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8 November 2017
Mercer Transportation Company Agrees to Pay $4.4 Million to Resolve Alleged Violations of the False Claims ActRead the Press Release
G. F. “Pete” Peterman, III, United States Attorney for the Middle District of Georgia, announced today a civil settlement with trucking company Mercer Transportation Company, Inc. (Mercer). Mercer has agreed to pay $4.4 million to resolve allegations that it violated the False Claims Act by submitting claims for payment related to shipments originating at the Marine Corps Logistics Base (MCLB) in Albany, Georgia, that were obtained by bribery of Government officials from 2006 through 2012.
This settlement resolves a lawsuit under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to bring civil actions on behalf of the Government and to share in any recovery. The Act also allows the Government to intervene and take over the action, as it did in this case. The relator who filed this case under the whistleblower provisions of the False Claims Act will receive $814,000 as his share of the recovery.
In its civil complaint, the United States alleged that Mercer, through its agents, employees, and representatives, bribed two Government employees who worked at MCLB in Albany and who were responsible for awarding contracts for the shipment of Government freight out of MCLB. The United States’ complaint alleged that the bribery of these Government employees resulted in Mercer’s being awarded contracts for shipments out of MCLB that it would not have otherwise received during the period from October 2006 through May 2012.
“In simple terms, fraud committed by defense contractors is theft directly from the American people,” Peterman said. “When dealing with the U.S. Government – especially when dealing with the armed forces whose lives may depend on the work of these contractors – contractors are expected to act in good faith and to comply with their obligations. This U.S. Attorney’s Office will hold accountable contractors that seek to profit unfairly at the expense of American troops and taxpayers.”
“This settlement demonstrates the commitment of the Defense Criminal Investigative Service and its law enforcement partners to protect the integrity of all Department of Defense programs,” said Special Agent in Charge John F. Khin, Southeast Field Office. “DCIS’ efforts in this investigation mitigated further significant loss and waste of taxpayer dollars from this fraudulent scheme.”
According to Special Agent in Charge Mike Wiest, NCIS Southeast Field Office, “the preservation of the integrity of Department of Navy procurement activities is a top priority of the Naval Criminal Investigative Service. Through a joint investigation, NCIS and its partner agencies steadfastly pursued numerous allegations of corruption that caused significant harm to the U.S. Marine Corps and other Department of Defense equities resulting in this settlement.”
“This settlement is a result of the steadfast efforts of our investigators and our law enforcement partners,” said Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “Uncovering these types of schemes is a cooperative effort, and we look forward to continuing our work together to eradicate corruption.”
The United States’ civil settlement was the result of a coordinated effort among the Naval Criminal Investigative Service, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigative Command’s Major Procurement Fraud Unit, the United States Attorney’s Office for the Middle District of Georgia, and the U. S. Department of Justice’s Civil Division’s Commercial Litigation Branch. The case was investigated by NCIS Special Agent Riley Proctor, DCIS Special Agent Lam Hoang, and Special Agent Jennifer Coleman of the U.S. Army Criminal Investigative Command.
The United States was represented by Assistant United States Attorney Todd P. Swanson and Assistant United States Attorney W. Taylor McNeill, both of the U.S. Attorney’s Office for the Middle District of Georgia, and Andrew Steinberg, of the Civil Division’s Commercial Litigation Branch.
Mercer fully cooperated in the United States’ pre-intervention investigation. The claims resolved by the settlement are allegations only; there has been no determination of liability. The case is captioned United States ex rel. James E. Reeves v. Mercer Transportation Co., Inc., (Case No. 1:13-CV-108-LJA (M.D. Ga.).
Questions concerning this case should be directed to Pamela Lightsey, Public Information Officer, United States Attorney’s Office, at (478) 621-2603.
Long Island Man Sentenced on Drug ChargesRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y. - Acting U.S. Attorney James P. Kennedy, Jr. announced today that Joel C. Jacob, 22, East Meadow, NY, who was convicted of conspiracy to possess with intent to distribute MDMA, also known as “Molly,” was sentenced to 36 months probation to include six months home detention by U.S. District Judge Elizabeth A. Wolford.
Assistant U.S. Attorney Patricia Astorga, who handled the case, stated that on August 17, 2016, Jacob signed for a parcel addressed to him during a controlled delivery by the U.S. Postal Inspection Service. The delivery was made to Jacob’s residence on Campus Drive in Buffalo, a residence he shared with co-defendant Connor Dempsey. The package, which was ordered over the internet using bitcoins, was sent from Munchen, Germany and contained over 180 grams of MDMA.
During a search of the Campus Drive apartment, officers recovered quantities of: marijuana; LSD; cocaine; THC; Xanax; and ketamine. They also found a digital scale, baggies, empty capsules, other drug paraphernalia, and another mail parcel addressed to a third co-defendant.
Connor Dempsey was also convicted and sentenced.
Today’s sentence is the result of an investigation by Immigration and Customs Enforcement, Homeland Security investigations, under the direction of Acting Special Agent-in-Charge Kevin Kelly; and the United States Postal Inspection Service, under the direction of Inspector-in-Charge Shelly Binkowski of the Boston Division.
Lexington County Gang Member Sentenced on Two Federal Firearm ChargesRead the Press Release
Columbia, South Carolina ---- United States Attorney Beth Drake stated that Jake Rupert, age 33, of Lexington, was sentenced to 96 months imprisonment, which will be followed by 3 years of supervised release. Rupert plead guilty in federal court in August 2017 to being a felon in possession of a firearm and ammunition and to being in possession of a firearm with an obliterated serial number, all in violation of Title 18, United States Code, Sections 922(g)(1) and 922(k). Senior United States District Judge Cameron McGowan Currie, of Columbia, imposed the sentence, which was the maximum under the suggested federal sentencing guidelines range.
Evidence presented in court established on April 19, 2017, a trooper with the South Carolina Highway Patrol was on patrol on Boy Scout Road in Lexington County when he observed a male (later identified as Rupert) and a female trying to take a tire off a Dodge Charger on the side of the road. The two individuals advised that they were trying to get the Charger out of the dirt for a friend and that their vehicle was the Lexus parked across the road. The trooper noticed that the tag on the Lexus was expired and the male and female both provided false names to the trooper, so he called for backup from the Gaston Police Department. During this time, Rupert paced back and forth nervously and put on three additional t-shirts until the trooper advised him to have a seat on the ground next to the Lexus. After learning Rupert’s true identity, the trooper patted Rupert down and found a loaded Jimenez Arms 9mm handgun in the front waistband of his pants. The serial number on the handgun had been obliterated. The trooper also found a black bag containing additional 9mm ammunition on the ground where Rupert had been sitting. Rupert admitted to being released from state prison on March 31, 2017, and to being a gang member. Rupert was placed under arrest for state charges. At the detention center, officers also found a small amount of marijuana in Rupert’s wallet. The female was also arrested on outstanding warrants. Rupert made bond on the state charges.
During the federal investigation, ATF learned that Rupert was the individual being sought by local law enforcement after accidentally discharging a shotgun inside Dutch Square on April 22, 2017, three days after the above incident. After advise of rights, Rupert admitted to ATF that he had a sawed-off shotgun in a bag inside the mall and that when he sat the bag down, the gun accidentally discharged. Rupert advised that he then fled the scene.
Rupert is prohibited under federal law from possessing firearms and ammunition based upon his prior state convictions for conspiracy to manufacture methamphetamine, possession with intent to distribute methamphetamine, burglary 2nd degree, grand larceny (4 counts), and possession of stolen motor vehicle. At the time of the incident, Rupert was on supervised re-entry release from the South Carolina Department of Corrections after being released March 31, 2017.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), the South Carolina Highway Patrol, and the Gaston Police Department and was prosecuted as part of the joint federal, state and local Project CeaseFire initiative, which aggressively prosecutes firearm cases. Assistant United States Attorney Stacey D. Haynes of the Columbia office handled the case.
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Latrobe Postal Contractor Charged with Opening Mail and Stealing Kmart Gift CardRead the Press Release
PITTSBURGH – A resident of Latrobe, Pennsylvania, has been indicted by a federal grand jury in Pittsburgh on a charge of theft of mail, Acting United States Attorney Soo C. Song announced today.
The one-count indictment named Dale R. McIntyre, 52, of Latrobe, Pennsylvania.
According to the indictment presented to the court, on or about July 14, 2017, McIntyre, a contract driver for the U.S. Postal Service, opened mail he was to deliver and stole a $50 Kmart gift card.
The law provides for a maximum total sentence of five years in prison, a fine of $250,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Shardul S. Desai is prosecuting this case on behalf of the government.
The United States Postal Inspection Service conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
KC Man Sentenced for Meth Conspiracy in Mid-MissouriRead the Press Release
JEFFERSON CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was sentenced in federal court today for his role in a conspiracy to distribute methamphetamine in mid-Missouri.
David Wayne Lederhos, 54, of Kansas City, was sentenced by U.S. District Judge Brian C. Wimes to 13 years in federal prison without parole.
On March 27, 2017, Lederhos pleaded guilty to participating in a conspiracy to distribute methamphetamine from November 2015 to Feb. 10, 2016.
A cooperating individual made a controlled purchase of approximately two ounces of methamphetamine from Lederhos on Feb. 4, 2016. Law enforcement officers executed a search warrant at Lederhos’s residence on Feb. 10, 2016. They found a Ziploc bag that contained eight separate baggies, each of which contained methamphetamine, for a total of 364 grams of methamphetamine. Officers also found a loaded Beretta 12-gauge shotgun, drug paraphernalia and approximately 19 grams of marijuana in the bedroom.
Lederhos told investigators that he had purchased one pound of methamphetamine the previous day for $8,000. He also stated that he purchased approximately one or two pounds of methamphetamine every day or every other day over a four-month period of time.
This case was prosecuted by Assistant U.S. Attorney Lawrence E. Miller. It was investigated by the Drug Enforcement Administration, the Missouri State Highway Patrol, the Jackson County Drug Task Force, the Cooper County, Mo., Sheriff’s Department and the East Central Drug Task Force.
Johnstown Man Charged with Possessing Child PornographyRead the Press Release
JOHNSTOWN, Pa. – A resident of Johnstown, Pa. was indicted by a federal grand jury in Johnstown on a charge of possession of child pornography, Acting United States Attorney Soo C. Song announced today.
The indictment named William Jay Clark, 30, of Johnstown, Pa., as the sole defendant.
According to the indictment presented to the court, on February 23, 2017, he knowingly possessed pictures and videos in individual computer graphic files which were produced using prepubescent minors engaging in sexually explicit conduct. The computer graphic files were shipped or transported in interstate or foreign commerce.
The law provides for a maximum total sentence of 20 years in prison, a fine of $250,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney John J. Valkovci, Jr., is prosecuting this case on behalf of the government.
The U.S. Immigration and Customs Enforcement, Homeland Security Investigations, conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who sexually exploit children and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Houston Men Sent to Prison for Distributing MethRead the Press Release
HOUSTON – Three local men have been ordered to federal prison following their convictions of possession with the intent to distribute methamphetamine, announced Acting U.S. Attorney Abe Martinez. Marco Zuniga, 25, Frank Flores, 25, Chance Nutt, 40, and Clifton Johnson, 42, all had previously guilty to the charges.
Today, U.S. District Judge Gray Miller ordered Flores to serve a 168-month term of imprisonment, while Zuniga, Nutt and Johnson will serve respective sentences of 78, 46 and 48 months in federal prison.
The investigation began in July 2014 when authorities made undercover purchases of methamphetamine in the Houston area. During that investigation, agents purchased or seized approximately one kilogram of high quality methamphetamine.
Flores was initially after he led authorities on a high-speed chase, during which time he threw approximately a ½ pound of methamphetamine from his car. Upon his eventual arrest, agents discovered a firearm in the glove compartment of his car.
All of the men sentenced today will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The Drug Enforcement Administration, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Marshals Service, Navasota Police Department and sheriff’s offices in Harris and Montgomery Counties conducted the investigation with assistance from District Attorney’s Offices in Harris and Montgomery Counties. Assistant U.S. Attorney Robert Stabe is prosecuting the case.
Honduran National Charged with Illegal ReentryRead the Press Release
Acting U.S. Attorney Duane A. Evans announced that MARCIO RODOLFO OCHOA-BORJAS, age 31, a citizen of Honduras, was charged yesterday in a one-count Bill of Information with illegal reentry of a removed alien after deportation, in violation of 8 U.S.C. ' 1326(a).
According to the Bill of Information, OCHOA-BORJAS reentered the United States on or about June 30, 2017, after having been previously removed therefrom on or about August 16, 2012.
If convicted, OCHOA-BORJAS faces a maximum term of imprisonment of two years, a fine of up to $250,000, one year supervised release after imprisonment, and a $100 special assessment.
Acting U.S. Attorney Evans reiterated that a Bill of Information is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
Acting U.S. Attorney Evans praised the work of the United States Department of Homeland Security, Immigration and Customs Enforcement in investigating this matter. Assistant United States Attorney Irene González is in charge of the prosecution.
Guatemalan National Pleads Guilty to Illegal Reentry After DeportationRead the Press Release
BOSTON - A Guatemalan national pleaded guilty today in federal court in Boston to illegally reentering the United States after being deported.
Nestor Mendez Nolasco, 26, pleaded guilty before U.S. District Court Judge Leo T. Sorokin to one count of illegal reentry of a deported alien. Sentencing is scheduled for Dec. 15, 2017.
Mendez Nolasco was previously deported on Jan. 31, 2013, April 9, 2013, and July 7, 2013. On April 25, 2017, Mendez was arrested in Hopkinton on an unrelated state charge.
Mendez Nolasco faces a sentence of no greater than 10 years in prison, three years of supervised release, a fine of $250,000, and will be subject to deportation upon completion of any sentence imposed. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
Acting United States Attorney William D. Weinreb and Michael Shea, Acting Special Agent in Charge of Homeland Security Investigations in Boston, made the announcement today. Assistant U.S. Attorney Nicholas Soivilien of Weinreb’s Major Crimes Unit is prosecuting this case.
