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Tuesday 25 September 2018
Hospital Chain Will Pay over $260 Million to Resolve False Billing and Kickback Allegations; One Subsidiary Agrees to Plead GuiltyRead the Press Release
Health Management Associates, LLC (HMA), formerly a U.S. hospital chain headquartered in Naples, Florida, will pay over $260 million to resolve criminal charges and civil claims relating to a scheme to defraud the United States. The government alleged that HMA knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services, paid remuneration to physicians in return for patient referrals, and submitted inflated claims for emergency department facility fees.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Assistant Attorney General Joseph H. Hunt of the Justice Department’s Civil Division, U.S. Attorney Maria Chapa Lopez for the Middle District of Florida, U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida, U.S. Attorney Charles E. Peeler for the Middle District of Georgia, U.S. Attorney John R. Lausch Jr. for the Northern District of Illinois, U.S. Attorney R. Andrew Murray for the Western District of North Carolina, U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania, U.S. Attorney Sherri Lydon for the District of South Carolina, Assistant Director Robert Johnson of FBI’s Criminal Investigative Division, and Acting Assistant Inspector General for Investigations Derrick L. Jackson for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
HMA was acquired by Community Health Systems Inc. (CHS), a major U.S. hospital chain, in January 2014, after the alleged conduct at HMA occurred. Since July 2014, HMA has been operating under a Corporate Integrity Agreement (CIA) between CHS and the HHS-OIG.
As part of the criminal resolution, HMA entered into a three-year Non-Prosecution Agreement (NPA) with the Criminal Division’s Fraud Section in connection with a corporate-driven scheme to defraud Federal health care programs by unlawfully pressuring and inducing physicians serving HMA hospitals to increase the number of emergency department patient admissions without regard to whether the admissions were medically necessary. The scheme involved HMA hospitals billing and obtaining reimbursement for higher-paying inpatient hospital care, as opposed to observation or outpatient care, from Federal health care programs, increasing HMA’s revenue. Under the terms of the NPA, HMA will pay a $35 million monetary penalty. Under the terms of the NPA, HMA and CHS, the current parent company, agreed to cooperate with the investigation, report allegations or evidence of violations of Federal health care offenses, and ensure that their compliance and ethics program satisfies the requirements of an amended and extended CIA between CHS and HHS-OIG.
In addition, an HMA subsidiary, Carlisle HMA, LLC, formerly doing business as Carlisle Regional Medical Center, has agreed to plead guilty to one count of conspiracy to commit health care fraud. The plea agreement remains subject to acceptance by the court. Up until 2017, Carlisle HMA, LLC owned and operated Carlisle Regional Medical Center, an acute care hospital located in Carlisle, Pennsylvania. Carlisle HMA, LLC was charged in a criminal information filed today in the District of Columbia with conspiracy to commit health care fraud.
According to admissions made in the resolution documents, HMA instituted a formal and aggressive plan to improperly increase overall emergency department inpatient admissions at all HMA hospitals, including at Carlisle Regional Medical Center. As part of the plan, HMA set mandatory company-wide admission rate benchmarks for patients presenting to HMA hospital emergency departments – a range of 15 to 20 percent for all patients presenting to the emergency department, depending on the HMA hospital, and 50 percent for patients 65 and older (i.e. Medicare beneficiaries) - solely to increase HMA revenue. HMA executives and HMA hospital administrators executed the scheme by pressuring, coercing and inducing physicians and medical directors to meet the mandatory admission rate benchmarks and admit patients who did not need impatient admission through a variety of means, including by threatening to fire physicians and medical directors if they did not increase the number of patients admitted.
“HMA pressured emergency room physicians, including through threats of termination, to increase the number of inpatient admissions from emergency departments—even when those admissions were medically unnecessary,” said Assistant Attorney General Benczkowski. “Hospital operators that improperly influence a physician’s medical decision-making in pursuit of profits do so at their own peril. Where we find such conduct, the Criminal Division’s Health Care Fraud Unit, together with our Civil Division and law enforcement colleagues, will aggressively prosecute those responsible to the fullest extent of the law.”
HMA also agreed to pay $216 million as part of a related civil settlement. The civil settlement resolves HMA’s liability for submitting false claims between 2008 and 2012 as part of its corporate-wide scheme to increase inpatient admissions of Medicare, Medicaid and the Department of Defense’s (DOD) TRICARE program beneficiaries over the age of 65. The government alleged that the inpatient admission of these beneficiaries was not medically necessary, and that the care needed by, and provided to, these beneficiaries should have been provided in a less costly outpatient or observation setting. HMA agreed to pay $62.5 million to resolve these allegations with $61,839,718 being paid to the United States and $706,084 being paid to participating States.
The civil settlement also resolves allegations that during the period from 2003 through 2011, two HMA hospitals in Florida, Charlotte Regional Medical Center and Peace River Medical Center, billed federal health care programs for services referred by physicians to whom HMA provided remuneration in return for patient referrals. To induce patient referrals, Charlotte Regional provided a local physician group with free office space and staff, as well as direct payments, which purportedly covered overhead and administrative costs incurred by the group for its management of a Charlotte Regional physician. HMA also provided another local physician with free rent and upgrades to his office space. HMA agreed to pay $93.5 million to resolve these civil allegations, with the United States receiving $87.96 million, and the State of Florida receiving $5.54 million.
Additional allegations that are resolved by the civil settlement are that between 2009 and 2012, two former HMA hospitals, Lancaster Regional Medical Center and Heart of Lancaster Medical Center in Pennsylvania, billed federal health care programs for services referred by physicians with whom the facilities had improper financial relationships. These relationships stemmed from HMA’s excessive payments to (1) a large physician group in return for two businesses owned by the group and for services allegedly performed by the group, and (2) a local surgeon that exceeded the value of the services provided. The government alleged that these arrangements were structured in this manner to disguise payments intended to induce the referral of patients. HMA agreed to pay $55 million to the United States to resolve these civil allegations.
Finally, the civil settlement will also resolve claims that Crossgates Hospital, an HMA facility in Brandon, Mississippi, leased space to a local physician from Jan. 15, 2005 through Jan. 14, 2007, but required the physician to pay rent for only half of the space he was actually occupying, in return for patient referrals to Crossgates Hospital. HMA agreed to pay $425,000 to the United States to resolve these civil allegations.
Federal law, including the Anti-Kickback Statute and the Stark Law, prohibits hospitals from providing financial inducements to physicians for referrals. These provisions are designed to ensure that physician decision-making is not compromised by improper financial incentives.
“Billing for unnecessary hospital stays wastes federal dollars,” said Assistant Attorney General Hunt. “In addition, offering financial incentives to physicians in return for patient referrals undermines the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”
“The payment of kickbacks in exchange for medical referrals undermines the integrity of our healthcare system,” said U.S. Attorney Chapa Lopez. “Today’s resolution should remind healthcare providers of their duty to comply with the law, and the heavy price to be paid for corrupt practices committed by their executives. Our Civil Division will continue to invest itself in the pursuit of health care providers who violate the law for personal gain.”
“Our office will continue to enforce prohibitions on improper financial relationships between health care providers and their referral sources, as these relationships can serve to corrupt physician judgment about a patient’s true health needs,” said U.S. Attorney Fajardo Orshan. “We will devote all necessary resources to ensure that those rendering medical care do so for the sole benefit of the patient and in compliance with the law.”
“By manipulating patient status, HMA increased Medicare costs and pocketed taxpayer funds to which it was not entitled,” said U.S. Attorney Peeler. “Our Medicare patients and our taxpayers deserve better, and I am proud that justice has been done. Nonetheless, we will continue to pursue those hospitals in our district that would seek to take advantage of the Medicare Program.”
“Government healthcare programs are vital to the welfare of our communities,” said U.S. Attorney Murray for the Western District of North Carolina, where two HMA hospitals were located. “We will aggressively pursue providers that fraudulently inflate charges to government programs and divert scarce resources from those in need into their own pockets.”
“Our resolution of this matter and the significant recovery we have obtained show once again that no matter how complex the scheme is, we will find it, stop it, and punish it,” said U.S. Attorney McSwain. “HMA covered up kickbacks for patient referrals with sham joint venture agreements, lease payments, and management agreements. These sorts of improper physician inducements are a form of ‘pay to play’ business practices that will not be tolerated. Healthcare institutions cannot pad their bottom line at the expense of the American taxpayers. And most importantly, this conduct must be rooted out because it gets in the way of providing top-notch patient care to American citizens.”
“It is critically important to all of us that the patients’ interest drive the physicians’ decisions on care,” said U.S. Attorney Lydon. “Unnecessary hospital admissions not only drive up costs but can cause damage to patients and cannot be tolerated.”
The government further alleged that from September 2009 through December 2011, certain HMA hospitals submitted claims to Medicare and Medicaid seeking reimbursement for falsely inflated emergency department facility charges. HMA agreed to pay $12 million to resolve these civil allegations, with $11.028 million being paid to the United States and $972,000 being paid to participating States.
“Compliance with government healthcare rules requires that patients only receive treatment they actually need,” said HHS-OIG Acting Assistant Inspector General for Investigations Jackson. “Then government programs must be billed just for those services. No more, no less. Let there be no doubt, we will continue to protect federal healthcare programs and beneficiaries by holding provider organizations fully accountable.”
“This settlement is a result of the FBI’s hard work and dedication to hold companies accountable for their role in healthcare fraud and abuse,” said FBI Assistant Director Johnson. “The FBI will not stand by when there are allegations that a company operates a corporate wide scheme to increase their financial gain at the expense of the U.S. government. We appreciate those who come forward with allegations of criminal misconduct and recognize the importance of the public’s assistance in our work.”
The allegations resolved by the settlement were originally brought in eight lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The eight qui tam cases, which were filed in various districts and transferred to the U.S. District Court for the District of Columbia as part of a multi-district litigation presided over by the Honorable Reggie B. Walton, are captioned: United States ex rel. Brummer v. HMA, Inc., 3-09-cv-135 (CDL) (M.D. Ga.); United States ex rel. Williams v. HMA, Inc., 3:09-cv-130 (M.D. Ga.); United States ex rel. Plantz v. HMA, Inc., 13-CV-1212 (N.D. Ill.); United States ex rel. Miller v. HMA, Inc., 10-3007 (E.D. Pa.); United States ex rel. Mason & Folstad v. HMA, Inc., 3:10-CV-472-GCM (W.D.N.C.); United States ex rel. Nurkin v. HMA, Inc., 2:11-cv-14-FtM-29DNF (M.D. Fla.); United States ex rel. Jacqueline Meyer & Cowling v. HMA, Inc., 0:11-cv-01713-JFA (D.S.C.); and United States ex rel. Paul Meyer v. HMA, Inc., 11-62445 cv-Williams (S.D. Fla.).
The whistleblower in United States ex rel. Nurkin will receive approximately $15 million as a share of the recovery, and the whistleblowers in United States ex rel. Miller will receive approximately $12.4 million as their share of the recovery. The whistleblower shares to be awarded in the remaining cases have not yet been determined.
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the Health Care Fraud Unit of the Criminal Division’s Fraud Section; the U.S. Attorneys’ Offices for the Middle District of Florida, Southern District of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Eastern District of Pennsylvania and the District of South Carolina, the FBI Healthcare Fraud Unit Major Provider Response Team, HHS-OIG and Defense Health Agency Program Integrity. On behalf of the States, an investigative/settlement team with members from North Carolina, Massachusetts, Virginia, Washington, and Florida assisted with the investigation and resolution of these matters.
The government’s resolution of this matter illustrates the government’s emphasis on combating healthcare fraud and marks another achievement for the Health Care Fraud and Enforcement Action Team (HEAT) initiative, a partnership between the Department of Justice and the Department of Health and Human Services to focus efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
Except for those facts admitted to in the guilty plea and in the Non-Prosecution Agreement, the claims resolved by the settlement are allegations only, and there has been no determination of liability.
If you believe you are a victim of this offense, please visit this website or call (888) 549-3945.
Hospital Chain Will Pay over $260 Million to Resolve False Billing and Kickback Allegations; One Subsidiary Agrees to Plead GuiltyRead the Press Release
WASHINGTON – Health Management Associates, LLC (HMA), formerly a U.S. hospital chain headquartered in Naples, Florida, will pay over $260 million to resolve criminal charges and civil claims relating to a scheme to defraud the United States. The government alleged that HMA knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services, paid remuneration to physicians in return for patient referrals, and submitted inflated claims for emergency department facility fees.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Assistant Attorney General Joseph H. Hunt of the Justice Department’s Civil Division, U.S. Attorney Maria Chapa Lopez for the Middle District of Florida, U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida, U.S. Attorney Charles E. Peeler for the Middle District of Georgia, U.S. Attorney John R. Lausch Jr. for the Northern District of Illinois, U.S. Attorney R. Andrew Murray for the Western District of North Carolina, U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania, U.S. Attorney Sherri Lydon for the District of South Carolina, Assistant Director Robert Johnson of FBI’s Criminal Investigative Division, and Acting Assistant Inspector General for Investigations Derrick L. Jackson for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
HMA was acquired by Community Health Systems Inc. (CHS), a major U.S. hospital chain, in January 2014, after the alleged conduct at HMA occurred. Since July 2014, HMA has been operating under a Corporate Integrity Agreement (CIA) between CHS and the HHS-OIG.
As part of the criminal resolution, HMA entered into a three-year Non-Prosecution Agreement (NPA) with the Criminal Division’s Fraud Section in connection with a corporate-driven scheme to defraud Federal health care programs by unlawfully pressuring and inducing physicians serving HMA hospitals to increase the number of emergency department patient admissions without regard to whether the admissions were medically necessary. The scheme involved HMA hospitals billing and obtaining reimbursement for higher-paying inpatient hospital care, as opposed to observation or outpatient care, from Federal health care programs, increasing HMA’s revenue. Under the terms of the NPA, HMA will pay a $35 million monetary penalty. Under the terms of the NPA, HMA and CHS, the current parent company, agreed to cooperate with the investigation, report allegations or evidence of violations of Federal health care offenses, and ensure that their compliance and ethics program satisfies the requirements of an amended and extended CIA between CHS and HHS-OIG.
In addition, an HMA subsidiary, Carlisle HMA, LLC, formerly doing business as Carlisle Regional Medical Center, has agreed to plead guilty to one count of conspiracy to commit health care fraud. The plea agreement remains subject to acceptance by the court. Up until 2017, Carlisle HMA, LLC owned and operated Carlisle Regional Medical Center, an acute care hospital located in Carlisle, Pennsylvania. Carlisle HMA, LLC was charged in a criminal information filed today in the District of Columbia with conspiracy to commit health care fraud.
According to admissions made in the resolution documents, HMA instituted a formal and aggressive plan to improperly increase overall emergency department inpatient admissions at all HMA hospitals, including at Carlisle Regional Medical Center. As part of the plan, HMA set mandatory company-wide admission rate benchmarks for patients presenting to HMA hospital emergency departments – a range of 15 to 20 percent for all patients presenting to the emergency department, depending on the HMA hospital, and 50 percent for patients 65 and older (i.e. Medicare beneficiaries) - solely to increase HMA revenue. HMA executives and HMA hospital administrators executed the scheme by pressuring, coercing and inducing physicians and medical directors to meet the mandatory admission rate benchmarks and admit patients who did not need impatient admission through a variety of means, including by threatening to fire physicians and medical directors if they did not increase the number of patients admitted.
