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11 September 2017
United States Files Civil Fraud Complaint Against Former Deutsche Bank Head of Subprime Mortgage TradingRead the Press Release
BROOKLYN – The United States today filed a civil complaint in federal court in Brooklyn, New York, against Paul Mangione, former Deutsche Bank head of subprime trading. In its complaint, the United States alleges that Mangione engaged in a fraudulent scheme to misrepresent the characteristics of loans backing two residential mortgage-backed securities (RMBS) that Deutsche Bank sold to investors that resulted in hundreds of millions of dollars in losses. This suit is brought pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and seeks an appropriate civil penalty.
The filing was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division, and Rene Febles, Deputy Inspector General for Investigations for the Federal Housing Finance Agency Office of the Inspector General.
As alleged in the complaint, Mangione engaged in a fraudulent scheme to sell ACE 2007-HE4 (“HE4”) -- a $ 1 billion security -- and ACE 2007-HE5 (“HE5”) -- a $400 million security -- by misleading investors about the quality of the loans backing the securitizations. The complaint further alleges that Mangione also misled investors about the origination practices of Deutsche Bank’s wholly-owned subsidiary, DB Home Lending LLC (DB Home) (f/k/a Chapel Funding, LLC), which was the primary originator of loans included in the deals. Mangione approved offering documents for HE4 and HE5 even though he knew they misrepresented key characteristics of the loans, including compliance with lending guidelines, borrowers’ ability to pay, borrowers’ fraud and appraisal accuracy.
The HE4 and HE5 offering documents also falsely represented that DB Home had “developed internal underwriting guidelines that it believe[d] generated quality loans” and that DB Home had instituted a quality control process that “monitor[ed] loan production with the overall goal of improving the quality of loan production,” among numerous other representations designed to instill in investors trust in DB Home’s underwriting processes. As alleged in the complaint, Mangione knew that these statements were false.
“The defendant fraudulently induced investors, including pension plans, religious organizations, financial institutions and government-sponsored entities, to name only a few, to invest nearly a billion and a half dollars in HE4 and HE5 RMBS, and caused them to suffer extraordinary losses as a result,” stated Acting United States Attorney Rohde. “We will hold accountable those who seek to deceive the investing public through fraud and misrepresentation.”
“The government’s complaint alleges that Mr. Mangione knew that certain of Deutsche Bank’s RMBS contained unsound mortgages that did not meet the credit or appraisal standards that the bank represented,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “By allegedly misleading investors about the riskiness of these securities, Mr. Mangione prioritized his and his employer’s bottom line over principles of honesty and fair dealing. The Department of Justice will continue to pursue those who engage in fraud as a way to conduct business.”
“As alleged in today’s filing, this individual knowingly took steps during the lead up to the financial crisis to sell defective mortgage loans while hiding the poor quality of the loans from investors,” stated Deputy Inspector General for Investigations Febles, “This conduct was deliberately fraudulent and resulted in significant losses for the investors. We are committed to working with the U.S. Department of Justice and the U.S. Attorney’s Office for the Eastern District of New York to hold accountable those who engaged in fraud in the secondary market for mortgages.”
In January 2017, the Department of Justice settled a related RMBS matter with Deutsche Bank.
The United States’ case is being handled by Assistant United States Attorneys Edward K. Newman and Ryan M. Wilson. Ms. Rohde thanked the Office of the Inspector General for the Federal Housing Finance Administration for its assistance in conducting the investigation in this matter.
The Defendant:
PAUL MANGIONE
Residence: Scarsdale, New York
E.D.N.Y. Docket No. 17-CV-5305 (NGG)
Download Mangione Complaint
United States Files Civil Fraud Complaint Against Former Deutsche Bank Head of Subprime Mortgage TradingRead the Press Release
The United States today filed a civil complaint in federal court in Brooklyn, New York, against Paul Mangione, former Deutsche Bank head of subprime trading. In its complaint, the United States alleges that Mangione engaged in a fraudulent scheme to misrepresent the characteristics of loans backing two residential mortgage-backed securities (RMBS) that Deutsche Bank sold to investors that resulted in hundreds of millions of dollars in losses. This suit is brought pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and seeks an appropriate civil penalty.
As alleged in the complaint, Mangione engaged in a fraudulent scheme to sell ACE 2007-HE4 (HE4) -- a $ 1 billion security -- and ACE 2007-HE5 (HE5) -- a $400 million security -- by misleading investors about the quality of the loans backing the securitizations. The complaint further alleges that Mangione also misled investors about the origination practices of Deutsche Bank’s wholly-owned subsidiary, DB Home Lending LLC (DB Home) (f/k/a Chapel Funding LLC), which was the primary originator of loans included in the deals. Mangione approved offering documents for HE4 and HE5 even though he knew they misrepresented key characteristics of the loans, including compliance with lending guidelines, borrowers’ ability to pay, borrowers’ fraud and appraisal accuracy.
The HE4 and HE5 offering documents also falsely represented that DB Home had “developed internal underwriting guidelines that it believe[d] generated quality loans” and that DB Home had instituted a quality control process that “monitor[ed] loan production with the overall goal of improving the quality of loan production,” among numerous other representations designed to instill in investors trust in DB Home’s underwriting processes. As alleged in the complaint, Mangione knew that these statements were false.
“The defendant fraudulently induced investors, including pension plans, religious organizations, financial institutions and government-sponsored entities, to name only a few, to invest nearly a billion and a half dollars in HE4 and HE5 RMBS, and caused them to suffer extraordinary losses as a result,” stated Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York. “We will hold accountable those who seek to deceive the investing public through fraud and misrepresentation.”
“The government’s complaint alleges that Mr. Mangione knew that certain of Deutsche Bank’s RMBS contained unsound mortgages that did not meet the credit or appraisal standards that the bank represented,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “By allegedly misleading investors about the riskiness of these securities, Mr. Mangione prioritized his and his employer’s bottom line over principles of honesty and fair dealing. The Department of Justice will continue to pursue those who engage in fraud as a way to conduct business.”
“As alleged in today’s filing, this individual knowingly took steps during the lead up to the financial crisis to sell defective mortgage loans while hiding the poor quality of the loans from investors,” said Deputy Inspector General for Investigations Rene Febles for the Federal Housing Finance Agency Office of the Inspector General. “This conduct was deliberately fraudulent and resulted in significant losses for the investors. We are committed to working with the U.S. Department of Justice and the U.S. Attorney’s Office for the Eastern District of New York to hold accountable those who engaged in fraud in the secondary market for mortgages.”
In January 2017, the Department of Justice settled a related RMBS matter with Deutsche Bank.
The United States’ case is being handled by Assistant U.S. Attorneys Edward K. Newman and Ryan M. Wilson. Acting U.S. Attorney Bridget M. Rohde and Acting Assistant Attorney General Readler thanked the Office of the Inspector General for the Federal Housing Finance Administration for its assistance in conducting the investigation in this matter.
The Case number is E.D.N.Y. Docket No. 17-CV-5305 (NGG).
U.S. Postal Service Mail Carrier Convicted in Stolen Identity Tax Refund SchemeRead the Press Release
A federal jury sitting in Columbus, Georgia returned a guilty verdict against a U.S. postal worker for his role in a stolen identity refund fraud conspiracy, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney G. F. Peterman III for the Middle District of Georgia.
According to evidence presented at trial, Harold Coley, 52, worked as a mail carrier for the U.S. Postal Service and his postal route was in Columbus, Georgia. In 2012, Coley was recruited by Keshia Lanier to participate in stolen identity tax refund conspiracy. Coley collected addresses on his route, including many that did not exist or related to vacant buildings, and provided them to Lanier and others for the purpose of filing fraudulent tax returns with the Internal Revenue Service (IRS). Lanier obtained many of the stolen identities from Tamika Floyd who worked for the Alabama Department of Public Health. The stolen identities primarily belonged to 16 and 17 year-olds.
Lanier and others directed the IRS to mail the tax refund checks to the addresses Coley provided. In exchange for cash, Coley intercepted the fraudulently obtained refund checks and provided them to Lanier and others. In total, Coley’s co-conspirators directed over 1,600 refund checks claiming more than $2.5 million to addresses on his postal route. Lanier and Floyd were previously sentenced to 15 years and more than seven years in prison for their roles in the scheme.
U.S. District Court Judge Clay D. Land scheduled sentencing for Dec. 19. Coley faces a statutory maximum sentence of 10 years in prison for the conspiracy count, 20 years in prison for each count of mail fraud and 5 years in prison for each count of embezzlement of the mail. Coley also faces a period of supervised release, restitution, forfeiture and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Peterman commended special agents of IRS Criminal Investigation and the U.S. Postal Service Office of Inspector General, who conducted the investigation, and Trial Attorneys Michael C. Boteler and William Montague of the Tax Division, who prosecuted the case, with assistance from the U.S. Attorney’s Office for the Middle District of Georgia.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Trafficking Synthetic Cannabinoids on Menominee Indian Reservation Leads to Prison Sentences for Three MenRead the Press Release
Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin, announced recent sentences after convictions for a group of men who were part of a drug trafficking organization operating on the Menominee Indian Reservation. The three codefendants entered guilty pleas in June 2017. The sentences were imposed by Chief United States District Judge William C. Griesbach.
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On August 15, 2017, Austin A. Kaquatosh (age: 24) received a sentence of 24 months’ imprisonment to be followed by 60 months on supervised release.
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On August 30, 2017, Mitchell E. Oshkosh (age: 31) received a sentence of 24 months’ imprisonment to be followed by 48 months on supervised release.
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On September 8, 2017, Woody Nahquaddy (age: 31) received a sentence of 42 months’ imprisonment to be followed by 60 months on supervised release.
The investigation revealed that the three defendants conspired amongst themselves and with others, and distributed a large quantity of synthetic cannabinoids referred to locally as “Ish” in and around the Menominee Indian Reservation. The group obtained synthetic drugs from Milwaukee several times a week, purchasing as much as two pounds per trip over nearly a year. Each trip involved spending approximately $2,000 - $2,500, after which the synthetic drugs were repackaged for distribution from designated residences in Keshena and Neopit on the Menominee Indian Reservation.
Abuse of synthetic cannabinoids on the Menominee Indian Reservation became a public health crisis in the same period of time, with numerous calls for medical service to assist users who had adverse reactions to synthetic drugs like those distributed by the defendants. Examples of symptoms suffered from those who abused the substances included seizures, extremely high blood pressure, high body temperature, catatonia, and disorientation.
In sentencing the three defendants, Chief Judge Griesbach noted the serious nature of the offense, which involved the sale of a substance that caused great harm to the Menominee Indian community. Chief Judge Griesbach indicated his intent to deter the defendants and anyone else from preying on the weaknesses of others in the community. At Nahquaddy’s sentencing hearing, Chief Judge Griesbach noted the roles each man played among a larger group, observing that Nahquaddy was “the major player” in the case.
The case was investigated by the Menominee Tribal Police Department, the Wisconsin Department of Justice - Division of Criminal Investigation (Native American Drug and Gang Initiative), the Wisconsin State Crime Laboratory, and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Andrew J. Maier.
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Topeka Man Sentenced for Two Armed RobberiesRead the Press Release
TOPEKA, KAN. - A Topeka man was sentenced Monday to 90 months in federal prison for two commercial robberies, including one in which he fired a shot into the ceiling, U.S. Attorney Tom Beall said.
Gary L. Gillom, 30, Topeka, Kan., pleaded guilty two counts of armed robbery. In his plea, he admitted that on June 26, 2016, he brandished a firearm while robbing the Arby’s restaurant at 1187 Southwest Gage in Topeka. He ordered restaurant employees to hurry with the cash and fired a round into the ceiling of the restaurant.