Georgia Federal Court Prohibits Tax Preparer from Preparing Tax Returns for OthersRead the Press Release
A federal court in Atlanta, Georgia, has permanently barred Tarralis K. Mack, individually and doing business as Metro Tax Advisors, from preparing federal tax returns for others, the Justice Department announced today. Mack previously pleaded guilty to willfully aiding or assisting in, or procuring counseling, or advising the preparation or presentation of a false or fraudulent amended income tax return.
The civil injunction order, to which the defendant consented, was signed by Judge William S. Duffey, Jr. of the U.S. District Court for the Northern District of Georgia.
According to the complaint, Mack prepared federal income tax returns for customers that generated fraudulent refunds by creating fictitious business expenses to offset wage income. The complaint alleges that none of these customers owned any businesses and Mack did not request information to substantiate the business income and expenses he claimed on the customers’ returns. The returns prepared by Mack and audited by the Internal Revenue Service (IRS) claimed a total of $481,302 in fraudulent refunds, according to the complaint.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2017. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Former Pennsylvania Resident Sentenced to Probation for Lying on Firearms Purchase FormRead the Press Release
JOHNSTOWN, Pa. - A resident of Pray, MT, formerly of Clearfield, Pa., pleaded guilty in federal court in Johnstown to charges of false statement to a federally licensed firearms dealer, and immediately thereafter was sentenced to five years’ probation and 50 hours of community service for each year of her probation, Acting United States Attorney Soo C. Song announced today.
Heather L. Welker, 41, pleaded guilty to the indictment before United States District Judge Kim R. Gibson.
In connection with the guilty plea, on various dates from January 28, 2015, to March 26, 2015, Welker purchased a number of firearms from Grice Gun Shop, a federally licensed firearms dealer, stating she was purchasing the firearms for herself, when, in truth and fact, she was not the actual buyer and was purchasing the firearms on behalf of another person.
Assistant United States Attorney John J. Valkovci, Jr., prosecuted this case on behalf of the government.
Ms. Song commended the Bureau of Alcohol, Tobacco, Firearms and Explosives for the investigation leading to the successful prosecution of Welker.
According to Ms. Song, Heather L. Welker was prosecuted as part of Project Safe Neighborhoods, a collaborative effort by federal, state and local law enforcement agencies, prosecutors and communities to prevent, deter and prosecute gun crime.
Former New Hampshire Investment Banker Sentenced to 18 Months in Prison for Defrauding Client of $2 MillionRead the Press Release
CONCORD, N.H. - Acting United States Attorney John J. Farley announced that Karl Edward Hahn, 44, of Manchester, Connecticut and formerly of New Castle, New Hampshire was sentenced to serve 18 months in prison for participating in a wire fraud scheme that defrauded a victim of approximately $2 million.
According to court records and statements in court, Hahn lived in New Hampshire and was employed as an investment advisor at investment banks in Portsmouth, New Hampshire. Starting as early as March of 2009 and continuing until July of 2010, he invited one of his investment clients to join him in what he referred to as an “off the books” investment. He described that investment as follows: Hahn and the victim would each contribute approximately $2 million, which Hahn would then loan to three individuals who would repay the money within 90 days with interest substantially above market rates. Hahn told the victim the “loan” would be secured by three pieces of residential real estate, one owned by each of the three borrowers, which were all unencumbered and which collectively had a value far in excess of the approximately $4 million loan.
Hahn told the victim that no one could know about the investment, including the defendant’s employer, because he was not allowed to enter into financial dealings with clients other than through his employment. In order to prevent his employer from learning of the “off the books” transaction, Hahn asked the victim to transfer the money into a bank account held by one of Hahn’s relatives and that Hahn would then get the money from his relative.
The victim agreed and transferred to Hahn’s relative’s account, in separate transactions, $300,000, $1,600,000, $100,000, and $35,000, totaling $2,035,000. Hahn later admitted that the entire story of landowners wanting to borrow money was false, that there never were three landowners who wanted to borrow money collateralizing the loans with deeds, and that loans were never made to any landowners using the victim’s money. Hahn simply used the victim’s money to pay personal expenses. In 2011, the New Hampshire Bureau of Securities Regulation barred Hahn from being licensed to sell securities.
Hahn also admitted that during the course of executing the scheme, he made additional materially false representations to the victim that lulled him into a false sense of security and caused him to temporarily refrain from reporting his dealings with the defendant to law enforcement authorities. Those false statements included: 1) that the supposed borrowers had defaulted on the loans; 2) that as a result of the alleged defaults, Hahn had possession of the deeds to the supposed borrowers’ properties; and 3) that Hahn had communicated with a hedge fund so the hedge fund could buy the properties, thereby resulting in the return of the victim’s money with interest. Hahn also later falsely represented to the victim that he had been successful in working with the supposed hedge fund and that he was confident that the victim would have his money back by early August of 2010.
Hahn, who previously pleaded guilty, will be required to begin serving his sentence on December 4, 2017.
This case was investigated by the FBI and United States Secret Service and was prosecuted by Assistant United States Attorney Arnold H. Huftalen.
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Former Louisville Business Owner Sentenced to 27 Months in Prison for Failure to File Income Tax Returns and Tax EvasionRead the Press Release
LOUISVILLE, Ky. – United States Attorney Russell M. Coleman, today announced the sentencing of former Louisville business owner Lawrence P. Tatem, in United States District Court, by Senior Judge Charles R. Simpson III, to 27 months in prison and one year supervisory release, for willful failure to file federal income tax returns during a four-year period and evasion of payment of taxes, penalties, and assessments totaling $533,498 from a two-year period.
According to the charges, Tatem, 50, willfully attempted to evade and defeat the payment of a large part of the federal income tax, penalties, and interest due by him to the United States of America, for the calendar years 2002 through 2004, totaling approximately $533,498, by concealing his assets; by changing the names and locations of his rehabilitation businesses; by placing his businesses in the names of nominees J.S., D.R., and M.Z.; by closing bank accounts at Republic Bank after the Internal Revenue Service attempted to levy funds from the accounts, and opening new bank accounts at Chase Bank under different names; and by operating in cash without keeping proper records of cash transactions.
Further, Tatem admitted to willful failure to file federal income tax returns for calendar years 2010 to 2013. Specifically, during the calendar year 2010, Tatem received gross income of approximately $252,860 and failed to file a federal tax return by April 15, 2011. During calendar year 2011, Tatem received gross income of approximately $45,353 and failed to file a federal tax return by April 15, 2012. During calendar year 2012, Tatem received gross income of approximately $199,067 and failed to file a federal income tax return by April 15, 2013. During the calendar year 2013, Tatem received gross income of approximately $120,994 and failed to file a federal income tax return by April 15, 2014.
This case was prosecuted by Assistant United States Attorney Amanda Gregory and was investigated by the Internal Revenue Service Criminal Investigation Division.
Former Director of Fixed Income and Head of Portfolio Strategy at the New York State Common Retirement Fund Pleads Guilty in “Pay-For-Play” Bribery SchemeRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that NAVNOOR KANG, the former Director of Fixed Income and Head of Portfolio Strategy at the New York State Common Retirement Fund (“NYSCRF”), pled guilty today before U.S. District Judge J. Paul Oetken for participating in a massive “pay-for-play” bribery scheme involving the NYSCRF, the nation’s third largest public pension fund.
Acting Manhattan U.S. Attorney Joon H. Kim said: “As an investment professional with New York State Common Retirement Fund, Navnoor Kang owed a duty to the public employees whose pension money he oversaw. But in this case of public corruption meets securities fraud, Kang sold himself and his duty to safeguard public retirement money for luxury vacations, jewelry, cash and even drugs. He has now admitted to his crimes and is a convicted felon. ”
According to allegations contained in the Indictment charging KANG and statements made during his plea proceeding:
The NYSCRF
The NYSCRF is a pension fund administered for the benefit of public employees of the State of New York. From January 2014 through February 2016, KANG served as Director of Fixed Income and Head of Portfolio Strategy for the NYSCRF. In that capacity, KANG was responsible for investing more than $53 billion in fixed-income securities and was entrusted with discretion to manage those investments on behalf of the NYSCRF. KANG owed a fiduciary duty to the NYSCRF and its members and beneficiaries, and was required to make investment decisions in their best interests and free of any conflict of interest. New York State law and NYSCRF policies prohibited KANG and other NYSCRF employees from receiving any bribes, gifts, benefits, or consideration of any kind.
The Scheme to Steer NYSCRF Fixed-Income Business in Exchange for Secret Bribes
From 2014 through 2016, KANG and others participated in a scheme to defraud the NYSCRF and its members and beneficiaries, and to deprive the NYSCRF of its intangible right to KANG’s honest services. The scheme involved, among other things, an agreement among KANG, Deborah Kelley, a managing director of institutional fixed income sales at New York-based broker-dealer (“Broker-Dealer-1”), Gregg Shonhorn, a vice president of fixed income sales at a New York-based broker-dealer (“Broker-Dealer-2”), and others to pay KANG bribes – in the form of entertainment, travel, lavish meals, prostitutes, nightclub bottle service, narcotics, tickets to sports games and other events, luxury gifts, and cash payments for strippers and KANG’s personal expenses – in exchange for fixed-income business from the NYSCRF. Such bribes – which totaled more than $100,000 – were strictly forbidden by the NYSCRF, and were paid secretly and without any disclosure to the NYSCRF and its members and beneficiaries concerning the conflicts of interest inherent therein.
In exchange for the bribes paid by Kelley, Schonhorn, and others, KANG used his position as Director of Fixed Income and Head of Portfolio Strategy at the NYSCRF to promote the interests of Kelley, Schonhorn, and their respective brokerage firms. KANG, in exchange for the bribes he received, agreed to steer fixed-income business to Broker-Dealer-1 and Broker-Dealer-2. In fact, KANG steered more than $3 billion in fixed-income business to Broker-Dealer-1 and Broker-Dealer-2, from which Kelley, Schonhorn, and their respective employers earned millions of dollars in commissions from the NYSCRF. In so doing, KANG, with the knowledge and approval of Kelley and Schonhorn, breached his fiduciary duty to make investment decisions in the best interest of the NYSCRF and its members and beneficiaries, and free of conflict, and deprived the NYSCRF of its intangible right to KANG’s honest services.
As the bribes paid by Schonhorn to KANG increased, so too did Broker-Dealer-2’s fixed-income business with the NYSCRF. The value of the NYSCRF’s domestic bond transactions with Broker-Dealer-2 skyrocketed from zero in the fiscal year ending March 31, 2013, to approximately $1.5 million in the fiscal year ending March 31, 2014, to approximately $858 million in the fiscal year ending March 31, 2015, and to approximately $2.378 billion in the fiscal year ending March 31, 2016. Broker-Dealer-2 became the third largest broker-dealer with which the NYSRCF executed domestic bond transactions for the fiscal year ending March 31, 2016, having not even been on the approved list in the fiscal year ending March 31, 2013. As the NYSCRF’s third largest broker-dealer in this asset class, Broker-Dealer-2 brokered approximately eight percent of the total value of the NYSCRF’s domestic bond transactions – a figure greater than that of all but two of the major international banks and brokerage houses on the list. Similarly, the value of NYSCRF’s domestic bond transactions with Broker-Dealer-1 increased from zero in the fiscal year ending March 1, 2014, to approximately $156 million in the fiscal year ending March 1, 2015, and to approximately $179 million in the fiscal year ending March 1, 2016.
KANG’s trades resulted in the payment of millions of dollars in commissions to Broker-Dealer-1 and Broker-Dealer-2, of which Kelley and Schonhorn personally earned approximately 35 to 40 percent.
The Obstruction of Justice
In late 2015, the Securities and Exchange Commission (“SEC”) opened an investigation into the entertainment and benefits that Kelley had provided KANG, and the SEC subpoenaed both KANG and Kelley for their testimony. In advance of their testimony, KANG and Kelley agreed to align their stories and testify falsely before the SEC in order to conceal their scheme. In late 2015 and early 2016, KANG and Kelley each falsely testified under oath before the SEC about expenses Kelley had paid for KANG. Moreover, after a federal grand jury investigation was opened, KANG instructed Schonhorn to testify falsely before the grand jury, and KANG admitted that he had hidden relevant evidence.
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KANG, 37, of Glendale, California, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison, and one count of conspiracy to commit honest services wire fraud, which carries a maximum sentence of 20 years in prison. KANG is scheduled to be sentenced on February 23, 2018, by Judge Oetken.
Kelley and Schonhorn have each pled guilty for participating in the scheme. Kelley was sentenced by Judge Oetken to three years of probation.
Mr. Kim praised the investigative work of the Federal Bureau of Investigation and noted that the investigation is continuing. He also thanked the SEC, which filed civil charges against Kang, Kelley, and Schonhorn in a separate civil action, and the Office of Inspector General for the Office of the New York State Comptroller.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Edward A. Imperatore and Joshua A. Naftalis are in charge of the prosecution.
Former Chief Financial Officer of American Realty Capital Partners Sentenced for Accounting FraudRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that BRIAN BLOCK, the former chief financial officer of the publicly traded real estate investment trust (“REIT”) formerly known as American Realty Capital Partners (“ARCP”), was sentenced to 18 months in prison for inflating a key metric used to evaluate the financial performance of publicly traded REITS in ARCP’s filings with the U.S. Securities and Exchange Commission (the “SEC”). BLOCK was convicted by a jury in June, following a three-week trial before U.S. District Judge J. Paul Oetken, who imposed today’s sentence.[1]
Acting Manhattan U.S. Joon H. Kim said: “Block, the CFO of a major REIT, deliberately cooked the books to mislead investors and the SEC. Investors in our securities markets must be able to trust that corporate officers will not lie about the financial health of a publicly traded company. And corporate officers who do lie face time in a federal prison, as Brian Block has learned.”