“HMA pressured emergency room physicians, including through threats of termination, to increase the number of inpatient admissions from emergency departments—even when those admissions were medically unnecessary,” said Assistant Attorney General Benczkowski. “Hospital operators that improperly influence a physician’s medical decision-making in pursuit of profits do so at their own peril. Where we find such conduct, the Criminal Division’s Health Care Fraud Unit, together with our Civil Division and law enforcement colleagues, will aggressively prosecute those responsible to the fullest extent of the law.”
HMA also agreed to pay $216 million as part of a related civil settlement. The civil settlement resolves HMA’s liability for submitting false claims between 2008 and 2012 as part of its corporate-wide scheme to increase inpatient admissions of Medicare, Medicaid and the Department of Defense’s (DOD) TRICARE program beneficiaries over the age of 65. The government alleged that the inpatient admission of these beneficiaries was not medically necessary, and that the care needed by, and provided to, these beneficiaries should have been provided in a less costly outpatient or observation setting. HMA agreed to pay $62.5 million to resolve these allegations with $61,839,718 being paid to the United States and $706,084 being paid to participating States.
The civil settlement also resolves allegations that during the period from 2003 through 2011, two HMA hospitals in Florida, Charlotte Regional Medical Center and Peace River Medical Center, billed federal health care programs for services referred by physicians to whom HMA provided remuneration in return for patient referrals. To induce patient referrals, Charlotte Regional provided a local physician group with free office space and staff, as well as direct payments, which purportedly covered overhead and administrative costs incurred by the group for its management of a Charlotte Regional physician. HMA also provided another local physician with free rent and upgrades to his office space. HMA agreed to pay $93.5 million to resolve these civil allegations, with the United States receiving $87.96 million, and the State of Florida receiving $5.54 million.
Additional allegations that are resolved by the civil settlement are that between 2009 and 2012, two former HMA hospitals, Lancaster Regional Medical Center and Heart of Lancaster Medical Center in Pennsylvania, billed federal health care programs for services referred by physicians with whom the facilities had improper financial relationships. These relationships stemmed from HMA’s excessive payments to (1) a large physician group in return for two businesses owned by the group and for services allegedly performed by the group, and (2) a local surgeon that exceeded the value of the services provided. The government alleged that these arrangements were structured in this manner to disguise payments intended to induce the referral of patients. HMA agreed to pay $55 million to the United States to resolve these civil allegations.
Finally, the civil settlement will also resolve claims that Crossgates Hospital, an HMA facility in Brandon, Mississippi, leased space to a local physician from Jan. 15, 2005 through Jan. 14, 2007, but required the physician to pay rent for only half of the space he was actually occupying, in return for patient referrals to Crossgates Hospital. HMA agreed to pay $425,000 to the United States to resolve these civil allegations.
Federal law, including the Anti-Kickback Statute and the Stark Law, prohibits hospitals from providing financial inducements to physicians for referrals. These provisions are designed to ensure that physician decision-making is not compromised by improper financial incentives.
“Billing for unnecessary hospital stays wastes federal dollars,” said Assistant Attorney General Hunt. “In addition, offering financial incentives to physicians in return for patient referrals undermines the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”
“The payment of kickbacks in exchange for medical referrals undermines the integrity of our healthcare system,” said U.S. Attorney Chapa Lopez. “Today’s resolution should remind healthcare providers of their duty to comply with the law, and the heavy price to be paid for corrupt practices committed by their executives. Our Civil Division will continue to invest itself in the pursuit of health care providers who violate the law for personal gain.”
“Our office will continue to enforce prohibitions on improper financial relationships between health care providers and their referral sources, as these relationships can serve to corrupt physician judgment about a patient’s true health needs,” said U.S. Attorney Fajardo Orshan. “We will devote all necessary resources to ensure that those rendering medical care do so for the sole benefit of the patient and in compliance with the law.”
“By manipulating patient status, HMA increased Medicare costs and pocketed taxpayer funds to which it was not entitled,” said U.S. Attorney Peeler. “Our Medicare patients and our taxpayers deserve better, and I am proud that justice has been done. Nonetheless, we will continue to pursue those hospitals in our district that would seek to take advantage of the Medicare Program.”
“Government healthcare programs are vital to the welfare of our communities,” said U.S. Attorney Murray for the Western District of North Carolina, where two HMA hospitals were located. “We will aggressively pursue providers that fraudulently inflate charges to government programs and divert scarce resources from those in need into their own pockets.”
“Our resolution of this matter and the significant recovery we have obtained show once again that no matter how complex the scheme is, we will find it, stop it, and punish it,” said U.S. Attorney McSwain. “HMA covered up kickbacks for patient referrals with sham joint venture agreements, lease payments, and management agreements. These sorts of improper physician inducements are a form of ‘pay to play’ business practices that will not be tolerated. Healthcare institutions cannot pad their bottom line at the expense of the American taxpayers. And most importantly, this conduct must be rooted out because it gets in the way of providing top-notch patient care to American citizens.”
“It is critically important to all of us that the patients’ interest drive the physicians’ decisions on care,” said U.S. Attorney Lydon. “Unnecessary hospital admissions not only drive up costs but can cause damage to patients and cannot be tolerated.”
The government further alleged that from September 2009 through December 2011, certain HMA hospitals submitted claims to Medicare and Medicaid seeking reimbursement for falsely inflated emergency department facility charges. HMA agreed to pay $12 million to resolve these civil allegations, with $11.028 million being paid to the United States and $972,000 being paid to participating States.
“Compliance with government healthcare rules requires that patients only receive treatment they actually need,” said HHS-OIG Acting Assistant Inspector General for Investigations Jackson. “Then government programs must be billed just for those services. No more, no less. Let there be no doubt, we will continue to protect federal healthcare programs and beneficiaries by holding provider organizations fully accountable.”
“This settlement is a result of the FBI’s hard work and dedication to hold companies accountable for their role in healthcare fraud and abuse,” said FBI Assistant Director Johnson. “The FBI will not stand by when there are allegations that a company operates a corporate wide scheme to increase their financial gain at the expense of the U.S. government. We appreciate those who come forward with allegations of criminal misconduct and recognize the importance of the public’s assistance in our work.”
The allegations resolved by the settlement were originally brought in eight lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The eight qui tam cases, which were filed in various districts and transferred to the U.S. District Court for the District of Columbia as part of a multi-district litigation presided over by the Honorable Reggie B. Walton, are captioned: United States ex rel. Brummer v. HMA, Inc., 3-09-cv-135 (CDL) (M.D. Ga.); United States ex rel. Williams v. HMA, Inc., 3:09-cv-130 (M.D. Ga.); United States ex rel. Plantz v. HMA, Inc., 13-CV-1212 (N.D. Ill.); United States ex rel. Miller v. HMA, Inc., 10-3007 (E.D. Pa.); United States ex rel. Mason & Folstad v. HMA, Inc., 3:10-CV-472-GCM (W.D.N.C.); United States ex rel. Nurkin v. HMA, Inc., 2:11-cv-14-FtM-29DNF (M.D. Fla.); United States ex rel. Jacqueline Meyer & Cowling v. HMA, Inc., 0:11-cv-01713-JFA (D.S.C.); and United States ex rel. Paul Meyer v. HMA, Inc., 11-62445 cv-Williams (S.D. Fla.).
The whistleblower in United States ex rel. Nurkin will receive approximately $15 million as a share of the recovery, and the whistleblowers in United States ex rel. Miller will receive approximately $12.4 million as their share of the recovery. The whistleblower shares to be awarded in the remaining cases have not yet been determined.
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the Health Care Fraud Unit of the Criminal Division’s Fraud Section; the U.S. Attorneys’ Offices for the Middle District of Florida, Southern District of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Eastern District of Pennsylvania and the District of South Carolina, the FBI Healthcare Fraud Unit Major Provider Response Team, HHS-OIG and Defense Health Agency Program Integrity. On behalf of the States, an investigative/settlement team with members from North Carolina, Massachusetts, Virginia, Washington, and Florida assisted with the investigation and resolution of these matters.
The government’s resolution of this matter illustrates the government’s emphasis on combating healthcare fraud and marks another achievement for the Health Care Fraud and Enforcement Action Team (HEAT) initiative, a partnership between the Department of Justice and the Department of Health and Human Services to focus efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
Except for those facts admitted to in the guilty plea and in the Non-Prosecution Agreement, the claims resolved by the settlement are allegations only, and there has been no determination of liability.
If you believe you are a victim of this offense, please call (888) 549-3945.
Harrisburg Man Sentenced to 20 Years’ Imprisonment for Possessing A Firearm in Furtherance of Drug TraffickingRead the Press Release
HARRISBURG- The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Jamar McMillan, age 34, of Harrisburg, Pennsylvania, was sentenced on September 21, 2018, to 20 years’ imprisonment and four years supervised release by Chief United States District Court Judge Christopher C. Conner for possession with the intent to distribute heroin, PCP, and synthetic marijuana, possession of a stolen firearm as a previously convicted felon and in furtherance of a drug trafficking crime.
According to United States Attorney David J. Freed, McMillan was convicted by a jury in March 2018, following a three-day trial before Chief Judge Conner. The case arose as a result of an arrest of McMillan in August 2015. During his arrest, officers found heroin, PCP and synthetic marijuana on his person, and located a craftsman soft pouch on the driver’s seat of his vehicle, containing a stolen loaded .45 Heckler and Koch pistol, a balaclava face mask and a phone. The face mask and firearm were processed by the PA State Police laboratory and McMillan’s DNA was found on the items.
The case was investigated by the Harrisburg Police Department Vice Unit and the Federal Bureau of Investigation. Assistant U.S. Attorney Chelsea Schinnour prosecuted the case.
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.
This case was also brought as part of a district wide initiative to combat the nationwide epidemic regarding the use and distribution of heroin. Led by the United States Attorney’s Office, the Heroin Initiative targets heroin traffickers operating in the Middle District of Pennsylvania and is part of a coordinated effort among federal, state and local law enforcement agencies to locate, apprehend, and prosecute individuals who commit heroin related offenses.
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Grandview Man Sentenced to 18 Years for Illegal FirearmRead the Press Release
KANSAS CITY, Mo. – A Grandview, Mo., man was sentenced in federal court today for illegally possessing a firearm.
Frank Vanoy, 37, was sentenced by U.S. District Judge Beth Phillips to 18 years in federal prison without parole. Vanoy was sentenced as an armed career offender due to his prior felony convictions.
On Feb. 3, 2018, Vanoy was convicted at trial of being a felon in possession of a firearm.
Vanoy was in possession of a stolen Glock .45-caliber pistol, loaded and equipped with an extended magazine, on Dec. 4, 2015, when he was arrested for violating his supervised release in an unrelated federal case. Law enforcement officers confronted Vanoy in the front yard of his parents’ residence. Vanoy dropped the firearm and a holster and fled to the front porch, where he immediately surrendered. Officers recovered the firearm and holster, which also contained a spare magazine, in the area where Vanoy had been standing.
Under federal law, it is illegal for anyone convicted of a felony to be in possession of any firearm or ammunition. Vanoy has a significant criminal history, including prior federal convictions for being a felon in possession of a firearm and conspiracy to distribute a controlled substance, and two Virginia state convictions for possession with intent to distribute a controlled substance and failure to appear in court. According to court documents, every time Vanoy has been on probation or supervised release for a felony case, he has violated his supervision by committing new state and federal felony offenses.
This case was prosecuted by Assistant U.S. Attorneys Adam Caine and Ashleigh Ragner. It was investigated by the FBI’s Violent Crimes Fugitive Task Force, which consists of the FBI, the U.S. Marshal’s Service, the Kansas City, Mo., Police Department, the Kansas City, Kan., Police Department, the Johnson County, Kan., Sheriff's Department, and the Independence, Mo., Police Department.
Four Inmates Charged with First-Degree Murder in Beating Death of Fellow Inmate at Federal Prison in VictorvilleRead the Press Release
SANTA ANA, California – An indictment unsealed today charges four prison inmates with first-degree murder in the beating death of another inmate at the Federal Correctional Institution II in Victorville, an offense that carries a potential death sentence.
In addition to the premeditated murder charge, all four defendants are charged with conspiracy to commit murder.
The indictment unsealed today was returned by a federal grand jury on August 29. The four defendants are accused in the October 1, 2013 killing of a 38-year-old inmate identified in the indictment as “J.S.,” who was repeatedly hit and kicked, dying as a result of blunt force head trauma.
The defendants charged in the indictment are:
- Aurelio Patino, also known as “Augie,” 35, most recently of Riverside, who at the time of the alleged murder was serving a 16-month sentence for being a felon in possession of a firearm and ammunition, and who is currently serving a 100-month sentence in a California state prison;
- Adilson Reyes, aka “Shanky,” 37, most recently of Los Angeles, who is serving a 135-month sentence in a cocaine distribution case;
- Christopher Ruiz, aka “Sneaky,” 44, most recently of San Diego, who is serving a 10-year sentence after being convicted on racketeering and methamphetamine charges; and
- Jose Villegas, aka “Torch,” 37, most recently of Los Angeles, who is serving a 15-year sentence in a methamphetamine case.
All four defendants are currently being housed in different prisons and in the near future will be brought to the Central District of California for arraignments in United States District Court.
According to the indictment, J.S. was escorted to the recreation yard in the prison, where he was attacked. Patino, Ruiz and Villegas allegedly used their hands and feet to strike J.S. When Reyes was informed that J.S. was no longer breathing, he instructed the other three defendants to continue beating J.S., the indictment alleges.
The indictment contains allegations that all four defendants participated in the attack, intentionally killed J.S., and “[c]omitted the offense in an especially heinous, cruel, or depraved manner in that it involved torture or serious physical abuse to the victim.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If they were to be convicted of the first-degree murder charge in the indictment, each defendant would face a mandatory sentence of life without parole in federal prison or, potentially, the death penalty.
This case was investigated by the Federal Bureau of Investigation.
Fort Polk soldier sentenced to more than 11 years for illegally manufacturing, using a chemical weaponRead the Press Release
LAFAYETTE, La. – United States Attorney David C. Joseph and Assistant Attorney General for National Security John C. Demers announced that a Fort Polk soldier was sentenced Monday to 135 months in prison for manufacturing and detonating a chemical weapon in the Kisatchie National Forest adjacent to the Fort Polk Army installation.
Ryan Keith Taylor, 24, of New Llano, Louisiana, was sentenced by U.S. District Judge Jay C. Zainey for producing, possessing, and using a chemical weapon in violation of federal law. He was also sentenced to five years of supervised release. According to the June 11, 2018 guilty plea, Taylor detonated an explosive device containing chlorine gas on the morning of April 12, 2017 in the Kisatchie National Forest near Fort Polk. Three U.S. Army soldiers who were conducting a training exercise nearby heard the explosions and found Taylor standing near his vehicle filming the explosion with his cell phone. They then questioned Taylor and reported the incident to military police.
Upon arriving at the site of the explosion, Fort Polk military police investigators examined the scene and began collecting samples at the blast site. One investigator filled a plastic bag with a rock coated in an unknown substance. The bag immediately popped, and the investigator’s plastic gloves and boots began to melt. He also began to experience difficulty breathing and his skin started burning. Law enforcement later detained Taylor at Fort Polk and searched his vehicle. During the search, investigators found remnants of the explosive device and chlorine residue, which one investigator inhaled and touched, causing him to be hospitalized. During the course of the investigation, law enforcement agents found bomb-making notes, materials and chemical residue in Taylor’s vehicle, apartment and storage building. The two victims who inhaled the chlorine gas were treated multiple times for their injuries and effectively ended their military careers.
