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Thursday 9 November 2017
Cleveland man indicted for child pornography offensesRead the Press Release
A Cleveland man was charged with child pornography crimes, said U.S Attorney Justin E. Herdman and FBI Special Agent in Charge Stephen D. Anthiony.
Anthony Gore, 24, was indicted on one count of receipt of visual depictions of real minors engaged in sexually explicit conduct.
Gore received numbers computer files with contained visual depictions of real minors engaged in sexually explicit conduct. This took place between February and April 2017, according to the indictment.
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 violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
This case is being prosecuted by Assistant U.S Attorney Carol M. Skutnik following an investigation by Task Force Officer Joanna Nagy Unger, with the FBI Violent Crime/Child Exploitation Task Force.
An indictment is only 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.
Cincinnati Man Sentenced for Promoting Child PornographyRead the Press Release
CINCINNATI –James Denney, 30, of Cincinnati, was sentenced in U.S. District Court to 36 months in prison for aiding and abetting another individual in accessing child pornography.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, and Steve Francis, Special Agent in Charge, Homeland Security Investigations (HSI), announced the sentence handed down today by U.S. District Judge Susan J. Dlott.
Denney was charged by indictment in January for knowingly promoting a URL on the Dark Web containing child pornography.
According to investigators, Denney provided an undercover agent with web links to an online board featuring dozens of links to child pornography chat rooms, video/image board sites, as well as “community” support groups and online security advice for child pornographers.
Denney pleaded guilty in May. According to the Statement of Facts filed in support of his plea agreement, Denney used the Kik Messenger app to provide the undercover officer guidance on how to download and use a TOR web browser for the purpose of concealing online activities from law enforcement and others.
While communicating with the officer, Denney personally recommended sections of the online board including “Hurt Core” and “Toddler Videos.” Such images were of – among other things – toddlers and pre-teens being bound and raped by adults who represented themselves as parents of those children.
Denney was also sentenced today to eight years of supervised release, and he must also register as a sex offender and comply with state and federal laws regarding sex offenders.
U.S. Attorney Glassman commended the investigation of this case by HSI, and Assistant United States Attorney Karl P. Kadon, who is prosecuting the case.
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Church Point woman pleads guilty to drug, firearm chargesRead the Press Release
LAFAYETTE, La. – Acting U.S. Attorney Alexander C. Van Hook announced that a Church Point woman pleaded guilty Wednesday to methamphetamine and cocaine distribution in Acadia and Lafayette parishes and firearm possession.
Courtney Lynn Daigle, 41, of Church Point, La., pleaded guilty before U.S. Magistrate Judge Patrick Hanna to one count of conspiracy to distribute and possess with intent to distribute at least 500 grams of methamphetamine and 5 kilograms of cocaine, and one count of possession of a firearm and ammunition by a prohibited person. The plea will become final when accepted by U.S. District Judge Dee D. Drell. According to the guilty plea, law enforcement agents identified Daigle as a supplier of methamphetamine while investigating drug distribution in Acadia and Lafayette parishes. Law enforcement executed a federal search warrant on February 3, 2017 at her residence in Church Point and a state search warrant at a related residence in Rayne, La. As a result, law enforcement recovered, a Smith and Wesson SD9VE 9 mm handgun, 60 rounds of 9 mm ammunition, and approximately 679.1 grams of methamphetamine, 873.1 grams of cocaine, 12.9 grams of cocaine base, 589. 4 grams of marijuana, 82 dosage units of LSD, 116 dosage units of alprazolam, 1.5 dosage units of hydrocodone, one 10 milliliter vial of testosterone cypionate, and one 10 milliliter vial of testosterone enanthate. Officers also recovered $5,000, digital scales, vacuum bags/sealer and narcotics packaging.
Daigle faces 10 years to life in prison, at least five years of supervised release, and a $10 million fine for the controlled substances count. She also faces up to 10 years in prison, three years of supervised release and a $250,000 fine for the firearms count. The court set sentencing for February 16, 2018.
The DEA, ATF, Louisiana State Police, Lafayette Metro Narcotics Task Force, Acadia Parish Sheriff’s Office and Eunice Police Department conducted the investigation. Assistant U.S. Attorney Daniel J. McCoy is prosecuting the case.
Burleson man sentenced on child pornography chargesRead the Press Release
DALLAS — Daryl Glenn Pawlak, 39, of Burleson, Texas, was sentenced this morning by U.S. District Judge Sidney A. Fitzwater to 210 months in federal prison, followed by a 15-year term of supervised release, for child pornography offenses. The announcement was made today by U.S. Attorney John Parker of the Northern District of Texas.
A federal jury convicted Pawlak of one count of receipt of child pornography and one count of access with intent to view material containing child pornography involving a prepubescent minor. Following the verdict, Judge Fitzwater remanded Pawlak into custody.
“Contrary to their innocent-sounding names, websites like Playpen facilitate the sexual victimization of children with ruthless efficiency,” said U.S. Attorney Parker. “Posts on these websites are frequently categorized within forums and sub-forums according to the child’s age, gender, and type of sexual abuse inflicted upon them. Targeting these websites and those who run and use them is a critical part of protecting and rescuing these children.”
This case arose from an FBI undercover operation involving an illegal member-only hidden-services website called Playpen. Playpen was dedicated to the advertisement and distribution of child pornography.
Pawlak was one of the individuals caught as a result of the FBI’s operation when he logged onto the website in March 2015 and clicked on a post, which caused a network investigative technique to be launched from the site onto his computer. Pawlak registered with the Playpen site in September 2014 and had spent approximately 14.6 hours logged into the website prior to the FBI’s two-week operation.
The FBI spoke with Pawlak as a part of its investigation. Pawlak confessed that he had been using his work computers to look at child pornography. He told the FBI that he began looking at child pornography sometime in 2012, he used the Tor network to find child pornography, and estimated that he had spent, on average, approximately half an hour a week seeking out child pornography. Pawlak told the FBI that he preferred child pornography that depicted girls between the ages of 7-11 years old.
As a result of the FBI’s operation, at least 350 U.S.-based individuals have been prosecuted nationwide. At least 55 American children who were subjected to sexual abuse have been successfully identified or rescued, including at least four in the North Texas area. In addition, internationally, at least 296 sexually abused children internationally have been successfully identified or rescued as a result of the operation. This case was prosecuted as a part of the U.S. Department of Justice’s Project Safe Childhood Initiative, which is aimed at protecting children from sexual abuse and exploitation. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
The FBI investigated this case. Assistant U.S. Attorneys Jamie L. Hoxie and Paul Yanowitch prosecuted.
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Bucks County Man Sentenced to 18 Months in Federal Prison for Filing False Tax Returns and Structuring Cash Deposits of Marijuana Sales ProceedsRead the Press Release
Bradley Mark Cohen, 61, of Ottsville, PA, with sentenced today to 18 months in prison, following his July 12, 2017 plea of guilty to four counts of filing false tax returns and three counts of structuring cash deposits to avoid a reporting requirement, announced Acting United States Attorney Louis D. Lappen. Cohen was also ordered to pay restitution of over $84,000 in back taxes to the IRS.
In connection with his guilty plea, Cohen admitted that between 2010 and 2014, he failed to report over $950,000 on his tax returns that he earned from his companies, Green Revolution, Inc. and Plug-In Manufacturing, which were involved in the business of selling “green” energy products, such as capacitors, to commercial and residential customers. Cohen admitted that instead of declaring this money as income, he used it to pay the majority of his personal living expenses, including his home mortgage, personal credit cards, golf club membership, and home improvements, and falsely treated these payments as business expenses that he falsely deducted from his income.
Cohen also admitted that between January 1, 2014, and September 18, 2015, he received cash from the illegal sale of marijuana that he had shipped to him from California, and that structured the deposit of over $143,000 of marijuana proceeds into his bank accounts in amounts less than $10,000 each deposit, in order to evade the banks’ currency transaction reporting requirements, of which Cohen was aware.
The case was investigated by the Internal Revenue Service, Criminal Investigation Division, and the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Michael S. Lowe.
Beresford Man Sentenced on Possession of Child Pornography ChargeRead the Press Release
United States Attorney Randolph J. Seiler announced that a Beresford, South Dakota, man convicted of Possession of Child Pornography was sentenced on Wednesday, November 8, 2017, by U.S. District Judge Karen E. Schrier.
Michael Jerry Harrison, age 28, was sentenced to 63 months in custody. He was also ordered to pay $100 to the Federal Crime Victims Fund.
Harrison was indicted for distribution and receipt of child pornography by a federal grand jury on May 10, 2016. He pled guilty on March 31, 2017.
Between May 7 and July 15, 2015, Harrison used his cell phone to possess images and videos of child pornography. Using the app “KIK Messenger” Harrison downloaded files of child pornography into his Dropbox account on the internet. Some of the images included prepubescent minors. Authorities discovered Harrison’s involvement after they apprehended another individual in Arizona that Harrison had shared files with on KIK Messenger.
This case was investigated by the Department of Homeland Security and the South Dakota Division of Criminal Investigation. Assistant U.S. Attorney Jeffrey C. Clapper prosecuted the case.
Michael Jerry Harrison was immediately turned over to the custody of the U.S. Marshals Service.
Baltimore Man Pleads Guilty to Robbery with Member of the Baltimore Police Gun Trace Task ForceRead the Press Release
FOR IMMEDIATE RELEASE Contact ELIZABETH MORSE
www.justice.gov/usao/md at (410) 209-4885
Baltimore, Maryland – David Kendall Rahim, age 41, of Baltimore, Maryland, pleaded guilty today to one count of robbery and one count of brandishing a firearm in furtherance of a crime of violence stemming from a 2014 robbery of a Baltimore city couple.
The guilty plea was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning and Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office.
Rahim’s cousin, Detective Jemell Lamar Rayam, a member of the Gun Trace Task Force (GTTF,) a division of the Baltimore Police Department, and Thomas Robert Finnegan, age 38, of Easton, Pennsylvania, were also charged in the robbery.
According to his plea agreement, on June 27, 2014, police officers with the Gun Trace Task Force, including Detective Rayam, executed a search and seizure warrant at a store that sold birdseed. No illegal contraband or firearms were found at the location. The storeowners, a married couple, had $20,000 in cash at the store that they intended to use to pay off tax liabilities they owed on two homes.
After the search, Rayam told Rahim and Finnegan about the money and agreed to rob the couple at their residence later that evening. Using a law enforcement database, the GTTF detective located the home address of the victims. The defendants surveilled the house then Rahim and Finnegan were given tactical gear by Detective Rayam to impersonate the police when conducting the home invasion. Rayam remained outside in the vehicle so that he could intercept any police officers who responded to the home invasion by telling them that he was a BPD officer. Finnegan and Rahim entered the residence and robbed the victims at gunpoint of the $20,000. During the robbery, Finnegan pointed a gun at one of the victims and said to “sit still and be patient,” while Rahim looked on. Rahim, Finnegan, and Rayam split the proceeds.
Rayam has also pleaded guilty. Sentencing dates for both defendants have not yet been set.
Acting United States Attorney Stephen M. Schenning commended the FBI for its work in the investigation. Mr. Schenning thanked Assistant U.S. Attorneys Leo J. Wise and Derek E. Hines, who are prosecuting this Organized Crime Drug Enforcement Task Force case.
Baldwin County Man Receives 46 Month Sentence for Possession of a Firearm After Felony ConvictionRead the Press Release
The United States Attorney, Richard W. Moore, announces that Clifford Guerrero, a 39 year old, resident of Daphne, Alabama was sentenced today to 46 months incarceration followed by three years of supervised release.
On March 22, 2017, Fairhope, Alabama police officers conducted a traffic stop of Guerrero based on reckless driving. Just before Guerrero pulled over pursuant to the blue lights flashing, he threw a small quantity of methamphetamine out of the window of his vehicle. Upon stopping, Guerrero immediately exited his vehicle extremely agitated, yelling unintelligibly and waving his arms. He would not obey officer commands to “stop,” “relax,” “be still,” “close the door,” “calm down,” etc. Guerrero appeared to be attempting to reach into the vehicle even with the officer commanding him to “be still.” Due to his behavior, the officer drew his weapon and called for back-up. Within minutes, back-up arrived. Guerrero was placed in handcuffs for officer safety and was asked if any guns were in the vehicle. Guerrero responded, “I think there might be a gun in the car.” Officers then went to the vehicle, searched for and seized a Glock GMBH, 9mm pistol. A firearm holster was also seized from the floorboard of the front seat.
The Federal Bureau of Investigation along with the Fairhope, Alabama Police Department investigated the case and presented it to the United States Attorney’s Office for prosecution. The prosecutor assigned to the case was Assistant United States Attorney, Gina S. Vann.
Arizona Man to Serve 11 Years in Prison, 30 Years Supervision for Possessing, Transporting Child Pornography Across State LinesRead the Press Release
Rock Island, Ill. – Joaquin Louis Cook, 36, of Mesa, Ariz., has been sentenced to 136 months (11 years, 4 months) in federal prison for transporting and possessing child pornography. Cook appeared yesterday before U.S. District Judge Sara Darrow in Rock Island. Upon release from prison, Judge Darrow ordered that Cook remain on supervised release for a 30-year term.
On June 14, 2017, Cook entered pleas of guilty for transporting printed child pornography images across state lines in September 2016, and for possessing additional images on Nov. 24, 2016. According to court documents, Cook traveled from Arizona to Illinois, and was living in Aledo, Ill., when he was arrested and charged on Feb. 2, 2017.
The case was prosecuted by Assistant U.S. Attorney Meredith DeCarlo. The charges were investigated by the U.S. Secret Service, the Moline Police Department, the Aledo Police Department, and the Mercer County Sheriff’s Office.
Arizona Man Charged with Coercing a Minor to have Sex, Travelling for Sex with a Minor and Receipt and Possession of Child PornographyRead the Press Release
PITTSBURGH - A former Arizona resident has been indicted by a federal grand jury in Pittsburgh, Pennsylvania, on charges of coercion and enticement of a minor to engage in illegal sexual activity, travel with intent to engage in illicit sexual conduct, and receipt and possession of material depicting the sexual exploitation of a minor, Acting United States Attorney Soo C. Song announced today.
The five-count indictment, returned on November 8, named Alastair Lee Stewart, age 25, of Van Buren, Arkansas, as the sole defendant.
According to the indictment, from on or about November 15, 2016 to March 26, 2017, Stewart used facilities and means of interstate and foreign commerce, specifically the internet and a cellular phone, to knowingly persuade, induce, entice, and coerce minor, Minor A, to engage in sexual activity. Also, from March 15, 2017 to March 26, 2017, Stewart knowingly travelled in interstate commerce for the purpose of engaging in illicit sexual conduct with another person, Minor A. Further, on March 5, 2017 and March 22, 2017, Stewart knowingly received images containing material depicting the sexual exploitation of a minor. The indictment further alleges that on March 24, 2017, Stewart possessed images in computer graphic files, the production of which involved the use of a minor engaging in sexually explicit conduct.
The law provides for a maximum sentence of life imprisonment, a maximum term of supervised release of life, and a fine of $1,250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Jessica Lieber Smolar is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation and Pennsylvania State Police 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.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals, who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Alabama Resident Convicted in Stolen Identity Refund Fraud Schemes That Sought $26 MillionRead the Press Release
A Phenix City, Alabama resident was convicted today by a federal jury sitting in Montgomery, Alabama in two stolen identity refund fraud schemes, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Louis V. Franklin, Sr. for the Middle District of Alabama.
William Anthony Gosha III, a/k/a Boo Boo, was convicted of one count of conspiracy, 22 counts of mail fraud, three counts of wire fraud, and 25 counts of aggravated identity theft.
According to the evidence presented at trial, between November 2010 and December 2013, Gosha ran a large-scale identity theft ring with his co-conspirators, Tracy Mitchell, Keshia Lanier, and Tamika Floyd, who were all previously convicted and sentenced to prison. Together they filed over 8,800 tax returns with the Internal Revenue Service (IRS) that sought more than $22 million in fraudulent refunds of which the IRS paid out approximately $9 million.
