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Wednesday 18 January 2017
Niagara Falls Man Pleads Guilty to Burglarizing A PharmacyRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y. — Acting U.S. Attorney James P. Kennedy, Jr. announced today that Darren Lockett, 37, of Niagara Falls, NY, pleaded guilty to burglary of a pharmacy before by U.S. District Judge Lawrence J. Vilardo. The charge carries a maximum penalty of 20 years in prison and a $250,000 fine.
Assistant U.S. Attorney Patricia Astorga, who is handling the case, stated that on February 9, 2016, the defendant went to Macleod’s Pharmacy in Niagara Falls and hid in the basement of the building waiting for the pharmacy to close. Lockett was familiar with the physical layout of the pharmacy and also brought along a flashlight to see in the dark. Once the pharmacy closed, the defendant came out of the basement and stole 60 suboxone tablets, 500 diazepam tablets, and 500 clozapine tablets.
Today’s plea is the culmination of an investigation by the Drug Enforcement Administration, under the direction of Special Agent-in-Charge James J. Hunt, New York Field Division and the Niagara Falls Police Department, under the direction of Chief Bryan DalPorto.
Sentencing is scheduled for May 9, 2017, at 9:00 a.m. before Judge Vilardo.
Nez Perce Tribal Member Pleads Guilty to StabbingRead the Press Release
BOISE – Coryn Lawyer, 23, of Kamiah, Idaho, pleaded guilty today to assault with a dangerous weapon, U.S. Attorney Wendy J. Olson announced. Lawyer was indicted by a federal grand Jury in Coeur d’Alene on July 20, 2016.
According to the plea agreement, Lawyer admitted that on February 4, 2016, she and the stabbing victim got into an argument at Lawyer's residence in Kamiah. The argument became physical. The victim tried to leave. Before she could do so, Lawyer grabbed two knives and stabbed the victim, inflicting small lacerations on her shoulder, ankle and knee.
The charge of assault with a dangerous weapon is punishable by up to ten years in prison, a maximum fine of $250,000, and up to three years of supervised release.
Sentencing is set for May 2, 2017, before Chief U.S. District Judge B. Lynn Winmill at the federal courthouse in Coeur d’Alene.
The case was investigated by Federal Bureau of Investigation (FBI) and the Nez Perce Tribal Police.
New York man sentenced to over 17 years in federal prison for transporting a minor to engage in sexual activityRead the Press Release
CHARLESTON, W.Va. – A New York man was sentenced today to 17 and a half years in federal prison for transporting a minor from West Virginia to Virginia for the purpose of engaging in sexual activity, announced United States Attorney Carol Casto. Ian Michael Cramer, 27, of Amherst, previously pleaded guilty to transportation of a minor with intent to engage in criminal sexual activity. After Cramer is released from prison, he will be on federal supervised release for 25 years and will be required to register as a sex offender.
Cramer admitted that in September 2015, he used an app on his cell phone to persuade a 15-year-old from Cross Lanes to engage in sexual activity. During the evening hours of September 18, 2015, Cramer drove from Richmond, where he was residing at the time, to Cross Lanes and picked up the minor. He then drove the minor back to his apartment in Richmond, where the two of them engaged in sexual activity. Law enforcement arrived at Cramer’s apartment on September 20, 2015, and rescued the minor.
“My office has made it a priority to work with local, state, and federal law enforcement partners to identify, investigate, and prosecute predators who exploit and abuse minors. This prison sentence should send a clear message that there are serious consequences for such behavior,” stated United States Attorney Carol Casto. “We will continue to use all of the tools available to us in order to protect children from predators and bring those who do commit such crimes to justice. I am grateful to the dedicated law enforcement officers for their commitment to keeping our children and our communities safe.”
The FBI, the Kanawha County Sheriff’s Office, the Virginia State Police, and the New York State Police conducted the investigation. Assistant United States Attorney Lisa G. Johnston is in charge of the prosecution. United States District Judge John T. Copenhaver, Jr., imposed the sentence.
This case is being prosecuted as part of an ongoing initiative of the United States Attorney’s Office to combat child sexual exploitation and abuse in the Southern District of West Virginia.
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New York Man Charged with Fort Lee, New Jersey, Bank RobberyRead the Press Release
NEWARK, N.J. – A Bronx, New York, man who was arrested on Jan. 13, 2017 in connection with a Fort Lee, New Jersey, bank robbery will make his initial court appearance tomorrow, U.S. Attorney Paul J. Fishman announced today.
Andres Dominguez, 38, is charged by complaint with one count of bank robbery and is scheduled to make his initial appearance before U.S. Magistrate Judge James B. Clark III in Newark federal court tomorrow.
According to documents filed in this case and statements made in court:
On Jan. 12, 2017, Dominguez allegedly robbed the Bank of New Jersey in Fort Lee. According to bank employees and video surveillance, a man wearing a gray Nike hooded sweatshirt, a blue rubber glove, sunglasses, a wool hat, Adidas pants, and white sneakers entered the bank.
The robber approached one of the bank tellers with a large kitchen knife in his right hand and jumped onto the counter separating the tellers from customers. He then verbally demanded money from the teller and instructed the teller to give him all the money in the teller drawers or he would kill her. The teller complied, and the robber jumped back over the counter and fled the bank on foot. The robber was later identified as Dominguez.
When law enforcement later searched the area around the bank for evidence of the bank robbery, they recovered a large kitchen knife from a dumpster behind the bank. They also found two blue rubber gloves, a gray Nike hooded sweatshirt, and a dark wool hat on the street at various locations within a few blocks of the bank. Law enforcement later located Dominguez in the Bronx and arrested him.
The bank robbery charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and officers of the Fort Lee Police Department, under the direction of Chief Keith M. Bendul, with the investigation.
The government is represented by Assistant U.S. Attorney Jason S. Gould of the U.S. Attorney’s Office General Crimes Unit in Newark.
The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Muskogee Man Sentenced to 33 Months for Firearm PossessionRead the Press Release
MUSKOGEE, OKLAHOMA – The United States Attorney’s Office for the Eastern District of Oklahoma announced that KEEVIN MICHAEL RAY WALKER, age 29, of Muskogee, Oklahoma, was sentenced to 33 months in the Bureau of Prisons, followed by supervised release for FELON IN POSSESSION OF FIREARM, in violation of Title 18, United States Code, Sections 922(g)(1) and 924(a)(2).
The Indictment alleged that on or about January 16, 2016, in the Eastern District of Oklahoma, the Defendant, having been convicted of a crime punishable by imprisonment for a term exceeding one year, did knowingly possess in and affecting commerce, a firearm, with said firearm having been shipped and transported in interstate commerce.
The charge arose from an investigation by the Muskogee Police Department, the Cherokee Nation Marshall Service, and the Federal Bureau of Investigation.
The Honorable Judge Ronald A. White, District Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, presided over the hearing. The defendant will remain in the custody pending transportation to the designated federal facility at which, the nonparoleable sentence will be served.
Assistant United States Attorney Kristin Harrington represented the United States.
Missouri Resident Pleads Guilty to Conspiracy to Pass Counterfeit CurrencyRead the Press Release
Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced today that on January 18, 2017, Kai D. Bowers, 22, of Florissant, Missouri, plead guilty in United States District Court, to conspiracy to manufacture and pass counterfeit United States currency. Bowers faces a term of imprisonment of not more than five years, a fine up to $250,000, or both, and a term of supervised release of not more than three years when he is sentenced on May 5, 2017 in United States District Court in East St. Louis.
At his plea, Bowers admitted that during September of 2015, he agreed with Dion Price and others, to manufacture counterfeit United States currency and then pass the counterfeit $100 dollar bills in the cities of Alton, Illinois and St. Charles, Missouri.
Dion Price who plead guilty to the same charge on October 5, 2016, will be sentenced in United States District Court in East St. Louis on February 10, 2017.
The investigation was conducted by the Alton, Illinois Police Department and the St. Charles, Missouri Police Departments. The case is being prosecuted by Assistant United States Attorney Ranley R. Killian.
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Mexican National Sentenced for Illegal Re-EntryRead the Press Release
U.S. Attorney Kenneth A. Polite announced that FAUSTINO JUAREZ-CASTILLO, age 32, was sentenced today after previously pleading guilty one-count Indictment for illegal reentry of a removed alien in violation of Title 8, United States Code, Section 1326(a).
U.S. District Judge Martin L.C. Feldman sentenced JUAREZ-CASTILLO to 14 months incarceration, to be followed by one year of supervised release. Following completion of his sentence, JUAREZ-CASTILLO will be surrendered to the custody of the U.S. Immigration and Customs Enforcement for removal proceedings.
According to the court documents, JUAREZ-CASTILLO was previously removed from the United States on October 28, 2011. JUAREZ-CASTILLO was found in the Eastern District of Louisiana on August 2, 2016, and had not received permission from the Attorney General of the United States or the Secretary of the Department of Homeland Security to reenter.
U.S. Attorney Polite praised the work of the United States Department of Homeland Security in investigating this matter. Assistant U.S. Attorney Spiro G. Latsis was in charge of the prosecution.
Mexican Man Pleads Guilty to Illegal Re-EntryRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.- Acting U.S. Attorney James P. Kennedy, Jr. announced today that Jose Manuel Salazar Estrada, 38, of Mexico, pleaded guilty to illegally reentering the United States after a conviction for an aggravated felony before U.S. District Judge Lawrence J. Vilardo. The charge carries a maximum penalty of 20 years in prison and a $250,000 fine.
Assistant U.S. Attorneys Stephanie Lamarque and Scott S. Allen, who are handling the case, stated that on December 7, 2016, Estrada was encountered at the Peace Bridge port of entry after getting lost and turning around on the bridge before reaching Canada. When he was initially questioned, the defendant claimed to be a citizen of the United States, born in Arizona. Standard record checks revealed that Estrada is a citizen of Mexico and had been deported from the United States on five prior occasions. The most recent deportation occurred in 2015, after the defendant was convicted in Arizona of conspiracy to transport illegal aliens for profit, an aggravated felony, and banned from entering the United States for life.
The plea is the result of an investigation by United States Customs and Border Protection, under the direction of Director of Field Operations Rose Hilmey.
Sentencing is scheduled for May 4, 2017, at 12:00 p.m. before Judge Vilardo.
Methamphetamine Trafficker Sentenced to More Than 11 Years in Federal PrisonRead the Press Release
ABILENE, Texas — A Fort Worth, Texas, man, Manuel Guadalupe Garcia, 21, was sentenced yesterday by U.S. District Judge Reed C. O’Connor to 135 months in federal prison, following his guilty plea in October 2016 to one count of possession with intent to distribute 50 grams or more of methamphetamine, announced U.S. Attorney John Parker of the Northern District of Texas.
Judge O’Connor further ordered that Garcia’s federal sentence be served consecutively to any sentences imposed in two state cases for murder and aggravated assault with a deadly weapon that are currently pending in Taylor County, Texas.
According to documents filed in the case, on October 22, 2015, an officer with the Abilene, Texas, Police Department was on routine patrol in a high-drug area when he observed an individual leave a residence from which drugs are commonly sold. The 2013 GMC pick-up truck left the residence and failed to stop at a stop sign. The vehicle was stopped and the driver/sole occupant was Garcia, who gave the officer consent to search his vehicle. The officer found a digital scale with a white powdery residue in the center console and an 8-ball of methamphetamine in the ashtray. An additional two baggies of methamphetamine, with a combined weight of more than 400 grams, were found in hidden compartments in the vehicle’s dashboard. Garcia admitted he was paid to transport the methamphetamine to Abilene and deliver it to “Bobby.”
The case was investigated by the Abilene Police Department and the Federal Bureau of Investigation. Assistant U.S. Attorney Juanita Fielden was in charge of the prosecution.
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Mescalero Apache Man Sentenced to Prison for Federal Child Sexual Abuse ConvictionRead the Press Release
ALBUQUERQUE – Raybert Darin Ahidley, 30, an enrolled member of the Mescalero Apache Nation who resides in Mescalero, N.M., was sentenced today in federal court in Las Cruces, N.M., to 24 months in prison for his conviction on a child sexual abuse charge. Ahidley will be on supervised release for five years after completing his prison sentence, and will be required to register as a sex offender.
Ahidley was arrested on Feb. 8, 2016, on a criminal complaint charging him with sexually abusing a minor who was between 12 and 16 years of age in Otero County, N.M. According to the criminal complaint, the victim was a member of the Mescalero Apache Nation.
On Aug. 4, 2016, Ahidley pled guilty to a felony information charging him with sexually abusing a minor. In entering the guilty plea, Ahidley admitted that he was 29 years old when he engaged in a sexual act with the victim who was 15 years old at the time. Ahidley acknowledged that he committed the crime on the Mescalero Apache reservation in Otero County.
This case was investigated by the Mescalero Agency of the BIA’s Office of Justice Services. The case was prosecuted by Assistant U.S. Attorney Aaron O. Jordan of the U.S. Attorney’s Las Cruces Branch Office as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice (DOJ) to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and DOJ’s Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.
McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
LEXINGTON, Ky. – McKesson Corporation (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Drug Enforcement Administration (DEA) Detroit Field Division Special Agent in Charge, Timothy J. Plancon, announced today.
Locally, this settlement resolves the U.S. Attorney’s Office for the Eastern District of Kentucky’s and DEA London Resident Office Diversion Group’s joint investigation of McKesson’s Washington Courthouse, Ohio Distribution Center, which distributed pharmaceutical drugs to pharmacies in Kentucky, Ohio, and West Virginia. The settlement further resolves open civil investigations being conducted by eleven other U.S. Attorney’s Offices across the nation and administrative investigations by DEA.
“McKesson’s failure to report suspicious orders fueled the opioid epidemic in eastern Kentucky,” said Acting U.S. Attorney Shier. “Opioid abuse has devastated our community, and the investigation of drug distributors, like McKesson, is one aspect of the United States’s multifaceted fight against this epidemic.”
