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3 April 2018
Manhattan U.S. Attorney Announces Settlement with Norwegian Not-For-Profit, Resolving Claims That It Provided Material Support to Iran, Hamas, and Other Prohibited Parties Under U.S. LawRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Ann Calvaresi Barr, Inspector General for the U.S. Agency for International Development (“USAID”), announced today the filing and settlement of a civil fraud complaint against NORWEGIAN PEOPLE’S AID (“NPA”), a non-profit, non-governmental organization headquartered in Norway, that receives funding from USAID. The settlement resolves claims that NPA violated the False Claims Act (the “FCA”) by providing material support to Iran, Hamas, the Popular Front for the Liberation of Palestine (“PFLP”), and the Democratic Front for the Liberation of Palestine (“DFLP”), contrary to federal funding requirements. At all times relevant to the lawsuit, Iran was included on the U.S. Department of State’s list of state sponsors of terrorism (the “State Sponsors of Terrorism List”), and Hamas, PFLP, and DFLP were included on the U.S. Office of Foreign Assets Control’s specially designated nationals and blocked persons list (the “SDN List”). The State Sponsors of Terrorism List includes countries that have repeatedly provided support for acts of international terrorism, and the SDN List includes individuals and entities that support terrorism or otherwise engage in conduct antithetical to U.S. interests.
On March 30, U.S. District Court Judge Gregory H. Woods approved a settlement agreement that resolves the Government’s claims against NPA. Under the settlement, NPA is required to pay $2.025 million to the United States (that amount is based on an analysis of NPA’s ability to pay a monetary settlement), and it has revised its internal policies to ensure that it complies with applicable U.S. sanctions laws and the terms of its USAID grants. In addition, in connection with the settlement, NPA has admitted to and accepted responsibility for its conduct.
Manhattan U.S. Attorney Geoffrey S. Berman said: “For years, Norwegian People’s Aid obtained grant money from USAID by falsely representing that it had not provided, and would take reasonable steps to ensure that it did not knowingly provide, material support to prohibited parties under U.S. law. With this settlement, NPA is being made to pay a significant financial penalty for its conduct, and importantly, has admitted to its conduct and agreed to put proper precautions in place to ensure that it does not happen again.”
USAID Inspector General Ann Calvaresi Barr said: “USAID depends on the integrity of its contractors and grantees to effectively reduce poverty, promote economic growth and democratic values, and deliver aid in crises worldwide. Making false representations to secure grant funding not only violates U.S. law, it is a serious breach of trust. And, when false claims hide an organization’s material support to designated terrorist organizations and a state sponsor of terrorism, the violation is all the more severe. My office makes these cases a top priority and we will continue to investigate them aggressively.”
As alleged in the Government’s complaint and set forth in the parties’ settlement agreement, both of which have been filed in Manhattan federal court:
Since at least 2012, NPA has received monetary grants from USAID to fund various projects and programs. As a condition of receiving those grants, NPA submitted certifications to USAID each year in which it represented that, “to the best of its current knowledge, it did not provide within the previous ten years, and will take all reasonable steps to ensure that it does not and will not knowingly provide, material support or resources to any individual or entity that commits, attempts to commit, advocates, facilitates, or participates in terrorist acts . . . .” In these annual certifications, NPA also represented that “[b]efore providing any material support or resources to an individual or entity,” it would (1) “verify that the individual or entity does not appear . . . on the [SDN List],” and (2) “consider all information about that individual or entity . . . that is reasonably available to it or of which it should be aware.” The annual certifications defined “material support and resources” to include “training [and] expert advice or assistance.”
Notwithstanding the above-referenced certifications, NPA provided training and expert advice or assistance to Iran, as well as to Hamas, PFLP, and DFLP. With respect to Iran, from 2001 through 2008, NPA performed mine clearance activities in Iran that were integral to an Iranian oil development project. Among other things, NPA (1) conducted risk assessments of the areas in Iran where the oil exploration and processing activities were to occur, (2) surveyed those areas for landmines and other unexploded ordnance, (3) trained members of the Iranian Army on how to conduct mine clearance activities, (4) accompanied and advised members of the Iranian Army as they conducted mine clearance activities in the relevant areas, and (5) conducted some mine clearance activities itself.
With respect to Hamas, PFLP, and DFLP, from 2012 through 2016, NPA provided representatives of those three SDN List entities with training and expert advice or assistance by funding a project called “Youth of Today . . . Leaders of Tomorrow.” Through this project, young people in the Gaza Strip, aged 15 through 28, who were affiliated with one of the project’s partner political parties – which included Hamas, PFLP, and DFLP – received training aimed at making them more effective participants in the political process. Such training included programs intended to improve the participants’ ability to organize, debate, negotiate, advocate for their positions, and resolve conflicts. In addition, through the Youth of Today project, NPA funded numerous workshops attended by young people in the Gaza Strip and senior officials from the partner political parties, including Hamas, PFLP, and DFLP. Hamas, PFLP, and DFLP used information that they obtained from these workshops to alter their behavior in order to become more attractive to youth and, thereby, benefit from increased youth support.
Because NPA provided training and expert advice or assistance to Iran (through the above-referenced oil development project), as well as to Hamas, PFLP, and DFLP (through the Youth of Today project), its certifications to USAID that, to the best of its knowledge, it had not provided and would take all reasonable steps to ensure that it did not knowingly provide material support or resources to any prohibited parties were false. As a result of those false certifications, NPA induced USAID to provide it with grant funding that, but for the false certifications, USAID would not have provided.
As part of the settlement, NPA admitted, acknowledged, and accepted responsibility for its conduct, including that: (1) “NPA’s participation in the [Iranian] oil development project was inconsistent with its Certifications to USAID”; and (2) “[t]he ‘Youth of Today . . . Leaders of Tomorrow’ training programs and workshops were conducted in a manner that was inconsistent with NPA’s Certifications to USAID, in that they were attended by representatives of entities that were prohibited parties under U.S. law, including entities that were identified on the SDN List as prohibited parties.”
In connection with the settlement, NPA has also revised its internal policies to ensure that it complies with applicable U.S. laws and the terms of any grants it receives. Such revisions include changes to its “Policy on Compliance with USAID Grants and U.S. Economic Sanctions Programs” to provide for additional training of NPA managers and administrative staff on compliance with applicable U.S. laws and grant terms; regular audits by an external auditor of NPA’s compliance with applicable U.S. laws and grant terms; and periodic reviews for purposes of making appropriate updates to relevant NPA internal policies and procedures. Moreover, upon request by USAID or any other U.S. agency that provides NPA with grants or any other type of funding, NPA shall provide such agency with, among other things, a written report, prepared by the external auditor, of the results of each of the above-referenced audits, and a description of any actions taken by NPA in response to such audits.
In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that previously had been filed under seal pursuant to the False Claims Act.
This is the second case that this Office has pursued successfully against a recipient of USAID grant funds based on allegations that it provided material support to prohibited parties under U.S. law. In March 2017, the Office resolved a similar case against the American University of Beirut.
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Mr. Berman thanked the USAID Office of Inspector General for its investigative efforts and assistance with the case.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Christopher B. Harwood is in charge of the case.
Manhattan Man Sentenced for Broadway Ticket Investment SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOSEPH MELI was sentenced today in Manhattan federal court to 78 months in prison by the Honorable Kimba M. Wood. Between 2015 and 2017, MELI solicited approximately $100 million in investments from 130 investors through false representations that MELI would use investor funds to purchase tickets to various live events for resale at a profit on the secondary market. MELI pled guilty before U.S. Magistrate Judge Barbara C. Moses on October 31, 2017.
U.S. Attorney Geoffrey S. Berman said: “Joseph Meli directed his own version of a Broadway production, where the lead character deceives investors into giving him money that he pockets and spends on himself, or uses to pay off other investors. Today, however, Meli’s Ponzi scheme is over, and he will serve prison time for his crimes.”
According to allegations in the superseding Indictment filed in Manhattan federal court, previous court filings, and statements made in public court proceedings:
From 2015 through January 2017, MELI conducted a scheme to defraud more than 130 investors who invested a total of more than approximately $100 million through false representations that MELI would use investor funds to purchase tickets to various live events for resale at a profit on the secondary market. In fact, MELI utilized a substantial portion of the investor funds he obtained for his personal expenses – including payments for a $3 million house in East Hampton, New York, a 2017 Porsche convertible, and expensive watches and jewelry – and to make payments, in a Ponzi-like manner, to previous investors in MELI’s ticket fraud scheme and in an unrelated hedge fund.
In furtherance of the fraudulent scheme, MELI falsely represented to investors that he had entered into written agreements with production companies for popular Broadway shows and with management companies for popular singers and music bands (together, the “Production and Management Companies”) to purchase large blocks of tickets to the shows and performances. As part of this deception, MELI provided investors with falsified documents purporting to reflect agreements between MELI’s company, Advance Entertainment, LLC, and the Production and Management Companies. In truth and in fact, MELI had not entered into such agreements and did not have any contractual rights to purchase such tickets from the Production and Management Companies.
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In addition to his prison sentence, MELI, 43, of New York, New York, was sentenced to three years of supervised release; ordered to forfeit $104,765,565, representing the amount of proceeds obtained as a result of his fraudulent scheme; and ordered to pay restitution.
Mr. Berman praised the work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission for its assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Elisha J. Kobre and Brendan F. Quigley are in charge of the prosecution.
Man Fled Country After Depositing $1.3 Million in Stolen ChecksRead the Press Release
ALEXANDRIA, Va. – A man who was a former resident of Fairfax pleaded guilty today to depositing over $1.33 million in stolen checks belonging to an Arlington businessman.
According to court documents, Charles Whitman, 40, who has most recently been living in Bogota, Colombia, filled out the two stolen checks, one for $369,000 and another for $968,850, before depositing them in February 2014. Whitman deposited the checks into a bank account for Devaplex LLC, a Virginia company that he owned. After depositing the checks, Whitman withdrew over $15,000 in cash and transferred over $270,000 to his other bank accounts. Whitman then fled to Columbia, where he was ultimately arrested in November 2016.
Whitman pleaded guilty to wire fraud and faces a maximum penalty of 20 years in prison when sentenced on July 20. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
Tracy Doherty-McCormick, Acting U.S. Attorney for the Eastern District of Virginia, and Andrew W. Vale, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after U.S. District Judge Liam O’Grady accepted the plea. Assistant U.S. Attorney Katherine L. Wong is prosecuting the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:16-cr-297.
Louisiana Man Pleads Guilty to Traveling with Minor to Engage in Illicit Sexual ConductRead the Press Release
SYRACUSE, NEW YORK - Iordan Bossev, age 21, of Baton Rouge, Louisiana, pled guilty in Syracuse to traveling in interstate commerce to engage in illicit sexual conduct with a minor and an additional count of persuading, inducing and enticing an individual to travel in interstate commerce to engage in sexual activity. The defendant also pled guilty to receipt of child pornography and one count of possession of child pornography, announced United States Attorney Grant C. Jaquith and Vadim D. Thomas, Special Agent-in-Charge of the Albany Field Office of the Federal Bureau of Investigation. Bossev, who remains detained pending his sentencing, faces a maximum sentence of six years of imprisonment and a lifetime of supervised release. He will also be required to register as a sex offender. Sentencing is scheduled for August 9, 2018, in Syracuse.
As part of his guilty plea, Bossev admitted that from March 2015 through November 2015, he engaged in internet communications of a sexual nature with a 14-year old victim. Bossev sought and received via the internet numerous sexually explicit images of the victim. In May 2015, after approximately 2 months of sending sexually explicit images back and forth, the defendant traveled from Louisiana to Watertown, New York, to meet the victim for the purpose of engaging in illicit sexual conduct. In anticipation of that meeting, the defendant rented a hotel room in Jefferson County near the victim’s home. When the defendant arrived, he and the victim spent parts of 2 days in the hotel room engaging in illicit sexual activities.
In November of 2015, the defendant traveled to Jefferson County with the intention of leaving New York State with the victim to further engage in illicit sexual activity. In furtherance of this plan, Bossev picked up the victim and went to New York City and later to San Francisco, California. From November 2015 to December 2016, in an effort to evade law enforcement, the defendant traveled with the victim to San Francisco, California, Seattle, Washington and Portland, Oregon.
Bossev’s case was investigated by the New York State Police, the United States Marshals Service, the Jefferson County Sheriff’s Department, the Washington County Sheriff’s Department and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Geoffrey J. L. Brown.
Launched in May 2006 by the Department of Justice, Project Safe Childhood is led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.
Lockport Felon Indicted for Possessing Stolen FirearmRead 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 a federal grand jury has returned a two-count indictment charging Daniel Hunt, 41, of Lockport, NY, with being a felon-in-possession of a firearm and ammunition, and with possessing a stolen firearm. The charges carry a maximum penalty of 10 years imprisonment and a $250,000 fine.
Assistant U.S. Attorney Scott S. Allen, Jr., who is handling the case, stated that on September 21, 2017, Lockport Police Officers conducted a traffic stop of a 2013 Chevy Silverado, driven by Hunt, after reports that an individual driving a similar vehicle kicked bags of garbage into the canal. During the stop, Officers detected alcohol on Hunt’s breath and asked Hunt to perform sobriety tests. After Hunt failed the tests, Officers recovered a gun case containing a GSG-522, .22lr caliber, semi-automatic rifle, and 446 rounds from the vehicle. Hunt has three prior felony convictions in Niagara County Court.
The defendant was arraigned today before U.S. Magistrate Judge Hugh B. Scott. Hunt is being held until a detention hearing on Thursday.
The indictment is the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent-in-Charge Ashan Benedict, New York Field Division; and Lockport Police Department, under the direction of Chief Mike Niethe.
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.
Lieutenant from Kirtland Air Force Base Pleads Guilty to Federal Child Pornography ChargesRead the Press Release
ALBUQUERQUE – Jesse Furse, 35, of Albuquerque. N.M., pled guilty today to federal child pornography offenses. At the time he committed the offenses, Furse was a Lieutenant with the U.S. Air Force and was stationed at Kirtland Air Force Base.
Furse was arrested on Feb. 10, 2017, on a criminal complaint alleging child pornography charges. The investigation into the case was initiated in Oct. 2015, when an agent with the New Mexico Internet Crimes against Children (ICAC) Task Force came upon a device using a specific IP address that allegedly was being used to share child pornography. In Jan. 2016, after investigation by APD revealed that the IP address was registered to Furse at an address located on Kirtland Air Force Base, the investigation was referred to the Air Force Office of Special Investigations (AFOSI). On Jan. 29, 2016, AFOSI obtained a search warrant for Furse’s residence from a Military Magistrate, and AFOSI and APD executed the search warrant and seized a computer and computer-related media from Furse’s residence. The FBI joined the investigation in Feb. 2016, and obtained a federal search warrant for the computer-related evidence seized from Furse’s residence in March 2016.