According to allegations contained in the Indictment, and evidence presented during the trial in Manhattan federal court:
In 2014, ARCP was a publicly traded REIT headquartered in Manhattan, New York. ARCP’s securities traded under the symbol “ARCP” on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) exchange.
ARCP, like many REITs, measured its financial performance through metrics besides, or in addition to, traditional measurements of company performance calculated using Generally Accepted Accounting Principles (“GAAP”). ARCP calculated and reported to the investing public a non-GAAP measure called adjusted funds from operations, or AFFO, which was designed to more accurately reflect ARCP’s cash flow and financial performance by presenting ARCP’s income before consideration of non-cash depreciation and amortization expense and by excluding certain one-time charges and expenses. REITs such as ARCP commonly reported their AFFO figures, including AFFO per share, to the investing public and in filings with the SEC. ARCP also provided forward-looking guidance to the investing public regarding their anticipated AFFO performance in upcoming time periods.
Prior to the filing of ARCP’s Form 10-Q setting forth ARCP’s financial statements for the second quarter of 2014 (the “Second Quarter 10-Q”), BRIAN BLOCK, along with Lisa McAlister and others, came to understand that the method used by ARCP to calculate AFFO in the first quarter of 2014 and in certain previous quarters was erroneously inflated. Another employee of ARCP (“CC-1”) had brought this methodological error to the attention of BLOCK, McAlister, and others shortly before the filing of ARCP’s first quarter 2014 10-Q (the “First Quarter 10-Q”), but no corrective change was made to the First Quarter 10-Q while the issue was under review. Following the filing of the First Quarter 10-Q, CC-1 concluded, and advised BLOCK, McAlister, and others, that the reported AFFO per share calculation for the first quarter of 2014 was overstated by approximately $0.03 per share. Instead of $0.26 per share, which was publicly reported by ARCP to its shareholders and the investing public, and which placed ARCP on track to meet its full-year AFFO per-share guidance, the correct AFFO for the first quarter of 2014 was $0.23 per share.
Despite his knowledge of a material error in ARCP’s previous filings with the SEC, BLOCK took no steps to advise the Audit Committee of ARCP’s Board of Directors, or ARCP’s outside auditors, of the error in the First Quarter 10-Q. Moreover, BLOCK, McAlister, and CC-1 then knowingly facilitated the use of the same materially misleading calculations in ARCP’s Second Quarter 10-Q. For example, on July 24, 2014, a draft of ARCP’s Second Quarter 10-Q was circulated to members of ARCP’s Audit Committee. The draft included an AFFO calculation for the six-month period ending June 30, 2014, that incorporated AFFO figures from the first quarter of 2014 that BLOCK, McAlister, and CC-1 knew to be erroneously inflated.
On July 28, 2014, BLOCK met with McAlister and CC-1 in his office in Manhattan for the purpose of finalizing the financial figures that were to be included in ARCP’s Second Quarter 10-Q. Utilization of a proper method to calculate ARCP’s second quarter 2014 AFFO would have exposed that the reported AFFO and AFFO per share figures from the first quarter were inflated. Accordingly, during the meeting, BLOCK, McAlister, and CC-1 inserted into a spreadsheet BLOCK was using to calculate AFFO and AFFO per share for the first and second quarters of 2014 and for the first six months of 2014 (“YTD 2014”) figures that fraudulently inflated the AFFO and AFFO per share calculations that were to be included in the Second Quarter 10-Q and the related ARCP press release. The fraudulent numbers BLOCK, McAlister, and CC-1 used to inflate the AFFO and AFFO per share figures had no basis in fact, were without documentary support, and did not tie to ARCP’s general ledger accounting system, as BLOCK knew and understood at the time. The fraudulent numbers included in the spreadsheet prepared by BLOCK were then incorporated into ARCP’s Second Quarter 10-Q, which was filed with the SEC the following day. As a result of the manipulative efforts of BLOCK, McAlister, and CC-1, ARCP’s SEC filings included AFFO and AFFO per share figures for the second quarter of 2014 and for the first six months of 2014 that were fraudulently inflated.
The Second Quarter 10-Q was signed by, among others, BLOCK. Additionally, on a certification accompanying the 10-Q, BLOCK falsely certified, among other things, that the Second Quarter 10-Q did not contain any materially untrue statements or material omissions. He further falsely certified that he had disclosed to ARCP’s auditors and the audit committee of its board of directors: “Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.” In a second certification accompanying the 10-Q, BLOCK falsely certified that: “The quarterly report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.”
With regard to YTD 2014 specifically, the fraud resulted in an intended overstatement of AFFO by approximately $13 million and an intended overstatement of AFFO per share by approximately $0.03, or approximately 5 percent of total AFFO per share. By reporting AFFO per share of $0.24 in the second quarter, after having reported AFFO per share of $0.26 in the first quarter, BLOCK and his co-conspirators misled ARCP’s shareholders and the investing public by falsely representing that ARCP’s AFFO per share for the first six months of 2014 was consistent with analysts’ expectations and on track to meet ARCP’s guidance for AFFO per share for calendar year 2014, when in fact, they were not.
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In addition to the prison term, BLOCK, 45, of Hatfield, Pennsylvania, was sentenced to three years of supervised release, and a $100,000 fine. Restitution will be determined at a future date.
Mr. Kim praised the investigative work of the Federal Bureau of Investigation and also thanked the SEC.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Edward Imperatore, and Daniel Tehrani are in charge of the prosecution.
[1] BLOCK’s co-defendant, ARCP’s former chief accounting officer Lisa McAlister, pled guilty to securities fraud and related charges on June 29, 2016, and has yet to be sentenced.
Former BBVA Compass Investments Employee Agrees to Plead Guilty to EmbezzlementRead the Press Release
BIRMINGHAM – The U.S. Attorney’s Office today charged a former BBVA Compass Investment Solutions employee with embezzling more than $200,000 from the bank, announced U.S. Attorney Jay E. Town and FBI Special Agent in Charge Johnnie Sharp Jr.
Prosecutors filed a one-count information in U.S. District Court charging ERIC SCOTT DARTY, 30, of Birmingham, with bank embezzlement. Darty has agreed to plead guilty and signed a plea agreement. He must appear before a judge to formally enter a guilty plea.
“This office and our law enforcement partners continue to aggressively investigate financial crimes in order to protect the integrity of our nation’s financial infrastructure,” Town said. “We must hold accountable employees of financial institutions who take from a bank or its customers for personal gain.”
“Darty was a stockbroker who used the trust customers placed in him to steal for his own personal greed,” Sharp said. “I would like to express my appreciation to the Alabama Securities Commission for their assistance in this investigation and helping to bring Darty to the justice he deserves.”
According to the Plea Agreement, also filed in the district court, Darty was an employee of BBVA Compass Investment Solutions and a registered stockbroker when he began embezzling customer funds by manipulating customer cashiers’ checks that were intended to purchase insurance products.
At times between November 2015 and his termination in October 2016, Darty would renegotiate a customer’s original cashier’s check into a cashier’s check for a lesser amount. Darty would receive the left over amount as cash, typically several thousand dollars, and keep the cash for himself, rather than returning it to the customer or using it to buy the investment product on the customer’s behalf. According to the plea agreement, he would use the newly issued cashier’s check to purchase the investment product. In some circumstances, Darty renegotiated an original cashier’s check more than one time into successively smaller amounts. On some occasions, he would move money between customer accounts to attempt to cover his embezzlement.
Darty admits in his plea agreement that his scheme involved 47 unauthorized transactions in 13 accounts belonging to nine customers and resulted in a loss to BBVA Compass of between $150,000 and $250,000 dollars. Darty has agreed to pay restitution of $206,970 to BBVA Compass Bank and to forfeit that same amount to the government as proceeds of illegal activity. He has also agreed to restrictions on his future employment in the financial services industries.
Darty faces a potential prison sentence of up to 30 years and a fine of up to $1 million.
The FBI, in conjunction with the Alabama Securities Commission, investigated the case, which Assistant U.S. Attorney Erica Williamson Barnes is prosecuting.
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Fentanyl Overdose Case SentencedRead the Press Release
COUNCIL BLUFFS, IOWA - On November 7, 2017, United States Senior District Court Judge James E. Gritzner sentenced Charles Jesse Beuterbaugh, 30, of Pottawattamie County, to 20 years in prison for conspiracy to distribute a fentanyl analogue that caused death or serious bodily injury, announced United States Attorney Marc Krickbaum. Beuterbaugh will serve five years of supervised release following imprisonment and pay $100 to the Crime Victims’ Fund. Beuterbaugh was part of a drug trafficking organization that was responsible for receiving and distributing fentanyl analogues obtained from a source in China to users in western Iowa and eastern Nebraska.
The investigation into the drug trafficking group began on June 28, 2015, when law enforcement was called to a Carter Lake, Iowa, residence regarding an unresponsive male. Law enforcement found the body of a 20-year-old male in Beuterbaugh’s living area. In addition, law enforcement learned that a second male had been transported to a local hospital from the Beuterbaugh residence prior to law enforcement being called, and had been placed on life support.
The investigation revealed that Beuterbaugh had provided "acetyl fentanyl" to both victims, which was determined to be the cause of death of the 20-year-old male, and the reason for the hospitalization for the second male. Beuterbaugh had obtained the acetyl fentanyl through an organization that began distributing fentanyl, or an analogue of fentanyl, in November of 2014 and continued to distribute in April of 2016. All members involved in the distribution of the acetyl fentanyl have entered guilty pleas.
On October 26, 2017, Senior Judge James E. Gritzner sentenced Beuterbaughs’ co-defendants, Dustin C. Sullivan, 27, of Council Bluffs, to 162 months in prison, and Cody Lanus, 31 of Omaha, Nebraska, to 144 months in prison. Both Sullivan and Lanus were also ordered to serve five years of supervised release following imprisonment.
Michael David Redmond, Jr. was previously sentenced by Senior Judge James E. Gritzner to 120 months in prison followed by five years of supervised release. Redmond, Jr., Sullivan, and Lanus were also ordered to pay $100 to the Crime Victims’ Fund. Amalia N. Pandis and Walter John O’Donohue, III are pending sentencing in February of 2018.
This investigation was conducted by the Carter Lake Police Department, the Pottawattamie County Sheriff’s Office, the Council Bluffs Police Department, the Southwest Iowa Narcotics Task Force, the Omaha, Nebraska, Police Department, the Iowa Division of Criminal Investigation, the Iowa Division of Narcotic Enforcement, the United States Postal Inspection Service, and the Drug Enforcement Administration in Nebraska. This case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
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Learn more about this release by calling Kevin E. VanderSchel at 515-473-9300, or by emailing him at [email protected] (link sends e-mail).
Federal Correctional Officer Pleads Guilty to Bribery, Narcotics and Sexual Abuse ChargesRead the Press Release
Earlier today, Armando Moronta pled guilty at the federal courthouse in Brooklyn to bribery, narcotics conspiracy and four counts of sexual abuse of a ward. At the time of the offenses, Moronta was a federal correctional officer employed by the United States Bureau of Prisons (BOP) at the Metropolitan Detention Center in Brooklyn, New York (MDC); he was suspended by the BOP after his initial arrest on bribery and narcotics charges. The charges stem from two separate indictments. When sentenced, Moronta faces up to 20 years in prison on the narcotics conspiracy charge and 15 years in prison on each of the bribery and sexual abuse charges. Moronta has also agreed to forfeiture of $15,000 in bribe payments and is required to register as a sex offender. The proceeding took place before United States District Judge Roslynn R. Mauskopf.
Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Ronald G. Gardella, Special Agent-in-Charge, United States Department of Justice, Office of the Inspector General, New York Field Office (DOJ OIG), and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the plea.
“In a fundamental breach of his duties as a public servant, former federal correctional officer Moronta compromised the safety of the MDC by allowing inmates to have prohibited goods and abusing inmates sexually,” stated Acting United States Attorney Rohde. “This case serves as a reminder that correctional officers who would so compromise the well-being of their colleagues and charges will be held accountable to the fullest extent of the law.”
“Corruption and abuse of power have no place in our federal correctional system and will not be tolerated,” stated DOJ OIG Special Agent-in-Charge Gardella. “Moronta’s conduct shattered the safety of his victims and imperiled the security of the MDC. The OIG will continue to work closely with the BOP and our law enforcement partners to ensure that individuals who abuse the public’s trust in this manner are brought to justice.”
“While the vast majority of law enforcement officers carry out their duties with honor and dignity, Moronta did not,” stated Assistant Director-in-Charge Sweeney. “May this case serve as an example to anyone who dares to threaten the integrity of the law enforcement profession—just because you’re awarded a badge of honor, it doesn’t mean you can hide behind the shield.”
According to court filings and facts presented during the plea proceeding, between March and December 2016, on approximately 12 occasions, Moronta smuggled cellular telephones and narcotics, including the synthetic narcotic “K2” and Suboxone, into the MDC for use and distribution by male inmates in exchange for thousands of dollars in bribe payments. Separately, between May and June 2016, Moronta engaged in criminal sexual contact and acts with three female inmates, including fondling a female inmate and causing inmates to perform oral sex on him while he was assigned to guard their unit.
The government’s bribery and narcotics case is being handled by the Office’s Public Integrity and International Narcotics and Money Laundering Sections. Assistant United States Attorneys Nadia Shihata and Andrew Gilman are in charge of that prosecution. The government’s sexual abuse case is being handled by the Office’s Public Integrity Section. Assistant United States Attorney Nadia Shihata is in charge of that prosecution.
The Defendant:
ARMANDO MORONTA
Age: 39
Brooklyn, NYE.D.N.Y. Docket Nos. 17-CR-036 (RRM) and 17-CR-279 (RRM)
Eastern Connecticut Drug Trafficker Sentenced to More Than 5 Years in Federal PrisonRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that CARLOS ALBERTO LOPEZ-ZELADA, also known as “Willi Mexico,” 40, a citizen of El Salvador last residing in Willimantic, was sentenced today by U.S. District Judge Victor A. Bolden in Bridgeport to 62 months of imprisonment, followed by three years of supervised release, for trafficking heroin, cocaine and crack cocaine.
