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4 December 2018
Panola County Man Indicted on Federal Drug Trafficking, Obstruction ChargesRead the Press Release
BEAUMONT, Texas – A 29-year-old Carthage, Texas man has been indicted for federal violations in the Eastern District of Texas, announced U.S. Attorney Joseph D. Brown today.
Winfred Earl Ware, Jr. was indicted by a federal grand jury on Nov. 14, 2018, and charged with conspiracy to possess with intent to distribute methamphetamine, obstruction of due administration of justice, and tampering with a witness by misleading conduct. Ware appeared before U.S. Magistrate Judge Keith Giblin today for an initial appearance.
The indictment alleges that from 2014 through 2017, Ware conspired with others to possess with the intent to distribute 50 grams or more of methamphetamine. The indictment further alleges that between May and July 2018, Ware obstructed or influenced information regarding the administration of justice in his prior federal criminal case and knowingly engaged in misleading conduct with the intent to prevent the testimony of a witness in that case.
If convicted, Ware faces a minimum of 10 years and up to Life in federal prison.
This case is being investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Federal Bureau of Investigation, and the Panola County Sheriff’s Office, and prosecuted by Assistant U.S. Attorneys Paul Hable and Lauren Gaston.
A grand jury indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Oxford Man Sentenced on Firearms ChargeRead the Press Release
GREENVILLE — The United States Attorney for the Eastern District of North Carolina, Robert J. Higdon, Jr., announced that today, United States District Judge Malcolm J. Howard sentenced Jamaal Ray Curtis, 36, of Oxford to 188 months’ imprisonment, followed by 5 years of supervised release. CURTIS pled guilty to one count of possession of a firearm by a convicted felon on January 11, 2018.
In 2016, investigators with the Oxford Police Department (OPD) received information that CURTIS was selling narcotics from his residence in Oxford. CURTIS was on post-release supervision arising from state charges, so on December 13, 2016, members of the North Carolina Department of Probation and Parole Services conducted a compliance check at CURTIS’s residence. Finding that CURTIS was not home, OPD learned that he was at the Oxford residence of his child’s mother.
When investigators responded to that residence and knocked on the door, they spotted CURTIS attempting to leave through a side door. Officers entered the residence and found CURTIS attempting to hide in a back bedroom. After CURTIS admitted that he had a firearm in a nearby coat, officers found and seized a .25 caliber pistol from a coat pocket. On CURTIS’s person, officers found over an ounce of cocaine and $3,000.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.
The investigation of this case was conducted by the Oxford Police Department, the North Carolina Department of Public Safety, and the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF).
Owings Mills Woman Pleads Guilty to Obtaining over $4.3 Million in an Advance Fee Fraud Scheme and to Evading Taxes on that IncomeRead the Press Release
Baltimore, Maryland – Late on November 29, 2018—a few days before she was scheduled to go to trial—Lauren Montillo, age 47, of Owings Mills, Maryland, pleaded guilty to conspiracy to commit wire fraud and to tax evasion. According to her plea agreement, from 2010 through 2015, Montillo and her co-conspirators sought at least $8.7 million in advance fees from foreign and United States victims, purporting to offer access to exotic bank financial instruments. Victims paid $4,342,540 in advance fees into Hong Kong bank accounts or attorney escrow accounts and received nothing in return. For tax years 2012 through 2014, Montillo reported no income other than $100, evading a substantial amount of income taxes.
The guilty plea was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; and Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
Montillo and her co-conspirators created shell companies, with associated websites, email addresses, and bank accounts, which they used to perpetrate the fraud. Specifically, in February 2010, Montillo opened an account with GoDaddy, which provides web-hosting services. From 2010 to 2015, Montillo and other co-conspirators used GoDaddy to host websites for shell companies such as MLL Holdings, The Bussola Group, Worldwide Escrow Holdings, Ltd., International Insurance of Nebraska, Atlas Investment Bancorp, Entirety Capital, GPF Global, and Atlas-Gayle Trust. Each of these shell companies had associated email addresses, which Montillo and her co-conspirators opened and used.
Also in 2010, Montillo's father incorporated "Worldwide Escrow Holdings Limited" ("Worldwide Escrow") in Hong Kong and opened a bank account for Worldwide Escrow at the Hong Kong Shanghai Bank (HSBC), Hong Kong with Montillo as a signatory. Montillo’s father resigned from the company in April 2011. In March 2011, Montillo and a co-conspirator opened two more bank accounts in Hong Kong, the MLL Holdings and the Skywall bank accounts, also at HSBC. Montillo and her co-conspirators had on-line access to the Hong Kong bank accounts so that they could conduct banking transactions over the internet. In 2012, Montillo’s father also opened an escrow account in the name of his mother-in-law, a licensed attorney in Maryland who had stopped practicing law in approximately 2007. She was not aware that the escrow account had been opened in her name. The conspirators directed victims to wire-transfer their advance fees into the HSBC, Hong Kong bank accounts or the attorney escrow account.
Montillo’s co-conspirator, Eric Becker, was her former fiancé. Becker developed, and Montillo edited, websites for the various phony businesses, which purported to offer access to financial instruments, such as standby letters of credit, bank guarantees, bonds, or private placement trading platforms. Montillo and her co-conspirators had no access to any financial instruments. For example, Montillo and several co-conspirators obtained advance fee payments from a victim that would purportedly gain access to a private placement trading platform. The co-conspirators persuaded the victim, through several broker intermediaries, to send $1.7 million to a BB&T bank account in Florida. BB&T returned the funds to the victim. The victim, a Mexican national, was told that the funds were returned because the window had closed on the investment opportunity. Co-conspirators, including Montillo, then informed the victim, through his broker, that they could offer him a private placement trading platform in which he would receive profits and a charitable organization would use its portion of the profits to invest in its projects. The conspirators directed the victim to send his money to the Worldwide Escrow account at HSBC, Hong Kong. On May 8, 2012, the victim used his own and his family's funds to send $3,099,990 to the Worldwide Escrow Holdings account. The conspirators, including Montillo, moved over $2 million of the funds to a bank account opened at Choice Bank in Belize.
To conceal the fraud and to reassure the victim and his brokers, co-conspirators including Montillo, created an insurance policy for a non-existent insurance company called International Insurance of Nebraska, which was back-stopped with a website hosted through Montillo's GoDaddy account. The insurance policy purported to show that the victim's investment funds would not be at risk because they were fully insured. In addition, co-conspirators, including Montillo, used her GoDaddy account to host the website wweholdingsltd.com to add an air of legitimacy to Worldwide Escrow Both the insurance company and the private placement trading platform were bogus.
Over the next several years, Montillo and her co-conspirators continued with the advance fee scheme. The scheme had both foreign and U.S. victims. To protect her identity, Montillo frequently used the name “Kati Conti” in the frauds and used a “burner phone” so that after the scam was concluded, she could “go dark” and stop communicating with the victims. In all, the scheme sought at least $8.7 million from victims, and actually obtained $4,342,540.
For tax years 2012 through 2014, Montillo filed personal tax returns showing no income or $100 in income, and thus no income tax was owed. Montillo admitted that she was the signatory on bank accounts in the names of limited liability corporations into which victims' funds were wire transferred from Hong Kong, Choice Bank in Belize, the attorney escrow account, and other accounts controlled by co-conspirators. Montillo used the victim funds transferred to the limited liability accounts for living expenses. Montillo had no accounts in her own name. Montillo admitted that by failing to report her income for 2012 through 2014 to the Internal Revenue Service, she evaded a substantial amount of income taxes.
As part of her plea agreement, Montillo will be required to forfeit a money judgment in the amount of $849,993.12 and to pay restitution in the full amount of the loss, which is at least $4,342,540.
Montillo faces a maximum sentence of 20 years in prison for the wire fraud conspiracy and 5 years in prison for tax evasion. U.S. District Judge Richard D. Bennett has scheduled sentencing for April 12, 2019 at 10 a.m.
Three defendants were charged in a related case in the Western District of Texas, James Edward Cox, Kelly Ray Coronado, and Gordon Richard Moscowitz. They have pled guilty to wire fraud conspiracy (Cox and Coronado) and money-laundering conspiracy (Moskowitz) and are scheduled for sentencing on February 6, 2019. Becker was indicted with Montillo but has since died. Montillo’s father died in 2016.
United States Attorney Robert K. Hur commended the FBI and IRS-CI for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorneys Joyce K. McDonald and Sean Delaney, who are prosecuting the case.
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Orlando Doctor Agrees to Pay $75,000 to Settle Controlled Substances Act ViolationsRead the Press Release
Orlando, FL – United States Attorney Maria Chapa Lopez announces today that Dr. Ajaz Afzal has agreed to pay the United States $75,000 to resolve allegations that he violated the Controlled Substances Act by improperly issuing prescriptions for schedule II drugs.
The settlement relates to Dr. Afzal’s issuance of prescriptions for schedule II drugs while he was out of the country. Schedule II drugs, substances, or chemicals are defined as drugs with a high potential for abuse. These drugs are also considered dangerous. According to the settlement agreement, from October 2013 through November 2015, Dr. Afzal issued 108 invalid prescriptions for schedule II drugs in violation of the Controlled Substances Act.
“The United States Attorney’s Office uses every means necessary to prosecute doctors who violate the Controlled Substances Act,” said U.S. Attorney Maria Chapa Lopez. “This settlement highlights our commitment to hold accountable anyone who does not follow the law.”
This settlement resulted from a coordinated effort by the U.S. Attorney’s Office for the Middle District of Florida and the Drug Enforcement Administration. Assistant United States Attorney Jeremy R. Bloor led the investigation.
The settlement resolves the United States’ claims. The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Olyphant Man Charged with Theft of Government FundsRead the Press Release
SCRANTON - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Timothy Scheitlin, age 43, of Olyphant, Pennsylvania, was charged in a criminal information on December 3, 2018, with theft of Government funds.
According to United States Attorney David J. Freed, the information alleges that Scheitlin was employed at Tobyhanna Army Depot and part of his job duties included collecting U.S. currency from vending machines. During the course of his employment, Scheitlin allegedly stole over $1,000 from the United States between January 2014 and February 2017.
The case was investigated by the Army Criminal Investigation Division and is being prosecuted by Assistant U.S. Attorney Jenny P. Roberts.
Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law for this offense is 10 years of imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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New York Man Indicted for Conspiring to Import and Distribute Cocaine from the Dominican RepublicRead the Press Release
NEWARK, N.J. – A New York man was indicted today for allegedly conspiring to import and distribute multi-kilogram quantities of cocaine from the Dominican Republic into the United States, U.S. Attorney Craig Carpenito announced.
Alberto Nicolas Montero, 48, of New York City, is charged with one count of conspiracy to import into the United States five kilograms or more of cocaine and one count of conspiracy to distribute five kilograms or more of cocaine. He has been in custody since his arrest in August 2018.
According to documents filed in this case:
From November 2017 through August 2018, Montero participated in a drug trafficking organization that was operating in New York, New Jersey, and the Dominican Republic by brokering cocaine transactions on behalf of a conspirator in the Dominican Republic (Co-Conspirator 1). In November 2017, an individual (Individual 1) spoke with Montero about a cocaine transaction with Co-Conspirator 1. Individual 1 traveled to the Dominican Republic. Montero put Individual 1 in contact with Co-Conspirator 1 to facilitate a cocaine transaction. Individual 1 met with Co-Conspirator 1, who expressed interest in setting up a transaction to distribute cocaine to the Newark area. Co-Conspirator 1 distributed to Individual 1 two kilograms of a substance that tested positive for the presence of cocaine.
From December 2017 through Aug. 2, 2018, Individual 1 continued to communicate with Montero regarding future illegal drug transactions. In July 2018, Montero discussed with Individual 1 a purchase of 15 kilograms – later reduced to 14 kilograms – of cocaine from Montero’s contacts in the Dominican Republic. On Aug. 2, 2018, Montero traveled to New Jersey, where a black backpack containing approximately $130,000 was placed in front of Montero as intended payment for the cocaine. Montero discussed with Individual 1 how the money would be transferred to the Dominican Republic so that Co-Conspirator 1 would release the 14 kilograms of cocaine to Individual 1’s associate in the Dominican Republic. Montero was arrested during the course of his discussions with Individual 1 about the logistics of the cocaine transaction.
Both charges in the indictment carry a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine.
U.S. Attorney Carpenito credited special agents and task force officers of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, the FBI’s Legal Attaché Office in Santo Domingo, Dominican Republic, the U.S. Drug Enforcement Administration’s New York Division, under the direction of Acting Special Agent in Charge Keith Kruskall, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) New York Division, under the direction of Special Agent in Charge Angel M. Melendez, and the New York Police Department with the investigation.
This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state and local law enforcement agencies dedicated to identifying and dismantling the most serious drug trafficking, weapons trafficking and money laundering organizations.
The government is represented by Assistant U.S. Attorney Jamie L. Hoxie of the OCDETF/Narcotics Unit of the U.S. Attorney’s Office in Newark.
The charges and allegations against the defendant are merely accusations, and he is presumed innocent unless and until proven guilty.
Navajo Man from Gallup Sentenced to Prison for Assault with Dangerous WeaponRead the Press Release
ALBUQUERQUE – Junior Cornfield, 34, an enrolled member of the Navajo Nation who resides in Gallup, N.M., was sentenced today in Albuquerque, N.M., federal court to 63 months in prison for assaulting a woman with a hammer intending to cause bodily injury. Cornfield will be on supervised release for three years after completing his prison sentence.
On June 14, 2018, Cornfield pled guilty to a felony information charging him with assault with a dangerous weapon. He admitted that on Nov. 25, 2017, he struck the victim with a hammer, causing her to become unconscious. Cornfield acknowledged that the victim suffered bruises and needed medical attention because of the assault.
This case was investigated by the Navajo Nation Division of Public Safety and was prosecuted by Assistant U.S. Attorney Elisa Dimas pursuant to the Tribal Special Assistant U.S. Attorney (Tribal SAUSA) Pilot Project in the District of New Mexico which is sponsored by the Justice Department’s Office on Violence Against Women under a grant administered by the Pueblo of Laguna. The Tribal SAUSA Pilot Project seeks to train tribal prosecutors in federal law, procedure and investigative techniques to increase the likelihood that every viable violent offense against Native women is prosecuted in either federal court or tribal court, or both. The Tribal SAUSA Pilot Project was driven largely by input gathered from annual tribal consultations on violence against women, and is another step in the Justice Department's on-going efforts to increase engagement, coordination and action on public safety in tribal communities.
Munster Man Enters Guilty Plea in Connection with September 2017 Explosion at East Chicago Post Office and SubsequentRead the Press Release
HAMMOND –Eric P. Krieg, age 46, of Munster, Indiana, plead guilty to knowingly making an unregistered destructive device, mailing a destructive device, malicious use of explosive materials, and mailing a threatening communication, announced U.S. Attorney Kirsch.
U.S. Attorney Kirsch said, “Mr. Krieg’s guilty plea is a reflection of the outstanding work by our local, state, and federal law enforcement partners in solving this horrific crime. Mr. Krieg’s egregious, retaliatory conduct put several lives at risk. Under the terms of his plea agreement he will be punished severely. Criminal conduct like Mr. Krieg’s will never be tolerated.”