DEA Special Agent in Charge Plancon said: “The United States is in the midst of an opiate epidemic which is being fueled by the misuse of opiate painkillers. This historic settlement demonstrates DEA’s commitment to the public health and safety by holding the McKesson Corporation accountable for their actions. It doesn’t matter if the violator is a multi-billion dollar corporation, or an individual selling smaller amounts of drugs on the street, DEA is committed to fighting this epidemic from all angles.”
The nationwide settlement requires McKesson to suspend sales of controlled substances from its Washington Courthouse Distribution Center and distribution centers in Colorado, Michigan, and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers – i.e. orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. For example, from January 1, 2009 to August 1, 2013, McKesson’s Washington Courthouse Distribution Center failed to report suspicious orders of controlled substances to DEA.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.
Locally, the civil penalty investigation was conducted by the U.S. Attorney’s Office for the Eastern District of Kentucky and DEA Detroit Field Division’s London Resident Office’s Diversion Group. This multi-district investigation also involved the following DEA Offices: Boston Field Division, Chicago Field Division, Denver Field Division, Miami Field Division, Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington District Office. The following U.S. Attorney’s Offices also participated in the case: Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit, and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado), Alan McGonigal (Northern District of West Virginia), and Katherine Crytzer (Eastern District of Kentucky) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill, and Krista Tongring represented DEA. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.
Man Pleads Guilty to Role in International Drug Trafficking ConspiracyRead the Press Release
RICHMOND, Va. – Lamar Gayle, 34, of Brooklyn, New York, pleaded guilty today to drug charges related to his role in an international drug trafficking conspiracy.
According to the statement of facts filed with the plea agreement, on Feb. 12, 2016, Gayle traveled from Brooklyn to Charleston, South Carolina, to receive 15 kilograms of cocaine from a Panamanian drug trafficking organization (DTO) for domestic distribution. On the same day, law enforcement intercepted 15 kilograms of cocaine on a commercial shipping vessel at the Port of Charleston sent by the Panamanian DTO. On Feb. 13, 2016, Gayle obtained a bag containing 15 kilograms of cocaine in Charleston from a co-conspirator while under surveillance of law enforcement, and upon taking possession of the cocaine, Gayle boarded a commercial bus and traveled to the Eastern District of Virginia. On Feb. 14, 2016, law enforcement executed a drug interdiction operation in Sussex County on the commercial bus on which Gayle was traveling. During the stop of the bus, law enforcement surveillance observed Gayle hide the bag containing the cocaine under a seat inside the bus, and shortly thereafter seized the bag containing the 15 kilograms of cocaine.
Gayle was indicted by a federal grand jury on Sept. 20, 2016, and faces a maximum penalty of life in prison when sentenced on April 28. 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; Daniel Salter, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Atlanta Division; Nick Annan, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Atlanta; Colonel W. Steven Flaherty, Superintendent, Virginia State Police; and Humberto I. Cardounel, Jr., Chief of Henrico County Police, made the announcement after the plea was accepted by U.S. District Judge Henry E. Hudson. Assistant U.S. Attorneys Erik Siebert, Peter S. Duffey, and David V. Harbach, II are 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. 3:16-cr-108.
Malheur County Man Sentenced to 45 Months in Prison for Unlawful Possession of FirearmRead the Press Release
EUGENE, Ore. – On January 18, 2017, Shawn James Franks Claytor, 27, a convicted felon from Nyssa, Oregon, was sentenced by U.S. District Judge Ann Aiken to 45 months in federal prison for unlawful possession of a firearm. Upon his release from prison, Claytor will be on supervised release for three years.
At approximately 1:00 a.m. on June 29, 2015, a police officer encountered Claytor and another man near some railroad tracks in Ontario, Oregon. Claytor was on probation and out past his 10:00 p.m. curfew. He fled on foot and discarded a loaded .22 caliber revolver and a bag of methamphetamine. Later that day, officers found Claytor and arrested him. He admitted the firearm and drugs were his and that he had been trying to sell them. Claytor had previously been convicted of first degree burglary in Oregon.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Ontario Police Department, and was prosecuted by Nathan J. Lichvarcik, Assistant United States Attorney for the District of Oregon, with the assistance of the Malheur County District Attorney’s Office.
Los Angeles Lawyer Pleads Guilty to Drug TraffickingRead the Press Release
SACRAMENTO, Calif. — Nathan Hoffman, 56, of Los Angeles, pleaded guilty today to manufacturing marijuana as part of a larger conspiracy to distribute marijuana throughout California, U.S. Attorney Phillip A. Talbert announced.
As part of his plea agreement, Hoffman agreed to give up his license to practice law in the State of California and not contest any disbarment proceedings instituted by the State Bar of California.
According to court documents, Hoffman, a Los Angeles attorney with offices on Wilshire Boulevard, conspired with Yan Ebyam, Hung Nguyen, and others to develop two industrial-sized marijuana cultivation sites in Sutter County and Sacramento. Hoffman created legal entities designed to lend legitimacy to the marijuana cultivation and distribution, but, as part of the plea agreement, Hoffman admitted that he and his co-conspirators sought to make profits from the illegal distribution of large amounts of marijuana. Much of the marijuana grown in Northern California from this conspiracy was distributed by Nguyen. Nguyen, who entered a guilty plea last week, operated two Southern California marijuana stores, the Canna Clinic of Garden Grove and the South Bay Canna Clinic in Torrance.
This case is part of investigations into industrial-scale marijuana cultivation conspiracies operating within the Eastern District of California. A total of 12 defendants were indicted for crimes relating to their marijuana cultivation in this case and in two related cases (United States v. Yan Ebyam et al. 2:11-cr-275-JAM and 2:11-cr-276-JAM). All defendants have now pleaded guilty to participation in the conspiracies, and most have been sentenced to prison.
According to court documents, on June 21, 2011, federal and state agents executed seven federal search warrants in Sacramento, Sutter, and Tehama Counties. Two of these warrants were executed at the sites of large, commercial greenhouses located at the Jopson Ranch in Rio Oso and at the Cal-Nevada Wholesale Florist in Sacramento. Law enforcement officers seized over 5,000 marijuana plants in all stages of growth from these two locations: approximately 2,168 plants at Jopson Ranch and approximately 3,305 plants at Cal-Nevada Florist. Two leaders arrested at the grow sites, Yan Ebyam and Aimee Sisco, admitted their involvement in the marijuana cultivation business.
Sentencing for Hoffman is set for April 18, 2017, before U.S. District Judge John A. Mendez. Hoffman faces a maximum statutory penalty of 20 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
These three cases are the product of an investigation by the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation, the Sutter County Sheriff’s Department, and the California Bureau of Narcotic Enforcement. It was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF Program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply. Assistant U.S. Attorneys Jason Hitt and Todd A. Pickles are prosecuting the cases.
Little Rock Man Operating Brothel Out of Home Sent to Prison for Lying to Social Security AdministrationRead the Press Release
LITTLE ROCK—Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Special Agent in Charge Robert Feldt, of the Social Security Administration, Office of Inspector General, announced today that Gary Lemond Shorter, age 61, of Little Rock, was sentenced federal prison for making a false statement to the Social Security Administration.
On Wednesday, United States District Judge Kristine G. Baker sentenced Shorter to 21 months’ imprisonment to be followed by three years of supervised release. Judge Baker also imposed a $500 fine and ordered Shorter to pay restitution to Social Security in the amount of $15,208. Shorter was indicted on September 2, 2015, and on April 28, 2016, he pleaded guilty to making a false statement to the Social Security Administration.
The charges in the Indictment were based upon an investigation which revealed that Shorter was operating a strip club and brothel out of his residence located on Wolfe Street in Little Rock, also known as "the Cat House." Shorter began receiving Social Security Disability benefits in 2011 based on false representations that he could not work.
Shorter hosted "shows" at "the Cat House" where he would charge a $10 admission fee and sell alcohol to patrons. Inside of the house, women would strip for the patrons and were required to pay Shorter a fee from what they earned for stripping. The upstairs of Shorter’s residence was known as "the VIP area," where women would engage in sex acts in exchange for money. Shorter would receive payment from the individuals using the VIP room.
The recommended sentencing range for Shorter was zero to six months’ imprisonment. Based on the egregiousness of Shorter’s conduct, the United States requested a higher sentence.
"A lengthier term than the recommended range was appropriate," Thyer said. "The defendant not only took advantage of the Social Security Administration, but he benefitted from the sexual exploitation of multiple women. This case represents the efforts by my office and the Social Security Administration to find individuals abusing the system and prosecute them.
Judge Baker allowed Shorter to self-report to prison by February 20, 2017.
"The Social Security Administration, Office of Inspector General will vigorously investigate individuals committing fraud against Social Security programs," Feldt said. "This case represents cooperation amongst federal and local agencies to bring to justice those who take advantage of government programs and innocent victims."
The investigation was conducted by the Little Rock Office of the Social Security Administration, Office of Inspector General, and the Federal Bureau of Investigation (FBI). The case was prosecuted by Assistant United States Attorney Kristin Bryant.
Lee's Summit Man Sentenced for Child PornRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Lee’s Summit, Mo., man was sentenced in federal court today for possessing child pornography.
Douglas E. Sands, 56, of Lee’s Summit, was sentenced by U.S. District Judge Gary A. Fenner to five years in federal prison without parole.
On May 24, 2016, Sands pleaded guilty to possessing child pornography. Sands, who admitted that he had been looking at child pornography for almost 20 years, was identified as having downloaded a number of suspected child pornography files over the Internet through a peer-to-peer file-sharing program.
On Feb. 19, 2015, federal agents interviewed Sands at his residence and seized a desktop computer and two thumb drives. A forensic analysis located approximately 1,326 photos and 203 videos of child pornography on his computer equipment.
This case was prosecuted by Assistant U.S. Attorney David Luna. It was investigated by the FBI and the Internet Crimes Against Children Task Force.
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."
Las Cruces Man Pleads Guilty to Federal Methamphetamine Trafficking ChargesRead the Press Release
ALBUQUERQUE – Jason Harrison, 23, of Las Cruces, N.M., pled guilty today in federal court to methamphetamine trafficking charges under a plea agreement with the U.S. Attorney’s Office.
Harrison and his co-defendant Ashley Valenzuela, 23, also of Las Cruces, were arrested and charged in a federal indictment with conspiracy and distribution of methamphetamine on July 1, 2016 and July 6, 2015, in Dona Ana County, N.M.
During today’s proceedings, Harrison pled guilty to the indictment. In entering the guilty plea, Harrison admitted that on July 1, 2016 and July 6, 2016, he worked with Valenzuela to distribute methamphetamine. Specifically, Harrison admitted that on July 1, 2016 and July 6, 2016, Harrison and Valenzuela sold methamphetamine to undercover law enforcement agents.
Valenzuela pled guilty to the same charges on Jan. 11, 2017. Valenzuela admitted that she and Harrison were working together and each had their own part in selling methamphetamine to the agents.
At sentencing, Harrison and Valenzuela face a statutory maximum penalty of 20 years in federal prison. Harrison and Valenzuela remain in custody pending sentencing hearings which have yet to be scheduled.
This case was investigated by the Las Cruces office of the FBI and the Las Cruces Police Department. Assistant U.S. Attorney Sarah M. Davenport of the U.S. Attorney’s Las Cruces Branch Office is prosecuting the case.
Kaufman County Man Who Filmed Young Boys and Claimed to be a Film Director for Film Production Company Indicted for Enticing a Minor and Child Pornography ChargesRead the Press Release
The U.S. Attorney’s Office is requesting the public’s assistance to identify any other children who Morris has victimized. Morris, who according to public sources claimed to be a film director for “Just Film It Productions,” is known to have set up trips for the purpose of photo and/or film shoots in the Northern District of Texas and Las Vegas, Nevada. Anyone who may have been victimized or who has additional information is asked to contact the FBI or the U.S. Attorney’s Office.
DALLAS — Kevin Scott Morris, 44, of Forney, Texas, has been indicted on one count of enticement of a minor, one count of production of child pornography and one count of possession of child pornography, announced U.S. Attorney John Parker of the Northern District of Texas,
The indictment in the case alleges that in May 2012, Morris knowingly persuaded, induced and enticed John Doe #1, a boy approximately 13 years old, to engage in sexually explicit conduct, which Morris filmed. It further alleges that in October 2016, Morris possessed a digital videotape that depicted John Doe #2, a boy approximately 12 years old. In the video, an adult male directs the boy to “start saying nasty stuff” to “lay down,” and to take off his underwear, and depicts the child lying on the floor with his genitals exposed.
The investigation began when the Kaufman County Sheriff’s Office was contacted by a detective in Orange County, California. That detective advised that a minor male victim made an outcry that Morris sexually assaulted him in 2012, when the victim was approximately 13 years old.
According to documents filed in the case, John Doe #1 flew to Dallas for photography and videography sessions with Morris. While in Dallas, Morris took photos of, and filmed, John Doe #1 and engaged in sexually explicit activity with him. Morris also was present in a bathroom while John Doe #1 undressed and showered. Law enforcement is aware of allegations of Morris traveling to Las Vegas, Nevada with at least one other boy for what Morris assured the boy’s family were legitimate acting or modeling purposes.
An indictment is an accusation by a grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, the statutory penalty for the enticement count is not less than 10 years and up to life in federal prison; for the production count is not less than 15 years or more than 30 years in federal prison; and for the possession count is up to 10 years in federal prison. Each count of conviction also carries a maximum fine of $250,000 and up to a lifetime of supervised release.
Morris has been in federal custody since his arrest in October 2016 on a related federal criminal complaint. A trial date of June 5, 2017, before U.S. District Judge Ed Kinkeade has been set.