“Supporting and protecting our soldiers is of utmost importance to my office,” Joseph stated. “Those serving our country put their lives on the line daily to protect us. They should not be put in danger needlessly. The chemical weapon the defendant created in this case is banned under international and national laws because of its terrible effects on the human body. I want to thank our U.S. military, federal and local law enforcement for their combined effort investigating this case and bringing this defendant to justice.”
“Taylor produced and detonated a chemical bomb near Fort Polk, causing injury to his fellow soldiers who responded to and investigated the incident.” said Assistant Attorney General Demers. “Today’s sentence holds Taylor accountable for his crime and makes clear that we will not tolerate such conduct. I want to thank the agents and prosecutors who are responsible for this result and our military and local law enforcement partners for their significant contributions to this investigation.”
The U.S. Army Directorate of Emergency Services, Military Police, Criminal Investigation Command, and Military Intelligence/Army Counterintelligence Gulf Coast at Fort Polk, Louisiana; the FBI and the FBI’s Joint Terrorism Task Force; the Louisiana State Police; the Vernon Parish Sheriff’s Office; and local police and fire agencies in Vernon Parish investigated the case.
U.S. Attorney David C. Joseph, Assistant U.S. Attorney Daniel J. McCoy, Special Assistant U.S. Attorney Dennis E. Robinson, and Trial Attorney David Cora of the National Security Division’s Counterterrorism section prosecuted the case.
Former Sioux City Council Member Charged with Environmental CrimesRead the Press Release
Aaron Rochester, 44, from Sioux City, Iowa, has been charged with one count of unlawful storage of hazardous waste and one charge of transportation of hazardous waste. The charges are contained in an Indictment filed on July 25, 2018, in United States District Court in Sioux City.
The Indictment alleges that, beginning on or about June 2015 through about July 2018, Rochester, as owner and operator of Recycletronics, knowingly and unlawfully, stored and transported hazardous waste, namely CRTs (cathode ray tubes) and leaded glass from televisions and computers at various facilities in and around Sioux City Iowa.
If convicted, Rochester faces a possible maximum sentence of five years’ imprisonment, a maximum fine of up to $50,000 for each day of the violation, and three years of supervised release following any imprisonment.
Rochester appeared today, September 25, 2018, in federal court in Sioux City and was released on bond with terms of supervision with US Probation. Rochester’s next appearance for trial is scheduled for November 5, 2018. As with any criminal case, a charge is merely an accusation and a defendant is presumed innocent until and unless proven guilty.
The case is being prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by the United States Environmental Protection Agency (EPA). EPA Special Agent in Charge Jeffrey Martinez stated, “EPA’s Criminal Investigation Division will continue to serve our communities by aggressively investigating and seeking prosecution of those whose conduct violates laws governing the storage of hazardous waste.”
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 18-4073. Follow us on Twitter @USAO_NDIA.
Former Sergeant Sentenced to Prison for Violating Civil Rights of DetaineeRead the Press Release
David Prejean, a former Sergeant in the K-9 Unit of the Iberia Parish Sheriff’s Office (IPSO), was sentenced yesterday to serve 30 months in prison and one year supervised release on his guilty plea to violating the civil rights of a detainee, announced John Gore, the Acting Assistant Attorney General of the Justice Department’s Civil Rights Division, David C. Joseph, the United States Attorney for the Western District of Louisiana, and FBI New Orleans Division Special Agent in Charge Eric J. Rommal. Prejean previously admitted, during a guilty plea hearing, that he acted without legal justification on Dec. 6, 2012, when he commanded his K-9 to bite the detainee, and then struck the detainee, resulting in bodily injury.
According to statements made in court and filings made in connection with the guilty plea, Prejean was a K-9 Sergeant on the IMPACT Unit, a specialized unit at IPSO, when he was called to the Iberia Parish Jail on Dec. 6, 2012, to assist with a shakedown. During the course of the shakedown, an inmate turned to look at Prejean after being told not to, at which point Prejean threw the inmate to the ground and then commanded his dog to bite him. Prejean also struck the inmate several times. Despite the fact that the inmate had complied with Prejean’s commands and did not pose a threat to anyone on the rec yard, Prejean allowed the dog to bite the inmate for several seconds before pulling the K9 away. Prejean’s unlawful use of force resulted in injury to the inmate. Following the assault, Prejean wrote false report designed to cover up his unjustified use of force.
“The United States Constitution protects all individuals, including those who are incarcerated,” said Acting Assistant Attorney General John Gore. “The Justice Department will uphold the rule of law and aggressively prosecute any violation of an inmate’s civil rights.”
“Law enforcement officers face danger in the field every day protecting the rights and safety of those in our communities,” said U.S. Attorney Joseph. “It is necessary that they follow the laws they are sworn to protect. Our district takes violations of the law seriously and will hold those accountable those who ignore those laws, especially those who tasked with their enforcement.”
“FBI New Orleans vigorously investigates all credible allegations of civil rights violations, including those who are incarcerated,” FBI New Orleans Division Special Agent in Charge Eric J. Rommal stated. “Violations of one’s civil rights will not be tolerated.”
This case was investigated by the Lafayette Resident Agency of the FBI, and was prosecuted by Assistant United States Attorney Mary Mudrick of the Western District of Louisiana and Trial Attorney Tona Boyd of the Civil Rights Division.
Former New Iberia sergeant sentenced to 30 months in prison for assault of detaineeRead the Press Release
LAFAYETTE, La. – David Prejean, a former Sergeant in the K-9 Unit of the Iberia Parish Sheriff’s Office (IPSO), was sentenced Monday to serve 30 months in prison and one year supervised release on his guilty plea to violating the civil rights of a detainee, announced David C. Joseph, the U.S. Attorney for the Western District of Louisiana; John Gore, the Acting Assistant Attorney General of the Justice Department’s Civil Rights Division; and FBI New Orleans Division Special Agent in Charge Eric J. Rommal. Prejean previously admitted, during a guilty plea hearing, that he acted without legal justification on Dec. 6, 2012, when he commanded his K-9 to bite the detainee, and then struck the detainee, resulting in bodily injury.
According to statements made in court and filings made in connection with the guilty plea, Prejean was a K-9 Sergeant on the IMPACT Unit, a specialized unit at IPSO, when he was called to the Iberia Parish Jail on Dec. 6, 2012, to assist with a shakedown. During the course of the shakedown, an inmate turned to look at Prejean after being told not to, at which point Prejean threw the inmate to the ground and then commanded his dog to bite him. Prejean also struck the inmate several times. Despite the fact that the inmate had complied with Prejean’s commands and did not pose a threat to anyone on the rec yard, Prejean allowed the dog to bite the inmate for several seconds before pulling the K9 away. Prejean’s unlawful use of force resulted in injury to the inmate. Following the assault, Prejean wrote false report designed to cover up his unjustified use of force.
“Law enforcement officers face danger in the field every day protecting the rights and safety of those in our communities,” said Joseph. “It is necessary that they follow the laws they are sworn to protect. Our district takes violations of the law seriously and will hold those accountable those who ignore those laws, especially those who tasked with their enforcement.”
“The United States Constitution protects all individuals, including those who are incarcerated,” said Gore. “The Justice Department will uphold the rule of law and aggressively prosecute any violation of an inmate’s civil rights.”
“FBI New Orleans vigorously investigates all credible allegations of civil rights violations, including those who are incarcerated,” Rommal stated. “Violations of one’s civil rights will not be tolerated.”
This case was investigated by the Lafayette Resident Agency of the FBI, and was prosecuted by Assistant U.S. Attorney Mary Mudrick of the Western District of Louisiana and Trial Attorney Tona Boyd of the Civil Rights Division.
Former Naples-Based Hospital Chain Will Pay over $260 Million to ResolveRead the Press Release
Fort Myers, FL – Health Management Associates, LLC (HMA), formerly a major U.S. hospital chain headquartered in Naples, Florida, will pay over $260 million to resolve criminal charges and civil claims relating to a scheme to defraud the United States, the Justice Department announced today. The government alleged that HMA knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services; inflated claims for emergency department facility fees; and operated hospitals, including two in Port Charlotte, which paid illegal remuneration to physicians in return for patient referrals.
Assistant Attorney General Brian A. Benczkowski, head of the Justice Department’s Criminal Division; Assistant Attorney General Joseph H. Hunt, head of the Justice Department’s Civil Division; U.S. Attorney Maria Chapa Lopez of the Middle District of Florida; U.S. Attorney Charles E. Peeler for the Middle District of Georgia; U.S. Attorney John R. Lausch, Jr. for the Northern District of Illinois; U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania; U.S. Attorney Sherri Lydon for the District of South Carolina, Assistant Director Robert Johnson of FBI’s Criminal Investigative Division, and Acting Assistant Inspector General for Investigations Derrick L. Jackson for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
Federal laws, including the Anti-Kickback Statute and the Stark Law, prohibit hospitals from providing financial inducements to physicians for referrals. These provisions are designed to ensure that physician decision-making is not compromised by improper financial incentives.
“Billing for unnecessary hospital stays wastes federal dollars,” said AAG Hunt. “In addition, offering financial incentives to physicians in return for patient referrals undermines the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”
The civil settlement resolves, among other allegations, that during the period from 2003 through 2011, two HMA hospitals in Florida, the Charlotte Regional Medical Center and the Peace River Medical Center, billed federal health care programs for services referred by physicians to whom HMA provided remuneration in return for patient referrals. To induce patient referrals, Charlotte Regional provided a local physicians’ group with free office space and staff, as well as direct payments, which purportedly covered overhead and administrative costs incurred by the group for its management of a Charlotte Regional physician. HMA also provided another local physician with free rent and upgrades to his office space.
The civil allegations were initially made as part of a qui tam lawsuit captioned United States ex rel. Nurkin v. HMA, Inc., 2:11-cv-14-FtM-29DNF (M.D. Fla.). In January 2014, after the conduct alleged by the government had occurred, HMA was acquired by another hospital company.
HMA has agreed to pay $93.5 million to resolve these civil allegations, with the United States receiving $87.96 million, and the State of Florida receiving $5.54 million. The whistleblower in United States ex rel. Nurkin will receive approximately $15 million as his share of the recovery in that case.
“The payment of kickbacks in exchange for medical referrals undermines the integrity of our healthcare system,” said United States Attorney for the Middle District of Florida Maria Chapa Lopez. “Today’s resolution should remind healthcare providers of their duty to comply with the law, and the heavy price to be paid for corrupt practices committed by their executives. Our Civil Division will continue to invest itself in the pursuit of health care providers who violate the law for personal gain.”
The Nurkin investigation was investigated by the Civil Division’s Commercial Litigation Branch; the Criminal Division’s Fraud Section; the U.S. Department of Health and Human Services Office of Inspector General; the FBI Healthcare Fraud Unit Major Provider Response Team; and by the U.S. Attorneys’ Offices for the Middle District of Florida. Assistant U.S. Attorney Kyle Cohen handled the Nurkin case locally with assistance from Assistant U.S. Attorneys Jay Trezevant and David Lazarus.
“Compliance with government healthcare rules requires that patients only receive treatment they actually need,” said HHS-OIG Acting Assistant Inspector General for Investigations Jackson. “Then government programs must be billed just for those services. No more, no less. Let there be no doubt, we will continue to protect federal healthcare programs and beneficiaries by holding provider organizations fully accountable.”
“This settlement is a result of the FBI’s hard work and dedication to hold companies accountable for their role in healthcare fraud and abuse,” said FBI Assistant Director Johnson. “The FBI will not stand by when there are allegations that a company operates a corporate wide scheme to increase their financial gain at the expense of the U.S. government. We appreciate those who come forward with allegations of criminal misconduct and recognize the importance of the public’s assistance in our work.”
HMA was acquired by Community Health Systems Inc. (CHS), a major U.S. hospital chain, in January 2014, after the alleged conduct at HMA occurred. Since July 2014, HMA has been operating under a Corporate Integrity Agreement (CIA) between CHS and the HHS-OIG.
The government’s resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
The civil claims resolved by the settlement are allegations only, and there has been no determination of liability.
Former NSA Employee Sentenced to Prison for Willful Retention of Classified National Defense InformationRead the Press Release
Nghia Hoang Pho, 68, of Ellicott City, Maryland, and a naturalized U.S. citizen originally of Vietnam, was sentenced today to 66 months in prison, to be followed by three years of supervised release, for willful retention of classified national defense information. According to court documents, Pho removed massive troves of highly classified national defense information without authorization and kept it at his home.
The sentence was announced by Assistant Attorney General for National Security John C. Demers, U.S. Attorney for the District of Maryland Robert K. Hur, and Special Agent in Charge Gordon B. Johnson of the FBI’s Baltimore Field Office. U.S. District Judge George L. Russell, III issued the sentence.
“Pho’s intentional, reckless and illegal retention of highly classified information over the course of almost five years placed at risk our intelligence community’s capabilities and methods, rendering some of them unusable,” said Assistant Attorney General Demers. “Today’s sentence reaffirms the expectations that the government places on those who have sworn to safeguard our nation’s secrets. I would like to thank the agents, analysts and prosecutors whose hard work brought this result.”
“Removing and retaining such highly classified material displays a total disregard of Pho’s oath and promise to protect our nation’s national security,” said U.S. Attorney Hur. “As a result of his actions, Pho compromised some of our country’s most closely held types of intelligence, and forced NSA to abandon important initiatives to protect itself and its operational capabilities, at great economic and operational cost.”
“The privilege of working for the U.S. Intelligence Community requires strict adherence to laws governing the lawful secrecy of its work,” said Special Agent in Charge Johnson. “We cannot have a functioning Intelligence Community without the protection of sources and methods, and taking classified information and placing it in a vulnerable setting has profound and often disastrous consequences. This case is a clarion call to all security clearance holders to follow the law and policy regarding classified information storage. The FBI will leave no stone unturned to investigate those who compromise or mishandle classified information.”
According to his plea agreement, beginning in April 2006, Pho was employed as a developer in Tailored Access Operations (TAO) at the National Security Agency (NSA). NSA is a component of the U.S. intelligence community and the U.S. Department of Defense (DoD). The NSA's TAO involved operations and intelligence collection from foreign automated information systems or networks, as well as actions taken to prevent, detect and respond to unauthorized activity within DoD information systems and computer networks, for the United States and its allies.
Pho held various security clearances in connection with his employment, including Top Secret and Top Secret // Sensitive Compartmented Information (SCI). Pho had access to national defense and classified information and worked on highly classified, specialized projects. Over his years of holding a security clearance, Pho received training regarding the proper handling, marking, transportation and storage of classified information. Pho was also told that unauthorized removal of classified materials, and the transportation and storage of those materials in unauthorized locations, risked disclosure of the materials and could endanger the national security of the United States. Pho signed numerous non-disclosure agreements demonstrating that he understood the trust that the United States places in individuals who receive a security clearance.
According to the plea agreement, beginning in 2010 and continuing through March 2015, Pho removed and retained U.S. government property, including documents and writings that contained national defense information classified as Top Secret and SCI. This material was in both hard copy and digital form, and was kept in a number of locations in Pho’s residence in Maryland. Pho knew that he was not authorized to remove the material or store it at his home.
Assistant Attorney General Demers and U.S. Attorney Hur commended the FBI and the NSA for their work in the investigation. This prosecution was handled by the District of Maryland, and the National Security Division’s Counterintelligence and Export Control Section.
Former NSA Employee Sentenced to over 5 Years in Federal Prison for Willful Retention of Classified National Defense InformationRead the Press Release
Baltimore, Maryland – United States District Judge George L. Russell, III sentenced Nghia Hoang Pho, age 68, of Ellicott City, Maryland, today to 66 months in prison, followed by three years of supervised release, for willful retention of classified national defense information. According to court documents, Pho removed massive troves of highly classified national defense information without authorization, which he kept at his residence.
