Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
Tuesday 9 October 2018
Texas Hospital Administrator Convicted of Health Care Fraud for Role in $16 Million Medicare Fraud SchemeRead the Press Release
A federal jury convicted a Houston-area hospital administrator on Friday for his role in a $16 million Medicare fraud scheme.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Dallas Region, Special Agent in Charge D. Richard Goss of IRS Criminal Investigation’s (IRS-CI) Houston Field Office, and Unit Division Chief Stormy Kelly of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.
Starsky D. Bomer, 45, of Harris County, Texas, was convicted of one count of conspiracy to pay and receive healthcare kickbacks, two counts of violating the Anti-Kickback Statute, and one count of conspiracy to commit health care fraud following a five-day trial. Sentencing has been scheduled for Jan. 28, 2019 before U.S. District Judge Vanessa D. Gilmore of the Southern District of Texas, who presided over the trial.
According to evidence presented at trial, from 2011 until February 2013, Bomer and others engaged in a scheme to defraud Medicare by submitting to Medicare, through Atrium Medical Center (Atrium) and Pristine Healthcare (Pristine), approximately $16 million in false and fraudulent claims for partial hospitalization program (PHP) services. A PHP is a form of intensive outpatient treatment for severe mental illness.
The evidence presented at trial showed that Bomer, the hospitals’ chief financial officer and chief operating officer, orchestrated a scheme by which he and others paid illegal bribes and kickbacks to group home owners and patient recruiters in exchange for sending Medicare patients to Atrium and Pristine’s PHPs. Bomer disguised bribes and kickbacks as salary payments and transportations payments to group home owners in exchange for patient referrals, the evidence showed. In addition, evidence presented at trial showed that Bomer knew that most of the patients admitted to Atrium and Pristine’s PHPs did not qualify for and were never provided legitimate partial hospital services.
Evidence at trial demonstrated that Bomer and his coconspirators billed Medicare over $16 million for psychiatric treatment purportedly provided to PHP patients at Atrium and Pristine’s PHPs.
The case was investigated by the HHS-OIG, FBI, IRS-CI, OPM-OIG, and MFCU. The case was prosecuted by Trial Attorneys Jason Knutson, Aleza Remis, and Gerald M. Moody Jr. of the Criminal Division’s Fraud Section.
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, now operating in 12 cities across the country, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.
St. Thomas Woman Sentenced to Prison for Contempt of CourtRead the Press Release
St. Thomas, USVI – Nilda N. Morton, 33, was sentenced on Thursday to 37 months in prison, to be run consecutively from any other sentence she is currently serving, for her contempt of Court for her refusal to testify in a revocation proceeding, after being ordered by the Court to respond to questioning by the prosecution, United States Attorney Gretchen C.F. Shappert announced. District Judge Curtis V. Gomez also sentenced Morton to three years of supervised release, also consecutive, 400 hours of community service, a $2,000 fine, and a $100 special assessment.
On April 30, 2018, Morton was found guilty, by a jury of failing to answer questions of the prosecutor and the judge after being advised on numerous occasions that the 5th Amendment Right against self-incrimination was not applicable in her case. According to court testimony, Ms. Morton was called to testify as a witness in a revocation proceeding surrounding events directly related to her own criminal narcotics case, a case in which she had previously pled guilty and signed an agreement to cooperate with the government. As one of the conditions of her cooperation agreement, she agreed to testify fully and truthfully about her knowledge and participations in any crimes. During the revocation hearing, she chose to invoke her 5th Amendment privilege as to other questions directly pertaining to her underlying case – a privilege she had previously waived by her guilty plea and cooperation agreement.
This case was prosecuted by Assistant United States Attorney Delia Smith.
St. Thomas Man Covicted by a Federal Jury is Sentenced for Cocaine Smuggling through the Cyril E. King AirportRead the Press Release
St. Thomas, USVI – Gerald W. Mercer, 42, was sentenced on Thursday to 191 months in prison for his role in a conspiracy to possess with intent to distribute cocaine, United States Attorney Gretchen C.F. Shappert announced. District Judge Curtis V. Gomez also sentenced Mercer to five years of supervised release, 400 hours of community service, and a $100 special assessment.
On June 1, 2018, Mercer was found guilty, by a federal jury sitting in St. Thomas. According to trial testimony, Mercer was a member of a large-scale cocaine smuggling organization that operated out of the Cyril E. King Airport between January of 2012 and November of 2016. The drug organization recruited a member of the Virgin Islands Police Department’s Executive Security Unit (ESU) who used his law enforcement credentials to bypass security screening at Cyril E. King Airport. The conspiracy smuggled at least 75 kilograms of cocaine from St. Thomas to Miami and Fort Lauderdale. The officer who transported the drugs was to be paid $2,500 per kilogram. According to trial testimony, Mercer would travel to the officer’s residence and provide him with a cellular phone, the first half of the payment, and a duffle bag containing the cocaine. Mercer would instruct the officer to purchase airline tickets and hotel reservations. While at the residence, Mercer would prepare and pack the cocaine (an average of 5 kilograms per trip) in the officer’s carryon bag. Upon arrival in Florida, the officer would receive the second half of his payment.
This case was investigated by Homeland Security Investigations, the Federal Bureau of Investigations and the U.S. Drug Enforcement Administration. It was prosecuted by Assistant United States Attorney Delia Smith.
South Jersey Man Sentenced to 78 Months in Prison for Stealing Car, Robbing Three BanksRead the Press Release
CAMDEN, N.J. – A Vineland, New Jersey, man was sentenced today to 78 months in prison for stealing a car and using it as part of a South Jersey bank robbery spree in September and October 2016, U.S. Attorney Craig Carpenito announced.
Nathan L. Wallace, 29, previously pleaded guilty before U.S. District Judge Renée Marie Bumb to an information charging him with three counts of bank robbery. Judge Bumb imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Wallace admitted stealing a 2003 Chrysler Sebring on Sept. 22, 2016, by threatening the victim with a toy revolver resembling an actual firearm. Wallace also admitted taking the Sebring on Sept. 24, 2016, to a BB&T Bank in Buena Vista Township, New Jersey, where he used the toy revolver to threaten bank employees and demand money. After taking cash from the employees, Wallace fled in the Sebring.
Wallace also admitted traveling in the same stolen Sebring with Quintin L. Jones, 36, of Vineland, to rob a Newfield National Bank in Newfield, New Jersey, on Oct. 7, 2016, and a Cape Bank in Upper Deerfield Township, New Jersey, on Oct. 11, 2016. During both robberies, one of the defendants used a toy revolver to threaten bank employees and steal money before they both fled in the stolen Searing. Wallace admitted that he and Jones set fire to the Sebring on Oct. 15, 2016, in order to destroy evidence of the robberies.
In addition to the prison term, Judge Bumb sentenced Wallace to three years of supervised release and ordered him to pay restitution of $33,206.
Jones pleaded guilty on Nov. 8, 2017, and was sentenced by Judge Bumb on Sept. 12, 2018, to 100 months in prison.
U.S. Attorney Carpenito credited special agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, the FBI’s South Jersey Resident Agency, under the direction of Special Agent in Charge Michael Harpster in Philadelphia, the N.J. State Police, under the direction of Acting Superintendent Col. Patrick J. Callahan, as well as the Vineland Police Department, the Hamilton Township Police Department, the Newfield Police Department, the Cumberland County Prosecutor’s Office, and the Salem County Prosecutor’s Office, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Gabriel J. Vidoni of the U.S. Attorney’s Office Criminal Division in Camden.
Defense counsel: Maggie F. Moy Esq., Camden
Solon woman sentenced to nearly three years in prison for embezzling $156,000 from someone entrusted to her careRead the Press Release
A Solon woman was sentenced to nearly three years in federal prison for embezzling $156,000 from a fund established on behalf of someone entrusted to her care.
Teresita Sidoti, 52, was sentenced to 30 months in prison. She was ordered to pay $156,949 to the victim’s family and $27,797 to the Internal Revenue Service. She pleaded guilty earlier this year to bank fraud and filing false tax returns.
Sidoti worked as a caregiver for Noel Zugay and was the trustee of the Noel Zugay Supplemental Needs Trust. From 2009 through 2015, Sidoti devised a scheme to defraud the trust of funds held at Huntington Bank for Zugay’s benefit. Sidoti used those funds for her personal benefit. She also diverted deposits that should have been to the trust account into her own personal account, according to the criminal information.
In total, Sidoti embezzled approximately $156,949, according to the information.
Sidoti also failed to claim some of this income on her tax returns between 2011 and 2014, according to court documents.
This case is being prosecuted by Assistant U.S. Attorney Matthew B. Kall, following an investigation by the FBI and IRS – Criminal Investigations.
Second Florida Man Admits to Trafficking Kilos of Cocaine into Rhode Island from Puerto RicoRead the Press Release
PROVIDENCE – The second of two Florida men charged with trafficking more than 5 kilograms of cocaine through the U.S. Postal Service into Rhode Island from Puerto Rico pleaded guilty in U.S. District Court in Providence today.
Appearing before U.S. District Court Judge John J. McConnell, Jr., Gabriel Conception, 28, of Kissimmee, FL, pleaded guilty to conspiracy to distribute and to possess with the intent to distribute 500 grams or more of cocaine, announced United States Attorney Stephen G. Dambruch, Inspector in Charge of the U.S. Postal Inspection Service Joseph W. Cronin, and Ann C. Assumpico, Superintendent of the Rhode Island State Police.
Conception admitted to the Court that he conspired with Rinaxo Rufino, 34, of Miramar, FL, to receive at least three multi-kilogram shipments of cocaine shipped through the U.S. Postal Service from Puerto Rico to residences in Central Falls and Cumberland. Each shipment contained approximately three kilograms of cocaine.
The packages were intercepted and seized by U.S. Postal Inspectors prior to delivery to the intended recipients. The two men were arrested on August 26, 2017, by U.S. Postal Inspectors and members of the Rhode Island State Police High Intensity Drug Trafficking Area Task.
Rufino was arrested when he attempted to retrieve a package containing 3,029 grams of cocaine addressed to a Central Falls residence. U.S. Postal Inspectors identified cocaine in the package prior to delivery and removed the controlled substance. In its place inspectors placed similarly weighted non-contraband material. Concepcion was arrested moments later in the vicinity of the residence.
Additionally, as part of the investigation into Concepcion and Rufino’s drug trafficking activities, a package addressed for delivery to a residence in Cumberland that contained approximately 3007.2 grams of cocaine was seized by Postal Inspectors on August 25, 2017. Another package addressed for delivery to a Central Falls residence which contained approximately 3006.9 grams of cocaine was seized by Postal Inspectors on August 28, 2017.
Rinaxo Rufino is scheduled to be sentenced by U.S. District Court Judge John J. McConnell, Jr., on December 12, 2018. Gabriel Concepcion is scheduled to be sentenced on January 9, 2019.
The cases are being prosecuted by Assistant U.S. Attorney Paul F. Daly, Jr.
###
San Diego Woman Charged in Federal Indictment Alleging Ponzi Scheme that Claimed to Offer Investments in Construction LoansRead the Press Release
SANTA ANA, California – A San Diego woman has been arrested on federal fraud and identity theft charges that allege she ran a multi-million dollar Ponzi scheme in which she solicited funds from investors by falsely claiming their money would be used to make short-term construction loans to other investors seeking to defer capital gains taxes through “1031 like-kind exchanges.”
Susan Margaret Werth, 57, was arrested by FBI special agents at her residence on October 4. Later that day, after being transported to United States District Court in Santa Ana, Werth entered a not guilty plea to charges contained in a four-count indictment returned on October 3 by a federal grand jury in Los Angeles.
The indictment charges Werth with two counts of wire fraud and two counts of aggravated identity theft related to the alleged scheme she ran out of two San Diego-based companies, Commercial Exchange Solutions, Inc. (CES) and Exchange Solutions Company, Inc. (ESC).
Werth and others working at her direction allegedly solicited millions of dollars from victims by falsely claiming their funds would be used to provide short-term construction loans to clients who were engaged in like-kind exchanges of commercial properties. According to the indictment, a 1031 like-kind exchange is a method of deferring the payment of capital gains taxes pursuant to section 1031 of the tax code in which a taxpayer sells an investment property and reinvests the proceeds to buy a like-kind investment property of equal or greater value.
Werth falsely promised victims that their investments were risk-free and 100 percent guaranteed by CES’s “collateral account” at Wells Fargo Bank, according to the indictment. Werth allegedly lulled victims by creating fictitious Wells Fargo bank statements to show that CES had an account with a balance of $7.2 million, as well as fabricating emails she claimed were from an employee of Wells Fargo Asset Management. Werth also falsely told investors that her companies were investing in properties that had been evaluated by the international valuation firm of Duff & Phelps.