This case stems from the September 6, 2017 U.S. Postal Service facility explosion in East Chicago and the mailing of a suspicious package on September 29, 2017. In October 2017, Krieg was arrested and charged. He has been in custody since his arrest.
In the plea agreement, the parties agree that Krieg should serve a sentence of 29 years.
According to the plea agreement filed today, Krieg is prepared to admit the following facts:
From 2012 through August 2017, I engaged in a series of online postings and communications concerning other residents of Northwest Indiana. Through these online postings and communications, I made statements in multiple online forums, including a webpage ‘blog’ format that I controlled and administered.
Victim 1 was an attorney who represented an individual in a lawsuit against me. This lawsuit was filed in the Lake County, Indiana Superior Court in 2013 based upon statements I made on my blog. After the filing of the lawsuit, I filed bankruptcy in the United States Bankruptcy Court, Northern District of Indiana. Through filings made in the Bankruptcy Court, Victim 1 claimed the lawsuit could not be discharged in bankruptcy. I agreed to settle the lawsuit with Victim 1’s client. The settlement required me to pay Victim 1’s client $45,000 and post an apology on my blog. I paid $45,000 and made an online apology.
In retaliation for the filing and settling of this lawsuit and other grudges I held, I devised a plan to construct and mail a pipe bomb that I hoped and believed would kill or injure Victim 1. I constructed this pipe bomb and knew that it contained explosives and items that would produce shrapnel. The pipe bomb was constructed in the Northern District of Indiana. The pipe bomb was not registered in the National Firearms Registration and Transfer Record.
On September 6, 2017, I placed the pipe bomb in the mail by delivering it to the United States Post Office, 901 East Chicago Avenue, East Chicago, Indiana and ensuring it had the appropriate postage. I mailed the pipe bomb with the intention that it kill or injure Victim 1. I am aware the pipe bomb exploded before it was delivered to Victim 1 and instead injured Victim 2, a postal worker. I damaged the Post Office where the pipe bomb exploded. At the time of the explosion, the Post Office was used in interstate commerce or was used in an activity affecting interstate commerce.
I engaged in online communications with Victim 3. Victim 3 was a resident of Northwest Indiana. I was upset with, and held grudges against, both Victim 1 and Victim 3. On September 29, 2017, I mailed a threat to kill or injure Victim 3. I placed this threatening communication in the mail in the Northern District of Indiana and it was post marked to, and I am now aware later delivered to, Victim 3 in the Northern District of Indiana.
This case results from an investigation by the United States Postal Inspection Service; Federal Bureau of Investigation; Bureau of Alcohol, Tobacco Firearms and Explosives; United States Marshal’s Service; East Chicago Police; Hammond Police; Indiana State Police; Munster Police; and Porter County Sheriff’s Department. This case is being handled by Assistant United States Attorneys Joshua P. Kolar and Jennifer Chang.
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Morris County, New Jersey, Man Charged with Making Bomb Threat to Religious InstitutionRead the Press Release
NEWARK, N.J. – A Pompton Plains, New Jersey, man was charged today with maliciously calling in a bomb threat to a religious institution, U.S. Attorney Craig Carpenito announced.
James Triano, 36, is charged by federal criminal indictment with one count of maliciously conveying false information about an explosive. The defendant is scheduled to appear later today before U.S. Magistrate Judge James B. Clark III in Newark federal court.
According to documents filed in this case:
On March 21, 2017, Triano allegedly called a religious institution in Livingston, New Jersey, and maliciously conveyed false information concerning an attempt being made to kill, injure, and intimidate individuals inside, and to damage and destroy the religious institution, by means of an explosive.
The count with which Triano has been charged is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine.
U.S. Attorney Carpenito credited special agents of the FBI’s Newark Office, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark and officers from the Livingston Police Department, under the direction of Police Chief Gary Marshuetz, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorney Catherine R. Murphy of the U.S. Attorney’s Office Criminal Division in Newark.
The charge and allegations in the indictment are merely accusations, and the defendant is considered innocent unless and until proven guilty.
Monroe County Man Sentenced to Six Years’ Imprisonment for Drug TraffickingRead the Press Release
SCRANTON—The United States Attorney’s Office for the Middle District of Pennsylvania, announced that Charles McRae, age 38, of East Stroudsburg, Pennsylvania, was sentenced on December 2, 2018, to six years in prison followed by three years’ supervised release, by U.S. District Court Judge Malachy E. Mannion for drug trafficking.
According to United States Attorney David J. Freed, McRae previously pleaded guilty to distribution and possession with intent to distribute heroin in Monroe County on January 20, 2016. McRae was arrested in July 2016, following a search of his residence, which resulted in the seizure of 199 bags of heroin and a digital scale.
McRae was indicted by a grand jury in December 2016.
The case was investigated by the Drug Enforcement Administration and local police from Monroe County. Assistant U.S. Attorney Francis P. Sempa prosecuted the case.
This case was brought as part of a district wide initiative to combat the nationwide epidemic regarding the use and distribution of heroin. Led by the United States Attorney’s Office, the Heroin Initiative targets heroin traffickers operating in the Middle District of Pennsylvania and is part of a coordinated effort among federal, state and local law enforcement agencies to locate, apprehend, and prosecute individuals who commit heroin related offenses.
This case is 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. Attorney General Jeff Sessions reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
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Mescalero Apache Man Sentenced for Assaulting a Federal OfficerRead the Press Release
ALBUQUERQUE – Gerald Castillo, Jr., 30, an enrolled member of the Mescalero Apache Nation who resides in Ruidoso, N.M., was sentenced yesterday afternoon in federal court in Las Cruces, N.M., to three years probation and ordered to pay a $1,000 fine for assaulting a federal officer.
On Aug. 3, 2018, Castillo pled guilty to a misdemeanor information charging him with assaulting, resisting or impeding a federal officer. Castillo admitted that on Feb. 24, 2018, he assaulted a Bureau of Indian Affairs officer by hitting the officer’s chest. According to court documents, Castillo assaulted the officer while attempting to flee from law enforcement following a bar fight on the Mescalero Apache Reservation in Otero County, N.M.
This case was investigated by the Las Cruces office of the FBI and the Mescalero Agency of the BIA’s Office of Justice Services, and was prosecuted by Assistant U.S. Attorney Aaron O. Jordan of the U.S. Attorney’s Las Cruces Branch Office.
Memphis Man Pleads Guilty to Tampering with Consumer ProductsRead the Press Release
Memphis, TN – A local man has pleaded guilty to one-count of tampering with consumer products. U.S. Attorney D. Michael Dunavant announced the guilty plea today.
On September 11, 2018, a federal grand jury returned an indictment against Gregory Stanton, 49, for tainting consumer products with the intent to cause serious injury to the business of any person.
In 2014, Stanton worked at a food manufacturing plant in Memphis. Stanton made a video recording of himself tampering with the production line at the plant. The defendant then uploaded the video to the internet in 2016.
U.S. Attorney D. Michael Dunavant said, "American citizens and consumers rely upon food manufacturers engaged in interstate commerce to provide them with safe and consistent products. Unfortunately, this defendant betrayed that trust by tampering with and tainting food products. We commend the U.S. Food and Drug Administration for their investigation in this matter, and we are pleased that the defendant has been held accountable for his criminal conduct."
"Maintaining the safety and wholesomeness of the U.S. food supply is a critical priority for the FDA, and the agency will work with food producers to identify steps that can be taken to remediate incidents that may implicate food safety," said Robert M. Hiser, Acting Special Agent in Charge, FDA Office of Criminal Investigations’ Miami Field Office. "Today’s announcement should serve as a clear reminder that the FDA will not tolerate illicit tampering activity in our nation’s food supply."
On November 30, 2018, Stanton pleaded guilty before U.S. District Judge Jon P. McCalla.
Stanton is set to be sentenced on February 28, 2019. He faces up to three years imprisonment; three years supervised release and a $250,000 fine.
This case was investigated by the U.S. Food and Drug Administration, Office of Criminal Investigations.
Assistant U.S. Attorney Tony Arvin is prosecuting this case on the government’s behalf.
Medical Device Maker ev3 to Plead Guilty and Pay $17.9 Million for Distributing Adulterated Device; Covidien Paid $13 Million to Resolve Civil Liability for Second DeviceRead the Press Release
WASHINGTON – Minnesota-based medical device manufacturer ev3 Inc. has agreed to plead guilty to charges related to its neurovascular medical device, Onyx Liquid Embolic System, and pay $17.9 million, the Department of Justice announced today. Covidien LP, whose parent acquired ev3, separately paid $13 million to resolve False Claims Act allegations resulting from its alleged payment of kickbacks in connection with another medical device, the Solitaire mechanical thrombectomy device.
“The Department of Justice will hold corporations accountable when they violate laws designed to protect consumers and protect public funds,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “This resolution demonstrates the Department’s continued commitment to protect taxpayer dollars and deter companies from putting profits before patient safety.”
Pursuant to a criminal information filed today in U.S. District Court for the District of Massachusetts, ev3 will plead guilty to a misdemeanor charge in connection with the company’s distribution of adulterated Onyx, in violation of the Food, Drug and Cosmetic Act. As part of the criminal resolution, ev3 will pay a criminal fine of $11.9 million and will forfeit $6 million.
According to the plea agreement, Onyx was approved by the U.S. Food and Drug Administration (FDA) as a liquid embolization device that is surgically injected into blood vessels to block blood flow to arteriovenous malformations in the brain. The FDA has approved Onyx only for use inside the brain. Despite the FDA’s limited approval of Onyx, from 2005 to 2009, ev3 sales representatives encouraged surgeons to use Onyx in large quantities for unproven and potentially dangerous surgical uses outside the brain. The company’s sales force continued to tout unapproved and potentially dangerous uses of Onyx even after FDA officials told ev3 executives that they had specific safety concerns regarding uses of Onyx outside the brain at a 2008 meeting. FDA officials told ev3 executives that a study would be required to gain approval for uses of Onyx outside the brain and to ensure that the benefits of the device outweighed the risks.
Rather than conduct a study to ensure the safety and effectiveness of Onyx for uses outside the brain, ev3’s sales representatives sometimes attended surgical procedures and provided explicit instructions to surgeons regarding how to use Onyx for unapproved surgical procedures outside the brain, including in quantities far larger than what would be used in the brain. According to the criminal information, ev3’s management also set-up a system of sales quotas and bonuses that incentivized sales representatives to sell Onyx for unapproved uses and trained the sales force how to instruct physicians on unapproved uses of the device.
Covidien acquired ev3 in 2010, subsequent to the course of criminal conduct covered by the plea agreement. Covidien was acquired by Medtronic in 2015. Although Medtronic played no role in the criminal conduct, the company has agreed as part of the ev3 criminal resolution to implement new compensation structures to ensure the sales force responsible for marketing Onyx is not incentivized to sell the device for unapproved uses. Medtronic has also agreed to conduct compliance monitoring related to the Onyx sales and marketing components.
“ev3 disregarded laws designed to protect patient safety,” said United States Attorney Andrew E. Lelling for the District of Massachusetts. “The U.S. Attorney’s Office is committed to protecting patients and the integrity of federal health care programs, and we will continue to use our criminal authority to ensure that medical device manufacturers play by the rules that protect the public and ensure quality of care.”
“Unnecessarily putting patients at risk to increase profits, as the government alleged in this case, will not be tolerated,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “We will continue to work with our federal partners and hold accountable companies that use deceptive practices to increase their bottom line.”
“Consumers rely on the FDA to ensure that there’s a reasonable assurance of safety and effectiveness for the approved uses of medical devices. When manufacturers ignore the FDA’s regulatory authority, they undermine these crucial assurances and put lives at risk. Our Office of Criminal Investigations investigated a bad actor who marketed their device for unapproved uses, potentially harming patients,” said FDA Commissioner Scott Gottlieb, M.D. “The ev3 agreement to plead guilty announced by the U.S. Department of Justice today is an example of the FDA’s comprehensive commitment to ensuring the safety of medical devices and investigating companies that put patients at risk. A key part of our overall efforts to promote safe and effective innovation and protect patients is our enforcement work related to unsafe practices and bad actors. In addition to investigating such activities, we’re advancing other new policies to assure post-market device safety, as we recently outlined in our Medical Device Safety Action Plan. The FDA is also committed to fully implementing a new active surveillance system that will enable the agency to harness real-world evidence from medical records and patient registries to more swiftly identify device safety issues and enable more informed decision-making.”
Covidien separately has agreed to pay $13 million to resolve its civil liability for allegedly paying kickbacks to induce the use of its Solitaire mechanical thrombectomy device. The Solitaire device is intended to restore blood flow and retrieve a blood clot in certain stroke patients.
The United States alleged that Covidien caused false claims to be submitted to Medicare and Medicaid by paying kickbacks to hospitals and institutions to induce them to use Covidien’s Solitaire device. Specifically, the United States alleged that after receiving FDA clearance for the Solitaire device, Covidien launched a registry to pay hospitals and institutions to collect data about user experiences with the device. For about two years beginning in August 2014, Covidien paid a fee to hospitals and institutions that participated in a registry each time they used a new Solitaire device and reported certain clinical data about their practices for treating stroke patients to Covidien. Covidien solicited certain hospitals and institutions for the registry in order to convert their business from the competitor’s product and/or persuade them to continue using Covidien products, and knowingly and willfully used the registry as a means of increasing device sales.
The civil lawsuit was filed by Jeffrey Faatz, who worked for Covidien from 2012 to 2014, under the qui tam, or whistleblower, provisions of the False Claims Act. The Act allows private parties to sue on behalf of the government for false claims and to share in any recovery. As part of today’s resolution, Mr. Faatz will receive $2,015,000. The case is captioned United States ex rel. Doe v. Covidien PLC et al., Civil Action No. 8:15-cv-01796 AG (JCGx) (C.D. Cal.).
“Illegal kickbacks bring fraud and abuse into the Medicare system,” said U.S. Attorney Nicola T. Hanna for the Central District of California. “As part of an aggressive marketing campaign for its medical device, Covidien allegedly found a way to subsidize facilities that agreed to use its product – often convincing them not to use devices sold by another manufacturer. Patients deserve to know that their medical providers are offering the best possible treatments and are not making decisions based on increasing the bottom line for health care providers.”
The plea agreement was the result of a coordinated effort among the U.S. Attorney’s Office for the District of Massachusetts and the Civil Division’s Consumer Protection Branch, with assistance from the FDA’s Office of Chief Counsel. The criminal investigation was conducted by the FDA’s Office of Criminal Investigations, HHS’s Office of the Inspector General, the Department of Veteran’s Affairs, Office of the Inspector General, and the Federal Bureau of Investigations.
The civil settlement was the result of an investigation by the Justice Department’s Civil Division, Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, and the Office of Inspector General at the U.S. Department of Health and Human Services. The False Claims Act claims resolved by the settlement are allegations only and there has been no determination of liability.
For more information about the Consumer Protection Branch, the Commercial Litigation Branch, Fraud Section, and their enforcement efforts, visit their websites at http://www.justice.gov/civil/consumer-protection-branch and https://www.justice.gov/civil/fraud-section.
