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Thursday 29 December 2016
Bangor Man Pleads Guilty to Conspiring to Violate Federal Firearms LawsRead the Press Release
Contact: Joel B. Casey
Assistant United States Attorney
Tel: (207) 945-0373Bangor, Maine: United States Attorney Thomas E. Delahanty II announced that Hayri Berberoglu, 31, of Bangor, Maine pleaded guilty yesterday in U.S. District Court in Bangor to conspiring to violate federal firearms laws.
According to court documents, between approximately February 7, 2012 and October 12, 2012, Bergerlogu was employed at a Brewer, Maine pawn shop which was licensed to sell firearms. During that time, Berberlogu knowingly facilitated multiple straw purchases of firearms by selling them to people who falsely claimed to be the actual buyers of the firearms. In fact, as Berberlogu knew or had reasonable cause to know, all of those people were buying the firearms on behalf of non-Maine residents who were prohibited under federal law from purchasing firearms. To accomplish these straw purchases, Berberlogu participated in the falsification of documents that are required to be submitted to the federal government in connection with the sale of firearms.
The conspiracy count carries a maximum prison sentence of five years imprisonment, a $250,000 fine and up to three years supervised release. Berberlogu will be sentenced after a presentence report is prepared by the United States Probation Office.
The case was investigated by the Maine Drug Enforcement Agency, the Maine Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the New Haven, Connecticut Office of Bureau of Alcohol, Tobacco, Firearms and Explosives, with assistance provided by the Brewer, Maine Police Department.
Baltimore Man Facing Federal Charges for Illegal Possession of Guns and SilencerRead the Press Release
Greenbelt, Maryland – Joseph Goldman, age 35, of Baltimore has been charged by federal criminal complaint for possessing unregistered firearms and for making a firearm. Goldman had an initial appearance today before U.S. Magistrate Judge Thomas M. DiGirolamo in U.S. District Court in Greenbelt, and was ordered to be detained pending a detention hearing scheduled for January 3, 2017, at 10:30 a.m.
The charges were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Daniel L. Board Jr. of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) - Baltimore Field Division; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Baltimore Police Commissioner Kevin Davis; and Baltimore City State’s Attorney Marilyn Mosby.
“Federal prosecutors work closely with state and local law enforcement agencies to protect the public from dangerous criminals,” said U.S. Attorney Rod J. Rosenstein.
According to the affidavit filed in support of the criminal complaint, on December 19, 2016, Baltimore City Police Department, Criminal Investigation Division Child Abuse Unit executed a search warrant at Goldman’s home as part of an investigation into possible sexual abuse of a minor. Goldman is facing state charges in connection with that investigation. During the search law enforcement discovered a cache of suspected illegal firearms and contacted ATF for assistance.
The following firearms were recovered from Goldman’s residence and seized by law enforcement: from behind the couch in the first floor living room, a 556 short barrel AR-15 long gun with a silver 6.5 inch silencer attached; from Goldman’s bedroom, a 12 gauge short barrel shotgun and two semi-automatic pistols; and 20 rounds of ammunition, a machine vice, miscellaneous gun parts and tools. Law enforcement determined that the AR-15, short barrel shotgun and silencer are firearms that are required to be registered under the law, but were not.
If convicted, Goldman faces a maximum sentence of 10 years in prison for possession of unregistered firearms, and for illegally making a firearm.
A criminal complaint is not a finding of guilt. An individual charged by criminal complaint is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Rod J. Rosenstein commended the ATF, FBI, Baltimore Police Department and Baltimore City State’s Attorney’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Paul E. Budlow, who is prosecuting the case.
Auto Dealer Arrested in $2 Million Fraud on Russian CitizensRead the Press Release
NEWARK, N.J. – A New Jersey auto dealer was charged today for allegedly defrauding more than 140 Russian citizens who were customers of his auto sales business, U.S. Attorney Paul J. Fishman announced.
Sergey Kapustin, 47, of Warminster, Pennsylvania, was arrested today by special agents of the FBI and charged by complaint with one count of wire fraud and conspiring to commit wire fraud. He will appear this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court.
According to documents filed in this case and statements made in court:
Kapustin was the owner and president of Global Auto Group, Effect Auto Sales and G Auto Sales, located in Elizabeth, New Jersey. Global bought and sold used cars, typically high-end vehicles that were classified as “salvaged.”
From January 2011 through December 2014, Kapustin allegedly operated business through a scheme to defraud customers, who usually lived in Russia, Ukraine or members of the former Soviet Union. Kapustin had one or more Russian language websites that offered for sale luxury vehicles, including Mercedes and Lexus that were normally priced below market value, that could be shipped to Finland for easy delivery to Russian citizens, if they agreed to pay full price upfront for the vehicle. Kapustin was Russian and his websites were geared to buyers who believed they were getting a “good deal” from a fellow countryman who could be trusted to follow through once the purchase price had been paid.
After the buyers would wire the full price to one or more bank accounts controlled by Kapustin, he would allegedly give them a litany of excuses and reasons for delay in delivery. Unbeknownst to them, more often than not Kapustin had neither possession of nor title to the vehicles being sold. At some point, the victim would be offered a different, often inferior car, burdened with added shipping and storage costs. The unsophisticated buyer, desperate to acquire something for money already spent, would oftentimes wire additional money to rescue the car from its storage; all to no avail. Those very few cars that did land in Finland were normally the product of salvage auctions for vehicles that had been immersed in or flooded with salt water and were inoperable. Kapustin allegedly stole approximately $2 million in this manner.
The count with which Kapustin is charged carries a maximum penalty of 20 years and $250,000 fine.
U.S. Attorney Fishman credited the special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to Kapustin’s arrest.
The government is represented by Senior Litigation Counsel V. Grady O’Malley of the U.S. Attorney’s Office Organized Crime/Gangs Unit.
The charge and allegations in the complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
12 Alleged Fairview Gang Members Sentenced for Drugs, Weapons, and Money Laundering OffensesRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced that, yesterday, an Anchorage man was sentenced by Chief District Judge Timothy M. Burgess to serve 12 years in prison for his role in a conspiracy to distribute heroin, cocaine, and crack in Anchorage, to launder thousands of dollars in drug proceeds, and for possession of a firearm in furtherance of the drug conspiracy. Isaiah Holloway was the last of twelve defendants to be sentenced in the case, which alleged that the defendants were involved in a Fairview gang tied to a set of the “Bloods” street gang in California.
Isaiah Holloway, a/k/a “Z” and “Zaya,” age 27, previously pled guilty to conspiring with others to distribute drugs and to launder the proceeds. As part of his guilty plea, Holloway admitted that he sold drugs on multiple occasions with other co-conspirators, and that he traveled with other members of the conspiracy who carried drug proceeds and firearms in order to protect themselves and those proceeds.
Following his release from prison, Holloway will be on supervised release for five years. As part of the sentence, Judge Burgess ordered forfeiture of the defendant’s interest in the $76,335 of drug proceeds seized during the investigation into the drug trafficking operation.
According to charging and sentencing documents, the conspiracy began in 2013 and continued until December of 2015. During that time, Holloway acquired drugs, including heroin, cocaine, and crack, and worked with eleven other conspirators to sell the drugs to others. The members of this conspiracy called themselves the “Fairview Mob” or “326 Mob” and associated with members of the “Campanell Park Piru Bloods” street gang in Compton, California. The investigation revealed that “326” was code for “Compton to Fairview.” Several of the defendants were seen on both social media and seized videos flaunting their gang ties to California, making gang signs, and repeating the phrase “Fairview to Compton.” They also posted music videos on YouTube promoting violence and a gang lifestyle.
Holloway and several other conspirators maintained a “stash house” in the Government Hill neighborhood, where law enforcement officers found large amounts of drugs and money. Several defendants also shared a “dope phone” that drug users could call to reach available members to arrange for drug sales. During the time of this conspiracy, the members were involved in numerous crimes in Anchorage involving the use or possession of firearms, for which several face sentencing or have recently been sentenced in state court.
During several of the sentencing hearings, Judge Burgess noted the lengthy criminal records of the defendants, despite their relatively young ages. In fact, on three of the defendants, Judge Burgess imposed sentences greater than those recommended by applicable sentencing guidelines, citing the need to protect the public from the defendants. Despite their conduct in several videos, almost all of the defendants disclaimed membership in a gang at sentencing. Regardless, Judge Burgess stated that the members of this conspiracy were living and promoting a dangerous gang lifestyle. He repeatedly stressed the seriousness and dangerousness of the crimes – which not only included the sale of drugs but the use of weapons to protect the conspiracy’s interests. Judge Burgess stated, “there are only two endings for people who get involved with this type of activity . . . jail or death.”
“Fairview is not Compton, and thanks to the cooperation of federal, state, and municipal agencies, it will never be Compton,” stated Deputy Criminal Chief Frank Russo of the U.S. Attorney’s Office. “But if you act like a gangster, and commit crimes like a gangster, rest assured that law enforcement and the criminal justice system will treat you like a gangster.”
To date, the following individuals have been sentenced as part of this investigation:
- Ishmael Holloway, 24, of Anchorage, to 10 years in prison for the drug conspiracy and possession of a firearm in furtherance of a drug trafficking crime;
- Lamont Moore, 37, of Compton, California, to 10 years for the drug conspiracy;
- Michael Reynold, 24, of Anchorage, to five years for drug trafficking near a school or playground;
- Dorian Topps, 23, of Anchorage, to four years for drug trafficking;
- Angelo Charter, 27, of Anchorage, to four years for the drug conspiracy;
- Karl Maddox Jr., 26, of Anchorage, to 40 months for drug trafficking;
- Christopher Meeks, 23, of Anchorage, to 22 months for drug trafficking near a school or playground;
- Felton Reynold, 28, of Anchorage, to 20 months for drug trafficking near a school or playground;
- Delano Williams, 26, of Anchorage, to 20 months for drug trafficking near a school or playground;
- Leonard Moore Jr., 27, of Anchorage, to 15 months for receiving a firearm while under felony indictment and providing false statements; and
- Malia Green, 22, of Anchorage, to eight months for drug trafficking.
One charged conspirator remains at large: Dearon Walton, a purported member of the Campanella Park Piru Bloods of California.