In return for their short-term investments of 30 to 90 days, Werth promised victims a rate of return of at least 15 percent.
According to the indictment, “[i]n truth and in fact, as defendant Werth then well knew, the representations described above were false and fraudulent in that defendant Werth operated CES/ESC as a Ponzi scheme, in which the vast majority of its incoming revenue was comprised of victim-investor funds, which defendant Werth used to repay prior victim-investors, to pay her personal expenses, to withdraw cash, to repay investors’ principal, and to make fictitious profit payments to some investors.”
The identity theft charges stem from communications Werth allegedly sent under the names of the Well Fargo employee and an employee of Duff & Phelps
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If she were to be convicted of the charges in the indictment, Werth would face a statutory maximum sentence of 20 years in federal prison for each of the wire fraud charges, as well as a mandatory two-year consecutive sentence for identity theft.
At her arraignment last week, Werth was released on a $100,000 bond. She was ordered to stand trial in United States District Court in Santa Ana on November 27.
On October 1, the Securities and Exchange Commission filed a civil complaint in this matter that alleges Werth raised approximately $26 million in her Ponzi scheme, and spent $2 million to fund her personal lifestyle.
The case against Werth is being investigated by the Federal Bureau of Investigation.
This matter is being prosecuted by Assistant United States Attorney Valerie Makarewicz of the Tax Division.
Roswell Man Charged with Using Interstate Communications to Threaten to Injure an IndividualRead the Press Release
ALBUQUERQUE – A U.S. Magistrate Judge sitting in Las Cruces, N.M., today ordered that Kory Dwayne Adams, 35, of Roswell, N.M., remain in custody pending trial on charges of using interstate communications to threaten to injure another individual. Trial has yet to be scheduled.
The FBI arrested Kory Adams on Sept. 28, 2018, for allegedly posting a message on social media which threatened to injure an individual. According to the complaint, Kory Adams’ brother, Dain Justin Adams, 37, also of Roswell, was arrested on Sept. 19, 2018, on a federal criminal complaint alleging child pornography offenses. On Sept. 25, 2018, the FBI received information that a social media account allegedly belonging to Kory Adams had posted a threatening communication directed at a particular individual and the threat allegedly appeared to have been related to Dain Adams’ child pornography charges.
If convicted of the charges in the criminal complaint, Kory Adams faces a statutory maximum penalty of five years in prison. Charges in criminal complaints are merely accusations, and defendants are presumed innocent unless found guilty beyond a reasonable doubt.
This case was investigated by the Roswell office of the FBI and is being prosecuted by Assistant U.S. Attorneys Dustin Segovia and Marisa A. Ong.
Roswell Man Charged with Federal Methamphetamine Trafficking OffenseRead the Press Release
ALBUQUERQUE – A U.S. Magistrate Judge sitting in Las Cruces, N.M., found probable cause to support a criminal complaint charging Alfonso Vazquez, 31, of Roswell, N.M., with a methamphetamine trafficking offense. The charge arises from the distribution of approximately 56.5 grams of methamphetamine to an undercover law enforcement agent. Vazquez was remanded into custody pending trial, which has yet to be scheduled.
According to the criminal complaint, Vazquez distributed approximately 56.5 grams of methamphetamine to an undercover agent with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) on Aug. 10, 2018, in Chaves County, N.M.
The penalty for a conviction on the offense charged in the criminal complaint is a statutory minimum penalty of five years and a maximum of 40 years in federal prison. Charges in criminal complaints are merely accusations and defendants are presumed innocent unless found guilty in a court of law.
This case was investigated by the Las Cruces offices of the ATF, DEA and Homeland Security Investigations and the HIDTA Chaves County Metro Narcotics Task Force. Assistant U.S. Attorney Sarah M. Davenport is prosecuting the case.
The HIDTA Chaves County Metro Narcotics Task Force is comprised of investigators from the Roswell Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, the FBI and the Chaves County Sherriff’s Office. The High Intensity Drug Trafficking Areas (HIDTA) program was created by Congress with the Anti-Drug Abuse Act of 1988. HIDTA is a program of the White House Office of National Drug Control Policy (ONDCP) which provides assistance to federal, state, local and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States and seeks to reduce drug trafficking and production by facilitating coordinated law enforcement activities and information sharing.
Romanian national accused of being leader of an international cyber fraud ring that used malware to steal $4 million after taking people’s passwords, personal and bank informationRead the Press Release
A Romanian national was returned to the United States Friday to face federal charges that accuse him of being the leader of an international cyber fraud ring that used malware to steal in excess of $4 million after taking people’s passwords, personal identifying information, and bank account information.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Justin E. Herdman of the Northern District of Ohio, Peter Elliot of the U.S. Marshals Service, Stephen D. Anthony of the FBI and Chief Kevin Bielozer of the Westlake Police Department made the announcement.
Romeo Vasile Chita, 38, was charged in a four-count indictment unsealed in U.S. District Court in Cleveland, Ohio. The charges include racketeering, wire fraud conspiracy, conspiracy to launder money and conspiracy to traffic in counterfeit services.
Eight other defendants were named in the indictment unsealed today. Two defendants—Daniel Mihai Radu, 39; and Manuel Tudor, 37, —have already been extradited from Romania and are awaiting trial in Cleveland. The other five defendants remain at large.
“Romeo Vasile Chita allegedly led a multinational criminal enterprise that stole sensitive personal data through deceptive phishing emails and organized fraudulent online auctions, causing millions of dollars in losses to innocent victims,” said Assistant Attorney General Benczkowski. “The Criminal Division will continue to work with our law enforcement partners, both domestic and international, to aggressively disrupt and dismantle international cyber criminal organizations that victimize our citizens and businesses.”
“This defendant led an international operation that used fraudulent emails and the internet to scam hard-working people out of their savings,” said U.S. Attorney Herdman. “It is gratifying that this defendant will be forced to answer the charges filed against him.”
According to the indictment, Chita was based in Romania and led a racketeering enterprise that operated in the United States, Romania, Canada, Croatia, Latvia, Hungary, Bosnia, China, Jordan, Malaysia and elsewhere. The goal of the enterprise was to generate money through various criminal acts, including wire fraud, trafficking in counterfeit services, and money laundering. It began operating as early as 2007.
Among other things, Chita’s group sent “phishing” emails purporting to be from the Better Business Bureau, the IRS, U.S. Tax Court, the National Payroll Records Center, and others. When a victim clicked on a link in a fraudulent email, specialized malware incorporating a “keylogger” was installed onto the victims’ computers, allowing members of the criminal enterprise to capture sensitive and confidential information, including the victims’ bank account information.
The conspirators, including Chita, then transmitted the sensitive information to each other and others for the purpose of fraudulently withdrawing funds from the victims’ bank accounts. The stolen funds were then transferred to specific accounts in the United States, where the money was withdrawn and transferred to other members of the conspiracy. The conspirators used their own network of accounts and “money mules” to transfer hundreds of thousands of dollars at a time to conceal the origin of the money.
The defendants also are alleged to have engaged in an extensive campaign of online auction fraud, placing ads for non-existent cars and other expensive items on eBay, Craigslist, Autotrader.com, and other websites. According to the indictment, victims were tricked into wiring thousands of dollars to money mules to purchase these vehicles. The money mules then transferred and laundered the proceeds for the benefit of the enterprise.
Chita managed and facilitated the various schemes, as well as directing other conspirators to launder fraudulently obtained money.
This case was investigated by the U.S. Marshals Service, the FBI, the Westlake Police Department and the U.S. Secret Service. The case is being prosecuted by Senior Counsel Brian L. Levine of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Duncan Brown of the Northern District of Ohio. Valuable assistance is being provided by the Justice Department’s Office of International Affairs. The Justice Department thanks the government of Romania for its assistance in this matter.
The prosecution of Chita prosecution is timely, as it occurs during National Cyber Security Awareness Month (NCSAM). NCSAM – observed every October – was created as a collaborative effort between government and industry to ensure every American has the resources they need to stay safer and more secure online. The Department of Justice encourages citizens to take advantage of cybersecurity tips and information provided by law enforcement to ensure their personal information is secured.
An indictment is merely an allegation, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Reno Man Sentenced to 40 Years in Prison for Sexually Exploiting an InfantRead the Press Release
RENO, Nev. – A Reno resident who sexually exploited an infant and distributed child pornography over the Internet was sentenced today by U.S. District Judge Howard D. McKibben to serve 480 months in federal prison to be followed by lifetime supervision, announced U.S. Attorney Dayle Elieson for the District of Nevada, Special Agent in Charge Aaron C. Rouse for the FBI’s Las Vegas Division, Chief Jason Soto for the Reno Police Department, and Sheriff Chuck Allen for the Washoe County Sheriff’s Office.
Derrick Joseph Rady, 37, previously pleaded guilty to sexual exploitation of a minor and distribution of child pornography. Upon completion of his prison term, he will be required to register as a sex offender under the Sex Offender Registration and Notification Act (SORNA).
The case was initiated when Facebook and Google identified a Reno resident, later determined to be Rady, who possibly possessed child pornography to the National Center for Missing and Exploited Children (NCMEC) for investigation by law enforcement. Members of the Northern Nevada Child Exploitation Task Force executed search warrants at Rady’s residence. The search warrant revealed that Rady possessed approximately 900 images and videos of child pornography. Investigators also determined that Rady used a cell phone to take sexually explicit photos of an infant and shared images of a minor engaging in sexually explicit conduct.
The investigation was conducted by the Northern Nevada Child Exploitation Task Force, which is comprised of members of the FBI, the Reno Police Department, the Washoe County Sheriff’s Office, and the Nevada Attorney General’s Office. The case was prosecuted by Assistant U.S. Attorney Sue Fahami.
If you have information regarding possible child sexual exploitation, make a report to NCMEC’s CyberTipline at www.cybertipline.org.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood and for information about internet safety education, please visit www.justice.gov/psc.
###
Registered Sex Offender Sentenced to 18 Years in Prison for Receipt of Child PornographyRead the Press Release
United States Attorney Erica H. MacDonald announced the sentencing of PAUL LEWIS AXELSON, 42, a registered sex offender, to 216 months in prison on one count of receipt of child pornography. AXELSON, who pleaded guilty on February 13, 2018, was sentenced today before U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minnesota.
According to his guilty plea and documents filed in court, AXELSON was convicted in 2008 in Dakota County, Minnesota of third degree criminal sexual conduct and possession of child pornography. In April 2016, while on probation for the 2008 conviction, AXELSON used file sharing software to download, collect, and distribute child pornography. A forensic review of AXELSON’S computer revealed that he possessed more than 160,000 image and video files containing child pornography.
This case was brought as part of Project Safe Childhood, a nationwide initiative, launched in May 2006, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov. In addition, if you know of any child who may have been a victim of exploitation, please contact the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com.
This case is the result of an investigation conducted by the Federal Bureau of Investigation and the Minneapolis Police Department.
This case was prosecuted by Assistant U.S. Attorney Carol M. Kayser.
Defendant Information:
PAUL LEWIS AXELSON, 42
Hastings, Minn.
Convicted:
- Receipt of child pornography, 1 count
Sentenced:
- 216 months in prison
- 10 years of supervised release
# # #
Additional news available on our website.
Follow us on Twitter and Facebook.
United States Attorney’s Office, District of Minnesota: (612) 664-5600
Queensbury Man Sentenced to 180 Months for Child Pornography OffensesRead the Press Release
ALBANY, NEW YORK – Chad Knowlton, age 24, of Queensbury, New York, was sentenced today to 180 months in prison for distribution, receipt, and possession of child pornography.
The announcement was made by United States Attorney Grant C. Jaquith and James N. Hendricks, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI).
Senior United States District Judge Thomas J. McAvoy also sentenced Knowlton to a lifetime of supervised release, to begin following his term of imprisonment. Knowlton will also be required to register as a sex offender upon his release from prison.
Knowlton pled guilty on June 12, 2018. As part of his plea, Knowlton admitted using a custom-built desktop computer, equipped with peer-to-peer file-sharing software, to download and distribute child pornography. Knowlton also admitted to using a phone to download additional child pornography. Overall, Knowlton downloaded and retained over 1,000 images and videos depicting child pornography.
Knowlton also faces state charges alleging the sexual abuse of children in Warren County. He is innocent unless and until proven guilty of those charges.
This case was investigated by the FBI and the New York State Police, and was prosecuted by Assistant U.S. Attorney Emmet O’Hanlon.
Launched in May 2006 by the Department of Justice, Project Safe Childhood is led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.