The sentence was announced by United States Attorney for the District of Maryland Robert K. Hur; Assistant Attorney General for National Security John C. Demers; and Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office.
“Removing and retaining such highly classified material displays a total disregard of Pho’s oath and promise to protect our nation’s national security,” said United States Attorney Robert K. Hur. “As a result of his actions, Pho compromised some of our country’s most closely held types of intelligence, and forced NSA to abandon important initiatives to protect itself and its operational capabilities, at great economic and operational cost.”
“Pho’s intentional, reckless, and illegal retention of highly classified information over the course of almost five years placed at risk our intelligence community’s capabilities and methods, rendering some of them unusable,” said Assistant Attorney General Demers. “Today’s sentence reaffirms the expectations that the government places on those who have sworn to safeguard our nation’s secrets. I would like to thank the agents, analysts and prosecutors whose hard work brought this result.”
“The privilege of working for the U.S. Intelligence Community requires strict adherence to laws governing the lawful secrecy of its work," said FBI Baltimore Special Agent in Charge Gordon B. Johnson. "We cannot have a functioning Intelligence Community without the protection of sources and methods, and taking classified information and placing it in a vulnerable setting has profound and often disastrous consequences. This case is a clarion call to all security clearance holders to follow the law and policy regarding classified information storage. The FBI will leave no stone unturned to investigate those who compromise or mishandle classified information.”
According to his plea agreement, beginning in April 2006, Pho was employed as a developer in Tailored Access Operations (TAO) at the National Security Agency (NSA). NSA is a component of the U.S. intelligence community and the U.S. Department of Defense (DoD). The NSA's TAO involved operations and intelligence collection from foreign automated information systems or networks, as well as actions taken to prevent, detect, and respond to unauthorized activity within DoD information systems and computer networks, for the United States and its allies.
Pho held various security clearances in connection with his employment, including Top Secret and Top Secret//Sensitive Compartmented Information (SCI). Pho had access to national defense and classified information and worked on highly classified, specialized projects. Over his years of holding a security clearance, Pho received training regarding the proper handling, marking, transportation, and storage of classified information. Pho was also told that unauthorized removal of classified materials, and the transportation and storage of those materials in unauthorized locations, risked disclosure of the materials and could endanger the national security of the United States. Pho signed numerous non-disclosure agreements demonstrating that he understood the trust that the United States places in individuals who receive a security clearance.
According to the plea agreement, beginning in 2010 and continuing through March 2015, Pho removed and retained U.S. government property, including documents and writings that contained national defense information classified as Top Secret and Sensitive Compartmented Information. This material was in both hard copy and digital form, and was kept in a number of locations in Pho’s residence in Maryland. Pho knew that he was not authorized to remove the material or store it at his home.
United States Attorney Robert K. Hur and Assistant Attorney General John C. Demers commended the FBI and the NSA for their work in the investigation. Mr. Hur thanked his office’s national security prosecutors and attorneys from the Justice Department’s National Security Division, Counterintelligence and Export Control Section, all of whom are handling the prosecution.
Former Chief Financial Officer of Bankrate Inc. Sentenced to 10 Years in Prison for Orchestrating a Complex Accounting and Securities Fraud SchemeRead the Press Release
The former chief financial officer of Bankrate Inc., a publicly traded financial services and marketing company formerly headquartered in North Palm Beach, Florida, was sentenced today to 10 years in prison for orchestrating an accounting and securities fraud scheme that caused more than $25 million in shareholder losses.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida and Inspector in Charge Delany DeLeon-Colon of the U.S. Postal Inspection Service’s Criminal Investigations Group made the announcement.
Edward J. DiMaria, 53, of Fairfield County, Connecticut, was sentenced by Chief U.S. District Judge K. Michael Moore of the Southern District of Florida, who also imposed three years of supervised release and ordered DiMaria to pay restitution in the amount of $21,234,214. On June 28, DiMaria pleaded guilty to one count of conspiracy to making false statements to a public company’s accountants, falsifying a public company’s books, records and accounts, and securities fraud; and one count of making materially false statements to the Securities and Exchange Commission (SEC).
“While serving as Bankrate’s CFO, Edward DiMaria blatantly manipulated the company’s publicly reported financial statements by repeatedly lying and directing others to lie to auditors, regulators, and shareholders,” said Assistant Attorney General Benczkowski. “The significant sentence handed down today underscores the serious nature of corporate fraud and the damage it causes to shareholders and to the public’s trust in our financial markets. The sentence also demonstrates the Department’s commitment to prosecuting corporate misconduct to the fullest extent of the law.”
“The U.S. Postal Inspection Service has an extensive history of investigating complex financial fraud schemes in order to protect investors as well as the integrity of the financial marketplace from fraudulent activities by trusted insiders who abuse their positions,” said Inspector in Charge Delany DeLeon-Colon. “Anyone who engages in this type of financial fraud scheme should know they will be found and they will be held accountable.”
As part of his guilty plea, DiMaria admitted that between 2010 and 2014 he directed and conspired to commit a complex scheme to artificially inflate Bankrate’s earnings through so-called “cookie jar” or “cushion” accounting, whereby millions of dollars in unsupported expense accruals were purposefully left on Bankrate’s books and then selectively reversed in later quarters to boost earnings. In addition, DiMaria admitted that he conspired with other Bankrate employees to misrepresent certain company expenses as “deal costs” in order to artificially inflate publicly reported adjusted earnings metrics. DiMaria made materially false statements to Bankrate’s independent auditors to conceal the improper accounting entries, and he caused Bankrate’s financial statements filed with the SEC to be materially misstated, he admitted.
Hyunjin Lerner, Bankrate’s former vice president of finance, previously pleaded guilty for his role in the conspiracy. Lerner was sentenced by Judge Moore earlier this year to serve 60 months in prison.
The U.S. Postal Inspection Service’s National Headquarters Fraud Team investigated the case. Assistant Chief Henry Van Dyck and Trial Attorneys Emily Scruggs and Jason Covert of the Criminal Division’s Fraud Section are prosecuting the case, with assistance from the U.S Attorney’s Office for the Southern District of Florida. The SEC also provided assistance in this matter.
Potential victims of the scheme can find information about their rights under relevant law at the following website: www.justice.gov/criminal-vns/case/edward-j-dimaria.
Former Chief Financial Officer of Bankrate Inc. Sentenced to 10 Years in Prison for Orchestrating a Complex Accounting and Securities Fraud SchemeRead the Press Release
WASHINGTON – The former chief financial officer of Bankrate Inc., a publicly traded financial services and marketing company formerly headquartered in North Palm Beach, Florida, was sentenced today to 10 years in prison for orchestrating an accounting and securities fraud scheme that caused more than $25 million in shareholder losses.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida and Inspector in Charge Delany DeLeon-Colon of the U.S. Postal Inspection Service’s Criminal Investigations Group made the announcement.
Edward J. DiMaria, 53, of Fairfield County, Connecticut, was sentenced by Chief U.S. District Judge K. Michael Moore of the Southern District of Florida, who also imposed three years of supervised release and ordered DiMaria to pay restitution in the amount of $21,234,214. On June 28, DiMaria pleaded guilty to one count of conspiracy to making false statements to a public company’s accountants, falsifying a public company’s books, records and accounts, and securities fraud; and one count of making materially false statements to the Securities and Exchange Commission (SEC).
“While serving as Bankrate’s CFO, Edward DiMaria blatantly manipulated the company’s publicly reported financial statements by repeatedly lying and directing others to lie to auditors, regulators, and shareholders,” said Assistant Attorney General Benczkowski. “The significant sentence handed down today underscores the serious nature of corporate fraud and the damage it causes to shareholders and to the public’s trust in our financial markets. The sentence also demonstrates the Department’s commitment to prosecuting corporate misconduct to the fullest extent of the law.”
“The U.S. Postal Inspection Service has an extensive history of investigating complex financial fraud schemes in order to protect investors as well as the integrity of the financial marketplace from fraudulent activities by trusted insiders who abuse their positions,” said Inspector in Charge Delany DeLeon-Colon. “Anyone who engages in this type of financial fraud scheme should know they will be found and they will be held accountable.”
As part of his guilty plea, DiMaria admitted that between 2010 and 2014 he directed and conspired to commit a complex scheme to artificially inflate Bankrate’s earnings through so-called “cookie jar” or “cushion” accounting, whereby millions of dollars in unsupported expense accruals were purposefully left on Bankrate’s books and then selectively reversed in later quarters to boost earnings. In addition, DiMaria admitted that he conspired with other Bankrate employees to misrepresent certain company expenses as “deal costs” in order to artificially inflate publicly reported adjusted earnings metrics. DiMaria made materially false statements to Bankrate’s independent auditors to conceal the improper accounting entries, and he caused Bankrate’s financial statements filed with the SEC to be materially misstated, he admitted.
Hyunjin Lerner, Bankrate’s former vice president of finance, previously pleaded guilty for his role in the conspiracy. Lerner was sentenced by Judge Moore earlier this year to serve 60 months in prison.
The U.S. Postal Inspection Service’s National Headquarters Fraud Team investigated the case. Assistant Chief Henry Van Dyck and Trial Attorneys Emily Scruggs and Jason Covert of the Criminal Division’s Fraud Section are prosecuting the case, with assistance from the U.S Attorney’s Office for the Southern District of Florida. The SEC also provided assistance in this matter.
Potential victims of the scheme can find information about their rights under relevant law at the following website: www.justice.gov/criminal-vns/case/edward-j-dimaria.
Federal Judge Trebles Damages and Imposes Civil Penalties Against Cape Girardeau Surgeon and His Fiancee in the Amount of $5,495,931Read the Press Release
St. Louis, MO – A civil judgment in the amount of $5,495,931 was entered today in favor of the United States against Dr. Sonjay Fonn and Ms. Deborah Seeger of Cape Girardeau, Missouri, and their professional corporations DS Medical and Midwest Neurosurgeons. Previously, in November 2017, a federal jury sitting in St. Louis, Missouri found that the couple conspired to violate the civil False Claims Act and also violated the False Claims Act and the Medicare Anti-Kickback statute.
The Government’s complaint and evidence at trial established that Dr. Fonn was a neurosurgeon during 2009-12. Dr. Fonn used spinal implants during the spinal fusion surgeries that he performed. Dr. Fonn practiced through his professional corporation Midwest Neurosurgeons. Ms. Deborah Seeger, who has been Dr. Fonn’s fiancé since 2008, started a spinal implant distributorship business called DS Medical in November 2008. Dr. Fonn then used DS Medical as his spinal implant distributor for most of the spinal implants he chose to implant during his surgeries from 2009-12. Many of Dr. Fonn’s patients had insurance coverage through Medicare and Medicaid, which are federal programs. The trial involved federal program payments for 228 spinal surgeries involving Medicaid and Medicaid patients.
Once DS Medical began operating, Ms. Seeger typically received 50% commissions on the implants Dr. Fonn used during his surgeries, meaning Dr. Fonn’s treatment choices directly impacted his fiance’s distributorship income. The evidence at trial established that when Dr. Fonn used expensive implants, or multiple implants during surgeries, her commission income increased. After Ms. Seeger received commission income through DS Medical, the evidence at trial established that Ms. Seeger spent some of that income to benefit Dr. Fonn through home improvements, a Sea Lion yacht, and many other purchases and expenditures. The United States alleged that that this conduct by defendants and their corporations violated the Anti-Kickback statute, a federal law that prohibits health care providers from making patient referrals in exchange for any direct or indirect benefits. Further, the United States alleged that this conduct violated the civil False Claims Act, in that defendants submitted or caused to be submitted claims for the surgeries and professional surgeries associated with these implants.
Through their verdicts, the federal jury agreed with the Government on 2/3 of the counts brought in the civil complaint from the case. The jury had made a number of findings in its verdict, including a $1,652,557 recovery to the Medicare and Medicaid program under the Government’s conspiracy claim, and a specific finding that each defendant conspired to submit 228 separate false claims to Medicare and Medicaid.
Typically, under federal law, damages are trebled under the False Claims Act. Courts also impose a statutory penalty of $5,500 to $11,000 for each false claim. Accordingly, the total amount of defendants’ civil liability was determined by the Court through the judgment issued today after the parties filed briefs, using the factual findings from the jury’s verdict.
Today’s judgment resolves a lawsuit that was filed by several Cape Girardeau, Missouri doctors and health care providers under the qui tam or “whistleblower” provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The case is captioned United States ex rel. Cairns et al. v. DS Medical et al., Case No. 1:12-CV-0004 AGF. The United States appreciates the relators’ interest in program integrity, and their assistance with this successful outcome. Defendants could further be liable for additional sums beyond the judgment issued today, including the costs of the lawsuit and attorneys’ fees of the relators.
The case was jointly handled by the U.S. Attorney’s Office and the Civil Frauds section of the Commercial Litigation Branch of the U.S. Department of Justice in Washington, D.C. The case was investigated by the Federal Bureau of Investigation, the Office of Inspector General for the U.S. Department of Health and Human Services, and the Medicaid Fraud Control Unit of the Missouri Attorney General’s Office.
Fairfield County Cardiologist Sentenced to Prison for Insider TradingRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that EDWARD J. KOSINSKI, MD, 70, of Weston, was sentenced today by U.S. District Judge Vanessa L. Bryant in Hartford to six months of imprisonment, two years of supervised release and a $500,000 fine for insider trading.
On November 28, 2017, a jury found KOSINSKI guilty of two counts of securities fraud-insider trading. According to the evidence presented during the trial, on January 29, 2014, KOSINSKI, a cardiologist, entered into a Clinical Study and Research Agreement with an authorized agent of Regado Biosciences, Inc., formerly a Delaware corporation whose common stock traded on the NASDAQ under the ticker symbol “RGDO.” KOSINSKI, as a principal investigator for Regado’s clinical trial, was required to maintain in strict confidence all confidential information he received from Regado or its agent during the course of the clinical trial. In May 2014, KOSINSKI owned 40,000 shares of Regado common stock.
On June 29, 2014, KOSINSKI and other principal investigators received an email from the clinical trial team stating that there had been several allergic reactions during the clinical trial, the acceptance of new subjects was put on hold and the Data and Safety Monitoring Board (“DSMB”) would be reviewing the recent events. On June 30, 2014, while in possession of this non-public information, KOSINSKI sold his 40,000 shares of Regado common stock for between $6.59 and $7.00 per share. On July 2, 2014, after the close of the market, Regado publicly announced that the DSMB initiated an unplanned review of the clinical trial and patient enrollment had been suspended until the DSMB completed its review. On July 3, 2014, the stock fell $3.95 from the day’s previous closing price, to close at $2.81.
By selling his shares of Regado stock KOSINSKI avoided a loss of approximately $160,000.
On July 29, 2014, KOSINSKI and other principal investigators received an email from the clinical trial team stating that a death occurred in the clinical trial and that the trial was on hold. On July 31, 2014, while in possession of this material, non-public information, KOSINSKI purchased 50 Regado common stock put option contracts with a strike price of $2.50. On August 25, 2014, before the market opened, Regado publicly announced that it permanently halted the clinical trial and the price of Regado common stock fell approximately 60 percent. KOSINSKI then purchased 5,000 shares of Regado common stock for approximately $1.13 per share and exercised his put options, netting more than $3,000.
KOSINSKI, who is released on a $500,000 bond, was ordered to report to prison on January 4, 2019.
