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Friday 30 June 2017
Rhode Island Man Sentenced for Failing to Register as a Sex OffenderRead the Press Release
BOSTON – A Rhode Island man was sentenced this afternoon in federal court in Boston for failing to register as a sex offender.
Michael Plant, 42, was sentenced by U.S. District Court Judge Denise J. Casper to time served and five years of supervised release, to include six months of home confinement. In March 2017, Plant pleaded guilty to one count of failing to register as a sex offender.
Plant was convicted on state charges of second degree child molestation in April 4, 2000, and is therefore required to register as a sex offender in Rhode Island. In addition, federal and state law require Plant to register any address where he works or lives. While Plant registered a home address in Newport, R.I., he failed to register either the address of his Massachusetts employer or a secondary residential address in Fall River, Mass., from February 2015 to October 2016.
Acting United States Attorney William D. Weinreb and John Gibbons, U.S. Marshal for the District of Massachusetts, made the announcement today. Assistant U.S. Attorney Anne Paruti, Weinreb’s Project Safe Childhood Coordinator and a member of the Major Crimes Unit, prosecuted the case.
The case was brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
Removed Alien Charged with Unlawfully Re-entering United StatesRead the Press Release
PITTSBURGH - A citizen of Mexico has been indicted by a federal grand jury in Pittsburgh on a charge of violating federal immigration laws, Acting United States Attorney Soo C. Song announced today.
The one-count indictment, returned on June 27, named Cirilo Castano-Garcia, age 29, of Mexico, as the sole defendant.
According to the indictment, on or about May 24, 2017, Castano-Garcia was found in Pittsburgh, Pa., after having unlawfully re-entered the United States following one previous removal.
The law provides for a maximum total sentence of twenty (20) years in prison, a fine of $250,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney James T. Kitchen is prosecuting this case on behalf of the government.
United States Immigration and Customs Enforcement (ICE) conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Physician Sentenced to 7 Years in Prison for Accepting Kickbacks and Failing to Remit Employment TaxesRead the Press Release
JOHNSTOWN, Pa. - A resident of Hollidaysburg, Pa. has been sentenced in federal court to 84 months in prison, 60 months of which will be concurrent with a sentence imposed in the Southern District of Florida; three years’ supervised release; and was ordered to pay restitution to the Internal Revenue Service of $722,476.55 and to Health and Human Services of $2,300,000, on his convictions of conspiring to commit an offense against the United States and willfully failing to remit employment taxes, Acting United States Attorney Soo C. Song announced today.
United States District Judge Kim R. Gibson imposed the sentence on Dr. John H. Johnson, 55, of Hollidaysburg, Pa. Dr. Johnson will surrender today, June 30, 2017, to the United States Marshal Service to begin serving his 84-month federal prison sentence.
According to information presented to the court and in connection with Dr. Johnson conspiring to commit an offense against the United States:
- Universal Oral Fluid Labs (UOFL) was a clinical drug testing and drug screening lab located in Greensburg, PA. William Hughes was the owner and operator of UOFL. Dr. Johnson was a PA licensed physician practicing anesthesiology and pain management, who owned and operated a group of pain management clinics.
- Both Dr. Johnson and UOFL were enrolled providers in the Medicare program and the Pennsylvania Medicaid program. As a condition of becoming a Medicare and/or Medicaid provider and being authorized to bill Medicare and/or Medicaid, Dr. Johnson and UOFL were required to certify on their enrollment applications, Medicare Form 885B, that they would comply with all applicable federal and state laws, regulations, policies, procedures, and program requirements.
- UOFL billed, and was paid by, Medicare and Pennsylvania Medicaid for performing drug tests and related services for Medicare and Medicaid beneficiaries who were referred to UOFL by physicians enrolled in the program, including Dr. Johnson. UOFL also billed, and was paid by, various private health care insurance companies in the business of providing health care insurance to individuals and entities under various insurance policies, pursuant to which the private insurers paid UOFL for drug tests and related services performed for insureds who had been referred to UOFL by physicians.
- From in and or around May, 2011, and continuing thereafter until at least November, 2013, Dr. Johnson did knowingly and intentionally conspire with William Hughes and others to commit offenses against the United States, that is, to solicit and receive remuneration, directly and indirectly, overtly and covertly, in cash and in kind, namely, kickbacks and bribes, from William Hughes and UOFL in return for referring patients to UOFL for the furnishing and arranging for the furnishing of items and services, that is, the referral of patient lab work, for which payment was made in whole or in part under a Federal health care program, namely, Medicare and Medicaid, contrary to Title 42, United States Code, Section 1320a-7b(b)(1)(A).
- Dr. Johnson received cash payments from William Hughes and UOFL in exchange for referring Medicare and Medicaid patients to UOFL. Likewise, Dr. Johnson received monthly checks from UOFL in exchange for referrals, including Medicare and Medicaid referrals. Dr. Johnson also agreed on the value of the “kickbacks” that William Hughes and UOFL would pay Dr. Johnson for each referral of lab work sent to UOFL by Dr. Johnson. Specifically, the monthly “kickback” checks UOFL paid to Dr. Johnson were paid pursuant to the terms of a “joint venture” that Dr. Johnson entered into with UOFL. Under this “joint venture,” Dr. Johnson referred all of his patients, including Medicare and Medicaid beneficiaries, to UOFL for drug testing and related services. UOFL, in turn, billed third-party payors, including Medicare and Medicaid, for such tests, and then “kicked back” to Dr. Johnson, for each referred patient, reimbursement amounts for the tests that exceeded agreed upon thresholds, which were typically between $100.00 and $150.00. Dr. Johnson received these “joint venture” payments from William Hughes and UOFL solely in exchange for the referrals Dr. Johnson provided to UOFL, and not in exchange for the performance of any other services.
- Between May 2011 and November 2013, Dr. Johnson received more than $2,300,000 in “kickbacks” from Williams Hughes and UOFL for referrals. UOFL then received millions of dollars from third party payors, including approximately $3,443,528 from Medicare and $1,147,768 from Pennsylvania Medicaid, based on Dr. Johnson’s referrals.
In connection with Dr. Johnson willfully failing to remit employment taxes:
- On or about April 22, 2002, Central Anesthesia was incorporated with Dr. Johnson as the 100% shareholder who exercised complete control over every aspect of the business affairs. As the owner and operator of Central Anesthesia, Dr. Johnson had the corporate responsibility to collect, truthfully account for, and pay over Central Anesthesia’s payroll taxes to the IRS. Despite withholding payroll taxes from his employees paychecks, Dr. Johnson failed to make payments to the IRS. Specifically, for the taxable third quarter of 2013 (i.e., from on or about July 1, 2013 to on or about September 30, 2013), Dr. Johnson willfully failed to truthfully account for and pay over to the IRS all of the federal income taxes withheld and Federal Insurance Contributions Act (FICA) taxes due and owing to the United States on behalf of Central Anesthesia and its employees, totaling $135,112.
Assistant United States Attorney Stephanie L. Haines prosecuted this case on behalf of the government.
Ms. Song commended the Federal Bureau of Investigation, Health and Human Services Office of Inspector General, the Internal Revenue Service Criminal Investigation, and Pennsylvania Office of Attorney General Medicaid Fraud Control Section for the investigation leading to the successful prosecution of Dr. Johnson.
Palmetto Woman Pleads Guilty to Tax Fraud ChargesRead the Press Release
Tampa, Florida – Acting United States Attorney W. Stephen Muldrow announces that Latronda Brooks (44, Palmetto) has pleaded guilty to theft of government funds and aggravated identity theft in connection with income tax fraud. She faces a maximum penalty of 10 years in federal prison for the theft charge, followed by an additional two-year, consecutive sentence for the aggravated identity theft charge. Brooks also agreed to a forfeiture money judgment in the amount of $327,521, representing the proceeds of the tax fraud.
According to court documents, Brooks opened an Urban Trust Bank account in her name, doing business as Magnificent Tax Services, and used it to deposit fraudulent tax refund checks. These fraudulent checks were falsely endorsed with the taxpayer’s signature and deposited with a falsely endorsed “permission” form that purportedly gave Brooks permission to deposit third-party tax refund checks into her bank account. Brooks spent the money from the third-party tax refunds on personal expenditures, including paying others involved in the tax fraud, and did not provide any of the funds to the taxpayer.
This case was investigated by Internal Revenue Service – Criminal Investigations and the Manatee County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney Kelley Howard-Allen.
Palm Beach County Sheriff’s Deputy Pleads Guilty to Aggravated Identity Theft After Moving to Withdraw His Initial Guilty PleaRead the Press Release
Yesterday, a Palm Beach County Sheriff’s deputy re-asserted his guilt before United States District Judge Donald M. Middlebrooks and admitted to providing personally identifying information to another individual who used that information in an identity theft scheme.
Benjamin G. Greenberg, Acting United States Attorney for the Southern District of Florida, Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), Sean Scheller, Chief, Town of Lantana Police Department, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Ric Bradshaw, Sheriff, Palm Beach County Sheriff’s Office, made the announcement.
On March 23, 2017, Frantz Felisma, 42, of Boynton Beach, a deputy with the Palm Beach County Sheriff’s Office, initially pled guilty to access device fraud in connection with the identity theft scheme, in violation of Title 18, United States Code, Section 1029(a)(2) and aggravated identity theft Title 18, United States Code, Section 1028A(a)(1) (Case No. 17-CR-80008). However, following his plea hearing Felisma moved to withdraw his guilty plea and the matter was set for trial. On June 29, 2017, in advance of the trial date, Felisma re-affirmed his guilt by pleading to the initial charges of conviction.
According to the court record, over the span of approximately eighteen months, Deputy Felisma used his police department issued laptop computer to access a law enforcement database in order to obtain personally identifying information (PII) belonging to numerous individuals. Felisma sold this information to his co-conspirator, who then used the identities of at least 15 of these victims to set up credit card and bank accounts, stealing tens of thousands of dollars in the names of the victims. Felisma’s criminal conduct caused between $150,000 and $250,000 in financial losses.
Felisma faces a mandatory minimum of two years’ imprisonment, to run consecutive to any other term of imprisonment imposed, as to the aggravated identity theft charge; and a maximum of ten years’ imprisonment as to the access device fraud charge. Felisma is scheduled to be sentenced on August 1, 2017, before Judge Middlebrooks.
Mr. Greenberg commended the investigative efforts of ICE-HSI, the Lantana Police Department, IRS-CI and Palm Beach County Sheriff’s Office. This case is being prosecuted by Assistant United States Attorneys Lauren Jorgensen and Rinku Tribuiani.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Pair Sentenced in Stolen Identity Tax Refund Fraud SchemeRead the Press Release
LAREDO, Texas – Two Texas men have been ordered to prison following their convictions for conspiring to fraudulently claim federal income tax refunds using stolen identity information, announced Acting U.S. Attorney Abe Martinez and Special Agent in Charge Rick Goss of IRS-Criminal Investigation. Sunday Quincy Usoh, 47, of Dallas, and Jeffery Wahab Jubril, 43, of Killeen, pleaded guilty May 17, 2016.
“These international thieves and their cohorts tried to get away with a major identity theft tax scheme designed to steal amounts in the millions of dollars from the American taxpayers,” said Goss. “CI agents use special investigative techniques to follow a crimes’ money trail, wherever it takes them, back to the perpetrator. Now, with today’s sentencing, these defendants will begin paying the price for stealing from the taxpayers.”
Today, U.S. District Judge Marina Garcia Marmolejo ordered Usoh to serve a total of 96 months in federal prison, while Jubril was sentenced to a 52-month-term of imprisonment. Both men will also serve three years of supervised release following completion of their prison terms. The court further ordered they pay more than $265,000 in restitution. At the hearing, additional evidence was presented including the impact that the victims had suffered as the result of the crimes. In handing down the sentences, Judge Marmolejo said the hearing was about an appropriate and just punishment for the defendants’ behavior. The judge increased each man’s prison sentence, telling them that the recommendations provided to the court did not begin to adequately address all of the harm that they had caused the victims in the case.
From February through September 2015, Usoh and Jubril conspired to use stolen personal identifying information to file fraudulent tax returns claiming more than $1.8 million in refunds. They arranged for the refunds to be direct deposited into one of more than 25 bank accounts they had opened in cities across Texas, including Killeen, Odessa, Midland and Del Rio. The U.S. Treasury paid out more than more than $675,000 before the scheme was discovered. At least 230 taxpayers were the victims of identity theft as a result of the pair’s scheme.
Both men will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
IRS - Criminal Investigation conducted the investigation. Assistant U.S. Attorney Mike Eaton is prosecuting the case.