The case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the proliferation of technology-facilitated sexual exploitation crimes against children. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, PSC marshals federal, state, tribal and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. Since FY 2011, the Department of Justice has filed 20,260 PSC cases against 19,111 defendants. These cases include prosecutions of child sex trafficking; sexual abuse of a minor or ward; child pornography offenses; obscene visual representation of the sexual abuse of children; selling or buying of children; and many more statutes. To learn more about PSC’s work, please visit: https://www.justice.gov/psc.
The Kaufman County Sheriff’s Office and the FBI are investigating the case. Assistant U.S. Attorney Jamie L. Hoxie is in charge of the prosecution.
Anyone who, or whose child, may have been victimized in this case is asked to call Lisa Shedden at the U.S. Attorney’s Office at 1-800-496-8341. Anyone who has additional information is asked to contact the FBI at 972-559-5000, the Kaufman County Sheriff’s Office at 972-932-9631, or Kaufman County Crime Stoppers at 877-TIPSKCC (847-7522).
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KC Man Sentenced for Laser StrikeRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Mo., man has been sentenced in federal court for aiming his laser pointer at a Kansas City, Mo, Police Department helicopter.
Jordan Clarence Rogers, 26, of Kansas City, was sentenced by U.S. District Judge Gary A. Fenner on Tuesday, Jan. 17, 2017, to three years in federal prison without parole.
Rogers, who pleaded guilty on Sept. 8, 2016, admitted that he aimed the beam of a laser pointer at a Kansas City, Mo., Police Department helicopter on Oct. 8, 2013. Rogers struck the helicopter three times with a green laser light. He twice hit the eye of one of the pilots, causing eye strain that lasted for hours after the incident.
In sentencing Rogers, the court found that he recklessly endangered the safety of an aircraft, which was flying over a residential neighborhood. The government, in a sentencing memorandum to the court, described Rogers’s conduct as “another example of the criminally antisocial behavior that (his) extensive criminal history shows to be part of his daily life.”
This case was prosecuted by Assistant U.S. Attorney Brian P. Casey. It was investigated by the FBI.
Justice Department Reaches Settlement with Duke Energy Corporation for Violating Premerger Notification and Waiting Period RequirementsRead the Press Release
Duke to Pay $600,000 for Prematurely Taking Control of the Osprey Energy Center
The Department of Justice announced today a settlement with Duke Energy Corporation (Duke) for violating the reporting and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The settlement requires Duke to pay $600,000 in civil penalties to resolve the department’s charges that, after agreeing to purchase the Osprey Energy Center (Osprey) from Calpine Corporation, Duke took control of Osprey’s business before filing required HSR Act notifications and waiting for the expiration of the mandatory waiting period for antitrust review.
The Justice Department’s Antitrust Division today filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia, along with a proposed settlement that, if approved by the court, would resolve the lawsuit.
“Parties cannot obtain control of the companies they are acquiring until the end of the premerger waiting period,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division. “The Antitrust Division remains vigilant against such ‘gun-jumping’ and takes action when parties to a reportable transaction stop competing independently before the review period has ended.”
The HSR Act requires companies planning transactions that meet certain thresholds to file premerger notification documents with the department and the Federal Trade Commission (FTC) and to observe a mandatory waiting period. During the waiting period, acquirers are prohibited from obtaining “beneficial ownership” of the assets they seek to acquire. A party may prematurely obtain beneficial ownership of a business by, among other things, assuming the risk or potential benefit of changes in the value of the business or exercising control over day-to-day business decisions before the end of the HSR waiting period. This conduct is sometimes referred to as “gun jumping.” HSR Act violators are subject to civil penalties.
The complaint alleges that at the same time that Duke agreed to purchase Osprey, Duke entered into a so-called “tolling agreement” that immediately gave Duke control over Osprey’s output and gave Duke the right to receive the day-to-day profits and losses from Osprey’s business. As a result, from the moment the tolling agreement went into effect, Osprey ceased to be an independent competitor. This occurred before Duke made its required HSR Act notifications and before it had observed the required waiting period.
Duke generates and sells electric power on a retail and/or wholesale basis in numerous local markets throughout the United States. Duke is headquartered in Charlotte, North Carolina. One of Duke’s wholly owned subsidiaries, Duke Energy Florida Inc., sells wholesale and retail power in various areas of Florida. The Osprey Energy Center is a combined-cycle natural gas-fired electrical generating facility located in Auburndale, Florida. Before Osprey was acquired by Duke, Osprey was owned and operated by Calpine Corporation.
Duke Complaint Duke CIS Duke Explanation Duke PFJ Duke StipulationJustice Department Reaches Agreement to Ensure Destruction of Timber Believed to Have Been Harvested in Violation of Peruvian LawRead the Press Release
The Department of Justice announced today that 24 pallets of timber seized by the U.S. Department of Homeland Security, Homeland Security Investigations (HSI) on December 20, 2015, at the Port of Houston, Texas for violation of the Lacey Act and customs law were destroyed in accordance with a settlement agreement reached by the United States and the importer of the timber, Oregon-based Popp Forest Products Inc. The agreement ensures that timber that the U.S. government maintains was harvested in violation of Peruvian law will not enter the U.S. stream of commerce.
The Lacey Act, which is the oldest wildlife protection law in the United States, prohibits importing, exporting, transporting, or receiving timber harvested in violation of foreign laws that regulate the harvesting of such timber. This is the first time the United States has taken such action under the Lacey Act, which was amended in 2008 to include timber products.
“We all have a stake in the sustainability of the world’s forests, which provide habitat for endangered wildlife, and mitigate global warming by drawing carbon from the atmosphere, among many other benefits,” said John C. Cruden, Assistant Attorney General for the Environment and Natural Resources Division. “The interdependence of the world’s ecosystems and natural resources is the foundation of the Lacey Act, the nation’s oldest environmental law. The law also provides us the tools to prevent illegally harvested timber from entering the U.S. marketplace and undercutting lawfully obtained products.”
“We are pleased to have reached a settlement in this case,” said Mark Dawson, Special Agent in Charge of HSI in Houston. “HSI will continue to work with our foreign and domestic partners to ensure imports to the U.S. are conducted in accordance with U.S. laws and regulations.”
The agreement reached between the United States and Popp Forest Products resolves allegations that the timber was harvested in Peru without proper authorization as required under Peruvian law or outside an approved zone. These allegations were based on a report HSI received from the Peruvian government under a Customs Mutual Assistance Agreement, providing the results of an inspection carried out in the areas in which the timber was allegedly harvested. According to the report, the timber could not be the species authorized for harvest. This finding was corroborated in testing by the U.S. Forest Service’s Forest Products Laboratory, which concluded that samples taken from the shipment were not the species authorized for harvest.
As part of the agreement, Popp Forest Products agreed to bear all costs associated with the transportation, destruction, and disposal of the seized timber. The United States agreed to waive further civil enforcement action, administrative fines or civil penalties for the alleged violations of the Lacey Act. This civil agreement does not bind any criminal prosecuting authority, whether federal, state, or local.
The settlement is the result of a coordinated effort by the Environment and Natural Resource Division’s Wildlife and Marine Resources Section, HSI, Immigration and Customs Enforcement, and Customs and Border Protection.
Jury Renders Guilty Verdict in Arson for Financial Gain CaseRead the Press Release
Gregory J. Haanstad, U.S. Attorney for the Eastern District of Wisconsin, announced that on January 12, 2017, Jeremy J. Neumann (age: 43) of Neenah, Wisconsin, was found guilty following a jury trial in federal court in Green Bay, Wisconsin, of the following charges: (1) arson of a building in interstate commerce in violation of Title 18 United States Code, Section 844(i); (2) mail fraud in violation of Title 18 United States Code, Section 1341; (3) arson in conjunction with another federal felony in violation of Title 18 United States Code, Section 844(h); and (4) three counts of making a false statement to a federal agency, that being the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) in violation of Title 18 United States Code, Section 1001.
The evidence at trial revealed that on November 6, 2015, at approximately 10:00 p.m., Neumann destroyed by fire the Anchorage Realty building located in Oshkosh, Wisconsin for purposes of financial gain. He rented warehouse space at that building for his business known as Gambit McDermott, which involved the sale of merchandise returned to retail stores. Neumann started the fire in his warehouse space and it quickly spread to the rest of the building damaging the property of many other tenants. The building was later leveled. When interviewed by law enforcement, Neumann denied being present at his warehouse space at the time of the fire. Law enforcement later obtained information from Neumann that placed him there when the fire started. Further, the government presented a video, recorded from an interior video camera within Anchorage Realty, capturing an individual, determined to be Neumann, in the warehouse at the time of the fire. Following the fire, Neumann submitted a proof of loss claim to his insurance company seeking to collect on the insurance policy after increasing the value thereof, a mere 10 days prior to the fire.
As a result of these convictions, Neumann faces a mandatory 10-year prison term that must be run consecutive to the mail fraud sentence. The arson of a building in interstate commerce charge has a five-year prison term mandatory minimum and a 20-year maximum. The false statement counts each have a five-year prison maximum. Sentencing in the matter is set before Chief Federal Judge William C. Griesbach on April 10, 2017. Neumann remains incarcerated pending that hearing.
The case was investigated by ATF, the Wisconsin Department of Justice- Division of Criminal Investigation- Arson Bureau, the Oshkosh Police Department, Oshkosh Fire Department, and Winnebago County District Attorney’s Office. It is being prosecuted by Assistant United States Attorneys William J. Roach and Zachary Corey.
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Jury Convicts Quincy Farmer for Insurance Fraud SchemeRead the Press Release
SPRINGFIELD, Ill. – A federal jury deliberated for less than two hours before returning guilty verdicts late yesterday on all counts charged in the trial of Dean Mowen, 53, of Quincy, Ill., for his involvement in an insurance fraud scheme. U.S. District Judge Sue E. Myerscough presided over the trial, which began on Jan. 10. Mowen, of the 6900 block of Ellington Road, was allowed to remain on bond pending sentencing, scheduled for May 22, 2017.
Evidence presented by the government during the trial showed that in August 2015, Mowen and co-defendant David Speer traveled to Mississippi. Speer negotiated the purchase price and Mowen paid a local farmer approximately $30,000 cash for a New Holland 8970 tractor and a Case IH 2388 combine. Following the purchase, Mowen added a tractor and combine to his insurance policy at an estimated value of $108,000. Mowen and Speer then agreed that Speer would set the tractor and combine on fire, and on Oct. 1, 2015, Speer set the implements on fire. Mowen then contacted his insurance company to report the estimated loss of $108,000. In response to the insurance company’s request for proof of payment for the tractor and combine, Mowen and Speer provided false receipts that exceeded the true value of the insured implements.
Speer, 68, of the 1500 block of N. 5th Street, Quincy, Ill., previously pled guilty, in August 2016, to conspiracy to commit mail fraud as charged with Mowen. In a separate case, Speer entered a plea of guilty to one count of interstate transportation of stolen property, for transportation in April 2014, of a Case IH 7250 tractor, taken by fraud, from Hancock county, Ill., to St. Charles County, Mo. Speer has been detained since his arrest on June 1, 2016. Speer is scheduled to be sentenced on Feb. 27, 2017.
At sentencing, Mowen faces maximum statutory penalties of up to five years in prison for conspiracy to commit mail fraud (one count) and up to 20 years in prison for the charge of mail fraud (one count). Speer faces up to five years in prison for conspiracy to commit mail fraud (one count) and up to 10 years in prison for interstate transportation of stolen property (one count.) The maximum statutory penalties are prescribed by Congress and are provided here for informational purposes, as sentencing is determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
Assistant U.S. Attorneys Crystal C. Correa and Gregory K. Harris are prosecuting the case and represented the government at trial. The charges were investigated by the West Central Illinois Task Force and the Quincy Police Department.
INTERPOL Washington helps Canada close a 19 year-old murder caseRead the Press Release
INTERPOL Washington—the U.S. National Central Bureau (USNCB)--investigative work played a key role in locating one of Canada’s ten most wanted persons. On December 16, 2016 a Canadian jury convicted John Boulachanis, 42, of first degree murder. In 1997, Boulachanis murdered Robert Tanguay, 32, in Riguad, Quebec, Canada, and then lived as an international fugitive under various aliases in Canada and the United States for over a decade. During this time he was sought by Canadian authorities and was the subject of an INTERPOL Red Notice. Boulachanis remained out of sight for years until Canada’s INTERPOL National Central Bureau (NCB) in Ottawa asked INTERPOL Washington to assist in the cold fugitive case because of new leads developed in Quebec.
To break this case, investigators in Canada and the United States shared and disseminated lead information between the two INTERPOL NCBs, and used all resources available to Canadian and U.S. investigators in a concerted effort to locate and apprehend Boulachanis. For the United States, INTERPOL Washington served as a centralized information repository in the effort to assist Canadian law enforcement with the location and capture of the fugitive in June 2011. INTERPOL Washington reviewed historical records and conducted analysis related to the fugitive and his aliases and collected information from U.S. law enforcement agencies which assisted in Boulachanis’ apprehension in Canada. The apprehension of Boulachanis was the result of outstanding cooperation and collaboration by INTERPOL Washington; the U.S. Marshals Service; the Pinellas County Sheriff’s Office (Florida); the Franklin County Sheriff’s Office (Virginia); Surete du Quebec – Canada, Major Crimes Unit; and INTERPOL Ottawa.
A component of the U.S. Department of Justice, INTERPOL Washington is co-managed by the U.S. Department of Homeland Security. As the designated representative to INTERPOL on behalf of the Attorney General, INTERPOL Washington serves as the national point of contact for all INTERPOL matters, coordinating international investigative efforts among member countries and the more than 18,000 local, state, federal, and tribal law enforcement agencies in the United States.
Housekeeper Sentenced for Stealing $550,000 from Elderly EmployerRead the Press Release
NEWPORT NEWS, Va. – Dana Morris, 42, of Williamsburg, was sentenced today to 37 months in prison for stealing over $558,595.26 from her former employer, an elderly resident of Williamsburg.