Gillom also admitted that on June 27, 2016, he brandished a firearm when he robbed the Long John Silver’s restaurant at 2746 Southwest Fairlawn in Topeka.
Gillom was arrested on June 29, 2016, after investigators identified a car used in the robberies.
Co-defendant Darien E. Fulton, 25, Topeka, Kan., was sentenced to six years in federal prison.
Beall commended the Topeka Police Department, the Kansas Highway Patrol, the FBI and Assistant U.S. Attorney Jared Maag for their work on the case.
Tax Fraud Conspirator Sentenced to PrisonRead the Press Release
Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin, announced that on September 7, 2017, LaTanya Ghee, (age: 51) of Milwaukee, was sentenced to one year in prison, followed by three years of supervised release. On April 18, 2017, Ghee pleaded guilty to conspiring to defraud the Internal Revenue Service, in violation of Title 18, United States Code, Section 286. Ghee was also ordered to pay restitution of $84,734 to the government.
According to the plea agreement, beginning in approximately 2011, and continuing until at least May 2012, Ghee conspired with others to defraud the Internal Revenue Service through a scheme to obtain false federal income tax refunds. To accomplish this, Ghee worked with others to file federal income tax returns with false wage and tax-withholding amounts. Using the information obtained and provided by Ghee, the co-conspirators prepared and filed tax returns that falsely claimed wage and tax-withholding amounts from Ghee’s businesses, Wisconsin Mortgage Real Estate Resources, Ghee’s Mortgages, and others. In reality, the individuals had either lesser or no wages or tax-withholding amounts from those businesses.
Based on her role in the conspiracy, Ghee received payment from the fraudulently obtained tax refunds. As a result of the conspiracy, Ghee caused the filing of more than a dozen false income tax returns with the IRS seeking more than $100,000 in fraudulent income tax refunds.
This case was investigated by IRS Criminal Investigation. The case was prosecuted by Assistant United States Attorney Matthew D. Krueger.
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Springfield Business Owner Sentenced for Wire Fraud, False Tax ReturnRead the Press Release
SPRINGFIELD, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced today that a Springfield, Mo., business owner has been sentenced in federal court for a wire fraud scheme in which she embezzled more than $800,000 from her clients, and for failing to pay more than $170,000 in taxes on any of the embezzled income.
Rebecca Pargeon, 58, of Springfield, was sentenced by U.S. District Judge M. Douglas Harpool on Thursday, Sept. 7, 2017, to four years in federal prison without parole. The court also ordered Pargeon to pay $948,273 in restitution to her victims.
On April 10, 2017, Pargeon pleaded guilty to wire fraud and to filing a false tax return.
Pargeon owned and operated three different medical payment collection businesses – Pargeon Medical Services, LLC, Kids First Pediatric Billing, LLC, and Surgical Billing Solutions, LLC. Pargeon was hired by medical practitioners throughout the country to collect monies owed by their patients and insurance companies as payment for medical services provided. Upon collecting monies owed to a medical practitioner, Pargeon was contractually obligated to deposit the checks she received into the practitioner’s bank account. At the end of each month, the practitioners would pay her a percentage of the monies her businesses collected on their behalf.
Pargeon embezzled $813,780 from her clients from Jan. 11, 2012, to April 26, 2016. Pargeon took payments she collected, which were made payable to the medical practitioners, and fraudulently deposited them into her business and personal bank accounts without the approval or authority of the medical practitioner. Pargeon did not have the authority to sign their names, endorse any of the checks, or deposit them into her business or personal bank accounts. Pargeon admitted that she fraudulently endorsed and deposited over 740 checks made payable to her medical practitioner clients.
Pargeon also admitted that she failed to report the embezzled income on her federal tax returns for 2012 through 2015. This resulted in a total tax loss to the government of $170,493, without penalty or interest. Pargeon, who prepared the tax returns herself utilizing the Turbo Tax computer tax program, specifically pleaded guilty to failing to report $232,929 in income received from the fraud scheme and earned from her businesses in 2012.
This case was prosecuted by Assistant U.S. Attorney Patrick Carney. It was investigated by the FBI and IRS-Criminal Investigation.
South Carolina Family Practice Chain, Its Co-Owner, and Its Laboratory Director Agree to Pay the United States $2 Million to Settle Alleged False Claims Act Violations for Illegal Medicare Referrals and Billing for Unnecessary Medical ServicesRead the Press Release
Family Medicine Centers of South Carolina LLC (FMC), has agreed to pay the United States $1.56 million, and FMC’s principal owner and former chief executive officer, Dr. Stephen F. Serbin, and its former Laboratory Director, Victoria Serbin, have agreed to pay $443,000 to resolve a False Claims Act lawsuit alleging that they submitted and caused the submission of false claims to the Medicare and TRICARE programs. FMC is a physician-owned chain of family medicine clinics located in and around Columbia, South Carolina, whose practices include Springwood Lake Family Practice, Woodhill Family Practice, Midtown Family Medicine, Saluda Pointe Family Medicine, Lake Murray Family Medicine, and the now closed Rice Creek Family Medicine.
The settlements announced today resolve allegations that FMC, as directed by Dr. Serbin, submitted claims to the Medicare Program that violated the physician self-referral prohibition, commonly known as the Stark Law, which is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives. The Stark Law forbids a clinic from billing Medicare for certain services ordered by physicians who have a financial relationship with the entity. In this case, the government alleged that the Stark Law was violated by FMC’s incentive compensation plan that paid FMC’s physicians a percentage of the value of laboratory and other diagnostic tests that they personally ordered through FMC, which FMC then billed to Medicare. Dr. Serbin, FMC’s co-owner and chief executive, allegedly initiated this program and reminded FMC’s physicians that they needed to order tests and other services through FMC in order to increase FMC’s profits and to ensure that their take-home pay remained in the upper level nationwide for family practice doctors.
“Financial arrangements that compensate physicians for referrals can sometimes encourage physicians to make decisions based on financial gain rather than patient needs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs and drive up the cost of healthcare for taxpayers.”
The settlements also resolve allegations that FMC, Dr. Serbin, and Victoria Serbin submitted and caused the submission of false claims to Medicare and TRICARE for medically unnecessary laboratory services by creating custom laboratory panels comprised of diagnostic tests not appropriate for routine measurement, performing these tests without an order from the treating physician, implementing standing orders to assure these custom panels were performed with defined frequency and not in reaction to clinical need, and programming FMC’s billing software to systematically change certain billing codes for laboratory tests to ensure payment by Medicare.
“Healthcare decisions should be made by physicians based on medical science and not with regard to maximizing the doctor’s own income,” said U.S. Attorney Beth Drake for the District of South Carolina. “Our goal in bringing this case was not only to recover money for improper healthcare claims, but also to deter similar conduct and promote health care affordability.”
The allegations settled today arose from a lawsuit filed by a physician formerly employed by FMC, Dr. Catherine A. Schaefer, under the whistleblower provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. Dr. Schaefer will receive $340,510.
As part of the settlement announced today, FMC and the Serbins have also agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General (HHS-OIG), which ensures the Serbins will have no management role in FMC for five years and obligates FMC to undertake other substantial internal compliance reforms, including hiring an independent review organization to conduct annual claims reviews.
“Patients and taxpayers should expect that doctors’ best medical judgement is not clouded by improper financial incentives,” said Special Agent in Charge Derrick L. Jackson for HHS-OIG. “We will work tirelessly with our law enforcement partners to preserve government health funds by bringing violators to justice.”
“We applaud the Department of Justice and the U.S. Attorney for the District of South Carolina for holding this provider accountable for its actions,” said Deputy Director Guy Kiyokawa of the Defense Health Agency. “The provider’s actions impacted American service members, veterans and their families, diverting valuable resources through unnecessary tests. The Defense Health Agency continues to work closely with the Justice Department and other state and federal agencies to investigate all those who participated in these nefarious, fraudulent practices.”
This case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of South Carolina, HHS-OIG and the Defense Health Agency.
The litigation and settlement of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
The claims resolved by this settlement are allegations only, and there has been no determination of liability. The case is captioned United States ex rel. Schaefer v. Family Medicine Centers of South Carolina, LLC, Stephen F. Serbin, M.D. and Victoria Serbin, No. 3:14-cv-342-MBS (D.S.C.).
Seven Individuals Arrested for Firearms TraffickingRead the Press Release
SAN JUAN, Puerto Rico – On August 30, 2017, a federal grand jury returned a three-count indictment against seven individuals for conspiracy to engage in firearms trafficking without a license, announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the District of Puerto Rico. The agencies in charge of the investigation are the Bureau of Alcohol, Tobbaco, Firearms and Explosives (ATF), the US Postal Inspector Service and the Puerto Rico Police Department.
The object of the conspiracy was to purchase firearms in the states of Georgia and Florida, transport them to Puerto Rico, and sell them to other individuals in Puerto Rico, for profit. The defendants purchased firearms and sent them to Puerto Rico using the mail. Other defendants would receive, store and deliver the firearms in exchange for money. During the course of the investigation law enforcement agents seized numerous rifles and handguns that this organization shipped to Puerto Rico.
The defendants are: Jeffrie Rivera-Santiago, aka “LaJ/Menor J;” Luis R. Martínez-Rivera, aka “Luis Ra;” Osvaldo L. Colón-Paulok Keyshla M. Disdier-Velázquez, aka “Keilita/Keyla;” Julio C. Morales-Vicente, aka “Pi/Junito Pi;” Glorianne T. López-Cortez; and Julissa Carrasquillo-Baldomero.
Assistant U.S. Attorney Victor O. Acevedo-Hernández is in charge of the prosecution of the case. If convicted, the defendants face up to five years in prison and a fine of up to $250,000. An indictment contains only charges and is not evidence of guilt. Defendants are presumed to be innocent unless and until proven guilty.
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Selma Man Sentenced to Federal Prison for Production of Child PornographyRead the Press Release
In San Antonio this morning, 29-year-old Vicente Rodriguez Hinojos, III, was sentenced to 585 months in federal prison for production of child pornography announced United States Attorney Richard Durbin, Jr. and FBI Special Agent in Charge Christopher Combs, San Antonio.
In addition to the prison term, Senior United States District Judge David A. Ezra ordered that Hinojos pay two of his victims $25,000 each in restitution and be placed on supervised release for a period of ten years after completing his prison term. Hinojos has remained in federal custody since his arrest on May 27, 2016.
On April 19, 2017, Hinojos pleaded guilty to two counts of production of child pornography. By pleading guilty, Hinojos admitted that between 2012 and May 12, 2016, he produced visual depictions of sexually explicit conduct involving a minor. According to court records, two of Hinojos’ victims were as young as two years old.
Agents from the FBI’s San Antonio Division executed a search warrant for the defendant’s residence on May 26, 2016, where they seized the defendant’s computer, USB thumbdrives, Apple iPhone and an HTC cellular phone. A subsequent forensics evaluation of one of Hinojos’ phones revealed the presence of child pornography.
The Federal Bureau of Investigation conducted this investigation. Assistant United States Attorney Tracy Thompson prosecuted this case on behalf of the Government.Self-Proclaimed “Grand Sheik” of Moorish Temple Sentenced to Nearly 6 Years in Prison for Scheming to Defraud the IRS out of $3.2 MillionRead the Press Release
CHICAGO — The self-proclaimed “Grand Sheik” of a Moorish temple in Chicago has been sentenced to nearly six years in federal prison for causing the Internal Revenue Service to issue more than $3.2 million in fraudulent tax returns.
MARCEL A. WALTON filed three fraudulent returns seeking $900,000 in refunds, causing the IRS to issue him more than $300,000. Walton also recruited individuals, including the elderly and homeless, to join a Chicago branch of the Moorish Science Temple of America and file similarly fraudulent returns on the false pretense that temple members were entitled to remuneration from the United States government for its purported use of Moorish lands. Walton claimed to be the “Grand Sheik” of the Chicago branch of the temple. At least 17 individuals filed nearly 50 returns seeking more than $15 million in refunds, ultimately obtaining more than $3.2 million from the IRS.