In November 2010, Gosha stole IDs of inmates from the Alabama Department of Corrections and provided the IDs to Lanier who used the information to seek fraudulent tax refunds. Gosha and Lanier agreed to split the proceeds. Gosha also stole employee records from a company previously located in Columbus, Georgia. In 2012, Lanier needed an additional source of stolen IDs and approached Floyd, who worked at two Alabama state agencies in Opelika, Alabama: the Department of Public Health and the Department of Human Resources. In both positions, Floyd had access to the personal identifying information of individuals, including teenagers. Lanier requested that Floyd primarily provide her with identities that belonged to sixteen and seventeen year-olds. Floyd agreed and provided thousands of names to Lanier and others at Lanier’s direction.
After receiving the additional stolen IDs, Gosha recruited Mitchell and her family to help file the fraudulent returns. Mitchell worked at a hospital located at Fort Benning, Georgia, where she had access to the personal identification information of military personnel, including soldiers who were deployed to Afghanistan. She stole soldiers’ IDs and used their information to file fraudulent returns.
In order to electronically file the fraudulent returns, Gosha, Lanier, and their co-conspirators applied for several Electronic Filing Identification Numbers (EFIN) with the IRS in the names of sham tax preparation businesses. Gosha, Lanier, and their co-conspirators then used these EFINs to file the returns and obtain tax refund related bank products from various financial institutions, which provided them with blank check stock. Gosha and his co-conspirators initially printed out the fraudulently obtained refund checks using the blank check stock.
However, the financial institutions halted Gosha’s and his co-conspirators’ ability to print checks, and as a result they recruited U.S. Postal employees who provided Gosha and others with addresses on their routes to which the fraudulent refund checks could be mailed. In exchange for cash, these postal employees collected the refund checks and provided them to Gosha, Lanier, Mitchell and others. Gosha also directed tax refunds to prepaid debit cards and had them sent to addresses he controlled. Gosha used the prepaid cards to withdraw the refunds.
In addition, between January 2010 and December 2013, Gosha participated in a separate stolen identity refund fraud scheme with Pamela Smith and others, in which Gosha sold the IDs that he had stolen from the Alabama Department of Corrections to Smith and others. Smith and others used the IDs to file returns that sought approximately $4.8 million in fraudulent refunds of which the IRS paid out approximately $1.85 million. Smith was previously convicted and sentenced to prison.
Chief U.S. District Court Judge Watkins did not set a date for sentencing. Gosha faces a statutory maximum sentence of 10 years in prison for the conspiracy to file false claims, a statutory maximum sentence of 20 years in prison for each count of wire and mail fraud and a mandatory minimum sentence of two years in prison for the aggravated identity theft. The defendant also faces a period of supervised release, restitution, forfeiture and monetary penalties. He was remanded into custody.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Franklin commended special agents of Internal Revenue Service Criminal Investigation and the U.S. Postal Inspection Service, who conducted the investigation, and Trial Attorneys Michael C. Boteler and Gregory P. Bailey of the Tax Division and Assistant U.S. Attorney Jonathan Ross of the Middle District of Alabama, who are prosecuting the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Akron women indicted for defrauding Department of Education out of $1.8 million through financial aid schemeRead the Press Release
A 23-count indictment was filed charging three Akron women with defrauding the U.S. Department of Education out of $1.8 million through a scheme where they enrolled inmates and people whose identities they stole in an Arizona community college in order to obtain financial aid, law enforcement officials said.
Janice M. Shufford, 53, Bridgid D. Sommerville, 47, and Christine M. Robinson, 38, are charged with conspiracy to commit wire fraud and multiple counts of wire fraud and aggravated identity theft.
“These defendants lied on applications or used stolen identities to steal money that otherwise would have gone to deserving students,” U.S. Attorney Justin Herdman said. “Our office will continue to prosecute those who defraud the federal government.”
“These individuals engaged in fraud that resulted in over a million dollars lining their greedy pockets and not going to deserving, eligible students in need,” said FBI Special Agent in Charge Stephen D. Anthony. “The FBI will continue efforts to bring self-serving fraudsters to justice."
Financial aid is sometimes provided to eligible students by the U.S. Department of Education to help pay for college. This money can include living expenses, beyond the cost of tuition, that is sometimes disbursed via bank debit cards. In this case, those refunds were sent to addresses or bank accounts controlled by the defendants, according to the indictment.
The defendants conspired to obtain federal student financial aid money to which the recipients were neither eligible nor entitled. For example, people who are incarcerated, or have not received a high school diploma or GED are not entitled to receive federal financial aid, according to the indictment.
The defendants fraudulently enrolled hundreds of people at Maricopa Community College in Arizona between 2011 and 2015, according to the indictment.
As a result of the conspiracy, the Department of Education was defrauded and sustained a total loss of at least $1,826,064, according to the indictment.
If convicted, the defendants’ sentences will be determined by the Court after review of factors unique to this case, including the defendants’ prior criminal record, if any, the defendants’ roles in the offense, and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The case is being prosecuted by Assistant U.S. Attorney Brian McDonough following an investigation by Special Agents of the Department of Education, Office of Inspector General, and the Federal Bureau of Investigation.
An indictment is only 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.
Acting Manhattan U.S. Attorney Announces Initial Distribution of More Than $770 Million to Victims of Madoff Ponzi SchemeRead the Press Release
Rod J. Rosenstein, the Deputy Attorney General, Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), announced today that the Madoff Victim Fund established by the Department of Justice began its initial distribution of $772.5 million in funds forfeited to the United States Government in connection with the Bernard L. Madoff Investment Securities LLC (“BLMIS”) fraud scheme. These funds will be sent to more than 24,000 victims worldwide, the first in a series of payments from the Madoff Victim Fund that will return to victims more than $4 billion in assets recovered as compensation for losses suffered by the collapse of BLMIS, following the largest fraud in history. Another $5 billion in assets recovered by the U.S. Attorney’s Office are being separately paid to Madoff victims through the BLMIS Customer Fund administered by the Securities Investor Protection Act Trustee.
Deputy Attorney General Rod J. Rosenstein said: “Thanks to civil asset forfeiture, the Department of Justice is announcing today the record-setting distribution of restitution to victims of Bernard Madoff’s notorious investment fraud scheme. We have recovered billions of dollars from third parties – not Mr. Madoff – and are now returning that money to tens of thousands of victims. This is the largest restoration of forfeited property in history.”
Acting Manhattan U.S. Attorney Joon H. Kim said: “Bernie Madoff committed one of history’s largest and most devastating frauds. This Office not only prosecuted Madoff himself and others who helped perpetrate his fraud, but has remained committed to recovering money for his victims. To date, this Office has recovered more than $9 billion for the innocent victims of Madoff’s fraud, and today’s distribution of $770 million, the single largest distribution of forfeited funds in the Department’s history, is part of our ongoing commitment to not only prosecute criminals but also find relief for victims.”
FBI Assistant Director William F. Sweeney Jr. said: “No amount of money in the world could ever reverse the catastrophic effects Madoff’s historic Ponzi scheme had on individuals and businesses alike. But now, nearly a decade after this crime was exposed, it is our hope that victims will finally be able to see the light at the end of a long, dark tunnel.”
Since the early 1970s, BERNARD L. MADOFF (“MADOFF”) used his position as Chairman of BLMIS, the investment advisory business he founded, to steal billions from his clients. On March 12, 2009, MADOFF pled guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle. On June 29, 2009, United States District Judge Denny Chin sentenced MADOFF to 150 years in prison for running the largest fraudulent scheme in history. Judge Chin ordered MADOFF to forfeit $170,799,000,000 as part of MADOFF’s sentence.
The Madoff Victim Fund is funded through recoveries by the U.S. Attorney’s Office in various criminal and civil forfeiture actions, and is overseen by Richard Breeden, the former Chairman of the United States Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings.
Of the approximately $4.05 billion that will be made available to victims through the Madoff Victim Fund, approximately $2.2 billion was collected as part of the civil forfeiture recovery from the estate of deceased MADOFF investor Jeffry Picower. An additional $1.7 billion was collected as part of a Deferred Prosecution Agreement with JPMorgan Chase Bank N.A. for MADOFF-related Bank Secrecy Act violations. Additional funds were collected through criminal and civil forfeiture actions against MADOFF and his co-conspirators, and certain MADOFF investors.
Mr. Kim praised the work of the FBI and the Madoff Victim Fund, and thanked the Money Laundering and Asset Recovery Section of the Department of Justice’s Criminal Division for their assistance.
For more information about the Madoff Victim Fund, compensation to victims of BLMIS, eligibility criteria, and payment information, please visit www.madoffvictimfund.com.
The case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit. Assistant United States Attorneys Jonathan Cohen, Louis A. Pellegrino, and Niketh Velamoor are in charge of the case.
Wednesday 8 November 2017
United States Attorney Announces Indictment for Heroin Distribution ConspiracyRead the Press Release
TULSA, Okla.— R. Trent Shores, United States Attorney for the Northern District of Oklahoma, announced that the Grand Jury handed down a “True Bill” and issued an Indictment against five defendants, charging them with eight counts to include heroin conspiracy, possession of heroin with intent to distribute and distribution of heroin. The defendants charged are: Martin Estaban-Flores, a/k/a “Martin Esteban Flores-Gamez”, age 27; Wilber Ramirez, a/k/a “Carlos Gonzales Rosales”, a/k/a “Tadeo”, age 27; Antonio Mauro Inda-Ibarra, a/k/a “Guillermo Samuel Inda-Perez”, a/k/a “Tono”, age 25; Richardo Desantiago Garcia, a/k/a “Eder Cervantes Garcia”, a/k/a “Jose Ramon Beltran Torres”, a/k/a “Sinaloa”, age 40; Angel Verdin Martinez, a/k/a “Gabino”, age 22.
The Indictment alleges that the five defendants are part of a heroin distribution network that mirrors the delivery systems of national pizza restaurants. According to the Indictment, Flores acted as the dispatcher, receiving calls from customers who placed orders for heroin. After receiving the orders, Flores then directed those customers to specific locations where delivery drivers, such as Inda-Ibarra, Inda-Perez and Martinez, met the customers. Upon meeting, the delivery drivers distributed to the customers balloons containing one gram of heroin at a cost of $100 per balloon. The turnaround time for one of these heroin sales was usually about 30 minutes. The Indictment further alleges that the defendants distributed quantities of heroin and used communication facilities (cellular telephones) to facilitate the sale of heroin.
On October 16, 2017, FBI Special Agents and Task Force Officers executed a federal search warrant for Room 217 of the Quality Inn at 10829 East 41st Street in Tulsa, Oklahoma. Law enforcement agents observed Flores and Ramirez enter the room and, utilizing a wiretapped phone, they overheard what sounded like the packaging of heroin. During the search, law enforcement agents seized approximately four kilograms of suspected heroin, over $1,200 in cash, eight cell phones, and assorted drug paraphernalia and processing equipment. Additionally, the Indictment alleges that both Inda-Ibarra and Inda-Perez sold quantities of heroin to an undercover officer while they acted as delivery drivers.
“Heroin and illegal opiate drugs are poisoning our local communities,” said United States Attorney Shores. “The four kilograms of heroin seized by law enforcement represented approximately 16,000 doses with an approximate street value of $400,000 to $500,000. The United States Attorney’s Office stands ready to work with federal, state, local, and tribal partners to aggressively prosecute those who would seek to profit from the trafficking of heroin.”
The Indictment is part of “Operation: Papa Juan’s”, an Organized Crime and Drug Enforcement Task Force (OCDETF) and High Intensity Drug Trafficking Area (HIDTA) investigation. The FBI, with the assistance of the Tulsa Police Department and the Broken Arrow Police Department, is the primary investigating agency, joined by the DEA HIDTA Task Force. Assistant United States Attorney Robert T. Raley is prosecuting the case on behalf of the United States.
THE RETURN OF AN INDICTMENT IS A METHOD OF INFORMING A DEFENDANT OF ALLEGED FEDERAL CRIMES WHICH MUST BE PROVEN IN A COURT OF LAW BEYOND A REASONABLE DOUBT TO OVERCOME A DEFENDANT’S PRESUMPTION OF INNOCENCE.
Two Washington County Men Plead Guilty to Unlawful Possession of FirearmsRead the Press Release
BOISE – Robby David Haley, 28, and Shawn Michael Hart, 28, both of Washington County, Idaho, pleaded guilty yesterday to unlawful possession of firearms, U.S. Attorney Bart M. Davis announced. Haley and Hart were indicted by a federal grand jury in Boise on April 11, 2017.
According to court proceedings, Haley and Hart admitted that they broke into a residence in Midvale, Idaho on February 18, 2017, and stole three firearms and other property valued at $21,299. Haley is prohibited from possessing firearms after he was convicted of burglary in Kootenai County, Idaho in 2010. Hart is prohibited from possessing firearms after he was convicted of misdemeanor domestic violence in the presence of a child in Washington County in 2016.
A charge of unlawful possession of firearms is punishable by up to ten years in prison, a maximum fine of $250,000, and a term of supervised release of three years.
Sentencings for Haley and Hart are set for January 30, 2018, before U.S. District Judge David C. Nye at the federal courthouse in Boise.
This case was investigated by the Washington County Sheriff’s Office, the Boise City Police Department, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
Two New Jersey Men Admit Conspiracy to Distribute More Than 140 Kilograms of Heroin and CocaineRead the Press Release
One Defendant Also Pleads Guilty to Assaulting Federal Officers
TRENTON, N.J. – Two New Jersey men today admitted their roles in a conspiracy to distribute 140 kilograms of narcotics in New Jersey, Acting U.S. Attorney William Fitzpatrick announced.
Gemal Singleton, 27, of Edison, New Jersey, and Siddeeq Q. Williams, 39, of Cranford, New Jersey, pleaded guilty before U.S. District Judge Brian R. Martinotti in Trenton federal court to separate informations charging them each with one count of conspiracy to possess with intent to distribute more than one kilogram of heroin and five kilograms of cocaine. Williams also pleaded guilty to one count of assaulting federal officers.
According to the documents filed in this case and statements made in court:
Singleton, Williams, and others arranged for cocaine and heroin to be shipped to New Jersey via tractor trailer. On Aug. 27, 2017, the tractor trailer arrived in New Jersey and law enforcement conducted a vehicle stop after the driver committed several traffic violations. A subsequent search of the tractor-trailer recovered five large duffle bags containing a total of 56 kilograms of heroin and 85 kilograms of cocaine. Singleton and Williams admitted that they were supposed to meet the tractor-trailer to collect the narcotics for eventual distribution.
On Aug. 30, 2017, law enforcement went to speak with Singleton and Williams. Williams admitted that when two law enforcement officers operating an undercover vehicle attempted to pull him over, he sped away in a Honda Pilot. Williams also admitted that during the ensuing pursuit, he rammed the Pilot into the officers’ vehicle and drove away.
The drug conspiracy charge carries a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine. The charge of assaulting a federal officer carries a maximum penalty of 20 years in prison and a $250,000 fine. Sentencing for both defendants is scheduled for Feb. 20, 2018.
Acting U.S. Attorney Fitzpatrick credited special agents with the Drug Enforcement Administration, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, with the investigation leading to today’s guilty pleas.
The government is represented by Assistant U.S. Attorney Meredith Williams of the U.S. Attorney’s Office OCDETF/Narcotics Unit in Newark.
Defense counsel:
Singleton: Robert DeGroot Esq., Newark
Williams: Jon Kearney Esq., Kearny, New Jersey
Two Illegal Aliens Sentenced to Prison for Selling Identification Documents and Aggravated Identity TheftRead the Press Release
Two illegal aliens who sold real identification documents belonging to United States citizens were each sentenced November 8, 2017, to over three and one-half years in federal prison.
