crime of violence.
Hagerty was a police officer with the Lee’s Summit Police Department from 2007 to 2016.
Hagerty entered Central Bank of the Midwest, located at 1305 N.W. Arborwalk Blvd. in Lee’s Summit, on Aug. 28, 2018. Hagerty, wearing a camouflage balaclava-style mask that covered part of his face and black gloves, pointed a Glock .40-caliber pistol at a customer and yelled, “Everybody get down on the floor, this is a robbery.” He demanded cash from two tellers, pointing the handgun at them while he was demanding money. Hagerty stole about $7,000 then fled from the bank on foot.
A Lee’s Summit police officer located Hagerty driving a dark gray Mazda on Hook Road and 139th Street shortly after the robbery. When the officer activated his emergency equipment, Hagerty accelerated and a vehicle pursuit ensued. The pursuit stretched from Lee’s Summit to Grandview, Mo., in the middle of the day, on busy thoroughfares. Hagerty drove erratically during the pursuit, according to court documents, by reaching speeds in excess of 100 miles per hour on those busy roads, passing through school zones, and crossing into oncoming traffic.
After the vehicle was finally stopped, the officer gave verbal instructions for the occupant of the Mazda to exit the vehicle. After a short delay, Hagerty exited through the driver's side door of the vehicle with his hands raised above his head. The officer immediately recognized Hagerty, who was arrested.
Inside the vehicle, officers saw a large amount of cash on the driver’s seat and the front driver’s and passenger’s floorboard. They also recovered the Glock handgun from the vehicle.
Under federal statutes, Hagerty is subject to a sentence of up to 25 years in federal prison without parole for armed bank robbery, plus a consecutive mandatory minimum sentence of seven years, up to life in federal prison, for brandishing the firearm. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Ashleigh Ragner. It was investigated by the Lee’s Summit, Mo., Police Department and the FBI.
Five Charged with Using Fake and Stolen Social Security Numbers to Get Credit, Lease Cars and ApartmentsRead the Press Release
COLUMBUS, Ohio – Criminal complaints were unsealed today that charge three men and two women with using false or stolen Social Security numbers to lease cars and apartments and get approximately $200,000 of credit.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Tracey Thanos, Special Agent in Charge, Social Security Administration Office of Inspector General and Hilliard Police Chief Robert Fisher announced the complaints which were unsealed after the suspects were arrested.
The criminal complaints charge the following five central Ohio residents:
Tommy Edwards Jr., 28, allegedly used three fake Social Security numbers – including two numbers belonging to children – and other fake identity documents to lease a car and three apartments in the Columbus area in 2016 through 2018.
Kiara Mitchell, 28, is charged with using a Social Security number belonging to a child to rent an apartment in Groveport.
Isaiah Burnley, 19, allegedly used false Social Security numbers and forged paycheck stubs to rent apartments in 2018
Wayne Hamler, 34, allegedly used a forged Social Security card to lease a car in 2018.
China Hester, 36, used a fake Social Security number to rent an apartment in the Columbus area in 2018.
The complaints also allege that Edwards, Mitchell, Burnley and Hamler used the false documents to get almost $200,000 in loans and credit cards. False representation of a Social Security number is a crime punishable by up to five years in prison and fine of up to $250,000 and three years of supervised release.
Defendants were arrested today and will appear before a U.S. Magistrate Judge on the charges.
U.S. Attorney Glassman commended the investigation of this case by the Social Security Administration Office of Inspector General and the assistance of the United States Marshals Service, as well as Special Assistant United States Attorney Timothy Landry, who is representing the United States in the case.
A criminal complaint merely contains allegations, and each defendant is presumed innocent unless proven guilty in a court of law.
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Felon Sentenced to 30 Months for Possessing Two Guns & AmmunitionRead the Press Release
MADISON, WIS. – Scott C. Blader, United States Attorney for the Western District of Wisconsin, announced that Raymond Jackson, 52, Chicago, Illinois, was sentenced today by U.S. District Judge James D. Peterson to 30 months in federal prison for possessing two firearms and ammunition as a felon. Jackson pleaded guilty to the charge on December 17, 2018.
On January 28, 2017, Price County law enforcement recovered two firearms and ammunition from Jackson’s vehicle during a traffic stop for operating while intoxicated. Jackson initially was charged in state court, but he absconded from his pretrial supervision and failed to appear for court. He was subsequently indicted by a federal grand jury and arrested by law enforcement in Chicago in September 2018.