Pain Management Doctor Arrested in Health Care Fraud CasesRead the Press Release
Acting United States Attorney Steve Butler of the Southern District of Alabama and Alabama Attorney General Steve Marshall announced today that Dr. Rassan M. Tarabein, 58, a neurologist residing in Fairhope, Alabama, was arrested by law enforcement officials on federal and state criminal charges relating to health care fraud. On June 16, 2017, a state grand jury in Montgomery County, Alabama returned a 2¬–count indictment against Dr. Tarabein, charging him with Medicaid fraud and theft of property in the first degree. On June 28, 2017, a federal grand jury for the Southern District of Alabama returned a 22–count superseding indictment against Dr. Tarabein, charging him with health care fraud, making false statements relating to health care matters, lying to a federal agent, unlawfully distributing schedule II controlled substances, and money laundering. Later today, Dr. Tarabein is scheduled for an initial appearance on the federal charges before United States Magistrate Judge P. Bradley Murray in Mobile, Alabama. Dr. Tarabein operated the Eastern Shore Neurology and Pain Center, a private clinic in Daphne, Alabama where he provided services relating to neurology and pain management, such as spinal injections.
Acting United States Attorney Steve Butler stated, “As alleged, this neurologist operated a fraudulent medical practice that for years stole millions of dollars from health care programs and endangered the safety of his patients. Federal and state investigators have worked diligently to expose the fraud. Now this physician must face the consequences of his actions.”
Attorney General Marshall stated, “I am pleased to partner with our federal law enforcement colleagues to protect precious state Medicaid resources. I hope that this case will serve as a warning to others who might be tempted to steal taxpayer money allocated to protect our most vulnerable citizens.”
Federal Bureau of Investigation (FBI) Special Agent in Charge Robert E. Lasky stated, “Health care fraud cases continue to be a priority for the FBI. We will continue to work closely with our law enforcement partners to bring these types of investigations to a swift and justifiable end.”
“It is disappointing when trusted professionals like Dr. Rassan Tarabein are engaged in corrupt practices, to include the diversion of controlled substances,” said Stephen G. Azzam, Special Agent in Charge of DEA’s New Orleans Field Division. “Doctors have an obligation to ensure that prescription medications are getting into the hands of legitimate patients. Thanks to the cooperative success of this investigation with our federal law enforcement partners and state investigators, this crooked doctor will be brought to justice.”
“Dr. Tarabein's alleged activities blatantly abused federal health care programs and treated patients as his personal money machines," said Special Agent in Charge Derrick L. Jackson, of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “This arrest should warn providers, who line their pockets at the expense of taxpayers, that they will face severe consequences.”
The facts in an indictment constitute allegations only. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.
The FBI, DEA, HHS-OIG, and Alabama Medicaid Fraud Division are investigating the federal case. Assistant United States Attorneys Sinan Kalayoglu and Gregory A. Bordenkircher are prosecuting the federal case in coordination with the Office of the Alabama Attorney General, Medicaid Fraud Control Unit. Assistant Attorney Generals Bruce M. Lieberman and Jon R. Moody are prosecuting the state case.
Online Reseller of Rare Nike Sneakers Pleads Guilty to Trafficking in Counterfeit Goods and Money LaunderingRead the Press Release
PORTLAND, Ore. – On Friday, June 30, 2017, former online sneaker retailer James Pepion appeared before U.S. Magistrate Judge Stacie F. Beckerman to plead guilty to charges of trafficking in counterfeit goods and money laundering under a plea agreement he negotiated with the United States. The maximum sentence for trafficking in counterfeit goods is 10 years in prison and a fine of up to $2 million (or twice the defendant’s proceeds, whichever is greater). The maximum sentence for money laundering is 20 years in prison and a fine of $500,000 (or twice the value of the property involved in the money-laundering scheme, whichever is greater).
Pepion offered rare Nike sneakers and similar merchandise for sale on the website Get-Supplied.com and through related businesses, including Supplied, Inc., and SwagSupply, Inc. using online platforms such as Instagram, eBay, and Shopify. Though Pepion acquired many of the limited-edition sneakers he resold through legitimate channels, he also imported counterfeit versions of some sneakers directly from black market sources in China, selling them as authentic Nike footwear to unwitting buyers. These fraudulent sales triggered numerous complaints to Nike as well as to Pepion.
Between June 2013 and September 2015, Pepion wired $174,460.00 to sellers in China, almost all of which was for counterfeit shoes and packaging. Pepion combined the proceeds of the sales of these counterfeit Nike sneakers with the proceeds of sales of authentic sneakers in various financial accounts in order to conceal the illegal source of much of his income.
Under the terms of Pepion’s plea agreement, he waived indictment by a federal grand jury and agreed to forfeit nearly $200,000 – including $92,000 seized from financial accounts at the same time federal agents executed a search warrant on his home and business in April 2016. The agreement provides that the government shall urge the court to impose a sentence of at least 18 months in federal prison.
“Oregon is at the center of athletic footwear design and technology for consumers around the globe, and Nike is a leader in the field,” said Billy J. Williams, United States Attorney for the District of Oregon. “It is essential to a safe and fair marketplace that consumers can trust that merchandise bearing the trademarks and insignias of respected companies like Nike are actually produced in compliance with those companies’ standards.” U.S. Attorney Williams emphasized that “the U.S. Attorney’s Office and Homeland Security Investigations will continue to work together to identify and prosecute vendors who seek to undermine that trust and to profit unjustly by smuggling and reselling counterfeit goods.”
This case was investigated by special agents of U.S. Immigration and Customs Enforcement Homeland Security Investigations (HSI) and Internal Revenue Service Criminal Investigations (IRS CI) and is being prosecuted by Ryan W. Bounds and Julia Jarrett, Assistant United States Attorneys for the District of Oregon.
Odenville Man Indicted for Possessing Pipe BombRead the Press Release
BIRMINGHAM – A federal grand jury late Thursday indicted an Odenville man for possessing a pipe bomb, announced Acting U.S. Attorney Robert O. Posey and federal Bureau of Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge Steven L. Gerido.
A one-count indictment filed in U.S. District Court charges EDWARD SHANE DEMPSEY, 39, with possessing the destructive device, which was not registered to him in the National Firearms Registration and Transfer Record, as required by law. Dempsey possessed the pipe bomb on Aug. 24, 2016, in St. Clair County, according to the indictment.
The maximum penalty for the charge is 10 years in prison and a $10,000 fine.
ATF investigated the case, which Assistant U.S. Attorney James Weil is prosecuting.
An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.
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North Carolina Man Indicted for Obstructing the IRS, Preparing Fraudulent Tax Returns and Bankruptcy FraudRead the Press Release
A grand jury sitting in the Middle District of North Carolina returned an indictment charging a Greensboro, North Carolina resident with corruptly endeavoring to obstruct and impede the Internal Revenue Service (IRS), preparing and filing fraudulent tax returns, bankruptcy fraud and making false bankruptcy declarations, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Sandra J. Hairston for the Middle District of North Carolina.
The indictment alleges that, between July 2008 and July 2009, Hassie Demond Nowlin aka Demond Nowlin and Brilliant Knowlin, filed personal tax returns with the IRS reporting fake income and income taxes withheld and seeking more than $700,000 in fraudulent refunds. According to the indictment, between 2008 and 2010, the IRS assessed taxes, penalties and interest against Nowlin related to his 2005 through 2008 income tax returns. After being notified of the assessments, Nowlin allegedly began concealing his assets and placing them in the names of nominee entities. The indictment also alleges that Nowlin made false statements to IRS agents, including that he did not prepare tax returns for clients.
The indictment further charges that between January 2011 and January 2017, Nowlin operated a tax preparation business, and filed tax returns for clients that claimed phony business and education expenses and sought refunds to which the clients were not entitled. According to the indictment, Nowlin did not identify himself as the paid preparer on these fraudulent returns. The indictment alleges that Nowlin caused more than $250,000 in clients’ tax refunds to be deposited into nominee bank accounts that he controlled.
In addition to the tax-related charges, the indictment alleges that Nowlin attempted to cheat his creditors by filing six fraudulent personal bankruptcy petitions between April 2013 and January 2017. Along with five of those petitions, Nowlin also allegedly submitted false financial statements on which he did not fully disclose his income and assets.
An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proved guilty beyond a reasonable doubt.
If convicted, Nowlin faces a statutory maximum sentence of three years in prison for obstructing the IRS and each count of preparing false tax returns and five years in prison for each count of bankruptcy fraud and making false bankruptcy declarations. He also faces a period of supervised release, restitution and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Hairston commended special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorney Robert J. Boudreau of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
North Carolina Man Indicted for Obstructing the IRS, Preparing Fraudulent Tax Returns and Bankruptcy FraudRead the Press Release
WASHINGTON – A grand jury sitting in the Middle District of North Carolina returned an indictment charging a Greensboro, North Carolina resident with corruptly endeavoring to obstruct and impede the Internal Revenue Service (IRS), preparing and filing fraudulent tax returns, bankruptcy fraud and making false bankruptcy declarations, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Sandra J. Hairston for the Middle District of North Carolina.
The indictment alleges that, between July 2008 and July 2009, Hassie Demond Nowlin aka Demond Nowlin and Brilliant Knowlin, filed personal tax returns with the IRS reporting fake income and income taxes withheld and seeking more than $700,000 in fraudulent refunds. According to the indictment, between 2008 and 2010, the IRS assessed taxes, penalties and interest against Nowlin related to his 2005 through 2008 income tax returns. After being notified of the assessments, Nowlin allegedly began concealing his assets and placing them in the names of nominee entities. The indictment also alleges that Nowlin made false statements to IRS agents, including that he did not prepare tax returns for clients.
The indictment further charges that between January 2011 and January 2017, Nowlin operated a tax preparation business, and filed tax returns for clients that claimed phony business and education expenses and sought refunds to which the clients were not entitled. According to the indictment, Nowlin did not identify himself as the paid preparer on these fraudulent returns. The indictment alleges that Nowlin caused more than $250,000 in clients’ tax refunds to be deposited into nominee bank accounts that he controlled.
In addition to the tax-related charges, the indictment alleges that Nowlin attempted to cheat his creditors by filing six fraudulent personal bankruptcy petitions between April 2013 and January 2017. Along with five of those petitions, Nowlin also allegedly submitted false financial statements on which he did not fully disclose his income and assets.
An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proved guilty beyond a reasonable doubt.
If convicted, Nowlin faces a statutory maximum sentence of three years in prison for obstructing the IRS and each count of preparing false tax returns and five years in prison for each count of bankruptcy fraud and making false bankruptcy declarations. He also faces a period of supervised release, restitution and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Hairston commended special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorney Robert J. Boudreau of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
# # #New Orleans CPA Charged with Filing a False Tax Return Underreporting Her IncomeRead the Press Release
Acting U.S. Attorney Duane A. Evans announced that BRENDEL DEEMER, 48, of New Orleans, a Certified Public Account (CPA), was charged today with willfully filing a false tax return for herself. DEEMER was charged with filing a false 2010 individual income tax return that excluded income and inflated expenses for businesses under her control.
According to the Bill of Information, DEEMER operated Deemer CPA & Consulting Services LLC since at least 2009. From 1999 through 2005, she also operated Building Blocks Academy, a day care center. DEEMER ceased operating Building Blocks Academy after Hurricane Katrina and did not resume operating the business. As alleged in the Bill of Information, for tax years 2009 and 2010, DEEMER filed individual income tax returns that falsely reported her Schedule C business income from Deemer CPA and Consulting Services, LLC, and her expenses for Building Blocks Academy.
Upon conviction, DEEMER faces a maximum penalty of three years of imprisonment. She also faces a term of supervised release, as well as potential fines and other monetary penalties.
Acting U. S. Attorney Evans reiterated that the Bill of Information is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
Acting U. S. Attorney Evans commended the work of IRS-Criminal Investigations in investigating this matter. Assistant U.S. Attorney Hayden Brockett is in charge of the prosecution.
Myrtle Beach Man Sentenced in Federal Court on Fraud ChargesRead the Press Release
Columbia, South Carolina ---- United States Attorney Beth Drake stated today that Howard Dillon, age 55, of Myrtle Beach was sentenced in federal court in Florence, South Carolina, for Conspiracy to Manufacture and Pass Counterfeit Securities, in violation of Title 18, United States Code, Section 371. United States District Judge R. Bryan Harwell, of Florence, sentenced Dillon to 30 months’ imprisonment followed by 3 years of supervised release. Dillon was also ordered to pay over $31,000 in restitution to victims of the fraud.
Evidence presented at the guilty plea hearing established that during the period from August 2015 through January of 2016, Dillon and others were involved in a conspiracy to manufacture and pass counterfeit securities (checks) of organizations.
The defendants would make counterfeit checks using genuine bank account and routing numbers they obtained from checks stolen out of mailboxes in Horry and Georgetown Counties.