Queens Man Pleads Guilty to Armed Bank Robbery and Weapons PossessionRead the Press Release
Earlier today, Leroy Scott, a resident of Queens, pled guilty at the federal courthouse in Central Islip, New York, to armed bank robbery and a related firearms possession charge. When sentenced, Scott faces up to 25 years’ imprisonment for the bank robbery and a minimum of seven years’ imprisonment and up to life imprisonment for the firearms charge.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the guilty plea.
According to court filings and prior public proceedings in the case, on August 21, 2017, Scott acted as a lookout for a co-conspirator, Pedro Benitez, who entered the Bridgehampton Savings Bank in Hewlett, New York, ordered customers and employees to the floor at gunpoint and demanded money from bank employees. Another co-conspirator, Troy Tavares, waited outside in a vehicle. Benitez fled the bank with over $12,000 and Tavares drove Benitez to a nearby location where they met up with Scott and another co-conspirator to split the proceeds. At his guilty plea proceeding, Scott admitted that he had also participated in two additional robberies that the crew committed during the summer of 2017, both in Nassau County. In each of those robberies, Scott had assisted in the planning and acted as a lookout for Benitez. In total, the robbery crew stole over $70,000 from four banks between July and September of 2017.
Scott is the last of the co-defendants in this bank robbery crew to plead guilty in this case. The government’s case is being prosecuted by Assistant United States Attorney Michael Maffei.
The Defendant:
LEROY SCOTT
Age: 28
Far Rockaway, New YorkE.D.N.Y. Docket No. 17-CR-572 (S-1) (JS)
Psychiatrist Pleads Guilty to Healthcare Fraud and Wire FraudRead the Press Release
Abingdon, VIRGINIA – A former psychiatrist who previously worked in Lebanon, Virginia pleaded guilty last week to healthcare fraud and wire fraud, United States Attorney Thomas T. Cullen and Virginia Attorney General Mark Herring announced.
Alfredo Cervantes, 62, pleaded guilty to one count of health care fraud and one count of wire fraud. As a condition of his guilty plea, Cervantes, whose medical license and DEA registration were revoked in 2015, agreed never to practice medicine again.
“Protecting the health and safety of patients, as well as the integrity of our health-care system, is a priority of the Department of Justice,” U.S. Attorney Cullen stated. “We will continue to investigate and prosecute physicians who violate the sacred trust placed in them by their patients, the public, and health-care officials. I am grateful for the hard work and dedication of the Virginia Attorney General’s Office and the Department of Health and Human Services in bringing this doctor to justice.”
“This was a violation of the law and of the duty of care that this doctor owed to one of his patients,” said Attorney General Mark Herring. “Cervantes’ stole from taxpayers and his unethical behavior could have jeopardized the health and welfare of a person in his care. I appreciate all the hard work done by my Medicaid Fraud Unit, the HHS Inspector General, and the U.S. Attorney’s Office to put a stop to this unlawful and unethical conduct.”
“Protecting patients from harm and the Medicare and Medicaid Programs from fraudulent billings is a top priority said Maureen R. Dixon, Special Agent in Charge for the Philadelphia Regional Office of the Department of Health and Human Services, Office of the Inspector General (HHS-OIG). HHS-OIG will work with our fellow law enforcement partners to aggressively investigate physicians who would cause harm to our beneficiaries or steal from US Taxpayers.”
According to evidence presented at last week’s guilty plea hearing, Cervantes was employed by Mountain States Medical Group and Russell County Medical Center as a psychiatrist. In February 2012, Cervantes began a sexual relationship with one of his patients, which continued until February 18, 2014, when Cervantes ended the relationship and the patient attempted suicide. While that relationship was ongoing, Cervantes purchased alcohol for her and encouraged her to drink with him, despite the fact that he was prescribing her medications for which alcohol is contraindicated. During that time, Cervantes billed United Healthcare in the amount of $1,508 for psychiatric care of that patient, and caused Virginia Medicaid to be fraudulently billed $9,313 for prescription medications he wrote for that patient, when no legitimate psychiatric care of the patient was occurring.
Cervantes will be sentenced on January 4, 2019 at 10:30 a.m. He faces up to 30 years in prison and up to $500,000 in fines.
This case was investigated by the Department of Health and Human Services Office of Inspector General and the Virginia Office of the Attorney General’s Medicaid Fraud Control Unit.
Special Assistant United States Attorney and Virginia Assistant Attorney General Janine Myatt and Assistant United States Attorney Zachary T. Lee are prosecuting the case for the United States.
Project Charleston -- Statement of United States Attorney Mike StuartRead the Press Release
CHARLESTON, W.Va. – United States Attorney Mike Stuart issued the following statement this morning during a press conference held at the Robert C. Byrd United States Courthouse in Charleston:
Remarks as prepared for delivery
“Good morning.
Attorney General Sessions and this Administration is wholly committed to working with our federal, state and local partners to ensure the safety of our streets, our families and our children. Frankly, we will no longer tolerate drug dealers, drug traffickers, violent criminals, or illegal guns on the street of the City of Charleston.
Our goal is simple -- To work with our federal, state and local partners to ensure safe streets and safe neighborhoods. A basic human right is to live safely in your home and your community. We intend to focus intense resources to ensure the streets of the West Side of Charleston are as safe as any neighborhoods in our state.
In what we are calling, “PROJECT CHARLESTON”, I have ordered a SURGE of federal resources and priorities to clean out violent elements and drugs from the West Side of Charleston. The instructions to my team cannot be more clear – “Put violent criminals and bad guys behind bars, off our streets, and away from the public as long as possible.” Following similar and successful efforts in Huntington, since our aggressive efforts in Huntington were announced, we have seen dramatic decreases in violent crime, criminal activity and overdoses. We expect the same or greater results in Charleston.
I want to personally thank Mayor Danny Jones, Charleston Police Chief Steve Cooper, and Kanawha County Prosecutor Chuck Miller for their partnership in this effort. “PROJECT CHARLESTON” would not be possible without their commitment and support.
In addition to Mayor Jones, Chief Cooper, and Prosecutor Miller, with me today are:
Supervisory Special Agent Wes Quigley, FBI
Assistant Special Agent in Charge David Gourley, DEA
Resident Agent in Charge Adam Black, ATF
Deputy Chief Jason Beckett, Charleston Police Department
Chief Deputy Sheriff Greg Young, Kanawha County Sheriff’s Department
With the assistance and commitment of our federal partners, “PROJECT CHARLESTON” ensures that every federal resource possible will be dedicated to working with our state and local partners to “Take Back These Streets” from troublemakers and hoodlums and those that bring havoc, chaos and despair to the Greater Charleston area.
Project Safe Neighborhoods (PSN) 2.0 is a priority of this Administration and Attorney General Jeff Sessions. Today is an important next step in those efforts.
Thank you.”
Follow us on Twitter: @SDWVNews and @USAttyStuart
###
Postal Employee Charged with Stealing from the MailRead the Press Release
ERIE, Pa. - A resident of Clymer, New York has been indicted by a federal grand jury in Erie on a charge of theft of mail by postal employee, United States Attorney Scott W. Brady announced today.
The one-count indictment named Rebecca A. Hulett, 63, 225 Cabbage Hill Road, Clymer, New York, as the sole defendant.
According to the indictment presented to the court, on or about March 17, 2017, Hulett, who was a postal employee, stole a $20 Federal Reserve Note from the mail.
The law provides for a maximum total sentence of 5 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Marshall J. Piccinini is prosecuting this case on behalf of the government.
The United States Postal Service, Office of Inspector General, conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Pittsburgh Man Pleads Guilty in Heroin Trafficking ConspiracyRead the Press Release
PITTSBURGH - A resident of Pittsburgh, PA, pleaded guilty in federal court to a charge of conspiracy to distribute 100 grams or more of heroin, United States Attorney Scott W. Brady announced today.
Angelo Everett, age 35, pleaded guilty to one count before United States District Judge Nora Barry Fischer.
In connection with the guilty plea, the court was advised that Angelo Everett was indicted in connection with a DEA wiretap investigation. The intercepted wiretap communications revealed that Everett and others conspired to possess with intent to distribute and distribute over 100 grams of heroin between January and September 2016.
Judge Fischer scheduled sentencing for March 13, 2019. The law provides for a total sentence of not less than 10 years and up to life in prison, a fine of $8,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history of the defendant.
Pending sentencing, the court continued the defendant’s detention.
Assistant United States Attorney Tonya Sulia Goodman is prosecuting this case on behalf of the government.
The investigation was funded 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. United States Attorney Brady commended the Drug Enforcement Administration, Internal Revenue Service – Criminal Investigation, Pittsburgh Bureau of Police, and Pennsylvania State Police for the investigation leading to the successful prosecution of Everett.
Pittsburgh Man Admits Distributing Child PornographyRead the Press Release
PITTSBURGH, PA - A resident of Pittsburgh, PA pleaded guilty in federal court to distribution of material depicting the sexual exploitation of a minor, United States Attorney Scott W. Brady announced today.
James Clay Russell, 60, pleaded guilty to one count before United States District Judge Mark R. Hornak.
In connection with the guilty plea, the court was advised that on February 20, 2017, Russell distributed an image depicting the sexual exploitation of a minor under the age of 12 years using the website, "Chatstep.com". Chatstep.com detected the distribution activity and reported it to the National Center for Missing and Exploited Children, triggering an investigation of the Chatstep user. Russell was identified as the perpetrator and a search warrant was executed at his apartment, resulting in the seizure of computers and DVDs containing thousands of images and videos depicting the sexual exploitation of minors.
Judge Hornak scheduled sentencing for February 5, 2019, at 9:30 a.m. The law provides for a total sentence of not less than five years and not more than 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history, if any, of the defendant. Russell remains incarcerated pending the sentencing hearing.
Assistant United States Attorney Carolyn Bloch is prosecuting this case on behalf of the government.
The Pennsylvania Attorney General’s Office and the Department of Homeland Security, Homeland Security Investigations, conducted the investigation that led to the prosecution of Russell.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals, who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Owners of Home Healthcare Company Charged with Tax FraudRead the Press Release
BOSTON – The co-owners of a Boston-area home healthcare company were charged in federal court in Boston today for underreporting income to the IRS resulting in over $1 million in losses.
Hannah Holland, 51, of Quincy, and Sheila O’Connell, 33, of North Weymouth, were charged in an Information with one count of conspiracy to defraud the United States and three counts of aiding and assisting in the preparation of false tax returns.
According to court documents, Holland and O’Connell co-owned and operated Erin’s Own Home Healthcare Inc. (“Erin’s Own”), a home healthcare business. Between 2010 and 2014, Holland and O’Connell cashed over $3.5 million of Erin’s Own business checks through nominee bank accounts controlled by an unnamed individual. During this time period, Holland also personally cashed over $77,000 of Erin’s Own business receipts. None of these funds were ever reported to the IRS or accounted for in the company’s tax filings. Instead, Holland and O’Connell provided their tax preparer with a limited set of the financial records that did not cover the substantial amounts of business funds Holland and O’Connell diverted. As a result of the underreporting, Erin’s Own caused a loss of $1,126,112 to the IRS.
The conspiracy charge provides for a sentence of no greater than five years in prison, three years supervised release, and a fine $250,000. The charge of aiding and assisting in the preparation of false tax returns provides for a sentence of no greater than three years in prison, one year supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. Assistant U.S. Attorney Jordi de Llano, Deputy Chief of Lelling’s Economic Crimes Unit, and Trial Attorney Brittney Campbell of the Department of Justice’s Tax Division are prosecuting the case.
The details contained in the charging documents are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Newburyport Man Pleads Guilty to Dealing FirearmsRead the Press Release
BOSTON – A man with alleged ties to the Latin Gangsta’ Disciples street gang pleaded guilty today in federal court in Boston in connection with the sale of numerous firearms in and around Lawrence.
Jose Ilarraza, a/k/a “Kae-Kae,” 26, of Newburyport, pleaded guilty to dealing firearms without a license and conspiracy to deal firearms without a license. U.S. Senior District Court Judge Rya W. Zobel scheduled sentencing for Jan. 23, 2019. In February 2018, Ilarraza was charged along with Bryan Torres-Almanzar, a/k/a “Flex,” 19, and Eric Valentin, a/k/a “Jefe,” 22, both of whom previously pleaded guilty.
In September 2017, an individual who was working as a cooperating witness for federal investigators was approached by Ilarraza after Ilarraza heard that the cooperating witness was interested in obtaining firearms to send to the Dominican Republic. Ilarraza, who was incarcerated at the time on state charges of breaking and entering and resisting arrest, instructed the cooperating witness to contact Torres-Almanzar, who, according to Ilarraza, was heavily involved in firearms trafficking.