According to court documents and statements made in court, in October 2015, the DEA, Willimantic Police Department and Connecticut State Police initiated an investigation into a Willimantic-based narcotics trafficking ring after several overdoses in the region. The investigation, which included the use of confidential informants, physical surveillance, controlled purchases of drugs and court-authorized wiretaps on five cellular telephones utilized by the co-conspirators, revealed that Jose Miranda, also known as “Omar,” of the Bronx, N.Y., was supplying large quantities of heroin and cocaine to LOPEZ-ZELADA and others. LOPEZ-ZELADA converted a portion of the cocaine he received into crack cocaine. LOPEZ-ZELADA, with the help of other co-conspirators, then distributed heroin, cocaine and crack cocaine in the Willimantic area.
The investigation further revealed that LOPEZ-ZELADA utilized a garage unit located on Willimantic Road in Chaplin as a stash location and point of distribution for narcotics.
Miranda was arrested on June 23, 2016, after he was intercepted threatening to shoot a co-conspirator who refused to pay him for a quantity of heroin that Miranda had provided to the individual on consignment.
LOPEZ-ZELADA has been detained since his arrest on July 6, 2016. On May 9, 2017, he pleaded guilty to one count of conspiracy to distribute heroin, cocaine and cocaine base (“crack”).
LOPEZ-ZELADA faces immigration proceedings when he is released from prison.
Miranda pleaded guilty to related charges and, on June 13, 2017, was sentenced to 74 months of imprisonment.
This matter was prosecuted by Assistant U.S. Attorneys Patrick Caruso, David Nelson and Amy Brown.
Drug Enforcement Administration Collects Record Number of Unused Pills as Part of its 14th Prescription Drug Take Back DayRead the Press Release
RALEIGH – Robert J. Higdon, Jr., United States Attorney for the Eastern District of North Carolina and William F. Baxley, Assistant Special Agent in Charge of the Drug Enforcement Administration’s Charlotte District Office announce that Americans nationwide did their part to reduce the opioid crisis by bringing the DEA and its more than 4,200 local and tribal law enforcement partners a record-setting 912,305 pounds—456 tons—of potentially dangerous expired, unused, and unwanted prescription drugs for disposal at more than 5,300 collection sites. That is almost six tons more than was collected at last spring’s event. This brings the total amount of prescription drugs collected by DEA since the fall of 2010 to 9,015,668 pounds, or 4,508 tons.
The Eastern District of North Carolina collected the following amount of dosage units of prescription drugs: Raleigh 8,500, Jacksonville 4,000,and Greenville 1,108. All were collected at return sites set up by the DEA in the Eastern District of North Carolina.
Now in its 8th year, National Prescription Drug Take Back Day events continue to remove ever-higher amounts of opioids and other medicines from the nation’s homes, where they could be stolen and abused by family members and visitors, including children and teens. The DEA action comes just days after President Donald J. Trump announced the mobilization of his entire Administration to address drug addiction and opioid abuse by directing the declaration of a Nationwide Public Health Emergency to address the opioids crisis.
This initiative addresses a vital public safety and public health issue. Medicines that languish in home cabinets are highly susceptible to diversion, misuse and abuse. Rates of prescription drug abuse in the U.S. are alarmingly high, as are the number of accidental poisonings and overdoses due to these drugs. Studies show that a majority of abused prescription drugs are obtained from family and friends, including from the home medicine cabinet. DEA launched its prescription drug take back program when both the Environmental Protection Agency and the Food and Drug Administration advised the public that their usual methods for disposing of unused medicines—flushing them down the toilet or throwing them in the trash—posed potential safety and health hazards.
Helping people to dispose of potentially harmful prescription drugs is just one way DEA is working to reduce the addiction and overdose deaths plaguing this country due to opioid medications.
DEA’s next Prescription Drug Take Back Day is April 28, 2018.
Document Thief Sentenced on Mail Fraud ChargeRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
BUFFALO, N.Y.-Acting U.S. Attorney James P. Kennedy, Jr. announced today that Daniel Witek, 54, of Buffalo NY, who was convicted of mail fraud, was sentenced to time served (six months) by Senior U.S. District Judge William M. Skretny. The defendant was also ordered to pay $2,100.00 in restitution.
Assistant U.S. Attorneys Michael DiGiacomo and Jonathan P. Cantil, who handled the case, stated that in the Spring of 2013, the defendant was a volunteer at the Buffalo History Museum. While volunteering at the museum, Witek devised a scheme to access and then stole certain historical writings addressed to Anson Conger Goodyear that belonged to the museum. The defendant then offered to sell the stolen documents to autograph dealers in New York City and New Jersey.
Today’s sentencing is the result of an investigation by Special Agents of the Federal Bureau of Investigation Safe Streets Task Force, under the direction of Special Agent-in-Charge Adam S. Cohen, and the United States Secret Service, under the direction of Special Agent-in-Charge Lewis Robinson.District Court Enters Order Against Los Angeles Area Telemarketing Companies and Their ExecutivesRead the Press Release
A federal court entered an order against three Los Angeles area telemarketing companies and two executives, the Department of Justice announced today. That order, entered by Judge Michael W. Fitzgerald in the Central District of California, permanently bans the companies and one executive from future telemarketing activity and restricts the telemarketing activities of another executive. The order also imposes a civil monetary penalty.
The Department filed a complaint on March 10, 2016, alleging that three companies, KFJ Marketing LLC, Sunlight Solar Leads LLC, and Go Green Education, initiated at least 1.3 million telemarketing calls that violated the Telemarketing Sales Rule. Those calls, which were intended to entice consumers to schedule appointments with solar panel providers, began with a prerecorded message warning consumers of a “pending 14% rate increase” in their energy bills. Francisco and Julio Salvat owned and operated all three companies.
“Unwanted telemarketing calls invade the privacy of American consumers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice will continue to work with the Federal Trade Commission to ensure telemarketers adhere to laws designed to protect against abusive and deceptive telemarketing practices.”
The filing of the suit was prompted by numerous complaints made by consumers to the Federal Trade Commission about the defendants’ telemarketing calls. The complaint alleged defendants called telephone numbers listed on the National Do-Not-Call Registry, initiated unlawful robocalls, displayed false information on consumers’ Caller IDs, and ignored consumer requests not to receive additional calls. The government’s complaint sought a permanent injunction to prevent future unlawful calls and a civil monetary penalty.
On Oct. 31, 2017, the United States and the defendants filed a proposed stipulated order for permanent injunction and civil penalty judgment. That stipulated order, entered by the district court, permanently bans the three corporate defendants and Francisco Salvat from engaging in telemarketing activity. Additionally, the order prohibits Julio Salvat from violating the Telemarketing Sales Rule and restricts his ability to place robocalls. The stipulated order also requires defendants to pay a $1.4 million dollar civil penalty, all of which but $155,000 will be suspended based on defendants’ inability to pay the entire penalty.
This matter was handled by Trial Attorneys Jacqueline Blaesi-Freed and Lisa Hsiao of the Civil Division’s Consumer Protection Branch, with assistance from Syliva Kundig of the Federal Trade Commission’s Western Region.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch.
Detroit One Collaboration Leads to Racketeering Indictment of Violent Gang Members from Detroit's EastsideRead the Press Release
The collaboration of local, state, and federal law enforcement under the Detroit One program has led to the investigation and racketeering indictment involving thirteen members of the violent eastside Detroit street gang, Smokecamp, a/k/a Original Paid Bosses (or OPB), Acting United States Attorney Daniel L. Lemisch announced.
According to the indictment unsealed today, the gang operates on the east side of Detroit, specifically the area in and around Albion Street and Seven Mile, an area Smokecamp/OPB members refer to as “ABlock.” This area is within a larger territory on Detroit’s east side claimed by the Bloods street gang known as the “Red Zone.” The gang has modified its name multiple times throughout the years going from “Runyon Boys” to “Original Paid Bosses” to “Paid Bosses Inc.” to “Smokecamp.”
While known to engage in robberies and extortion, the gang makes its money predominantly through the sale of narcotics, including cocaine, crack cocaine, heroin, marijuana, ecstacy, and other prescription pills. According to the indictment, the gang regularly sold these controlled substances on the “ABlock,” outside of vacant houses known as “trap houses,” and businesses in the area of Seven Mile and Albion. Additionally, between approximately 2014 – 2015, Smokecamp/OPB members regularly sold controlled substances from an apartment complex on East Seven Mile, which they branded the “Plaga,” sharing workers and firearms to distribute and protect their narcotics. However, this activity was not confined only to Detroit with some of their members traveling to Kentucky, West Virginia, and Ohio to sell their narcotics.
Under the Detroit One Initiative, and through the lead efforts of the ATF and Detroit Police Department Gang Intelligence Unit, along with the efforts of the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Michigan Department of Corrections, investigators were able to identify the members of this particular gang while investigating a similar gang on Detroit’s westside and piece together the varied criminal misconduct of the Smokecamp/OPB organization.
Charged today are:
- Korey Sanders, a/k/a “No Loan Corleon,” “Stax,” 26, of Detroit, with RICO conspiracy and willful engagement in firearms business without a license;
- Jerray Key, a/k/a “Chino,” “Dre,” 28, of Canton, with RICO conspiracy and willful engagement in firearms business without a license;
- Deshawn Langston, a/k/a “Pook,” “Slips,” 26, of Detroit, with RICO conspiracy;
- Richard Langston, a/k/a “Dub,” “Rich,” “Blow,” 27, of Detroit, with RICO conspiracy;
- Hakeem Bunnell, a/k/a “LB Dub,” 24, of Detroit, with RICO conspiracy, assault with a dangerous weapon in aid of racketeering, and possession of a firearm during, and in relation to, a crime of violence;
- Keenan Nielbock, a/k/a “Dolla,” “Keno” 30, of Taylor, with RICO conspiracy and willful engagement in firearms business without a license;
- Caraun Key, a/k/a “Luch,” “Ron,” “Slick,” 26, of Detroit with RICO conspiracy;
- Darryl Key, a/k/a “DB,” “Big Baby,” 27, of Detroit, with RICO conspiracy;
- Tyree Williams, a/k/a “Snoop,” 24, of Detroit, with RICO conspiracy, assault with a dangerous weapon in aid of racketeering, and possession of a firearm during, and in relation to, a crime of violence;
- Romale Gibson Jr., a/k/a “Santana,” 24, of Detroit, with RICO conspiracy;
- Cary Dailey, a/k/a “Cease,” 28, of Detroit, with RICO conspiracy;
- Antonio Langston, a/k/a “Tone,” 29, of Detroit, with RICO conspiracy; and
- Carlos Davis, a/k/a “Los,” “Loso,” 24, of Detroit with RICO conspiracy, assault with a dangerous weapon in aid of racketeering, possession of a firearm during, and in relation to, a crime of violence, and willful engagement in firearms business without a license.
Acting U.S. Attorney Daniel L. Lemisch said, “This indictment is the latest in a string of cases charging violent gang members in the City of Detroit. We are grateful to the Detroit One collaborative of law enforcement, who are all dedicated to improving the lives of the residents of Detroit.”
“ATF remains relentless in the effort to disrupt violent gangs operating in Detroit neighborhoods so law-abiding citizens can live in peace,” said ATF Detroit Acting Special Agent in Charge Marcus Watson. “This investigation is another example of how by working together, the Detroit One Initiative is making a difference.”
"Ensuring the safety and security of our residents in the city of Detroit is our number one priority. With the collaborative efforts of Detroit One partnership, we will continue our efforts to target and dismantle gangs, as well as, other violent offenders that pose a threat to the safety and wellbeing of our city," said Chief James Craig.
Detroit One is a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit. By working collaboratively, local, state, and federal law enforcement is striving to maximize its ability to identify and arrest the persons and groups initiating the violence in Detroit. This indictment is the latest in a string of indictments or informations from the United States Attorney’s Office and Wayne County Prosecutor’s Office over the last five years involving violent street gangs in the city of Detroit, including:
- Fourteen members of the Playboy Gangster Crips street gang for federal racketeering conspiracy;
- Twenty members of the Seven Mile Blood street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;
- Nine members of the Bounty Hunter Bloods street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;
- Fourteen members of the Rollin’ 60s Crips street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;
- Thirteen members of the Latin Counts street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;
- Fourteen members of the Phantom Outlaw Motorcycle Club / Vice Lords street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;
- Four Vice Lord members in state court for armed robbery and a Vice Lord leader charged under the federal street gang statute for his role in that armed robbery;
- Nine Vice Lords members for racketeering charges stemming from the shooting of four individuals at their family residence on Detroit’s northwest side;
- Three members of the Band Crew street gang charged under the state of Michigan gang felony statute for violent acts in furtherance of their gang activities and eight members of the Band Crew for federal racketeering conspiracy and other violent acts in furtherance of racketeering;
- Ten members of the RTM street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;
- Four members of the Bandgang street gang charged under the state of Michigan gang felony statute for conspiracy to commit murder and assaults with intent to commit murder and eighteen members/associates of Bandgang in federal court for access device fraud, aggravated identity theft, firearms, and obstruction of justice;
- Three members of the A1Killers street gang for federal narcotics offenses;
- Eleven members of the 6Mile Chedda Grove street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering; and
- Four members of the HNIC street gang for violent acts in aid of racketeering.
These charges are just some more of the tangible and significant results of this joint effort. The charges and allegations contained in the indictment are merely accusations. The defendants are presumed innocent until and unless proven guilty.
Deported Honduran Charged with Illegally Re-Entering the United StatesRead the Press Release
PITTSBURGH - An illegal alien found in Pittsburgh, Pennsylvania, has been indicted by a federal grand jury in Pittsburgh on a charge of illegal re-entry after deportation, Acting United States Attorney Soo C. Song announced today.