Walton, 47, of Chicago, pleaded guilty last year to one count of mail fraud. U.S. District Judge Thomas M. Durkin on Friday imposed the 68-month sentence in federal court in Chicago.
The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Gabriel L. Grchan, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
“Walton exploited a vulnerability in our tax system and filed blatantly false trust tax returns,” Assistant United States Attorney Carol A. Bell argued during the sentencing hearing. “He used his position to recruit individuals to further his tax scheme.”
In 2010 and 2011, Walton told numerous individuals that, if they became members of the temple, they could claim the money purportedly owed to the Moors by the federal government. Walton told the potential recruits that the Moors were the original discoverers of America and that a Moorish prophet was given a deed to lands making up North America. Walton executed the scheme by preparing and causing the preparation of trust or estate tax returns for himself and the others that contained false information regarding the purported trust’s income, fiduciary fees, exemptions and federal tax withheld.
Walton stood to gain from the returns filed by his temple members because he instructed them to pay him ten percent of the money they received from the IRS through the filing of the fraudulent returns. One of the temple members paid Walton $90,000 after receiving $900,000 in refunds from the IRS in 2010.
Scranton Woman Pleads Guilty to Making Straw Purchases of FirearmsRead the Press Release
SCRANTON - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Crystal Muentes, age 34, of Scranton, Pennsylvania, pleaded guilty on September 7, 2017, before United States District Court Judge Malachy E. Mannion, to a conspiracy to make false statements to a federally licensed firearms dealer.
According to United States Attorney Bruce D. Brandler, Muentes admitted that she provided false information regarding the purchase of two firearms from Dave’s Gun Shop, in Drums, Luzerne County, on June 1, 2016 and June 17, 2016, and the purchase of a firearm from Ed’s Sports Shop in Tamaqua, Schuylkill County, on June 17, 2016.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the United States Postal Inspection Service, and the Scranton Police Department. Assistant U.S. Attorney Robert J. O’Hara is prosecuting the case.
This case was brought as part of the Violent Crime Reduction Partnership (“VCRP”), a district wide initiative to combat the spread of violent crime in the Middle District of Pennsylvania. Led by the United States Attorney’s Office, the VCRP consists of federal, state and local law enforcement agencies whose mission is to locate, apprehend, and prosecute individuals who commit violent crimes with firearms.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
A sentencing date for Muentes has not yet been scheduled.
The maximum penalty under federal law for these offenses is five years’ imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Schenectady Men Sentenced for Heroin and Crack Cocaine ConspiracyRead the Press Release
ALBANY, NEW YORK – William Hilts, a/k/a “True,” age 53, and Elijah Jones, age 31, both of Schenectady, New York, were sentenced today for conspiring to distribute heroin and crack cocaine.
Senior United States District Judge Thomas J. McAvoy sentenced Hilts to 180 months in prison and 8 years of post-imprisonment supervised release. He sentenced Jones to 92 months in prison and 4 years of supervised release.
The announcement was made by Acting United States Attorney Grant C. Jaquith and Special Agent in Charge James J. Hunt, New York Division, U.S. Drug Enforcement Administration (DEA).
Jones, Hilts’s nephew and conspirator, pled guilty in May 2017 to conspiracy to distribute heroin and crack cocaine.
Following a week-long jury trial in May 2017, Hilts was convicted of conspiring to distribute heroin and crack, and other, related drug crimes. The evidence at trial demonstrated that Hilts supervised the distribution of crack cocaine and heroin out of a residence in Schenectady, New York, adjacent to a children’s daycare center, and often in direct view of young children. Hilts, who has numerous felony convictions for drug trafficking, began selling heroin and crack just weeks after being released from state prison for a 2013 felony drug offense.
This case was investigated by the DEA and the Schenectady County Sheriff’s Department, and was prosecuted by Assistant United States Attorneys Wayne A. Myers and Joseph A. Giovannetti.
Roslindale Man Pleads Guilty to Distributing CocaineRead the Press Release
BOSTON – A Roslindale man pleaded guilty today in federal court in Boston to his role in a cocaine distribution operation on the South Shore.
Roberto Fonseca-Rivera, 46, pleaded guilty to one count of conspiracy to possess with intent to distribute and distribution of cocaine. U.S. District Court Judge Denise J. Casper scheduled sentencing for Dec. 6, 2017.
From late February 2016 until July 19, 2016, Fonseca-Rivera conspired with co-defendant Angel Morales, 46, of Stoughton, and others, to distribute cocaine in Canton, Stoughton, Randolph, Quincy and Weymouth. Morales asked Fonseca-Rivera and another individual to receive packages containing cocaine that were being shipped from Puerto Rico to locations in Randolph and Canton, where Fonseca-Rivera had rented private mailboxes. Fonseca-Rivera received at least eight packages from Puerto Rico and delivered them to Morales, who paid Fonseca-Rivera for receiving the cocaine. Morales and Fonseca-Rivera then distributed the cocaine to other individuals.
Morales is scheduled to plead guilty on Sept. 14, 2017.
The charging statute provides a sentence of no greater than 20 years in prison, a mandatory minimum of three years and up to a lifetime of supervised release and a fine of $1 million. 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 Weinreb; Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Colonel Richard D. McKeon, Superintendent, Massachusetts State Police; and Stoughton Police Chief Donna McNamara made the announcement today. Assistant U.S. Attorneys James E. Arnold and Craig E. Estes of Weinreb’s Narcotics and Money Laundering Unit are prosecuting the case.
Riverside County Woman Pleads Guilty to Marijuana Cultivation in the Sequoia National ForestRead the Press Release
FRESNO, Calif. —Coral Herrera, 21, of Perris, pleaded guilty today to conspiring to manufacture, distribute and possess with intent to distribute, and manufacturing marijuana in connection with two separate large-scale marijuana cultivation operations in Kern County in the Sequoia National Forest, U.S. Attorney Phillip A. Talbert announced.
Herrera also agreed to pay restitution to the U.S. Forest Service for the damage to public land and natural resources caused by the marijuana cultivation activities.
According to court documents, Herrera was linked to grow sites in the Lucas Creek drainage and an area known as the Box 6 site after a four-month investigation. The investigation revealed that she was supplying material, equipment, and personnel to the grow sites, which consisted of 10,396 marijuana plants, and that she was also responsible for transporting co-defendants Abel Toledo-Villa, 34, and Alfredo Cardenas-Suastegui, 56, both natives and citizens of Mexico, away from the Box 6 grow site after it was raided. The marijuana cultivation operations caused extensive damage to the land and natural resources. Harmful pesticides and large amounts of trash were found at both sites. Native trees and vegetation were also removed to make room for the marijuana plants.
This case is the product of an investigation by the U.S. Forest Service, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Southern Tri‑County High Intensity Drug Trafficking Area (HIDTA) task force, California Department of Justice’s Campaign Against Marijuana Planting (CAMP), California Department of Fish and Wildlife, Kern County Sheriff’s Office, Riverside County Sheriff’s Department, Fontana Police Department, and Victorville Police Department. Assistant U.S. Attorney Karen Escobar is prosecuting the case.
Herrera is scheduled for sentencing on December 4, 2017, by U.S. District Judge Lawrence J. O’Neill. She faces a maximum penalty of 20 years in prison and a fine of $1 million. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. Toledo-Villa previously entered a guilty plea and was sentenced to five years in prison. Charges against Cardenas-Suastegui and Maldonado-Soto are still pending. The charges are only allegations; Cardenas-Suastegui and Maldonado-Soto are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Reno Man Sentenced to Five Years in Prison for Receipt of Child PornographyRead the Press Release
RENO, Nev. – A Reno resident was sentenced Monday to 60 months in prison for receipt of approximately 3,500 images and videos depicting child pornography, announced Acting U.S. Attorney Steven W. Myhre for the District of Nevada.
Scott Russell, 36, who pleaded guilty in June 2017 to one count of receipt of child pornography, was sentenced by U.S. District Judge Larry R. Hicks. In addition to the prison term, Russell was sentenced to 30 years of supervised release and is required to register as a sex offender under the Sex Offender Registration Notification Act.
According to his plea agreement, between April 27, 2015 and September 9, 2015, while conducting an online undercover operation, law enforcement identified a computer possessing and sharing child pornography using the peer-to-peer file sharing program BitTorrent. During the execution of a search warrant, the defendant admitted to using file sharing software to search for and download child pornography. During a forensic examination of the defendant’s laptop computer and other electronic devices, law enforcement found approximately 3,370 images and 76 videos depicting child pornography including children as young as infants. In addition, over 8,000 images of child erotica was found on portable flash drives owned by the defendant.
The case was investigated by the Northern Nevada Internet Crimes Against Children Task Force, which includes the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI), the Nevada Attorney General’s Office, and the Washoe County Sheriff’s Office. The case was prosecuted by Assistant U.S. Attorney Shannon M. Bryant.
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 U.S. 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 exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood and for information about internet safety education, please visit www.justice.gov/psc.
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Previously Convicted Sex Offender from Long Beach Sentenced to 10 Years in Federal Prison for Attempted Sex Trafficking of a MinorRead the Press Release
SANTA ANA, California – A convicted sex offender from Long Beach was sentenced this morning to 10 years in federal prison after pleading guilty to attempted sex trafficking of a child for responding to an online advertisement that offered sex with a 15-year-old girl in exchange for $200.
Victor James Sporman, 47, was sentenced by United States District Judge James V. Selna. Once he completes the prison sentence, Sporman will be on supervised release for the rest of his life.
The case against Sporman is the result of an undercover operation by U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI). Authorities were conducting an anti-sex trafficking operation in Long Beach and posted an advertisement on the Craigslist website that was designed to attract individuals interested in engaging in sex acts with minors.
On October 26, 2016 Sporman responded to the advertisement via e-mail and subsequently engaged in a series of text messages with an undercover agent he thought was a 15-year-old girl, according to court documents. Sporman agreed to pay $200 to engage in sex with the “girl.” Sporman repeatedly texted photographs of himself, money and his genitals. In preparation for the encounter on December 6, Sporman purchased condoms. When Sporman arrived at the hotel to have the sexual encounter with the girl, Sporman had approximately $200 in his possession, as well as two condoms. He was arrested at the scene.
Sporman engaged in nearly identical conduct in 2008 when he was caught in an undercover sting attempting to have sex with a 13-year-old girl.
Sporman “was given every opportunity to address his sexual attraction to children, and he did nothing,” prosecutors wrote in a sentencing memorandum. “Instead, he continued to troll the internet looking for additional victims.”
The case against Sporman is the product on an investigation by HSI’s Los Angeles Human Smuggling and Trafficking Group, which received substantial assistance from the Long Beach Police Department.
The case was prosecuted by Assistant United States Attorney Lana Morton-Owens of the Violent and Organized Crime Section. Assistant United States Attorney Terrence Mann of the Santa Ana Branch Office handled today’s sentencing hearing.
Pikesville Man Pleads Guilty in Federal Court to 2009 MurderRead the Press Release
FOR IMMEDIATE RELEASE Contact ELIZABETH MORSE
www.justice.gov/usao/md at (410) 209-4855
Baltimore, Maryland – On September 8, 2017, Stanislav “Steven” Yelizarov, age 27, of Pikesville, Maryland, pleaded guilty in U.S. District Court to one count of Use, Carry and Discharge of a Firearm During and in Relation to a Crime of Violence Causing the Death of Another. The victim of the 2009 murder was Wayne Ruder.
