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Newest first across public DOJ and U.S. Attorney press releases.
Monday 9 July 2018
New Orleans Man Pleads Guilty in Methamphetamine Trafficking ConspiracyRead the Press Release
NEW ORLEANS – U.S. Attorney Duane A. Evans announced that PETER GIANDALONE, age 43, of New Orleans pled guilty today to one count of conspiring to traffic 500 grams or more of a mixture containing methamphetamine in the Eastern District of Louisiana. GIANDALONE faces a mandatory minimum sentence of 10 years in prison, a maximum life sentence, a fine of up to $10,000,000 and at least 5 years of supervised release.
U.S. District Judge Susie Morgan set sentencing for GIANDALONE on October 11, 2018.
U.S. Attorney Evans praised the work of the United States Postal Inspection Service, Louisiana State Police, Jefferson Parish Sheriff’s Office, Texas Department of Public Safety, Texas Highway Patrol, Montgomery County (Texas) Sheriff’s Office, Immigration and Customs Enforcement, AMTRAK Police, and the Orleans Parish District Attorney’s Office. Assistant United States Attorney Brandon S. Long is in charge of the prosecution.
Minnesota Man Charged with Kidnapping Kansas GirlRead the Press Release
KANSAS CITY, KAN. – A Minnesota man was charged Monday with kidnapping a 13-year-old Kansas girl and taking her to St. Paul, U.S. Attorney Stephen McAllister said.
Dechon White, 23, St. Paul, Minn., is charged with one count of kidnapping. Documents filed in the case allege White and the victim met online in February 2018. On July 1, White came to visit the victim at her home in Lenexa, Kan. He told the victim’s mother he was 16 years old. During his stay in Lenexa, he had sex with the victim.
On July 4, White and the victim told her mother they were going to a shopping mall. Instead, they went to a Greyhound bus station in Kansas City and took a bus to St. Paul.
After the victim’s mother reported her missing, police found White and the victim at his residence in St. Paul.
If convicted, White faces a penalty of not less than 20 years in federal prison and a fine up to $250,000. The Lenexa Police Department, the South St. Paul Police Department and the FBI investigated. Assistant U.S. Attorneys Kim Flannigan and David Zabel are prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Mexican Man Arrested at the Cyril E. King Airport Sentenced to Incarceration for Illegal Reentry into the United StatesRead the Press Release
St. Thomas, USVI – FilibertoMoreno, 50, of Mexico, was sentenced today before District Court Judge Curtis V. Gomez, to four months incarceration for illegal reentry into the United States, United States Attorney Gretchen C.F. Shappert announced. In addition, Judge Gomez sentenced Moreno to one year of supervised release and ordered him to pay a $100 special assessment.
According to plea agreement, Moreno was stopped by U.S. Customs and Border Protection (CBP) officers at the Cyril E. King Airport after he presented himself at primary inspection. During the inspection process, Customs agents discovered that Moreno had been previously deported from the United States and that he did not have permission to legally be in the territory.
The case was investigated Homeland Security Investigations (HSI) and U.S. Customs and Border Protection (CBP) and prosecuted by Assistant United States Attorney Sigrid M. Tejo-Sprotte.
Lewis County man admits to firearms chargeRead the Press Release
ELKINS, WEST VIRGINIA – Roger Lee Clem, II, aka “Woody,” of Weston, West Virginia, has admitted to a firearms charge, United States Attorney Bill Powell announced.
Clem, age 30, pled guilty to one count of “Possession of a Stolen Firearm.” Clem admitted to having a stolen .45-caliber pistol in Lewis County in October 2016.
Clem faces up to 10 years incarceration and a fine of up to $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Stephen D. Warner is prosecuting the case on behalf of the government. The Bureau of Alcohol, Firearms, Tobacco and Explosives, The Mountain Region Drug & Violent Crime Task Force, the Greater Harrison Drug &Violent Crime Task Force, a HIDTA-funded initiative, the West Virginia State Police, Upshur County Sheriff’s Office, Lewis County Sheriff’s Office, the Buckhannon Police Department, and the Weston Police Department investigated.
U.S. Magistrate Judge Michael John Aloi presided.Justice Department Files Sexual Harassment Lawsuit Against Owner of Cullman, Alabama, Rental PropertyRead the Press Release
The Justice Department today announced that it has filed a lawsuit alleging that Randy Hames, a residential property owner and landlord in Cullman, Alabama, subjected female tenants to egregious sexual harassment in violation of the Fair Housing Act. Along with Randy Hames, the Department’s complaint names his residential property company, Hames Marina, LLC, as a defendant.
The complaint, filed in the U.S. District Court for the Northern District of Alabama, alleges that since at least 2011, Hames sexually harassed numerous women who lived in the defendants’ residential property. The suit alleges that Hames’s conduct included demanding or pressuring female tenants to engage in sexual acts with him in exchange for rent or to prevent eviction; evicting female tenants when they refused his advances; making female tenants feel unsafe by stalking them and entering their residences without permission; and making unwelcome sexual comments and advances.
“Subjecting female tenants to harassment and demands for sex is offensive and illegal,” said Acting Assistant Attorney General John Gore. “The Justice Department will continue its vigorous enforcement of the Fair Housing Act against landlords who engage in this reprehensible conduct. No woman should feel unsafe in her own home.”
“The alleged behavior of Randy Hames is abhorrent and repulsive. We will not let women, or any person, in our district be threatened, harassed, or retaliated against by landlords,” said U.S. Attorney Jay E. Town for the Northern District of Alabama. “The Fair Housing Act is an extraordinary tool that allows the Department of Justice to protect all tenants from egregious misconduct, like sexual harassment, and we will continue to strongly enforce all violations of it.”
The Justice Department’s Sexual Harassment in Housing Initiative (SHHI) was launched in October 2017 and expanded nationally in April 2018. The initiative specifically seeks to increase the Department’s efforts to protect individuals from harassment by landlords, property managers, maintenance workers, security guards, loan officers, or other people who have control over housing. The Justice Department has filed or settled 10 sexual harassment cases and has recovered over $1.6 million for victims of sexual harassment in housing since Jan. 20, 2017. Today’s lawsuit seeks monetary damages to compensate the victims, civil penalties, and a court order barring future discrimination. The complaint contains allegations of unlawful conduct. The allegations must be proven in federal court.
Individuals who believe that they may have been victims of sexual harassment or discrimination at rental dwellings owned or operated by Randy Hames or Hames Marina, or who have other information that may be relevant to this case, should contact the Housing Discrimination Tip Line, by calling 1-800-896-7743, pressing 1 to continue in English, and selecting mailbox 7 to leave a message.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability, and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt.
Individuals who believe that they may have been victims of sexual harassment in housing should call the Justice Department at 1-844-380-6178, send an e-mail to [email protected], or contact the Department of Housing and Urban Development (HUD) at 1-800-669-9777. If you have information or questions about any other housing discrimination, you can contact the Justice Department at 1-800-896-7743.
Judge Sentences CPA to Prison for Helping Cyber Charter School CEO in Fraud SchemeRead the Press Release
PITTSBURGH, PA - A resident of Koppel, Pennsylvania, has been sentenced by a federal district court judge in Pittsburgh, Pennsylvania, to one year and a day in prison on charges of Criminal Conspiracy to Impede the Lawful Functions of the Internal Revenue Service in Ascertaining and Collecting Taxes, United States Attorney Scott W. Brady announced today.
Neal Prence, 62, entered a plea of guilty on September 28, 2016, to Count 6 (Criminal Conspiracy) of an Indictment that was returned by a grand jury against Prence and co-defendant Nicholas Trombetta in August of 2013. In his plea, Prence acknowledged that his actions had played a part in causing a tax loss to the Federal Government that Judge Conti found was $437,632.
According to the particular charges set forth in Count 6 of the Indictment, Prence, a certified public accountant, was instrumental in aiding the former head of the PA Cyber Charter School, Trombetta, in funneling approximately $8,000,000 from PA Cyber through an entity then known as NNDS and finally to a company called Avanti Management Group, where Trombetta had free access to the funds. Among the matters charged in Count 6 that were attributed to Prence were the filing of tax returns that attributed Trombetta’s income to the four straw owners of Avanti, the filing of false tax returns by Trombetta’s sister, Elaine Trombetta Neill, and the filing of false tax returns on behalf of Trombetta. All of this was done to disguise income that should have been reported by Trombetta, but was shifted to other persons or entities.
At the sentencing proceeding, Chief U.S. District Judge Joy Flowers Conti also imposed a three-year term of supervised release on Prence and ordered him to pay $50,000 in restitution to the IRS. Judge Conti stated that, "As a CPA, Prence knew what he was doing was illegal."
Assistant United States Attorneys Stephen R. Kaufman, Robert S. Cessar and James R. Wilson prosecuted this case on behalf of the government.
The Internal Revenue Service, Criminal Investigation, the Federal Bureau of Investigation and the United States Department of Education – Office of Inspector General conducted the investigation leading to the prosecution of this case.
Judge Finds Ohio Man Guilty of Possessing CocaineRead the Press Release
PITTSBURGH, PA - Upon the conclusion of a non-jury trial before United States District Judge Reginald B. Walton, Judge Walton found Adolph Brown guilty of one count of possession with intent to distribute 500 grams or more of cocaine, United States Attorney Scott W. Brady announced today.
Brown, 47, formerly of Akron, Ohio, waived his right to a jury trial, resulting in a non-jury bench trial before the Honorable Judge Walton in Pittsburgh, Pennsylvania.
According to Assistant United States Attorneys Stephen S. Gilson and Eric Olshan, who prosecuted the case, the evidence presented at trial established that, on March 2, 2015, Adolph Brown traveled from Akron, Ohio, to Farrell, Pennsylvania, for the purposes of completing a sale of approximately 722 grams of cocaine. While on his way to Farrell, the vehicle Brown was traveling in was stopped by police and searched. The search resulted in the discovery of the cocaine hidden behind inside a child’s car seat in the back seat of the vehicle. Upon the discovery of the cocaine, Brown voluntarily spoke with special agents from the Federal Bureau of Investigation, who were leading the investigation In this interview with the FBI, Brown admitted that the cocaine was his and that he was on his way to sell the cocaine to a customer in Farrell. Drug lab reports later confirmed the amount and type of narcotics was approximately 722 grams of cocaine.
Judge Walton scheduled sentencing for November 13, 2018 at 2 p.m. The law provides for a total sentence of not less than 10 years and not more than life in prison, a fine not to exceed $8,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based on the seriousness of the offense and the prior criminal history, if any, of the defendant.
Pending sentencing, the court continued the defendant’s detention.
The Federal Bureau of Investigation conducted the investigation thethat led to the prosecution of Adolph Brown, with assistance from the Southwest Mercer County Regional Police Department, the Pennsylvania State Police, and the Pennsylvania Attorney General’s Office.
Hurricane Felon Sentenced to Federal Prison for Gun CrimeRead the Press Release
CHARLESTON, W.Va. – A Hurricane man who possessed a firearm in April 2017 was sentenced today to 27 months in federal prison, announced United States Attorney Mike Stuart. Brandon Pistore, 34, previously pled guilty to being a felon in possession of a firearm. U.S. Attorney Stuart commended the investigative efforts of the St. Albans Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
On April 19, 2017, an officer with the St. Albans Police Department stopped a vehicle Pistore was driving and discovered a gun. The officer seized the firearm, a Davis Industries, Model P380 pistol. Pistore later admitted that it was his gun. He was prohibited from possessing any firearm under federal law because of a 2006 federal drug conviction for conspiracy to manufacture methamphetamine.
“Just another felon with an illegal firearm,” said United States Attorney Mike Stuart. “So many felons and so many illegal firearms, too many press releases read the same. That’s okay. We are going to keep arresting and prosecuting them to the fullest extent of the law for the longest prison sentences possible.”
Assistant United States Attorney Meredith George Thomas was in charge of the prosecution. Senior United States District Judge David A. Faber handed down the sentence.
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.
Follow us on Twitter: @SDWVNews and @USAttyStuart
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Health Quest and Putnam Hospital Center to Pay $14.7 Million to Resolve False Claims Act AllegationsRead the Press Release
Health Quest Systems, Inc. and certain of its subsidiaries (Health Quest) and Putnam Health Center (PHC) have agreed to pay over $14.7 million to resolve allegations of violations of the False Claims Act by submitting inflated and otherwise ineligible claims for payment, the Justice Department announced today. New-York based Health Quest is a family of integrated hospitals and healthcare providers that deliver surgical, medical and home health care services. PHC is a Health Quest subsidiary hospital based in Carmel Hamlet, New York.
“This resolution is a testament to our deep commitment to protecting the integrity of federally- funded healthcare programs,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “We are determined to hold accountable healthcare providers that knowingly claim taxpayer funds to which they are not entitled.”
In the settlement announced today, Health Quest and PHC admitted, acknowledged, and accepted responsibility for certain facts involving the submission of improper claims for various health-related services, including the following:
From April 1, 2009 through June 23, 2015, Health Quest submitted claims for evaluation and management services but did not sufficiently document the services to support the level of service billed. As a result, the services were billed two levels higher than supported by the medical record.
From April 1, 2011 through August 2014, Health Quest submitted claims for home health services that lacked sufficient medical records to support the claim, including documentation of a face-to-face encounter with a physician.
From March 1, 2014 through December 31, 2014, Health Quest subsidiary hospital, PHC, submitted allegedly false claims for inpatient and outpatient services referred to PHC by two orthopedic physicians, in alleged violation of the Physician Self-Referral Law. The two physicians had a direct financial relationship with PHC for providing administrative services and received compensation from PHC. The United States alleged their compensation exceeded the fair market value for the services, and thereby violated the Physician Self-Referral Law, which prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation arrangement. The United States further alleged that one purpose of the excessive compensation was to induce the above referrals to PHC, in violation of the Anti-Kickback Statute.
“Today’s settlement holds Heath Quest responsible for false billings to federally funded health care programs, as well as claims tainted by a hospital’s payments to two physicians for administrative services where it appears that one purpose of those payments was to improperly induce referrals. Hospitals and providers must be vigilant to make sure that claims accurately reflect medical services provided and are supported by sufficient documentation. We will continue to investigate whistleblower complaints vigorously to protect public funds,” said United States Attorney Grant C. Jaquith for the Northern District of New York.
As part of the settlements announced today, Health Quest will pay an additional $895,427 to the State of New York, which jointly funds the State’s Medicaid program with the federal government.