The one-count indictment named Feliciano Ramirez, age 33, of Honduras, as the sole defendant.
According to the indictment presented to the court, Feliciano Ramirez, an illegal alien, was formally removed from the United States by United States Immigration and Customs Enforcement on September 5, 2002 and December 23, 2016. Feliciano Ramirez was found to be illegally present in Pittsburgh, Pennsylvania, on October 3, 2017.
The law provides for a maximum total sentence of 20 years in prison, a fine of $250,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Gregory C. Melucci is prosecuting this case on behalf of the government.
The U.S. Immigration and Customs Enforcement/Homeland Security Investigations conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Defendant Indicted with Sherman Park ArsonRead the Press Release
Gregory J. Haanstad, the United States Attorney for the Eastern District of Wisconsin, announced that on November 7, 2017, Toronse Carter (age: 20) of Milwaukee was indicted for rioting, arson, and arson connected with a federal felony in violation of Title 18, United States Code, Sections 2101(a)(2), 844(i), and 844(h). If the defendant is convicted of arson connected with a federal felony, he faces a 10-year mandatory prison sentence; if convicted of arson, the defendant faces a 5-year mandatory prison sentence; and if convicted of rioting, the defendant faces a 5-year maximum prison sentence.
“This case reflects that the United States Attorney’s Office and the United States Department of Justice are committed to aggressively pursuing those who took part in violent and criminal conduct during the August 13, 2016 riots in Sherman Park,” explained U.S. Attorney Haanstad.
“We continue to work diligently on pursuing this joint investigation into the Sherman Park arsons,” said Assistant Special Agent in Charge Joel Lee of the St. Paul Field Division. “After a more than year-long investigation, we are proud of our team’s results, bringing justice to this community. These businesses, and more importantly this community, needs to know that these vandals will be held accountable for their actions and that we will continue to pursue the prosecutions of the remaining individuals involved in last summer’s riot-related arsons.”
This case was investigated by the United States Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Milwaukee Police Department. The case is being prosecuted by United States Attorney Gregory Haanstad and Assistant United States Attorney Christopher Ladwig.
The public is cautioned that an indictment is merely an accusation and the defendant is presumed innocent unless and until proven guilty.
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For further information contact:
Public Information Officer Dean Puschnig at (414) 297-1700
Day Trader Indicted in Computer Hacking and Securities Fraud Scheme Targeting Online Brokerage AccountsRead the Press Release
A four-count indictment was returned today charging a self-described day trader with conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusions, securities fraud and conspiracy to commit money laundering.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office made the announcement.
As alleged in the indictment, between September 2014 and May 2017, Joseph Willner, 42, of Ambler, Pennsylvania, and others conspired to hack into victims’ online securities brokerage accounts and used them to place unauthorized trades, at times fraudulently liquidating existing positions in the victims’ accounts in order to fund the unauthorized trades.
The indictment further alleges that, as a part of the conspiracy, the defendant used brokerage accounts in his name to place “short sale” offers for publicly-traded companies’ stock at artificially high, above-market prices. Simultaneously, Willner’s co-conspirators hacked into victims’ online brokerage accounts and used them to place buy orders for the stock at the artificially high prices, matching Willner’s short sale offers. After using the victims’ accounts to purchase the stock, Willner and his co-conspirators then re-purchased the stock from the victims’ accounts at market or below-market prices. This series of fraudulent trades usually took place within minutes, and Willner immediately profited based on the difference between his artificially high short sale price, and the lower price at which he subsequently re-purchased the stock.
According to the indictment, while discussing the scheme in private messages on Twitter, one of Willner’s co-conspirators said: “legal trading too hard.” Willner responded that he would be a “good trading partner.” As a result of Willner and his co-conspirators’ alleged actions, the affected brokerage firms lost more than $2 million.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The FBI’s New York field office investigated the case. Trial Attorney Cory E. Jacobs of the Criminal Division’s Fraud Section, Securities and Financial Fraud Unit, and Assistant U.S. Attorneys Tiana A. Demas, Mark E. Bini and David Kessler of the U.S. Attorney’s Office, Business and Securities Fraud and National Security and Cybercrime Sections, are prosecuting the case. The U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission provided significant assistance in the investigation.
Day Trader Indicted in Computer Hacking and Securities Fraud Scheme Targeting Online Brokerage AccountsRead the Press Release
Earlier today, a four-count indictment was returned by a federal grand jury in the Eastern District of New York, charging Joseph P. Willner, a self-described day trader, with Conspiracy to Commit Wire Fraud, Conspiracy to Commit Securities Fraud and Computer Intrusions, Securities Fraud and Conspiracy to Commit Money Laundering. As alleged in the indictment and other court filings, between September 2014 and May 2017, Willner engaged in a computer intrusion and securities fraud scheme, illegally profiting from a series of coordinated trades involving more than 50 hacked online brokerage accounts. The defendant laundered the proceeds of his crimes using Bitcoin, a cryptocurrency. Willner was arrested on a criminal complaint on June 13, 2017 in Ambler, Pennsylvania.
Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Kenneth A. Blanco, Acting Assistant Attorney General for the Justice Department’s Criminal Division and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI) announced the charges.
“Cybercriminals continue to come up with innovative ways to steal money from victims using the Internet, as in this case where defendant Willner’s co-conspirators allegedly hacked into the victims’ accounts in order to execute fraudulent short sales,” stated Acting United States Attorney Rohde. “Regardless of what innovative ways fraudsters come up with, this Office, together with our law enforcement partners, will prosecute them to the fullest extent of the law.” Ms. Rohde expressed her grateful appreciation to the United States Securities and Exchange Commission and the United States Commodity Futures Trading Commission for their significant assistance in the investigation.
“This case involves a 21st Century cyber boiler room, except the buyers were not even aware they were purchasing shares of stock,” stated FBI Assistant Director-in-Charge Sweeney. “As alleged, the scheme involved hacking into victims’ online securities brokerage accounts to make unauthorized trades that would benefit the defendant through the use of short sales. The scheme ultimately led to a loss of over $2 million to victim accounts. The FBI will continue to investigate and bring to justice those who commit securities fraud in an effort to ensure the fairness and integrity of our financial markets.”
As alleged in the indictment and other court filings, between September 2014 and May 2017, Willner and others conspired to hack into victims’ online securities brokerage accounts and used them to place unauthorized trades. As a part of the conspiracy, Willner used brokerage accounts in his name to place “short sale” offers for publicly-traded companies’ stock at artificially high, above-market prices. Simultaneously, Willner’s co-conspirators hacked into victims’ online brokerage accounts and used them to place buy orders for the stock at the artificially high prices, matching Willner’s short sale offers. After using the victims’ accounts to purchase the stock, Willner and his co-conspirators then re-purchased the stock from the victims’ accounts at market or below-market prices. This series of fraudulent trades usually took place within minutes, and Willner immediately profited based on the difference between his artificially high short sale price, and the lower price at which he subsequently re-purchased the stock. While discussing the scheme in private messages on Twitter, one of Willner’s co-conspirators stated: “legal trading too hard.” Willner responded that he would be a “good trading partner.”
As a result of Willner’s and his co-conspirators’ alleged actions, the affected brokerage firms lost more than $2 million. If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment.
The charges announced today are allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the U.S. Attorney’s Office’s Business and Securities Fraud and National Security and Cybercrime Sections, and the Securities and Financial Fraud Unit of the Department of Justice, Fraud Section. Assistant United States Attorneys Tiana A. Demas, Mark E. Bini and David Kessler and Trial Attorney Cory E. Jacobs of the Criminal Division’s Fraud Section are in charge of the prosecution.
The Defendant:
JOSEPH P. WILLNER
Age: 42
Ambler, PennsylvaniaE.D.N.Y. Docket No. 17-CR-620 (LDH)
Cumberland County, New Jersey, Man Admits Bank RobberyRead the Press Release
CAMDEN, N.J. – A Cumberland, County, New Jersey, man today admitted robbing two banks with an accomplice, Acting U.S. Attorney William E. Fitzpatrick announced.
Quintin L. Jones, 35, pleaded guilty before U.S. District Court Judge Renée Marie Bumb to an information charging him with two counts of bank robbery.
According to documents filed in this case and statements made in court:
On Oct. 11, 2016, Jones and an accomplice robbed a Cape Bank in Upper Deerfield Township, New Jersey. According to bank employees and video surveillance, two men wearing black hooded sweatshirts entered the bank. While one man crouched near the entrance and pointed what appeared to be a black revolver at employees, the other man approached bank tellers and directed them to place cash into a bag.
Afterwards, both robbers fled with $24,926 in stolen money from the bank. Employees observed a tan or gold vehicle with a black soft-top rapidly exit the parking lot and turn in the direction of Vineland. Security cameras at the bank and an employee also captured pictures of the car. Investigators determined that the car matched the description of a Chrysler Sebring that was stolen on Sept. 22, 2016, during a carjacking in the parking lot of a Walmart in Mays Landing, New Jersey.
The following Saturday, on Oct. 15, 2016, troopers with the N.J. State Police responded to a vehicle fire at a parking lot in Parvin State Park in Pittsgrove Township, New Jersey. After fire personnel extinguished the flames, troopers determined that the vehicle was the same car that had been stolen in the carjacking on Sept. 22, 2016.
Subsequent investigation revealed that Jones and the accomplice had purchased a gas can at a Walmart in Vineland and then took a cab to a Wawa gas station near Parvin State Park, where they purchased gas shortly before police responded to the vehicle fire. Investigators also learned that Jones, who had been staying at a local hotel on Oct. 15, 2016, had been observed by an employee placing a large amount of cash in a bag. Acting on this and other information, the State Police later obtained state arrest warrants for Jones and the accomplice along with search warrants for their residences. Law enforcement personnel who searched the accomplice’s residence also found clothing consistent with the outfits worn by the two men during the Cape Bank robbery as well as a toy revolver, cash, gloves, and a car key that appeared to be for the Chrysler Sebring.
Jones also admitted robbing Newfield National Bank in Newfield, New Jersey, on Oct. 7, 2016, with the accomplice. During that robbery, Jones and the accomplice stole $5,557 before fleeing in the same stolen Chrysler Sebring.
The counts with to which Jones pleaded guilty each carry a maximum punishment of 20 years in prison and a $250,000 fine. Sentencing is scheduled for Feb. 16, 2018.
The charges against Jones’ accomplice, Nathan L. Wallace of Vineland, remain pending, and he is considered innocent unless and until proven guilty.
Acting U.S. Attorney William E. Fitzpatrick credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher; the FBI’s Philadelphia Division, South Jersey Resident Agency, under the direction of Special Agent in Charge Michael Harpster; the N.J. State Police, under the direction of Col. Rick Fuentes. He also thanked the Vineland Police Department; the Hamilton Township Police Department; the Newfield Police Department; the Cumberland County Prosecutor’s Office; and the Salem County Prosecutor’s Office for their roles in the investigation.
The government is represented by Assistant U.S. Attorney Gabriel J. Vidoni of the U.S. Attorney’s Office Criminal Division in Camden.
Defense counsel: Megan J. Davies Esq., Cherry Hill, New Jersey
Connecticut Man Sentenced to over Eight Years for Conspiring to Distribute OxycodoneRead the Press Release
Bangor, Maine: United States Attorney Halsey B. Frank announced that Michael Vicente, 29, of Waterbury, Connecticut, was sentenced today in U.S. District Court by Judge John A. Woodcock, Jr. to 100 months in prison and three years of supervised release for conspiring to distribute oxycodone. He pleaded guilty on June 1, 2017.
According to court records, between June 2013 and April 2015, Vicente supplied about 15,000 30 mg oxycodone tablets to conspirators who distributed them in Central Maine. Conspirators from Maine travelled to Connecticut on a weekly basis to obtain the drugs from Vicente. On April 16, 2015, law enforcement agents and officers executed search warrants at the Central Maine residences of two co-conspirators and seized oxycodone, other controlled substances, drug paraphernalia and firearms. Vicente was arrested after being identified as the source of the drugs.
The case was investigated by the U.S. Drug Enforcement Administration and the Somerset County Sheriff’s Department, with the assistance of the Waterville Police Department. This case was investigated and prosecuted as part of the Department of Justice’s Strategy to Combat the Opioid Epidemic.
Colombian National Extradited to the United States to Face Charges for Encouraging and Inducing Aliens to Come to the United StatesRead the Press Release
A Colombian citizen was extradited from Colombia to the United States today to face a four-count federal indictment in the Southern District of Florida for encouraging and inducing aliens to come to the United States.
Acting U.S. Attorney Benjamin G. Greenberg of the Southern District of Florida, Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and Special Agent in Charge Mark Selby U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Miami, made the announcement.
Carlos Emilio Ibarguen Palacios, 26, is charged along with three other defendants in a Jan. 6, 2017, indictment with one count of conspiracy to encourage and induce aliens to come to the United States as well as three counts of encouraging and inducing aliens to come to the United States. The indictment alleges that in at least one instance, the defendant’s conduct resulted in the death of two individuals.
This case is being investigated by HSI Miami, with assistance from the HSI Bogota field office. The government of Colombia, including the Colombian Office of the Attorney General, provided significant assistance and support during the investigation. The Criminal Division’s Office of International Affairs provided significant support with the defendant’s extradition.
This case is being prosecuted by Assistant U.S. Attorney Brian Dobbins of the Southern District of Florida and Trial Attorney Danielle Hickman of the Criminal Division’s Human Rights and Special Prosecutions Section.
The charges and allegations in the indictment are merely accusations. A defendant is presumed innocent unless proven guilty.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Colombian National Extradited to the United States to Face Charges for Encouraging and Inducing Aliens to Come to the United StatesRead the Press Release
A Colombian citizen was extradited from Colombia to the United States today to face a four-count federal indictment in the Southern District of Florida for his role in a scheme to smuggle illegal aliens from Colombia into the United States.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Benjamin G. Greenberg of the Southern District of Florida and Special Agent in Charge Mark Selby U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Miami made the announcement.