Medical Device Maker ev3 to Plead Guilty and Pay $17.9 Million for Distributing Adulterated Device; Covidien Paid $13 Million to Resolve Civil Liability for Second DeviceRead the Press Release
Minnesota-based medical device manufacturer ev3 Inc. has agreed to plead guilty to charges related to its neurovascular medical device, Onyx Liquid Embolic System, and pay $17.9 million, the Department of Justice announced today. Covidien LP, whose parent acquired ev3, separately paid $13 million to resolve False Claims Act allegations resulting from its alleged payment of kickbacks in connection with another medical device, the Solitaire mechanical thrombectomy device.
“The Department of Justice will hold corporations accountable when they violate laws designed to protect consumers and protect public funds,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “This resolution demonstrates the Department’s continued commitment to protect taxpayer dollars and deter companies from putting profits before patient safety.”
Pursuant to a criminal information filed today in U.S. District Court for the District of Massachusetts, ev3 will plead guilty to a misdemeanor charge in connection with the company’s distribution of adulterated Onyx, in violation of the Food, Drug and Cosmetic Act. As part of the criminal resolution, ev3 will pay a criminal fine of $11.9 million and will forfeit $6 million.
According to the plea agreement, Onyx was approved by the U.S. Food and Drug Administration (FDA) as a liquid embolization device that is surgically injected into blood vessels to block blood flow to arteriovenous malformations in the brain. The FDA has approved Onyx only for use inside the brain. Despite the FDA’s limited approval of Onyx, from 2005 to 2009, ev3 sales representatives encouraged surgeons to use Onyx in large quantities for unproven and potentially dangerous surgical uses outside the brain. The company’s sales force continued to tout unapproved and potentially dangerous uses of Onyx even after FDA officials told ev3 executives that they had specific safety concerns regarding uses of Onyx outside the brain at a 2008 meeting. FDA officials told ev3 executives that a study would be required to gain approval for uses of Onyx outside the brain and to ensure that the benefits of the device outweighed the risks.
Rather than conduct a study to ensure the safety and effectiveness of Onyx for uses outside the brain, ev3’s sales representatives sometimes attended surgical procedures and provided explicit instructions to surgeons regarding how to use Onyx for unapproved surgical procedures outside the brain, including in quantities far larger than what would be used in the brain. According to the criminal information, ev3’s management also set-up a system of sales quotas and bonuses that incentivized sales representatives to sell Onyx for unapproved uses and trained the sales force how to instruct physicians on unapproved uses of the device.
Covidien acquired ev3 in 2010, subsequent to the course of criminal conduct covered by the plea agreement. Covidien was acquired by Medtronic in 2015. Although Medtronic played no role in the criminal conduct, the company has agreed as part of the ev3 criminal resolution to implement new compensation structures to ensure the sales force responsible for marketing Onyx is not incentivized to sell the device for unapproved uses. Medtronic has also agreed to conduct compliance monitoring related to the Onyx sales and marketing components.
“ev3 disregarded laws designed to protect patient safety,” said United States Attorney Andrew E. Lelling for the District of Massachusetts. “The U.S. Attorney’s Office is committed to protecting patients and the integrity of federal health care programs, and we will continue to use our criminal authority to ensure that medical device manufacturers play by the rules that protect the public and ensure quality of care.”
“Unnecessarily putting patients at risk to increase profits, as the government alleged in this case, will not be tolerated,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “We will continue to work with our federal partners and hold accountable companies that use deceptive practices to increase their bottom line.”
“Consumers rely on the FDA to ensure that there’s a reasonable assurance of safety and effectiveness for the approved uses of medical devices. When manufacturers ignore the FDA’s regulatory authority, they undermine these crucial assurances and put lives at risk. Our Office of Criminal Investigations investigated a bad actor who marketed their device for unapproved uses, potentially harming patients,” said FDA Commissioner Scott Gottlieb, M.D. “The ev3 agreement to plead guilty announced by the U.S. Department of Justice today is an example of the FDA’s comprehensive commitment to ensuring the safety of medical devices and investigating companies that put patients at risk. A key part of our overall efforts to promote safe and effective innovation and protect patients is our enforcement work related to unsafe practices and bad actors. In addition to investigating such activities, we’re advancing other new policies to assure post-market device safety, as we recently outlined in our Medical Device Safety Action Plan. The FDA is also committed to fully implementing a new active surveillance system that will enable the agency to harness real-world evidence from medical records and patient registries to more swiftly identify device safety issues and enable more informed decision-making.”
Covidien separately has agreed to pay $13 million to resolve its civil liability for allegedly paying kickbacks to induce the use of its Solitaire mechanical thrombectomy device. The Solitaire device is intended to restore blood flow and retrieve a blood clot in certain stroke patients.
The United States alleged that Covidien caused false claims to be submitted to Medicare and Medicaid by paying kickbacks to hospitals and institutions to induce them to use Covidien’s Solitaire device. Specifically, the United States alleged that after receiving FDA clearance for the Solitaire device, Covidien launched a registry to pay hospitals and institutions to collect data about user experiences with the device. For about two years beginning in August 2014, Covidien paid a fee to hospitals and institutions that participated in a registry each time they used a new Solitaire device and reported certain clinical data about their practices for treating stroke patients to Covidien. Covidien solicited certain hospitals and institutions for the registry in order to convert their business from the competitor’s product and/or persuade them to continue using Covidien products, and knowingly and willfully used the registry as a means of increasing device sales.
The civil lawsuit was filed by Jeffrey Faatz, who worked for Covidien from 2012 to 2014, under the qui tam, or whistleblower, provisions of the False Claims Act. The Act allows private parties to sue on behalf of the government for false claims and to share in any recovery. As part of today’s resolution, Mr. Faatz will receive $2,015,000. The case is captioned United States ex rel. Doe v. Covidien PLC et al., Civil Action No. 8:15-cv-01796 AG (JCGx) (C.D. Cal.).
“Illegal kickbacks bring fraud and abuse into the Medicare system,” said U.S. Attorney Nicola T. Hanna for the Central District of California. “As part of an aggressive marketing campaign for its medical device, Covidien allegedly found a way to subsidize facilities that agreed to use its product – often convincing them not to use devices sold by another manufacturer. Patients deserve to know that their medical providers are offering the best possible treatments and are not making decisions based on increasing the bottom line for health care providers.”
The plea agreement was the result of a coordinated effort among the U.S. Attorney’s Office for the District of Massachusetts and the Civil Division’s Consumer Protection Branch, with assistance from the FDA’s Office of Chief Counsel. The criminal investigation was conducted by the FDA’s Office of Criminal Investigations, HHS’s Office of the Inspector General, the Department of Veteran’s Affairs, Office of the Inspector General, and the Federal Bureau of Investigations.
The civil settlement was the result of an investigation by the Justice Department’s Civil Division, Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, and the Office of Inspector General at the U.S. Department of Health and Human Services. The False Claims Act claims resolved by the settlement are allegations only and there has been no determination of liability.
For more information about the Consumer Protection Branch, the Commercial Litigation Branch, Fraud Section, and their enforcement efforts, visit their websites at www.justice.gov/civil/consumer-protection-branch and www.justice.gov/civil/fraud-section.
Medical Device Maker ev3 Agrees to Plead Guilty and Pay $17.9 Million for Distributing Adulterated DeviceRead the Press Release
BOSTON – The U.S. Attorney’s office announced today that Minnesota-based medical device manufacturer ev3 Inc. (ev3), has agreed to plead guilty to charges related to the distribution of its neurovascular medical device, Onyx Liquid Embolic System, and pay $17.9 million in fines and forfeiture.
“ev3 disregarded laws designed to protect patient safety,” said United States Attorney Andrew E. Lelling. “The U.S. Attorney’s Office is committed to protecting patients and the integrity of federal health care programs, and we will continue to use our criminal authority to ensure that medical device manufacturers play by the rules that protect the public and ensure quality of care.”
“The Department of Justice will hold corporations accountable when they violate laws designed to protect consumers and protect public funds,” said Assistant Attorney General Joseph H. Hunt, of the Department of Justice’s Civil Division. “This resolution demonstrates the Department’s continued commitment to protect taxpayer dollars and deter companies from putting profits before patient safety.”
“Consumers rely on the FDA to ensure that there’s a reasonable assurance of safety and effectiveness for the approved uses of medical devices. When manufacturers ignore the FDA’s regulatory authority, they undermine these crucial assurances and put lives at risk. Our Office of Criminal Investigations investigated a bad actor who marketed their device for unapproved uses, potentially harming patients,” said FDA Commissioner Scott Gottlieb, M.D. “The ev3 agreement to plead guilty announced by the U.S. Department of Justice today is an example of the FDA’s comprehensive commitment to ensuring the safety of medical devices and investigating companies that put patients at risk. A key part of our overall efforts to promote safe and effective innovation and protect patients is our enforcement work related to unsafe practices and bad actors. In addition to investigating such activities, we’re advancing other new policies to assure post-market device safety, as we recently outlined in our Medical Device Safety Action Plan. The FDA is also committed to fully implementing a new active surveillance system that will enable the agency to harness real-world evidence from medical records and patient registries to more swiftly identify device safety issues and enable more informed decision-making.”
Pursuant to a criminal information filed in federal court in Boston today, the United States charged ev3 with violations of the Food, Drug and Cosmetic Act. As part of the criminal resolution, ev3 has agreed to plead guilty to a misdemeanor offense, to pay a criminal fine of $11.9 million, and to forfeit $6 million.
According to court documents, Onyx was approved by the U.S. Food and Drug Administration (FDA) as a liquid embolization device that is surgically injected into blood vessels to block blood flow to arteriovenous malformations in the brain. The FDA has approved Onyx only for use inside the brain. Despite the FDA’s limited approval of Onyx, from 2005 to 2009, ev3 sales representatives encouraged surgeons to use Onyx in large quantities for unproven and potentially dangerous surgical uses outside the brain. The company’s sales force continued to tout unapproved and potentially dangerous uses of Onyx even after FDA officials told ev3 executives in 2008 that they had specific safety concerns regarding uses of Onyx outside the brain. FDA officials told ev3 executives that a study would be required to gain approval for uses of Onyx outside the brain and to ensure that the benefits of the device outweighed the risks.
Rather than conduct a study to ensure the safety and effectiveness of Onyx for uses outside the brain, ev3’s sales representatives attended surgical procedures and provided explicit instructions to surgeons regarding how to use Onyx for unapproved surgical procedures outside the brain, including in greater quantities than would be used in the brain. According to the criminal information, ev3’s management also set up a system of sales quotas and bonuses that incentivized sales representatives to sell Onyx for unapproved uses and trained the sales force to instruct physicians on unapproved uses of the device.
“The American people, as both taxpayers and consumers, expect medical device manufacturers like EV3 to abide by relevant laws and regulations,” stated HHS-OIG Special Agent in Charge Phillip Coyne. “When medical device companies take shortcuts in order to boost profits, it erodes public confidence in the health care system, compromises patient safety, and wastes taxpayer funds intended for healthcare programs that help the most vulnerable members of society. We will continue to investigate allegations of fraud in close cooperation with our law enforcement partners.”
“This sends a clear message that VA OIG and our federal partners will vigorously investigate healthcare fraud and hold companies accountable,” said Sean J. Smith, Special Agent in Charge of the Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, Northeast Field Office.
“Incentivizing employees to promote surgical devices outside approved protocols violates FDA regulations, places patients at risk, and are unacceptable business practices. In this case, ev3 ignored serious patient safety concerns when it gave sales representatives the green light to promote its device for unapproved uses. Today’s plea and settlement demonstrate the FBI’s commitment to holding companies accountable who violate regulations solely intended to protect the public,” said Harold H. Shaw, Special Agent in Charge of the FBI Boston Division. “The FBI’s Health Care Fraud program will continue to investigate companies like ev3 that promote dangerous sales tactics that pose unacceptable risk to patient safety.”
ev3 was acquired by Covidien LP in 2010, subsequent to the course of criminal conduct covered by the plea agreement. Covidien was then acquired by Medtronic in 2015. Although Medtronic played no role in the criminal conduct, the company has agreed to implement new compensation structures to ensure the sales force responsible for marketing Onyx is not incentivized to sell the device for unapproved uses. Medtronic has also agreed to conduct compliance monitoring related to Onyx sales and marketing.
U.S. Attorney Lelling, Assistant Attorney General Hunt, FDA Commissioner Gottlieb, HHS-OIG SAC Coyne, VA-OIG SAC Smith, and FBI Boston SAC Shaw made the announcement today. This matter was handled by Assistant U.S. Attorneys Gregg Shapiro, Chief of Lelling’s Affirmative Civil Enforcement Unit, Nathaniel Yeager, Chief of Lelling’s Health Care Fraud Unit, and Christopher Looney of Lelling’s Health Care Fraud Unit, and Trial Attorney Matthew Lash of the Justice Department’s Consumer Protection Branch.
Maryland man sentenced to more than 12 years for transporting a minor across state lines for sexRead the Press Release
MARTINSBURG, WEST VIRGINIA – Kenneth Earle Ewing, of Hagerstown, Maryland, was sentenced to 151 months incarceration for transporting a 12-year-old across state lines for sex, United States Attorney Bill Powell announced.
Ewing, age 38, pled guilty to one count of “Transportation of a Minor with Intent to Engage in Criminal Sexual Activity” in August 2018. Ewing admitted to transporting a 12-year-old girl from Ranson, West Virginia, to Hagerstown, Maryland, to engage in sexual conduct.
Ewing was also ordered to pay restitution in the amount of $4,596.03. He will be on 40 years of supervised release after his sentence is served.
Assistant U.S. Attorney Lara Omps-Botteicher prosecuted the case on behalf of the government. The Federal Bureau of Investigation investigated.
Chief U.S. District Judge Gina M. Groh presided.
Martinsburg man sentenced to more than 20 years for heroin distributionRead the Press Release
MARTINSBURG, WEST VIRGINIA – Steven Jonathan Blunt, of Martinsburg, West Virginia, was sentenced Monday to 250 months incarceration for distributing heroin, United States Attorney Bill Powell announced.
Blunt, age 43, pled guilty to one count of “Aiding and Abetting Possession with Intent to Distribute more than 100 grams of Heroin” in May 2018. Blunt admitted to distributing heroin in September 2017 in Berkeley County.
Special Assistant U.S. Attorney C. Lydia Lehman, also with the Berkeley County Prosecuting Attorney’s Office, prosecuted the case on behalf of the government. The Eastern Panhandle Drug & Violent Crimes Task Force, a HIDTA-funded initiative, investigated.
Chief U.S. District Judge Gina M. Groh presided.Martinsburg man sentenced to more than 12 years for cocaine chargeRead the Press Release
MARTINSBURG, WEST VIRGINIA – Adam Gunn, II, of Martinsburg, West Virginia, was sentenced Monday to 151 months incarceration for a drug charge, United States Attorney Bill Powell announced.
Gunn, age 31, pled guilty to one count of “Distribution of Cocaine” in August 2018. Gunn admitted to selling cocaine in Berkeley County in August 2017.