Contemporaneously with the False Claims Act settlement, Health Quest also agreed to enter into a Corporate Integrity Agreement (CIA) with HHS-OIG to address future compliance.
“Government health program dollars are precious and need to be carefully guarded,” said Scott J. Lampert, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG). “Working closely with our law enforcement partners we will fight for the integrity of these taxpayer-funded programs.”
The settlement resolves three lawsuits brought by former employees of Health Quest under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery. Tim Cleary will receive $1,893,092, John Betaudier and Carolyn Carroll will receive, collectively, $56,266, and Gregory Folta will receive at least $875,546.
The lawsuits, are captioned: United States, et al. ex rel. Folta v. Health Quest Systems, Inc., et al., No. 1:15-cv-396 (N.D.N.Y.); United States, et al. ex rel. Cleary v. Health Quest Systems, Inc., et al., No. 16-cv-76 (N.D.N.Y.); and United States, et al. ex rel. Betaudier and Carroll v. Health Quest Medical, Practice, P.C., et al., No. 1:16-cv-1344 (N.D.N.Y.).
The federal government’s resolution of these matters illustrate its emphasis on combating health care 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).
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Office for the Northern District of New York; HHS-OIG; the FBI; and the U.S. Postal Service Office of Inspector General.
Health Quest and Putnam Hospital Center to Pay $14.7 Million to Resolve False Claims Act AllegationsRead the Press Release
SYRACUSE, NEW YORK - Health Quest Systems, Inc. and certain of its subsidiaries (Health Quest) and Putnam Health Center (PHC) have agreed to pay over $14.7 million to resolve allegations of violations of the False Claims Act by submitting inflated and otherwise ineligible claims for payment, the Justice Department announced today. New-York based Health Quest is a family of integrated hospitals and healthcare providers that deliver surgical, medical and home health care services. PHC is a Health Quest subsidiary hospital based in Carmel Hamlet, New York.
“This resolution is a testament to our deep commitment to protecting the integrity of federally- funded healthcare programs,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “We are determined to hold accountable healthcare providers that knowingly claim taxpayer funds to which they are not entitled.”
In the settlement announced today, Health Quest and PHC admitted, acknowledged, and accepted responsibility for certain facts involving the submission of improper claims for various health-related services, including the following:
From April 1, 2009 through June 23, 2015, Health Quest submitted claims for evaluation and management services but did not sufficiently document the services to support the level of service billed. As a result, the services were billed two levels higher than supported by the medical record.
From April 1, 2011 through August 2014, Health Quest submitted claims for home health services that lacked sufficient medical records to support the claim, including documentation of a face-to-face encounter with a physician.
From March 1, 2014 through December 31, 2014, Health Quest subsidiary hospital, PHC, submitted allegedly false claims for inpatient and outpatient services referred to PHC by two orthopedic physicians, in alleged violation of the Physician Self-Referral Law. The two physicians had a direct financial relationship with PHC for providing administrative services and received compensation from PHC. The United States alleged their compensation exceeded the fair market value for the services, and thereby violated the Physician Self-Referral Law, which prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation arrangement. The United States further alleged that one purpose of the excessive compensation was to induce the above referrals to PHC, in violation of the Anti-Kickback Statute.
“Today’s settlement holds Heath Quest responsible for false billings to federally funded health care programs, as well as claims tainted by a hospital’s payments to two physicians for administrative services where it appears that one purpose of those payments was to improperly induce referrals. Hospitals and providers must be vigilant to make sure that claims accurately reflect medical services provided and are supported by sufficient documentation. We will continue to investigate whistleblower complaints vigorously to protect public funds,” said United States Attorney Grant C. Jaquith for the Northern District of New York.
As part of the settlements announced today, Health Quest will pay an additional $895,427 to the State of New York, which jointly funds the State’s Medicaid program with the federal government.
Contemporaneously with the False Claims Act settlement, Health Quest also agreed to enter into a Corporate Integrity Agreement (CIA) with HHS-OIG to address future compliance.
“Government health program dollars are precious and need to be carefully guarded,” said Scott J. Lampert, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG). “Working closely with our law enforcement partners we will fight for the integrity of these taxpayer-funded programs.”
The settlement resolves three lawsuits brought by former employees of Health Quest under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery. Tim Cleary will receive $1,893,092, John Betaudier and Carolyn Carroll will receive, collectively, $56,266, and Gregory Folta will receive at least $875,546.
The lawsuits, are captioned: United States, et al. ex rel. Folta v. Health Quest Systems, Inc., et al., No. 1:15-cv-396 (N.D.N.Y.); United States, et al. ex rel. Cleary v. Health Quest Systems, Inc., et al., No. 16-cv-76 (N.D.N.Y.); and United States, et al. ex rel. Betaudier and Carroll v. Health Quest Medical, Practice, P.C., et al., No. 1:16-cv-1344 (N.D.N.Y.).
The federal government’s resolution of these matters illustrate its emphasis on combating health care 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).
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Office for the Northern District of New York; HHS-OIG; the FBI; and the U.S. Postal Service Office of Inspector General.
Hartford Man Sentenced to 3 Years in Federal Prison for Drug and Gun OffensesRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that JOSEPH STEELE, also known as “Joey,” 32, of Hartford, was sentenced today by U.S. District Judge Michael P. Shea in Hartford to 36 months of imprisonment, followed by three years of supervised release, for drug and firearm offenses.
According to the evidence disclosed during his trial, on June 14, 2017, the Hartford Police Department’s Vice and Narcotics Unit received information that STEELE was in possession of a firearm while operating a white Cadillac. Investigators located the Cadillac and conducted a traffic stop at the intersection of Enfield Street and Capen Street. After STEELE consented to a search of the vehicle, investigators lifted a rear seat cushion and found a stolen .40 caliber semiautomatic pistol, 50 wax folds of fentanyl, and two knotted plastic bags containing approximately 6.5 grams of crack cocaine.
In April 2016, STEELE was convicted in Connecticut Superior Court of possession of a pistol without a permit, and was sentenced to 18 months of incarceration for that conviction. He was released from state prison in March 2017 and was serving a three-year term of probation when he was found in possession of the stolen firearm, fentanyl and crack.
On April 16, 2018, a jury found STEELE guilty of one count of possession with intent to distribute cocaine base (“crack”), one count of possession with intent to distribute fentanyl, and one count of possession of a firearm by a previously convicted felon. STEELE was acquitted of one count of possession of a firearm in furtherance of a drug trafficking crime.
STEELE has been detained since his arrest on June 14, 2017.
This investigation was conducted by the Hartford Police Department’s Vice and Narcotics Unit and the FBI’s Northern Connecticut Violent Crime Gang Task Force, which includes members of the Hartford Police Department, East Hartford Police Department, Connecticut State Police and Connecticut Department of Correction. The case was prosecuted by Assistant U.S. Attorneys Michael J. Gustafson and Jocelyn Courtney Kaoutzanis.
This prosecution stems from Project Longevity, a comprehensive initiative to reduce gun violence in Connecticut’s major cities. Through Project Longevity, community members and law enforcement directly engage with members of groups that are prone to violence. A critical component of the Project Longevity strategy is the “call-in,” a face-to-face meeting where Project Longevity partners engage group members and deliver a community message against violence, a law enforcement message about the consequences of further violence and an offer of help for those who want it. STEELE attended a call-in in May 2017 and declined Project Longevity services that were offered to him.
Harrison County man admits to methamphetamine chargeRead the Press Release
CLARKSBURG, WEST VIRGINIA –Jacob Renard White, of Clarksburg, West Virginia, has admitted to methamphetamine distribution, United States Attorney Bill Powell announced.
White, age 30, pled guilty to one count of “Conspiracy to Possess with Intent to Distribute and Distribute Methamphetamine.” White admitted to distributing methamphetamine in February of 2017 in Harrison County.
White faces up to 20 years incarceration and a fine of up to $1,000,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Andrew R. Cogar is prosecuting the cases on behalf of the government. The Greater Harrison Drug and Violent Crimes Task Force, a HIDTA-funded initiative, investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Greensboro Man Sentenced to 32 Years in Prison for Extensive Bank Lien Theft Scheme, Money Laundering, & Aggravated Identity TheftRead the Press Release
RALEIGH – The United States Attorney for the Eastern District of North Carolina, Robert J. Higdon, Jr., announced that today in federal court Senior United States District Judge W. Earl Britt sentenced XAVIER MILTON EARQUHART, 31, of Greensboro, NC to serve 32 years in prison and 5 years of supervised release on ten counts of Bank Fraud, two counts of Engaging in Monetary Transactions Involving Criminally Derived Property and one count of Aggravated Identity Theft and Aiding and Abetting. EARQUHART was also ordered to make restitution in the amount of $1,570,561.86, and to forfeit a stash of gold bullion, cash, and studio equipment previously seized by law enforcement. Today’s sentencing follows a three-day jury trial in March in which a jury convicted EARQUHART on all counts.
The evidence at trial showed that, in one bank fraud scheme, the defendant forged a deed on a property owned by an out of state landowner, and then channeled the property ownership through fictitious individuals and a holding company before personally taking title to the property. The defendant then attempted to secure $495,000 in home equity loans using the property as collateral, becoming successful on three such attempts.
In a second scheme, the evidence showed that the defendant forged bank lien releases on 8 properties, in some instances, by stealing the identities of bank employees, and in other instances, using fictitious notaries. The defendant created Delaware holding companies to conceal his activities. The defendant then sold the properties off to unknowing third parties. At trial, the evidence showed that because of the defendant’s actions, some homeowners lost the funds that they had invested into the properties. Other victims were left uncertain as to the ability of their families to remain in the homes due to the cloud upon their title.
Lastly, the evidence at trial included evidence from law enforcement concerning the tracing of the defendant’s fraudulent gains. Law enforcement used a note and key found in the defendant’s Prius to uncover a hidden trove of $300,000 worth of gold, concealed in a storage unit in Spring, Texas. Law enforcement also seized various items of valuable recording studio equipment.
United States Attorney Robert J. Higdon, Jr. stated: “This was a crime that hurt not just banks, but also individuals and families who feared they would lose their homes through no fault of their own. The defendant will have plenty of time to think about the harm he has caused during the next 32 years in prison. I want to recognize the great work of IRS Criminal Investigation who tracked down and seized the defendant’s treasure chest filled with hundreds of thousands of dollars in gold bullion which will now benefit the victims in this case.”
"Today's announcement exemplifies the intense focus our Special Agent’s engage in when unraveling complex schemes such as this one orchestrated by Xavier Earquhart,” said Special Agent in Charge of the IRS Criminal Investigation, Charlotte Field Office, Matthew D. Line. “Earquhart’s scheme was driven by insatiable greed and a blatant disregard for the tremendous damage inflicted on innocent victims. Be assured that IRS Criminal Investigation will continue to work with our law enforcement partners to hold those who engage in similar behavior fully accountable."
The investigation of this case was conducted by the IRS Criminal Investigation, with the assistance of the Federal Deposit Insurance Corporation Office of the Inspector General, and the Wake County Register of Deeds. Assistant United States Attorney William M. Gilmore represented the government in this case.
Former NBA Player Sentenced for False Tax Returns, Identity Theft Related to Charity Fraud SchemeRead the Press Release
KANSAS CITY, Mo. – A former professional basketball player was sentenced in federal court today on charges related to an extensive charity fraud scheme.
Kermit Alan Washington, 66, of Las Vegas, Nev., was sentenced by U.S. District Judge Greg Kays six years in federal prison without parole. The court also ordered Washington to pay $967,158 in restitution. Washington was taken into federal custody at the conclusion of today’s sentencing hearing.
“This former NBA player abused his fame and status to promote a charity scam by which he raised hundreds of thousands of dollars that he diverted to personal spending on lavish vacations, shopping sprees, and even plastic surgery for his girlfriend,” said Garrison. “Although he told his donors that 100 percent of all donations would go to support charitable work in Africa, including a medical clinic for needy families and HIV-positive children, in fact he spent most of the donated funds on himself. His fraud scheme also victimized law-abiding taxpayers by stealing from the public treasury rather than paying taxes owed.”
On Nov. 30, 2017, Washington pleaded guilty to two counts of filing a false tax return and one count of aggravated identity theft. Washington is among 11 defendants who have been convicted in several cases arising from the investigation of one of the largest software piracy schemes ever prosecuted by the U.S. Department of Justice. Investigators seized more than $20 million in assets from conspirators who are estimated to have sold in excess of $100 million worth of illicit, unauthorized and counterfeit software products to thousands of online customers.
eBay/PayPal Software Piracy Fraud Scheme
Washington’s charity, The Sixth Man Foundation, doing business as Project Contact Africa, operated an eBay store and used a PayPal account to facilitate payments. Approximately $12 million in items, including unauthorized, illicit, and counterfeit software and software components were sold on the Project Contact Africa eBay store.
In a separate but related case, Reza Davachi of Damascus, Md., pleaded guilty to a fraud scheme for abusing the benefits afforded a charity in these sales on Project Contact Africa’s eBay store.
Customers of the charity’s eBay store were under the impression that “100 percent” of the proceeds of sales were intended to go to the charity when, in fact, only a portion of the proceeds actually went to the charity. Washington admitted that he diverted funds from the charity’s bank account to pay himself or for personal spending, such as rent, credit card payments, vacation trips and plastic surgery for his then-girlfriend. Washington claimed to pay the rent and school fees for a family in Africa when, in fact, these payments were to a former prostitute, and rose and fell depending on their level of sexual intimacy.
By using the charity’s account to sell items through the eBay charity store, conspirators saved thousands of dollars per month that would have otherwise been paid to eBay in the form of various fees. As a result, eBay/PayPal sustained losses of approximately $908,231 due to the waived fees.
Workers’ Compensation Referral Scheme
Washington also admitted that he referred professional athletes to attorney Ronald Jack Mix, 80, of San Diego, Calif., so that Mix could file workers’ compensation claims in the state of California on behalf of the athletes. Mix then agreed to make donations to Washington’s charity.
Washington accepted approximately $155,000 in donations to his charity, which were actually illegal referral payments from Mix and his law firm. Washington diverted those funds from the charity’s bank account to pay himself or for personal spending. Washington admitted that he failed to account for this income to the charity on Project Contact Africa’s IRS filings during those years.