The defendants would then use fraudulent driver's licenses bearing their photographs, but in other persons' names which matched the names on the counterfeit checks, to pass these counterfeit checks at various businesses.
The defendants would purchase merchandise at one store using the counterfeit checks, then they would go to another store in the same chain and exchange the merchandise for cash.
The case was investigated by agents of the U.S. Postal Inspection Service and officers of the Horry County Police Department. Assistant United States Attorney A. Bradley Parham of the Florence office prosecuted the case.
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Montgomery County Man Sentenced to Life in Federal Prison for Distributing Acetyl Fentanyl Resulting in DeathRead the Press Release
June 30, 2017
FOR IMMEDIATE RELEASE Contact ELIZABETH MORSE
www.justice.gov/usao/md at (410) 209-4885
Greenbelt, Maryland – On Thursday, June, 29, 2017, U.S. District Judge Paula Xinis sentenced Justin Larson, age 30, of Gaithersburg, Maryland, to life in prison, for distribution of acetyl fentanyl, which resulted in death, as well as conspiracy to distribute narcotics, five counts of possession or attempted possession of a controlled substance and controlled substance analogue with intent to distribute, and one count of possession with intent to distribute and distribution of a controlled substance. Larson was convicted by a federal jury on January 25, 2017. The jury was not able to reach a verdict on a second count of distribution of acetyl fentanyl, resulting in death.
The sentence was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Special Agent in Charge Andre R. Watson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Postal Inspector in Charge Robert B. Wemyss of the U.S. Postal Inspection Service - Washington Division; Chief J. Thomas Manger of the Montgomery County Police Department; and Montgomery County State’s Attorney John McCarthy.
According to the testimony at his three-week trial, from May 2014 through March 17, 2016, Larson conspired to distribute acetyl fentanyl, and furanyl fentanyl, a controlled substance analogue. The evidence showed that on May 9, 2014, Larson distributed acetyl fentanyl to an individual, resulting in the death of that individual.
Larson remains detained.
Acting United States Attorney Stephen M. Schenning praised HSI Baltimore, the FBI, U.S. Postal Inspection Service, Montgomery County Police Department, and Montgomery County State’s Attorney’s Office for their work in the investigation and prosecution. Mr. Schenning thanked Assistant United States Attorneys Kelly O’Connell Hayes and Erin Pulice, who prosecuted the case.
Moncks Corner Man Pleads Guilty to Federal Narcotics, Firearms ChargesRead the Press Release
Charleston, South Carolina ---- United States Attorney Beth Drake stated today that Joshua Frederick Davis, age 31, of Moncks Corner, South Carolina, has entered a guilty plea in federal court in Charleston, to two counts of possession with intent to distribute methamphetamine and one count of possession of firearms by a convicted felon. United States District Judge Richard M. Gergel, of Charleston, accepted the guilty plea and will impose sentence after he has reviewed the presentence report which will be prepared by the U.S. Probation Office.
Evidence presented at the change of plea hearing established that on December 28, 2015, the Berkeley County Sheriff’s Office conducted a traffic stop on Davis. During the stop, officers conducted a probable cause search of the defendant and located 96 grams of crystal methamphetamine, 19 grams of crack cocaine and 12 grams of cocaine in Davis’ pants. Officers then executed a search warrant at Davis’ residence, where they found over 500 grams of crystal methamphetamine and two firearms in Davis’ bedroom.
On February 8, 2016, the Goose Creek Police Department conducted a lawful traffic stop on Davis. After placing Davis under arrest for a small amount of crystal methamphetamine found in his vehicle, officers recovered 25 grams of crystal methamphetamine, 10 grams of crack cocaine and 2 grams of cocaine from Davis’ pants.
Ms. Drake stated the maximum penalty is life imprisonment and/or a fine of $4,000,000.
The case was investigated by agents of the Drug Enforcement Administration, Berkeley County Sheriff’s Office, Moncks Corner Police Department and Goose Creek Police Department. Assistant United States Attorney Nick Bianchi of the Charleston office is prosecuting the case.
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Millvale Man Charged with Transporting a Minor for Sex, Other Child Exploitation ChargesRead the Press Release
PITTSBURGH - A former resident of Millvale, Pennsylvania, has been indicted by a federal grand jury in Pittsburgh on charges of transporting a minor in interstate commerce for the purpose of engaging in sexual conduct, as well as producing and distributing images and videos of such sexual conduct, Acting United States Attorney Soo C. Song announced today.
The six-count indictment, returned on June 27, named Daniel A. Kundrat, 34, as the sole defendant.
According to the indictment, Kundrat, on August 10, 2016, traveled to Columbus, Ohio, where he picked up a 14-year old female, whom he brought back to the State of Pennsylvania with the intent to engage in unlawful sexual activity, including intercourse. He is further alleged to have produced videos of their sexual activity on August 22, 2016, and on August 31, 2016, as well as to have distributed in interstate and foreign commerce three videos depicting the sexual exploitation of a minor.
The law provides for a maximum total sentence of life in prison, a fine of $1,500,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Carolyn J. Bloch is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation, Allegheny County Police Department, Allegheny County District Attorney’s Office, and Millvale Police Department conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Memphis Man Pleads Guilty in Scheme to Defraud Financial InstitutionsRead the Press Release
Memphis, TN – A Memphis man pleaded guilty to committing bank fraud against financial institutions in the Memphis area. Lawrence J. Laurenzi, Acting U.S. Attorney for the Western District of Tennessee, announced the conviction today.
According to the indictment, from August 2011 through February 2016, Talmadge Garner and other co-conspirators, participated in a deceptive scheme to defraud Orion Federal Credit Union, SunTrust Bank and Regions Bank. The fraud consisted of opening new accounts and/or using their existing accounts to deposit fraudulent checks. Garner also stole the identities of individuals to pass fraudulent checks to the banks.
Nearly 200 fraudulent closed accounts totaling $110,831.95 were deposited into accounts at the banks. Immediately after deposits were made in the banks, withdrawals were made by Garner and others not named in the indictment. Garner would give co-conspirators some of the proceeds withdrawn from the banks.
Garner pled guilty to two counts of bank fraud during the five-year period. The maximum penalty for bank fraud is 30 years in prison and a $1,000,000 fine. The sentencing hearing will be held on September 28, 2017.
The case was investigated by the United States Secret Service. Assistant U.S. Attorney Damon Keith Griffin is prosecuting this case on the government’s behalf.
Memphis Man Charged with Distributing a Lethal Dose of FentanylRead the Press Release
Memphis, TN – On June 29, 2017, a federal grand jury returned a four-count indictment against 30-year-old Cortez Armstrong, aka "B.B.," for distribution of a variety of narcotics including fentanyl which resulted in the death of 21-year-old Z.R. Lawrence J. Laurenzi, Acting U.S. Attorney for the Western District of Tennessee, announced the indictment today.
According to the indictment, on or about October 9, 2016, Armstrong distributed fentanyl to Z.R. The victim’s body was discovered by law enforcement during the early morning hours of October 10, 2016 at 3799 Shelby Drive, Memphis, Tennessee. The cause of Z.R.’s death was determined to be the result of a fentanyl overdose.
"Pursuant to federal law, a person who distributes fentanyl which causes the death of the buyer is criminally responsible for the buyer’s death even though the drug dealer did not intend to harm the buyer. Last year the Mid-South lost far too many lives to drug overdoses. Law enforcement will not sit idly by while the death toll continues to rise," said Acting U.S. Attorney Lawrence J. Laurenzi.
The penalty for distribution of fentanyl where death or serious bodily injury results is not less than 20 years in prison, but if the defendant has a prior felony drug conviction then life.
This case is being investigated by the Drug Enforcement Administration (DEA) and Memphis Police Department. Assistant U.S. Attorneys Michelle Kimbril-Parks and J. William Crow are prosecuting this case on the government’s behalf.
Massachusetts Man Pleads Guilty to Distributing FentanylRead the Press Release
CONCORD, N.H. – Acting United States Attorney John J. Farley announced today that Edward Garcia, 36, of Massachusetts, pleaded guilty to two counts of distributing fentanyl at the Rockingham Mall in June and July 2015.
According to documents on file with the court and statements made at today’s change of plea hearing, in 2015 law enforcement officers were targeting the sale of heroin and fentanyl from sources located in Massachusetts. As part of the investigation, an undercover officer purchased fentanyl from Garcia on June 12, 2015 and on July 14, 2015. Each sale involved 29.5 grams of the controlled substance fentanyl.
A sentencing hearing is scheduled for October 23, 2017.
“The United States Attorney’s Office is committed to working with all of our law enforcement partners to stop the flow of fentanyl into New Hampshire,” said Acting U.S. Attorney Farley. “Because even a small quantity of fentanyl can be deadly, we will continue to work together to prosecute those who are responsible for distributing this drug and will make every effort to stop this drug from being sold in New Hampshire. While those who suffer from substance use disorders should receive treatment, those who seek to profit from the drug trade need to be held accountable for their actions.”
“Opioid abuse is at epidemic levels in New Hampshire,” said Special Agent in Charge Michael J. Ferguson. “Fentanyl is causing overdose deaths across the Granite State in record numbers, and DEA is committed to aggressively pursue anyone who distributes this poison in order to profit and destroy people’s lives. This investigation demonstrates the strength and continued commitment of our local, state and federal law enforcement partners and our strong relationship with the U.S. Attorney’s Office.”
The case was investigated by the Drug Enforcement Administration. Task Force Officers from a number of New Hampshire law enforcement agencies and members of the Massachusetts State Police assisted in the investigation. This case is being prosecuted by Assistant United States Attorney Don Feith.
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Maryland Man Pleads Guilty to Involuntary Manslaughter After Punching and Killing a Man in Northeast WashingtonRead the Press Release
WASHINGTON – Paul Hagans Jr., 37, of Waldorf, Maryland, pled guilty today to a charge stemming from his role in the killing of a man during an altercation earlier this year in Northeast Washington, D.C., announced U.S. Attorney Channing D. Phillips.
Hagans pled guilty to involuntary manslaughter in the Superior Court of the District of Columbia. The plea, which is contingent upon the Court’s approval, calls for him to be sentenced to five years in prison. The Honorable Zoe Bush scheduled sentencing for Sept. 8, 2017.
According to the government’s evidence, on March 2, 2017, at about 3:40 p.m., Hagans was working as a flagger near the 200 block of Rhode Island Avenue NE. Around the same time, the victim, Desmond Joseph, had driven his work truck into the 200 block of Rhode Island Avenue to a building in which he had been doing repair work. At some point, Mr. Joseph exited his truck to move traffic cones out of the way, so that he could drive his truck into a parking lot.
When Hagans noticed that Mr. Joseph had moved the traffic cones, Hagans approached him and began arguing with him. Witnesses were present when the argument took place. One heard Hagans say to Mr. Joseph: “he was a gangsta up there . . . he was a big man up there” (or words to that effect). That witness then observed Hagans throw a single punch, contacting Mr. Joseph’s head, causing Mr. Joseph backwards and hit his head on the street. According to witnesses, as soon as Hagans delivered the punch, Mr. Joseph was “knocked out” and fell backwards off the curb and onto the street. Another witness said that while Mr. Joseph and Hagans were arguing, Mr. Joseph had a cell phone in his hand and appeared to be making a phone call. Witnesses also said that while the two men were arguing, Mr. Joseph never had anything in his hands.
Mr. Joseph, 41, was taken to the hospital with a hematoma to the back, right portion of his head with no brain activity. On or about he died from injuries caused by the defendant.
In announcing the pleas, U.S. Attorney Phillips commended the work of those who investigated the case from the Metropolitan Police department (MPD). He also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office including Victim/Witness Advocate Jennifer Allen and Paralegal Specialist Alesha Matthews. Finally, he commended the work of Assistant U.S. Attorney Damien Diggs, who investigated and prosecuted the case.
Manhattan U.S. Attorney Announces Charges Against Individual for Defrauding Investors in Digital Media CompanyRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a criminal Complaint charging WILLIAM McFARLAND with wire fraud, in connection with a scheme to defraud investors in a company controlled by McFARLAND, Fyre Media LLC (“Fyre Media”), as well as a related entity responsible for organizing a music festival set to take place in the Bahamas (the “Fyre Festival”). McFARLAND was arrested today in New York, New York, and is expected to be presented before U.S. Magistrate Judge Kevin N. Fox tomorrow.
Acting Manhattan U.S. Attorney Joon Kim said: “As alleged, William McFarland promised a 'life changing' music festival but in actuality delivered a disaster. McFarland allegedly presented fake documents to induce investors to put over a million dollars into his company and the fiasco called the Fyre Festival. Thanks to the investigative efforts of the FBI, McFarland will now have to answer for his crimes.”