Court documents indicate that the computer-related evidence seized from Furse’s residence was encrypted, and experts at the FBI’s Regional Computer Forensics Laboratory (RCFL) repeatedly attempted to access the computer-related evidence between March 2016 and Feb. 2017. In Feb. 2017, RCFL experts were able to access the computer-related evidence, and a preliminary review of the contents of a hard drive seized from Furse’s residence indicated that it contained approximately 1400 video files of child pornography.
Furse subsequently was charged on Feb. 28, 2017, in a nine-count indictment with distributing visual depictions of minors engaged in sexually explicit conduct on eight occasions between Oct. 2015 and Jan. 2016, and possessing visual depictions of minors engaged in sexually explicit conduct between May 2014 and Jan. 2016. The indictment charged Furse with committing the crimes in Bernalillo County, N.M.
During today’s proceedings, Furse pled guilty to the nine-count indictment. In entering the guilty plea, Furse admitted that he made available for sharing, through online peer-to-peer file sharing software, approximately 58,529 image and video files containing child pornography on eight occasions between Oct. 10, 2015 and Jan. 17, 2016. Furse further admitted that from March 2015 through Jan. 2016, he possessed an external hard drive that contained approximately 1,436 video files and 13,335 image files of child pornography.
At sentencing, Furse faces a statutory mandatory minimum of five years and a maximum of 20 years of imprisonment on the distribution charges, and a statutory maximum of 20 years of imprisonment on the possession charge.
The investigation of this case was handled by the Albuquerque office of the FBI, New Mexico ICAC Task Force, AFOSI, APD, and RCFL. Assistant U.S. Attorneys Sarah Mease and Jonathon M. Gerson are prosecuting the case as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice (DOJ) to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and DOJ’s Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, visit http://www.justice.gov/psc/.
The case also was brought as a part of the New Mexico (ICAC) Task Force’s mission, which is to locate, track, and capture Internet child sexual predators and Internet child pornographers in New Mexico. There are 86 federal, state and local law enforcement agencies associated with the New Mexico ICAC Task Force, which is funded by a grant administered by the New Mexico Office of the Attorney General. Anyone with information relating to suspected child predators and suspected child abuse is encouraged to contact federal or local law enforcement.
Law Enforcement Agencies Come Together to Address School Threats and Introduce Initiative to Visit SchoolsRead the Press Release
Following the unprecedented increase in threats made against our schools since the tragic shooting in Parkland, Florida, the U.S. Attorney’s Office, along with our local prosecutors and sheriffs, State Police, and federal law enforcement partners, came together to speak as one and emphasize that we intend to use our collective resources to find, arrest, and prosecute those who make threats against our schools,
“School threats, which are oftentimes the lead story in the news, are damaging our communities and terrifying our citizens – parents and children alike,” stated United States Attorney Matthew Schneider. “This is an epidemic that the law enforcement community is facing together.”
The goal of today’s press conference was to send the message that law enforcement, at every level, will aggressively prosecute anyone who threatens our children and our schools.
It is also important that we appeal to the parents of our students. We must underscore the important of talking to their children about this issue. It is imperative that both the parents and students understand the potential consequences for students who make these threats. To that end, we have developed an initiative to visit schools and present this message directly to the students and parents. It is our hope that this collective message will deter people from threatening our schools and cause parents to talk to their children about this problem.
Joining Schneider was Chief Deputy Michigan Attorney General Laura Moody, Macomb County Prosecutor Eric Smith, Livingston County Prosecutor William Vailliencourt, Macomb County Sheriff Anthony Wickersham, Wayne County Sheriff Benny Napolean, Livingston County Sheriff Mike Murphy, Washtenaw County Sheriff Jerry Clayton, Captain Curtis Childs, Oakland County Sheriff's Office, Detroit Police Chief James Craig and representatives from MSP, FBI, ATF, DEA, HSI, and Secret Service.
We welcome and encourage parents and educators to contact the U.S. Attorney’s Office to schedule a visit to your school.
For more information and/or to schedule a visit, please contact Assistant U.S. Attorney and Director of Community Outreach Terrence Haugabook at (313) 226-9157 or email at [email protected]
Justice Department Sues to Stop Attorney from Promoting Nationwide Charitable Giving Tax SchemeRead the Press Release
The United States filed a civil complaint seeking to permanently bar Michael L. Meyer, of Southwest Ranches, Florida, from providing federal tax advice for compensation because Meyer allegedly promotes, organizes, and executes a national charitable giving tax scheme that has cost the United States Treasury more than $35 million. The complaint alleges that Meyer executes his scheme through three bogus charities that he controls. The United States also seeks to disgorge the fees that Meyer received from the scheme.
According to the complaint filed in the United States District Court for the Southern District of Florida, Meyer, an attorney licensed in Kentucky and Indiana, advises scheme participants to claim unwarranted charitable deductions for purported contributions to one of three bogus charities that Meyer controls. The complaint alleges that the purported donations are made on paper only and the participants never actually surrender dominion or control of the donated property to the charities. Some of the purported contributions allegedly consist solely of backdated promissory notes created by Meyer as well as fabricated intellectual property. The complaint alleges that Meyer prepares baseless appraisals and false federal tax forms to facilitate the scheme.
Meyer allegedly markets his charitable giving tax scheme nationwide through financial planners and CPAs, and he executes every material aspect of the scheme. The complaint alleges that Meyer sells his scheme by making demonstrably false statements about his experience and credentials, including falsely claiming that he is a licensed Certified Public Accountant and Certified Valuation Analyst, and by making false statements about the legality of his tax scheme.
Return preparer fraud, abusive tax shelters, and transactions involving fake charities are three of the IRS’s Dirty Dozen Tax Scams for 2018, and taxpayers seeking a tax return preparer or a tax adviser should remain vigilant. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Requires Knorr and Wabtec to Terminate Unlawful Agreements Not to Compete for EmployeesRead the Press Release
The Department of Justice announced today that it has reached a settlement with Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation (Wabtec), two of the world’s largest rail equipment suppliers, to resolve a department lawsuit alleging that the companies had for years maintained unlawful agreements not to compete for each other’s employees. The lawsuit further alleges that the companies entered into similar “no-poach” agreements with rail equipment supplier Faiveley Transport S.A. before Faiveley was acquired by Wabtec in November 2016.
The Justice Department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to challenge Knorr and Wabtec’s no-poach agreements. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns and restore competition for employees, to the benefit of U.S. workers.
“The unlawful no-poach agreements challenged today restrained competition for employees and deprived rail industry workers of important opportunities, information, and the ability to obtain better terms of employment,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “Today’s settlement will restore competition for employees in the U.S. rail industry.”
“Today’s complaint is part of a broader investigation by the Antitrust Division into naked agreements not to compete for employees—generally referred to as no-poach agreements. As part of today’s settlement, Knorr and Wabtec are required to cooperate with the Antitrust Division in any investigation into additional no-poach agreements to which they may have been counterparties,” continued Assistant Attorney General Delrahim. The department has also agreed as part of the settlement that it will not bring further civil actions or criminal charges against Knorr or Wabtec in connection with any other potential no-poach agreements that the companies disclosed to the department prior to today’s lawsuit.
According to the department’s complaint, Knorr and Wabtec compete with each other to attract, hire, and retain various skilled employees, including project managers, engineers, executives, business unit heads, and corporate officers. The department’s complaint alleges that:
- Beginning no later than 2009, Knorr and Wabtec reached agreements not to solicit, recruit, hire without prior approval, or otherwise compete with one another for employees. For example, in a letter dated January 28, 2009, a director of Knorr Brake Company wrote to a senior executive at Wabtec’s headquarters, “[Y]ou and I both agreed that our practice of not targeting each other’s personnel is a prudent cause for both companies. As you so accurately put it, ‘we compete in the market.’”
- Beginning no later than 2011, Knorr Brake Company (a wholly-owned subsidiary of Knorr) and Faiveley Transport North America (the U.S. subsidiary of Faiveley before Faiveley was acquired by Wabtec) agreed to get the other’s permission before pursuing each other’s employees. For example, in October 2011, a senior executive at Knorr Brake Company explained that he had a discussion with an executive at Faiveley’s U.S. subsidiary that “resulted in an agreement between us that we do not poach each other’s employees. We agreed to talk if there was one trying to get a job[.]”
- Beginning no later than 2014, Wabtec Passenger Transit, a U.S. business unit of Wabtec, and Faiveley Transport North America similarly agreed not to hire each other’s employees without prior approval. For example, in an e-mail to his colleagues, a Wabtec Passenger Transit executive explained that a candidate for employment “is a good guy, but I don’t want to violate my own agreement with [Faiveley Transport North America].”
According to the complaint, the no-poach agreements between Knorr, Wabtec, and Faiveley restricted competition for U.S. rail industry workers, which limited their access to better job opportunities, restricted their mobility, and deprived them of competitively significant information that they could have used to negotiate for better terms of employment.
Under the antitrust laws, no-poach agreements that are naked (i.e., not reasonably necessary for a separate, legitimate business transaction or collaboration) eliminate competition in the same irredeemable way as agreements to fix product prices or allocate customers, which have traditionally been criminally investigated and prosecuted as hardcore cartel conduct. Beginning in October 2016, the department has made several announcements that it intends to bring criminal, felony charges against culpable companies and individuals who entered into these types of no-poach agreements. In an exercise of prosecutorial discretion, the department will pursue as civil violations no-poach agreements that were formed and terminated before those announcements were made. Knorr’s and Wabtec’s respective no-poach agreements were discovered by the Division and terminated by the parties before October 2016, prompting the Division to resolve its competition concerns through a civil action.
Under the terms of the proposed settlement, Wabtec and Knorr are prohibited from entering, maintaining, or enforcing no-poach agreements with any other companies, subject to limited exceptions. The settlement also requires Knorr and Wabtec to implement rigorous notification and compliance measures to preclude their entry into these types of anticompetitive agreements in the future.
The settlement includes several new provisions that are designed to improve the effectiveness of the decree and the Division’s future ability to enforce it. For example, the parties have agreed that the Division may prove any alleged violations of the decree by a preponderance of the evidence, and that they will reimburse American taxpayers for the costs of investigating and enforcing any violations.
Knorr-Bremse AG is a privately-owned German company with its headquarters in Munich, Germany. Knorr is a global leader in the development, manufacture, and sale of rail and commercial vehicle equipment. In 2017, Knorr had annual revenues of approximately $7.7 billion. Knorr Brake Company, a Delaware corporation with its headquarters in Westminster, Maryland, and New York Air Brake Corporation, a Delaware corporation with its headquarters in Watertown, New York, are wholly-owned subsidiaries of Knorr.
Westinghouse Air Brake Technologies Corporation (Wabtec), a Delaware corporation based in Wilmerding, Pennsylvania, is a global rail equipment supplier that provides a wide range of equipment used on passenger and freight trains. In 2017, Wabtec’s worldwide revenues were $3.88 billion. Wabtec Passenger Transit is a business unit of Wabtec based in Spartanburg, South Carolina.
Until its acquisition by Wabtec, Faiveley was a French société anonyme based in Gennevilliers, France. Faiveley was the world’s third-largest rail equipment supplier behind Wabtec and Knorr and had revenues of approximately €1.2 billion in 2016. Faiveley Transport North America, a New York corporation headquartered in Greenville, South Carolina, was a wholly-owned subsidiary of Faiveley.
As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Maribeth Petrizzi, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
Justice Department Files Lawsuit to Shut Down Tax Preparation Businesses in St. Petersburg Area FloridaRead the Press Release
The United States has sued Steven M. Doletzky, Michael A. Garno, Michael A. Bass, and Florida corporations they used to operate Liberty Tax Service stores in the St. Petersburg, Florida area. The complaint seeks to permanently bar Doletzky, Garno, and Bass from preparing federal tax returns for others. In addition, the complaint seeks orders from the federal court requiring all defendants to disgorge to the United States any ill-gotten fees Doletzky, Bass, and Garno charged customers for the preparation of false or fraudulent federal tax returns, the Justice Department announced today.
According to the complaint, as part of his tax fraud scheme, Doletzky recruited homeless individuals as customers by offering food, beverages, and false promises of assistance with obtaining welfare benefits on their behalf. Doletzky allegedly obtained vans to transport homeless individuals to his Liberty Tax Service stores from locations in the St. Petersburg area where homeless people were known to congregate. Doletzky then directed others to prepare false tax returns on behalf of these homeless individuals that claimed fraudulent tax refunds, the bulk of which Doletzky retained as tax preparation fees, the complaint alleges.
According to the lawsuit, Doletzky directed the preparation of false or fraudulent tax returns at his Liberty Tax Service stores and provided tax preparation training to Garno and Bass before they became independent Liberty Tax Service franchisees. The complaint alleges that Doletzky, Garno, and Bass directed their preparers to prepare federal income tax returns that claimed fraudulent claims for tax credits, including for education credits and the Earned Income Tax Credit (EITC). For example, from 2013 to 2015, Doletzky, Garno, and Bass’ Liberty Tax Service stores allegedly prepared and filed federal income tax returns that claimed over 1,250 separate, false claims for education credits.
The IRS has a list of steps on their website that you can take now in anticipation of filing your 2017 federal income tax return and ten tips for choosing a tax preparer. Return preparer fraud was one of the IRS’s Dirty Dozen Tax Scams for 2018 and taxpayers seeking a return preparer should remain vigilant. The IRS has some information on their website about selecting a return preparer and has launched a free directory of federal tax preparers.
In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Judge Sentences Illegal Alien Felon to 15 Months Imprisonment for Illegally Re-Entering U.S. After DeportationRead the Press Release
PITTSBURGH, PA - An illegal alien found in Ross Township, Pennsylvania, pleaded guilty to one count of illegal reentry after deportation, and has been sentenced in federal court to 15 months’ imprisonment, United States Attorney Scott W. Brady announced today.
Senior United States District Judge Arthur J. Schwab imposed the sentence on Hilario Garcia-Miranda, a/k/a Francisco Xavier Hernandez-Garcia, age 39, of Mexico. Judge Schwab further ordered that, following service of the sentence of imprisonment, Garcia-Miranda be remanded to the custody of federal immigration authorities for commencement of deportation proceedings.