In selecting a 30-month sentence, Judge Peterson noted Jackson’s lengthy criminal history, which included prior convictions for burglary, robbery, possession of a controlled substance, theft, unlawful use of a weapon by a felon, criminal damage to property, and domestic battery. Judge Peterson also noted that one of the firearms Jackson possessed had an obliterated serial number.
The charge against Jackson was the result of an investigation conducted by the Price County Sheriff’s Office; Phillips Police Department; Bureau of Alcohol, Tobacco, Firearms and Explosives; Chicago Police Department Fugitive Apprehension Unit; Federal Bureau of Investigation; and the Price County District Attorney’s Office. The prosecution of the case has been handled by Assistant U.S. Attorney Meredith P. Duchemin.
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.
Felon in Possession of a FirearmRead the Press Release
BATON ROUGE, LA – United States Attorney Brandon J. Fremin announced today that District Judge John W. DeGravelles sentenced CORY CONRAD, a 30 year-old resident of Magnolia, Mississippi to 46 months in federal prison following his conviction of possessing a firearm by a convicted felon. The Court further sentenced CONRAD to 3 years of supervised release following his term of imprisonment and ordered that the firearm be forfeited.
On March 16, 2018, Baton Rouge Police Officers stopped CONRAD, who was driving a vehicle that had been reported stolen. CONRAD was the only occupant of the vehicle. Upon stopping the vehicle, officers asked CONRAD to step out of the vehicle at which time CONRAD told the officers that he had a firearm in his lap. The firearm, a loaded Smith and Wesson M&P 9 Shield, 9mm semi-automatic pistol, serial number HKY3107, fell as CONRAD exited the vehicle, and the officers recovered it from the driver’s area of the vehicle.
CONRAD has five prior felony convictions which prohibit him from possessing a firearm.
On March 12, 2012, in the Nineteenth Judicial District Court of Louisiana, CONRAD pled guilty to simple burglary and attempted simple robbery. On March 25, 2008, in the Nineteenth Judicial District Court of Louisiana, CONRAD pled guilty to simple burglary. On March 20, 2007, in the Nineteenth Judicial District Court of Louisiana, CONRAD pled guilty to possession of Alprazolam. On July 18, 2011, in the Twenty-third Judicial District Court of Louisiana, CONRAD plead guilty to theft of a motor vehicle.
U.S. Attorney Fremin stated, “Our office takes seriously the issue of guns in the hands of career criminals. We will continue to work tirelessly with our federal, state and local partners to protect our district from chronic offenders. I want to thank our prosecutors, the ATF, and the Baton Rouge Police Department for their work on this case.”
This matter is being handled by the U.S. Attorney’s Office for the Middle District of Louisiana, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Baton Rouge Police Department. The case is being prosecuted by Assistant United States Attorney Jessica Thornhill.
Federal Jury Finds Greenbrier County Man Guilty on Federal Gun ChargesRead the Press Release
BECKLEY, W.Va. – A federal jury has convicted a Greenbrier County man on federal gun charges, announced United States Attorney Mike Stuart. In January 2018, Ronald Collins, 39, lied on ATF form 4473, indicating that he had never been committed to a mental institution, and thereafter purchased a firearm. The jury returned guilty verdicts on charges of making a false and fictitious written statement on an ATF Form 4473 in order to acquire a firearm, and of being in possession of a firearm after being committed to a mental institution. The Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) and the West Virginia State Police conducted the investigation.
“Collins is prohibited from possessing a firearm by virtue of having previously been committed to a mental institution,” said United States Attorney Mike Stuart. “This is a prime example of how enforcing existing gun laws keeps guns out of the wrong hands. I want to thank ATF, the West Virginia State Police and my prosecutors for their exemplary work in this case.”
Collins posted several videos of himself with the firearm on social media, including one of him shooting the firearm, which were shown to the jury. Collins now faces up to 20 years in prison when sentenced on July 10, 2019.
United States District Judge Irene C. Berger presided over the trial. Assistant United States Attorneys Steve Loew and Alex Hamner handled the prosecution.
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Federal Jury Convicts Former Chicago Police Officer of Participating in Robbery and Extortion CrewRead the Press Release
CHICAGO — A federal jury has convicted a former Chicago Police Department sergeant of participating in a robbery and extortion crew that targeted suspected drug dealers.
The jury in U.S. District Court in Chicago on Monday convicted EDDIE C. HICKS, also known as “David Rose,” 70, on all eight counts against him, including conspiracy to commit racketeering; drug conspiracy; possession of a controlled substance with intent to distribute; carrying a firearm in furtherance of a drug trafficking offense and crime of violence; theft of government funds; and failure to appear for a judicial proceeding. The conviction is punishable by up to life in prison. U.S. District Judge Joan Humphrey Lefkow did not immediately schedule sentencing. A status hearing is set for April 10, 2019.