This case was investigated as part of the Organized Crime Drug Enforcement Task Force (OCDETF), and led by the FBI Safe Streets Task Force and the Anchorage Police Department. It was prosecuted by Assistant U.S. Attorney Frank Russo and Special Assistant U.S. Attorney Erin Bennett, a municipal prosecutor on loan to the U.S. Attorney’s Office to address gang crimes. The Municipality has partnered with the U.S. Attorney’s Office since 2007 by supplying prosecutorial resources to the U.S. Attorney’s Office to assist in drug and violent crime cases in Anchorage. Since 2007, these municipal prosecutors have been responsible for over 200 federal felony prosecutions involving drug, gun, and violent crime cases.
In announcing the sentence, U.S. Attorney Loeffler also praised the Internal Revenue Service Criminal Investigation Division, which led the financial investigation. The Bureau of Alcohol, Tobacco, Firearms and Explosives and the Drug Enforcement Administration also provided assistance.
Wednesday 28 December 2016
Woman Sentenced to Seven Years’ Imprisonment for Tax Fraud, Identity Theft, and Making False Statements to Get Housing AssistanceRead the Press Release
A woman who stole others’ identities, filed false tax returns seeking to get more than $250,000 in fraudulent tax refunds, and lied in order to get government housing assistance was sentenced today to seven years in federal prison.
Kaeisha Robinson, age 38, from Phoenix, Arizona, and formerly of Maquoketa and Dubuque, Iowa, received the prison term after a September 2, 2016, guilty plea to one count of aggravated identity theft, one count of theft of government property, and one count of making false statements to a government agency.
In a plea agreement, Robinson admitted that from May 2011 to February 2013, she filed numerous false and fraudulent tax returns. She further admitted that she filed these returns in both her own name and the names of others, some of whom were unaware that Robinson was using their identities to file fraudulent returns. Robinson also admitted that as a result of these fraudulent returns, she received tax refunds from the Internal Revenue Service to which she was not entitled and stole money from the government. Finally, Robinson admitted that from October 2011 through July 2013, she lied on forms she completed in order to receive Section 8 housing assistance by failing to report all of her income. As a result, Robinson received $12,143 in housing assistance to which she would not have been entitled had she been truthful.
Robinson was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Robinson was sentenced to 84 months’ imprisonment. A special assessment of $300 was imposed, and she was ordered to make $336,380 in restitution to the Internal Revenue Service and $12,143 in restitution to the Eastern Iowa Regional Housing Authority. She must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Robinson is being held in the United States Marshal’s custody until she can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Anthony Morfitt and was investigated by the Internal Revenue Service-Criminal Investigations, United States Postal Inspection Service-Criminal Investigations, and the Department of Housing and Urban Development Office of the Inspector General.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 15-CR-00071.
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United Shore Financial Services LLC Agrees to Pay $48 Million to Resolve Alleged False Claims Act Liability Arising from FHA-Insured Mortgage LendingRead the Press Release
United Shore Financial Services LLC (USFS) has agreed to pay the United States $48 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today. USFS is headquartered in Troy, Michigan.
“The settlement announced today holds United Shore accountable for its endorsement of ineligible loans for FHA mortgage insurance,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Over the past several years, the Civil Division, in collaboration with numerous U.S. Attorneys’ Offices, HUD and its Office of Inspector General, has diligently worked to hold FHA-approved lenders accountable for actions that deprived homeowners of their homes, wasted taxpayer funds, and contributed to the financial crisis. The settlement announced today is yet another success in this continuing effort.”
“The federal government insures loans on the condition that lenders comply with certain rules to safeguard federal funds,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan. “When lenders breach their duty of due diligence and make risky loans that go bad, taxpayers pay the bill. By holding accountable lenders who fail to comply with underwriting requirements, we hope to send a message to all lenders that they must comply with government standards for federally insured loans.”
“USFS acknowledged that it failed to comply with FHA underwriting and quality control (QC) requirements, resulting in improperly originated mortgages,” said U.S. Attorney John W. Vaudreuil for the Western District of Wisconsin. “While USFS deserves credit for acknowledging and resolving its conduct, that conduct not only resulted in substantial losses of public funds, but also put Wisconsin homeowners at risk of losing their homes or ruining their credit. This large settlement should send a clear message that such conduct will not be tolerated.”
During the time period covered by the settlement, USFS participated as a direct endorsement lender (DEL) in the FHA insurance program. A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance. If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan. Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance. DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a QC program that can prevent and correct deficiencies in their underwriting practices, and to self-report any deficient loans identified by their QC program.
The settlement announced today resolves allegations that between Jan. 1, 2006, and Dec. 31, 2011, USFS failed to comply with certain FHA origination, underwriting and QC requirements. As part of the settlement, USFS admitted to the following facts: USFS improperly pressured underwriters to approve FHA mortgages and its compensation plan used a formula expressly tying underwriter compensation to the percentage of loans approved by the underwriter and closed by USFS. USFS also falsely certified that direct endorsement underwriters personally reviewed appraisal reports prior to USFS approving and endorsing mortgages for FHA insurance.
Additionally, although USFS’ internal QC reviews showed severe problems with FHA insured mortgages, USFS routinely failed to provide any meaningful information to senior management regarding its QC findings.
USFS also failed to adhere to HUD’s self-reporting requirements. While USFS’s QC reviews identified hundreds of materially-deficient FHA insured loans during the time period at issue, USFS self-reported only three loans to HUD.
As a result of USFS’ conduct and omissions, HUD insured hundreds of loans approved by USFS that were not eligible for FHA mortgage insurance under the Direct Endorsement program, and that HUD would not otherwise have insured. HUD subsequently incurred substantial losses when it paid insurance claims on those loans.
Further, on Jan. 10, 2014, after the United States initiated an investigation into USFS, USFS made certain discretionary distributions to a shareholder in the company.
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“The settlement announced today strongly demonstrates HUD OIG’s continued efforts to identify and investigate underwriting deficiencies in the origination and underwriting of single-family residential loans insured by FHA,” said HUD Inspector General David A. Montoya.
“This settlement, once again, demonstrates HUD’s unyielding efforts to root out poor underwriting practices in its mortgage insurance programs,” said Acting HUD General Counsel Tonya Robinson. “We want to thank the Department of Justice for partnering with us in holding lenders accountable for their actions. It is critically important that lenders comply with HUD’s underwriting standards and originate mortgages that are in accordance with FHA requirements and that borrowers can sustain.”
The settlement was the result of a joint investigation conducted by HUD, HUD’s Office of Inspector General, the Civil Division’s Commercial Litigation Branch and the U.S. Attorneys’ Offices for the Eastern District of Michigan and the Western District of Wisconsin.
United Shore Financial Services LLC Agrees to Pay $48 Million to Resolve Alleged False Claims Act Liability Arising from Fha-Insured Mortgage LendingRead the Press Release
WASHINGTON - United Shore Financial Services LLC (USFS) has agreed to pay the United States $48 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today. USFS is headquartered in Troy, Michigan.
“The settlement announced today holds United Shore accountable for its endorsement of ineligible loans for FHA mortgage insurance,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Over the past several years, the Civil Division, in collaboration with numerous U.S. Attorneys’ Offices, HUD and its Office of Inspector General, has diligently worked to hold FHA-approved lenders accountable for actions that deprived homeowners of their homes, wasted taxpayer funds, and contributed to the financial crisis. The settlement announced today is yet another success in this continuing effort.”
“The federal government insures loans on the condition that lenders comply with certain rules to safeguard federal funds,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan. “When lenders breach their duty of due diligence and make risky loans that go bad, taxpayers pay the bill. By holding accountable lenders who fail to comply with underwriting requirements, we hope to send a message to all lenders that they must comply with government standards for federally insured loans.”
“USFS acknowledged that it failed to comply with FHA underwriting and quality control (QC) requirements, resulting in improperly originated mortgages,” said U.S. Attorney John W. Vaudreuil for the Western District of Wisconsin. “While USFS deserves credit for acknowledging and resolving its conduct, that conduct not only resulted in substantial losses of public funds, but also put Wisconsin homeowners at risk of losing their homes or ruining their credit. This large settlement should send a clear message that such conduct will not be tolerated.”
During the time period covered by the settlement, USFS participated as a direct endorsement lender (DEL) in the FHA insurance program. A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance. If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan. Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance. DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a QC program that can prevent and correct deficiencies in their underwriting practices, and to self-report any deficient loans identified by their QC program.
The settlement announced today resolves allegations that between Jan. 1, 2006, and Dec. 31, 2011, USFS failed to comply with certain FHA origination, underwriting and QC requirements. As part of the settlement, USFS admitted to the following facts: USFS improperly pressured underwriters to approve FHA mortgages and its compensation plan used a formula expressly tying underwriter compensation to the percentage of loans approved by the underwriter and closed by USFS. USFS also falsely certified that direct endorsement underwriters personally reviewed appraisal reports prior to USFS approving and endorsing mortgages for FHA insurance.
Additionally, although USFS’ internal QC reviews showed severe problems with FHA insured mortgages, USFS routinely failed to provide any meaningful information to senior management regarding its QC findings.
USFS also failed to adhere to HUD’s self-reporting requirements. While USFS’s QC reviews identified hundreds of materially-deficient FHA insured loans during the time period at issue, USFS self-reported only three loans to HUD.
As a result of USFS’ conduct and omissions, HUD insured hundreds of loans approved by USFS that were not eligible for FHA mortgage insurance under the Direct Endorsement program, and that HUD would not otherwise have insured. HUD subsequently incurred substantial losses when it paid insurance claims on those loans.
Further, on Jan. 10, 2014, after the United States initiated an investigation into USFS, USFS made certain discretionary distributions to a shareholder in the company.
* * *
“The settlement announced today strongly demonstrates HUD OIG’s continued efforts to identify and investigate underwriting deficiencies in the origination and underwriting of single-family residential loans insured by FHA,” said HUD Inspector General David A. Montoya.
“This settlement, once again, demonstrates HUD’s unyielding efforts to root out poor underwriting practices in its mortgage insurance programs,” said Acting HUD General Counsel Tonya Robinson. “We want to thank the Department of Justice for partnering with us in holding lenders accountable for their actions. It is critically important that lenders comply with HUD’s underwriting standards and originate mortgages that are in accordance with FHA requirements and that borrowers can sustain.”
The settlement was the result of a joint investigation conducted by HUD, HUD’s Office of Inspector General, the Civil Division’s Commercial Litigation Branch and the U.S. Attorneys’ Offices for the Eastern District of Michigan and the Western District of Wisconsin.