In a separate but related case, Mix pleaded guilty to filing a false tax return. Mix admitted that he made donations ranging from $5,000 to $25,000 for referrals of athletes, some of whom lived in the Western District of Missouri. Mix then claimed those payments as charitable contributions on his individual tax returns from 2010 to 2013. Mix was sentenced to time served and ordered to pay $49,543 in restitution.
False Tax Returns, Identity Theft
According to court documents, Washington diverted charity proceeds and failed to declare this income on federal income tax returns from 2010 to 2014. During this time, Washington also improperly claimed tens of thousands of dollars in personal charitable deductions. Washington’s additional tax due for his underreported income is $90,181.
Additionally, Washington is assessed $876,977 in excess benefit taxes related to the payment of excess benefits to a disqualified person (the use of charity funds for personal purposes by an officer of a charity). Washington’s accumulated tax loss for 2010 through 2014 thus totals $976,158.
Washington specifically pleaded guilty to filing a materially false individual tax return on Feb. 18, 2014, and to filing a materially false Form 990-EZ for his tax-exempt organization on Aug. 20, 2012.
Washington also specifically pleaded guilty to using the name, personal address and business address of another person without lawful authority in numerous state and federal filings on behalf of the charity. The identity theft victim, identified in court documents as “T.G.”, was a resident of Oregon. Washington admitted that he used her identity information so that Project Contact Africa could maintain its active status within the state of Oregon, which enabled the charity to receive the charitable donations and to maintain the charity store on eBay.
This case was prosecuted by Assistant U.S. Attorneys Patrick Daly and Curt Bohling in the Western District of Missouri and Assistant U.S. Attorney Ryan Raybould of the Middle District of Tennessee (formerly of the Department of Justice Tax Division). It was investigated by IRS-Criminal Investigation and Immigration and Customs Enforcement’s Homeland Security Investigations.
Former Kansas CPA Ordered to Pay Costs of His Own ImprisonmentRead the Press Release
KANSAS CITY, KAN. – A former Kansas CPA was sentenced Monday to a year and a day in jail and ordered to pay the cost of his imprisonment, which could be an estimated $34,000, U.S. Attorney Stephen McAllister said. In addition, the accountant was ordered to pay $106,055 in restitution for unpaid taxes.
Robert M. Purinton, 70, Fountain Hills, Ariz., pleaded guilty to one count of making a false statement on his 2009 tax return by under-reporting his income. He agreed to make restitution for taxes owed in 2009 and 2010. During those years, he was a CPA with an accounting firm in Overland Park.
McAllister commended the Internal Revenue Service and Assistant U.S. Attorney Leon Patton for their work on the case.
Former Boy Scout Employee Arrested, Charged with Possession of Child PornographyRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051Investigators Looking for Help from the Public
BUFFALO, N.Y.-U.S. Attorney James P. Kennedy, Jr. announced today that Russell Ruth, 34, of Lyons, NY, was arrested and charged by criminal complaint with possession of child pornography. The charge carries a maximum penalty of 10 years in prison and a $250,000 fine.Assistant U.S. Attorney Melissa M. Marangola, who is handling the case, stated that according to the complaint, in early March 2018, Yahoo! reported to the National Center for Missing and Exploited Children (NCMEC) that a subscriber uploaded five suspected child pornography files to a Yahoo! server. NCMEC contacted law enforcement officers who traced the files to an email address belonging to the defendant.
On June 7, 2018, the New York State Police executed the search warrant at Ruth’s Ditton Street residence in Lyons. A forensic examination of the defendant’s laptop computer and cellular telephone recovered hundreds of images and videos of child pornography involving minor boys.
The defendant was employed by the Boy Scouts of America in the Ovid, NY area.
Members of the public who have information related to this case are urged to contact the local HSI Buffalo Office at 716-464-5949. HSI victim-witness specialists will be available to assist any parent or guardian should they need victim-related resources. If any members of the public have general questions or concerns regarding sexual abuse of children or would like guidance on how to discuss this issue with children, please call the Bivona Child Advocacy Center at 1-585-935-7800.
Ruth made an initial appearance today before U.S. District Judge Jonathan W. Feldman and is being held pending a detention hearing on July 11, 2018, at 2:30 p.m.
The complaint is the result of investigation by Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent-in-Charge Kevin Kelly.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Former Avoyelles Correctional Center warden’s ex-wife pleads guilty to conspiracy chargeRead the Press Release
ALEXANDRIA, La. – United States Attorney David C. Joseph announced today that the ex-wife of a former warden for the Avoyelles Correctional Center pleaded guilty to conspiracy to commit wire fraud.
Tonia Bandy Cain, 43, of Moreauville, Louisiana, pleaded guilty before U.S. District Judge Dee D. Drell to one count of conspiracy to commit wire fraud. According to the guilty plea, Nathan Burl Cain II, 51, also of Moreauville, was the warden of Avoyelles Correctional Center located in Cottonport, Louisiana, and Tonia Cain served as the manager of the business office of the facility. They are accused of using Louisiana Department of Corrections credit cards to purchase items for personal use while misrepresenting that the items were bought for official use between December 2012 and January 2016. The defendants are also accused of structuring purchases to evade state purchasing restrictions.
Tonia Cain faces up to 20 years in prison, five years of supervised release and a fine of $250,000. The court set sentencing for October 9, 2018. Nathan Cain was indicted for one count of conspiracy and 17 counts of wire fraud.
The FBI and the Louisiana Office of Inspector General conducted the investigation. Assistant U.S. Attorneys John Luke Walker and David J. Ayo are prosecuting the case.
Federal Court Dismisses Spokane Postal Service Employee’s Discrimination CaseRead the Press Release
Spokane– Joseph H. Harrington, United States Attorney for the Eastern District of Washington, announced that United States District Judge Salvador Mendoza, Jr. dismissed a discrimination case filed against the U.S. Postal Service by Justin Harter, a former temporary employee.
According to information disclosed during court proceedings, Harter, a resident of Missoula, Montana who has American Indian/Alaska Native heritage, worked as a temporary Postal Support Employee (PSE) during the 2014 holiday season at the U.S. Postal Service’s Processing and Distribution Center near the Spokane Airport. Harter and several other temporary PSEs were let go after the Christmas holiday season. In 2015, Harter applied for temporary holiday positions with the U.S. Postal Service but was not rehired.
Harter filed a complaint with the Postal Service’s Equal Employment Opportunity Office (EEO) claiming race and gender discrimination. After the EEO found no discrimination, Harter filed suit in federal court. Harter’s civil complaint alleged race and gender-based discrimination, breach of employment contract, and use of prohibited practices by the Postal Service.
In dismissing Harter’s race and gender-based discrimination claims, Judge Mendoza found Harter had not produced evidence that he suffered an adverse employment action connected to gender discrimination or that the Postal Service treated him differently because of his race. Judge Mendoza also concluded the Postal Service had articulated a legitimate, non-discriminatory reason for not rehiring Harter in 2015. Judge Mendoza dismissed Harter’s breach of contract and prohibited practices claims in November/December 2017.
U.S. Attorney Harrington said, “Claims of employment discrimination in federal employment are taken seriously. But when meritless lawsuits are brought, our office is dedicated to vigorously defending those suits and protecting the public purse.”
This case was defended by Rudy J. Verschoor, an Assistant United States Attorney for the Eastern District of Washington.
District Court Orders Minnesota Dairy Farm and Owners to Stop Distributing Adulterated Meat in Interstate CommerceRead the Press Release
A federal court enjoined Todd & Patty Meech Dairy Farm and its co-owners from introducing adulterated meat into interstate commerce pending required remedial action, the Department of Justice announced today.
The U.S. District Court for the District of Minnesota entered a consent decree of permanent injunction against the Meech Dairy Farm, located in Sebeka, Minnesota, and its co-owners Todd Meech and Patty Meech. The consent decree settles a complaint filed by the Department alleging violations of the Food, Drug, and Cosmetic Act, and it requires the defendants to implement specific steps to ensure consumer safety before they can resume introducing specific food – animals and their edible tissue, into interstate commerce. In particular, the decree requires defendants to establish and implement a quarantine or segregation system that ensures ready distinction between medicated and unmediated animals and that prevents defendants from selling or delivering for food slaughter any animals with illegal new animal drug residues in their edible tissues.
“The Department of Justice is committed to protecting consumers from unsafe foods,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will continue to work with FDA to ensure that food producers maintain processes necessary to keep food safe.”
The Department filed a complaint in the District of Minnesota on Feb. 23, at the request of the U.S. Food and Drug Administration (FDA). According to the complaint, the Meech Dairy Farm has approximately 500 cattle, including approximately 400 dairy cows, and sells cows for slaughter for use as food. The complaint alleged that defendants failed to abide by laws designed to protect consumers from consuming food that contained new animal drugs above legal limits. According to the complaint, lab testing by the U.S. Department of Agriculture (USDA) detected above-tolerance drug residue in the liver of one of defendant’s cows sold for slaughter. The complaint alleged that a FDA inspection confirmed that the defendants did not record information regarding administered dosage, administration route, withdrawal time for meat, or the usable date for meat.
High levels of new animal drugs in animals’ edible tissues poses a significant public health risk. For example, consumers of edible animal tissues who are susceptible to antibiotics may experience severe allergic reactions as a result of ingesting food containing antibiotic levels above established tolerances.
“Poor recordkeeping practices and improper administration of drugs to food-producing animals poses a serious risk to consumers,” said United States Attorney Erica H. MacDonald for the District of Minnesota. “The United States Attorney’s Office, along with the FDA, will continue to take action on these types of cases to ensure that Minnesota farmers are following the law and maintaining high food safety standards.”
The government is represented by Trial Attorney Monica Groat of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Fred Siekert of the U.S. Attorney’s Office for the District of Minnesota, with assistance of Associate General Counsel for Enforcement Jennifer Argabright of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the District of Minnesota, visit its website at https://www.justice.gov/usao-mn.
District Court Orders Minnesota Dairy Farm and Owners to Stop Distributing Adulterated Meat in Interstate CommerceRead the Press Release
WASHINGTON – A federal court enjoined Todd & Patty Meech Dairy Farm and its co-owners from introducing adulterated meat into interstate commerce pending required remedial action, the Department of Justice announced today.
The U.S. District Court for the District of Minnesota entered a consent decree of permanent injunction against the Meech Dairy Farm, located in Sebeka, Minnesota, and its co-owners Todd Meech and Patty Meech. The consent decree settles a complaint filed by the Department alleging violations of the Food, Drug, and Cosmetic Act, and it requires the defendants to implement specific steps to ensure consumer safety before they can resume introducing specific food – animals and their edible tissue, into interstate commerce. In particular, the decree requires defendants to establish and implement a quarantine or segregation system that ensures ready distinction between medicated and unmediated animals and that prevents defendants from selling or delivering for food slaughter any animals with illegal new animal drug residues in their edible tissues.
“The Department of Justice is committed to protecting consumers from unsafe foods,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will continue to work with FDA to ensure that food producers maintain processes necessary to keep food safe.”
The Department filed a complaint in the District of Minnesota on Feb. 23, at the request of the U.S. Food and Drug Administration (FDA). According to the complaint, the Meech Dairy Farm has approximately 500 cattle, including approximately 400 dairy cows, and sells cows for slaughter for use as food. The complaint alleged that defendants failed to abide by laws designed to protect consumers from consuming food that contained new animal drugs above legal limits. According to the complaint, lab testing by the U.S. Department of Agriculture (USDA) detected above-tolerance drug residue in the liver of one of defendant’s cows sold for slaughter. The complaint alleged that a FDA inspection confirmed that the defendants did not record information regarding administered dosage, administration route, withdrawal time for meat, or the usable date for meat.
High levels of new animal drugs in animals’ edible tissues poses a significant public health risk. For example, consumers of edible animal tissues who are susceptible to antibiotics may experience severe allergic reactions as a result of ingesting food containing antibiotic levels above established tolerances.
“Poor recordkeeping practices and improper administration of drugs to food-producing animals poses a serious risk to consumers,” said United States Attorney Erica H. MacDonald for the District of Minnesota. “The United States Attorney’s Office, along with the FDA, will continue to take action on these types of cases to ensure that Minnesota farmers are following the law and maintaining high food safety standards.”
The government is represented by Trial Attorney Monica Groat of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Fred Siekert of the U.S. Attorney’s Office for the District of Minnesota, with assistance of Associate General Counsel for Enforcement Jennifer Argabright of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the District of Minnesota, visit its website at https://www.justice.gov/usao-mn.
Department of Justice Seeks to Terminate “Legacy” Antitrust Judgments in Federal District Court in Washington, D.C.Read the Press Release
The Department of Justice’s Antitrust Division today filed a motion and supporting papers, seeking to terminate 19 “legacy” judgments in the District Court for the District of Columbia. Today’s court filing is part of the Antitrust Division’s effort to terminate decades-old antitrust judgments that no longer serve their original purpose.
“Today we have taken an important next step toward eliminating antitrust judgments that no longer protect competition,” said Assistant Attorney General for Antitrust, Makan Delrahim. “Today’s filing is the first of many that we will make in courts around the country in our effort to terminate obsolete judgments.”
In its motion filed today, the Antitrust Division explained that perpetual judgments rarely continue to protect competition, and those that are more than ten years old should be terminated absent compelling circumstances. Other reasons for terminating the judgments include that essential terms of the judgment have been satisfied, most defendants likely no longer exist, the judgment largely prohibits that which the antitrust laws already prohibit, and market conditions likely have changed. Each of these reasons suggests the judgments no longer serve to protect competition.
The Antitrust Division announced in April its initiative to terminate legacy antitrust judgments, stating that it would review all such judgments to identify those that no longer serve to protect competition. In its prior announcement, the Antitrust Division set forth the process by which it would seek the termination of outdated judgments. It also established a new public website (https://www.justice.gov/atr/JudgmentTermination) to serve as the primary source of information for the public regarding the initiative.
At the time that the Antitrust Division announced the initiative, it posted on its public website the legacy judgments in federal district court in Washington, D.C. and in Alexandria, Virginia. After a 30-day public comment period, the Antitrust Division concluded that termination of these 19 judgments is appropriate.
Since the announcement of its initiative, the Antitrust Division has posted for public comment judgments in 19 additional federal district courts. It will continue to post judgments periodically as review of those judgments by Antitrust Division attorneys is completed.
