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Thursday 19 January 2017
Multiple Life Sentences Handed Down in Bradenton Gang ProsecutionRead the Press Release
Tampa, Florida – U.S. District Judge Elizabeth A. Kovachevich this week sentenced six individuals for their roles in wide-ranging racketeering and drug distribution conspiracies that involved seven murders, three kidnappings, multiple firearms and drug offenses, and related criminal conduct. The defendants were found guilty on September 8, 2016, following a three-month jury trial.
U.S. Attorney A. Lee Bentley, III, James Trusty, Chief of the Justice Department’s Organized Crime and Gang Section, and Special Agent in Charge Daryl McCrary of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Tampa Field Office, made the announcement.
Nathaniel Harris (25), a/k/a “Popo,” was sentenced to four life terms for the murders of Demetrius Cunningham and Calvin Barnes, and racketeering and drug trafficking conspiracy. In addition, he was sentenced to consecutive terms ranging from 10 to 25 years’ imprisonment for attempted murder, armed kidnapping, and drug and firearms offenses.
Napoleon Harris (32), a/k/a “Pole,” was sentenced to three life terms for the murder of Demetrius Cunningham, racketeering, and drug conspiracy. He was also sentenced to 10 years in prison for being a felon in possession of ammunition.
Charlie Green (30), aka “Mr. 30N32,” was sentenced to five life terms for the murders of Joseph Evans and Ceola Lazier, racketeering, drug conspiracy, and armed kidnapping.
Jerry Green (30), a/k/a “Jerk,” was sentenced to four life terms for the murders of Ceola Lazier and Carlos Jurado, racketeering, and drug conspiracy.
Deonte Martin (27), a/k/a “Tang,” was sentenced to three life terms for the murder of Brenton Coleman, racketeering, and drug trafficking conspiracy. He also received additional sentences ranging from 10 to 30 years for firearms and drug charges.
Corey Harris (26), aka “James,” was sentenced to 120 years in federal prison for drug trafficking and distribution of crack cocaine.
Nathaniel Harris and Napoleon Harris were also ordered to pay $8,000 restitution to the family of Demetrius Cunningham.
According to evidence presented at trial, the defendants were members of a racketeering enterprise that controlled illicit drug distribution and committed murders for hire in and around Bradenton. From about 2006 through 2014, the defendants were responsible for murdering seven individuals, including one victim who was gunned down at a community center in front of hundreds of children and their parents. The racketeering enterprise attempted to murder an eighth individual who survived, but is now paralyzed and confined to a wheelchair. The enterprise maintained a number of so-called “trap houses” that were used to distribute cocaine, cocaine base, MDMA, oxycodone and marijuana, and used extreme violence to collect drug debts and enforce its control of the drug trafficking in its territory. The enterprise also used threats of violence to prevent members of the community from testifying against its members.
“The sentences handed down this week were just in light of the scars these defendants inflicted on their community. Our thoughts remain with the families of the murdered victims,” stated U.S. Attorney Bentley. “The Department of Justice, working closely with our partners at all levels of law enforcement, will continue to use every available resource to protect vulnerable communities from the scourge of violent crime. We are deeply committed to dismantling violent criminal organizations.”
“A key component of ATF’s mission is reducing violent crime. These sentences represent a fulfillment of a promise that ATF made to this community to stand by them and we will continue to stand by them,” stated Special Agent in Charge Daryl McCrary of ATF-Tampa Division. “We appreciate the cooperation of our federal, state and local partners to this bring this case to a successful conclusion.”
Twelve enterprise members and co-conspirators previously pleaded guilty to drug trafficking, firearms, and other offenses in connection with this case.
The Bureau of Alcohol, Tobacco, Firearms and Explosives, and the U.S. Attorney’s Office of the Middle District of Florida investigated the case, with assistance from other federal, state, and local law enforcement agencies. Assistant U.S. Attorneys Christopher Murray, Natalie Adams and Walter “Terry” Furr of the Middle District of Florida, and Trial Attorney Marty Woelfle of the Criminal Division’s Organized Crime and Gang Section prosecuted the case.
Manhattan U.S. Attorney Announces $50 Million Settlement with Walgreens for Paying Kickbacks to Induce Beneficiaries of Government Healthcare Programs to Fill Their Prescriptions at Walgreens’ PharmaciesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Scott J. Lampert, Special Agent in Charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), and Craig Rupert, Special Agent in Charge of the Northeast Field Office of the Defense Criminal Investigative Service, Department of Defense, Office of Inspector General (“DoD-OIG”), announced today a $50 million settlement in a civil fraud lawsuit against WALGREEN CO. (“WALGREENS”), a nationwide retail pharmacy chain that owns and operates thousands of retail pharmacies throughout the United States. The settlement resolves claims that WALGREENS violated the federal Anti-Kickback Statute (“AKS”) and False Claims Act (“FCA”) by enrolling hundreds of thousands of beneficiaries of government healthcare programs (“government beneficiaries”) in its Prescription Savings Club program (“PSC program”). Specifically, the Government’s Complaint alleges that Walgreens violated the AKS and FCA by providing government beneficiaries with discounts and other monetary incentives under the PSC program, in order to induce them to patronize WALGREENS’ pharmacies for all of their prescription drug needs. The Complaint further alleges that WALGREENS understood that allowing government beneficiaries to participate in the PSC program was a violation of the AKS, but that it nevertheless marketed the program to government beneficiaries and paid its employees bonuses for each customer they enrolled in the program, without verifying whether the customers were government beneficiaries. The settlement will also resolve numerous state law civil fraud claims.
U.S. District Court Judge J. Paul Oetken has approved a settlement agreement to resolve the Government’s claims against WALGREENS. Under the settlement, WALGREENS is required to pay approximately $46.21 million to the United States and has admitted and accepted responsibility for conduct alleged in the Government’s Complaint. Further, as part of the settlement, WALGREENS will pay approximately $3.79 million to resolve the state law civil fraud claims.
Manhattan U.S. Attorney Preet Bharara said: “Recognizing that it was a violation of the Anti-Kickback Statute to enroll government beneficiaries in its discount program, Walgreens nonetheless marketed the program to government beneficiaries and incentivized its employees to enroll customers in the program, regardless of whether they were government beneficiaries. As a result, Walgreens ended up unlawfully enrolling hundreds of thousands of government beneficiaries. With today’s settlement, Walgreens is being made to pay $50 million and has admitted to its conduct.”
HHS-OIG Special Agent in Charge Scott J. Lampert said: “The sheer scope of this nationwide kickback scheme is shocking. Walgreens admits to having paid bonuses to employees for enrolling customers in its prescriptions savings program without verifying whether the customers were Medicare or Medicaid beneficiaries, despite stated company policy against enrolling such beneficiaries based on federal statutes. Today’s settlement is a message to other retailers that there will be consequences for such conduct.”
DoD-OIG Special Agent in Charge Craig Rupert said: “This settlement is evidence of the continuing efforts of the Defense Criminal Investigative Service and our law enforcement partners to identify, investigate, and prosecute significant threats to the DoD health care system. DCIS will continue to aggressively investigate allegations of fraud and abuse harmful to U.S. taxpayers and the Department of Defense.”
As alleged in the Complaint and set forth in the parties’ Settlement Agreement, both of which have been filed in Manhattan federal court:
WALGREENS launched the PSC program in 2007. Throughout the period January 2007 through December 2010, the PSC program provided members with discounts on thousands of brand-name and generic drugs, as well as a 10 percent rebate on all WALGREENS’ branded products, including household products, baby-care products, most grocery items, and non-prescription medications. WALGREENS intended these lower drug prices and other monetary benefits to be an inducement to its existing and potential customers to cause them to patronize WALGREENS for all of their pharmacy needs. WALGREENS hoped that by offering these significant benefits to its customers, it would prevent them from taking their pharmacy business to WALGREENS’ competitors.
WALGREENS recognized that allowing government beneficiaries to participate in the PSC program would violate the AKS. Specifically, WALGREENS recognized that the features of the PSC program that made it attractive to its customers generally would constitute an illegal kickback when provided to government beneficiaries, as such features would induce government beneficiaries to patronize WALGREENS for all of their prescription medication needs, including those paid for in whole or in part by government healthcare programs. Accordingly, WALGREENS consistently maintained in its published materials regarding the PSC program that government beneficiaries were ineligible to participate in the program.
Notwithstanding WALGREENS’ understanding that allowing government beneficiaries to participate in the PSC program would violate the AKS, WALGREENS consistently marketed the PSC program to government beneficiaries. WALGREENS also incentivized its employees to enroll customers in the PSC program, regardless of whether they were government beneficiaries. For example, from May 2008 through August 2010, WALGREENS paid its employees from $1 to $5 for each customer they enrolled in the PSC program. In making these incentive payments, WALGREENS did not check whether the customers who had been enrolled were government beneficiaries.
Consequently, during the period January 2007 through December 2010, WALGREENS enrolled hundreds of thousands of government beneficiaries in the PSC program. These government beneficiaries included beneficiaries of the Medicare, Medicaid and TRICARE programs. Thereafter, from January 2011 through December 2015, while WALGREENS’ internal company policy continued to preclude the enrollment of government beneficiaries in the PSC program, WALGREENS continued to enroll such beneficiaries in the program.
As part of the settlement, WALGREENS admitted, acknowledged, and accepted responsibility for the following conduct:
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During the period January 1, 2007 through December 31, 2010, WALGREENS’ published materials regarding the PSC program stated that persons receiving benefits from the Medicare and Medicaid programs were not eligible to participate in the PSC program.
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In October 2007, WALGREENS identified approximately 13,000 PSC program members who it had determined were beneficiaries of the Medicare and Medicaid programs, and it removed those individuals from the PSC program. In an internal news release informing its employees of this removal, WALGREENS stated that “any customer who ha[d] any type of 3rd party coverage with a Medicare or Medicaid plan was removed from the [Prescription] Savings Club database,” and that “th[is] removal was necessary to comply with State/Federal regulations.”
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Subsequent to October 2007 and continuing through December 31, 2010, internal WALGREENS documents reflect that its stated policy to exclude Medicare and Medicaid beneficiaries from the PSC program was based on, among other things, the prohibition on offering inducements to beneficiaries of government healthcare programs reflected in the federal AKS and corresponding state anti-kickback laws.
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Notwithstanding its stated policy to exclude Medicare and Medicaid beneficiaries from the PSC program, subsequent to October 2007 and continuing through December 31, 2010, WALGREENS enrolled hundreds of thousands of Medicare and Medicaid beneficiaries in the PSC program.
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Between November 2007 and December 31, 2010, WALGREENS also enrolled more than 10,000 TRICARE beneficiaries in the PSC program.
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Prior to December 31, 2010, pharmacists at WALGREENS’ stores nationwide made tens of thousands of notations in WALGREENS’ internal customer database reflecting that specific Medicare, Medicaid, and TRICARE beneficiaries had been enrolled in the PSC program and were using the PSC program to purchase some of their prescription drugs.
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At various times between November 2007 and December 31, 2010, WALGREENS paid its employees a bonus of between $1 and $5 for each customer they enrolled in the PSC program. When paying these bonuses, WALGREENS did not verify that the customers its employees had enrolled in the PSC program were not government beneficiaries.
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Prior to December 31, 2010, WALGREENS did not have effective mechanisms in place to block government beneficiaries from enrolling in the PSC program or to monitor adequately whether government beneficiaries had been allowed to enroll in the PSC program, to ensure compliance with its stated policy to exclude such beneficiaries from the PSC program. As a result, hundreds of thousands of government beneficiaries were enrolled in the PSC program.
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Subsequent to December 31, 2010, and continuing through December 31, 2015, WALGREENS’ internal company policy continued to preclude the enrollment of government beneficiaries in the PSC program, and WALGREENS continued to enroll such beneficiaries in the program.
In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had previously been filed under seal pursuant to the False Claims Act.
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Mr. Bharara thanked HHS’s Office of the Inspector General, DOD’s Office of the Inspector General, and the Medicaid Fraud Control Units for Illinois and New York for their investigative efforts and assistance with the case.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Christopher B. Harwood is in charge of the case.
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Man Sentenced to Prison for Bribery Involving the City of BettendorfRead the Press Release
DAVENPORT, IA - On January 18, 2017, Robert L. Budd, Jr., heather Jean Reekrage 73, of Bettendorf, Iowa, was sentenced by Chief United States District Court Judge John A. Jarvey to four months in prison for conspiracy to bribe a public official and four months for bribery of a public official, the sentences to run concurrently, announced United States Attorney Kevin E. VanderSchel. Budd was fined $25,000, was ordered to serve a two-year term of supervised release following his imprisonment, and to pay $200 in special assessments to the Crime Victims’ Fund.
On May 20, 2016, Budd pleaded guilty to conspiracy to commit bribery and bribery concerning programs receiving federal funds. As part of a written plea agreement, Budd admitted he was a manager at Brown Traffic Products, Inc. (BTP) in Davenport, Iowa, and he approved and made payments to Robert Webster, the Bettendorf City Electrician, for travel, meals, drinks, entertainment, and other expenses, including tickets to NASCAR events and trips to business conferences.
Budd also admitted on March 27, 2009, he reimbursed Webster for a trip by writing a check to Webster’s wife for $2,700, which was deposited into the Websters’ credit union account. Budd admitted this and other payments were made in an effort to influence Webster to continue doing business with BTP, and to reward him for conducting business with BTP.
In July of 2016, Robert Webster, former Bettendorf City Electrician, pleaded guilty to three felony counts. He is presently scheduled to be sentenced on March 16, 2017, in Davenport.
The investigation was conducted by the Federal Bureau of Investigation, with the cooperation of the City of Bettendorf. This case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Learn more about this release by contacing Rachel J. Scherle at 515-473-9300, or by emailing her at [email protected]
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Man Indicted for Enticing Missing Teen for Illicit SexRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a man previously charged with attempting to entice a missing Springfield, Mo., teenager to engage in illicit sexual activity has been indicted by a federal grand jury.
Dominic Keith Pearson, 25, no known address, was charged in an indictment returned by a federal grand jury in Springfield, Mo., on Wednesday, Jan. 18, 2017. The federal indictment replaces a criminal complaint that was filed against Pearson on Jan. 11, 2017.
