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21 December 2017
Rochester Man Sentenced for Sex Trafficking Minors and AdultsRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051ROCHESTER, N.Y.—U.S. Attorney James P. Kennedy, Jr., announced today that Stephen Jones, 30, of Rochester, NY, who was convicted by a federal jury of conspiring to recruit underage girls to commit commercial sex acts, and sex trafficking of minors and adults by force, fraud or coercion, was sentenced to 25 years in prison by U.S. District Judge David G. Larimer.
Assistant U.S. Attorneys Melissa M. Marangola and Craig R. Gestring, who together handled the trial of the case, stated that between 2011 and June 2014, the defendant conspired with others, including Kasandra Weeks and Christian Nartey, to target and manipulate seven minor victims and two adult victims, many of whom were at-risk and vulnerable, to engage in prostitution activities. While some victims were located through social media accounts, Jones went to the Department of Social Services or women shelters and waited until girls appearing young in age came outside. Victims were promised quick money and drugs, and on other occasions, threatened with violence.
Jones and his co-conspirators posted daily advertisements using fake photos for the victims on backpage.com. One advertisement read: “ITS KRISTEN AND ASHLEY!! Ur 2 favorite young GODDESS up all day READY2play!! :-) CALL NOW!! Victims were taken from the Rochester area to Buffalo, Syracuse, Albany, Utica, and New Jersey in order to engage in prostitution activities and avoid detection by law enforcement. To keep control over the victims, Jones and the others kept the money victims earned from prostitution activities, as many as 10 clients a day, and limited the victims’ communications with family and friends.
“The decision by Mr. Jones and his co-conspirators, to target females who—because of their ages or circumstances in life—were exceptionally vulnerable, was despicable,” stated United States Attorney Kennedy. “Even more depraved and diabolical was the defendant’s decision to force these vulnerable victims to engage in sex acts so that they might provide him with a revenue stream. Today’s sentence ensures that at least for the next quarter century, girls and women in this community will be protected from this predator.”
Kasandra Weeks and Christian Nartey were also convicted.
The sentencing is the culmination of an investigation on the part of the Federal Bureau of Investigation Child Exploitation Task Force, under the direction of Special Agent-in-Charge Adam S. Cohen; Immigration and Customs Enforcement, Homeland Security Investigations, of under the direction of Special Agent-in-Charge Kevin Kelly; and the Rochester Police Department, under the direction of Chief Michael Ciminelli.Rochester Man Convicted of Fentanyl Trafficking Charges Sentenced to 60 Months in Federal PrisonRead the Press Release
CONCORD – Acting United States Attorney John J. Farley announced today that Casey Jones, 41, formerly of Rochester, New Hampshire, was sentenced to five years in federal prison for fentanyl trafficking.
Statements made in court and court filings established that during the late evening hours of March 31, 2016, a New Hampshire State Police Trooper on patrol in Dover, New Hampshire observed the defendant driving his vehicle erratically. As a result, the trooper conducted a traffic stop of the defendant’s vehicle. During the course of the traffic stop, $2,266 in cash was located on the defendant’s person. A search of the defendant’s vehicle at the scene resulted in the seizure of a digital scale, cell phone, plastic baggies commonly used for packaging narcotics, and hypodermic needles. The vehicle was towed to the New Hampshire State Police barracks and a search warrant was obtained for the vehicle. During the search, over 77 grams of fentanyl were found in a duffle bag within the vehicle.
In September of 2017, Jones pleaded guilty to unlawful possession of fentanyl with the intent to distribute. Upon his release from federal prison, Jones will serve a period of three years of supervised release.
“The United States Attorney’s Office is committed to working with our local, state and federal law enforcement partners to address the significant presence of heroin and fentanyl in New Hampshire,” said Acting U.S. Attorney Farley. “We will continue to target those who are distributing these deadly drugs in the streets of New Hampshire and to prosecute drug trafficking offenses aggressively. I commend the Trooper whose work prevented a significant amount of fentanyl from being distributed in New Hampshire.”
The investigation was conducted by the New Hampshire State Police. Assistant United States Attorney Jennifer Cole Davis prosecuted the case.
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Press Conference AdvisoryRead the Press Release
There will be a press conference today in White Plains at 11:00 a.m. to announce the arrests and federal criminal charges against a dozen gang members in the Mount Vernon area, including murder charges for the shooting deaths of 13-year-old Shamoya McKenzie and Dean Daniels.
WHO:
Joon H. Kim, Acting United States Attorney for the Southern District of New York
Michael Osborn, Assistant Special-Agent-In Charge of the New York Field Office of the FBI
Anthony Scarpino Jr., Westchester County District Attorney
WHEN:
Thursday, December 21, 2017 at 11:00 a.m.
WHERE:
U.S. Attorney’s Office, White Plains
300 Quarropas St.
White Plains, New York, NY
CONTACT:
James Margolin, Dawn Dearden, Nicholas Biase
(212) 637-2600
Palmetto Woman Sentenced to More Than Three Years on Tax Fraud ChargesRead the Press Release
Tampa, Florida – United States District Judge James D. Whittemore has sentenced Latronda Brooks to three years and six months in federal prison for theft of government funds and aggravated identity theft in connection with income tax fraud. She was taken into custody immediately following the pronouncement of her sentence today. In addition, she was ordered to pay $327,521 in restitution, representing the proceeds of the tax fraud. She pleaded guilty on June 30, 2017.
According to court documents, Brooks opened an Urban Trust Bank account in her name, doing business as Magnificent Tax Services, and used it to deposit more than $327,000 in fraudulent tax refund checks. These fraudulent checks were falsely endorsed with the taxpayer signatures and deposited with a falsely-endorsed “permission” form that purportedly gave Brooks permission to deposit third-party tax refund checks into her bank account. Brooks spent the money on personal expenditures, including paying others involved in the tax fraud, and did not provide any of the funds to the taxpayers.
This case was investigated by the Internal Revenue Service – Criminal Investigation and the Manatee County Sheriff’s Office. It was prosecuted by Assistant United States Attorney Kelley Howard-Allen.
Olean Man Sentenced on Child Pornography ChargeRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y. – U.S. Attorney James P. Kennedy, Jr. announced today that Shawn Lebrecht, 35, of Olean, NY, who was convicted of possession of child pornography, was sentenced to 60 months in prison and 10 years supervised release by U.S. District Court Judge Elizabeth A. Wolford.
Assistant U.S. Attorney Michael DiGiacomo, who handled the case, stated that in early August 2016, an undercover law enforcement officer began communicating online with the defendant. Lebrecht sent the officer several images of child pornography. On August 25, 2016, a search warrant was executed at the defendant’s East Green Street residence. During the search, officers recovered a laptop computer. A forensic analysis determined the laptop contained over 300 images of child pornography. Some of the images depicted pre-pubescent children and violence.
“The public needs to understand that even in cases like this—in which there is no evidence of physical contact between the defendant and a child—there is significant harm to children,” said U.S. Attorney Kennedy. “Individuals such as Mr. Lebrecht create the demand for child pornography that fuels others to produce images of child rape, child abuse, and child exploitation. Hopefully, the prospects of serving 5 years in federal jail for even looking at this stuff is a strong enough incentive to deter others from doing what Mr. Lebrecht did.”
"As this sentencing clearly demonstrates, child predators will not be tolerated in our communities," said Kevin Kelly, Special Agent-in-Charge of HSI Buffalo. "These heinous crimes cause irreparable damage to our children and society. HSI will continue to aggressively pursue those who commit these acts."
The sentencing is the culmination of an investigation by Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent-in- Charge Kevin Kelly.
Mt. Carmel Doctor Indicted for Operating A “Pill Mill” and Causing the Death of Five PatientsRead the Press Release
HARRISBURG – Attorney General Jeff Sessions and the United States Attorney’s Office for the Middle District of Pennsylvania announced today that Dr. Raymond Kraynak, age 60, of Mt. Carmel, Pennsylvania, was indicted by a federal grand jury on December 20, 2017, in a 19-count indictment charging the unlawful distribution and dispensing of controlled substances, causing the death of five patients by the unlawful distribution and dispensing of controlled substances, and maintaining two drug-involved premises in Mt. Carmel and Shamokin, Pennsylvania. Dr. Kraynak was taken into custody today by agents of the Drug Enforcement Administration and appeared before United States Magistrate Judge Schwab for his initial appearance. He was temporarily detained until 10:00 a.m. tomorrow morning when he will appear for a bail hearing before Magistrate Judge Schwab. No date for trial was set.
According to United States Attorney David J. Freed, the indictment alleges that Kraynak, who operated two offices in Mt. Carmel and Shamokin, Pennsylvania, known as Keystone Family Medicine Associates, prescribed approximately 2.7 million units of oxycodone, hydrocodone, oxycontin and fentanyl to approximately 2,838 patients between January 2016 through July 31, 2017. During that time period, he was the top prescriber of those drugs in the Commonwealth of Pennsylvania.
The indictment further alleges that on multiple occasions between 2005 and 2016 that Dr. Kraynak prescribed these opioids to multiple patients outside of the usual course of professional practice and without a legitimate medical purpose, including prescribing the opioids without conducting a proper medical examination, inadequately verifying the patient’s medical complaint, and failing to assess the risk of abuse by individual patients.
The indictment further alleges that Dr. Kraynak caused the death of five of his patients between 2013 and 2015 by unlawfully distributing and dispensing controlled substances to them that ultimately led to their death. Dr. Kraynak is also charged in two additional counts with maintaining drug-involved premises at his offices located in Mt. Carmel and Shamokin, Pennsylvania, and the government is seeking the forfeiture of those two offices, his Pennsylvania medical license and $500,000.
"One American dies of a drug overdose every nine minutes, and millions of Americans are living with an addiction to opioids," Attorney General Sessions said. "This is the deadliest drug crisis in our history, and it's unconscionable that some doctors and medical professionals would violate their oaths to exploit it for cash. The Trump administration will not tolerate fraud of any kind. That's why earlier this year, this Department conducted the largest health care fraud takedown in American history, arresting more than 120 defendants on opioid-related charges. We will remain relentless and will take this fight to street dealers, corrupt doctors, and the companies that have helped fuel this devastating crisis. I believe we will ultimately turn the tide of this historically devastating epidemic."
“These serious charges are the culmination of a substantial commitment of Federal, State and Local law enforcement resources specifically directed at one of the root causes of our current epidemic of heroin and opioid abuse: unlawful over-prescription of highly addictive and dangerous drugs,” said United States Attorney Freed. “The sheer number of pills prescribed in this case is staggering. Death or serious injury was the inevitable result of this defendant’s conduct. I am particularly thankful to the Drug Enforcement Administration, Attorney General Josh Shapiro, the Pennsylvania State Police, the Mt. Carmel Borough Police and the Schuylkill County Drug Task Force for their hard work in this case.”
“The allegations against Dr. Kraynak in this indictment are deeply disturbing, especially given that he is accused of causing the death of five of his patients through the unlawful distribution of controlled substances such as oxycodone and hydrocodone,” said Gary Tuggle, Special Agent in Charge of the Drug Enforcement Administration’s Philadelphia Field Division. “At the height of the most devastating drug epidemic in our nation’s history that has claimed tens of thousands of lives across the country, the DEA, working with our partners such as, the U.S. Attorney’s Office, Attorney General Josh Shapiro and the Pennsylvania State Police, will aggressively work to identify, investigate, and prosecute rogue doctors that are responsible for contributing to this epidemic through their alleged criminal activity.”
“My office will relentlessly pursue medical professionals who divert prescription drugs from their intended purpose, especially when that diversion results in death,” Attorney General Josh Shapiro said. “Thanks to law enforcement collaboration and the strong work of U.S. Attorney David J. Freed, this doctor, who prescribed 2.7 million opioids to fewer than 3,000 patients over 18 months, will be prosecuted. I’m proud that our office partnered with U.S. Attorney Freed and his office to pursue charges in this case and put an end to this doctor’s crimes.”
This case was investigated by the Drug Enforcement Administration, with assistance from the Pennsylvania State Police, the Pennsylvania Office of Attorney General, the Mt. Carmel Borough Police Department and the Schuylkill County Drug Task Force. Assistant United States Attorneys William Behe and Fran Sempa are prosecuting the case.
This case was brought as part of a district wide initiative to combat the nationwide epidemic regarding the use and distribution of heroin. Led by the United States Attorney’s Office, the Heroin Initiative targets heroin traffickers operating in the Middle District of Pennsylvania and is part of a coordinated effort among federal, state and local law enforcement agencies to locate, apprehend, and prosecute individuals who commit heroin related offenses.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
Kraynak faces a mandatory minimum term of 20 years’ imprisonment up to life on each of the five counts where patients are alleged to have died as a result of taking the controlled substances Kraynak prescribed them. Kraynak faces up to 20 years’ imprisonment on each of the 12 counts alleging that he prescribed controlled substances to specific patients outside of the usual course of professional practice and not for a legitimate medical purpose. Each of the two counts charging Kraynak with maintaining drug involved premises is punishable as well by up to 20 years’ imprisonment. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Montegut Man Sentenced for Possession of Child PornographyRead the Press Release
Acting U.S. Attorney Duane A. Evans announced that TYLER DAVIS, age 22, of Montegut, Louisiana, was sentenced today after previously pleading guilty for crimes involving the sexual exploitation of children.
U.S. District Judge Mary Ann Vial Lemmon sentenced DAVIS to 109 months incarceration, to be followed by ten years of supervised release.