Assistant U.S. Attorneys Shawn M. Adkins and Lara K. Omps-Botteicher prosecuted the case on behalf of the government. The investigation was led by the Drug Enforcement Administration, the Federal Bureau of Investigation, Homeland Security Investigations, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the United States Marshals Service, the Eastern Panhandle Drug & Violent Crimes Task Force, a HIDTA-funded initiative, the Potomac Highlands Drug & Violent Crimes Task Force, the Northwest Virginia Regional Drug & Gang Task Force , the West Virginia State Police, the Virginia State Police, the Berkeley County Sheriff’s Office, the Jefferson County Sheriff’s Office, the Martinsburg Police Department, the Charles Town Police Department, and the Ranson Police Department. Other agencies that assisted in the investigation are the Winchester City Police Department; and Frederick County, Virginia Sheriff’s Office; Pittsylvania County; Virginia Sheriff’s Office; and the Henry County, Virginia, Sheriff’s Office.
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.
Chief U.S. District Judge Gina M. Groh presided.
Marion County man sentenced to 14 years for methamphetamine distribution and a firearms violationRead the Press Release
CLARKSBURG, WEST VIRGINIA – William A. Six, of Fairmont, West Virginia, was sentenced Monday to 168 months incarceration for selling crystal methamphetamine and having a firearm near a school, United States Attorney Bill Powell announced.
Six, age 27, pled guilty to one count of “Distribution of Methamphetamine” and one count of “Possession of a Firearm in a School Zone” in October 2018. Six admitted to selling crystal methamphetamine, also known as “Ice,” in Marion County in September 2017. Six also admitted to having a 12-gauge shotgun, and a semi-automatic rifle on the grounds of Washington Irving Middle School in Harrison County in September 2017.
This case was brought as part of Project Safe Neighborhoods (PSN), a program that has been historically successful in bringing together all levels of law enforcement to reduce violent crime and make our neighborhoods safer for everyone. The Attorney General’s Office has made turning the tide of rising violent crime in America a top priority. In October 2017, as part of a series of actions to address this crime trend, the Attorney General’s Office announced the reinvigoration of PSN and directed all U.S. Attorney’s Offices to develop a district crime reduction strategy that incorporates the lessons learned since PSN launched in 2001.
Assistant U.S. Attorney Traci M. Cook prosecuted the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms and Explosives, the Three Rivers Drug Task Force, and the Fairmont Police Department investigated.
Senior U.S. District Judge Irene M. Keeley presided.
Manhattan U.S. Attorney Announces Settlement of Civil Fraud Claims Against Law Firm Rosicki, Rosicki & Associates, P.C., and Two Affiliates for Inflating Foreclosure- And Eviction-Related ExpensesRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Laura Wertheimer, Inspector General for the Federal Housing Finance Agency Office of Inspector General (“FHFA-OIG”), and Michael J. Missal, Inspector General for the U.S. Department of Veterans Affairs (“VA”) Office of Inspector General (“VA-OIG”), announced today the settlement of a civil fraud lawsuit against New York law firm Rosicki, Rosicki & Associates, P.C. (“ROSICKI”) and its wholly owned affiliates, Enterprise Process Service, Inc. (“ENTERPRISE”) and Paramount Land, Inc. (“PARAMOUNT”). The settlement resolves the United States’ claims, asserted under the False Claims Act, alleging that ROSICKI used its affiliates, ENTERPRISE and PARAMOUNT, to systematically generate false and inflated bills for foreclosure-related and eviction-related expenses, and caused those expenses to be submitted to and paid for by the Federal National Mortgage Association, known colloquially as Fannie Mae. The settlement also resolves claims arising from identical misconduct in connection with eviction-related expenses that were submitted to and paid for by the VA. As part of the settlement approved by U.S. District Judge Jed S. Rakoff, ROSICKI, ENTERPRISE, and PARAMOUNT admitted and accepted responsibility for their conduct and must pay $4.6 million to the United States. The settlement also requires ROSICKI to implement a compliance program with regular reporting over the next five years, and to publicly disclose the nature of its affiliation with ENTERPRISE and PARAMOUNT on its website.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Lawyers are not above the law. For years, the Rosicki firm submitted bills to Fannie Mae and the VA that contained inflated and unnecessary charges. This Office will continue to hold accountable those who seek to achieve profits by fraudulent conduct.”
FHFA-OIG Inspector General Wertheimer said: “FHFA is committed to holding accountable those who waste, steal, or abuse the resources of FHFA or any of the entities it regulates. We work with U.S. Attorneys’ Offices across the country to protect the interests of the American taxpayers in the housing government-sponsored enterprises and are proud to have partnered with the U.S. Attorney’s Office for the Southern District of New York on this matter.”
VA-OIG Inspector General Michael J. Missal said: “This civil settlement should send a clear message to individuals and businesses that VA-OIG and its law enforcement partners will vigorously investigate and expose false claims that fraudulently impact programs designed to benefit our veterans and their families.”
ROSICKI is a New York law firm whose main practice area is mortgage foreclosures. The two founding ROSICKI partners also own a number of affiliated entities, including ENTERPRISE, a service-of-process company, and PARAMOUNT, a title search company. Fannie Mae approved ROSICKI to perform legal work in connection with foreclosures on residential properties for which Fannie Mae owned the mortgage loans. Fannie Mae’s Servicing Guide required, among other things, that all foreclosure costs and expenses be “actual, reasonable, and necessary,” and that foreclosure law firms “must make every effort to reduce foreclosure-related costs and expenses in a manner that is consistent with all applicable laws.” ROSICKI understood those requirements and represented at various times that the firm was complying with them.
In fact, as ROSICKI, ENTERPRISE, and PARAMOUNT have admitted, from 2009 through 2018, on certain invoices for service of process (i.e., delivery or attempted delivery of legal papers) in connection with foreclosures or evictions, ENTERPRISE added additional charges to the costs charged by independent contractors and otherwise took actions that increased costs and expenses. Similarly, on certain invoices for foreclosure searches and title continuations, PARAMOUNT added additional charges to the costs charged by independent contractors and otherwise took actions that increased costs and expenses. ROSICKI submitted those costs and expenses for payment, with the understanding that Fannie Mae would reimburse for them.
The settlement also resolves identical conduct by ROSICKI, ENTERPRISE, and PARAMOUNT pertaining to expenses attendant to evictions that ultimately were paid by the VA.
This case arose from a lawsuit filed by a whistleblower under the False Claims Act. In March of this year, the United States intervened in the case and took over prosecution of some of the claims that the whistleblower asserted. In a separate settlement agreement, ROSICKI, ENTERPRISE, and PARAMOUNT agreed to pay the United States an additional $1,518,000 to resolve separate False Claims Act claims pursued by the whistleblower, resulting in a total recovery to the United States of $6,118,000.
* * *
Mr. Berman thanked the FHFA-OIG and VA-OIG for their efforts and ongoing support and assistance with the case.
The case is being handled by the Office’s Civil Division. Assistant U.S. Attorneys Cristy Irvin Phillips, Andrew E. Krause, and Joseph N. Cordaro are in charge of the case.
Man Sentenced for Stealing Construction EquipmentRead the Press Release
MADISON, WIS. – Scott C. Blader, United States Attorney for the Western District of Wisconsin, announced that Gene Sauer, 49, Cambria, Wisconsin, was sentenced on November 29 by U.S. District Judge William M. Conley to 42 months in federal prison for interstate trafficking of stolen property. Sauer pleaded guilty to the offense on September 18, 2018.
Sauer was taken into custody by U.S. Marshals to begin serving his sentence immediately following the sentencing. The final amount of restitution owed to victims will be determined at a hearing on February 15, 2018.
Over a two-year period, Sauer stole eight skid steer loaders from construction sites in Wisconsin, and transported them to an implement dealer in Illinois, where they were later resold. Sauer took the skid steer loaders to Illinois so they would be more difficult for law enforcement to find. Sauer has four previous felony theft-related convictions.
Sauer’s co-defendant in three of the thefts, Daniel Grupe, 26, pleaded guilty to interstate trafficking of stolen property on September 19, 2018. His sentencing is scheduled for December 13, 2018.
The charges against Gene Sauer and Daniel Grupe were the result of an investigation conducted by the Federal Bureau of Investigation, DeForest and Sun Prairie Police Departments, Columbia and Green Lake County Sheriffs’ Offices, and the Illinois State Police. The prosecution of the case has been handled by Assistant U.S. Attorney Meredith P. Duchemin.
Los Angeles-Area Clothing Outlets Owner Gets One-Year Prison Sentence for Failing to Report Nearly $4 Million in Income to IRSRead the Press Release
LOS ANGELES – A Downey man who operates second-hand clothing stores in Los Angeles County has been sentenced to one year and one day in federal prison for not reporting nearly $4 million in corporate income to the Internal Revenue Service.
Jose Martin Andrade Flores, 53, the owner and operator of American Superior Used Clothing, Inc., also was ordered by United States District Judge Christina A. Snyder on Monday to pay a $10,000 fine.
Flores pleaded guilty in September to one count of subscribing to a false corporation income tax return that he filed for American Superior for 2013. In that year, American Superior had income of approximately $3,440,769, but Flores instead reported only $2,505,183, omitting income of $935,586.
According to court documents, part of American Superior’s business model was to recycle used clothing, then resell it at retail stores located on Melrose Avenue, Hollywood, Echo Park and Pasadena. The company also engaged in bulk wholesale transactions with international buyers and sold merchandise at Rose Bowl swap meets and on East Los Angeles sidewalk locations.
From 2012 through 2016, Flores concealed from his corporate tax preparer cash sales and deposits into foreign bank accounts that were made on behalf of American Superior. As a result, the tax returns he filed for American Superior for those five years failed to report a total of $3,966,473 in income to the IRS.
In early 2017, Flores put American Superior up for sale, advertising the company’s sale on BizBuySell, a website where companies are bought and sold, according to the government’s sentencing memorandum. The advertisement listed a selling price of $3.5 million and estimated revenue of $4 million – twice the revenue the company reported to the IRS in its tax returns.
Prospective buyers then met in person with Flores on three occasions, and engaged in multiple telephone calls with him. During a May 2017 meeting with the prospective buyers, Flores said American Superior generated $800,000 to $1 million in cash each year, but reported only enough money on its tax returns to give the appearance it was breaking even. Flores also told them that he made between $300,000 and $400,000 each year from American Superior.
According to court documents, Flores also told the prospective buyers, “There is no better business than this business. When you report, you can always break even. It’s a recycling business. They won’t touch you.”
Two months later, the IRS executed a search warrant and seized the company’s true cash receipts that Flores had described and shown to the prospective buyers. The agents also seized cash and text messages sent to Flores from employees reporting the daily sales at one of his retail stores.
As part of this case, Flores agreed to pay all back taxes, interest and penalties associated with his willful failure to accurately report American Superior’s income. Flores has paid the IRS $1,189,331, which includes $439,632 in penalties.
This matter was investigated by IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorney Ranee Katzenstein, Chief of the Major Frauds Section.
LivaNova agrees to pay $1.87 Million to resolve False Claims Act allegations arising from improper kickback paymentsRead the Press Release
ATLANTA – LivaNova USA, Inc. (“LivaNova”), formerly known as Cyberonics, Inc., has agreed to pay the United States and the State of Georgia $1.87 million to resolve allegations that it violated the False Claims Act and the Georgia False Medicaid Claims Act by knowingly paying kickbacks to Georgia physicians with the intent to cause referrals for implantation of LivaNova’s medical devices.
“Healthcare providers must make recommendations about their patients’ health without respect to their own financial interests and medical device manufacturers cannot be permitted to influence that process with thinly-disguised kickback payments,” said U.S. Attorney Byung J. “BJay” Pak. “This settlement demonstrates our commitment to ensuring that the healthcare provided to our citizens, and the medical guidance given by Georgia physicians, is free from improper monetary influence.”
“The success of Georgia’s Medicaid program depends on the integrity of medical professionals in making decisions regarding patient care,” said Attorney General Chris Carr. “When companies provide incentives to physicians that emphasize interests beyond the patient, the entire system is corrupted. I am proud of our Medicaid Fraud Division’s work on this case, and we will continue to work alongside our federal partners to root out this activity.”
The government’s investigation concerned LivaNova’s policy and practice of paying speaking fees to Georgia physicians for supposed speaking and marketing events at which the attendees were primarily the physicians and their own staff. The physicians who received these fees were amongst the highest referral sources for surgical implantation of LivaNova’s device for treatment of refractory epilepsy. The government alleges that these payments violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), which prohibits the knowing and willful payment of “remuneration” to induce or reward the generation of business involving any item or service payable by Medicare and Medicaid. Such violations are actionable under the False Claims Act and the Georgia False Medicaid Claims Act.
The settlement resolves allegations filed by Ashley Case, a former employee of LivaNova, under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it did in this case. The lawsuit was filed in the Northern District of Georgia and is captioned United States of America and State of Georgia ex rel. Ashley Case v. LivaNova, P.L.C., Civil Action No: 1:16-cv-0807-MHC (N.D. Ga.). Ms. Case will receive a share of the settlement.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
This matter was investigated by the U.S. Attorney’s Office for the Northern District of Georgia and the Georgia Medicaid Fraud Control Unit.
Assistant U.S. Attorney Gabriel Mendel handled this matter for the U.S. Attorney’s Office.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao-ndga.
Leader of Boston-Based Drug Trafficking Organization Sentenced to 16 Years in PrisonRead the Press Release
BOSTON – The leader of a Boston-based heroin and fentanyl trafficking organization was sentenced yesterday in federal court in Boston.
Jose Antonio Lugo-Guerrero, a/k/a Fernando Rivera-Rodriguez, 40, a Dominican national formerly residing in Mattapan, was sentenced by U.S. District Court Judge Indira Talwani to 16 years in prison and five years of supervised release. Lugo-Guerrero will be subject to deportation proceedings upon completion of his sentence. In August 2018, Lugo-Guerrero pleaded guilty to one count of conspiracy to distribute and possess with intent to distribute more than one kilogram of heroin, more than 400 grams of fentanyl, and more than five kilograms of cocaine, and one count of possession of a firearm in furtherance of a drug trafficking crime. In February 2017, Lugo-Guerrero was arrested and charged along with 22 co-defendants.
From mid-2016 through February 2017, federal law enforcement investigated two drug trafficking organizations operating in Taunton and Boston; the former led by Fernando Hernandez, and the latter led by Lugo-Guerrero. Hernandez’s organization obtained drugs from a network of suppliers that included Lugo-Guerrero.
Lugo-Guerrero sold kilograms of heroin, fentanyl, and cocaine to customers in Boston, New Bedford, Fall River, and surrounding areas. The evidence, including federal wiretaps in late 2016 and early 2017, further showed that he obtained some of the drugs he sold by robbing other drug dealers. On Nov. 3, 2016, Lugo-Guerrero and five co-defendants traveled to New Bedford planning to rob a drug dealer who had stolen half a kilogram of heroin from Lugo-Guerrero. At Lugo-Guerrero’s direction, one of the co-defendants transported a firearm and provided it to another co-defendant just before the attempted robbery. Based on intercepted communications, law enforcement agents were aware of the planned robbery and stopped and questioned the defendants before it occurred. As a result, Lugo-Guerrero aborted his plan that night and returned to Boston.
In February 2018, Hernandez was sentenced to 15½ years in prison after pleading guilty in November 2017. The court found that Hernandez was responsible for distributing more than a kilogram of heroin over a two-month period in the summer of 2016.