Morris pleaded guilty on July 14, 2016. According to court documents, Morris pleaded guilty to engaging in a monetary transaction involving proceeds of unlawful activity and tax evasion. Through her work as a housekeeper and a personal assistant, Morris gained access to the victim’s home and personal effects. Between 2012 and 2014, Morris altered and completely forged 117 checks drawn on her employer’s personal checking account. Morris deposited all of these checks into her personal checking account and spent all of the stolen money on, among other things, rent, jewelry, and over $445,000 in retail and entertainment items. In March 2014, Morris and another individual signed a promissory note to purchase a 2014 Hyundai Sonata Limited for $27,000.00. On the day the payment was due, Morris stole and forged three checks drawn on her employer’s checking account, each in the amount of $7,500.00. Morris used the stolen funds to pay the balance of the new vehicle in full. During the period in which she stole from her elderly employer, Morris failed to report the majority of the stolen money on her federal income taxes. In her 2012 tax return, Morris falsely underreported her income. Morris then evaded the assessment of personal income tax in 2013 and 2014 by failing to file tax returns and filing extensions in which she falsely stated she would owe no tax for each year. In total, Morris evaded the assessment and payment of income tax totaling $172,497.00.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Thomas Holloman, Acting Special Agent in Charge, Washington, D.C. Field Office, IRS-Criminal Investigation (IRS-CI), made the announcement after sentencing by U.S. District Judge Arenda Wright Allen. Assistant U.S. Attorneys Howard J. Zlotnick and Kaitlin C. Gratton prosecuted the case. This case was adopted for prosecution through the U.S. Postal Inspection Service’s Financial Crimes Task Force.
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. 4:16-cr-4.
Houma Man Pleads Guilty to Possession of Child PornographyRead the Press Release
U.S. Attorney Kenneth A. Polite announced that MICHAEL CHAUVIN, age 31, of Houma, pled guilty today to a one-count Indictment, charging him with possession of images and videos depicting the sexual exploitation of children under the age of twelve.
According to court documents, law enforcement officials executed a search warrant at CHAUVIN’S residence on August 7, 2015, during which time they seized numerous electronic items, including one laptop computer, one cellular “smart” phone, four external hard drives, and two external “thumb” drives that contained images and videos of child pornography. A forensic examination of the devices revealed that CHAUVIN used the devices to search for, download, and save images and videos of children as young as approximately two years old engaging in sexually explicit conduct. CHAUVIN obtained most, if not all, of the images and videos via a peer-to-peer file sharing program. The forensic examination located approximately 1,354 images and 779 videos of prepubescent children engaging in sexually explicit on CHAUVIN’S electronic devices.
CHAUVIN faces a maximum term of imprisonment of twenty years, followed by up to a lifetime of supervised release, and a $250,000 fine. He can also be required to register as a sex offender. U.S. District Judge Kurt D. Engelhardt set sentencing for April 12, 2017.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigation in investigating this matter. Assistant United States Attorney Jordan Ginsberg and Special Assistant United States Attorney J. Ryan McLaren are in charge of the prosecution.
Harrison County Man Sentenced to 264 Months for Brandishing Machine Gun During Robbery in Freeport, OhioRead the Press Release
COLUMBUS, Ohio – Nicholas T. Billman, 20, of Flushing, Ohio, was sentenced in U.S. District Court to 264 months in prison for brandishing a machine gun while he robbed a general store in Freeport, Ohio on October 22, 2015.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Trevor Velinor, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and Harrison County Sheriff Ronald J. Myers announced the sentence handed down yesterday by Senior U.S. District Judge James L. Graham.
Billman pleaded guilty in September to one count of robbery of a business that is engaged in interstate commerce and one count of carrying and brandishing a machine gun during a crime of violence.
Testimony during the plea hearing confirmed that Billman entered the Hilltop General Store brandishing an AK-47 type rifle. Billman wore a handgun holstered on his right hip and a sheathed knife on his left hip. He robbed the store of cash and cigarettes then fled. A witness followed Billman but stopped after Billman fired three shots toward him.
Acting on information received from the public and other witnesses, investigators obtained a warrant and searched Billman’s residence two days later. They found an AK-47 similar to the one used in the robbery as well as other firearms and evidence indicating that Billman had committed the crimes. Forensic tests determined that the weapon was fully automatic. Sheriff’s deputies arrested Billman on state charges, then contacted ATF to pursue federal charges. A federal grand jury indicted Billman in February 2016. He has been in custody since sheriff’s deputies arrested him.
U.S. Attorney Glassman commended Assistant U.S. Attorney Timothy Prichard, who is representing the United States in this case.
Four Miami-Dade County Residents Guilty of Stealing Personal Property from over 380 Victims for Identity Theft Fraud RingRead the Press Release
Four Miami-Dade County residents conspired to break into parked vehicles to steal personal property, including personal identification information, that was then used to carry out identity-related fraud schemes.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI), Miami Field Office, and Juan J. Perez, Director, Miami-Dade Police Department (MDPD), made the announcement.
According to the court record, Willie Smith, 34, Daryl Pugh 42, Lloyd Scott, 28, Naomie Maitre, 39, and Christopher Simpson, 35, all of North Miami, were charged by indictment for their participation in a identity theft and fraud scheme conspiracy. The defendants conspired to break into vehicles parked at gas stations, day care centers, and churches in order to steal personal property, including purses, which often contained personal identification documents and information belonging to other individuals. This stolen information was then used to commit aggravated identity theft and fraud. In total, the co-defendants unlawfully possessed property, including purses, sunglasses, cellular telephones, credit cards, debit cards, social security cards, legal permanent resident cards, health insurance cards, Florida bar cards, and passports, belonging to more than 380 victims.
Co-defendants Smith, Pugh and Scott pled guilty for their participation in the identity theft and fraud conspiracy. On January 13, 2017, co-defendant Maitre was convicted by a trial jury of conspiracy to possess 15 or more access devices, possession of 15 or more access devices with the intent to commit fraud, and two separate counts of aggravated identity theft. Smith and Scott were each sentenced, by United States District Judge Ursula Ungaro, to 94 months’ imprisonment.
Maitre and Pugh are scheduled to be sentenced on March 27, 2017, at 11:00 am, before U.S. District Judge Ursula Ungaro.
The case against Christopher Simpson is pending before the court.
An indictment is merely an allegation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Mr. Ferrer commended the investigative efforts of ICE-HSI and MDPD. The case is being prosecuted by Assistant U.S. Attorneys Cary O. Aronovitz and Daya Nathan.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Four Miami-Dade County Residents Guilty of Stealing Personal Property from over 380 Victims for Identity Theft Fraud RingRead the Press Release
Four Miami-Dade County residents conspired to break into parked vehicles to steal personal property, including personal identification information, that was then used to carry out identity-related fraud schemes.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI), Miami Field Office, and Juan J. Perez, Director, Miami-Dade Police Department (MDPD), made the announcement.
According to the court record, Willie Smith, 34, Daryl Pugh 42, Lloyd Scott, 28, Naomie Maitre, 39, and Christopher Simpson, 35, all of North Miami, were charged by indictment for their participation in a identity theft and fraud scheme conspiracy. The defendants conspired to break into vehicles parked at gas stations, day care centers, and churches in order to steal personal property, including purses, which often contained personal identification documents and information belonging to other individuals. This stolen information was then used to commit aggravated identity theft and fraud. In total, the co-defendants unlawfully possessed property, including purses, sunglasses, cellular telephones, credit cards, debit cards, social security cards, legal permanent resident cards, health insurance cards, Florida bar cards, and passports, belonging to more than 380 victims.
Co-defendants Smith, Pugh and Scott pled guilty for their participation in the identity theft and fraud conspiracy. On January 13, 2017, co-defendant Maitre was convicted by a trial jury of conspiracy to possess 15 or more access devices, possession of 15 or more access devices with the intent to commit fraud, and two separate counts of aggravated identity theft. Smith and Scott were each sentenced, by United States District Judge Ursula Ungaro, to 94 months’ imprisonment.
Maitre and Pugh are scheduled to be sentenced on March 27, 2017, at 11:00 am, before U.S. District Judge Ursula Ungaro.
Co-defendant Christopher Simpson remains a fugitive.
An indictment is merely an allegation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Mr. Ferrer commended the investigative efforts of ICE-HSI and MDPD. The case is being prosecuted by Assistant U.S. Attorneys Cary O. Aronovitz and Daya Nathan.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Fort Worth Man Sentenced to 20 Years in Federal Prison on Child Pornography ConvictionRead the Press Release
ABILENE, Texas — Jose Diego Gonzales, 30, of Fort Worth, Texas, was sentenced yesterday by U.S. District Judge Reed C. O’Conner to 240 months in federal prison, following his guilty plea in September 2016 to one count of receipt of child pornography and aiding and abetting, announced U.S. Attorney John Parker of the Northern District of Texas.
Gonzales has been in custody since his arrest in July 2016 in Fort Worth.
According to documents filed in the case, in December 2015, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) learned that an individual, later identified at Gonzales, was using the free instant messenger software, Kik, and free public WiFi in Tye, Texas, to receive and distribute child pornography.
Special Agents with HSI executed a search warrant and obtained two cell phones; a forensic examination of one of the phones revealed 30 images of child pornography.
The investigation also identified a Dropbox file hosting service account that Gonzales used that also contained images of child pornography. In fact, the investigation revealed that the Dropbox account contained 56 images of child pornography and 279 videos of child pornography.
The case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the proliferation of technology-facilitated sexual exploitation crimes against children. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, PSC marshals federal, state, tribal and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. To learn more about PSC’s work, please visit: https://www.justice.gov/psc.
ICE HSI investigated the case. Assistant U.S. Attorney Juanita Fielden was in charge of the prosecution.
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Former Operator of Therapeutic Services Provider Indicted for Wire Fraud and Identity Theft OffensesRead the Press Release
HONOLULU -- Sheila Harris, 51, of Honolulu, formerly the owner and operator of Harris Therapy, Inc., a therapeutic services provider with a primary location in Honolulu, entered not guilty pleas today in federal court on a 13-count indictment returned by a federal grand jury on January 4, 2017. The indictment charges Harris with eleven counts of wire fraud and two counts of aggravated identity theft related to a scheme to defraud TRICARE, a military health benefits program. The indictment also includes forfeiture allegations to recover the proceeds of the scheme. United States Magistrate Judge Kenneth J. Mansfield set the case for trial on May 16, 2017, before Senior District Judge Helen Gillmor.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to allegations in the indictment, from at least 2010 through 2012, Harris engaged in a scheme to submit claims and bill TRICARE for speech therapy services that were not rendered to TRICARE beneficiaries. The beneficiaries were Harris Therapy speech therapy patients that were minors of military families. Harris falsified claims to TRICARE by including dates of service where no speech therapy was provided and by using the name and identifying information of a speech therapist as the rendering provider who was actually on maternity leave during the relevant period. In addition, the indictment alleges that during this time frame, after a beneficiary complaint to TRICARE about Harris Therapy’s billing for services not provided, TRICARE’s regional affiliate, Triwest, engaged in an audit of Harris Therapy. During the audit, Harris provided Triwest with false documentation in an attempt to conceal the scheme.
If convicted, Harris faces a maximum term of imprisonment of up to 20 years for each count of wire fraud and a mandatory minimum term of imprisonment of two years for each aggravated identity theft. The charges in the indictment are merely accusations, and the defendant is presumed innocent until proven guilty.
The case was investigated by the Defense Criminal Investigative Service and the Federal Bureau of Investigation, and is being prosecuted by Assistant U.S. Attorney Rebecca A. Perlmutter.
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Former New York State Senator John L. Sampson Sentenced to 5 Years for Obstruction of Justice and Making False Statements to the FBIRead the Press Release
Earlier today in federal court in Brooklyn, former New York State Senator John Sampson was sentenced to five years of incarceration following his conviction at trial of obstruction of justice in connection with his efforts to interfere with a federal criminal case against a close associate who had given Sampson an undisclosed $188,500 loan that Sampson never repaid. Sampson was also convicted of two counts of making false statements to agents of the Federal Bureau Investigation. As part of the sentence, the court also imposed a fine of $75,000. Today’s proceeding was held before United States Chief District Judge Dora L. Irizarry.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, FBI, New York Field Office.
“John Sampson abused his position as a member of the State Senate and as a member of the bar,” said United States Attorney Capers. “He repeatedly broke the law and then compounded those offenses by obstructing a federal criminal investigation. By his actions, Sampson showed that he was not fit to hold office as a state legislator or practice law. He has now been held to account for his criminal conduct.” Mr. Capers commended the FBI for its outstanding work and expressed his grateful appreciation to the Federal Deposit Insurance Corporation, Office of the Inspector General; the Public Integrity Section of the Department of Justice; and the Office of the Inspector General of the Department of Justice for their assistance in this case.
“Corrupt activity on behalf of our elected officials leaves the public feeling betrayed. Those responsible for upholding the law shouldn’t be the ones breaking it. Although this chapter ends today, the FBI will continue the very important work of investigating public corruption in all its many forms,” said FBI Assistant Director-in-Charge Sweeney.
From 1997 until his conviction by a jury on July 24, 2015, Sampson served in the New York State Senate representing the 19th Senate District in southeastern Brooklyn. From June 2009 to December 2012, Sampson was the leader of the Democratic Conference of the Senate, and from June 2009 to December 2010 he was effectively the leader of the Senate. From January 2011 to December 2012, he was the Senate Minority Leader. Sampson has also served as the chairman of the Senate Ethics Committee and the Senate Judiciary Committee.
Obstruction of Justice
As established at trial, Sampson obstructed justice by using a personal friend who was a supervisory paralegal at the U.S. Attorney’s Office in an attempt to obtain confidential law enforcement information. Specifically, Sampson requested the identity of cooperating witnesses and their statements to the government to improperly help a Queens businessman, Edul Ahmad, fight a mortgage fraud case brought by the Office against Ahmad. Sampson’s motive was to prevent the possibility of Ahmad cooperating with the government and disclosing that Sampson borrowed $188,500 from Ahmad to replenish escrow accounts from which Sampson, an attorney, had embezzled hundreds of thousands of dollars to fund his unsuccessful 2005 campaign for Kings County District Attorney. Sampson never repaid the loan to Ahmad, failed to report it on his Senate financial disclosure forms as required by law, and used his Senate office in various ways to help Ahmad. At the time of his indictment, Sampson had failed to repay over $160,000 of the embezzled funds. At present, over $80,000 of the embezzled funds remains unpaid.