The conviction 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 Federal Bureau of Investigation. Valuable assistance was provided by the U.S. Attorney’s Office in the Eastern District of Michigan, U.S. Marshals Service, Detroit, Mich., Police Department, Chicago Police Department, Cook County Sheriff’s Police Department, Bolingbrook Police Department, and Alsip Police Department.
The government is represented by Assistant U.S. Attorneys Morris Pasqual and Grayson Walker.
Hicks served as a Chicago Police officer from 1970 to 2000, ultimately attaining the rank of sergeant. In the 1990s, he was assigned to CPD’s Narcotics Section. Evidence at trial revealed that for nearly a decade Hicks and three other law enforcement personnel participated in a robbery ring that targeted suspected drug dealers under the guise of legitimate police investigations. The four-person crew staged phony drug raids and automobile stops of suspected dealers, threatened them with arrest, then kept the drugs, cash or weapons they discovered. From the early 1990s to 2001, the scheme netted the crew thousands of dollars in cash, multi-kilogram quantities of cocaine, hundreds of pounds of marijuana, and several firearms.
The three other crew members were previously convicted: LARRY HARGROVE, a former Chicago Police sergeant, was sentenced to 13 years in prison; MATTHEW L. MORAN, a former investigator for the State of Illinois Department of Professional Regulation, was sentenced to seven years and ten months in prison; and LAWRENCE W. KNITTER, a former CPD electrical mechanic, was sentenced to nine years and four months in prison.
The failure-to-appear charge against Hicks stemmed from his flight on the eve of trial when it was originally scheduled in June 2003. Hicks was free on bond when he failed to appear in court. He remained a fugitive until his arrest in Detroit, Mich., in September 2017.
Federal Inmate Pleads Guilty to Possessing a Controlled SubstanceRead the Press Release
RICHMOND, Va. – A Maryland man pleaded guilty today to possessing suboxone, a Schedule III controlled substance, while in federal prison.
According to court documents, James Pixley, 29, of Leonardtown, was in the visiting area of the Petersburg Federal Correctional Institution in July 2018 when he received 35 12mg suboxone strips from a visitor. Suboxone is a controlled substance that is available only by prescription. Prison officials recovered the suboxone from Pixley immediately after the visit.
Pixley pleaded guilty to possession of a prohibited object by a federal inmate and faces a maximum penalty of 5 years in prison when sentenced on April 9. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, David W. Archey, Special Agent in Charge of the FBI’s Richmond Field Office, and John I. Dixon III, Chief of Petersburg Police, made the announcement after Senior U.S. District Judge Henry E. Hudson accepted the plea. Assistant U.S. Attorney Angela Mastandrea-Miller is prosecuting 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 is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 3:19-cr-011.
Father and Son Conviceted of Multimillion-Dollar Investment Fraud SchemeRead the Press Release
BIRMINGHAM – A federal jury found a father and son guilty Friday of multiple charges for their roles in investment fraud and bank fraud schemes in which they stole over $10 million from individual investors—including multiple former professional athletes—and Alamerica Bank of Birmingham, Alabama.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jay E. Town of the Northern District of Alabama and Special Agent in Charge Johnnie Sharp Jr. of the FBI Birmingham Field Office made the announcement.
Donald Watkins Sr., 70, of Atlanta, Georgia, was convicted on seven counts of wire fraud, two counts of bank fraud and one count of conspiracy. Donald Watkins Jr., 46, of Birmingham was convicted on one count of wire fraud and one count of conspiracy. Sentencing is set for July 16 before U.S. District Court Judge Karon O. Bowdre of the Northern District of Alabama, who presided over the trial.
“The jury’s verdict today sends a clear message: Donald Watkins Sr. and Donald Watkins Jr. are frauds, plain and simple,” said Assistant Attorney General Benczkowski. “They induced their victims to part with more than $10 million of supposed ‘investment capital’ and used it to support their lavish lifestyle. I want to thank the prosecutors and law enforcement agents for their hard work investigating and prosecuting this case.”
“This was a case about deception and greed at the expense of too many,” said U.S. Attorney Town. “The findings of guilt for these two individuals should forewarn anyone who would seek to defraud investors so brazenly. We appreciate the labor of the jurors whose role as citizens in this process is so critical to our system of justice. We are also grateful to the Alabama Securities Commission and the Department of Justice’s Fraud Section for allowing their personnel to engage in this prosecution.”