The indictment contains the same charge as the original criminal complaint, alleging that Pearson attempted to entice a minor to engage in illicit sex.
According to an affidavit filed in support of the complaint, the 13-year-old child victim – identified in court documents as “Jane Doe” – was reported missing from her home in Springfield on Jan. 8, 2017. Investigators found a series of messages between Pearson and Jane Doe on a cell phone, the affidavit says, indicating that Pearson was traveling to meet Jane Doe.
On Jan. 10, 2017, Pearson and Jane Doe were located in a truckers lounge at Petro Truck Stop off Interstate 70 near Oak Grove, Mo. Both Pearson and Jane Doe had luggage with them in the lounge.
Dickinson cautioned that the charge contained in this indictment is simply an accusation, and not evidence of guilt. Evidence supporting the charge must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Ami Harshad Miller. It was investigated by the Springfield, Mo., Police Department, the FBI, the Southwest Missouri Cyber Crimes Task Force and the Oak Grove, Mo., Police Department.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Magellan Pipeline Settles Alleged Clean Water Act Violations Related to Spills in Texas, Nebraska and KansasRead the Press Release
The Department of Justice and the U.S. Environmental Protection Agency (EPA) today announced a settlement with Magellan Pipeline Company, L.P., for alleged violations of the Clean Water Act related to gasoline, diesel and jet fuel spills in Texas City, Texas, Nemaha, Neb. and El Dorado, Kan. Magellan has agreed to complete approximately $16 million of injunctive relief across its 11,000-mile pipeline system and pay a $2 million civil penalty.
“This settlement holds Magellan accountable for multiple petroleum fuel pipeline spills that impacted waterways in three states,” said John C. Cruden, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The terms of the agreement require Magellan to improve training of its staff and monitoring of its pipeline system’s integrity, and increase public transparency about leaks and responses.”
“Fuel spills have real and lasting impacts on clean water for communities,” said Cynthia Giles, Assistant Administrator for EPA's Office of Enforcement and Compliance Assurance. “Companies need to take the necessary precautions to make sure fuel is transported safely and responsibly. This settlement puts in place important pipeline safety and spill prevention measures that make this industry safer for communities.”
According to a complaint and consent decree filed today in U.S. District Court for the Northern District of Oklahoma, Tulsa, Okla.-based Magellan is responsible for spilling a combined total of approximately 5,177 barrels of petroleum products in three separate incidents. The complaint alleges that Magellan was responsible for the following illegal discharges:
- On Feb. 24, 2011, a Magellan owned 18-inch refined petroleum products pipeline ruptured in an area north of Texas City, Texas, and spilled approximately 482 barrels of gasoline. The spill impacted a local watercourse known as Pierre Bayou.
- On Dec. 10, 2011, two of Magellan’s refined petroleum products pipelines were struck by a third-party who was operating heavy machinery while attempting to clear a hedgerow in an agricultural field near the town of Nemaha, Neb. The strikes resulted in the spilling of approximately 650 barrels of diesel fuel from one line, and approximately 655 barrels of jet fuel and 1,529 barrels of gasoline from the other. The spills impacted a local watercourse know as Jarvis Creek. Cleanup efforts are still underway and will be completed as part of the proposed consent decree.
- On May 4, 2015, a Magellan owned 10-inch refined petroleum products pipeline ruptured near the City of El Dorado, Kan., and spilled approximately 1,861 barrels of diesel fuel. Diesel fuel form that spill impacted a local watercourse known as Constant Creek.
The consent decree requires Magellan to: (1) complete an ongoing spill cleanup effort in Nebraska; (2) institute an enhanced annual training program for its third-party damage prevention staff; (3) update and enhance company information resources concerning selective seam corrosion; (4) update its integrity management plan; and (5) create a publicly-accessible web page that will report information about certain types of pipeline releases and Magellan’s responses to them.
The requirement to create a publically-accessible web page directly supports EPA’s Next Generation Compliance efforts to expand transparency.
The consent decree is subject to a 30-day public comment period and approval by the federal court. Information on how to comment on the consent decree will be available on the Department of Justice’s website: www.justice.gov/enrd/consent-decrees.
To learn more about this settlement:
www.epa.gov/enforcement/magellan-pipeline-company-lp-clean-water-act-settlement
Liberty County Man Sentenced to 35 years for Child Exploitation ViolationsRead the Press Release
BEAUMONT, Texas — A 40-year-old Daisetta, Texas man has been sentenced to federal prison for child exploitation violations in the Eastern District of Texas, announced Acting U.S. Attorney Brit Featherston today.
Steven Wayne Robinson pleaded guilty on Sep. 1, 2016, to two counts of production of child pornography and was sentenced to a total of 420 months in federal prison today by U.S. District Judge Marcia Crone.
According to information presented in court, Robinson persuaded, induced, and coerced three children to engage in sexually explicit conduct for the purpose of producing videos or visual depictions of that conduct. Homeland Security Investigations conducted an online undercover operation targeting Robinson and other child predators, and Robinson sent ten videos to the undercover operation that depicted himself engaging in sexual acts with children known to him. One victim was less than one-year-old, a second victim was six years of age, and a third victim was only eight years old. Robinson forced each of them to engage in sexual acts with him. Further investigation by the office of Homeland Security revealed that Robinson at one point offered to give another suspected child predator access to one of the children in exchange for money to be paid to Robinson. Homeland Security working with the Liberty County Sheriff's Office took Robinson into custody before Robinson could act on those intentions. Robinson was indicted by a federal grand jury on Nov. 4, 2015.
“For the victims of child abuse, we pray for their healing,” said Acting U.S. Attorney Brit Featherston. “These cases are heart wrenching for all involved, the child advocates, the families, the investigators, the prosecutors and the courts; I applaud their resilience and fortitude in bringing Steven Robinson to justice. For Robinson, he deserves all the punishment ordered, and for those out there that choose to do these despicable acts, law enforcement will be knocking at your door and justice will be swift.”
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was investigated by the Homeland Security Investigations and the Liberty County Sheriff’s Office and prosecuted by Assistant U.S. Attorney Lesley A. Woods.
Leader of Stolen U.S. Treasury Check Ring SentencedRead the Press Release
ATLANTA – Milton Minter a/k/a White Boi has been sentenced as one of the leaders of a group that stole over $10 million in U.S. Treasury checks and cashed them at Walmart and Kroger stores using fake identifications.
“Minter was one of the leaders of a theft ring responsible for stealing over 6,000 checks,” said U.S. Attorney John Horn. “When criminals steal Treasury checks, they victimize senior citizens, the disabled, and veterans who depend on these funds for their well-being.”
“The success of this investigation is a directly attributable to the other federal agencies that partnered with the Secret Service to bring this ring to justice," said Kenneth Cronin, Special Agent in Charge of the U. S. Secret Service, Atlanta Field Office. "It is immensely satisfying to see those who prey on the vulnerable among us punished.”
“As a result of coordinated investigative efforts, the sentence handed down in this case will send a clear message to mail thieves that you will be vigorously pursued and brought to justice. I fully commend the hard work and countless hours put forth by the Stolen Treasury Check Task Force, which resulted in the arrest and prosecution of this individual and the other co-defendants in this case,” said Paul D. Mezzanotte, Acting U.S. Postal Inspector in Charge of the Charlotte Division. “An important part of the U. S. Postal Inspection Service mission is to ensure public trust in the mail and to defend the nation’s mail system from illicit financial gain.”
“Social Security payments are intended to benefit some of our most vulnerable citizens, including seniors and the disabled, so leading a scheme to steal millions of dollars in government checks is an intolerable offense,” said Margaret Moore-Jackson, Special Agent-in-Charge of the Social Security Office of the Inspector General’s Atlanta Field Division. “The SSA OIG is committed to working with the Stolen Treasury Check Task Force to detect and investigate government check theft, and we thank the U.S. Attorney’s Office in Northern Georgia for prosecuting this significant case.”
“The United States Postal Service Office of Inspector General takes allegations of mail theft seriously and vigorously investigate these matters to protect the overall integrity of the Postal Service,” said Special Agent in Charge Paul L. Bowman.
Robert A. Bourbon, Special Agent in Charge of the DOJ OIG’s Miami Field Office said, “The DOJ OIG very much appreciates the diligent efforts of our fellow law enforcement agencies in bringing this matter to such a successful conclusion.”
According to U.S. Attorney Horn, the charges, and other information presented in court: Milton Minter a/k/a White Boi, received stolen U.S. Treasury checks that were taken from the U.S. Mail before reaching their intended recipients. The stolen checks included tax refunds, Social Security benefits, and veteran’s disability checks. After receiving the checks, Minter provided them to check cashers who negotiated the stolen checks, mainly at Walmart and Kroger stores. The check cashers used fake driver’s licenses to pose as the check payees and forged the payees’ names on the back of the checks. They also used others’ Social Security numbers to cash the checks.
In an effort to avoid detection, they traveled to different states, including Alabama, Mississippi, Illinois, Michigan, Minnesota, Kentucky, Iowa, Louisiana, and Tennessee, to cash the stolen checks. The ring was responsible for cashing over 6,000 stolen U.S. Treasury checks worth over $10 million.
The indictment in this case charged Minter along with 15 other defendants. The indictment alleges that another leader of the group, Maurice Shuler a/k/a Fred, 27, of Atlanta, Georgia, also received stolen U.S. Treasury checks and provided them to check cashers. The remaining defendants are alleged to have worked with Minter and Shuler and cashed checks as part of the scheme. To date, eight of the other 15 defendants have pleaded guilty. Seven of those defendants have been sentenced so far, to jail terms spanning from two to seven years.
Minter, 32, of Riverdale, Georgia, was sentenced by U.S. District Judge Timothy C. Batten, Sr. to 10 years in prison to be followed by three years of supervised release, and ordered to pay a $75,000 fine. He was convicted of theft of government money and aggravated identity theft after pleading guilty on May 31, 2016.
This case is being investigated by the United States Secret Service; United States Postal Inspection Service; Social Security Administration, Office of Inspector General; United States Postal Service, Office of Inspector General; and Department of Justice, Office of the Inspector General.
Assistant United States Attorneys Stephen H. McClain and Christopher C. Bly are prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
Las Vegas Sands Corporation Agrees to Pay Nearly $7 Million Penalty to Resolve FCPA Charges Related to China and MacaoRead the Press Release
Las Vegas Sands Corp. (Sands), a Nevada-based gaming and resort company, agreed to pay a $6.96 million criminal penalty to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) in connection with business transactions in the People’s Republic of China (PRC) and Macao.
Acting Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division and Special Agent in Charge Aaron C. Rouse of the FBI’s Las Vegas, Nevada, Field Office made the announcement.
According to admissions by Sands made in connection with the resolution, certain Sands executives knowingly and willfully failed to implement a system of internal accounting controls to adequately ensure the legitimacy of payments to a business consultant who assisted Sands in promoting its brand in Macao and the PRC, and to prevent the false recording of those payments in its books and records. Sands continued to make payments to the consultant despite warnings from its finance staff and an outside auditor that the business consultant had failed to account for portions of these funds. In addition, Sands terminated the finance department employee who raised concerns about the payments.
In total, from 2006 through 2009, Sands paid approximately $5.8 million to the business consultant without any discernable legitimate business purpose, it admitted.
Sands entered into a non-prosecution agreement and has agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct described in the agreement, including of individuals, to enhance its compliance program, and to report to the department on the implementation of its enhanced compliance program.
Pursuant to the non-prosecution agreement, Sands will pay a $6.96 million criminal penalty, which reflects a 25-percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range. The department reached this resolution based on a number of factors, including the nature and seriousness of the internal controls violations, and the fact that Sands fully cooperated in the investigation and fully remediated. Sands’ cooperation included conducting a thorough internal investigation and voluntarily collecting, analyzing and organizing voluminous evidence and information for the government in response to requests, including translating key documents.
Sands no longer employs or is affiliated with any of the individuals implicated in the conduct described in the agreement, and it engaged in extensive remedial measures, including revamping and expanding its compliance and audit functions and programs and making significant personnel changes, such as the retention of new leaders of its legal, compliance, internal audit and financial gatekeeper functions.
In related proceedings, on April 7, 2016, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Sands, whereby Sands agreed to pay a civil penalty of approximately $9 million.
The FBI’s Las Vegas field office investigated the case, and the case was prosecuted by Trial Attorney David M. Fuhr of the Criminal Division’s Fraud Section. The department appreciates the cooperation and assistance provided by the SEC, the U.S. Attorney’s Office for the District of Nevada and the Criminal Division’s Office of International Affairs in this matter.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Las Vegas Sands NPAKoerber Charged with Wire Fraud, Money Laundering, Tax Evasion, and Fraud in the Offer and Sale of Securities in 18-Count Indictment Returned by Federal Grand JuryRead the Press Release
SALT LAKE CITY – A federal grand jury returned an 18-count indictment Wednesday afternoon charging Claud R. Koerber aka Rick Koerber with violations of federal law in connection with an alleged fraudulent investment scheme.
Koerber, age 43, faces four counts of fraud in the offer and sale of securities, 10 counts of wire fraud, two counts of money laundering, and two counts of tax evasion.
"In reinitiating this prosecution, the United States brings a case that the community deserves to have determined on its merits. Our intent is to press this matter to such a resolution. We seek a speedy public trial, without undue delay, where a jury of his peers can fairly assess the evidence against the defendant," U.S. Attorney John W. Huber said today.
The indictment alleges that Koerber was involved with several businesses in Utah. He exercised almost complete control over Founders Capital, which received investment money, sometimes termed as loans, from victims of the alleged fraud scheme described in the indictment. The indictment alleges Koerber was also involved with Founders Capital, Franklin Squires Investments, and Franklin Squires Companies.
According to the indictment, which is attached to this press release, from about 2004 to about Dec. 31, 2008, Koerber devised a fraud investment scheme to obtain money through false pretenses, representations, and promises. Koerber used the United States mails, interstate wire transmissions, and interstate commerce to execute the scheme, the indictment alleges.