Assistant Director-in-Charge William F. Sweeney Jr. said: “Under McFarland's direction, Fyre Media created a promoter's marketplace for entertainment bidding. In addition to this initial business venture, McFarland went one step further in establishing a subsidiary of the company, Fyre Festival LLC. But in order to drive the success of both entities, as alleged, McFarland truly put on a show, misrepresenting the financial status of his businesses in order to rake in lucrative investment deals. In the end, the very public failure of the Fyre Festival signaled that something just wasn't right, as we allege in detail today.”
According to the allegations in the Complaint[1] unsealed today in Manhattan federal court:
McFARLAND was the founder and Chief Executive Officer of Fyre Media. In 2016, McFARLAND started Fyre Media to build a digital app that would allow individuals organizing commercial events, such as concerts, to bid for artist and celebrity bookings at such events. According to Fyre Media documents provided to investors by McFARLAND, Fyre Media’s historical and projected revenue from at least April 2016 to November 2017 consisted solely of artist bookings. In late 2016, McFARLAND established a subsidiary of Fyre Media known as Fyre Festival LLC and began promoting the Fyre Festival. McFARLAND promoted the Fyre Festival in part by claiming that it would bring a global audience together to share a life changing experience. Ultimately, the Fyre Festival was widely deemed to have been a failure.
From in or about 2016 through in or about May 2017, McFARLAND perpetrated a scheme to defraud, inducing at least two individuals to invest approximately $1.2 million dollars in Fyre Media and an associated entity based on misrepresentations about Fyre Media’s revenue and income. In order to procure these investments, McFARLAND provided materially false information. For example, McFARLAND told investors that Fyre Media earned millions of dollars of revenue from thousands of artist bookings from at least July 2016 until April 2017. In reality, during that approximate time period, Fyre Media earned less than $60,000 in revenue from approximately 60 artist bookings.
In addition, McFARLAND provided at least one investor an altered stock ownership statement, in an effort to make it appear that McFARLAND could personally guarantee the investment. Specifically, McFARLAND provided an altered brokerage statement that purported to show that he owned shares of a specific stock worth over $2.5 million, when in reality he owned shares of that stock valued at less than $1,500.
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McFARLAND, 25, of New York, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.
The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Kim praised the investigative work of the FBI’s New York Field Office, and thanked the Securities and Exchange Commission for their assistance.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Kristy J. Greenberg and Dina McLeod are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Man Sentenced in Hacking Conspiracy that Targeted Senior U.S. Government OfficialsRead the Press Release
ALEXANDRIA, Va. – A North Carolina man who conspired with others to gain unauthorized access to government computer systems and online accounts belonging to several United States government officials was sentenced today to 2 years in prison.
Andrew Otto Boggs, aka “INCURSIO”, 23, of North Wilkesboro, pleaded guilty on January 10. According to the statement of facts filed with the plea agreement, Boggs, along with others including co-conspirator Justin Gray Liverman, aka “D3f4ult”, 24, of Morehead City, North Carolina, joined a hacking group that called itself “Crackas With Attitude.” From about October 2015 to February 2016, the group used social engineering, including victim impersonation, to gain unlawful access to the personal online accounts of senior U.S. government officials, their families, and several U.S. government computer systems. In November 2015, Boggs and other co-conspirators used a victim's government credentials to gain unlawful access to a confidential federal law enforcement database. Several months later, Boggs publicly posted documents and personal information that the conspiracy unlawfully obtained from another government system, and which included names and contact information for tens of thousands of Department of Justice and Department of Homeland Security employees. In total, the conspiracy targeted more than 10 victims and caused more than $1.5 million in losses to victims.
Liverman pleaded guilty on January 6, and is scheduled to be sentenced on July 28. Other members of the conspiracy are located in the United Kingdom and are being prosecuted by the Crown Prosecution Service.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Andrew W. Vale, Assistant Director in Charge of the FBI’s Washington Field Office; and Brian J. Ebert, Special Agent in Charge of the U.S. Secret Service’s Washington Field Office, made the announcement after sentencing by U.S. District Judge Gerald Bruce Lee. Assistant U.S. Attorneys Maya D. Song and Jay V. Prabhu, and Special Assistant U.S. Attorney Joseph V. Longobardo are prosecuting the case.
The U.S. Attorney’s Offices for the Eastern and Western Districts of North Carolina, and the FBI’s Charlotte Division provided significant assistance with the investigation.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information is located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:16-cr-314 (Boggs), and 1:16-cr-313 (Liverman).
Man Admits to Possessing Child PornographyRead the Press Release
Columbia, South Carolina ---- United States Attorney Beth Drake stated today that Ryan Smith, age 23, formerly of Charleston, South Carolina, has entered a guilty plea in federal court in Columbia, to possessing child pornography containing images of children under the age of 12 that had traveled in interstate/foreign commerce by computer, a violation of 18 U.S.C. § 2252A. United States District Judge Joseph F. Anderson, Jr. accepted the guilty plea and will impose sentence after he has reviewed the presentence report, which will be prepared by the U.S. Probation Office.
Evidence presented at the change of plea hearing established that Smith used a University of South Carolina computer, in Columbia, to access a pay to view child pornography hidden service on the internet in March 2016. Law enforcement agencies in the United States and in other countries began monitoring the site and determined that Smith was one of many people accessing the web site. Further investigation revealed that Smith also possessed images of child pornography involving prepubescent children on his personal lap top computer.
Ms. Drake stated the maximum penalty for possessing child pornography containing images of children younger than 12 years old is imprisonment for up to 20 years plus supervised release from 5 years to life and/or a fine of $250,000.
The case was investigated by agents of the Federal Bureau of Investigation and ICE-Homeland Security Investigations. Assistant United States Attorney William E Day, II of the Columbia office is prosecuting the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys’ Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information, please visit www.projectsafechildhood.gov.
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Local Businessman Sentenced to 180 Months in Prison for Orchestrating $70 Million Ponzi SchemeRead the Press Release
DAYTON – William M. Apostelos, 55, formerly of Springboro, Ohio, was sentenced in U.S. District Court to 180 months in prison for defrauding nearly 500 victims in a $70 million Ponzi scheme.
Apostelos pleaded guilty to conspiracy to commit mail and wire fraud and theft or embezzlement from an employee benefit plan in February.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio; Ryan L. Korner, Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Cincinnati Field Office; Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI); Christopher White, Assistant Inspector in Charge, U.S. Postal Inspection Service; James Vanderberg, Special Agent in Charge, U.S. Department of Labor Office of Inspector General; Joe Rivers, Regional Director of the U.S. Department of Labor Employee Benefits Security Administration; and Andrea Seidt, Commissioner, Ohio Department of Commerce Division of Securities, announced the sentence handed down today by U.S. District Judge Thomas M. Rose.
Apostelos and his wife, Connie, also known as Connie Coleman, were indicted in October 2015. According to court documents, beginning in 2009, and continuing for at least five years, the couple and others orchestrated a Ponzi scheme in the Dayton area in which nearly 480 investors lost more than $20 million collectively. Apostelos received $70 million in investment funds in total.
William Apostelos operated and oversaw multiple purported investment and asset management companies in the Dayton area, including WMA Enterprises, LLC, Midwest Green Resources, LLC and Roan Capital. He falsely reported that he held a degree in mathematics and was a registered securities broker.
Connie Apostelos also operated and oversaw multiple companies in the Dayton area, including Coleman Capital, Inc. and Silver Bridle Racing, LLC. These companies were allegedly operated through improper use of investor funds to William Apostelos’ companies.
The couple recruited investors from 37 states to invest in WMA and Midwest Green, telling the investors that their money would be used for acquiring stocks or securities, purchasing real estate or land, providing loans to business and buying gold and silver.
Rather than investing the money, the couple used it to pay for personal luxuries. According to court documents, William Apostelos was spending $35,000 per month on his wife’s horse racing company and $400 per month on Victoria’s Secret lingerie.
When the defendants became late on interest payments to the victims, they advised that their bank account had been hacked, a bank mistakenly failed to wire payment and/or the deal the victim had invested in was temporarily on hold.
The government has seized two racehorses, vehicles, jewelry, artwork and cash totaling approximately $650,000 from the couple.
“This was a massive and devastating fraud – the largest Ponzi scheme ever in Dayton,” U.S. Attorney Glassman said. “Apostelos thoroughly deserves the substantial prison sentence that he received today.”
“In Ponzi schemes the promoter eventually runs out of other people's money and the scheme collapses like a house of cards," said Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “William Apostelos left approximately 500 investors in financial peril and created a recipe for devastation that could last a lifetime.”
“William Apostelos stole approximately $1.9 million from pension funds that American workers were counting on for retirement. We will continue to work with our law enforcement partners to safeguard employee benefit plan assets," said James Vanderberg, Special Agent in Charge, Chicago Region, U.S. Department of Labor, Office of Inspector General.
“Mr. Apostelos falsely reported that he was a registered securities broker,” said Ohio Securities Commissioner Andrea Seidt. “This is why we encourage investors to always check the background of people who try to sell them any kind of investment product. Ohioans can call our Investor Protection Hotline at 877-683-7841 to find out if the person is licensed to sell securities and if the product is properly registered.”
Steven Scudder, 62, of Centerville, an attorney who served as trustee of the WMA Trust, pleaded guilty in U.S. District Court on January 19 to wire fraud, admitting that he used his position as an attorney to facilitate the fraudulent investment scheme. He was sentenced to serve 14 months in prison.
Connie Apostelos pleaded guilty to one count of mail fraud on April 4 and is scheduled for sentencing on August 2 before Judge Rose.
U.S. Attorney Glassman commended the investigation of this case by law enforcement, and Assistant United States Attorney Brent G. Tabacchi and Deputy Criminal Chief Laura Clemmens, who are prosecuting the case, as well as Enforcement Attorney Brian Peters, who represented the Ohio Division of Securities on the case.
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Las Vegas Man Sentenced to More Than Six Years in Prison for $5.3 Million Advance Fee Grant Scheme Targeting Small Business OwnersRead the Press Release
LAS VEGAS, Nev. – A Las Vegas man was sentenced today to 78 months in prison for conspiracy to commit a nearly $5.3 million advance fee fraud scheme targeting small business owners seeking grant funding, announced Acting U.S. Attorney Steven W. Myhre for the District of Nevada.
Gregory Villegas, 37, pleaded guilty on March 17, 2017, to one count of conspiracy to commit wire fraud. In addition to the term of prison, U.S. District Chief Judge Gloria M. Navarro ordered him to pay restitution in the amount of $5,908,726.38, and sentenced him to three years of supervised release.
According to his plea agreement, from March 1, 2008 to about May 2, 2012, Villegas and his co-conspirators Christine Gagnon, Mickey Gines, and others, defrauded at least 390 small business owners for an approximate total loss of $5,261,218. Villegas and his conspirators pretended to operate companies that would obtain grants for the small business owners from public and private sources. In truth, Villegas and his conspirators never intended to pursue any grant funding for the victims. The sole purpose of the scam was to enrich Villegas and conspirators. He and his conspirators made numerous false statements, including false promises of grant funding and false claims that grants had been obtained, but that the victims needed to pay additional fees for the grant agencies to release the funds. Villegas operated the scheme under multiple business names to avoid detection by consumer protection agencies and apprehension by law enforcement.
The case was investigated by the FBI and U.S. Secret Service and prosecuted by Assistant U.S. Attorney Dan Cowhig.
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Large scale marijuana distribution network dismantledRead the Press Release
Stored firearms and cash in Indianapolis storage facilities
PRESS RELEASE
Indianapolis –United States Attorney Josh Minkler announced today federal charges against six Indianapolis-area residents for their role in a large-scale marijuana distribution network in Central Indiana. The group faces charges including conspiracy to distribute 1,000 kilograms or more of marijuana, money laundering and unlawful possession of a firearm.
“Drug dealing brings guns and violence into our communities,” said Minkler. “Those who feel they can deal drugs without consequences in this district should think again.”
Those arrested include:
Joseph P. Pickett Sr. a/k/a Jay, 46, Indianapolis
Darrell P. Pickett, 52, Indianapolis
Sheila Stepp, 54, Indianapolis
Leonard O. Allen Jr., 48, Mooresville
Kelly Jo Spinks Jr., 33, Speedway
William J. Belew Jr., 32, Martinsville
The indictment alleges, between June 2015 and March 2017, the drug trafficking organization (DTO) lead by Joseph Pickett Sr., Darrell Pickett and Spinks, travelled to California and obtained between 100 and 400 pounds of marijuana each trip, then transported it back to Indianapolis. It is alleged that on at least 20 occasions, members of the DTO flew by commercial airlines to California to obtain marijuana. They also drove a motor home to a destination in California for the same purpose.
Once in Indianapolis, the marijuana was placed in storage facilities on the Westside of Indianapolis. Members of the DTO would then remove various amounts from the storage facilities for redistribution.