According to information presented to the court, Hilario Garcia-Miranda, a Mexican national who had been previously deported from the United States on March 28, 2003, after conviction of an aggravated felony in the State of Oregon, was found to be present on December 29, 2017, working as a cook at the Cheesecake Factory at Ross Park Mall in Ross Township, Pennsylvania, without first receiving permission from the Attorney General or the Secretary of Homeland Security to reenter the United States.
Assistant United States Attorney Carolyn J. Bloch prosecuted this case on behalf of the government.
United States Attorney Brady commended the U.S. Immigration, and Customs Enforcement (ICE)/Homeland Security Invesitgations (HSI) for the investigation leading to the successful prosecution of Garcia-Miranda.
Jefferson County, Ohio man admits to counterfeit chargesRead the Press Release
CLARKSBURG, WEST VIRGINIA – Travis Knight, of Mingo Junction, Ohio, has admitted today to counterfeit currency charges, United States Attorney Bill Powell announced.
Knight, age 33, pled guilty to one count of “Uttering Counterfeit Currency,” and one count of “Attempted Uttering of Counterfeit Currency.” Knight admitted to passing counterfeit $50 bills and attempting to pass counterfeit $50 bills in Marion and Monongalia Counties in October and November 2017.
Knight faces up to 20 years incarceration and a fine of up to $250,000 for each count. 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 David J. Perri is prosecuting the case on behalf of the government. The United States Secret Service investigated.
U.S. Magistrate Judge Michael John Aloi presided.Jamaican National Pleads Guilty to Drug Trafficking and BriberyRead 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 Damion Christopher Alexander Brown, 42, a Jamaican National residing in Buffalo, NY, pleaded guilty, before U.S. District Judge William M. Skretny, to conspiracy to possess with intent to distribute 100 kilograms or more of marijuana, and bribery of a public official. The charges carry a minimum penalty of 5 years in prison, a maximum of 40 years in prison and a $5,000,000.00 fine.
Special Assistant U.S. Attorney Jeremy Murray and Assistant U.S. Attorney Paul Bonanno, both of whom handled the case, stated that over a nine-month period between 2012 and 2013, Brown trafficked 100 kilograms or more of marijuana and bribed a United States Postal Service (USPS) carrier to deliver U.S. priority mail parcels filled with marijuana. Brown paid the USPS carrier to provide addresses of unsuspecting citizens, who lived along the carrier’s route in the City of Buffalo, to which parcels filled with marijuana could be mailed. When the boxes arrived in Buffalo, the postal carrier did not deliver the boxes to the listed recipient address, but instead, the carrier held on to the boxes and handed them directly to Brown in exchange for cash payments.
The plea is the result of an investigation by Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent-in-Charge, Kevin Kelly; the Federal Bureau of Investigation, under the direction of Acting Special Agent-in-Charge Kevin P. Lyons; the United States Postal Inspection Service, under the direction of Acting Inspector-in-Charge Raymond Moss, Boston Division; the United States Postal Service, Office of the Inspector General, under the direction of Special Agent-in-Charge Kenneth G. Cleevely; and the Amherst Police Department, under the direction of Chief John Askey.
Sentencing is scheduled for July 18, 2018, at 11:00 am before Judge Skretny.
Hartford Gang Member Sentenced to More Than 5 Years in Federal Prison for Distributing CrackRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that CHARLES TURNER, also known as “Rell” and “CJ,” 27, of Hartford, was sentenced today by Chief U.S. District Judge Janet C. Hall in New Haven to 66 months of imprisonment, followed by five years of supervised release, for distributing crack cocaine.
According to court documents and statements made in court, this matter stems from a joint law enforcement investigation headed by the Federal Bureau of Investigation’s Northern Connecticut Violent Crimes Task Force and the Hartford Police Department’s Vice and Narcotics Division targeting gang violence and narcotics trafficking in Hartford’s Parkville neighborhood, and related overdoses. The investigation specifically targeted criminal activity being committed by members and associates of the Orange Street Killas (OSK), which operated principally in the area of Orange, Cherry and Arbor Streets. The investigation followed a series of reports of shots fired in the area, and a homicide that was committed on Cherry Street in October 2015. The prosecution was built on court-authorized wiretaps, controlled purchases of narcotics and physical and video surveillance, all of which revealed that OSK members acquired heroin and crack cocaine and then sold the narcotics on the streets of Hartford.
The investigation revealed TURNER, an OSK member, supplied crack cocaine to other OSK members for street sale.
TURNER has been detained since his arrest on February 21, 2017. On November 15, he pleaded guilty to one count of conspiracy to possess with intent to distribute 28 grams or more of cocaine base (“crack”).
TURNER’s criminal history includes convictions for firearm and drug offenses.
Sixteen individuals were charged and convicted as a result of this investigation.
This matter was investigated by the Federal Bureau of Investigation’s Northern Connecticut Violent Crimes Task Force and the Hartford Police Department. The Task Force includes members of the Hartford Police Department, East Hartford Police Department, Connecticut State Police and Connecticut Department of Correction. The Hartford Police Department’s Vice and Narcotics Division and Shooting Task Force have provided valuable assistance to the investigation.
The case is being prosecuted by Assistant U.S. Attorney Brian P. Leaming.
Harrison County man indicted on firearm chargeRead the Press Release
WHEELING, WEST VIRGINIA – Robert Wayne Wiles, Jr., of Clarksburg, West Virginia, was indicted today by a federal grand jury on a firearm charge, United States Attorney Bill Powell announced.
Wiles, age 31, was indicted on one count of “Unlawful Possession of a Firearm.” Wiles, having previously been convicted of three felonies, is accused of having a 9mm pistol, a .380-caliber pistol, and .243 caliber rifle in January 2018 in Harrison County.
Wiles 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 Sarah E. Wagner is prosecuting the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms and Explosives and the Harrison County Sheriff’s Office investigated.
An indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.
Guymon Doctor Sentenced to Prison for Dispensing Opiates Without a Medical PurposeRead the Press Release
OKLAHOMA CITY – DR. CHRISTOPHER BATEMAN SLATER, 57, of Guymon, Oklahoma, has been sentenced to eight months in federal prison for distributing codeine without a medical purpose, announced Robert J. Troester, Acting U.S. Attorney for the Western District of Oklahoma.
On May 26, 2017, Slater, a doctor of osteopathy, was charged with knowingly distributing and dispensing promethazine with codeine, a Schedule V controlled substance, outside the usual course of professional medical practice and without legitimate purpose. Codeine is an opiate used to treat pain and carries a high risk of addiction. According to the charges, the crime took place on April 18, 2012, in Texas County, Oklahoma. Slater pleaded guilty on June 15, 217.
On April 2, 2018, U.S. Magistrate Judge Shon T. Erwin sentenced Slater to 8 months in federal prison and a fine of $100,000, to be paid within 30 days. Slater must report to the Bureau of Prisons by April 11.
This case is the result of an investigation by Drug Enforcement Administration and the Oklahoma Bureau of Narcotics and Dangerous Drugs. It was prosecuted by Assistant U.S. Attorney Kerry Blackburn.
Grants Man Sentenced to 70 Months for Federal Methamphetamine Trafficking ConvictionRead the Press Release
ALBUQUERQUE – Jeffrey Chavez, 32, of Grants, N.M., was sentenced today in federal court in Albuquerque, N.M., to 70 months in prison for his methamphetamine trafficking conviction. Chavez will be on supervised release for four years after completing his prison sentence.
Chavez was arrested on March 10, 2017, on an indictment charging him with distributing methamphetamine on June 11, 2015, in Cibola County, N.M. On Oct. 4, 2017, Chavez pled guilty to a felony information charging him with distributing methamphetamine. In entering the guilty plea, Chavez admitted that on June 11, 2015, he sold approximately 82.8 grams of pure methamphetamine to an individual working with law enforcement in exchange for $1,800.
This case was investigated by Homeland Security Investigations and the DEA, and was prosecuted by Assistant U.S. Attorney Jennifer M. Rozzoni.
Fort Worth Man Sentenced to 240 Months in Federal Prison after Pleading Guilty to Felony Offense Related to Elder AbuseRead the Press Release
FORT WORTH — Micaha Paul Sneed, aka “Micaha “Mike” McGrath,” 40, of Fort Worth, Texas, was last week by U.S. District Judge John McBryde to serve 240 months in federal prison following his guilty plea in October 2017 to a felony offense related to elder abuse, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.
Specifically, Sneed pleaded guilty to one count of wire fraud. He has been in custody since the time of his arrest in August 2017.
According to the factual resume filed in the case, starting in 2008 and continuing until June 2017, Sneed devised and operated a scheme to defraud, and to obtain money by false and fraudulent pretenses, representations and promises. McGrath solicited and obtained large sums of money from multiple victims by making false representations that he needed help paying legal fees and other costs related to a lawsuit with the U.S. government over his biological father’s Florida estate and obtaining proceeds of a life insurance policy for which Sneed was the beneficiary. Neither the estate nor the life insurance policy existed.
Sneed, according to the factual resume, was given money by each of the victims in exchange for his promise to pay the victims from either the fictitious estate or fictitious life insurance policy. Between October 20, 2014, and June 29, 2017, McGrath provided approximately 18 counterfeit checks to the victims, falsely representing that the checks were payments of partial proceeds from the lawsuit and/or the life insurance policy.
The Federal Bureau of Investigation investigated the case. Assistant U.S. Attorney Nancy Larson prosecuted.
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Former Oregon Department of Energy Employee Given 60 Months in Prison for Money Laundering ConspiracyRead the Press Release
PORTLAND, Ore. – Joseph J. Colello, 57, of Salem, Oregon, was sentenced today in U.S. District Court to 60 months in prison followed by three years’ supervised release for money laundering and defrauding the IRS. Colello was also ordered to pay more than $81,000 in restitution.
“Government employees are called to be stewards of taxpayers’ dollars and interests. Instead, this defendant chose to betray his obligation and defy public trust,” said Billy J. Williams, U.S. Attorney for the District of Oregon. “Plain and simple, corruption erodes confidence in government.”
According to court documents, between June 2012 and March 2015, Colello was employed as a pass-through program manager for the Oregon Department of Energy’s (ODOE) Business Energy Tax Credit (BETC) program. In his role, Colello helped owners of BETCs sell their credits by locating buyers and facilitating transfers.
In 2012, Colello and a coconspirator devised a plan whereby Colello would give the coconspirator the names of BETC sellers and interested buyers—information he had access to as an ODOE employee. Colello would then contact the sellers and buyers to negotiate credit transfers, but made it appear as though the coconspirator had brokered the deals. Colello and the coconspirator agreed to have the coconspirator create a sham company in order to receive commission payments from the sellers of the tax credits and to conceal their earned income from the IRS. Colello and the coconspirator charged sellers a 1-2% fee, undercutting brokers who typically charged a 10% fee for facilitating similar credit transfers. Colello would receive a portion of this fee as a kickback.
Between 2012 and 2015, the coconspirator deposited over $1.3 million in income from the commissions charged to sellers of BETC credits. The coconspirator would transfer a portion of these funds into a personal account from which he would purchase and issue biweekly cashier’s checks payable to Colello. Over the course of the conspiracy, the coconspirator purchased and issued approximately 58 cashier’s checks to Colello or his girlfriend. In total, Colello received more than $300,000 in bribe payments for his role in the scheme.
Colello previously pleaded guilty to one count each of conspiracy to engage in monetary transactions in property derived from specific unlawful activity, conspiracy to defraud the IRS and filing a false income tax return on March 15, 2018.
The case was investigated by IRS Criminal Investigation and the FBI and prosecuted by Claire M. Fay and Scott E. Bradford, Assistant U.S. Attorneys for the District of Oregon.
Former Mobile Phone Industry CEO Sentenced in Manhattan Federal Court to 10 Years in Prison for Role in Multimillion-Dollar Consumer Fraud SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that DARCY WEDD was sentenced yesterday to 10 years in prison for his participation in a fraudulent scheme to charge mobile phone customers millions of dollars in monthly fees for unsolicited, recurring text messages without the customers’ knowledge or consent – a practice known as “auto-subscribing.” The fraud committed by WEDD and his co-conspirators resulted in the theft of over $150 million from consumers throughout the United States. WEDD was convicted by a jury on December 15, 2017, following a two-week trial, and was sentenced yesterday in Manhattan federal court by the Honorable Katherine B. Forrest.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Darcy Wedd was convicted of engaging in a large-scale auto-subscribing scheme that forced mobile phone users to pay charges for unsolicited and unwanted text messaging services. The conduct of Wedd and his co-conspirators ultimately netted over $150 million in illegal profits. Today’s sentence reflects the seriousness of Wedd’s predatory consumer fraud.”
According to the Superseding Indictment filed in Manhattan federal court, the evidence presented at trial, and statements made in connection with WEDD’s sentencing:
WEDD was the chief operating officer, and eventually the chief executive officer, of Mobile Messenger, a U.S. aggregation company in the mobile phone industry. In the relevant time period, mobile aggregators like Mobile Messenger compiled, or “aggregated,” charges for premium text messaging services – such as monthly horoscopes, celebrity gossip, and trivia facts – on consumers’ mobile phone bills. Between 2011 and 2013, WEDD and others engaged in a massive scheme to defraud ordinary consumers by placing unauthorized charges for premium text messaging services on their cell phone bills, through a practice known as auto-subscribing.
The auto-subscribing scheme essentially involved two main players in the mobile phone industry: mobile aggregators, such as Mobile Messenger, and content providers, which sent consumers the unwanted text messages that ultimately resulted in them being billed for services they had not authorized. Mobile Messenger worked with four different content providers in the scheme, each of which was essential to the scheme’s success. WEDD participated in auto-subscribing through three of those content providers: Tatto, which was operated by co-conspirator Lin Miao, and CF Enterprises and DigiMobi, which were operated by co-conspirator Eugeni Tsvetnenko, a/k/a “Zhenya.”
In or about 2010, Miao, who was the CEO of Tatto, decided to begin auto-subscribing mobile phone users to Tatto’s premium text messaging services in order to boost Tatto’s sagging revenues. Miao and others built a computer program that could spoof the required consumer authorizations for premium text messaging services – i.e., a program that could generate the text message correspondence that one would ordinarily see if a consumer was genuinely signing up to receive the services, which was operational by in or about the middle of 2011. In or about October 2011, Miao met with WEDD and told him, in sum and substance, that Miao wanted to auto-subscribe consumers through Mobile Messenger’s billing platform and needed phone numbers to do so. WEDD agreed to assist Miao. WEDD further told Miao, in sum and substance, that co-conspirator Michael Pajaczkowski, who was the Vice President of Compliance and Consumer Protection at Mobile Messenger, would provide phone numbers and assistance to Miao, and that all payments made in connection with the scheme needed to go through Pajaczkowski. WEDD later received his portion of the payments from Miao through Pajaczkowski.