The indictment alleges that Koerber used investors’ money for purposes not disclosed to many investors or potential investors, such as for Koerber’s personal housing, other personal expenses, expensive automobiles, investments into restaurants, and unsecured loans to other businesses and entities.
The indictment alleges that in order to convince earlier investors that their funds were earning money and to convince potential investors that the program was working and earning money, Koerber operated the businesses of Founders Capital and related entities as a “Ponzi scheme.” According to the indictment, Koerber used money placed with Founders Capital to make interest payments to earlier investors to create the false impression that the businesses were profitable, that investments were safe, secure, and that interest was being paid.
The indictment alleges that at no time during the operation of the investment scheme did Founders Capital or Franklin Squires entities operated by Koerber make a yearly profit. Koerber, by means of his misrepresentations and omissions, obtained approximately $100 million in investor funds, the indictment alleges. More than $50 million of the investor funds were used to make Ponzi payments to other investors. When Founders Capital stopped making payments to investors in 2007, investors lost approximately $47 million, according to the indictment.
Despite the fact that neither Founders Capital nor Franklin Squires made a profit in 2005, 2006, or 2007, the indictment alleges that Koerber falsely stated in an article distributed to investors and potential investors that in 2005, the Franklin Squires Companies did $111 million in revenue and in 2006 Franklin Squires and the businesses in which Franklin Squires had a substantial interest generated revenues in excess of $500 million.
A summons will be issued to Koerber to appear on the charges. The potential maximum penalty for each count of fraud in the offer and sale of securities is five years. Each wire fraud count carries a potential penalty of 20 years. The money laundering counts, which allege Koerber used criminally derived money to purchase expensive cars in excess of $200,000 each, carry potential 10-year sentences. The two tax evasion counts have potential penalties of five years. The tax counts allege Koerber had taxable income of in excess of $600,000 in tax year 2005 and taxable income in excess of $300,000 in tax year 2006 and failed to file an income tax return with the IRS.
The case is being prosecuted by the U.S. Attorney’s Office in Utah and investigated by special agents of IRS-Criminal Investigation and the FBI.
Kenner Woman and Construction Company Sentenced for Labor Violations and False StatementsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that KATIA MURILLO COSTA, age 42, of Kenner, was sentenced today after previously pleading guilty to violating provisions of the Fair Labor Standards Act. Her company, KLV OPERATIONS LLC (“KLV”), was also sentenced after previously pleading guilty to violating the Fair Labor Standards Act and to having representatives make false statements to federal agents.
U.S. District Judge Jane Triche Milazzo sentenced COSTA and KLV to five years of probation. The parties were both ordered to pay approximately $58,000 to the United States Department of Labor, Wage and Hour division so the agency can pay back wages to former KLV employees.
According to court documents, in November 2013, the U.S. Department of Labor (“DOL”), a department or agency of the United States, began investigating whether KLV was paying its employees proper overtime and minimum wage pay in compliance with the Fair Labor Standards Act. The investigation disclosed that the defendants, KLV and COSTA, failed to pay 47 employees overtime and minimum wage. In addition, representatives of KLV submitted materially false and fraudulent payroll and timesheet records to the DOL, in an effort to make representatives of the DOL believe that KLV was complying with the Fair Labor Standards Act.
U.S. Attorney Polite praised the work of Investigators with the DOL Wage and Hour Division, and Special Agents with the DOL, Office of Inspector General in investigating this matter. Assistant U. S. Attorney Sharan E. Lieberman was in charge of the prosecution.
KC Tax Preparer Indicted for False ClaimsRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Mo., tax preparer has been indicted by a federal grand jury for making false claims for refunds.
Virginia Marie Hayes, 32, of Kansas City, was charged in a 25-count indictment that was returned under seal by a federal grand jury in Kansas City, Mo., on Thursday, Jan. 12, 2017. The indictment was unsealed and made public following her arrest and initial court appearance.
The federal indictment alleges that Hayes, the owner of KC Tax Professionals, LLC, filed fraudulent tax returns that claimed refunds to which the individuals were not entitled. Hayes is charged with 25 counts of making false claims to a government agency for tax returns filed in 2012 and 2013.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Brian P. Casey. It was investigated by IRS-Criminal Investigation.
KC Man Pleads Guilty to $1.2 Million Oxycodone ConspiracyRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man pleaded guilty in federal court today to his role in a $1.2 million conspiracy to distribute oxycodone that was obtained by using forged and fraudulent prescriptions.
Robert G. Joy, also known as “Bear,” 34, of Kansas City, pleaded guilty before U.S. Chief District Judge Greg Kays to the charge contained in a Feb. 2, 2016, federal indictment.
By pleading guilty today, Joy admitted that he participated in a conspiracy from June 2013 to January 2016 to distribute, and to possess with the intent to distribute, oxycodone. Conspirators obtained prescription-quality paper commonly used by authorized health care providers to write prescriptions. They also obtained the DEA registration numbers of health care providers, which they used to prepare fraudulent prescriptions for oxycodone.
Conspirators took the false prescriptions to pharmacies in Kansas City metropolitan area. They commonly sold the oxycodone 30mg pills for between $15 to $25 per pill.
Joy was arrested with co-defendant Katherine E. Beaven, 33, of Kansas City, Mo., on Nov. 26, 2013. Kansas City Police Department detectives stopped the vehicle Joy was driving. Officers found an orange pill bottle in the car that contained 34 oxycodone pills, which was marked as a prescription in another person’s name. Officers also found a three-ring binder that contained a dozen forged prescriptions for oxycodone as well as blank sheets of prescription-quality paper.
Joy is the ninth defendant to plead guilty in this case. Beaven, Timothy D. Kroenke, 27, Nicholas Destefano, 38, and Jermaine C. Brooks, 29, all of Kansas City, Mo., Christopher J. Neale, 27, of Harrisonville, Mo.; and Thomas Poindexter, 42, of Olathe, Kan., have pleaded guilty and await sentencing. Co-defendants Michelle C. Newton, 46, and Felicita A. San Miguel, also known as “Cassandra Jasso,” “Susan Hernandez,” and “Sarah Buckner,” 38, both of Kansas City, Mo., pleaded guilty and have been sentenced.
Under federal statutes, Joy is subject to a sentence of up to 20 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
Under the terms of today’s plea agreement, Joy must also forfeit to the government a $1.2 million money judgment, which represents the proceeds of the drug-trafficking conspiracy.
This case is being prosecuted by Assistant U.S. Attorney Jess E. Michaelsen. It was investigated by the Kansas City, Mo., Police Department, the Drug Enforcement Administration, the Missouri State Highway Patrol, and the police departments of Riverside, Blue Springs, Independence, Kearney, Odessa, Nevada, Higginsville, Drexel Lee’s Summit and Butler.
Joaquin “El Chapo” Guzman Loera Has Arrived in the United StatesRead the Press Release
Joaquin Archivaldo Guzman Loera, known by various aliases including “El Chapo,” has arrived in the United States to face criminal charges in connection with his leadership of the Mexican organized crime syndicate known as the Sinaloa Cartel.
Guzman Loera is charged in six separate indictments throughout the United States; however, the indictment filed in the Eastern District of New York contains a provision that he must first enter the United States in that district to preserve the Eastern District of New York indictment. As such, Guzman Loera landed at Long Island MacArthur Airport in Islip, New York.The Justice Department extends its gratitude to the Government of Mexico for their extensive cooperation and assistance in securing the extradition of Guzman Loera to the United States.
Additional details regarding the time and place of Guzman Loera’s initial appearance in U.S. District Court are forthcoming.
Joaquin “El Chapo” Guzman Loera Has Arrived in the United StatesRead the Press Release
WASHINGTON – Joaquin Archivaldo Guzman Loera, known by various aliases including “El Chapo,” has arrived in the United States to face criminal charges in connection with his leadership of the Mexican organized crime syndicate known as the Sinaloa Cartel.
Guzman Loera is charged in six separate indictments throughout the United States; however, the indictment filed in the Eastern District of New York contains a provision that he must first enter the United States in that district to preserve the Eastern District of New York indictment. As such, Guzman Loera landed at Long Island MacArthur Airport in Islip, New York.
The Justice Department extends its gratitude to the Government of Mexico for their extensive cooperation and assistance in securing the extradition of Guzman Loera to the United States.
Additional details regarding the time and place of Guzman Loera’s initial appearance in U.S. District Court are forthcoming.
Joaquin “El Chapo” Guzman Loera Extradited to United StatesRead the Press Release
Joaquin Archivaldo Guzman Loera, known by various aliases including “El Chapo,” has been extradited and is en route to the United States to face criminal charges in connection with his leadership of the Mexican organized crime syndicate known as the “Sinaloa Cartel.”
Guzman Loera is charged in six separate indictments throughout the United States.
The Justice Department extends its gratitude to the Government of Mexico for their extensive cooperation and assistance in securing the extradition of Guzman Loera to the United States.
Additional details regarding the time and place of Guzman Loera’s initial presentation in court are forthcoming.
Joaquin “El Chapo” Guzman Loera Extradited to United StatesRead the Press Release
WASHINGTON – Joaquin Archivaldo Guzman Loera, known by various aliases including “El Chapo,” has been extradited and is en route to the United States to face criminal charges in connection with his leadership of the Mexican organized crime syndicate known as the “Sinaloa Cartel.”
Guzman Loera is charged in six separate indictments throughout the United States.
The Justice Department extends its gratitude to the Government of Mexico for their extensive cooperation and assistance in securing the extradition of Guzman Loera to the United States.
Additional details regarding the time and place of Guzman Loera’s initial presentation in court are forthcoming.
Jackson County Man Sentenced for Methamphetamine OffensesRead the Press Release
On January 18, 2017, Kyle E. Easterly, 30, of Murphysboro, was sentenced to federal prison for methamphetamine offenses, Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced today.
Easterly, who had previously pled guilty to a second superseding indictment charging him with one count of conspiracy to manufacture and distribute methamphetamine and one count of possession of pseudoephedrine knowing that it would be used to manufacture methamphetamine, was sentenced to 235 months of imprisonment, 3 years of supervised release, and was fined $700.00. Evidence at the plea and sentencing hearings established that Easterly was involved with numerous other persons in the manufacture of methamphetamine and the distribution of ice in Jackson and Perry Counties. Ice is methamphetamine which has a purity level of at least 80%. At sentencing, the district court found that Easterly was responsible for the possession of 48 grams of pseudoephedrine and the distribution of 1,134 grams of ice. Because Easterly had twice been convicted of felony domestic battery offenses, he was classified and sentenced as a Career Offender. Co-defendant Charles W. Yearian was previously sentenced to 144 months of imprisonment for his involvement in the drug offenses. Four co-defendants have pled guilty and are awaiting sentencing in this case. One co-defendant has pled not guilty and is awaiting a February 27, 2017, jury trial.
The ongoing investigation is being conducted by the Jackson County Sheriff’s Office and the Murphysboro Police Department. The Union County Sheriff’s Office, Bureau of Alcohol, Tobacco, Firearms, and Explosives, DuQuoin Police Department, and Jackson County States Attorney’s Office also assisted in the investigation.
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Investment Manager Arrested on Fraud and Misappropriation Charges in Alleged Multi-Million Dollar SwindleRead the Press Release
CHICAGO — A Connecticut investment manager has been arrested for allegedly operating a multi-million dollar fraud scheme that swindled approximately 30 individuals, including victims who reside in the Chicago area.
ALVIN WILKINSON, the founder of Chicago Index Partners LP and Wilkinson Financial Opportunity Fund LP, both based in Sharon, Conn., persuaded approximately 30 individuals to invest approximately $13 million in his funds, according to an indictment returned in federal court in Chicago. Wilkinson’s marketing materials to potential investors noted his prior affiliation with the Chicago Board Options Exchange, where he previously served as a Director. Instead of investing the funds as promised to clients, Wilkinson used the victims’ money to cover personal expenses and to pay earlier investors through Ponzi-type payments, the indictment states.
The indictment was returned Tuesday and ordered unsealed after Wilkinson’s arrest Wednesday morning in Connecticut. The indictment charges Wilkinson, 58, of Sharon, Conn., with three counts of mail fraud and one count of wire fraud. A court date in Chicago has not yet been scheduled.
The indictment seeks forfeiture of $13 million in cash, as well as a property in Sharon, Conn.
The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Commodity Futures Trading Commission, which previously filed a civil enforcement lawsuit against Wilkinson, provided valuable assistance.
According to the indictment, Wilkinson was the sole officer of his funds and had exclusive authority to manage their operations. Investors in the funds included Wilkinson’s friends, acquaintances and former colleagues. Wilkinson claimed he would trade a portfolio of financial instruments on their behalf, including options and futures, and that his trading strategy made money regardless of market conditions. In reality, Wilkinson did not maintain any trading accounts for the funds, and he did not use investor funds to trade in options and futures, according to the indictment.
The fraud scheme alleged in the indictment began no later than 1999 and continued until at least May 2016.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Each count of the indictment is punishable by up to 20 years in prison. 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 Nicholas Eichenseer.
Wilkinson IndictmentInformation Technology Chief and Consultant Charged with Multimillion-Dollar False Invoicing SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the filing of a criminal complaint charging ENRICO RUBANO, a/k/a “Rick Rubano,” and SHIVANAND MAHARAJ with two counts of conspiracy to commit wire fraud in connection with a false invoicing scheme that defrauded health and retirement funds (the “Funds”) of millions of dollars. As alleged, over a period of six years, RUBANO, MAHARAJ, and their co-conspirators generated hundreds of invoices for work they had not performed, which RUBANO, in his role as co-head of information technology for the Funds, approved for payment. RUBANO and MAHARAJ were arrested this morning, and will be presented before U.S. Magistrate Judge Andrew J. Peck.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Enrico Rubano used his position as the co-head of IT for a health and retirement benefit fund to perpetrate a scheme to falsely invoice millions of dollars from the fund for consulting work never actually performed. Rubano allegedly had the fund make payments based on hundreds of fake invoices to Shivanand Maharaj’s company, not for IT work actually done by that company, but really in exchange for alleged kickback payments to Rubano. Money that should have gone to help pay retirement and health care benefits were instead allegedly diverted to Rubano and Maharaj.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “These defendants devised a scheme to falsely bill their client for work that was never performed by allegedly using an ‘inside’ employee to approve bogus invoices. They went one step too far when they decided to use the US Mail to facilitate their criminal misdeeds. Postal Inspectors will resolutely pursue fraudsters who use the U.S. mail to facilitate fraud schemes.”