This matter was investigated by the Federal Bureau of Investigation was prosecuted by Assistant U.S. Attorneys Heather Cherry and Jonathan Francis.
In a related federal civil matter, KOSINSKY has been charged by the Securities and Exchange Commission. (Securities and Exchange Commission v. Edward J. Kosinski 3:16-cv-01322)
El Dorado Man Sentenced to 7 Years in Federal Prison for Distribution of Methamphetamine and Firearms ViolationRead the Press Release
El Dorado, Arkansas - Duane (DAK) Kees, United States Attorney for the Western District of Arkansas, announced that Tommie Roshaun Glosson, age 23, of El Dorado, was sentenced today to 84 months in federal prison followed by three years of supervised release on one count of Distribution of Methamphetamine and two counts of Felon in Possession of a Firearm. The Honorable Susan O. Hickey presided over the sentencing hearing in the United States District Court in El Dorado.
According to court records, in 2017, investigators with the 13th Judicial District Drug Task Force, the Union County Sheriff’s Department, the Federal Bureau of Investigation, and the El Dorado Police Department conducted two controlled purchases from Glosson, first of a firearm and methamphetamine, and later of a firearm. Glosson was subsequently arrested.
Glosson was indicted by a federal grand jury in October 2017 and entered a guilty plea to distribution of methamphetamine and felon in possession of a firearm in February 2018.
This case was investigated by the 13th Judicial District Drug Task Force, the Union County Sheriff’s Department, the Federal Bureau of Investigation, and the El Dorado Police Department. Assistant United States Attorney Graham Jones prosecuted the case for the United States.
Department of Justice Announces the Rollout of an Updated United States Attorneys’ ManualRead the Press Release
The Department of Justice announced the rollout of an updated United States Attorneys’ Manual, now titled the Justice Manual. It is the first comprehensive review and overhaul of the Manual in more than 20 years. The Department-wide effort involved the dedicated work of over 200 Department of Justice employees.
“This was truly a Department-wide effort, involving hundreds of employees collaborating from many different Department components,” said Deputy Attorney General Rod Rosenstein. “To mark this significant undertaking, and to emphasize that the Manual applies beyond the United States Attorneys’ Offices, we have renamed it the Justice Manual. Though the name has changed, the Manual will continue as a valuable means of improving efficiency, promoting consistency, and ensuring that applicable Department policies remain readily available to all employees as they carry out the Department’s vital mission.”
By 2017, many provisions of the Manual no longer reflected current law and Department practice. This diminished the Manual’s effectiveness as an internal Department resource, and reduced its value as a source of transparency and accountability for the public. To bring the Manual up to date, employees from around the country, primarily career attorneys, undertook a yearlong, top-to-bottom review. The Department’s goals were to identify redundancies, clarify ambiguities, eliminate surplus language, and update the Manual to reflect current law and practice.
Some specific changes include expanding the Principles of Federal Prosecution to incorporate current charging and sentencing policies, and adding new policies on religious liberty litigation, third-party settlement payments, and disclosure of foreign influence operations.DOJ Funds Services for Victims of Domestic Violence and Sexual AssaultRead the Press Release
The U.S. Department of Justice’s Office of Violence against Women has awarded a three- year $600,000 grant to provide legal assistance to victims of domestic violence and sexual assault in Skagit County, Washington announced U.S. Attorney Annette L. Hayes. The grant was awarded to the Northwest Justice Project, headquartered in Seattle, in partnership with Skagit Domestic Violence and Sexual Assault Services.
“These funds will support victims of crime and enhance the ability of local organizations to reach out to victims who may be isolated geographically or have limited English-speaking skills,” said U.S. Attorney Annette L. Hayes. “The work supported by thee grants is important to ensuring justice reaches everyone in our Western Washington communities.”
According to the grant award, the funding will increase civil and criminal legal assistance programs for victims of domestic violence, dating violence, sexual assault and stalking. The funds provide legal services, at minimal or no cost, to victims who are seeking relief through the courts arising out of domestic abuse or violence. Some of the services include assisting with protection orders and victim impact statements; attending court in support of victims; and providing culturally relevant education programs about domestic abuse and sexual violence to immigrant, Native American and limited English-speaking populations.
For more information on this grant, please contact the Northwest Justice Project or DOJ’s Office on Violence Against Women.
Cushing Man Pleads Guilty to Seaman’s ManslaughterRead the Press Release
Bangor, Maine: United States Attorney Halsey B. Frank announced that Christopher A. Hutchinson, 30, of Cushing, Maine pleaded guilty today in U.S. District Court to two counts of Seaman’s Manslaughter for causing two deaths at sea.
According to court records, on November 1, 2014, after smoking marijuana and drinking, Hutchinson took his lobster boat, No Limits, out into a predicted storm with two crewmen aboard. After he had ingested oxycodone, the boat capsized. The two crewmen were not wearing personal floatation devices or survival suits. The No Limits’ Emergency Position Indicating Radio Beacon alerted at about 1:20 p.m. The Coast Guard rescued Hutchinson at about 4 p.m. At the time, he was wearing shorts and a t-shirt. The Coast Guard located the bow of No Limits at about 5 p.m. The bodies of the crewmen have never been recovered.
The defendant faces up to 10 years in prison, three years of supervised release, and a $250,000 fine on each count. He will be sentenced after the completion of a presentence investigation report by the U.S. Probation Office. A plea agreement provides that a sentence of four years in prison and three years of supervised release is appropriate and that the defendant may withdraw his guilty plea if the court rejects that sentence.
The investigation was conducted by the U.S. Coast Guard.
Chinese National Arrested for Allegedly Acting Within the United States as an Unregistered Agent of the People’s Republic of ChinaRead the Press Release
CHICAGO — A Chinese national was arrested in Chicago today for allegedly acting within the United States as an illegal agent of the People’s Republic of China.
JI CHAOQUN, 27, a Chinese citizen residing in Chicago, worked at the direction of a high-level intelligence officer in the Jiangsu Province Ministry of State Security, a provincial department of the Ministry of State Security for the People’s Republic of China, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago. Ji was tasked with providing the intelligence officer with biographical information on eight individuals for possible recruitment by the JSSD, the complaint states. The individuals included Chinese nationals who were working as engineers and scientists in the United States, some of whom were U.S. defense contractors, according to the complaint.
The complaint charges Ji with one count of knowingly acting in the United States as an agent of a foreign government without prior notification to the Attorney General. He will make an initial court appearance today at 4:00 p.m. CDT before U.S. Magistrate Judge Michael T. Mason in Courtroom 2266 of the Everett M. Dirksen U.S. Courthouse in Chicago.
The arrest and complaint were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; John C. Demers, Assistant Attorney General for National Security at the U.S. Department of Justice; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. The U.S. Army 902nd Military Intelligence Group provided valuable assistance. The government is represented by Assistant U.S. Attorney Shoba Pillay of the Northern District of Illinois, and Senior Trial Attorney Heather Schmidt of the National Security Division’s Counterintelligence and Export Control Section.
According to the complaint, Ji was born in China and arrived in the United States in 2013 on an F1 Visa, for the purpose of studying electrical engineering at the Illinois Institute of Technology in Chicago. In 2016, Ji enlisted in the U.S. Army Reserves as an E4 Specialist under the Military Accessions Vital to the National Interest program, which authorizes the U.S. Armed Forces to recruit certain legal aliens whose skills are considered vital to the national interest. In his application to participate in the MAVNI program, Ji specifically denied having had contact with a foreign government within the past seven years, the complaint states. In a subsequent interview with a U.S. Army officer, Ji again failed to disclose his relationship and contacts with the intelligence officer, the charge alleges.
The public is reminded that a complaint is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. The charge in the complaint is punishable by a maximum sentence of ten years in prison. The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Chinese National Arrested for Allegedly Acting Within the United States as an Illegal Agent of the People’s Republic of ChinaRead the Press Release
Ji Chaoqun, 27, a Chinese citizen residing in Chicago, was arrested in Chicago today for allegedly acting within the United States as an illegal agent of the People’s Republic of China.
The arrest and complaint were announced by Assistant Attorney General for National Security John C. Demers, U.S. Attorney John R. Lausch, Jr. for the Northern District of Illinois, and Special Agent in Charge Jeffrey S. Sallet of the FBI’s Chicago field office.
Ji worked at the direction of a high-level intelligence officer in the Jiangsu Province Ministry of State Security, a provincial department of the Ministry of State Security for the People’s Republic of China, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago. Ji was tasked with providing the intelligence officer with biographical information on eight individuals for possible recruitment by the JSSD, the complaint states. The individuals included Chinese nationals who were working as engineers and scientists in the United States, some of whom were U.S. defense contractors, according to the complaint.
The complaint charges Ji with one count of knowingly acting in the United States as an agent of a foreign government without prior notification to the Attorney General. He will make an initial court appearance today at 5:00 p.m. EDT (4:00 p.m. CDT) before U.S. Magistrate Judge Michael T. Mason in Courtroom 2266 of the Everett M. Dirksen U.S. Courthouse in Chicago.
According to the complaint, Ji was born in China and arrived in the United States in 2013 on an F1 Visa, for the purpose of studying electrical engineering at the Illinois Institute of Technology in Chicago. In 2016, Ji enlisted in the U.S. Army Reserves as an E4 Specialist under the Military Accessions Vital to the National Interest (MAVNI) program, which authorizes the U.S. Armed Forces to recruit certain legal aliens whose skills are considered vital to the national interest. In his application to participate in the MAVNI program, Ji specifically denied having had contact with a foreign government within the past seven years, the complaint states. In a subsequent interview with a U.S. Army officer, Ji again failed to disclose his relationship and contacts with the intelligence officer, the charge alleges.
A criminal complaint is merely an accusation. The defendant is presumed innocent unless and until proven guilty. The charge carries a maximum sentence of ten years in prison. The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
The U.S. Army 902nd Military Intelligence Group provided valuable assistance. The government’s case is represented by Assistant U.S. Attorney Shoba Pillay of the Northern District of Illinois and Senior Trial Attorney Heather Schmidt of the National Security Division’s Counterintelligence and Export Control Section.
Chief Financial Officer of Marlborough Business Sentenced for Bank Fraud ConspiracyRead the Press Release
BOSTON – The chief financial officer of a Marlborough business was sentenced yesterday in federal court in Worcester in connection with a scheme to commit bank fraud.
John J. Crowley, 62, of Boca Raton, Fla., was sentenced by U.S. District Court Judge Timothy S. Hillman to three years of supervised release and ordered to pay restitution of $60,000. In March 2018, Crowley and co-defendant James R. Faro, of Dover, each pleaded guilty to conspiring to commit bank fraud. On Sept. 18, 2018, Faro was sentenced to two years in prison and ordered to pay $1,121,155 in restitution.
Faro is the former owner and president of Sea Star Seafood Corporation, a company previously headquartered in Marlborough that distributed frozen seafood products. Crowley is the former chief financial officer for Sea Star.
From October 2010 until August 2012, Sea Star maintained an asset-backed loan agreement whereby a bank agreed to loan Sea Star up to $6 million pursuant to a revolving line of credit. Sea Star pledged its assets – most notably its inventory and accounts receivable – as collateral for the loan.
Between November 2010 and August 2012, Faro and Crowley conspired to intentionally overstate the value of Sea Star’s outstanding accounts receivable that it reported to the bank. By doing so, Faro and Crowley fraudulently increased the level of assets against which Sea Star could borrow from the bank. In August 2012, Sea Star informed the bank that it had discovered a “discrepancy” of over $3 million in its reported, versus actual, assets. Sea Star discontinued its business operations approximately one week later.
United States Attorney Andrew E. Lelling and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. Assistant U.S. Attorney Greg A. Friedholm of Lelling’s Worcester Branch Office prosecuted the case.
Chicago Insurance Agent Guilty of Failing to Pay Taxes on More Than $4.7 Million in IncomeRead the Press Release
CHICAGO — A Chicago insurance agent has pleaded guilty to willfully failing to pay federal and state taxes on more than $4.7 million in income earned over a decade.
JOHN OCWIEJA admitted in a plea agreement that he willfully failed to pay income taxes for tax years 2006 to 2016, causing a combined loss to the United States and State of Illinois of more than $1.1 million. During those years, Ocwieja earned a total income of more than $4.7 million as a licensed insurance agent and financial representative, the plea agreement states.
Ocwieja, 49, of Chicago, pleaded guilty Monday to three counts of willfully failing to file a federal tax return. U.S. Magistrate Judge M. David Weisman set sentencing for Dec. 18, 2018, at 10:00 a.m.
The guilty plea was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Gabriel L. Grchan, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The government is represented by Assistant U.S. Attorneys Andrianna Kastanek and Patrick King.
According to the plea agreement, Ocwieja earned more than $500,000 in three of the eleven years he failed to pay income taxes, and more than $300,000 in four other years. Ocwieja acknowledged in the plea agreement that he used the funds for personal matters instead of satisfying his tax liabilities.
The conviction carries a maximum total sentence of three years in federal prison. The Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
Charlotte Man Convicted of Conspiracy to Defraud the GovernmentRead the Press Release
A federal jury in Charlotte, North Carolina convicted a Charlotte man today of conspiracy to defraud the government, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney R. Andrew Murray for the Western District of North Carolina.
According to court documents and evidence presented at trial, between October 2007 and May 2016, Arthur Joseph Gerard III assisted clients in hiding income and assets from the Internal Revenue Service (IRS) using straw companies and bank accounts opened in the names of those companies. In particular, Gerard conspired with his client, Reuben DeHaan, to hide from the IRS over $2.7 million in gross receipts earned by DeHaan through his holistic medicine business. Gerard recruited his friend, Richard H. Campbell Jr., into the scheme to serve as a nominee on DeHaan’s bank accounts. Gerard also assisted DeHaan in the filing of false documents with the IRS to obstruct the IRS’ collection efforts. Gerard charged DeHaan a fee of between $1,000 and $2,500 for each straw company he created. In total, Gerard’s conduct caused a tax loss of approximately $560,000.
Gerard faces a statutory maximum of five years in prison, as well as a period of supervised release, restitution, and monetary penalties. DeHaan and Campbell each previously pleaded guilty and have been sentenced.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Murray commended special agents of IRS–Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney William Miller and Trial Attorney Mara Strier of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Charlotte Man Convicted of Conspiracy to Defraud the GovernmentRead the Press Release
CHARLOTTE, N.C. - A federal jury in Charlotte, North Carolina convicted a Charlotte man today of conspiracy to defraud the government, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney R. Andrew Murray for the Western District of North Carolina.
According to court documents and evidence presented at trial, between October 2007 and May 2016, Arthur Joseph Gerard III assisted clients in hiding income and assets from the Internal Revenue Service (IRS) using straw companies and bank accounts opened in the names of those companies. In particular, Gerard conspired with his client, Reuben DeHaan, to hide from the IRS over $2.7 million in gross receipts earned by DeHaan through his holistic medicine business. Gerard recruited his friend, Richard H. Campbell Jr., into the scheme to serve as a nominee on DeHaan’s bank accounts. Gerard also assisted DeHaan in the filing of false documents with the IRS to obstruct the IRS’ collection efforts. Gerard charged DeHaan a fee of between $1,000 and $2,500 for each straw company he created. In total, Gerard’s conduct caused a tax loss of approximately $560,000.
Gerard faces a statutory maximum of five years in prison, as well as a period of supervised release, restitution, and monetary penalties. DeHaan and Campbell each previously pleaded guilty and have been sentenced.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Murray commended special agents of IRS–Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney William Miller and Trial Attorney Mara Strier of the Tax Division, who prosecuted the case.