In or about early 2012, WEDD, Pajaczkowski, and two other co-conspirators, Erdolo Eromo and Fraser Thompson, who were also Mobile Messenger executives, had discussions about how to increase revenue at Mobile Messenger in the wake of the decreasing profitability of premium text messaging services. Tsvetnenko had been kicked off Mobile Messenger’s aggregation platform in the past due to suspicious subscribing practices, including past incidents of auto-subscribing. Nevertheless, in early 2012, WEDD, Pajaczkowski, Eromo, and Thompson agreed to allow Tsvetnenko to establish two new content providers, CF Enterprises and DigiMobi, to conduct a scheme to auto-subscribe on Mobile Messenger’s aggregation platform. WEDD, Pajaczkowski, Eromo, and Thompson also devised a method of receiving and distributing their cut of the proceeds from the auto-subscribing scheme through multiple layers of shell companies, in an effort to conceal the nature and purpose of the money.
The auto-subscription scheme, through all of the content providers that it involved, affected hundreds of thousands of consumers and generated over $150 million in proceeds, which the co-conspirators apportioned among themselves and used to fund lavish lifestyles of expensive vacations, luxury cars, and gambling. WEDD, moreover, personally received over $1.7 million in fraud proceeds as a result of his participation in the illegal scheme.
* * *
In addition to the 10-year prison term, WEDD, 40, of New York, New York, was sentenced to three years of supervised release.
To date, eight defendants, Andrew Bachman, Miao, Pajaczkowski, Eromo, Jonathan Murad, Francis Assifuah, Jason Lee, and Christopher Goff have pled guilty in connection with their participation in the fraud. One additional defendant, Thompson, was convicted by a jury on September 5, 2017, following a three-week trial.
Mr. Berman praised the investigative work of the Internal Revenue Service-Criminal Investigation Division and the Federal Bureau of Investigation, and expressed his sincere gratitude to the Federal Trade Commission for their support and assistance with the investigation.
If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900. For additional information, go to:
http://www.usdoj.gov/usao/nys/victimwitness.html.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Sarah E. Paul, Richard Cooper, and Jennifer L. Beidel are in charge of the prosecution.
Former Controller of Saint Paul Town & Country Club Pleads Guilty to Million Dollar Embezzlement SchemeRead the Press Release
United States Attorney Gregory G. Brooker announced the guilty plea of JULIE ANN LEE, 53, former controller of the Town & Country Club in St. Paul, Minnesota, for operating a million dollar embezzlement scheme. LEE, who was indicted on August 23, 2017, entered her guilty plea yesterday before Senior Judge Donovan W. Frank in U.S. District Court in St. Paul, Minnesota.
“The Town & Country Club has been a Saint Paul institution since 1888. Unfortunately, Julie Lee, who was entrusted with the club’s finances, chose to use her position to embezzle more than one million dollars. She then spent the money on things such as home improvements, travel and vehicles,” said U.S. Attorney Greg Brooker. “With this guilty plea, the defendant has accepted responsibility for her crimes.”
“Tax evasion and wire fraud charges are not victimless crimes,” said Acting Special Agent in Charge Hubbard Burgess of the St. Paul Field Office IRS Criminal Investigation. “We all pay when others steal from their employers and the government. The magnitude of this fraud committed by Ms. Lee, along with this degree of dishonesty and deceit deserves to be punished.”
According to the defendant’s guilty plea and documents filed in court, from 2008 through December 2016, LEE was the controller of the Town & Country Club (“TCC”) in St. Paul, Minnesota. In her role, LEE was responsible for managing TCC’s finances and had authority to sign and issue checks on behalf of TCC as well as signing authority on TCC’s bank accounts, including a line of credit TCC had with Alliance Bank. LEE used her position as controller to devise a scheme to embezzle more than $1 million from TCC over the course of eight years.
According to the defendant’s guilty plea and documents filed in court, as part of her embezzlement scheme, LEE fraudulently issued herself more than 50 checks totaling approximately $163,357 directly from TCC’s bank accounts. LEE also stole approximately $250,000 in cash from TCC, which she deposited into her personal bank account. As part of the scheme, LEE also made payments on her personal credit cards directly from TCC bank accounts totaling approximately $764,932. LEE spent the funds she embezzled on things unrelated to TCC, including personal travel, home improvements and her mortgage, a 2013 Dodge Charger, a 2015 GMC Sierra K3500 pickup truck, a motorcycle, and a recreational vehicle.
According to the defendant’s guilty plea and documents filed in court, LEE attempted to conceal her embezzlement scheme and cover the shortage of money in TCC’s bank accounts by taking advances on TCC’s line of credit at Alliance Bank. As a result of LEE’s embezzlement, TCC was left without sufficient funds to make its quarterly payroll tax payments to the IRS. In order to conceal the shortage of funds, LEE filed false quarterly payroll tax returns with the IRS understating TCC’s payroll tax liability. At times, LEE also filed TCC’s quarterly payroll tax returns late and made TCC’s quarterly tax payments late, which resulted in TCC paying more than $300,000 in interest and penalties to the IRS.
This case is being prosecuted by Assistant U.S. Attorney Joseph H. Thompson.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS, the United States Secret Service, and the Saint Paul Police Department.
Defendant Information:
JULIE ANN LEE, 53
Farmington, MN
Convicted:
- Wire fraud, 1 count
- Filing a false tax return, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Former Alabama Kindergarten Teacher Sentenced to Prison for Producing Child PornographyRead the Press Release
An Alabama man was sentenced today to 10 years in prison, to be followed by three years of supervised release, for producing child pornography between 1997 and 1998, announced Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and U.S. Attorney Jay E. Town of the Northern District of Alabama.
Charles Mark McCormack, 54, of Muscle Shoals, Alabama, pleaded guilty on Nov. 27, 2017, to one count of production of child pornography before Chief U.S. District Judge Karon O. Bowdre of the Northern District of Alabama.
According to admissions made in connection with his guilty plea, between Aug. 1, 1997, and Oct. 15, 1998, McCormack used an approximately six-year-old girl to engage in sexually explicit conduct for the purpose of producing visual depictions of the conduct, by videotaping the girl urinating in a bathroom in his Colbert County, Alabama residence. During a May 2016 search of McCormack’s residence, law enforcement discovered images of nude and topless females believed to constitute child pornography and a suitcase containing young girls’ panties. McCormack was employed as a kindergarten teacher at the time of the search.
The U.S. Immigration and Customs Enforcement’s Homeland Security Investigations is investigating this case with support from the Georgia Bureau of Investigation. Trial Attorney William M. Grady of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Chinelo Dike-Minor of the Northern District of Alabama are prosecuting the case.
This investigation is a part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Federal Jury Deliberates Just 20 Minutes before Convicting Pittsburgh Man of Bank Robbery and Firearms OffensesRead the Press Release
PITTSBURGH, PA - After deliberating twenty minutes, a federal jury of twelve men and women found Leonard Gibbons guilty of five counts of violating federal bank robbery and firearms laws, United States Attorney Scott W. Brady announced today.
Gibbons, age 55, of Pittsburgh, Pennsylvania, was tried before Senior United States District Judge Donetta W. Ambrose in Pittsburgh, Pennsylvania.
According to Assistant United States Attorney Shardul Desai, who prosecuted the case, the evidence presented at trial established that on or about July 17, 2015, Gibbons stole $7,828.00 from the Compass Federal Savings Bank located at 111 Westinghouse Avenue, Wilmerding, Pennsylvania; and on or about November 19, 2015, Gibbons used a firearm to steal $3,971.00 from the First Commonwealth Bank located at 1527 Lincoln Way, White Oak, Pennsylvania. It is unlawful for Gibbons, who has previously been convicted of multiple felony offenses, to possess a firearm. Federal law prohibits a person convicted of a crime punishable by in excess of one year imprisonment from possessing a firearm or ammunition.
Judge Ambrose scheduled sentencing for July 30, 2018 at 11 a.m. The law provides for a total sentence of not less than 22 years in prison, a fine of $500,000.00, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based on the seriousness of the offenses and the prior criminal history, if any, of the defendant.
The Federal Bureau of Investigation, the McKeesport Police Department, the North Versailles Police Department, the White Oak Police Department, and the Allegheny County Police Department conducted the investigation that led to the prosecution of Gibbons.
Deputy Attorney General Rod Rosenstein Announces Edward O’Callaghan as Acting Principal Associate Deputy Attorney GeneralRead the Press Release
Deputy Attorney General Rod Rosenstein today announced that Edward O’Callaghan will serve as the Acting Principal Associate Deputy Attorney General. O’Callaghan, who has been serving as the Principal Deputy Assistant Attorney General in the National Security Division, will replace Robert Hur, who is succeeding Rosenstein as the United States Attorney in the District of Maryland.
“Edward O’Callaghan has served the Department of Justice with distinction, excelling as a prosecutor in the Southern District of New York and most recently as the Principal Deputy Assistant Attorney General in the National Security Division. His experiences in a variety of roles throughout the Department will be invaluable as we work to protect our national security, reduce violent crime, and promote the rule of law,” said Deputy Attorney General Rosenstein. “I also want to thank Robert Hur for serving as the Principal Associate Deputy Attorney General. His counsel was invaluable over the past ten months and I look forward to seeing him thrive as the United States Attorney for the District of Maryland.”
Prior to his appointment as Acting Principal Associate Deputy Attorney General, O’Callaghan most recently served as Principal Deputy Assistant Attorney General for the National Security Division, where he assisted the Assistant Attorney General in the administration of all units and components in the National Security Division, most notably in the Counterterrorism Section, the Counterintelligence and Export Control Section, the Office of Intelligence, the Office of Law & Policy, the Foreign Investment Review Staff, and the Office of Justice for the Victims of Overseas Terrorism. While awaiting the confirmation of Assistant Attorney General John Demers, O’Callaghan served as Acting Assistant Attorney General for the National Security Division.
Before rejoining the Department of Justice in 2017, O’Callaghan was a partner at an international law firm. O’Callaghan specialized in defending financial institutions, public companies, asset management firms, and individuals in international and domestic regulatory investigations and criminal prosecutions. These cases involved securities fraud, bank fraud, money laundering, RICO, and corruption, among other things.
O’Callaghan previously served as an Assistant U.S. Attorney for the Southern District of New York from 1999 to 2008. He was also Co-Chief of the Terrorism & National Security Unit from 2005 to 2008. As an Assistant U.S. Attorney, O’Callaghan was the lead prosecutor on several important cases, including the Department of Justice’s international fraud investigation and prosecutions in relation to corruption in the United Nations Oil-for-Food Program, RICO prosecutions of crime families, and numerous bank and securities fraud cases. He received the U.S. Attorney General's Award for Distinguished Service in 2008, and the Director's Award for Superior Performance as an Assistant U.S. Attorney in 2000.
After earning his J.D. from NYU Law School in 1994, O’Callaghan began his career as a clerk to the Honorable Kevin Thomas Duffy of the U.S. District Court for the Southern District of New York.David C. Joseph begins term as U.S. Attorney for the Western District of LouisianaRead the Press Release
SHREVEPORT, LAFAYETTE, MONROE, ALEXANDRIA, LAKE CHARLES, La. – David C. Joseph was sworn in today as the U.S. Attorney for the Western District of Louisiana. President Donald Trump nominated Joseph on February 16, 2018, and the U.S. Senate confirmed his nomination March 22, 2018.
“I am deeply honored to be confirmed as the United States Attorney and look forward to serving the residents of Louisiana and our great country,” Joseph stated. “It has been my privilege to work with many hard working and talented federal and state law enforcement agents while working as a federal prosecutor. As U.S. Attorney, I will continue working with our law enforcement partners to protect our communities, prosecute those who break our laws, and promote the mission of the Department of Justice.”
Prior to becoming U.S. Attorney, Joseph served as an Assistant U.S. Attorney in the Western District of Louisiana, where he prosecuted a wide variety of offenses, with a focus on fraud, public corruption, white-collar crime and crimes committed on the District’s military installations.
Prior to joining the Department of Justice, Joseph served as a commissioned officer and prosecutor in the U.S. Army Judge Advocate General’s Corps, as an attorney in the Professional Liability & Financial Crimes Section of the Federal Deposit Insurance Corporation, and in private practice as a commercial litigation attorney. He received his Bachelor’s degree of Business Administration from the University of Oklahoma and his Juris Doctorate from the Paul M. Hebert Law Center at Louisiana State University, where he was a member of the Louisiana Law Review and was inducted into the Order of the Coif. After graduating law school, Joseph clerked for Justice Jeffrey P. Victory of the Louisiana Supreme Court and Judge John V. Parker of the U.S. District Court for the Middle District of Louisiana. United States Attorney Joseph will headquarter his office in Shreveport, while maintaining regular office hours in Lafayette, Monroe, Lake Charles and Alexandria.
As U.S. Attorney, Joseph oversees the investigation and litigation of all criminal and civil cases on behalf of the United States in the Western District of Louisiana. The Western District consists of 42 of the State’s 64 parishes and geographically encompasses two-thirds of the State of Louisiana.
Dallas County Schools Superintendent Charged in $3 Million Kickback SchemeRead the Press Release
DALLAS — Rickey Dale Sorrells, 62, of Dallas, has been charged for his role in receiving more than $3 million in bribe and kickback payments to help secure over $70 million in contracts, agreements, and orders, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.
The criminal felony Information filed today charges Sorrells with one count of conspiracy to commit honest services wire fraud. Signed plea papers were also filed indicating Sorrells’ intent to plead guilty. Sorrells faces a maximum penalty of imprisonment not to exceed twenty years and a $250,000 fine. Restitution could also be ordered. An arraignment date has not yet been set.
According to the filed Information and plea papers, from 2011 through 2017, the president of a technology company (Person A) that put cameras on school buses, paid Sorrells, the superintendent of Dallas County Schools (DCS), in excess of $3 million in bribe and kickback payments in exchange for favorable official action, including Sorrells’ decision to enter into contracts and licensing agreements on behalf of DCS and to purchase school-bus-camera equipment.
Payments made to Sorrells were funneled through various pass-through companies created and operated by his business associate, Slater Washburn Swartwood, Sr., as well as through a law firm. An account in the name of a nonexistent company was created to conceal payments that were made toward Sorrells’ credit card debt. To further disguise the bribe and kickback payments, Sorrells received a portion of the payments through shell companies which, at the behest of Person A, he created in his and/or a family member’s name(s).