Members of the public are encouraged regularly to check the Antitrust Division’s Judgment Termination page on its website, www.justice.gov/atr/JudgmentTermination, for updates. Members of the public also may subscribe to the mailing list (https://public.govdelivery.com/accounts/USDOJ/subscriber/new) to receive notice of new postings to the website, including judgments that the Division has identified as appropriate for termination.
Dallas Attorney Sentenced for Marriage Fraud SchemeRead the Press Release
DALLAS — Bilal Ahmed Khaleeq, 48, a Dallas attorney, was sentenced today by U.S. District Judge David C. Godbey to 6 months in federal prison, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.
Co-defendant Amna Cheema, 38, a Pakistani national, previously pleaded guilty to her role in the scheme and was sentenced to time served.
According to the plea agreement factual resume, in June 2015, Khaleeq and others knowingly and unlawfully conspired and agreed together and with each other to unlawfully facilitate and enter into a marriage between Cheema and a United States citizen, Person A, for the purpose of evading immigration laws. Cheema and Person A were married in Dallas County, Texas and subsequently filed permanent residence applications with USCIS in July 2015. In exchange for agreeing to marry Cheema, Person A was paid $745. Cheema also admitted engaging in discussions with Khaleeq and Person A at Khaleeq’s law office on more than one occasion to discuss preparation for the USCIS interview and required documentary evidence including joint bank accounts, tax returns, and bills concerning their joint residence. According to co-defendant Cheema, Khaleeq also represented the couple at the USCIS interview in April 2016 and advised them on additional evidence to make the marriage appear legitimate.
U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) investigated the case. Special Assistant U.S. Attorney Lynn Javier prosecuted.
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Cohoes Man Pleads Guilty to Producing and Distributing Child PornographyRead the Press Release
ALBANY, NEW YORK – George Muzio, Jr., 37, of Cohoes, New York, pled guilty today to two counts of sexual exploitation of a child, six counts of distribution of child pornography, and one count of possession of child pornography, announced United States Attorney Grant C. Jaquith and Kevin M. Kelly, Special Agent in Charge of the Buffalo Field Office of Homeland Security Investigations (HSI).
As part of his guilty plea, Muzio admitted that between August 2014 and May 2016, he communicated with thirteen underage girls using his cellular phone and the Kik Messenger application. The minors lived throughout North America and ranged in age from 11 to 17 years old, with most being between 13 and 14 years old at the time the defendant engaged them in text-message exchanges via Kik. The communications, which Muzio frequently steered toward graphic sexual conversation, generally spanned thousands of messages sent and received over several months.
In pleading guilty Muzio admitted that he posed as a teenage boy and repeatedly requested and received sexually explicit photographs from the underage girls whom he targeted. As Muzio admitted, he texted detailed instructions to two victims about how he wanted them to pose in the sexually explicit photographs that they took and sent to him at his request. One of those victims, a resident of Montana with whom Muzio exchanged over 2,000 text messages over a period of 8 months, was 11 years old at the time. The second, a resident of Georgia with whom Muzio exchanged over 4,700 text messages over a period of 4 months, was 13 years old.
In addition, Muzio admitted that on six occasions between March 2015 and January 2016, he distributed child pornography videos from his Cohoes home through an Internet file-sharing program. He also admitted that on May 3, 2016, he possessed a laptop computer that contained approximately 400 child pornography videos depicting the sexual abuse of children as young as 10 years old.
Muzio, who has been in custody since March 2, 2018, is scheduled to be sentenced on November 6, 2018, at which time he faces a sentence of at least 15 years and up to 30 years in prison on each of the two counts of sexual exploitation, and between 5 and 20 years on the distribution counts, and up to 20 years on the possession count. He also can be sentenced to at least 5 years and up to lifetime post-imprisonment supervised release, and a maximum $250,000 fine. He will also have to register as a sex offender when he is released from prison. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines, and other factors.
This case was investigated by Homeland Security Investigations (HSI), with assistance from the Colonie Police Department and the Cohoes Police Department, and is being prosecuted by Assistant U.S. Attorneys Joseph A. Giovannetti and Emmet O’Hanlon.
This case is prosecuted as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys’ Offices, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.
Buffalo Man Pleads Guilty to Production of Child PornographyRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y. - U.S. Attorney James P. Kennedy, Jr. announced today that Daniel Sasiadek, 64, of Buffalo, NY, pleaded guilty to production of child pornography before U.S. District Judge Elizabeth Wolford. The charge carries a mandatory minimum penalty of 15 years in prison, a maximum of 30 years, and a fine of $250,000.
Assistant U.S. Attorney Marie P. Grisanti, who is handling the case, stated that between July 2004 and October 2004, the defendant produced child pornography of a child who was approximately six years old.
The plea is the result of an investigation by the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Gary Loeffert.
Sentencing is scheduled for October 24, 2018, at 2:30 p.m. before Judge Wolford.
Bridgeport Felon Pleads Guilty to Possessing Loaded FirearmRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that FEDERICO CANNON, also known as “Rico,” 36, of Bridgeport, pleaded guilty today before U.S. District Judge Stefan R. Underhill in Bridgeport to one count of possession of a firearm by a convicted felon.
According to court documents and statements made in court, on June 26, 2017, CANNON was released from federal prison after serving a 70-month sentence for possession of a firearm by a convicted felon. On July 31, 2017, while CANNON was on federal supervised release, Bridgeport Police received information that CANNON had a gun and was riding in a car in the area of the Trumbull Gardens housing complex in Bridgeport. Officers located and stopped the vehicle. After CANNON was removed from the car, officers located a 9mm semi-automatic SAR B6P handgun from the floor below the passenger seat where CANNON had been sitting. The gun was loaded with 16 rounds of ammunition.
CANNON has been detained since his arrest on July 31, 2017. Judge Underhill scheduled for December 3, 2018, at which time CANNON faces a maximum term of imprisonment of 10 years on the firearm charge and a maximum term of imprisonment of three years for violating the conditions of his supervised release.
This is CANNON’s third federal conviction for possession of a firearm by a convicted felon.
In the early morning hours of October 21, 2004, CANNON was in a car with three other individuals driving northbound on Interstate 95 between Norwalk and Bridgeport when they initiated a confrontation with another car occupied by two men. The confrontation culminated at the bottom of the Exit 25 ramp in Bridgeport when approximately seven or eight shots were fired at the victims’ vehicle. A subsequent search of the vehicle in which CANNON was a passenger revealed a semi-automatic pistol at CANNON’s feet in the right rear passenger seat of the vehicle. A jury in New Haven found CANNON guilty and, on April 12, 2006, he was sentenced to 42 months of imprisonment.
In the early morning hours of February 25, 2012, Bridgeport Police stopped a vehicle in which CANNON was a passenger on Caroline Street in Bridgeport. CANNON initially exited the vehicle and attempted to walk away, but police ordered him back into the car. After directing the driver out of the vehicle, a Bridgeport Police detective observed a 9mm semi-automatic pistol on the floor of the rear passenger area near where CANNON was sitting. The firearm was loaded with 10 live hollow-point cartridges and two full-metal jacket cartridges. A jury in Hartford found CANNON guilty and, on July 11, 2014, he was sentenced to 70 months of imprisonment, followed by three years of supervised release.
CANNON also has a state conviction stemming from a car stop by Bridgeport Police on June 6, 1999. On that date, officers located a .25 caliber semi-automatic handgun concealed under the right front passenger seat where CANNON had been sitting.
This matter was investigated by the Bridgeport Police Department’s Tactical Narcotics Team and the Federal Bureau of Investigation, with the assistance of the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case is being prosecuted by Assistant U.S. Attorney Rahul Kale.
Birmingham Man Sentenced on Gun ChargesRead the Press Release
United States Attorney Richard W. Moore of the Southern District of Alabama announced that Darrius Lamar Smith, 31, of Birmingham, Alabama, was sentenced on June 29, 2018, to 30 months’ imprisonment on a federal charge of felon in possession of a firearm. Court documents show that Smith’s prior felony convictions were for Robbery First Degree in 2007, and Certain Persons Forbidden to Possess a Firearm in 2009, both in Circuit Court of Jefferson County, Alabama. Court documents also reflected that in March of 2018, Smith pled guilty to federal charge in Mobile, which alleged his illegal possession of a firearm in October of 2017.
United States District Court Judge Kristi K. Dubose sentenced Smith to 30 months’ imprisonment, noting that he had significant criminal history. The judge ordered that the sentence would run concurrently with another state case pending against Smith in the Circuit Court of Conecuh County, Alabama. The judge also ordered that Smith serve a three-year term of supervised release when he is discharged from his custody sentence, during which he will undergo further drug abuse and mental health treatment. Smith was also ordered to pay $100 in mandatory special assessments, but no fine was imposed.
The case was investigated by the Evergreen Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. It was prosecuted in the United States Attorney’s Office by Assistant United Sates Attorney Gloria Bedwell.
$100 Million Settlement Will Speed Cleanup Work at Centredale Manor Superfund Site in North Providence, R.I.Read the Press Release
The U.S. Department of Justice, the U.S. Environmental Protection Agency (EPA), and the Rhode Island Department of Environmental Management (RIDEM) announced today that two subsidiaries of Stanley Black & Decker Inc.—Emhart Industries Inc. and Black & Decker Inc.—have agreed to clean up dioxin contaminated sediment and soil at the Centredale Manor Restoration Project Superfund Site in North Providence and Johnston, Rhode Island.
“We are pleased to reach a resolution through collaborative work with the responsible parties, EPA, and other stakeholders,” said Acting Assistant Attorney General Jeffrey H. Wood for the Justice Department's Environment and Natural Resources Division . “Today’s settlement ends protracted litigation and allows for important work to get underway to restore a healthy environment for citizens living in and around the Centredale Manor Site and the Woonasquatucket River.”
“This settlement demonstrates the tremendous progress we are achieving working with responsible parties, states, and our federal partners to expedite sites through the entire Superfund remediation process,” said EPA Acting Administrator Andrew Wheeler. “The Centredale Manor Site has been on the National Priorities List for 18 years; we are taking charge and ensuring the Agency makes good on its promise to clean it up for the betterment of the environment and those communities affected.”
“Successfully concluding this settlement paves the way for EPA to make good on our commitment to aggressively pursue cleaning up the Centredale Manor Superfund Site,” said EPA New England Regional Administrator Alexandra Dunn. “We are excited to get to work on the cleanup at this site, and get it closer to the goal of being fully utilized by the North Providence and Johnston communities.”
“We are pleased that the collective efforts of the State of Rhode Island, EPA, and DOJ in these negotiations have concluded in this major milestone toward the cleanup of the Centredale Manor Restoration Superfund site and are consistent with our long-standing efforts to make the polluter pay,” said RIDEM Director Janet Coit. “The settlement will speed up a remedy that protects public health and the river environment, and moves us closer to the day that we can reclaim recreational uses of this beautiful river resource.”
The settlement, which includes cleanup work in the Woonasquatucket River (River) and bordering residential and commercial properties along the River, requires the companies to perform the remedy selected by EPA for the Site in 2012, which is estimated to cost approximately $100 million, and resolves longstanding litigation.
The cleanup remedy includes excavation of contaminated sediment and floodplain soil from the Woonasquatucket River, including from adjacent residential properties. Once the cleanup remedy is completed, full access to the Woonasquatucket River should be restored for local citizens. The cleanup will be a step toward the State’s goal of a fishable and swimmable river. The work will also include upgrading caps over contaminated soil in the peninsula area of the Site that currently house two high-rise apartment buildings. The settlement also ensures that the long-term monitoring and maintenance of the site, as directed in the remedy, will be implemented to ensure that public health is protected.
Under the settlement, Emhart and Black & Decker will reimburse EPA for approximately $42 million in past costs incurred at the Site. The companies will also reimburse EPA and the State of Rhode Island for future costs incurred by those agencies in overseeing the work required by the settlement. The settlement will also include payments on behalf of two federal agencies to resolve claims against those agencies. These payments, along with prior settlements related to the Site, will result in a 100 percent recovery for the United States of its past and future response costs related to the Site.
Litigation related to the Site has been ongoing for nearly eight years. While the Federal District Court found Black & Decker and Emhart to be liable for their hazardous waste and responsible to conduct the cleanup of the Site, it had also ruled that EPA needed to reconsider certain aspects of that cleanup. EPA appealed the decision requiring it to reconsider aspects of the cleanup. This settlement, once entered by the District Court, will resolve the litigation between the United States, Rhode Island, and Emhart and Black and Decker, allowing the cleanup of the Site to begin.
The Site spans a one and a half mile stretch of the Woonasquatucket River and encompasses a nine-acre peninsula, two ponds and a significant forested wetland. From the 1940s to the early 1970s, Emhart’s predecessor operated a chemical manufacturing facility on the peninsula and used a raw material that was contaminated with 2,3,7,8-tetrachlorodibenzo-p-dioxin, a toxic form of dioxin. The Site property was also previously used by a barrel refurbisher. Elevated levels of dioxins and other contaminants have been detected in soil, groundwater, sediment, surface water and fish.
The Site was added to the National Priorities List (NPL) in 2000, and in December 2017, EPA included the Centredale Manor Restoration Project Superfund Site on a list of Superfund sites targeted for immediate and intense attention. Several short-term actions were previously performed at the Site to address immediate threats to the residents and minimize potential erosion and downstream transport of contaminated soil and sediment. This settlement is the latest agreement EPA has reached since the Site was listed on the NPL. Prior agreements addressed the performance and recovery of costs for the past environmental investigations and interim cleanup actions from Emhart, the barrel reconditioning company, the current owners of the peninsula portion of the Site, and other potentially responsible parties.
The Consent Decree, lodged in the U.S. District Court of Rhode Island, will be posted in the Federal Register and available for public comment for a period of 30 days. The Consent Decree can be viewed on the Justice Department website: www.justice.gov/enrd/Consent_Decrees.html.
EPA information on the Centredale Manor Superfund Site: www.epa.gov/superfund/centredale.
Friday 6 July 2018
Woman Sentenced for AssaultRead the Press Release
DAPHNE JEAN PEAHRORA, 26, of Fort Washakie, Wyoming was sentenced by Chief Federal District Court Judge Scott W. Skavdahl on July 2, 2018 for assault resulting in serious bodily injury. Peahrora was arrested in Fort Washakie, Wyoming. She received nine months of imprisonment, to be followed by thirty-six months of supervised release, and ordered to pay restitution in the amount of $33,350.45 and a $100.00 special assessment. The FBI investigated this case.