Ari Hernandez-Chacon, age 47, a native and citizen of Mexico illegally residing in Columbus Junction, Iowa, received the prison term after a June 22, 2017 guilty plea to one count of possession with intent to transfer identification documents and one count of aggravated identity theft. In a plea agreement, Hernandez-Chacon admitted that on February 25, 2016, he sold three real Social Security cards and three real birth certificates to an undercover agent, knowing that the documents belonged to United States citizens. Hernandez-Chacon admitted that the identities sold were real and had no arrest records to avoid problems for the person using the stolen identities.
Magali Marroquin-Garcia, age 38, a native and citizen of Mexico illegally residing in Columbus Junction, Iowa, received the prison term after a June 22, 2017 guilty plea one count of possession with intent to transfer identification documents and one count of aggravated identity theft. In a plea agreement, Marroquin-Garcia admitted that on May 12, 2016, she sold three real Social Security cards and three real birth certificates to an undercover agent, knowing that the documents belonged to United States citizens.
Hernandez-Chacon and Marroquin-Garcia were sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade.
Hernandez-Chacon was sentenced to 43 months’ imprisonment. A special assessment of $200 was imposed. He must also serve a three-year term of supervised release after the prison term.
Marroquin-Garcia was sentenced to 43 months’ imprisonment. A special assessment of $200 was imposed. She must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Hernandez-Chacon and Marroquin-Garcia are being held in the United States Marshal’s custody until they can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Daniel C. Tvedt and investigated by the Department of Homeland Security, Homeland Security Investigations.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 17-CR-10.
Follow us on Twitter @USAO_NDIA.
Traverse City Physician Sentenced to Incarceration for Fraudulent PrescriptionsRead the Press Release
GRAND RAPIDS, MICHIGAN — Acting U.S. Attorney Andrew Birge announced that on Monday, November 6, 2017, Mark Edward Brewster, M.D., of Traverse City, Michigan, was sentenced to 10 months’ incarceration following his guilty plea to writing fraudulent prescriptions to obtain controlled substances. Brewster will also pay restitution to Blue Cross Blue Shield of Michigan, which paid for a number of Brewster’s fraudulent prescriptions. Brewster further surrendered his DEA registration to federal authorities as part of this investigation.
A federal investigation revealed that between 2006 and 2015, Brewster wrote over 150 fraudulent prescriptions in the names of seven different people in order to obtain quantities of Ritalin, a Schedule II controlled substance, that ultimately exceeded five times the maximumFDA-approved adult dosage. Brewster started issuing fraudulent prescriptions before he graduated from medical school, wrote fraudulent prescriptions while he was on state court probation for a domestic violence conviction, and continued writing fraudulent prescriptions after being fired by a northern Michigan hospital for his prescribing practices. When Brewster’s prescriptions to his girlfriend became the subject of a state licensing investigation in 2015, he assured state investigators that, going forward, there was "zero chance" he would write prescriptions for anyone other than his patients. Brewster continued writing fraudulent prescriptions the very next day and concealed those prescriptions by writing them in the names of his girlfriend’s minor children and others who were unknown to licensing investigators.
During his nearly decade-long prescription fraud, Brewster boasted, in text messages, that he was "[s]ticking it to the man" by having some of his fraudulent prescriptions paid for by other people’s private insurance. Brewster also falsified progress notes in a patient’s medical record to cover other fraudulent prescriptions.When he became aware of the federal investigation, Brewster instructed people not tell the DEA anything about his fraudulent prescriptions.
At sentencing, Judge Maloney described Brewster’s crime as "a product of the doctor’s arrogance" and noted that Brewster caused a number of otherwise law-abiding people to become involved in felonious conduct. The sentence, Judge Maloney said, should deter other health care professionals who might consider illegally abusing their prescribing authorities to obtain drugs for themselves or others.
In connection with this investigation, Brewster’s girlfriend, Nicole Aiello, R.N., also pled guilty to aiding and abetting Brewster in illegally obtaining controlled substances. Aiello will be sentenced on January 5, 2018. To date, the U.S. Attorney’s Office has further recovered $46,200.00 in civil penalties from other individuals who filled fraudulent prescriptions and returned controlled substances to Brewster.
"The U.S. Attorney’s Office will aggressively use all available criminal, civil, and administrative remedies when health care professionals abuse their licenses to illegally prescribe controlled substances for themselves or others," Acting U.S. Attorney Birge said. "The national epidemic of prescription drug abuse warrants the serious attention that we give this conduct."
This case was investigated by the U.S. Drug Enforcement Administration, Blue Cross Blue Shield of Michigan, and the U.S. Attorney’s Office. The case was prosecuted by Assistant U.S. Attorneys Adam B. Townshend and Raymond E. Beckering III.
END
Three Defendants Convicted on All Counts for Mortgage Fraud Scheme Involving 14 PropertiesRead the Press Release
THREE DEFENDANTS CONVICTED ON ALL COUNTS FOR MORTGAGE FRAUD SCHEME INVOLVING 14 PROPERTIES
SACRAMENTO, Calif. — A federal jury in Sacramento convicted three Northern California residents today of crimes relating to their involvement in a mortgage fraud scheme, U.S. Attorney Phillip A. Talbert announced.
After a seven-day trial, the jury found Surjit Singh, 71, of Dublin, and his son, Rajeshwar Singh, 43, of Pleasanton, each guilty of four counts of mail fraud, four counts of bank fraud, and four counts of false statements on loan and credit applications. Anita Sharma, 55, of Gilroy, was found guilty of two counts of mail fraud, two counts of bank fraud, and two counts of false statements on loan and credit applications.
“Today’s verdict is yet another step in the efforts taken by this office and our partners at the FBI to bring to account those whose fraudulent activities contributed to the financial decline which had such a tremendous impact on our communities,” said U.S. Attorney Talbert. “We are gratified by the verdict and thankful for the hard work and dedication of our investigative partners.”
“One of the FBI’s top priorities is to combat major white-collar crimes such as mortgage fraud,” said Special Agent in Charge Sean Ragan of the FBI Sacramento Field Office. “Mortgage fraud has negatively impacted entire communities in our region by artificially influencing home values and threatening the investments of lawful buyers. To ensure a bright future for our region, identification and investigation of mortgage fraud schemes is imperative. We will continue to investigate such crimes to both deter would-be fraudsters from acting and ensure those who commit fraud face justice.”
According to court documents, in 2006 and 2007, Surjit Singh recruited individuals with good credit to act as straw buyers for residential properties owned by his family members and associates. Rajeshwar Singh, a licensed real estate agent, assisted in the scheme by submitting loan applications for the straw buyers. Anita Sharma, a dental assistant at the time, was one of the straw buyers. Because Sharma and the other straw buyers could not afford the homes based on their true incomes, the Singhs submitted fraudulent loan applications and supporting material to lending institutions that included false statements about the straw buyers’ income, employment, liabilities, and intent to occupy the homes as their primary residences.
At least 14 properties were involved in the scheme. Anita Sharma alone purchased five homes in San Jose, San Ramon, Elk Grove, Sacramento, and Modesto. Other straw buyers purchased or refinanced properties in Stockton, Modesto, Patterson, Lathrop and Tracy. All of these homes were ultimately either foreclosed upon or sold in a short sale where the bank lets homeowners sell their homes for less than is owed on the mortgage.
Sharma was paid for her involvement in the scheme. Rajeshwar Singh received financial benefits through broker commissions for the transactions and as the seller of seven of the properties. He also continued to occupy the San Ramon property at a time when Anita Sharma should have been living there. Surjit Singh benefitted through payments out of escrow directed to shell companies, such as SJR Investments and BK Investments, associated with his daughter and significant other, whose initials are SJR and BK respectively. These payments were purportedly for contracting services, which did not occur. He also benefitted through rental payments made to him and his significant other by the renters of the homes, as the straw buyers were not living in the homes. In addition, many of his family members received money by selling properties and had money directed to them out of escrow. According to court documents and evidence produced at trial, the defendants were responsible for the origination of more than $9.3 million in fraudulently procured residential mortgage loans.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorneys Lee S. Bickley and Kelli L. Taylor are prosecuting the case.
The defendants are scheduled for sentencing on January 26, 2018. They face a maximum penalty of 30 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The court remanded Surjit Singh into custody.
Shelby County Woman Sentenced to 25 Months in Prison for Fraudulently Raising Money on False Cancer ClaimRead the Press Release
BIRMINGHAM – A federal judge today sentenced a Shelby County woman to more than 25 months in prison for fraudulently soliciting more than $260,000 by falsely claiming she had terminal cancer, announced U.S. Attorney Jay E. Town, FBI Special Agent in Charge Johnnie Sharp Jr. and Alabama Attorney General Steve Marshall.
JENNIFER FLYNN CATALDO, 37, of Sterrett, pled guilty in August to one count of wire fraud and one count of bank fraud for using her claim of terminal cancer to get money from family and friends and to solicit donations through the online fund-raising site, GoFundMe.
U.S. District Court Judge Virginia Emerson Hopkins sentenced Cataldo to 25 months and 20 days in prison and ordered her to pay $79,629 in restitution to the victims of her fraud, and to forfeit that amount to the government as proceeds of illegal activity.
“This defendant’s conduct was reprehensible,” Town said. “For more than two years she engaged in an elaborate scheme that preyed upon the sympathy and generosity of her friends and family. Not only did she fake cancer to take their money, she used her minor child as part of her ruse and allowed the child to believe his mother was dying,” he said. “She has earned every nickel of her punishment.”
“Crimes like this make good people think twice before they are willing to be charitable, and Cataldo’s conduct could have a chilling effect on donations to legitimate accounts set up for people who are truly in need,” Sharp said. “It is hard to understand how anyone could ignore the anguish that their greed- or drug-fueled lie brought to their loved ones every single day.”
“This crime involved an act of calculated cruelty carried out over a prolonged time, causing terrible anguish and grief to the defendant’s family and friends, as well as her own young child, who were led to believe she was dying. She took heartless advantage of their love as well as the compassion of strangers who gave generously to meet what they believed was a desperate need,” Marshall said. “The fact that we now know that part of the money was going to fund illegal opioids is yet more evidence of how destructive these drugs can be. It is imperative that we confront such criminal activities and that the offenders are stopped and punished.”
Cataldo fraudulently collected a total of $264,163 in checks and cash deposited into her personal checking account, according her guilty plea. A government sentencing document states that throughout Cataldo’s scheme, she was spending part of the money she obtained fraudulently to pay for 30 to 40 non-prescribed Percocet, an opioid containing painkiller, per day.
Court documents, including Cataldo’s plea agreement, describe her fraudulent scheme as follows:
From 2014 to about May 2017, Cataldo misrepresented to friends and family that she had been diagnosed with terminal cancer. In person, online and via text messages, she solicited contributions from friends, family and others and received the more than $200,000 in donations for expenses including utilities and living, medical, insurance and funeral costs. In January 2016, Cataldo also created an account on the GoFundMe website titled, “Mom has Terminal Cancer Disney Trip,” with the stated goal of raising $4,000 to take her young child to visit Disney before she died. The account featured a photo of the child on the cover and a statement from Cataldo that she had “had cancer for two years and was just told it was inoperable! I would like to experience this with my [minor child] before I die within the year.” That account raised more than $10,000.
In September 2016, a friend who believed Cataldo was suffering from terminal cancer created a second GoFundMe account titled, “Jenny Flynn Cataldo Medical Care,” with a $20,000 fund-raising goal. The medical GoFundMe account featured a photo of Cataldo, her husband and their child. The accompanying story related that Cataldo had been battling cancer for three years, that it was no longer treatable and “the primary goal of medical care at this point is to give Jenny as much time as possible” with her husband and child.
Between September 2016 and May 2017, Cataldo repeatedly re-posted the medical GoFundMe account link to her Facebook page with messages thanking people for their contributions, giving false updates on her condition, and requesting more donations. The medical account raised more than $25,000. Cataldo withdrew $27,755 and deposited it into her personal banking account.
In addition to the two GoFundMe accounts, Cataldo solicited funds on Facebook, in person, and by phone, e-mail and text message to friends, family and organizations, including churches. Some of those individuals paid third-party vendors on Cataldo’s behalf.
The FBI and the Alabama Attorney General’s Office investigated the case, which Assistant U.S. Attorney Robin Beardsley Mark is prosecuting.
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Seven Individuals Indicted in November Federal Grand JuryRead the Press Release
MUSKOGEE, OKLAHOMA – The United States Attorney’s Office announced today the results of the November 2017 Federal Grand Jury.
“The following named individuals have been charged with a federal crime or crimes by the return of an indictment by the Grand Jury. A grand jury Indictment does not constitute evidence of guilt. A grand jury Indictment is a method of bringing formal charges against the defendant. A defendant is presumed innocent of the charges and may not be found guilty unless evidence establishes guilt beyond a reasonable doubt. United States Sentencing Guidelines may be considered, upon conviction, by the sentencing court. Federal prison sentences are non-parolable.”
RODNEY PHILLIP AIRD, age 50, of Seminole, Oklahoma
Possession With Intent To Distribute Methamphetamine
The Indictment alleges that on or about August 13, 2017, within the Eastern District of Oklahoma, the defendant, RODNEY PHILLIP AIRD, did knowingly and intentionally possess with the intent to distribute 5 grams or more of methamphetamine (actual), a Schedule II controlled substance, in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(B), punishable by no more than 40 years imprisonment, a fine up to $5,000,000.00 or both.
The charge arose from an investigation by the Seminole Nation Tribal Police, the Bureau of Indian Affairs, and the Drug Enforcement Administration.
Assistant United States Attorney John David Luton
KRISTI MICHELLE JUAREZ, age 32, of Sanger, Texas
Theft By Officers Or Employees Of An Indian Gaming Establishment
The Indictment alleges that on January 2, 2017, in the Eastern District of Oklahoma, KRISTI MICHELLE JUAREZ, defendant herein, while an employee of the Chickasaw Nation WinStar World Casino and Resort, did embezzle, abstract, purloin, willfully misapply, and take and carry away in excess of $1,000.00 of moneys belonging to the Chickasaw Nation WinStar World Casino and Resort, an Indian gaming establishment operated by the Chickasaw Nation, pursuant to an ordinance or resolution approved by the National Indian Gaming Commission, in violation of Title 18, United States Code, Section 1168(b), punishable by up to 20 years imprisonment, a fine up to $1,000,000.00 or both.
The charge arose from an investigation by the Federal Bureau of Investigation, and the Bureau of Indian Affairs.
Assistant United States Attorney John David Luton
MANUEL EMILIO PAYANO, age 42, of Hazleton, Pennsylvania
ANGEL VEGA, age 43, of Philadelphia, Pennsylvania
Possession With Intent To Distribute Cocaine
The Indictment alleges that on or about October 16, 2017, within the Eastern District of Oklahoma, the defendants, MANUEL EMILIO PAYANO and ANGEL VEGA, did knowingly and intentionally possess with intent to distribute 5 kilograms or more of a mixture or substance containing a detectable amount of cocaine a Schedule II controlled substance, in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(A) and Title 18, United States Code, Section 2, punishable by not less than 10 years imprisonment, a fine up to $10,000,000.00 or both.
The charge arose from an investigation by the Oklahoma Highway Patrol and the Drug Enforcement Administration.
Assistant United States Attorney Dean Burris
JUSTIMIANO PEREZ DIAZ, age 42, of Stigler, Oklahoma
Enticement Of A Minor Using The Internet
The Indictment alleges that from in or about September 2017, the exact date being unknown to the Grand Jury, until on or about October 16, 2017, in the Eastern District of Oklahoma, and elsewhere, the defendant, JUSTIMIANO PEREZ DIAZ, 42 years old, did use a facility and means of interstate commerce, the Internet, to attempt to knowingly persuade, induce, and entice an individual whom he believed was 13 years old, to engage in sexual activity for which a person can be criminally charged under Oklahoma State law, to wit: Title 21, Oklahoma Statute, Section 1123, Lewd or Indecent Proposals or Acts with a Child under 16, in violation of Title 18, United States Code, Section 2422(b), punishable by not less than 10 years imprisonment, a fine up to $250,000.00 or both.