The guilty plea was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Commissioner Kevin Davis of the Baltimore City Police Department; and Chief Terrence B. Sheridan of the Baltimore County Police.
A summary of the facts that the government would prove beyond a reasonable doubt at trial noted that Yelizarov was a serial burglar of homes in Baltimore County. The victim, Wayne Ruder, owned a jewelry store on Reisterstown Road in Baltimore City. Ruder’s business bought and sold precious metals and stones, and engaged in business throughout Maryland, Washington D.C., Virginia and Pennsylvania. In March 2009, Yelizarov burglarized the home of an acquaintance and during the course of that burglary, stole a large diamond engagement ring, valued at more than $22,000. Yelizarov sold the diamond to Ruder for approximately $9,000 cash. Yelizarov later came to believe that the diamond was worth significantly more and that Ruder had cheated him.
In April 2009, Yelizarov burglarized the home of another acquaintance, and stole a number of firearms and accessories, including a Llama handgun that was equipped with a suppressor and had been converted to fire .22 caliber ammunition. Following the burglary, Yelizarov searched for and purchased .22 subsonic ammunition.
In addition, the government was prepared to prove that in early December 2009, Yelizarov told Ruder that he had people from New York who were looking to sell a large amount of gold. Yelizarov and Ruder communicated frequently over the next days and weeks regarding the transaction, which Ruder reported was going to involve over $30,000 worth of gold. On December 25, 2009, Ruder agreed to meet Yelizarov at his store the following day. On December 26, 2009, after a number of phone calls between Yelizarov and Ruder, Yelizarov drove to the store and went in the front door. Using the stolen Llama equipped with a suppressor and loaded with .22-caliber subsonic ammunition, Yelizarov shot Ruder at the store entrance, and then continued to shoot him as he fled to the back of the store. In total, Yelizarov shot Ruder 15 times, including 3 shots to his back and 10 shots to his head. After killing Ruder, Yelizarov took Ruder’s bank bag, which typically contained between $15,000 and $30,000 of cash.
Subsequent to the robbery and murder, Yelizarov dismantled and disposed of the Llama handgun in a quarry near Yelizarov’s residence.
Yelizarov faces a maximum sentence of life in prison. U.S. District Judge Marvin J. Garbis has scheduled sentencing for December 21, 2017 at 10 a.m.
Acting United States Attorney Stephen M. Schenning commended the FBI, Baltimore City Police and Baltimore County Police for their work in the investigation. Mr. Schenning thanked Assistant U.S. Attorney Aaron Zelinsky who assisted the investigation and U.S. Attorneys Paul Budlow and Daniel Gardner who are prosecuting the case.
Owner of O.C. Pet Products Company Pleads Guilty to Selling Pet Meds Without Prescriptions, Some of Which Were Not Approved for U.S. SaleRead the Press Release
LOS ANGELES – A Laguna Hills man pleaded guilty today to charges of selling misbranded veterinary medications without a prescription, some of which were not approved for use in the United States.
Sean Gerson, 49, the owner Vaccination Services, Inc. in Lake Forest, pleaded guilty in a scheme that netted him at least $2.5 million over the past 15 years.
Gerson pleaded guilty to smuggling, introduction into interstate commerce misbranded animal prescription drugs with the intent to defraud and mislead the United States Food and Drug Administration, and a misdemeanor charge of distribution and sale of an unregistered pesticide. Vaccination Services also pleaded guilty today to the same federal charges.
The misbranded drugs – meaning they were sold without a valid prescription from a veterinarian – were Comfortis, an anti-flea medication, and Ciprofloxacin, a powerful antibiotic commonly called “Cipro” that can be used in dogs and cats to treat skin, respiratory and urinary tract infections.
According to court documents, Gerson sold Comfortis that was designed for the South African market and was not approved for distribution in the United States. Federal law prohibits the importation and sale of veterinary medicines that have not been approved by the FDA and Environmental Protection Agency for use in this country.
Gerson used several websites – including fleastuff.com, mydoghasfleas.xyz and fleaandtickstuff.com – to market prescription animal products to buyers without valid prescriptions.
In a plea agreement filed in United States District Court, Gerson admitted that he “knowingly distributed, transported and sold the prescription animal drugs Comfortis and Ciprofloxacin in interstate commerce” to an undercover law enforcement officer in Missouri in August 2016. Gerson at the time knew that the drug had been smuggled into the United States “because the drugs were foreign-market branded and not approved by the U.S. FDA for entry into the United States.”
Gerson also admitted that he sold foreign market pesticides – animal flea and tick products not approved for sale and distribution in the United States – to an undercover law enforcement officer in Washington in June 2012.
Gerson pleaded guilty today before United States District Judge R. Gary Klausner, who is scheduled to sentence Gerson and his company on December 11.
In the plea agreement, prosecutors and Gerson have agreed that the appropriate sentence in this case is 30 months in federal prison and a fine of $200,000. The final sentence will be determined by Judge Klausner, and if the judge decides to deviate from the agreed-upon sentence both parties have the right to withdraw from the plea agreement and proceed to trial.
In addition to the prison sentence and criminal fine, Gerson has agreed to the entry of a $2.5 million forfeiture judgment which will require Gerson to forfeit the proceeds of his long-running scheme.
In its plea agreement, Vaccination Services has agreed to pay a $300,000 fine and to be placed on probation for a period of five years. This stipulated sentence is also subject to the approval of Judge Klausner.
Gerson was previously convicted of charges related to the illegal sale of pet medications and products. According to documents previously filed in the federal case in Los Angeles, Gerson pleaded guilty in Texas in 2014 to state charges of delivery of a dangerous drug, specifically a prescription drug called Clenbuterol.
In a related case, Judge Klausner in June ordered a South African veterinarian to pay a fine of $5,000 and forfeit to the United States $145,000 after pleading guilty to a charge of making false statements in relation to unapproved pet medications he shipped to Gerson. Craig Mostert sent the foreign-market drugs to Gerson, and significantly understated the value of the products in a series of shipments between 2008 and 2017.
The case against Gerson and Vaccination Services is the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations, the Food and Drug Administration’s Office of Criminal Investigations, and the Environmental Protection Agency.
This case is being prosecuted by Assistant United States Attorney Joseph O. Johns, Chief of the Environmental and Community Safety Crimes Section.
Orlean Man Charged with Bank FraudRead 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 Joseph Stevens, 53, of Olean, NY, was arrested and charged by criminal complaint with bank fraud. The charge carries a maximum penalty of 30 years in prison and a $1,000,000.
Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that according to the complaint, in August 2012, the defendant, a Certified Public Accountant (CPA), was hired by a business owner to handle all of the bookkeeping responsibilities for his business. Responsibilities included paying vendors, employee payroll, and personal and business tax return preparation. In order to perform the accounting duties, Stevens was given access to the business’ banking account information, which included the routing and account numbers for the business owner’s two business accounts at a Five Star Bank branch in Warsaw, NY.
Beginning in early 2016, the defendant began to notify the business owner that the business was not doing well financially. For instance, a $30,000.00 line of credit at Five Star Bank was maxed out without authorization. When questioned about the line of credit, Stevens told the business owner that the business was not generating enough revenue. Also, sometime in 2016, the business owner received a letter from the Internal Revenue Service stating that his 2015 taxes had not been paid. When the business owner questioned the defendant, Stevens again stated that the business was not generating enough revenue.
In September 2016, the business owner realized that monthly statements for the Five Star Bank accounts were no longer being received at the business owner’s office. On March 24, 2017, the business owner went to the bank branch to review the business accounts activity. The business owner discovered two recent checks, both made payable to "Joseph Stevens," with the business owner’s forged signature. The business owner informed the bank of the issue, and requested copies of all records related to the business accounts.
On April 4, 2017, the business owner received a telephone call from Five Star Bank and was told that someone was in the branch attempting to negotiate a $5,000.00 check drawn against the business owner's account. The business owner advised the bank that the $5,000.00 check was not authorized and to freeze the account. While still on the telephone with a bank representative, the business owner received a telephone call from the defendant stating that the business accounts were frozen.
According to the complaint, between September 2013, and April 2017, Stevens made approximately $470,000.00 in unauthorized withdrawals from the business owner’s accounts.
The defendant made an initial appearance before U.S. Magistrate Judge Jeremiah J. McCarthy and is being detained.
The criminal complaint is the result of an investigation by the Internal Revenue Service, Criminal Investigations Division, under the direction of James D. Robnett, Special Agent-in-Charge, New York Field Office, and the United States Postal Inspection Service, under the direction of Inspector-in-Charge Shelly Binkowski of the Boston Division.
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.
Omaha Man Indicted on Tax ChargesRead the Press Release
Acting United States Attorney Robert C. Stuart announced that Mark A. Harrell, age 34, of Omaha, Nebraska, was detained at his initial appearance today by Magistrate Judge Michael D. Nelson. Harrell was recently indicted by a federal grand jury on four counts of aiding and assisting in the preparation of false tax returns for the 2012 filing year. The penalty on each count is a maximum of 3 years’ imprisonment, a $250,000 fine, and three years of supervised release.
Harrell is charged with including fraudulent information as to the taxpayers’ wages, wage withholding and claims of American Opportunity Credit. It is alleged that by including the false information the taxpayers received a larger refund than they were entitled to receive.
The case was investigated by the Internal Revenue Service Criminal Investigation Unit.
New Cumberland Businessman Pleads Guilty to Filing False Tax ReturnRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced that Michael Powers, age 53, of New Cumberland, Pennsylvania, pleaded guilty today before Chief United States District Court Judge Christopher C. Conner to charges that he filed a false Federal Income Tax Return pertaining to tax year 2010.
According to United States Attorney Bruce D. Brandler, Powers who owns and operates Powers Auto Repair in New Cumberland, pleaded guilty to understating his true income by $238,381 on his 2010 income tax return. The tax owed on that unreported income amounted to $42,774. Under the terms of his plea agreement, Powers will make restitution to the Internal Revenue Service (IRS) in that amount plus another $26,198 for unpaid taxes owed on unreported income of $208,979 for tax year 2012. Thus, the total loss to the IRS as a result of Powers’ underreporting of income was $68,972.
The IRS investigation of Powers began after the IRS received a Form 1099-K indicating Powers Auto Repair had significantly more gross receipts than what Powers reported on his 2011 income tax return. A Form 1099-K is a reporting document filed by entities that process credit card payments on behalf of businesses.
As a result, the IRS obtained Powers’ bank records, which showed that Powers established two accounts - a business account and a personal account at the same bank. Powers deposited all of the cash and all of the checks he received from his customers into the business bank account, and all of his credit card income into his personal account. However, Powers only reported the income in his business account as income on his 2010 and 2012 tax returns.
The case was investigated by the Harrisburg Office of the Internal Revenue Service, Criminal Investigations. Assistant United States Attorney Kim Douglas Daniel is prosecuting the case.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law for this offense is three years of imprisonment, a term of supervised release following imprisonment, and a $250,000 fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Milford Man Sentenced for High Speed ChaseRead the Press Release
SCRANTON- The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Matthew Wojciechowski, age 26, of Milford, Pennsylvania, was sentenced on September 7, 2017, by United States District Court Judge Robert Mariani to two years’ probation for fleeing and eluding rangers at the Delaware Water Gap National Recreation Area.
According to United States Attorney Bruce D. Brander, Wojciechowski engaged in a high speed chase while operating a Black Kawasaki Ninja motorcycle within the National Recreation Area, willfully failed to stop, and attempted to elude a pursuing police officer causing danger to other officers and pedestrians.
The investigation was conducted by the National Park Service and was prosecuted by Assistant U.S. Attorney Evan Gotlob.