Virginia Man Sentenced for Obstructing Counterterrorism InvestigationRead the Press Release
Sean Andrew Duncan, 22, of Sterling, Virginia, was sentenced today to 20 years in prison, to be followed by a lifetime of supervised release, for obstructing a counterterrorism investigation and receipt of child pornography.
Assistant Attorney General for National Security John C. Demers, U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia, and Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office, made the announcement after sentencing by U.S. District Judge Leonie M. Brinkema.
According to court documents, Duncan altered, destroyed, mutilated, concealed and covered up a thumb drive and memory chip with the intent to impede and obstruct an FBI terrorism investigation. He knowingly and unlawfully received images of minors engaged in sexually explicit conduct, and possessed thousands of such images including images of infants being sexually abused. In the statement of facts, Duncan admitted to his involvement with ISIS and production of child pornography.
Obstruction of Justice
In June 2017, the FBI learned that Duncan had been in contact with an individual who had been detained in a foreign country for actively planning to travel to join ISIS. In or around February 2015, Duncan told the individual that he wanted to make “hijrah” to Syria and that he wanted her to go with him. Later in February 2016, Duncan was denied entry into Turkey and returned to the United States.
Around this same time, the individual told Duncan she was upset at work due to non-Muslim women wearing shorts that exposed their bodies. Duncan replied with a link to a website, and a message saying she could “try this.” The link contained pictures and instructions on how to make weapons and bombs. The link was to an article titled, “How to build a bomb in the kitchen of your Mom” from Inspire magazine. In December 2016, Duncan contacted the individual and told her that he had come back from Turkey, where he and his wife were deported back to the United States. Duncan said he thought the FBI was monitoring him.
In or around October 2017, law enforcement authorities of a foreign government arrested one of their citizens (Recruiter 1) for inciting rebellion. Recruiter 1 is an ISIS recruiter who is suspected of drawing foreign fighters from around the world to Recruiter 1’s home country using social media. Recruiter 1 kept names and telephone numbers of individuals who had requested to join her social media and/or communication application groups. Recruiter 1’s notes included a handwritten name appearing to be “Sean Ibn Gary Duncan,” with Duncan’s known previous phone number and known previous mobile messaging account.
On or about Oct. 6, 2017, the Allegheny County Police Department (ACPD) provided a copy of Duncan’s phone to the FBI. ACPD had obtained this copy during an investigation surrounding the recent death of Duncan’s infant child (the cause of death in the autopsy was inconclusive). The FBI’s review of Duncan’s imaged phone revealed numerous internet searches for ISIS-related material, ISIS attacks, weapons, and body armor.
On Dec. 29, 2017, FBI agents executed a search warrant at Duncan’s residence. Upon execution of the warrant, the agents knocked on the door, identified themselves as FBI, and announced that they were there to execute a search warrant. Moments before the FBI agents entered the residence through the front door, Duncan ran out the back door, barefoot, and with something clenched in his fist. FBI agents guarding the back door yelled at Duncan to stop. Before stopping, Duncan threw a plastic baggie in the air and over the heads of the agents. FBI agents recovered the baggie thrown by Duncan. The baggie was a clear plastic bag, containing a memory chip from a thumb drive that had been snapped into pieces, and placed in a liquid substance that produced frothy white bubbles. Upon searching Duncan, agents recovered a broken casing for a thumb drive from Duncan’s pants pocket.
Receipt of Child Pornography
In December 2017, Duncan possessed a smartphone containing images of pre-pubescent minors that appeared to be engaged in sexually explicit conduct with adult males. Other images on the phone were of pre-pubescent minors posed to expose their genitalia in a sexual manner. Several of the images of child pornography were screen shots that Duncan had taken of websites containing child pornography that he had visited. The pre-pubescent minors in the photos were as young as infants, and the total number of images was in the thousands.
One image on his phone consisted of Duncan’s hand exposing the genitalia of an infant in a sexual manner. Also found on several of Duncan’s phones and electronic devices were thousands of videos and images of children and women that Duncan took in a voyeuristic manner. Several of the videos and images are taken in public venues such as stores, metros, parks and restaurants.
Assistant U.S. Attorneys Gordon D. Kromberg, Colleen E. Garcia and Jay V. Prabhu of the Eastern District of Virginia, and Trial Attorneys B. Celeste Corlett, Rachel Hertz and Troy Edwards of the National Security Division’s Counterterrorism Section prosecuted this case.
Vero Beach Orthopedic Surgeon Sentenced to Life in Prison Following Conviction for Fentanyl Analog Drug Conspiracy Resulting in DeathRead the Press Release
Johnny Clyde Benjamin, Jr., M.D., 52, an orthopedic surgeon practicing in Vero Beach, Florida, was sentenced to life in prison today, after having been convicted at trial of participating in a conspiracy to possess with intent to distribute Furanyl Fentanyl which resulted in death, aiding and abetting the distribution of Furanyl Fentanyl which resulted in death, attempted possession with intent to distribute Acetyl Fentanyl, possession with intent to distribute Oxycodone, and conspiracy to possess with intent to distribute Hydrocodone and Oxycodone.
Benjamin G. Greenberg, United States Attorney for the Southern District of Florida; Adolphus P. Wright, Special Agent in Charge, Drug Enforcement Administration (DEA), Miami Field Division, Ari C. Shapira, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Miami Field Office; Peter Kuehl, Acting Special Agent in Charge, U.S. Food and Drug Administration, Office of Criminal Investigations (FDA-OCI); Mark Selby, Special Agent in Charge, U.S. Immigration and Custom Enforcement’s Homeland Security Investigations (ICE-HSI); Dave Aronberg, State Attorney, Palm Beach County State Attorney’s Office; Bruce Colton, State Attorney for the 19th Judicial Circuit; Ric Bradshaw, Sheriff, Palm Beach County Sheriff’s Office (PBSO); Deryl Loar, Sheriff, Indian River County Sheriff’s Office; and Renee Purden, Chief, Orlando Melbourne Airport Police Department, made the announcement.
U.S. District Court Judge William P. Dimitrouleas sentenced Dr. Benjamin to life in prison, to be followed by five years of supervised release and was ordered to pay restitution in the amount of $10,241.38, in addition to other counts. Dr. Benjamin was convicted by a Fort Lauderdale federal jury on April 27, 2018.
The evidence presented at the trial established that on September 1, 2016, a young woman who resided in Wellington, Florida died after overdosing on counterfeit oxycodone pills. The pills contained a Fentanyl analog, Furanyl Fentanyl, as the active ingredient. Furanyl Fentanyl is an extremely powerful synthetic opioid, many times more powerful than street level heroin or oxycodone.
Following a toxicology analysis, the Office of the District Medical Examiner of Palm Beach County attributed the cause of decedent’s death to the Furanyl Fentanyl.
An extensive investigation by law enforcement identified Dr. Benjamin as the source of the Furanyl Fentanyl pills that caused the decedent’s death. The investigation also revealed that Dr. Benjamin was involved with the manufacture and distribution of counterfeit oxycodone pills, outside the South Florida area.
This case is the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF) a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.
Mr. Greenberg commended the investigative efforts of DEA, ATF, FDA-OCI, PBSO, HSI-ICE, Indian River County Sheriff’s Office, and Orlando Melbourne Airport Police Department. Mr. Greenberg also thanked the Palm Beach County State Attorney’s Office and State Attorney’s Office for the 19th Judicial Circuit for their assistance. This case was prosecuted by Assistant U.S. Attorneys John McMillian and Rolando Garcia.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
United States Reaches $1.53 Million Dollar Settlement with Defense Contractor to Resolve Contract ClaimRead the Press Release
Baltimore, Maryland – CACI Technologies, LLC has agreed to pay the United States $1,531,928.77 to settle an allegation that it breached its contract with the National Security Agency (NSA), a component of the Department of Defense, by billing and accepting payment from the NSA for work performed by certain CACI employees who did not meet the required qualifications.
The civil settlement was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Robert E. Craig, Jr. of the Defense Criminal Investigative Service - Mid-Atlantic Field Office; and Assistant Inspector for Investigations G. Shawn Tate, NSA Office of the Inspector General.
CACI Technologies, LLC (“CACI”), located in Chantilly, Virginia, is an information technology company that develops, integrates, and maintains technological solutions across a range of markets, including intelligence systems, communication, cyber-security, logistics and material readiness, and other services for government and commercial customers. In September 2007, CACI was awarded an NSA contract. As part of the contract, NSA required that CACI provide the resources and services of skilled professional and technical personnel necessary to meet the responsibilities specified in, or required by, Delivery Orders and/or Technical Task Orders issued under the contract. The contract and Delivery Orders referenced and attached labor categories that prescribed the type of experience and educational qualifications needed for classes of personnel billed under the particular labor category.
The United States alleged that between January 1, 2010 and June 30, 2014, certain CACI employees who provided services under the Delivery Orders issued under the Contract did not meet all the qualifications described in the labor categories corresponding to the rates billed to and paid by the NSA for those CACI employees. According to the civil settlement agreement, the settlement resolves these allegations.
As part of the settlement, CACI has already paid NSA $739,037.37, and agrees to pay an additional $792,891.40 within 30 days.
The claim resolved by this settlement is an allegation. The settlement is not an admission of liability by CACI, which cooperated in the investigation and took remedial action in the wake of the investigation, nor a concession by the United States that its claims are not well founded.
United States Attorney Robert K. Hur commended the Defense Criminal Investigative Service and NSA Office of the Inspector General for their work in this civil investigation. Mr. Hur thanked Assistant U.S. Attorney Tarra DeShields, who handled this case.
Two Defendants Convicted on All Counts for International Computer Hacking and Securities Fraud SchemeRead the Press Release
Vitaly Korchevsky, a former hedge fund manager, and Vladislav Khalupsky, a securities trader, were convicted today in federal court in Brooklyn of conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusion, conspiracy to commit money laundering and two counts of securities fraud in connection with their roles in an international scheme to hack into three business newswires and steal yet-to-be published press releases containing non-public financial information, which was then used to make trades that generated approximately $30 million in illegal profits. The verdicts followed a four-week trial before United States District Judge Raymond J. Dearie. When sentenced, each defendant faces a maximum of 20 years’ imprisonment.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Michael Breslin, Deputy Assistant Director, United States Secret Service, Office of Investigations (USSS), announced the verdict.
“The defendants teamed up with cybercriminal co-conspirators to hack pre-distribution press releases and then traded in the stock market based on that stolen information, making massive profits as a result,” stated United States Attorney Donoghue. “Today’s verdict sends a powerful message that this Office, together with our law enforcement partners, will work tirelessly to disrupt any scheme, no matter how sophisticated, that threatens the integrity and fairness of our markets.” Mr. Donoghue expressed his grateful appreciation to the United States Attorney’s Office for the District of New Jersey (USAO-DNJ), the Department of Homeland Security (DHS) and the U.S. Securities and Exchange Commission (SEC) for their significant cooperation and assistance in this case.
“Conspiring with hackers overseas, Korchevsky and Khalupsky worked swiftly to trade on stolen press releases, illegally profiting millions of dollars,” stated FBI Assistant Director-in-Charge Sweeney. “Such a massive criminal operation called for massive cover-ups, but their attempts to cover their tracks were done in vain. Devoting much time to the execution of this sneaky scheme, upon sentencing, the defendants will now rightfully face time in prison.”
“This case represents the core of the U.S. Secret Service’s commitment and strategy to aggressively pursue cyber-enabled financial criminal enterprises through our proven taskforce model of global partnerships,” stated USSS Deputy Assistant Director Breslin. “The guilty verdict delivered today represents a win for the country and for all law enforcement agencies who worked together to ensure that justice was served.”
The evidence at trial established that between February 2010 and August 2015, computer hackers based in the Ukraine gained unauthorized access into the computer networks of Marketwired L.P., PR Newswire Association LLC, and Business Wire, via a series of sophisticated cyberattacks. At one point, one of the hackers sent an online chat message in Russian to another individual stating, “hacking prnewswire.com.” The hackers moved through the computer networks and stole press releases about upcoming announcements by public companies concerning earnings, revenues and other material non-public information. Over the course of the scheme, the hackers stole more than 100,000 press releases.
In order to monetize the material non-public information in the stolen press releases, the hackers shared those stolen press releases with a network of traders, including Korchevsky and Khalupsky, via overseas computer servers controlled by the hackers and/or through secure email accounts. Once they received the stolen press releases, Korchevsky and Khalupsky generally traded ahead of the public distribution of the stolen releases. In order to execute their trades before the releases were made public, Korchevsky and Khalupsky often had to execute trades in extremely short windows of time between when the hackers illegally accessed and shared information, and when the press releases were disseminated to the public by the newswires, usually shortly after the close of the markets. As a result, the trading data often showed a flurry of trading activity around a stolen press release just prior to its public release. The defendants traded on stolen press releases containing material nonpublic information about publicly traded companies that included, among hundreds of others: Align Technology Inc.; CA Technologies; Caterpillar Inc.; Hewlett Packard; Home Depot; Panera Bread Co.; and Verisign Inc.
The illegal trading by the criminal network resulted in gains of more than $30 million, much of which was routed back to the hackers. Korchevsky traded on the stolen press releases both in accounts that benefited the criminal network as well as in his own personal accounts, and ultimately netted more than $15 million in profits over the course of the scheme. Khalupsky primarily traded in accounts that benefited the criminal network, and received a percentage of the profits he generated by trading on the stolen press releases, totaling at least $500,000 over the course of the scheme.
The evidence at trial also demonstrated that the defendants went to great lengths to conceal their roles in the criminal scheme. The conspirators used separate phones, computers and hotspots to conduct their illegal trading activity, and routinely deleted emails and/or destroyed hardware that contained evidence of their crimes. The conspirators also directed that payments received for the illegal profits they generated for the criminal network be made to offshore shell companies.
The charges against Korchevsky and Khalupsky were set forth in an indictment that was unsealed in August 2015 in connection with a broader investigation conducted by this Office, the USAO-DNJ, the FBI, the USSS and the DHS, as well as a parallel investigation by the SEC. In total, nine defendants were charged criminally for their roles in the scheme. All those defendants have either pleaded guilty or been convicted at trial except for three, who remain at large.
The government’s case is being handled by the Office’s Business and Securities Fraud Section and National Security and Cybercrime Section. Assistant United States Attorneys Richard M. Tucker, Julia Nestor and David Gopstein are in charge of the prosecution.