On six occasions between Sept. 12, 2017, and Oct. 19, 2017, another cooperating witness used Ilarraza’s tip to purchase firearms from Torres-Almanzar and Valentin. The cooperating witness was directed to put the proceeds of the first such sale into Ilarraza’s canteen account at the Middleton House of Corrections.
The charges of dealing in firearms without a license and conspiracy each provide for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling; Mickey D. Leadingham, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Boston Field Division; Lawrence Police Chief Roy P. Vasque; Essex County Sheriff Kevin F. Coppinger; Essex County District Attorney Jonathan W. Blodgett; Lowell Superintendent of Police Kelly Richardson; and Nashua (N.H.) Police Chief Andrew J. Lavoie made the announcement today.
New London Tax Preparer Pleads GuiltyRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, and Kristina O’Connell, Special Agent in Charge of IRS Criminal Investigation in New England, announced that YVES AUBOURG, 49, of New London, waived his right to be indicted and pleaded guilty today before U.S. District Judge Jeffrey A. Meyer in New Haven to a federal tax offense.
According to court documents and statements made in court, AUBOURG prepared more than 2,000 federal tax returns for the 2011 through 2015 tax years through a tax return preparation practice he operated in New London. AUBOURG falsified information on numerous returns that he prepared for clients by fabricating the existence of education expenses, fabricating deductions for business expenses and charitable contributions, and by claiming exemptions for fictitious dependents.
Through AUBOURG’s preparation of false tax returns, including his own tax returns, the government lost a total of $264,870.
AUBOURG pleaded guilty to one count of aiding and assisting the filing of a false tax return, an offense that carries a maximum term of imprisonment of three years. Judge Meyer scheduled sentencing for January 15, 2019.
AUBOURG is required to make full restitution to the government. The IRS is taking action to recover unpaid taxes from AUBOURG’s clients, and his restitution figure will be reduced as money is recovered from his clients.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney Lauren C. Clark.
N.Y. Resident Admits to Running Large-Scale Indoor Marijuana OperationsRead the Press Release
PROVIDENCE – A New York man pleaded guilty in U.S. District Court in Providence today to charges that he participated in conspiracies to operate large-scale, sophisticated marijuana grow facilities inside a converted Providence mill building.
Appearing before U.S. District Court Chief Judge William E. Smith, Irwan Anwar, 54, pleaded guilty to conspiracy to manufacture 100 or more marijuana plants, manufacturing more than 100 marijuana plants, and using or maintaining a drug premises.
Anwar’s guilty plea is announced by United States Attorney Stephen G. Dambruch and Special Agent in Charge of the Boston Division of the FBI Harold H. Shaw.
According to information presented to the Court, in August 2015, FBI agents, assisted by agents and officers from the DEA, Rhode Island State Police and Providence Police Department, executed a series of federal court-authorized search warrants at 725 Branch Avenue in Providence, a former mill building which had been sub-divided into numerous units. Two of the units were found to contain multiple rooms housing sophisticated, large-scale hydroponic marijuana grows.
One unit contained 550 marijuana plants in various stages of growth. The second unit contained 252 plants in various stages of growth. Both units contained vast amounts of sophisticated equipment and supplies used to grow and harvest marijuana.
Anwar, and another person, Ilhawan Cha, 35, of Providence, admitted to having been employed for more than a year by Richard A. Yang, 38, of Providence, to maintain the facilities, and to grow and harvest the marijuana.
Yang pleaded guilty on April 7, 2017, to conspiracy to manufacture over 100 marijuana plants and manufacture of over 100 marijuana plants. He was sentenced on April 20, 2017, to 24 months in federal prison to be followed by 4 years supervised release.
Cha pleaded guilty on May 12, 2016, to conspiracy to manufacture 100 or more marijuana plants, manufacturing more than 100 marijuana plants, and using or maintaining a drug premises. Cha, who had been detained in federal custody since his arrest on February 23, 2016, was sentenced on April 11, 2017, to time served to be followed by 3 years supervised release.
Anwar is scheduled to be sentenced on January 19, 2019.
The case is being prosecuted by Assistant U.S. Attorney William J. Ferland.
###
Mineral County man admits to a firearms chargeRead the Press Release
MARTINSBURG, WEST VIRGINIA – Thomas Edward Wright, of Keyser, West Virginia, has admitted to a firearms charge, United States Attorney Bill Powell announced.
Wright, age 29, pled guilty to one count of “Possession of a Stolen Firearm.” Wright admitted to possessing a stolen .22 caliber long rifle in February 2016 in Mineral County.
Wright faces up to 10 years incarceration and a fine of up to $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
This case 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. Attorney General Jeff Sessions 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, Attorney General Sessions 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 Shawn M. Adkins is prosecuting the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Keyser Police Department investigated.
U.S. Magistrate Judge Robert W. Trumble presided.
Michigan Man Arrested for Alien SmugglingRead the Press Release
PLATTSBURGH, NEW YORK – Narcis Gabriel Burcea, age 26, of Sterling Heights, Michigan, was arrested on October 6 for transporting Andreea Tita Pirlica, an alien and citizen of Romania, following Pirlica’s illegal entry into the United States.
The announcement was made by United States Attorney Grant C. Jaquith and Robert N. Garcia, Acting Chief Patrol Agent, United States Border Patrol, Swanton Sector.
The charges in the complaints are merely accusations. The defendants are presumed innocent unless and until proven guilty.
According to the criminal complaints, Burcea entered the United States from Canada at the Massena, New York, Port of Entry on October 5, 2018. He spent the night at a local hotel, then traveled to the Akwesasne Mohawk Reservation on October 6. Border Patrol Agents saw Burcea enter a parking lot alone, and a few minutes later saw him leave the parking lot with Pirlica. The investigation revealed that Pirlica traveled from Canada to the United States via boat and was driven to the area of the parking lot where she met Burcea. Agents stopped Burcea as he and Pirlica traveled toward Massena.
The charges filed against Burcea carry a maximum sentence of 5 years in prison, a fine of up to $250,000, and a post-imprisonment term of supervised release of up to 3 years. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines, and other factors.
Pirlica is charged with the misdemeanor crime of illegal entry.
This case is being investigated by Border Patrol, with assistance from U.S. Customs and Border Protection's Massena Office of Field Operations, and is being prosecuted by Assistant U.S. Attorney Katherine Kopita.
Miami-Area Pharmacy Owner Pleads Guilty for Role in $8.4 Million Medicare Fraud SchemeRead the Press Release
The owner of a Miami-area pharmacy pleaded guilty for his role in Medicare prescription fraud scheme involving approximately $8.4 million in fraudulent billings.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division; U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida; Special Agent in Charge Robert Lasky of the FBI’s Miami Field Office; Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG); Special Agent in Charge Brian Swain of the U.S. Secret Service (USSS), and Special Agent in Charge Adolphus P. Wright of the U.S. Drug Enforcement Administration (DEA) Miami Field Division made the announcement.
Antonio Perez Jr., 48, of Miami Beach, Florida, pleaded guilty today before U.S. District Judge Federico A. Moreno to one count of conspiracy to commit health care fraud.
According to admissions made in connection with his guilty plea, Perez Jr. was the owner of A.R.A. Medical Services Inc., which did business under the name Valles Pharmacy Discount (Valles Pharmacy). Perez Jr. pleaded guilty to agreeing to pay illegal health care kickbacks to Medicare beneficiaries in exchange for a promise from the beneficiaries to fill their prescriptions at Valles Pharmacy, and to allow Valles Pharmacy to submit claims to Medicare for prescription drugs that were not provided to the beneficiaries. Perez Jr. also admitted that he submitted claims to Medicare for expensive prescription medications that Valles Pharmacy never purchased, and were never provided to Medicare beneficiaries. According to admissions made in connection with Perez Jr.’s plea, during the course of the scheme, Valles Pharmacy Discount submitted over $32 million in claims to Medicare for prescription drugs, of which approximately $8.4 million was for medically unnessecary prescription drugs that Valles Pharmacy never purchased, and were never provided to Medicare beneficiaries. Perez Jr. also agreed to forfeit a property located on Collins Avenue in Miami Beach, as well as several bank accounts used to carry out the fraud.
The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida. The case was prosecuted by Trial Attorney Timothy P. Loper of the Criminal Division’s Fraud Section.
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, now operating in 12 cities across the country, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Methuen Physician Convicted of Insider Trading in Shares of Ariad PharmaceuticalsRead the Press Release
BOSTON – A Methuen physician was convicted today by a federal jury of insider trading in the shares of Ariad Pharmaceuticals based on information gleaned from his spouse, who worked at the company.
Harold Altvater, 57, was convicted following a one-week jury trial of three counts of securities fraud. U.S. District Court Judge Denise J. Casper scheduled sentencing for Jan. 16, 2019.
The charges related to three occasions in late 2013 when Dr. Altvater misappropriated nonpublic information from his spouse about the safety of Ariad’s only marketed product, the leukemia drug Iclusig, as well as about the company’s negotiations with the U.S. Food and Drug Administration (FDA) concerning whether the drug would be permitted to remain on the market in the wake of serious adverse events that occurred during the drug’s clinical trials. At the time, Altvater’s spouse was the director of drug safety for Ariad. Without his spouse’s knowledge, Altvater then traded in Ariad shares in his personal accounts ahead of several critical announcements, avoiding losses and notching gains totaling approximately $115,000. In 2017, Ariad was acquired by Takeda Pharmaceutical Co., Ltd.
Today’s verdict marks the second time in three months that a Boston jury has convicted defendants of insider trading in the shares of local pharmaceutical companies. In July, two defendants, Schultz “Jason” Chan, 54, of Newton, and Songjiang Wang, 54, of Westford, were convicted of securities fraud and conspiracy to commit securities fraud in connection with a scheme to trade on inside information concerning their employers, Akebia Pharmaceuticals and Merrimack Pharmaceuticals, respectively. Chan and Wang are scheduled to be sentenced on Oct. 22 and Nov. 5, 2018.
In June 2018, a fourth pharmaceutical executive, Robert Gadimian, of California-based Puma Technology, Ltd., was sentenced to 27 months in prison after pleading guilty to seven counts of securities fraud in connection with trading on inside information in that company, earning profits of nearly $1 million.
The charging statute provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $5 million. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Harold Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. Assistant U.S. Attorney Sara Miron Bloom of Lelling’s Economic Crimes Unit and Special Assistant U.S. Attorney Michael Joseph Vito are prosecuting the case.
Meadville Woman Charged with Defrauding Social SecurityRead the Press Release
ERIE, Pa. - A resident of Meadville, Pennsylvania has been indicted by a federal grand jury in Erie on a charge of social security fraud, United States Attorney Scott W. Brady announced today.
The one-count indictment named Karen Louise Keiper, 49, as the sole defendant.
According to the indictment presented to the court, between on or about February 13, 2013 and August 7, 2015, Keiper fraudulently received approximately $28,948.00 in Supplemental Security Income benefit payments by concealing the fact that she did not live alone, failed to disclose the existence of a bank account and claimed she did not receive any other type of income in order in order to continue to receive these payments.
The law provides for a maximum total sentence of 5 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Marshall J. Piccinini is prosecuting this case on behalf of the government.
The Social Security Administration, Office of Inspector General, conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Massachusetts Sex Offender Sentenced for Travelling to Rhode Island to Engage in Illicit Sex with a MinorRead the Press Release
PROVIDENCE – A 57-year-old man from Fairhaven, MA, was sentenced today to 97 months in federal prison for traveling in interstate commerce to engage in sexual activity with a minor.
Robert F. Eccleston, a registered sex offender, admitted to the Court that on July 12, 2016, he traveled from Massachusetts to East Providence, RI, expecting to meet with and engage in illicit sexual activity with a 15-year-old boy he had been communicating with on the Internet.
Eccleston pleaded guilty in U.S. District Court in Providence on September 21, 2017, to travelling in interstate commerce for the purpose of engaging in illicit sexual conduct.
At sentencing today, U.S. District Court Chief Judge William E. Smith also sentenced Eccleston to serve lifetime supervised release upon completion of his term of incarceration.
The U.S. Sentencing Guidelines range of imprisonment in this matter is 78-97 months. The government recommended the court impose a sentence of 97 months in prison.
Eccleston’s sentence is announced by United States Attorney Stephen G. Dambruch, Homeland Security Investigations Special Agent in Charge Peter C. Fitzhugh, and Colonel Ann C. Assumpico, Superintendent of the Rhode Island State Police.
At the time of his guilty plea, Eccleston admitted to the Court that on July 7, 2016, he responded to an online Personals/Encounters posting and photograph of a male who initially represented that he was 18-years-old and single. The online posting was actually posted earlier that day by a Rhode Island State Police Detective assigned to the Rhode Island State Police Internet Crimes Against Children (ICAC) task force.