In an effort to obscure the illegal purpose of the payments, according to documents filed in the case, Sorrells and others created fake consulting agreements, fake invoices, a fake real estate business, fake loan documents, discussed tying all past payments from Person A to Sorrells to the “note,” conspired to have Sorrells begin making payments on the “loan,” after which Person A would “recycle” the money back to Sorrells, and created a document with a narrative to ensure that they all had their stories straight.
The investigation was conducted by the Federal Bureau of Investigation.
Assistant U.S. Attorney Andrew Wirmani is in charge of the prosecution.
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Corpus Christi Man Convicted of Multiple Sexual Exploitation CrimesRead the Press Release
CORPUS CHRISTI, Texas - A 30-year-old Corpus Christi man has admitted he sexually assaulted four minor females, announced U.S. Attorney Ryan K. Patrick. Matthew Joseph Lucio pleaded guilty to two counts each of online solicitation and production of child pornography.
In November 2017, the National Center for Missing and Exploited Children (NCMEC) notified authorities that Lucio had solicited a minor female via an internet messaging application for sexual intercourse. Law enforcement identified the minor female who confirmed the abuse. Days later, law enforcement received another NCMEC report that Lucio solicited a different minor female via an internet messaging application for sexual intercourse. Authorities identified the second minor female who also confirmed the abuse.
Law enforcement obtained a search warrant for Lucio’s residence, after which agents seized several digital devices and located narcotics. Forensic analysis of the devices led to the discovery of videos depicting the sexual assault of two different minor females. Both minors were located and also confirmed the abuse. All four minor females reported that Lucio drugged them before they were sexually assaulted.
Today, the court also heard that law enforcement has identified an additional six minor females and two adult females that have reported Lucio sexually assaulted them.
U.S. District Judge Nelva Gonzales Ramos accepted the guilty plea today and set sentencing for Aug. 9, 2018. At that time, Lucio faces a minimum of 10 years and up to life in federal prison for the online solicitation of a minor charges and a minimum of 15 and up to 30 years for production of child pornography. Lucio also faces a possible $250,000 maximum fine on each charge. Upon completion of any prison term imposed, Lucio also faces a maximum of life on supervised release during which time the court can impose a number of special conditions designed to protect children and prohibit the use of the internet.
Lucio was arrested on federal charges in February 2018 and has been in custody since that time where he will remain pending his sentencing hearing.
Immigration and Customs Enforcement’s Homeland Security Investigations, Corpus Christi Police Department—Internet Crimes Against Children Task Force and the Nueces County District Attorney’s Office conducted the investigation with the assistance of NCMEC.
Assistant U.S. Attorney Hugo R. Martinez is prosecuting the case, which was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Convicted Sex Offender Pleads Guilty to Distribution of Child PornographyRead the Press Release
Ocala, Florida – Michael Philip Auld (30, Ocala) today pleaded guilty to an indictment charging him with distribution of child pornography. Because Auld already has a 2008 federal conviction for possession of child pornography, he faces a minimum sentence of 15 years, up to 40 years, in prison.
According to the plea agreement, on October 23, 2016, Auld distributed images of child pornography over the internet using a cellular telephone. Acting on a tip from an internet service provider, law enforcement executed a search warrant at Auld’s Marion County residence on January 11, 2018. In Auld’s bedroom, investigators recovered two cellular telephones and a tablet computer. Auld had been using these electronic devices to receive, possess, and distribute hundreds of images of child pornography since at least 2016. In saved internet conversations on these same devices, Auld graphically described his sexual abuse of minor children, including an infant. At the time of the offense, he was serving a lifetime of supervised release for his prior child pornography conviction.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Marion County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney Robert E. Bodnar, Jr.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Connecticut Man Sentenced for Multimillion-Dollar Fraud SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that STEVEN SIMMONS was sentenced today in Manhattan federal court to 37 months in prison by U.S. District Judge Kimba M. Wood. Between 2013 and January 2017, SIMMONS solicited over $6 million in investments for a hedge fund (the “Hedge Fund”). SIMMONS, however, misappropriated nearly $2 million of these funds for his own use and that of a co-conspirator. As SIMMONS well knew, other investor funds solicited by SIMMONS were used by the owner of the Hedge Fund in a Ponzi-like scheme to make payments to prior Hedge Fund investors. SIMMONS pled guilty before U.S. Magistrate Judge Barbara C. Moses on October 30, 2017.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Steven Simmons lied to investors about how their money would be used and what returns they could expect. He used investor funds for his own personal use – including the purchase of a house – and provided other investor funds for use in paying back earlier investors. Now Simmons has been sentenced to more than three years in prison for his crimes.”
According to allegations in the superseding Indictment filed in Manhattan federal court, previous court filings, and statements made in public court proceedings:
Between 2013 and January 2017, SIMMONS solicited investments by falsely representing to investors that their funds would be used by the Hedge Fund for legitimate, specified investment purposes, that they would receive specific rates of return, and that their investments would not be placed at risk or commingled with other funds. In fact, SIMMONS diverted a substantial portion of investor funds for his own use and the use of a co-conspirator, while the remaining funds were used by the Hedge Fund to repay earlier investors who were demanding the return of their money.
Among other false and misleading statements, SIMMONS told one investor, a single mother of three children whose source of funds was an alimony payment received in a recent divorce (“Victim-1”), that her capital would be invested with the Hedge Fund in securities, her principal investment would be preserved and not commingled with other investor funds, and that she would receive a return of at least 15% on the investment. Contrary to these representations, SIMMONS stole much of Victim-1’s investment, using $700,000 of that money within two months of Victim-1’s investment to buy a house in Wilton, Connecticut, and wiring $700,000 to the personal account of a co-conspirator.
SIMMONS told another investor, a family investment office (“Victim Entity-2”), that its funds would be placed by the Hedge Fund with a highly successful group of portfolio managers and provided performance information for these portfolio managers. In truth and in fact, SIMMONS solicited those investment funds from Victim Entity-2 for the purpose of repaying an earlier investor in the Hedge Fund who had demanded the return of its investment. Much of Victim Entity-2’s funds were, within minutes of their receipt by the Hedge Fund, wired to the earlier investor. The following day, $50,000 was wired by the Hedge Fund to an account controlled by SIMMONS. As part of the fraudulent scheme, Simmons also created and provided investors with false monthly statements.
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In addition to his prison sentence, SIMMONS, 49, of Wilton, Connecticut, was sentenced to three years of supervised release, ordered to forfeit $6,900,000, representing the amount of proceeds obtained as a result of the conspiracy, including the forfeiture of property SIMMONS bought in Wilton, Connecticut with proceeds of the fraud, and ordered to pay restitution to the victims of the offense.
Mr. Berman praised the investigative work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance in the investigation.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Elisha J. Kobre and Brendan F. Quigley are in charge of the prosecution.
Connecticut Man Convicted of Robbing Dollar Tree Stores in New York and IdahoRead the Press Release
ALBANY, NEW YORK – David Daniel Hunter, age 54, of Enfield, Connecticut, pled guilty today to robbing two Dollar Tree stores in May 2017.
The announcement was made by United States Attorney Grant C. Jaquith and Vadim D. Thomas, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation.
In pleading guilty, Hunter admitted to committing two robberies, one of a Dollar Tree in the Town of North Greenbush, New York, and the other of a Dollar Tree in Coeur d’Alene, Idaho.
He admitted to stealing a 2017 Dodge Charger in Connecticut on May 5, 2017, and driving it to New York to commit a robbery. On May 6, Hunter entered the Dollar Tree store in North Greenbush, displayed what appeared to be a handgun, and demanded money. After taking $1,200 from the store’s safe and registers, Hunter directed the clerks to the store’s stock room, took one clerk’s cellphone, and left the store with the stolen money and cellphone. Hunter travelled to Idaho, where he entered a Dollar Tree store in Coeur d’Alene on May 28, displayed a stun gun, and demanded money. After stealing approximately $3,700, Hunter took a clerk’s cellphone and fled.
For each robbery, Hunter faces up to 20 years in prison, a fine of up to $250,000, and a term of post-release supervision of up to 3 years. Sentencing is scheduled for August 2, 2018 in Albany before Senior U.S. District Judge Frederick J. Scullin, Jr.
This case was investigated by the FBI, the North Greenbush Police Department, and the Enfield (Connecticut) Police Department, and is being prosecuted by Assistant United States Attorney Cyrus P.W. Rieck. The Idaho robbery was initially prosecuted by Assistant United States Attorney Traci Whelan of the District of Idaho.
Clinton Man Indicted for $4.7 Million Investment Fraud SchemeRead the Press Release
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KANSAS CITY, Mo. – A Clinton, Mo., man has been indicted in a $4.7 million investment fraud scheme in which he defrauded 89 investors who believed they were purchasing cattle for resale at a profit.
Cameron J. Hager, 42, of Clinton, was charged in a nine-count indictment returned under seal by a federal grand jury in Kansas City, Mo., on Wednesday, March 28, 2018. That indictment was unsealed and made public today upon Hager’s arrest and initial appearance at the U.S. District Court in Jefferson City, Mo.
The federal indictment alleges that Hager, who operated 5A Holdings, LLC, engaged in the fraud scheme from July 17, 2015, to March 28, 2018. Hager allegedly induced victims to invest in a “cattle fund” that was used to purchase herds of cattle to be sold later at a substantial profit, although he never actually purchased or intended to purchase any cattle.
According to a federal forfeiture complaint, filed in a separate but related civil proceeding, Hager received approximately $4.7 million dollars from approximately 89 investors. Investment amounts ranged from $1,000 to $267,000.
According to the indictment, Hager told victim investors that he would arrange to purchase herds of cattle from farmers or ranchers who had reasons to sell their herds because of financial distress and inability to maintain their herds. Hager and his organization, he allegedly claimed, evaluated the cattle, including having the cattle examined by a “seasoned veterinarian,” and determined that a predictable profit could be realized by maintaining and feeding the cattle until an optimum time for marketing the cattle. Hager allegedly claimed that 5A Holdings realized net returns greater than 20 percent on investments in herds of cattle during 2015, 2016, and 2017.
Hager induced other individuals to recruit investors, the indictment says, although he knew the representations they made to potential investors were false. Hager used money obtained from investors to pay commissions, for the purpose of perpetuating referrals of additional investors.
Before the scheme unraveled, according to court documents, Hager used the majority of investor funds for his personal living expenses, including paying his home mortgage, travel expenses, lodging, airfare, payments for religious conferences, numerous Amazon purchases, ATM withdrawals, building supplies, credit card payments, paying taxes and purchasing personal vehicles.
In some cases, money obtained from investors was used to provide “returns” to other investors with the false representation that the “returns” of money resulted from the sale of cattle. Any money that was returned to investors was money that had been supplied by other investors and not money resulting from sales of cattle. As a result of Hager’s misuse of investors’ funds, the total loss to his victims is currently estimated at $3.5 million dollars.
The indictment also contains a forfeiture allegation, which would require Hager to forfeit to the government any property derived from the proceeds of the alleged offenses, including $394,074 in an Equity Bank account, his 46.6-acre residential property (currently listed for sale with an asking price of $899,000), a 2013 Ford F-150 pickup truck, a 2006 Toyota 4Runner and two 2017 Winnebago travel trailers.
The charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by First Assistant U.S. Attorney David M. Ketchmark and Assistant U.S. Attorney Thomas M. Larson. Assistant U.S. Attorney Stacey Perkins Rock is handling the forfeiture. This case was investigated by the Missouri Secretary of State, Securities Division and the FBI.
Cleveland man and two Mexican nationals charged in federal court after agents seize 140 pound of methamphetamine; bust comes days after seizure of 44 pounds of heroin in AkronRead the Press Release
Two Mexican nationals and a Cleveland man were charged in federal court after law enforcement agents seized more than 140 pounds of methamphetamine, believed to be the largest seizure of meth in Ohio history.
Tyrone Rogers, 36, Hector Manuel Ramos-Nevarez, 26, and Gilbert Treviso-Garcia, 24, are charged with conspiracy to possess with intent to distribute methamphetamine.
They were arrested after DEA agents seized approximately 82 pounds of crystal methamphetamine from 7592 Olde Eight Road in Hudson. They also seized an additional 60 pounds of liquid meth from the same warehouse.
The seizure of crystal methamphetamine came the same week another Mexican national was arrested with approximately 44 pounds (20 kilograms) of heroin on State Route 8 in Akron. Octavio Barragan-Manzo, 54, was indicted Tuesday on one count of possession with intent to distribute heroin.
“Although we in Northeast Ohio are far from the border, these cases demonstrate that the threat posed by Mexican criminal organizations to our region is very real,” U.S. Attorney Justin E. Herdman said. “International drug trafficking organizations are active right here in our backyard and they seek to profit from the misery of our friends and neighbors struggling with addiction. The destruction caused by heroin and fentanyl is well documented, and now we are seeing an influx of crystal methamphetamine and cocaine. Law enforcement will work vigilantly to choke off the supply of these deadly drugs here in Ohio, and we need to come together as a community to reduce the demand.”
“These seizures are yet another example of the prevalence of drugs and the demand for drugs in the Cleveland area and surrounding communities,” said DEA Special Agent in Charge Timothy Plancon. “The DEA continues our efforts to target drug traffickers especially those contributing to the opioid epidemic in America.”
Akron Police Chief Kenneth Ball said: “This case represents a win for law enforcement and our citizens. It reflects the dedication of our investigators and strength of partnering organizations that join with us to make our communities safer. Unfortunately, it also represents that the threat of illegal drug activities remain formidable. I look forward to a sentencing that will properly protect us from these drug trafficking predators.”
"Law enforcement in Ohio is working every day to stop those bringing these deadly drugs into our state," said Ohio Attorney General Mike DeWine. "Task forces operating as part of my office's Ohio Organized Crime Investigations Commission will continue to work in partnership with state, local, and federal authorities to intercept drugs before they can be abused."
Rogers traveled from Cleveland to the La Quinta Inn in Macedonia last month, where he picked up two men later identified as Ramos-Nevarez and Treviso-Garcia. Together, they traveled to a residence at 226 Barrington Place East in Aurora. Rogers drove the two men between Barrington Place East and the location on Olde Eight Road several times, according to court documents.
Investigators executed a delayed-notice search warrant at 7592 Olde Eight Road on March 24, where they seized approximately 82 pounds of crystal methamphetamine. The location appeared to be a crystal methamphetamine processing facility used to make, package and distribute the drug, according to court documents.
Since it was a delayed-notice warrant, no notification was left at Olde Eight Road. Investigators listened to several conversations about who had “broken into” the location. Rogers and others believed it was an inside person who robbed them, according to court documents.