The charge arose from an investigation by the Wagoner Police Department and the Federal Bureau of Investigation.
Assistant United States Attorney Edward Snow
DARRELL LEE McLEMORE, age 55, of Porum, Oklahoma
Concealment Of A Material Fact
False Statement (Two Counts)The Indictment alleges that from in or about October 2012 and continuing through in or about October 2017, within the Eastern District of Oklahoma and elsewhere, the ,defendant DARRELL LEE McLEMORE, in a matter within the jurisdiction of Social Security Administration, having knowledge of the occurrence of an event affecting the right to receive or continue to receive Social Security Supplemental Security Income payments, concealed and failed to disclose such event with the intent to fraudulently secure payment when no payment was authorized. Specifically, defendant DARRELL LEE McLEMORE intentionally concealed that DARRELL LEE McLEMORE secured gainful employment and owned or acquired assets, which would disqualify him from eligibility for the payments, in order to receive and continue to receive Supplemental Security Income payments made by the Social Security Administration to him. By such action, defendant DARRELL LEE McLEMORE took approximately $48,075.00 in Social Security Supplemental Security Income payments to which he was not entitled, in violation of Title 42, United States Code, Section 1383a(a)(3), punishable by not more than 5 years imprisonment, a fine up to $250,000.00 or both.
The Indictment further alleges that on or about February 1, 2017, within the Eastern District of Oklahoma, the defendant, DARRELL LEE McLEMORE, did knowingly make or caused to be made any false statement or representation of a material fact to the Social Security Administration used to determine the right for any payment. Specifically, DARRELL LEE McLEMORE participated in a redetermination conference wherein DARRELL LEE McLEMORE stated that DARRELL LEE McLEMORE had not worked since the date of DARRELL LEE McLEMORE’s last eligibility determination, when, in fact, DARRELL LEE McLEMORE knew that he had been gainfully employed during the period, in violation of Title 42, United States Code, Section 1383a(a)(2). punishable by not more than 5 years imprisonment, a fine up to $250,000.00 or both.
The Indictment further alleges that on or about June 14, 2016, within the Eastern District of Oklahoma, the defendant, DARRELL LEE McLEMORE, did knowingly and willfully, make a materially false statement or representation, in a matter within the jurisdiction of the Social Security Administration of the United States, by submitting a Form SS-5 Application for a Social Security Card and stating to a Social Security Administration Service Representative that he had never applied for or been issued a Social Security Card, when, in fact, defendant, DARRELL LEE McLEMORE, knew that he had been assigned a Social Security Number and issued a Social Security Card on or about October 14, 1975, in violation of Title 18, United States Code, Section 1001, punishable by not more than 5 years imprisonment, a fine up to $250,000.00 or both.
The charges arose from an investigation by the Social Security Administration Office of Inspector General.
Assistant United States Attorney Rob Wallace
TIFFANY RHEA SPEARS, age 30, of Thackerville, Oklahoma
Bank Theft, Embezzlement And Misapplication
False Entry In The Books Of A Federally Insured Bank (Four Counts)
Bank FraudThe Indictment alleges that from on or about January 6, 2017, until on or about June 5, 2017, within the Eastern District of Oklahoma, defendant TIFFANY RHEA SPEARS, being an officer, director, agent, or employee of, or connected in a capacity with, Citizens Bank and Trust of Ardmore, Oklahoma, a bank whose deposits are insured by the Federal Deposit Insurance Corporation, with intent to injure and defraud the said Citizens Bank and Trust of Ardmore, Oklahoma, willfully misapplied, embezzled, abstracted, and purloined more than $1,000.00 of the moneys, funds, assets or securities entrusted to the custody or care of Citizens Bank and Trust of Ardmore, Oklahoma, in that the defendant made advances on certain customer loans and withdrew cash from the accounts of certain bank customers and misapplied, embezzled, abstracted and purloined the funds for her own use or benefit, in violation of Title 18, United States Code, Section 656, punishable by not more than 30 years imprisonment, a fine up to $1,000,000.00 or both.
The Indictment further alleges that from on or about January 6, 2017, until on or about June 5, 2017, within the Eastern District of Oklahoma, defendant TIFFANY RHEA SPEARS, with the intent to deceive an officer of Citizens Bank and Trust of Ardmore, Oklahoma, a bank whose deposits are insured by the Federal Deposit Insurance Corporation, knowingly made false entries in the books, reports, or statements of Citizens Bank and Trust of Ardmore, Oklahoma, as set forth in the table below, in that defendant created false transaction documents showing customers advancing monies on their loans and withdrawing cash from their accounts, when in truth and in fact, as the defendant well knew, the advances and withdrawals from customer accounts were by, and for the benefit of, the defendant, punishable by not more than 30 years imprisonment, a fine up to $1,000,000.00 or both.
The Indictment further alleges that from on or about January 6, 2017, until on or about June 5, 2017, within the Eastern District of Oklahoma, defendant, TIFFANY RHEA SPEARS, devised, executed, and attempted to execute a scheme and artifice to obtain moneys, funds, credits, assets, securities, or other property under the custody or control of Citizens Bank and Trust of Ardmore, Oklahoma, a bank whose deposits are insured by the Federal Deposit Insurance Corporation, by means of materially false and fraudulent pretenses, representations, and promises.
The charges arose from an investigation by the Federal Reserve Office of Inspector General.
Assistant United States Attorney Rob Wallace
Second Superseding Indictment Unsealed Charging St. Charles Parish Narcotics RingRead the Press Release
Acting U.S. Attorney Duane A. Evans, announces the arrest of LUIS J. COTTO, a/k/a “Luis Pereira,” age 31, of New York, following the unsealing of a Second Superseding Indictment charging an array of federal narcotics and firearm violations by members of a drug trafficking organization operating in south Louisiana.
The Second Superseding Indictment, which was returned by the grand jury on October 27, 2017, and unsealed today charges seven defendants with conspiring to distribute controlled dangerous substances in the parishes of St. Charles, St. John the Baptist, and elsewhere. As with the prior Indictment, this Second Superseding Indictment alleges that the conspirators included ANDRE STAGGERS, a/k/a “Dre,” age 43; COREY SESSION, age 43; GREGORY LONDON, JR., a/k/a “Lil Gregg,” age 41; TERRANCE ANDERSON, a/k/a “City,” age 35; KIRK BALLARD, age 36; and LEONARD MORRISON, a/k/a “Leonard London,” age 35.
This Second Superseding Indictment names COTTO as an additional co-conspirator. COTTO was arrested today at his residence in Utica, New York, pursuant to a federal arrest warrant issued after the Second Superseding Indictment was returned by the grand jury.
The Second Superseding Indictment also alleges that COTTO was responsible for more than one kilogram of heroin and five kilograms of cocaine through his own conduct and the reasonably foreseeable conduct of his co-conspirators. The Second Superseding Indictment asserts that, on or about August 7, 2016, COTTO transported more than $225,000 in cash in furtherance of the drug conspiracy.
According to the Second Superseding Indictment, these defendants conspired together from approximately January 2015 through August 2016 to distribute heroin, cocaine, and marijuana in the Eastern District of Louisiana and elsewhere. The scope of the conspiracy encompassed at least five kilograms or more of cocaine and one kilogram or more of heroin. During the course of this investigation, federal and state law enforcement officers seized various drugs, including cocaine, heroin, marijuana, and methamphetamine.
According to court documents, search warrants executed on February 25, 2016, at two residences used by COREY SESSION resulted in the seizure of two AK-style rifles, approximately $10,000 in cash, and a half kilogram of cocaine. A search warrant executed the same day at the residence of ANDRE STAGGERS resulted in the seizure of an AR-15 rifle, a half kilogram of heroin, and over $400,000 in cash.
If convicted for violating federal drug conspiracy laws, the defendants face the following penalties. STAGGERS, SESSION, LONDON Jr., ANDERSON, BALLARD, and COTTO each face a maximum of life imprisonment, a $10,000,000 fine, and at least five years of supervised release. MORRISON faces a maximum of 40 years imprisonment, a $5,000,000 fine, and at least four years of supervised release.
STAGGERS, SESSION, and MORRISON also are charged with federal firearms violations. STAGGERS is charged with possession of a firearm as a felon, for which he could receive up to ten years of imprisonment, a $250,000 fine, and up to three years of supervised release. SESSION and MORRISON are each charged with possession of a firearm as an armed career criminal, for which each could receive a minimum of fifteen years in prison and a maximum of life imprisonment, a $250,000.00 fine, and up to five years of supervised release. STAGGERS, SESSION, and MORRISON are also charged with possession of a firearm in furtherance of a drug trafficking crime, for which they each face a minimum of five years in prison consecutive to any other sentence, a $250,000 fine, and up to five years of supervised release.
Acting U.S. Attorney Evans reiterated that the Second Superseding Indictment is merely a charge and that the guilt of the defendants must be proven beyond a reasonable doubt.
This Second Superseding Indictment represents a coordinated effort of federal and state law enforcement authorities within the Drug Enforcement Administration’s Gulf Coast High Intensity Drug Trafficking Area (HIDTA) Program. The DEA’s HIDTA Group #11, operating out of the New Orleans Field Division, includes members of the Louisiana State Police, Jefferson Parish Sheriff’s Office, and other local agencies. Acting U.S. Evans thanked the Drug Enforcement Administration Syracuse Field Office and the Utica Police Department for their assistance in arresting COTTO.
The prosecution is being handled by Assistant United States Attorney Matthew Payne and Special Assistant United States Attorney Andre Gaudin, who is assigned from the Orleans Parish District Attorney’s Office to the DEA HIDTA Group.
San Juan County Woman Sentenced to Prison for Federal Health Care Fraud ConvictionRead the Press Release
ALBUQUERQUE – Rosita Toledo, 48, of Kirtland, N.M., was sentenced today in federal court in Albuquerque, N.M., for her healthcare fraud conviction. Toledo was sentenced to a 25-month term of imprisonment followed by three years of supervised release, during which she will be required to perform 40 hours of community service each year. Toledo also was ordered to pay, jointly with her co-defendant, $1,218,165.00 in restitution to the victim of their criminal conduct.
Toledo and co-defendant Cory Werito, 33, of Farmington, N.M., were charged in a ten-count indictment that was filed on June 15, 2016. The indictment included nine health care fraud charges against Toledo and Werito, and an aggravated currency structuring charge against Werito. The health care fraud charges arose out of the defendants’ roles in creating and operating a medical transportation company, CW Transport, a New Mexico company located in Farmington that provided non-emergency medical transportation to Arizona Medicaid recipients, funded by reimbursement payments from the Arizona Health Care Cost Containment System (AHCCCS), a healthcare benefit program. Over the course of two years between 2011 and 2013, CW Transport collected more than $1.9 million in Medicaid reimbursements from AHCCCS by submitting more than 18,000 claims for reimbursement, the vast majority of which were wholly or substantially false and fraudulent.
According to Count 10 of the indictment, the aggravated currency structuring charge, Werito conducted financial transactions involving the proceeds of the health care fraud in a manner that avoided the filing of Currency Transaction Reports (CTRs). CTRs are reports which must be filed by financial institutions on transactions involving more than $10,000 during any business day and are used by law enforcement authorities to uncover a broad range of illegal activities including money laundering. From Aug. 2011 to July 2013, Werito conducted at least 200 cash withdrawals, each for several thousands of dollars but less than $10,000 and totaling at least $800,000, to avoid the filing of CTRs.
The indictment included forfeiture provisions seeking an order requiring Toledo and Werito to forfeit to the United States at least $1,959,405, the proceeds allegedly derived from the health care fraud alleged in Counts 1 through 9 of the indictment.
On March 30, 2017, Toledo entered a guilty plea to Count 1 of the indictment, and admitted her role in the health care fraud scheme. In entering her guilty plea, Toledo admitted that between July 2011 and July 2013 and in her capacity as the primary claims processor for CW Transport, she submitted 18,765 fraudulent claims for reimbursement, which caused AHCCCS to pay CW Transport a total of $1,959,405.
On March 9, 2017, Werito pled guilty to Count 1 of the indictment, charging him with committing health care fraud. Werito admitted, as the sole owner of CW Transport, he submitted approximately 18,765 claims for reimbursement to AHCCCS between July 2011 and July 2013. Because the claims were grouped in 140 invoices, Werito received 140 payments from AHCCCS in an amount totaling $1,959,405. Werito admitted submitting the claims for reimbursement as part of a scheme to defraud AHCCCS because he either never provided or provided in a substantially different manner many of the services for which he sought and received reimbursement. On Sept. 6, 2017, Werito was sentenced to 30 months in prison followed by three years of supervised release, and was ordered to pay $1,218,165 in restitution to the victim of his criminal conduct.
The Albuquerque office of HSI investigated the case with assistance from the FBI, U.S. Marshals Service, San Juan County Sheriff’s Office, the Arizona Health Care Cost Containment System and New Mexico Office of the Attorney General. Assistant U.S. Attorney Jeremy Peña prosecuted the case.
Rochester Man Pleads Guilty to Methamphetamine ChargeRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.-Acting U.S. James P. Kennedy, Jr. announced today that Pablo Ulloa, 33, of Rochester, NY, who was convicted of conspiracy to possess with intent to distribute five grams or more of methamphetamine, was sentenced to 37 months in prison by Senior U.S. District Court Judge William M. Skretny.
Assistant U.S. Attorney Michael J. Adler, who handled the case, stated that the Drug Enforcement Administration received a tip regarding the drug trafficking activities of the defendant and his co-defendant Brian Donaldson. On October 27, 2016, Hamburg Police conducted surveillance at a local motel where the defendants were staying. At approximately 9:15 p.m., Donaldson left the motel and was subsequently pulled over in a traffic stop by Hamburg officers. A search of the vehicle recovered a small quantity of methamphetamine, and a lock box which contained a much larger quantity of methamphetamine. A search was then conducted of the motel room where Donaldson and Ulloa were staying. During that search, officers recovered more containers of methamphetamine, several cellular telephones, drug packaging materials, a scale, and pipes.
Donaldson was convicted and sentenced to 51 months in prison.
Today’s sentencing is the result of an investigation by the Drug Enforcement Administration, under the direction of Special Agent-in-Charge James J. Hunt, New York Field Division and the Hamburg Police Department, under the direction of Chief Gregory Wickett.
Retired Navy Veteran Charged with Kidnapping Virginia Beach WomanRead the Press Release
NORFOLK, Va. – A retired Navy veteran was arrested today for the kidnapping of Ashanti M. Billie, a 19 year-old Virginia Beach woman.
According to court documents, Eric Brian Brown, 45, allegedly abducted Billie on September 18 as Billie arrived for work at a Blimpie’s restaurant on Joint Expeditionary Base Little Creek. On September 29, Billie’s body was found in a wooded area behind a church on Greir’s Grove Road in Charlotte, North Carolina, approximately 300 yards from Brown’s childhood home.
According to court documents, Brown, who spent 21 years in the navy, worked as a day laborer and participated in the construction of the Blimpie’s this past summer. Based on the investigation to date, agents believe that Brown is homeless and lives at random facilities and buildings on and off the naval bases. Billie’s coworkers reported that Brown would visit the Blimpie’s almost every day, and that he was seen so often in the neighboring buildings, such as a 24-hour laundromat directly next door, that they believed Brown worked there. Witnesses reported seeing Brown attempting to flirt with Billie on several occasions, and one witness recalled hearing a conversation where Brown made a crude sexual comment directly to Billie.
Video surveillance recorded Billie’s car enter the base at 4:58 a.m. on September 18, and circle the Blimpie’s at 5 a.m. The driver of the vehicle in both videos was a person wearing dark colored clothing, consistent with the clothing Billie was reportedly wearing. Video surveillance recorded a person in light colored clothing driving Billie’s car exit the base at approximately 5:33 a.m. At approximately 5:44 a.m., residential video surveillance recorded a person wearing light colored clothing driving a car consistent with Billie’s stop at a construction dumpster in Norfolk. A few hours later, construction workers found Billie’s cell phone in the dumpster.