According to the Complaint[1]:
From 2008 through October 2015, RUBANO was the co-head of information technology for the Funds and had the authority to approve the payment of invoices from third-party vendors. Beginning in 2009, and continuing through 2015, RUBANO, MAHARAJ, and others devised a scheme in which companies they owned or controlled submitted to the Funds invoices for millions of dollars in information technology services that were never performed or that had, in fact, been performed by employees of the Funds or other vendors. RUBANO, in his position as co-head of information technology, approved these fraudulent invoices, and received kickbacks from MAHARAJ and other co-conspirators. Between 2009 and 2015, RUBANO, MAHARAJ, and their co-conspirators falsely billed and fraudulently received from the Funds at least approximately $3.4 million.
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RUBANO, 48, of Tappan, New York, and MAHARAJ, 36, of Cresskill, New Jersey, were arrested this morning in Tappan, New York, and Cresskill, New Jersey, respectively. RUBANO and MAHARAJ are each charged with two counts of conspiracy to commit wire fraud, each of which carries a maximum sentence of 20 years in prison. 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 the judge.
Mr. Bharara praised the efforts of the USPIS in this investigation. He added that the investigation is continuing.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Matthew Podolsky and Jacob Warren are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint forth herein constitute only allegations, and every fact described should be treated as an allegation.
Indictment Alleges Child Pornography Production, DistributionRead the Press Release
PROVIDENCE – Jay Gaccione, 39, of Westerly, was arraigned in U.S. District Court in Providence today on a nine-count federal indictment returned on Tuesday charging him with production, distribution and possession of child pornography.
The indictment alleges that on at least six occasions between April 14, 2014, and April 24, 2016, Gaccione persuaded and coerced minor children to engage in sexually explicit conduct which was electronically recorded.
The indictment and arraignment of Gaccione on six (6) counts of production of child pornography, one (1) count of distribution of child pornography, and two (2) counts of possession of child pornography are announced by United States Attorney Peter F. Neronha; Matthew J. Etre, Special Agent in Charge of Homeland Security Investigations (HSI) for New England; and Colonel Ann C. Assumpico, Superintendent of the Rhode Island State Police.
On November 4, 2016, as part an on-going investigation, HSI agents and members of the Rhode Island State Police Internet Crimes Against Children Task Force executed court authorized search warrants at Gaccione’s residence and seized, among other items, electronic and digital storage devices. Gaccione was arrested on November 4, 2016, and ordered detained on a federal criminal complaint charging him with the production and possession of child pornography.
An extensive forensic examination of the electronic devices seized and additional information developed by law enforcement since Gaccione’s arrest resulted in additional charges contained in the federal indictment.
An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant United States Attorney Denise M. Barton.
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Contact:
Jim Martin (401) 709-5357
email: [email protected]
on Twitter @USAO_RI
Houston Drug Trafficker Sentenced to Federal PrisonRead the Press Release
Tampa, Florida – U.S. District Judge James D. Whittemore has sentenced Deandre Marqui Gray (42, Houston, Texas) to 20 years in federal prison for conspiring to possess with intent to distribute five kilograms or more of cocaine. He pleaded guilty on November 2, 2016.
According to court documents, the Drug Enforcement Administration (DEA) began investigating Gray in December 2014, after seizing $104,000 and $18,000 from his drug associates. Those seizures led to the arrest of several individuals in the Middle District of Florida. A cooperating defendant (“CD”) relayed to DEA agents that he had been receiving cocaine from Gray, beginning in late 2014. According to the CD, he and others would travel to Houston, Texas to meet with Gray and then transport the cocaine back to Bradenton, Florida. The CD was paying Gray approximately $31,000 per kilogram to Gray. The money that was seized in December 2014 was intended to be used to purchase kilograms of cocaine from Gray. From September 2014 through May 2015, Gray was responsible for the transportation of 50 kilograms of cocaine from Texas to the Middle District of Florida.
This case was investigated by the DEA. It was prosecuted by Assistant United States Attorney Shauna S. Hale.
Heroin Dealer Arrested in Loudoun County Pleads GuiltyRead the Press Release
ALEXANDRIA, Va. – George Eric Stevens, 33, of Jamaica, New York, pleaded guilty today to charges his role in a conspiracy to distribute heroin.
According to the statement of facts filed with the plea agreement, Stevens obtained heroin from a source of supply in New York. Instead of distributing it locally, he traveled to Loudoun County where he believed distribution would be more lucrative. Stevens was arrested on Nov. 16, 2016, in Loudoun County with approximately 170 grams of heroin that he intended to distribute.
Stevens was indicted by a federal grand jury on Dec. 8, 2016, with conspiracy to distribute 100 grams or more of a mixture and substance containing detectable amount of heroin. Stevens faces a maximum penalty of 40 years in prison when sentenced on April 21. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office; Michael L. Chapman, Loudoun County Sheriff; and Gregory C. Brown, Leesburg Chief of Police, made the announcement after the plea was accepted by U.S. District Judge T.S. Ellis, III. Special Assistant U.S. Attorney David A. Peters is prosecuting the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:16-cr-281.
Head of North Idaho Drug Trafficking Organization Pleads Guilty to Conspiracy to Distribute a Controlled Substance and Conspiracy to Launder MoneyRead the Press Release
COEUR D'ALENE – Loren Michelle Toelle, 52, of Coeur d'Alene, Idaho pleaded guilty yesterday conspiracy to distribute a controlled substance and conspiracy to launder money, U.S. Attorney Wendy J. Olson announced. Toelle was indicted by a federal grand Jury in Coeur d'Alene on January 20, 2016.
In court, Loren admitted to being the head of a drug trafficking organization which distributed 3000 (80 mg) oxycodone pills, 1000 (30) milligram oxycodone pills, 1,500 grams of heroin and 500 grams of a mixture or substance containing methamphetamine in the District of Idaho and elsewhere. She also admitted to renting or causing to be rented apartments and storage units in Spokane, Washington, Coeur d’Alene, Idaho, Williston, North Dakota and Fargo, North Dakota which were used to hold controlled substance or where co-conspirators stayed when selling controlled substances. Toelle admitted that she and her co-defendants’ received and deposited, into various accounts, currency totaling at least $1,466.611.31 of which Toelle personally received and deposited at least $538,777.86.
Toelle is the ninth of 11 defendants to plead guilty in connection to the conspiracy. In addition to pleading guilty, Toelle agreed to forfeit any interest she has in real property, jewelry, and cash held by herself or co-conspirators, as outlined in the indictment.
The charge of conspiracy to distribute controlled substances is punishable by at least 5 years and up to 40 years in prison, a $5,000,000 fine and at least 4 years supervised released after release from prison. Conspiracy to launder money is punishable by up to 20 years in prison, a maximum fine of $500,000 and up to 5 years of supervised release after release from prison.
Sentencing is set for May 2, 2017, before Chief U.S. District Judge B. Lynn Winmill at the federal courthouse in Coeur d'Alene.
“I am very proud of the efforts of the men and women from all the various law enforcement agencies who worked tirelessly on this case to dismantle the Loren Toelle drug trafficking organization,” Olson stated. “Their efforts demonstrate that, in Idaho, we will bring to justice those who seek to poison communities with dangerous, addictive drugs.”
The case was investigated by CDA Police, Drug Enforcement Administration (DEA), Federal Bureau of Investigation (FBI), Internal Revenue Service, Criminal Investigations (IRS-CI), Kootenai County Sheriff, North Idaho Violent Crimes Task Force (NIVCTF), Organized Crime and Drug Enforcement Task Force (OCDETF) and U.S. Customs and Border Protection.
The OCDETF program is a federal multi agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Greenville Man Enters Guilty Plea in Federal Court for Possession of a Firearm During a Drug Trafficking CrimeRead the Press Release
Contact Person: Lance Crick (864) 282-2100
Columbia, South Carolina ---- United States Attorney Beth Drake stated today that Benjamin Marcel Wright, age 23, of Greenville, pled guilty on Wednesday in federal court in Anderson for possession of a firearm during a drug trafficking crime, a violation of Title 18, United States Code, Section 924(c). United States District Judge Timothy M. Cain accepted the plea and will impose sentence after he has reviewed the presentence report which will be prepared by the U.S. Probation Office.
Wright faces a statutory mandatory minimum sentence of 5 years and a maximum of life in federal prison. Wright was arrested on federal firearms charges on September 15, 2016, and has remained in custody since his federal arrest. Evidence presented at the change of plea hearing established that on September 11, 2016, Greenville Police Officers were conducting foot patrol at a closed city park when they encountered Wright and a female engaged in physical activity. When officers conducted a search of Wright, they recovered a loaded .9mm pistol from his pants, and drugs from a nearby vehicle.
The Greenville Police Department along with agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) investigated the case. Assistant United States Attorney Max Cauthen in the Greenville U.S. Attorney’s Office is prosecuting the case.
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Greenville Man Enters Guilty Plea in Federal Court for Possession of a Firearm During a Drug Trafficking CrimeRead the Press Release
Contact Person: Lance Crick (864) 282-2100
Columbia, South Carolina ---- United States Attorney Beth Drake stated today that Benjamin Marcel Wright, age 23, of Greenville, pled guilty on Wednesday in federal court in Anderson for possession of a firearm during a drug trafficking crime, a violation of Title 18, United States Code, Section 924(c). United States District Judge Timothy M. Cain accepted the plea and will impose sentence after he has reviewed the presentence report which will be prepared by the U.S. Probation Office.
Wright faces a statutory mandatory minimum sentence of 5 years and a maximum of life in federal prison. Wright was arrested on federal firearms charges on September 15, 2016, and has remained in custody since his federal arrest. Evidence presented at the change of plea hearing established that on September 11, 2016, Greenville Police Officers were conducting foot patrol at a closed city park when they encountered Wright and a female engaged in physical activity. When officers conducted a search of Wright, they recovered a loaded .9mm pistol from his pants, and drugs from a nearby vehicle.
The Greenville Police Department along with agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) investigated the case. Assistant United States Attorney Max Cauthen in the Greenville U.S. Attorney's Office is prosecuting the case.
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Georgia Man Pleads Guilty to Federal Escape ChargeRead the Press Release
Contact Person: Stacey Haynes (803) 929-3000
Columbia, South Carolina ---- United States Attorney Beth Drake stated that Santonio Dwayne Ramsey, age 26, of Appling, Georgia, plead guilty in federal court to escape, in violation of Title 18, United States Code, Section 751(a). Senior United States District Judge Cameron McGowan Currie of Columbia accepted the plea and will impose sentence after she has reviewed the presentence report, which will be prepared by the U.S. Probation Office.
Evidence presented in court established that on the evening of July 19, 2016, the Alston Wilkes Society Residential Re-Entry Center, a contracted Federal Bureau of Prisons halfway house facility in Columbia, conducted a routine head count and found Ramsey absent. Ramsey, who had recently been transferred to the halfway house facility from the Federal Bureau of Prisons, Williamsburg, South Carolina, was serving the remainder of a federal sentence stemming from a 2010 conviction for being a felon in possession of a firearm in the Southern District of Georgia. After determining that Ramsey was not in a local hospital or detention center, the Federal Bureau of Prisons declared him to be in escape status, notified the United States Marshals Service, and a federal escape charge was obtained. Ramsey was arrested on state charges stemming from a domestic issue on November 2, 2016, in Columbia County, Georgia. After initially providing deputies a fake name, deputies determined Ramsey's true identity and the outstanding federal escape charge from South Carolina.
Ramsey faces a statutory maximum of five (5) years imprisonment and/or a fine of $250,000 on the escape charge. The case was investigated by the United States Marshals Service. Assistant United States Attorney Stacey D. Haynes of the Columbia office handled the case.
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Gang Associate Sentenced for Disclosing Private Hospital Information of Victims and Witnesses in Gang-Related ShootingRead the Press Release
A Detroit man was sentenced to four years in prison yesterday for witness tampering for disclosing personal identification information of shooting victims and their family members to a leader of a street gang. The case was the result of work by the Detroit One partnership of local, state and federal law enforcement.
The announcement was made by Acting Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Robin Shoemaker of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Special Agent in Charge David P. Gelios of the Federal Bureau of Investigation, and Chief James Craig of the Detroit Police Department.
Jamerio Clark, 28, of Detroit, pleaded guilty on September 27, 2016, to tampering with a witness, victim or informant before U.S. District Judge David M. Lawson in Detroit. He is the eighth person to be sentenced in this case, part of the Detroit One partnership of local, state and federal law enforcement.
According to admissions made by the Vice Lord gang members who have pleaded guilty in this case, the Vice Lords is a national gang engaged in a variety of crimes, and Vice Lords’ leaders are located in both Chicago and Detroit. As admitted in the plea agreements, members of the Vice Lords, including Antonio Clark, were searching for two brothers who had attempted to leave the gang as part of a plan to “violate” the brothers for their perceived infractions against the gang. to admissions, on May 7, 2015, they and others met at a Vice Lord member’s house to discuss their plan and collect firearms, including an AK-47 assault rifle, and then traveled in multiple cars to the intended victims’ house. After a brief confrontation with the brothers’ family members, Antonio Clark opened fire with an AK-47, firing at the family more than two dozen times and hitting the brothers, their mother and 15-year-old sister. All of the victims survived the shooting.
Jamerio Clark admitted that from May 8, 2015, through at least January 2016, he was employed at a medical facility where he had access to a private database that contained personally identifiable health information for anyone who had been treated at a Detroit Medical Center facility. At his brother’s request and while employed at the medical facility, Jamerio Clark accessed this database on at least 15 occasions to search for three Vice Lords shooting victims. According to the plea agreement, Jamerio Clark then provided to Antonio Clark information, including dates of birth, phone numbers, addresses and information pertaining to relatives of these individuals. Jamerio Clark admitted that he knew his brother wanted this information to locate these individuals and prevent them from cooperating in the investigation and prosecution of the shooting.