Investigators intercepted telephone calls in which Rogers got the “green light” (believed to be from his Mexican supplier) to kill the person Rogers believed stole his drugs. Rogers said people were going to “knock his head in,” according to court documents.
Investigators arrested Rogers, Ramos-Nevarez and Treviso-Garcia on March 24, believing they were going to kill the person they incorrectly believed took the 82 pounds of crystal methamphetamine from 7592 Olde Eight Road. Investigators found an additional 60 pounds of liquid meth during another search of that location. Another search of other locations associated with Rogers resulted in the seizure of four firearms, according to court documents.
In the heroin case, Barragan-Manzo was arrested on March 21 after he was found with 20 kilogram-sized packages containing heroin. Barragan-Manzo was stopped driving on State Route 8 in Akron, according to court documents.
An Ohio State Highway Patrol canine positively alerted to the presence of drugs. Law enforcement officers then located 20 brick-shaped objects which later tested positive for heroin. A subsequent search of a location in Akron resulted in the seizure of three pistols, a rifle and a shotgun, according to court documents.
The Barragan-Manzo case was investigated by the DEA, Akron Police Department, Ohio State Highway Patrol, Summit County Sheriff’s Office and the Ohio Organized Crime Investigations Commission. It is being prosecuted by Assistant U.S. Attorney Henry F. DeBaggis.
The methamphetamine case is an Organized Crime Drug Enforcement Task Force investigation led by the Cleveland DEA Task Force, which includes representatives from the Lake County Narcotics Agency, Cuyahoga County Sheriff’s Office, Euclid Police Department, Aurora Police Department, Summit County Sheriff’s Office, Boston Heights Police Department, Cleveland Heights Police Department, Cleveland Division of Police, Ashtabula County Sheriff’s Office, Ohio State Highway Patrol, Ohio BCI and U.S. Border Patrol. It is being prosecuted by Assistant U.S. Attorney Marisa T. Darden.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violations. In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.
An indictment is a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
Circleville Businessman Sentenced for Tax FraudRead the Press Release
COLUMBUS, Ohio – John Anderson Rankin, 55, of Circleville, Ohio, was sentenced in U.S. District Court to 60 months in prison for tax crimes that included a total tax loss of approximately $8.1 million. Rankin was also ordered to pay restitution in the amount of $7.1 million.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, and Ryan L. Korner, Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Cincinnati Field Office announced the sentence handed down today by Chief U.S. District Judge Edmund A. Sargus, Jr.
Rankin was convicted of 17 tax-related charges following a two-week trial in September 2017.
A federal grand jury indicted Rankin in July 2015 with seven counts of failing to account for and pay over employment taxes to the Internal Revenue Service (IRS), six counts of willfully filing false federal individual income tax returns with the IRS, three counts of willfully filing false federal corporate income tax returns with the IRS and one count of obstructing and impeding the due administration of the IRS.
According to court documents and testimony, Rankin operated a number of Circleville-based businesses, including Connectivity Systems, Inc., a mainframe software company that provides internet protocol development and servicing. Rankin Enterprises, LLC was a shell corporation that included the Circleville Movie House, Screening Room, J.R. Hooks Café and Tootles Pumpkin Inn. Rankin also owned the Tuscan Table, an Italian restaurant in downtown Circleville.
Between June 2008 and April 2011 Rankin, conducting business as Rankin Enterprises and Tuscan Table, failed to account for and pay over to the IRS all federal income and FICA taxes.
Rankin also filed false Amended U.S. Individual Income Tax Returns with the IRS for the 2005, 2006, 2007, 2008 and 2009 income tax years. He claimed a corrected adjusted gross income amount of a negative $1.7 million, when in actuality his corrected adjusted gross income was more than $8.9 million.
In 2010, Rankin filed a false individual income tax return that reported an adjusted gross income of nearly $27,000, when his actual gross income was nearly $1.6 million.
In addition, Rankin filed false U.S. Corporation Income Tax Returns with the IRS for Connectivity Systems Incorporated for the 2008, 2009 and 2010 income tax years. These false forms claimed a fraudulent accelerated Research & Development Credit in the amount of $1.7 million against the corporate taxes due and owing of Connectivity Systems Incorporated.
Lastly, between January 2005 and July 2015 Rankin made false and misleading statements to agents of the IRS and concealed information from agents of the IRS.
“Rankin effectively robbed both the United States and his employees, and not only did he perpetrate this decade-long tax-fraud scheme, but he also introduced fake records at trial,” U.S. Attorney Glassman said. “The jury rightfully convicted him for his illegal conduct, and his sentence today reflects his continued disregard for the law.”
“The sentencing of Rankin is an important victory for America's taxpayers who play by the rules and have no tolerance for those who make up their own rules. This investigation serves to remind us that there is no such thing as free money and there are no awards or incentives for creativity when it comes to crime,” said Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.
U.S. Attorney Glassman commended the investigation of this case by IRS-Criminal Investigation, as well as Assistant United States Attorneys Daniel A. Brown and Noah R. Litton, who represented the United States in this case.
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Chinese Citizen Pleads Guilty to Mail Fraud and Smuggling Related to Dietary Supplement SchemeRead the Press Release
Gao Mei Fang (a.k.a. Amy Gao), of Shanghai, China, pleaded guilty in Dallas to mail fraud and smuggling charges in connection with a scheme to sell mislabeled dietary supplements, the Department of Justice announced today.
Gao was the supply chain manager for Genabolix USA Inc. and Shanghai Yongyi Biotechnology Co. Ltd., Chinese firms that sell raw ingredients for use in dietary supplements. In pleading guilty, Gao admitted that she agreed to help sell synthetic stimulant ingredients, including the substance known as 1,4-DMAA, to a purported dietary supplement manufacturer in the United States. According to an indictment returned in October 2017, Gao and two co-defendants agreed with a confidential government informant to either mislabel the synthetic ingredients or otherwise help to hide the true nature of a proposed dietary supplement from retailers. Gao admitted that she knew major American dietary supplement retailers would refuse to carry supplements known to contain certain stimulants, such as DMAA.
Gao also admitted to making false statements to FDA’s import division regarding a shipment of synthetic stimulants entering the United States.
“Protecting Americans from fraud and ensuring the safety of the products they consume are top priorities of the Department of Justice,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will pursue those who attempt to import dangerous and illegal commodities into the United States.”
Gao pleaded guilty before U.S. Magistrate Judge David Horan of the Northern District of Texas. She faces a statutory maximum sentence of 20 years of imprisonment on both the mail fraud and smuggling counts. The Court set sentencing for Oct. 1.
“As evidenced by the global scope of this investigation and this plea of guilty, my office is fully committed to protecting our citizens,” said U.S. Attorney Erin Nealy Cox. “We will continue to vigorously investigate and prosecute those who fraudulently mislead and endanger the American public.”
“U.S. consumers trust that their dietary supplements are safe and contain appropriate labeling. When unscrupulous producers add undeclared or misidentified ingredients to dietary supplements, there is no assurance that the product is safe for consumption,” said Catherine A. Hermsen, Acting Director, FDA Office of Criminal Investigations. “The FDA will continue to pursue and bring to justice those who participate in fraudulently marketing dietary supplements to the detriment of public health.”
Gao was arrested in September 2017 along with a co-defendant, Zhang Xiao Dong, while attending a dietary supplement trade show in Las Vegas. A third defendant named in the case, Hu Chang Chun, is not believed to be in the United States.
The case was investigated by FDA’s Office of Criminal Investigations. The case was prosecuted by Kate Rumsey, Assistant United States Attorney for the Northern District of Texas; and David Sullivan and Patrick R. Runkle, Trial Attorneys in the Department of Justice’s Consumer Protection Branch.
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 Northern District of Texas, visit its website at https://www.justice.gov/usao-ndtx.
Charleston Man Pleads Guilty to Distributing MethamphetamineRead the Press Release
CHARLESTON, W.Va. – A Charleston man pled guilty today in federal court to a drug crime, announced United States Attorney Michael B. Stuart. Avante Anthony Jones, age 22, of South Park Road, pled guilty to distribution of methamphetamine. United States Attorney Stuart gave credit to the joint investigation conducted by DEA, the U.S. 119 Drug Task Force, and the Metropolitan Drug Enforcement Network Team (MDENT) for the successful prosecution.
“Methamphetamine is quickly becoming the illicit drug of choice among West Virginia drug abusers,” said United States Attorney Mike Stuart. “We are making a concerted effort to stem the tide of methamphetamine coming into our communities by aggressively prosecuting distributors like Avante Jones.”
On August 8, 2017, a confidential informant contacted Jones and arranged to buy an ounce of methamphetamine for $1000. Jones met the confidential informant on Centers Road in Charleston and conducted the deal.
The plea hearing was held before United States District John T. Copenhaver, Jr. Assistant United States Attorney R. Gregory McVey is in charge of this prosecution.
Jones faces up to 40 years imprisonment and a fine of up to $5 million when he is sentenced on July 2, 2018.
Follow us on Twitter: @SDWVNews and @USAttyStuart
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Charges Allege Two Individuals and Their Companies Exploited the USDOT Disadvantaged Business ProgramRead the Press Release
PHILADELPHIA - Stamatios “Tom” Kousisis, 60 of Downingtown, PA and Emanouel “Manny” Frangos, 41, of Campbell, OH, along with Alpha Painting & Construction Co., Inc., of Baltimore MD, and Liberty Maintenance, Inc., of Youngstown, OH were charged today by Indictment with conspiracy to commit wire fraud, wire fraud, and making false statements in a scheme involving the USDOT Disadvantaged Business Program and work performed on the federally funded Girard Point Bridge project and the federally funded 30th Street Station, announced United States Attorney Louis D. Lappen.
Kousisis is the Project Manager of Alpha and Frangos is an owner of Liberty Maintenance, which are both bridge painting contractors, although neither is a certified Disadvantaged Business in Pennsylvania. The alleged scheme involved Alpha-Liberty JV, a joint venture between defendants Liberty Maintenance and Alpha Painting, and Markias, Inc., a now-defunct certified Disadvantaged Business.
In September 2009, PENNDOT awarded a contract for approximately $70.3M to a triventure that included the Alpha-Liberty JV to perform structural steel painting and repairs, and concrete repairs, on the Girard Point Bridge in Philadelphia. As part of that award, the triventure made a commitment to PENNDOT to subcontract approximately $4.7M in Disadvantaged Business work to Markias to supply materials to be used in performing the contract. Under governing law, the Alpha-Liberty JV was only entitled to Disadvantaged Business credit for worked performed by a Disadvantaged Business that was performing a commercially useful function. Instead, according to the indictment, the Alpha-Liberty JV and Kousisis ordered materials needed for their work on the Girard Point Project directly from suppliers that were not Disadvantaged Businesses, and used Markias as a mere pass-through or front, to make it falsely appear that disadvantaged business enterprise requirements had been met on the Girard Point Project when those requirements had in fact not been met. Markias did not perform a commercially useful function.
In December 2010, PENNDOT awarded a contract for approximately $50.8 million to a joint venture of two companies referred to in the indictment as Company C and Company F, to perform structural steel painting and repairs and roadway reconstruction beneath and around AMTRAK’s 30th Street Train Station in Philadelphia. Company C and Company F entered into a subcontract, for approximately $15 million, for the Alpha-Liberty JV to perform the structural steel painting beneath 30th Street Station. As part of the bid process, Company C and Company F committed to subcontract approximately $1.7M in Disadvantaged Business work to Markias to supply paint materials for the 30th Street Project. Instead, according to the indictment, the Alpha-Liberty JV and Kousisis ordered materials needed for their work on the 30th Station Project directly from suppliers that were not Disadvantaged Businesses, and used Markias as a mere pass-through or front, to make it falsely appear that disadvantaged business enterprise requirements had been met on the 30th Station Project when those requirements had in fact not been met. Markias did not perform a commercially useful function.
In addition, the indictment alleges that the Alpha-Liberty JV and Kousisis, and Frangos ordered materials to be delivered to and used on out-of-state projects while directing that the purchase invoices be sent to Markias in New Jersey. Then, allegedly at the direction of Alpha-Liberty JV and Kousisis, and Frangos, Markias issued invoices that made it falsely appear that those supplies had been used on the Girard Point and 30th Street Projects in Pennsylvania. Alpha-Liberty JV and Kousisis, and Frangos allegedly caused Company C to falsely report to PENNDOT that the supplies delivered to and used on the out-of-state projects qualified for Disadvantaged Business credit in Pennsylvania when those purchases did not so qualify. PENNDOT awarded approximately $3.26 million in DBE credit to for the Girard Point Project and approximately $1.275 million in Disadvantaged Business credit for the 30th Street Station Project based on Disadvantaged Business work supposedly performed by a disadvantaged business (Markias). Alpha-Liberty JV paid Markias 2.25% of the face value of the invoices processed by Markias allegedly to act as a pass-through.
If convicted the defendants face a statutory maximum sentence of 170 years in prison, a possible fine, supervised release, and a $1600 special assessment.
The case was investigated by the U.S. Department of Transportation Office of Inspector General, the FBI, the Department of Labor Office of Inspector General, and Amtrak Office of Inspector General. It is being prosecuted by Assistant United States Attorney Paul Shapiro.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Carlsbad Woman Pleads Guilty to Federal Methamphetamine Trafficking ChargesRead the Press Release
ALBUQUERQUE – Jamie Moreno, 34, of Carlsbad, N.M., pled guilty this afternoon in federal court in Las Cruces, N.M., to methamphetamine trafficking charges.
Moreno and co-defendant Jesus Sanchez, 30, also of Carlsbad, were arrested in Feb. 2018, on a seven-count indictment charging them with methamphetamine trafficking offenses. Moreno and Sanchez were charged with conspiracy and distributing methamphetamine on Sept. 28, 2017. The indictment also charged Sanchez with distributing methamphetamine on May 23, 2017, June 1, 2017, June 30, 2017, Aug. 16, 2017, and Aug. 23, 2017. According to the indictment, Moreno and Sanchez committed the offenses in Eddy County, N.M.
During today’s proceedings, Moreno pled guilty to Counts 6 and 7, charging her with conspiracy and distribution of methamphetamine. In entering the guilty plea, Moreno admitted that on Sept. 28, 2017, she distributed approximately 427.7 grams of pure methamphetamine to an undercover law enforcement agent.
At sentencing, Moreno faces a statutory mandatory minimum penalty of five years and a maximum of 40 years in federal prison. She remains in custody pending a sentencing hearing which has yet to be scheduled.
Sanchez has entered a plea of not guilty to the charges against him. Charges in indictments are merely accusations, and defendants are presumed innocent unless found guilty in a court of law.