In total, law enforcement confiscated 181 firearms, (seven of which were stolen in Indiana) 21 vehicles, two motor homes, 16 motorcycles, $19,000 in jewelry, over $4.5 million in cash and 280 pounds of high grade marijuana.
This case was investigate by the Indianapolis Metropolitan Police Department and the Drug Enforcement Administration.
“Drug trafficking contributes to the unstableness and violence we observe within our communities today,” said DEA Assistant Special Agent in Charge Greg Westfall. “The DEA, through its core mission and its law enforcement partnerships bring safety to your neighborhoods by investigating and bringing to justice, criminal organizations that poison our streets with illegal drugs. The success of this case was a direct result of the teamwork and dedication to duty of the investigators and prosecutors who worked this investigation.”
“We are extremely thankful for our federal partnerships that continue to help us rid our streets of illegal narcotics,” said Chief Roach. “Federal, State, and Local law enforcement efforts will continue to keep the pressure on those who choose to participate in illegal narcotics selling in our community.”
According to Assistant United States Attorney Barry D. Glickman who is prosecuting this case for the government, Allen faces up to 10 years imprisonment, all other defendants face 10 years to life if convicted.
An indictment is only charge and not evidence of guilt. All defendants are considered innocent until proven guilty beyond a reasonable doubt in federal court.
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Justice Department Settles Immigration-Related Discrimination Claim against Florida Staffing CompanyRead the Press Release
The Justice Department announced today that it has reached an agreement with Sellari’s Enterprises, Inc. (Sellari’s), a company that provides staffing services in Orlando, Florida. The agreement resolves the department’s investigation into whether Sellari’s violated the Immigration and Nationality Act (INA) by discriminating against work-authorized immigrants when verifying their work authorization.
Based on its investigation, the department concluded that Sellari’s requested that non-U.S. citizens present specific documents to prove their work authorization, such as a Permanent Resident Cards or Employment Authorization Documents, while not requesting specific documents from U.S. citizens. All work-authorized individuals, whether citizens or non-citizens, have the right to choose which valid documentation to present to prove they are authorized to work. The anti-discrimination provision of the INA prohibits employers from subjecting employees to different or unnecessary documentary demands based on employees’ citizenship, immigration status or national origin.
Under the settlement, Sellari’s will pay a civil penalty of $120,000 to the United States, post notices informing workers about their rights under the INA’s antidiscrimination provision, train its staff, and be subject to departmental monitoring and reporting requirements for three years.
“The law protects individuals who are work-authorized from discriminatory obstacles during the employment eligibility verification process,” said Acting Assistant Attorney General Tom Wheeler of the Civil Rights Division. “Employers must ensure that their employment eligibility verification processes are not applied in an unlawful manner.”
The division’s Immigrant and Employee Rights Section (IER), formerly known as the Office of Special Counsel for Immigration-Related Unfair Employment Practices, is responsible for enforcing the anti-discrimination provision of the INA. Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; and retaliation and intimidation.
For more information about protections against employment discrimination under immigration laws, call IER’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call IER’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar; email [email protected]; or visit IER’s English and Spanish websites.
Applicants or employees who believe they were subjected to different documentary requirements based on their citizenship/immigration status or national origin, or discrimination based on their citizenship/immigration status, or national origin in hiring, firing, or recruitment or referral for a fee, should contact IER’s worker hotline for assistance.
Information: Federal Court ArraignmentsRead the Press Release
The United States Attorney’s Office announced that those persons listed below were arraigned before the U.S. Magistrate and the indictments handed down by the Grand Jury unsealed.
Appearing before U.S. Magistrate Cavan in Billings on June 27, 2017 and entering pleas of Not Guilty were:
- ROBERT JOHN BIGBACK, a 22-year-old resident of Billings, appeared on charges of felon in possession of a firearm. If convicted of the charge contained in the indictment, BIGBACK faces 10 years in prison, and $250,000 in fines. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives. PACER Case Reference. 17-59
Appearing before U.S. Magistrate Cavan in Billings on June 22, 2017 and entering pleas of Not Guilty were:
- GEORGE SCOTT PRINDLE, a 60-year-old resident of Billings, appeared on charges of distribution of methamphetamine. If convicted of the charge contained in the indictment, PRINDLE faces 20 years in prison, and $1,000,000 in fines. The case was investigated by the FBI Task Force. PACER Case Reference. 17-64
Appearing before U.S. Magistrate Cavan in Billings on June 20, 2017 and entering pleas of Not Guilty were:
- MATTHEW FRANCESCO MANDALA, a 29-year-old resident of Billings, appeared on charges of conspiracy to possess with intent to distribute heroin, possession with intent to distribute heroin, and possession of a firearm in furtherance of a drug trafficking crime. If convicted of the most serious charges contained in the indictment, MANDALA faces life in prison, and $5,000,000 in fines. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives. PACER Case Reference. 17-62
If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system so that you stay current and not miss any important developments in the case.
To establish a PACER account, which will allow you to review documents filed in the case, please go to, http://www.pacer.gov/register.html. To access the district court’s calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.
Illegal Alien Sentenced to Federal Prison for Iowa-Minnesota Meth ConspiracyRead the Press Release
A man was sentenced June 30, 2017, to six years in federal prison for conspiracy to distribute methamphetamine.
Javier Martinez, 50, from Mexico received the prison term after a guilty plea on March 23, 2017, to conspiracy to distribute methamphetamine.
At his guilty plea hearing, Martinez admitted his involvement in a conspiracy that distributed at least 1,500 grams of actual (pure) methamphetamine from 2015 through September 2016 in Minnesota and Iowa. Martinez also admitted to purchasing about 4-12 grams of methamphetamine 3 to 4 times per week for about one year from Rogelio Garcia-Jimenez for further re-distribution.
Martinez was sentenced in Sioux City by United States District Court Chief Judge Leonard T. Strand. Martinez was sentenced to 72 months’ imprisonment. A special assessment of $100 was imposed. He must also serve a 2-year term of supervised release after the prison term. Martinez is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated as part of the Organized Crime Drug Enforcement Task Force (OCDETF) program of the United States Department of Justice through a cooperative effort of the Drug Enforcement Administration; Iowa Department of Narcotics Enforcement; Minnesota Bureau of Criminal Apprehension; South Dakota Division of Criminal Investigation; Buffalo Ridge Task Force; and Internal Revenue Service.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 17-4084. Follow us on Twitter @USAO_NDIA.
Houston Pill Mill Operator Sentenced to 51 Months in Federal PrisonRead the Press Release
DALLAS — Fahim Ahmed Khan, 59, of Houston, Texas, was sentenced this morning for his involvement in a “pill mill” operation, announced U.S. Attorney John Parker of the Northern District of Texas.
Specifically, Khan was sentenced before U.S. District Judge Sidney A. Fitzwater to 51 months in federal prison. In addition to his prison sentence, he was ordered to pay a $17,500 fine. Khan pleaded guilty in August 2016 to one count of conspiracy to distribute a controlled substance, namely oxycodone. Judge Fitzwater ordered Khan to report to serve his sentence on September 5, 2017.
Twenty-four individuals were indicted by a federal grand jury in Dallas in February 2015 on offenses related to their participation in the prescription drug distribution conspiracy. That indictment alleged that from at least January 2013 through July 2014, the defendants participated in a scheme to illicitly obtain prescriptions for pain medications, such as oxycodone and hydrocodone, and then distribute those controlled substances for profit. As part of the conspiracy, individuals, often homeless or of limited means, were recruited and paid to pose as patients at medical clinics, including the McAllen Medical Clinic, to obtain prescriptions to fill those prescriptions at designated pharmacies.
Superseding indictments were returned in December 2015 and in January 2016, and a total of 26 individuals have now been convicted.
According to plea documents in Khan’s case, beginning in January 2013 and continuing through July 29, 2014, Khan, who has never been a licensed medical practitioner, has never held a DEA registration number, and has never been authorized to distribute or dispense oxycodone, a Schedule II controlled substance, obtained oxycodone with the intent to distribute it at a later time.
Khan established relationships with medical professionals and clinic owners, including co-conspirators, Muhammad Faridi and Dr. Richard Andrews of McAllen Medical Clinic in Dallas, Texas, to assist in the illegal distribution of oxycodone. Khan also pursued relationships with prescription ring leaders and agreed to bring patients to clinics and assisted patients in obtaining prescriptions. Khan would then collected between $420 and $600 in cash from each patient who obtained a prescription for oxycodone. The money collected was then distributed among Faridi, Andrews, himself, and office staff.
This Organized Crime Drug Enforcement Task Force (OCDETF) investigation is being conducted by the Drug Enforcement Administration, with assistance from the Internal Revenue Service Criminal Investigation, the Texas Department of Public Safety, the Louisiana State Police, the Grand Prairie Police Department, the Dallas Police Department, the Houston Police Department, the Arlington Police Department, the Greenville Police Department, the Parker County Sheriff’s Office, the U.S. Marshal’s Service, the U.S. Postal Inspection Service, and the Diplomatic Security Service.
Assistant U.S. Attorney Mary Walters is in charge of the prosecution.
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Houston Bank Robber Handed Significant SentenceRead the Press Release
HOUSTON – A 49-year-old Houston man has been ordered to federal prison for more than 21 years as a result of his convictions for two counts of bank robbery, one count of attempted bank robbery and one count of escape, announced Acting U.S. Attorney Abe Martinez. In May 2016, a federal jury sitting in Houston convicted Henry Lee London Jr. following a three-day trial and approximately five hours of deliberation.
Today, U.S. District Judge Melinda Harmon ordered he serve a total of 262 months in federal prison. The sentence included 240 months for the first bank robbery which will run concurrently to 60 months for the escape. He also received 22 months for each of the other two bank robberies which will served concurrently to each other but consecutive to the other term. The judge noted that London had two prior federal bank robbery convictions which made him a career offender.
“This is exactly the kind of criminal we are targeting with our collaborative Houston Law Enforcement Violent Crime Initiative announced yesterday,” said Martinez. “Reduction of violent crime is important to the community and this sentence reflects the severity of consequences to those that put our citizens at risk.”
During the trial, the jury heard that London escaped from the Leidel Sanction Center on Commerce Street in Houston on March 20, 2014, where he was serving the remainder of his federal sentence for the previous bank robberies. He was wearing a plain blue baseball hat, black shirt, a tan backpack and shoes. Shortly thereafter, a man wearing the same clothing robbed the BBVA Compass bank on 43rd Street in Houston. The robber handed a teller a demand note that read “This is a robbery give large bills.”
Four days later, a man wearing the same clothing and plain blue baseball hat attempted to rob an IBC bank on Katy Freeway in Houston. He was unsuccessful. The teller testified that she was trying to get the money but the robber became frustrated and left. Less than an hour later, the same man wearing the same clothes and plain blue baseball hat robbed the Comerica Bank on Highway 6 South in Houston.
The jury saw videos and photos from each of the robberies and heard testimony from 10 witnesses. Three of the witnesses knew London well from his personal life and were able to identify him in all of the robberies.
London’s defense did not dispute the fact that he escaped from the halfway house. They also did not dispute that the banks were robbed, but contended London was not the robber. The jury was not convinced and found him guilty on all counts.
He has been and will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The FBI Bank Robbery Task Force which included the U.S. Marshals Service, sheriff’s offices in Harris and Fort Bend Counties and the Houston Police Department conducted the investigation. Assistant U.S. Attorneys Jennie Basile and Jill Stotts are prosecuting the case.
Hoover Man Pleads Guilty to Federal Wire, Bank FraudRead the Press Release
TUSCALOOSA – A Hoover man pleaded guilty to fraud charges today in federal court for stealing money from two former employers and a non-profit organization that supported the University of Alabama’s Million Dollar Band, announced Acting U.S. Attorney Robert O. Posey and FBI Acting Special Agent in Charge David W. Archey.
RANDALL SHO WOODS, 33, pleaded guilty before U.S. District Court Judge L. Scott Coogler to two counts of wire fraud and one count of bank fraud. Woods sentencing is scheduled Oct. 12 in Tuscaloosa.
Ingram’s Accounting & Financial Management Inc. in Tuscaloosa previously employed Woods as a staff accountant. While working at the business, Woods fraudulently charged more than $30,000 on corporate credit card accounts for personal expenses, according to the charges and Woods’ plea. Another company, Birmingham-based State Traditions, previously employed Woods as an account clerk. While at State Traditions, Woods engaged in numerous fraudulent activities, including stealing from the company’s Pay-Pal account and forging the endorsement of one of State Traditions’ owners on multiple checks. Combined, Woods stole more than $150,000 from State Traditions, according to his plea. Finally, while Woods served as treasurer of the Million Dollar Band Association, he stole more than $28,000 by writing checks payable to himself, according to his plea.