U.S. Department of Transportation Takes Action to Ensure Equitable Driver License Office Access for Alabama ResidentsRead the Press Release
WASHINGTON – U.S. Transportation Secretary Anthony Foxx today announced that the U.S. Department of Transportation (USDOT) has reached an agreement with the Alabama Law Enforcement Agency (ALEA) to ensure that driver licensing services in the state will be available to all residents, regardless of race, color or national origin, in compliance with Title VI of the 1964 Civil Rights Act.
“The U.S. Department of Transportation took on this issue as part of our responsibility under Title VI to prevent discriminatory behavior, and I’m pleased to have reached this agreement with the State of Alabama,” said U.S. Transportation Secretary Anthony Foxx. “DMVs play a critical role in the day-to-day functioning of the American people, including ensuring their ability to drive to work and other essential services and to get proper identification needed to vote or open a bank account. No one should be prevented from accessing these services based on their race, color or national origin -- Title VI is not optional.”
In late 2015, the State of Alabama announced that it planned to close or reduce service to 31 driver license offices throughout the state. Because its preliminary analysis of the closures suggested that the service modifications would disproportionately impact African American residents in the state’s “Black Belt” region, USDOT opened an investigation into whether this action violated Title VI, which prohibits entities that receive federal funding from discriminating on the basis of race, color or national origin in their programs and activities. The State of Alabama and ALEA, in particular, receive Federal assistance from the Department and, therefore, are subject to Title VI’s nondiscrimination prohibition.
The Department conducted a thorough investigation, including review of data and information related to the operation of the State’s driver licensing program, site visits to the affected areas and interviews with residents impacted by the program. The investigation revealed that African Americans residing in the state’s Black Belt region are disproportionately underserved by ALEA’s driver license services, causing a disparate and adverse impact on the basis of race, in violation of Title VI.
“Today’s agreement between USDOT and ALEA is intended to correct this violation by guaranteeing that driver licensing services will be available to all Alabama residents on an equitable basis without regard to race, color or national origin,” said Yvette Rivera, Associate Director of the Departmental Office of Civil Rights, which conducted the investigation.
Under the agreement, ALEA will ensure that Alabama residents are not, directly or through other means, underserved by ALEA’s driver licensing programs on the basis of race, color or national origin. The agreement also establishes a working relationship between USDOT and ALEA for ensuring that the state’s driver licenses services continue to comply with Title VI in the future.
Specifically, ALEA agreed to:
- Expand the hours of operation for district and field driver license offices throughout the Black Belt region;
- Appoint a Title VI coordinator who will be responsible for the development and operation of ALEA’s Title VI program, as well as for the provision of Title VI training to ALEA’s staff;
- Prepare and submit a Community Participation Plan within 90 days to achieve robust community participation throughout all stages of the planning and decision-making processes for ALEA’s programs and activities in connection with licensing services to ensure that communities are informed about potential impacts, that they have meaningful input into the process, and that ALEA officials hear and consider diverse views;
- Submit any proposed modifications to field office hours or driver’s license services to USDOT for prior approval.
Press Release posted from here.
- Expand the hours of operation for district and field driver license offices throughout the Black Belt region;
U.S. Attorney's Office Collects over Nearly $4 Million in Civil and Criminal Actions for U.S. TaxpayersRead the Press Release
HONOLULU –U.S. Attorney Florence T. Nakakuni announced today that the District of Hawaii collected over $3.9 million in criminal and civil actions in Fiscal Year 2016. Of this amount, approximately $3.6 million was collected in criminal actions and approximately $300,000 was collected in civil actions. Additionally, the Hawaii USAO worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $1.7 million in civil cases pursued jointly with these offices.
Attorney General Loretta E. Lynch announced on December 14, 2016, that the Justice Department collected nearly $15.4 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2016. The $15,380,130,434 in collections in FY 2016 represents more than five times the appropriated $2.93 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period.
"Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse," said Attorney General Lynch. "Today’s announcement is a testament to that work, and it makes clear that our actions deliver a significant return on public investment. I want to thank the prosecutors and trial attorneys who made this year's collections possible, and I want to emphasize that the department remains committed to the well-being of our people and our nation."
In April and August 2016, for example, the District of Hawaii recovered $1,225,000 from Doorae Shipping Co., LTD, a South Korean maritime operations company. In April, as a result of convictions on two criminal charges relating to the unauthorized discharge of over 500 gallons of oily machinery space bilge water directly into the ocean, the office recovered $950,000, consisting of a $750,000 fine and $200,000 as a community service payment. In August, the office recovered an additional $275,000 as a result of another conviction relating to failure to document inappropriate storage of 5,400 gallons of oil contaminated bilge water and the location of approximately 8,400 gallons of machinery space oil contaminated bilge water.
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Two Atlanta Women Indicted in Counterfeit Credit Card SchemeRead the Press Release
BIRMINGHAM – A federal grand jury today indicted two Atlanta women on federal charges related to an interstate counterfeit credit card scheme, announced U.S. Attorney Joyce White Vance and U.S. Secret Service Special Agent in Charge Michael Williams.
A five-count indictment filed in U.S. District Court charges NENITA CHIFFON BARNES, 40, and ALICIA SHANTE STEWART, 34, with conspiracy to defraud Regions Bank by using stolen credit card numbers to create counterfeit credit cards that they used for purchases and cash advances between October 2015 and April 13, 2016, in north Alabama.
Along with the conspiracy, the indictment charges both women with one count of bank fraud and one count of possessing more than 15 counterfeit credit cards in Calhoun County on April 13. The indictment charges Barnes and Stewart separately with one count each of aggravated identity theft.
According to the indictment, Barnes and Stewart traveled to multiple locations, including the federal Northern District of Alabama, to use the counterfeit cards to make purchases and cash advances. The indictment charges that the women worked together at multiple Regions Bank branches within north Alabama to withdraw or to attempt to withdraw cash using the counterfeit cards.
Barnes is charged with aggravated identity theft for using, without lawful authority, the names and debit or credit card numbers of four specific individuals to commit fraud on April 13 in Calhoun County, and Stewart faces the same charge for unlawfully using the names and card numbers of three other individuals.
The conspiracy and bank fraud charges each carry a maximum penalty of 30 years in prison and a $1 million fine. The charge of possessing more than 15 counterfeit credit or debit cards carries a maximum penalty of 10 years in prison and a $250,000 fine. Aggravated identity theft carries a mandatory minimum prison sentence of two years, which must be served after completion of any other sentence imposed for an associated crime, and a maximum $250,000 fine.
The U.S. Secret Service and the Jacksonville Police Department investigated the case, which Assistant U.S. Attorney Robin Beardsley Mark is prosecuting.
An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.
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Romanian Man Pleads Guilty in Capital Region ATM Skimming ConspiracyRead the Press Release
ALBANY, NEW YORK – Ilie Sitariu, age 37, a citizen of Romania, pled guilty today to stealing about $127,000 through the use of skimming devices that were secretly installed on several bank ATMs in the Capital Region.
The announcement was made by U.S. Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent in Charge of the Albany Division of the Federal Bureau of Investigation (FBI).
As part of his guilty plea, Sitariu admitted that from August 30, 2015 through October 24, 2015, he and a co-conspirator used skimming devices and pinhole cameras to secretly capture the account numbers and personal identification numbers (PINs) of customers who used ATMs at First Niagara Bank, Trustco Bank, and Berkshire Bank branches in Chatham, New York, Delmar, New York, and Great Barrington, Massachusetts. The skimming devices captured the information encoded on the magnetic strips of customers’ bank debit cards, while the pinhole cameras allowed the conspirators to record the PINs used by the customers at ATMs. The conspirators then used the information to steal approximately $127,000 from the customers’ accounts by making withdrawals at ATMs in New York City.
Sitariu faces at least 2 years and up to 30 years in prison, a fine of up to $250,000, and a term of post-imprisonment supervised release of up to 3 years when he is sentenced on May 10, 2017 by Senior United States District Judge Lawrence E. Kahn. A defendant’s sentence is imposed by a judge based on the particular statutes the defendant is charged with violating, the U.S. Sentencing Guidelines, and other factors.
This case was investigated by the FBI, with assistance from the New York State Police and the U.S. Secret Service, and is being prosecuted by Assistant U.S. Attorney Emmet O’Hanlon.
Prison Employee Arrested for Attempting to Provide Contraband to PrisonersRead the Press Release
Federal authorities arrested Ray Alexander Barr, a prison employee at the Central Texas Detention Facility – GEO (GEO), yesterday afternoon for allegedly attempting to provide contraband to an inmate inside the federal detention facility announced United States Attorney Richard L. Durbin, Jr., and Federal Bureau of Investigation Special Agent in Charge Christopher Combs, San Antonio Division.
According to the complaint, Barr, a kitchen supervisor at GEO, a federal pre-trial detention facility in San Antonio, asked several inmates if they wanted contraband smuggled into GEO in return for money. Barr agreed to smuggle alcohol and ICE methamphetamine into the facility in exchange for money. Agents arrested Barr immediately after he accepted payment but before he could smuggle in the contraband.
Barr is scheduled for an initial appearance today.
If convicted Barr faces up to 20 years in federal prison and a maximum $250,000 fine.
This case was investigated by deputies with the United States Marshal Service and agents with the Federal Bureau of Investigation. Assistant United States Attorney Sarah Wannarka is prosecuting this case on behalf of the Government.
A complaint is merely a charge and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.
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North Royalton woman charged with stealing $2 million from Catholic CharitiesRead the Press Release
A North Royalton woman was charged in federal court for embezzling approximately $2 million from Catholic Charities of the Diocese of Cleveland, said Carole S. Rendon, U.S. Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office.
Michelle Medrick, 58, was charged via criminal information with bank fraud.
The information alleges that Medrick embezzled approximately $2 million from Catholic Charities in a scheme to defraud Fifth Third Bank and to obtain money under the custody and control of Fifth Third Bank by means of false and fraudulent pretenses and representations from in or around 2008 to March 2016.
At various times, Medrick was employed as the Comptroller and the Business Manager of Catholic Charities. The information alleges that as part of the scheme, Medrick converted proceeds of client-agency and donor checks to cash, which she used for her own benefit.