According to court documents, Billie’s car was found in Norfolk on September 23. Inside of the car, agents recovered Billie’s pants, which contained dirt and debris, consistent with being removed while outside and on the ground. The undercarriage of the car also contained dirt and vegetative debris, consistent with being driven off-road. During interviews conducted on or about September 30, several witnesses described seeing a car like Billie’s during the week of September 18 parked at various locations in Charlotte neighborhoods near to where Billie’s body was found. The property on which the body was found is owned by and located next to the church where Brown attended vacation Bible school as a child.
A detailed review of Brown’s wireless internet usage data indicates that Brown used his mobile devices nearly every day from September 1 to September 29. The only day in that time period that there was no usage data is September 18, which is the day Billie went missing.
Further, the review of Brown’s wireless internet usage data indicates that he was on base from September 14 until late in the evening of September 17, which is when all usage data ceased until starting again on September 19. A review of security camera video from all of the gates on the base revealed no evidence of Brown ever leaving the base from September 14 through September 18. A records check of base entry logs indicate that Brown reentered Joint Expeditionary Base Little Creek on the afternoon of September 19.
A review of Brown’s phone’s web history indicates that when Brown first initiated web activity on September 19, he made numerous searches of Norfolk news to include “police looking for man,” “Norfolk police looking for man in connection with homicide,” “amber alert sept 2017,” “missing woman and baby,” and “missing woman and man.” Additionally, Brown searched for information on Charlotte news websites on September 21, which was eight days before the victim’s body was recovered by law enforcement. And on September 22, Brown entered searches for “JEB Little Creek Blimpies” and a search regarding parents of a missing college student.
During an interview with law enforcement on October 27, Brown told agents he was on Joint Expeditionary Base Little Creek on the evening of September 17, and that at one point he blacked out and had no recollection of what he did for several days after that. When discussing the abduction and murder of Billie, Brown confirmed that he could not remember if he did anything to Billie.
Billie’s body and clothing were processed for evidence and on two separate articles of clothing an unknown male DNA profile was identified. The first male DNA profile was obtained from a swab of the pocket openings of Billie’s hooded sweatshirt found on her body in Charlotte. This DNA profile was compared to a buccal swab of Brown. The male DNA profile from the hooded sweatshirt was consistent with the DNA profile of Brown, and the probability of this DNA profile belonging to any other person is 1 in 2.7 quadrillion. The second male DNA profile was obtained from a swab of the outside, back center torso area of Billie’s shirt, also found on her body in Charlotte. This DNA profile was also compared with a buccal swab of Brown. The male DNA profile from the shirt was consistent with the DNA profile of Brown, and the probability of this DNA profile belonging to any other person is 1 in 720 billion.
Brown has been charged with kidnapping and faces a maximum penalty of life in prison if convicted. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia, Martin Culbreath, Special Agent in Charge of the FBI’s Norfolk Field Office, John A. Strong, Special Agent in Charge of the FBI’s Charlotte Field Office, Cliff Everton, Special Agent in Charge of the Naval Criminal Investigative Service (NCIS) Norfolk Field Office, Larry D. Boone, Chief of Norfolk Police, James A. Cervera, Chief of Virginia Beach Police, and Kerr Putney, Chief of Charlotte-Mecklenberg Police, made the announcement. Assistant U.S. Attorneys Kevin M. Comstock and Randy C. Stoker are prosecuting the case.
The U.S. Navy provided significant assistance with this investigation.
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-mj-562.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Parking Lot Operator Arrested for Allegedly Failing to Pay Dept. of Veteran’s Affairs at least $11 Million while Paying Bribes to VA OfficialRead the Press Release
LOS ANGELES – The owner of a business that operated parking lots was arrested this morning after being charged with bilking the U.S. Department of Veteran’s Affairs out of more than $11 million that should have been paid in relation to a contract to operate parking facilities on the VA’s Los Angeles medical campuses.
Richard Scott, 58, the owner of Westside Services LLC (WSS), was arrested without incident this morning at his Santa Monica residence.
The arrest was made pursuant to a criminal complaint filed on November that charges Scott with major fraud against the United States. Scott is expected to make his first court appearance this afternoon in United States District Court in downtown Los Angeles.
An FBI agent described the fraud in a 103-page affidavit filed in support of the criminal complaint. As outlined in the affidavit, Scott obtained a contract to operate parking lots on the campuses of the VA Greater Los Angeles Healthcare System (VA GLAHS) and soon after began defrauding the VA by failing to properly report income and expenses. The vast majority of the activity authorized under the contract took place at the West Los Angeles VA Medical Center near Westwood.
For approximately the past 15 years, Scott has had a contract with the VA that required him to provide the VA with 60 percent of the gross revenues from the parking lots, according to the affidavit. In order to determine these amounts, Scott was required to submit annual reports detailing revenue generated by parking fees, as well as improvements and services his company provided that could be used to offset payments due to the VA.
The investigation determined that Scott maintained at least two sets of financial books, according to the affidavit. The numbers reported to the VA contained false revenue and expense statements, while a second set of books maintained by Scott’s bookkeeper/tax preparer contained the actual revenues and expenditures, except for unreported cash.
“The investigation has revealed that Scott underreported revenue to the VA by a minimum of $4,689,081 and over-reported expenses to the VA by a minimum of $8,219,762, which caused a direct loss to the VA of $11,397,779,” according to the affidavit. The court document notes that the amount of unreported revenue is likely greater because cash generated from parking during UCLA baseball games and other events – which potentially totals more than $1 million – also was not reported to the VA.
As part of the scheme to defraud the VA, Scott allegedly began bribing the VA contracting official responsible for overseeing the contract in 2003 and continued to bribe him on a regular basis until the official abruptly retired in 2014 after he was confronted by federal agents. According to the affidavit, Scott continued making payments to the retired VA official to continue the scheme and attempt to avoid termination of his parking contract.
As a result of the long-running scheme to defraud the VA, Scott amassed considerable wealth, including three $2.5 million condominiums in Santa Monica, numerous high-end collectible cars, a Cigarette Top Gun racing boat that is docked in Miami, and brokerage accounts, according to the affidavit. Between 2003 and 2016, Scott allegedly used WSS business bank accounts to pay for approximately $740,000 in travel, $413,000 in meals and entertainment, his salary of $3.1 million, and numerous personal expenses and owner’s draws. The affidavit states, “The travel and meal/entertainment expenses are especially suspicious because the business of WSS consisted of overseeing parking lots at the VA GLAHS, only two of which were regularly staffed, which did not require any travel beyond the few mile area” around the VA’s West Los Angeles campus.
This morning, pursuant to court orders, federal authorities are moving to seize Scott’s assets, including the racing boat and vehicles that include three Ferraris, a 1969 Corvette L88, two high-end Mercedes-Benzes and a Shelby Super Snake Mustang.
The former VA contracting official began cooperating with the federal investigation in May, according to the affidavit, which states that the retired VA official admitted he participated in the bribery scheme and knew Scott was underreporting revenue and inflating expenses reported to the VA. Furthermore, the former VA official said that Scott used proceeds from cash parking events to pay the official. During an interview earlier this year recounted in the affidavit, the former official said, “He [Scott] was definitely bribing me and I was definitely looking the other way.”
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If Scott were to be convicted of the charge of committing a major fraud against the United States, he would face a statutory maximum sentence of 10 years in federal prison.
The VA contract with WSS was terminated early this year after the VA settled a lawsuit that challenged the VA’s use of its West Los Angeles campus for any purposes not specifically related to the care and housing of veterans. However, pursuant to the agreement, WSS will continue to operate the parking lots until January.
The case against Scott is part of an ongoing investigation being conducted by the United States Department of Veterans Affairs, Office of Inspector General; the Federal Bureau of Investigation; and IRS Criminal Investigation.
The prosecution of Scott is being handled by Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section.
Panama City Man Sentenced to 144 Months in Prison for a Methamphetamine chargeRead the Press Release
PENSACOLA, FLORIDA – Joshua Ray Fountain, 40, of Panama City, Florida, was sentenced today to serve a total term of 144 months in prison after pleading guilty to possessing with intent to distribute over five grams of methamphetamine, and admitting to violating the terms of his federal supervised release by possessing the methamphetamine while on federal supervision. The sentence was announced by Christopher P. Canova, United States Attorney for the Northern District of Florida.
Documents introduced at the time of the guilty plea reflect that Joshua Ray Fountain was serving a five-year term of federal supervised release following his 150-month term of incarceration in federal prison for the offense of possession with intent to distribute over fifty grams of methamphetamine. On May 2, 2017, while on federal supervised release for the previous federal drug violation, Walton County Sheriff’s Deputies and Drug Enforcement Administration officials found Fountain in possession of over 25 grams of methamphetamine.
The case resulted from an investigation by the Drug Enforcement Administration and the Walton County Sheriff’s Office. It was prosecuted by Assistant United States Attorney J. Ryan Love.
The United States Attorney's Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. To access public court documents online, please visit the U.S. District Court for the Northern District of Florida . For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
For more information, contact:
Amy Alexander, Public Information Officer
(850) 216-3854, [email protected]Owner of Defense Contracting Firm Sentenced to 5 Years in Prison for Paying Bribes to Civilian Employee at Aberdeen Proving GroundRead the Press Release
FOR IMMEDIATE RELEASE Contact ELIZABETH MORSE
www.justice.gov/usao/md at (410) 209-4885
Baltimore, Maryland – On November 7, 2017, United States District Judge Richard D. Bennett sentenced Rainier Ramos, age 50, of Bel Air, Maryland, to two years in prison, including a 12-month period of home confinement, followed by three years of supervised release for bribery in connection with his duties at the U.S. Army Public Health Command at Aberdeen Proving Ground. Judge Bennett also ordered Ramos to pay a money judgment of at least $33,000, and pay restitution in the full amount of the victim’s losses, $2,215,779.
Co-conspirator Bhupesh Wadhawan, age 40, of Ashburn, Virginia, previously pleaded guilty and was sentenced to five years in prison for his role in the conspiracy. Judge Bennett also ordered Wadhawan to pay $2,215,779 in restitution.
The sentence was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Special Agent in Charge L. Scott Moreland, Mid-Atlantic Fraud Field Office, Major Procurement Fraud Unit, U.S. Army Criminal Investigation Command; and Special Agent in Charge Robert E. Craig, Jr. of the Defense Criminal Investigative Service - Mid-Atlantic Field Office.
Ramos was a civilian information technology professional at the U.S. Army Public Health Command at Aberdeen Proving Ground (APG). Co-conspirator Bhupesh Wadhawan was the owner and Chief Executive Officer (CEO) of Link Solutions, Inc. (“LSI”), an information technology company headquartered in McLean, Virginia.
Bhupesh Wadhawan, was the owner and Chief Executive Officer (CEO) of Link Solutions, Inc. (“LSI”) an information technology company headquartered in McLean, Virginia. The Defendant founded LSI in December 2006.
Beginning in September 2009, Ramos and Wadhawan engaged in a course of conduct that consisted of Wadhawan offering, promising and ultimately giving and Ramos soliciting and accepting a stream of benefits, worth approximately $33,000 in the form of meals and drinks, rounds of golf and tickets to sporting events, including courtside seats to Washington Wizards basketball games, football tickets and access to the LSI luxury suite for Washington Redskins football games at FedEx field, tickets to see the New Orleans Saints play at the Mercedes Benz Superdome in New Orleans, tickets to see the New Orleans Hornets basketball team in New Orleans, Louisiana, gift cards and other things of value in exchange for Ramos’s favorable treatment of Wadhawan’s business interests in contracting with the United States, as opportunities arose, in relation to contract number W81XWH-11-R-0348 in violation of Ramos’s lawful duty to the U.S. Army Public Health Command.
In early 2010, the Wadhawan expressed to Ramos his interest in a high value IT contract the award of which, as the Defendant knew, Ramos had the ability to influence. That contract, the Agency Information Technology Services Support (AITSS) contract, was held by CSC Corporation in Fall 2009 but was ultimately re-competed as contract number W81XWH-11-R-0348 (hereafter the “MEDCOM” contract) with a value of $10,000,000 in the base year and the option to extend for 4 more years, for a total value of more than $50,000,000.
In exchange for bribes from Wadhawan, Ramos sought contracting opportunities at APG in the spring and summer of 2010, that would allow LSI to develop a track record of performance, in order to increase the likelihood that the company would be awarded the MEDCOM contract when it was re-competed in 2011. Ramos admitted that he took the following actions in exchange for bribes: influenced the award of a contract to LSI to deploy and configure 70 desktop and laptop computers at APG; recommended that the MEDCOM contract be reserved for companies that were part of the U.S. Small Business Administration 8(a) program, - a significant benefit to LSI as a certified 8(a) business.
After the award of this contract, the Wadhawan advocated for and Ramos recommended that a portion of the AITSS contract that had previously been awarded to CSC Corporation be reserved for companies that were part of the U.S. Small Business Administration 8(a) program. LSI was a certified 8(a) company and, as a result, would be in an enhanced competitive position if the work that had previously been part of the CSC contract was restricted to 8(a) companies, which CSC was not. Ultimately, in exchange for things of value provided by Wadhawan, Ramos influenced the decision to restrict the MEDCOM contract to 8(a) companies, which was a significant benefit to LSI.
After the decision was made to restrict the former CSC contract to 8(a) entities. Ramos, in exchange for things of value provided by the Wadhawan, introduced Wadhawan to various potential teaming partners that Ramos and the Defendant believed would increase the likelihood that LSI would be awarded the MEDCOM contract.
Ramos also provided Wadhawan with the winning proposal of the previous contractor on the MEDCOM contract, including pricing data, which was sensitive, proprietary information; and helped write the Statement of Work for the MEDCOM contract to increase the likelihood that LSI would be awarded that contract.
Ramos also included in the Statement of Work for the MEDCOM contract two certifications that Ramos knew LSI had and, thus, increased the likelihood that LSI would be awarded the MEDCOM contract.
On or about November 2, 2010, a Manager of Client Services with the Washington Redskins sent another Redskins employee an email with the subject line, “Barry Kane will be in Bhupesh Wadhawan (Link Solution) suite for the Philadelphia game (see note).” The body of the email contained the following, “army-public health command….one of the customers which is $10 million a year annually to him the CIO is coming to the suite for the Philly game…” (emphasis added)
On May 20, 2010, in an email to Wadhawan, Ramos stated, “If there’s any way you can pull off a miracle and switch the 10 Eagles/Skins tickets you have already acquired for 10 Skins/Cowboys tickets, I’ll owe you some serious 8A business. . . . Thanks again for EVERYTHING.” (emphasis added)
In August 2011, the solicitation for the MEDCOM contract was issued, and Ramos was selected as the Chairman of the Source Selection Board. In early 2012, Ramos recommended that the contract be awarded to LSI.
After LSI was awarded the contract, Ramos approved invoices submitted by the Company under the contract. As of July 2016, LSI has been paid almost $37 million by the U.S. government for invoices submitted under the MEDCOM contract.
The National Procurement Fraud Task Force was formed in October 2006 to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force includes the United States Attorneys= Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as other cases brought by members of the Task Force, demonstrate the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.
Acting United States Attorney Stephen M. Schenning commended the FBI, Army CID, and DCIS for their work in the investigation. Mr. Schenning thanked Assistant United States Attorney Leo J. Wise, who prosecuted the case.
Oakland Man Pleads Guilty to Conspiracy to Alter U.S. Postal Money OrdersRead the Press Release
Acting U.S. Attorney Duane A. Evans announced that DARREN BRANDON WILLIAMS, age 29, of Oakland, California, pleaded guilty today to conspiracy to alter U.S. Postal money orders.