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Michigan man admits to heroin trafficking chargeRead the Press Release
CLARKSBURG, WEST VIRGINIA – A Detroit, Michigan man pled guilty today to a drug trafficking charge, Acting United States Attorney Betsy Steinfeld Jividen announced.
Wali “Black” Murphy, age 25, pled guilty to one count of “Distribution of Heroin.” Murphy admitted to selling heroin in September 2016 in Monongalia County.
Murphy 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 Zelda E. Wesley prosecuting the case on behalf of the government. The Mon Metro Drug & Violent Crime Task Force, a HIDTA-funded initiative, investigated.
Senior U.S. District Judge Irene M. Keeley presided.Mexican Citizen Sentenced for Illegal Re-entry into United StatesRead the Press Release
ALBANY, NEW YORK – Abel Cruz-Bautista, age 25, and a citizen of Mexico, was sentenced today to time served (48 days in jail) for illegally re-entering the United States.
The announcement was made by Acting United States Attorney Grant C. Jaquith and Thomas E. Feeley, Director of the Buffalo Field Office of Immigration and Customs Enforcement (ICE), Enforcement and Removal Operations (ERO).
As part of his guilty plea, Cruz-Bautista admitted that he is a citizen of Mexico, and that he illegally returned to the United States after he was removed to Mexico on September 3, 2010.
On July 25, 2017, Cruz-Bautista was arrested by ICE officers in Richfield Springs, New York.
Following the sentencing, Cruz-Bautista was remanded to the custody of the Department of Homeland Security, for removal proceedings.
This case was investigated by ICE-ERO and prosecuted by Assistant U.S. Attorney Edward P. Grogan.
McKean-FCI Inmate Admits Assault on Federal OfficerRead the Press Release
ERIE, Pa. - A federal prisoner at McKean Federal Correctional Institution in Bradford, Pennsylvania pleaded guilty in federal court to a charge of assaulting a federal officer, Acting United States Attorney Soo C. Song announced today.
Rogelio Muniz-Valdez, 41, pleaded guilty to one count before United States District Judge David S. Cercone.
In connection with the guilty plea, the court was advised that on March 15, 2017, Muniz-Valdez assaulted a federal officer who was engaged in his official duties.
Judge Cercone scheduled sentencing for January 8, 2018 at 1:30 p.m. The law provides for a maximum total sentence of 8 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Christian A. Trabold is prosecuting this case on behalf of the government.
Office of the McKean Federal Correctional Institution conducted the investigation that led to the prosecution of Muniz-Valdez.
MS-13 Member Pleads Guilty to RICO Conspiracy Involving Attempted Murder of Gang RivalRead the Press Release
BOSTON – A member of MS-13’s Enfermos Criminales Salvatrucha clique in Chelsea, Mass., pleaded guilty today in federal court in Boston to RICO conspiracy involving the attempted murder of a rival gang member.
Daniel Menjivar, a/k/a “Roca,” a/k/a “Sitiko,” 22, a Salvadoran national who resided in Chelsea, pleaded guilty to conspiracy to conduct enterprise affairs through a pattern of racketeering activity, more commonly referred to as RICO conspiracy, and admitted responsibility for the attempted murder of a rival 18th Street gang member in Chelsea in May 2014. Menjivar is the 16th defendant to plead guilty in this case.
U.S. District Court Judge F. Dennis Saylor IV scheduled sentencing for Dec. 4, 2017. According to the plea agreement, at sentencing the government will argue that in addition to the attempted murder, Menjivar also participated in an April 2015 conspiracy to kill an MS-13 member that the gang believed (incorrectly) was cooperating with law enforcement authorities.
In court filings and at today’s plea hearing, Menjivar was identified as a member of MS-13’s Enfermos Criminales Salvatrucha (ECS) clique in Chelsea. On May 29, 2014, Menjivar and another MS-13 member repeatedly stabbed and shot a rival 18th Street gang member on Washington Avenue in Chelsea. The victim survived the attack.
In addition, the government advised at today’s plea hearing that in April 2015, agents used a cooperating witness to secretly audio and video record Menjivar and two other MS-13 members as they plotted to murder an individual identified in the superseding indictment as Victim 22, an ECS “paro” or probationary member whom they believed was cooperating with law enforcement.
After a three-year investigation, Menjivar was one of 61 defendants named in a January 2016 superseding indictment targeting the criminal activities of alleged leaders, members, and associates of MS-13 in Massachusetts. According to court documents, MS-13 was identified as a violent transnational criminal organization whose branches or “cliques” operate throughout the United States, including in Massachusetts. MS-13 members are required to commit acts of violence to maintain membership and discipline within the group. Specifically, MS-13 members are required to attack and murder gang rivals whenever possible.
The RICO conspiracy charge provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000. According to the terms of the plea agreement, the government will recommend that Menjivar be sentenced to 13 years in prison. Menjivar will also be subject to deportation upon the completion of his sentence. 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; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police; Commissioner Thomas Truco of the Massachusetts Department of Corrections; Essex County Sheriff Kevin F. Coppinger; Suffolk County Sheriff Steven W. Thompkins; Suffolk County District Attorney Daniel F. Conley; Middlesex County District Attorney Marian T. Ryan; Essex County District Attorney Jonathan Blodgett; Boston Police Commissioner William Evans; Chelsea Police Chief Brian A. Kyes; Everett Police Chief Steven A. Mazzie; Lynn Police Chief Michael Mageary; Revere Police Chief Joseph Cafarelli; and Somerville Police Chief David Fallon made the announcement.
The details contained in the charging documents are allegations. The remaining defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Lubbock Man Sentenced to 151 Months in Federal Prison for Drug OffenseRead the Press Release
LUBBOCK, Texas — Dewitt Donnell Bailey, 33, was sentenced on Friday, September 8, 2017, by Senior U.S. District Judge Sam R. Cummings to a 151 months in federal prison following his guilty plea in May 2017 to one count of possession with intent to distribute 28 grams or more of cocaine base, announced U.S. Attorney John Parker of the Northern District of Texas.
Charlene Denise Davis, 47, Bailey’s half-sister, pleaded guilty in May 2017 to one count of possession with intent to distribute cocaine. Judge Cummings previously sentenced Davis to 41 months in federal prison. She is ordered to surrender to the Bureau of Prisons on October 6, 2017. Bailey has been in custody since the time of his arrest in March 2017.
According to documents filed in the case, on March 15, 2017—following an investigation that spanned several months—law enforcement executed three search warrants in Lubbock, Texas related to individuals involved in the distribution of cocaine and cocaine base. Bailey had access to, and control of, all three residences. Davis was a resident at one of the locations. Searches of the three residences revealed a total of approximately $10,000 in cash, approximately 160 grams of suspected cocaine base, and several digital scales.
The U.S. Immigrations and Customs (ICE) Homeland Security Investigations (HSI), Drug Enforcement Administration (DEA), and the Lubbock County Sheriff’s Office investigated the case.
Assistant U.S. Attorney Sean Long prosecuted.
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Lewis County woman admits to her role in an oxycodone distribution operationRead the Press Release
CLARKSBURG, WEST VIRGINIA – Makyna Kancso, of Crawford, West Virginia, pled guilty today to an oxycodone distribution charge, Acting United States Attorney Betsy Steinfeld Jividen announced.
Kancso, age 22, pled guilty to one count of “Distribution of Oxycodone.” She admitted to distributing oxycodone in Upshur County in June 2015.
Kancso 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 Zelda E. Wesley prosecuted the case on behalf of the government. The Mon Valley Drug and Violent Crime Drug Task Force, a HIDTA-funded initiative, investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Letter by Attorney General Sessions and Director of National Intelligence Coats Urging Congress to Reauthorize Title VII of the Foreign Intelligence Surveillance ActRead the Press Release
Please see the attached letter signed by Attorney General Sessions and Director of National Intelligence Coats urging Congress to promptly reauthorize, in clean and permanent form, Title VII of the Foreign Intelligence Surveillance Act, which is set to sunset at the end of this year.
View the letter attached or below:
The Honorable Paul Ryan Speaker
U.S. House of Representatives
Washington, DC 20515
The Honorable Mitch McConnell Majority Leader
United States Senate
Washington, DC 20510
The Honorable Nancy Pelosi Minority Leader
U.S. House of Representatives
Washington, DC 20515
The Honorable Charles E. Schumer Minority Leader
United States Senate
Washington, DC 20510
Dear Speaker Ryan and Leaders McConnell, Pelosi and Schumer: We are writing to urge that the Congress promptly reauthorize, in clean and permanent form, Title VII of the Foreign Intelligence Surveillance Act (FISA), enacted by the FISA Amendments Act of 2008 (FAA), which is set to sunset at the end of this year.
Title VII of FISA allows the Intelligence Community, under a robust regime of oversight by all three branches of Government, to collect vital information about international terrorists, cyber actors, individuals and entities engaged in the proliferation of weapons of mass destruction and other important foreign intelligence targets located outside the United States. Reauthorizing this critical authority is the top legislative priority of the Department of Justice and the Intelligence Community. As publicly reported by the Privacy and Civil Liberties Oversight Board, information collected under one particular section of FAA, Section 702, produces significant foreign intelligence that is vital to protect the nation against international terrorism and other threats.
Section 702 permits the Attorney General and the Director of National Intelligence, under procedures approved by the Foreign Intelligence Surveillance Court, to authorize the acquisition of foreign intelligence information by targeting non-U.S. persons located outside the United States when such persons possess or are likely to communicate foreign intelligence information. At the same time, Section 702 provides a comprehensive regime of oversight by all three branches of Government to protect the privacy and civil liberties of U.S. persons. Section 702 may not be used to intentionally target a U.S. person located anywhere in the world, nor may the law be used to intentionally target any person, regardless of nationality, who is known to be located in the United States. The law requires the Intelligence Community to follow court approved targeting and minimization procedures designed to ensure compliance with the law's targeting restrictions and the requirements of the Fourth Amendment. The procedures are designed to protect the privacy of U.S. persons whose nonpublic information may be incidentally acquired.
The Department of Justice and the Office of the Director of National Intelligence conduct extensive oversight reviews of Section 702 activities and Title VII requires us to report to Congress on implementation and compliance twice a year. In addition, as demonstrated in numerous declassified court opinions and other materials, the Foreign Intelligence Surveillance Court exercises rigorous independent oversight of activities conducted pursuant to Section 702 to ensure that incidents of non-compliance are addressed through appropriate remedial action.
As you are aware, we have conducted briefings outlining the utility and implementation of Section 702 for both Members and staff this year, and will continue to do so over the course of the next few months. We look forward to working with you to ensure the speedy enactment of legislation reauthorizing Title VII, without amendment beyond removing the sunset provision, to avoid any interruption in our use of these authorities to protect the American people.
Sincerely, Jefferson B. Sessions III
Attorney General
Daniel R. Coats
Director of National Intelligencecc: The Honorable Devin Nunes, Chairman, Permanent Select Committee on Intelligence
The Honorable Adam B. Schiff, Ranking Member, Permanent Select Committee on Intelligence
The Honorable Richard Burr, Chairman, Select Committee on Intelligence
The Honorable Mark Warner, Vice Chairman, Select Committee on Intelligence The Honorable Bob Goodlatte, Chairman, Judiciary Committee
The Honorable John Conyers, Jr., Ranking Member, Judiciary Committee
The Honorable Chuck Grassley, Chairman , Committee on the Judiciary
The Honorable Dianne Feinstein, Ranking Member, Committee on the JudiciaryLeader of International Narcotics Money Laundering Business Pleads Guilty in Manhattan Federal CourtRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JESUS RODRIGUEZ-JIMENEZ pled guilty in Manhattan federal court before United States District Judge Katherine B. Forrest to money laundering and conspiracy offenses in relation to RODRIGUEZ-JIMENEZ’s leadership of an international money laundering business working on behalf of drug cartels in Mexico and Central America. Through a web of front companies, shell bank accounts, and money couriers based in the United States and Europe, RODRIGUEZ-JIMENEZ successfully laundered in excess of $250 million in furtherance of those cartels’ narcotics trafficking activities.