Business Owners and Corporation Plead Guilty to Immigration CrimesRead the Press Release
Jackson, Miss. – Cheng Lin, 36, and and his father, Guo Guang Lin, 61, both of Meridian, Mississippi, pled guilty today before U.S. District Court Senior Judge David M. Bramlette III to harboring illegal aliens at their restaurant, China Buffet II, in Meridian, announced U.S. Attorney Mike Hurst, Homeland Security Investigations Special Agent in Charge Jere T. Miles and U.S. Department of Labor Office of Inspector General Special Agent in Charge Rafiq Ahmad. In addition, Lin’s China Buffett of Meridian, Inc. d/b/a/ China Buffet II also pled guilty to harboring illegal aliens and agreed to two years probation and an immigration compliance program, in addition to forfeiture and a $200,000 fine.
The Defendants will be sentenced by Judge Bramlette on January 8, 2019 at 10:00AM.
"Employing and harboring illegal aliens harms American citizens by stealing jobs and puts business owners who follow the law at a competitive disadvantage. This should serve as a warning to all those who attempt to illegally profit and gain a competitive advantage by violating our immigration laws - you will be prosecuted and punished, and your ill-gotten gains will be forfeited. I commend the prosecutors and agents who worked tirelessly for years to bring these criminals to justice," said U.S. Attorney Hurst.
In 2004, Defendant Guo Guang Lin was listed as one of the principal officers of China Buffet of Meridian. In 2011, Guo Guang Lin became the principal officer of the company. In 2014, the company was dissolved and reincorporated as Lin’s China Buffet of Meridian d/b/a China Buffet II, with Gui Guang Lin and Cheng Lin listed as some of the incorporators.
From 2012 through January 2017, HSI agents observed a 15-passenger van registered to China Buffet II making multiple trips to a house owned by China Buffet of Meridian Inc. to pick up illegal aliens living at the house and transport them to the restaurant where they worked, and back to the home.
In January 2013, three illegal aliens were encountered by HSI, two of whom were in a 15-passenger van previously parked at a residence owned by China Buffet where the illegal aliens lived while working at China Buffet.
On February 22, 2017, HSI agents executed a search warrant at China Buffet and encountered 9 illegal aliens. None of them were required to complete any paperwork or show any documents or identification when they were hired as employees, nor were they asked about their immigration status.
Guo Guang Lin was identified by multiple illegal aliens as the driver of the passenger van between the home housing the illegal aliens and the business. Guo Guang Lin was also identified by illegal aliens as a cook at the restaurant. When Cheng Lin was interviewed, he admitted that the employees he paid in cash lived at the house owned by China Buffet II, while the hostess was paid via check. A monthly payroll ledger discovered during the search confirmed illegal employee names, dates worked, amounts paid and other information from July 2013 through January 2017. This ledger was separate from the payroll records for legal employees. It was also discovered through the investigation that China Buffet II omitted wages for their illegal employees when sending payroll records to their accountant in New York. The defendants also failed to withhold and pay federal income taxes on these illegal aliens, failed to prepare I-9 Forms, and failed to report wages to the Mississippi Department of Employment Security or the Internal Revenue Service.
In 2007, HSI arrested numerous illegal aliens employed at a restaurant owned by Cheng Lin in New Orleans. Cheng Lin admitted to paying employees in cash, and that employees were provided lodging, transportation and meals at no expenses. Lin was fined $23,250 for I-9 violations.
The defendants agreed to the following forfeiture amounts resulting from seizures by HSI agents during execution of the search warrant on February 22, 2017:
$437,046 cash seized from safe deposit box number at Citizen’s National Bank;
$106,000 cash in lieu of house owned by the corporation used to house illegal aliens;
$86,070 cash seized from Defendant Cheng Lin’s home;
$68,124.00 cash seized at the China Buffet II Restaurant;
$34,212.94 held at Citizens National Bank in the name of Lin’s China Buffet of Meridian, Inc
Insurance payments or proceeds relating to the 2007 Ford E-350 van, VIN x-8040;
The case was investigated and indicted by Assistant United States Attorneys Glenda Haynes and Dave Fulcher. It is currently being prosecuted by United States Attorney Mike Hurst.
Boston Philharmonic Orchestra Artistic Director Arrested for Child PornographyRead the Press Release
BOSTON – An employee of the Boston Philharmonic Orchestra and the Boston Philharmonic Youth Orchestra was arrested today and charged in federal court in Boston with receipt and possession of child pornography.
David St. George, 71, of Arlington, was charged with one count of receipt of child pornography and one count of possession of child pornography.
According to charging documents, law enforcement in Boston received information regarding an online storage account suspected of containing child pornography. The IP address linked to the account was assigned to St. George’s internet account. Further investigation into the files revealed approximately 83 images and videos depicting the sexual abuse of children, including a one-year-old girl.
A search warrant executed at St. George’s residence today revealed thousands of files of child pornography, including the sexual assaults of children between six-and-eight years old. It is alleged that St. George has been receiving and downloading child pornography from the “Dark Web” and taking steps to conceal his identity.
According to court documents, St. George is employed by the Boston Philharmonic and the Boston Philharmonic Youth Orchestra.
The charge of receipt of child pornography provides for a mandatory minimum sentence of five years and up to of 20 year in prison. The charge of possession of child pornography carries a sentence of no greater than 10 years in prison. Both counts carry a minimum of five years and up to a lifetime 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.
Members of the public who have questions, concerns, or information regarding this case should call 617-748-3274.
The case is brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
United States Attorney Andrew E. Lelling and Peter C. Fitzhugh, Special Agent in Charge of Homeland Security Investigations in Boston, made the announcement today. Valuable assistance was provided by the Arlington Police Department. Assistant U.S. Attorney James Herbert of Lelling’s Major Crimes Unit is prosecuting the case.
The details contained in the charging documents are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Bangor Man Sentenced to Six Months for Marijuana ConspiracyRead the Press Release
Bangor, Maine: United States Attorney Halsey B. Frank announced that Nicholas Reynolds, 34 of Bangor, Maine, was sentenced today in U.S. District Court by Judge Jon D. Levy to six months in prison and three years of supervised release, with six months of home confinement, for making and distributing marijuana.
According to court records, during a period between October 2010 and August 2016, the defendant conspired with others to illegally manufacture and distribute marijuana. The defendant grew marijuana at a large, sophisticated indoor growing facility in Frankfort, Maine which he was told was an illegal medical marijuana grow. In May 2016, law enforcement officers executed a federal search warrant at the facility and recovered about 400 marijuana plants, 295 marijuana root balls, and paraphernalia used to manufacture and process marijuana. According to the search warrant affidavit, the defendant and his co-conspirators were not registered as medical marijuana caregivers with the Maine Department of Health and Human Services (DHHS), and the location of the facility was not reported to DHHS.
The case was investigated by the U.S. Drug Enforcement Administration.
Bangor Man Sentenced to 2 Years of Probation for Marijuana ConspiracyRead the Press Release
Bangor, Maine: United States Attorney Halsey B. Frank announced that Jeremy Duguay, 35 of Bangor was sentenced today in U.S. District Court by Judge Jon D. Levy to two years of probation with six months of home confinement and 240 hours of community service for conspiring to make and distribute marijuana.
According to court records, during a period between October 2010 and August 2016, the defendant conspired with others to illegally manufacture and distribute marijuana. The defendant grew marijuana at a large, sophisticated indoor growing facility in Frankfort, Maine which he was told was an illegal medical marijuana grow. In May 2016, law enforcement officers executed a federal search warrant at the facility and recovered about 400 marijuana plants, 295 marijuana root balls, and paraphernalia used to manufacture and process marijuana. According to the search warrant affidavit, the defendant and his co-conspirators were not registered as medical marijuana caregivers with the Maine Department of Health and Human Services (DHHS), and the location of the facility was not reported to DHHS.
The case was investigated by the U.S. Drug Enforcement Administration.
Anchorage Woman Who Defrauded Alaska Medicaid Program Sentenced to Federal PrisonRead the Press Release
Anchorage, Alaska – U.S. Attorney Bryan Schroder announced that an Anchorage woman was sentenced yesterday by Chief U.S. District Judge Timothy Burgess to serve eight months in federal prison for defrauding the state of Alaska Medicaid Program out of $90,000.
Mi Ran Yu, 41, of Anchorage, acted as a personal care assistant for her parents, who qualified for Medicaid assistance, between 2012 and 2016. Yu was indicted by a federal grand jury in July 2016 for felony health care fraud charges stemming from a scheme to grossly exaggerate the alleged infirmity of her parents, and to falsely report the number of hours which she was allegedly spending to render assistance to them. Yu pleaded guilty in January 2017 to 20 counts of committing health care fraud against the Medicaid program.
In addition to the eight-month prison sentence, Judge Burgess ordered Yu to pay $90,000 in restitution to the state of Alaska Medicaid Program. Yu was also placed on a three-year period of supervised release following service of her custody sentence, and was ordered to pay the federal government a special assessment of $2,000.00
At sentencing, Judge Burgess noted that cases of fraud against social services programs such as Medicaid are often hard to detect, and that sentences of incarceration in these types of cases are especially warranted as a general deterrence to the public. As stated by Judge Burgess “people need to understand that there are serious consequences to committing this type of fraud beyond simply paying the money back.”
This case was investigated by the state of Alaska Medicaid Fraud Control Unit and the Federal Bureau of Investigation (FBI). The case was prosecuted by Assistant U.S. Attorney Joseph Bottini.
Anchorage Hip-Hop Impresario Sentenced to 87 MonthsRead the Press Release
Anchorage, Alaska – U.S. Attorney Bryan Schroder announced that Rico Paris Gillespie, a/k/a “Rico G The Mayor,” 31, of Anchorage, was sentenced yesterday by U.S. District Judge Sharon L. Gleason, to serve 87 months in prison, followed by four years of supervised release, for his conviction of distribution of methamphetamine.
According to court documents, on three separate occasions in April and May of 2017, Gillespie sold methamphetamine in Anchorage. In May 2017, Gillespie’s house and vehicle were searched by law enforcement officers. During the search, officers found methamphetamine, heroin, and fentanyl packaged for sale, as well as three digital scales inside Gillespie’s house. In a vehicle Gillespie was seen driving prior to the search of the house, law enforcement officers found a loaded Taurus 9mm firearm with a round in the chamber underneath the driver’s seat.
Gillespie styled himself as a local hip-hop performer known by the moniker, “Rico G The Mayor.” Gillespie has posted many videos online where his lyrics and videos depict a glamorous lifestyle funded by drug trafficking and other illegal activities.
Before imposing a sentence, Judge Gleason commented that she was particularly troubled that Gillespie dealt drugs out of the same home that he shared with young children. She was also concerned that Gillespie was a “for profit” drug trafficker and did not appear to have an addiction to the drugs he was selling in the community. At the sentencing hearing, the record was clear that Mr. Gillespie’s last verified employment was in 2014.
The Drug Enforcement Administration (DEA), the Alaska State Troopers (AST), and the Anchorage Police Department (APD) conducted the investigation leading to the successful prosecution of this case. This case was prosecuted by Assistant U.S. Attorney Kelly Cavanaugh.
Monday 24 September 2018
York Man Charged with Medicaid FraudRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Nagy Mohamed Abdelhamed, age 68, of York, Pennsylvania, was indicted on September 19, 2018, by a federal grand jury on one count of health care fraud and six counts of false statements in health care matters. The indictment was unsealed following Abdelhamed’s arrest.
According to the United States Attorney David J. Freed, the indictment alleges that on August 13, 2014, Abdelhamed applied for Medicaid and SNAP (formerly known as Food Stamp) benefits with the York County Assistance Office in August of 2014, even though he owned a four- bedroom residence in York, a gas station in York, a 2008 Mercedes Benz E350 automobile, received $1,124 a month in Social Security disability benefits, and held approximately $58,500 in eight different bank accounts.
The Indictment further alleges that on August 22, 2014, Abdelhamed sold his gas station for $172,883 and deposited $87,016 of the sales proceeds into a bank account. Abdelhamed did not notify the York County Assistance Office of the sale or his receipt of the sales proceeds. According to the Indictment Abdelhamed continued to receive Medicaid and SNAP benefits into 2018 and as a result, fraudulently obtained approximately $29,337 in benefits, including approximately $20,338 in Medicaid benefits.
The case was investigated by the Harrisburg Offices of the Federal Bureau of Investigation and the U.S. Health and Human Services Office of Inspector General. Assistant U. S. Attorney Kim Douglas Daniel is prosecuting the case.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Woman Sentenced to 10 Years in Prison for Transportation of A Minor with the Intent of Committing A Criminal Sexual ActRead the Press Release
SAN JUAN, P.R. – United States District Court Senior Judge Daniel R. Domínguez sentenced Yaira Tanies Cotto-Flores to 10 years in prison followed by eight years of supervised release for one count of transportation of a minor with intent to engage in criminal sexual activity, announced United States Attorney Rosa Emilia Rodríguez-Vélez.
On April 27, 2018, after a nine-day jury trial and four hours of deliberation, Yaira Tanies Cotto-Flores was found guilty of one count of transportation of a minor with intent to engage in criminal sexual activity. According to the evidence presented at trial, on March 1, 2016, the defendant transported a 14-year-old male student to a motel located in San Lorenzo, PR, with the intent to engage in sexually explicit conduct. Cotto-Flores was the victim’s English teacher. They met at the beginning of the school year and the defendant gave the victim various gifts including an acne treatment kit, a neckband and a Bulova wristwatch.
“This sentence should serve to reassure the public that we are paying close attention to the well-being of our children, and that we will spare no expense to take child predators off the streets,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez. “We entrust teachers to serve as role models for our children and safeguard their welfare. The jury found Ms. Cotto-Flores guilty of robbing a child’s innocence and causing harm to the victim and his family. As this conviction makes clear, when that trust is violated, there are severe consequences.”
“Children who are sexually exploited either physically or through the dissemination of child pornography suffer immeasurable harm,” said Ivan J. Arvelo, special agent in charge of HSI San Juan. “And while this significant sentence cannot repair the damage done, it should serve as a stark reminder that we are watching and the aggressive investigation and prosecution of predators remains a high priority for HSI.”
The criminal prosecution was handled by Assistant U.S. Attorney Elba Gorbea. ICE-HSI was in charge of the investigation with the collaboration of the Puerto Rico Police Department.
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Winthrop Man Pleads Guilty to Making False Statements to a Federal Firearms DealerRead the Press Release
Bangor, Maine: United States Attorney Halsey B. Frank announced that Donald Henderson, 35, of Winthrop, Maine, pleaded guilty today in U.S. District Court to making false statements to a federal firearms licensee.
According to court records, in February and March, 2017, Henderson purchased a firearm from a Kennebec County firearms dealer. During each transaction, Henderson falsely claimed to be the actual purchaser of the firearm, when, in fact, he was not. He also claimed that he was not an unlawful user of controlled substances, when, in fact, he was.
The defendant faces up to 10 years in prison, three years supervised release and a $250,000 fine. He will be sentenced after the completion of a presentence investigation report by the U.S. Probation Office.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
Westside Man Sentenced to Federal Prison for Meth Conspiracy and Possessing a Firearm to Further the ConspiracyRead the Press Release
A man who conspired to distribute over 100 pounds of methamphetamine and possessed a GSG, MP5, .22-caliber firearm to further the conspiracy was sentenced today to 26 years in federal prison.
Robert “Bobby” Whitenack, 37, from Westside, Iowa, received the prison term after an April 5, 2018, guilty plea to one count of conspiracy to distribute methamphetamine and one count of possession of a firearm during and in furtherance of a drug trafficking crime.