Sampson also endeavored to obstruct the government’s case against Ahmad by arranging for compromised counsel to represent Ahmad’s co-conspirators and by hiring a retired FBI agent to use his connections with law enforcement to obtain confidential law enforcement information.
False Statements
In February 2012, when Ahmad showed Sampson a document related to the $188,500 loan and told Sampson that the U.S. Attorney’s Office had subpoenaed it, Sampson instructed Ahmad not to give the government the document and to lie to investigators about the document and the loan. He then took the document from Ahmad and kept it. As Chief Judge Irizarry found at today’s sentencing hearing, this conduct constituted witness tampering and evidence tampering. In July 2012, when FBI agents interviewed Sampson and showed him a copy of the document, Sampson falsely claimed he did not recall it.
During the same July 2012 interview, Sampson falsely stated to the FBI that he had never asked a Senate staff member to intervene with the New York State Department of Taxation and Finance in an effort to resolve a sales tax liability of a liquor store he owned, in violation of the New York Public Officers law.
The government’s case is being prosecuted by the Office’s Public Integrity Section. Assistant United States Attorneys Paul Tuchmann, Alexander A. Solomon, and Marisa Megur Seifan are in charge of the prosecution.
The Defendant:
JOHN L. SAMPSON.
Age: 51
Brooklyn, New York
E.D.N.Y. Docket No. 13-CR-269 (DLI)
Former East Hartford Resident Admits Robbing More than $21K from USPS Employee in HartfordRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that DION EDWARD THOMPSON, 39, formerly of East Hartford, pleaded guilty yesterday in Hartford federal court to robbing a U.S. Postal Service employee in Hartford in September 2014.
According to court documents and statements made in court, on September 9, 2014, THOMPSON, and another man who was armed with what appeared to be a firearm, robbed a U.S. Postal Service employee of U.S. Postal Service funds at the Barry Square Post Office, located at 645 Maple Avenue in Hartford. The robbery occurred as the employee was loading the Post Office’s daily proceeds into a postal vehicle, which was parked at the loading dock. Approximately $21,817 in cash, checks and money orders was stolen during the robbery.
THOMPSON pleaded guilty to one count of robbery of a U.S. Postal Service employee, which carries a maximum term of imprisonment of 10 years. He is scheduled to be sentenced by U.S. District Judge Robert N. Chatigny on April 20, 2017.
THOMPSON is currently detained.
This investigation is being conducted by the U.S. Postal Inspection Service with the assistance of the Hartford Police Department and the Colorado Springs (Colo.) Police Department. The case is being prosecuted by Assistant U.S. Attorneys Deborah R. Slater and Douglas P. Morabito.
Former Chicago Police Dispatch Supervisor Pleads Guilty to Federal Extortion Charge in Connection with Scheme to Smuggle Contraband into Cook County JailRead the Press Release
CHICAGO — A former dispatch supervisor for the Chicago Police Department admitted in federal court today that she provided private government information to her boyfriend in an effort to help smuggle contraband into Cook County Jail.
STEPHANIE LEWIS used her position in the City of Chicago Office of Emergency Management and Communications to access law enforcement databases to locate the personal information of a corrections officer at the jail, according to a written plea agreement. Lewis provided the information to her boyfriend, an inmate in the jail who had schemed with the officer and others to smuggle in the contraband to sell to other inmates. Lewis admitted in the plea agreement that she knew her boyfriend and the others used the information to threaten the officer with physical harm unless he continued with the scheme and smuggled additional contraband into the jail.
Lewis, 42, of Chicago, pleaded guilty to one count of conspiracy to commit extortion. The conviction carries a maximum sentence of 20 years in prison. U.S. District Judge Charles R. Norgle set sentencing for April 26, 2017, at 11:30 a.m.
The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Cook County Sheriff Thomas J. Dart; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
Lewis’ guilty plea brings to five the number of defendants convicted in the case. The prior convictions include the corrections officer, JASON MAREK, who admitted delivering contraband, including marijuana, tobacco and alcohol, to a jail inmate after tucking it into sandwiches and sneaking it past security. Marek was assigned to a maximum-security tier of the jail when he smuggled in the goods in May and June 2013.
Lewis’ boyfriend, PRINCE JOHNSON, of Chicago, has pleaded not guilty to conspiracy charges and is awaiting trial.
The government is represented by Assistant U.S. Attorney Megan Cunniff Church.
Five Mission, Texas Residents and One Oklahoman Plead Guilty to Participating in Drug Trafficking and Money Laundering SchemeRead the Press Release
In San Antonio today, six individuals pleaded guilty to their roles in a drug trafficking and money laundering conspiracy occurring in South Texas, Central Texas and Oklahoma announced United States Attorney Richard L. Durbin, Jr., Western District of Texas; United States Attorney Kenneth Magidson, Southern District of Texas; Internal Revenue Service-Criminal Investigation Special Agent in Charge William Cotter, San Antonio Division; and, Drug Enforcement Administration Special Agent in Charge Joseph M. Arabit, Houston Division.
Appearing before United States District Judge Xavier Rodriguez this afternoon:
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Juan Villarreal-Arelis (aka “Juando”), age 43, of Mission, pleaded guilty to one count of conspiracy to commit money laundering and one count of possession with intent to distribute cocaine;
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Jose Luis Villarreal-Gonzalez (aka “Nune”), age 32, of Mission, pleaded guilty to one count of conspiracy to commit money laundering and one count of possession with intent to distribute cocaine;
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Manuel Villarreal-Garcia, age 40, of Mission, pleaded guilty to one count of conspiracy to commit money laundering and one count of possession with intent to distribute cocaine;
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Jovanna Villarreal-Diaz, age 37, of Mission, pleaded guilty to one count of conspiracy to commit money laundering;
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Raymundo Villarreal, Jr. (aka “Mundito”), age 23, of Mission; pleaded guilty to one count of conspiracy to commit money laundering and one count of conspiracy to structure transactions to evade reporting requirements; and,
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Denis Winn, age 54, of Tecumseh, OK, pleaded guilty to one count of conspiracy to structure transactions to evade reporting requirements.
By pleading guilty, the defendants admittedly conspired since January 2000 to: (1) engage in financial transactions using proceeds derived from the importation, receiving, concealment, buying, and/or selling cocaine; and (2), transport or transmit monetary instruments to locations outside of the United States in an effort to conceal the source, ownership and control of proceeds derived from unlawful activity.
Raymundo Villarreal, Jr., and Denis Winn also admitted that in October and November 2011, they purchased American Quarter Horses from an auction house in Oklahoma using drug proceeds collected in San Antonio. Furthermore, payments for horses were made under $10,000 so as to avoid having to complete an IRS form 8300, which would have alerted the IRS and possibly raised suspicion about the source of the funds.
The defendants face sentences of between ten years and life in federal prison on the drug charge; up to 20 years in federal prison for the money laundering conspiracy charge; and, up to five years in federal prison on the structuring charge. Sentencing is scheduled for May 24, 2017.
Nine defendants remain under indictment in this case. Jury selection and trial is set for March 13, 2017.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendants are presumed innocent until proven guilty in a court of law.
This investigation was conducted by the Internal Revenue Service-Criminal Investigation Waco Treasury Task Force comprised of IRS-CI, Irving Police Department, Woodway Police Department, Texas Department of Public Safety and the McLennan County Sheriff’s Office together with the Drug Enforcement Administration’s McAllen, San Antonio and Houston field offices and Homeland Security Investigations.
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Federal Jury Convicts Lockport Woman of Scheming to Defraud a Not-For-Profit Organ Donation NetworkRead the Press Release
CHICAGO — A Lockport woman was convicted on federal fraud charges today for scheming to swindle money from a not-for-profit network that coordinated organ and tissue donations in Illinois and northwest Indiana.
DEBRA A. SCHULTZ received the proceeds of false invoices which had been submitted to the organization by purported physicians for alleged organ and tissue procurement. The procurement work was not actually performed, and the invoices were fraudulent. A co-defendant, SHARI L. HANSEN, who worked as an auditing coordinator for the organization, approved the payments for the bogus invoices, causing the organization to issue checks to Schultz and another co-defendant, ERIC V. MURFF.
The scheme netted the defendants $ 652,298 in illegal profits. Schultz retained thousands of dollars of the stolen funds for her own benefit.
The jury convicted Schultz, 46, on all three counts of wire fraud. The convictions carry a maximum sentence of 60 years in prison. U.S. District Judge Robert M. Dow Jr. scheduled a sentencing hearing for May 19, 2017.
The verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and E.C. Woodson, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. Evidence at trial revealed that the scheme began no later than March 2008 and continued until at least April 2010. Hansen created or caused to be created fraudulent invoices that she submitted to the not-for-profit organization. The invoices requested payment to Schultz and Murff for organ and tissue procurement work that the defendants knew was not actually performed. Many of the false invoices specified that Murff as well as Schultz’s son, identified as Individual A, were doctors who performed organ and tissue procurement, when in reality neither Murff nor Individual A did any such work and was not a physician. Indeed, when the fraud began, Individual A was 17 years old and attending high school.
Hansen, in her role as auditing coordinator, approved the fake invoices, thereby authorizing and directing the organization to issue checks to Murff and Schultz’ son. Murff and Schultz pocketed some of the money and transferred other portions of the funds to one or more bank accounts held in Hansen’s name.
Federal Inmates Indicted for AssaultRead the Press Release
SCRANTON – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Jeffrey Lynn Mattox, age 32, and Clayton John Shinn, age 26, inmates at the United States Penitentiary, Canaan, in Waymart, Pennsylvania, were indicted on January 17, 2017, by a federal grand jury for assault.
According to United States Attorney Bruce D. Brandler, the indictment alleges that on October 4, 2016, Mattox and Shinn assaulted another inmate by repeatedly striking, punching and kicking the inmate, resulting in serious bodily injury.
The case was investigated by the Federal Bureau of Investigation and the Bureau of Prisons. Assistant United States Attorney Michelle Olshefski is prosecuting the case.
Indictments are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law for this offense is 10 years’ imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Environment and Natural Resources Division and National Association of Attorneys General Announce Guidelines for Joint State-Federal Civil Environmental EnforcementRead the Press Release
The Department of Justice’s Environment and Natural Resources Division and the National Association of Attorneys General announced the availability today of Guidelines for Joint State/Federal Civil Environmental Enforcement Litigation. A workgroup of litigators from the Environment and Natural Resources Division, the NAAG’s National Attorneys General Research and Training Institute, and state attorney general offices developed these guidelines as a revision to a document originally issued in 2003.
The Guidelines provide a general framework for cooperation between sovereigns in joint civil environmental enforcement litigation and derive from lessons learned in such cases over many years. They include both organizational and substantive suggestions on common topics that arise in joint civil enforcement matters, including case management and settlement issues, pre-filing considerations, and information sharing. They also include several appendices with sample documents and reference information.
“Cooperative federalism is fundamental to the structure and effectiveness of our Nation’s environmental laws, and the Environment and Natural Resources Division vigorously pursues opportunities to partner with our state and local counterparts in environmental enforcement,” said Assistant Attorney General John C. Cruden. “In doing so, we combine sovereigns, reduce costs, and obtain more comprehensive results for the American people. These Guidelines draw on the expertise of a variety of litigators and will be a valuable resource to environmental enforcement colleagues at all levels of government. I am grateful to the National Association of Attorneys General for partnering with the Division on this project.”
“The National Attorneys General Training and Research Institute appreciated the opportunity to work with U.S. Department of Justice’s Environment and Natural Resource Division staff in this collaborative effort to provide information that it anticipates will be helpful to our members,” said Chris Toth, Deputy Executive Director of the National Association of Attorneys General and Director of the National Attorneys General Training and Research Institute (NAGTRI). “Most importantly, NAGTRI would like to offer an extended thank you to attorneys from the New York and Michigan Offices of the Attorney General who worked diligently on this endeavor.”
You can access the Guidelines on the ENRD website.
East Lyme Man Pleads Guilty to Heroin Distribution Charge Stemming from Overdose DeathRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, and Michael J. Ferguson, Special Agent in Charge of the Drug Enforcement Administration for New England, announced that CHRISTOPHER STEVENS, 25, of East Lyme, waived his right to be indicted and pleaded guilty today in New Haven federal court to one count of distribution of heroin. This prosecution is part of an ongoing statewide initiative targeting narcotics dealers who distribute heroin, fentanyl or opioids that cause death or serious injury to users.
According to court documents and statements made in court, early in the morning of June 4, 2016, East Lyme Police and emergency medical personnel responded to a vehicle parked on the side of a road with its engine running and found a 25-year-old male slumped over dead in the driver’s seat, and a young child in the rear seat. Investigators also found a torn wax paper baggy in the man’s hand and several other baggies under his body.
The Office of the Chief Medical Examiner for the State of Connecticut subsequently determined that the victim died from acute heroin and fentanyl toxicities.
The investigation revealed that, shortly before he overdosed, the victim met STEVENS at STEVENS’ East Lyme residence, and STEVENS provided heroin to the victim at that time.
The charge of distribution of heroin carries a maximum term of imprisonment of 20 years. STEVENS is scheduled to be sentenced by U.S. District Judge Jeffrey A. Meyer on April 12, 2017.
This matter is being investigated by the Drug Enforcement Administration’s Tactical Diversion Squad with the assistance of the East Lyme Police Department.
This case is being prosecuted by Assistant U.S. Attorneys Jennifer P. Laraia and Michael E. Runowicz.