According to court documents, beginning at an unknown time to on or about July 13, 2015, DAVIS knowingly possessed images and videos depicting the sexual victimization of minors. DAVIS entered a plea of guilty to possessing a Samsung Galaxy cell phone that contained pre-pubescent images and videos of children less than twelve-years-old.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Acting U.S. Attorney Evans praised the work of the U. S. Department of Homeland Security, Homeland Security Investigations (HSI Houma), HSI Ottawa, and the York Regional Police Special Victim’s Unit, Ottawa, Canada in investigating this matter. The prosecution of this case was handled by Project Safe Childhood Coordinator and Fraud Section Chief, Assistant U.S. Attorney Brian M. Klebba.
Monroe County Man Charged with Sex and Drug TraffickingRead the Press Release
SCRANTON- The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Fredrick Brown, age 35, of Monroe County, Pennsylvania, was indicted on December 19, 2017, by a federal grand jury on sex and drug trafficking charges.
According to United States Attorney David J. Freed, the indictment was unsealed on December 20, 2017, and alleges that between 2011 and 2014 Brown trafficked multiple women as prostitutes through force, threat, and coercion. One of the victims Brown is alleged to have forced to commit commercial sex acts was under the age of eighteen. The indictment further charges Brown with distribution and possession with intent to distribute over 280 grams of cocaine base, or “crack.”
The case was investigated by the U.S. Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Sean A. Camoni.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Indictments are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law for this offense is a life term of imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Monongalia County woman pleads guilty to drug distribution chargeRead the Press Release
CLARKSBURG, WEST VIRGINIA – A Morgantown, West Virginia woman has admitted to a drug distribution charge, United States Attorney Bill Powell announced.
Jayla Shade, age 21, pled guilty to one count of “Unlawful Use of Communication Facility.” Shade admitted to using a phone to distribute and assist in a conspiracy to distribute oxycodone. The crime occurred in Monongalia County in February 2017.
Shade faces up to four years incarceration and a fine of up to $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Zelda E. Wesley prosecuted the case on behalf of the government. The Mon Metro Drug and Violent Crimes Task Force, a HIDTA-funded initiative, investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Mission Viejo Man Indicted on Federal Charges for Allegedly Bilking Employer Out of Nearly $1 Million for Services Never ProvidedRead the Press Release
UPDATEPursuant to a motion by the government, the case against defendant John Bauche described in the news release below was dismissed by the court on November 30, 2021.
SANTA ANA, California – A Mission Viejo man who allegedly bilked his employer out of nearly $1 million by using his consulting company to submit bills for internet marketing services that were not performed has been indicted by a federal grand jury.
John Bauche, 36, was named in a six-count indictment returned yesterday by the grand jury. The indictment specifically charges Bauche with five counts of mail fraud and one count of money laundering.
Bauche was employed by Masimo, an Irvine medical technology company that developed patient monitoring equipment. While employed there, Bauche was assigned to enhance the internet profile of Masimo and the Patient Safety Movement Foundation (PSM) – a philanthropic organization established by the owner of Masimo – through search engine optimization (SEO).
The indictment alleges that Bauche set up a company called Boundless Rise LLC in early 2014 to perform SEO work for Masimo. Bauche allegedly failed to disclose to Masimo that he controlled Boundless Rise and falsely claimed that Boundless Rise was the best qualified vendor to perform the SEO work.
Bauche submitted false invoices through Boundless Rise to his employer between February 2014 and July 2016 for work that was not performed, according to the indictment, which further alleges that very little of the money paid to Boundless Rise went to anyone other than Bauche.
As a result of the fraudulent scheme, Masimo and PSM paid Boundless Rise approximately $958,000, some of which was used to pay Bauche’s American Express bills after he made purchases from Amazon, airlines, Uber, domestic and foreign hotels, and concert venues, the indictment alleges. In November 2016, the FBI seized $642,643 of the allegedly stolen funds from the Boundless Rise bank account.
Bauche is expected to be ordered to appear for an arraignment in United States District Court in early 2018.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If he were to be convicted of all counts alleged in the indictment, Bauche would face a statutory maximum sentence of 120 years in federal prison.
The investigation into Bauche’s alleged scheme is being conducted by the Federal Bureau of Investigation.
This case against Bauche is being prosecuted by Assistant United States Attorney Gregory Staples of the Santa Ana Branch office.
Mexican National Pleads Guilty to Illegal Use of a Social Security Number, False Claim to United States Citizenship, Illegal Reentry of a Removed Alien and Identity TheftRead the Press Release
Acting U.S. Attorney Duane A. Evans announced that LUIS ALBERTO TEJEDA-QUIROZ, age 32, a citizen of Mexico, pled guilty today to a 4-count Superseding Bill of Information charging him with to illegal use of a social security number, false claim to United States citizenship, illegal reentry of a removed alien and identity theft.
According to court documents, TEJEDA-QUIROZ, for the purpose of obtaining employment and for other purposes, did falsely represent that a Social Security Number was assigned to him by the Commission of Social Security when TEJEDA-QUIROZ knew that Social Security Number had not been assigned to him. Additionally, TEJEDA-QUIROZ falsely represented himself to be a citizen of the United States. TEJEDA-QUIROZ was found in the United States on or about August 13, 2017, after having been previously removed therefrom on or about December 31, 2009. Lastly, TEJEDA-QUIROZ knowingly possessed and used a Kentucky state driver’s license, knowing that the means of identification belong to another actual person.
TEJEDA-QUIROZ admitted to being previously convicted of a felony, which subjects him to a maximum term of imprisonment of ten years for illegally reentering the United States. Additionally, TEJEDA-QUIROZ is subject to terms of imprisonment of up to five years for illegal use of the social security number, five years for identity theft, and three years for falsely claiming U.S. citizenship.
Acting U.S. Attorney Evans praised the work of the United States Immigration and Customs Enforcement - Homeland Security Investigations in investigating this matter. Assistant U.S. Attorney Chandra Menon is in charge of the prosecution.
Mexican Citizen Sentenced to Six Months for Illegal Re-entryRead the Press Release
ALBANY, NEW YORK – Dario Sanchez-Rosas, age 56, and a citizen of Mexico, was sentenced today to 6 months in prison for illegally re-entering the United States.
The announcement was made by Acting United States Attorney Grant C. Jaquith and Thomas E. Feeley, Director of the Buffalo Field Office of Immigration and Customs Enforcement (ICE), Enforcement and Removal Operations (ERO).
Sanchez-Rosas, a citizen of Mexico, admitted that he was removed from the United States to Mexico three times in 2001. On August 24, 2017, an ICE Officer arrested Sanchez-Rosas in Guilderland, New York. Sanchez-Rosas did not have permission to re-enter the United States following the 2001 removals.
Senior United States District Judge Norman A. Mordue also ordered Sanchez-Rosas to serve a 1-year term of supervised release should he remain in the United States after completion of the prison term. Sanchez-Rosas will be processed for removal from the United States when he is released from prison.
This case was investigated by ICE-ERO and prosecuted by Assistant U.S. Attorney Edward P. Grogan.
Medical Doctor Indicted for Causing Patient’s Overdose Death in Staten IslandRead the Press Release
A second superseding indictment was unsealed today in federal court in Brooklyn charging medical doctor Martin Tesher with unlawfully prescribing oxycodone and fentanyl to a patient, Nicholas Benedetto, without legitimate medical purpose, which resulted in Benedetto’s overdose death on March 5, 2016 in Staten Island. Dr. Tesher was previously indicted for unlawfully prescribing thousands of oxycodone pills to patients without a legitimate medical purpose. Dr. Tesher’s arraignment on the second superseding indictment is scheduled for this afternoon before United States Magistrate Judge Steven M. Gold.
Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), announced the superseding indictment.
“As alleged, instead of providing his opioid addicted patients with medically appropriate and lawful care, Dr. Tesher quite literally fed their addiction, and, in this case, his actions resulted in the death of a patient,” stated Acting United States Attorney Rohde. “This Office and our law enforcement partners are committed to holding accountable those medical professionals who foster the opioid crisis for personal gain.”
“This investigation led law enforcement to a drug dealer using his doctor’s office as a front for opioid trafficking,” stated DEA Special Agent-in-Charge Hunt. “Dr. Tesher enabled drug addiction by prescribing medication beyond the scope of legitimate medical practice and need. Allegedly, his actions resulted in death. Law enforcement has and will continue to pool resources in order to identify drug sources who feed addiction in our communities.”
As alleged in court filings, the defendant operates a family medical practice in Manhattan. He was authorized by the DEA to treat up to 30 drug-addicted patients by prescribing them Schedule III, IV or V narcotics to ease their addiction. Dr. Tesher has, in fact, treated countless patients who identified as or whom he determined to be drug addicts. Instead of diverting those addicted patients to drug rehabilitation or prescribing them with Schedule III, IV or V drugs as authorized by law, Dr. Tesher prescribed his addicted patients with the very drugs they were addicted to, Schedule II opioids, such as oxycodone and fentanyl. While under Dr. Tesher’s care, many of his patients tested positive for drugs such as cocaine, heroin, morphine or methadone. Even upon learning that information, Dr. Tesher continued to prescribe those patients with Schedule II narcotics that could have been lethal on their own or in combination with the other drugs Dr. Tesher knew his patients were ingesting.
According to court documents, Benedetto was one of Dr. Tesher’s patients. While under Tesher’s care, Benedetto drug tested positive for cocaine, heroin, morphine and methadone, in addition to the oxycodone and fentanyl Dr. Tesher was prescribing to him. Dr. Tesher allegedly continued to prescribe Schedule II narcotics to Benedetto despite several indicators that his patient was addictively abusing those narcotics. Benedetto died of a drug overdose on March 5, 2016, two days after he had been prescribed both oxycodone and fentanyl patches by Dr. Tesher.
If convicted of the top charge, Dr. Tesher will face a mandatory minimum of 20 years’ imprisonment and a maximum of life in prison. The charges in the superseding indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s investigation was led by the DEA’s Long Island Tactical Diversion Squad, which is comprised of agents and officers of the DEA, Internal Revenue Service, Nassau County Police Department (NCPD), Suffolk County Police Department, Port Washington Police Department, and Rockville Centre Police Department. The DEA Tactical Diversion Squad also worked in conjunction with officers and agents of the New York City Police Department, Criminal Enterprise Investigations, the Department of Health & Human Services, Office of Inspector General, New York City Department of Investigation, and NCPD’s Asset Forfeiture and Intelligence Bureau.
This case is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this district, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Initiative to mount a comprehensive response to what the United States Department of Health and Human Services Centers for Disease Control and Prevention called an epidemic increase in the abuse of so-called opioid analgesics. To date, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 19 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorney Jennifer M. Sasso is in charge of the prosecution.
The Defendant:
MARTIN TESHER
Age: 81
Manhattan, New YorkE.D.N.Y. Docket No. 17-CR-523 (SJ)
Massachusetts Man Sentenced to Time-Served for Social Security FraudRead the Press Release
Portland, Maine: United States Attorney Halsey B. Frank announced that Apolonio Montes Garcia, 40, of Haverhill, Massachusetts, was sentenced yesterday in U.S. District Court by Chief Judge Nancy Torresen to time-served (about 2½ months) for social security fraud. Montes Garcia had been in custody since October 11, 2017. Montes Garcia pleaded guilty to the charge on November 14, 2017.
Court records reveal that on April 4, 2017, Montes Garcia attempted to gain entry to the Portsmouth Naval Shipyard in Kittery, Maine. At the time, Montes Garcia was working for a contractor doing repairs at the Shipyard. In order to gain entry, he was asked to provide identification. He presented Shipyard security personnel with a permanent resident card and a social security card, both bearing the same name that was not his. The social security card also bore a social security number that was not assigned to Montes Garcia.
This case was investigated by U.S. Immigration and Customs Enforcement – Enforcement Removal Operations, the U.S. Social Security Administration – Office of Inspector General, and the U.S. Naval Criminal Investigative Service
Massachusetts Man Sentenced to 17 Years in Prison for Producing Child PornographyRead the Press Release
CONCORD, N.H. – Acting United States Attorney John J. Farley announced today that Matthew Adey, 47, of Malden Massachusetts was sentenced to 17 years in federal prison for producing child pornography.
According to statements in court and court documents, on February 26, 2017, the defendant met a 14-year-old boy in an online local interest chat group. The defendant, aware of the child’s age, requested a photograph of the child engaging in sexually explicit conduct, which the child took and sent to the defendant. The defendant continued to communicate with the child over the Internet. On March 4, 2017, the defendant traveled from Massachusetts to the child’s residence in New Hampshire. On March 4 and March 5, 2017, the defendant engaged in sexual intercourse with the child multiple times. A subsequent forensic analysis of the defendant’s computers indicated that he possessed various images and videos containing additional child pornography.
Adey, who previously pleaded guilty, will be on supervised release for ten years following his release from prison.
“Those who produce child pornography rob children of their innocence and cause immeasurable harm,” said Acting U.S. Attorney Farley. “We work closely with our law enforcement partners to identify and prosecute those who prey on minors. Lengthy sentences like this should send a clear message that this type of behavior will not be tolerated in our community.”
The investigation in this case was led by the Londonderry, New Hampshire Police Department, the Massachusetts State Police Computer Crimes Unit, and Homeland Security Investigations, with the assistance of the Massachusetts Internet Crimes Against Children Task Force and the New Hampshire Internet Crimes Against Children Task Force. The case was prosecuted by Assistant United States Attorney Georgiana L. Konesky.