The Defendants:
VITALY KORCHEVSKY
Age: 53
Glen Mills, PennsylvaniaVLADISLAV KHALUPSKY
Age: 47
Brooklyn, New York and Odessa, UkraineE.D.N.Y. Docket No. 15 CR 381 (RJD)
Texas Construction Company’s Owner and CEO Sentenced to Prison for Defrauding the State DepartmentRead the Press Release
The owner, chief executive officer, and former president of a Texas construction company, HERC Solutions, was sentenced to 18 months in prison today for defrauding the U.S. Department of State out of $1.37 million. Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney G. Zachary Terwilliger of the Eastern District of Virginia, Inspector General Steve A. Linick of the U.S. Department of State and Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office made the announcement.
Gary A. Duff, 53, of Kansas City, Kansas, was sentenced by U.S. District Judge Liam O’Grady of the Eastern District of Virginia. On Feb. 12, Duff pleaded guilty to a one-count criminal information charging him with conspiracy to defraud the United States and commit wire fraud.
According to admissions made in connection with Duff’s plea, HERC specialized in international construction projects for the State Department and other agencies in military zones and developing countries. Duff’s co-conspirator, Steven J. Graves, 66, of Woodbridge, Virginia, was a contract specialist and senior contracts administrator for the State Department’s Office of Acquisitions Management from November 2011 to February 2013. In this capacity, Graves often served as a point of contact for contracts awarded to HERC and other companies seeking to perform construction work or provide supplies and materials to U.S. embassies and consular buildings.
Duff and Graves used Graves’ official positions to steer contracts to HERC during a time-period when Graves was an actual or de facto partner in HERC. Graves served as the assigned point of contact for State Department contracts awarded to HERC while Graves was simultaneously attempting to generate business and raise capital for HERC, was concealing his conflict of interest from others, was participating in HERC’s internal business operations, and was disclosing confidential procurement information to HERC and its business partners. Upon his departure from government service, Graves immediately became HERC’s majority owner and a company executive.
On Sept. 20, 2017, Graves pleaded guilty to a two-count criminal information charging him with conspiracy to defraud the United States and commit wire fraud and a willful violation of the conflict of interest statute. Graves was sentenced to serve 15 months in prison by District Judge O’Grady on Jan. 19.
Special agents with the Department of State’s Office of Inspector General and the FBI’s Washington Field Office investigated the case. Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Jack Hanly of the Eastern District of Virginia are prosecuting the case.
Tax Preparer Sentenced to Prison for Falsifying Income Tax ReturnsRead the Press Release
St. Louis, MO – Filmon Tekle was sentenced on Thursday to 21 months in prison for obstructing the administration of the internal revenue laws.
Tekle, 34, St. Louis, pled guilty in May 2018 to one felony count of conspiracy to defraud the United States and four counts of falsifying tax returns.
According to court documents, between 2013 and 2015, Tekle operated tax preparation stores under several different names. He paid nominees to use their names to obtain Electronic Filing Identification Numbers (EFINs) for the operating years of 2014 to 2015. New employees at the tax preparation businesses were trained to report the existence Schedule C income without the necessary documentation. Tekle instructed the employees how to prepare the returns and how to interact with the customers.
Tekle facilitated the filing of numerous false income tax returns between 2013 and 2015. The defendant charged significant fees for the filing of the false tax returns and had a system for paying the preparers a kickback for the false returns after the refund checks were mailed to the business. The total loss to the Internal Revenue Service as a result of the false tax returns filed is at least $167,469.
“The United States tax system depends on the voluntary compliance of taxpayers and the skill and integrity of tax professionals,” said U.S. Attorney Jeff Jensen.
Co-defendants Eddie Buren is awaiting trial and LaJohnda Dunger has pled – sentencing is set for July 17, 2018.
This case was investigated by IRS Criminal Investigation. Assistant United States Attorney Jeannette Graviss handled the case for the U.S. Attorney's Office.
Senior Sinaloa Cartel Leader Extradited to the United StatesRead the Press Release
WASHINGTON – Today, Mexican authorities extradited Sinaloa Cartel leader Damaso Lopez Nuñez, also known as “El Licenciado,” to the United States to face drug trafficking charges filed in the Eastern District of Virginia.
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division; U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia, Assistant Director Robert Johnson of the FBI Headquarters Criminal Investigative Division, Assistant Director in Charge Nancy McNamara of the FBI Washington Field Office and Acting Special Agent in Charge Scott W. Hoernke of the U.S. Drug Enforcement Administration (DEA), Washington Division Office made the announcement.
Lopez Nuñez, 52, arrived in the United States this afternoon and will make an initial appearance on Monday, July 9, before U.S. Magistrate Michael S. Nachmanoff in federal court in Alexandria, Virginia. The case is assigned to U.S. District Judge T.S. Ellis III.
Lopez Nuñez is charged in a one-count indictment alleging that between 2003 and December 2016, Lopez Nuñez conspired with others to distribute significant quantities of narcotics for illegal importation into the United States.
“Until his capture, Damaso Lopez Nuñez allegedly participated in a multi-year conspiracy to distribute large amounts of cocaine, intending that the drugs be imported to the United States,” said Acting Assistant Attorney General Cronan. “Lopez Nuñez’s arrest and extradition demonstrates the commitment of the United States and our partners in Mexico to the pursuit of drug traffickers who seek to flood our streets with addictive and deadly poisons, for their own illicit gain.”
“This successful extradition of a high-level target is a reflection of years of collaboration and cooperation by multiple Department of Justice units and our law enforcement partners who are all committed to combatting transnational criminal organizations,” said U.S. Attorney Terwilliger. “With thanks to the authorities in Mexico for their efforts in facilitating this extradition so the defendant can be held accountable and face justice for his alleged crimes.”
The case was investigated by the FBI and the DEA, in cooperation with Mexican and Colombian law enforcement authorities. Substantial assistance was provided by the U.S. Attorney’s Office in the Southern District of California. The Department of Justice’s Office of International Affairs provided significant assistance in bringing Lopez Nuñez to the United States. The U.S. Marshals Service provided critical assistance in the location and capture of Lopez Nuñez and assisted in the extradition.
The U.S. Department of Justice thanks the Government of Mexico for its assistance in this case.
This case is also the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Forces (OCDETF), a partnership that brings together the combined expertise and unique abilities of federal, state, and local enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high-level members of drug trafficking, weapons trafficking, and money laundering organizations and enterprises.
Deputy Chief Amanda Liskamm, Assistant Deputy Chief Michael Lang, and Trial Attorney Cole Radovich of the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) and Assistant U.S. Attorneys Daniel J. Grooms and James L. Trump of the Eastern District of Virginia are prosecuting the case.
Senior Sinaloa Cartel Leader Extradited to the United StatesRead the Press Release
Today, Mexican authorities extradited Sinaloa Cartel leader Damaso Lopez Nuñez, also known as “El Licenciado,” to the United States to face drug trafficking charges filed in the Eastern District of Virginia.
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division; U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia, Assistant Director Robert Johnson of the FBI Headquarters Criminal Investigative Division, Assistant Director in Charge Nancy McNamara of the FBI Washington Field Office and Acting Special Agent in Charge Scott W. Hoernke of the U.S. Drug Enforcement Administration (DEA), Washington Division Office made the announcement.
Lopez Nuñez, 52, arrived in the United States this afternoon and will make an initial appearance on Monday, July 9, before U.S. Magistrate Michael S. Nachmanoff in federal court in Alexandria, Virginia. The case is assigned to U.S. District Judge T.S. Ellis III.
Lopez Nuñez is charged in a one-count indictment alleging that between 2003 and December 2016, Lopez Nuñez conspired with others to distribute significant quantities of narcotics for illegal importation into the United States.
“Until his capture, Damaso Lopez Nuñez allegedly participated in a multi-year conspiracy to distribute large amounts of cocaine, intending that the drugs be imported to the United States,” said Acting Assistant Attorney General Cronan. “Lopez Nuñez’s arrest and extradition demonstrates the commitment of the United States and our partners in Mexico to the pursuit of drug traffickers who seek to flood our streets with addictive and deadly poisons, for their own illicit gain.”
“This successful extradition of a high-level target is a reflection of years of collaboration and cooperation by multiple Department of Justice units and our law enforcement partners who are all committed to combatting transnational criminal organizations,” said U.S. Attorney Terwilliger. “With thanks to the authorities in Mexico for their efforts in facilitating this extradition so the defendant can be held accountable and face justice for his alleged crimes.”
The case was investigated by the FBI and the DEA, in cooperation with Mexican and Colombian law enforcement authorities. Substantial assistance was provided by the U.S. Attorney’s Office in the Southern District of California. The Department of Justice’s Office of International Affairs provided significant assistance in bringing Lopez Nuñez to the United States. The U.S. Marshals Service provided critical assistance in the location and capture of Lopez Nuñez and assisted in the extradition.
The U.S. Department of Justice thanks the Government of Mexico for its assistance in this case.
This case is also the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Forces (OCDETF), a partnership that brings together the combined expertise and unique abilities of federal, state, and local enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high-level members of drug trafficking, weapons trafficking, and money laundering organizations and enterprises.
An indictment is merely an allegation, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Deputy Chief Amanda Liskamm, Assistant Deputy Chief Michael Lang, and Trial Attorney Cole Radovich of the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) and Assistant U.S. Attorneys Daniel J. Grooms and James L. Trump of the Eastern District of Virginia are prosecuting the case.
Reputed Godfather of Payday Lending Sentenced to 168 months in Federal PrisonRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Charles Hallinan, 77, of Villanova, Pennsylvania, was sentenced today to 168 months in federal prison and ordered to pay a $2.5 million fine in connection with a scheme to collect hundreds of millions of dollars in unlawful debt obtained from high-interest loans. In November 2017, a federal jury convicted Hallinan of all 17 counts of criminal conduct the government charged in its superseding indictment: two counts of conspiracy to violate the Racketeer Influenced and Corrupt Organization Act (“RICO”); one count of conspiracy to commit mail fraud, wire fraud, and money laundering; two counts of mail fraud and aiding and abetting; three counts of wire fraud and aiding and abetting; and nine counts of international money laundering and aiding and abetting.
Hallinan, a former investment banker, was in the payday lending business from at least 1997 to 2013. Dubbed “the Godfather of payday lending” by the media during his trial, Hallinan owned, operated, and financed companies that issued small-amount, fixed-fee loans and collected debts on these loans in excess of $690 million. The loans were known in the industry as “payday loans” because borrowers often took them out to cover expenses and then paid back the principal, plus fees and interest, with their next paychecks or other steady income, such as social security payments. Hallinan made his illegal fortune by charging fixed fees and high interest rates far in excess of what was permitted under states’ usury laws.
“Charles Hallinan, a sophisticated, highly educated business person, was nothing more than a loan shark whose entire business model was built on trapping his victims in an endless debt cycle,” said U.S. Attorney McSwain. “For years, this defendant unabashedly preyed on those who could least afford it—struggling borrowers who made these loans oftentimes to pay for life’s necessities. He bet his lifestyle on the fact that we would not catch him. He lost that bet,” McSwain commented. “Now, it’s time for Hallinan to repay his debt with the only currency we will accept: his freedom and his fortune, amassed at his victims’ expense.”
The government proved at trial that Hallinan knew these loans violated state law, so he hid his personal involvement behind a series of “straw” lenders, including a federally-insured bank and three Indian tribes. Hallinan’s co-defendant, Delaware attorney Wheeler K. Neff, assisted Hallinan in structuring the scam and hiding Hallinan’s involvement. Neff was sentenced in May 2018 to eight years’ imprisonment for his part in the scheme.
“Charles Hallinan devised an ugly way to make a pretty penny,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “This multimillionaire lived large on the proceeds of his sleazy payday lending empire, built on the backs of people literally living paycheck to paycheck. Exorbitant fees and usurious interest rates were the name of the game, and Hallinan always walked away the winner. Well, not this time. Now he’s walking away in handcuffs, headed to federal prison.”
As part of the sentence imposed today, the government sought and obtained a significant forfeiture judgment against Hallinan, which will strip him of the trappings of success he acquired as a result of his unlawful conduct. The district court ordered the defendant to pay a forfeiture money judgment of just over $64 million as proceeds of the RICO conspiracy, and also ordered him to forfeit his interest in approximately $1.2 million in funds in 18 bank accounts; two Mercedes Benz vehicles; one Bentley vehicle; and his Villanova mansion.
“IRS Criminal Investigation is committed to using our forensic accounting skills to help unravel complex financial fraud and money laundering schemes,” said IRS Criminal Investigation Special Agent in Charge Guy Ficco. “We are proud to work with our law enforcement partners to investigate and prosecute individuals who attempt to enrich themselves by fraudulent means. Charles Hallinan’s prison sentence is a reminder that there are detrimental consequences for this type of criminal behavior.”
Daniel Brubaker, Inspector in Charge of the United States Postal Inspection Service, Philadelphia Division, praised the investigatory work behind the conviction: “This Office prides itself on investigating this type of criminal behavior. We too are proud to have worked with our law enforcement partners to aggressively investigate those who scheme to prosper at the expense of others.”
The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigations, and the United States Postal Inspection Service. It is being prosecuted by Assistant United States Attorneys Mark B. Dubnoff and Maria Carrillo.
Pollock prisoner from California sentenced to 20 years for attempt to kill prison staffRead the Press Release
ALEXANDRIA, La. – United States Attorney David C. Joseph announced today that an inmate originally from California was sentenced to 240 months in prison for attempting to kill two staff members at the U.S. Penitentiary in Pollock.
Charles Lee White, 47, an inmate at the U.S. Penitentiary in Pollock, Louisiana, and who was formerly from Vallejo, California, was sentenced by U.S. District Judge Dee D. Drell on two counts of attempted murder of a federal employee. He was also sentenced to three years of supervised release. During a three-day trial that ended March 28, 2018, evidence admitted showed White and another inmate attacked two prison staff members on January 13, 2017. The staff members were conducting a health and welfare inspection of a housing unit when they noticed an inmate’s cell had a large surplus of commissary items and contraband items. The staff members decided to do a more detailed search of the cell, and were in the process of searching, when one inmate, a member of the California Crips, confronted the staff members. The staff members told the inmate to leave. He left for a while and then confronted the staff members a second time. Both staff members came out of the cell with the first staff member backing out of the cell while facing the inmate who had assumed a fighting stance and was refusing commands from staff. The second staff member was behind the inmate.