The maximum penalty for wire fraud is 20 years in prison and a $250,000 fine. The maximum prison sentence for bank fraud is 30 years.
The FBI investigated the case, which Assistant U.S. Attorney Robin Beardsley Mark is prosecuting.
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Home Health Care Business Owner Sentenced to Two Years in Prison for Tax FraudRead the Press Release
Acting United States Attorney Gregory G. Brooker today announced the sentencing of MICHAEL TOBAK, 55, to two years in prison for filing a false tax return. TOBAK pleaded guilty on November 7, 2016, and was sentenced on June 29, 2017, before U.S. District Judge Joan N. Ericksen in U.S. District Court in Minneapolis, Minn.
According to the defendant’s guilty plea and documents filed in court, TOBAK operated International Health Care Services (“IHCS”), a non-profit home health care company. TOBAK maintained two business bank accounts that were used to receive payments for services that IHCS provided to Medicaid beneficiaries. TOBAK purposefully omitted from IHCS’s accounting records the activity in one of those bank accounts. TOBAK then used the business income received in that bank account to make payments on his home mortgage, to pay off personal credit cards, and to transfer money to other accounts he controlled, including large transfers to personal investment accounts. In total, between 2006 and 2013, TOBAK obtained approximately $3.3 million in income from IHCS that he did not report on his individual income tax returns. In pleading guilty, TOBAK admitted to willfully filing false income tax returns from 2006 through 2013, causing a total tax loss for all eight years of $1,356,525.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS.
Assistant U.S. Attorney John E. Kokkinen prosecuted the case.
Defendant Information:
MICHAEL TOBAK, 55
Wayzata, Minn.
Convicted:
- Filing a false tax return, 1 count
Sentenced:
-
24 months in prison
-
One year of supervised release
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Harrison County man convicted of drug chargeRead the Press Release
CLARKSBURG, WEST VIRGINIA – A Mount Clare, West Virginia, man was convicted today of drug possession, Acting United States Attorney Betsy Steinfeld Jividen announced.
Eric Scott Barker, age 37, pled guilty to one count of “Attempted Possession with Intent to Distribute Para-Fluorofentanyl.” The crime took place in Doddridge County on September 15, 2016.
Barker 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 Andrew M. Cogar prosecuted the case on behalf of the government. The United States Postal Service Office of Inspector General, the West Virginia State Police, and the Greater Harrison Drug and Violent Crime Task Force, a HIDTA-funded initiative, investigated.
U.S. District Judge Irene M. Keeley presided.Gulf Breeze Man Sentenced to 20 Years for Receipt of Child PornographyRead the Press Release
PENSACOLA, FLORIDA – Thomas E. Matassa, 24, of Gulf Breeze, was sentenced today to 20 years in prison, followed by lifetime supervised release as a sex offender for receipt of child pornography. The sentence was announced by Christopher P. Canova, United States Attorney for the Northern District of Florida.
In February 2016, a detective interviewed Matassa, who admitted to downloading child pornography online. A forensic examination of Matassa’s laptop revealed approximately 200 images of child pornography and more than 30,000 chat messages with underage males to exchange videos and images of child sexual acts. Matassa pled guilty on April 10, 2017.
The case was investigated by the Federal Bureau of Investigation, the United States Immigration and Customs Enforcement Homeland Security Investigations, the Florida Department of Law Enforcement, the Santa Rosa County Sheriff’s Office, the Georgia Bureau of Investigation, and the North Florida Internet Crimes Against Children Task Force. Assistant United States Attorney David L. Goldberg prosecuted the case.
U.S. Attorney Canova said: “Protecting our children from exploitation is a top priority of my office and the Department of Justice. I commend the hard work of our prosecutors and law enforcement professionals who protect our communities and bring child predators to justice.”
“The FBI is committed to protecting children, who are among the most vulnerable in our society,” said Charles P. Spencer, Special Agent in Charge of the FBI Jacksonville Division. “We appreciate the efforts of our many law enforcement partners in this case, and remain committed to working tirelessly with them to identify these predators, and find justice for their victims.”
“HSI special agents, with our local, state and federal law enforcement partners, have ensured this predator will not continue to re-victimize children,” said Ivan J. Arvelo, acting special agent in charge of HSI Tampa.
“Matassa is a dangerous predator who was aggressively targeting young boys online in an attempt to establish relationships with them,” said FDLE Pensacola Special Agent in Charge Jack Massey. “I thank our FDLE agents and law enforcement partners for their dedication and hard work to take this suspect off the street.”
The United States Attorney's Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. To access public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
Grandview Man Sentenced to 17 Years for Crack CocaineRead the Press Release
KANSAS CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that a Grandview, Mo., man was sentenced in federal court today for possessing crack cocaine with the intent to distribute.
Michael T. Johnson, 60, of Grandview, was sentenced by U.S. Chief District Judge Greg Kays to 17 years in federal prison without parole.
On Nov. 7, 2016, Johnson pleaded guilty to possessing crack cocaine with the intent to distribute.
Johnson was arrested on April 3, 2014, following a traffic stop by Kansas City police officers. When Johnson got out of his vehicle, an officer saw two clear plastic baggies on the driver’s seat that contained a total of .4 grams of crack cocaine. Officers also found a white grocery sack containing a clear plastic bag with 22.9 grams of crack cocaine in Johnson’s hoodie pocket.
This case is being prosecuted by Special Assistant U.S. Attorney Courtney R. Pratten. It was investigated by the Kansas City, Mo., Police Department.
Georgia Man Indicted for Possessing Multiple Counterfeit Bank CardsRead the Press Release
BIRMINGHAM – A federal grand jury late Thursday indicted a Georgia man for possessing multiple counterfeit credit or debit cards in Calhoun County in April, announced Acting U.S. Attorney Robert O. Posey and U.S. Secret Service Special Agent in Charge Michael Williams.
A one-count indictment filed in U.S. District Court charges MARVIN ELIOTT GERMAIN, 22, with possessing more than 15 of the counterfeit cards on April 12.
The maximum penalty for possessing more than 15 unauthorized and counterfeit access devices is 10 years in prison and a $250,000 fine.
The Secret Service investigated the case, which Assistant U.S. Attorney Erica W. Barnes is prosecuting.
An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.
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Four Erie Residents Charged with Dealing Crack CocaineRead the Press Release
ERIE, Pa. – Four Erie residents have been indicted by a federal grand jury in Erie on charges of violating federal drug laws, Acting United States Attorney Soo C. Song announced today.
The 11-count indictment, returned on June 13 and unsealed yesterday, named Ravone Robert Deberry, 24, Paris Xavier Boyd, 28, Chardonna Lasha Gordy, 21, and Andre Javon Knight, 34 as defendants.
According to the indictment presented to the court, the defendants conspired to possess with intent to distribute and distribute crack cocaine. In addition, Deberry and Boyd possessed with intent to distribute and distributed crack cocaine. Knight and Goudy are also charged with using a cellular telephone in the commission of the drug conspiracy.
Andre Javon Knight is a fugitive. Anyone with information regarding his whereabouts is asked to call the FBI in Erie at (814) 452-4516 or the Erie Bureau of Police at (814) 870-1125.
The law provides for a maximum total sentence of 80 years in prison, a fine of $7,000,000, or both for Deberry; 100 years in prison, a fine of $8,000,000 or both for Boyd; 52 years in prison, a fine of $5,750,000 or both for Knight; and 48 years in prison, a fine of $5,500,000 or both for Goudy. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendants.
Assistant United States Attorney Marshall J. Piccinini is prosecuting this case on behalf of the government.
The EAGLE task force, which is comprised of members of the Federal Bureau of Investigation, the Pennsylvania Attorney General’s Office, Bureau of Narcotics Investigation and the Erie Police Department, conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former United States Air Force Airman Indicted on Two Counts of Involuntary Manslaughter in Fatal Collision near Vandenberg AFBRead the Press Release
LOS ANGELES – A former airman with the United States Air Force has been indicted on two counts of involuntary manslaughter stemming from a traffic collision last summer near Vandenberg Air Force Base that caused the death of two people and the serious injury of a third.
Shaquille Lindsey, 23, of Covington, Georgia, was named in a three-count indictment returned by a federal grand jury on Wednesday. Lindsey previously served at Vandenberg Air Force Base in Lompoc.
The indictment alleges two counts of involuntary manslaughter while driving under the combined influence of both alcohol and marijuana, and while using his cellphone. The third count alleges driving under the influence and causing bodily injury.
Lindsey allegedly drove his car into oncoming traffic and collided head on into the victim’s vehicle, causing the death of the driver and his wife, and seriously injuring the driver’s adult son.
The indictment alleges that on August 28, 2016, Lindsey was driving on Santa Lucia Canyon Road – allegedly going more than 15 miles above the speed limit – when his vehicle veered into the oncoming lane and collided head-on with the victim’s car.
An indictment or criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Lindsey is expected to make his initial court appearance in United States District Court in Georgia in early July.
If convicted of the three offenses charged in the indictment, Lindsey would face a statutory maximum sentence of 18 years in federal prison.
The investigation of this case was conducted by the United States Air Force, Office of Special Investigations. The case is being prosecuted by Assistant United States Attorneys Joanna Curtis and Julian André.
Former Postal Employee Sent to Prison for Soliciting Bribes During ElectionRead the Press Release
McALLEN, Texas – A former U.S. Postal Service (USPS) carrier has been ordered to federal prison for receiving bribe money in exchange for providing addresses of postal ballot recipients, announced Acting U.S. Attorney Abe Martinez.
Noe Olvera, a 44-year-old resident of Mission, pleaded guilty March 7, 2017, admitting he accepted $1,000 for providing the addresses in relation to the Hidalgo County Sheriff’s race in 2014.
Today, U.S. District Judge Micaela Alvarez handed Olvera an 18-month sentence to be immediately followed by three years of supervised release. In handing down the sentence, Judge Alvarez noted the problems with corruption in this community and stated that it was so prevalent that some people had equated the area with a third world country. The court stated that she intended this sentence to help deter others from committing acts of corruption in the local community in the future, knowing that imprisonment was a likely outcome for them as well.
It is a violation of law and official duty for Postal Service employee to provide a list of postal patrons names and/or addresses to another person.
On or about Oct. 15, 2014, Olvera provided a list of names and addresses of postal patrons on his route in Mission who received ballots during the Democratic primary. He accepted the $1,000 payment while on duty in his official vehicle and in his postal carrier uniform.
Olvera was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.
The USPS-Office of Inspector General conducted the investigation with assistance of the FBI. Assistant U.S. Attorneys David A. Lindenmuth and Roberto “Bobby” Lopez are prosecuting the case.
Former Chief Financial Officer of American Realty Capital Partners (“ARCP”) Found Guilty After Trial of Accounting FraudRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that a federal jury today found BRIAN BLOCK, the former chief financial officer of the publicly traded real estate investment trust (“REIT”) formerly known as American Realty Capital Partners (“ARCP”), guilty of inflating a key metric used to evaluate the financial performance of publicly traded REITs in ARCP’s filings with the U.S. Securities and Exchange Commission (the “SEC”). BLOCK was convicted after a three-week trial before U.S. District Judge J. Paul Oetken.
BLOCK’s co-defendant, former chief accounting officer Lisa McAlister, pled guilty to securities fraud and related charges on June 29, 2016.
Acting Manhattan U.S. Joon H. Kim said: “As a unanimous jury found today, Brian Block, the former CFO of ARCP, intentionally misled investors by overstating the health and profitability of his company. This trial revealed that when it looked like ARCP would not meet investors' expectations, Block made up numbers and fudged the books. The integrity of our markets rests on the truth of the financial information provided to investors. And those like Block who lie and manipulate the markets must be identified and held to account.”
According to allegations contained in the Indictment and evidence presented during the trial in Manhattan federal court:
In 2014, ARCP was a publicly traded REIT headquartered in Manhattan, New York. ARCP’s securities traded under the symbol “ARCP” on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) exchange.
ARCP, like many REITs, measured its financial performance through metrics besides, or in addition to, traditional measurements of company performance calculated using Generally Accepted Accounting Principles (“GAAP”). ARCP calculated and reported to the investing public a non-GAAP measure called adjusted funds from operations, or AFFO, which was designed to more accurately reflect ARCP’s cash flow and financial performance by presenting ARCP’s income before consideration of non-cash depreciation and amortization expense and by excluding certain one-time charges and expenses. REITs such as ARCP commonly reported their AFFO figures, including AFFO per share, to the investing public and in filings with the SEC. ARCP also provided forward-looking guidance to the investing public regarding their anticipated AFFO performance in upcoming time periods.