District Man Pleads Guilty to Federal Charge for Trafficking in Counterfeit GoodsRead the Press Release
WASHINGTON – Arthur Chan, 31, of Washington, D.C., pled guilty today to a federal charge involving the sale of counterfeit designer apparel and accessories, announced U.S. Attorney Channing D. Phillips, Clark E. Settles, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Washington, D.C., and Michael W. Sonntag, Special Agent in Charge, Eastern Field Office, National Aeronautics and Space Administration (NASA) Office of Inspector General.
Chan pled guilty in the U.S. District Court for the District of Columbia to trafficking in counterfeit goods. The charge carries a statutory maximum of 10 years in prison and potential financial penalties. Under federal sentencing guidelines, Chan faces a likely range of 10 to 16 months in prison and a fine of up to $55,000. The plea agreement also calls for Chan to pay a forfeiture money judgment of $37,246, which represents the amount of proceeds he generated through the crimes. He is to be sentenced on May 9, 2017, by the Honorable Rosemary M. Collyer.
According to a statement of offense, signed by the defendant as well as the government, Chan is a resources analyst at NASA’s Goddard Space Flight Center in Greenbelt, Md. Between November 2013 and March 2016, according to the statement of offense, he used two personal eBay accounts to complete approximately 610 sales of apparel and accessories bearing marks identical with, or substantially indistinguishable from, those registered to Hugo Boss.
Chan imported all of these items from India to a mailbox he maintained at a UPS store in Lanham or his residence in Washington, D.C. According to the statement of offense, he netted a total of $37,246 from the sale of these items. During the investigation, law enforcement seized a variety of counterfeit items, including 113 counterfeit Hugo Boss wallets; 18 counterfeit Ralph Lauren Polo wallets; three counterfeit Fred Perry wallets; 23 counterfeit Hugo Boss Polo shirts; two counterfeit Fred Perry Polo shirts, and counterfeit Hugo Boss and Ralph Lauren packaging.
This case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Washington, D.C., and the NASA Office of Inspector General. Hugo Boss AG, based in Metzingen, Germany, provided assistance to the investigative team. The matter is being prosecuted by Assistant U.S. Attorney Michael J. Marando, with assistance on asset forfeiture issues from Special Assistant U.S. Attorney Andrea Duvall.
Credit Suisse Agrees to Pay $5.28 Billion in Connection with its Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
The Justice Department announced today a $5.28 billion settlement with Credit Suisse related to Credit Suisse’s conduct in the packaging, securitization, issuance, marketing and sale of residential mortgage-backed securities (RMBS) between 2005 and 2007. The resolution announced today requires Credit Suisse to pay $2.48 billion as a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). It also requires the bank to provide $2.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing. Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Credit Suisse between 2005 and 2007.
“Today’s settlement underscores that the Department of Justice will hold accountable the institutions responsible for the financial crisis of 2008,” said Attorney General Loretta E. Lynch. “Credit Suisse made false and irresponsible representations about residential mortgage-backed securities, which resulted in the loss of billions of dollars of wealth and took a painful toll on the lives of ordinary Americans. Under the terms of this settlement, Credit Suisse will pay $2.48 billion as a fine for its conduct. And Credit Suisse has pledged $2.8 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s lending practices. These sums reflect the huge breach of public trust committed by financial institutions like Credit Suisse.”
“Credit Suisse claimed its mortgage backed securities were sound, but in the settlement announced today the bank concedes that it knew it was peddling investments containing loans that were likely to fail,” said Principal Deputy Associate Attorney General Bill Baer. “That behavior is unacceptable. Today's $5.3 billion resolution is another step towards holding financial institutions accountable for misleading investors and the American public.”
“Resolutions like the one announced today confirm that the financial institutions that engaged in conduct that jeopardized the nation’s fiscal security will be held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “This is another step in the Department’s continuing effort to redress behavior that contributed to the Great Recession.”
“Credit Suisse’s mortgage misconduct hurt people, including in Colorado,” said Acting United States Attorney for the District of Colorado Bob Troyer. “Unscrupulous lenders knew they could get away with shoddy underwriting when making mortgage loans, because they knew Credit Suisse would buy those defective mortgage loans and put them into securities. When those mortgages went into foreclosure, many people got hurt: families lost their homes, communities were blighted by empty houses, and investors who had put their trust in Credit Suisse’s supposedly safe securities suffered huge losses. Our office led this investigation into Credit Suisse to protect homeowners, communities, and investors across the country, including here in Colorado. Credit Suisse is paying a hefty penalty and acknowledging its misconduct, but that is not all. Years after the Great Recession, many families still struggle to afford a home, so we also crafted an agreement to bring needed housing relief to such families, including specifically in Colorado.”
This settlement includes a statement of facts to which Credit Suisse has agreed. That statement of facts describes how Credit Suisse made false and misleading representations to prospective investors about the characteristics of the mortgage loans it securitized. (The quotes in the following paragraphs are from that agreed-upon statement of facts, unless otherwise noted.):
- Credit Suisse told investors in offering documents that the mortgage loans it securitized into RMBS “were originated generally in accordance with applicable underwriting guidelines,” except where “sufficient compensating factors were demonstrated by a prospective borrower.” It also told investors that the loans “had been originated in compliance with all federal, state, and local laws and regulations, including all predatory and abusive lending laws.”
- Credit Suisse has now acknowledged that “Credit Suisse repeatedly received information indicating that many of the loans reviewed did not conform to the representations that would be made by Credit Suisse to investors about the loans to be securitized.” It has acknowledged that in many cases, it purchased and securitized loans into its RMBS that “did not comply with applicable underwriting guidelines and lacked sufficient factors” and/or “w[ere] not originated in compliance with applicable laws and regulations.” Credit Suisse employees even referred to some loans they securitized as “bad loans,” “‘complete crap’ and ‘[u]tter complete garbage.’”
- Credit Suisse acquired some of the mortgage loans it securitized by buying, from other loan originators, “Bulk” packages containing numerous loans. For example, in December 2006, Credit Suisse purchased a “Bulk” pool of approximately 10,000 loans originated by Countrywide Home Loans. Credit Suisse selected fewer than 10 percent of these loans for due diligence review. “Reports from Credit Suisse’s due diligence vendors showed that approximately 85 percent of the loans in this sample violated Countrywide’s underwriting guidelines and/or applicable law,” but “Credit Suisse securitized over half of the loans into various RMBS it then sold to investors.” Credit Suisse did not review the remaining unsampled 90 percent of the pool to determine whether those loans had similar problems. Instead, it “securitized an additional $1.5 billion worth of unsampled—and therefore unreviewed—loans from this pool into various RMBS it then sold to investors.” A Credit Suisse manager wrote to another manager who was reviewing these loans, “Thanks for working thru this mess. If it helps, it looks like we will make a killing on this trade.”
- Credit Suisse acquired other mortgage loans for securitization through its “Conduit” channel. Through this channel, Credit Suisse bought loans from other lenders one-by-one or in small packages, and also itself extended loans to borrowers as “Wholesale” loans. Approximately 25-35 percent of the loans Credit Suisse acquired from 2005 to 2007 were acquired through its mortgage “Conduit.”
- Credit Suisse employees discussed in internal emails that for Conduit loans, the loan review and approval process was “‘virtually unmonitored.’” For loans Credit Suisse purchased through its Conduit, Credit Suisse told investors, ratings agencies and others, “‘Credit Suisse senior underwriters make final loan decisions, not contracted due diligence firms.’” Credit Suisse has now acknowledged, “For Conduit loans, these representations were false.”
- Credit Suisse has acknowledged that “[a] September 2004 audit by Credit Suisse’s audit department gave the Conduit a C rating on an A-D scale (the second worst possible rating) and a level 4 materiality score on a 1-4 scale (the highest possible score),” and that a March 2006 evaluation by Credit Suisse of one of the third-party vendors it used to review Conduit loans “similarly reported that ‘There are serious concerns as to compliance[.]’”
- Between 2005 and 2007, Credit Suisse managers made comments in emails about the quality of Conduit loans and its process for reviewing those loans. For example, a top Credit Suisse manager wrote to senior traders, “‘Of course we would like higher quality loans. That’s never been the identity of our [mortgage] conduit, and we’re becoming less and less competitive in that space.’” A senior Credit Suisse trader, discussing the “fulfillment centers” Credit Suisse used to review Conduit loans, stated in an email: ‘we make these underwriting exceptions and then we have liability down the road when the loans go bad and people point out that we violated our own guidelines. . . . The fulfillment process is a joke.’”
- For example, in one instance Credit Suisse approved, through its Conduit, a purchase of over $700 million worth of loans originated by Resource Bank. Credit Suisse senior traders “referr[ed] to Resource Bank loans as ‘complete crap’ and ‘[u]tter complete garbage.’” Despite this, “Credit Suisse provided Resource Bank with financial ‘incentives’ in exchange for loan volume [and] securitized Resource Bank loans into various RMBS it then sold to investors.”
- Credit Suisse has acknowledged that it also “received reports from vendors that it might have been acquiring and securitizing loans with inflated appraisals” and that its approach for reviewing the property values associated with the mortgage loans “could lead to the acceptance of inflated appraisals.” In August 2006, a Credit Suisse manager wrote to two senior traders, “How would investors react if we say that 20 percent of the pool have values off by 15 percent? If we are comfortable buying these loans, we should be comfortable telling investors.”
- Credit Suisse used vendors to conduct quality control on a small subset of loans it acquired. Credit Suisse has now acknowledged that its quality control review vendors reported that “more than 25 percent of the loans that they reviewed for quality control were designated ‘ineligible’ because of credit, compliance, and/or property defects.”
- Credit Suisse has now acknowledged that its “Co-Head of Transaction Management expressed concern that the quality control results could serve as a written record of defects, and sought to avoid documented confirmation of these defects.” In May 2007, a top Credit Suisse manager met with others “to discuss implementing this reduction of quality control review.” Credit Suisse’s Co-Head of Transaction Management wrote that “this change was to ‘avoid the previous approach by which a lot of loans were QC’d . . . creating a record of possible rep/warrant breaches in deals . . . .’”
- In another example, in May 2007, a Credit Suisse employee identified two wholesale loans Credit Suisse itself had originated and wrote, “‘I would think that we would want to see loans like these that seem to represent confirmed problems, especially on our own originations. Why do we have an appraisal watch list and broker oversight group if we aren’t going to review the bad ones and take action appropriately? . . . I just see so many of these cross my desk, fraud, value, etc., it’s hard to just let them go by and not do something.’” Credit Suisse’s Co-Head of Transaction Management responded, “‘I think the idea is that we don’t want to spend a lot of $ to generate a lot of QC results that give us no recourse anyway but generate a lot of negative data, so no need to order QC on each of these loans.’” The employee then stated, “‘I think the lack of interest in bad loans is scary.’”
- As another example, in June 2007, a Credit Suisse employee identified 44 Wholesale loans Credit Suisse had itself originated that had gone 60 days delinquent. Credit Suisse’s Co-Head of Transaction Management wrote in response, “‘if we already know: that the loans aren’t performing . . . the only thing QC will tell us is that there were compliance errors, occupancy misreps etc. I think we already know we have systemic problems in FC/UW [fulfillment centers/underwriting] re both compliance and credit. The downside of QC’ing these 44 loans is, after we get the QC results, we will be obligated to repurchase a fair chunk of the loans from deals, assuming the loans are securitized and the QC results look like the QC we’ve done in the past. So based on a wholesale QC historical fail rate of over 35 percent (major rep defects), the avg bal of wholesale loans and the loss severities, it is reasonable to expect this QC may cost us a few million dollars.’” Credit Suisse has now acknowledged that it “did not inform investors or ratings agencies that its Wholesale loan channel had a ‘QC historical fail rate of over 35 percent (major rep defects).’”
- Credit Suisse commented about the mortgage loans that accumulated in its inventory. For example, Credit Suisse’s Co-Head of Transaction Management wrote to another Credit Suisse manager that “loans with potential defects ‘pile up in inventory . . . . So my theory is: we own the risk 1 way or another. . . . I am inclined to securitize loans that are close calls or marginally non-compliant, and take the risk that we’ll have to repurchase, if we can’t put them back, rather than adding to sludge in inventory. . . .’ One of the senior traders responded, ‘Agree.’” In another instance, a Credit Suisse senior trader commented in 2007 that “‘we have almost $2.5B of conduit garbage to still distribute.’” In another instance, a Credit Suisse trader wrote to a top manager, discussing another bank to which Credit Suisse was seeking to sell loans from its inventory, and stated, “‘[The other bank] again came back with an embarrassing number of diligence kicks this month. . . . If their results are in any way representative of our compliance with our reps and warrants, we have major problems.’ But rather than holding these loans in its own inventory, Credit Suisse securitized certain of these loans into its RMBS.”
Assistant U.S. Attorneys Kevin Traskos, Hetal J. Doshi, Shiwon Choe, Ian J. Kellogg, Lila M. Bateman, and J. Chris Larson of the District of Colorado investigated Credit Suisse’s conduct in connection with RMBS, with the support of the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG).
“Credit Suisse knowingly put investors at risk, and the losses caused by its irresponsible behavior deeply affected not only financial institutions such as the Federal Home Loan Banks, but also taxpayers, and contributed significantly to the financial crisis,” said Special Agent in Charge Catherine Huber of the Federal Housing Finance Agency-Office of Inspector General’s (FHFA-OIG) Midwest Region. “This settlement illustrates the tireless efforts put forth toward bringing a resolution to this chapter of the financial crisis. FHFA-OIG will continue to work with our law enforcement partners to hold those who have engaged in misconduct accountable for their actions.”
The $2.48 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. The settlement expressly preserves the government’s ability to bring criminal charges against Credit Suisse or any of its employees. The settlement does not release any individuals from potential criminal or civil liability. As part of the settlement, Credit Suisse has agreed to fully cooperate with any ongoing investigations related to the conduct covered by the agreement.