According to the court records, WILLIAMS conspired with others in the New Orleans area to buy U.S. Postal money orders in small amounts (typically $1.00). These money orders were sent out of state where they were altered to much higher amounts. WILLIAMS, working with other conspirators, then enlisted individuals to deposit the altered U.S. Postal money orders into local bank accounts. Once the money orders cleared, the funds were withdrawn and split by WILLIAMS and the conspirators.
WILLIAMS faces up to five years imprisonment, a fine of up to $250,000, up to three years of supervised release following any term of imprisonment, and $100 special assessment. U.S. District Judge Sarah S. Vance set sentencing for February 21, 2018.
Acting U. S. Attorney Evans praised the investigative work of the United States Postal Inspector Office for its handling of the matter. Assistant U.S. Attorney Edward J. Rivera is in charge of the prosecution.
Nine Aliens Indicted on Illegal Reentry Charges, False Representation of a Social Security Account Number, and Aggravated Identity TheftRead the Press Release
RALEIGH – Robert J. Higdon, Jr., United States Attorney for the Eastern District of North Carolina, announces that a federal grand jury in Raleigh has returned indictments charging JOSE RAUDILIO ACOSTA-HERNANDEZ, age 28, of Honduras, SAUL CISNEROS-FRANCO, age 52, of Mexico, AGRIPINO CRISOSTOMO-LOPEZ, age 38, of Guatemala, JORGE GOMEZ-PEREZ, age 48, of Mexico, JOSE QUINVERO, age 36, of El Salvador, MARIO SANTANA, age 29, of Mexico, JOSE CARMEN SOTO, age 44, of Mexico, and VICTORIANO VALENZUELA-ROJAS, with Illegal Reentry of a Deported Alien.
Additionally, a federal grand jury in Raleigh has returned an indictment charging MARIA ASUNCION LUCAS-MENDEZ, age 31, of Guatemala, with False Representation of a Social Security Account Number, and Aggravated Identity Theft.
If convicted of Illegal Reentry of a Deported Alien, ACOSTA-HERNANDEZ, found in Robeson County, CRISOSTOMO-LOPEZ, found in Pitt County, GOMEZ-PEREZ, found in Pender County, QUINVERO, found in Wake County, SANTANA, found in Sampson County, SOTO, found in Harnett County, and VALENZUELA-ROJAS, found in Duplin County, would face maximum penalties of two years’ imprisonment, a $250,000 fine, and a term of supervised release following any term of imprisonment.
CISNEROS-FRANCO, found in Wilson County, is alleged to have been previously deported subsequent to aggravated felony convictions (trafficking in a controlled substance and illegal reentry of an aggravated felon). Therefore, if convicted, he would face a maximum imprisonment term of 20 years, a $250,000 fine, and a term of supervised release following any term of imprisonment.
If convicted of False Representation of a Social Security Account Number and Aggravated Identity Theft, LUCAS-MENDEZ, found in Wayne County, would face maximum penalties of seven years’ imprisonment, a $250,000 fine, and a term of supervised release following any term of imprisonment.
The charges and allegations contained in the indictments are merely accusations. The defendants are presumed innocent unless and until proven guilty in a court of law.
The cases are being investigated by ICE’s Enforcement and Removal Operations, and Homeland Security Investigations.
Niagara Falls Man Pleads Guilty to Heroin ChargeRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.-Acting U.S. Attorney James P. Kennedy, Jr. announced today that Shaquan M. Shingledecker, 25, of Niagara Falls, NY, pleaded guilty to possession with intent to distribute heroin before U.S. District Judge Elizabeth A. Wolford. The charge carries a maximum penalty of 20 years in prison and a $1,000,000 fine.
Assistant U.S. Attorney Meghan A. Tokash, who is handling the case, stated that on February 2, 2017, New York State Troopers attempted to conduct a traffic stop of the defendant for a missing front license plate. Shingledecker did not pull over, but instead lead police on a high-speed chase at over 95 miles per hour through commercial and residential sections of Niagara Falls. The defendant lost control of his vehicle and crashed into the side of a house located at the intersection of Girard Avenue and 75th Street in Niagara Falls.
At the accident scene, police found 95 glassine envelopes containing heroin, a loaded Ruger handgun with 10 rounds of ammunition, and $1,439.08 in United States currency in Shingledecker’s vehicle.
Today’s plea is the result of an investigation by the New York State Police, under the direction of Major Edward Kennedy; the Bureau of Alcohol, Tobacco, Firearms, and Explosives, under the direction of Special Agent-in-Charge Ashan Benedict; the Drug Enforcement Administration, under the direction of Special Agent-in-Charge James J. Hunt, New York Field Division; and the Niagara Falls Police Department, under the direction of Superintendent Bryan DalPorto.
Sentencing is scheduled for February 15, 2018, at 8:30 a.m. before Judge Wolford.
New York Doctor Sentenced to 33 Months in Prison for Role in Test-Referral Scheme with New Jersey Clinical LabRead the Press Release
NEWARK, N.J. – An internal medicine doctor practicing in Staten Island, New York, was sentenced today to 33 months in prison for taking bribes in connection with a long-running and elaborate test referral scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, Acting U.S. Attorney William E. Fitzpatrick announced.
Ahmed El Soury, 45, of Monmouth Junction, New Jersey, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to Count One of an indictment charging him with conspiracy to violate the Anti-Kickback Statute, the Federal Travel Act, and the honest services wire fraud statute. Judge Chesler imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
El Soury admitted accepting cash bribes in return for referring patient blood specimens to BLS. From March 2011 through April 2013, El Soury received bribes totaling more than $66,000 from BLS employees and associates. El Soury’s referrals generated approximately $650,000 in lab business for BLS.
The investigation has thus far resulted in 51 convictions – 37 of them doctors – in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies. It is believed to be the largest number of medical professionals ever prosecuted in a bribery case.
The investigation has to date recovered more than $13 million through forfeiture. On June 28, 2016, BLS, which is no longer operational, pleaded guilty and was required to forfeit all of its assets.
In addition to the prison term, Judge Chesler sentenced El Soury to three years of supervised release and fined him $7,500.
Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Joseph W. Cronin; IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; and the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the ongoing investigation.
The government is represented by Assistant U.S. Attorneys Joseph N. Minish, Danielle Alfonzo Walsman, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit.
The New Jersey U.S. Attorney’s Office reorganized its health care fraud practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since that time, the office has recovered more than $1.37 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
Defense counsel: Albert Dayan Esq., Kew Gardens, New York
Mercer Transportation Company Agrees to Pay $4.4 Million to Resolve Alleged Violations of the False Claims ActRead the Press Release
G. F. “Pete” Peterman, III, United States Attorney for the Middle District of Georgia, announced today a civil settlement with trucking company Mercer Transportation Company, Inc. (Mercer). Mercer has agreed to pay $4.4 million to resolve allegations that it violated the False Claims Act by submitting claims for payment related to shipments originating at the Marine Corps Logistics Base (MCLB) in Albany, Georgia, that were obtained by bribery of Government officials from 2006 through 2012.
This settlement resolves a lawsuit under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to bring civil actions on behalf of the Government and to share in any recovery. The Act also allows the Government to intervene and take over the action, as it did in this case. The relator who filed this case under the whistleblower provisions of the False Claims Act will receive $814,000 as his share of the recovery.
In its civil complaint, the United States alleged that Mercer, through its agents, employees, and representatives, bribed two Government employees who worked at MCLB in Albany and who were responsible for awarding contracts for the shipment of Government freight out of MCLB. The United States’ complaint alleged that the bribery of these Government employees resulted in Mercer’s being awarded contracts for shipments out of MCLB that it would not have otherwise received during the period from October 2006 through May 2012.
“In simple terms, fraud committed by defense contractors is theft directly from the American people,” Peterman said. “When dealing with the U.S. Government – especially when dealing with the armed forces whose lives may depend on the work of these contractors – contractors are expected to act in good faith and to comply with their obligations. This U.S. Attorney’s Office will hold accountable contractors that seek to profit unfairly at the expense of American troops and taxpayers.”
“This settlement demonstrates the commitment of the Defense Criminal Investigative Service and its law enforcement partners to protect the integrity of all Department of Defense programs,” said Special Agent in Charge John F. Khin, Southeast Field Office. “DCIS’ efforts in this investigation mitigated further significant loss and waste of taxpayer dollars from this fraudulent scheme.”
According to Special Agent in Charge Mike Wiest, NCIS Southeast Field Office, “the preservation of the integrity of Department of Navy procurement activities is a top priority of the Naval Criminal Investigative Service. Through a joint investigation, NCIS and its partner agencies steadfastly pursued numerous allegations of corruption that caused significant harm to the U.S. Marine Corps and other Department of Defense equities resulting in this settlement.”
“This settlement is a result of the steadfast efforts of our investigators and our law enforcement partners,” said Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “Uncovering these types of schemes is a cooperative effort, and we look forward to continuing our work together to eradicate corruption.”
The United States’ civil settlement was the result of a coordinated effort among the Naval Criminal Investigative Service, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigative Command’s Major Procurement Fraud Unit, the United States Attorney’s Office for the Middle District of Georgia, and the U. S. Department of Justice’s Civil Division’s Commercial Litigation Branch. The case was investigated by NCIS Special Agent Riley Proctor, DCIS Special Agent Lam Hoang, and Special Agent Jennifer Coleman of the U.S. Army Criminal Investigative Command.
The United States was represented by Assistant United States Attorney Todd P. Swanson and Assistant United States Attorney W. Taylor McNeill, both of the U.S. Attorney’s Office for the Middle District of Georgia, and Andrew Steinberg, of the Civil Division’s Commercial Litigation Branch.
Mercer fully cooperated in the United States’ pre-intervention investigation. The claims resolved by the settlement are allegations only; there has been no determination of liability. The case is captioned United States ex rel. James E. Reeves v. Mercer Transportation Co., Inc., (Case No. 1:13-CV-108-LJA (M.D. Ga.).
Questions concerning this case should be directed to Pamela Lightsey, Public Information Officer, United States Attorney’s Office, at (478) 621-2603.
Long Island Man Sentenced on Drug ChargesRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y. - Acting U.S. Attorney James P. Kennedy, Jr. announced today that Joel C. Jacob, 22, East Meadow, NY, who was convicted of conspiracy to possess with intent to distribute MDMA, also known as “Molly,” was sentenced to 36 months probation to include six months home detention by U.S. District Judge Elizabeth A. Wolford.
Assistant U.S. Attorney Patricia Astorga, who handled the case, stated that on August 17, 2016, Jacob signed for a parcel addressed to him during a controlled delivery by the U.S. Postal Inspection Service. The delivery was made to Jacob’s residence on Campus Drive in Buffalo, a residence he shared with co-defendant Connor Dempsey. The package, which was ordered over the internet using bitcoins, was sent from Munchen, Germany and contained over 180 grams of MDMA.
During a search of the Campus Drive apartment, officers recovered quantities of: marijuana; LSD; cocaine; THC; Xanax; and ketamine. They also found a digital scale, baggies, empty capsules, other drug paraphernalia, and another mail parcel addressed to a third co-defendant.
Connor Dempsey was also convicted and sentenced.
Today’s sentence is the result of an investigation by Immigration and Customs Enforcement, Homeland Security investigations, under the direction of Acting Special Agent-in-Charge Kevin Kelly; and the United States Postal Inspection Service, under the direction of Inspector-in-Charge Shelly Binkowski of the Boston Division.
Lexington County Gang Member Sentenced on Two Federal Firearm ChargesRead the Press Release
Columbia, South Carolina ---- United States Attorney Beth Drake stated that Jake Rupert, age 33, of Lexington, was sentenced to 96 months imprisonment, which will be followed by 3 years of supervised release. Rupert plead guilty in federal court in August 2017 to being a felon in possession of a firearm and ammunition and to being in possession of a firearm with an obliterated serial number, all in violation of Title 18, United States Code, Sections 922(g)(1) and 922(k). Senior United States District Judge Cameron McGowan Currie, of Columbia, imposed the sentence, which was the maximum under the suggested federal sentencing guidelines range.
Evidence presented in court established on April 19, 2017, a trooper with the South Carolina Highway Patrol was on patrol on Boy Scout Road in Lexington County when he observed a male (later identified as Rupert) and a female trying to take a tire off a Dodge Charger on the side of the road. The two individuals advised that they were trying to get the Charger out of the dirt for a friend and that their vehicle was the Lexus parked across the road. The trooper noticed that the tag on the Lexus was expired and the male and female both provided false names to the trooper, so he called for backup from the Gaston Police Department. During this time, Rupert paced back and forth nervously and put on three additional t-shirts until the trooper advised him to have a seat on the ground next to the Lexus. After learning Rupert’s true identity, the trooper patted Rupert down and found a loaded Jimenez Arms 9mm handgun in the front waistband of his pants. The serial number on the handgun had been obliterated. The trooper also found a black bag containing additional 9mm ammunition on the ground where Rupert had been sitting. Rupert admitted to being released from state prison on March 31, 2017, and to being a gang member. Rupert was placed under arrest for state charges. At the detention center, officers also found a small amount of marijuana in Rupert’s wallet. The female was also arrested on outstanding warrants. Rupert made bond on the state charges.
During the federal investigation, ATF learned that Rupert was the individual being sought by local law enforcement after accidentally discharging a shotgun inside Dutch Square on April 22, 2017, three days after the above incident. After advise of rights, Rupert admitted to ATF that he had a sawed-off shotgun in a bag inside the mall and that when he sat the bag down, the gun accidentally discharged. Rupert advised that he then fled the scene.
Rupert is prohibited under federal law from possessing firearms and ammunition based upon his prior state convictions for conspiracy to manufacture methamphetamine, possession with intent to distribute methamphetamine, burglary 2nd degree, grand larceny (4 counts), and possession of stolen motor vehicle. At the time of the incident, Rupert was on supervised re-entry release from the South Carolina Department of Corrections after being released March 31, 2017.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), the South Carolina Highway Patrol, and the Gaston Police Department and was prosecuted as part of the joint federal, state and local Project CeaseFire initiative, which aggressively prosecutes firearm cases. Assistant United States Attorney Stacey D. Haynes of the Columbia office handled the case.
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Latrobe Postal Contractor Charged with Opening Mail and Stealing Kmart Gift CardRead the Press Release
PITTSBURGH – A resident of Latrobe, Pennsylvania, has been indicted by a federal grand jury in Pittsburgh on a charge of theft of mail, Acting United States Attorney Soo C. Song announced today.
The one-count indictment named Dale R. McIntyre, 52, of Latrobe, Pennsylvania.
According to the indictment presented to the court, on or about July 14, 2017, McIntyre, a contract driver for the U.S. Postal Service, opened mail he was to deliver and stole a $50 Kmart gift card.
The law provides for a maximum total sentence of five years in prison, a fine of $250,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Shardul S. Desai is prosecuting this case on behalf of the government.
The United States Postal Inspection 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.
KC Man Sentenced for Meth Conspiracy in Mid-MissouriRead the Press Release
JEFFERSON CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was sentenced in federal court today for his role in a conspiracy to distribute methamphetamine in mid-Missouri.
David Wayne Lederhos, 54, of Kansas City, was sentenced by U.S. District Judge Brian C. Wimes to 13 years in federal prison without parole.
On March 27, 2017, Lederhos pleaded guilty to participating in a conspiracy to distribute methamphetamine from November 2015 to Feb. 10, 2016.
A cooperating individual made a controlled purchase of approximately two ounces of methamphetamine from Lederhos on Feb. 4, 2016. Law enforcement officers executed a search warrant at Lederhos’s residence on Feb. 10, 2016. They found a Ziploc bag that contained eight separate baggies, each of which contained methamphetamine, for a total of 364 grams of methamphetamine. Officers also found a loaded Beretta 12-gauge shotgun, drug paraphernalia and approximately 19 grams of marijuana in the bedroom.
Lederhos told investigators that he had purchased one pound of methamphetamine the previous day for $8,000. He also stated that he purchased approximately one or two pounds of methamphetamine every day or every other day over a four-month period of time.