Carlos Emilio Ibarguen Palacios, 26, is charged along with three others in a Jan. 6, indictment with one count of conspiracy to encourage and induce aliens to come to the Unites States as well as three counts of encouraging and inducing aliens to come to the United States. According to allegations in the indictment, from as early as November 2014, Ibarguen and other co-conspirators organized and arranged the unlawful smuggling of illegal aliens to the United States. The indictment alleges that in at least one instance, the defendant’s conduct resulted in the death of two individuals.
The charges and allegations in the indictment are merely accusations. A defendant is presumed innocent unless proven guilty.
This case is being investigated by HSI Miami, with assistance from the HSI Bogota field office. The government of Colombia, including the Colombian Office of the Attorney General, provided significant assistance and support during the investigation. The Criminal Division’s Office of International Affairs provided significant support with the defendant’s extradition.
This case is being prosecuted by Trial Attorney Danielle Hickman of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Brian Dobbins of the Southern District of Florida.
Cocaine, Methamphetamine Trafficker Sentenced to 262 Months in Federal PrisonRead the Press Release
SALT LAKE CITY -- Guillermo Lopez-Casillas, age 37, of Compton, Calif., will serve 262 months in federal prison for possession of methamphetamine and possession of cocaine with intent to distribute. U.S. District Judge Jill N. Parrish imposed the sentence Monday afternoon in U.S. District Court.
A jury deliberated for just a few hours before finding Lopez-Casillas guilty on both counts following a two-day trial in June.
“Drug trafficking organizations regularly travel along Utah roadways to deliver their poison to Utah neighborhoods and points beyond,” observed Utah U.S. Attorney John W. Huber. “The Utah Highway Patrol is one of the top law enforcement agencies in the nation in detecting and interdicting large shipments of narcotics. As partners, we will continue to doggedly pursue those who exploit addictions for profit,” Huber said.
In addition to the UHP, DEA and the Utah State Bureau of Investigations contributed to the investigation of the case.
In August 2015, a Utah Highway Patrol trooper stopped Lopez-Casillas on 1-70 in southern Utah for a traffic violation. The defendant told the trooper he did not have a driver’s license because it had been suspended for a DUI. After speaking with Lopez-Casillas and his juvenile passenger and observing their conduct, the trooper became suspicious that they were involved in criminal activity. Lopez-Casillas gave the trooper permission to search the car. The trooper found 1,009.5 grams of cocaine and 646.7 grams of methamphetamine. Both individuals were arrested.
The sentencing guideline range for the drug convictions was 262 to 327 months. Federal prosecutors argued for a 300-month sentence. In a sentencing memorandum filed with the court, prosecutors said the defendant was trafficking significant quantities of methamphetamine and cocaine. Prosecutors were also concerned that the defendant involved a juvenile in his drug trafficking activities.
Lopez-Casillas has a prominent gang affiliation and a lengthy history of criminal activity, including prior narcotics trafficking offenses, violent crimes, and possession and use firearms.
Judge Parrish ordered Lopez-Casillas to serve five years of supervised release when he completes his federal prison sentence. Among other standard conditions of supervised release, the judge ordered special conditions including prohibiting contact with any member or associate of a street gang or prison gang and prohibited Lopez-Casillas from possessing material which gives evidence of gang involvement or activity. He also cannot receive new tattoos associated with gangs or wear clothing identified with gangs.
The juvenile in the car with Lopez-Casillas was not prosecuted in federal court.
Citizen of Mexico, Deported Multiple Times, Charged with Illegally Re-entering United StatesRead the Press Release
PITTSBURGH – An individual found by the U.S. Immigration and Customs Enforcement has been indicted by a federal grand jury in Pittsburgh on charges of illegal reentry after deportation, Acting United States Attorney Soo C. Song announced today.
The one-count indictment named Bartolo Fabian-Mendez, 47, a citizen of Mexico.
According to the indictment, Fabian-Mendez, an alien, who was removed from the United States by U.S. Immigration and Customs Enforcement on January 5, 2010, February 15, 2016, March 16, 2016, November 26, 2016, and June 17, 2017, was encountered in Verona, Pennsylvania, and taken into custody on October 5, 2017, by the U.S. Immigration and Customs Enforcement, Enforcement and Removal Operations.
The law provides for a maximum total sentence of two years in prison, a fine of $250,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
The U.S. Immigration and Customs Enforcement 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.
Central Falls Resident Pleads Guilty in Stolen ID, Fraud SchemeRead the Press Release
PROVIDENCE – Reynaldo Martinez, 25, of Central Falls, pleaded guilty today to federal charges relating to his participation in a scheme to use the stolen identity of numerous individuals to open retail store credit cards and lines of credits, which he used to purchase tens of thousands of dollars worth of goods in Rhode Island and Massachusetts.
Martinez pleaded guilty as charged in a superseding indictment returned on August 15, 2017, to four counts of aggravated identity theft, two counts of access fraud, and one count each of bank fraud, conspiracy to commit fraud, attempted access fraud, and interstate transportation of stolen goods.
Martinez’s guilty plea is announced by Acting United States Attorney Stephen G. Dambruch and Brian Deck, Resident Agent in Charge of the United States Secret Service.
Appearing before U.S. District Court Judge John J. McConnell, Jr., Martinez admitted to the court that beginning as early as March 15, 2017, he used various sources, including internet websites, to obtain personal identification information of individuals, including their Social Security Numbers, dates of birth and addresses, after which he would have false, counterfeit government identifications manufactured bearing his photograph. Martinez admitted that he used the counterfeit identifications to secure credit to make purchases at various businesses including Sprint Cell Phone locations, Kohl's Department Store, Sak' s Fifth Avenue, Best Buy, Cardi' s Furniture, Raymour and Flanigan Furniture, and Home Depot. Martinez admitted that he used the stolen credit to make between $40,000 and $90,000 dollars in purchases, for which he had no intention of paying.
Martinez was first charged in this matter by way of a federal criminal complaint on May 17, 2017. He was arrested on May 24, 2017, and ordered detained in federal custody. Martinez is scheduled to be sentenced on January 25, 2018.
Bank fraud is punishable by up to 30 years imprisonment, $1,000,000 fine, and 5 years supervised release; conspiracy to commit access device fraud, attempted access device fraud, access devise fraud, and interstate transportation of goods are each punishable by up to 10 years imprisonment, $250,000 fine, and 3 years supervised release; and aggravated identity theft is punishable by 2 years imprisonment, $250,000 fine, and 3 years supervised release.
The case is being prosecuted by Assistant U.S. Attorney William J. Ferland.
Acting United States Attorney Stephen G. Dambruch acknowledges and thanks the Middletown, Warwick, Richmond and Central Falls, R.I., Police Departments; Rhode Island State Police; Mansfield and Seekonk, Mass, Police Departments; West Hartford and Hamden, Conn., Police Departments; and the Richardson, Texas, Police Department for their assistance in gathering and providing information to the United States Attorney’s Office in Rhode Island and the United States Secret Service New England Electronic Crimes Task Force during the course of the investigation.
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Cedar Rapids Man Sentenced to over 17 Years in Federal Prison for Distribution of Child PornographyRead the Press Release
A man who distributed child pornography was sentenced today to over 17 years in federal prison.
Scott Ristine, age 40, from Cedar Rapids, Iowa, received the sentence after a July 14, 2017 guilty plea to one count of distribution of child pornography. At the plea hearing, Ristine admitted that, in 2015, he knowingly distributed child pornography. He also admitted that he was convicted of receipt of child pornography in the Northern District of Iowa in 2002.
Ristine was sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade. Ristine was sentenced to 210 months’ imprisonment. A special assessment of $100 was imposed, and Ristine must also serve a 10-year term of supervised release. He must comply with all sex offender registration and public notification requirements.
This case was prosecuted by Assistant United States Attorney Mark Tremmel and was investigated by the Cedar Rapids Police Department and the Iowa Division of Criminal Investigation.
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.”
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is CR 17-37.
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Casey County, Kentucky, Man Sentenced to 12 Months in Prison for Defrauding the Farm Credit Administration Through Sales of Grain to Unauthorized PurchasersRead the Press Release
Ordered to pay $689,104 restitution
BOWLING GREEN, Ky. – a Casey County, Kentucky, man was sentenced today in United States District Court by District Judge Greg N. Stivers, to 12 months in prison, 3 years supervisory release, with the first 12 months spent in home confinement, and ordered to pay restitution in the amount of $689,104.28 to the Farm Services Agency, for his role in a conspiracy to defraud the Farm Credit Administration by concealing the sale of grain to unauthorized purchasers, announced United States Attorney Russell M. Coleman.
Christopher S. Fair, 38, of Liberty, Kentucky, previously entered a guilty plea to two counts of a criminal indictment including converting assets pledged to the Farm Credit Administration and bankruptcy fraud.
According to the plea agreement, between July 18, 2012, and October 29, 2013, defendant Fair obtained loans from Central Kentucky Agriculture Credit (CKAC) and secured these loans with the proceeds of expected grain sales and pursuant to the loan agreements, Fair was only authorized to sell grain to authorized buyers. CKAC is a subsidiary of the US Department of Agriculture (USDA), Farm Credit Administration, and the loans were guaranteed by the USDA Farm Service Agency (FSA).
Contrary to the loan agreement, and without CKAC’s knowledge or consent, Fair sold his grain to unauthorized purchasers, and transferred the proceeds of those sales to bank accounts under his own control and the control of others, including a bank account under the name FJ Holdings, an entity created by Fair’s friend, Timothy Jaynes. Fair subsequently used those proceeds for his own personal benefit. Fair ultimately defaulted on the CKAC loans, resulting in a loss to FSA of $689,104.28.
In July 2013 Fair filed for Chapter 7 bankruptcy protection and knowingly and fraudulently concealed his property and proceeds from his creditors and the US Trustee, including proceeds held in bank accounts under the names FJ Holdings and Jman Farms, LLC. Jman Farms LLC was created by another of Fair’s friends, at Fair’s request, for the purpose of hiding Fair’s assets from creditors.
Defendant Jaynes, 51, of Casey County, was charged in a separate case by Criminal Information and pled guilty in U.S. District Court to converting assets pledged to the Farm Credit Administration Defendant. Jaynes was sentenced to serve three years of probation with supervision, and ordered to pay restitution in the amount of $50,000 to the Farm Service Agency.
This case was prosecuted by Assistant United States Attorney David Weiser and is being investigated by the Department of Agriculture, the Federal Bureau of Investigation (FBI), and the US Bankruptcy Trustee’s Office.
California Man Pleads Guilty for His Role in A Drug Trafficking Ring Linked to A Mexican Drug CartelRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.-Acting U.S. Attorney James P. Kennedy, Jr. announced today that Enrique Munoz, 53, of California, pleaded guilty to conspiracy to distribute five kilograms or more or cocaine, and money laundering conspiracy before U.S. District Judge Elizabeth A. Wolford. The charges carry a mandatory minimum penalty of 10 years in prison, a maximum of life and a $10,000,000 fine.
Assistant U.S. Attorney Michael J. Adler, who is handling the case, stated that between July 2012, and December 2014, the defendant conspired with others to illegally distribute narcotics. Specifically, Munoz managed bank accounts that were used to assist in the money laundering of the proceeds of drug transactions; he made structured deposits in other bank accounts with the proceeds of drug transactions; and 3) he received and sent packages containing kilograms of cocaine. The defendant obtained multiple kilograms of cocaine that were then distributed in cities including Buffalo and Chicago, IL.
In December 2014, Munoz was arrested in Buffalo with co-conspirators. The defendant had $69,320 in a black shoulder bag at that time. The defendant also had paperwork for a receipt for a hotel room from a co-conspirator, paperwork for a rental car utilized by Munoz and his co-conspirators, and a list of several Bank of America accounts into which structured deposits were made.
A total of seven defendants have been indicted in this sophisticated drug trafficking organization with ties to a Mexican drug cartel operating out of the Los Angeles, California area. The organization shipped drugs to various states including New York, New Jersey, Illinois, Colorado, and Ohio. To date, three defendants have been convicted. Charges are pending against the remaining defendants. The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
The plea is the culmination of an investigation on the part of the Drug Enforcement Administration, under the direction of Special Agent-in-Charge James J. Hunt, New York Field Division; Immigration and Custom Enforcement, Homeland Security Investigations, under the direction of Special Agent-in-Charge Kevin Kelly; and the Internal Revenue Service, Criminal Investigations Division, under the direction of James D. Robnett, Special Agent-in-Charge, New York Field Office. Additional assistance was provided by ICE-HSI in Los Angeles, California.
Sentencing is scheduled for February 8, 2018, at 4:00 p.m. before Judge Wolford.
Brookville Man Pleads Guilty to Receiving Child Pornography through Kik Messenger AppRead the Press Release
DAYTON – Zachery Van Meter, 21, of Brookville, Ohio, pleaded guilty in U.S. District Court to receiving child pornography.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, Preble County Sheriff Michael L. Simpson and Perry Township Police Chief Bob Bowman announced the plea entered into before U.S. District Judge Thomas M. Rose.
According to court documents, Van Meter created a Kik messenger app account in July 2016. From that time until February 2017, Van Meter used Kik to receive images of child pornography from others and to communicate with others about the sexual exploitation of children.
During the course of these conversations, Van Meter took at least 15 photographs of clothed juveniles who were known to the defendant and sent these photographs to others in an effort to receive more child pornography files.
Van Meter received at least 30 sexually explicit photographs of children, including at least one that portrayed sadistic and/or masochistic conduct involving the binding of a child’s arms and legs by black material to a hook on the floor.
Receipt of child pornography is a federal crime punishable by a range of five to 20 years in prison.
U.S. Attorney Glassman commended the investigation of this case by the FBI, Preble County Sheriff’s Office and Perry Township Police Department, as well as Assistant United States Attorney Dominick S. Gerace, who is representing the United States in this case.