Credit Suisse will pay out the remaining $2.8 billion in the form of relief to aid consumers harmed by its unlawful conduct. Specifically, Credit Suisse agrees to provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country. It also agrees to provide financing for affordable rental and for-sale housing throughout the country. This agreement represents the most substantial commitment in any RMBS agreement to date to provide financing for affordable housing—a crucial need following the turmoil of the financial crisis.
The settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered tens of billions of dollars on behalf of American consumers and investors for claims against large financial institutions arising from misconduct related to the financial crisis. The RMBS Working Group brings together attorneys, investigators, analysts and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the U.S. Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, SIGTARP, the Federal Reserve Board’s OIG, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country. The RMBS Working Group is led by Director Joshua Wilkenfeld and four co-chairs: Principal Deputy Assistant Attorney General Mizer, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Andrew Ceresney of the SEC’s Division of Enforcement, and New York Attorney General Eric Schneiderman. This settlement is the latest in a series of major RMBS settlements announced by the Working Group.
To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.
Credit Suisse Agrees to Pay $5.28 Billion in Connection with Its Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
NOTE: Settlement agreement and other document links at bottom of release
DENVER – The Justice Department announced today a $5.28 billion settlement with Credit Suisse related to Credit Suisse’s conduct in the packaging, securitization, issuance, marketing and sale of residential mortgage-backed securities (RMBS) between 2005 and 2007. The resolution announced today requires Credit Suisse to pay $2.48 billion as a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). It also requires the bank to provide $2.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing. Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Credit Suisse between 2005 and 2007.
“Today’s settlement underscores that the Department of Justice will hold accountable the institutions responsible for the financial crisis of 2008,” said Attorney General Loretta E. Lynch. “Credit Suisse made false and irresponsible representations about residential mortgage-backed securities, which resulted in the loss of billions of dollars of wealth and took a painful toll on the lives of ordinary Americans. Under the terms of this settlement, Credit Suisse will pay $2.48 billion as a fine for its conduct. And Credit Suisse has pledged $2.8 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s lending practices. These sums reflect the huge breach of public trust committed by financial institutions like Credit Suisse.”
“Credit Suisse claimed its mortgage backed securities were sound, but in the settlement announced today the bank concedes that it knew it was peddling investments containing loans that were likely to fail,” said Principal Deputy Associate Attorney General Bill Baer. “That behavior is unacceptable. Today's $5.3 billion resolution is another step towards holding financial institutions accountable for misleading investors and the American public.”
“Resolutions like the one announced today confirm that the financial institutions that engaged in conduct that jeopardized the nation’s fiscal security will be held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “This is another step in the Department’s continuing effort to redress behavior that contributed to the Great Recession.”
“Credit Suisse’s mortgage misconduct hurt people, including in Colorado,” said Acting United States Attorney for the District of Colorado Bob Troyer. “Unscrupulous lenders knew they could get away with shoddy underwriting when making mortgage loans, because they knew Credit Suisse would buy those defective mortgage loans and put them into securities. When those mortgages went into foreclosure, many people got hurt: families lost their homes, communities were blighted by empty houses, and investors who had put their trust in Credit Suisse’s supposedly safe securities suffered huge losses. Our office led this investigation into Credit Suisse to protect homeowners, communities, and investors across the country, including here in Colorado. Credit Suisse is paying a hefty penalty and acknowledging its misconduct, but that is not all. Years after the Great Recession, many families still struggle to afford a home, so we also crafted an agreement to bring needed housing relief to such families, including specifically in Colorado.”
This settlement includes a statement of facts to which Credit Suisse has agreed. That statement of facts describes how Credit Suisse made false and misleading representations to prospective investors about the characteristics of the mortgage loans it securitized. (The quotes in the following paragraphs are from that agreed-upon statement of facts, unless otherwise noted.):
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Credit Suisse told investors in offering documents that the mortgage loans it securitized into RMBS “were originated generally in accordance with applicable underwriting guidelines,” except where “sufficient compensating factors were demonstrated by a prospective borrower.” It also told investors that the loans “had been originated in compliance with all federal, state, and local laws and regulations, including all predatory and abusive lending laws.”
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Credit Suisse has now acknowledged that “Credit Suisse repeatedly received information indicating that many of the loans reviewed did not conform to the representations that would be made by Credit Suisse to investors about the loans to be securitized.” It has acknowledged that in many cases, it purchased and securitized loans into its RMBS that “did not comply with applicable underwriting guidelines and lacked sufficient factors” and/or “w[ere] not originated in compliance with applicable laws and regulations.” Credit Suisse employees even referred to some loans they securitized as “bad loans,” “‘complete crap’ and ‘[u]tter complete garbage.’”
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Credit Suisse acquired some of the mortgage loans it securitized by buying, from other loan originators, “Bulk” packages containing numerous loans. For example, in December 2006, Credit Suisse purchased a “Bulk” pool of approximately 10,000 loans originated by Countrywide Home Loans. Credit Suisse selected fewer than 10 percent of these loans for due diligence review. “Reports from Credit Suisse’s due diligence vendors showed that approximately 85 percent of the loans in this sample violated Countrywide’s underwriting guidelines and/or applicable law,” but “Credit Suisse securitized over half of the loans into various RMBS it then sold to investors.” Credit Suisse did not review the remaining unsampled 90 percent of the pool to determine whether those loans had similar problems. Instead, it “securitized an additional $1.5 billion worth of unsampled—and therefore unreviewed—loans from this pool into various RMBS it then sold to investors.” A Credit Suisse manager wrote to another manager who was reviewing these loans, “Thanks for working thru this mess. If it helps, it looks like we will make a killing on this trade.”
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Credit Suisse acquired other mortgage loans for securitization through its “Conduit” channel. Through this channel, Credit Suisse bought loans from other lenders one-by-one or in small packages, and also itself extended loans to borrowers as “Wholesale” loans. Approximately 25-35 percent of the loans Credit Suisse acquired from 2005 to 2007 were acquired through its mortgage “Conduit.”
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Credit Suisse employees discussed in internal emails that for Conduit loans, the loan review and approval process was “‘virtually unmonitored.’” For loans Credit Suisse purchased through its Conduit, Credit Suisse told investors, ratings agencies and others, “‘Credit Suisse senior underwriters make final loan decisions, not contracted due diligence firms.’” Credit Suisse has now acknowledged, “For Conduit loans, these representations were false.”
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Credit Suisse has acknowledged that “[a] September 2004 audit by Credit Suisse’s audit department gave the Conduit a C rating on an A-D scale (the second worst possible rating) and a level 4 materiality score on a 1-4 scale (the highest possible score),” and that a March 2006 evaluation by Credit Suisse of one of the third-party vendors it used to review Conduit loans “similarly reported that ‘There are serious concerns as to compliance[.]’”
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Between 2005 and 2007, Credit Suisse managers made comments in emails about the quality of Conduit loans and its process for reviewing those loans. For example, a top Credit Suisse manager wrote to senior traders, “‘Of course we would like higher quality loans. That’s never been the identity of our [mortgage] conduit, and we’re becoming less and less competitive in that space.’” A senior Credit Suisse trader, discussing the “fulfillment centers” Credit Suisse used to review Conduit loans, stated in an email: ‘we make these underwriting exceptions and then we have liability down the road when the loans go bad and people point out that we violated our own guidelines. . . . The fulfillment process is a joke.’”
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For example, in one instance Credit Suisse approved, through its Conduit, a purchase of over $700 million worth of loans originated by Resource Bank. Credit Suisse senior traders “referr[ed] to Resource Bank loans as ‘complete crap’ and ‘[u]tter complete garbage.’” Despite this, “Credit Suisse provided Resource Bank with financial ‘incentives’ in exchange for loan volume [and] securitized Resource Bank loans into various RMBS it then sold to investors.”
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Credit Suisse has acknowledged that it also “received reports from vendors that it might have been acquiring and securitizing loans with inflated appraisals” and that its approach for reviewing the property values associated with the mortgage loans “could lead to the acceptance of inflated appraisals.” In August 2006, a Credit Suisse manager wrote to two senior traders, “How would investors react if we say that 20 percent of the pool have values off by 15 percent? If we are comfortable buying these loans, we should be comfortable telling investors.”
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Credit Suisse used vendors to conduct quality control on a small subset of loans it acquired. Credit Suisse has now acknowledged that its quality control review vendors reported that “more than 25 percent of the loans that they reviewed for quality control were designated ‘ineligible’ because of credit, compliance, and/or property defects.”
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Credit Suisse has now acknowledged that its “Co-Head of Transaction Management expressed concern that the quality control results could serve as a written record of defects, and sought to avoid documented confirmation of these defects.” In May 2007, a top Credit Suisse manager met with others “to discuss implementing this reduction of quality control review.” Credit Suisse’s Co-Head of Transaction Management wrote that “this change was to ‘avoid the previous approach by which a lot of loans were QC’d . . . creating a record of possible rep/warrant breaches in deals . . . .’”
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In another example, in May 2007, a Credit Suisse employee identified two wholesale loans Credit Suisse itself had originated and wrote, “‘I would think that we would want to see loans like these that seem to represent confirmed problems, especially on our own originations. Why do we have an appraisal watch list and broker oversight group if we aren’t going to review the bad ones and take action appropriately? . . . I just see so many of these cross my desk, fraud, value, etc., it’s hard to just let them go by and not do something.’” Credit Suisse’s Co-Head of Transaction Management responded, “‘I think the idea is that we don’t want to spend a lot of $ to generate a lot of QC results that give us no recourse anyway but generate a lot of negative data, so no need to order QC on each of these loans.’” The employee then stated, “‘I think the lack of interest in bad loans is scary.’”
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As another example, in June 2007, a Credit Suisse employee identified 44 Wholesale loans Credit Suisse had itself originated that had gone 60 days delinquent. Credit Suisse’s Co-Head of Transaction Management wrote in response, “‘if we already know: that the loans aren’t performing . . . the only thing QC will tell us is that there were compliance errors, occupancy misreps etc. I think we already know we have systemic problems in FC/UW [fulfillment centers/underwriting] re both compliance and credit. The downside of QC’ing these 44 loans is, after we get the QC results, we will be obligated to repurchase a fair chunk of the loans from deals, assuming the loans are securitized and the QC results look like the QC we’ve done in the past. So based on a wholesale QC historical fail rate of over 35 percent (major rep defects), the avg bal of wholesale loans and the loss severities, it is reasonable to expect this QC may cost us a few million dollars.’” Credit Suisse has now acknowledged that it “did not inform investors or ratings agencies that its Wholesale loan channel had a ‘QC historical fail rate of over 35 percent (major rep defects).’”
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Credit Suisse commented about the mortgage loans that accumulated in its inventory. For example, Credit Suisse’s Co-Head of Transaction Management wrote to another Credit Suisse manager that “loans with potential defects ‘pile up in inventory . . . . So my theory is: we own the risk 1 way or another. . . . I am inclined to securitize loans that are close calls or marginally non-compliant, and take the risk that we’ll have to repurchase, if we can’t put them back, rather than adding to sludge in inventory. . . .’ One of the senior traders responded, ‘Agree.’” In another instance, a Credit Suisse senior trader commented in 2007 that “‘we have almost $2.5B of conduit garbage to still distribute.’” In another instance, a Credit Suisse trader wrote to a top manager, discussing another bank to which Credit Suisse was seeking to sell loans from its inventory, and stated, “‘[The other bank] again came back with an embarrassing number of diligence kicks this month. . . . If their results are in any way representative of our compliance with our reps and warrants, we have major problems.’ But rather than holding these loans in its own inventory, Credit Suisse securitized certain of these loans into its RMBS.”
Assistant U.S. Attorneys Kevin Traskos, Hetal J. Doshi, Shiwon Choe, Ian J. Kellogg, Lila M. Bateman, and J. Chris Larson of the District of Colorado investigated Credit Suisse’s conduct in connection with RMBS, with the support of the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG).
“Credit Suisse knowingly put investors at risk, and the losses caused by its irresponsible behavior deeply affected not only financial institutions such as the Federal Home Loan Banks, but also taxpayers, and contributed significantly to the financial crisis,” said Special Agent in Charge Catherine Huber of the Federal Housing Finance Agency-Office of Inspector General’s (FHFA-OIG) Midwest Region. “This settlement illustrates the tireless efforts put forth toward bringing a resolution to this chapter of the financial crisis. FHFA-OIG will continue to work with our law enforcement partners to hold those who have engaged in misconduct accountable for their actions.”
The $2.48 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. The settlement expressly preserves the government’s ability to bring criminal charges against Credit Suisse or any of its employees. The settlement does not release any individuals from potential criminal or civil liability. As part of the settlement, Credit Suisse has agreed to fully cooperate with any ongoing investigations related to the conduct covered by the agreement.
Credit Suisse will pay out the remaining $2.8 billion in the form of relief to aid consumers harmed by its unlawful conduct. Specifically, Credit Suisse agrees to provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country. It also agrees to provide financing for affordable rental and for-sale housing throughout the country. This agreement represents the most substantial commitment in any RMBS agreement to date to provide financing for affordable housing—a crucial need following the turmoil of the financial crisis.
The settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered tens of billions of dollars on behalf of American consumers and investors for claims against large financial institutions arising from misconduct related to the financial crisis. The RMBS Working Group brings together attorneys, investigators, analysts and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the U.S. Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, SIGTARP, the Federal Reserve Board’s OIG, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country. The RMBS Working Group is led by Director Joshua Wilkenfeld and four co-chairs: Principal Deputy Assistant Attorney General Mizer, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Andrew Ceresney of the SEC’s Division of Enforcement, and New York Attorney General Eric Schneiderman. This settlement is the latest in a series of major RMBS settlements announced by the Working Group.
To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.
Click HERE for Credit Suisse Settlement Agreement.