Prior to the filing of ARCP’s Form 10-Q setting forth ARCP’s financial statements for the second quarter of 2014 (the “Second Quarter 10-Q”), BRIAN BLOCK, along with Lisa McAlister and others, came to understand that the method used by ARCP to calculate AFFO in the first quarter of 2014 and in certain previous quarters was erroneously inflated. Another employee of ARCP (“CC-1”) had brought this methodological error to the attention of BLOCK, McAlister, and others shortly before the filing of ARCP’s first quarter 2014 10-Q (the “First Quarter 10-Q”), but no corrective change was made to the First Quarter 10-Q while the issue was under review. Following the filing of the First Quarter 10-Q, CC-1 concluded, and advised BLOCK, McAlister, and others, that the reported AFFO per share calculation for the first quarter of 2014 was overstated by approximately $0.03 per share. Instead of $0.26 per share, which was publicly reported by ARCP to its shareholders and the investing public, and which placed ARCP on track to meet its full-year AFFO per-share guidance, the correct AFFO for the first quarter of 2014 was $0.23 per share.
Despite his knowledge of a material error in ARCP’s previous filings with the SEC, BRIAN BLOCK took no steps to advise the Audit Committee of ARCP’s Board of Directors, or ARCP’s outside auditors, of the error in the First Quarter 10-Q. Moreover, BLOCK, McAlister, and CC-1 then knowingly facilitated the use of the same materially misleading calculations in ARCP’s Second Quarter 10-Q. For example, on or about July 24, 2014, a draft of ARCP’s Second Quarter 10-Q was circulated to members of ARCP’s Audit Committee. The draft included an AFFO calculation for the six-month period ending June 30, 2014, that incorporated AFFO figures from the first quarter of 2014 that BLOCK, McAlister, and CC-1 knew to be erroneously inflated.
On or about July 28, 2014, BLOCK met with McAlister and CC-1 in his office in Manhattan for the purpose of finalizing the financial figures that were to be included in ARCP’s Second Quarter 10-Q. Utilization of a proper method to calculate ARCP’s second quarter 2014 AFFO would have exposed that the reported AFFO and AFFO per share figures from the first quarter were inflated. Accordingly, during the meeting, BLOCK, McAlister, and CC-1 inserted into a spreadsheet BLOCK was using to calculate AFFO and AFFO per share for the first and second quarters of 2014 and for the first six months of 2014 (“YTD 2014”) figures that fraudulently inflated the AFFO and AFFO per share calculations that were to be included in the Second Quarter 10-Q and the related ARCP press release. The fraudulent numbers BLOCK, McAlister, and CC-1 used to inflate the AFFO and AFFO per share figures had no basis in fact, were without documentary support, and did not tie to ARCP’s general ledger accounting system, as BLOCK knew and understood at the time. The fraudulent numbers included in the spreadsheet prepared by BLOCK were then incorporated into ARCP’s Second Quarter 10-Q, which was filed with the SEC the following day. As a result of the manipulative efforts of BLOCK, McAlister, and CC-1, ARCP’s SEC filings included AFFO and AFFO per share figures for the second quarter of 2014 and for the first six months of 2014 that were fraudulently inflated.
The Second Quarter 10-Q was signed by, among others, BRIAN BLOCK. Additionally, on a certification accompanying the 10-Q, BLOCK falsely certified, among other things, that the Second Quarter 10-Q did not contain any materially untrue statements or material omissions. He further falsely certified that he had disclosed to ARCP’s auditors and the audit committee of its board of directors: “Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.” In a second certification accompanying the 10-Q, BLOCK falsely certified that: “The quarterly report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.”
With regard to YTD 2014 specifically, the fraud resulted in an intended overstatement of AFFO by approximately $13 million and an intended overstatement of AFFO per share by approximately $0.03, or approximately 5% of total AFFO per share. By reporting AFFO per share of $0.24 in the second quarter, after having reported AFFO per share of $0.26 in the first quarter, BRIAN BLOCK and his co-conspirators misled ARCP’s shareholders and the investing public by falsely representing that ARCP’s AFFO per share for the first six months of 2014 was consistent with analysts’ expectations and on track to meet ARCP’s guidance for AFFO per share for calendar year 2014, when in fact, they were not.
* * *
BRIAN BLOCK, 44, of Hatfield, Pennsylvania, was convicted of one count of conspiracy to commit securities fraud and other offenses (Count One), one count of securities fraud (Count Two), two counts of making false filings with the SEC (Counts Three and Four), and two counts of submitting false certifications along with required filings with the SEC (Counts Five and Six). The securities fraud, false filings charges, and false certification charges each carry a maximum prison term of 20 years. The charge of conspiracy carries a maximum prison term of five years.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Kim praised the investigative work of the FBI and also thanked the SEC.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Edward Imperatore, and Daniel Tehrani are in charge of the prosecution.
Former CFO of Health Insurance Company Sentenced to Prison for EmbezzlementRead the Press Release
The former Chief Financial Officer (CFO) of Soundpath Health was sentenced today in U.S. District Court in Seattle to a year and a day in prison for embezzling more than $631,000 from his employer, announced U.S. Attorney Annette L. Hayes. The embezzlement was part of a complex wire fraud scheme that 58-year-old ZACHARY AUGUSTUS SMULSKI used in an attempt to fund his own start-up companies. When the Comptroller at Soundpath Health discovered that SMULSKI had hidden company funds, SMULSKI transferred the money to Soundpath and left the company. Today SMULSKI paid $29,514 in restitution. U.S. District Judge Robert S. Lasnik imposed three years of supervised release to follow prison and told SMULSKI, “it was a crime done for selfish reasons.”
According to records filed in the case, SMULSKI was hired as the CFO of Soundpath Health in 2008. In 2011, in order to improve the company’s cash reserves, SMULSKI initiated a leaseback program which should have put cash on the company balance sheet. However, SMULSKI diverted funds received under the program to accounts he established for a start-up company he was developing. While he passed some of the funding back to Soundpath Health, he retained $631,500 for his personal business endeavors and used fake accounting documents to conceal the embezzlement. It was only after the Soundpath Health Comptroller started questioning some of the financial records in the midst of a state audit, that SMULSKI suddenly delivered a check from the start-up account to Soundpath Health to repay the $631,500. SMULSKI had used more than $20,000 of Soundpath Health’s money to pay business expenses of his start-up.
The case was investigated by the U.S. Department of Health and Human Services -- Office of Inspector General and the FBI. The case is being prosecuted by Assistant United States Attorney Francis Franze-Nakamura.
Former Border Patrol Agent Convicted of Making a False StatementRead the Press Release
McALLEN, Texas ‐ A former Border Patrol (BP) agent has been convicted of making a false statement regarding a narcotics seizure, announced Acting U.S. Attorney Abe Martinez. Eduardo Bazan, 49, Edinburg, Texas, pleaded guilty today.
As part of an ongoing investigation, law enforcement learned that a 66-kilogram load of cocaine that Border Patrol seized in 2007, may have been staged with sham, or diluted, narcotics to allow drug traffickers to steal the original narcotics from unwitting sources of supply.
On Oct. 31, 2016, Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) interviewed Bazan who had been a Border Patrol agent assigned to the McAllen Border Station. He falsely stated that in February 2007, he had unsuccessfully attempted to apprehend individuals running from a vehicle. Upon returning to that vehicle, he saw other agents recovering the bundles of cocaine.
On Nov. 1, 2016, Bazan admitted he had lied to agents and that the load vehicle had been abandoned. Bazan ran from the scene to make other agents believe the vehicle had been occupied. Bazan further admitted to receiving $8,000 for assisting the drug traffickers with the staged seizure.
U.S. District Judge Randy Crane accepted the plea and has set sentencing for Sept. 12, 2017. At that time, he faces up to five years in federal prison and a possible $250,000 maximum fine. He was permitted to remain on bond pending that hearing.
HSI conducted the investigation. Assistant U.S. Attorney Kristen Rees is prosecuting the case.
Former Bookkeeper for South Sound Real Estate Franchises Convicted of Embezzling more than $400,000Read the Press Release
The 48-year-old former bookkeeper for two Windermere Real Estate franchises was convicted today in U.S. District Court in Tacoma of six counts of wire fraud related to her embezzlement scheme, announced U.S. Attorney Annette L. Hayes. CINDI ALLISON, now of Ben Wheeler, Texas, used her unfettered access to the bank accounts of Windermere Puyallup and Windermere South Sound to embezzle $478,398. ALLISON was remanded to custody following the jury verdict this morning. Sentencing is scheduled before U.S. District Judge Ronald B. Leighton on October 6, 2017.
During a four-day jury trial, prosecutors presented evidence that ALLISON transferred money from Windermere accounts to her own bank accounts and those of her boyfriend, ex-husband, and service providers such as a roofer in Ben Wheeler, Texas. Between 2011 and 2015, ALLISON made 782 unauthorized transfers from the two real estate franchise accounts to sixteen different accounts that all had some connection to ALLISON. As the bookkeeper, ALLISON made various entries in the records to make the transfers appear legitimate. The fraud came to light in March 2015, when the owner of the two franchises decided to sell the South Sound Windermere franchise because the company was not generating enough income compared to expenses. The purchaser started investigating some of the transfers and could not get straight answers from ALLISON. ALLISON had been working remotely from Texas as the bookkeeper, and the company shut down the computer system to protect its accounts.
The U.S. Secret Service began investigating the wire fraud in August 2015. When questioned, ALLISON claimed she had embezzled the money to support her boyfriend’s drug habit.
The case was investigated by the U.S. Secret Service. The case is being prosecuted by Assistant United States Attorneys Andre Peñalver and Steven Masada.
Five Illegal Aliens Indicted for Reentering U.S.Read the Press Release
BIRMINGHAM – A federal grand jury this week indicted five men for being in the United States illegally after previous deportation, announced Acting U.S. Attorney Robert O. Posey and U.S. Immigrations and Customs Enforcement Special Agent in Charge Ray Parmer.
Separate indictments filed in U.S. District Court charge DANIEL ESTEBAN-MATEO, 48, MARIANO MARTINEZ-DIEGO, 31, both of Guatemala, and JACIEL JIMENEZ-CAMPUSANO, 34, MISAEL AGOSTTINI-OTERO, 32, and CELEDONIO CONTRERAS-PACHECO, 32, all of Mexico, with illegal re-entry into the United States after previous deportation or removal.
According to their individual indictments, the charges are as follows:
Esteban-Mateo was voluntarily in the U.S., in Jefferson County, on June 2 after having been removed from the country to Guatemala in September 1996 following a conviction for an aggravated felony.
Martinez-Diego was found in Marshall County on May 14. He previously was removed from the U.S. in 2012, 2014 and 2015.
Jimenez-Campusano was found in Madison County on May 26 after being removed to Mexico in November 2011.
Agosttini-Otero was in Jefferson County on May 25 after being removed to Mexico in 2009, five times in 2010, and twice in 2012.
Contreras-Pacheco was in Shelby County on June 10 after being removed from the U.S. in May 2010.
The maximum penalty for illegal re-entry after deportation is two years in prison and a $250,000 fine.
ICE investigated the cases, which the U.S. Attorney’s Office for the Northern District of Alabama is prosecuting.
An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.
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Felon Wounded in Drug Deal Gunfight Sentenced to Five Years in Prison for Drug and Gun CrimesRead the Press Release
A 24 -year-old Seattle man was sentenced today in U.S. District Court in Seattle to five years in prison and five years of supervised release for three felony counts related to illegal gun possession and drug distribution, announced U.S. Attorney Annette L. Hayes. DION VINCENT HOOKS survived an August 2015, gun battle inside a car at a downtown Seattle Shell gas station. In the shooting, another young man was shot in the head and killed. The shooting occurred during a drug deal involving HOOKS and three others. Hooks pleaded guilty last March to being a felon in possession of a firearm, possession of marijuana with intent to distribute, and possession of a firearm in furtherance of a drug trafficking crime. At sentencing U.S. District Judge Robert S. Lasnik said, “any number of people could have been shot and killed at that service station . . . with drunk felons with firearms.”
“This case demonstrates yet again that guns and drugs don’t mix,” said U.S. Attorney Annette L. Hayes. “One person killed and bullets flying – with those who happened to be in the area very much at risk. My office is steadfastly committed to working with our state and local partners to prosecute federally those who risk the safety of our neighborhoods and communities without a second thought.”
According to records filed in the case, two men drove into the Shell station on Denny Way in Seattle intending to do a drug deal. Different witnesses have said the deal was for marijuana, or for prescription cough syrup, or Xanax. What is known is that after HOOKS and another man got into the back seat of the car, gunfire erupted and 22-year-old Wafi Kilaouy was shot in the head and killed. Frankie Miranda and HOOKS were both shot but survived. The car’s driver managed to get out of the car uninjured and fled the scene. Miranda was sentenced last month to ten years in prison. The forensic evidence indicates HOOKS did not fire his weapon.