Over the next several days, an HSI agent posing as the person who placed the online posting and Eccleston engaged in a series of Internet and email communications. The communications quickly became sexual in nature. The agent, posing as the person who placed the online posting, repeatedly told Eccleston that he was only 15-years-old, adding that he lived with his mother. As the communications continued, and believing that he was actually communicating with a 15-year-old, Eccleston asked for photographs of the boy, including an explicit nude photograph.
According to court documents and information presented to the Court, at Eccleston’s urging, the two agreed to meet in East Providence on July 12, 2016, to engage in sexual activity. ICAC task force members and HSI agents arrested Eccleston near the location where he believed that he would meeting with the 15-year-old boy.
Eccleston has been detained in federal custody since his arrest on July 12, 2016.
According to court records, Eccleston was ordered to register as a sex offender in Massachusetts in 2006, following his conviction on charges that he raped a person under 18.
The case was prosecuted by Assistant U.S. Attorney Dulce Donovan.
The Rhode Island Internet Crimes Against Children Task Force is comprised of law enforcement personnel from the Rhode Island State Police, Homeland Security Investigations, and the Warwick, Cranston, East Providence, Newport, Pawtucket, North Kingstown, Bristol, and Woonsocket Police Departments.
###
Massachusetts Man Pleads Guilty to Cocaine TraffickingRead the Press Release
CONCORD - Jason Belmer, 30, of Haverhill, Massachusetts pleaded guilty in federal court to possession with intent to distribute cocaine, United States Attorney Scott W. Murray announced today.
According to court documents and statements made in court, on August 31, 2017, the defendant was stopped by a member of the Salem Police Department after running a red light. The officer observed various signs that the defendant was driving while impaired. Another officer arrived on scene and observed drug paraphernalia in plain view in the front seat of the car. This observation prompted officers to ask the defendant for consent to search the car, at which time the defendant attempted to flee the traffic stop. A struggle ensued and the defendant fought with police. After the defendant was taken into custody, officers received a search warrant for the car and recovered approximately 1,191 grams of cocaine and approximately $59,775 dollars in cash.
Belmer is scheduled to be sentenced on January 16, 2019. The cash has been administratively forfeited to the United States.
“Those who seek to profit from the sales of drugs will be aggressively prosecuted,” said U.S. Attorney Murray. “I commend the hard work of the Salem police officers whose efforts got over a kilogram of cocaine off the streets. We will continue to work with federal, state, and local law enforcement officers to stop the distribution of illegal drugs in the Granite State.”
This matter was investigated by the Salem Police Department and the Drug Enforcement Administration. The case is being prosecuted by Assistant U.S. Attorney Georgiana L. Konesky.
This case was supported by the Organized Crime Drug Enforcement Task Force (OCDETF). 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.
###
Manhattan Man Sentenced for Viewing Child PornRead the Press Release
TOPEKA, KAN. – A Manhattan man was sentenced Tuesday to 51 months in federal prison for viewing child pornography, U.S. Attorney Stephen McAllister said. He also was ordered to pay $26,000 in restitution whose images he viewed.
John Francis Wear, 48, Manhattan, Kan., pleaded guilty to one count of accessing child pornography online. Wear admitted he downloaded software that masks a user’s identity online so he could view sexually explicit photos of children under the age of 18.
McAllister commended the FBI and Assistant U.S. Attorney Christine Kenney for their work on the case.
Manchester Man Pleads Guilty to Being a Felon in Possession of FirearmsRead the Press Release
CONCORD - United States Attorney Scott W. Murray announced today that Hector Velez, 22, formerly of Manchester, pleaded guilty in federal court to being a felon in possession of firearms.
According to court documents and statements made in court, on July 30, 2017, Manchester Police stopped a car driven by Velez. Upon seeing what appeared to be drugs in plain view inside the car, the officers impounded the car and applied for a search warrant. A search of the vehicle resulted in the seizure of two firearms, as well as marijuana and cocaine. Velez, as a previously convicted felon, is legally prohibited from possessing firearms.
Velez is scheduled to be sentenced on January 16, 2019.
“This case demonstrate the effectiveness of Project Safe Neighborhoods,” said U.S. Attorney Murray. “Through this program, we work closely with our law enforcement partners to get guns out of the hands of criminals so we can reduce violent crime and protect the safety of the citizens of the Granite State.”
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Manchester Police Department. The case is being prosecuted by Assistant U.S. Attorneys Shane B. Kelbley and Anna Z. Krasinski.
The case is part of ATF’s Project Safe Neighborhoods initiative, which is a federally-funded program intended to reduce gun violence through law enforcement training, public education, and aggressive law enforcement efforts to investigate and prosecute gun-related crimes.
###
Man Receives 106 Year Sentence After String of Violent Convenience Store Robberies in the TriangleRead the Press Release
GREENVILLE – The United States Attorney for the Eastern District of North Carolina, Robert J. Higdon, Jr., announced that today, Senior United States District Judge Malcolm J. Howard sentenced JOHN DEVERE BATTLE, 25, of Durham, to 1,272 months imprisonment followed by 5 years of supervised release. He was also ordered to pay $35,791.00 in restitution. BATTLE was convicted on May 17, 2018, after a four-day jury trial, of 12 counts including Conspiracy to commit Hobbs Act Robbery, Interference with commerce by robbery and aiding and abetting, four-counts of Brandishing a firearm in furtherance of a crime of violence and aiding and abetting, Interference with commerce by robbery and aiding and abetting, Taking motor vehicle by force, violence and intimidation with intent to cause serious bodily injury, and aiding and abetting, Bank robbery and aiding and abetting, two-counts of Possession of a firearm and ammunition by a convicted felon.
The evidence at trial showed that on May 14, 2016, BATTLE and others robbed the Kangaroo gas station located at 1807 North Harrison Avenue in Cary at gunpoint. On June 15, 2016, BATTLE and others robbed the Quality Mart gas station located at 7411 Chapel Hill Road in Cary at gunpoint. On June 16, 2016, BATTLE and others committed a home invasion in Cary. During the home invasion, BATTLE and others robbed the victims at gunpoint, tied up the victims and threatened to kill them. One of the victims was pistol-whipped. BATTLE and others took one of the victims at gunpoint to a bank in Cary and forced the victim to withdraw money. The evidence also established that BATTLE was arrested on June 17, 2016 after the execution of a search warrant at a home in Wendell, NC. During the execution of the search warrant, a handgun was recovered along with numerous stolen items taken from the home invasion.
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.
In support of PSN, the United States Attorney’s Office for the Eastern District of North Carolina has implemented the Take Back North Carolina Initiative. This initiative emphasizes the regional assignment of federal prosecutors to work with law enforcement and District Attorney’s Offices on a sustained basis in those communities to reduce the violent crime rate, drug trafficking, and crimes against law enforcement.
The investigation of this case was conducted by the Cary Police Department, Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), Durham Police Department, Federal Bureau of Investigation, Wake County Sheriff’s Office, Wendell Police Department, City County Bureau of Identification and the North Carolina State Bureau of Investigation. Assistant United States Attorneys Peggah B. Wilson and Ethan A. Ontjes represented the government in this case.
MS-13 Leader Sentenced for RICO ConspiracyRead the Press Release
BOSTON – The leader of MS-13’s Eastside Loco Salvatrucha (ESLS) clique was sentenced today in federal court in Boston for RICO conspiracy.
Herzzon Sandoval, a/k/a “Casper,” 36, was sentenced by U.S. District Court Judge F. Dennis Saylor IV to 20 years in prison and two years of supervised release. In February 2018, Sandoval and two other MS-13 members, Edwin Guzman, a/k/a “Playa,” 32, and Erick Argueta Larios, a/k/a “Lobo,” 33, both Salvadoran nationals residing in the U.S. illegally, were convicted by a federal jury of conspiracy to conduct enterprise affairs through a pattern of racketeering activity, more commonly referred to as RICO conspiracy. A fourth MS-13 member, Cesar Martinez, a/k/a “Cheche,” 37, also a Salvadoran national illegally residing in the U.S., was convicted at the same trial of conspiracy to possess with intent to distribute 500 grams or more of cocaine.
According to court documents, MS-13 was identified as a violent transnational criminal organization whose branches, or “cliques,” operate throughout the United States, including in Massachusetts. MS-13 members are required to commit acts of violence, specifically against rival gang members, to gain membership in and be promoted within the gang. Sandoval and Guzman were the leaders, also known as the “first word,” and “second word,” of the ESLS clique in Massachusetts.
On Sept. 20, 2015, Joel Martinez, a/k/a “Animal,” murdered a 15-year-old boy in East Boston. On Jan. 8, 2016, as a reward for the 2015 murder, Joel Martinez was promoted by the gang to “homeboy” status with a 13-second beat-in by other MS-13 members at an ESLS meeting that Sandoval, Guzman, Martinez and Argueta Larios attended.
In May 2018, Joel Martinez was sentenced to 40 years in prison and two years of supervised release after pleading guilty to RICO conspiracy involving murder. Cesar Martinez, Guzman, and Argueta Larios are scheduled to be sentenced on Nov. 6, Nov. 15, and Nov. 19, 2018, respectively.
Sandoval was one of 49 defendants convicted as part of this case. All nine defendants who went to trial were convicted and 40 others pleaded guilty. In all, 16 defendants, including Joel Martinez, were found to have committed or knowingly participated in murders.
United States Attorney Andrew E. Lelling; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Peter C. Fitzhugh, Special Agent in Charge of Homeland Security Investigations in Boston; Colonel Kerry A. Gilpin, Superintendent of the Massachusetts State Police; Commissioner Thomas Turco of the Massachusetts Department of Corrections; Essex County Sheriff Kevin F. Coppinger; Suffolk County Sheriff Steven W. Thompkins; Suffolk County District Attorney John P. Pappas; Middlesex County District Attorney Marian T. Ryan; Essex County District Attorney Jonathan Blodgett; Boston Police Commissioner William Gross; Chelsea Police Chief Brian A. Kyes; Everett Police Chief Steven A. Mazzie; Lynn Police Chief Michael Mageary; Revere Police Chief James Guido; and Somerville Police Chief David Fallon made the announcement today. The U.S. Marshals Service has provided crucial assistance with the case.
Loudon Man Pleads Guilty to Methamphetamine TraffickingRead the Press Release
CONCORD - Randy Barton, 49, of Loudon, New Hampshire, pleaded guilty in federal court to possession of methamphetamine with intent to distribute, United States Attorney Scott W. Murray announced today.
According to court documents and statements made in court, on April 11, 2018, a New Hampshire State Trooper was patrolling I-93 in Canterbury. After observing a Chevrolet Cobalt commit a traffic infraction, the Trooper stopped the car and approached it. A woman, Katie-Jo Waters, was driving the car, and defendant Randy Barton was in the front seat. After making numerous observations of Waters and Barton and detecting inconsistencies in their stories, Trooper Owens asked Barton to step out of the vehicle, and conducted a pat-down search. The Trooper detected a bulge in Barton's pants pocket, and recovered two plastic baggies containing 15.5 grams of highly pure methamphetamine.
Barton is scheduled to be sentenced on January 15, 2019.
Katie-Jo Waters previously pleaded guilty in federal court to conspiracy to distribute methamphetamine on July 24, 2018. She will be sentenced on January 15, 2019.
“Methamphetamine is a dangerous drug that is causing increasing damage in the Granite State,” said U.S. Attorney Murray. “Even as our state addresses the opioid crisis, we continue to work with our law enforcement partners to combat the threats posed by other illicit drugs. The presence of highly pure methamphetamine in New Hampshire is a grave concern and we will aggressively prosecute those who choose to distribute it.”
"The U.S. Postal Inspection Service and our law enforcement partners will continue to work diligently to keep methamphetamine and other highly addictive drugs out of our communities," said Inspector in Charge, Joseph W. Cornin, Boston Division.
This matter was investigated by the New Hampshire State Police, DEA, and the U.S. Postal Inspection Service. The case is being prosecuted by Assistant U.S. Attorneys John S. Davis and Shane B. Kelbley.
This case was supported by the Organized Crime Drug Enforcement Task Force (OCDETF). 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.
###
Leader of International Cyber Fraud Ring Returned to United States to Face Federal Racketeering ChargesRead the Press Release
A Romanian national was returned to the United States Friday to face federal charges that accuse him of being the leader of an international cyber fraud ring that used malware to steal in excess of four million dollars after taking people’s passwords, personal identifying information, and bank account information.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Justin E. Herdman of the Northern District of Ohio, Peter Elliot of the U.S. Marshals Service, Stephen D. Anthony of the FBI and Chief Kevin Bielozer of the Westlake Police Department made the announcement.