Seven gang members have already been sentenced in this case and received the following terms of imprisonment:
Antonio Clark, 27, of Detroit – 20 years
Aramis Wilson, 26, of Detroit – 12 years, 6 months
Tyrone Price, 27, of Detroit – 11 years, 8 months
Dion Robinson, 38, of Detroit – 10 years, 1 month
Jonathan Kinchen, 24, of Detroit – 10 years
Kojuan Lee, 20, of Detroit – 8 years, 1 month
Kirshean Nelson, 20, of Detroit – 3 years
“The Detroit One partners are working to dismantle violent street gangs that commit gun violence because of the harm it causes to our residents and our neighborhoods,” McQuade said. “Our community will not tolerate gun violence as a method to resolve disputes.”
The arrests and convictions in this case are, in part, the result of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit. Through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and the FBI, law enforcement authorities linked various acts of violence in Detroit to the Vice Lords street gang, and identified the leaders and key members of the gang.
Another defendant, Burney Everett, 27, of Detroit, is scheduled to be sentenced on February 8, 2017. The sentencing date for the final defendant, Kenneth Smith, has yet been set.
This case is being investigated by the ATF, FBI, and Detroit Police Department. The case is being prosecuted by Assistant United States Attorneys Christopher Graveline and Mark Bilkovic of the United States Attorney’s Office for the Eastern District of Michigan, and Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section.
Gaffney Man Enters Guilty Plea in Federal Court to Charges of Using Explosive DevicesRead the Press Release
Contact Person: Lance Crick (864) 282-2100
Columbia, South Carolina ---- United States Attorney Beth Drake stated today that Jeffrey Dean Daily, age 44, of Gaffney, pled guilty on Wednesday in federal court in Anderson to use of an explosive device to damage a building, a violation of Title 18, United States Code, Section 844(i). United States District Judge Timothy M. Cain accepted the plea and will impose sentence after he has reviewed the presentence report which will be prepared by the U.S. Probation Office.
Daily faces a statutory mandatory minimum sentence of 5 years and a maximum of 20 years in federal prison. Evidence presented at the change of plea hearing established that on October 1, 2014, Daily used an explosive device to damage the Chesnee Car Wash, and on July 6, 2015, he used an explosive device to damage the Oasis Car Wash in Gaffney. On July 17, 2015, law enforcement officers executed a search warrant at Daily’s residence and found components like those used in the two explosions at the carwashes. Agents also recovered an intact homemade explosive device located in his truck.
The Chesnee Police Department, Gaffney Police Department, Cherokee County Sheriff’s Office, SLED, Spartanburg County Sheriff’s Office, along with agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) investigated the case. Assistant United States Attorney Max Cauthen in the Greenville U.S. Attorney’s Office is prosecuting the case.
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Fountain Inn Man Pleads Guilty to Child Porn ChargesRead the Press Release
Contact Person: Lance Crick (864) 282-2100
Columbia, South Carolina ---- United States Attorney Beth Drake stated today that Christopher Taggart, age 56, of Fountain Inn, pled guilty today in federal court in Anderson, to possession of child pornography, a violation of Title 18, United States Code, Section 2252A. United States District Judge Timothy M. Cain of Anderson accepted the 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 law enforcement received a cyber-tip from the National Center for Missing and Exploited that Taggart had attempted to download two images that contained child pornography. Taggart was approached by law enforcement and his computer was searched. A forensic exam of his computer revealed 136 images and two videos of child pornography.
Ms. Drake stated the maximum penalty Taggart can receive is a fine of $250,000 and/or imprisonment for 20 years, plus a special assessment of $100.
The case was investigated by agents of U.S. Postal Inspection Service. Assistant United States Attorney Bill Watkins of the Greenville office handled 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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Former UPS Employee Pleads Guilty to Drug Trafficking ChargesRead the Press Release
BOSTON – A former United Parcel Service (UPS) employee pleaded guilty on Jan. 17, 2017, in U.S. District Court in Boston in connection with his role in a cocaine trafficking organization that shipped cocaine, secreted in UPS packages, from Puerto Rico to Massachusetts.
Jorge Carrasquillo-Ortiz, 41, of Toa Baja, Puerto Rico, pleaded guilty to one count of attempted distribution of 500 grams of cocaine. U.S. District Court Senior Judge Rya Zobel scheduled sentencing for April 13, 2017.
Carrasquillo-Ortiz, a UPS employee in Puerto Rico, worked on behalf of a drug trafficking organization that shipped cocaine laden packages from Puerto Rico to Massachusetts via UPS. Carrasquillo-Ortiz was paid $1,200 for each kilogram of cocaine that he shipped on behalf of the drug trafficking organization. In June 2016, a cooperating witness began placing recorded telephone calls to Carrasquillo-Ortiz in which they made plans for a six-kilogram shipment. The telephone calls culminated in the delivery of a box containing six kilograms of “sham” cocaine to Carrasquillo-Ortiz in Puerto Rico. Carrasquillo-Ortiz snuck the package through UPS security, and it was placed on a UPS airplane, where it was delivered to Massachusetts. Carrasquillo-Ortiz then called back the cooperating witness, expecting payment for his services; instead, Carrasquillo-Ortiz was arrested at his home in August 2016.
The narcotics charge provides for a minimum mandatory sentence of five years and no greater than 40 years in prison, a minimum of three years and up to a lifetime of supervised release and a fine of $5 million. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney William D. Weinreb; Michael J. Ferguson, Special Agent in Charge of the Drug Enforcement Administration, New England Field Division; Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police; Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service; and Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement. Assistant U.S. Attorney Eric S. Rosen of Weinreb’s Narcotics and Money Laundering Unit is prosecuting the case.
Former U.S. Probation Officer Sentenced for Obstruction of InvestigationRead the Press Release
HARRISBURG - The United States Attorney's Office for the Middle District of Pennsylvania announced today that United States District Court Chief Judge Christopher C. Conner sentenced Rachel Lynn Howze, age 30, of Pittsburgh, Pennsylvania, to a split sentence of five months’ imprisonment and five months’ home confinement for obstructing an official federal proceeding while serving as a U.S. Probation Officer in Pittsburgh.
According to United States Attorney Bruce D. Brandler, Howze was charged in a criminal information filed in June 2016, with attempting to obstruct, influence, and impede an investigation by intentionally disclosing to unauthorized persons the existence of a state criminal investigation involving an individual under federal supervised release.
Howze, while employed as a Federal Probation Officer in the Western District of Pennsylvania, used her position to access confidential computer files related to an ongoing state heroin trafficking investigation. The individual cooperating with state law enforcement and the target of the state investigation were both under federal supervised release and the federal probation office possessed information about the state investigation in its system of records. Howze alerted the target’s sister about the existence of the criminal investigation. Based on the information Howze provided, the target and his accomplices were able to identify the informant and agreed that the informant “had to go.”
Howze is no longer employed by the U.S. Probation Office.
The U.S. Attorney’s Office for the Middle District of Pennsylvania prosecuted the case because the defendant was an employee under the supervision of the U.S. District Court in Pittsburgh at the time of the criminal activity.
This investigation was conducted by the Pittsburgh Office of the Federal Bureau of Investigation. Assistant United States Attorney Joseph J. Terz prosecuted the case.
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Former Resident of Medford Lake, NJ and Beaufort, SC Accused of Threatening President Obama’s Life on FacebookRead the Press Release
PHILADELPHIA - An indictment[1] was filed today charging William Peterman, Jr., formerly of Medford Lake, NJ and more recently of Beaufort, SC, with threatening to kill President Barack Obama. According to the indictment, on January 10, 2017, posted on his Facebook page that he “will kill” President Barack Obama.
With the increased use of various forms of social media comes increased online threats that vary in nature. Law enforcement agencies as a whole, take such online based threats seriously and they can easily evolve into federal criminal charges for those individuals making them. Threats against the President of the United States and others that the United States Secret Service is statutorily authorized to protect is the Secret Service’s number one investigative priority. “This case and the resulting indictment demonstrates the Secret Service’s proactive stance investigating threats against those we are sworn to protect,” said James Henry, Special Agent in Charge of the U.S. Secret Service Philadelphia Field Office. “When brought to our attention - whether in person, electronically or written, the Secret Service takes every threat very seriously.”
If convicted, Peterman faces a statutory maximum sentence of five years’ imprisonment, a possible $250,000 fine, a period of supervised release, and a $100 special assessment.
The case was investigated by the United States Secret Service, the Burlington County (NJ) Prosecutor’s Office, and the Mercer County (NJ) Sheriff’s Office and is being prosecuted by Assistant United States Attorney Anita Eve.
[1] An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former Portfolio Manager Stefan Lumiere Convicted on All Counts in Manhattan Federal CourtRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that STEFAN LUMIERE, a former portfolio manager at Visium Asset Management, was convicted of conspiracy to commit securities and wire fraud, securities fraud, and wire fraud in connection with a scheme to mismark securities held in a particular fund from 2011 to 2013 in order to overstate the net asset value (“NAV”) of the fund that was reported to investors on a monthly basis. LUMIERE was convicted following a six-day jury trial presided over by U.S. District Judge Jed S. Rakoff.
U.S. Attorney Preet Bharara said: “In a swift verdict, a federal jury convicted Stefan Lumiere, a former portfolio manager at Visium, of securities and wire fraud. For years, Lumiere mismarked securities in his portfolio, using sham broker quotes and fake purchase prices to vastly overstate the value of his fund. The securities Lumiere traded may have been complex, but his criminal scheme was simple: lie and make up numbers to make more money. As the verdict reflects, the jury quickly saw Lumiere’s conduct for what it was, criminal fraud.”
According to the allegations in the charging documents and statements made in court proceedings:
Visium Asset Management
At all relevant times, Visium Asset Management (“Visium”) managed hedge funds specializing in healthcare-related investments. Visium managed a credit fund (the “Credit Fund”), which operated from in or about 2009 until in or about September 2013, and invested primarily in debt instruments issued by healthcare companies.
The Scheme to Mismark Securities
From June 2011 through September 2013, LUMIERE and others participated in a scheme to defraud the Credit Fund’s investors and potential investors by deceptively mismarking each month the value of certain securities held by the Credit Fund. The objective of the scheme was two-fold: (1) to inflate the Credit Fund’s NAV; and (2) to mislead investors about the liquidity of the Credit Fund’s holdings. Visium assessed performance fees to be paid by investors each year based on the Credit Fund’s profits and losses. LUMIERE’s mismarking was in violation of Visium’s internal valuation procedures and contrary to Visium’s representations to investors. The effect of the scheme was to overstate the Credit Fund’s NAV, often by tens of millions of dollars as calculated at the end of each month to investors.
In order to carry out the scheme, LUMIERE and others solicited, obtained, and relied on false and fraudulent price quotes from employees of broker-dealers in order to improperly override prices calculated by the Credit Fund’s administrator and artificially inflate the Credit Fund’s NAV each month. For each month-end valuation, LUMIERE and others would begin by reviewing an inventory of the Credit Fund’s investments and proposed valuations for each prepared by the Credit Fund’s administrator and Visium’s back office. LUMIERE and others would then identify those relatively illiquid securities as to which they disagreed with or disliked the proposed price, and create a list reflecting the prices at which they wanted each security to be marked for month-end valuation purposes. That price was often significantly higher or lower than the price available from public price data. LUMIERE and others would then contact one or two “friendly” brokers and dictate to the friendly brokers the price quotes that they needed. The brokers would then parrot back the price quotes from their Bloomberg email account, giving the price quotes the appearance that they had come from an independent broker, and thus were in compliance with the Credit Fund’s pricing methodology. The friendly brokers’ sham quotes were then submitted to Visium’s accounting department as purportedly independent bases for that security’s valuation, for the eventual submission to the Credit Fund’s administrator.
By obtaining these sham quotes, LUMIERE and others caused a number of the Credit Fund’s securities to be misclassified in order to mislead investors about the liquidity of the securities (i.e., how actively traded the securities were). Specifically, for a number of illiquid bonds, LUMIERE and others fraudulently caused Visium to assign a classification that led investors to believe that the bonds were relatively liquid, when in fact they were entirely illiquid. This was done contrary to disclosures to investors about the Credit Fund’s percentage of illiquid investments, in order to induce investors to invest in or keep their money in the Credit Fund.
As another method to carry out the scheme, LUMIERE purchased additional quantities of certain securities – in which the Credit Fund had an established position – at a deceptively inflated price, markedly higher than the prevailing market was offering that security, in a practice known as “painting the tape.” The inflated price was then reported to Visium’s accounting department for NAV purposes. In both cases – the sham broker quotes and the inflated purchase prices – it was LUMIERE’s intent to increase the price of certain securities in order to inflate the Credit Fund’s month-end valuation.
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LUMIERE, 46, of New York, New York, was convicted of one count of conspiracy to commit securities fraud and wire fraud, which carries a maximum sentence of five years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison; and one count of wire fraud, which also carries a maximum sentence of 20 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the work of the FBI, and thanked the SEC for its assistance.
This case was brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Ian McGinley, Damian Williams, and Joshua A. Naftalis are in charge of the prosecution.
Former Office Manager Sentenced to Three Years in Prison for Stealing at Least $340,000 from EmployerRead the Press Release
WASHINGTON – Bianca Bush-Bronson, 38, the former office manager for a consulting and lobbying firm, has been sentenced to three years in prison for a scheme in which she embezzled more than $340,000 from her employer, announced U.S. Attorney Channing D. Phillips and Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office.
Bush-Bronson, of Washington, D.C., pled guilty in April 2016 to a charge of wire fraud in the U.S. District Court for the District of Columbia. She was sentenced on Jan. 18, 2017, by the Honorable Tanya S. Chutkan. Following her prison term, Bush-Bronson will be placed on three years of supervised release. She also is subject to a restitution order that will be imposed later by the Court.
According to the government’s evidence, Bush-Bronson worked from April 2011 to October 2012 for a business identified in court documents as “Company A,” a consulting and lobbying firm in the District of Columbia. She maintained responsibility for the company’s day-to-day financial operations, including preparing checks, depositing funds, performing reconciliation of funds in bank accounts, and serving as a point of contact with the bank.