This case was investigated by Homeland Security Investigations and the New Mexico State Police. Assistant U.S. Attorney Alexander B. Shapiro of the U.S. Attorney’s Las Cruces Branch Office is prosecuting the case.
Canadian Man Pleads Guilty to Marijuana SmugglingRead the Press Release
SYRACUSE, NEW YORK – Colin Stewart, age 41, of Elgin, Quebec, Canada, pled guilty today to conspiracy to distribute marijuana.
The announcement was made by United States Attorney Grant C. Jaquith and Special Agent in Charge James J. Hunt, New York Division, U.S. Drug Enforcement Administration (DEA).
Stewart admitted that he and his co-conspirators smuggled thousands of pounds of marijuana into the United States from Canada through the Akwesasne Mohawk Indian Reservation. The marijuana was distributed throughout the northeastern United States. Stewart admitted to organizing the smuggling, to the paying of co-conspirators, and to personally transporting thousands of pounds of marijuana across the St. Lawrence River from Canada into the United States.
The plea agreement calls for Stewart to serve 135 months in prison when he is sentenced on August 7, 2018. The parties’ recommended sentence is subject to the approval of Chief United States District Judge Glenn T. Suddaby, who is presiding over the case.
The investigation and prosecution of Stewart was the result of a joint investigation by the DEA, Homeland Security Investigations (HSI), the United States Border Patrol, U.S. Customs and Border Protection Air and Marine Operations, the New York State Police, the St. Regis Mohawk Tribal Police Department, the Akwesasne Mohawk Police Services, and the District Attorneys of Franklin and Clinton Counties.
The case is being prosecuted by Assistant U.S. Attorneys Katherine E. Kopita and Douglas G. Collyer.
Brunswick Man Sentenced to 2½ Years on Firearms ChargeRead the Press Release
Portland, Maine: United States Attorney Halsey B. Frank announced that Evan Lewis, 28, of Brunswick, Maine, was sentenced today in U.S. District Court by Judge George Z. Singal to 2½ years in prison and three years of supervised release for providing false information during an attempt to purchase a firearm. Lewis pleaded guilty on October 26, 2017.
According to court records, on July 22, 2015, Lewis attempted to purchase a Taurus, semi-automatic, 9mm pistol from a pawn shop in Lewiston, Maine. In the process of doing so, Lewis completed an Firearms Transaction Record form in which he falsely claimed that his name was David Frank Lewis and denied having been convicted of a felony crime or being an unlawful drug user. In fact, Lewis was a convicted felon and an unlawful user of Methamphetamine. The pawn shop ultimately refused to sell Lewis the pistol because the name he gave did not match the name on his driver's license.
The case was investigated by the Lisbon and Auburn Police Departments and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Bossier City man sentenced to 87 months in prison for methamphetamine trafficking conspiracyRead the Press Release
SHREVEPORT, La. – United States Attorney David C. Joseph announced today that a Bossier City man was sentenced Monday to seven years and three months in prison for transporting methamphetamine from Dallas to the Shreveport/Bossier City area.
Anthony Joseph Armenio, 32, of Bossier City, La., was sentenced by U.S. District Judge S. Maurice Hicks Jr. on one count of conspiracy to possess methamphetamine with intent to distribute. He was also sentenced to three years of supervised release. According to the May 17, 2017 guilty plea, Armenio and codefendant Steven Blaine McLendon, 28, of Shreveport, traveled to Dallas, Texas, on January 14, 2017 to pick up methamphetamine. On their return trip, a Shreveport Police officer conducted a traffic stop on the vehicle. The officer asked McLendon to get out of the vehicle. After McLendon exited the vehicle, the officer saw a black handgun sitting on the driver’s seat and observed an open bag on the back seat of the vehicle. Upon searching the vehicle, the officer found a 9 mm semi-automatic handgun and ammunition, a small clear plastic bag of marijuana, and a larger bag containing 209.02 grams of methamphetamine.
McLendon pleaded guilty on May 23, 2017 to conspiracy and possession of a firearm in furtherance of drug trafficking. He was sentenced on August 31, 2017 to 216 months in prison and five years of supervised release.
The DEA and the Shreveport Police Department conducted the investigation. Assistant U.S. Attorney Tennille M. Gilreath prosecuted the case.
Blair County Man Charged with Wire Fraud and Tax EvasionRead the Press Release
PITTSBURGH, PA - A resident of Blair County, Pennsylvania, has been indicted by a federal grand jury in Pittsburgh on charges of tax evasion and wire fraud, United States Attorney Scott W. Brady announced today.
The 23-count indictment named Patrick S. LaMarsh as the sole defendant.
According to the indictment, LaMarsh defrauded TracFone and Walmart by selling fraudulently obtained Straight Talk airtime cards on Amazon.com.
The law provides for a total sentence of five years imprisonment for each count of conviction for tax evasion, and 20 years imprisonment for each count of conviction for wire fraud, a fine of $4,750,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the criminal history, if any, of the defendant.
Assistant United States Attorney Gregory C. Melucci is prosecuting this case on behalf of the government.
The Internal Revenue Service-Criminal Investigations and United States Secret Service conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Berkeley County man admits to sex offender registry violationRead the Press Release
MARTINSBURG, WEST VIRGINIA – Gregory Keith Parr, of Martinsburg, West Virginia, has admitted to a sex offender registration violation, United States Attorney Bill Powell announced.
Parr, age 61, pled guilty to one count of “Failure to Register.” Parr, who had previously been convicted of a sex offense in Michigan, admitted to traveling across state lines without updating his sex offender registration, as required by law, in December 2017 in Berkeley County.
Parr 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 Lara Omps-Botteicher is prosecuting the case on behalf of the government. The United States Marshals Service investigated.
U.S. Magistrate Judge Robert W. Trumble presided.
Attorney General Jeff Sessions Announces Results of J-Code’s First Law Enforcement Operation Targeting Opioid Trafficking on the DarknetRead the Press Release
Today, the Department of Justice, FBI and U.S. Postal Inspection Service (USPIS) announced the results of a four-day long, nationwide law enforcement operation, called Operation Disarray, which targeted vendors and buyers of opioids and cocaine on the Darknet. This operation was the first coordinated action by the new Joint Criminal Opioid Darknet Enforcement (J-CODE) Team.
These results were announced by Attorney General Jeff Sessions, FBI Director Christopher A. Wray and U.S. Postal Inspection Service Chief Postal Inspector Guy Cottrell.
“Synthetic opioids are responsible for nearly one-third of the unacceptable 64,000 drug overdoses in America in 2016,” said Attorney General Sessions. “Some of the deadliest drugs can be purchased with a few clicks of a button and ordered online. That’s why I ordered the creation of J-CODE—the Joint Criminal Opioid Darknet Enforcement team—back in January. J-CODE coordinates our efforts to stop online opioid sales, and it is already getting results. Today, we announce the first nationwide J-CODE operation, one that led to the arrest of alleged traffickers across America. I want to thank all of our law enforcement partners at the FBI, DEA, ATF, our Postal Inspectors, IRS-CI, NCIS, FinCEN and ICE-HSI who helped make this possible, and I want to thank President Trump for his strong support of our efforts. J-CODE is helping us keep deadly drugs out of this great country.”
“Our work to combat drug trafficking has taken us from coast to coast and to the darkest corners of the web. The opioid epidemic is a public health crisis, and those of us in law enforcement must be relentless in our efforts to disrupt this illicit activity,” said FBI Director Christopher Wray. “We thank our partners in this operation; through J-CODE, we will continue to work together to target the sale of opioids on the Darknet.”
“The Postal Inspection Service is dedicated to protecting the American public,” said Chief Postal Inspector Guy Cottrell. “One of the ways we fulfill this mission is by working tirelessly with other law enforcement agencies in operations just like this one to keep dangerous drugs out of the communities we serve.”
During the March 27 to 30 operation, FBI, USPIS, and local law enforcement made eight arrests related to Operation Disarray. Agents conducted more than 160 interviews nationwide of people who have bought or sold opioids and other drugs online. Leads from the investigation identified 19 overdose deaths of persons of interest. FBI, USPIS and the Internal Revenue Service Criminal Investigation (IRS-CI) also executed numerous search warrants, which resulted in the seizure of weapons, drugs, counterfeit currency, and computer equipment. During the operation, law enforcement agents distributed literature regarding the dangers of opioid abuse, as well as, offered support for those affected by the opioid epidemic. The investigation is ongoing.
The J-CODE Team is a new FBI initiative announced by Attorney General Sessions in January 2018, and is aimed at targeting drug trafficking, especially fentanyl and other opioids, on the Darknet. With this team, the FBI is bringing together agents, analysts, and professional staff with expertise in drugs, gangs, health care fraud, and more, and our federal, state, and local law enforcement partners from across the U.S. Government, to focus on disrupting the sale of drugs via the Darknet and dismantling criminal enterprises that facilitate this trafficking. Operation Disarray is the J-CODE’s first joint, nationwide coordinated operation.
Attorney General Sessions thanked our law enforcement partners on the J-CODE team, to include the FBI, USPIS, Department of Justice Criminal Division’s Computer Crime and Intellectual Property Section and the Organized Crime and Gang Section; Drug Enforcement Agency; Bureau of Alcohol, Tobacco, Firearms, and Explosives; Department of Defense; IRS-CI; U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); and Financial Crimes Enforcement Network (FinCEN) for bringing expertise, professionalism and a shared desire to combat this epidemic. Through continued collaboration and determination the successes J-CODE will continue to forge a positive difference and outcome.
Atlanta drug dealer charged under Operation SCOPE for distributing heroin that resulted in an overdose deathRead the Press Release
ATLANTA – Donquell Weddington has been indicted on federal charges of distributing heroin to an individual which resulted in serious injury and death, as well as three additional counts of distributing heroin and cocaine in 2017 and 2018. This case was presented as part of Operation SCOPE.
“Weddington’s alleged heroin distribution led to a drug overdose which resulted in a death in our community,” said U.S. Attorney Byung J. “BJay” Pak. “Operation SCOPE does not just apply to those who prescribe opioids, it also targets drug traffickers who allegedly distribute heroin, fentanyl, or opioids that cause death or serious injury to users. We have a zero tolerance for those who destroy lives through the distribution of drugs like heroin.”
“In this case, the death of a person addicted to heroin strikes at the core of this country’s opioid epidemic,” said Robert J. Murphy, the Special Agent in Charge of the DEA Atlanta Field Division. “Donquell Weddington allegedly provided the victim in this case with a deadly dose of heroin. The mission of DEA is unwavering--we combat drug traffickers by investigating and prosecuting those who criminally distribute drugs, which ultimately cause immeasurable damage and even death to those in our communities. This case is a perfect example of how the law enforcement community and the U.S. Attorney’s Office work together to remove such criminals from its streets.”
“The Georgia Bureau of Investigation is proud to partner with local, state, and federal agencies in battling the opioid/heroin epidemic,” said GBI Director Vernon Keenan. “This indictment serves as notice that drug dealers will be held accountable for the consequences of the dangerous drugs they sell.”
“We will not stand by and allow these criminals distributing drugs throughout our city to do so unchecked,” said Atlanta Police Chief Erika Shields. “The relationship we have with our local, state and federal partners is invaluable and with them, we will continue the fight against the distribution of dangerous drugs in our communities.”
According to U.S. Attorney Pak, the charges, and other information presented in court: On the morning of April 10, 2017, Donquell Weddington allegedly sold heroin to an individual after days of negotiating the deal by telephone. Later that day, the buyer suffered a drug overdose in the lobby of an office building in the Buckhead area of Atlanta, Georgia. Paramedics transported the person to Piedmont Hospital where the individual was treated for symptoms related to a heroin overdose.
The person was released from the hospital later that evening, and proceeded to Hartsfield-Jackson Atlanta International Airport intent on catching a flight to New York. Instead, the individual collapsed in the T-Gate Concourse of the airport and died the following morning from a heroin overdose.
Months later, Weddington allegedly sold heroin and cocaine on three separate occasions in the Northern District of Georgia.
Donquell Weddington, 24, of Atlanta, Georgia, will be arraigned at a later date. Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the DEA, the Georgia Bureau of Investigation, and the Atlanta Police Department.
Assistant U.S. Attorney Nicholas Hartigan is prosecuting the case.
The U.S. Attorney’s Office in Atlanta recommends parents and children learn about the dangers of drugs at the following web site: www.justthinktwice.gov.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
Another Massive Sentence Imposed for Pasadena Bank RobberyRead the Press Release
HOUSTON – A Houston man will be serving nearly 43 years in prison for the attempted robbery and robbery of the Shared Resources Credit Union and for using and carrying a firearm during commission of the crimes, announced U.S. Attorney Ryan K. Patrick. A federal jury deliberated for less than five hours before convicting Raynard Gray, 34 and Sonny Pervis, 28, March 23, 2017, on all counts as charged following a three-day-trial.
Today, U.S. District Judge Sim Lake handed Gray a total sentence of 510 months in federal prison – 150 months for the robberies in addition to five years for the first firearms charge and another 25 years for the second which must be served consecutively to each other and to the bank robbery sentences. Following completion of his more than 42-year prison term, he will serve five years of supervised release. In imposing the sentence, the court found that Gray planned, organized and recruited participants for the bank robbery and that he was the leader of this robbery crew which warranted the most prison time.
Pervis was previously sentence to a total of 485 months in federal prison. His sentence was also enhanced due to the reckless endangerment during flight. The judge found that following the robbery, Pervis aided and abetted the high speed chase and fired his weapon at a civilian in a nearby neighborhood.
A total of seven men met and planned the robbery of the credit union. At trial, the jury heard Gray was the leader of this robbery crew and acted as a lookout during the robberies, while Pervis was one of the men who entered the credit union and brandished and discharged a firearm.
They arrived at the bank first on Saturday, July 26, 2014, with the intention of committing the robbery. The jury heard that employees inside the bank observed the men with the firearms as they approached. However, the doors to the lobby were locked so the crew left, but returned two days later to complete the crime.
The men fled the scene after stealing the money on July 28. A civilian followed them in order to give police the vehicle information of the robbers, during which time Howard Glaze, 24, of Houston, and Pervis discharged their firearms in a neighborhood in his direction. The group then led officers on a high-speed chase from Pasadena to north Houston, where they abandoned their vehicle and fled on foot. Glaze was soon apprehended. The investigation later led to the discovery and arrest of the others.
During trial, the jury saw surveillance videos, photos and police dash camera footage of the high speed chase and heard testimony from 12 witnesses. They also heard from a sergeant with the Pasadena Police Department who collected cash, bank straps and clothing of the robbers from the abandoned vehicle. The officer was also able to lift a fingerprint off a trash bag found in that vehicle, which belonged to Pervis.