“Both of the men found guilty today are financial predators who truly represent pure greed,” said FBI Special Agent in Charge Sharp. “We are pleased that the defendants in this case are being held accountable for their crimes and we will continue to work with our law enforcement partners to investigate and prosecute those who commit these types of financial crimes.”
According to evidence presented at trial, between approximately 2007 and 2013, Donald Watkins Sr. sold “economic participations” and promissory notes connected with Masada Resource Group, a company that he ran as manager and CEO. Investors paid millions of dollars after Donald Watkins Sr. and Donald Watkins Jr. falsely represented that the money would be used to grow Masada, which Donald Watkins Sr. described as a “pre-revenue” company that supposedly had technology that could convert garbage into ethanol. Instead of investing the money into Masada, however, Donald Watkins Sr. and Donald Watkins Jr. diverted funds to pay personal bills and the debts of their other business ventures. The evidence showed that victim money was used to pay for Donald Watkins Sr.’s alimony, hundreds of thousands of dollars in back taxes, personal loan payments, a private jet and clothing purchased by Donald Watkins Jr. and his wife. Emails introduced at trial also showed that Donald Watkins Jr. and Donald Watkins Sr. planned to obtain millions of dollars for these purposes from one victim on multiple occasions, when they knew that their victims trusted them to put their money to use in growing Masada. The defendants’ scheme eventually grew to include another business venture, Nabirm Global, a company that Donald Watkins Sr. claimed held mineral rights in Namibia.
Donald Watkins Sr. also defrauded Alamerica Bank, an entity in which Donald Watkins Sr. was the largest shareholder, the evidence showed. In order to pay hundreds of thousands in litigation expenses associated with another one of Donald Watkins Sr.’s business ventures, Donald Watkins Sr. executed a plan to use a straw borrower to take out money from Alamerica Bank and give it to them. This straw borrower—Donald Watkins Sr.’s long-time mentor and a prominent figure in the Birmingham community—took over $900,000 in loans from Alamerica Bank and then immediately permitted Donald Watkins Sr. and Donald Watkins Jr. to use those funds for their personal benefit.
The investigation was conducted by the FBI’s Birmingham Field Office. Trial Attorney Kyle C. Hankey of the Criminal Division’s Fraud Section and First Assistant U.S. Attorney Lloyd C. Peeples III, Special Assistant U.S. Attorney Beau Brown (on detail from the Alabama Securities Commission) and Special Assistant U.S. Attorney Xavier O. Carter Sr. of the Northern District of Alabama prosecuted the case.
Equine Insurance Agent Sentenced in $1.3 Million Fraud SchemeRead the Press Release
PROVIDENCE - A Middletown insurance agent/owner specializing in providing equine insurance coverage who admitted to operating various schemes which defrauded customers, insurance companies, and finance companies of approximately $1.3 million dollars was sentenced yesterday to 36 months in federal prison.
At sentencing, U.S. District Court Judge John J. McConnell, Jr., also ordered Randall N. Levesque, 57, of Middletown, owner of Equine Insurance Services, LLC and Randall Levesque Agency, to serve 3 years supervised release upon completion of his term of incarceration and to pay restitution to the victims of his schemes totaling $1,382,815.08.
Levesque pled guilty on December 12, 2018, to wire fraud.
Levesque’s sentence is announced by United States Attorney Aaron L. Weisman, Special Agent in Charge of the United States Secret Service Stephen Marks, and Superintendent of the Rhode Island State Police Colonel James M. Manni.
At the time of his guilty plea, Levesque admitted to the Court that he overbilled and double-billed customers when billing their credit cards for premiums due on policies, some of which the client did not request or did not agree to finance, at times forging the customers’ signature; collected premiums on insurance policies issued by at least two insurance companies but, upon receipt from customers, did not forward the payments to the insurance companies; and, at times, financed premiums and received funds on behalf of customers without the customers’ consent or knowledge, and submitted financing agreements to finance companies for fictitious customers, for whom there were no policies.
According to Court documents, Levesque collected but did not remit to insurance companies over $800,000 in premiums; fraudulently obtained over $500,000 in financed premiums from at least two finance companies; and charged customers’ credit cards a total of approximately $80,000 for premiums that he failed to provide to insurance companies.
The case was prosecuted by Assistant U.S. Attorney Sandra R. Hebert. The matter was investigated by the United States Secret Service and Rhode Island State Police.