Romeo Vasile Chita, 38, was charged in a four-count indictment unsealed in U.S. District Court in Cleveland, Ohio. The charges include racketeering, wire fraud conspiracy, conspiracy to launder money and conspiracy to traffic in counterfeit services.
Eight other defendants were named in the indictment unsealed today. Two defendants—Daniel Mihai Radu, 39; and Manuel Tudor, 37, —have already been extradited from Romania and are awaiting trial in Cleveland. The other five defendants remain at large.
“Romeo Vasile Chita allegedly led a multinational criminal enterprise that stole sensitive personal data through deceptive phishing emails and organized fraudulent online auctions, causing millions of dollars in losses to innocent victims,” said Assistant Attorney General Benczkowski. “The Criminal Division will continue to work with our law enforcement partners, both domestic and international, to aggressively disrupt and dismantle international cyber criminal organizations that victimize our citizens and businesses.”
“This defendant led an international operation that used fraudulent emails and the internet to scam hard-working people out of their savings,” said U.S. Attorney Herdman. “It is gratifying that this defendant will be forced to answer the charges filed against him.”
According to the indictment, Chita was based in Romania and led a racketeering enterprise that operated in the United States, Romania, Canada, Croatia, Latvia, Hungary, Bosnia, China, Jordan, Malaysia and elsewhere. The goal of the enterprise was to generate money through various criminal acts, including wire fraud, trafficking in counterfeit services, and money laundering. It began operating as early as 2007.
Among other things, Chita’s group sent “phishing” emails purporting to be from the Better Business Bureau, the IRS, U.S. Tax Court, the National Payroll Records Center, and others. When a victim clicked on a link in a fraudulent email, specialized malware incorporating a “keylogger” was installed onto the victims’ computers, allowing members of the criminal enterprise to capture sensitive and confidential information, including the victims’ bank account information.
The conspirators, including Chita, then transmitted the sensitive information to each other and others for the purpose of fraudulently withdrawing funds from the victims’ bank accounts. The stolen funds were then transferred to specific accounts in the United States, where the money was withdrawn and transferred to other members of the conspiracy. The conspirators used their own network of accounts and “money mules” to transfer hundreds of thousands of dollars at a time to conceal the origin of the money.
The defendants also are alleged to have engaged in an extensive campaign of online auction fraud, placing ads for non-existent cars and other expensive items on eBay, Craigslist, Autotrader.com, and other websites. According to the indictment, victims were tricked into wiring thousands of dollars to money mules to purchase these vehicles. The money mules then transferred and laundered the proceeds for the benefit of the enterprise.
Chita managed and facilitated the various schemes, as well as directing other conspirators to launder fraudulently obtained money.
This case was investigated by the U.S. Marshals Service, the FBI, the Westlake Police Department and the U.S. Secret Service. The case is being prosecuted by Senior Counsel Brian L. Levine of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Duncan Brown of the Northern District of Ohio. Valuable assistance is being provided by the Justice Department’s Office of International Affairs. The Justice Department thanks the government of Romania for its assistance in this matter.
The prosecution of Chita is timely, as it occurs during National Cyber Security Awareness Month (NCSAM). NCSAM – observed every October – was created as a collaborative effort between government and industry to ensure all Americans have the resources they need to stay safer and more secure online. The Department of Justice encourages citizens to take advantage of cybersecurity tips and information provided by law enforcement to ensure their personal information is secured.
An indictment is merely an allegation, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Landover Man Sentenced to over 13 Years in Federal Prison for a Series of Armed RobberiesRead the Press Release
Greenbelt, Maryland – U.S. District Judge George J. Hazel sentenced Kodi Lamont Johnson, age 36, of Landover, Maryland, to 162 months in prison, followed by three years of supervised release, for two armed robberies, an armed bank robbery, using and brandishing a gun in relation to a crime of violence, and possession of stolen firearms.
The sentence 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 Chief Henry P. Stawinski III of the Prince George’s County Police Department.
According to his plea agreement and information presented at today’s sentencing hearing, sometime after 11:15 a.m. on November 3, 2017, Johnson broke into a residence in Accokeek, Maryland, and stole a 45-caliber revolver, two 20-gauge shotguns, and a black baseball hat. He then set the house on fire before fleeing in the homeowner’s red pick-up truck. Between approximately 2:19 p.m. and 2:36 p.m. Johnson robbed, at gun point, a market, a tavern and a credit union, all in Accokeek, Maryland. In each instance, Johnson left the scene in the pick-up truck he’d stolen earlier in the day.
Specifically, Johnson displayed a handgun and demanded money and cigarettes from two victims at the market, stealing $500 from the store register and 15 packs of cigarettes. At 2:22 p.m., Johnson robbed the tavern, displaying a gun and demanding money from the seven victims in the tavern and from the cash register. The victims relinquished $80 in cash and Johnson stole approximately $200 from the cash register. At 2:36 p.m. Johnson robbed a credit union, displaying a handgun and demanding money from a customer and a teller. The customer relinquished approximately $2,800 and Johnson stole another $2,970 from the teller.
Later that afternoon, Johnson was arrested in the parking lot of a convenience store. At the time of the arrest, Johnson was in possession of $5,317 in a cash bag marked with the name of the credit union and the stolen 45-caliber revolver. A later search of the stolen pick-up truck recovered a number of items stolen from the Accokeek residence, including two 20-gauge shotgun and the black baseball hat.
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.
United States Attorney Robert K. Hur commended the FBI and the Prince George’s County Police Department for their work in the investigation. Mr. Hur thanked Special Assistant U.S. Attorney Elizabeth S. Boison and Assistant U.S. Attorney Kristi N. O’Malley, who prosecuted the case.
Justice Department Settles Immigration-Related Discrimination Claim Against Georgia Poultry Processing CompanyRead the Press Release
The Justice Department today announced that it has reached a settlement with Mar-Jac Poultry, Inc., a poultry processing company in Gainesville, Georgia. The settlement resolves a long-standing lawsuit filed by the Justice Department alleging that Mar-Jac Poultry violated the Immigration and Nationality Act (INA) by discriminating against work-authorized non-U.S. citizens when verifying their work authorization.
The Department filed its complaint on July 14, 2011, after investigating a charge that a worker filed. The complaint alleged that from at least July 1, 2009 to at least January 27, 2011, Mar-Jac Poultry routinely required work-authorized non-U.S. citizens to present a document issued by the Department of Homeland Security, such as a Permanent Resident Card or Employment Authorization Document, to prove their work authorization, but did not require specific documents from U.S. citizens. On March 3, 2017, the court found that Mar-Jac was liable for a pattern or practice of this type of discrimination against non-U.S. citizens Respondent hired between June 16, 2010 and February 9, 2011, leaving monetary and other remedies for future resolution. All work-authorized individuals, whether U.S. citizens or non-U.S. citizens, have the right to choose which valid documentation to present to prove they are authorized to work. The INA’s antidiscrimination provision prohibits employers from subjecting employees to unnecessary documentary demands based on employees’ citizenship status or national origin.
“Even an employer that hires many non-U.S. citizens can violate the INA if it treats employees differently based on citizenship status or national origin when verifying their identity and work authorization,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “This case demonstrates the Department’s commitment to ensuring that all employers implement the employment eligibility verification process in a non-discriminatory manner.”
Under the settlement agreement, Mar-Jac will pay a civil penalty of $190,000; pay $1020 to a refugee the company fired when he did not produce a DHS-issued document to reverify his work authority; pay up to $23,980 in back pay to compensate other affected employees and applicants; train its employees on the INA’s anti-discrimination provision; and be subject to departmental monitoring for two years.
The Division’s Immigrant and Employee Rights Section (IER) is responsible for enforcing the anti-discrimination provision of the INA. Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; and retaliation and intimidation.
For more information about protections against employment discrimination under immigration laws, call IER’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call IER’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar; email [email protected]; or visit IER’s English and Spanish websites. Subscribe to GovDelivery to receive updates from IER.
Applicants or employees who believe they were subjected to different documentary requirements based on their citizenship, immigration status, or national origin; or discrimination based on their citizenship, immigration status, or national origin in hiring, firing, or recruitment or referral, should contact IER’s worker hotline for assistance.
Jersey City Police Officer Sentenced to One Year in Prison for Conspiracy to Commit FraudRead the Press Release
NEWARK, N.J. – A Jersey City police officer was sentenced today to one year and one day in prison for participating in a conspiracy to defraud Jersey City by obtaining compensation for off-duty work that they did not perform, U.S. Attorney Craig Carpenito announced.
James Cardinali, 38, of Jersey City, previously pleaded guilty before U.S. District Judge John Michael Vazquez to an information charging him with one count of conspiracy to commit fraud. Judge Vazquez imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Cardinali’s duties included serving as the “pick coordinator” for Jersey City’s South District, responsible for assigning police officers to off-duty details. On multiple occasions, Cardinali asked representatives of certain vendors who were performing work in the South District to sign Jersey City off-duty vouchers indicating that a police officer had completed an off-duty assignment for that vendor, even though no officer had in fact completed any assignment. Cardinali then falsely represented on these vouchers that a particular police officer had completed an off-duty assignment. These officers were paid for work they did not perform. Cardinali personally obtained from the officers some of the money that they were paid as a result of the fraudulent conduct.
In addition to the prison term, Judge Vazquez sentenced Cardinali to three years of supervised release and ordered restitution of $166,255 and forfeiture of $39,587.
U.S. Attorney Cardinali credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s sentencing. The Jersey City Police Department is cooperating with the investigation.
The government is represented by Assistant U.S. Attorney Vikas Khanna of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
Defense counsel: Matthew E. Beck Esq., West Orange, New Jersey
Jefferson Dispatcher Charged with Wire FraudRead the Press Release
U.S. Attorney Peter G. Strasser announced that NICOLE SERUNTINE, age 35, an employee of Company A.M.M., was charged Friday, October 5, 2018 with wire fraud.
According to the Bill of Information, from around June 2010 through February 2017, NICOLE SERUNTINE worked as a secretary and dispatcher at Company A.M.M., located in Jefferson, Louisiana. Around October 2014 through February 17, 2017, SERUNTINE devised a scheme to defraud Company A.M.M. out of more than $500,000 by using her role as administrative assistant to order a fuel card that she was not entitled to use, and unlawfully used it for her own personal expenses, including food, gas, and cash advances.
If found guilty, NICOLE SERUNTINE could face up to 20 years imprisonment, a fine of up to $250,000 or twice the gross gain or loss, 5 years of supervised release, and a special assessment of $100.
U.S. Attorney Peter G. Strasser stated that a Bill of Information is merely an accusation and that the guilt of the defendant must be proven beyond a reasonable doubt.
This case is being investigated by the United States Secret Service. Assistant U.S. Attorney Sharan E. Lieberman is in charge of the prosecution.
Independence Business Owner Sentenced for Distributing K2, Accepting Food StampsRead the Press Release
KANSAS CITY, Mo. – The owner of two Independence, Mo., stores was sentenced in federal court today for distributing synthetic cannabinoids, also known as K2, and for accepting food stamps as payment for K2.
Haq Nawaz Choudhry, 53, of Kansas City, Mo., was sentenced by U.S. Chief District Judge Greg Kays to three years and six months in federal prison without parole. The court also ordered Choudhry to pay $3,275 in restitution to the USDA and a money judgment and forfeiture to the government of $27,443.
Choudhry is the president of H Habib Enterprises, Inc., which owned the Short Stop convenience store and Kerns Liquor, located next door to each other at 9013 E. U.S. 40 Highway in Independence and operated by Choudhry. On Feb. 6, 2018, Choudhry pleaded guilty to participating in a conspiracy to distribute a controlled substance and controlled substance analogue, and to participating in a money-laundering conspiracy.
An undercover Jackson County Drug Task Force detective and three people conducting undercover transactions on behalf of the U.S. Department of Agriculture made a series of purchases from both Short Stop and Kerns from Feb. 14 to Oct. 22, 2013. The undercover purchases used cash on some occasions, and EBT cards (used to redeem Supplemental Nutrition Assistance Program – SNAP – benefits, also known as food stamps) on other occasions, to purchase synthetic cannabinoids.
During the course of the investigation Choudhry concealed the sale of synthetic cannabinoids by conducting financial transactions through the point-of-sale terminal, using EBT cards. The purchases would routinely be processed as “food purchases” with funds electronically deposited into the company’s bank account, thus concealing the proceeds of the synthetic cannabinoids sales. Choudhry specifically admitted, for example, that he fraudulently processed a $46.50 purchase of synthetic cannabinoids using SNAP benefits on May 30, 2013.