In February 2006, the Department of Justice introduced Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorney’s Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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Maryland Man Sentenced to 25 Years in Prison for Production of Child PornographyRead the Press Release
FOR IMMEDIATE RELEASE Contact ELIZABETH MORSE
www.justice.gov/usao/md at (410) 209-4885
Greenbelt, Maryland – On December 19, 2017, United States District Judge Roger W. Titus sentenced Aaron Lee Smiley, age 57, of Mechanicsville, Maryland to 25 years in prison, followed by a lifetime of supervised release, for Sexual Exploitation of a Minor for the Purpose of Producing Child Pornography. Judge Titus also ordered forfeiture of Smiley’s interest in his house because he used the computer in his home office to sexually exploit minors for the purpose of producing child pornography.
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 Andre R. Watson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Colonel William M. Pallozzi, Superintendent of the Maryland State Police; and Sheriff Timothy K. Cameron of St. Mary’s County Sheriff’s office.
According to his plea agreement, between 2014 and 2016, Smiley had three victims ages 12 through 16 and one victim under the age of twelve. Smiley exchanged pictures, text messages, internet chats and videos with minors using a variety of programs, including Skype, ooVoo, and KIK. Smiley was entrusted with the custody, care, or supervisory control of the victim under twelve when he took pictures of the child.
During a raid of his home, Department of Homeland Security agents recovered over 100 online video recordings of chats between Smiley and one of the victims in which he entices the underage victim to engage in sexual explicit conduct for the purpose of producing visual depictions.
Acting United States Attorney Stephen M. Schenning praised the FBI, HSI, MSP, St. Mary’s County Sherriff and the Queensland Police Service in Brisbane, Australia for their work in the investigation. Mr. Schenning thanked Assistant U.S. Attorney Joseph Baldwin and Special Assistant U.S. Attorney Julie Finocchiaro, who prosecuted the case.
Lockland Company Sentenced for Failing to Report Large Cash Transactions, Trucking Safety ViolationsRead the Press Release
CINCINNATI – Enson Trading LLC, which does business as Eternal Food Service, was sentenced in U.S. District Court for failing to file required IRS forms for cash transactions exceeding $10,000, and for violating Federal Motor Carrier Safety regulations.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Ryan L. Korner, Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Thomas J. Ullom, Special Agent in Charge, U.S. Department of Transportation Office of Inspector General, and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI) Cincinnati Division, announced the sentence handed down today by U.S. District Judge Timothy S. Black.
According to the Statement of Facts in this case, Enson is a Lockland-based wholesale food storage facility and distributor to primarily Asian restaurants in Ohio and nine other states, and many of the company’s customers pay in cash.
Between October 2010 and June 2012, the company failed to file a federal Form 8300 for 41 cash transactions totaling more than half a million dollars. Federal laws and regulations require every person engaged in a nonfinancial trade or business that receives cash in excess of $10,000 to file the form within 15 days of receipt of the cash.
The company also conspired to continue operation after receiving an out-of-service order from the Federal Motor Carrier Safety Administration (FMCSA).
In June 2010, FMCSA conducted a compliance review of the trucks the company used to distribute its products in Ohio and out of state and issued the company an unsatisfactory safety rating based upon critical violations of several regulations. FMCSA gave the company 60 days to address the violations or they would receive an out-of-service order.
Eight days before the company’s trucking operations were to be put out of service, the company registered and incorporated under a different name. The company did that five more times between 2010 and 2014, using the names Heng Hua, National Trucking, Eternal Trading Corporation, Aspiron and FC Logistics.
As part of its sentence, the company has been ordered to pay a $525,000 fine and forfeit $215,012.55. In July, Enson Trading, LLC manager Qing Xia Zheng entered a guilty plea on behalf of the company, which was also ordered to serve three years of probation.
U.S. Attorney Glassman commended the investigation of this case by the IRS Criminal Investigation, the U.S. Department of Transportation Office of Inspector General and the FBI, as well as District Criminal Chief Kenneth L. Parker, who is representing the United States in this case.
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Local Man Sentenced for Trafficking in Contraband CigarettesRead the Press Release
Acting U.S. Attorney Duane A. Evans announced that JADALLAH SAED age 31, of Gretna, was sentenced yesterday after previously pleading guilty to one count of trafficking in counterfeit cigarettes.
U.S. District Judge Kurt D. Engelhardt sentenced SAED to 22 months imprisonment to be followed by a 2 year term of supervised release. SAED was additionally ordered to pay restitution in the amount of $456,611.04.
According to previously filed court documents, co-defendants JUSTIN BROWN, JOSHUA CARTHON and GARRETT PARTMAN, all local law enforcement officers at the time of the Indictment, were utilized to protect and transport the shipment of contraband cigarettes across state lines. SAED, along with co-defendants ANWAR ABDELMAJID-AHMAD and ATALLA ATALLA, would then distribute and sell the contraband cigarettes in North Carolina and other states where the cigarette taxes are higher than Louisiana, resulting in a total tax loss to the federal and state governments of between $400,000 and $900,000.
Acting U.S. Attorney Evans praised the work of the FBI New Orleans Division and Immigration and Customs Enforcement/Homeland Security Investigations. Assistant United States Attorneys Tracey N. Knight and Irene Gonzalez are in charge of the prosecution.
Local Felon Charged with Illegally Possessing Gun and AmmunitionRead the Press Release
PITTSBURGH - A resident of Pittsburgh, Pennsylvania, has been indicted by a federal grand jury in Pittsburgh on a charge of violating federal firearms laws, Acting United States Attorney Soo C. Song announced today.
The one-count indictment named Montcrief Grinage, 39, of Pittsburgh, Pennsylvania, as the sole defendant.
According to the indictment, on or about December 13, 2017, Grinage illegally possessed a firearm and ammunition after previously having been convicted of a felony. Federal law prohibits anyone who has been convicted of a crime punishable by a term of imprisonment exceeding one year from possessing a firearm or ammunition.
The law provides for a maximum total sentence of not more than 10 years in prison, a fine not to exceed $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 of the defendant.
Assistant United States Attorney Stephen S. Gilson is prosecuting this case on behalf of the government.
The Drug Enforcement Administration 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.
Lake in the Hills Man Indicted on Child Pornography ChargesRead the Press Release
ROCKFORD — A man from Lake in the Hills has been indicted by a federal grand jury in Rockford on charges of child pornography.
PAUL W. CHRISTMANN, 50, was charged Tuesday with two counts of transporting child pornography via the internet in 2013, and one count of possessing two computers in 2017 containing images of child pornography.
Each count of transporting child pornography carries a mandatory minimum sentence of five years and a maximum of 20 years in prison, and possessing child pornography carries a maximum of up to ten years in prison. Each count carries a $250,000 maximum fine. If Christmann is convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey Sallet, Special Agent-in-Charge of the Federal Bureau of Investigation in Chicago. The McHenry County Sheriff’s Office and Internet Crimes Against Children Task Force assisted in the investigation.
The government is represented by Assistant U.S. Attorney Michael D. Love.
Justice Department Requires TransDigm Group to Divest Airplane Restraint Businesses Acquired from TakataRead the Press Release
The Department of Justice announced today that TransDigm Group Incorporated will be required to divest two businesses it acquired from Takata Corporation. The divestitures will restore competition in markets for several types of restraint systems used on commercial airplanes. TransDigm acquired the businesses—SCHROTH Safety Products GmbH and SCHROTH Safety Products LLC (collectively, “SCHROTH”)—from Takata in February 2017 in a $90 million transaction that, due to its structure, was not reportable under the Hart-Scott-Rodino Antitrust Improvements Act.
The Justice Department’s Antitrust Division filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia challenging the consummated acquisition. At the same time, it filed a proposed settlement that, if approved by the court, would resolve the Department’s competitive concerns.
“Today’s settlement, which requires TransDigm to divest the entire SCHROTH business, restores competition without relying on a regulatory behavioral decree,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “TransDigm’s AmSafe subsidiary is the world’s largest supplier of restraint systems used on commercial airplanes and SCHROTH was its only meaningful competitor.”
According to the Department’s complaint, AmSafe and SCHROTH develop, manufacture, and sell a wide range of restraint systems used on commercial airplanes, including traditional two-point lapbelts, three-point shoulder belts, technical restraints, and more advanced “inflatable” restraint systems such as airbags. The complaint alleges that prior to the acquisition, SCHROTH was a growing competitive threat to AmSafe that was challenging AmSafe on price and investing heavily in the research and development of new restraint technologies. According to the complaint, the acquisition eliminated TransDigm’s most significant competitor, and the loss of competition between AmSafe and SCHROTH was likely to result in higher prices and reduced innovation.
Under the terms of the proposed settlement, TransDigm must divest the entirety of SCHROTH, including its facilities in Pompano Beach, Florida, and Arnsberg, Germany, to a consortium between Perusa Partners Fund 2, L.P. and SSP MEP Beteiligungs GmbH & Co. KG (MEP KG), or an alternate acquirer approved by the United States. Pursuant to an agreement with the Antitrust Division, TransDigm held SCHROTH separate from AmSafe during the pendency of the Division’s investigation.
Perusa is a diversified German private equity fund that invests in mid-sized companies. MEP KG is a German limited partnership owned by several members of the existing management team of SCHROTH, including executives who have extensive experience in the airplane restraint systems business. The Department said that the divestiture will remedy the acquisition’s anticompetitive effects by quickly reestablishing SCHROTH as an independent competitor.
TransDigm, a Delaware corporation headquartered in Cleveland, Ohio, is a leading global designer, manufacturer, and supplier of highly engineered airplane components. In 2016, TransDigm’s global revenues were $3.1 billion. TransDigm’s AmSafe subsidiary is a Delaware corporation headquartered in Phoenix, Arizona. AmSafe had global revenues of approximately $198 million in 2016.
SCHROTH Safety Products GmbH (SSPG) is a German limited liability corporation based in Arnsberg, Germany. SCHROTH Safety Products LLC (SSPL) is a Delaware corporation based in Pompano Beach, Florida. SSPG and SSPL collectively had approximately $37 million in revenue in fiscal year 2016.
As required by the Tunney Act, the proposed consent decree, along with the Department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Maribeth Petrizzi, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
Justice Department Recovers over $3.7 Billion from False Claims Act Cases in Fiscal Year 2017Read the Press Release
The Department of Justice obtained more than $3.7 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2017, Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division announced today. Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $56 billion.
“Every day, dedicated attorneys, investigators, analysts, and support staff at every level of the Justice Department are working to root out fraud and hold accountable those who violate the law and exploit critical government programs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The recoveries announced today are a testament to the efforts of these valuable public servants and a message to those who do business with the government that fraud and dishonesty will not be tolerated.”
Of the $3.7 billion in settlements and judgments, $2.4 billion involved the health care industry, including drug companies, hospitals, pharmacies, laboratories, and physicians. This is the eighth consecutive year that the department’s civil health care fraud settlements and judgments have exceeded $2 billion. The recoveries included in the $2.4 billion reflect only federal losses. In many of these cases, the department was instrumental in recovering additional millions of dollars for state Medicaid programs.
In addition to combatting health care fraud, the False Claims Act serves as the government’s primary civil remedy to redress false claims for government funds and property under government programs and contracts relating to such varied areas as defense and national security, food safety and inspection, federally insured loans and mortgages, highway funds, small business contracts, agricultural subsidies, disaster assistance, and import tariffs.
Health Care Fraud
The department investigates and resolves matters involving a wide array of health care providers, goods and services. The department’s health care fraud recoveries restore valuable assets to federally funded programs, such as Medicare, Medicaid, and TRICARE. But just as important, the department’s vigorous pursuit of health care fraud prevents billions more in losses by deterring others who might otherwise try to cheat the system for their own gain.
The largest recoveries involving the health care industry this past year – over $900 million – came from the drug and medical device industry. Shire Pharmaceuticals LLC paid $350 million to resolve allegations that Shire and the company it acquired in 2011, Advanced BioHealing (ABH), induced clinics and physicians to use or overuse its bioengineered human skin substitute by offering lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates. In addition to these kickback allegations, the settlement also resolved allegations brought by relators that Shire and ABH unlawfully marketed the skin substitute for uses not approved by the FDA, made false statements to inflate the price of the product, and caused improper coding, verification, or certification of claims for the product and related services. The settlement included $343.9 million in federal recoveries, and another $6.1 million in recoveries to state Medicaid programs.
In another important case, drug manufacturer Mylan Inc. paid approximately $465 million to resolve allegations that it underpaid rebates owed under the Medicaid Drug Rebate Program by erroneously classifying its patented, brand name drug EpiPen – which has no therapeutic equivalents or generic competition – as a generic drug to avoid its obligation to pay higher rebates. Between 2010 and 2016, Mylan increased the price of EpiPen by approximately 400 percent yet paid only a fixed 13 percent rebate to Medicaid during the same period based on EpiPen’s misclassification as a generic drug. Mylan paid approximately $231.7 million to the federal government and $213.9 million to state Medicaid programs.
The department also reported substantial recoveries from other health care providers. Life Care Centers of America Inc. and its owner agreed to pay $145 million to settle allegations that it caused skilled nursing facilities to submit false claims for rehabilitation therapy services that were not reasonable, necessary, or skilled. This was the largest civil settlement with a skilled nursing facility chain in the history of the False Claims Act. The government alleged that Life Care instituted corporate-wide policies and practices designed to place beneficiaries in the highest level of Medicare reimbursement – known as “Ultra High” – irrespective of the clinical needs of the patients, resulting in the provision of unreasonable and unnecessary therapy to many beneficiaries. Life Care also allegedly sought to keep patients longer than necessary in order to continue billing for rehabilitation therapy.