While the first staff member was facing the inmate, White, also a California Crip, snuck up from behind, punched the first staff member in the back of the head knocking him to the ground. White then pulled a homemade weapon, otherwise known as a shank, and stabbed the first staff member multiple times in the torso, arm and shoulder while saying he was going to kill him. The other inmate attacked the second staff member punching and biting him. After stabbing the first staff member, White stabbed the second staff member while he was struggling with the other inmate. White stabbed the second staff member in the torso and back and stabbed the other inmate in the arm. At this point, other staff responded and sprayed White with pepper spray. White refused to surrender, and continued to move around the unit with the shank in his hand. White returned to the second staff member and stabbed him again. Additional staff responded to the housing unit, gave commands to surrender, and sprayed both inmates with pepper spray after the commands were ignored. Both inmates were finally detained, and the shank was recovered as evidence. The inmates were taken to medical and assessed for injuries, which White had none. The other inmate refused medical treatment from the Pollock medical staff. The two staff members were transported to the emergency room at a local hospital to assess and treat their injuries and survived.
White is already serving a life sentence for a RICO conviction that included counts of murder and attempted murder.
The FBI and the U.S. Bureau of Prisons conducted the investigation. Assistant U.S. Attorney Mike O’Mara prosecuted the case.
Perry County Man Sentenced for Filing False Federal Income Tax ReturnsRead the Press Release
Jackson, TN – Joel Anthony Bunch, 41, of Clifton, Tennessee, has been sentenced to 12 months and a day imprisonment for filing false Federal Individual Tax Returns. U.S. Attorney D. Michael Dunavant for the Western District of Tennessee announced the sentence today.
According to information presented in court, on November 20, 2017, Bunch pled guilty to one count of filing a false U.S. Individual Income Tax Return for tax year 2013. At that time, Bunch owned Bunch Forest Products, located in Clifton, Tennessee, and was the sole person responsible for the business record keeping. Bunch caused his paid tax return preparer to underreport his gross receipts for 2013 by depositing business income into his personal bank account, cashing income checks, and knowingly providing incomplete and inaccurate information to his paid preparer. As a result, Bunch’s 2013 gross receipts were underreported by $27,371, resulting in an additional tax due and owing of $8,361.
Today’s sentencing is based on Bunch underreporting gross receipts on U.S. Corporation Income Tax Returns for the tax years 2010 through 2013, as well as underreporting gross receipts on his Schedule C, Profit or Loss from Business on his U.S. Individual Income Tax Returns for tax years 2010 through 2013, in the amount of $555,572, which is outlined in an 8-count indictment handed down by a federal grand jury in Jackson on February 21, 2017, resulting in unreported corporate and individual income tax of $129,527.
U.S. Attorney D. Michael Dunavant said: "Protection of the United States Treasury is a core value and critical mission for this office and the Department of Justice. Income tax evasion and fraud strike at the very heart of our federal government, and will not be tolerated."
On July 2, 2018, Senior U.S. District Judge S. Thomas Anderson sentenced Bunch to 12 months and a day in federal prison followed by one year of supervised release. He was also ordered to pay $129,527 in restitution to the IRS, a result of his failing to pay taxes on all of his income.
This case was investigated by the Internal Revenue Service, Criminal Investigation.
Assistant U.S. Attorney Matthew J. Wilson prosecuted the case for the government.
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Parkersburg Man Pleads Guilty to Federal Gun ChargeRead the Press Release
CHARLESTON, W.Va. – A Parkersburg man pled guilty yesterday to a federal gun charge, announced United States Attorney Mike Stuart. Anthony Michael Mowery, 42, entered his guilty plea to being a felon in possession of a firearm before United States District Judge Joseph R. Goodwin. Stuart commended the investigative efforts of the Parkersburg Police Department and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
“Recidivism is real,” said United States Attorney Mike Stuart. “Far too often convicted felons like Mowery, who are prohibited from possessing guns, continue their criminal conduct. Prosecution of felons in possession of firearms is vital to public safety.”
On August 19, 2016, Mowery possessed a Hi Point 9mm semiautomatic pistol during an argument he had with Joseph Daniel Mills near the little league baseball field in the vicinity of Buckeye Street and Camden Avenue in Parkersburg. Video evidence provided by Mills showed Mowery brandishing a pistol at Mills from the passenger seat of a vehicle. During the altercation, Mowery fled with the driver, abandoning the vehicle at the scene. Police recovered nine millimeter ammunition from the vehicle and a Hi Point pistol and magazine in the field nearby. Mowery was prohibited from possessing the firearm as a result of his previous felony convictions for child abuse and unlawful assault. In an unrelated matter, Mills has since been convicted of methamphetamine trafficking and was sentenced on May 25, 2018 to 108 months in federal prison.
Mowery faces up to 10 years in prison when he is sentenced on October 4, 2018. Assistant United States Attorney Joshua C. Hanks is responsible for the prosecution.
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.
Follow us on Twitter: @SDWVNews and @USAttyStuart
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North Suburban Businessman Sentenced to 24 months for Evading More Than $800,000 in State and Federal Income TaxesRead the Press Release
CHICAGO — A north suburban businessman who operated a cellular telephone distributorship throughout Illinois and other Midwestern states was sentenced last Friday to 24 months imprisonment for willfully failing to pay more than $800,000 in personal and corporate income taxes.
JORDAN ECKERLING, 53, of Highland Park, the owner of Pagecomm of Illinois Inc., pled guilty in January 2018, admitting that from 2008 to 2012 he caused tax losses to the United States and Illinois in the total amount of $806,099. As the sole shareholder and officer of Pagecomm, Eckerling attempted to conceal income by causing the company to issue him “business checks” that he cashed and used for personal expenses. Eckerling admitted he caused the company to pay personal expenses such as a housekeeper to regularly clean his boat and his primary and secondary residences, and charged personal expenses to Pagecomm’s credit card accounts, including for a family vacation to Cancun, Mexico. Eckerling also admitted that he used gift cards belonging to the company for personal expenses, and that he placed his wife on the company payroll to obtain health insurance in her name rather than his, even though she was not employed by the company.
U.S. District Judge Virginia M. Kendall imposed the sentence in federal court in Chicago. Eckerling was ordered to report to the Federal Bureau of Prisons on September 28, 2018. He paid the $806,099 tax obligations while the case was pending.
The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; 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. Attorney Sheri H. Mecklenburg.
North American Power Group Ltd and its Owner Agree to Pay $14.4 Million to Resolve Alleged False Claims for Department of Energy Cooperative Agreement FundsRead the Press Release
North American Power Group Ltd. (NAPG) and its owner and president, Michael Ruffatto, have agreed to pay the United States $14.4 million to resolve allegations that they violated the False Claims Act by submitting fraudulent claims under a cooperative agreement with the Department of Energy (DOE) National Energy and Technology Laboratory (NETL), located in Pittsburgh, Pennsylvania, the Department of Justice announced today.
Based in Greenwood Village, Colorado, NAPG develops, owns, operates and manages energy-related projects. On December 8, 2009, NETL awarded a $14 million cooperative agreement to NAPG for a Carbon Site Characterization Project to collect and analyze data, as well as to design and implement carbon sequestration wells at the Two Elk Energy Park (TEEP) located in Campbell County, Wyoming. Between December 2009 and January 2012, Ruffatto served as NAPG’s representative for the cooperative agreement and was responsible for authorizing the submission of the company’s invoices to NETL for payment. During that time, NAPG was paid approximately $5.7 million by NETL for costs purportedly related to the project. In fact, however, none of the claimed costs were for work associated with the project and instead reflected expenses incurred by Ruffatto to pay legal fees, car payments, jewelry, international travel and other personal items unrelated to the scope of work under the cooperative agreement. The DOE suspended the cooperative agreement in January 2012 after discovering the fraudulent claims.
“The money allocated by Congress for the National Energy and Technology Laboratory is designed to fund the important mission carried out by the laboratory, not to be diverted for personal use,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This investigation and its resolution demonstrate that the Justice Department will work with its agency partners to ensure that public funds are used for their intended purposes.”
“This $14.4 million False Claims Act settlement is the largest NETL settlement in the history of western Pennsylvania,” said U.S. Attorney Scott W. Brady of the Western District of Pennsylvania. “Protecting taxpayer funds is an important priority of our office and this settlement, along with yesterday’s sentence, demonstrate we will use every tool in our arsenal to prevent and deter wrongful expenditures of government monies.”
“The Office of Inspector General is committed to ensuring the integrity of Department subcontractors by detecting and holding accountable those who choose to abuse their positions of trust while attempting to hide behind sophisticated fraud schemes,” said Acting Inspector General April G. Stephenson for the Department of Energy’s Office of Inspector General. “We appreciate the efforts of the DOJ in pursuing this important matter resulting in an 18 month sentence of incarceration, a $50,000 fine and a $14.4 million civil settlement for Mr. Ruffatto and NAPG. We will continue to work with the DOJ to aggressively investigate those who seek to defraud Department programs.”
On October 21, 2016, Ruffatto entered a plea of guilty in the U.S. District Court for the Western District of Pennsylvania to a felony count of intentional submission of false claims under 18 U.S.C. § 287. He was sentenced on June 27, 2018, to 18 months in prison, three years supervised release, a $50,000 fine and $2 million dollars more in restitution.
This settlement was the result of a joint investigation conducted by the DOE Office of Inspector General, the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the Western District of Pennsylvania.
Maryland Man Sentenced to 6 ½-Year Prison Term for Sexually Assaulting Boy Who Was in His CareRead the Press Release
WASHINGTON – A 28-year-old man, from Laurel, Md., was sentenced today to a 6 ½-prison term for sexually abusing a young boy whose mother entrusted him to his care, U.S. Attorney Jessie K. Liu announced.
The defendant, who is not identified here to protect the privacy of the victim, pled guilty in April 2018, in the Superior Court of the District of Columbia, to a charge of second-degree child sexual abuse with aggravating circumstances. The plea, which was subject to the Court’s approval, called for a prison term of five to seven years. The Honorable Craig Iscoe accepted the plea today and sentenced the defendant accordingly. Upon completion of his prison term, the man will be placed on five years of supervised release. He also will be required to register as a sex offender for a period of 10 years.
According to the government’s evidence, the defendant was residing with the boy and the boy’s mother at an apartment in Southeast Washington at the time of the incidents in the District of Columbia, which took place between late October 2014 and late December 2015. At the time, the boy was four or five years old. The defendant was a significant caregiver to the boy during this time period because the mother worked one or two jobs or was attending school.
According to the evidence, the man rubbed his penis between the boy’s buttocks while the mother was out of the house. The victim disclosed the abuse in the summer of 2017, and an investigation led to the man’s arrest. He has been in custody since August 2017.
The victim also disclosed that the defendant’s abuse continued when the family moved to Prince George’s County, Md. Following the defendant’s sentencing by Judge Iscoe, the man pled guilty to a charge of sex abuse of a minor in that jurisdiction. He was sentenced to a concurrent sentence to the sentence imposed today in the District of Columbia.
In announcing the sentence, U.S. Attorney Liu commended those who investigated the case from the Metropolitan Police Department’s Youth and Family Services Division (MPD). She also expressed appreciation for the work of the Children’s Advocacy Center and Children’s National Medical Center. Finally, she acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Victim/Witness Advocate Veronica A. Vaughan, Forensic Interviewer Tracy Owusu, Paralegal Specialist T.J. McPhail, and Assistant U.S. Attorney Stuart D. Allen, who investigated and prosecuted the case.
Manhattan U.S. Attorney Files Civil Injunction Lawsuit Against Convicted Tax Preparer to Prevent Him from Continuing to Engage in Tax Preparation BusinessRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the filing of a civil complaint against SAMUEL GENTLE, who was previously convicted of preparing fraudulent federal tax returns through a tax preparation business, to prohibit him from preparing tax returns for others or engaging in activities that substantially interfere with the administration of federal tax laws.
U.S. Attorney Geoffrey S. Berman said: “A tax return preparer who has repeatedly cheated the tax system by filing fraudulent tax returns should not be permitted to continue business as usual. This Office is committed to ensuring the integrity of the federal tax system that depends on truthful, accurate reporting.”
As alleged in the Government’s complaint filed in federal district court today:
From 2008 to 2014, GENTLE systematically and intentionally filed fraudulent federal tax returns on behalf of customers through his tax return preparation business, GenGen, Inc. In preparing these tax returns, GENTLE repeatedly invented charitable donations, claimed phony business losses for nonexistent businesses, and fabricated unreimbursed employee business expenses. GENTLE, who filed an average of 3,200 federal tax returns each year and whose profits depended on word-of-mouth referrals, prepared and fraudulently filed false tax returns in order to reduce his customers’ tax liabilities or obtain tax refunds to which his clients were not entitled. GENTLE’s conduct caused the United States to lose millions of dollars in understated taxes and fraudulent refunds. In 2016, a jury found GENTLE guilty of 38 counts of aiding and assisting in the preparation of false and fraudulent federal tax returns. The Government is now seeking an injunction against GENTLE that would, among other things, permanently bar him from preparing or filing federal tax returns on behalf of others.
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Mr. Berman thanked the Internal Revenue Service for its assistance with this case.
The case is being handled by the Tax and Bankruptcy Unit in the Office’s Civil Division. Assistant U.S. Attorney Jennifer C. Simon is in charge of the case.
Man Sentenced for Obstructing Counterterrorism InvestigationRead the Press Release
ALEXANDRIA, Va. – A Sterling man was sentenced today to 20 years in prison, followed by a lifetime period of supervised release, for obstructing a counterterrorism investigation and receipt of child pornography.
According to court documents, Sean Andrew Duncan, 22, altered, destroyed, mutilated, concealed, and covered up a thumb drive and memory chip with the intent to impede and obstruct an FBI terrorism investigation. He knowingly and unlawfully received images of minors engaged in sexually explicit conduct, and possessed thousands of such images including images of infants being sexually abused. In the statement of facts Duncan admitted to his involvement with ISIS and production of child pornography.
Obstruction of Justice
In June 2017, the FBI learned that Duncan had been in contact with an individual who had been detained in a foreign country for actively planning to travel to join ISIS. In or around February 2015, Duncan told the individual that he wanted to make “hijrah” to Syria and that he wanted her to go with him. Later in February 2016, Duncan was denied entry into Turkey and returned to the United States.