From June 2011 through October 2012, according to the government’s evidence, Bush-Bronson issued checks drawn on the company’s account to herself, to cash, and to third parties for her own benefit. To conceal this activity, she made false entries in internal books and records. In total, she issued at least $80,000 in checks in this manner, using the money for, among other things, a down payment on a car, a mortgage payment, and a payment to her dentist.
Bush-Bronson also used the company’s credit card to make at least $260,000 in unauthorized purchases for her own personal use at various retailers, including a jewelry store, department stores, and a salon, as well as for restaurants, airline tickets, and hotel stays. Finally, she received $1,470 in parking benefits without authorization.
In announcing the sentence, U.S. Attorney Phillips and Assistant Director in Charge Abbate commended the work of those who investigated the case from the FBI’s Washington Field Office. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Aisha Keys and Tasha Harris, Legal Assistant Angela Lawrence, and former Paralegal Specialist Heather Sales. Finally, they commended Assistant U.S. Attorneys Michelle A. Zamarin and David A. Last, who prosecuted the case.
First of Loren Toelle Drug Trafficking Organization SentencedRead the Press Release
COEUR D'ALENE – Geena Lauren Milho, 25, of Williston, North Dakota was sentenced yesterday in United States District Court to 36 months in prison followed by 3 years supervised release for conspiracy to distribute heroin, oxycodone and methamphetamine, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also ordered Milho to forfeit any interest she has in cash and real estate from the drug proceeds. Milho pleaded guilty to the charge on September 13, 2016.
According to the court records, Milho did not join the organization, which was in operation from 2009 to February of 2016, until 2015. She assisted her girlfriend, Augustine Jackson (Loren Toelle’s daughter) with deliveries of controlled substances and helped transport money back to the organization. Milho had no prior criminal convictions. Jackson, 32, of Williston, North Dakota, pleaded guilty to conspiracy to distribute heroin, oxycodone and methamphetamine on October 19, 2016, and she is scheduled to be sentenced on March 7, 2017, before Chief U.S. District Judge B. Lynn Winmill at the federal courthouse in Coeur d’Alene.
“This case is an excellent example of multi-agency and multi-state cooperation by law enforcement,” Olson stated. “This drug organization moved oxycodone pills, heroin and other controlled substances through Idaho and other states. The dismantling of this organization is an important step in community safety.”
The case was investigated by CDA Police, Drug Enforcement Administration (DEA), Federal Bureau of Investigation (FBI), Internal Revenue Service, Criminal Investigations (IRS-CI), Kootenai County Sheriff, North Idaho Violent Crimes Task Force (NIVCTF), Organized Crime and Drug Enforcement Task Force (OCDETF) and U.S. Customs and Border Protection.
The OCDETF program is a federal multi agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Federal Prison Chaplain Guilty of BriberyRead the Press Release
BEAUMONT, Texas – A 42-year-old federal prison chaplain has pleaded guilty to bribery in the Eastern District of Texas, announced Acting U.S. Attorney Brit Featherston today.
Eric S. Patrick, of Nederland, Texas, pleaded guilty to an Information charging him with bribery of a public official today before U.S. Magistrate Judge Zack Hawthorn.
According to information presented in court, in July 2015, investigators at the U.S. Penitentiary in Beaumont, Texas seized two gallon bags of tobacco and rolling papers from inmates at the prison. An investigation revealed that Patrick, while employed by the U.S. Bureau of Prisons as a chaplain at the prison, was smuggling tobacco and cigarettes into the prison for inmates. To facilitate the scheme, Patrick set up several scam post office boxes and charged inmates $1,500 in each instance.
Under federal statutes, Patrick faces up to 15 years in federal prison at sentencing. The maximum statutory sentence prescribed by Congress and is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.
This case was investigated by the Department of Justice – Office of the Inspector General, the U.S. Postal Inspection Service, and the Drug Enforcement Administration. This case was prosecuted by Assistant U.S. Attorney John Craft.
Federal Jury Convicts U.K. Citizen and City of Austin Employee in Marriage Fraud SchemeRead the Press Release
In Del Rio this morning, a federal jury found Nancy Chan, a 39-year-old citizen of the United Kingdom and City of Austin employee, guilty of perpetrating a marriage fraud scheme announced United States Attorney Richard L. Durbin, Jr and Special Agent in Charge Jeff Arndt, Customs and Border Protection Office of Professional Responsibility, El Paso Division.
The jury convicted Chan of one count of conspiracy to commit marriage fraud and one count of conspiracy to commit mail fraud. During the two-day trial, two co-defendants entered guilty pleas for their roles in the scheme. Isabel Metzler, a 46-year-old former Customs and Border Protection officer at the Eagle Pass Port of Entry, pleaded guilty to conspiracy to commit marriage fraud. Metzler’s husband, Luis Morales, a 37-year-old Customs and Border Protection officer at the Eagle Pass Port of Entry, pleaded guilty to one count of making a false statement to a federal agent.
Testimony during trial revealed that after discussing her immigration status with her friend, Isabel Metzler, Nancy Chan entered into a fraudulent marriage agreement with a person known to Metzler and Morales for the purpose of becoming a lawfully permanent resident. On March 2, 2011, in Maverick County, Chan married the U.S. citizen. In 2014, Chan and her legal spouse submitted false documentation to obtain Lawfully Admitted Permanent Resident (LAPR) status for Chan and to seek naturalization. Chan and her spouse were subsequently interviewed separately by an officer of the United States Citizenship and Immigration Services to determine the validity of their marriage. Their answers to questions posed by the officer contained numerous inconsistencies.
By pleading guilty, Metzler admitted to her role in setting up and attempting to conceal the fraudulent marriage scheme. Morales admitted that on February 9, 2016, he lied to Customs and Border Protection Office of Professional Responsibility investigators about his knowledge of the marriage fraud scheme and for convincing the spouse to maintain the marriage charade to authorities.
Chan and Metzler face up to five years in federal prison for conspiracy to commit marriage fraud. Chan also faces up to 20 years in federal prison for conspiracy to commit mail fraud. Morales faces up to five years in federal prison for making a false statement to authorities. Chan was remanded into U.S. Marshals Service custody following the verdict. Metzler and Morales remain on bond pending sentencing. No sentencing date has been scheduled.
This case was investigated by the Customs and Border Protection Office of Professional Responsibility together with the U.S. Citizenship and Immigration Services, Federal Bureau of Investigation and the Austin Police Department. Assistant United States Attorneys Patrick Burke and Todd Keagle are prosecuting this case on behalf of the government.
Edwardsville Man Indicted for Attempted Robbery and Unlawful Possession of A FirearmRead the Press Release
SCRANTON- The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Victor Santiago-Rivera, age 42, of Edwardsville, Pennsylvania, was indicted on January 17, 2017, by a federal grand jury on attempted robbery and firearms charges.
According to United States Attorney Bruce D. Brandler, the indictment alleges that on January 6, 2017, Santiago-Rivera attempted to rob Simon and Co. Jewelers located in Kingston, Pennsylvania, and illegally possessed a Glock 17 firearm. The indictment alleges that the defendant has been previously convicted of a crime that is punishable by imprisonment of at least one year, making it illegal for him to possess a firearm.
The investigation was conducted by the Bureau of Alcohol, Tobacco and Firearms along with the Kingston Police Department. Assistant United States Attorney Jenny P. Roberts is prosecuting the case.
This case was brought as part of the Violent Crime Reduction Partnership (“VCRP”), a district wide initiative to combat the spread of violent crime in the Middle District of Pennsylvania. Led by the United States Attorney’s Office, the VCRP consists of federal, state and local law enforcement agencies whose mission is to locate, apprehend, and prosecute individuals who commit violent crimes with firearms.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law for the attempted robbery is 20 years’ imprisonment followed by three years supervised release and a fine. The firearms charge carries a maximum of 10 years’ imprisonment followed by three years supervised release and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Deputy Attorney General Sally Q. Yates Statement on the Clemency InitiativeRead the Press Release
Deputy Attorney General Sally Q. Yates released the following statement on the Clemency Initiative:
“In late August, we made a promise: that the Department of Justice would review and make a recommendation to President Obama on every commutation petition from a drug offender then in our possession. I’m proud to say we kept that promise. The Office of the Pardon Attorney has now processed more than 16,000 petitions since the launch of the Clemency Initiative in April 2014, ensuring that President Obama had the information he needed to evaluate worthy cases up until the final week of his presidency. With 1,715 commutations in total, this undertaking was as enormous as it was unprecedented, and I am incredibly grateful to the teams of people who devoted their time and energy to the project since its inception. By restoring proportionality to unnecessarily long drug sentences, this Administration has made a lasting impact on our criminal justice system.”
Department of Justice Releases Community Policing Report Highlighting AG Lynch's Visit to MiamiRead the Press Release
WASHINGTON – As part of the Department’s commitment to working with communities and law enforcement to build stronger relationships and mutual trust, Attorney General Loretta E. Lynch today announced the release of the “Attorney General’s Community Policing Report,” a summary of the Attorney General’s twelve-city Community Policing Tour and the Department of Justice’s four Regional Justice Forums. The Attorney General’s Community Policing Tour Report builds on President Obama’s priorities to engage with law enforcement and other members of the community to implement key recommendations from the Final Report of the President’s Task Force on 21st Century Policing.
“This document is not meant to be a comprehensive, step-by-step guide, but, rather, a useful blueprint—a window into what citizens across the nation are doing to build stronger bonds between police and the people they serve,” said Attorney General Lynch. “I hope that this report will help inspire ideas and foster cooperation in communities from coast to coast—so that, together, we can continue our work toward a stronger, a safer, and a more united nation.”
During the Community Policing Tour, Attorney General Lynch visited 12 jurisdictions in two phases. Phase I focused on jurisdictions that had addressed difficult histories of mistrust between communities and law enforcement through strong collaboration and innovation. During this phase, the Attorney General traveled to Cincinnati, Ohio; Birmingham, Alabama; East Haven, Connecticut; Pittsburgh, Pennsylvania; Seattle, Washington; and Richmond, California. Phase II highlighted cities that had made outstanding progress implementing the six key pillars identified in the Final Report of the President’s Task Force on 21st Century Policing. During this phase, the Attorney General visited Miami/Doral, Florida; Portland, Oregon ; Indianapolis, Indiana; Fayetteville, North Carolina; Phoenix, Arizona; and Los Angeles, California, with each site focusing on one of the report’s pillars.
In the wake of the horrific tragedies of the summer of 2016 in Baton Rouge, Louisiana; Dallas, Texas; and St. Paul, Minnesota, the Attorney General and Deputy Attorney General Sally Q. Yates convened a series of Regional Justice Forums with members of the local law enforcement, youth, faith, non-profit and civil rights communities. These meetings were designed to help local stakeholders critically examine community policing issues in their respective cities and regions and to seek concrete solutions together. The Attorney General convened Justice Forums in Detroit, Michigan and Newark, New Jersey. The Deputy Attorney General hosted forums in Denver, Colorado, and Atlanta, Georgia.
This report chronicling the community policing work of the Department of Justice highlights innovative local approaches to policing that help foster stronger ties between officers and the people they are sworn to serve and protect. The document is meant to serve as a tool for communities and law enforcement agencies seeking to deepen their own commitment to community policing principles and practices.
Click the following hyperlink to access the report as a pdf file: Attorney General’s Community Policing Report. AG Lynch’s visit to Miami can be found on pages 31-35.
Dallas County Man Sentenced in Bank Fraud ConspiracyRead the Press Release
PLANO, Texas – A 64-year-old Grand Prairie, Texas man has been sentenced to federal prison for his role in a conspiracy to commit bank fraud and perjury in the Eastern District of Texas, announced Acting U.S. Attorney Brit Featherston today.
Melvin Ray Layman pleaded guilty on July 20, 2016, to conspiracy to commit bank fraud and conspiracy t commit perjury and was sentenced to 51 months in federal prison on Jan. 11, 2017 by U.S. District Judge Marcia A. Crone. Layman was also ordered to pay restitution in the amount of $111,744.
According to information presented in court, from July 2014 to September 2015, Layman conspired with Daylon Esaw to execute a scheme to defraud financial institutions by forging distressed borrowers’ signatures on quitclaim deeds purported to grant ownership of the properties from the true owners to Esaw. Layman and Esaw then filed civil law suits in Dallas County District Courts against the financial institutions that asserted a fraudulent ownership interest in the properties. Layman and Esaw then sought to force the financial institutions to either pay them a settlement to clear up the titles or allow Layman and Esaw to short sell the properties. Layman and Esaw intended to split the proceeds from their scheme when they were successful. Additionally, from November 2011 to June 2013, Layman conspired with Rebecca Quinn and others to make a false statement to the Grand Jury of the United States District Court in the Eastern District of Texas in regards to a mortgage fraud investigation. Quinn had been subpoenaed to testify in the Grand Jury about the use of her notary on certain mortgage documents. Layman met with Quinn prior to her testimony, so that they could strategize on how she would lie to the Grand Jury about the use of her notary. On June 12, 2013, Quinn appeared before the Grand Jury and while under oath made false statements about the use of her notary on certain mortgage documents.
“The U.S. Attorney’s Office is committed to prosecuting and holding responsible those who are engaged in fraud, including the type of mortgage fraud that led to this prosecution,” said Acting United States Attorney Brit Featherston. “The defendants in this case engaged in activities that caused losses to multiple mortgage lenders as well as the Department of Housing and Urban Development, along with fraudulent documents filed in the Dallas County deed records and district court records. Compounding this activity was the defendant’s conspiracy with others to make false statements before a United States grand jury, related to a separate mortgage fraud scheme. Thanks to the diligent work by Special Agents with the Office of Inspector General of the Federal Housing Finance Agency, the Federal Bureau of Investigation, and the Office of the Inspector General for the Department of Housing and Urban Development, this activity was investigated and successfully prosecuted.”
FHFA-OIG Special Agent in Charge Tim Mowery said, “The act of victimizing distressed home owners who are at risk of losing their homes is a despicable act. When individuals exploit the foreclosure process for their personal gain, FHFA-OIG will pursue those perpetrators to the fullest extent of the law.”