The information further alleges that Medrick altered copies of the checks, which she then placed into Catholic Charities’ records.
“The Diocese uncovered the fraud and came forward to federal authorities,” Rendon said. “They are cooperating fully. The defendant will now be held accountable for her criminal activity.”
If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense, and the characteristics of the violation. In all cases, the sentences will not exceed the statutory maximum and in most cases they will be less than the maximum.
The case is being prosecuted by Assistant U.S. Attorney M. Kendra Klump following an investigation by the Federal Bureau of Investigation.
An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Mexican national pleads guilty to immigration crimeRead the Press Release
CHARLESTON, W.Va. – A Mexican national pleaded guilty today to an immigration crime, announced United States Attorney Carol Casto. Adan Zamudio-Escalante, also known as Victor Giron, 39, entered his guilty plea to illegally reentering the United States after having previously been removed from the United States on two different occasions.
Zamudio-Escalante admitted that he had twice been convicted of the federal crime of illegally reentering the United States. The first conviction occurred on April 1, 2005, in Texas. After that conviction, Zamudio-Escalante was removed from the United States to his home country of Mexico. Zamudio-Escalante then illegally reentered the United States. He was convicted for a second time of illegally reentering the United States on January 6, 2010, in West Virginia, and was again removed from the United States. Zamudio-Escalante was subsequently found in Charleston by Department of Homeland Security agents on September 20, 2016, having illegally reentered the United States for a third time.
Zamudio-Escalante faces up to 10 years in federal prison when he is sentenced on February 13, 2017. He is also subject to removal proceedings at the conclusion of the case.
The investigation was conducted by the Department of Homeland Security. Assistant United States Attorney Erik S. Goes is in charge of the prosecution. The plea hearing was held before United States District Judge John T. Copenhaver, Jr.
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Methuen Man Pleads Guilty to Distributing Fentanyl and HeroinRead the Press Release
CONCORD, N.H. – Emily Gray Rice, United States Attorney for the District of New Hampshire, announced today that Luis Martin Carvajal Gonzalez, also known as Wilfredo Laboy, pleaded guilty to distributing fentanyl and heroin, as well as possessing fentanyl with intent to distribute.
According to court documents, Carvajal Gonazalez, 34, sold heroin and fentanyl to an undercover law enforcement officer on multiple occasions in December of 2015. The transactions occurred at retail stores in Salem, New Hampshire. On February 9, 2016, the defendant (who previously has used the name Wilfredo Laboy) arrived at a store parking lot in Salem to conduct another drug deal. When law enforcement officers approached, he ran away and attempted to throw “fingers” of drugs as he fled. He was apprehended and approximately 156 grams of fentanyl were recovered.
Carvajal Gonzalez is scheduled to be sentenced on April 11, 2017.
In announcing the plea, U.S. Attorney Rice said, “The United States Attorney’s Office remains committed to identifying and prosecuting those who attempt to profit from the sales of deadly drugs. We continue to work each day to stop the flow of fentanyl and heroin into New Hampshire and to reverse the escalating number of drug-related deaths in our state.”
"Opioid abuse is at epidemic levels in New Hampshire," said Special Agent in Charge Michael J. Ferguson. "Fentanyl and heroin are causing overdose deaths across the Granite State in record numbers, and DEA is committed to aggressively pursuing Drug Trafficking Organizations and individuals who are coming from out of state to distribute these poisons across New Hampshire in order to profit and destroy people's lives and wreak havoc in our communities. This investigation demonstrates the strength and continued commitment of our local, state and federal law enforcement partners."
This matter was investigated by the Drug Enforcement Administration, with assistance from the New Hampshire State Police, and the Salem, Manchester, and Methuen (Massachusetts) Police Departments. The case is being prosecuted by Assistant United States Attorney John J. Farley.
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Louisiana Resident Pleads Guilty to Conspiracy to Defraud the United StatesRead the Press Release
WASHINGTON – A Tangipahoa Parish, Louisiana resident pleaded guilty to one count of conspiracy to defraud the United States and to commit theft of public money, wire fraud and aggravated identity theft, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Kenneth A. Polite for the Eastern District of Louisiana.
According to the plea agreement, Jackie Chaney, aka Jackie Scott, 46, admitted to conspiring with others to prepare false tax returns using stolen identities. Chaney admitted that she and her co-conspirators obtained the names and social security numbers of individuals which were used to prepare and file false tax returns. At least one of Chaney’s co-conspirators electronically filed the false tax returns and Chaney and others received the fraudulently obtained refunds in the form of checks or prepaid debit cards. Chaney also admitted that she and her co-conspirators further conspired to convert fraudulently obtained tax refund checks into cash.
Sentencing is scheduled for March 29, 2017 before U.S. District Court Judge Susie Morgan. Chaney faces a statutory maximum sentence of five years in prison for the conspiracy charge, a period of supervised release, restitution and monetary penalties.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Polite commended special agents of the Internal Revenue Service-Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Hayden Brockett and Trial Attorney Lauren Castaldi of the Tax Division, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Louisiana Resident Pleads Guilty to Conspiracy to Defraud the United StatesRead the Press Release
A Tangipahoa Parish, Louisiana resident pleaded guilty to one count of conspiracy to defraud the United States and to commit theft of public money, wire fraud and aggravated identity theft, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Kenneth A. Polite for the Eastern District of Louisiana.
According to the plea agreement, Jackie Chaney, aka Jackie Scott, 46, admitted to conspiring with others to prepare false tax returns using stolen identities. Chaney admitted that she and her co-conspirators obtained the names and social security numbers of individuals which were used to prepare and file false tax returns. At least one of Chaney’s co-conspirators electronically filed the false tax returns and Chaney and others received the fraudulently obtained refunds in the form of checks or prepaid debit cards. Chaney also admitted that she and her co-conspirators further conspired to convert fraudulently obtained tax refund checks into cash.
Sentencing is scheduled for March 29, 2017 before U.S. District Court Judge Susie Morgan. Chaney faces a statutory maximum sentence of five years in prison for the conspiracy charge, a period of supervised release, restitution and monetary penalties.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Polite commended special agents of the Internal Revenue Service-Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Hayden Brockett and Trial Attorney Lauren Castaldi of the Tax Division, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Lewiston Man Sentenced to 10 Years for Accessing Child PornographyRead the Press Release
Contact: Craig M. Wolff
Assistant United States Attorney
Tel: (207) 780-3257Portland, Maine: United States Attorney Thomas E. Delahanty II announced that Douglas Blodgett, 46, of Lewiston, Maine, was sentenced today in U.S. District Court to 10 years in prison and 10 years of supervised release for accessing with intent to view material containing images of child pornography. He pleaded guilty to the charge on August 22, 2016. Blodgett was also ordered to pay $3,000 in restitution to the child depicted in several of the child pornography images he accessed.
According to court records, in March of this year, Blodgett used the internet to access Internet Relay Chat channels and chatrooms containing child pornography images. Investigators executed a search warrant on Blodgett’s computer and residence, and found that he had accessed internet addresses containing child pornography images. In an interview with agents, Blodgett admitted visiting chatrooms containing child pornography.
The investigation was conducted by U.S. Immigration and Custom Enforcement’s Homeland Security Investigations.
Justice Department Reaches Settlement with Ohio-Based Banks to Resolve Allegations of Lending DiscriminationRead the Press Release
CINCINNATI – The Justice Department filed a consent order today to resolve allegations that Union Savings Bank and Guardian Savings Bank engaged in a pattern or practice of “redlining” predominantly African-American neighborhoods in and around Cincinnati; Columbus, Ohio; Dayton, Ohio; and Indianapolis. “Redlining” is the discriminatory practice by banks or other financial institutions of denying or avoiding providing credit services to consumers because of the racial demographics of the neighborhood in which the consumer lives.
The settlement, which is subject to court approval, was filed in conjunction with the department’s complaint in the U.S. District Court for the Southern District of Ohio. The complaint alleges that Union and Guardian violated the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race and color in their mortgage lending practices. The lawsuit alleges that, from at least 2010 through 2014, Union and Guardian served the credit needs of the residents of predominantly white neighborhoods to a significantly greater extent than they served the credit needs of majority African-American neighborhoods. Those neighborhoods are easily recognized because each of the four metropolitan areas in which the banks operate has long maintained highly-segregated residential housing patterns for African Americans. Both banks are headquartered in Cincinnati and share common ownership and management.
As a result of the settlement, Union will open two full-service branches and Guardian will open one loan production office to serve the residents of African-American neighborhoods. Together, Union and Guardian will invest at least $9 million in majority African-American neighborhoods in the Cincinnati, Columbus, Dayton and Indianapolis metropolitan areas. That investment includes $7 million in a loan subsidy fund to increase the amount of credit that Union and Guardian extend to residents of majority African-American census tracts. In order to make residential mortgage loans available to residents of predominately African-American neighborhoods that were not adequately served by Union and Guardian, the banks will further invest $2 million in advertising, outreach, financial education and community partnership efforts. The settlement also requires both banks to develop robust internal controls to ensure compliance with fair lending obligations and conduct fair lending training for their employees.
“Lenders must treat all potential borrowers equally and fairly,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “This settlement embodies a win-win solution for all parties by increasing the volume of mortgage loans, driving economic activity and creating a level playing field for qualified borrowers.”
“Redlining has no place in the Southern District of Ohio,” said U.S. Attorney Benjamin C. Glassman of the Southern District of Ohio. “This office is committed to vigorously enforcing the guarantees of the Fair Housing Act and the Equal Credit Opportunity Act so that the people in our District can borrow without prejudice based on race and color.”
The Justice Department’s enforcement of fair lending laws is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section. Since 2010, the division has provided over $1.6 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act. The Attorney General’s annual reports to Congress on ECOA enforcement highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/.
The Civil Rights Division and the U.S. Attorney’s Office of the Southern District of Ohio are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Justice Department Reaches Settlement with Ohio-Based Banks to Resolve Allegations of Lending DiscriminationRead the Press Release
Settlement Provides $9 Million to Ensure Equal Lending Services to African-American Communities in Ohio and Indiana
The Justice Department filed a consent order today to resolve allegations that Union Savings Bank and Guardian Savings Bank engaged in a pattern or practice of “redlining” predominantly African-American neighborhoods in and around Cincinnati; Columbus, Ohio; Dayton, Ohio; and Indianapolis. “Redlining” is the discriminatory practice by banks or other financial institutions of denying or avoiding providing credit services to consumers because of the racial demographics of the neighborhood in which the consumer lives.