In addition, eClinicalWorks (ECW) – a national electronic health records software vendor – and certain of its employees paid $155 million to resolve allegations that they falsely obtained certification for the company’s electronic health records software by concealing from its certifying entity that its software did not comply with the requirements for certification. For example, rather than programming all the required standardized drug codes into its software, the company allegedly “hardcoded” into its software only the drug codes required for testing. As a result of the deficiencies in its software, ECW allegedly caused physicians who used its software to submit false claims for federal incentive payments. The United States also alleged that ECW paid unlawful kickbacks to certain customers in exchange for promoting its product.
“While we encourage voluntary reporting of suspected federal violations through self-disclosures, compliance guidance, and corporate integrity agreements, the False Claims Act holds accountable those health care organizations unwilling to comply with law,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “Large health care recoveries benefit vulnerable Medicare and Medicaid beneficiaries as well as the taxpayers who support these programs.”
Housing and Mortgage Fraud
The department reported settlements and judgments totaling over $543 million in the areas of housing and mortgage fraud this past fiscal year. In September 2017, a unanimous jury in Houston, Texas, found that Allied Home Mortgage Capital Corporation and Allied Home Mortgage Corporation violated the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and awarded the government over $296 million. The court also entered judgment for over $25 million against Allied’s President and Chief Executive Officer (CEO). At trial, the government presented evidence that Allied falsely certified that thousands of high risk, low quality loans were eligible for Federal Housing Administration (FHA) insurance and then submitted insurance claims to FHA when any of those loans defaulted. The jury also heard evidence that, to evade oversight and disguise default rates, Allied Capital originated FHA-insured loans from more than one hundred “shadow” branch offices without the authorization of HUD. In addition, the jury received evidence that Allied’s quality control department submitted falsified quality control reports to HUD auditors and falsely certified that Allied was in compliance with HUD quality control guidelines. Allied has appealed the judgment.
In addition to the judgment against Allied, the Department secured a settlement with PHH Mortgage for $65 million and Financial Freedom for $89 million. PHH Mortgage admitted that it had originated and endorsed residential mortgages as eligible for federal insurance by the FHA that did not meet underwriting requirements intended to reduce the risk of default. The government alleged that although internal reports identified high rates of underwriting deficiencies, PHH Mortgage failed to report such deficiencies to the authorities as required under the program to enable the agency to prevent continued program violations and mounting losses. By originating and endorsing ineligible loans for FHA insurance, PHH Mortgage allegedly put borrowers at risk of losing their homes, and increased its mortgage profits at taxpayer expense while incurring little or no risk of its own. The settlement with Financial Freedom concerned the servicing of reverse mortgage loans, which allow older people to access equity in their homes. The United States alleged that Financial Freedom misrepresented its eligibility for certain insurance payments, thereby obtaining interest from FHA to which it was not entitled.
Procurement Fraud
In fiscal year 2017, the department aggressively pursued a variety of procurement fraud matters. For example, Agility Public Warehousing Co. KSC, a Kuwaiti company, as part of a global settlement, paid $95 million to resolve civil fraud claims and agreed to forgo administrative claims against the United States seeking $249 million in additional payments under its military food contracts, among other terms. In its civil complaint, the United States alleged that Agility knowingly overcharged the Department of Defense for locally available fresh fruits and vegetables supplied to U.S. soldiers in Kuwait and Iraq by failing to disclose and pass through discounts and rebates it obtained from suppliers, as required by its contracts.
The department resolved two cases involving the alleged failure to follow applicable nuclear quality standards. Bechtel National Inc., Bechtel Corp., URS Corp. (the predecessor in interest to AECOM Global II LLC) and URS Energy and Construction Inc. (now known as AECOM Energy and Construction Inc.) agreed to pay $125 million to resolve allegations that they charged the Department of Energy (DOE) for deficient nuclear quality materials, services, and testing, and improperly used federal contract funds to pay for a comprehensive, multi-year campaign to lobby Congress and other federal officials. Energy & Process Corporation (E&P) agreed to pay $4.6 million to resolve allegations that it knowingly failed to perform required quality assurance procedures and supplied defective steel reinforcing bars (rebar) in connection with a contract to construct a DOE nuclear waste treatment facility.
CA Inc. agreed to pay $45 million to resolve allegations that it made false statements and claims in the negotiation and administration of a General Services Administration (GSA) contract for software licenses and maintenance services. The settlement resolved allegations that CA provided false information to the GSA about the discounts it gave commercial customers for its software licenses and maintenance services during contract negotiations and failed to provide government customers with additional discounts when commercial discounts improved.
Other Fraud Recoveries
The number and variety of judgments and settlements announced during fiscal year 2017 illustrate the diversity of cases pursued by the department to root out fraud and false claims against the government wherever they may be found.
For example, SolarCity Corporation agreed to pay $29.5 million to resolve allegations that it submitted inflated claims to the U.S. Department of the Treasury pursuant to Section 1603 of the American Recovery and Reinvestment Act of 2009. Under the Section 1603 Program, the Treasury paid a cash grant to construct or acquire qualified renewable solar energy systems. The settlement resolved allegations that SolarCity falsely overstated the cost bases of its solar energy properties in claims for Section 1603 funds in order to receive inflated grant payments from the Treasury. As part of the settlement, SolarCity and its affiliates also released all pending and future claims against the United States for additional Section 1603 payments.
Total Call Mobile LLC agreed to pay $30 million to resolve allegations that it defrauded the Lifeline Program, a federal government subsidy program that offers discounted mobile phone services to eligible low-income consumers. Total Call and its co-defendants allegedly submitted false claims for federal payments by seeking reimbursement for tens of thousands of consumers who did not meet Lifeline Program eligibility requirements. As part of the settlement, Total Call entered into a separate administrative agreement with the Federal Communications Commission and agreed to no longer participate in the Lifeline Program.
ADS Inc. and its subsidiaries agreed to pay $16 million to settle allegations that they violated the False Claims Act by knowingly conspiring with and causing purported small businesses to submit false claims for payment in connection with fraudulently obtained small business contracts. The settlement also resolved allegations that ADS engaged in improper bid rigging relating to certain of the fraudulently obtained contracts. The settlement with ADS ranked as one of the largest recoveries involving alleged fraud in connection with small business contracting eligibility.
Individual Accountability
The department continued to ensure individual accountability for corporate wrongdoing by pursuing False Claims Act and other civil remedies to redress fraud by individuals as well as corporations.
In some cases, individual owners and executives of private corporations agreed to be held jointly and severally liable for settlement payments with their corporations. For example, Girish Navani, Rajesh Dharampuriya, and Mahesh Navani, three of the founders of eClinicalWorks, agreed to joint and several liability for the $155 million settlement discussed above. In addition, three other eClinicalWorks employees – developer Jagan Vaithilingam and project managers Bryan Sequeira, and Robert Lynes – entered into separate settlement agreements to resolve liability for their alleged personal involvement in the conduct. Forrest Preston, the owner of Life Care Centers of America, agreed to joint and several liability for the $145 million settlement discussed above, and Nicholas and Gregory Melehov, the owners of Medstar Ambulance Inc., agreed to be jointly and severally liable for a $12.7 million settlement with their company.
The department also obtained more than $60 million in settlements and judgments with individuals under the False Claims Act that did not involve joint and several liability with the corporate entity. For example, after 21st Century Oncology LLC paid $19.75 million to resolve allegations that it billed federal health care programs for medically unnecessary laboratory tests, the department secured separate settlements with various individual urologists, including a $3.8 million settlement with Dr. Meir Daller, resolving allegations that the physicians referred unnecessary tests to a laboratory owned and operated by 21st Century Oncology. Other examples include Dr. Robert Windsor, a pain management physician who agreed to the entry of a $20 million consent judgment to resolve allegations that he billed federal health care programs for surgical monitoring services that he did not perform and for medically unnecessary diagnostic tests; Dr. Gary L. Marder, a physician and the owner and operator of the Allergy, Dermatology & Skin Cancer Centers in Port St. Lucie and Okeechobee, Florida, who agreed to the entry of an $18 million consent judgment in connection with the performance of radiation therapy services; Joseph Bogdan, the owner of AMI Monitoring Inc. (also known as Spectocor), who agreed to pay $1 million to resolve liability for his alleged involvement in billing Medicare for higher and more expensive levels of cardiac monitoring services than requested by the ordering physicians; and Siddhartha Pagidipati, the former CEO of Freedom Health, who agreed to pay $750,000 to resolve liability for his alleged involvement in an illegal scheme to maximize payment from the Medicare Advantage program.
Recoveries in Whistleblower Suits
Of the $3.7 billion in settlements and judgments reported by the government in fiscal year 2017, $3.4 billion related to lawsuits filed under the qui tam provisions of the False Claims Act. During the same period, the government paid out $392 million to the individuals who exposed fraud and false claims by filing a qui tam complaint.
The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 669 qui tam suits filed this past year – an average of more than 12 new cases every week.
“Because those who defraud the government often hide their misconduct from public view, whistleblowers are often essential to uncovering the truth,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department’s recoveries this past year continue to reflect the valuable role that private parties can play in the government’s effort to combat false claims concerning government contracts and programs.”
In 1986, Senator Charles Grassley and Representative Howard Berman led the successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud. And in 2009, Senator Patrick J. Leahy, along with Senator Grassley and Representative Berman, championed the Fraud Enforcement and Recovery Act of 2009, which further strengthened the False Claims Act and its whistleblower provisions.
Mr. Readler also expressed his deep appreciation for the many dedicated public servants who investigated and pursued these cases throughout the Department’s Civil Division and the U.S. Attorneys’ Offices, as well as the agency Offices of Inspector General, and the many federal and state agencies that contributed to the Department’s recoveries this past fiscal year.
“One of the honors of leading the Civil Division is the pleasure of working with the many passionate, dedicated, and talented Department of Justice employees,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “These individuals have committed their careers to serving the American people and defending the interests of our great nation. The accomplishments announced today are largely the result of their hard work and sacrifices.”
The government’s claims in the matters described above are allegations only; except where indicated, there has been no determination of liability. The numbers contained in this press release may differ slightly from the original press releases due to accrued interest.
Jury Convicts Stafford Man of Dealing Drugs While ArmedRead the Press Release
ALEXANDRIA, Va. – A federal jury convicted a Stafford man today of drug and firearms offenses.
According to court records and evidence presented at trial, Mark Jamahl Stephens, 26, was arrested by the Metropolitan Police Department in May 2017 after officers discovered two firearms and crack cocaine in his vehicle. Following his arrest, ATF agents executed a search warrant at his home and seized three firearms and marijuana packaged for distribution.
Stephens was convicted of possession with intent to distribute marijuana and possession of a firearm in furtherance of a drug trafficking crime. He faces a mandatory minimum penalty of five years in prison when sentenced on Feb. 23, 2018. 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, Thomas L. Chittum, III, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) Washington Field Division, and Peter Newsham, Chief of Metropolitan Police Department, made the announcement after Senior U.S. District Judge T.S. Ellis, III accepted the verdict. Assistant U.S. Attorneys Tobias D. Tobler and William M. Sloan are prosecuting the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:17-cr-202.
Joint Statement from Attorney General Sessions, FBI Director Wray, DNI Coats, CIA Director Pompeo, and NSA Director Rogers on FISA Section 702 ReauthorizationRead the Press Release
Reauthorizing Section 702 before it expires is vital to keeping the nation safe. Let us be clear: if Congress fails to act, vital intelligence collection on international terrorists and other foreign adversaries will be lost. The country will be less secure.
There is no substitute for Section 702. If Congress fails to reauthorize this authority, the Intelligence Community will lose valuable foreign intelligence information, and the resulting intelligence gaps will make it easier for terrorists, weapons proliferators, malicious cyber actors, and other foreign adversaries to plan attacks against our citizens and allies without detection. Section 702 has been instrumental in preventing attacks on the homeland and removing terrorists from the battlefield.
To be clear – Congress is not required to make any changes to Section 702. The Intelligence Community conducts and uses 702 collection in a manner that protects the privacy and civil liberties of individuals. Every single court that has reviewed Section 702 and queries of its data has found it to be constitutional. The Intelligence Community’s use of Section 702, which permits targeted surveillance only of foreign persons located outside the United States, is subject to extensive oversight and incorporates substantial protections to protect the privacy and civil liberties of individuals. In short, we believe Congress got it right in 2008 when it passed Section 702 and in 2012 when Congress reauthorized it. Nevertheless, the Intelligence Community continues to be open to reasonable reforms to Section 702 to further enhance the already-substantial privacy protections contained in the law, but we simply cannot support legislation that would impede the operational efficacy of this vital authority.
We also believe it is important that Congress reauthorize Section 702 before it expires on December 31, 2017. Although the current Section 702 certifications do not expire until April 2018, the Intelligence Community would need to start winding down its Section 702 program well in advance of that date. Winding down such a valuable program would force agencies to divert resources away from addressing foreign threats. Short-term extensions are not the long-term answer either, as they fail to provide certainty, and will create needless and wasteful operational complications. We urge Congress, therefore, to act quickly to reauthorize Section 702 in a manner that preserves the effectiveness of this critical national security law before it expires.Jeff Sessions
Attorney General of the United StatesChristopher Wray
Director, Federal Bureau of InvestigationDaniel R. Coats
Director of National IntelligenceMike Pompeo
Director, Central Intelligence AgencyAdmiral Michael S. Rogers
Director, National Security AgencyItalian National Pleads Guilty to Illegally Exporting and Attempting to Export Night Vision Equipment and Assault Rifle ComponentsRead the Press Release
Earlier today, in federal court in Brooklyn, Giovanni Zannoni, an Italian national and member of the Italian armed services, pleaded guilty to illegally exporting controlled military technology from the United States to Italy. As part of his plea, Zannoni agreed to forfeit $436,673.73, in addition to the dozens of gun parts and night vision and thermal imaging devices recovered by the government in connection with this prosecution. Today’s plea took place before United States District Judge Pamela K. Chen.
Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Leigh-Alistair Barzey, Special Agent-in-Charge, Department of Defense, Defense Criminal Investigative Service, Northeast Field Office (DCIS), and Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York, announced the guilty plea.
“The defendant Giovanni Zannoni skirted laws intended to safeguard our national security by keeping specialized technologies out of the wrong hands,” stated Acting United States Attorney Rohde. “We will investigate and prosecute those who illegally export our defense technology, upon which our troops rely, to the fullest extent of the law.” Ms. Rohde extended her grateful appreciation to U.S. Department of Defense, Defense Criminal Investigative Service, and U.S. Immigration and Customs Enforcement, Homeland Security Investigations, for their assistance in this case.
“The defendant’s guilty plea is the result of a successful joint investigation conducted by the U.S. Attorney’s Office, HSI and the Defense Criminal Investigative Service (DCIS),” stated DCIS Special Agent-in-Charge Barzey. “The illegal exportation of controlled military technology poses a significant threat to our national security and DCIS is committed to working with its law enforcement partners to ensure that sensitive defense technology is properly protected.”
“Over a period of four years, Zannoni illegally moved military equipment half way around the globe for a profit, with no concern of the buying agent,” said HSI Special Agent-in Charge Melendez. “His actions supported the military potential and weapons proliferation of other nations, creating potential national security risks. Protecting our homeland encompasses many missions, including safeguarding our nation's technologies, and Zannoni will now face the consequences on this actions.”
According to court filings and admissions made in court at the time he entered the guilty plea, between June 2013 and May 2017, Zannoni illegally exported and attempted to export night vision goggles and assault rifle components designated as defense articles on the United States Munitions List. The export of sensitive night vision equipment and assault rifle components requires a license from the United States Department of State. The Department of State has placed restrictions on the export of items that it has determined could make a significant contribution to the military potential and weapons proliferation of other nations and that could be detrimental to the foreign policy and national security of the United States. On May 14, 2017, the defendant was arrested after entering the United States at Miami International Airport.
When sentenced, Zannoni faces a maximum sentence of 20 years in prison and a $1 million fine.
The government’s case is being handled by the Office’s General Crimes Section. Assistant United States Attorney Nomi D. Berenson is in charge of the prosecution, with the assistance from Trial Attorney Matthew Walczewski of the National Security Division’s Counterintelligence and Export Control Section.
The Defendant:
GIOVANNI ZANNONI
Age: 35
Residence: Gavorrano, ItalyE.D.N.Y. Docket No. 17-CR-565 (PKC)
Iowa Business Owner Pleads Guilty to Tax Evasion Concealed More Than $5.5 Million in Gross Receipts and Lied to IRSRead the Press Release
Council Bluffs, Iowa – A McClelland, Iowa, businessman pleaded guilty today to tax evasion, announced Principal Deputy Assistant Attorney General Richard Zuckerman and United
States Attorney Marc Krickbaum for the Southern District of Iowa.According to documents and information provided to the court, Michael Collins, 49, was part-owner of a real-estate development firm that earned significant income in 2006. As a result of his ownership in the company, Collins received approximately $289,000 in income that year, but did not report it on his individual income tax return. In 2008, the Internal Revenue Service
(IRS) contacted Collins regarding the unreported income and Collins filed an amended return reporting the income and reflecting a tax due of more than $100,000. However, Collins did not pay the tax liability.From 2006 through the present, Collins also operated an excavating and trucking company that generated more than $5.5 million in gross receipts. To evade payment of his outstanding tax liability, Collins registered the business as well as its bank accounts in the name of nominees, used nominee entities to conceal over $5 million in gross receipts from the business, filed fraudulent corporate tax returns that listed nominees as the owners of the business and paid his personal expenses using the business’ unreported income. Collins also filed fraudulent documents with the IRS claiming to have no gross business receipts for the company and falsely told IRS employees that his only source of income was unemployment benefits. He admitted to causing a tax loss of more than $250,000.
Sentencing is scheduled for May 11, 2018, before United States District Court Judge
Stephanie M. Rose. Collins faces a statutory maximum sentence of five years in prison. He also faces a period of supervised release, restitution and monetary penalties.Principal Deputy Assistant Attorney General Zuckerman and United States Attorney Marc
Krickbaum thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Matthew Hoffman and Lee Langston, who are prosecuting the case.Additional information about the Tax Division’s enforcement efforts can be found on the division’s Website.
Investigation of 3 Overdoses Leads to Heroin Distribution Charges against Waterbury ManRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, and Michael J. Ferguson, Special Agent in Charge of the Drug Enforcement Administration for New England, announced that ANDRE REED, 25, of Waterbury, was arrested today on a criminal complaint charging him with heroin distribution offenses.
REED appeared before U.S. Magistrate Judge Sarah A. L. Merriam in New Haven and was ordered detained.
This matter stems from an ongoing statewide initiative targeting narcotics dealers who distribute heroin, fentanyl or opioids that cause death or serious injury to users.
According to court documents and statements made in court, on March 1, 2016, at approximately 11:39 p.m., Danbury Police responded to a service station on the report of a woman in medical distress in a restroom. At the location, officers observed the victim on her knees, with her face on the floor, taking a deep gasping breath every 20 seconds. The victim also was holding a syringe. The victim was transported to the hospital, where she was placed on life support. She has since recovered from the overdose.
It is alleged that REED supplied heroin to another individual who then sold it to the victim.
On December 29, 2016, at approximately 6:53 a.m., Torrington Police and emergency personnel responded to a Torrington residence on the report of an unresponsive female at the residence. Efforts to resuscitate the victim, who was 29, were not successful. Investigators seized drug and non-drug evidence indicating that the death was an opioid overdose. Investigators also seized the victim’s cell phone.
On December 29, 2016, at approximately 8:28 a.m., Torrington Police and paramedics responded to another Torrington residence on the report of an unresponsive female. The victim, who was 21, was pronounced deceased at the scene. Investigators seized drug and non-drug evidence, including multiple empty “folds,” which are commonly used to package heroin. Investigators also seized the victim’s cell phone.
As alleged in the complaint, analysis of the cell phones seized from the two Torrington overdose victims revealed that the 21-year-old victim contacted REED to purchase heroin on December 28, 2016. Minutes later, the 21-year-old victim sent a text message to the 29-year-old victim that said “I already called my dude he’s around.”
The complaint charges REED with possession with intent to distribute and distribution of heroin, and conspiracy to distribute heroin. Both offenses carry a maximum term of imprisonment of 20 years.
U.S. Attorney Durham stressed that a complaint is only a charge and is not evidence of guilt. Charges are only allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Drug Enforcement Administration’s New Haven Tactical Diversion Squad and the Torrington, Danbury and Wilton Police Departments. The case is being prosecuted by Assistant U.S. Attorney Douglas P. Morabito.
Illinois Resident Sentenced on Sex Trafficking ChargesRead the Press Release
FARGO – United States Attorney Chris C. Myers announced that on December 21, 2017, ANTHONY DONTE COLLIER, a/k/a Koleone The Great, age 30, of Illinois, was sentenced in federal court after being found guilty by a trial jury in April of this year. Collier was sentenced to 40 years’ imprisonment, to be followed by a lifetime of supervised release on charges of Conspiracy to Engage in Sex Trafficking, Sex Trafficking of a Child, and four counts of Sex Trafficking. Collier was further ordered to pay $600 in special assessments to the Crime Victims’ Fund, in addition to a $5,000 special assessment payable to the Trafficking Victims’ Protection Act, and also $38,885.41 in restitution to the victims in the case.
This case came to the attention of law enforcement after Collier’s state probation office discovered an image on Collier’s Facebook page depicting a young woman on her knees, dressed in lingerie, with a dog collar around her neck which was attached to a leash that was being held by Collier. Law enforcement learned that Collier was frequenting hotels with that same woman depicted in the image and subsequently obtained a search warrant for Collier’s cell phone, which contained images of several women, including a 17-year-old juvenile girl. During the forensic examination of the cell phone, law enforcement found that the same images located on Collier’s cell phone were also seen on Backpage.com under the "Escort" section. The exam further revealed that the cell phone was utilized to purchase virtual currency known as "Bitcoins," which were ultimately used to purchase advertisements on Backpage.com; the ads depicted the same women and the same photos. Backpage.com is an online classified advertising company which Collier utilized to advertise the women for sex.
Victims were subsequently identified and interviewed, during which time they disclosed that Collier assaulted them, including urinating on one of the victims, to compel the victims to engage in commercial sex acts. The sex acts occurred in hotels as well as private residences located in both Moorhead and Fargo. A total of five victims were identified and interviewed as part of this case.
"This sentencing stands as a warning to those who would sell another person into sexual slavery," said Special Agent in Charge Alex Khu of HSI – St. Paul. "HSI, in addition to our local and state law enforcement partners, remain ever vigilant and will take aggressive action to find and rescue victims, and to put their victimizers behind bars."
U. S. Attorney Myers stated, "This case is a shining example of the commitment of local, state, and federal law enforcement, along with victim service providers, to rescue victims of sex trafficking and to punish defendants like Mr. Collier who prey on victims for their own financial gain."
This case was investigated by the Moorhead Police Department, Department of Homeland Security – Homeland Security Investigations, and the North Dakota Bureau of Criminal Investigation.
Assistant United States Attorneys Jennifer Puhl and Brett Shasky prosecuted the case.
This case was prosecuted with the assistance of the North Dakota Human Trafficking Task Force (NDHTTF), which includes regional response teams that consist of federal, state, and local law enforcement and victim service providers working together to identify and rescue human trafficking victims as well as investigate and prosecute human trafficking cases. Led by the U.S. Attorney’s Office, ND BCI, and the North Dakota Counsel on Abused Women Services (CAWS), the NDHTTF is dedicated to addressing the individualized needs of human trafficking victims and the apprehension, investigation, and prosecution of the perpetrators of human trafficking.
The NDHTTF includes representatives from Youthworks, the Children’s Advocacy Center, the Domestic Violence Crisis Center, Lutheran Social Services, the ND Association of Counties, a Force to End hUman Sexual Exploitation (FUSE), a survivor of human trafficking, First Nations Women’s Alliance (FNWA), and the Department of Homeland Security - Homeland Security Investigations (HSI).
Idaho Falls Pair Who Possessed Drugs and Guns Plead Guilty in Federal CourtRead the Press Release
POCATELLO – Nicholas Levi Olsen, 34, and Chanel Lynn Bistodeau, 32, both of Idaho Falls, pleaded guilty this week to possession with intent to distribute methamphetamine, U.S. Attorney Bart M. Davis announced. Olsen and Bistodeau were indicted by a federal grand jury on April 25, 2017. This case highlights the strong partnership between the U.S. Attorney’s Office and the Eastern Idaho Partnership in reducing gun and drug offenses in eastern Idaho.
According to court records, in March of this year, Olsen and Bistodeau caught the attention of police while driving in Blackfoot. Olsen and Bistodeau parked at an apartment complex, where Bistodeau fled on foot while Olsen walked away from the car. The police caught up with Olsen, walked Olsen back to the car and had Olsen empty $730 in cash from his pocket. Shortly thereafter, Olsen ran. The police were unable to catch Olsen or Bistodeau.
Police searched the car. They found approximately ten ounces of methamphetamine, three pistols and drug paraphernalia.
On April 15, police arrested Olsen and Bistodeau at the Fairbridge Inn in Idaho Falls. Police found another pistol, about eight grams of methamphetamine and over four grams of heroin.
The charge for possession with intent to distribute methamphetamine is punishable by a term of imprisonment of ten years to life, a $10,000,000 fine, and at least five years of supervised release. Sentencing is set for January 18, 2018, before U.S. District Judge B. Lynn Winmill at the federal courthouse in Pocatello.
The case was investigated through the combined efforts of the Bingham County Prosecutor’s Office, the Blackfoot Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Attorney’s Office, and the Eastern Idaho Partnership. The Eastern Idaho Partnership is a collaborative effort among local communities, law enforcement, the State of Idaho, and the U.S. Attorney for the District of Idaho. The Partners combine efforts to fund and support a Special Assistant United States Attorney, or “SAUSA.” The SAUSA, Bryan Wheat, works with local prosecutors and law enforcement to prosecute serious local crimes in federal court. The Partnership focuses its efforts on regional drug trafficking, gun and gang violence, internet based crimes against children, and other serious crimes with a federal nexus that affect the southeast Idaho region.
“I applaud all of the agencies involved in this investigation and prosecution for a job well done,” said Bingham County Prosecutor Cleve Colson, who is also the chair of the Eastern Idaho Partnership. “The prosecution of Chanel Bistodeau and Nicholas Olsen through the Eastern Idaho Partnership is a clear illustration of its effectiveness in creating stronger and safer communities in eastern Idaho. The partnership has been a tremendous success and I look forward to its continued growth.”
“I am so pleased with the cooperative efforts between federal, state and local law enforcement officers and prosecutors in working together to reduce drug and gun crimes in Idaho. I applaud the Eastern Idaho Partnership for the concern they have for keeping their communities safe and am honored to work with them hand-in-hand,” U.S. Attorney Bart Davis said.
Hunterdon County, New Jersey, Man Pleads Guilty to Distributing Child PornographyRead the Press Release
NEWARK, N.J. – A High Bridge, New Jersey, man today admitted distributing images of child sexual abuse over the Internet, Acting U.S. Attorney William E. Fitzpatrick announced.