The defense did not dispute that the robberies occurred, but contended that Pervis and Gray were not involved. The jury was not convinced and convicted them on all charges.
Gray will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The remaining five co-defendants - Keith McGee, 27, Glaze, Kwhun Johnson, 25, Leroy Richardson, 37, and Christopher Braziel, 30, all of Houston, had pleaded prior to trial. McGee was ordered to serve a sentence of 140 months, while Richardson, Johnson and Glaze received respective sentences of 130, 60 and 130 months imprisonment. Braziel is set for sentencing June 14, 2018.
The FBI and police departments in Pasadena and Houston conducted the investigation. Assistant U.S. Attorneys Richard Hanes and Heather Winter are prosecuting the case.
5 Florida Men Indicted for Defrauding Xerox of $25 MillionRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051ROCHESTER, N.Y.- U.S. Attorney James P. Kennedy, Jr. announced today that the grand jury returned a 63-count superseding indictment against Robert Lee Fisher, David Haynes, Kyle Haynes, Jason Haynes and Bryan Day. The indictment charges the defendants with wire fraud, conspiracy to commit mail and wire fraud, and conspiracy to commit money laundering. The charges stemmed from a scheme to defraud Xerox Corporation of approximately $25 million. The charges each carry a maximum penalty of 20 years imprisonment and a $250,000 fine.
Assistant U.S. Attorney Richard A. Resnick, who is handling the case, stated that the defendants reside near Daytona Beach, Florida. Fisher’s company RBM Imaging was an authorized reseller of Xerox Corporation’s office equipment. The other defendants (the “Haynes Defendants”) own Haynes Brother Furniture in Daytona.
Xerox Corporation, which is located in, among other places, Webster, New York, sells and leases office equipment, including printers. Xerox sells or leases the office equipment directly to end-user customers or to authorized resellers, like Fisher, who then resell or lease the office equipment to end-user customers, like the Haynes Defendants. The office equipment requires toner and other products to operate. End-user customers order the toner for their printers from Xerox. Rather than pay Xerox up-front for the toner, the end-user customers pay Xerox based on the number of prints made with the toner. However, at all times, the toner belongs to Xerox until consumed by the end-user customers. At no time may the end-user customers sell the toner.
The indictment alleges that the Haynes Defendants set up a sham company, HDH Graphics to obtain approximately sixty-three Xerox printers from Fisher. Although HDH Graphics made few, if any, prints with the printers, the Haynes Defendants fraudulently represented to Xerox that HDH Graphics was making prints using much more toner than the industry average, which deceived Xerox into shipping approximately $25 million worth of toner to HDH Graphics. The Haynes Defendants then sold the fraudulently obtained toner for approximately $11 million to an individual in Miami, Florida. The Haynes Defendants and Fisher shared the profits from the fraudulent sale of the Xerox consumables.
The indictment further alleges that the defendants repeatedly misrepresented to Xerox that the Haynes Defendants were making millions of prints with the toner, even though most of the printers were never taken out of their boxes. The defendants also provided Xerox with false usage profiles from the printers and false print samples that made it appear that the Haynes Defendants were making millions of prints and using much more toner than the industry average for each print.The indictment further alleges that the Haynes Defendants made financial transactions to avoid having to pay federal income taxes on the fraudulent proceeds they received for selling the toner. For example, the Haynes Defendants transferred fraudulent funds to themselves under the false pretense that they were entitled to monthly reimbursements for travel and freight expenses that they purportedly paid and incurred on behalf of HDH Graphics. The Haynes Defendants also paid one of Fisher’s sham companies to assist Fisher in avoiding paying federal income taxes on the fraudulent proceeds he received.
“The fraudulent scheme alleged to have been devised and used by the defendants essentially allowed them to sell property which did not belong to them,” stated United States Attorney James P. Kennedy, Jr. “While the program was designed to help Xerox customers by only having them pay for the materials they actually used, the defendants converted Xerox’s goodwill into their own windfall. Such dishonest business practices—the cost of which is often borne by the consumer—will not be tolerated.”
“These defendants allegedly engaged in a $25 million multi-year fraud scheme,” said Kevin Kelly, Special Agent in Charge of U.S. Immigration & Customs Enforcement, Homeland Security Investigations. “The reality is losses like these often get passed on to the consumer in the forms of higher prices, which is why we must hold the operators of these schemes accountable. HSI special agents dedicated to uncovering financial fraud will continue to aggressively investigate those who seek to blatantly disregard the law for their own financial gain.”
The indictment also seeks forfeiture of millions of dollars in funds and assets that the government has seized from the defendants.
The charges were the result of an investigation by Immigration and Customs Enforcement, Homeland Security Investigation, Buffalo Office, under the direction of Special Agent-in-Charge Kevin Kelly, and the Internal Revenue Service, Criminal Investigation Division, under the direction of James Robnett, Special Agent-in-Charge, New York Field Office .
The defendants will be in Rochester on April 4, 2018, at 2:00 p.m. for their initial appearances before Magistrate Judge Jonathan W. Feldman.
2 April 2018
“King of Death” Supplier Sentenced to 37 YearsRead the Press Release
NORFOLK, Va. – A New Jersey man was sentenced today to 37 years in prison for supplying a Chesapeake drug dealer with heroin and fentanyl known as “King of Death.”
According to court documents, Clark supplied local ringleader, Erskine Dawson, Jr., with heroin and fentanyl from September to December 2016 while co-supplier, Kenneth Stuart, aka “Bones,” aka “Brutal,” was incarcerated on state charges. Clark concealed the narcotics in stuffed animals and trafficked them from New Jersey to Virginia where he would stay for days at a time to oversee Dawson’s operation, which was based out of a Studios 4 Less motel in Virginia Beach. Clark supplied Dawson with thousands of wax baggies containing heroin and fentanyl stamped with labels like “King of Death,” “Last Call,” “Mad Max,” “Bentley,” “No Evil,” “Black Dynamite,” “Superman,” “Tango Cash,” “Moneybag,” “Tower of Power,” and “Steph Curry.”
On Sept. 7, 2016, H.D. consumed fentanyl supplied by Dawson via Clark and suffered a fatal overdose. On Nov. 14, 2016, G.M. consumed heroin supplied by Dawson via Clark and suffered a fatal overdose. On Dec. 8, 2016, the DEA in partnership with officers from the Virginia Beach and Chesapeake police departments executed search warrants on motels in Virginia Beach, Chesapeake, and Norfolk, made arrests, and seized guns and over 1,800 wax baggies of heroin and fentanyl. From September to December 2016 over $70,000 cash was deposited by members of this conspiracy into a Wells Fargo account controlled by Clark.
Seven of the eight co-conspirators have been sentenced. Clark’s co-defendant, Kenneth Stuart, faces a mandatory term of life imprisonment when he is sentenced on April 24.
Name, Age
Hometown
Sentencing Date
Sentence
Rashad Clark, 38
Elizabethport, New Jersey
April 2
444 months (37 years)
Erskine Dawson, Jr., 33
Chesapeake
Nov. 1, 2017
432 months (36 years)
Christopher Boone, 31
Chesapeake
Nov. 16, 2017
186 months (15 ½ years)
Thomas Jennings, 33
Virginia Beach
Sept. 25, 2017
180 months (15 years)
David Thomas, 33
Chesapeake
Oct. 18, 2017
51 months (4 ¼ years)
Frank Harris, 23
Chesapeake
January 11
78 months (6 ½ years)
Carolyn Freeman, 28
Newark, NJ
March 29
96 months (8 years)
Tracy Doherty-McCormick, Acting U.S. Attorney for the Eastern District of Virginia, Mark R. Herring, Attorney General of Virginia, Karl C. Colder, Special Agent in Charge for the Drug Enforcement Administration’s (DEA) Washington Field Division, James A. Cervera, Chief of Virginia Beach Police, and Kelvin L. Wright, Chief of Chesapeake Police, made the announcement after sentencing by U.S. District Judge Raymond A. Jackson. Special Assistant U.S. Attorney John F. Butler and Assistant U.S. Attorneys Andrew C. Bosse, Daniel T. Young, and William D. Muhr 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. 2:17-cr-61 and 2:17-cr-92.
York Man Admits to Distributing Child PornographyRead the Press Release
Columbia, South Carolina ---- United States Attorney Beth Drake stated that Gordon Bigelow, age 39, of York, South Carolina, entered a guilty plea in federal court in Columbia, to distributing child pornography images that had traveled in interstate/foreign commerce by computer, a violation of 18 U.S.C. § 2252A. United States District Judge Cameron McGowan Currie, accepted the guilty plea and will impose sentence after she has reviewed the presentence report, which will be prepared by the U.S. Probation Office.
Evidence presented at the change of plea hearing established that ICE - Homeland Security Investigations agents investigated an individual in North Carolina who was trading child pornography on the internet and looking for “playmates“ with minor girls in North Carolina, Virginia, and South Carolina. An ICE - Homeland Security Investigations agent contacted the individual in North Carolina, posing as an individual offering a 13-year-old child as a “playmate.” The individual from North Carolina was arrested when he showed up for a meeting with the undercover agent. A search of the North Carolina’s individual’s electronic equipment revealed that Bigelow was one of the people with whom he had been trading child pornography. A search warrant was executed at Bigelow’s residence and child pornography was found as well as evidence that Bigelow was trading child pornography on the internet.
Ms. Drake stated the maximum penalty for distributing child pornography is imprisonment for not less than 5 nor more than 20 years plus Supervised Release for from 5 years to life and/or a fine of $250,000. The case was investigated by agents of the ICE - Homeland Security Investigations. Assistant United States Attorney William E. Day, II, of the Columbia office is prosecuting the case.
This case was brought 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, please visit www.projectsafechildhood.gov.
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Walton, New York Creamery Subject of Permanent InjunctionRead the Press Release
SYRACUSE, NEW YORK - A federal court permanently enjoined a Walton, New York, creamery and its owner from manufacturing and distributing adulterated food, Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division and United States Attorney Grant C. Jaquith announced today.
In a complaint filed March 19 at the request of the U.S. Food and Drug Administration (FDA), the United States alleged that Vulto Creamery LLC and its owner, Johannes H. Vulto, violated the Federal Food, Drug and Cosmetic Act by manufacturing and distributing ready-to-eat cheeses contaminated with the bacterium Listeria monocytogenes (L. mono). According to the complaint, a 2017 investigation by FDA and the Centers for Disease Control and Prevention (CDC) determined Vulto Creamery cheese was the source of a multistate listeriosis outbreak that sickened at least eight people, two of whom died. The defendants agreed to be bound by a consent decree filed with the complaint in U.S. District Court for the Northern District of New York.
“L. mono is a serious health threat that can prove fatal,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Consumers should be able to trust that the food they buy is safe, and we will continue working with FDA to take action against manufacturers that employ substandard practices.”
“The presence of this dangerous bacteria at a cheese manufacturing facility in Upstate New York is of grave concern,” said U.S. Attorney Grant C. Jaquith for the Northern District of New York. “We will continue to use all available tools to ensure that our food supply is safe and violations of laws protecting public heath are addressed.”
The complaint alleged that the defendants’ cheeses were prepared, packed or held under insanitary conditions. According to the complaint, company records revealed positive tests for a type of Listeria in the Vulto facility, but the defendants never attempted to identify the species of Listeria or its source. The complaint alleged the defendants also failed to conduct microbial testing of finished cheese products despite finding indications of Listeria on food contact surfaces. Vulto Creamery used raw, or unpasteurized, milk to make its ready-to-eat cheese.
The consent decree entered by the court permanently enjoins the defendants from violating the FDCA. Under the order, the defendants may not manufacture or distribute food unless they comply with specific remedial measures set forth in the decree. Among other requirements, the defendants must hire a qualified independent expert to develop an effective sanitation control program to adequately control for the risk of L. mono. Before manufacturing or distributing any food, defendants must first receive FDA’s written determination that their manufacturing practices comply with the law.
This matter was handled by Trial Attorney Natalie Sanders of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Michael Gadarian of the U.S. Attorney’s Office for the Northern District of New York, with the assistance of Associate Chief Counsel for Enforcement Leslie Cohen of the FDA’s Office of General Counsel, Department of Health and Human Services.
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 Northern District of New York, visit its website at https://www.justice.gov/usao-ndny.
Utah Construction Contractors Reach Civil Settlement in False Claims Act CaseRead the Press Release
SALT LAKE CITY – Big-D Construction Corp. and Creative Times Day School, Inc., have agreed to pay the federal government a combined amount of $1,062,900 and $150,000 respectively to resolve allegations that they violated the terms of a Small Business Administration (SBA) program for small and disadvantaged businesses. Big-D Construction Corp. and Creative Times Day School, Inc. are Utah corporations that have performed construction projects for federal agencies under the terms of various government contracts.
U.S. Attorney for Utah John W. Huber and SBA Acting Inspector General Hannibal “Mike” Ware announced the settlement Monday afternoon. The settlement with Big D was the result of a coordinated effort among the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the District of Utah, the SBA Office of Inspector General, the SBA Office of General Counsel and the U.S. Army Criminal Investigation Commands Major Procurement Fraud Unit.
The United States contends that Big-D, a large construction company, entered into a leasing agreement with Creative Times, a small business participant in the SBA programs, under which Big-D provided personnel who performed or substantially performed the work on the contracts. The United States contends that the leasing agreement was improper and caused Creative Times to fail to meet the SBA’s regulatory requirement that the small businesses perform a certain percentage of the work under the contracts, thereby causing the small businesses to submit false or fraudulent claims for payments to the United States. The settlements involve a number of different government contracts in Kansas, Colorado, New Mexico, and Utah between July 2009 and June 2013.
“These programs exist to help small business, often minority owned, to receive federal contracts. Those who apply for them must be honest and forthright in their dealings with the United States,” U.S. Attorney John W. Huber said today. “In our experience, these cases are on the rise in Utah. We will continue to partner with the Department of Justice and our agency partners to investigate these cases,” Huber said.
“Concealing the true nature of a purported small business contract participation will be met with significant penalties,” said SBA Acting Inspector General Hannibal “Mike” Ware. “SBA OIG will continue to aggressively pursue parties that undermine Americans’ confidence in federal contracting programs designed to assist small businesses. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication in enforcing compliance in SBA’s programs.”
The qui tam complaint was filed in the District of Utah and is captioned United States ex rel, Bart Anderson v. Big D Construction Corp. et al., No. 1:11-cv-00176. The settlement resolved allegations of non-compliance. Neither Big-D nor Creative Times Day School, Inc. admit liability.