Click HERE for Credit Suisse Annex 1
Click HERE for Credit Suisse Annex 2
Click HERE for Credit Suisse Annex 3
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Cookson Man Sentenced to 108 Months for Firearm PossessionRead the Press Release
MUSKOGEE, OKLAHOMA – The United States Attorney’s Office for the Eastern District of Oklahoma announced that LEON RICHARD AUTRY, age 43, of Cookson, Oklahoma, was sentenced to 108 months imprisonment, and 3years supervised release for FELON IN POSSESSION OF FIREARM, in violation of Title 18, United States Code, Sections 922(g)(1) and 924(a)(2).
The Indictment alleged that on or about March 2, 2016, within the Eastern District of Oklahoma, the defendant, having been convicted of a crime punishable by imprisonment for a term exceeding one year, did knowingly possess in and affecting commerce, firearms, which had been shipped and transported in interstate commerce.
The charge arose from an investigation by the Cherokee County Sheriff’s Office, the Tahlequah Police Department, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The Honorable Judge Ronald A. White, District Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, presided over the hearing. The defendant will remain in the custody pending transportation to the designated federal facility at which, the nonparoleable sentence will be served.
Assistant United States Attorney Kristin Harrington represented the United States.
Colombian National Sentenced to Prison for Unlawfully Injecting Silicone into Victims’ BodiesRead the Press Release
A Colombian national was sentenced today to prison for unlawfully injecting silicone into victims’ bodies for aesthetic enhancements, without a medical license or approval by the U.S. Food and Drug Administration.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George M. Karavetsos, Director, U.S. Food and Drug Administration, Office of Criminal Investigations (FDA-OCI), made the announcement.
Juan David Acosta, 44, of Hallandale Beach, was sentenced to a year and a day in prison, to be followed by one year of supervised release. Acosta previously pled guilty to two counts of receipt in interstate commerce of a misbranded device and delivery for pay with intent to defraud or mislead, in violation of Title 21, United States Code, Sections 331(c) and 333(a)(2).
According to court record, Acosta engaged in the business of administering injections of polydimethylsiloxane, commonly referred to as silicone, into the bodies of other individuals. Acosta was paid thousands of dollars for this service. Specifically, on July 29, 2015 and again on August 9, 2015, Acosta, at his residence in the Southern District of Florida, injected silicone into the buttocks of two victims in order to affect the size, contour, and structure of that portion of the human body for aesthetic purposes. The injection of silicone into the human body in this manner, regardless of whether such injection was dispensed and administered by a licensed practitioner, requires an FDA-approved application. Acosta did not advise the victims that silicone was being injected into their bodies. Acosta is not a licensed medical practitioner and he had not received FDA approval to administer the injections.
Mr. Ferrer commended the investigative efforts of the FDA-OCI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Palm Beach County Sherriff’s Office Narcotics Unit, and Miami-Dade Police Department’s Medical Crimes Unit. The case was prosecuted by Assistant United States Attorney Randy Katz.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.A Colombian national was sentenced today to prison for unlawfully injecting silicone into victims’ bodies for aesthetic enhancements, without a medical license or approval by the U.S. Food and Drug Administration.
Colombian Man Sentenced to 18 Years in Federal PrisonRead the Press Release
Tampa, Florida – U.S. District Judge James D. Whittemore has sentenced Dario Renteria-Garcia (41, Colombia, South America) to 18 years in federal prison for conspiring with others to distribute five kilograms or more of cocaine on board a vessel subject to the jurisdiction of the United States. He pleaded guilty on October 24, 2016.
According to the plea agreement, on multiple occasions between 2010 and 2013, Renteria-Garcia organized maritime cocaine shipments. Among other things, he recruited mariners to smuggle cocaine from Colombia by sea in September 2010 and January 2013. Those mariners were subsequently interdicted by the U.S. Coast Guard in the eastern Pacific Ocean with over 1,000 kilograms of cocaine. Renteria-Garcia was arrested in Colombia, and subsequently extradited to the United States.
This case was investigated by the Panama Express Strike Force, a standing Organized Crime Drug Enforcement Task Force (OCDETF) investigation comprised of agents and analysts from the Drug Enforcement Administration, the Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Coast Guard Investigative Service, the Naval Criminal Investigative Service, and U.S. Southern Command's Joint Interagency Task Force South. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply. The case was prosecuted by Assistant United States Attorney Christopher F. Murray. The Office of International Affairs, U.S. Department of Justice assisted with Renteria-Garcia’s extradition from Colombia.
Collinsville Man Sentenced for Conspiring to Distribute OxycodoneRead the Press Release
Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced today that Gerald Tanner, 56, of Collinsville, Illinois, was sentenced to a year and a day in federal prison for conspiring to distribute oxycodone and methadone.
On November 18, 2015, a federal grand jury handed down an indictment alleging that three St. Clair County residents participated in a conspiracy to distribute oxycodone and methadone into the Southern District of Illinois. Evidence discussed in court established that the St. Louis Division of the Drug Enforcement Administration began investigating Tanner for illegally distributing schedule II narcotics out of his home. The DEA obtained the assistance of a confidential source and purchased opiate-based pain medications from Ryan Koch and Lisa-Marie Sue Ketterer, who were supplied by Gerald Tanner. Koch and Ketterer resold a portion of the drugs they bought and used the remainder. Koch, 34, and Ketterer, 26, both of St. Clair County, were previously prosecuted and sentenced in federal court for their role in the charged conspiracy.
United States Attorney Donald S. Boyce previously said, "There has been a national proliferation of opiate drug abuse. Sales of opioid pain relievers quadrupled between 1999 and 2010. And that proliferation has correlated strongly with an increase in heroin abuse and drug-related deaths. Opiates are causing tremendous damage in our community and the United States Attorney’s office will continue to fight the distribution of drugs that endanger public safety."
The investigation is being conducted by Diversion Investigators from the Drug Enforcement Administration. The case is being prosecuted by Assistant United States Attorney Steven D. Weinhoeft.
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Canton Man Convicted of Conspiracy to Distribute Kilo of HeroinRead the Press Release
BOSTON – After three hours of deliberations, a federal jury convicted a Canton man yesterday of heroin distribution charges.
Obinna Obiora, 38, was convicted following a six-day trial of conspiring with others to distribute heroin in the greater Brockton area. U.S. District Court Judge William G. Young scheduled sentencing for April 28, 2017.
Over the course of three weeks between September and October 2015, Obiora and his brother, Chukwuma Obiora, provided heroin in amounts ranging from 300 to 400 grams, to Marvin Antoine. The last time that Obinna Obiora and his brother supplied heroin to Antoine, Antoine stole the heroin and refused to pay. Obinna Obiora called Antoine repeatedly to collect his drug debt. These calls were intercepted on a federally-authorized wiretap.
Chukwuma Obiora previously pleaded guilty to conspiracy to distribute heroin and is set to be sentenced on March 27, 2017 by Judge Young. Antoine is scheduled to stand trial in spring 2017.
The narcotics charge provides for no greater than life in prison, a minimum of five years and up to a lifetime of supervised release and a fine of $10 million. Obiora also faces deportation to Nigeria upon completion of his sentence. 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.
Acting United States Attorney William D. Weinreb and Michael Ferguson, Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division, made the announcement today. The Brockton Police Department, Massachusetts State Police and Barnstable Police Department assisted with the investigation. Assistant U.S. Attorneys Eric Rosen and Leah Foley of Weinreb’s Narcotics and Money are prosecuting the case.
Business Manager Agrees to Plead Guilty after Admitting $7.2 Million Embezzlement from Alanis Morissette and Other CelebritiesRead the Press Release
LOS ANGELES – The business manager for Alanis Morissette and other entertainment and sports figures admitted in court papers filed today that he embezzled nearly $7.2 million from his clients.
Jonathan Todd Schwartz, 48, who now resides in Playa Vista, but was living in Agoura Hills at the time of the criminal conduct, was charged today with wire fraud and subscribing to a false tax return for failing to disclose the embezzled funds to the Internal Revenue Service.
In conjunction with the criminal information filed today, prosecutors also filed a plea agreement in which Schwartz agreed to plead guilty to the two felony offenses.
Schwartz was a member of GSO Business Management, LLC, a business management firm based in Sherman Oaks that provides financial guidance to clients, including managing bank accounts, providing accounts payable services, and preparing short- and long-term budgets.
In the plea agreement, Schwartz admitted that he took clients’ money for himself and falsified account records to conceal the embezzlement of client funds. Schwartz admitted that between May 2010 and January 2014, he withdrew approximately $4.8 million belonging to “Client Number 2” – Alanis Morissette – without her knowledge or authorization. Schwartz further admitted that he falsely labeled the unauthorized cash withdrawals as “sundry/personal expenses” on the accounting records GSO maintained for Morissette. When confronted about the missing funds, Schwartz stated that the money was an investment in illegal marijuana “grow” businesses, a statement that Schwartz has now admitted was false.
“Money managers have fiduciary and moral responsibilities to their clients that begin with preserving client assets and not using that money to line their own pockets,” said United States Attorney Eileen M. Decker. “This defendant violated this basic principle, and then engaged in further criminal conduct by attempting to hide his ill-gotten gains from the Internal Revenue Service. Despite those efforts, however, the defendant will now face serious consequences for victimizing his clients and American taxpayers.”
In the plea agreement, Schwartz also admits that he embezzled over $1 million from another client and concealed the embezzlement by falsely coding the unauthorized cash withdrawals as money used for the client’s home renovations. Schwartz further admitted that he embezzled $737,500 from yet another client and forged that client’s signature on at least two cash receipts.
“Mr. Schwartz was hired to protect his clients’ money by managing it professionally, but instead misappropriated millions to enrich himself,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case should serve as a warning that there are serious consequences for those who abuse their positions of trust to embezzle funds.”
While he has agreed to plead guilty to filing a false tax return for the year 2012, Schwartz admitted in the plea agreement that he did not report any of the approximately $7.2 million he obtained through his embezzlement scheme to the IRS. As a result of the entire scheme, Schwartz acknowledges that he owes the IRS more than $1.7 million in federal income taxes.
“Schwartz was caught with his hand in the proverbial cookie jar,” stated IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. “No matter what the source of income, all income is taxable. The IRS works regularly with our law enforcement partners in cases like these to prevent other financial professionals from duping their clients.”
Schwartz is expected to make his initial appearance in United States District Court on February 1.
Once he pleads guilty to the charges that have been filed in this case, Schwartz will face a statutory maximum penalty of 23 years in federal prison. While the plea agreement contemplates a sentence of approximately four to six years, the actual sentence will be determined by the judge that hears the case.
This case was investigated by the Federal Bureau of Investigation and IRS Criminal Investigation. GSO Business Management, LLC fully cooperated during the investigation.
This case is being prosecuted by Assistant United States Attorney Ranee A. Katzenstein, Chief Assistant for Trials, Integrity and Professionalism.
Buffalo Man Sentenced on Drug ChargeRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y. – Acting U.S. Attorney James P. Kennedy, Jr. announced today that David Varner, 57, of Buffalo, NY, who was convicted of maintaining a drug involved premises, was sentenced to time served and three years of supervised release by Senior U.S. District Judge William M. Skretny.
Assistant U.S. Attorney Timothy C. Lynch, who handled the prosecution, stated that between April of 2011 and April 3, 2013, the defendant allowed his co-defendants to utilize his apartment, which was located on the grounds of the Perry Housing Projects, to manufacture, possess, and distribute crack cocaine. Varner’s apartment was one of several locations on the grounds of the Perry Housing Projects in Buffalo, which were maintained by members of the conspiracy in furtherance of their drug trafficking activities.
On April 3, 2013, law enforcement officers executed search warrants at 124 Fulton Street and 305 Perry Street during which they recovered over 300 grams of cocaine base and 700 grams of powered cocaine as well as a firearm. Varner was arrested in April 2013 along with 10 others. All defendants have been convicted.
The sentencing is the culmination of an investigation on the part of the Federal Bureau of Investigation Safe Streets Task Force, under the direction of Adam S. Cohen, Special Agent-in-Charge, the New York State Police, under the direction of Major Steven Nigrelli, and the Buffalo Police Department, under the direction of Commissioner Daniel Derenda.
Brookline Man Sentenced to Prison for Million Dollar Insider Trading SchemeRead the Press Release
BOSTON - A Brookline man was sentenced today in U.S. District Court in Boston for tipping off two friends in connection with an insider trading scheme that netted more than $1 million in illegal profits.
Amit Kanodia, 49, of Brookline, was sentenced by U.S. District Court Judge Nathaniel M. Gorton to 20 months in prison, two years of supervised release including 100 hours of community service, a fine of $200,000 and forfeiture of $242,500. Kanodia was also ordered to forfeit $242,500, which represented his portion of the illegal trading profits. In October 2016, Kanodia was convicted by a federal jury, following a six-day trial, of one count of conspiracy and 10 counts of securities fraud.
The spring of 2013, Kanodia tipped off his two friends, Iftikar Ahmed and Steven Watson, about the contemplated acquisition of Cooper Tire & Rubber Company (“Cooper Tire”) by India-based Apollo Tyres (“Apollo”). Kanodia learned about the possible acquisition from his wife who was General Counsel for Apollo at the time. the months leading up to the public announcement of the acquisition, both Ahmed and Watson purchased shares and options in Cooper Tire, which trades on the New York Stock Exchange. On the day of the announcement, Cooper Tire’s share price increased 41%, and Ahmed and Watson began selling their interests in the company for a combined profit of more than $1 million. connection with their agreement, both Ahmed and Watson paid Kanodia a portion of their illegal profits.
In November 2016, Watson was sentenced to two years of probation and ordered to pay a fine of $25,000. He was also ordered to forfeit the almost $170,000 in illegal trading profits that he made on the scheme. Ahmed is a fugitive.
Acting U.S. Attorney William D. Weinreb and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The U.S. Attorney’s Office received valuable assistance from the Securities & Exchange Commission. Assistant U.S. Attorneys Sarah E. Walters and Brian Perez-Daple, of Weinreb’s Economic Crimes Unit prosecuted the case.