Darrel Underhill, 73, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an information charging him with one count of distributing child pornography.
According to documents filed in the case and statements in court:
Underhill used a peer-to-peer file sharing program on his computer to download videos and images of child sexual abuse. In October 2016, law enforcement downloaded over three dozen such videos from Underhill’s computer. After executing a search warrant at Underhill’s home in March of 2017, agents located nearly 1000 videos and over 12,000 images of child sexual abuse on Underhill’s computers. Underhill admitted today that he was making videos available for others to download.
The distribution of child pornography charge to which Underhill pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Underhill will be required to register as a sex offender. Under the terms of the plea agreement, if accepted by the court, Underhill will be sentenced to 121 months in prison. He remains in custody pending his March 28, 2018 sentencing date.Acting U.S. Attorney Fitzpatrick credited special agents with the U.S. Department of Homeland Security (DHS), Homeland Security Investigation’s (HSI) Newark Division, under the direction of Acting Special Agent in Charge Michael McCarthy, with the investigation.
The government is represented by Assistant U.S. Attorney Mark J. McCarren of the U.S. Attorney’s Office Criminal Division in Newark.
Defense counsel: Lisa Mack Esq., Assistant Federal Public Defender
Home Invasion Leader Indicted for Robbery and Gun ChargesRead the Press Release
FRESNO, Calif. — A federal grand jury returned a three-count indictment today against Jose Jesus Carbajal, 31, of Waterford, charging him with conspiracy to commit Hobbs Act robbery, interference with commerce by robbery, and brandishing a firearm during and in relation to a crime of violence, United States Attorney Phillip A. Talbert announced. The Hobbs Act prohibits robbery and extortion that interferes with interstate commerce.
According to court documents, Carbajal was the leader of a home invasion crew that posed as police officers and robbed drug dealers. On one occasion, Carbajal allegedly led his crew to a house in Arbuckle, California, where they robbed the home’s occupants of money, marijuana, and other valuables before fleeing.
This case was the product of an investigation by the Federal Bureau of Investigation and the Colusa County Sheriff’s Department. Assistant United States Attorneys Melanie Alsworth and Ross Pearson are prosecuting the case.
If convicted of all counts, Carbajal faces a mandatory minimum statutory penalty of five years in prison, a maximum statutory penalty of life in prison and a $250,000 fine. Any sentence, however, would 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 charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Hartford Woman Sentenced to 2 Years in Prison for Role in Heroin Trafficking RingRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, today announced that ZULEYMA CRUZ, 29, of Hartford, was sentenced yesterday by U.S. District Judge Vanessa L. Bryant in Hartford to 24 months of imprisonment, followed by three years of supervised release, for her role in a heroin trafficking operation.
According to court documents and statements made in court, this matter stems from a Drug Enforcement Administration Hartford Task Force investigation into a drug trafficking organization that distributed large quantities of heroin in the Hartford area. The investigation revealed that CRUZ allowed members of the organization to store heroin, cocaine, drug packaging materials and cash at her Wayland Street apartment, and allowed her apartment to be used to process and package narcotics for street sale.
CRUZ and several co-conspirators were arrested on June 4, 2015. On that date, a search of CRUZ’s apartment revealed a bag of cocaine, approximately 400 bags of heroin, a heroin stamp, six boxes containing hundreds of stamped bags for packaging heroin, and other items used to process and package heroin for street sale.
On February 17, 2017, CRUZ pleaded guilty to one count of conspiracy to distribute and to possess with intent to distribute heroin.
CRUZ is currently incarcerated in state custody. In September 2015, she was sentenced in Manchester Superior Court to a total effective sentence of seven and one-half years of incarceration on convictions for manslaughter with a motor vehicle and assault with a motor vehicle.
Judge Bryant ordered CRUZ to begin serving the 24-month federal sentence when she is released from state custody.
Six other individuals were charged as a result of this investigation.
This matter has been investigated by the Drug Enforcement Administration’s Hartford Task Force with the assistance of the Connecticut State Police. The DEA Task Force includes participants from the Bristol, East Hartford, Hartford, Manchester, New Britain, Rocky Hill, Wethersfield, Willimantic and Windsor Locks Police Departments, and the Food and Drug Administration. The case is being prosecuted by Assistant U.S. Attorney Geoffrey M. Stone.
Harrisburg Woman Charged with Distribution of HeroinRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Marjorie Maldonado, age 30, of Harrisburg, Pennsylvania, was indicted on December 20, 2017, by a federal grand jury with unlawful distribution of heroin.
According to United States Attorney David J. Freed, the indictment alleges that Maldonado distributed heroin on December 1, 2017, in Harrisburg.
The charge stems from an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant United States Attorney James T. Clancy is prosecuting the case.
This case was brought as part of a district wide initiative to combat the nationwide epidemic regarding the use and distribution of heroin. Led by the United States Attorney’s Office, the Heroin Initiative targets heroin traffickers operating in the Middle District of Pennsylvania and is part of a coordinated effort among federal, state and local law enforcement agencies to locate, apprehend, and prosecute individuals who commit heroin related offenses.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty for this drug trafficking charge is 20 years in prison, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Harrisburg Man Sentenced to Prison for Tax FraudRead the Press Release
HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Felix Ramon Diaz, age 58, of Harrisburg, Pennsylvania, was sentenced on December 19, 2017, to one year and one day imprisonment by United States District Court Judge William W. Caldwell for aiding and assisting the preparation of false tax documents.
According to United States Attorney David J. Freed, Diaz was a tax preparer who owned Felix Tax Service. From 2010 through 2013, Diaz filed 45 tax returns with false and fraudulent income, deductions, and addresses in an effort to maximize income tax refunds. Diaz’s conduct resulted in approximately $100,000 in losses taxes to the government.
Judge Caldwell noted the health issues facing Diaz and his lack of prior criminal history as mitigating factors. However, when imposing sentence, the judge noted the crimes were serious and Diaz committed the offense for years.
In March 2016, a grand jury indicted Diaz for the tax fraud scheme. On January 25, 2017, Diaz entered a guilty plea to the offense before Judge Caldwell.
The case was investigated by the Internal Revenue Service Criminal Investigation Division and Assistant United States Attorney Michael A. Consiglio prosecuted the case.
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Harrisburg Man Charged with Firearms OffensesRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Eddie Junior Pena, age 23, of Harrisburg, Pennsylvania, was indicted on December 20, 2017, by a federal grand jury for unlawful possession of a firearm.
According to United States Attorney David J. Freed, the indictment alleges that between March 2017 and December 2017, Pena possessed a 9mm Glock firearm as a convicted felon in furtherance of drug trafficking.
The charges stem from an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant United States Attorney James T. Clancy is prosecuting the case.
This case was brought as part of the Violent Crime Reduction Partnership (“VCRP”), a district wide initiative to combat the spread of violent crime in the Middle District of Pennsylvania. Led by the United States Attorney’s Office, the VCRP consists of federal, state and local law enforcement agencies whose mission is to locate, apprehend, and prosecute individuals who commit violent crimes with firearms.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty for possession of a firearm in furtherance of drug trafficking is life in prison, a term of supervised release following imprisonment, and a fine. The maximum penalty for possessing a firearm after being convicted of a felony offense is 10 years in prison, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Glastonbury Man Charged with Child Exploitation OffenseRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, today announced that a federal grand jury in Hartford returned an indictment yesterday charging JAMES RIPBERGER, 62, of Glastonbury, with one count of receipt of child pornography.
As alleged in court documents and statements made in court, on October 12, 2017, law enforcement officers conducted a search of RIPBERGER’s Glastonbury residence and seized computers and electronic storage devices. Preliminary analysis of the seized items revealed more than 125 images and videos of child pornography.
If convicted of receipt of child pornography, RIPBERGER faces a mandatory minimum term of imprisonment of five years and a maximum term of imprisonment of 20 years.
RIPBERGER has been in federal custody since December 15, 2017, when he was arrested on a federal criminal complaint.
U.S. Attorney Durham stressed that an indictment is not evidence of guilt. Charges are only allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This ongoing investigation is being conducted by Homeland Security Investigations, the Glastonbury Police Department and the Connecticut Center for Digital Investigations. The case is being prosecuted by Assistant U.S. Attorney Nancy V. Gifford.
Gentilly Resident Sentenced to over 10 Years Imprisonment for Money Laundering and other Financial CrimesRead the Press Release
Acting U.S. Attorney Duane A. Evans announced that CORNELL PENDLETON, age 51, of the Gentilly neighborhood in New Orleans, was sentenced today for his role in laundering money on behalf of heroin dealers in the New Orleans area.
U.S. District Judge Jane Triche Milazzo sentenced PENDELTON to a term of incarceration of 121 months, followed by two years of supervised release. Judge Milazzo also ordered PENDLETON to pay a fine of $100,000.
Following a weeklong trial, a jury found PENDLETON guilty of conspiracy to commit money laundering; numerous substantive money laundering offenses involving the purchase of real property and cars using illegal drug money; structuring his cash deposits; and providing false statements on loan applications. The jury also found that PENDLETON must forfeit over $700,000 in cash and assets that were involved in his criminal activities.
According to the evidence presented trial, the case against PENDLETON stemmed from a Drug Enforcement Administration investigation of a heroin-trafficking organization that operated in New Orleans East. The original investigation, nicknamed “Wild Wild East,” began in 2013 and has since resulted in the conviction of twelve New Orleans-based heroin dealers.
Through that investigation, the government began developing evidence that PENDLETON was helping drug dealers to acquire high-end assets in an effort to conceal the proceeds of their drug operation. These high-end assets included multiple cars, such as Mercedes, Porsche, Corvette, Bentley, and BMW; residential and investment real estate; jewelry, including Rolex watches; and other expensive items. PENDLETON’s scheme involved purchasing assets in his own name, and then allowing the drug dealers to use the assets while making sizable, off-the-books payments to PENDLETON. Once an asset was fully paid off, PENDLETON would often transfer title of the asset back to the drug dealer. PENDLETON was paid entirely in cash for his assistance in acquiring these assets. The evidence showed that, over a two and a half year period between 2012 and 2014, PENDLETON deposited over $1.5 million in cash into four bank accounts, while knowing that the cash included illegal drug proceeds.
Acting U.S. Attorney Evans praised the work of the Drug Enforcement Administration, Kenner Police Department, and Border Patrol in investigating this matter. Assistant United States Attorneys Brandon S. Long and Theodore Carter were in charge of the prosecution.
Four Aliens Indicted on Illegal Reentry Charges, False Representation of a Social Security Account Number, False Claim of United States Citizenship with Intent to Engage Unlawfully in Employment in the United States, 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 JELBER ALEXANDER LOPEZ-SANCHEZ, age 25, of Guatemala, JUAN SEGURA-GOMEZ, age 48, of Mexico, and KEVIN TERRASA, age 32, of Mexico, with Illegal Reentry of a Deported Alien. Additionally, a federal grand jury in Raleigh has returned an indictment charging JOSE DARWIN MARTINEZ-LAINEZ, age 32, of Honduras, with False Representation of a Social Security Account Number, False Representation of United States Citizenship with Intent to Engage in Unlawful Employment in the United States, and Aggravated Identity Theft.
If convicted of Illegal Reentry of a Deported Alien, LOPEZ-SANCHEZ, found in Duplin County, SEGURA-GOMEZ, previously deported twice and found in Beaufort County, and TERRASA, previously deported twice and found in Wake County, would face maximum penalties of two years’ imprisonment, 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, False Representation of United States Citizenship with Intent to Engage Unlawfully in Employment in the United States, and Aggravated Identity Theft, MARTINEZ-LAINEZ, found in Sampson County, would face maximum penalties of twenty-four 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.
ICE’s Enforcement and Removal Operations and Homeland Security Investigations are investigating the cases.
Former Owner of Sleep Study Clinics Pleads Guilty to Fraud, Tax ChargesRead the Press Release
ALEXANDRIA, Va. – The former owner of 1st Class Sleep Diagnostic Center and 1st Class Medical, pleaded guilty today to conspiracy to commit health care and wire fraud, and conspiracy to defraud the United States.
According to court documents, from at least 2005 through 2014, Dannie Ahn, 43, of Centreville, helped control, manage, and oversee various corporations, to include 1st Class Sleep Diagnostic Center and 1st Class Medical, which provided sleep studies and sleep-related treatment at clinics located throughout Northern Virginia and Maryland.
According to the statement of facts filed with the plea agreement, Ahn, along with a conspirator, directed a scheme to defraud health care benefit programs by causing the submission of false, fraudulent, and misleading claims. Ahn fraudulently incentivized individuals to receive sleep studies, which he had no reason to believe were medically necessary and were not authorized by any medical practitioner, in order to increase revenue. Ahn also caused kickbacks to be paid to physicians in exchange for referring patients to 1st Class, and disguised the kickbacks using various means.
According to the statement of facts, Ahn, along with a conspirator, caused 1st Class to pay personal expenses which were falsely and fraudulently characterized as business expenses on the financial books and records of 1st Class. Later, Ahn caused the false information, including the false business records of 1st Class, to be provided to various individuals for preparation of corporate income tax returns and individual income tax returns. According to court documents, the loss attributable to Ahn’s conduct is between $4.5 and $25 million, and the loss to government health care programs is more than $1 million.