Law enforcement officers executed a search warrant at Kern’s and Short Stop on Oct. 22, 2013. Officers recovered synthetic cannabinoids and drug paraphernalia from both businesses. Officers also seized $21,135 from Short Stop and $308 from Kerns. Choudhry was not present during the execution of the warrant. On Feb. 11, 2014, officers returned to Kerns and Short Stop based on a complaint that the business was selling K2 again. Choudhry was contacted and denied that any such sales were occurring, and gave written permission for the detectives and officers on scene to search both of his stores for illegal items. Officers recovered additional synthetic cannabinoids and drug paraphernalia from Kerns. Officers also seized $6,000 from Kerns.
This case is being prosecuted by Assistant U.S. Attorney Adam Caine. It was investigated by the U.S. Department of Agriculture, Office of Inspector General and the Independence, Mo., Police Department.
Illegal Alien Pleads Guilty to U.S. Passport FraudRead the Press Release
PROVIDENCE - A Colombian national living in Central Falls, RI, pleaded guilty in U.S. District Court in Providence today to false statements in a passport application.
Appearing before U.S. District Court Chief Judge William E. Smith, Carlos Tabares, 55, admitted to the Court that he knowingly and willingly made false statements on a U.S. passport application in February 2009.
Tabares admitted to the Court that he fraudulently used the name of Freddie Adams Pena and his place of birth as being Yauco, Puerto Rico.
After the issuance of a passport, a subsequent investigation by the U.S. Department of State – Diplomatic Security Service determined Tabares’ true identity and place of birth, Antioquia, Columbia.
Prior to his arrest on August 16, 2018, Tabares used the passport to travel to and from Columbia.
Tabares, who is detained in federal custody, is scheduled to be sentenced on January 4, 2019.
False statement in a passport application is punishable by statutory penalties of up to 10 years in federal prison followed by up to 3 years supervised release.
Tabares’ guilty plea is announced by United States Attorney Stephen G. Dambruch and William B. Gannon, Special Agent in Charge of U.S. Department of State – Diplomatic Security Service.
The case is being prosecuted by Assistant U.S. Attorney Dulce Donovan.
###
HSBC Agrees to Pay $765 Million in Connection with Its Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
DENVER – U.S. Attorney Bob Troyer announced today that HSBC will pay $765 million to settle claims related to its packaging, securitization, issuance, marketing and sale of residential mortgage-backed securities (RMBS) between 2005 and 2007. During this period, federally-insured financial institutions and others suffered major losses from investing in RMBS issued and underwritten by HSBC. Under the settlement, HSBC will pay the $765 million as a civil penalty pursuant to the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
“HSBC made choices that hurt people and abused their trust,” said Bob Troyer, United States Attorney for the District of Colorado. “HSBC chose to use a due diligence process it knew from the start didn’t work. It chose to put lots of defective mortgages into its deals. When HSBC saw problems, it chose to rush those deals out the door. When deals went south, investors who trusted HSBC suffered. And when the mortgages failed, communities across the country were blighted by foreclosure. If you make choices like this, beware. You will pay.”
“The actions of HSBC resulted in significant losses to investors, which purchased the HSBC Residential Mortgage-Backed Securities backed by defective loans,” said Associate Inspector General Jennifer Byrne of the Federal Housing Finance Agency-Office of Inspector General (FHFA-OIG). “We are proud to have partnered with the U.S Attorney’s Office for the District of Colorado on this matter.”
FIRREA authorizes the federal government to seek civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. The United States alleged that HSBC violated FIRREA by misrepresenting to investors the quality of its RMBS and the due diligence procedures it claimed it would use to ensure that quality. The United States’ allegations are described in the settlement agreement at paragraph 3.
The United States alleged that HSBC had a due diligence process for reviewing the loans HSBC planned to securitize as RMBS, but as early as 2005, an HSBC credit risk manager expressed concerns with HSBC’s due diligence process. HSBC nevertheless touted its due diligence process to potential investors. It told investors that when it purchased pools of subprime loans, HSBC would review at least 25% of the loans in the pool for credit and compliance. It told investors that it selected 20% of the loan pool as an “adverse sample” based on “a proprietary model, which will risk-rank the mortgage loans in the pool.” But on some loan pools, HSBC’s RMBS trading desk influenced how the risk management group selected loans for the adverse portion of the sample, and as a result, the sample was not based on its model. HSBC also told investors that it selected another 5% of the loan pool as a “random sample.” But in some instances, HSBC used a random sample that was less than 5% of the pool, or used a sample that was not random at all.
To review the loans HSBC did select for review, HSBC used due diligence vendors, and HSBC saw the results of the vendors’ reviews of the loans before the deals were issued. Over a one-and-a-half year period, between January 2006 and June 2007, HSBC’s primary due diligence vendor flagged over 7,400 loans as having low grades—more than one out of every four loans the vendor reviewed for HSBC during that time. When HSBC employees saw loans with low grades, they sometimes “waived” those loans through or recategorized the grades to make the due diligence “percentages look better.” They also expressed views about the deals they were issuing. For example, in 2007, an HSBC trader said, in reference to an RMBS that HSBC was about to issue, “it will suck.”
For a loan pool HSBC purchased in 2006, HSBC learned of what employees referred to as an “abnormally large” and “alarmingly” high number of payment defaults. HSBC had purchased the loan pool but had not securitized it yet. Early payment defaults (EPDs)—when a borrower fails to make one of the first few payments on a mortgage—could be, in the words of HSBC’s co-head of RMBS, “an indicator of higher expected loss on the pool.” In an internal email, HSBC’s head of risk management for RMBS wrote that the high EPD rate could be a sign of systemic problems with the pool. Others within HSBC’s risk management group expressed concern that the pool “may be contaminated” and asked whether “they should hold back on the securitization launch until there is further clarity on all the issues….” The next day, the head of HSBC’s whole loan trading risk management group stated that he was “comfortable that we need not make any further disclosures to investors….” HSBC issued the securitization a few days later. A later post-close quality control review indicated that loans that “appear to have fraud or misrep” went into the securitization. HSBC went on to buy and securitize more loans from the same originator, even after the head of HSBC’s due diligence team concluded that the originator had offered “bad collateral.”
After purchasing certain loan pools, HSBC ordered a quality control review but did not wait for the final results before issuing the securitization. On two pools, HSBC received preliminary quality control results before the issuance of the securitization that, according to the quality control vendor, showed indications of fraud in the origination of particular loans, but included those loans in the RMBS anyway. On a loan pool in 2007, HSBC performed post-close due diligence on a sample of loans from that pool. HSBC’s due diligence vendor graded approximately 30% of the loans in the post-close due diligence sample as having the lowest grade. HSBC went on to securitize loans from that same pool without any further credit or compliance review before securitization.
These are allegations only, which HSBC disputes and does not admit.
Assistant U.S. Attorneys Kevin Traskos, Jasand Mock, Ian J. Kellogg, Hetal J. Doshi, and Lila M. Bateman of the District of Colorado investigated this matter, with the support of the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG).
To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.
Grape Street Crip Gang Member Sentenced to 25 Years in Federal Prison for Possession of Firearm during RobberiesRead the Press Release
Memphis, TN - A Memphis man has been sentenced to 25 years in federal prison for possession of a firearm during robberies. D. Michael Dunavant, United States Attorney for the Western District of Tennessee announced the sentence today.
According to information presented in court, on December 9, 2016, three men armed with handguns and a shotgun entered Village Mart located at 1169 S. Bellevue. The employees were held at gunpoint after being ordered to the ground by one of the males. The males smashed display cases and took merchandise and cash from the register. One of the suspects jumped on a glass counter causing a cut to his right hand, leaving his DNA. The DNA belonged to James Moss, a member of the Grape Street Crip gang. The robbers fled the scene in a Nissan Maxima that was stolen by Moss and the robbery crew earlier in the day.
On December 30, 2016, two men armed with handguns entered Dollar General located at 3433 Jackson, in Memphis. The men forced the clerk to open the cash register and the safe. The suspects took the cash drawers from the store. A tracking device attached to the stolen cash led law enforcement to Moss’ residence.
U.S. Attorney D. Michael Dunavant said, "As part of our violent crime reduction strategy, we are taking the fight to the gangs to dismantle their organizations and remove them from our communities. Violent crimes committed by and in furtherance of gangs will be met with severe consequences, and this sentence shows our resolve."
On October 3, 2018, U.S. District Court Judge Samuel H. Mays sentenced Moss to 25 years in federal prison followed by 3 years supervised release.
Lavunte Evans, a co-defendant to the Village Mart robbery was previously sentenced to 125 months.
This case was investigated by the FBI Safe Streets Task Force and theMulti Agency Gang Unit.
Assistant U.S. Attorney Marques Young prosecuted this case on the government’s behalf.
Former Upstate New York Democratic Party Chair Pleads Guilty to Conspiracy to Cause Foreign Campaign DonationRead the Press Release
A former Erie County, New York Democratic party chair pleaded guilty today to conspiring to illegally cause a $25,000 campaign donation from a foreign source to a New York state official running for reelection.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney James P. Kennedy Jr. for the Western District of New York made the announcement.
G. Steven Pigeon, 58, of Buffalo, New York, pleaded guilty before U.S. District Judge Richard J. Arcara to an information charging him with conspiracy to cause a foreign donation in a state election in violation of federal law. Sentencing is set for Jan. 25, 2019.
As part of his plea, Pigeon admitted that while working as a political consultant and lobbyist in Buffalo, New York, he represented a foreign client, Company A. At the time, the CEO of Company A was Person A, a Canadian citizen. In early 2014, despite knowing that it was illegal to make a foreign donation to a state political campaign, Pigeon solicited Person A to make a $25,000 donation to the reelection campaign of a New York state elected official, Public Official A. The campaign rejected the donation from Person A because Person A was not a citizen or permanent legal resident of the United States. Pigeon and Person A then agreed to cause the donation from Person A to be made through Person B, a permanent legal resident of the United States and an employee of Company A. On or about Feb. 24, 2014, as directed by Person A, Person B made a $25,000 donation to Public Official A’s campaign. Pigeon and Person A knew that Person A would pay for, or reimburse, the donation. As a result of the $25,000 donation, Pigeon and Person A were granted entry to a fundraising event for Public Official A in New York City on Feb. 26, 2014.
“Steven Pigeon undermined the transparency and integrity of the electoral process by funneling foreign money into a campaign,” said Assistant Attorney General Benczkowski. “The Criminal Division and our law enforcement partners are committed to protecting our electoral process and we will aggressively pursue those who seek to circumvent our campaign finance laws.”
“Transparency in political activity, including the disclosure of the sources of political contributions, is a necessary check on the power of money and a necessary ingredient for a healthy democracy,” said U.S. Attorney Kennedy. “Schemes such as this, which introduce obfuscation and secrecy into the political process, threaten our very democracy by endeavoring to use anonymity as a means of eliminating accountability.”
The plea is the result of an investigation by the FBI Buffalo Field Office, under the direction of Special Agent in Charge Gary Loeffert; the New York State Attorney General’s Office, under the direction of Barbara Underwood; and the New York State Police, under the direction of Major Edward Kennedy. The case is being prosecuted by Deputy Chief John Keller of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Paul E. Bonanno of the Western District of New York.
Former State Trooper Sentenced for Child PornographyRead the Press Release
SPRINGFIELD, Mo. – A former Missouri state trooper was sentenced in federal court today for transmitting sexually explicit photos of a teenage victim.
Justin Watson, 47, of Mountain View, Mo., was sentenced by U.S. District Judge M. Douglas Harpool to seven years in federal prison without parole. The court also sentenced Watson to 10 years of supervised release following incarceration.
Watson was employed as a trooper with the Missouri State Highway Patrol from July 1996 until he was dismissed in October 2017. He also worked as a high school baseball umpire in the Mountain View-Birch Tree School District.
On May 29, 2018, Watson pleaded guilty to receiving and distributing child pornography. Watson admitted he took several sexually explicit photos of a 17-year-old juvenile. The photographs were taken using the victim’s iPhone; Watson then transmitted the images of child pornography to his own cell phone.
Watson also has been charged in Howell County Circuit Court with four counts of sexual exploitation of a minor and one count of sexual contact with a student.
This case was prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the Missouri State Highway Patrol.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Former State DOT Employee Indicted for Federal Program TheftRead the Press Release
ALBANY, NEW YORK – Jerome Lauzon, age 44, of Gansevoort, New York, was arraigned today on a charge of misappropriating at least $5,000 from a federally funded program.
The announcement was made by United States Attorney Grant C. Jaquith; Douglas Shoemaker, Special Agent in Charge of the Northeast Regional Office of the United States Department of Transportation, Office of Inspector General (USDOT-OIG); New York State Inspector General Catherine Leahy Scott; and Robert L. Keihm, Chief Investigator for the New York State Department of Transportation (NYSDOT) Investigations Bureau.