At sentencing, the government presented evidence that showed Whitenack distributed approximately 100 pounds of methamphetamine from January 2014 through May 2017. During the conspiracy, Whitenack recruited at least five individuals to pick up pound-quantities of methamphetamine from Denison, Iowa, and Omaha, Nebraska, for distribution. Whitenack received or expected to receive compensation for every pound that his subordinates sold. Whitenack handled drug proceeds ranging from $20,000 to $63,000 at a time from his subordinates before sending most of the money to the source in Mexico or associates of the source. In February 2017, Whitenack used a GSG, MP5, .22-caliber firearm and pistol-whipped a cooperator in the head, causing a deep gash in the victim’s forehead.
The government also presented evidence that, on May 30, 2017, Whitenack engaged in a 4.5-hour standoff with law enforcement and threatened to commit “suicide by cop.” After officers deployed multiple canisters of tear gas, Whitenack ultimately emerged from his residence with what appeared to be a gun in his right hand wrapped in a blanket while waving the middle finger on his left hand. Unbeknownst to Whitenack, two members of the tactical team had entered the residence from the upstairs, allowing them to tase Whitenack from behind before ultimately securing his arrest.
Whitenack was sentenced in Sioux City by United States District Court Chief Judge Leonard T. Strand. Whitenack was sentenced to 312 months’ imprisonment. He must also serve a 10-year term of supervised release after the prison term. There is no parole in the federal system.
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.
Whitenack is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Ajay J. Alexander and investigated by was investigated by the Iowa Division of Narcotics Enforcement, Drug Enforcement Administration, Crawford County Sheriff’s Office, Denison Police Department, Carroll County Sheriff’s Office, Carroll Police Department, and Iowa Division of Criminal Investigation.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 17-CR-3020-LTS.
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United States Attorney Mike Stuart Launches Listening TourRead the Press Release
CHARLESTON, W.Va. – United States Attorney Mike Stuart is launching a series of community forums over the next few months to discuss public safety issues. The forums, presented in partnership with West Virginia’s Substance Abuse Prevention Coalitions, will be held at locations throughout the Southern District of West Virginia and invite open discussion on substance abuse, violent crime, school safety, and other public safety issues currently impacting local communities. City and county government officials, public health officials, school administrators, teachers, parents, students, church leaders, residents and area law enforcement representatives are encouraged to attend the community forums.
“I’m going to do a lot more listening than talking,” said United States Attorney Mike Stuart. “I want to hear the concerns of the public and to make sure we are doing all we can do to address the needs of our citizens.”
In October, the following community forums will be held from 6:00 – 7:30pm:
Tuesday, October 2 - Cabell County – Holiday Inn Express, 3551 US Rt. 60 East, Barboursville
Thursday, October 11 – Raleigh County – Raleigh County Convention Center, 200 Armory Drive, Beckley
Tuesday, October 16 – Logan County - Word of Life Church, 518 Mud Fork Road, Logan
Tuesday, October 23 – Putnam County – Teays Valley Church of the Nazerene, 3937 Teays Valley Road, Hurricane
Doors will open at 5:00pm for networking.
For more information, please email Public Information Officer/Law Enforcement Coordinator Deanna Eder at [email protected].
SDWVNews and USAttyStuart
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United States Attorney Announces Appointment of Five New Federal ProsecutorsRead the Press Release
U.S. Attorney Erin Nealy Cox today announced the appointment of five new Assistant United States Attorneys: Stephen Rancourt, assigned to the Lubbock Criminal Division; Melanie Smith, assigned to the Dallas Criminal Division’s Violent and Major Crimes Section; Damien Diggs, also assigned to the Dallas Criminal Division’s Violent Crimes Section; Braden Civins, assigned to the Dallas Civil Division; and Abe McGlothin, assigned to the Dallas Criminal Division’s Violent and Major Crimes Section.
All five prosecutors were sworn in Monday morning before Chief U.S. District Judge Barbara M.G. Lynn.
A two-time graduate of the University of Richmond, Mr. Rancourt joins Nealy Cox’s prosecutorial team from the District Attorney’s Office in Wichita County, where he spent six years as an Assistant District Attorney, rising to become First Assistant ADA.
Ms. Smith, an alumnus of Gonzaga University and the University of Virginia School of Law, is happy to be returning to the same district where she clerked for former U.S. District Judge Jorge A. Solis six years ago. In the intervening years, she served in the Department of Justice’s Tax Division in Washington, DC.
Mr. Diggs joins the Northern District of Texas from the U.S. Attorney’s Office in DC, where he prosecuted homicides and other criminal cases; before that, he worked for the U.S. Department of Education’s Office for Civil Rights. Mr. Diggs earned his undergraduate degree from Towson University and his law degree from American University’s Washington College of Law.
An alumnus of Emory University and the University of Texas School of Law, Mr. Civins previously served as Assistant Attorney General at the Texas Attorney General’s Office’s Civil Medicaid Fraud Division, where he handled complex civil litigation under the Texas Medicaid Fraud Prevention Act.
Mr. McGlothin joins Northern District from the U.S. Attorney’s Office the Southern District of Mississippi, where he prosecuted a wide range of violent crimes and served as the Project Safe Neighborhood Coordinator. He earned his degrees at Jackson State University and the University of Mississippi School of Law.
“I am thrilled to welcome these five exceptional attorneys to the Northern District of Texas today,” said Nealy Cox. “I’m confident they will bring honor to the important work this office does day in and day out.”
U.S. Trustee Program Reaches $5 Million Settlement with Citibank to Protect Debtors in BankruptcyRead the Press Release
The Department of Justice’s U.S. Trustee Program (USTP) has entered into a national settlement agreement with Citibank N.A. (Citibank), Department Stores National Bank (DSNB) (collectively Citi), and FDS Bank requiring Citi to pay $5 million to remediate robo-signed proofs of claim filed in consumer bankruptcy cases in connection with more than 71,000 Macy’s-branded credit card accounts, Director Cliff White of the Executive Office for U.S. Trustees announced today.
The proposed settlement has been filed in the U.S. Bankruptcy Court for the Northern District of Georgia, where it is subject to court approval. In the settlement, Citi acknowledges that its affiliate DSNB issued Macy’s-branded consumer credit card accounts. FDS Bank was responsible for account servicing activities and contracted certain bankruptcy-related services to vendors. Between 2012 and 2015, tens of thousands of proofs of claim were filed in bankruptcy cases across the country on DSNB’s behalf. These proofs of claim were improperly signed, under the penalty of perjury, by employees of a third-party vendor who had not reviewed and/or lacked knowledge of the contents of the proof of claim. In some cases, the electronic credentials of the vendor’s employees were used to file claims where the employee did not review the claim. These improper practices were identified when Citibank took over the servicing of the accounts in late 2015 from the third parties. Citi self-reported the errors to the USTP.
“I am pleased that Citi has acted responsibly by self-reporting these deficient bankruptcy practices and agreeing to remediate affected borrowers to address the errors,” said USTP Director White. “I am also encouraged that Citi has instituted internal bankruptcy procedures to ensure that the vendor’s errors should not be repeated. When creditors fail to comply with the bankruptcy laws and rules, they must be held accountable. The U.S. Trustee Program remains diligent in its effort to ensure that creditors as well as debtors who disregard the law will be held accountable for their actions.”
Settlement Terms
Citi agrees to pay $5 million to remediate DSNB account holders in whose bankruptcy cases improperly signed proofs of claim may have been filed. Using the former vendor’s data, Citi has undertaken a review and identified more than 71,000 eligible accounts. Each eligible account will receive a pro rata share of the $5 million dollar payment. Citi will also send a notice to eligible accounts informing the account holder of the reason for the payment.
Citi’s independent internal compliance group will perform an audit to ensure that Citi has met its obligations under the settlement. Citi will then file a report with the Court certifying that it has completed its corrective action obligations under the settlement.
While the settlement resolves any actions that could be brought by the USTP for the covered conduct, it does not impact the rights of borrowers or other third parties, including trustees.
The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The Program has 21 regions and 92 field office locations. Learn more information on the Program at: https://www.justice.gov/ust.
U.S. Soldier Sentenced to More Than 11 Years for Illegally Manufacturing, Using a Chemical WeaponRead the Press Release
Ryan Keith Taylor, 24, of New Llano, Louisiana, and a soldier at Fort Polk, was sentenced today to 135 months in prison, to be followed by five years of supervised release, for manufacturing, possessing and detonating a chemical weapon in the Kisatchie National Forest adjacent to the Fort Polk Army installation in Louisiana.
The sentence was announced by Assistant Attorney General for National Security John C. Demers and U.S. Attorney David C. Joseph for the Western District of Louisiana. The sentence was issued by U.S. District Judge Jay C. Zainey.
“Taylor produced and detonated a chemical bomb near Fort Polk, causing injury to his fellow soldiers who responded to and investigated the incident.” said Assistant Attorney General Demers. “Today’s sentence holds Taylor accountable for his crime and makes clear that we will not tolerate such conduct. I want to thank the agents and prosecutors who are responsible for this result and our military and local law enforcement partners for their significant contributions to this investigation.”
“Supporting and protecting our soldiers is of utmost importance to my office,” said U.S. Attorney Joseph. “Those serving our country put their lives on the line daily to protect us. They should not be put in danger needlessly. The chemical weapon the defendant created in this case is banned under international and national laws because of its terrible effects on the human body. I want to thank our U.S. military, federal and local law enforcement for their combined effort investigating this case and bringing this defendant to justice.”
According to the June 11, guilty plea, Taylor detonated an explosive device containing chlorine gas on the morning of April 12, 2017 in the Kisatchie National Forest near Fort Polk. Three U.S. Army soldiers who were conducting a training exercise nearby heard the explosions and found Taylor standing near his vehicle filming the explosion with his cell phone. They then questioned Taylor and reported the incident to military police.
Upon arriving at the site of the explosion, Fort Polk military police investigators examined the scene and began collecting samples at the blast site. One investigator filled a plastic bag with a rock coated in an unknown substance. The bag immediately popped and the investigator’s plastic gloves and boots began to melt. He also began to experience difficulty breathing and his skin started burning. Law enforcement later detained Taylor at Fort Polk and searched his vehicle. During the search, investigators found remnants of the explosive device and chlorine residue, which one investigator inhaled and touched, causing him to be hospitalized. During the course of the investigation, law enforcement agents found bomb-making notes, materials and chemical residue in Taylor’s vehicle, apartment and storage building. The two victims who inhaled the chlorine gas were treated multiple times for their injuries and effectively ended their military careers.
The U.S. Army Directorate of Emergency Services, Military Police, Criminal Investigation Command, and Military Intelligence/Army Counterintelligence Gulf Coast at Fort Polk, Louisiana; the FBI and the FBI’s Joint Terrorism Task Force; the Louisiana State Police; the Vernon Parish Sheriff’s Office; and local police and fire agencies in Vernon Parish investigated the case.
U.S. Attorney David C. Joseph, Assistant U.S. Attorney Daniel J. McCoy and Special Assistant U.S. Attorney Dennis E. Robinson of the Western District of Louisiana, and Trial Attorney David Cora of the National Security Division’s Counterterrorism section prosecuted the case.
U.S. Attorney Brady Welcomes HIDTA Designation to Combat Drug Trafficking and Reduce Supply of Illegal DrugsRead the Press Release
PITTSBURGH – United States Attorney Scott W. Brady announced today that three Western Pennsylvania counties will receive new federal funding to combat drug trafficking and reduce the supply of illegal drugs. The counties of Allegheny, Beaver and Washington have been officially designated as a High Intensity Drug Trafficking Area (HIDTA) by the White House’s Office of National Drug Control Policy, meaning Western Pennsylvania will now receive more resources to coordinate federal, state and local governments to fight drug trafficking and abuse.
"We are pleased to receive this surge in funding from the White House. The HIDTA designation for Western Pennsylvania is long overdue," stated U.S. Attorney Brady. "We are at a critical point in the opioid crisis and the President has made clear that failure is not an option. The HIDTA program will expand our law enforcement efforts by providing critical funding to local, state and federal agencies. Through a centralized command structure, we will be able to share information and intelligence so those individuals who are polluting our communities with drugs will be held accountable. The HIDTA designation will also permit broader and more effective training initiatives and provide the opportunity to turn the corner in this devastating drug crisis."
Until today, Western Pennsylvania was the only metropolitan area in the country that had no designated HIDTA areas. The U.S. Attorney’s Office, in partnership with FBI, DEA and other law enforcement agencies, worked closely with the District Attorneys’ Offices for Allegheny, Beaver and Washington Counties to petition the White House for designation. All three petitions for designation detailed the region’s record levels of fatal overdoses, primarily due to widespread distribution of fentanyl and its analogues. Each petition also noted the need to enhance each County’s ability to stop illegal drugs from entering the communities through the federal highways, including I-376, I-76 (The Pennsylvania Turnpike), I-79, I-70, and PA Route 51, as well as by mass transit, including buses from Chicago, Detroit, Philadelphia and Newark.
U.S. Attorney Brady thanked Pennsylvania’s United States Senators, Senator Pat Toomey and Senator Robert Casey, the members of Western Pennsylvania Congressional delegation, Governor Tom Wolf, District Attorney Gene Vittone, District Attorney David Lozier and District Attorney Stephen Zappala, the Federal Bureau of Investigation, the Drug Enforcement Administration, the Pennsylvania State Police, the US Postal Inspection Service, and the Department of Homeland Security, as well as state and local law enforcement who supported and worked in concert to receive this designation.
Turlock Man Sentenced to over 8 Years in Prison for Receipt and Distribution of Child PornographyRead the Press Release
FRESNO, Calif. — Gary Gene Bishop, 43, of Turlock, was sentenced today by U.S. District Judge Dale A. Drozd to eight years and four months in prison, to be followed by 10 years of supervised release for receiving and distributing child pornography, U.S. Attorney McGregor W. Scott announced.
According to court documents, between July 27, 2016 and August 22, 2016, in Stanislaus County, Bishop was found to have received and distributed through the internet over 100 videos and 5,000 image files of minors engaged in sexually explicit conduct. The images also involved the portrayal of sadistic, masochistic, and other depictions of violence, and included depictions of pre-pubescent minors.
This case was the product of an investigation by Homeland Security Investigations and the Turlock Police Department. Assistant U.S. Attorney Brian W. Enos prosecuted the case.
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 those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.
Tulsa Receives $800,000 from the Department of Justice's Public Safety Partnership to Support Crime Reduction EffortsRead the Press Release
TULSA, Okla.—Attorney General Jeff Sessions announced today the grant awards to Public Safety Partnership member sites that will include $800,000 in funding to Tulsa law enforcement departments and their partners to fight violent crime.
The partnership delivers $10 million in grant awards to support various state, local and tribal law enforcement departments and agencies who battle violent crime. Tulsa was awarded $800,000 to fund ballistic technology and to improve investigative practices through Crime Gun Intelligence Centers.
The Office of Justice Programs’ Bureau of Justice Assistance, in partnership with the Bureau of Alcohol, Tobacco, Firearms, and Explosives, is awarding $5 million under the Local Law Enforcement Crime Gun Intelligence Center Integration Initiative to encourage local jurisdictions to use intelligence, technology and community engagement to identify unlawfully used firearms and to prosecute those who commit violent crimes.