Around this same time, the individual told Duncan she was upset at work due to non-Muslim women wearing shorts that exposed their bodies. Duncan replied with a link to a website, and a message saying she could “try this.” The link contained pictures and instructions on how to make weapons and bombs. The link was to an article titled, “How to build a bomb in the kitchen of your Mom” from Inspire magazine. In December 2016, Duncan contacted the individual and told her that he had come back from Turkey, where he and his wife were deported back to the United States. Duncan said he thought the FBI was monitoring him.
In or around October 2017, law enforcement authorities of a foreign government arrested one of their citizens (Recruiter 1) for inciting rebellion. Recruiter 1 is an ISIS recruiter who is suspected of drawing foreign fighters from around the world to Recruiter 1’s home country using social media. Recruiter 1 kept names and telephone numbers of individuals who had requested to join her social media and/or communication application groups. Recruiter 1’s notes included a handwritten name appearing to be “Sean Ibn Gary Duncan,” with Duncan’s known previous phone number and known previous mobile messaging account.
On or about Oct. 6, 2017, the Allegheny County Police Department (ACPD) provided a copy of Duncan’s phone to the FBI. ACPD had obtained this copy during an investigation surrounding the recent death of Duncan’s infant child (the cause of death in the autopsy was inconclusive). The FBI’s review of Duncan’s imaged phone revealed numerous internet searches for ISIS-related material, ISIS attacks, weapons, and body armor.
On Dec. 29, 2017, FBI agents executed a search warrant at Duncan’s residence. Upon execution of the warrant, the agents knocked on the door, identified themselves as FBI, and announced that they were there to execute a search warrant. Moments before the FBI agents entered the residence through the front door, Duncan ran out the back door, barefoot, and with something clenched in his fist. FBI agents guarding the back door yelled at Duncan to stop. Before stopping, Duncan threw a plastic baggie in the air and over the heads of the agents. FBI agents recovered the baggie thrown by Duncan. The baggie was a clear plastic bag, containing a memory chip from a thumb drive that had been snapped into pieces, and placed in a liquid substance that produced frothy white bubbles. Upon searching Duncan, agents recovered a broken casing for a thumb drive from Duncan’s pants pocket.
Receipt of Child Pornography
In December 2017, Duncan possessed a smartphone containing images of pre-pubescent minors that appeared to be engaged in sexually explicit conduct with adult males. Other images on the phone were of pre-pubescent minors posed to expose their genitalia in a sexual manner. Several of the images of child pornography were screen shots that Duncan had taken of websites containing child pornography that he had visited. The pre-pubescent minors in the photos were as young as infants, and the total number of images was in the thousands.
One image on his phone consisted of Duncan’s hand exposing the genitalia of an infant in a sexual manner. Also found on several of Duncan’s phones and electronic devices were thousands of videos and images of children and women that Duncan took in a voyeuristic manner. Several of the videos and images are taken in public venues such as stores, metros, parks, and restaurants.
G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, John C. Demers, Assistant Attorney General for National Security, and Nancy McNamara, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by U.S. District Judge Leonie M. Brinkema. Assistant U.S. Attorneys Gordon D. Kromberg, Colleen E. Garcia, Jay V. Prabhu, and Trial Attorneys B. Celeste Corlett, Rachel Hertz, and Troy Edwards of the National Security Division’s Counterterrorism Section prosecuted the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:18-cr-19.
Local Man Sentenced on Federal conspiracy Charges Involving Synthetic Drug TraffickingRead the Press Release
St. Louis, MO – Charles Wolfe, 57, from St. Peters, MO was sentenced to 186 months in prison in connection with conspiracy charges involving synthetic drug trafficking and money laundering. Wolfe’s co-defendants Mark Palmer, 47, from Granite City, IL, was sentenced to 168 months in prison and Sam Leinicke, 27 from Arnold, MO was sentenced to 48 months in prison.
According to court documents, Charles Wolfe d/b/a Psychedelic Blur, was a large scale distributor of synthetic cannabinoids also known as “K2” or “incense” and synthetic cathinones also known as “bath salts”. Wolfe distributed these dangerous drugs to customers located throughout the United States. Wolfe had a number of sources of supply, including Mark Palmer who manufactured the synthetic drugs with chemicals imported from China. Wolfe’s other suppliers included, but were not limited to defendants Anwer Rao, from O`Fallon Illinois, Michael Lentsch, from O`Fallon, IL, Brett Beeman, from O`Fallon, MO, Roy Ehrett, from Kansas City, MO and Robert Jaynes, from Indianapolis, IN whom have pled guilty. Samuel Leinicke manufactured the synthetic drugs for a period of time on behalf of Palmer.
After making adjustments for sentencing, Wolfe was responsible for the distribution of the marijuana equivalent of over 481,000 kilograms of marijuana and the laundering of millions of dollars in drug proceeds.
The charges include conspiracy to distribute and possess with the intent to distribute controlled substances and controlled substance analogues for human consumption, conspiracy to introduce misbranded drugs into interstate commerce, conspiracy to launder money, conspiracy to import controlled substances and controlled substance analogues intended for human consumption into the United States and conspiracy to receive in interstate commerce imported goods with a false manifest or documentation. In order to prove the substances are controlled substance analogues it must be shown that the substance had a substantially similar chemical structure as a controlled substance and that it also had a substantially similar stimulant, depressant or hallucinogenic effect on the central nervous system as a controlled substance. If intended for human consumption, the substance is treated as a Schedule I controlled substance.
The manufacture of synthetic drugs is a recent development designed to circumvent traditional drug laws by creating new chemical compounds that mimic the effects of drugs like marijuana and cocaine but purport to avoid the classification of a controlled substance because of a chemical alteration. The synthetic drugs are most frequently marketed as legitimate products and sold in typical commercial outlets such as convenience stores and gas stations. The drugs masquerade as incense, potpourri, glass cleaner, bath salts, and plant food, just to name a few and are usually sold in 1 gram, 3 gram, 5 gram, and 10 gram packages for prices ranging from $15.00 to $100.00 each.
Synthetic cathinones, also known as “bath salts,” are human-made substances with stimulant effects. These synthetic cathinones are typically smoked, snorted or injected and are packaged in containers with names such as Full Throttle, Fresh, Limited, Starry Nights, Twisted, Pump It and Blitz. Rao and Lentsch manufactured and marketed cathinones under the name “Go Go.” Reported effects have included hypertension, paranoia, anxiety, psychosis and in some cases death.
Synthetic cannabinoids mimic the effects of tetrahydrocannabinol (“THC”), the main psychoactive chemical in marihuana. Unlike THC, however, most synthetic cannabinoids are “full agonists.” That is, they activate the body’s type 1 cannabinoid receptors (CB1) to a greater degree (i.e., at 100%) than THC, which activates the CB1 receptors only at 30 to 50 percent. Additionally, unlike THC, synthetic cannabinoids do not contain the additional substances that moderate their adverse effects. Synthetic cannabinoids are typically smoked, and are packaged in multi-gram packets with names such as Mega Kush, Mad Hatter, Bayou Blaster, Avalon, Pirates Booty, Lights Out, and Golden Leaf. Rao and Lentsch manufactured and marketed their own blends of synthetic cannabinoids under the names “Mad Hatter,” “Deew,” “Cloud 9 Optima,” “Crazy Eyes,” and “Primo.” Although commonly referred to as synthetic marijuana, the effects are far more powerful and dangerous than so-called natural marijuana, with reported additional effects including excessive heart rate, vomiting, organ failure and death.
Charles Wolfe, Mark Palmer and Samuel Leinicke were found guilty in October 2017 after a 15-day trial to conspiracy drug charges and money laundering charges.
This case was investigated by US Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Internal Revenue Service Criminal Investigation, Drug Enforcement Administration and the Postal Inspection Service. Additional assistance was received from the St. Louis County Police Department, St. Charles County Sheriff’s Department, MO Lake Area Narcotics Enforcement Group, Metropolitan Enforcement Group for Southern IL, Southern Illinois Drug Task Force, the Illinois Attorney General’s Office as well as the prosecuting attorney offices in St. Louis County, MO, St. Charles County, MO, Madison County, IL and St. Clair County, MO. Assistant United States Attorneys James Delworth, Erin Granger and Jennifer Winfield are handling the cases for the U.S. Attorney's Office.
Lincoln Man Sentenced for Conspiracy to Distribute MethamphetamineRead the Press Release
United States Attorney Joe Kelly announced that on July 6, 2018, William Ellsworth Howell, Jr., 36, of Lincoln, Nebraska, was sentenced to 10 years and one month (121 months) in prison for conspiracy to distribute 500 grams or more of a mixture or substance containing methamphetamine. Information provided to law enforcement indicated that between January of 2013 and August of 2016, Howell was responsible for the distribution of at least 1.5 kilograms (approximately three pounds) of methamphetamine in the Lincoln area. Following the prison term, Howell will serve five years on supervised release.
This case was investigated by the Lincoln/Lancaster County Drug Task Force.
Lafayette man pleads guilty to making threatening communications to office of U.S. Representative Clay HigginsRead the Press Release
LAFAYETTE, La. – United States Attorney David C. Joseph announced that a Lafayette man pleaded guilty Thursday to making threatening communications to the Lafayette office of U.S. Representative Clay Higgins.
Sohail Rana, 60, of Lafayette, pleaded guilty before U.S. District Judge Dee D. Drell to one count of threats by interstate communications. According to the guilty plea, Rana called Higgins’ Lafayette office on July 17, 2017 while in Colorado and spoke to his district director. Rana was described as being irate, cursing and screaming during the call. He said that he would end Higgins’ career and kill Higgins. The district director noted the phone number and reported the call within minutes to his chief of staff in Washington, D.C. Rana also made five subsequent calls that day with no additional threats. Rana took no steps toward following through on the original threat. The phone number used to call the office was traced to Rana’s cell phone, and he was later arrested in Colorado.
Rana faces up to five years in prison, one year of supervised release and a $250,000 fine. The court set sentencing for October 9, 2018.
The FBI, U.S. Capitol Police-Threat Assessment Section, Lafayette Police Department and the Costilla County Sheriff’s Office in Colorado conducted the investigation. Assistant U.S. Attorney David J. Ayo is prosecuting the case.
Internet Business Owner Pleads Guilty to Selling $2.3 Million Worth of Non-FDA Approved and Misbranded Botox and Juvederm-Related ProductsRead the Press Release
LAS VEGAS, Nev. – The owner and operator of numerous beauty product websites pleaded guilty today to selling $2.3 million in non-FDA approved and misbranded drugs and medical devices, announced U.S. Attorney Dayle Elieson for the District of Nevada and Special Agent in Charge William P. Conway of the U.S. Food & Drug Administration (FDA) Office of Criminal Investigations’ Chicago Field Office.
Kelly Luanne Schaible, aka Kelly Reed and Heather Lane, 56, previously of Henderson, Nevada, pleaded guilty before U.S. District Judge Andrew P. Gordon to one count of wire fraud and one count of introduction of misbranded medical devices in interstate commerce.
According to court documents, from 2009 to at least 2014, Schaible owned and operated AAE d/b/a Basics, Inc.; Basics, Inc.; and Basics Inc., Ltd. The companies’ websites sold various beauty products related to weight loss, hair loss, skin care, eyelashes, and wrinkle reduction. She operated the websites from Illinois, then from various homes she occupied in Henderson.
In admissions made in her plea agreement, Schaible knowingly marketed, sold, and distributed non-FDA approved prescription drugs containing Botulinum Toxin Type A, also known as Botox, and non-FDA approved prescription devices containing hyaluronic acid, also known as Juvederm related products. She obtained these products from distributors in China.
She further admitted that she made various misrepresentations on the websites that lead customers to believe the fake Botox and Juvederm products offered for sale were safe and could be administered without a prescription. She did not require customers to provide a valid prescription prior to purchase and the products were not properly labeled as required by federal law. Schaible sold approximately 9,500 units of misbranded prescription drugs containing Botulinum and received approximately $1.7 million in sales revenue. She also sold approximately 4,000 units of misbranded Juvederm products and received approximately $630,000 in sales revenue.
Furthermore, on July 1, 2012, Schaible made an online sale of misbranded products to a customer in Pennsylvania. The products did not have proper labeling providing adequate directions for use as required by federal law. She mailed the products from Henderson to Dresher, Pennsylvania using the U.S. Postal Service.
Sentencing is scheduled for October 25, 2018. The maximum statutory penalty for wire fraud is up to 20 years in prison and a $250,000 fine and the maximum statutory penalty for introducing misbranded devices into interstate commerce is three years in prison and a $10,000 fine.
The case was investigated by the FDA-Office of Criminal Investigations. Assistant U.S. Attorney Carla Baldwin Carry is prosecuting the case.
If you find a website that may be illegally selling medical products and devices, dietary supplements or cosmetics over the internet, make a report to the FDA by calling 1-866-300-4374 or at https://www.fda.gov/Safety/ReportaProblem/ucm059315.htm.
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Huntsville Man Sentenced for Explosives and FirearmsRead the Press Release
HOUSTON - A previously convicted felon has been ordered to federal prison for unlawfully possessing three explosive devices and firearms, announced U.S. Attorney Ryan Patrick along with Special Agent in Charge Fred Milanowski of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Carl Eugene Fleming, 55, pleaded guilty March 16, 2018.
Today, U.S. District Judge Malinda Harmon sentenced him to 71 months imprisonment to be immediately followed by three years of supervised release. In arriving at the sentence, the Judge considered the need for punishment, deterrence and respect for the law. Judge Harmon further noted Fleming’s long history of possessing firearms while being a prohibited person.
“As the agency charged with investigating illegally obtained explosives, ATF works closely with the U.S. Attorney’s Office to prosecute offenders who violate these laws,” said Milanowski.
The investigation began after law enforcement believed Fleming had improvised explosive devices in the residence he was renting.
The ATF conducted a search at the location, at which time they discovered two explosive devices - one constructed with a grey metal pipe and a fuse, while the other was a 20mm ammunition can with explosive powder and shrapnel and a fuse primed for detonation. Also found were several firearms and ammunition.
He was taken into custody, at which time he also had in his possession a loaded .45 caliber pistol and three magazines of ammunition.
A third explosive device was later located hidden in Fleming’s room. This improvised explosive device consisted of PVC pipe with explosive powder, shrapnel and a fuse attached to an arrow.
As a previously convicted felon, Fleming is prohibited by federal law of possessing any firearm, ammunition or destructive devices.
He had been and will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
ATF conducted the investigation. Assistant U.S. Attorney Steven Schammel is prosecuting the case.