Employee of Federal Contractor Facing Federal Charges for Allegedly Accepting Cash to Falsify Urinalysis Results to U.S. Probation and Pretrial ServicesRead the Press Release
Greenbelt, Maryland – Michael Andre Brown, age 47, of Waldorf, Maryland, was arrested today on federal charges alleging that Brown accepted bribes and illegal gratuities, in connection with his employment with a federal contractor in which he administered urinalysis tests to individuals on federal probation, supervised release and pre-trial supervision. The criminal complaint was filed on March 11, 2019, and unsealed at Brown’s initial appearance today.
The federal charges were 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 Chief Henry P. Stawinski III of the Prince George’s County Police Department.
According to the affidavit filed in support of the criminal complaint, Brown was an employee at a company in Camp Springs, Maryland, which was a federally contracted business tasked with, among other things, administering urinalysis tests to individuals on federal probation, supervised release, and pre-trial supervision on behalf of the U.S. Probation and Pretrial Services Office of the District of Maryland. Brown was a urinalysis technician for the company. According to the affidavit, on December 26, 2018, an FBI undercover task force officer (UC) posing as a federal probationer who had been ordered to submit to urine analysis as part of his/her probation, met with Brown at the company in Camp Springs. The UC indicated to Brown that he/she expected to have a positive urinalysis result. Brown allegedly told the UC that he was willing to work with the UC. According to the affidavit, Brown subsequently took the UC to a bathroom to perform the urinalysis. The UC added a substance to the urine sample that would produce a positive result for marijuana. Brown inspected the cup and indicated to the UC that it was positive for drug use, but again said that he would “take care of” the UC. The UC expressed his appreciation to Brown and placed $100 on the bathroom sink. Brown took the money.
According to the affidavit, Brown then gave instructions to the UC on how to check in on his/her next date for urine analysis, but also informed the UC that his/her next date would be December 28, 2018, two days away, and that Brown would be working again on that date. Such dates are assigned daily and are not supposed to be divulged to the probationers until the evening before.
The affidavit alleges that on December 28, 2018, the UC provided another urine sample to Brown, but instead of checking it, Brown told the UC, “Go ahead and pour it [the urine] out,” “Cause if it was dirty the other day, it’s gonna be dirty today.” The UC again expressed appreciation to Brown and asked if Brown “needed anything.” The affidavit alleges that Brown then accepted $100 from the UC and indicated that he would do so on future dates, as well. Neither Brown, nor anyone else from his company ever contacted the U.S. Probation and Pretrial Services Office to alert them that the UC had tested positive for drug use. Brown allegedly also accepted $150 from the UC on February 11, 2019, without requiring Brown to submit a urine sample at all, before causing a negative urinalysis result to be reported. On February 15, 2019, a representative of the U.S. Probation and Pretrial Services Office contacted Brown’s employer and was informed by a representative of the company that the UC had tested negative for drugs on February 11, 2019. All of the meetings between the UC and Brown were audio- and video-recorded.
If convicted, Brown faces a maximum sentence of 10 years in prison for bribery, and a maximum of two years in prison for accepting an illegal gratuity. At today’s initial appearance in U.S. District Court in Greenbelt, U.S. Magistrate Judge Gina L. Simms ordered that Brown be released pending trial.
A criminal complaint is not a finding of guilt. An individual charged by criminal complaint is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Robert K. Hur commended the FBI and the Prince George’s County Police Department for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorney Elizabeth G. Wright, who is prosecuting the case.
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Diamondhead Man Sentenced to 30 Years in Federal Prison for Trafficking MethamphetamineRead the Press Release
Gulfport, Miss – Brian Galbreth, 40, of Diamondhead, Mississippi, was sentenced today by Senior U.S. District Judge Louis Guriola, Jr. to serve 360 months in federal prison, followed by 5 years of supervised release, for conspiracy to possess with intent to distribute methamphetamine, announced U.S. Attorney Mike Hurst, Assistant Special Agent in Charge Derryle Smith with the Drug Enforcement Administration (DEA), and Special Agent in Charge Jere T. Miles with Homeland Security Investigations (HSI) in New Orleans. Galbreth was also ordered to pay a $20,000 fine.
An investigation by HSI and DEA revealed that, beginning in 2012, Brian Galbreth conspired with others to possess and distribute methamphetamine in the Hancock County, Mississippi area. The investigation revealed that Galbreth supplied over 15 kilograms of methamphetamine to numerous distributors. As a result, Galbreth pled guilty on December 11, 2018, to conspiracy to possess with intent to distribute methamphetamine.
The case was investigated by the Drug Enforcement Administration, Homeland Security Investigations, and the Hancock County Sheriff’s Office. It was prosecuted by Assistant United States Attorney Shundral H. Cole.