This case was prosecuted by Assistant U.S. Attorney Lawrence E. Miller. It was investigated by the Drug Enforcement Administration, the Missouri State Highway Patrol, the Jackson County Drug Task Force, the Cooper County, Mo., Sheriff’s Department and the East Central Drug Task Force.
Johnstown Man Charged with Possessing Child PornographyRead the Press Release
JOHNSTOWN, Pa. – A resident of Johnstown, Pa. was indicted by a federal grand jury in Johnstown on a charge of possession of child pornography, Acting United States Attorney Soo C. Song announced today.
The indictment named William Jay Clark, 30, of Johnstown, Pa., as the sole defendant.
According to the indictment presented to the court, on February 23, 2017, he knowingly possessed pictures and videos in individual computer graphic files which were produced using prepubescent minors engaging in sexually explicit conduct. The computer graphic files were shipped or transported in interstate or foreign commerce.
The law provides for a maximum total sentence of 20 years in prison, a fine of $250,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney John J. Valkovci, Jr., is prosecuting this case on behalf of the government.
The U.S. Immigration and Customs Enforcement, Homeland Security Investigations, 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.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who sexually exploit children and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Houston Men Sent to Prison for Distributing MethRead the Press Release
HOUSTON – Three local men have been ordered to federal prison following their convictions of possession with the intent to distribute methamphetamine, announced Acting U.S. Attorney Abe Martinez. Marco Zuniga, 25, Frank Flores, 25, Chance Nutt, 40, and Clifton Johnson, 42, all had previously guilty to the charges.
Today, U.S. District Judge Gray Miller ordered Flores to serve a 168-month term of imprisonment, while Zuniga, Nutt and Johnson will serve respective sentences of 78, 46 and 48 months in federal prison.
The investigation began in July 2014 when authorities made undercover purchases of methamphetamine in the Houston area. During that investigation, agents purchased or seized approximately one kilogram of high quality methamphetamine.
Flores was initially after he led authorities on a high-speed chase, during which time he threw approximately a ½ pound of methamphetamine from his car. Upon his eventual arrest, agents discovered a firearm in the glove compartment of his car.
All of the men sentenced today will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The Drug Enforcement Administration, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Marshals Service, Navasota Police Department and sheriff’s offices in Harris and Montgomery Counties conducted the investigation with assistance from District Attorney’s Offices in Harris and Montgomery Counties. Assistant U.S. Attorney Robert Stabe is prosecuting the case.
Honduran National Charged with Illegal ReentryRead the Press Release
Acting U.S. Attorney Duane A. Evans announced that MARCIO RODOLFO OCHOA-BORJAS, age 31, a citizen of Honduras, was charged yesterday in a one-count Bill of Information with illegal reentry of a removed alien after deportation, in violation of 8 U.S.C. ' 1326(a).
According to the Bill of Information, OCHOA-BORJAS reentered the United States on or about June 30, 2017, after having been previously removed therefrom on or about August 16, 2012.
If convicted, OCHOA-BORJAS faces a maximum term of imprisonment of two years, a fine of up to $250,000, one year supervised release after imprisonment, and a $100 special assessment.
Acting U.S. Attorney Evans reiterated that a Bill of Information is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
Acting U.S. Attorney Evans praised the work of the United States Department of Homeland Security, Immigration and Customs Enforcement in investigating this matter. Assistant United States Attorney Irene González is in charge of the prosecution.
Guatemalan National Pleads Guilty to Illegal Reentry After DeportationRead the Press Release
BOSTON - A Guatemalan national pleaded guilty today in federal court in Boston to illegally reentering the United States after being deported.
Nestor Mendez Nolasco, 26, pleaded guilty before U.S. District Court Judge Leo T. Sorokin to one count of illegal reentry of a deported alien. Sentencing is scheduled for Dec. 15, 2017.
Mendez Nolasco was previously deported on Jan. 31, 2013, April 9, 2013, and July 7, 2013. On April 25, 2017, Mendez was arrested in Hopkinton on an unrelated state charge.
Mendez Nolasco faces a sentence of no greater than 10 years in prison, three years of supervised release, a fine of $250,000, and will be subject to deportation upon completion of any sentence imposed. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
Acting United States Attorney William D. Weinreb and Michael Shea, Acting Special Agent in Charge of Homeland Security Investigations in Boston, made the announcement today. Assistant U.S. Attorney Nicholas Soivilien of Weinreb’s Major Crimes Unit is prosecuting this case.
Georgia Federal Court Prohibits Tax Preparer from Preparing Tax Returns for OthersRead the Press Release
A federal court in Atlanta, Georgia, has permanently barred Tarralis K. Mack, individually and doing business as Metro Tax Advisors, from preparing federal tax returns for others, the Justice Department announced today. Mack previously pleaded guilty to willfully aiding or assisting in, or procuring counseling, or advising the preparation or presentation of a false or fraudulent amended income tax return.
The civil injunction order, to which the defendant consented, was signed by Judge William S. Duffey, Jr. of the U.S. District Court for the Northern District of Georgia.
According to the complaint, Mack prepared federal income tax returns for customers that generated fraudulent refunds by creating fictitious business expenses to offset wage income. The complaint alleges that none of these customers owned any businesses and Mack did not request information to substantiate the business income and expenses he claimed on the customers’ returns. The returns prepared by Mack and audited by the Internal Revenue Service (IRS) claimed a total of $481,302 in fraudulent refunds, according to the complaint.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2017. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal 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.
Former Pennsylvania Resident Sentenced to Probation for Lying on Firearms Purchase FormRead the Press Release
JOHNSTOWN, Pa. - A resident of Pray, MT, formerly of Clearfield, Pa., pleaded guilty in federal court in Johnstown to charges of false statement to a federally licensed firearms dealer, and immediately thereafter was sentenced to five years’ probation and 50 hours of community service for each year of her probation, Acting United States Attorney Soo C. Song announced today.
Heather L. Welker, 41, pleaded guilty to the indictment before United States District Judge Kim R. Gibson.
In connection with the guilty plea, on various dates from January 28, 2015, to March 26, 2015, Welker purchased a number of firearms from Grice Gun Shop, a federally licensed firearms dealer, stating she was purchasing the firearms for herself, when, in truth and fact, she was not the actual buyer and was purchasing the firearms on behalf of another person.
Assistant United States Attorney John J. Valkovci, Jr., prosecuted this case on behalf of the government.
Ms. Song commended the Bureau of Alcohol, Tobacco, Firearms and Explosives for the investigation leading to the successful prosecution of Welker.
According to Ms. Song, Heather L. Welker was prosecuted as part of Project Safe Neighborhoods, a collaborative effort by federal, state and local law enforcement agencies, prosecutors and communities to prevent, deter and prosecute gun crime.
Former New Hampshire Investment Banker Sentenced to 18 Months in Prison for Defrauding Client of $2 MillionRead the Press Release
CONCORD, N.H. - Acting United States Attorney John J. Farley announced that Karl Edward Hahn, 44, of Manchester, Connecticut and formerly of New Castle, New Hampshire was sentenced to serve 18 months in prison for participating in a wire fraud scheme that defrauded a victim of approximately $2 million.
According to court records and statements in court, Hahn lived in New Hampshire and was employed as an investment advisor at investment banks in Portsmouth, New Hampshire. Starting as early as March of 2009 and continuing until July of 2010, he invited one of his investment clients to join him in what he referred to as an “off the books” investment. He described that investment as follows: Hahn and the victim would each contribute approximately $2 million, which Hahn would then loan to three individuals who would repay the money within 90 days with interest substantially above market rates. Hahn told the victim the “loan” would be secured by three pieces of residential real estate, one owned by each of the three borrowers, which were all unencumbered and which collectively had a value far in excess of the approximately $4 million loan.
Hahn told the victim that no one could know about the investment, including the defendant’s employer, because he was not allowed to enter into financial dealings with clients other than through his employment. In order to prevent his employer from learning of the “off the books” transaction, Hahn asked the victim to transfer the money into a bank account held by one of Hahn’s relatives and that Hahn would then get the money from his relative.
The victim agreed and transferred to Hahn’s relative’s account, in separate transactions, $300,000, $1,600,000, $100,000, and $35,000, totaling $2,035,000. Hahn later admitted that the entire story of landowners wanting to borrow money was false, that there never were three landowners who wanted to borrow money collateralizing the loans with deeds, and that loans were never made to any landowners using the victim’s money. Hahn simply used the victim’s money to pay personal expenses. In 2011, the New Hampshire Bureau of Securities Regulation barred Hahn from being licensed to sell securities.
Hahn also admitted that during the course of executing the scheme, he made additional materially false representations to the victim that lulled him into a false sense of security and caused him to temporarily refrain from reporting his dealings with the defendant to law enforcement authorities. Those false statements included: 1) that the supposed borrowers had defaulted on the loans; 2) that as a result of the alleged defaults, Hahn had possession of the deeds to the supposed borrowers’ properties; and 3) that Hahn had communicated with a hedge fund so the hedge fund could buy the properties, thereby resulting in the return of the victim’s money with interest. Hahn also later falsely represented to the victim that he had been successful in working with the supposed hedge fund and that he was confident that the victim would have his money back by early August of 2010.
Hahn, who previously pleaded guilty, will be required to begin serving his sentence on December 4, 2017.
This case was investigated by the FBI and United States Secret Service and was prosecuted by Assistant United States Attorney Arnold H. Huftalen.
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Former Louisville Business Owner Sentenced to 27 Months in Prison for Failure to File Income Tax Returns and Tax EvasionRead the Press Release
LOUISVILLE, Ky. – United States Attorney Russell M. Coleman, today announced the sentencing of former Louisville business owner Lawrence P. Tatem, in United States District Court, by Senior Judge Charles R. Simpson III, to 27 months in prison and one year supervisory release, for willful failure to file federal income tax returns during a four-year period and evasion of payment of taxes, penalties, and assessments totaling $533,498 from a two-year period.
According to the charges, Tatem, 50, willfully attempted to evade and defeat the payment of a large part of the federal income tax, penalties, and interest due by him to the United States of America, for the calendar years 2002 through 2004, totaling approximately $533,498, by concealing his assets; by changing the names and locations of his rehabilitation businesses; by placing his businesses in the names of nominees J.S., D.R., and M.Z.; by closing bank accounts at Republic Bank after the Internal Revenue Service attempted to levy funds from the accounts, and opening new bank accounts at Chase Bank under different names; and by operating in cash without keeping proper records of cash transactions.
Further, Tatem admitted to willful failure to file federal income tax returns for calendar years 2010 to 2013. Specifically, during the calendar year 2010, Tatem received gross income of approximately $252,860 and failed to file a federal tax return by April 15, 2011. During calendar year 2011, Tatem received gross income of approximately $45,353 and failed to file a federal tax return by April 15, 2012. During calendar year 2012, Tatem received gross income of approximately $199,067 and failed to file a federal income tax return by April 15, 2013. During the calendar year 2013, Tatem received gross income of approximately $120,994 and failed to file a federal income tax return by April 15, 2014.
This case was prosecuted by Assistant United States Attorney Amanda Gregory and was investigated by the Internal Revenue Service Criminal Investigation Division.
Former Director of Fixed Income and Head of Portfolio Strategy at the New York State Common Retirement Fund Pleads Guilty in “Pay-For-Play” Bribery SchemeRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that NAVNOOR KANG, the former Director of Fixed Income and Head of Portfolio Strategy at the New York State Common Retirement Fund (“NYSCRF”), pled guilty today before U.S. District Judge J. Paul Oetken for participating in a massive “pay-for-play” bribery scheme involving the NYSCRF, the nation’s third largest public pension fund.
Acting Manhattan U.S. Attorney Joon H. Kim said: “As an investment professional with New York State Common Retirement Fund, Navnoor Kang owed a duty to the public employees whose pension money he oversaw. But in this case of public corruption meets securities fraud, Kang sold himself and his duty to safeguard public retirement money for luxury vacations, jewelry, cash and even drugs. He has now admitted to his crimes and is a convicted felon. ”
According to allegations contained in the Indictment charging KANG and statements made during his plea proceeding:
The NYSCRF
The NYSCRF is a pension fund administered for the benefit of public employees of the State of New York. From January 2014 through February 2016, KANG served as Director of Fixed Income and Head of Portfolio Strategy for the NYSCRF. In that capacity, KANG was responsible for investing more than $53 billion in fixed-income securities and was entrusted with discretion to manage those investments on behalf of the NYSCRF. KANG owed a fiduciary duty to the NYSCRF and its members and beneficiaries, and was required to make investment decisions in their best interests and free of any conflict of interest. New York State law and NYSCRF policies prohibited KANG and other NYSCRF employees from receiving any bribes, gifts, benefits, or consideration of any kind.
The Scheme to Steer NYSCRF Fixed-Income Business in Exchange for Secret Bribes
From 2014 through 2016, KANG and others participated in a scheme to defraud the NYSCRF and its members and beneficiaries, and to deprive the NYSCRF of its intangible right to KANG’s honest services. The scheme involved, among other things, an agreement among KANG, Deborah Kelley, a managing director of institutional fixed income sales at New York-based broker-dealer (“Broker-Dealer-1”), Gregg Shonhorn, a vice president of fixed income sales at a New York-based broker-dealer (“Broker-Dealer-2”), and others to pay KANG bribes – in the form of entertainment, travel, lavish meals, prostitutes, nightclub bottle service, narcotics, tickets to sports games and other events, luxury gifts, and cash payments for strippers and KANG’s personal expenses – in exchange for fixed-income business from the NYSCRF. Such bribes – which totaled more than $100,000 – were strictly forbidden by the NYSCRF, and were paid secretly and without any disclosure to the NYSCRF and its members and beneficiaries concerning the conflicts of interest inherent therein.
In exchange for the bribes paid by Kelley, Schonhorn, and others, KANG used his position as Director of Fixed Income and Head of Portfolio Strategy at the NYSCRF to promote the interests of Kelley, Schonhorn, and their respective brokerage firms. KANG, in exchange for the bribes he received, agreed to steer fixed-income business to Broker-Dealer-1 and Broker-Dealer-2. In fact, KANG steered more than $3 billion in fixed-income business to Broker-Dealer-1 and Broker-Dealer-2, from which Kelley, Schonhorn, and their respective employers earned millions of dollars in commissions from the NYSCRF. In so doing, KANG, with the knowledge and approval of Kelley and Schonhorn, breached his fiduciary duty to make investment decisions in the best interest of the NYSCRF and its members and beneficiaries, and free of conflict, and deprived the NYSCRF of its intangible right to KANG’s honest services.
As the bribes paid by Schonhorn to KANG increased, so too did Broker-Dealer-2’s fixed-income business with the NYSCRF. The value of the NYSCRF’s domestic bond transactions with Broker-Dealer-2 skyrocketed from zero in the fiscal year ending March 31, 2013, to approximately $1.5 million in the fiscal year ending March 31, 2014, to approximately $858 million in the fiscal year ending March 31, 2015, and to approximately $2.378 billion in the fiscal year ending March 31, 2016. Broker-Dealer-2 became the third largest broker-dealer with which the NYSRCF executed domestic bond transactions for the fiscal year ending March 31, 2016, having not even been on the approved list in the fiscal year ending March 31, 2013. As the NYSCRF’s third largest broker-dealer in this asset class, Broker-Dealer-2 brokered approximately eight percent of the total value of the NYSCRF’s domestic bond transactions – a figure greater than that of all but two of the major international banks and brokerage houses on the list. Similarly, the value of NYSCRF’s domestic bond transactions with Broker-Dealer-1 increased from zero in the fiscal year ending March 1, 2014, to approximately $156 million in the fiscal year ending March 1, 2015, and to approximately $179 million in the fiscal year ending March 1, 2016.
KANG’s trades resulted in the payment of millions of dollars in commissions to Broker-Dealer-1 and Broker-Dealer-2, of which Kelley and Schonhorn personally earned approximately 35 to 40 percent.