FBI Special Agent in Charge Thomas M. Class Sr. said, “The FBI is committed to holding those accountable who undermine the financial security of our citizens and institutions through fraud schemes. Hijacking the foreclosure system impacts homeowners when they are most vulnerable and will not be tolerated.”
"It is always disturbing when individuals choose to engage in actions to defraud the government,” said Phyllis Robinson, Special Agent in Charge, HUD Office of the Inspector General. “Our office will continue to partner with federal prosecutors and the law enforcement community to aggressively pursue those that seek to undermine federal housing programs,” she concluded.
This case was investigated by the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG), Federal Bureau of Investigation (FBI), and U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG).
DTO Members Who Trafficked Multiple Thousands of Kilograms of Marijuana from El Paso to Dumas, Texas, and Elsewhere are SentencedRead the Press Release
AMARILLO, Texas — Two men from Moore County, Texas, who pleaded guilty last year to federal offenses stemming from their respective roles in a marijuana trafficking organization, were sentenced yesterday, announced U.S. Attorney John Parker of the Northern District of Texas.
Manuel Rodrigues Reyes, 48, and Maximilliano Gonzales, 50, both of Cactus, Texas, were sentenced by U.S. District Judge Sidney A. Fitzwater to 70 months, and 51 months, respectively, in federal prison. Each pleaded guilty in September 2016 to one count of conspiracy to distribute and possess with intent to distribute 1,000 kilograms or more of marijuana.
According to plea documents filed in the case, from approximately August 2006 through November 2015, Adan Reyes, along with his brother Guadalupe Reyes, operated a drug trafficking organization (DTO) that trafficked multiple thousands of kilograms of marijuana from El Paso, Texas, to the Dumas, Texas, area, and then to locations primarily in the Midwestern U.S. They transported the marijuana in various ways, including using vehicles and/or horse trailers with hidden compartments. Marijuana was also sometimes hidden inside bone meal.
Adan Reyes led the DTO. It employed people to transport as well as follow load vehicles from El Paso through the checkpoint, and from the checkpoints usually to the Dumas/Cactus, Texas, area, where the marijuana was warehoused at a ranch near Gruver, Texas. From the ranch, Adan Reyes used pickup trucks to drive 500 to 1,000 pound loads of marijuana to customers in the Midwest, including locations in Dodge City, Kansas, and Kansas City and St. Louis, Missouri. Proceeds from the marijuana sales were driven back to the ranch in Gruver. Adan and Guadalupe Reyes shared the drug proceeds. Different drivers were used to drive the money from Gruver to El Paso to deliver Adan Reyes’ share.
Manuel Reyes performed various tasks for the Reyes DTO, including assisting in tracking marijuana loads from El Paso to Cactus/Dumas, and he would ensure the loads made it to the ranch near Gruver, where he would assist in unloading it from vehicles arriving from El Paso and onto vehicles that would transport it to customers. He also counted the drug proceeds that were returned to the ranch and ensured the drivers were paid. On multiple occasions, he also transported cash proceeds from Cactus/Dumas to El Paso.
Maximilliano Gonzales was a driver for the Reyes DTO. He drove marijuana from the ranch in Gruver to customers and was paid for each load he transported. He used a work truck with a welder containing a false compartment to transport the marijuana.
When law enforcement conducted a search at the ranch in February 2016, investigators located a white Ford truck with a welding machine mounted to the truck bed. The welder contained a false compartment that housed packaging material, digital scales, and other items associated with marijuana trafficking. There were also papers in the truck stating the vehicle was registered to, and insured by, Maximilliano Gonzales. In addition, drug ledgers indicating payments to customers as well as payments to Manuel Rodrigues Reyes and Maximilliano Gonzales were found.
Reyes was paid approximately $1,000 per week for his services in working for the Reyes DTO, thus earning at least $150,000 during his employment. According to his plea agreement, Reyes agrees to forfeit $150,000 that represents a portion of the proceeds he obtained as a result of his criminal conduct.
Adan Reyes is currently being detained in the El Paso Division of the Western District of Texas where he is awaiting sentencing next month on charges related to his role in the Reyes DTO. Guadalupe Reyes has pleaded guilty to similar charges and was sentenced in November 2016 to 188 months in federal prison.
The case was investigated by the Federal Bureau of Investigation, the Texas Department of Public Safety, the Moore County Sheriff’s Office and the Cactus Police Department. Assistant U.S. Attorney Sean Long was in charge of the prosecution.
# # #
Cowart Seafood, Inc. Officers Charged with Illegal Seafood Conspiracy and Firearms ViolationRead the Press Release
Gulfport, Miss – Lonnie M. Ray and Shelley H. Ray, the principal officers of Cowart Seafood, Inc., of Bay St. Louis, Mississippi, have been indicted on charges which include conspiracy to violate the Lacey Act, announced U.S. Attorney Gregory K. Davis; Acting Assistant Director Manny Antonaras with the National Oceanic and Atmospheric Administration; Special Agent in Charge Louis Santiago with the U.S. Fish and Wildlife Service; Keith Davis with the Mississippi Department of Marine Resources, Office of Marine Patrol; and Resident Agent in Charge Jason Denham with the Bureau of Alcohol, Tobacco, Firearms and Explosives. The Lacey Act makes it unlawful to sell in interstate commerce any fish taken in violation of state law.
Lonnie Ray, the president of Cowart Seafood, Inc., and Shelley Ray, the company’s secretary/treasurer, were also charged with individual Lacey Act violations, namely, the sale of red drum in interstate commerce to Kenney Seafood, Inc., Slidell, Louisiana on March 20, 2015, and the sale of red drum and spotted seatrout in interstate commerce to the New Orleans Fish House, New Orleans, Louisiana on May 12, 2015. In addition, Lonnie Ray was charged with illegal possession of a short-barreled shotgun. Both defendants made their initial appearance earlier today before the Honorable Robert H. Walker, United States Magistrate Judge, at the federal courthouse in Gulfport.
"The Department of Justice will continue to vigorously prosecute those individuals who jeopardize our nation’s fisheries by providing a market for illegally caught fish," said U.S. Attorney Davis. "Protecting our nation's fishing industry is essential for deterring those who would undermine the sustainable management of our fisheries resource."
"This case demonstrates the value of a combined investigative effort on the part of all agencies involved," said Acting Assistant Director Manny Antonaras with the National Oceanic and Atmospheric Administration.
In the indictment unsealed today, both defendants were charged with conspiring to violate the Lacey Act by selling fish to Louisiana seafood buyers that was taken in violation of Mississippi law. According to Mississippi law, seafood dealers are required to submit information about each seafood purchase from a commercial fisherman on a form known as a trip ticket that is provided by the Mississippi Department of Marine Resources ("DMR"). Lonnie Ray and Shelley Ray are alleged to have violated this requirement by failing to report seafood purchases to DMR and by maintaining separate records of their actual seafood sales. Both defendants are also charged with buying fish from recreational fishermen in violation of state law. The indictment alleges that, on March 18, 2015, Lonnie Ray sold approximately 200 pounds of red drum to a wholesale seafood purchaser in Louisiana for shipment in interstate commerce. On May 12, 2015, he purchased approximately 75 pounds of red drum and 78 pounds of spotted seatrout but never asked for any information needed to complete a Mississippi state trip ticket, and no trip ticket for this purchase was ever submitted to DMR, as required by Mississippi law. Later that day, Lonnie M. Ray sold seven red drum and 33 spotted sea trout to a wholesale seafood purchaser in Louisiana for shipment in interstate commerce. On June 17, 2015, during the execution of a search warrant for the business and residence, agents found an Essex SX Gun Works 12-gauge double-barrel shotgun, having a barrel of less than l8 inches in length.
For the conspiracy and Lacey Act charges, both defendants face a maximum of five years of imprisonment on each count. In addition to possible imprisonment, the defendants face a maximum fine of $250,000, and three years of supervised release for each count. On the firearms count, Lonnie Ray faces a maximum of ten years of imprisonment, a $250,000 fine, and three years of supervised release.
United States Attorney Davis praised the efforts of the federal and state investigative agencies for their diligent work in the investigation of this matter.
The public is reminded that an indictment represents an accusation only and all defendants are entitled to a presumption of innocence.
Costco Wholesale to Pay $11.75 Million to Settle Allegations of Lax Pharmacy ControlsRead the Press Release
LOS ANGELES – Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances.
The settlement announced today resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations.
The settlement was announced today by United States Attorney Eileen M. Decker, along with U.S. Attorneys Annette L. Hayes for the Western District of Washington, Michael C. Ormsby for the Eastern District of Washington, Barbara L. McQuade for the Eastern District of Michigan, and Phillip A. Talbert for the Eastern District of California.
“These are not just administrative or paperwork violations – Costco’s failure to have proper controls in place in its pharmacies likely played a role in prescription drugs reaching the black market,” said United States Attorney Eileen M. Decker. “Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.”
Under the settlement that was finalized yesterday, Costco acknowledged that, from the beginning of 2012 through the end of 2015, certain Costco Pharmacies dispensed controlled substances inconsistent with their compliance obligations under the Controlled Substances Act (CSA) and its implementing regulations. The violations included filling prescriptions from practitioners who did not have a valid DEA number, incorrectly recording the practitioner’s DEA number, filling prescriptions outside the scope of a practitioner’s DEA registration, filling prescriptions that did not contain all the required information, failing to maintain accurate dispensing records, and failing to maintain records for their central fill locations in Sacramento and Everett, Washington.
As part of an investigation in 2012 into the diversion of controlled substances by local physicians, the DEA’s Los Angeles Field Division discovered that Los Angeles-area Costco pharmacies had filled numerous prescriptions issued by individual practitioners who lacked a valid DEA registration number. The resulting DEA investigation into the practices, policies and procedures for validating DEA registration numbers at local Costco pharmacies revealed that, between January 2012 and August 2013, area Costco pharmacies filled dozens of prescriptions issued by individual practitioners who lacked a valid DEA registration number, and filled nearly 200 prescriptions issued by individual practitioners with a valid DEA registration number but used an invalid DEA registration number when recording and reporting the prescription. Costco filled these prescriptions because its system for validating DEA registration numbers was deficient and flawed.
“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”
“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said United States Attorney Annette L. Hayes of the Western District of Washington. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the Drug Enforcement Administration investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”
To address issues uncovered in this investigation, Costco made improvements in its pharmacies. The company purchased a new pharmacy management system at a total budgeted five year cost of approximately $127 million. Additionally, Costco implemented a three tier audit program of its pharmacy locations: Tier 1 done by pharmacy managers and regional pharmacy supervisors; Tier 2 completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3 an External Audit of 40 annual audits.
Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco Pharmacy locations without Administrative Inspection Warrants. The Drug Enforcement Administration monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number – the authorization that allows them to write prescriptions for controlled substances.
Michael C. Ormsby, United States Attorney for the Eastern District of Washington, said “Opioid misuse has reached epidemic levels in the United States. This important matter is yet another example of the tenacious dedication of Drug Enforcement Administration investigators in uncovering and addressing corporate regulatory noncompliance. The DEA must be commended for its superb efforts in combating the opioid problem at so many different levels, including regulatory compliance.”
“In light of the prescription pill and opioid overdose epidemic we are seeing across the country, compliance with regulations governing pharmacies is more important than ever,” said United States Attorney Barbara L. McQuade of the Eastern District of Michigan. “We applaud Costco for working with DEA and taking steps to tighten up its compliance to ensure that prescription pills do not end up on the street market.”
“Pharmacies are the gatekeepers responsible for ensuring the lawful use of powerful drugs that have a legitimate medical purpose but are easily abused. The CSA provides the statutory oversight to ensure that pharmacies keep meticulous records,” said United States Attorney Phillip A. Talbert of the Eastern District of California. “The successful resolution of this matter demonstrates the Department of Justice’s commitment to enforcing the CSA.”
This case was investigated by DEA Diversion Groups in Seattle, Los Angeles, Sacramento and Detroit. While this settlement is national in scope, the settlement was negotiated by the United States Attorney’s Offices in the Western and Eastern Districts of Washington, the Central and Eastern Districts of California, and the Eastern District of Michigan.
Costco Wholesale to Pay $11.75 Million to Settle Allegations of Lax Pharmacy ControlsRead the Press Release
Costco Pharmacies Filled Prescriptions that Were Improper or Incomplete
Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid Drug Enforcement Administration (DEA) numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations.
The settlement was announced today by U.S. Attorneys Annette L. Hayes of the Western District of Washington, Michael C. Ormsby of the Eastern District of Washington, Eileen M. Decker of the Central District of California, Barbara L. McQuade of the Eastern District of Michigan and Phillip A. Talbert of the Eastern District of California.
“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said U.S. Attorney Hayes. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the DEA investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”
“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”
Under the settlement reached Jan. 18, 2017, Costco acknowledges that between Jan. 1, 2012 and Dec. 31, 2015, certain Costco Pharmacies dispensed controlled substances inconsistent with their compliance obligations under the Controlled Substances Act (CSA) and its implementing regulations. The violations include: filling prescriptions from practitioners who did not have a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions that did not contain all the required information; failing to maintain accurate dispensing records; and failing to maintain records for their central fill locations in Sacramento, California, and Everett, Washington.
“In light of the prescription pill and opioid overdose epidemic we are seeing across the country, compliance with regulations governing pharmacies is more important than ever,” said U.S. Attorney McQuade. “We applaud Costco for working with DEA and taking steps to tighten up its compliance to ensure that prescription pills do not end up on the street market.”
“These are not just administrative or paperwork violations – Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market,” said U.S. Attorney Decker. “Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.”
“Opioid misuse has reached epidemic levels in the United States. This important matter is yet another example of the tenacious dedication of Drug Enforcement Administration investigators in uncovering and addressing corporate regulatory noncompliance,” said U.S. Attorney Ormsby. “The DEA must be commended for its superb efforts in combating the opioid problem at so many different levels, including regulatory compliance.”