United States Attorney Andrew E. Lelling; Brian D. Boyle, Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division; Colonel Kerry A. Gilpin, Superintendent of the Massachusetts State Police; Bristol Country District Attorney Thomas M. Quinn; Bristol County Sheriff Thomas M. Hodgson; Attleboro Police Chief Kyle P. Heagney; Boston Police Commissioner William Gross; Bridgewater Police Chief Christopher Delmonte; Fairhaven Police Chief Michael Myers; Fall River Police Chief Albert F. Dupere; New Bedford Police Chief Joseph C. Cordeiro; and Taunton Police Chief Edward James Walsh made the announcement. Assistant U.S. Attorney Ted Heinrich of Lelling’s Narcotics and Money Laundering Unit prosecuted the case.
Las Vegas Pharmacist Sentenced to Prison for Health Care Fraud ConspiracyRead the Press Release
LAS VEGAS, Nev. – A Las Vegas pharmacist was sentenced Monday by U.S. District Judge Richard F. Boulware II, to 14 months in prison and three years of supervised release for conspiring with others to commit health care fraud, announced U.S. Attorney Dayle Elieson for the District of Nevada. As part of his sentence, he was ordered to pay $3,749,121 in restitution.
Nelson M. Mukuna, 41, previously pleaded guilty to conspiracy to commit health care fraud and structuring transactions to evade reporting requirements. He was the owner and operator of Atlas Specialty Pharmacy which concentrated in specialty drugs.
The conspiracy was in place between July 2016 to December 2017. It started when Mukuna became friends with Robert Harvey, who in turn introduced him to co-conspirator Alejandro Incera, an Advanced Practice Registered Nurse. In November 2016, Mukuna and Incera conspired and agreed that Mukuna would provide Incera with Xeomin, a form of Botox injection, in exchange for Incera’s patient referrals to Atlas Pharmacy for their prescriptions. As their business relationship developed, Incera referred more patients to Atlas. By January 2017, Mukuna started paying Incera $100 cash for each patient referral. Soon after, Mukuna approached other providers and offered cash for their patient referrals. In November 2016, Incera introduced Mukuna to co-conspirator Leslie Kalyn who started engaging in the same kickback referral scheme. In January 2017, Mukuna agreed to pay his co-conspirators $200 per patient referral. The approximate kickback payments totaled $175,000.
In an effort to conceal the kickback scheme, Mukuna structured cash withdrawals from his business bank account in order to avoid a Currency Transaction Report from being generated. Domestic financial institutions, like banks, are required to file transaction reports for cash transactions exceeding $10,000 in a single day.
As a result of this prosecution, Atlas Pharmacy has closed and Mukuna has surrendered his pharmacy and DEA licenses.
The case was investigated by the FBI, the Office of Inspector General of the U.S. Department of Health and Human Services, and the Nevada Attorney General’s Office Medicaid Fraud Control Unit. Assistant U.S. Attorney Kilby Macfadden prosecuted the case.
The Opioid Fraud and Abuse Detection Unit is a program that utilizes data to help combat the devastating opioid crisis. The District of Nevada was selected as one of 12 districts nationally to participate in the pilot program. The District of Nevada has assigned an experienced prosecutor that focuses solely on investigating and prosecuting health care fraud related to medical professionals who prescribe opioids, that unlawfully divert of dispense prescription opioids for illegitimate purposes.
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Jury Convicts St. Joseph Man of Illegal FirearmRead the Press Release
KANSAS CITY, Mo. – A St. Joseph, Mo., man was convicted by a federal trial jury today of illegally possessing a firearm following an 11-hour standoff with law enforcement officers.
Terrance T. Brown, 41, of St. Joseph, was found guilty of being a felon in possession of a firearm.
Evidence introduced during the trial indicated that Brown was in possession of a loaded Ruger 9mm pistol on Sept. 13, 2017. Brown was arrested following a 11-hour standoff at a St. Joseph residence on that date. Officers with the St. Joseph Police Department and the Buchanan County Sheriff’s Department established a perimeter around the residence. After several minutes, three individuals (including a juvenile) came out of the residence, but Brown – armed with the handgun – remained inside. Officers with the Special Response Team used portable cameras to locate Brown in the attic of the residence. Eventually, Brown surrendered to officers and was arrested as he left the residence. The loaded Ruger 9mm pistol with an extended magazine was found during a search of the attic. Officers also found ammunition and an empty box for a Smith & Wesson .40-caliber firearm, which contained some ammunition.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Brown has a prior federal conviction in the District of Kansas for being a felon in possession of a firearm. Brown has two prior felony convictions for robbery in Wyandotte County, Kan., as well as prior felony convictions for aggravated assault, criminal possession of a firearm, and attempted possession of a controlled substance. Brown was under supervision by Missouri Probation and Parole for felony drug possession in Jackson County, Mo., at the time of the offense.
Following the presentation of evidence, the jury in the U.S. District Court in Kansas City, Mo., deliberated for and an hour and a half before returning the guilty verdict to U.S. District Judge Stephen R. Bough, ending a trial that began Monday, Dec. 3, 2018.Under federal statutes, Brown 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 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. Attorneys Emily A. Morgan and Adam Caine. It was investigated by Bureau of Alcohol, Tobacco, Firearms and Explosives, the St. Joseph, Mo., Police Department and the Buchanan County, Mo., Sheriff’s Department.
Project Safe Neighborhoods
The U.S. Attorney’s Office is partnering with federal, state, and local law enforcement to specifically identify criminals responsible for significant violent crime in the Western District of Missouri. A centerpiece of this effort is Project Safe Neighborhoods, a program that brings together all levels of law enforcement to reduce violent crime and make neighborhoods safer for everyone.Jury Convicts Honduran Drug Trafficker of Cocaine ConspiracyRead the Press Release
A federal jury in the Eastern District of Virginia convicted a Honduran man yesterday of leading a drug trafficking organization that helped smuggle thousands of kilograms of cocaine into the United States over the last decade.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia, Acting Special Agent in Charge Scott W. Hoernke for the Drug Enforcement Administration’s (DEA) Washington Field Division, Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office, Special Agent in Charge Patrick J. Lechleitner of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Washington, D.C., and Colonel Gary T. Settle, Superintendent of Virginia State Police, made the announcement.
Arnulfo Fagot-Maximo, 57, was convicted of conspiracy to distribute cocaine knowing that the cocaine was to be unlawfully imported into the United States following a five-day trial before U.S. District Judge Liam O’Grady. Fagot-Maximo had been extradited to the United States following his indictment in the Eastern District of Virginia. According to court records and evidence presented at trial, Arnulfo Fagot-Maximo was the leader of a drug trafficking organization based in the La Mosquitia region of the Departamento Gracias a Dios, Honduras. His organization was a critical link between Colombian cocaine suppliers and other major Honduran traffickers. For over a decade, Fagot-Maximo received cocaine from Colombia along the Mosquitia coast by “go fast” boats, small aircraft, and submersible vessels in quantities ranging from a few hundred to several thousand kilograms per delivery. Most of this cocaine was transferred to the Montes Bobadilla organization in Francia, Honduras, where it was received by other traffickers. Eventually the cocaine was transported by land through Honduras and Guatemala, and it was then delivered to Mexican cartels for importation into the United States. Fagot-Maximo received tens of millions of dollars in U.S. currency for the sale and delivery of this cocaine.
He faces a mandatory minimum sentence of 10 years and a maximum sentence of life in prison when sentenced on March 29, 2019. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
The case was investigated by the DEA as part of the Organized Crime Drug Enforcement Task Forces (OCDETF), Operation Harpoon through DEA’s HIDTA Task Force in Annandale Virginia. The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
Assistance in the investigation and prosecution was provided by the U.S. Attorney’s Offices for the Southern District of New York, the Middle District of Florida, and the Southern District of Florida, as well as assistance from the U.S. Coast Guard, and the Honduran National Police. Trial Attorney Anthony T. Aminoff of the Criminal Division’s Narcotic and Dangerous Drug Section and Assistant U.S. Attorneys James L. Trump and Thomas W. Traxler of the Eastern District of Virginia are prosecuting the case. The Criminal Division’s Office of International Affairs assisted with the extradition in this matter.
Jury Convicts Honduran Drug Trafficker of Cocaine ConspiracyRead the Press Release
ALEXANDRIA, Va. – A federal jury convicted a Honduran man late yesterday of leading a drug trafficking organization that smuggled at least thousands of kilos of cocaine into the United States over the last decade.
According to court records and evidence presented at trial, Arnulfo Fagot-Maximo, 57, was the leader of a drug trafficking organization based in the La Mosquitia region of the Departamento Gracias a Dios, Honduras. His organization was a critical link between Colombian cocaine suppliers and other major Honduran traffickers. For over a decade, the Fagot-Maximo received cocaine along the Mosquitia coast from Colombia by “go fast” boats, small aircraft, and submersible vessels in quantities ranging from a few hundred to several thousand kilograms per delivery. Most of this cocaine was transferred to the Montes Bobadilla organization in Francia, Honduras, where it was received by other traffickers. Eventually the cocaine was transported by land through Honduras and Guatemala, and then it was delivered to the Mexican cartels for importation into the United States. Fagot-Maximo received tens of millions of dollars in U.S. currency for the sale and delivery of this cocaine.
Arnulfo Fagot-Maximo was convicted of conspiracy to distribute cocaine knowing that the cocaine was to be unlawfully imported into the United States. He faces a mandatory minimum sentence of 10 years and a maximum sentence of life in prison when sentenced on March 29, 2018. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
The case was investigated by the DEA as part of the Organized Crime Drug Enforcement Task Forces (OCDETF), Operation Harpoon through DEA’s HIDTA Task Force in Annandale Virginia. The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, Brian A. Benczkowski, Assistant Attorney General for the Criminal Division of the Department of Justice, Scott W. Hoernke, Acting Special Agent in Charge for the Drug Enforcement Administration’s (DEA) Washington Field Division, Nancy McNamara, Assistant Director in Charge of the FBI’s Washington Field Office, Patrick J. Lechleitner, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Washington, D.C., and Colonel Gary T. Settle, Superintendent of Virginia State Police, made the announcement after U.S. District Judge Liam O’Grady accepted the verdict.
Assistance in the investigation and prosecution was provided by the U.S. Attorney’s Offices for the Southern District of New York, the Middle District of Florida, and the Southern District of Florida. Assistance was also provided by the U.S. Coast Guard and the Honduran National Police. Assistant U.S. Attorneys James L. Trump, Thomas W. Traxler and DOJ Trial Attorney Anthony Aminoff 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. 1:15-cr-290.
Joint Statement of the U.S. Attorney’s Office and the Denver Field Office of the Drug Enforcement Administration regarding the City and County of Denver’s Proposal to Create Supervised Locations to Inject Heroin and Other Illegal DrugsRead the Press Release
DENVER -- The Denver City Council recently passed an ordinance that proposes establishing supervised use sites, where drug users would be allowed to lawfully inject heroin and other illegal drugs in a facility operated by a governmental organization or a nonprofit. This proposal still has a number of steps to go before it becomes a reality. In the meantime, there are a few things Coloradans should know.
Foremost, the operation of such sites is illegal under federal law. 21 U.S.C. Sec. 856 prohibits the maintaining of any premises for the purpose of using any controlled substance. Potential penalties include forfeiture of the property, criminal fines, civil monetary penalties up to $250,000, and imprisonment up to 20 years in jail for anyone that knowingly opens, leases, rents, maintains, or anyone that manages or controls and knowingly and intentionally makes available such premises for use (whether compensated or otherwise). Other federal laws likely apply as well.
Second, there is no evidence that such sites actually reduce the number of drug-related deaths or make it more likely that users will seek help for their addiction or mental health issues. Indeed, a recent review of one facility in Vancouver found that the overdose death rate in the immediate vicinity of the facility was actually the highest in the city. This may be due in part to the fact that while these facilities are touted as being “safe” because of the availability of opioid antagonists (e.g., Naloxone or Narcan), these facilities are not actually limited to opioid users. Those injecting methamphetamine, cocaine, or other drugs for which there is no counteragent are also welcome to use the facility. The Denver facility likewise would welcome users of any drug, not just opioids.
Third, these facilities actually increase public safety risks. Just like so-called crack houses, these facilities will attract drug dealers, sexual predators, and other criminals, ultimately destroying the surrounding community. More importantly, the government-sanctioned operation of these facilities serves only to normalize serious drug usage – teaching adults and children alike that so-called “safe” drug usage is somehow appropriate or can actually be done “safely.” The type of drug use contemplated here is always life-threatening behavior.
Finally, we note that nothing in this statement should be read as casting aspersions on the laudable motives of those seeking to improve our communities and free Coloradans from the scourge of drug addiction. The U.S. Attorney’s Office and the Denver Field Office of the Drug Enforcement Administration support all methods of legal intervention to address the opioid and methamphetamine crisis in Colorado, and in fact work hard to facilitate them every day.
But these efforts must comply with federal law. Efforts that do not comply with federal law risk action by the U.S. Attorney’s Office using any and all federal remedies available.
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Jefferson County man sentenced for heroin and firearms chargesRead the Press Release
MARTINSBURG, WEST VIRGINIA – Tyler Logan Kranenberg, of Ranson, West Virginia, was sentenced Monday to 61 months incarceration for heroin distribution and a firearms charge, United States Attorney Bill Powell announced.
Kranenberg, age 30, pled guilty to one count of “Possession of a Firearm During and in Relation to a Drug Crime” and one count of “Distribution of Heroin” in August 2018. Kranenberg admitted to possessing a .25 caliber pistol while distributing heroin in July 2017 in Jefferson County.
This case was brought as part of Project Safe Neighborhoods (PSN), a program that has been historically successful in bringing together all levels of law enforcement to reduce violent crime and make our neighborhoods safer for everyone. The Attorney General’s Office has made turning the tide of rising violent crime in America a top priority. In October 2017, as part of a series of actions to address this crime trend, the Attorney General’s Office announced the reinvigoration of PSN and directed all U.S. Attorney’s Offices to develop a district crime reduction strategy that incorporates the lessons learned since PSN launched in 2001.
Assistant U.S. Attorney Lara K. Omps-Botteicher prosecuted the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated.
Chief U.S. District Judge Gina M. Groh presided.
Jefferson County man sentenced for drug chargeRead the Press Release
MARTINSBURG, WEST VIRGINIA – Guillermo Jose Rodriguez, of Charles Town, West Virginia, was sentenced Monday to two years probation for a drug charge, United States Attorney Bill Powell announced.
Rodriguez, age 26, pled guilty to one count of “Aiding and Abetting Possession with Intent to Distribute Cocaine Hydrochloride” in August 2018. Rodriguez admitted to possessing and distributing cocaine in Jefferson County in January 2018.
Assistant U.S. Attorney Lara Omps-Botteicher prosecuted the case on behalf of the government. The Drug Enforcement Administration, the U.S. Postal Inspection Service, and the Jefferson County Sheriff’s Office investigated.
Chief U.S. District Judge Gina M. Groh presided.
Jefferson County man sentenced for bank robberyRead the Press Release
MARTINSBURG, WEST VIRGINIA –A Charles Town, West Virginia man was sentenced Monday to 70 months incarceration for robbing a Charles Town bank, United States Attorney Bill Powell announced.
Ryan Stepanian, age 26, pled guilty to one count of “Bank Robbery” in August 2018. Stepanian admitted to taking $14,890 from the City National Bank of Charles Town, West Virginia, on January 22, 2018.