The settlement, which is subject to court approval, was filed in conjunction with the department’s complaint in the U.S. District Court for the Southern District of Ohio. The complaint alleges that Union and Guardian violated the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race and color in their mortgage lending practices. The lawsuit alleges that, from at least 2010 through 2014, Union and Guardian served the credit needs of the residents of predominantly white neighborhoods to a significantly greater extent than they served the credit needs of majority African-American neighborhoods. Those neighborhoods are easily recognized because each of the four metropolitan areas in which the banks operate has long maintained highly-segregated residential housing patterns for African Americans. Both banks are headquartered in Cincinnati and share common ownership and management.
As a result of the settlement, Union will open two full-service branches and Guardian will open one loan production office to serve the residents of African-American neighborhoods. Together, Union and Guardian will invest at least $9 million in majority African-American neighborhoods in the Cincinnati, Columbus, Dayton and Indianapolis metropolitan areas. That investment includes $7 million in a loan subsidy fund to increase the amount of credit that Union and Guardian extend to residents of majority African-American census tracts. In order to make residential mortgage loans available to residents of predominately African-American neighborhoods that were not adequately served by Union and Guardian, the banks will further invest $2 million in advertising, outreach, financial education and community partnership efforts. The settlement also requires both banks to develop robust internal controls to ensure compliance with fair lending obligations and conduct fair lending training for their employees.
“Lenders must treat all potential borrowers equally and fairly,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “This settlement embodies a win-win solution for all parties by increasing the volume of mortgage loans, driving economic activity and creating a level playing field for qualified borrowers.”
“Redlining has no place in the Southern District of Ohio,” said U.S. Attorney Benjamin C. Glassman of the Southern District of Ohio. “This office is committed to vigorously enforcing the guarantees of the Fair Housing Act and the Equal Credit Opportunity Act so that the people in our District can borrow without prejudice based on race and color.”
The Justice Department’s enforcement of fair lending laws is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section. Since 2010, the division has provided over $1.6 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act. The Attorney General’s annual reports to Congress on ECOA enforcement highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/.
The Civil Rights Division and the U.S. Attorney’s Office of the Southern District of Ohio are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Additional information about fair lending enforcement by the Justice Department can be found on the Justice Department’s website at www.justice.gov/fairhousing.
Union Savings and Guardian Savings Complaint Union Savings and Guardian Savings Proposed Consent OrderInvestment Advisor Sentenced to Five Years for Defrauding Investors of $1.725 MillionRead the Press Release
The United States Attorney’s Office for the District of Minnesota announced the sentencing of DAVID BLAINE WELLIVER, 56, to five years in prison for defrauding investors in the Dblaine Fund of $1.725 million. WELLIVER pleaded guilty on July 13, 2016, to one count of securities fraud. He was sentenced today before Senior U.S. District Judge Paul A. Magnuson in U.S. District Court in St. Paul, Minn.
According to the defendant’s guilty plea, WELLIVER was the CEO and CIO of Dblaine Capital, LLC, an investment advisory company he founded in Buffalo, Minn. In September 2010, WELLIVER negotiated an agreement with Lazy Deuce Capital Company, LLC (Lazy Deuce), to purportedly finance the merger between Dblaine Capital and other mutual funds.
According to the defendant’s guilty plea, WELLIVER, in 27 separate transactions between October 2010 and May 2011, borrowed a total of $4 million from Lazy Deuce. Aside from a $95,000 payment to acquire the assets of a mutual fund, WELLIVER did not use any of the other proceeds of the Lazy Deuce loans to acquire mutual funds as he had represented to Lazy Deuce. Instead, WELLIVER diverted over $500,000 in proceeds from the Lazy Deuce loans to his own personal use, including for landscaping and interior decorating at his personal residence, to purchase land adjacent to his personal residence, to buy a personal vehicle, and to pay for his son’s college tuition.
According to the defendant’s guilty plea, between December 16, 2010, and April 15, 2011, WELLIVER caused $1.725 million in Dblaine Fund investors’ money to be invested in a shell company formed by several Lazy Deuce principals, called Semita Partners LLC (Semita). At the time WELLIVER made the investments in Semita, he knew that Semita was a shell company formed by principals of Lazy Deuce – the same company from which Dblaine Capital had borrowed money – and that Semita had no operations. On December 31, 2010, in order to meet a series of redemptions in the Dblaine Fund, WELLIVER liquidated nearly all of the stocks held by the Dblaine Fund. Following this liquidation, the Dblaine Fund’s only holdings consisted of worthless Semita shares and cash held in a money market account.
This case was the result of an investigation conducted by the United States Postal Inspection Service, the Federal Bureau of Investigation, and the Internal Revenue Service – Criminal Investigation.
This case was prosecuted by Assistant United States Attorneys Kimberly A. Svendsen and Benjamin F. Langner.
Defendant Information:DAVID BLAINE WELLIVER, 56
Buffalo, Minn.Convicted:
• Securities fraud, 1 countSentenced:
• Five years in prison
• Three years of supervised release
• Restitution of $2,161,079.83Gangster Disciple Pleads Guilty to RICO ConspiracyRead the Press Release
Jackson, TN – The first of 16 alleged Gangster Disciples indicted on racketeering charges in May 2016 has pleaded guilty to RICO conspiracy. Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee, announced the guilty plea today.
According to information presented in court, Daniel Lee Cole aka "D-Money," 37, of Jackson, Tennessee, reportedly ordered acts of violence against subordinate gang members and rival gang members; issued operational directives and organizational decisions; and engaged in narcotics trafficking in furtherance of the Gangster Disciples enterprise.
The Gangster Disciples are a highly-organized street gang that operates in more than 35 states and is responsible for violent acts and large-scale drug and firearm distribution.
The Gangster Disciples are organized into different positions, including board members, and governor-of-governors who each control geographic regions; governors, assistant governors, chief enforcers and chief of security for each state or regions within the state where the Gangster Disciples are active; and coordinators and leaders within each local group.
During his plea agreement, Cole admitted that he was a past governor of the 731 region (Jackson, Tennessee) and was also Literature Coordinator. Cole also admitted that the Gangster Disciples purchased heroin, cocaine and methamphetamine from contacts in various states and transported the drugs into Tennessee. These drugs were regularly sold to associates in Memphis, Jackson and other areas of the state.
Cole is one of 16 Gangster Disciples in the Memphis and Jackson areas who were indicted in May 2016 for allegedly conspiring to participate in a racketeering enterprise.
On Wednesday, December 21, 2016, Cole pleaded guilty before U.S. District Judge John T. Fowlkes Jr. to one count of conspiracy to participate in a racketeering enterprise.
Cole is scheduled to be sentenced by Judge Fowlkes on March 23, 2017.
He faces up to life in federal prison and a fine of up to $250,000.
This case is being investigated by the Federal Bureau of Investigation (FBI); Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); Drug Enforcement Administration (DEA); Tennessee Bureau of Investigation (TBI); the Jackson Police Department – Gang Enforcement Team; Police Departments for Memphis, Bartlett, Germantown and Columbia; Sheriff's Offices for Tipton, Desoto, Madison, and Fayette Counties; 28th District West Tennessee Drug Task Force; and 26th, 25th and 30th Judicial District Attorney's General's Offices.
Assistant U.S. Attorneys Jerry Kitchen, Beth Boswell, Michelle Parks and Samuel Stringfellow are prosecuting this case on the government’s behalf.
Federal Jury in Rutland Convicts Brooklyn New York Man of Conspiracy to Distribute Heroin and Crack Cocaine in Rutland AreaRead the Press Release
The Office of the United States Attorney for the District of Vermont stated that Joel Joyce (a.k.a. “Prince”), 27, of Brooklyn, New York was convicted of conspiracy to distribute cocaine base and heroin by a federal jury sitting in Rutland on December 23, 2016. The jury also convicted Joyce of possession with intent to distribute 28 grams or more of cocaine base. The minimum term of imprisonment for these offenses is five years and the maximum term of imprisonment is 40 years. There is also a mandatory four-year term of supervised release which begins after the prison term is served.
According to the evidence presented at trial, Joyce would use co-conspirators from Brooklyn, New York to bring heroin and crack cocaine from Brooklyn to the Rutland, Vermont area. Joyce then used drug addicts in the Rutland area to distribute these drugs and collect his money. The government presented evidence that Joyce and his co-conspirators from New York would often stay at the homes of addicts in Rutland and West Rutland and used these homes as a base of operations in which to operate Joyce’s drug trafficking enterprise. Joyce paid these addicts heroin and crack cocaine for assisting him.
The government also presented evidence at trial showing that Joyce made tens of thousands of dollars selling drugs in the Rutland area. The government presented evidence that Joyce often managed by cell phone the drug trafficking operation in Rutland while he was in Brooklyn, New York.
Sentencing in this matter will likely be scheduled for some time in the spring of 2017 before U.S. District Court Judge Geoffrey Crawford sitting in Rutland.
Vermont’s United States Attorney, Eric Miller, noted that the investigation that led to the arrest and conviction of Joyce was jointly conducted by the Federal Bureau of Investigation, the Drug Enforcement Administration, the Vermont State Police Drug Task Force, and the United States Attorney’s Office. “This conviction is the result of state and federal investigators and prosecutors working hand-in-hand to bring a dangerous drug dealer to justice. Mr. Joyce was a significant source of heroin and crack in the Rutland area, and Vermont’s communities are safer as a result of this successful prosecution.”
The United States is represented in this matter by Assistant U.S. Attorneys Joe Perella and Jon Ophardt. The defendant is represented by David Williams, Esq. of Burlington.
Defense Contractor Agrees to $4.535 Million Settlement for Alleged False Claim Act ViolationsRead the Press Release
Baltimore, Maryland – Advanced C4 Solutions, Inc. agreed today to pay $4.535 million to the United States to settle allegations that it submitted inflated invoices to the government for work performed at Joint Base Andrews.
The settlement was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Brigadier General Keith M. Givens, Commander Air Force Office of Special Investigations (OSI); Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service - Mid-Atlantic Field Office (DCIS); and U.S. Small Business Administration Inspector General Peggy E. Gustafson.