The shooting on Lower Queen Anne Hill was the latest in a string of convictions for HOOKS. As a juvenile he was convicted of unlawful possession of a firearm following a “shots fired” incident at Laurelhurst Park in Seattle. In 2010, HOOKS was convicted of robbery and second degree assault with a deadly weapon for robbing two school classmates at gunpoint. In 2011, HOOKS was sentenced to four years in prison for promoting prostitution. He was released from custody about a year before the shooting in this case.
In imposing the sentence, Judge Lasnik noted that after he was shot, but before he was arrested in this case, HOOKS had turned his life around and abandoned his criminal lifestyle.
The investigation revealed that three days before the shooting at the Shell station, HOOKS and Kilaouy burglarized a marijuana store in North Seattle while armed with at least one firearm.
The case was investigated by the Seattle Police Department and the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF). The case is being prosecuted by Assistant United States Attorney Stephen Hobbs.
Federal Grand Jury indicts 23 for their roles in Southern West Virginia drug conspiracyRead the Press Release
CHARLESTON, W.Va. – United States Attorney Carol Casto announced today that a federal grand jury sitting in Charleston returned two indictments charging a total of 23 individuals for their roles in a Southern West Virginia drug conspiracy. The indictments resulted from a long-term investigation led by the Federal Bureau of Investigation with assistance from the Beckley/Raleigh County Drug and Violent Crime Unit, the Drug Enforcement Administration, the West Virginia State Police, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
One indictment charged 18 individuals with one count each of conspiracy to manufacture, distribute, and to possess with intent to distribute 280 grams or more of crack and conspiracy to distribute and to possess with intent to distribute five kilograms or more of cocaine, and one kilogram or more of heroin.
The defendants charged with that crime are Velarian Carter, also known as “L” or “Larry,” 38, of Beckley; Detria Carter, also known as “Tria,” 32, of Beckley; Rashaun Carter, also known as “Show,” 39, of Christiansburg, Virginia; Charles Hill, also known as “UNC,” 53, of Beckley; James Rodney Staples, also known as “Rod” or “Puerto Rico,” 38, of Woodbridge, Virginia; Karl Funderburk, also known as “Scoot,” 31, of Hurricane; Letina Carter, 55, of Beckley; Esau Burnette, also known as “Saw,” 38, of Beckley; Derrick Staples, 40, of Charleston; Dominic Copney, 23, of Beckley; Corey Larkin, 37, of Beckley; George Brockman, 37, of Kimberly in Fayette County; Shaun Jones, 39, of Beckley; Shaun Givens, 39, of Beckley; Jonathan Brockman, 33, of Kimberly; Jonathan Vincent Moore, 33, of Beckley; Shawn Akiem Anderson, 43, of Beckley; and Shaun Coleman, 45, of Raleigh County.
In the same indictment, some of the defendants identified above were charged with additional crimes. Detria Carter was also charged with one count of possession with intent to distribute 500 grams or more of cocaine and one count of possession with intent to distribute fentanyl. Detria Carter was additionally charged with one count of carrying firearms during a drug trafficking crime. Funderburk was also charged with one count of possession with intent to distribute crack and one count of using a firearm during a drug trafficking crime. Larkin was also charged with one count of possession with intent to distribute 100 grams or more of heroin. Moore was also charged with one count of distribution of cocaine.
A separate indictment charged five individuals with one count each of conspiracy to distribute and to possess with intent to distribute oxycodone, 500 grams or more of methamphetamine, and heroin.
The defendants charged with that crime are Cheyenne Fragale, 29, of Boomer in Fayette County; Macon Fragale, 33, of Fayette County; Rory White, also known as “Dub,” 33, of Montgomery; Tiffany Ramsey, 26, of Boomer; and Donald Scalise, 60, of Fayette County.
These prosecutions are 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 illegal drugs. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down pill trafficking, eliminating open air drug markets, and curtailing the spread of illegal drugs in communities across the Southern District.
NOTE: The indictments in these cases are only accusations. The defendants are presumed innocent unless and until proven guilty in a court proceeding.
Federal Grand Jury in Chicago Indicts Two Former Tech Executives for Allegedly Conspiring to Obstruct SEC Probe into Sale of CompanyRead the Press Release
CHICAGO — A federal grand jury in Chicago has indicted two former executives of a Florida technology company for allegedly conspiring to obstruct an investigation by the U.S. Securities and Exchange Commission.
CHRISTOPHER YOUNG, the former President of Tampa-based M2 Interactive Group Inc., and JOSHUA CARLUCCI, M2 Interactive’s former Chief Executive Officer, are charged with conspiracy to obstruct, influence, and impede an official proceeding. The pair allegedly conspired with executives from Schaumburg-based Quadrant 4 System Corp. to obstruct an SEC investigation into Quadrant 4’s 2013 purchase of M2 Interactive.
The indictment was returned Thursday in federal court in Chicago. In addition to the conspiracy count, Young, 35, of Norwich, N.Y., and Carlucci, 39, of Tampa, Fla., are also charged with attempting to obstruct, influence, and impede an official proceeding. Carlucci also faces a charge of making false statements to the Federal Bureau of Investigation. The Court will schedule arraignments for Young and Carlucci at a later date.
New and expanded criminal charges were also filed Thursday against the two Quadrant 4 executives, NANDU THONDAVADI and DHRU DESAI. A criminal information filed in federal court in Chicago charged them with wire fraud. Arraignments for Thondavadi, 63, of North Barrington, and Desai, 55, of Barrington, have been scheduled for July 6, 2017, at 10:00 a.m., before U.S. District Judge Charles Norgle.
The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent in Charge of the Chicago office of the FBI. The Chicago office of the SEC provided valuable assistance.
M2 Interactive was a technology company that developed applications for mobile devices and conducted business under the name Momentum Mobile. Quadrant 4 provides software products, platforms and consulting services to customers in the healthcare and education sectors. As a public company, Quadrant 4 is required to provide to the SEC a detailed report of its financial condition.
In 2015 the SEC launched an investigation of Quadrant 4 based on indications that the firm may have violated federal securities laws. The FBI initiated an investigation of Quadrant 4 in 2016. As set forth in the information against Thondavadi and Desai, the investigation revealed that Thondavadi and Desai engaged in a wide-ranging scheme to defraud Quadrant 4’s shareholders by misappropriating more than $3 million from the company, fraudulently inflating Quadrant 4’s revenue, and regularly concealing Quadrant 4’s liabilities. The information charges that Thondavadi and Desai certified false SEC reports, including Quadrant 4’s 2014 Form 10-K, in which the defendants fraudulently inflated Quadrant 4’s revenue by more than $4.2 million – nearly 10% of Quadrant 4’s reported income that year.
The fraud scheme also involved numerous misrepresentations related to Quadrant 4’s acquisitions, including misrepresentations about the terms of Quadrant 4’s purchase of Momentum Mobile in 2013. Quadrant 4 purchased Momentum Mobile for $100,000 in cash and 250,000 shares of Quadrant 4 stock, plus assumption of approximately $165,000 in Momentum Mobile liabilities, according to the indictment against Young and Carlucci. Federal authorities discovered that Thondavadi and Desai later concealed the true terms of the deal from Quadrant 4’s auditor and its shareholders, according to the charges. The pair furnished the auditor with a fictitious agreement that Thondavadi created, the charges state. The bogus document inflated the purchase price and failed to mention the liabilities Quadrant 4 assumed, according to the charges.
As set forth in the charges, the investigation further revealed that Thondavadi and Desai attempted to obstruct the SEC’s investigation of Quadrant 4 as it related to the Momentum Mobile acquisition. In July 2016 SEC attorneys sought to question Young and Carlucci, who were unaware of the fictitious acquisition agreement that Thondavadi created. Carlucci notified Thondavadi and Desai of the SEC’s inquiry, and the Quadrant 4 executives responded by striking a deal with Young and Carlucci to pay them cash in exchange for their agreement to send Thondavadi an e-mail falsely stating that Momentum Mobile had previously authorized the terms of the fictitious agreement, according to the charges. The defendants attempted to disguise the payments – $102,900 to Young and $60,000 to Carlucci – as “consulting” fees, the charges state.
The public is reminded that charges are not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The conspiracy, obstruction and wire fraud charges are each punishable by up to 20 years in prison, while making false statements to the FBI is punishable by up to five years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Matthew Madden.
Federal Grand Jury Indicts Two as Repeat Felons Possessing FirearmsRead the Press Release
BIRMINGHAM – A federal grand jury late Thursday indicted two men, both with multiple prior felony convictions, for illegally possessing firearms, announced Acting U.S. Attorney Robert O. Posey and federal Bureau of Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge Steven L. Gerido.
Separate and unrelated indictments filed in U.S. District Court charge ARTHUR McCALL JR., 42, of Birmingham, and TERRY ROY WILLIAMS, 45, of Jackson County, with being convicted felons in possession of firearms.
According to McCall’s one-count indictment, he possessed a Smith & Wesson 9mm semi-automatic pistol on June 3, 2016, in Jefferson County. McCall’s prior felony convictions listed in the indictment are: unlawful possession of a controlled substance, June 2007, Shelby County District Court; second-degree assault, March 2011, Shelby County District Court; first-degree unlawful possession of marijuana and unlawful possession of a controlled substance, December 2004, Morgan County Circuit Court; and, all in Jefferson County Circuit Court, unlawful possession and receiving a controlled substance, July 1996, third-degree robbery, February 1999, unlawful possession of a controlled substance, June 2005, and first-degree possession of marijuana, July 2010.
Williams’ two-count indictment charges him with possessing a destructive device, similar to an explosive grenade, on July 6, 2016, in Jackson County. Williams’ prior felony convictions listed in the indictment are: bank robbery, February 1994, U.S. District Court for the Western District of Oklahoma; third-degree burglary and second-degree property theft, January 1995, Etowah County Circuit Court; first-degree property theft, August 1999, Jackson County Circuit Court; and unlawful possession of a controlled substance, November 2002, Jackson County Circuit Court.
A second count in Williams’ indictment charges him with possessing a destructive device that he did not register with the National Firearms Registration and Transfer Record. The device he possessed should have been registered because it expelled a projectile by explosive discharge and it had a barrel with a bore of more than one-half inch in diameter, according to the indictment.
The maximum penalty for being a convicted felon in possession of a firearm is 10 years in prison and a $250,000 fine. The maximum penalty for possessing an unregistered firearm is 10 years in prison and a $10,000 fine.
ATF investigated the cases, which the U.S. Attorney’s Office for the Northern District of Alabama is prosecuting.
An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.
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Federal Court Enters Judgement Imposing $4.4 Million Civil Penalty Against Former Berea PharmacyRead the Press Release
Judgment assesses penalties for illegal sales of pseudoephedrine
LEXINGTON, Ky. – The U.S. District Court has entered a civil judgment for $4,474,000, in favor of the United States and against a former Berea pharmacy and its owner, assessing civil penalties against them for illegally selling 100-count bottles of pseudoephedrine and failing to comply with other laws governing pseudoephedrine sales.
The civil judgment is part of a settlement resolving a federal civil suit against RX Discount of Berea, P.L.L.C., which formerly operated a retail pharmacy in Berea, and its owner and manager, Lonnie W. Hubbard, age 41. According to the United States’ civil complaint, from 2009 through 2012, RX Discount, acting through Hubbard, knowingly or recklessly sold at retail over 1,000 100-count bottles of pseudoephedrine, in violation of the Controlled Substances Act (CSA). Further, RX Discount was not certified under the CSA to sell pseudoephedrine, from January 1, 2011 through June 8, 2011, July 1, 2012 through July 18, 2012, and August 1, 2013 through March 29, 2014.
As part of the civil settlement, RX Discount and Hubbard acknowledged that they engaged in this misconduct, and the civil judgment holds RX Discount and Hubbard liable under the CSA. The judgment also imposes civil monetary penalties against them: $4,000 for each sale of 100-count bottles of pseudoephedrine, and $10,000 for each period RX Discount failed to be properly certified to sell pseudoephedrine, for a total of $4,474,000.
In February 2017, in a related criminal case, Hubbard was convicted of 71 counts involving the illegal sales of oxycodone, hydrocodone, and pseudoephedrine and money laundering. Today Hubbard was sentenced to 30 years imprisonment. Hubbard’s wife, Meggan, who also worked at RX Discount, is currently incarcerated, serving five months for her involvement in purchasing property using funds from the unlawful sales of prescription drugs and pseudoephedrine.
Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky announced the judgment.
The investigation of the civil case was conducted by the DEA, the Office of the Inspector General for the Cabinet of Health and Family Services, and the Kentucky Board of Pharmacy. Assistant U.S. Attorney Christine Corndorf represented the United States.