Under RODRIGUEZ-JIMENEZ’s plea agreement with this Office, he faces a stipulated Guidelines sentence of 30 years in prison under the United States Sentencing Guidelines, which is also the maximum potential sentence. RODRIGUEZ-JIMENEZ is scheduled to be sentenced by Judge Forrest later this year.
Acting Manhattan U.S. Attorney Joon H. Kim said: “As he admitted in Manhattan federal court today, Jesus Rodriguez-Jimenez led an international money laundering operation that handled the proceeds of cocaine and heroin trafficking by Mexican and Central American cartels. Using front companies, sham bank accounts, and money drops in several U.S. cities, the Rodriguez-Jimenez organization laundered more than a quarter of a billion dollars in illegal drug trafficking proceeds. Thanks to the efforts of the DEA and IRS, Rodriguez-Jimenez now awaits sentencing for his crimes.”
According to the charging and other documents filed in the case, as well as statements made during RODRIGUEZ-JIMENEZ’s guilty plea proceeding:
Since July 2013, the U.S. Drug Enforcement Administration (“DEA”) has been investigating JESUS RODRIGUEZ-JIMENEZ’s international money laundering organization and its cartel clients, which together have been involved in trafficking hundreds of kilograms of cocaine and heroin, among other narcotics, and laundering narcotics proceeds through a variety of methods, including through one or more seemingly “legitimate” corporations under their control. RODRIGUEZ-JIMENEZ and his organization have ties to Panama, Mexico, Italy, Spain, and the United States, among other locations.
RODRIGUEZ-JIMENEZ, as the leader of a network of front companies created in Mexico and Las Vegas, Nevada, among other places, controlled numerous sham bank accounts opened under the names of those businesses. Using those fronts for cover, RODRIGUEZ-JIMENZ received large amounts of drug proceeds in the form of cash in the United States and elsewhere, deposited that cash into the sham bank accounts controlled by his organization, and transmitted that cash via a series of domestic and international wire transfers to members and associates of his cartel clients. As part of his involvement in this laundering activity, RODRIGUEZ-JIMENEZ orchestrated the delivery of narcotics proceeds to money launderers in the United States, including through the delivery of hundreds of thousands of dollars in single-day “money drops” in New York, Philadelphia, Atlanta, Chicago, and Las Vegas.
RODRIGUEZ-JIMENZ and multiple other members of his organization were included in two Indictments filed in June and November 2016 – 16 Cr. 644 (KBF) – now before Judge Forrest, in which all of the defendants were charged with money laundering conspiracy for participation in RODRIGUEZ-JIMENEZ’s organization, and various of the defendants were also charged with participation in narcotics trafficking.
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Acting U.S. Attorney Kim praised the outstanding work of the Las Vegas Division of the DEA and the Las Vegas Office of the Internal Revenue Service, Criminal Investigation, in the investigation of this case.
This case is being handled by this Office’s Money Laundering and Asset Forfeiture Unit. Assistant United States Attorneys Andrew C. Adams and Noah Falk are in charge of the prosecution.
Knoxville Man Pleads Guilty to Conspiring to Defraud the FDARead the Press Release
Abingdon, VIRGINIA – A Tennessee man, who operated a business that created illegal drugs for the purpose of evading existing Food and Drug Administration laws, pleaded guilty last week in the United States District Court for the Western District of Virginia in Abingdon to a federal conspiracy charge, Acting United States Attorney Rick A. Mountcastle announced.
Billy K. Groce, 65, of Knoxville, waived his right to be indicted and pleaded guilty last week to a one count Information that charged him with conspiracy to defraud the United States by impeding, impairing obstructing and defeating the lawful functions of the Food and Drug Administration.
According to evidence presented by Assistant United States Attorney Randy Ramseyer, Groce operated a business that was created for the purpose of illegally circumventing the FDA’s regulation of the interstate shipment and labeling of veterinary drugs. Groce’s business illegally obtained, stored, sold and caused to be shipped, drugs from veterinary drug manufacturers and distributers. Groce’s business was not a licensed wholesale, a licensed pharmacy or a veterinary clinic.
Groce shipped drugs to co-conspirator Marlin Webb, who was the store manager at the Carroll County Cooperative. Webb then illegally sold the veterinary prescription drugs through the cooperative. Webb previously pleaded guilty to one count of conspiracy to defraud the FDA and was sentenced to one year of probation and paid $125,000 in forfeiture and other payments at the time of his guilty plea.
The investigation of the case was conducted by the U.S. Food and Drug Administration – Office of Criminal Investigations and the Virginia Department of Health Professions. Assistant United States Attorney Randy Ramseyer prosecuted the case for the United States.
Kirksville Man Pleads Guilty to Stealing $380,000 from FraternityRead the Press Release
JEFFERSON CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced today that a Kirksville, Mo., man has pleaded guilty in federal court to embezzling more than $380,000 from the Sigma Alpha Epsilon fraternity in Columbia, Mo.
Burt Louis Beard, 62, of Kirksville, waived his right to a grand jury and pleaded guilty before U.S. Magistrate Judge Willie J. Epps on Thursday, Sept. 8, 2017, to a federal information that charges him with bank fraud.
By pleading guilty, Beard admitted that he defrauded the Sigma Alpha Epsilon (SAE) fraternity of $380,502 during the period between March 2008 and August 2014.
Beard was the volunteer treasurer from 2000 to 2014. During that time, Beard was responsible for all financial duties related to maintaining the house, paying various vendors and collecting rent checks.
Beard wrote himself in excess of 150 checks. Beard claimed the checks to himself were for reimbursement of personal loans to SAE for direct payments he made to venders. When asked for copies of his personal checks, Beard supplied copies of checks to fictitious vendors or existing vendors that did not have an account receivable for that amount or during that period. In cases where Beard supplied vendor invoices for his reimbursements, vendors said the invoices were not theirs.
SAE elected a new slate of officers for the fraternity in the fall of 2014. During the transition of financial responsibilities from Beard to the new treasurer, numerous red flags began to appear. SAE hired RGL Forensics, a forensic accounting company, to investigate Beard’s wrongdoing. Based on the documentation provided and reviewed, RGL calculated $380,502 as the entire loss from March 2008 through September 2014. The calculated loss consisted of $414,979 in checks issued to Beard from March 2008 through September 2014, less $34,477 in payments that Beard issued to or on behalf of SAE.
Under federal statutes, Beard is subject to a sentence of up to 30 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendants will be determined by the court based on the advisory sentencing guidelines and other statutory factors. Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Ashley S. Turner. It was investigated by the FBI.
Kansas Man Sentenced for Bank RobberyRead the Press Release
KANSAS CITY, KAN. - A Kansas man was sentenced Monday to 75 months in federal prison for robbing a bank in Kansas City, Kan., U.S. Attorney Tom Beall said.
Andre U. Randle, 37, Kansas City, Kan., pleaded guilty to one count of bank robbery. In his plea, he admitted that on Feb. 1, 2017, he robbed the U.S. Bank at 10959 Parallel Parkway, in Kansas City, Kan.
According to court documents, he gave a clerk a note saying, “I have 2 guns. Don’t make me use them,” before leaving the bank with stolen cash in a purple pillow case. Officers of the Kansas City, Kan., Police Department stopped his car in the 6900 block of Troop and arrested him.
Beall commended the Kansas City, Kan., Police Department, the FBI and Assistant U.S. Attorney Chris Oakley for their work on the case.
Indiana Gospel Singer Sentenced to 60 Years for Sexual Exploitation of a Minor and Distribution of Child PornographyRead the Press Release
A Muncie, Indiana man was sentenced today to serve 60 years in prison for sexual exploitation of a minor and distribution of child pornography, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and Acting U.S. Attorney Patrick D. Hansen of the Central District of Illinois.
Shawn Shannon, 45, a traveling gospel singer, was sentenced today by U.S. District Judge Colin S. Bruce of the Central District of Illinois, who also ordered Shannon to pay $1,387 in restitution to the victim and serve a lifetime of supervised release following his release from prison. Shannon was convicted on July 27, 2016, after a three-day jury trial of 19 counts of sexual exploitation of a minor and one count of distribution of child pornography.
According to evidence presented at trial, Shannon lured a 13-year-old boy to a hotel in Decatur, Illinois, and directed him to pose for a series of sexually explicit photos which Shannon took with his iPhone 5s. The evidence showed that Shannon attempted to delete evidence from his iPhone 5s including thousands of text messages and contacts after the victim’s mother learned of Shannon’s conduct and confronted him. Expert testimony presented at trial revealed that forensic examiners were able to recover these text messages which demonstrated Shannon’s nefarious intentions with the victim. Shannon also engaged in sexual contact with another minor boy and took similar photos, according to trial evidence.
Shannon was arrested on April 15, 2015, and was remanded to the custody of the U.S. Marshals Service pending trial.
U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Decatur Police Department investigated the case. This case is being prosecuted by Trial Attorney Elly M. Peirson of the Child Exploitation and Obscenity Section (CEOS) of the Justice Department’s Criminal Division, and Maureen C. Cain, a former CEOS Trial Attorney who is now an Assistant United States Attorney at the U.S. Attorney’s Office for the Eastern District of Virginia.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Huntington felon pleads guilty to federal gun crimeRead the Press Release
HUNTINGTON, W.Va. – A Huntington man pleaded guilty today a federal gun charge, announced United States Attorney Carol Casto. Jermaine D. Cathey, 36, entered his guilty plea to being a felon in possession of a firearm.
On January 2, 2017, officers from the Huntington Police Department observed Cathey walking and screaming in the middle of Veteran’s Memorial Boulevard in Huntington. When officers approached Cathey, they saw that he had a pistol in his right hand. Cathey was prohibited from possessing any firearm under federal law because of multiple felony convictions, including a 2013 conviction in Cabell County Circuit Court for being a felon in possession of a firearm.
Cathey faces up to 10 years in federal prison when he is sentenced on December 11, 2017.
The Bureau of Alcohol, Tobacco, Firearms and Explosives and the Huntington Police Department conducted the investigation. Assistant United States Attorney Stephanie S. Taylor is responsible for the prosecution. The plea hearing was held before United States District Judge Robert C. Chambers.
This case was brought as part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide commitment to reduce gun crime in the United States by networking with existing local programs targeting gun crime.
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Huntington drug dealer pleads guilty to federal heroin chargeRead the Press Release
HUNTINGTON, W.Va. – A Huntington man who sold heroin in June 2016 pleaded guilty today to a federal drug crime, announced United States Attorney Carol Casto. George Holloway, 45, entered his guilty plea to distribution of heroin.
On June 7, 2016, a confidential informant working with the Huntington FBI Drug Task Force met Holloway at 833 26th Street in Huntington. The informant bought approximately 20.6 grams of heroin from Holloway. As part of the plea agreement, Holloway admitted to all the drug trafficking activity charged in the indictment, including that he distributed heroin in Huntington on four other occasions in 2015 and 2016.
Holloway faces up to 20 years in federal prison when he is sentenced on December 11, 2017.
The Huntington FBI Drug Task Force conducted the investigation. Assistant United States Attorney Stephanie S. Taylor is handling the prosecution. The plea hearing was held before United States District Judge Robert C. Chambers.
This case is being prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs and heroin. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin in communities across the Southern District.
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Four Members of Philadelphia Identity Theft Ring Plead Guilty to Conspiring to File Fraudulent Tax Refund ClaimsRead the Press Release
Four Philadelphia, Pennsylvania men pleaded guilty in the Eastern District of Pennsylvania to conspiring to file fraudulent tax refund claims, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Louis D. Lappen for the Eastern District of Pennsylvania.