The Obstruction of Justice
In late 2015, the Securities and Exchange Commission (“SEC”) opened an investigation into the entertainment and benefits that Kelley had provided KANG, and the SEC subpoenaed both KANG and Kelley for their testimony. In advance of their testimony, KANG and Kelley agreed to align their stories and testify falsely before the SEC in order to conceal their scheme. In late 2015 and early 2016, KANG and Kelley each falsely testified under oath before the SEC about expenses Kelley had paid for KANG. Moreover, after a federal grand jury investigation was opened, KANG instructed Schonhorn to testify falsely before the grand jury, and KANG admitted that he had hidden relevant evidence.
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KANG, 37, of Glendale, California, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison, and one count of conspiracy to commit honest services wire fraud, which carries a maximum sentence of 20 years in prison. KANG is scheduled to be sentenced on February 23, 2018, by Judge Oetken.
Kelley and Schonhorn have each pled guilty for participating in the scheme. Kelley was sentenced by Judge Oetken to three years of probation.
Mr. Kim praised the investigative work of the Federal Bureau of Investigation and noted that the investigation is continuing. He also thanked the SEC, which filed civil charges against Kang, Kelley, and Schonhorn in a separate civil action, and the Office of Inspector General for the Office of the New York State Comptroller.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Edward A. Imperatore and Joshua A. Naftalis are in charge of the prosecution.
Former Chief Financial Officer of American Realty Capital Partners Sentenced for Accounting FraudRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that BRIAN BLOCK, the former chief financial officer of the publicly traded real estate investment trust (“REIT”) formerly known as American Realty Capital Partners (“ARCP”), was sentenced to 18 months in prison for inflating a key metric used to evaluate the financial performance of publicly traded REITS in ARCP’s filings with the U.S. Securities and Exchange Commission (the “SEC”). BLOCK was convicted by a jury in June, following a three-week trial before U.S. District Judge J. Paul Oetken, who imposed today’s sentence.[1]
Acting Manhattan U.S. Joon H. Kim said: “Block, the CFO of a major REIT, deliberately cooked the books to mislead investors and the SEC. Investors in our securities markets must be able to trust that corporate officers will not lie about the financial health of a publicly traded company. And corporate officers who do lie face time in a federal prison, as Brian Block has learned.”
According to allegations contained in the Indictment, and evidence presented during the trial in Manhattan federal court:
In 2014, ARCP was a publicly traded REIT headquartered in Manhattan, New York. ARCP’s securities traded under the symbol “ARCP” on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) exchange.
ARCP, like many REITs, measured its financial performance through metrics besides, or in addition to, traditional measurements of company performance calculated using Generally Accepted Accounting Principles (“GAAP”). ARCP calculated and reported to the investing public a non-GAAP measure called adjusted funds from operations, or AFFO, which was designed to more accurately reflect ARCP’s cash flow and financial performance by presenting ARCP’s income before consideration of non-cash depreciation and amortization expense and by excluding certain one-time charges and expenses. REITs such as ARCP commonly reported their AFFO figures, including AFFO per share, to the investing public and in filings with the SEC. ARCP also provided forward-looking guidance to the investing public regarding their anticipated AFFO performance in upcoming time periods.
Prior to the filing of ARCP’s Form 10-Q setting forth ARCP’s financial statements for the second quarter of 2014 (the “Second Quarter 10-Q”), BRIAN BLOCK, along with Lisa McAlister and others, came to understand that the method used by ARCP to calculate AFFO in the first quarter of 2014 and in certain previous quarters was erroneously inflated. Another employee of ARCP (“CC-1”) had brought this methodological error to the attention of BLOCK, McAlister, and others shortly before the filing of ARCP’s first quarter 2014 10-Q (the “First Quarter 10-Q”), but no corrective change was made to the First Quarter 10-Q while the issue was under review. Following the filing of the First Quarter 10-Q, CC-1 concluded, and advised BLOCK, McAlister, and others, that the reported AFFO per share calculation for the first quarter of 2014 was overstated by approximately $0.03 per share. Instead of $0.26 per share, which was publicly reported by ARCP to its shareholders and the investing public, and which placed ARCP on track to meet its full-year AFFO per-share guidance, the correct AFFO for the first quarter of 2014 was $0.23 per share.
Despite his knowledge of a material error in ARCP’s previous filings with the SEC, BLOCK took no steps to advise the Audit Committee of ARCP’s Board of Directors, or ARCP’s outside auditors, of the error in the First Quarter 10-Q. Moreover, BLOCK, McAlister, and CC-1 then knowingly facilitated the use of the same materially misleading calculations in ARCP’s Second Quarter 10-Q. For example, on July 24, 2014, a draft of ARCP’s Second Quarter 10-Q was circulated to members of ARCP’s Audit Committee. The draft included an AFFO calculation for the six-month period ending June 30, 2014, that incorporated AFFO figures from the first quarter of 2014 that BLOCK, McAlister, and CC-1 knew to be erroneously inflated.
On July 28, 2014, BLOCK met with McAlister and CC-1 in his office in Manhattan for the purpose of finalizing the financial figures that were to be included in ARCP’s Second Quarter 10-Q. Utilization of a proper method to calculate ARCP’s second quarter 2014 AFFO would have exposed that the reported AFFO and AFFO per share figures from the first quarter were inflated. Accordingly, during the meeting, BLOCK, McAlister, and CC-1 inserted into a spreadsheet BLOCK was using to calculate AFFO and AFFO per share for the first and second quarters of 2014 and for the first six months of 2014 (“YTD 2014”) figures that fraudulently inflated the AFFO and AFFO per share calculations that were to be included in the Second Quarter 10-Q and the related ARCP press release. The fraudulent numbers BLOCK, McAlister, and CC-1 used to inflate the AFFO and AFFO per share figures had no basis in fact, were without documentary support, and did not tie to ARCP’s general ledger accounting system, as BLOCK knew and understood at the time. The fraudulent numbers included in the spreadsheet prepared by BLOCK were then incorporated into ARCP’s Second Quarter 10-Q, which was filed with the SEC the following day. As a result of the manipulative efforts of BLOCK, McAlister, and CC-1, ARCP’s SEC filings included AFFO and AFFO per share figures for the second quarter of 2014 and for the first six months of 2014 that were fraudulently inflated.
The Second Quarter 10-Q was signed by, among others, BLOCK. Additionally, on a certification accompanying the 10-Q, BLOCK falsely certified, among other things, that the Second Quarter 10-Q did not contain any materially untrue statements or material omissions. He further falsely certified that he had disclosed to ARCP’s auditors and the audit committee of its board of directors: “Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.” In a second certification accompanying the 10-Q, BLOCK falsely certified that: “The quarterly report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.”
With regard to YTD 2014 specifically, the fraud resulted in an intended overstatement of AFFO by approximately $13 million and an intended overstatement of AFFO per share by approximately $0.03, or approximately 5 percent of total AFFO per share. By reporting AFFO per share of $0.24 in the second quarter, after having reported AFFO per share of $0.26 in the first quarter, BLOCK and his co-conspirators misled ARCP’s shareholders and the investing public by falsely representing that ARCP’s AFFO per share for the first six months of 2014 was consistent with analysts’ expectations and on track to meet ARCP’s guidance for AFFO per share for calendar year 2014, when in fact, they were not.
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In addition to the prison term, BLOCK, 45, of Hatfield, Pennsylvania, was sentenced to three years of supervised release, and a $100,000 fine. Restitution will be determined at a future date.
Mr. Kim praised the investigative work of the Federal Bureau of Investigation and also thanked the SEC.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Edward Imperatore, and Daniel Tehrani are in charge of the prosecution.
[1] BLOCK’s co-defendant, ARCP’s former chief accounting officer Lisa McAlister, pled guilty to securities fraud and related charges on June 29, 2016, and has yet to be sentenced.
Former BBVA Compass Investments Employee Agrees to Plead Guilty to EmbezzlementRead the Press Release
BIRMINGHAM – The U.S. Attorney’s Office today charged a former BBVA Compass Investment Solutions employee with embezzling more than $200,000 from the bank, announced U.S. Attorney Jay E. Town and FBI Special Agent in Charge Johnnie Sharp Jr.
Prosecutors filed a one-count information in U.S. District Court charging ERIC SCOTT DARTY, 30, of Birmingham, with bank embezzlement. Darty has agreed to plead guilty and signed a plea agreement. He must appear before a judge to formally enter a guilty plea.
“This office and our law enforcement partners continue to aggressively investigate financial crimes in order to protect the integrity of our nation’s financial infrastructure,” Town said. “We must hold accountable employees of financial institutions who take from a bank or its customers for personal gain.”
“Darty was a stockbroker who used the trust customers placed in him to steal for his own personal greed,” Sharp said. “I would like to express my appreciation to the Alabama Securities Commission for their assistance in this investigation and helping to bring Darty to the justice he deserves.”
According to the Plea Agreement, also filed in the district court, Darty was an employee of BBVA Compass Investment Solutions and a registered stockbroker when he began embezzling customer funds by manipulating customer cashiers’ checks that were intended to purchase insurance products.
At times between November 2015 and his termination in October 2016, Darty would renegotiate a customer’s original cashier’s check into a cashier’s check for a lesser amount. Darty would receive the left over amount as cash, typically several thousand dollars, and keep the cash for himself, rather than returning it to the customer or using it to buy the investment product on the customer’s behalf. According to the plea agreement, he would use the newly issued cashier’s check to purchase the investment product. In some circumstances, Darty renegotiated an original cashier’s check more than one time into successively smaller amounts. On some occasions, he would move money between customer accounts to attempt to cover his embezzlement.
Darty admits in his plea agreement that his scheme involved 47 unauthorized transactions in 13 accounts belonging to nine customers and resulted in a loss to BBVA Compass of between $150,000 and $250,000 dollars. Darty has agreed to pay restitution of $206,970 to BBVA Compass Bank and to forfeit that same amount to the government as proceeds of illegal activity. He has also agreed to restrictions on his future employment in the financial services industries.
Darty faces a potential prison sentence of up to 30 years and a fine of up to $1 million.
The FBI, in conjunction with the Alabama Securities Commission, investigated the case, which Assistant U.S. Attorney Erica Williamson Barnes is prosecuting.
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Fentanyl Overdose Case SentencedRead the Press Release
COUNCIL BLUFFS, IOWA - On November 7, 2017, United States Senior District Court Judge James E. Gritzner sentenced Charles Jesse Beuterbaugh, 30, of Pottawattamie County, to 20 years in prison for conspiracy to distribute a fentanyl analogue that caused death or serious bodily injury, announced United States Attorney Marc Krickbaum. Beuterbaugh will serve five years of supervised release following imprisonment and pay $100 to the Crime Victims’ Fund. Beuterbaugh was part of a drug trafficking organization that was responsible for receiving and distributing fentanyl analogues obtained from a source in China to users in western Iowa and eastern Nebraska.
The investigation into the drug trafficking group began on June 28, 2015, when law enforcement was called to a Carter Lake, Iowa, residence regarding an unresponsive male. Law enforcement found the body of a 20-year-old male in Beuterbaugh’s living area. In addition, law enforcement learned that a second male had been transported to a local hospital from the Beuterbaugh residence prior to law enforcement being called, and had been placed on life support.
The investigation revealed that Beuterbaugh had provided "acetyl fentanyl" to both victims, which was determined to be the cause of death of the 20-year-old male, and the reason for the hospitalization for the second male. Beuterbaugh had obtained the acetyl fentanyl through an organization that began distributing fentanyl, or an analogue of fentanyl, in November of 2014 and continued to distribute in April of 2016. All members involved in the distribution of the acetyl fentanyl have entered guilty pleas.
On October 26, 2017, Senior Judge James E. Gritzner sentenced Beuterbaughs’ co-defendants, Dustin C. Sullivan, 27, of Council Bluffs, to 162 months in prison, and Cody Lanus, 31 of Omaha, Nebraska, to 144 months in prison. Both Sullivan and Lanus were also ordered to serve five years of supervised release following imprisonment.
Michael David Redmond, Jr. was previously sentenced by Senior Judge James E. Gritzner to 120 months in prison followed by five years of supervised release. Redmond, Jr., Sullivan, and Lanus were also ordered to pay $100 to the Crime Victims’ Fund. Amalia N. Pandis and Walter John O’Donohue, III are pending sentencing in February of 2018.
This investigation was conducted by the Carter Lake Police Department, the Pottawattamie County Sheriff’s Office, the Council Bluffs Police Department, the Southwest Iowa Narcotics Task Force, the Omaha, Nebraska, Police Department, the Iowa Division of Criminal Investigation, the Iowa Division of Narcotic Enforcement, the United States Postal Inspection Service, and the Drug Enforcement Administration in Nebraska. This case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
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Learn more about this release by calling Kevin E. VanderSchel at 515-473-9300, or by emailing him at [email protected] (link sends e-mail).
Federal Correctional Officer Pleads Guilty to Bribery, Narcotics and Sexual Abuse ChargesRead the Press Release
Earlier today, Armando Moronta pled guilty at the federal courthouse in Brooklyn to bribery, narcotics conspiracy and four counts of sexual abuse of a ward. At the time of the offenses, Moronta was a federal correctional officer employed by the United States Bureau of Prisons (BOP) at the Metropolitan Detention Center in Brooklyn, New York (MDC); he was suspended by the BOP after his initial arrest on bribery and narcotics charges. The charges stem from two separate indictments. When sentenced, Moronta faces up to 20 years in prison on the narcotics conspiracy charge and 15 years in prison on each of the bribery and sexual abuse charges. Moronta has also agreed to forfeiture of $15,000 in bribe payments and is required to register as a sex offender. The proceeding took place before United States District Judge Roslynn R. Mauskopf.
Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Ronald G. Gardella, Special Agent-in-Charge, United States Department of Justice, Office of the Inspector General, New York Field Office (DOJ OIG), and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the plea.
“In a fundamental breach of his duties as a public servant, former federal correctional officer Moronta compromised the safety of the MDC by allowing inmates to have prohibited goods and abusing inmates sexually,” stated Acting United States Attorney Rohde. “This case serves as a reminder that correctional officers who would so compromise the well-being of their colleagues and charges will be held accountable to the fullest extent of the law.”
“Corruption and abuse of power have no place in our federal correctional system and will not be tolerated,” stated DOJ OIG Special Agent-in-Charge Gardella. “Moronta’s conduct shattered the safety of his victims and imperiled the security of the MDC. The OIG will continue to work closely with the BOP and our law enforcement partners to ensure that individuals who abuse the public’s trust in this manner are brought to justice.”
“While the vast majority of law enforcement officers carry out their duties with honor and dignity, Moronta did not,” stated Assistant Director-in-Charge Sweeney. “May this case serve as an example to anyone who dares to threaten the integrity of the law enforcement profession—just because you’re awarded a badge of honor, it doesn’t mean you can hide behind the shield.”
According to court filings and facts presented during the plea proceeding, between March and December 2016, on approximately 12 occasions, Moronta smuggled cellular telephones and narcotics, including the synthetic narcotic “K2” and Suboxone, into the MDC for use and distribution by male inmates in exchange for thousands of dollars in bribe payments. Separately, between May and June 2016, Moronta engaged in criminal sexual contact and acts with three female inmates, including fondling a female inmate and causing inmates to perform oral sex on him while he was assigned to guard their unit.
The government’s bribery and narcotics case is being handled by the Office’s Public Integrity and International Narcotics and Money Laundering Sections. Assistant United States Attorneys Nadia Shihata and Andrew Gilman are in charge of that prosecution. The government’s sexual abuse case is being handled by the Office’s Public Integrity Section. Assistant United States Attorney Nadia Shihata is in charge of that prosecution.
The Defendant:
ARMANDO MORONTA
Age: 39
Brooklyn, NYE.D.N.Y. Docket Nos. 17-CR-036 (RRM) and 17-CR-279 (RRM)