“Federal authorities will vigorously investigate and prosecute defense contractors that cheat the government,” said U.S. Attorney Rod J. Rosenstein. “The Justice Department works closely with defense agencies to safeguard taxpayer dollars."
Advanced C4 Solutions, Inc. (the “Company”) is a Florida-based company that was operating as a certified “small business” under Section 8(a) of the Small Business Act. On June 10, 2010, the Company was awarded a contract, DO27, to supply project management and labor services for an Air Force technology project. The contract was awarded by the U.S. Navy’s Space and Warfare Systems Command (“SPAWAR”), which was administering the contract in support of the United States Air Force. Among other things, DO 27 required the Company to design, construct, and implement certain local area network and wide area network systems that would be utilized by Air Force personnel and other components of the U.S. Armed Forces on Joint Base Andrews in Maryland. The DO 27 contract required the Company to accurately provide invoices to the United States for work performed under the DO 27 contract, including work by subcontractors. Labor costs were required to be billed according to the job classifications set forth in the contract and the number of labor hours worked by personnel at each job classification. The DO 27 contract also provided that the Company could only utilize pre-approved subcontractors. Pursuant to this provision, the Company entered into subcontractor agreements with several entities, one of which was Superior Communication Solutions, Inc. (“SCSI”).
Advanced C4 Solutions and its subcontractors began work under the DO 27 Contract in June 2010. Andrew Bennett was the Company’s project manager who was tasked with overseeing the work performed by the Company and its subcontractors under the DO 27 contract. In this capacity, he was responsible for verifying the accuracy of all invoices submitted by subcontractors to the Company and, in turn, all the invoices submitted by the Company to SPAWAR.
The settlement resolves allegations that Bennett, while an employee of the Company, knew that SCSI created false invoices that charged for labor hours that were not actually worked, and charged the United States at job classification rates for personnel that did not have the requisite credentials to be billed at those rates, and yet submitted those SCSI invoices to the government for payment anyway. SPAWAR subsequently paid these invoices not knowing they were false.
In related cases, Andrew Bennett, age 52, of Tampa Florida, James T. Shank, age 68, of Perry, Georgia, and a third individual were indicted on federal criminal charges related to their actions in this matter. Bennett and Shank pled guilty to conspiracy to commit wire fraud for their conduct related to the DO 27 contract. The third defendant is scheduled for trial beginning on January 30, 2017.
United States Attorney Rod J. Rosenstein commended Air Force OSI, DCIS, and SBA for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Jason D. Medinger who handled this case.
Clarksburg woman pleads guilty to unlawful purchase of a firearmRead the Press Release
CLARKSBURG, WEST VIRGINIA – Hannah Marie Elwell, 26, of Clarksburg, West Virginia pled guilty to unlawfully purchasing a firearm in federal court today, United States Attorney William J. Ihlenfeld, II, announced.
Elwell pled guilty to one count of “False Statement During the Purchase of a Firearm.” She admitted to falsely representing that she was the actual buyer of a .40 caliber pistol when she was actually attempting to purchase the firearm on behalf of another person.
She faces up to ten years in prison and a fine of up to $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Shawn M. Adkins prosecuted the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms, and Explosives investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Clarksburg man pleads guilty to unlawful possession of a firearmRead the Press Release
CLARKSBURG, WEST VIRGINIA – Charles A. Hamlett, 24, of Fairmont, West Virginia pled guilty to unlawfully possessing a firearm in federal court today, United States Attorney William J. Ihlenfeld, II, announced.
Hamlett, who was previously convicted of a felony offense of “Attempted Burglary” in Montgomery County, Ohio, admitted to possessing a .380 caliber pistol in November 2015. Hamlett pled guilty to one count of “Unlawful Possession of a Firearm.”
He faces up to ten years in prison and a fine of up to $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Traci M. Cook prosecuted the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Harrison County Sheriff’s Office, and the Clarksburg Police Department investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Bay Sleep Clinic and Related Entities Agree to Pay the United States $2.6 Million to Settle False Claims Act AllegationsRead the Press Release
SAN JOSE – Bay Sleep Clinic, its related businesses— Qualium Corporation and Amerimed Corporation—and their owners and operators, Anooshiravan Mostowfipour and Tara Nader (collectively, the Defendants) have agreed to pay $2.6 million to settle allegations that they fraudulently billed the Medicare program, announced United States Attorney Brian J. Stretch and U.S. Department of Health and Human Services-Office of the Inspector General (HHS-OIG) Special Agent in Charge, Steven Ryan. The settlement resolves allegations that the Defendants fraudulently charged the Medicare program for diagnostic sleep tests and medical devices in violation of Medicare payment rules.
The allegations against the Defendants were set out in an amended False Claims Act complaint filed by the United States on August 8, 2016. According to the complaint, Saratoga, Calif., residents Mostowfipour, 58, and Nader, 58, own Amerimed Corporation (that was doing business as Amerimed Sleep Diagnostics and Amerimed CPAP Specialists) and Qualium Corporation, which operated twenty sleep clinics doing business as Bay Sleep Clinic. The government alleged that as early as April 2002, Mostowfipour, Nader, and their businesses fraudulently billed Medicare for sleep tests performed by technicians lacking the licenses or certifications required by Medicare payment rules. In addition, the Defendants billed Medicare for sleep tests that allegedly were conducted at unenrolled and unapproved locations. Specifically, the government alleged that defendants regularly falsified documents to make it appear that a sleep test had been given at one of the defendants’ two locations which had been approved by Medicare, when, in fact, the test had been conducted at another, unapproved facility. Additionally, the government alleged the Defendants fraudulently billed Medicare for medical devices in violation of Medicare rules and regulations that prohibit providers of diagnostic sleep tests from supplying medical devices and from sharing a sleep laboratory location with a durable medical equipment supplier.
“Medicare patients expect to be treated by properly credentialed health care professionals in approved locations,” said U.S. Attorney Stretch. “When companies treating Medicare beneficiaries violate the rules, they will be held accountable.”
“Medicare beneficiaries need full confidence their medical professionals are properly licensed and services are provided in fully approved facilities,” said Special Agent in Charge Steven Ryan. “Patients and taxpayers deserve no less.”
The whistleblower action, captioned United States ex rel. Dresser v. Qualium Corp., et al., Civil Action No. 12-1745 (N.D. Cal.), was filed under the qui tam provisions of the False Claims Act. The False Claims Act allows for private persons, such as Elma F. Dresser in this case, to file actions to provide the government information about wrongdoing and then obtain a portion of the government’s recovery. Dresser will receive approximately $545,000.
As is permitted by the statute, the United States intervened in the action in May 2015 and filed its initial complaint in intervention in September 2015.
As part of today’s agreement, the defendants have voluntarily terminated their two existing Medicare enrollments and agreed not to re-enroll as providers or suppliers in the Medicare program for a period of three years.
The claims resolved by this settlement are allegations only and there has been no determination of liability.
Assistant U.S. Attorneys Erica Blachman Hitchings, Robin Wall, Kimberly Friday, and Tom Green handled the case with assistance from Jacqueline Hollar, Tina Louie, Bonny Wong, and Stefania Chin. The investigation was conducted by the U.S. Attorney’s Office for the Northern District of California and HHS-OIG.
Army Colonel Sentenced to 12 Years’ Imprisonment for Possession and Distribution of Child PornographyRead the Press Release
HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced that Robert J. Rice, a Colonel in the U.S. Army stationed at the U.S. Army War College, age 58, of Carlisle, Pennsylvania, was sentenced today by Chief U.S. District Court Judge Christopher C. Conner to 144 months’ imprisonment to be followed by 10 years’ supervised release for distribution of child pornography over the internet.
According to United States Attorney Bruce D. Brandler, the sentence follows a five-day jury trial in May 2016. The jury found that Rice knowingly possessed child pornography from August 2010 through January 29, 2013, and that he received and distributed child pornography through the internet from January 23, 2013 through January 28, 2013. Rice is currently incarcerated at Ft. Leavenworth Prison in Kansas where he is serving a 48-month sentence as a result of a court martial conviction. Today’s federal sentence was ordered to run concurrent with Rice’s military sentence.
The case was investigated by the Cumberland County District Attorney’s Office, the U.S. Army Criminal Investigation Division and Homeland Security Investigations. Assistant United States Attorneys James T. Clancy and Chelsea B. Schinnour prosecuted the case.
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Alleged Gangster Disciple Pleads Guilty to Felony Possession of Firearm Linked to Gang-Related ShootingsRead the Press Release
Jackson, TN – An alleged member of the Gangster Disciples has pleaded guilty to felony possession of a firearm that is linked to two gang-related shootings. Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee, announced the guilty plea today.
According to information presented in court, on July 13, 2015, Jackson Police Department officers responded to a domestic disturbance call at an apartment in Madison County. Once law enforcement arrived, they observed Brandon Tavarious Purdy, 27, of Jackson, Tennessee, standing inside the apartment. Officers also noticed a .40 caliber handgun lying on the kitchen counter next to Purdy.
After Purdy was apprehended, an analysis was conducted on the firearm at the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) lab. It was determined that the weapon was a match to casings collected at the scenes of two shootings involving the Gangster Disciples.
Purdy is reportedly a member of the Gangster Disciples, a highly-organized street gang that operates in more than 35 states and is responsible for violent acts and large-scale drug and firearm distribution.
Purdy has an extensive criminal history, including convictions for attempted second degree murder, attempted especially aggravated robbery, aggravated robbery and reckless endangerment with a deadly weapon.
On Thursday, December 22, 2016, Purdy pleaded guilty before Chief U.S. District Judge J. Daniel Breen to one count of felony possession of a firearm.
Purdy is scheduled to be sentenced by Judge Breen on March 24, 2017 at 10 a.m.
He faces up to 10 years in federal prison and a fine of up to $250,000.
This case is being investigated by the ATF and the Jackson Police Department – Gang Enforcement Team.
Assistant U.S. Attorney Beth C. Boswell is prosecuting this case on the government’s behalf.
Tuesday 27 December 2016
United States Attorney John P. Fishwick Jr. to Resign Effective January 6, 2017Read the Press Release
ROANOKE, VIRGINIA –John P. Fishwick Jr. announced today that he recently informed President Barrack Obama that he will be resigning as United States Attorney for the Western District of Virginia effective at midnight on January 6, 2017.
"The opportunity to serve as United States Attorney has been the greatest honor of my career and it has been a privilege to serve the people of Western Virginia," Fishwick said.