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Bristol Man Admits to Distributing Heroin, Fentanyl and Crack to Canton Overdose VictimRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that ROBERT DEWAYNE WATKINS, also known as “D,” 42, of Bristol, pleaded guilty today in New Haven federal court to one count of possession with intent to distribute, and distribution of, heroin and cocaine base (“crack”).
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 18, 2017, Canton Police responded to a suspected overdose incident at a Collinsville restaurant and encountered a 29-year-old male in a bathroom of the restaurant. After unsuccessful resuscitation efforts, the victim was pronounced deceased. The investigation, which included witness interviews and analysis of the victim’s cellphone, revealed that the victim purchased heroin and crack cocaine from WATKINS shortly before his death. Some of the heroin contained fentanyl.
The Office of the Chief Medical Examiner has determined that the victim died from acute intoxication due to the combined effects of fentanyl, heroin, cocaine, amphetamine and alprazolam.
WATKINS is scheduled to be sentenced by Chief U.S. District Judge Janet C. Hall on January 31, 2018, at which time he faces a maximum term of imprisonment of 20 years.
WATKINS has been detained since his arrest on July 25, 2017.
This matter has been investigated by the Drug Enforcement Administration’s New Haven Tactical Diversion Squad and the Canton Police Department. The Tactical Diversion Squad includes participants from the New Haven, Hamden, Greenwich, Shelton, Bristol, Vernon, Wilton, Milford, Monroe and Fairfield Police Departments, and the Connecticut State Police. The case is being prosecuted by Assistant U.S. Attorney Avi M. Perry.
Brazilian National Sentenced to Prison, Ordered Deported for Inducing as Minor to Engage in Sexual ActivityRead the Press Release
PROVIDENCE – Rafael P. Leal, 39, a Brazilian national who most recently lived in Boston, Mass., was sentenced today in U.S. District Court in Providence, R.I., to 235 months in federal prison and ordered deported upon completion of his term of incarceration for enticing a minor to engage in illicit sexual activity and traveling interstate to engage in illicit sexual conduct.
Leal was arrested by Bristol Police on October 22, 2016, after an officer on patrol discovered Leal attempting to engage in illicit sexual conduct with a 14 year-old girl in a parked vehicle at the Bristol Town Beach. Leal pleaded guilty on June 7, 2017.
Leal’s sentence, imposed by U.S. District Court Chief Judge William E. Smith, is announced by Acting United States Attorney Stephen G. Dambruch, Bristol Police Chief Josue D. Canario, and Harold H. Shaw, Special Agent in Charge of the FBI Boston Division.
The U.S. Sentencing Guidelines range of imprisonment in this matter is 188-235 months. The government recommended the court impose a sentence of 241 months in prison.
An investigation by the Bristol Police Department, with the assistance of the FBI, determined that Leal and the victim began communicating through social media in June 2016. During continued contact through various social media platforms and other means of communication, Leal groomed the victim through emotional manipulation and gifts. He escalated the relationship from an online relationship to numerous sexual encounters, despite the victim expressing to Leal that she did not want a sexual relationship. The investigation determined that Leal controlled the victim’s activity by insisting that she not engage in social activities with others, particularly male friends, and that she keep their contact and relationship from her parents.
Leal continued to attempt to communicate with the victim in a manipulating manner after he was arrested and ordered detained in prison.
The case was prosecuted by Assistant U.S. Attorney John P. McAdams.
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Bozeman Man Sentenced to Prison for Illegal Gun PossessionRead the Press Release
MISSOULA - The United States Attorney’s Office announced today that Max Edward Samaniego, 27, of Bozeman, was sentenced to 10 months in prison, three years of supervised release, and a $100 special assessment. Chief U.S. District Judge Dana L. Christensen presided over the hearing.
On May 28, 2016, Samaniego possessed a Smith and Wesson 9mm pistol with an obliterated serial number in Bozeman, Montana. The pistol was found after he was stopped for reckless driving.
From June until August 2016, Samaniego possessed numerous firearms that were stolen from a Bozeman area residence. Samaniego then traded four firearms to someone in Butte for a motorcycle. Samaniego gave one firearm to a neighbor who helped him out. Another firearm was given to a friend.
The case was prosecuted by Assistant U.S. Attorney Paulette Stewart and investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Bozeman Police Department, and the Gallatin County Sheriff’s Office.
The U.S. Attorney’s Office is partnering with federal, state, local and tribal law enforcement to identify those responsible for significant violent crime in Montana. A centerpiece of this effort is Project Safe Neighborhoods, a recently reinvigorated Department of Justice program that has proven to be successful in reducing violent crime. Today’s sentencing is part of the Project Safe Neighborhoods program.
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Blackfeet Head Start Employees Appear in Federal Court on Indictment for Embezzlement of over $230,000Read the Press Release
GREAT FALLS - Ethyl Lee Grant, Allen Shane Goss, and Carol Hall Bird appeared before U.S. Magistrate Judge John Johnston on November 8, 2017, at 10:00 a.m., in Great Falls, Montana. The defendants face charges of Theft from an Indian Tribal Government Receiving Federal Funding and Wire Fraud. The charges stem from the defendants allegedly embezzling federal funds while working at the Blackfeet Head Start Program. The maximum available penalties for these offenses include up to 30 years in prison, $500,000 in fines, full restitution, and forfeiture.
In outlining the charges, the indictment explains the purpose of the Head Start Program. It was designed to help break the cycle of poverty, providing preschool children of low-income families with a comprehensive program to meet their emotional, social, health, nutritional, and psychological needs. The Head Start and Early Head Start programs provide services to over a million children every year, in every U.S. state and territory, in farmworker camps, and in over 155 tribal communities. The program is one of the longest-running programs attempting to address systemic poverty in the United States by intervening to aid children.
The indictment explains that the Blackfeet Head Start Program received $8.0 million in federal funding during the period of the alleged embezzlement. According to the indictment, the fraud arose because the defendants and “others yet to be named” fraudulently claimed over 7,800 hours in overtime and inappropriately received over $232,000 in federal funds from the Head Start Program during a 15-month timeframe.
Trial is set for January 8, 2018 before United States District Judge Brian Morris, in Great Falls, Montana. The case was investigated by the Federal Bureau of Investigation and U.S. Department of Health and Humans Services, Office of Inspector General.
The indictment is merely a formal charging document. It is not proof of guilt and all persons indicted are presumed to be innocent of any crime until proof of guilt is established by trial or guilty plea.
Barbour County man admits to role in a methamphetamine distribution operationRead the Press Release
ELKINS, WEST VIRGINIA – A Belington, West Virginia man has admitted to his participation in a methamphetamine distribution operation, United States Attorney William J. Powell announced.
Austin Jay Robinson, 18, pled guilty to one count of “Possession with Intent to Distribute Methamphetamine-Aiding and Abetting.” Robinson admitted to conspiring with others to distribute methamphetamine in Randolph County in April 2017.
Robinson faces up to 20 years incarceration and a fine of up to $1,000,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Stephen D. Warner is prosecuting the case on behalf of the government. The Bureau of Alcohol, Firearms, Tobacco and Explosives, The Mountain Region Drug & Violent Crime Task Force, the Greater Harrison Drug &Violent Crime Task Force, a HIDTA-funded initiative, the West Virginia State Police, Upshur County Sheriff’s Office, Lewis County Sheriff’s Office, the Buckhannon Police Department, and the Weston Police Department investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Armed Heroin Dealer Sentenced to over Five Years in Federal PrisonRead the Press Release
Jacksonville, Florida – U.S. District Judge Timothy J. Corrigan has sentenced Matthew Barker (34, Jacksonville) to five years and five months in federal prison for distributing heroin and for possessing a firearm in furtherance of a drug trafficking crime. He pleaded guilty on May 24, 2017.
According to court documents, during July 2016, detectives from the Jacksonville Sheriff’s Office and agents from the Federal Bureau of Investigation and the Drug Enforcement Administration were investigating Barker for selling heroin and firearms in Jacksonville. Task force agents purchased almost 7 grams of heroin mixed with fentanyl for $1,500 and a .40 caliber pistol from Barker. FBI SWAT team members later executed a search warrant at Barker’s home and recovered more than 40 firearms and thousands of rounds of ammunition. All of the firearms and ammunition were forfeited to the government.
This case was investigated by the Jacksonville Sheriff’s Office, the Federal Bureau of Investigation, and the Drug Enforcement Administration as part of the Organized Crime and Drug Enforcement Task Force. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation's drug supply. It was prosecuted by Assistant United States Attorney Frank Talbot.
Appleton Tax Return Preparer Sentenced to Prison for Aiding and Assisting in the Filing of False Federal Income Tax ReturnsRead the Press Release
Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin, announced that on October 27, 2017, Gerardo “Gerry” Garcia (age: 55) of Appleton, was sentenced to 18 months in prison, followed by one year of supervised release. On June 16, 2017, Garcia pleaded guilty to assisting in the preparation and filing of a false federal income tax return, in violation of Title 26, United States Code, Section 7206(2). Garcia was also ordered to pay restitution of $355,088 to the Internal Revenue Service.
According to the plea agreement, Garcia, who owned the tax preparation business Garcia Enterprises LLC, admitted that he had knowingly prepared fraudulent Federal tax returns that understated his customers' tax liabilities and claimed refunds to which his customers were not entitled. During the period from April 2011 through April 2015, Garcia filed at least 44 false and fraudulent income tax returns with the Internal Revenue Service. The fraudulent tax returns falsely claimed, among other things, ineligible dependents for customers, which resulted in inflated exemptions, child tax credits, and additional child tax credits. Garcia also claimed improper filing statuses on his customers’ tax returns.
During the sentencing hearing, United States District Court Chief Judge William C. Griesbach noted several factors affecting the sentence imposed, including the magnitude and serious nature of the of the offense and the need to send a strong message to other tax preparers who would consider similar conduct.
In rejecting Garcia’s request for a sentence of probation, Judge Griesbach stated that, “Our tax system relies upon voluntary compliance, and I agree that there is a loss of confidence in our system when somebody engages in this type of behavior, and if they were to be met with straight probation … that seems to me to be counter to the purpose of imposing a just sentence.” Judge Griesbach further stated, “This is an awful lot of money over a long, long period of time, and I think an argument can be made for a much higher sentence here. These are public funds, that you’ve deprived the government of. . . this is the kind of thing that a court should send a strong message on.”
The case was investigated by Internal Revenue Service, Criminal Investigation. The case was prosecuted by Assistant United States Attorney Elizabeth Monfils.
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For Additional Information Contact:
Public Information Officer Dean Puschnig - (414) 297-1700
Adelanto City Councilmember Arrested on Federal Charges Alleging $10,000 Bribe and Arson Plot to Burn Down his RestaurantRead the Press Release
RIVERSIDE, California – Adelanto City Councilmember Jermaine Wright is expected to make his first court appearance this afternoon after being arrested yesterday on federal charges that allege he took a $10,000 cash bribe and that he hired a man to burn down his restaurant to collect insurance proceeds.
Jermaine Wright, 41, was arrested yesterday by FBI special agents after he was named in a criminal complaint filed on Monday that charges him with bribery and attempted arson of a building.
Wright’s initial appearance will be this afternoon in United States District Court in Riverside.
The criminal complaint outlines two schemes. In the first, Wright allegedly solicited and accepted a $10,000 bribe from an undercover FBI agent who told Wright he wanted the councilmember’s assistance in navigating city rezoning and code enforcement issues related to a supposed marijuana transportation business.
In the second scheme, Wright allegedly paid $1,500 to another undercover FBI agent to burn down his restaurant.
The investigation into Wright, which began as a probe into possible corruption in the City of Adelanto, utilized an informant who introduced Wright to both of the undercover FBI agents and recorded a series of conversations in which Wright discussed both plots, according to the affidavit in support of the criminal complaint filed on Monday.
Soon after the investigation began, the informant – who is identified in the affidavit as a CHS, or confidential human source – introduced Wright to a man who said he wanted to move his marijuana cultivation business to Adelanto. The man who purportedly wanted to relocate his marijuana business was an undercover FBI agent who told Wright he was interested in using a property outside of the zone designated by the city for marijuana cultivation. The undercover operative – who is called UC-1 in the affidavit – specifically wanted Wright’s assistance in expanding the area where marijuana cultivation was permitted.
During a meeting in June, Wright said that “to obtain the necessary votes from the Adelanto City Council for the expansion of the area zoned for marijuana cultivation, UC-1 would have to purchase Wright’s vote,” according to the affidavit. After Wright said that his “price” was “20” – interpreted by the undercover agent to be $20,000 – Wright said a “donation” had to be made to a third party “because he keeps us out of jail.”
In mid-July, the Adelanto City Council approved the expansion of the marijuana zone with Wright voting in favor of the issue.
After the City Council action, the undercover agent sought Wright’s assistance in fast-tracking an approval for the purported marijuana business, which Wright agreed to do in exchange for “15.”
Wright did not receive the $20,000 for his vote because the City Council’s action occurred sooner than anticipated and the funds to pay the bribe were not available at the time, according to the affidavit. Wright similarly was not paid for his services in speeding up the permit process for the marijuana cultivation operation because it required the purchase of a property prior to paying the bribe. However, the informant later told the FBI that Wright was willing to take money in exchange for his help in securing an “exemption” that would allow the undercover operative to operate a marijuana transportation business.
After two meetings with the informant in which Wright discussed how the undercover agent could open a marijuana transportation business, Wright participated in a third meeting that also involved the undercover agent.
“During a meeting on October 6, UC-1 then placed $10,000 dollars on a box being used as a table, made up of two stacks of $50 bills, and told Wright, ‘that’s for you, or your non-profit, whatever,’” according to the affidavit. “Wright responded, ‘my non-profit, yes sir, thank you sir.’ Wright eventually placed the $10,000 in his pocket.”
After taking the bribe, Wright confirmed that he would assist with code enforcement and votes, according to the affidavit. Wright also said he could curtail code enforcement activities against the marijuana transportation business, but it would require a “stack” – which Wright identified as $2,000 – each time Wright interceded.