Ahn pleaded guilty to conspiracy to commit health care and wire fraud, and conspiracy to defraud the United States. He is scheduled for sentencing on Sept. 14, 2018.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia, Andrew W. Vale, Assistant Director in Charge of the FBI’s Washington Field Office, Kimberly Lappin, Special Agent in Charge, Washington, D.C. Field Office, IRS-Criminal Investigation (IRS-CI), Robert E. Craig, Special Agent in Charge for the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office, Nicholas DiGiulio, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), and Norbert E. Vint, Acting Inspector General for the Office of Personnel Management (OPM), made the announcement after U.S. District Judge Liam O’Grady accepted the plea. Assistant U.S. Attorney Katherine Wong and Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section are prosecuting the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:17-cr-222.
Former Executive of Defunct Tampa Technology Company Sentenced to Five Years in Prison for Investment FraudRead the Press Release
Tampa, Florida – U.S. District Judge Elizabeth A. Kovachevich has sentenced Terrance F. Taylor (52, Bradenton) to five years in federal prison for conspiracy to commit wire fraud. The Court also ordered him to pay $3,341,500 in restitution to the victims of the fraud.
Taylor pleaded guilty on September 9, 2015.
According to court documents, in 2010, Taylor and Timothy Roberts founded Savtira Corporation Inc., a technology company headquartered in Ybor City. Savtira purported to offer a centralized, cloud-based shopping cart platform for online and traditional retailers to sell products, regardless of the device used by the online purchaser. Roberts and Taylor marketed Savtira stock to investors by making false claims about the company, including that Savtira was profitable and that the company had entered into executed agreements with nationally recognized technology firms. They also falsely claimed that Savtira owned patents and/or that the company was valued between $450 and $540 million. Roberts and Taylor then misused and misappropriated some of the investors’ funds for personal expenses and cash withdrawals without the investors’ consent or knowledge. They also failed to disclose that Roberts had entered into a settlement agreement with the U.S. Securities and Exchange Commission in 2008 that required Roberts to pay a fine and banned him from selling unregistered securities.
Roberts previously pleaded guilty to wire fraud and faces up to 20 years in federal prison. His sentencing hearing is scheduled for March 16, 2018.
This case was investigated by the Florida Office of Financial Regulation’s Bureau of Financial Investigations and the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorneys Mandy Riedel and Rachel Jones.
Former Embraer Sales Executive Pleads Guilty to Foreign Bribery and Related ChargesRead the Press Release
A former sales executive of Embraer S.A. (Embraer), a Brazilian-based manufacturer of aircraft, pleaded guilty today in connection with a scheme to pay bribes to a high-level foreign government official in exchange for assistance in securing Embraer’s sale of aircraft to Saudi Arabia’s national oil company.
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon H. Kim of the Southern District of New York, Assistant Director Stephen E. Richardson of the FBI’s Criminal Investigative Division and Special Agent in Charge Robert F. Lasky of the FBI’s Miami Field Office made the announcement.
Colin Steven, 61, a U.K. citizen residing in the United Arab Emirates, was charged by information filed today in the Southern District of New York with one count of violating the Foreign Corrupt Practices Act (FCPA), one count of conspiracy to violate the FCPA, one count of wire fraud, one count of conspiracy to commit wire fraud, one count of money laundering, one count of conspiracy to launder money and one count of making a false statement. Steven pleaded guilty to all of those counts before U.S. District Judge Alison J. Nathan of the Southern District of New York. A sentencing date has not been scheduled yet. The Court set a control date of June 21, 2018.
As part of his plea, Steven, a former vice president of sales & marketing in Embraer’s Executive Jets Division, admitted that he engaged in a scheme to have Embraer pay bribes to a foreign official in exchange for assistance in getting an aircraft sales contract with favorable terms awarded to Embraer; retained a kickback as part of the scheme; and lied to law enforcement officials about his kickback.
Steven consented to the filing of the information, which alleged that Embraer was in negotiations with Saudi Arabia’s national oil company over a potential aircraft sale when Steven and the foreign official devised an arrangement whereby the foreign official would guarantee that Embraer would win a contract and that the contract would involve new rather than used aircraft in exchange for approximately $1.5 million in bribe payments. In early 2010, Saudi Arabia’s national oil company awarded Embraer a contract for three new aircraft, valued at approximately $93 million. The information further alleged that he arranged to disguise the bribes as commissions to a South African company that was owned in part by Steven’s personal friends. The South African company transferred the bulk of the bribe proceeds to the foreign official’s intermediary but, at Steven’s direction, paid a portion of the bribe proceeds to Steven.
In pleading guilty, Steven admitted that he executed, and conspired with others to execute, the bribery and kickback schemes; laundered and conspired to launder the proceeds of those schemes through the South African company and lied to U.S. law enforcement about the kickback.
The guilty plea entered today follows the execution in October 2016 of a deferred prosecution agreement between the Department and Embraer, under which Embraer agreed to pay a $107 million penalty to the Department as part of a $205 million global resolution to investigations by the Department, the Securities and Exchange Commission and Brazilian authorities related to corrupt conduct in several countries, including Saudi Arabia. The agreement acknowledged Embraer’s cooperation with the investigations. With the cooperation of U.S. authorities, Brazilian authorities have charged 11 individuals for their alleged involvement in Embraer’s misconduct in the Dominican Republic. Saudi Arabian authorities have charged two individuals for their alleged involvement in Embraer’s misconduct in Saudi Arabia.
The FBI’s International Corruption Squads, based in Miami, Florida, and Los Angeles, California, investigated the case. Trial Attorneys John-Alex Romano and Nikhila Raj and Assistant Chief David Johnson of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Richard Cooper of the Southern District of New York, are prosecuting the case. The Fraud Section appreciates the cooperation and assistance provided by the SEC in this matter.
The Criminal Division’s Office of International Affairs provided significant assistance in this matter. The Department also appreciates the cooperation and assistance provided by authorities in Brazil, the Dominican Republic, South Africa and Switzerland in this matter.
In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Former Embraer Sales Executive Pleads Guilty to Foreign Bribery and Fraud ChargesRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and John P. Cronan, the Acting Assistant Attorney General of the Criminal Division of the U.S. Department of Justice, announced that COLIN STEVEN pled guilty to Foreign Corrupt Practices Act, wire fraud, money laundering, and false statement charges arising from his role in paying bribes to a foreign official in exchange for assistance in obtaining business for STEVEN’s employer, Embraer S.A. (“Embraer”). STEVEN, a former executive in Embraer’s Executive Jets Division, arranged for Embraer to pay over $1.5 million in bribes to an official at the state-owned and state-controlled national oil company of Saudi Arabia (the “Saudi Arabia Company”), and ultimately received a kickback from a portion of the bribe proceeds. STEVEN pled guilty today before U.S. District Judge Alison J. Nathan.
According to the allegations contained in the Information to which STEVEN pled guilty, and statements made during the plea and other court proceedings:
Embraer, an aircraft manufacturer based in Brazil, has operations and subsidiaries in various locations around the world, including the United States and the Middle East. Embraer manufactures commercial, executive, and defense aircraft for governmental and private customers throughout the world. STEVEN, a British national, was an executive responsible for overseeing the generation of sales for a particular Embraer division in regions that included the Middle East.
In approximately 2006, STEVEN learned that the Saudi Arabia Company was interested in purchasing aircraft, and for a period of three years after that STEVEN and a salesperson who reported to him had occasional contact with employees of the Saudi Arabia Company to discuss the potential sale of three Embraer jets. In late 2009, STEVEN met with an official of the Saudi Arabia Company (the “Saudi Arabia Official”) in London, England. The Saudi Arabia Official offered to help Embraer win the aircraft contract from the Saudi Arabia Company, and to ensure that the Saudi Arabia Company would buy new – not used – jets from Embraer, in exchange for a payment. STEVEN agreed to cause Embraer to pay the Saudi Arabia Official $550,000 per aircraft, for a total bribe amount of $1.65 million.
In late 2009 and early 2010, STEVEN developed a plan to use a company based in South Africa (the “South Africa Company”) as a purported agent on the transaction, which would result in Embraer paying the South Africa Company $1.65 million in “finders fees,” when in fact the South African Company would perform no work on the transaction and would be used to facilitate and to disguise the payment to the Saudi Arabia Official.
In early 2010, on the Saudi Arabia Official’s recommendation, a committee at the Saudi Arabia Company approved the purchase of three new aircraft from Embraer for $93 million. A subsidiary of Embraer also entered into an agreement with the South Africa Company, pursuant to which the South Africa Company would purportedly promote the sale of Embraer aircraft to a subsidiary of the Saudi Arabia Company. In reality, the South Africa Company provided no services to Embraer other than serving as a conduit to funnel payments to the Saudi Arabia Official. An Embraer subsidiary subsequently wired $1.65 million to the South Africa Company, in December 2010 and February 2011. Between February 2011 and April 2011, the South Africa Company wired approximately $1.4 million to bank accounts in Switzerland and Bahrain held by an individual who was acting as an intermediary for the Saudi Arabia Official.
STEVEN also developed a plan to take a portion of the bribe proceeds as a kickback, and ultimately received approximately $130,000 in wire transfers from the South Africa Company in October and December 2011.
STEVEN was later interviewed by an agent of the Federal Bureau of Investigation in December 2014, and falsely stated that a wire transfer he received from the South Africa Company in 2011 was for the purpose of buying real estate in connection with a potential business venture between STEVEN and an executive of the South Africa Company.
The guilty plea entered today follows the execution in October 2016 of a deferred prosecution agreement between the Department of Justice and Embraer, under which Embraer agreed to pay a $107 million penalty as part of a $205 million global resolution to investigations by the Department, the Securities & Exchange Commission, and Brazilian authorities related to corrupt conduct in several countries, including Saudi Arabia. The agreement acknowledged Embraer’s cooperation with the investigations.
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STEVEN, 61, resides in Dubai, United Arab Emirates. A chart listing the maximum sentences relating to the charges in the Information is below. As part of his plea agreement, STEVEN is also required to pay forfeiture and restitution. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. STEVEN is scheduled to be sentenced by Judge Nathan on June 21, 2018.
This case is being prosecuted by the Justice Department’s Criminal Division Fraud Section and the Office’s Complex Frauds and Cybercrime Unit. Trial Attorneys John-Alex Romano and Nikhila Raj as well as Assistant United States Attorney Richard Cooper and Assistant Chief David Johnson of the Fraud Section are prosecuting the case.
The FBI’s International Corruption Squads, based in Miami, Florida, and Los Angeles, California, investigated the case. The Criminal Division’s Office of International Affairs provided significant assistance in this matter. The Office also appreciates the cooperation and assistance provided by authorities in Brazil, the Dominican Republic, South Africa and Switzerland in this matter.
Count
Charge
Maximum sentence
One
Conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”), 18 U.S.C. § 371
Five years in prison
Two
Violation of the FCPA, 15 U.S.C. §§ 78dd-1 and 78ff(c)(2)(A), and 18 U.S.C. § 2
Five years in prison
Three
Conspiracy to commit wire fraud, 18 U.S.C. § 1349
20 years in prison
Four
Wire fraud, 18 U.S.C. §§ 1343 and 2
20 years in prison
Five
Conspiracy to commit money laundering, 18 U.S.C. § 1956(h)
20 years in prison
Six
Money laundering, 18 U.S.C. §§ 1956(a)(2)(A) and 2
20 years in prison
Seven
False statements, 18 U.S.C. § 1001
Five years in prison
Former Delhi City Clerk Sentenced to over a Year in Federal Prison for Stealing over $100,000 from the CityRead the Press Release
A woman who used her position as the city clerk for the City of Delhi to steal more than $100,000 in public funds was sentenced yesterday to more than a year in federal prison.
Angela Billings from Anamosa, Iowa, received the prison term after a guilty plea to theft from a program receiving public funds.
In a plea agreement, Billings admitted that she held a position of public trust as the city clerk and that her position of trust contributed significantly to the commission and concealment of her crime. She agreed that she stole more than $100,000 from the city by, among other means, using the city’s credit card for personal expenses and adjusting her own utility bills. Billings also agreed she owes more than $130,000 in restitution, which includes costs the city incurred to conduct the audit that discovered the breadth of her crime.
Billings was sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade. Billings was sentenced to 15 months’ imprisonment. A special assessment of $100 was imposed, and she was ordered to pay $133,915.31 in restitution to the city. She must also serve a term of supervised release after the prison term. There is no parole in the federal system.
Public employees hold a special place in our society and are given a great deal of trust,” stated United States Attorney Peter Deegan. “We are committed to holding those employees responsible when they betray that trust by stealing from the communities they are supposed to be serving.”
Billings was released on the bond previously set and is to surrender to the Bureau of Prisons on a date yet to be set.
The case was prosecuted by Assistant United States Attorney Jacob A. Schunk and investigated by the Federal Bureau of Investigation.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 17-CR-2032.
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Former Bothell Resident Pleads Guilty to Production, Distribution and Possession of Images of Child MolestationRead the Press Release
A 53-year old Bothell, Washington, man pleaded guilty today in U.S. District Court in Seattle to production, distribution and possession of child pornography, announced U.S. Attorney Annette L. Hayes. DONALD MCCOY JR was arrested in October 2016, and has been in federal custody since that time. MCCOY faces a mandatory minimum 15 years in prison and up to 30 years in prison when sentenced by U.S. District Judge James L. Robart on March 12, 2018.
According to records filed in the case, MCCOY came to the attention of federal law enforcement in 2016, when an undercover agent using peer-to-peer file sharing software observed images of child rape being shared from a computer tied to an internet protocol address that traced back to MCCOY’s residence. After obtaining the address and a court authorized search warrant, law enforcement executed the search at MCCOY’s home. Forensic examination of various electronic devices revealed that MCCOY had made images of the molestation of four young children between the ages of 6 and 13 years-old. MCCOY molested several the young children while they were asleep.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc .
The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) with assistant with the Seattle Internet Crimes Against Children Task Force. The case was prosecuted by Assistant United States Attorney Matthew Hampton.
Florida Resident Guilty of Theft of Federal Student Aid Funds and Aggravated Identity Theft Sentenced to 44 Months of ImprisonmentRead the Press Release
Acting U.S. Attorney Duane A. Evans announced that ROMAN WILLIAMS, age 36, of Pensacola, Florida, was sentenced today after previously pleading guilty to theft of government funds and aggravated identity theft.
U.S. District Judge Eldon E. Fallon sentenced WILLIAMS to 44 months of imprisonment, to be followed by two years of supervised release after his release from prison. WILLIAMS was also ordered to pay restitution to his victims.
According to court documents, WILLIAMS falsified federal student loan applications using stolen identities and then used the stolen student aid monies for his own personal use.
Acting U.S. Attorney Evans praised the work of the Department of Education, Office of the Inspector General and the Federal Bureau of Investigation in investigating this matter. Assistant United States Attorney Richard R. Pickens, II was in charge of the prosecution.
Firearm and Drug Trafficking Lands Washington Man in PrisonRead the Press Release
HELENA — On Thursday, December 21, 2017, United States District Court Judge Sam Haddon sentenced Christian Jesus Ruiz, 23, of Sunnyside, Washington, to 60 months in prison, 5 years’ supervised release, and a $100 surcharge for possession of a firearm in furtherance of a drug trafficking offense. Ruiz was part of a scheme by multiple conspirators to distribute very large amounts of methamphetamine through Deer Lodge, Montana each month between January 2016 and January 2017. Members of the conspiracy, including Ruiz, possessed firearms in connection with the drug trafficking crimes they committed in Montana.
Other members of the conspiracy included Jeff Allen Trask, Chase Ryan Storlie, and Hector Ricardo Gonzalez. The court previously sentenced Trask and Gonzalez. Trask was sentenced to 54 months in prison and five years of supervised release for his role in the conspiracy. Gonzalez was sentenced to 260 months in prison and five years of supervised release. Storlie faces sentencing on January 3, 2018.
Gonzalez and Ruiz’s involvement in the conspiracy came to a sudden end on January 24, 2017, when the authorities arrested them in Mineral County, Montana, in possession of 20 pounds of methamphetamine. The methamphetamine was destined for Deer Lodge.
The charges against Ruiz and his codefendants are the result of an investigation by the Montana Division of Criminal Investigations, the Missouri River Drug Task Force, the Helena Police Department, the Lewis and Clark County Sheriff’s Office, the Federal Bureau of Investigation, the Mineral County Sheriff’s Office, the Powell County Sheriff’s Office, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Montana Highway Patrol, and the Drug Enforcement Administration. Criminal Chief Assistant United States Attorney Joseph Thaggard and Assistant United States Attorney Tom Bartleson prosecuted the case.
United States Attorney Kurt Alme explained, “I want to thank our law enforcement partners for helping us bring these defendants to justice. The volatile combination of methamphetamine and guns is closely associated with a rise in violent crime in communities across Montana. The Department of Justice is committed to reducing violent crime in those communities and prosecuting Ruiz and his co-defendants is another positive step toward that goal.” Alme also praised the collaborative work of the law enforcement agencies and prosecutors in the case.
Felony Warrant Enforcement Operation Nets 22 Defendants Wanted for Gun, Drug and Other ChargesRead the Press Release
FAYETTEVILLE – The United States Attorney for the Eastern District of North Carolina, Robert J. Higdon, Jr., announces that “Operation Wintry Mix” resulted in the arrest of sixteen (16) defendants for outstanding federal charges in a coordinated warrant enforcement operation. In addition, three subjects related to this operation were found to be in the custody of the North Carolina Department of Corrections and a local jail in Virginia. Federal detainers have been filed against those subjects. Also, three subjects were arrested on state charges.
The following individuals were charged by way of Criminal Indictment. The individual charges for each defendant is contained in the parenthesis following the personal information.
- Larry Donnell Adams,41, of Fayetteville, NC (Felon in Possession of a Firearm)
- Robert Edmond, Jr., 43 of Fayetteville, NC (Possession with Intent to Distribute Cocaine & Marijuana, Possession of a Firearm in Furtherance of a Drug Trafficking Crime, Felon in Possession of a Firearm)
- Dervin Francis, 24, of Fayetteville, NC (Felon in Possession of a Firearm)
- Malcolm Dion Fuller, 36, of Fayetteville, NC (Felon in Possession of a Firearm)
- Adam Golden, 23, of Fayetteville, NC (2-Counts of Felon in Possession of a Firearm, Possession of a Stolen Firearm)
- Jesus Eliezer Gonzalez-Acevedo, 27,of Fayetteville, NC (Arson)
- Jason Stewart Hollingsworth, 41, of Fayetteville, NC (Possession with the Intent to Distribute Oxycodone & Amphetamine, Possession of a Firearm in Furtherance of a Drug Trafficking Crime, & Felon in Possession of a Firearm)
- Joseph Luther Lewis, 28, of Spring Lake, NC (Felon in Possession of a Firearm, & Possession of a Stolen Firearm)
- Antonio Rashawn McArthur, 23, of Fayetteville, NC (Felon in Possession of a Firearm)
- Johnny Dewayne McArthur, 33, of Fayetteville, NC (Felon in Possession of a Firearm, Possession with the Intent to Distribute Marijuana, & Possession of Firearm in Furtherance of a Drug Trafficking Crime)
- Larry Lamar Nance, 32, of Raleigh, NC (Felon in Possession of a Firearm)
- Christopher Ray Parrish, 33, of Fayetteville, NC (Possession with the Intent to Distribute Marijuana, Possession of a Firearm in Furtherance of a Drug Trafficking Crime & Felon in Possession of a Firearm)
- Rochi Dowell Purdie, 42, of Rex, NC (Felon in Possession of a Firearm, & Possession of Marijuana and Pyrrolidinopentiophenone (Flakka))
- Brandon Alexander Siermons, 25, of Fayetteville, NC (Felon in Possession of a Firearm)
- Albert Vines, 28, of Dunn, NC (2-Counts of Hobbs Act Robbery, 2-Counts of Felon in Possession of a Firearm, Possession with the Intent to Distribute Cocaine, & Possession of a Firearm in Furtherance of a Drug Trafficking Activity)
- Harold Edward Williams, Jr., 45, of Fayetteville, NC (3-Counts of Distribution of Heroin, Possession of a Firearm in Furtherance of Drug Trafficking Crime, & Felon in Possession of a Firearm)
The enforcement operation was conducted by the Bureau of Alcohol, Tobacco, Firearms, & Explosives, (ATF), the United States Marshal Service, Fayetteville Police Department, Cumberland County Sheriff’s Office, Cumberland County District Attorney’s Office, the North Carolina Department of Public Safety Adult Probation and the United States Probation Office.
The charges and allegations contained in the Indictments are merely accusations. The defendants are considered innocent unless and until proven guilty in a court of law.
Feds Focus on Mail Theft Based Identity Theft Crimes during Busy Holiday Shipping SeasonRead the Press Release
Five people have been charged federally in five separate mail theft cases brought in joint effort with the U.S. Postal Inspection Service to combat identity theft, announced U.S. Attorney Annette L. Hayes. Mail and package theft is a heightened problem in the busy holiday shipping season. These cases have taken some of the worst offenders off the street over the last few months. Some of those charged have already entered guilty pleas, and face mandatory minimum sentences for aggravated identity theft.
“Over the last several months we have worked with investigators from the Postal Inspection Service to federally prosecute mail thieves who repeatedly steal from homes, apartment buildings and other locations around western Washington,” said U.S. Attorney Annette L. Hayes. “These cases should serve as a warning that there are significant consequences for those who steal mail and victimize so many people.”
“The arrest and prosecution of prolific mail thieves is a top priority of the Postal Inspection Service,” said Inspector in Charge Tony Galetti.
Some of the cases pursued in this initiative include:
CHARLLETTE MILLER, 35, of Olympia, Washington pleaded guilty to access device fraud and will be sentenced in March 2018. MILLER used stolen mail, including drivers’ licenses to open bank and credit accounts in the names of her victims and then ran up thousands of dollars in fraudulent charges.
JESSE FRANKLIN DENHAM, 27, is scheduled for trial in January 2018 on an eight-count indictment charging bank fraud, access device fraud and aggravated identity theft. Using stolen mail, DENHAM allegedly opened bank and credit accounts, and forged balance transfer checks associated with the accounts. When arrested, DENHAM had mail from more than 50 victims in his car. DENHAM remains in custody.
SHAWLEE GEIGER, 41, of Seattle, is scheduled for trial in June 2018 on an eight-count indictment charging her with multiple counts of bank fraud and aggravated identity theft. GEIGER allegedly used stolen checks to inflate the balances of bank accounts she controlled and then quickly withdrew cash before the bank was notified that the checks were invalid.
DENNIE DENG, 27, of Auburn, Washington is scheduled for trial in March 2018 on a four-count indictment charging him with bank fraud and aggravated identity theft. DENG allegedly used stolen checks to inflate the balance of his bank account and then withdrew cash. In some instances he altered the stolen checks to further increase the amount of money fraudulently deposited in his account.
TRAVIS SICKLOVAN, 34, pleaded guilty in October to bank fraud, aggravated identity theft and possession of stolen mail. SICKLOVAN was arrested in November 2016, in a Snohomish County hotel with stolen mail from more than 60 victims. SICKLOVAN used the stolen mail to make and cash fraudulent checks and to obtain fraudulent credit cards.
Defendants convicted of aggravated identity theft face a mandatory minimum two years in prison in addition to any other sentence imposed based on other convictions.
The charges contained in a criminal complaint or indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
The Seattle Division of the U.S. Postal Inspection Service employs a multi-faceted approach to address mail theft in western Washington. Using prevention and investigative efforts to combat mail theft, postal inspectors work with local, state and federal agencies across the area. Targeted enforcement data is used to identify, arrest and prosecute the mail thieves who are having the biggest impact on the community. The inspection service also seeks out ways to improve the security of postal facilities and mailboxes leading the effort to secure US Mail to prevent access to would-be thieves. Lastly, the Postal Inspection Service educates the public on ways to mitigate their risk of mail theft and to report it in a timely manner when it does happen.
These cases are being prosecuted by Assistant United States Attorneys Andre Penalver, Stephen Hobbs and Seungjae Lee.
Federal Jury Convicts Eloy “Chino” Alonzo of Methamphetamine Distribution and Firearms ViolationsRead the Press Release
KNOXVILLE, Tenn. - Following a three-day trial before the Honorable Thomas A. Varlan, Chief U.S. District Court Judge, a jury found Eloy “Chino” Alonzo, 31, of Sweetwater, Tennessee, guilty of conspiracy to distribute methamphetamine, possession with intent to distribute methamphetamine and possession of a firearm in furtherance of his drug trafficking. Sentencing is set for 2:00 pm, April 26, 2018, in U.S. District Court.
Evidence presented at trial showed that Eloy Alonzo, an illegal alien and citizen of Mexico, was a large-scale drug distributor that brought and sold pounds of methamphetamine into east Tennessee. A large quantity of methamphetamine and multiple assault rifles were found at Alonzo’s residence during the execution of a search warrant in Monroe County, Tennessee, in September 2016.
Law enforcement agencies participating in this joint investigation included the Ninth Judicial Drug Task Force, Drug Enforcement Administration, Tennessee Bureau of Investigation, Monroe County Sheriff’s Department, Sweetwater City Police Department, U.S. Homeland Security Investigations, Blount County Sherriff’s Department and Fifth Judicial Drug Task Force. Assistant U.S. Attorneys Cynthia Davidson and LaToyia Carpenter represented the United States.
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Federal Judge Sentences Prior Felon to 10 Years in Prison for Possessing 31 GunsRead the Press Release
BIRMINGHAM – A federal judge on Wednesday sentenced a Birmingham man to 10 years in prison on separate counts of being a convicted felon in possession of firearms, including a 2016 incident in which police recovered 31 firearms after he barricaded himself and three other people inside a house to avoid arrest.
U.S. Attorney Jay E. Town and the Bureau of Alcohol, Tobacco, Firearms, and Explosives announced the sentence.
U.S. District Court Judge Sharon Lovelace Blackburn sentenced WILLIE LEE COOKS, 46, for being a convicted felon in possession of a firearm on April 4, 2016, and multiple firearms on August 30, 2016.
“Cooks was a threat to the community, to his victims, and to law enforcement,” Town said. “Violent felons who possess firearms will not get diversion. They will not get probation. They will get a cell in the Bureau of Prisons.”
Birmingham Police stopped Cooks on April 4, 2016, for driving a vehicle without a license plate and arrested him on an outstanding felony warrant after seeing a Glock 9mm pistol on the floorboard, according to Cook’s plea agreement. The pistol was loaded with 31 rounds of ammunition in an extended magazine. Cooks had several prior felony convictions at that time, according to his plea agreement.
On Aug. 30, 2016, the U.S. Marshals Fugitive Task Force and the Alabama Law Enforcement Agency task force approached Cooks’ Birmingham residence to arrest him on a warrant, and Cooks barricaded himself and others in the house, according to his plea agreement. A Birmingham Police SWAT team was called to the scene and tear gas was deployed to get the occupants out of the house after negotiations for Cooks’ surrender failed, according to the plea agreement.
Police subsequently found the 31 firearms hidden in a crawl space under the house.
The Bureau of Alcohol, Tobacco, Firearms, and Explosives investigated the case, which Assistant U.S. Attorney L. James Weil Jr. prosecuted.
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