Assistant U.S. Attorney Anna Z. Krasinski prosecuted the case on behalf of the government. The Federal Bureau of Investigation, the Ranson Police Department, and the Charles Town Police Department investigated.
Chief U.S. District Judge Gina M. Groh presided.
Jefferson City Man Pleads Guilty to Meth ConspiracyRead the Press Release
KANSAS CITY, Mo. – A Jefferson City, Mo., man pleaded guilty in federal court today to his role in a conspiracy to distribute methamphetamine that was mailed to him by a co-conspirator in California.
Javier Rashad Rosser, 32, pleaded guilty before U.S. Magistrate Judge Willie J. Epps, Jr., to one count of conspiracy to distribute methamphetamine from April 4, 2016, to April 4, 2017.
Co-defendant Shadeed Seifullah Muhammad, 42, of Compton, Calif., mailed a package that contained nearly two pounds of methamphetamine from California to an address in Columbia, Mo., on April 4, 2016. This package was tracked online by a computer IP address that traced to Rosser’s residence. Co-defendant Robert Istill McNair, 32, of Jefferson City, picked up the package from a co-conspirator at the Columbia residence. McNair traveled to Jefferson City with the package with the intent to deliver it to Rosser. He had instructions leave the package of methamphetamine in a car at his workplace in Jefferson City, but Rosser never picked it up. On the same day, Rosser deposited $5,500 into the bank account of Muhammad’s girlfriend.
Muhammad mailed another package, which contained approximately one pound, nine ounces of methamphetamine, from California to an address at Lincoln University in Jefferson City on March 30, 2017. A student at Lincoln University later told investigators that Rosser had asked her to pick up the package and deliver it to him. On April 4, 2017, U.S. Postal Inspection agents set up a controlled delivery and surveillance at the Lincoln University mailroom. When an individual arrived to pick up the package from the mailroom, he was arrested.
Muhammad also admitted that he had mailed a package that contained two pounds of methamphetamine to an address in Jefferson City nearly a year earlier. The package was seized by the U.S. Post Office on March 11, 2016. According to computer IP addresses, the package was being tracked online by Muhammad and Rosser.
Both Muhammad and McNair have pleaded guilty to their roles in the drug-trafficking conspiracy and await sentencing.
Under federal statutes, Rosser is subject to a mandatory minimum sentence of ten years in federal prison without parole, up to a sentence of life in federal prison without parole. 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 Lawrence E. Miller. It was investigated by the Drug Enforcement Administration, the FBI and the U.S. Postal Inspection Service.
Jackson Man Sentenced to 15 Years in Prison for Methamphetamine ConspiracyRead the Press Release
Jackson, Miss. – Keith Mullen, 46, of Jackson, was sentenced today by U.S. District Judge William H. Barbour, Jr. to 180 months in federal prison, followed by 5 years of supervised release, for conspiring to possess with the intent to distribute 50 grams or more of actual methamphetamine, announced U.S. Attorney Mike Hurst and DEA Assistant Special Agent in Charge Derryle Smith. Mullen was also ordered to pay a $1,500.00 fine.
From November 2015 to February 2016, and while in federal prison, Mullen assisted co-conspirators in arranging the purchase and delivery of 30 kilograms of methamphetamine from a source of supply in Mexico. The drugs were intended for distribution in central Mississippi. The case is the result of an extensive investigation, dubbed ARock Bottom,@ which began as an operation targeting illegal narcotics distribution in central Mississippi that involved the distribution of cocaine, crack and methamphetamine.
The case was investigated by the Drug Enforcement Administration, the Mississippi Bureau of Narcotics, and the Bureau of Alcohol Tobacco Firearms and Explosives, with assistance from the Hinds County Sheriff’s Office, Ridgeland Police Department, Jackson Police Department, U.S. Marshals Service, Federal Bureau of Investigation, Mississippi Highway Patrol, Madison County Sheriff’s Office, Brandon Police Department, Rankin County Sheriff’s Office, Mississippi Department of Corrections, Pearl Police Department, Flowood Police Department, Customs and Border Patrol, and the DEA Houston Field Division. It was prosecuted by Assistant United States Attorney Chris Wansley.
Illegal Alien Convicted of Hindering His Removal from the United StatesRead the Press Release
SCRANTON - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Euphrem Kios Dohou, age 50, a native and citizen of Benin, West Africa, was convicted on November 29, 2018, after a two-day bench trial before United States District Court Judge Robert D. Mariani, of hindering his removal from the United States.
According to United States Attorney David J. Freed, the evidence showed that Dohou entered the United States in 1992 on a B-2 Visitor Visa that permitted him to visit in the United States for a period of six months but Dohou failed to return to his home country of Benin as required by law. In August 2006, Dohou was charged and convicted in the Eastern District of New York of a federal drug trafficking crime for which he was sentenced to a term of ten years’ imprisonment. He was subsequently encountered by Immigration Officials while serving his sentence at a Bureau of Prisons facility in Minnesota. On September 22, 2015, an Immigration Judge sitting in York, Pennsylvania issued a final order of removal against Dohou.
On September 29, 2015, September 30, 2015, October 9, 2015, October 16, 2015, October 29, 2015, and November 5, 2015, Dohou refused to complete the required travel document application to facilitate his deportation to Benin. Immigration Officials were subsequently able to secure the necessary travel document in Dohou’s name via the Republic of Benin Embassy. Flight arrangements for deportation from the United States were scheduled for Dohou but on January 15, 2016 and again on February 9, 2015, Dohou physically and verbally resisted efforts of Immigration Officials to transport him from the York County Prison to the Washington Dulles International Airport. Dohou was subsequently indicted by a federal grand jury in March of 2016.
The case was investigated by U.S. Immigration and Customs Enforcement and Removal Operations (ERO). Assistant United States Attorney Michelle Olshefski prosecuted the case.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines. In this case, Dohou faces up to ten years’ imprisonment and a $250,000 fine. Dohou remains in custody with a tentative sentencing date of February 4, 2019.
Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Identity Thief Pleads Guilty to Operating $1.4 Million Ponzi SchemeRead the Press Release
ALEXANDRIA, Va. – An Alexandria man pleaded guilty today to running a Ponzi scheme that defrauded over 20 victims of more than $1.4 million.
According to court documents, Brian Thomas Sapp, 38, ran a company called Novus Properties, which purported to have relationships with banks and mortgage lenders who wished to sell distressed lender-owned properties. These were supposedly single-family residences in Virginia, Maryland and the District of Columbia. Sapp raised capital from investors to loan him money to be used in the purchase of the homes, which he claimed he would resell 90 days later at a substantial profit. Sapp promised rates of return as high as 25 percent, and falsely claimed to have a guaranteed buyer for all his properties, usually a real Alexandria-based construction company.
To execute the scheme, Sapp stole the identity of the president of the construction company. Sapp, using a cloud-based platform called DocuSign, executed false contracts between Novus and the construction company, using the same IP address within minutes of each other to affix both his own digital signature as seller for Novus and the digital signature of the victim construction company president as buyer. Sapp would send the purchase contracts to victims, along with falsified HUD-1 Settlement Statement summaries, as evidence that he had purchased the properties and already contracted to re-sell them. Altogether, Sapp executed hundreds of false real estate transactions to induce victims to part with money. In truth, Sapp did not close on deals and used victim money to buy a Mercedes, take golf vacations, and to make lulling payments to investors. Sapp targeted close friends and their family who trusted him.
Sapp pleaded guilty to wire fraud and to aggravated identity theft and faces a mandatory minimum penalty of two years in prison for the identity theft charge, and a maximum of 20 years for the wire fraud charge, when sentenced on March 15, 2019. 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, and Nancy McNamara, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after U.S. District Judge Anthony J. Trenga accepted the plea. Assistant U.S. Attorney Russell L. Carlberg 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. 1:18-cr-446.
Houston Man Convicted of Federal Drug Trafficking and Money Laundering ChargesRead the Press Release
BEAUMONT, Texas – A 40-year-old Houston man has been convicted of drug trafficking and money laundering violations in the Eastern District of Texas, announced U.S. Attorney Joseph D. Brown today.
John D. Leontaritis, owner and operator of Vanderhall Exotics of Houston, and former owner operator of Global Motorcars of Houston, car dealerships that specialize in exotic, luxury automobiles, was found guilty by a jury today following a six-day trial before U.S. District Judge Marcia A. Crone.
According to information presented in court, Leontaritis was indicted by a federal grand jury on Apr. 4, 2018, and charged with conspiracy to possess with intent to distribute and distribution of methamphetamine, as well as, conspiracy to commit money laundering, which were committed from 2013 to 2017 in both the Houston and Beaumont areas. As a result of this investigation, seven other members of the conspiracy have already pleaded guilty and been sentenced.
This case is the result of an extensive joint investigation by the Organized Crime Drug Enforcement Task Force (OCDETF). The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.
This case was investigated by the U.S. Drug Enforcement Administration, the Houston Police Department and the Internal Revenue Service-CI and prosecuted by Assistant U.S. Attorneys Michelle S. Englade and Michael Anderson.
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Hartford Man Sentenced to 8 Years in Federal Prison for Drug and Gun OffensesRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that DAQUAN PATTERSON-GREENE, 22, of Hartford, was sentenced today by U.S. District Judge Alvin W. Thompson in Hartford to 96 months of imprisonment, followed by four years of supervised release, for drug and firearm offenses.
According to court documents and statements made in court, on September 7, 2017, Patterson-Greene led Hartford Police officers on a foot chase in Hartford’s North End. During the chase, Patterson-Greene discarded a loaded Glock 22 .40 caliber semi-automatic pistol, a firearm magazine containing 15 rounds of .40 caliber ammunition, and an orange backpack.
Officers apprehended Patterson-Greene on Vineland Terrace and recovered the discarded pistol, ammunition and backpack. A search of Patterson-Greene’s person revealed $252 in cash and small amount of marijuana. A search of the backpack revealed approximately 13 ounces of marijuana, 13 zip lock bags containing marijuana, a knotted plastic bag containing several pieces of a substance that field-tested positive for the presence of MDMA (ecstasy), a digital scale, and a box of sandwich bags.
Subsequent analysis of the suspected MDMA identified it as N-Ethylpentylone, which is a controlled analogue of MDMA.
Patterson-Greene’s criminal history includes felony convictions for first-degree assault and possession of a pistol without a permit. In addition, he was on state probation at the time of his arrest.
Patterson-Greene has been detained since his arrest on September 7, 2017. On September 11, 2018, he pleaded guilty to one count of possession of marijuana with the intent to distribute, and one count of possession of a firearm in furtherance of a drug trafficking crime.
Judge Thompson ordered Patterson-Greene to perform 100 hours of community service during his term of supervised release.
This matter was investigated by the Hartford Police Department and the FBI’s Northern Connecticut Violent Crimes Gang Task Force. The case was prosecuted by Assistant U.S. Attorney Michael J. Gustafson and Special Assistant U.S. Attorney John F. Fahey of the Hartford State’s Attorney’s Office.
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.
Hartford Man Pleads Guilty to Federal Gun ChargeRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that NOEL PEREZ, 22, of Hartford, pleaded guilty today before U.S. District Judge Jeffrey A. Meyer in New Haven to one count of possession of a firearm by a convicted felon.
According to court documents and statements made in court, on May 29, 2018, Hartford Police stopped a vehicle Perez was driving on Wadsworth Street. A search of the vehicle revealed a loaded Sig Sauer P2022 .40 caliber handgun, which had a laser sight attached to its barrel.
Perez’s criminal history includes felony convictions in state court for assault, burglary and larceny offenses.
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.
Perez has been detained since his arrest.
Judge Meyer scheduled sentencing for February 27, 2019, at which time Perez faces a maximum term of imprisonment of 10 years.
This investigation has been conducted by the Hartford Police Department and the Federal Bureau of Investigation’s Northern Connecticut Violent Crimes Task Force. The case is being prosecuted by Assistant U.S. Attorney Anastasia E. King.
This prosecution 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.
Fraudsters Sentenced to Federal Prison and Ordered to Pay Restitution of More Than $491,000 after a Jury Convicted Them of Federal Charges Related to Foreclosure Prevention Fraud SchemeRead the Press Release
Greenbelt, Maryland – On December 3, 2018, U.S. District Judge Roger W. Titus sentenced Michelle Sylethia Jordan, a/k/a Michelle Harris and Michelle Welsh, age 49; and her husband, Michael Paul Anthony Welsh, a/k/a Michael A. Welsh and Michael Paul S. Welsh, age 45, both of Laurel, Maryland, to 57 months and 46 months in federal prison, respectively, each followed by three years of supervise release, on conspiracy and wire fraud charges in connection with a foreclosure prevention fraud scheme. Judge Titus sentenced co-conspirator, Carrol Antonio Jackson, a/k/a Jack Jackson, age 48, of Hinesville, Georgia, to time served, followed by nine months of home detention as part of three years of supervised release. Finally, Judge Titus ordered that each defendant pay restitution of $491,036.87. A federal jury convicted the three co-conspirators on June 20, 2018. After the verdict was announced, Judge Titus ordered that Jordan and Welsh be detained pending sentencing and they were immediately taken into custody.
The sentence was announced by United States Attorney for the District of Maryland Robert K. Hur; Acting Deputy Inspector General for Investigations Richard Parker of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG); Special Agent in Charge Bertrand Nelson of the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG); Postal Inspector in Charge Peter Rendina of the U.S. Postal Inspection Service - Washington Division; Chief Henry P. Stawinski of the Prince George’s County Police Department; Chief J. Thomas Manger of the Montgomery County Police Department; Sheriff Steve Sikes of the Liberty County, Georgia, Sheriff’s Office; and Vernon M. Keenan, Director of the Georgia Bureau of Investigation.
According to the evidence presented at their eight-day trial, Jordan was chief executive officer and director of MJ Loan Auditor Group, LLC (MJLAG), a limited liability company registered and doing business in Maryland. Welsh was president and chief executive officer of MJLAG. Jackson was the owner and manager of CJ Maxx Group LLC, a limited liability company doing business in Maryland, Virginia, and Georgia.
Trial evidence proved that from August 2012 until February 2017, Jordan and Welsh falsely told victim homeowners that, for a fee, MJLAG could help these homeowners modify their mortgage loans and prevent foreclosure of their homes. Jordan and Welsh falsely represented that MJLAG could help the homeowners get “free and clear” title to their homes, with no debt or liens against the property, and that MJLAG could obtain money from the homeowners’ lenders, typically by suing the lenders. Jordan and Welsh told homeowners that they needed to purchase one or more “audits” of the homeowners’ mortgage loans in order to uncover fraud and alleged illegal acts committed by the lenders, and that these “audits” could be used as evidence in lawsuits against the lenders and in negotiating for a loan modification.
Witnesses testified that as part of the scheme, Jordan and Welsh had homeowners sign a “contract fee agreement” setting out what fees would be charged for the “audit.” The contract fee agreement contained the seal of the National Association of Mortgage Underwriters (NAMU), even though the defendants and their companies had no current affiliation with NAMU. Jordan advised clients to submit baseless complaints about their lender to state and federal agencies, file frivolous lawsuits in local courts, and to stop paying their mortgages. Jordan further advised MJLAG clients whose homes already were in foreclosure proceedings to file for bankruptcy in order to delay the foreclosure proceedings and as part of the process to prevent foreclosure of the clients’ homes. Jordan assisted MJLAG clients in filing for bankruptcy, by preparing bankruptcy petitions and related documents and court filings.