“This crime-fighting collaboration will be Tulsa tailored. It will provide a data driven, strategic look at the city’s most violent and problematic criminal activity that is infiltrating and harming neighborhoods. Additionally, our Tulsa law enforcement partners, who know our community well, will play an active role in forming priorities and solutions and will further gain invaluable tools, training and focused resources,” said United States Attorney Trent Shores. “Together, we will all move forward in our common mission to stop violent crime and create an environment where our neighborhoods thrive.”
Tulsa Police Chief Chuck Jordan said, “We are very grateful to be receiving this Department of Justice grant, which will formalize Tulsa as a Crime Gun Intelligence Center. This funding will help support collaborative efforts that are already in place with our federal and local partners here in Tulsa. These resources will help us identify our most violent offenders even quicker, targeting them for enforcement and removing them from our streets. The Tulsa Police Department has a world class forensic laboratory that supports some of the most gifted investigators and prosecutors in the nation. I look forward to seeing all that is accomplished with this grant!”
Tulsa County District Attorney Steve Kunzweiler added, “Tulsa County is indeed blessed to have a network of partner agencies working hard to reduce violent crime in our communities. I am committed to ensuring public safety, and the Tulsa County District Attorney’s Office is proud to be part of this effort.”
Grant recipients include the PSP cities of Indianapolis, Indiana, $798,866; Memphis, Tennessee, $714,055; Tulsa, Oklahoma, $800,000 and Baton Rouge, Louisiana, $634,971. Other locations include Detroit, Michigan, $800,000; the Albuquerque, New Mexico, Police Department, $452,108, and the City/County of San Francisco, California, $800,000. The jurisdictions will use these awards to hire personnel to utilize the National Integrated Ballistic Information Network (NIBIN), to purchase technology required to operate a Crime Gun Intelligence Center and ammunition for ballistic tests of recovered weapons.
Attorney General Jeff Sessions made the announcement during today’s National Public Safety Partnership Symposium on Violent Crime in Birmingham, Alabama. The National Public Safety Partnership is a DOJ-wide initiative that enables cities to consult with and receive a coordinated array of resources from DOJ’s programmatic and law enforcement components: the Bureau of Justice Assistance; United States Attorneys’ Offices; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Federal Bureau of Investigation; the U.S. Drug Enforcement Administration; the U.S. Marshals Service; the Office on Violence Against Women; the Office of Justice Programs; the Office of Community Oriented Policing Services; and other federal agencies in order to improve local violence reduction strategies.
Trinidadian Man Sentenced to 42 Months in Prison on Federal Bank Fraud ChargesRead the Press Release
WASHINGTON - Garth Anthony Gardner, 49, a citizen of the Republic of Trinidad & Tobago, was sentenced today to 42 months in prison for a scheme in which he made misrepresentations to apply for and obtain more than $3 million in multiple home equity line of credit loans.
The announcement was made by U.S. Attorney Jessie K. Liu and Acting Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service Criminal Investigation (IRS-CI) Washington D.C. Field Office.
Gardner pled guilty in July 2018, in the U.S. District Court for the District of Columbia, to two counts of bank fraud. He was sentenced by the Honorable Christopher R. Cooper. In addition to his prison term, Gardner will be subject to a restitution order to be set at a later date. He also must pay a forfeiture money judgment in the amount of $2,048,446. Following his prison term, Gardner will be placed on five years of supervised release and could be deported.
According to the government’s evidence, in October 2003, Gardner purchased a property in the 5100 block of 13th Street NW, using the Social Security number of another person and falsely representing himself as a U.S. citizen. In May 2005, he used a corporation that he owned to purchase a second property in the 1300 block of Dexter Terrace SE. Gardner transferred ownership of the second property from the company to himself for $10. Next, Gardner applied for a series of home equity line of credit loans using the two properties as collateral.
By settling these loans in close proximity to each other, Gardner minimized the banks’ ability to learn about the other loans. From August to October 2004, Gardner obtained 12 home equity line of credit loans from 12 different banks secured by the 13th Street property, totaling approximately $1.4 million. Between March and April 2006, Gardner applied for 13, and obtained 12, such loans from 12 banks, secured by the Dexter Terrace property, totaling approximately $1.9 million.
In approximately February 2008, Gardner stopped making payments and defaulted on all of the loans. The banks discovered Gardner’s fraudulent conduct after initiating foreclosure proceedings on the properties.
Gardner admitted that he used a portion of the proceeds from the fraudulent scheme to purchase 15 silver bars, which the government recovered and liquidated for about $1.1 million.
Gardner was arrested in Frankfurt, Germany in May 2017, and was extradited to the District in February 2018, to face the charges that had been pending since 2014. He remained in custody pending his sentencing.'
The Department of Justice’s Office of International Affairs provided significant assistance in the extradition of Gardner from Germany to the United States.
In announcing the sentence, U.S. Attorney Liu and Acting Special Agent in Charge Jackson commended the work performed by those who investigated the case from the Internal Revenue Service-Criminal Investigation. They also expressed appreciation for the assistance provided by the Washington Field Office of the U.S. Secret Service and the Office of the Inspector General of the Social Security Administration. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Denise A. Simmonds and Diane Lucas, former Assistant U.S. Attorneys Michelle Bradford and David A. Last, and Paralegal Specialist Aisha Keys.
Torrington Man Pleads Guilty to Tax EvasionRead 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 SERAFINO CANINO, 52, of Torrington, waived his right to be indicted and pleaded guilty today in Bridgeport federal court to one count of tax evasion.
According to court documents and statements made in court, CANINO was employed by and had an ownership interest in Innovative Concepts Corporation (“ICC”), a company that manufactured and distributed small power and hand tools. ICC contracted with factories in Asia through intermediaries located in Taiwan. The intermediaries were responsible for, among other things, negotiating with the factories in Asia, ensuring the shipment of manufactured products to ICC, and invoicing ICC for the manufacturing of its products.
From 2008 through 2011, CANINO engaged in fraudulent billing using two of ICC’s intermediaries in Taiwan whereby CANINO instructed the intermediaries to charge ICC an inflated price and kick back the overage to CANINO using overseas bank accounts and an overseas corporate entity. Through this scheme, CANINO improperly received more than $633,000 in income. CANINO failed to disclose this illegal income to his accountants who prepared his federal tax returns, and he failed to report the income on his 2008, 2009, 2010 and 2011 tax returns. The total tax loss to the Internal Revenue Service was $186,358.
CANINO is scheduled to be sentenced by U.S. District Judge Stefan R. Underhill on December 17, 2018, at which time he faces a maximum term of imprisonment of five years and more than $430,000 in back taxes, interest and penalties.
This matter is being investigated by the Internal Revenue Service, Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney Susan L. Wines.
Tipton Man Sentenced to 50 Years in Federal Prison for Producing Child PornographyRead the Press Release
A man who produced child pornography involving a prepubescent child and traded child pornography with others was sentenced on September 19, 2018, to 50 years in federal prison.
Christian Hansen, age 40, of Tipton, Iowa, received the sentence after a March 23, 2018, jury verdict finding him guilty of one count of sexual exploitation of a child, one count of sexually exploiting a child while being required to register as a sex offender, one count of distribution of child pornography, one count of receipt of child pornography, and five counts of possession of child pornography.
The evidence at trial showed that in July 2017, Hansen took photos of a prepubescent child’s genital area and e-mailed the photos to others. Hansen also traded child pornography, including the child pornography he produced, with others and possessed child pornography on multiple electronic devices. At the time of these offenses, Hansen was required to register as a sex offender based on his 2011 Nebraska convictions for three counts of possession of child pornography.
Hansen was sentenced in Cedar Rapids by Chief United States District Court Judge Leonard T. Strand. Hansen was sentenced to 600 months’ imprisonment. A special assessment of $900 was imposed, Hansen was ordered to pay over $32,500 in victim restitution, and he must also serve a life term of supervised release. He must comply with all sex offender registration and public notification requirements.
This case was prosecuted by Assistant United States Attorney Mark Tremmel and was investigated by Homeland Security Investigations, the Iowa Division of Criminal Investigation, the Tipton Police Department, and the Cedar Rapids Police Department.
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.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is CR 17-99.
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Three People Charged in Newark Heroin Trafficking ConspiracyRead the Press Release
NEWARK, N.J. – Three men were charged today in connection with their respective roles in a drug trafficking conspiracy, U.S Attorney Craig Carpenito announced.
Ahmad Johnson, a/k/a “OC,” 38, Cory Canzater, a/k/a “Big C,” 45, and Maurice McPhatter a/k/a “Ree,” 45, all of Newark, were charged today in a five-count indictment. All three defendants are charged with one count of conspiracy to distribute and possess with intent to distribute controlled substances, including heroin, cocaine and fentanyl (Count One). Additionally, Johnson is charged with one count of conspiracy to distribute and possess with intent to distribute heroin (Count Two); two counts of distribution and possession with intent to distribute heroin (Counts Three and Four); and one count of possession of a weapon by a convicted felon (Count Five). The indictment follows the arrests of seven members of Johnson’s drug trafficking organization in September 2017.
According to documents filed in this case and statements made in court:
From September 2016 through June 2017, Johnson and others took part in a heroin distribution conspiracy that operated in and around Newark.
Through the authorized interception of telephone calls and text messages, controlled purchases of heroin, the use of confidential sources of information, and other investigative means, law enforcement learned that Johnson was allegedly a leader of the conspiracy and was responsible for obtaining wholesale amounts of narcotics, including heroin and cocaine, and processing and packaging the narcotics for sale. Johnson sometimes found users to “test” the narcotics to evaluate their quality, potency, and danger for broader distribution. Distributors then sold the narcotics to other distributors and to users.
Count One of the indictment, the conspiracy charge against Johnson, Canzater and McPhatter, carries a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine. Counts Two and Four are punishable by up to 40 years in prison and a $5 million fine, Count Three is punishable by up to 20 years in prison and a $1 million fine and Count Five is punishable by up to 10 years in prison and a $250,000 fine.
Attorney Carpenito credited special agents and officers with DEA’s High-Intensity Drug Trafficking Area (HIDTA) Group 1, under the direction of Special Agent in Charge Valerie A. Nickerson, with the investigation leading to todays’ indictment.
The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the U.S. Attorney’s Office Organized Crime and Drug Enforcement Task Force / Narcotics Unit in Newark.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Third Federal Inmate at Fort Dix Sentenced to Additional 160 Months for Possessing Images and Videos of Child Sexual Abuse While in PrisonRead the Press Release
CAMDEN, N.J. – A Brookhaven, Pennsylvania, man was sentenced today to an additional 160 months in prison for possessing hundreds of images and videos of child sexual abuse while imprisoned at Federal Correctional Institution Fort Dix for previous offenses involving the distribution and possession of child pornography, U.S. Attorney Craig Carpenito announced.
Brian J. McKay, 47, previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez to an information charging him with one count of possession of child pornography. Judge Rodriguez imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
McKay admitted that he possessed two micro SD Cards which together contained a total of approximately 593 images and 645 videos of child pornography, some of which depicted children being sexually abused and sadistic and masochistic sexual conduct involving infants and toddlers. In connection with his plea, McKay also admitted that he distributed child pornography to another inmate.
McKay and seven other inmates were arrested in April 2017 and February 2018 following an FBI investigation involving multiple covert recordings and several cooperating inmates. The investigation revealed that McKay and other inmates utilized contraband cellphones, micro SD cards, and access to the internet to obtain, view, and distribute child pornography within the prison. A co-defendant organized and helped facilitate this criminal activity by maintaining cloud accounts that were used as repositories for child pornography.
In addition to the prison term, Judge Rodriguez sentenced McKay to 10 years of supervised release. Restitution will be determined at a later date.
Six other inmates – all of whom were serving sentences for prior child pornography offenses while committing the alleged crimes in this case – have pleaded guilty: Erik M. Smith, 36, of Iron Mountain, Michigan; Anthony C. Jeffries, 32, of Orange, Virginia; Jordan T. Allen, 31, of Plain City, Ohio; Christopher D. Roffler, 30, of Virginia Beach, Virginia; Jacob S. Good, 26, of Fredericksburg, Virginia; and Charles Wesley Bush, 38, of Knoxville, Tennessee. Smith was sentenced to 151 months in prison and Good was sentenced to 10 years in prison; the other four defendants are awaiting sentencing.
William H. Noble, 52, of Lowell, Massachusetts, was indicted on May 23, 2018, and is scheduled for trial next year. The charges and allegations against Noble are merely accusations, and he is presumed innocent unless and until proven guilty.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation. He also thanked officials of the Bureau of Prisons at Federal Correctional Institution Fort Dix for their assistance.
The government is represented by Assistant U.S. Attorneys Gabriel J. Vidoni and Alyson M. Oswald of the U.S. Attorney’s Office’s Criminal Division in Camden.
Defense counsel: John B. Brennan Esq., Camden
Thibodaux Man Indicted for Receipt of Child PornographyRead the Press Release
JARED CARRELL (“CARRELL”), age 38, of Thibodaux, Louisiana, was indicted Friday, September 21, 2018 for receipt of child pornography, announced United States Attorney Peter G. Strasser.
On May 30, 2018, law enforcement officers with the Louisiana State Police found CARRELL in possession of a LG cellular device containing images depicting the sexual victimization of prepubescent children. On July 9, 2018, members of the Louisiana State Police and the U.S. Department of Homeland Security, Homeland Security Investigations, executed a search warrant at CARRELL’s Thibodaux residence. At which time, CARRELL was arrested and charged with possessing child pornographic materials. Today’s indictment charges CARRELL with knowingly receiving and attempting to receive images of minors engaging in sexually explicit conduct. CARRELL will appear before a U.S. magistrate judge for his arraignment on this indictment in the next two weeks.
U. S. Attorney Strasser reiterated that the Indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
If convicted, CARRELL faces a mandatory minimum penalty of five (5) years imprisonment up to twenty (20) years, followed by up to a life term of supervised release, and a $250,000.00 fine.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
U.S. Attorney Strasser praised the work of the U. S. Department of Homeland Security, Homeland Security Investigations, and the Louisiana State Police in investigating this matter. The prosecution of this case is being handled by Project Safe Childhood Coordinator and Fraud Section Chief, Assistant U. S. Attorney Brian M. Klebba.
Texas man sentenced to nearly 5 years in prison for traveling to Lake Charles to have sex with minorRead the Press Release
LAFAYETTE, La. – United States Attorney David C. Joseph announced today that a Texas man was sentenced to 57 months in prison for traveling to Lake Charles to have sex with a 12 year old.
Wendell Eaves, 61, of Kirbyville, Texas, was sentenced by U.S. District Judge Jay C. Zainey on one count of travel with intent to engage in illicit sexual contact with a minor. He was also sentenced to 20 years of supervised release and must register as a sex offender. According to the June 11, 2018 guilty plea, Eaves communicated with a group of people who said they had a 12-year-old female available for prostitution. The defendant planned to meet the girl at a Lake Charles casino on September 22, 2017, but law enforcement uncovered the plan and arrested him at the casino.
This case is part of Project Safe Childhood, a U.S. Department of Justice nationwide initiative 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 combines 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.
The U.S. Department of Homeland Security and U.S. Immigration & Customs Enforcement (ICE) also encourage the public to report suspected child predators and any suspicious activity through its toll-free hotline at (866) 347-2423. Investigators are available at all hours to answer hotline calls. Tips or other information can also be submitted to ICE online by visiting their website at www.ice.gov/exec/forms/hsi-tips/tips.asp or through the Operation Predator smartphone application www.ice.gov/predator/smartphone-app. Tips may be submitted anonymously.
The U.S. Department of Homeland Security and the Lake Charles Police Department conducted the investigation. Assistant U.S. Attorney John Luke Walker prosecuted the case.