“Pharmacies are the gatekeepers responsible for ensuring the lawful use of powerful drugs that have a legitimate medical purpose but are easily abused. The CSA provides the statutory oversight to ensure that pharmacies keep meticulous records,” said U.S. Attorney Talbert. “The successful resolution of this matter demonstrates the Department of Justice’s commitment to enforcing the CSA.”
To address issues uncovered in this investigation, Costco made improvements in its pharmacies. The company purchased a new pharmacy management system at a total budgeted five year cost of approximately $127 million. Additionally, Costco implemented a three tier audit program of its pharmacy locations: Tier 1 done by pharmacy managers and regional pharmacy supervisors; Tier 2 completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3 an External Audit of 40 annual audits.
Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco Pharmacy locations without Administrative Inspection Warrants. The DEA monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number – the authorization that allows them to write prescriptions for controlled substances.This case was investigated by DEA Diversion Groups in Seattle, Los Angeles, Sacramento and Detroit. While this settlement is national in scope, the settlement was negotiated by the United States Attorney’s Offices in the Western and Eastern Districts of Washington, Central and Eastern Districts of California and Eastern District of Michigan.
Costco Wholesale to Pay $11.75 Million to Settle Allegations of Lax Pharmacy ControlsRead the Press Release
SACRAMENTO, Calif. — Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act (CSA) when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA registration numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations, which resulted in a significant shortage at the West Sacramento central fill pharmacy.
The settlement was announced today by U.S. Attorneys Annette L. Hayes for the Western District of Washington, Michael C. Ormsby for the Eastern District of Washington, Eileen M. Decker for the Central District of California, Barbara L. McQuade for the Eastern District of Michigan, and Phillip A. Talbert for the Eastern District of California.
“Pharmacies are the gatekeepers responsible for ensuring the lawful use of powerful drugs that have a legitimate medical purpose but are easily abused. The CSA provides the statutory oversight to ensure that pharmacies keep meticulous records,” U.S. Attorney Talbert stated. “The successful resolution of this matter demonstrates the Department of Justice’s commitment to enforcing the CSA.”
“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”
Under the settlement reached January 18, 2017, Costco acknowledges that between January 1, 2012, and December 31, 2015, certain Costco pharmacies dispensed controlled substances inconsistent with their compliance obligations under the CSA and its implementing regulations. The violations include: filling prescriptions from practitioners who did not have a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions that did not contain all the required information; failing to maintain accurate dispensing records; and failing to maintain records for their central fill locations in Sacramento, California and Everett, Washington.
U.S. Attorney McQuade stated, “In light of the prescription pill and opioid overdose epidemic we are seeing across the country, compliance with regulations governing pharmacies is more important than ever. We applaud Costco for working with DEA and taking steps to tighten up its compliance to ensure that prescription pills do not end up on the street market.”
“These are not just administrative or paperwork violations — Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market,” said U.S. Attorney Decker. “Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.”
U.S. Attorney Ormsby said “Opioid misuse has reached epidemic levels in the United States. This important matter is yet another example of the tenacious dedication of Drug Enforcement Administration investigators in uncovering and addressing corporate regulatory noncompliance. The DEA must be commended for its superb efforts in combating the opioid problem at so many different levels, including regulatory compliance.”
“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said U.S. Attorney Hayes. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the Drug Enforcement Administration investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”
To address the numerous issues uncovered in this investigation, Costco surrendered its DEA Registration at its central fill location in West Sacramento and accordingly, lost the ability to handle controlled substances. Costco also made improvements in its pharmacies by purchasing a new pharmacy management system at a total budgeted five-year cost of approximately $127 million. Additionally, Costco implemented a three-tier audit program of its pharmacy locations: Tier 1, done by pharmacy managers and regional pharmacy supervisors; Tier 2, completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3, an External Audit of 40 annual audits.
Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco pharmacy locations without Administrative Inspection Warrants. The Drug Enforcement Administration monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number — the authorization that allows them to write prescriptions for controlled substances.
This case was investigated by DEA Diversion Groups in Seattle, Los Angeles, Sacramento and Detroit. While this settlement is national in scope, the settlement was negotiated by the U.S. Attorney’s Offices in the Western and Eastern Districts of Washington, Central and Eastern Districts of California and Eastern District of Michigan. Assistant U.S. Attorneys Anderson Berry and Kurt A. Didier handled the matter for the Eastern District of California.
Costco Wholesale to Pay $11.75 Million to Settle Allegations of Lax Pharmacy ControlsRead the Press Release
Costco Pharmacies Filled Prescriptions that Were Improper or Incomplete
DETROIT - Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid Drug Enforcement Administration (DEA) numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations.
The settlement was announced today by U.S. Attorneys Annette L. Hayes of the Western District of Washington, Michael C. Ormsby of the Eastern District of Washington, Eileen M. Decker of the Central District of California, Barbara L. McQuade of the Eastern District of Michigan and Phillip A. Talbert of the Eastern District of California.
“In light of the prescription pill and opioid overdose epidemic we are seeing across the country, compliance with regulations governing pharmacies is more important than ever,” said U.S. Attorney McQuade. “We applaud Costco for working with DEA and taking steps to tighten up its compliance to ensure that prescription pills do not end up on the street market.”
“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said U.S. Attorney Hayes. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the DEA investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”
“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”
Under the settlement reached Jan. 18, 2017, Costco acknowledges that between Jan. 1, 2012 and Dec. 31, 2015, certain Costco Pharmacies dispensed controlled substances inconsistent with their compliance obligations under the Controlled Substances Act (CSA) and its implementing regulations. The violations include: filling prescriptions from practitioners who did not have a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions that did not contain all the required information; failing to maintain accurate dispensing records; and failing to maintain records for their central fill locations in Sacramento, California, and Everett, Washington.
“These are not just administrative or paperwork violations – Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market,” said U.S. Attorney Decker. “Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.”
“Opioid misuse has reached epidemic levels in the United States. This important matter is yet another example of the tenacious dedication of Drug Enforcement Administration investigators in uncovering and addressing corporate regulatory noncompliance,” said U.S. Attorney Ormsby. “The DEA must be commended for its superb efforts in combating the opioid problem at so many different levels, including regulatory compliance.”
“Pharmacies are the gatekeepers responsible for ensuring the lawful use of powerful drugs that have a legitimate medical purpose but are easily abused. The CSA provides the statutory oversight to ensure that pharmacies keep meticulous records,” said U.S. Attorney Talbert. “The successful resolution of this matter demonstrates the Department of Justice’s commitment to enforcing the CSA.”
To address issues uncovered in this investigation, Costco made improvements in its pharmacies. The company purchased a new pharmacy management system at a total budgeted five year cost of approximately $127 million. Additionally, Costco implemented a three tier audit program of its pharmacy locations: Tier 1 done by pharmacy managers and regional pharmacy supervisors; Tier 2 completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3 an External Audit of 40 annual audits.
Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco Pharmacy locations without Administrative Inspection Warrants. The DEA monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number – the authorization that allows them to write prescriptions for controlled substances.
This case was investigated by DEA Diversion Groups in Seattle, Los Angeles, Sacramento and Detroit. While this settlement is national in scope, the settlement was negotiated by the United States Attorney’s Offices in the Western and Eastern Districts of Washington, Central and Eastern Districts of California and Eastern District of Michigan.
Costco Wholesale to Pay $11.75 Million to Settle Allegations of Lax Pharmacy ControlsRead the Press Release
WASHINGTON – Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations.
The settlement was announced today by United States Attorneys Michael C. Ormsby for the Eastern District of Washington, Annette L. Hayes for the Western District of Washington, Eileen M. Decker for the Central District of California, Barbara L. McQuade for the Eastern District of Michigan and Phillip A. Talbert for the Eastern District of California.
Michael C. Ormsby, United States Attorney for the Eastern District of Washington, said “Opioid misuse has reached epidemic levels in the United States. This important matter is yet another example of the tenacious dedication of Drug Enforcement Administration investigators in uncovering and addressing corporate regulatory noncompliance. The DEA must be commended for its superb efforts in
combating the opioid problem at so many different levels, including regulatory compliance.”
“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”
Under the settlement reached January 18, 2017, Costco acknowledges that between January 1, 2012 and December 31, 2015, certain Costco Pharmacies dispensed controlled substances inconsistent with their compliance obligations under the Controlled Substances Act (CSA) and its implementing regulations. The violations include: filling prescriptions from practitioners who did not have a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions that did not contain all the required information; failing to maintain accurate dispensing records; and failing to maintain records for their central fill locations in Sacramento, California and Everett, Washington.
“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said U.S. Attorney Annette L. Hayes. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the Drug Enforcement Administration investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”
United States Attorney Barbara L. McQuade stated, “In light of the prescription pill and opioid overdose epidemic we are seeing across the country, compliance with regulations governing pharmacies is more important than ever. We applaud Costco for working with DEA and taking steps to tighten up its compliance to ensure that prescription pills do not end up on the street market.”
“These are not just administrative or paperwork violations – Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market,” said United States Attorney Eileen M. Decker. “Costco
pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.”
“Pharmacies are the gatekeepers responsible for ensuring the lawful use of powerful drugs that have a legitimate medical purpose but are easily abused. The CSA provides the statutory oversight to ensure that pharmacies keep meticulous records,” U.S. Attorney Phillip A. Talbert for the Eastern District of California stated. “The successful resolution of this matter demonstrates the Department of Justice’s commitment to enforcing the CSA.”
To address issues uncovered in this investigation, Costco made improvements in its pharmacies. The company purchased a new pharmacy management system at a total budgeted five year cost of approximately $127 million. Additionally, Costco implemented a three tier audit program of its pharmacy locations: Tier 1 done by pharmacy managers and regional pharmacy supervisors; Tier 2 completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3 an External Audit of 40 annual audits.
Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco Pharmacy locations without Administrative Inspection Warrants. The Drug Enforcement Administration monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number – the authorization that allows them to write prescriptions for controlled substances.
This case was investigated by DEA Diversion Groups in Seattle, Los Angeles, Sacramento and Detroit. While this settlement is national in scope, the settlement was negotiated by the United States Attorney’s Offices in the Western and Eastern Districts of Washington, Central and Eastern Districts of California and Eastern District of Michigan.
Costco Wholesale to Pay $11.75 Million to Settle Allegations of Lax Pharmacy ControlsRead the Press Release
WASHINGTON – Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations.
The settlement was announced today by U.S. Attorneys Annette L. Hayes for the Western District of Washington, Michael C. Ormsby for the Eastern District of Washington, Eileen M. Decker for the Central District of California, Barbara L. McQuade for the Eastern District of Michigan and Phillip A. Talbert for the Eastern District of California.
“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said U.S. Attorney Annette L. Hayes. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the Drug Enforcement Administration investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”
“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”
Under the settlement reached January 18, 2017, Costco acknowledges that between January 1, 2012 and December 31, 2015, certain Costco Pharmacies dispensed controlled substances inconsistent with their compliance obligations under the Controlled Substances Act (CSA) and its implementing regulations. The violations include: filling prescriptions from practitioners who did not have a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions that did not contain all the required information; failing to maintain accurate dispensing records; and failing to maintain records for their central fill locations in Sacramento, California and Everett, Washington.
United States Attorney Barbara L. McQuade stated, “In light of the prescription pill and opioid overdose epidemic we are seeing across the country, compliance with regulations governing pharmacies is more important than ever. We applaud Costco for working with DEA and taking steps to tighten up its compliance to ensure that prescription pills do not end up on the street market.”
“These are not just administrative or paperwork violations – Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market,” said United States Attorney Eileen M. Decker. “Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.”
Michael C. Ormsby, United States Attorney for the Eastern District of Washington, said “Opioid misuse has reached epidemic levels in the United States. This important matter is yet another example of the tenacious dedication of Drug Enforcement Administration investigators in uncovering and addressing corporate regulatory noncompliance. The DEA must be commended for its superb efforts in combating the opioid problem at so many different levels, including regulatory compliance.”
“Pharmacies are the gatekeepers responsible for ensuring the lawful use of powerful drugs that have a legitimate medical purpose but are easily abused. The CSA provides the statutory oversight to ensure that pharmacies keep meticulous records,” U.S. Attorney Phillip A. Talbert for the Eastern District of California stated. “The successful resolution of this matter demonstrates the Department of Justice’s commitment to enforcing the CSA.”
To address issues uncovered in this investigation, Costco made improvements in its pharmacies. The company purchased a new pharmacy management system at a total budgeted five year cost of approximately $127 million. Additionally, Costco implemented a three tier audit program of its pharmacy locations: Tier 1 done by pharmacy managers and regional pharmacy supervisors; Tier 2 completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3 an External Audit of 40 annual audits.
Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco Pharmacy locations without Administrative Inspection Warrants. The Drug Enforcement Administration monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number – the authorization that allows them to write prescriptions for controlled substances.
This case was investigated by DEA Diversion Groups in Seattle, Los Angeles, Sacramento and Detroit. While this settlement is national in scope, the settlement was negotiated by the United States Attorney’s Offices in the Western and Eastern Districts of Washington, Central and Eastern Districts of California and Eastern District of Michigan.
costco_executed_settlement_agreement.pdfCorrectional Officer Sentenced for Distributing Marijuana to InmatesRead the Press Release
United States Attorney G.F. “Pete” Peterman, III, announced that James Royal, age 43, of Cuthbert, Georgia, was sentenced on January 19, 2017, in Columbus, Georgia, by the Honorable Clay D. Land, United States District Judge, to serve a total of six months imprisonment, followed by two years of supervised release, for distributing marijuana to inmates. He will also not be able to seek or obtain further employment in law enforcement.
Mr. Royal worked as a correctional officer at the Stewart County Detention Center in Lumpkin, Georgia. Evidence showed that he smuggled marijuana into the facility to various detainees, who then arranged to have Mr. Royal paid via Western Union transfers. Mr. Royal collected the money at a convenience store in Cuthbert, after friends or relatives of the detainees transmitted the money.
The case was investigated by the Department of Homeland Security. Assistant United States Attorney Melvin E. Hyde prosecuted this matter on behalf of the Government.
Questions concerning this case should be directed to Pamela Lightsey, Public Information Officer, United States Attorney’s Office, at (478) 621-2603.