The evidence proved that Jordan and Welsh paid Jackson to prepare fraudulent documents purporting to be “Forensic Audit Reports” and “Real Estate Securitization Audits” relating to loans for properties owned by MJLAG clients. The victim homeowners paid money to MJLAG with the expectation of receiving assistance with modifying their mortgage loans and preventing foreclosure of their homes.
United States Attorney Robert K. Hur commended the FHFA-OIG, HUD-OIG, U.S. Postal Inspection Service, Prince George’s County and Montgomery County Police Departments, Liberty County Sheriff’s Office SWAT Team, and the Georgia Bureau of Investigation for their work in the investigation, and recognized the Maryland Department of Labor, Licensing, and Regulations for its assistance. Mr. Hur thanked Assistant U.S. Attorneys Kristi N. O’Malley and Nicolas A. Mitchell, and Special Assistant United States Attorney Elizabeth Boison, who prosecuted the case.
# # #
Four Defendants Charged in Panama Papers Investigation for Their Roles in Panamanian-Based Global Law Firm’s Decades-Long Scheme to Defraud the United StatesRead the Press Release
Four individuals have been charged in an indictment unsealed today in the Southern District of New York with wire fraud, tax fraud, money laundering and other offenses in connection with their alleged roles in a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (“Mossack Fonseca”), a Panamanian-based global law firm, and related entities.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, Chief Don Fort of IRS Criminal Investigation (IRS-CI), and Special Agent in Charge Angel M. Melendez of U.S. Immigrations and Customs Enforcement’s Homeland Security Investigations (HSI) New York made the announcement today.
Ramses Owens, 50, a Panamanian citizen; Dirk Brauer, 54, a German citizen; Richard Gaffey, 74, a U.S. citizen, of Medfield, Massachusetts; and Harald Joachim Von Der Goltz, 81, a German citizen, have been charged in an 11-count indictment. Owens, Gaffey and Von Der Goltz are charged with one count of conspiracy to commit tax evasion, one count of wire fraud, and one count of money laundering conspiracy. Owens and Brauer have been charged with one count of conspiracy to defraud the United States and one count of conspiracy to commit wire fraud. Gaffey and Von Der Goltz are additionally charged with four counts of willful failure to file an FBAR. Von Der Goltz has been additionally charged with two counts of making false statements.
Three of the four defendants named in the indictment have been arrested. Brauer, who worked as an investment manager for Mossfon Asset Management, S.A. (“Mossfon Asset Management”), an asset management company closely affiliated with Mossack Fonseca, was arrested in Paris, France, on Nov. 15. Von Der Goltz, a former U.S. resident and taxpayer, was arrested in London, United Kingdom, on Dec. 3. Gaffey, a U.S.-based accountant, was arrested in Boston, Massachusetts earlier today. Owens, a Panamanian attorney who worked for Mossack Fonseca, remains at large.
“Law firms, asset managers, and accountants play key roles enabling entry into the global financial system,” said Assistant Attorney General Benczkowski. “The charges announced today demonstrate our commitment to prosecute professionals who facilitate financial crime across international borders and the tax cheats who utilize their services.”
"As alleged, these defendants went to extraordinary lengths to circumvent U.S. tax laws in order to maintain their wealth and the wealth of their clients,” said Manhattan U.S. Attorney Berman. “For decades, the defendants, employees and a client of global law firm Mossack Fonseca allegedly shuffled millions of dollars through offshore accounts and created shell companies to hide fortunes. In fact, as alleged, they had a playbook to repatriate un-taxed money into the U.S. banking system. Now, their international tax scheme is over, and these defendants face years in prison for their crimes.”
“The unsealing of this indictment sends a clear message that IRS-CI is actively engaged in international tax enforcement, and more investigations are on the way,” said IRS-CI Chief Don Fort. “IRS-CI specializes in unraveling these intricate offshore tax schemes and following the money around the globe wherever it may lead. Cases like this help maintain the public’s confidence in our tax system by letting them know that we investigate and prosecute those who evade their tax obligation.”
“Today we announce the indictment of four individuals who allegedly defrauded the U.S. government through a large scale, intercontinental money laundering and wire fraud scheme, associated with Mossack Fonseca and its affiliates,” said HSI Special Agent-in-Charge Angel M. Melendez. “HSI’s El Dorado Task Force, together with the IRS, built a case that uncovered an alleged complex trail of offshore shell corporations and bogus foundations used to disguise the beneficial ownership of huge amounts of money. These efforts reflect the commitment of U.S. law enforcement to follow that trail and apprehend these criminals regardless of where they are in the world.”
According to the indictment, from at least in or about 2000 through in or about 2017, Owens and Brauer conspired with others to help U.S. taxpayer clients of Mossack Fonseca conceal assets and investments, and the income generated by those assets and investments, from the IRS through fraudulent, deceitful, and dishonest means. To conceal their clients’ assets and income from the IRS, Owens and Brauer allegedly worked to establish and manage opaque offshore trusts and undeclared bank accounts on behalf of U.S. taxpayers who were clients of Mossack Fonseca. Owens and Brauer allegedly marketed, created, and serviced sham foundations and shell companies formed under the laws of countries such as Panama, Hong Kong, and the British Virgin Islands, to conceal from the IRS and others the ownership by U.S. taxpayers of accounts established at overseas banks, as well as the income generated in those accounts. As structured by Mossack Fonseca, the sham foundations typically “owned” the shell companies that nominally held the undeclared assets on behalf of the U.S. taxpayer clients of Mossack Fonseca. The names of Mossack Fonseca’s clients generally did not appear anywhere on the incorporation paperwork for the sham foundations or related shell companies, although the clients in fact beneficially owned, and had complete access to, the assets of those sham entities and accounts.
In furtherance of the scheme, and in exchange for additional fees, Owens and Brauer allegedly provided support to clients who had purchased the sham foundations and related shell companies by providing corporate meeting minutes, resolutions, mail forwarding, and signature services. Moreover, Owens and Brauer are alleged to have purposefully established the bank accounts in locations with strict bank secrecy laws, which impeded the ability of the United States to obtain bank records for the accounts. Owens and Brauer also allegedly instructed U.S. taxpayer clients of Mossack Fonseca about how to repatriate funds to the United States from their offshore bank accounts in a manner designed to keep the undeclared bank accounts concealed. Among other things, Owens and Brauer instructed clients to use debit cards and fictitious sales to repatriate their funds covertly, the indictment alleges.
Von Der Goltz was allegedly one of Mossack Fonseca’s U.S. taxpayer clients. At all relevant times, Von Der Goltz was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts. U.S. citizens, resident aliens, and permanent legal residents with a foreign financial interest in or signatory authority over a foreign financial account worth more than $10,000 are required to file a Report of Foreign Bank and Financial Accounts, commonly known as an FBAR, disclosing the account. Von Der Goltz is alleged to have evaded his tax reporting obligations by setting up a series of shell companies and bank accounts, and hiding his beneficial ownership of the shell companies and bank accounts from the IRS. These shell companies and bank accounts allegedly made investments totaling tens of millions of dollars. According to the indictment, Von Der Goltz was assisted in this scheme by Owens and by Gaffey, a partner at a U.S.-based accounting firm. In furtherance of Von Der Goltz’s fraudulent scheme, Von Der Goltz, Gaffey, and Owens are alleged to have falsely claimed that Von Der Goltz’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and — unlike Von Der Goltz — was not a U.S. taxpayer.
As alleged in the indictment, Gaffey, in addition to assisting Von Der Goltz evade U.S. income taxes and reporting requirements, also worked closely with Owens to help another U.S. taxpayer client (“Client-1”) of Mossack Fonseca defraud the IRS. Client-1 allegedly maintained a series of offshore bank accounts, which Mossack Fonseca helped Client-1 conceal from the IRS for years. The indictment further alleges that, upon the advice of Owens and Gaffey, Client-1 covertly repatriated approximately $3 million of Client-1’s offshore money to the United States by falsely stating on Client-1’s federal tax return that the money represented proceeds from the sale of a company. After Client-1 repatriated approximately $3 million in this manner, approximately $1 million still remained in Client-1’s offshore account, the existence of which remained hidden from the IRS.
The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The investigation was conducted by IRS-CI and HSI with significant assistance by the Justice Department’s Tax Division and the FBI. The Justice Department’s Office of International Affairs and law enforcement partners in France and the United Kingdom secured the arrests of the defendants located overseas.
This case is being prosecuted by Trial Attorneys Michael Parker and Parker Tobin of the Criminal Division’s Money Laundering and Asset Recovery Section of the Justice Department and Assistant U.S. Attorneys Sarah E. Paul, Nathan Rehn, Kristy Greenberg and Andrew Adams of the Manhattan U.S. Attorney’s Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Transnational Criminal Enterprises Unit, with substantial support from previous co-counsel, Assistant U.S. Attorney Ann Marie Blaylock of the Western District of Kentucky.
Four Defendants Charged in Panama Papers InvestigationRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Brian A. Benczkowski, Assistant Attorney General of the Criminal Division of the U.S. Department of Justice, Don Fort, Chief, Internal Revenue Service-Criminal Investigation (“IRS-CI”), and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today the unsealing of an indictment charging RAMSES OWENS, DIRK BRAUER, RICHARD GAFFEY, and HARALD JOACHIM VON DER GOLTZ, with wire fraud, tax fraud, money laundering, and other offenses in connection with their roles in a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (“Mossack Fonseca”), a Panamanian-based global law firm, and related entities.
Three of the four defendants named in the indictment have been arrested. BRAUER, who worked as an investment manager for Mossfon Asset Management, S.A., an asset management company closely affiliated with Mossack Fonseca, was arrested in Paris, France, on November 15, 2018. VON DER GOLTZ, a former U.S. resident and taxpayer, was arrested in London, United Kingdom, on December 3, 2018. GAFFEY, a U.S.-based accountant, was arrested in Medfield, Massachusetts, this morning. OWENS, a Panamanian attorney who worked for Mossack Fonseca, remains at large.
Manhattan U.S. Attorney Geoffrey S. Berman said: “As alleged, these defendants went to extraordinary lengths to circumvent U.S. tax laws in order to maintain their wealth and the wealth of their clients. For decades, the defendants, employees and a client of global law firm Mossack Fonseca, allegedly shuffled millions of dollars through off-shore accounts and created shell companies to hide fortunes. In fact, as alleged, they had a playbook to repatriate un-taxed money into the U.S. banking system. Now, their international tax scheme is over, and these defendants face years in prison for their crimes.”
AAG Brian A. Benczkowski said: “Law firms, asset managers, and accountants play key roles enabling entry into the global financial system. The charges announced today demonstrate our commitment to prosecute professionals who facilitate financial crimes across international borders and the tax cheats who utilize their services.”
IRS-CI Chief Don Fort said: “The unsealing of this indictment sends a clear message that IRS-CI is actively engaged in international tax enforcement, and more investigations are on the way. IRS-CI specializes in unraveling these intricate offshore tax schemes and following the money around the globe wherever it may lead. Cases like this help maintain the public’s confidence in our tax system by letting them know that we investigate and prosecute those who evade their tax obligation.”
HSI Special Agent-in-Charge Angel M. Melendez said: “Today we announce the indictment of four individuals who allegedly defrauded the U.S. government through a large scale, intercontinental money laundering and wire fraud scheme, associated with Mossack Fonseca and its affiliates. HSI’s El Dorado Task Force, together with the IRS, built a case that uncovered an alleged complex trail of offshore shell corporations and bogus foundations used to disguise the beneficial ownership of huge amounts of money. These efforts reflect the commitment of U.S. law enforcement to follow that trail and apprehend these criminal regardless where they are in the world.”
According to the Indictment, which was unsealed today in Manhattan federal court[1]:
From 2000 through 2017, OWENS and BRAUER conspired with others to help U.S. taxpayer clients of Mossack Fonseca conceal assets and investments, and the income generated by those assets and investments, from the IRS through fraudulent, deceitful, and dishonest means. To conceal their clients’ assets and income from the IRS, OWENS and BRAUER worked to establish and manage opaque offshore trusts and undeclared bank accounts on behalf of U.S. taxpayers who were clients of Mossack Fonseca. OWENS and BRAUER marketed, created, and serviced sham foundations and shell companies formed under the laws of countries such as Panama, Hong Kong, and the British Virgin Islands, to conceal from the IRS and others the ownership by U.S. taxpayers of accounts established at overseas banks, as well as the income generated in those accounts. As structured by Mossack Fonseca, the sham foundations typically “owned” the shell companies that nominally held the undeclared assets on behalf of the U.S. taxpayer clients of Mossack Fonseca. The names of Mossack Fonseca’s clients generally did not appear anywhere on the incorporation paperwork for the sham foundations or related shell companies, although the clients in fact beneficially owned, and had complete access to, the assets of those sham entities and accounts.
In furtherance of the scheme, and in exchange for additional fees, OWENS and BRAUER provided support to clients who had purchased the sham foundations and related shell companies by providing corporate meeting minutes, resolutions, mail forwarding, and signature services. Moreover, OWENS and BRAUER purposefully established the bank accounts in locations with strict bank secrecy laws, which impeded the ability of the United States to obtain bank records for the accounts. OWENS and BRAUER also instructed U.S. taxpayer clients of Mossack Fonseca about how to repatriate funds to the United States from their offshore bank accounts in a manner designed to keep the undeclared bank accounts concealed. Among other things, OWENS and BRAUER instructed clients to use debit cards and fictitious sales to repatriate their funds covertly.
VON DER GOLTZ was one of Mossack Fonseca’s U.S. taxpayer clients. At all relevant times, VON DER GOLTZ was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts. VON DER GOLTZ evaded his tax reporting obligations by setting up a series of shell companies and bank accounts, and hiding his beneficial ownership of the shell companies and bank accounts from the IRS. These shell companies and bank accounts made investments totaling tens of millions of dollars. VON DER GOLTZ was assisted in this scheme by OWENS and by GAFFEY, a partner at a U.S.-based accounting firm. In furtherance of VON DER GOLTZ’s fraudulent scheme, VON DER GOLTZ, GAFFEY, and OWENS falsely claimed that VON DER GOLTZ’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and – unlike VON DER GOLTZ – was not a U.S. taxpayer.
GAFFEY, in addition to assisting VON DER GOLTZ evade U.S. income taxes and reporting requirements, also worked closely with OWENS to help another U.S. taxpayer client (“Client-1”) of Mossack Fonseca defraud the IRS. Client-1 maintained a series of offshore bank accounts, which Mossack Fonseca helped Client-1 conceal from the IRS for years. The indictment further alleges that upon the advice of OWENS and GAFFEY, Client-1 covertly repatriated approximately $3 million of Client-1’s offshore money to the United States by falsely stating on Client-1’s federal tax return that the money represented proceeds from the sale of a company. After Client-1 repatriated approximately $3 million in this manner, approximately $1 million still remained in Client-1’s offshore account, the existence of which remained hidden from the IRS.