"Since 2015, U.S. Attorney John P. Fishwick Jr. has served the people of the Western District of Virginia, and the people of this nation, with integrity and distinction," said Attorney General Loretta E. Lynch. "During John’s tenure as U.S. Attorney, his office made significant progress on many of the difficult challenges facing law enforcement today. Under his leadership, the Western District successfully prosecuted the gang responsible for the murder of a police captain, collaborated with local and state law enforcement officials to fight the scourge of gun violence, and tirelessly combated the heroin epidemic. And John personally promoted strong relationships between law enforcement and the community. Among other initiatives, John educated youth about gun violence and drug addiction, and introduced a mentoring program that links law enforcement mentors -- such as John -- with the young people of Roanoke. I want to thank John for his service, and I wish him the very best in the next phase of his career."
Mr. Fishwick will return to private practice upon completion of his service as U.S. Attorney.
While U.S. Attorney, Mr. Fishwick focused not only on prosecution of federal crimes but also on educating the community in an effort to prevent crime.
A. Prosecution of Violent Offenders
During Mr. Fishwick’s tenure as U.S. Attorney, the US Attorney’s Office successfully prosecuted the gang responsible for the kidnapping and murder of Waynesboro Reserve Police Capt. Kevin Quick.
In addition, as part of the effort to combat violent offenders, Mr. Fishwick personally prosecuted several cases involving guns and violence and has regularly met with federal, local, state and regional law enforcement officials to discuss solutions to combat rising gun violence.
B. The Student Gun Pledge
Mr. Fishwick worked tirelessly in his efforts to combine crime prevention and education during his time as the U.S. Attorney. During a six-day period in October, more than 15,000 youth throughout the Western District of Virginia signed the Students Against Gun Violence Pledge. Mr. Fishwick made presentations to these students, who in turn, made a commitment to never bring a gun to school and never use a gun to settle a score. Additionally, Mr. Fishwick made this presentation to various community action organizations, furthering his efforts to reach young people.
C. Heroin Epidemic
Mr. Fishwick worked with federal, state and local law enforcement to ensure that the U.S. Attorney’s Office prosecuted significant cases in which victims were killed or seriously injured as a result of a heroin overdose.
Additionally, the U.S. Attorney’s Office hosted a public heroin summit at the Grandin Theatre in Roanoke. More than 300 members of the community viewed the powerful film, "Chasing the Dragon." Afterward, Mr. Fishwick led a panel discussion of law enforcement officials, medical experts and a brave parent. This summit has led to more heroin education and prevention work at area schools and this effort is ongoing.
D. Promoting Strong Relationships with Law Enforcement and the Community
Mr. Fishwick regularly met with law enforcement and the community to promote strong relationships between the two groups.
As a member of the Baltimore/Washington High Intensity Drug Trafficking Area (HIDTA), Mr. Fishwick was instrumental in bringing the Badges for Baseball Program to Roanoke. The Badges for Baseball program, a signature program of the Cal Ripken, Sr. Foundation,
works to bring law enforcement mentors to young people participating in the Boys and Girls Club. This past summer, Mr. Fishwick and his sons served as mentors in the program. In addition to the Roanoke program, a Badges for Baseball program has been started in the Harrisonburg Boys and Girls Clubs.
As of January 7, 2017, First Assistant United States Attorney Rick Mountcastle will assume leadership of the office as Acting United States Attorney for the Western District of Virginia.
U.S. Attorney Glassman Presents Attorney General Commendation to Cincinnati PoliceRead the Press Release
CINCINNATI – Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, presented Cincinnati Police Chief Eliot K. Isaac today with a community policing commendation on behalf of U.S. Attorney General Loretta E. Lynch.
Lynch presented the recognition as part of her Inaugural Attorney General’s Community Policing Awards Ceremony on October 6.
There, she recognized the Cincinnati Police Department for its steadfast commitment to the principles of community policing and outstanding contributions to the safety, security and welfare of Cincinnati. Specifically, the police department was honored for its efforts to strengthen bonds between citizens and law enforcement, build mutual trust and promote the public good.
Lynch launched a national community policing tour in Cincinnati in May 2015. The tour was created to highlight collaborative programs and innovative policing practices designed to advance public safety, strengthen police-community relations and foster mutual trust and respect.
While in Cincinnati, the Attorney General, the U.S. Attorney’s Office, the Community Oriented Policing Services (COPS) office, the City of Cincinnati and the Cincinnati Police Department hosted a roundtable with city officials, law enforcement, local leaders, young people and other members of the community at the National Underground Railroad Freedom Center.
Cincinnati Police also hosted officials at their Right to Read Program at Chase Elementary School where Cincinnati police officers work with University of Cincinnati students to tutor and mentor children. As part of the tour, the Attorney General also visited with the Cincinnati Police Department where she thanked officers for their hard work and spoke to officers that were hired with COPS Office hiring grants.
“The Attorney General began her community policing tour here in Cincinnati because of this department’s outstanding community policing,” U.S. Attorney Glassman said. “Since the Attorney General’s visit, moreover, the Cincinnati Police Department has continued to innovate in this vital area. I am very pleased to partner closely with the Cincinnati Police on a daily basis, so it’s my particular pleasure to present this recognition from the Attorney General. On her behalf and all of the Department of Justice, I thank the men and women of the Cincinnati Police for their service.”
Two Dubuque Felons Who Stole Guns in a Burglary Sent to Federal PrisonRead the Press Release
Two felons from Dubuque, who stole firearms in a burglary in March 2016, were each sentenced last week to federal prison. Arthur Robledo, age 25, received a 57 month sentence after his June 30, 2016, guilty plea to one count of possession of firearms by a felon. His co-defendant, Adam Becker, also 25 years old, received a 71 month sentence after a July 5, 2016, guilty plea to the same crime. Robledo and Becker were sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. In their respective plea agreements, and at sentencing hearings, Robledo and Becker each admitted they stole firearms in a burglary in Dubuque, Iowa, on March 29, 2016.
Chief Judge Reade found Robledo was affiliated with the “Latin Kings” gang, posed a danger to the community, and was at a high risk to recidivate. At his sentencing hearing, Chief Judge Reade also found that, on the night of Christmas 2014, following an incident at a local bar, Robledo was intoxicated and acted in a “totally outrageous” manner by attempting to bite an East Dubuque, Illinois police officer, trying to spit blood on an officer, and threatening to have a number of law enforcement officers and their families beheaded. In the 2014 incident, Robledo bragged that his family were members of the Los Zetas Mexican drug cartel and referenced the well-publicized assassinations of police officers in another state. Chief Judge Reade observed Robledo’s criminal activity was “escalating”, as the 2016 burglary followed the 2014 incident and another burglary conviction in Iowa.
Chief Judge Reade found Becker had a “very concerning criminal history”, which included multiple burglary convictions involving firearms. Judge Reade characterized Becker as a “serial burglar” at “extremely high risk to recidivate.” She indicated Becker had committed “the same offense over and over again” yet had received leniency in state court.
A special assessment of $100 was imposed in each case. Robledo and Becker must also each serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Robledo and Becker are being held in the United States Marshal’s custody until they can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorneys Tim Vavricek and Lisa Williams and investigated by the Dubuque Police Department.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 16-CR-1015-LRR.
Follow us on Twitter @USAO_NDIA.
Third Jefferson City Man Pleads Guilty to Distributing MethRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Jefferson City, Mo., man who led police in a pursuit that resulted in the seizure of a large quantity of methamphetamine pleaded guilty in federal court today to his role in a drug-trafficking conspiracy.
Michael Pearson, 33, of Jefferson City, pleaded guilty before U.S. Magistrate Judge Matt J. Whitworth to the charge contained in a July 15, 2015, federal indictment. Co-defendants David Eugene Rodebaugh, 41, and Hernan Hurtado, 25, both of Jefferson City, have also pleaded guilty to participating in a conspiracy to distribute methamphetamine.
By pleading guilty today, Pearson admitted that on Feb. 13, 2015, he was driving a black Acura, in which Rodebaugh was a passenger, which was under surveillance by the Drug Enforcement Administration and MUSTANG (the Mid-Missouri Unified Strike Team and Narcotics Group). Officers followed Pearson to the parking lot of the Capital Mall in Jefferson City, where they met Hurtado. After speaking with Hurtado for about 30 minutes, Pearson reached into the cab of Hurtado’s pickup truck and retrieved a plastic bag (later determined to contain methamphetamine), which he placed in the back seat of the Acura.
As the group left the parking lot, law enforcement officers attempted to stop Pearson. However, Pearson failed to stop and a pursuit ensued. The Acura left the roadway, drove down an embankment and was rendered inoperable. Pearson jumped from the Acura and fled. Rodebaugh was arrested at the scene. Pearson was later located and arrested.
Officers found a plastic bag, which contained two bundles that each contained 1,968 grams of pure methamphetamine, approximately 75 yards from where the Acura stopped. Rodebaugh admitted he threw the bag out of the vehicle’s window during the pursuit.
Later that same afternoon, Hurtado called the Jefferson City Police Department to report he had been robbed at his home in Jefferson City. Hurtado voluntarily came to the police station, where he was questioned and arrested.
Hurtado admitted that an unidentified source from Kansas City, Mo., had delivered the approximately five pounds of methamphetamine to him the evening prior to his meeting with Pearson and Rodebaugh.
Under federal statutes, Pearson, Rodebaugh and Hurtado are each subject to a mandatory minimum sentence of 10 years in federal prison without parole, up to a sentence of life in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Jim Lynn. It was investigated by the Drug Enforcement Administration, MUSTANG (the Mid-Missouri Unified Strike Team and Narcotics Group) and the Jefferson City, Mo., Police Department.
Statement by Attorney General Loretta E. Lynch on the Departure of John P. Fishwick Jr. from the U.S. Attorney's Office for the Western District of VirginiaRead the Press Release
Attorney General Loretta E. Lynch released the following statement on the planned departure of U.S. Attorney John P. Fishwick Jr. of the Western District of Virginia:
“Since 2015, U.S. Attorney John P. Fishwick Jr. has served the people of the Western District of Virginia, and the people of this nation, with integrity and distinction. During John’s tenure as U.S. Attorney, his office made significant progress on many of the difficult challenges facing law enforcement today. Under his leadership, the Western District successfully prosecuted the gang responsible for the murder of a police captain, collaborated with local and state law enforcement officials to fight the scourge of gun violence and tirelessly combated the heroin epidemic. And John personally promoted strong relationships between law enforcement and the community. Among other initiatives, John educated youth about gun violence and drug addiction, and introduced a mentoring program that links law enforcement mentors – such as John – with the young people of Roanoke. I want to thank John for his service, and I wish him the very best in the next phase of his career.”