According to documents and information provided to the court, Philadelphia residents Ronald LaFortune, 40, Jean Celestin, 35, and Douge Francois, 26, conspired to use stolen IDs to file tax returns with the Internal Revenue Service (IRS) fraudulently seeking tax refunds to which they were not entitled. LaFortune opened a bank account at Citizens Bank in Philadelphia in the name of “Ronald Tax Service,” though he did not actually have a tax service. LaFortune and his co-conspirators directed the IRS to deposit some of the fraudulently obtained tax refunds into this bank account. He then withdrew money from the account to provide to Celestin, Francois and other co-conspirators. Celestin and Francois cashed checks they received from LaFortune and kept a portion of the proceeds. Celestin recruited other individuals to join the conspiracy, and he transported cash proceeds from the scheme from Philadelphia to Miami. The defendants agreed that they caused a tax loss of $118,000.
U.S. District Court Judge John R. Padova set sentencing dates as follows: LaFortune is scheduled to be sentenced on Dec. 18; Celestin is scheduled to be sentenced on Dec. 18; and Francois is scheduled to be sentenced on Dec. 19. All three defendants face a statutory maximum sentence of 10 years in prison, a period of supervised release, restitution and monetary penalties.
In a separate, but related scheme, according to documents and information provided to the court, Daniel Monville, 28, conspired with others to use stolen IDs to file tax returns with the IRS fraudulently seeking refunds to which he was not entitled. Despite not having a tax preparation business, Monville opened up a bank account in the name of “Daniel Tax Services” at Citizens Bank in Philadelphia to facilitate the crime. He admitted to causing a tax loss of $155,789.23.
Monville is scheduled to be sentenced on Dec. 13 also before Judge Padova. He faces a statutory maximum sentence of 10 years in prison on the conspiracy charge and five years in prison for aiding and abetting the filing of fraudulent tax refunds, as well as a period of supervised release, restitution and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Lappen commended special agents of IRS Criminal Investigation and the FBI, who conducted the investigation, and Assistant U.S. Attorney David Ignall and Trial Attorney Eric B. Powers of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Four Members of Philadelphia Identify Theft Ring Plead Guilty to Conspiring to File Fraudulent Tax Refund ClaimsRead the Press Release
WASHINGTON – Four Philadelphia, Pennsylvania men pleaded guilty in the Eastern District of Pennsylvania to conspiring to file fraudulent tax refund claims, announced Acting U.S. Attorney Louis D. Lappen for the Eastern District of Pennsylvania and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
According to documents and information provided to the court, Philadelphia residents Ronald LaFortune, 40, Jean Celestin, 35, and Douge Francois, 26, conspired to use stolen IDs to file tax returns with the Internal Revenue Service (IRS) fraudulently seeking tax refunds to which they were not entitled. LaFortune opened a bank account at Citizens Bank in Philadelphia in the name of “Ronald Tax Service,” though he did not actually have a tax service. LaFortune and his co-conspirators directed the IRS to deposit some of the fraudulently obtained tax refunds into this bank account. He then withdrew money from the account to provide to Celestin, Francois and other co-conspirators. Celestin and Francois cashed checks they received from LaFortune and kept a portion of the proceeds. Celestin recruited other individuals to join the conspiracy, and he transported cash proceeds from the scheme from Philadelphia to Miami. The defendants caused a tax loss of $118,000.
District Court Judge John R. Padova set sentencing dates as follows: LaFortune is scheduled to be sentenced on Dec. 18; Celestin is scheduled to be sentenced on Dec.18; and Francois is scheduled to be sentenced on Dec. 19. All three defendants face a statutory maximum sentence of 10 years in prison, a period of supervised release, restitution and monetary penalties.
In a separate, but related scheme, according to documents and information provided to the court, Daniel Monville, 28, conspired with others to use stolen IDs to file tax returns with the IRS fraudulently seeking refunds to which he was not entitled. Despite not having a tax preparation business, Monville opened up a bank account in the name of “Daniel Tax Services” at Citizens Bank in Philadelphia to facilitate the crime. He admitted to causing a tax loss of $155,789.23.
Monville is scheduled to be sentenced on Dec. 13 also before Judge Padova. He faces a statutory maximum sentence of 10 years in prison on the conspiracy charge and five years in prison for aiding and abetting the filing of fraudulent tax refunds, as well as a period of supervised release, restitution and monetary penalties.
Acting U.S. Attorney Lappen and Acting Deputy Assistant Attorney General Goldberg commended special agents of IRS Criminal Investigation and the FBI, who conducted the investigation, and Assistant U.S. Attorney David Ignall and Trial Attorney Eric B. Powers of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Fort Edward Man Arrested for Sexual Exploitation of a ChildRead the Press Release
ALBANY, NEW YORK - James J. Mattison, age 46, of Fort Edward, New York, appeared today in federal court on charges that he sexually exploited a child.
The announcement was made by Acting United States Attorney Grant C. Jaquith and Vadim D. Thomas, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI).
United States Magistrate Judge Daniel J. Stewart ordered Mattison detained pending further proceedings.
The complaint filed against Mattison alleges that in October 2016, he communicated with a 13-year-old boy using both text messages and the Live.me phone application. The complaint further alleges that Mattison pretended to be a teenage girl named Megan, and coerced the victim into taking and sending sexually explicit photographs of himself by threatening to commit suicide if the victim refused. The charges in the complaint are merely accusations. The defendant is presumed innocent unless and until proven guilty.
If convicted of the charge in the complaint, Mattison faces at least 15 years and up to 30 years in prison, post-imprisonment supervised release of at least 5 years and up to life, and a maximum $250,000 fine. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.
This case is being investigated by the FBI and is being prosecuted by Assistant United States Attorney Joseph A. Giovannetti.
This case is prosecuted as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys’ Offices, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.
Former Owner of Restaurant in Lenexa Sentenced for Bank FraudRead the Press Release
KANSAS CITY, KAN. - A former owner of a restaurant in Lenexa was sentenced Monday for bank fraud, U.S. Attorney Tom Beall said.
Charles R. Waits, 56, Lenexa, Kan., was sentenced to three years on supervised release and ordered to pay $10,000 within 90 days toward restitution. Waits pleaded guilty to one count of bank fraud. In his plea, he admitted the crime occurred while he was one of the owners of the Kansas City Sports Grille, which is now closed. Waits provided false financial information to Community America Credit Union when he applied for a loan. He listed assets including property he did not own and he significantly overvalued one of the properties he owned.
Beall commended the U.S. Secret Service and Assistant U.S. Attorney Chris Oakley for their work on the case.
Fifth Defendant Sentenced to Federal Prison for Credit Card Fraud and Identity Theft Related to Cyberattacks on 3 U.S. CompaniesRead the Press Release
LOS ANGELES – The fifth and final defendant charged with using credit and debit cards obtained from a series of cyberattacks on U.S. companies that resulted in an estimated $5 million in losses – and caused one victim company to go out of business – was sentenced today to 33 months in federal prison.
Dmitry Fedoseev, 34, a Russian national who resides in Koreatown, was sentenced after pleading guilty in March to possession of unauthorized access devices (credits cards and debit cards) and aggravated identity theft.
Fedoseev was sentenced today by United States District Judge Stephen V. Wilson.
Three other Russian nationals and another Eastern European immigrant who monetized the information obtained from the cyberattacks by making fraudulent purchases, selling the purchased goods and transferring money to others involved in the fraudulent scheme were previously sentenced to federal prison. They are:
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Siarhei Patapau, 26, of the Miracle Mile District of Los Angeles, a native of Belarus, who was sentenced to 30 months in prison;
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Timur Safin, 29, of Burbank, who was sentenced to three years;
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Kristina Gerasimova, 22, of the Miracle Mile District of Los Angeles, who was sentenced to one year and one day in prison; and
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Fedoseev’s ex-wife, Irina Fedoseeva, 33, who was sentenced to 14 months.
All five defendants admitted to helping make fraudulent purchases with credit and debit cards obtained as a result of cyberattacks on two healthcare administrators in December 2015 and February 2016. Due to their federal felony convictions, all five defendants have or will be deported from the United States.
According to court documents filed in two separate cases, the five defendants conspired with computer hackers, some of whom are believed to be in Russia. The hackers staged attacks that included:
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a July 2014 intrusion into an airline’s computer system in which the hackers fraudulently funded pre-paid credit cards in the amount of $900,000;
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a December 2015 hack into the system of a healthcare administrator that allowed the cybercriminals to reactivate a dormant dependent care account and order the production of numerous debit cards that were used to make approximately $550,000 in fraudulent purchases; and
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a February 2016 attack on another healthcare administrator that allowed the intruders to order the production of debit cards linked to reactivated accounts that were used to make approximately $3.5 million in fraudulent purchases.
The computer hackers directed the pilfered debit and credit cards to be sent to the five defendants charged in Los Angeles and other co-conspirators. Members of the conspiracy then used the unauthorized cards to make cash withdrawals, purchase money orders and make purchases at retail outlets such as Apple, Best Buy, Home Depot and Target.
For example, Safin admitted in court that he used a number of the pre-paid credit cards to withdraw approximately $5,074 at ATMs throughout Los Angeles County and to purchase money orders totaling $19,420. He used debit cards obtained from the healthcare administrators to make at least $225,000 in fraudulent purchases.
When they were arrested last year, Fedoseev and Fedoseeva possessed more than 519 unauthorized credit, debit and gift cards and $29,300 in cash. Patapau was found with approximately 525 credit and debit cards in other people’s names.
The investigation that led to the two cases filed in Los Angeles was conducted by the Federal Bureau of Investigation.
The two criminal cases are being prosecuted by Assistant United States Attorney Bryant Yang of the Organized Crime and Drug Enforcement Task Force.
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Federal Authorities Successfully Prosecute Convicted Felon for the Illegal Possession of Multiple FirearmsRead the Press Release
Acting United States Attorney Steve Butler of the Southern District of Alabama announces that Chief United States District Court Judge Kristi K. DuBose sentenced Ernest Lamar Rogers on September 8, 2017 to serve a term of imprisonment of 12 months followed by 3 years of supervised release for illegally possessing multiple firearms. He possessed the firearms in Mobile, Alabama on February 11, 2017 in violation of 18 USC § 922(g)(1). The defendant entered a guilty plea before the Court on May 11, 2017.
On the date of incident, the Mobile County Sheriff’s Office Delta Patrol Squad attempted to initiate a traffic stop after they observed the defendant commit a traffic violation in his vehicle. However, the defendant did not comply and threw a Glock, .40-caliber pistol out of a window of the vehicle he was in at the time. Shortly thereafter, a dangerous car chase ensued.
Once the defendant was apprehended, the authorities located an additional firearm, a Smith and Wesson, .38-caliber revolver, on the floorboard of the same vehicle. During the investigation, the authorities learned that the defendant’s driver’s license had been suspended.
This case was investigated by the Federal Bureau of Investigation (FBI), and the Mobile County Sheriff’s Office. The case was prosecuted by Assistant United States Attorney Lawrence J. Bullard for the United States Attorney’s Office for the Southern District of Alabama.
Essex County, New Jersey, Man Sentenced to 173 Months in Prison for Summer 2016 Bank Robbery SpreeRead the Press Release
NEWARK, N.J. – A Newark, New Jersey, man was sentenced today to 173 months in prison for robbing four banks in August and September 2016 and for violating his supervised release from a previous offense, Acting U.S. Attorney William E. Fitzpatrick announced.