Lauzon, formerly a NYSDOT employee, was the Engineer in Charge of a $10.5 million road reconstruction project in Washington County, New York, from 2012 to 2017. The Federal Highway Administration, a USDOT agency, provided 80 percent of the funding for the contract.
According to the indictment, the contractor for the project purchased goods and services for Lauzon’s personal use, and Lauzon unlawfully reimbursed the company for these purchases using project funds. The charges in the indictment are merely accusations. The defendant is presumed innocent unless and until proven guilty.
Lauzon was arraigned today before United States Magistrate Judge Christian F. Hummel, and was released with conditions pending trial. If convicted, he faces up to 10 years in prison, a maximum $250,000 fine, and up to 3 years of post-imprisonment supervised release. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.
This case is being investigated by USDOT-OIG, NYSDOT’s Investigations Bureau, and the Office of the New York State Inspector General, and is being prosecuted by Assistant U.S. Attorney Michael Barnett.
Former Managing Partner of Manhattan Accounting Firm Arrested for FraudRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Philip Bartlett, Inspector-In-Charge for the New York Division of the U.S. Postal Inspection Service (“USPIS”), announced today that STEVEN L. HENNING, a certified public accountant who was a Managing Partner at a Manhattan accounting firm, was charged with wire fraud in connection with a scheme in which he falsely claimed to have entered into multimillion-dollar intellectual property deals and defrauded investors out of $2 million. HENNING was arrested in St. Johns, Florida, yesterday afternoon and presented before a U.S. Magistrate judge in federal court in Jacksonville, Florida, this afternoon.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Steven Henning, a CPA at a Manhattan accounting firm, established his own firm called OpportunIP, which he allegedly told victims was a company specializing in assisting other entities in taking intellectual property to the market. Henning allegedly induced victims to invest in OpportunIP by providing them with false documents showing OpportunIP’s involvement in multi-million dollar transactions that would reap millions of dollars in future profits. Ultimately, the victims learned that the deals did not exist and they were victims of an alleged scheme to defraud them out of millions of dollars.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “Mr. Henning’s claims were nothing more than a bag of lies. Law enforcement reminds investors to research all investment opportunities thoroughly to avoid being scammed.”
According to the allegations contained in the Complaint unsealed today[1]:
HENNING, a certified public accountant, was a managing partner at an accounting firm in Manhattan (the “Accounting Firm”). He was the Partner-in-Charge of Advisory Services and served on the firm’s Executive Committee. Previously, HENNING was employed as a Professor of accounting at a Texas university (the “University”) and he served as an Academic Fellow in the Office of the Chief Accountant at the U.S. Securities and Exchange Commission.
In June 2008, while employed at the Accounting Firm, HENNING formed what would later become known as OpportunIP, LLC (“OpportunIP”), a business that, at different times, had offices in Purchase and Tarrytown, New York. HENNING was the Chief Executive Officer and owned an interest in OpportunIP through an entity known as the Henning Family Partnership (“HFP”). Members of the Accounting Firm also owned interests in OpportunIP.
In May 2012, HENNING told one of his prior students from the University (“Victim-1”) about an endeavor he was involved in, OpportunIP. HENNING described OpportunIP as a business venture through which HENNING established partnerships with owners or developers of intellectual property (“IP”) and assisted them in taking the IP to market in exchange for a substantial percentage share of future profits. Over the next few years, HENNING provided Victim-1 with information about OpportunIP, including a series of IP opportunities that were in various stages of implementation. For example, he claimed that OpportunIP had signed an escrow agreement with two multi-national corporations (“MNC-1” and “MNC-2”) relating to the “license-out” of certain IP that was being represented by OpportunIP (the “Escrow Agreement”).
In fall 2014, HENNING presented Victim-1 with an opportunity to invest in OpportunIP and asked Victim-1 to help secure bridge financing for an IP owner (“IP Owner-1”) who was in financial distress and needed temporary financing while he brought his IP to market. HENNING represented that the IP owner needed a $500,000 loan to get him past certain financial hurdles and would repay the loan in six months.
Thereafter, there were ongoing communications relating to Victim-1’s purchase of an interest in OpportunIP and, at around the same time, HENNING disclosed another multi-million dollar OpportunIP License-Out deal involving an agreement between an IP owner represented by OpportunIP and a global automobile manufacturer (“AM-1”). HENNING provided Victim-1 with a copy of the License-Out Agreement (“AM-1 License Agreement) and an AM-1 corporate guarantee (the “AM-1 Guarantee”). In addition, he provided an agreement in which a second global automobile manufacturer (“AM-2”) agreed to license the same technology (“AM-2 License Agreement”).
On October 31, 2014, HENNING listed IP deals for which he had “signed deals and minimum guarantees” and proposed that Victim-1 acquire 5 percent of OpportunIP for $2 million. On November 2, 2014, Victim-1 indicated his willingness to proceed and on November 7, 2014, HENNING sent Victim-1 the purported License-in Agreement between OpportunIP and MNC-1 (“MNC-1 License Agreement”) and the “License-out Agreement” between OpportunIP and MNC-2 (“MNC-2 License Agreement”). Three days later, on November 10, 2014, HENNING emailed Victim-1 the Escrow Agreement, in which MNC-1, MNC-2, and OpportunIP purportedly agreed that, pursuant to the license agreements, $35 million would be held in escrow and OpportunIP would receive $2 million no later than December 31, 2014.
The AM-1 Guarantee, AM-1 Licensing Agreement, and the Escrow Agreement were all fraudulent documents and the deals never existed. However, based on the information and documentation provided by HENNING, on November 21, 2014, Victim-1 sent HENNING $500,000, which was the beginning of the funding for HENNING’s proposal for Victim-1 to purchase an interest in OpportunIP and was a loan to HENNING. On November 26, 2014, Victim-1 had another $500,000 wired to a bank account controlled by IP Owner-1, in order to fund the purported loan to IP Owner-1.
HENNING and Victim-1 continued to communicate about HENNING’s proposal to have Victim-1 purchase an interest in OpportunIP. HENNING proposed forming a new company with the same goals and business model as OpportunIP. Victim-1 brought in his relative (“Victim-2”) and Victim-2’s family. In spring 2015, Victim-1, Victim-2, another investor (“Victim-3”), and a corporate attorney working on the transaction on their behalf (“Attorney-1”), were communicating with HENNING about the creation of a new corporate entity through which HENNING would transfer control of the company from his Accounting Firm partners to HENNING and Victim-1.
Thereafter, the Victims’ families agreed that they, through their joint and separate investment entities, would fund an additional loan to the new HENNING venture, based largely upon confidence in the purported MNC-1 and AM-1 agreements and HENNING’s additional representations of future business opportunities.
After discussions relating to the structure of the company and requests for information from the Victims’ corporate attorney, on June 3, 2015, HENNING sent purported electronic bank records for the months of April and May for a bank account in the name of OpportunIP (the “OpportunIP Account”). He represented that “the April statement shows the amount coming in from [MNC-1] ($2 million plus remaining interest from the escrow account).” The bank statements were also fraudulent and there was no deposit of over $2 million during those months.
On October 9, 2015, Victim-1 and Victim-2 had $1 million transferred to an account in the name of an entity that was set up to be the holding branch of the new OpportunIP. Thereafter, nearly all of the $1 million was transferred to accounts controlled by HENNING.
Meanwhile, HENNING continued to make false representations about the supposed progress he was making in securing deals for OpportunIP and he indicated that he was ready to have Victim-1 become more involved in OpportunIP’s operations. Consequently, in Summer/Fall 2016, Victim-1 left his job at an investment bank to become Chief Operating Officer of OpportunIP. But, despite HENNING’s representations that business was going well, he insulated his alleged business contacts from direct interaction with Victim-1 or Victim-2 and provided them with excuses for why deals were delayed. In addition, in at least one instance in November 2016, HENNING made it appear that he had scheduled a meeting between HENNING, Victim-1 and an MNC-1 Executive (the “MNC-1 Executive”) when he actually had not. Victim-1 traveled to New York and came to the Purchase office of OpportunIP to subsequently meet with HENNING and the MNC-1 Executive. But, that meeting was never actually scheduled. To make it appear that it had been, on November 18, 2016, HENNING forwarded a fabricated email to Victim-1, which was purportedly sent from the MNC-1 Executive to HENNING, and canceled the meeting.
In August 2017, during a search of HENNING’s office at the Accounting Firm, the Escrow Agreement, the AM-1 Guarantee, and the AM-1 License-out agreement were all recovered and contained taped-on signatures of executives on their signature pages.
* * *
HENNING, 57, is charged with wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Berman praised the outstanding investigative work of the USPIS and the SEC Office of Inspector General.
The case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorney Margery B. Feinzig is in charge of the prosecution.
The charge contained in the Complaint is merely an accusation, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Former Manager for a Colorado Resort Sentenced to Prison for Tax FraudRead the Press Release
A Scottsdale, Arizona man, who formerly resided in Pagosa Springs, Colorado, was sentenced today in the U.S. District Court for the District of Colorado to eighteen months in prison for filing a false tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
According to court documents, William Whittington, 68, filed a false 2010 individual income tax return, on which he underreported income received from his offshore accounts and through the payment of his personal expenses by an entity over which he exercised managerial control. From 2010 to 2012, Whittington directed that the Springs Resort & Spa, in Pagosa Springs, Colorado, a business managed by Whittington and family members at the time, pay over $1 million of his personal expenses. The total additional tax due for those three years, 2010 through 2012, based on Whittington’s failure to report the payment of the personal expenses as income is $364,994.00.
From 2003 to 2010, Whittington failed to report $9.7 million in investment income generated through two offshore bank accounts in Liechtenstein. Combined with the tax loss from the resort payment of his personal expenses, Whittington’s fraudulent conduct created a $1.8 million tax loss.
Whittington is a competitive racecar driver, whose team won the 1979 24 Hours of Le Mans. Whittington was previously sentenced to prison in 1987 for evading income tax and importing multiple tons of marijuana. See United States v. Whittington, 918 F.2d 149 (11th Cir. 1990).
In addition to the term of imprisonment imposed, U.S. District Court Judge Robert E. Blackburn ordered Whittington to serve one year of supervised release. Whittington paid approximately $1.8 million in restitution to the Internal Revenue Service as a condition of his plea agreement.
Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS–Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Kathleen M. Barry, Lori A. Hendrickson, and Sarah A. Kiewlicz, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Former Las Vegas Valley Water District Employee Pleads Guilty to $6.7 Million Ink/Toner Cartridge Scheme and Tax EvasionRead the Press Release
LAS VEGAS, Nev. – A former employee of the Las Vegas Valley Water District pleaded guilty today to mail fraud and tax evasion as part of a scheme to defraud the public utilities company of over $6.7 million, announced U.S. Attorney Dayle Elieson of the District of Nevada.
Jennifer J. McCain-Bray, aka JJ McCain, 43, of Las Vegas, pleaded guilty before U.S. District Judge Kent J. Dawson to one count of mail fraud and one count of subscribing to a false tax return. Sentencing is set for January 29, 2019. The maximum penalty for mail fraud is 20 years in prison and a $250,000 fine, and the maximum penalty for subscribing to a false tax return is three years in prison and a $250,000 fine. She also faces a $6,715,531 criminal forfeiture money judgment.
Between October 2001 and October 2007, McCain worked as a purchasing analyst for the Las Vegas Valley Water District (LVVWD) and she was responsible for transmitting orders and payments to vendors when particular products were requested from LVVWD departments and employees. McCain-Bray admitted that between January 1, 2007 to about December 7, 2015, she devised the scheme to defraud the LVVWD by falsely representing that her purchases of ink and toner cartridges were for the LVVWD, when she knew that the products were actually purchased for a New Jersey company which received and then resold the cartridges for its own profit. McCain-Bray instructed the vendor to ship the ink and toner cartridges from California and other locations to her at her LVVWD office in Las Vegas. She then relabeled the packages and shipped them to the New Jersey company. In exchange, the New Jersey company transferred money to McCain-Bray’s personal PayPal account. Financial records indicate that McCain-Bray used the fraud proceeds for personal expenses and purchases, including extensive home remodeling and improvements, trips, gifts to family members and friends, and other lifestyle expenses. Between 2007 and 2015, McCain-Bray fraudulently purchased approximately $6.7 million in ink and toner cartridges with LVVWD funds.
McCain-Bray also failed to report her profits from the scheme on her personal tax returns for tax years 2011 to 2015. For those years, she failed to report a total of $2,339,156.12 in taxable income to the Internal Revenue Service.
The case is being investigated by the FBI and the IRS-Criminal Investigation. Assistant U.S. Attorney Patrick Burns is prosecuting the case.
###