* * *
A chart outlining the charges against each defendant is below. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge. The charges in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
COUNT
DEFENDANT
AGE & CITIZENSHIP
MAXIMUM SENTENCE
Count One: Conspiracy to Defraud the United States
18 U.S.C. § 371
RAMSES OWENS
DIRK BRAUER
50, Panamanian Citizen
54, German Citizen
Five years in prison
Count Two: Conspiracy to Commit Wire Fraud
18 U.S.C. § 1349
RAMSES OWENS
DIRK BRAUER
50, Panamanian Citizen
54, German Citizen
20 years in prison
Count Three: Conspiracy to Commit Tax Evasion
18 U.S.C. § 371
RAMSES OWENS
RICHARD GAFFEY
HARALD JOACHIM VON DER GOLTZ
50, Panamanian Citizen
74, U.S. Citizen
81, German Citizen
Five years in prison
Count Four: Wire Fraud
18 U.S.C. § 1343
RAMSES OWENS
RICHARD GAFFEY
HARALD JOACHIM VON DER GOLTZ
50, Panamanian Citizen
74, U.S. Citizen
81, German Citizen
20 years in prison
Count Five: Money Laundering Conspiracy
18 U.S.C. § 1956
RAMSES OWENS
RICHARD GAFFEY
HARALD JOACHIM VON DER GOLTZ
50, Panamanian Citizen
74, U.S. Citizen
81, German Citizen
20 years in prison
Counts Six-Nine: Willful Failure to File an FBAR
31 U.S.C. §§ 5314 & 5322(a)
RICHARD GAFFEY
HARALD JOACHIM VON DER GOLTZ
74, U.S. Citizen
81, German Citizen
10 years in prison for each count
Counts Ten-Eleven: False Statements
18 U.S.C. § 1001
HARALD JOACHIM VON DER GOLTZ
81, German Citizen
Five years in prison for each count
Mr. Berman praised the outstanding investigative work of IRS-CI and HSI, and thanked the Justice Department’s Tax Division and the Federal Bureau of Investigation for their significant assistance in the investigation. Mr. Berman also thanked the U.S. Justice Department’s Office of International Affairs and law enforcement partners in France and the United Kingdom for their assistance in securing the arrests of the defendants located overseas.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Transnational Criminal Enterprises Unit, working in partnership with the Money Laundering and Asset Recovery Section of the Criminal Division. Assistant United States Attorneys Sarah E. Paul, Thane Rehn, Kristy Greenberg, and Andrew Adams, along with Trial Attorneys Michael Parker and Parker Tobin of the Money Laundering and Asset Recovery Section, are in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Four Bemidji Residents Sentenced for Their Roles in Home Invasion on Red Lake ReservationRead the Press Release
United States Attorney Erica H. MacDonald today announced the sentencing of DEREK JON PADDY, 22, KEVIN ROBERTSON, 32, CHERAI MICHELLE CLARK, 26, and SHANISE FRANCES OSTLUND, 29, for their roles in a burglary on the Red Lake Reservation in the early morning hours of November 24, 2017.
PADDY was sentenced to 29 months imprisonment, ROBERTSON was sentenced to 51 months imprisonment, CLARK was sentenced to 21 months imprisonment, and OSTLUND was sentenced to 3 years probation. Judge Susan Richard Nelson sentenced the defendants on December 3, 2018, in U.S. District Court, in Duluth, Minnesota.
OSTLUND and ROBERTSON were found guilty of burglary in the second degree and of robbery, following a jury trial, before on Judge Susan Richard Nelson in U.S. District Court in Duluth, Minnesota, on September 12, 2018. PADDY and CLARK each pleaded guilty to one count of burglary in the second degree, on August 31, 2018 and September 10, 2018, respectively, before Judge Susan Richard Nelson.
United States Attorney MacDonald said, “Defendants Paddy and Robertson are repeat violent offenders, who chose to continue to commit crime. My office and our law enforcement partners are committed to ensuring all communities have the opportunity to be safe.”
As proven at trial, in the early morning hours of November 24, 2017, following a brawl at a local Walmart store, OSTLUND, ROBERTSON, PADDY and CLARK drove together to the victim’s residence with intentions to confront the victim and steal their property. When the defendants arrived, PADDY and CLARK kicked in the front door and entered the residence along with OSTLUND and ROBERTSON. The defendants expected to find the victim inside the residence; however, the victim escaped by jumping out of a window. The defendants stole various items from the residence before leaving the property.
This case is the result of an investigation conducted by the FBI Headwaters Safe Trails Task Force, the Red Lake Police Department and the Bemidji Police Department.
Assistant U.S. Attorney Deidre A. Aanstad and former Assistant U.S. Attorney Clifford B. Wardlaw tried the case.
Defendant Information:
Derek Jon Paddy, 22
Bemidji, Minn.
Convicted:
- Burglary in the second degree, 1 count
Sentenced:
- 29 months imprisonment
- 3 years supervised release
Kevin Robertson, 32
Bemidji, Minn.
Convicted:
- Burglary in the second degree, 1 count
- Robbery, 1 count
Sentenced:
- 51 months imprisonment
- 3 years supervised release
Cherai Michelle Clark, 26
Bemidji, Minn.
Convicted:
- Burglary in the second degree, 1 count
Sentenced:
- 21 months imprisonment
- 3 years supervised release
Shanise Frances Ostlund, 29
Bemidji, Minn.
Convicted:
- Burglary in the second degree, 1 count
- Robbery, 1 count
Sentenced:
- 3 years probation
###
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Fort Thompson Woman Charged with Conspiracy to Distribute a Controlled SubstanceRead the Press Release
United States Attorney Ron Parsons announced that a Fort Thompson, South Dakota, woman has been indicted by a federal grand jury for Conspiracy to Distribute a Controlled Substance.
Brooke Kristen Shields, age 32, was indicted on November 14, 2018. She appeared before U.S. Magistrate Judge Mark A. Moreno on November 29, 2018, and pled not guilty to the Indictment.
The maximum penalty upon conviction is a minimum of 10 years in federal prison and/or a $20,000,000 fine, at least 5 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The Indictment alleges that beginning no later than January 1, 2017, and continuing through the date the Indictment was filed, Shields knowingly and intentionally distributed and possessed with the intent to distribute 500 grams or more of methamphetamine.
The charge is merely an accusation and Shields is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Northern Plains Safe Trails Drug Enforcement Task Force. Assistant U.S. Attorney Cameron Cook is prosecuting the case.
Shields was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
Fort Lauderdale Broker Sentenced to More than Six Years in Prison for $16 Million Precious Metals and Securities Fraud SchemeRead the Press Release
Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office and Michael J. De Palma, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI) announced that Salvatore Colonna, 69, of Fort Lauderdale, was sentenced on November 30, 2018, to 78 months in prison for his role in a $16 million precious metals and securities fraud scheme and ordered to pay approximately $13 million in restitution.
According to court record, including the plea documents, from January 2010, through October 2013, the defendant worked as a broker for Liberty International Financial Services and related entities (together, “Liberty”) in Fort Lauderdale, Florida. During that period, Colonna agreed on a scheme with other co-conspirators to obtain money from investors by means of materially false and fraudulent pretenses, including (a) that investors’ money would be used to buy precious metals; (b) that investors would receive substantial dividends on Liberty investments; and (c) that the defendant would only take a five to fifteen percent commission on investments. In truth and in fact, as the defendant knew, Liberty was not using investor money to buy precious metals, Liberty investments would not pay substantial dividends, and Colonna knowingly took commissions on investors’ monies as high as forty percent.
According to the plea documents and statements at sentencing, from January 2010, through October 2013, investors sent over $16 million in funds to Liberty. Liberty returned only around $3 million to investors. A substantial percentage of the money was used to pay the founders of Liberty and Colonna received approximately $2.4 million in victims’ funds.
U.S. Attorney Fajardo Orshan commended the investigative efforts of the FBI and IRS-CI in this matter. The case was prosecuted by Assistant U.S. Attorney Michael N. Berger.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov.
Former Washington University Official Admits to Embezzling from Medical SchoolRead the Press Release
St. Louis, MO – Barbara “Basia” Skudrzyk, a/k/a Barbara “Basia” Najarro, 38, of St. Louis, pleaded guilty to three counts of mail fraud.
Skudrzyk was employed as the Business Director for the Division of Medical Education at Washington University. According to the plea agreement, beginning in May 2010 and continuing through July 31, 2018, Skudrzyk defrauded Washington University in St. Louis, Missouri of in excess of approximately $300,000 through various means. On many occasions, Skudrzyk hired contractors and other service providers to perform personal services for her benefit, and at her personal residence. She would then create, submit and approve false invoices and false W-9 tax forms for these contractors and other service providers to make it appear as if they had performed work for the Division of Medical Education when they had not. Skudrzyk approved and processed payment to these contractors and other service providers from Washington University’s funds. These service providers included a moving company, a home cleaning service, a divorce law firm, residential painters and construction companies, a jewelry boutique, a babysitter, and various other vendors and contractors. Further, Skudrzyk purchased VISA gift cards at the Washington University bookstore, forging another Washington University employee’s signature on the receipts and charging the purchases to the Division of Medical Education. Skudrzyk then used the VISA gift cards for her own personal use, including for purchases at restaurants, a jewelry store, and a number of other retailers. Additionally, Skudrzyk falsified and changed invoices from two different travel companies for airline flights for herself and her family to such places as Krakow, Poland, Munich, Germany, Bangkok, Thailand, Toronto, Canada, West Palm Beach, Florida, New York City, and Dallas and San Antonio, Texas. Skudrzyk submitted, processed and approved these falsified invoices in order to get Washington University to pay for the personal trips.
Judge Sippel accepted Skudrzyk’s plea and deferred sentencing until March 8, 2019. The maximum penalty for mail fraud is 20 years in prison and a $250,000 fine. Restitution to the victim is also mandatory. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case is being investigated by the Postal Inspection Service and the Federal Bureau of Investigation with the assistance and cooperation of Washington University. Assistant U.S. Attorney Hal Goldsmith is handling the case for the U.S. Attorney’s Office.
Former Orleans Parish Sheriff’s Office Employee Pleads GuiltyRead the Press Release
NEW ORLEANS – U.S. Attorney Peter G. Strasser announced that CIBONEY PARKER, age 25, of New Orleans, pleaded guilty today before United States District Judge Nannette Jolivette Brown, to charges relating to an attempt to introduce controlled substances into the Orleans Justice Center.
According to court documents, Elton Williams, an inmate at the Orleans Justice Center jail, solicited the assistance of his relative, CIBONEY PARKER (a civilian employee of the Orleans Parish Sheriff’s Office), and two friends, Brittany Theophile and Rachelle Kelson, to smuggle drugs into the jail. Theophile and Kelson provided the drugs, including marijuana, heroin, and Tramadol, to PARKER during her work shift. The Orleans Parish Sheriff’s Office Intelligence Division became aware of the plan through audio and visual surveillance and detained PARKER before she could gain access to Williams. Williams, Theophile, and Kelson pleaded guilty and await sentencing.
PARKER faces a maximum term of imprisonment of five (5) years, a $250,000 fine and, upon release from imprisonment, will serve a three (3) year term of supervised release. Sentencing before Judge Brown is scheduled for March 7, 2019.
U.S. Attorney Peter Strasser praised the work of the FBI and the Orleans Parish Sheriff’s Office Investigative Service Bureau. Assistant United States Attorney Tracey Knight is in charge of this prosecution.
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Former Bank Manager Who Embezzled $879K from CD Accounts is SentencedRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that STEPHEN CARBONELLA, 60, of Hamden, was sentenced today by U.S. District Judge Robert N. Chatigny in Hartford to 21 months of imprisonment, followed by three years of supervised release, for embezzling funds from Webster Bank Corporation, where he served as bank manager of the Orange branch office. Judge Chatigny also ordered Carbonella to serve the first six months of his supervised release in home confinement.
According to court documents and statements made in court, between approximately 2003 and 2017, Carbonella withdrew $879,016.48 from approximately 20 account holders’ certificate of deposit (CD) accounts at Webster Bank, without the knowledge or consent of the account holders, and used the embezzled funds for his own purposes. He also took steps to conceal his misconduct, including by forging signatures and falsifying documents.
Judge Chatigny ordered Carbonella to pay full restitution.
On September 12, 2018, Carbonella pleaded guilty to one count of embezzlement by a bank officer or employee.
Carbonella, who is released on a $200,000 bond, is required to report to prison on January 29, 2019.
This matter was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant U.S. Attorney John T. Pierpont, Jr.
Florida Woman Sentenced to Two Years of Probation for Credit Card Fraud OffensesRead the Press Release
Portland, Maine: United States Attorney Halsey B. Frank announced that Zulairam Ramos, 31, of Orlando, Florida, was sentenced today in U.S. District Court by Chief Judge Nancy Torresen to two years of probation with 120 hours of community service for access device fraud and conspiracy to commit access device fraud. Ramos pleaded guilty on January 3.
Court records show that between October 2016 and March 2017, Ramos and three co-defendants used stolen credit and debit card numbers belonging to Maine residents to fraudulently purchase merchandise and gift cards at Maine stores.
Ramos’s co-defendants were sentenced on September 5. Alejandro Caal was sentenced to 10 months in prison, Adrian Teruel was sentenced to 12 months, and Olga Valido was sentenced to nine months. The defendants were also ordered to serve three years of supervised release upon their release from prison.
The case was investigated by the Falmouth, Augusta, Scarborough, South Portland and Winthrop Police Departments, the Cumberland County Sheriff’s Office, and the U.S. Secret Service.
Florida Home Health Services Company Owner and Co-Conspirator Plead Guilty for Roles in $8.6 Million Health Care Fraud SchemeRead the Press Release
Two Miami, Florida residents pleaded guilty today to health care fraud charges for their roles in an $8.6 million health care fraud scheme.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office, Special Agent in Charge Shimon R. Richmond of the Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office and Miami Air and Marine Branch Director Martin G. Wade of the U.S. Customs and Border Protection (CBP) Air and Marine Operations made the announcement.
Alexander Ros Lazo, 54, an owner and operator of T.L.C. Health Services Inc., a home health agency, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Jose E. Martinez of the Southern District of Florida. Misleidy Ibarra, 46, also of Miami, a licensed massage therapist, pleaded guilty before Judge Martinez to one count of conspiracy to commit health care fraud. Sentencing has been scheduled for Feb. 5, 2019 before Judge Martinez.
As part of his guilty plea, Ros Lazo admitted that he paid kickbacks and bribes to his co-conspirators in exchange for home health services prescriptions and the referral of Medicare beneficiaries to T.L.C. Health Services, a company based in Miami. He further admitted that he and his co-defendant, Misleidy Ibarra, agreed with their co-conspirators to commit health care fraud by arranging for Ibarra to render therapy services on behalf of licensed therapists despite the fact that they knew she was not licensed to render the physical and occupational therapy services to the Medicare beneficiaries and billed Medicare for those services. As part of her guilty plea, Ibarra admitted to conspiring with Ros Lazo to commit health care fraud by rendering physical therapy services to Medicare beneficiaries when Ibarra was not licensed to provide these services. Ros Lazo admitted that as a result of the fraudulent claims, Medicare paid $8.6 million in benefits that it otherwise would not have. Ros Lazo was charged along with Ibarra in an indictment returned on June 21, 2018.
The case was investigated by the FBI, HHS-OIG and CBP Air and Marine Operations. Trial Attorney Alexander Kramer of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Yisel Valdes of the Southern District of Florida are prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.