James Lockwood, 39, previously pleaded guilty before U.S. District Judge Esther Salas to an information charging him with four counts of bank robbery. He was sentenced to 125 months in prison on the bank robbery counts, as well as an additional 48 months for violating supervised release. He was originally arrested by state authorities on Sept. 23, 2016, and has been in custody since that time. Judge Salas imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court, Lockwood robbed the following banks:
Bank
Location
Date
M & T Bank
Lyndhurst, New Jersey
Aug. 16, 2016
Schuyler Bank
Kearney, New Jersey
Aug. 25, 2016
Schuyler Bank
Kearney, New Jersey
Sept. 8, 2016
Capital One Bank
Clifton, New Jersey
Sept. 16, 2016
Lockwood admitted that during each of the above robberies, he threatened to use force while demanding money from the bank employees. He also robbed the same Schuyler Bank on Aug. 25, 2016, and Sept. 8, 2016.
In addition to the prison term, Judge Salas sentenced Lockwood to three years of supervised release.
Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to today’s sentencing. He also thanked the Hudson County Prosecutor’s Office, the Passaic County Prosecutor’s Office, and the Kearny and Clifton Police Departments for their assistance.
The government is represented by Assistant U.S. Attorney Sammi Malek of the U.S. Attorney’s Office Criminal Division in Newark.
Defense counsel: Keith Hirschorn Esq., Hoboken, New Jersey
Erie Man Sentenced to 13 years in Jail for Sex Trafficking Two Minor VictimsRead the Press Release
ERIE, Pa. - A former resident of Erie, Pennsylvania, has been sentenced in federal court to 13 years in jail and 10 years of supervised release on his conviction for sex trafficking of a child and conspiracy to commit sex trafficking, Acting United States Attorney Soo C. Song announced today.
United States District Judge David S. Cercone imposed the sentence on Devonte Lamonte Lucas, 22.
According to the information presented to the court, from March 2015 to October 2015, Lucas and a co-defendant knowingly recruited, enticed, harbored, transported, provided, advertised and maintained two minor victims who engaged in commercial sex acts at the behest of Lucas and his co-defendant. Lucas’ illegal activity was ultimately stopped when members of the Millcreek Police Department observed Lucas transport a minor female to a Millcreek motel. The Millcreek officers, acting in an undercover capacity, had set up a meeting at the motel with one of the victims via an Internet advertisement that had been placed by Lucas’ co-defendant.
Assistant United States Attorney Christian A. Trabold prosecuted this case on behalf of the government.
Acting United States Attorney Song commended the Federal Bureau of Investigation, and the Millcreek Police Department for the investigation leading to the successful prosecution of Lucas.
East Bay Developer Arraigned on Campaign Finance Fraud ChargesRead the Press Release
OAKLAND – James Tong, a prominent East Bay developer, was arraigned today on an indictment alleging that he made illegal campaign finance donations, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation, Special Agent in Charge John F. Bennett.
According to the indictment, Tong, 72, of Pleasanton, Calif., used “conduit contributors,” or straw donors, to make donations from his own funds to a political campaign in excess of the amounts allowed by one individual. The indictment alleges that in both 2012 and 2013, Tong made over $10,000 of these “straw” donations to the authorized political committee supporting the campaign of a candidate for federal elected office. Neither the committee nor the candidate are named in the indictment.
Court filings confirm that Tong is the same individual who was convicted last year of violating the Endangered Species Act, in United States v. James Tong, 15-512-JST.
Tong was arraigned and made his initial appearance in federal court in Oakland before U.S. Magistrate Judge Kandis A. Westmore. He was released on his own recognizance and required to surrender his passport. Tong’s next scheduled appearance is at 9:30 on September 29, 2017, before the Honorable Jon S. Tigar, U.S. District Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence on each of the counts alleged of 2 years, and a fine of $50,000 or 1000% of the amount involved in the violation, whichever is greater. There is also a minimum mandatory fine of at least 300% of the amount involved in the violation. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by the Special Prosecution and National Security Unit of the U.S. Attorney’s Office and is the result of a year-long investigation by the Federal Bureau of Investigation.
District Man Pleads Guilty to Sexually Assaulting WomanRead the Press Release
WASHINGTON – Michael Williams, 24, of Washington, D.C., has pled guilty to a charge of third-degree sexual abuse for groping a stranger after knocking her to the sidewalk in downtown Washington, announced U.S. Attorney Channing D. Phillips.
The victim was eight months pregnant at the time. Fortunately, both the victim and her baby sustained no serious injuries.
Williams pled guilty on Sept. 8, 2017, in the Superior Court of the District of Columbia. The Honorable Zoe Bush scheduled sentencing for Nov. 17, 2017. Once released from prison, Williams will be placed on a period of supervised release. He also will be required to register as a sex offender for a 10-year period.
According to the government’s evidence, on May 5, 2017, at about 3:30 p.m., Williams approached the victim just outside the U.S. Tax Court in the 400 block of 3rd Street NW. He was stark naked. When the victim saw Williams approaching, she tried to flee, but Williams caught her, grabbed her, and tackled her to the sidewalk, where he groped her. A guard inside the Tax Court saw the assault and ran outside to try to intervene, but Williams fled. By happenstance, a homicide detective with the Metropolitan Police Department (MPD) was driving by and saw a naked man running up 3rd Street. He jumped out of his car, pursued, caught and arrested Williams. Williams has been in custody since his arrest.
In announcing the plea, U.S. Attorney Phillips praised the quick action of the homicide detective and the security officers at the U.S. Tax Court who helped pursue the defendant. He also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Brenda C. Williams and Victim/Witness Advocate Juanita Harris. Finally, U.S. Attorney Phillips commended Assistant U.S. Attorney Peter V. Taylor, who investigated and prosecuted this case.
Connecticut Real Estate Developer Admits to Defrauding Investors and Lenders out of MillionsRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that JOHN DiMENNA, 74, of Vero Beach, Florida, waived his right to be indicted and pleaded guilty today before U.S. District Judge Victor A. Bolden in Bridgeport to two counts of wire fraud stemming from an extensive real estate investment and financing scheme.
According to court documents and statements made in court, DiMENNA worked in the commercial real estate industry, arranging for the purchase and development of large commercial real estate projects in Fairfield County, including hotels or multi-tenant properties with hundreds of apartments. DiMENNA and his business partners operated through various entities including Seaboard Realty LLC, Seaboard Stamford Investment Group (SSIG), and Seaboard Properties Group LLC. To raise capital for real estate projects, DiMENNA and his partners sold membership interests to outside investors in each LLC that owned or was to purchase a designated commercial property. DiMENNA also sold interests to investors in other LLCs that did not own specific properties but were to have some involvement in certain projects. Various financial institutions and other entities provided millions of dollars in financing to purchase, renovate or construct DiMENNA’s commercial real estate projects. DiMENNA oversaw each project, including each entity’s profitability, its cash flow, operating cash needs and any additional funds needed for repairs or renovations.
Between approximately 2010 and March 2016, DiMENNA engaged in a scheme to defraud investors and financial institutions. Knowing that certain of his properties were not cash positive, and without disclosing this fact to investors and lenders, DiMENNA used funds from separate cash-positive entities to support capital improvements, construction, and operating expenditures in other LLCs that needed the cash. In addition, DiMENNA used funds from cash positive entities to continue to make required interest and preferred returns to investors of any entity that he managed, regardless of the true available cash that an entity might have to fund such payments.
As part of the scheme, DiMENNA prepared spreadsheets that inflated the projected cash flows of certain projects, and then shared the spreadsheets with his business partners knowing that they would be marketing the ventures to potential investors. DiMENNA also provided his business partners with false sales contracts, false lease commitments and other false documents concerning the status and prospect of the various real estate investments.
DiMENNA provided existing investors inaccurate financial information in order to induce investors not to withdraw an investment, and he provided prospective investors with false information about a project’s financial viability to induce them to invest. DiMENNA frequently received a template from his accounting manager that set forth actual financial figures relating to a property, and then changed the numbers to make the figures appear stronger. In certain instances, DiMENNA simply created his own template with his own false figures and then provided the summaries to current and potential investors.
DiMENNA also sold investors equity in certain entities at a time when he knew the entities were fully subscribed and thus not eligible for receiving investment monies.
During the scheme, DiMENNA provided lenders and appraisers with inaccurate financial data concerning the various real estate properties and other entities used to collateralize various loans, including providing lenders with overstated income figures, understated expense figures, false personal financial statements, false bank statements, and false tax returns relating to the properties. He also failed to disclose to potential lenders intercompany debt obligations and all unrecorded liens on particular properties, and he created false releases of liens and UCC filing documents.
DiMENNA often sought financing from various lenders without informing existing lenders of prior loans secured by the property at issue, entered loan agreements with lenders without recording such agreements, and forged the names of his two business partners on various documents without their knowledge to secure financing. At times, DiMENNA entered into financing agreements with lenders without the knowledge, consent or authorization of his two business partners.
The government contends that, through this scheme, victim investors lost approximately $28 million and victim lenders lost approximately $41 million, for a total combined loss of $69,617,685.38.
DiMENNA faces a maximum term of imprisonment of 50 years when he is sentenced by U.S. District Judge Victor A. Bolden in Bridgeport. A sentencing date is not scheduled.
DiMENNA is released on a $250,000 bond pending sentencing.
This matter is being investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Christopher A. Schmeisser.
Chief Executive Sent to Prison and Ordered to Pay Back Nearly Two Million Dollars to the IRS for Tax OffenseRead the Press Release
Defendant was formerly CEO of Michigan BioDiesel
GRAND RAPIDS, MICHIGAN — Defendant John Gerald Oakley, age 66, was sentenced to a year and a day in prison based on his guilty plea to two counts of federal tax evasion, Acting U.S. Attorney Andrew Birge announced today. Oakley, a resident of Dimondale, Michigan, was formerly the Chief Executive Officer of Michigan BioDiesel, a company based in Bangor, Michigan. Michigan Biodiesel claimed it was producing “an alternative fuel mixture,” which allegedly qualified as an excise tax-exempt fuel. Oakley was also ordered to pay back $1,923,443.50 to the Internal Revenue Service. The restitution money includes $1,867,122.50 of tax refunds improperly sent to Michigan BioDiesel and approximately $56,000 in personal federal taxes owed by Oakley.
Acting U.S. Attorney Birge emphasized that his office will zealously prosecute crimes against the United States Treasury. “Cheating on your taxes is stealing from your neighbors.”
A co-defendant, Tracy Darin Daniels, a 50-year-old resident of Mississippi, was sentenced to two years of probation based on his plea of guilty to misprision of a bankruptcy fraud. Daniels provided false documents to co-defendant Oakley, who then submitted them in a United States Bankruptcy Court case in the Western District of Michigan.
This matter was handled by Assistant U.S. Attorneys Michael A. MacDonald, Sally J. Berens, and Hagen W. Frank.
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California Internet Sales Company President Sentenced to Prison for Embezzlement and False Tax ReturnsRead the Press Release
A Manhattan Beach, California resident was sentenced to nine months in prison for wire fraud and filing false tax returns, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Alana W. Robinson for the Southern District of California.
According to the evidence presented at trial, James Miller, a California attorney, was the president and managing partner of MWRC Internet Sales LLC, an online sales company. As part of his duties, Miller had check signing authority for the company’s business bank account. From January 2009 through October 2012, Miller wrote unauthorized checks to himself from MWRC’s account, embezzling more than $300,000. Miller used this money to pay for personal expenses and did not report it on his individual tax returns for 2009 through 2012, causing a tax loss of approximately $58,000.
In addition to the term of prison imposed, U.S. District Judge George Wu ordered Miller to serve two years of supervised release and to pay $64,329 in restitution to the Internal Revenue Service (IRS).
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Robinson commended special agents of FBI and IRS Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Rebecca Kanter and Trial Attorney Benjamin Weir of the Tax Division, who prosecuted the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.