In the second scheme, Wright sought the informant’s assistance in setting fire to Wright’s business, an Adelanto restaurant called Fat Boyz Grill. The affidavit alleges that Wright subsequently solicited a second FBI undercover agent (UC-2) to assist Wright in burning down his restaurant so he could collect $300,000 in insurance proceeds. Wright eventually paid the second undercover agent $1,500, gave the agent a tour of the restaurant, and assisted in the planning of the arson by providing a ladder for the undercover agent and discussing various tactics to maximize the damage.
The informant first reported the arson scheme to the FBI in early August, according to the affidavit. In late August, the informant reported that Wright had again sought his assistance in finding someone to burn down Fat Boyz Grill. In late September, Wright asked the informant to pass his cell phone number to the “electrician” – so named because Wright wanted the cause of the fire to appear to be an electrical problem.
Wright met the “electrician” – actually the second undercover FBI agent – on October 3 and said he wanted the fire on the following Saturday when the sprinkler system would be turned off, according to the affidavit. After Wright assured the undercover agent that his insurance policy covers everything, the “electrician” agreed to do the job for $1,500. At a meeting three days later, Wright paid the $1,500 after the undercover agent told Wright he needed more time to prepare for the job.
On October 17, FBI agents executed a federal search warrant at the restaurant and interviewed Wright. According to the affidavit, Wright confessed to paying the undercover agent to burn down Fat Boyz Grill and that the would-be arsonist assured him that “this place be gone.” The FBI told Wright that the “electrician” was providing agents with information about the scheme. The affidavit states that, after Wright confessed to the attempted arson plot, Wright agreed to cooperate with the FBI’s investigation into corruption in the City of Adelanto, which included agreeing to surreptitiously use a recording device if requested by the FBI, tell the truth and maintain the confidentiality of the investigation.
The very next day, October 18, the informant reported to the FBI that Wright had called the informant, disclosed the FBI search warrant on the restaurant, and said that the so-called electrician was a “snitch.” Wright requested the CHS’s assistance in making UC-2 “go away,” according to the affidavit.
Wright later contacted the informant and asked the informant to attack Wright. According to the affidavit, one of the reasons Wright wanted to be assaulted was to obtain “the dismissal of criminal charges due to memory loss Wright would claim he suffered as a result of the assault.” Wright instructed the informant to “put a rat next to me,” explaining that the FBI “would suspect someone has found out that I have talked to them [the FBI], and they’re sending me a message.” According to the affidavit, Wright continued, “I am going to lose at least three months of memory or more.”
On the morning of November 3, the San Bernardino County Sheriff’s Department received a call for medical aid from an employee at Fat Boyz Grill. When deputies responded, they observed Wright on the ground in the restaurant’s parking lot being treated by firefighters. While he had no visible injuries, Wright was transported to a hospital, and he reported being attacked and robbed by an unknown assailant.
Wright was taken into custody yesterday by FBI agents after he was summoned for another interview.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If Wright were to be convicted of the two charges in the complaint, he would face a statutory maximum sentence of 10 years in prison for the bribery count and up to 20 years in prison for the arson charge. The arson charge also carries a mandatory minimum prison sentence of five years in prison.
The case against Wright is the product of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorneys Sean D. Peterson of the Riverside Branch Office and Joseph B. Widman, Chief of the Riverside Branch Office.
22 Alleged Gang Members Indicted for Multiple Violent CrimesRead the Press Release
HOUSTON – More than a dozen alleged members and associates of the Southwest Cholos street gang are set to appear in federal court on a variety of charges to include sex trafficking, drug trafficking, selling firearms, human smuggling and identity theft, announced Acting U.S. Attorney Abe Martinez.
A federal grand jury returned the 37-count indictment Nov. 2, 2017. It was partially unsealed today following a motion in federal court.
Those arrested during the enforcement actions yesterday include Houston residents Giovani Alecio aka Whiteboy, 26, Victor Javiel Gonzalez, 29, Maria Angelica Moreno-Reyna aka Patty, 51, Gabriela Gonzalez-Flores aka Gabby, 46, Eddie Torres aka Monterrey 38, Jose Luis Moreno aka Lucky, 23, Gilberto Espinoza Garcia, 49, Hector Reyna aka Pantera, 26; Jimmy Mejia Chavez, 33; and Grisel Salas aka Cris, 34, of Donna; and Jose Ruben Palomo-Martinez, 48, of Mission. Those arrested in the Houston area are expected to make their initial appearances before U.S. Magistrate Judge Nancy Johnson at 10:00 a.m. today.
Two more defendants – Erik Ivan Alvarez-Chavez aka Casa, 39, and Denis Amaya Calballero aka Keiko, 25, both of Houston - were already in custody on related charges and are expected to make their appearances in federal court in the near future.
Nine others are also charged but not as yet in custody. Bianca Stephanie Reyna aka Troubles, 20, Claudia Soriano-Hernandez, 26, Juan Carlos Contreras Cervantes, 25, all from Houston; Raul Moreno Reyna aka Coney, 53,William Alberto Lopez, 27, Anadalit Duarte aka Paola, 25, and Walter Lopez, 26, all originally from Houston but believed to have fled to Mexico; and Israel Juarez Sifuentes, 43, and Melissa Dominguez aka Missy, 50, both of Donna; are considered fugitives and warrants remain outstanding for their arrests. Anyone with information about their whereabouts is asked to contact the FBI Houston field office at 713-693-5000.
All of the defendants are indicted in the criminal scheme as alleged members or affiliates of the Southwest Cholos. All are charged in varying counts to include multiple conspiracy counts; sex trafficking by force, fraud or coercion; sex trafficking of a minor by force, fraud or coercion; transportation to engage in prostitution; enticing or coercing another to travel in interstate commerce for prostitution; transportation of illegal aliens; importation of aliens for immoral purposes; possession with the intent to distribute heroin; possession with intent to distribute methamphetamines; illegal dealing of firearms; felon in possession of a firearm; illegal re-entry; false statements; and aggravated identity theft.
According to the indictment, the defendants operated several brothels in apartments throughout Houston as well as in Mexico. The primary location was the Carriage Way Apartment Complex on Dashwood in southwest Houston, which was also home to their base of operations for drug and firearms trafficking, according to the allegations.
In the sex trafficking scheme, illegal aliens were allegedly promised they could work in a restaurant to pay off their smuggling debts. After arriving in Houston, however, victims were told they actually had to work as prostitutes in brothels the alleged gang members controlled. The indictment alleges the defendants engaged in numerous acts and threats of violence against the victims and their families whenever the women refused to work as prostitutes or failed to make enough money.
The indictment further alleges the defendants would tattoo their names or nicknames on the victims to identify them as their property and demonstrate control over them.
Authorities have identified at least six trafficking victims, the youngest of whom was 14. At the time of arrests, seven more victims were found in the brothels.
Some of the defendants also allegedly engaged in human smuggling separate from the sex trafficking scheme. The indictment alleges at least nine aliens have been identified as being smuggled through stash houses some of the defendants controlled in the Rio Grande Valley to locations in Houston. The smuggled aliens paid substantial sums, including two Chinese nationals who each paid more than $40,000, according to the charges. During the enforcement actions yesterday, 16 more smuggled aliens were discovered in area stash houses.
The indictment also alleges several counts of heroin and methamphetamine trafficking and the selling of numerous stolen firearms
If convicted of sex trafficking, the defendants face a minimum of 15 years and up to life imprisonment. Those charged with the drug trafficking also face up to life with a minimum of 10 years as possible punishment. The human smuggling charges carry a maximum of 20 years imprisonment, while those convicted in the illegal trafficking of firearms face another five years imprisonment.
Soriano-Hernandez, Mejia-Chavez and Contreras-Cervantes were also indicted for illegally re-entering the United States following deportation for which they face up to two years imprisonment, while Javiel Gonzalez is also charged as a convicted felon in possession of a firearm and faces up to 10 years imprisonment.
Alvarez-Chavez also allegedly stole the identity of a Salvadoran man so he could obtain temporary protected status as a citizen of that country. If convicted, he faces a mandatory two years which must be served consecutively to any other prison term imposed.
The FBI, Drug Enforcement Administration, Harris County Sheriff’s Office, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations, Houston Police Department, Texas Anti-Gang Center and ICE’s Enforcement Removal Operations conducted the investigation as part of both the Organized Crime Drug Enforcement Task Force and the Human Trafficking Rescue Alliance (HTRA). The case is also an example of the coordination among law enforcement who are part of the Houston Law Enforcement Violent Crime Initiative announced in June 2017 which combines personnel and resources from numerous federal, state and local agencies. The goal of the initiative is to proactively fight and reduce violent crime across the Greater Houston area by targeting the region’s most violent offenders, augmenting investigative and prosecutorial efforts, and enhancing training, public awareness and education.
Established in 2004, the United States Attorney’s office in Houston formed the HTRA to combine resources with federal, state and local law enforcement agencies and prosecutors, as well as non-governmental service organizations to target human traffickers while providing necessary services to those that the traffickers victimized. Since its inception, HTRA has been recognized as a national model in identifying and assisting victims of human trafficking and prosecuting those engaged in trafficking offenses. In 2016, the Human Trafficking Rescue Alliance received $1.5 million in federal funds from the Bureau of Justice Assistance and the Office for Victims of Crime through the Enhanced Collaborative Model Anti-Human Trafficking Task Force Program, which provides funding to investigate and prosecute cases of human trafficking and provide services to victims.
Assistant U.S. Attorney Adam Goldman is prosecuting the case.
An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.
7 November 2017
Westport Resident Sentenced to 4 Years in Prison for Stealing Almost $1 Million from His EmployerRead the Press Release
John H. Durham, United States Attorney for the District of Connecticut, announced that CLAUDE CARNAHAN, 54, of Westport, was sentenced today by U.S. District Judge Stefan R. Underhill in Bridgeport to 48 months of imprisonment, followed by three years of supervised release, for embezzling more than $984,000 from his employer.
According to court documents and statements made in court, from approximately 2008 until approximately 2014, while serving as the regional controller for Nations Roof LLC, CARNAHAN embezzled from the company by issuing company checks made payable to credit card companies with which he had personal accounts. He then engaged in a sophisticated scheme to cover up his fraud by entering checks on company ledgers as being in payment of obligations to legitimate vendors, failing to post checks to the general ledger, removing copies of the checks from company bank statements so that anyone reviewing the statements would not see checks going to credit card companies, and entering invoices into the system but then voiding them after they were paid.
CARNAHAN stole $984,057.09 from Nations Roof during the approximately six-year period.
Judge Underhill ordered CARNAHAN to pay full restitution to Nations Roof.
On May 15, 2017, CARNAHAN pleaded guilty to one count of mail fraud.
CARNAHAN, who is released on a $100,000 bond, was ordered to report to prison on January 10, 2018.
This matter was investigated by the Federal Bureau of Investigation and the Greenwich Police Department. The case is being prosecuted by Assistant U.S. Attorney Susan L. Wines.
West Palm Beach Man Sentenced for the Distribution of Heroin and Fentanyl Resulting in DeathRead the Press Release
A Palm Beach County resident was sentenced to 102 months in prison for distributing heroin laced with fentanyl resulting in the death of a 24 year-old man.
Benjamin G. Greenberg, Acting United States Attorney for the Southern District of Florida, Adolphus P. Wright, Special Agent in Charge, Drug Enforcement Administration (DEA), Ric Bradshaw, Sheriff, Palm Beach County Sheriff’s Office (PBSO), and Sarah J. Mooney, Chief, West Palm Beach Police Department (WPBPD), made the announcement.
Travis Reshard Preston, 38, of Palm Beach County was found guilty of five counts of distributing heroin to an undercover officer in August of 2017. Preston was sentenced to 102 months’ imprisonment followed by three years of supervised release, and a $500 special assessment, after the Government asked the Court to enhance his sentence based upon a prior distribution he made which resulted in the death of a 24 year-old New Jersey man.
Mr. Greenberg commended the investigative efforts of the DEA, PBSO, WPBPD, and the Palm Beach Narcotics Task Force for their assistance in this matter. This case is being prosecuted by Assistant U.S. Attorney Jennifer C. Nucci.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Weldon Man Sentenced for Drug and Firearm OffensesRead the Press Release
RALEIGH – The United States Attorney for the Eastern District of North Carolina Robert J. Higdon, Jr., announced that in federal court today, United States District Judge Terrence W. Boyle Howard, sentenced ERVIN RODELL HUGHES, 39, of Weldon, NC to 75 months of imprisonment followed by 3 years of supervised release.
HUGES was named in an Indictment filed on July 24, 2017. On August 3, 2017, HUGHES pled guilty to Possession with Intent to Distribute a Quantity of Cocaine and Possession of a Firearm in Furtherance of a Drug Trafficking Crime.
The investigation began in April 2016, after the Halifax County Sheriff’s Office (HCSO) received information from a confidential informant (CI) that HUGHES was selling cocaine from his residence in Weldon. Consequently, between April 13, 2016, and June 8, 2016, the HCSO utilized a CI to conduct two controlled purchases of cocaine totaling .73 gram from HUGHES at his home.
On June 10, 2016, the HCSO executed a search warrant at HUGHES’ residence. HUGHES was present during the search. Inside HUGHES’ bedroom closet, law enforcement found a loaded .380 Caliber handgun, 7.06 grams of cocaine, and two digital scales. Law enforcement also located a small-unspecified quantity of marijuana, a marijuana grinder, and other drug paraphernalia inside HUGHES’ home.
This case was part of the Project Safe Neighborhoods (PSN) initiative which encourages federal, state, and local agencies to cooperate in a unified “team effort” against gun crime, targeting repeat offenders who continually plague their communities.
The Halifax County Sheriff’s Office and the Bureau of Alcohol Tobacco Firearms and Explosives (ATF) conducted the criminal investigation of this case. Assistant United States Attorney S. Katherine Burnette handled the prosecution of this case for the government.