Redflex Traffic Systems Enters into Non-Prosecution Agreement with United StatesRead the Press Release
CHICAGO — The Department of Justice and the United States Attorney’s Offices for the Northern District of Illinois and the Southern District of Ohio (collectively, “DOJ”) have entered into a Non-Prosecution Agreement with Redflex Traffic Systems Inc., a Phoenix-based automated safety company.
The agreement was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Benjamin C. Glassman, United States Attorney for the Southern District of Ohio.
The agreement was reached in part due to Redflex’s extensive and thorough cooperation over recent years, which is detailed in the agreement. It included cooperation with the successful prosecutions of several individuals, including a high-ranking city of Chicago official and Redflex’s prior Chief Executive Officer.
Among the company’s obligations under the agreement, which shall continue for two years, Redflex will pay restitution and compensatory damages to the City of Chicago, the amount of which will be determined either by a final judgment or a settlement agreement in Chicago’s pending civil lawsuit against Redflex. Redflex will also pay restitution of $100,000 to the City of Columbus, Ohio.
Further, Redflex agreed to cooperate fully with DOJ and any other law enforcement agency designated by DOJ, including the Australian Federal Police and other Australian law enforcement authorities. As part of that obligation, Redflex must, among other things, provide DOJ, the Australian Federal Police, and other Australian law enforcement authorities, upon request, all non-privileged information, documents, records, or other tangible evidence. Notwithstanding the two-year time period of the agreement, Redflex agreed to cooperate with DOJ, the Australian Federal Police, and other Australian law enforcement authorities until all of their investigations or prosecutions are concluded.
In exchange for Redflex’s fulfillment of its obligations under the agreement, DOJ agreed that it will not criminally prosecute Redflex for any of the conduct arising out of investigations in Chicago and Columbus. The agreement does not relate to any potential tax charges.
Redflex Traffic Systems is wholly owned by Redflex Holdings Group of Melbourne, Australia, which owns and operates a network of digital speed and red-light cameras worldwide. The company installs cameras that automatically record and ticket drivers who run red lights. As part of the Non-Prosecution Agreement, Redflex accepted responsibility for its conduct related to the illegal activities of its employees in recent U.S. investigations.
Its former CEO was convicted as part of the probes into bribes paid to elected officials to procure or expand Redflex’s contracts with Chicago and Columbus. The investigations also resulted in the convictions of a Chicago official and a Columbus lobbyist. John Bills, a former Chicago assistant transportation commissioner, was convicted of accepting cash and benefits from Redflex in exchange for expanding the company’s business with Chicago. The lobbyist, John Raphael, pleaded guilty to extorting cash from Redflex to pass on to elected officials in Ohio in an effort to obtain red-light camera contracts.
Since the inception of the U.S. investigations, Redflex has initiated substantial additions and changes to its compliance program, policies and procedures. The company agreed in the Non-Prosecution Agreement to revise and address any deficiencies in its compliance code, policies and procedures regarding compliance with applicable anti-bribery and anti-corruption laws. Redflex agreed to adopt new policies to ensure that it maintains a rigorous anti-bribery and anti-corruption compliance code, and to install procedures designed to detect and deter violations of such laws.
During the term of the agreement, Redflex must prepare at least four follow-up reports and periodically submit them to DOJ. If DOJ determines that Redflex has violated any provision of the Non-Prosecution Agreement, Redflex shall be subject to prosecution for any applicable violation of U.S. law, including perjury and obstruction of justice.
The government was represented in the Chicago case by Mr. Fardon and Assistant U.S. Attorneys Laurie Barsella and Timothy Storino of the Northern District of Illinois. The Chicago case was investigated by the FBI’s Chicago Field Office, the IRS Criminal Investigation Division, and the City of Chicago’s Inspector General’s Office.
The government in the Columbus case was represented by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio. The Columbus case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, the IRS Criminal Investigation Division, and the Ohio Bureau of Criminal Investigation.
Redflex Traffic Systems Enters into Non-Prosecution Agreement with United StatesRead the Press Release
The Department of Justice and the United States Attorney’s Offices for the Northern District of Illinois and the Southern District of Ohio (collectively, “DOJ”) have entered into a non-prosecution agreement with Redflex Traffic Systems Inc., a Phoenix-based automated safety company.
The agreement was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Benjamin C. Glassman, United States Attorney for the Southern District of Ohio.
The agreement was reached in part due to Redflex’s extensive and thorough cooperation over recent years, which is detailed in the agreement. It included cooperation with the successful prosecutions of several individuals, including a high-ranking city of Chicago official and Redflex’s prior Chief Executive Officer.
Among the company’s obligations under the agreement, which shall continue for two years, Redflex will pay restitution and compensatory damages to the City of Chicago, the amount of which will be determined either by a final judgment or a settlement agreement in Chicago’s pending civil lawsuit against Redflex. Redflex will also pay restitution of $100,000 to the City of Columbus, Ohio.
Further, Redflex agreed to cooperate fully with DOJ and any other law enforcement agency designated by DOJ, including the Australian Federal Police and other Australian law enforcement authorities. As part of that obligation, Redflex must, among other things, provide DOJ, the Australian Federal Police, and other Australian law enforcement authorities, upon request, all non-privileged information, documents, records, or other tangible evidence. Notwithstanding the two-year time period of the agreement, Redflex agreed to cooperate with DOJ, the Australian Federal Police, and other Australian law enforcement authorities until all of their investigations or prosecutions are concluded.
In exchange for Redflex’s fulfillment of its obligations under the agreement, DOJ agreed that it will not criminally prosecute Redflex for any of the conduct arising out of investigations in Chicago and Columbus. The agreement does not relate to any potential tax charges.
Redflex Traffic Systems is wholly owned by Redflex Holdings Group of Melbourne, Australia, which owns and operates a network of digital speed and red-light cameras worldwide. The company installs cameras that automatically record and ticket drivers who run red lights. As part of the non-prosecution agreement, Redflex accepted responsibility for its conduct related to the illegal activities of its employees in recent U.S. investigations.
Its former CEO was convicted as part of the probes into bribes paid to elected officials to procure or expand Redflex’s contracts with Chicago and Columbus. The investigations also resulted in the convictions of a Chicago official and a Columbus lobbyist. John Bills, a former Chicago assistant transportation commissioner, was convicted of accepting cash and benefits from Redflex in exchange for expanding the company’s business with Chicago. The lobbyist, John Raphael, pleaded guilty to extorting cash from Redflex to pass on to elected officials in Ohio in an effort to obtain red-light camera contracts.
Since the inception of the U.S. investigations, Redflex has initiated substantial additions and changes to its compliance program, policies and procedures. The company agreed in the non-prosecution agreement to revise and address any deficiencies in its compliance code, policies and procedures regarding compliance with applicable anti-bribery and anti-corruption laws. Redflex agreed to adopt new policies to ensure that it maintains a rigorous anti-bribery and anti-corruption compliance code, and to install procedures designed to detect and deter violations of such laws.
During the term of the agreement, Redflex must prepare at least four follow-up reports and periodically submit them to DOJ. If DOJ determines that Redflex has violated any provision of the non-prosecution agreement, Redflex shall be subject to prosecution for any applicable violation of U.S. law, including perjury and obstruction of justice.
The government was represented in the Chicago case by Mr. Fardon and Assistant U.S. Attorneys Laurie Barsella and Timothy Storino of the Northern District of Illinois. The Chicago case was investigated by the FBI’s Chicago Field Office, the IRS Criminal Investigation Division, and the City of Chicago’s Inspector General’s Office.
The government in the Columbus case was represented by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio. The Columbus case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, the IRS Criminal Investigation Division, and the Ohio Bureau of Criminal Investigation.
Redflex Traffic Systems Enters into Non-Prosecution Agreement with United StatesRead the Press Release
COLUMBUS, Ohio — The Department of Justice and the United States Attorney’s Offices for the Southern District of Ohio and the Northern District of Illinois have entered into a Non-Prosecution Agreement with Redflex Traffic Systems Inc., a Phoenix-based automated safety company.
The agreement was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Benjamin C. Glassman, United States Attorney for the Southern District of Ohio; and Zachary T. Fardon, United States Attorney for the Northern District of Illinois.
The agreement was reached in part due to Redflex’s extensive and thorough cooperation over recent years, which is detailed in the agreement. It included cooperation with the successful prosecutions of several individuals, including a Columbus lobbyist, a high-ranking city of Chicago official and Redflex’s prior Chief Executive Officer.
Among the company’s obligations under the two-year agreement, Redflex will pay restitution of $100,000 to the City of Columbus. The company will also pay restitution and compensatory damages to the City of Chicago, the amount of which will be determined either by a final judgment or a settlement agreement in Chicago’s pending civil lawsuit against Redflex.
Further, Redflex agreed to cooperate fully with DOJ and any other law enforcement agency designated by DOJ, including the Australian Federal Police and other Australian law enforcement authorities. As part of that obligation, Redflex must, among other things, provide DOJ, the Australian Federal Police, and other Australian law enforcement authorities, upon request, all non-privileged information, documents, records, or other tangible evidence. Notwithstanding the two-year time period of the agreement, Redflex agreed to cooperate with DOJ, the Australian Federal Police, and other Australian law enforcement authorities until all of their investigations or prosecutions are concluded.
In exchange for Redflex’s fulfillment of its obligations under the agreement, DOJ agreed that it will not criminally prosecute Redflex for any of the conduct arising out of investigations in Chicago and Columbus. The agreement does not relate to any potential tax charges.
Redflex Traffic Systems is wholly owned by Redflex Holdings Group of Melbourne, Australia, which owns and operates a network of digital speed and red-light cameras worldwide. The company installs cameras that automatically record and ticket drivers who run red lights. As part of the Non-Prosecution Agreement, Redflex accepted responsibility for its conduct related to the illegal activities of its employees in recent U.S. investigations.
Its former CEO was convicted as part of the probes into bribes paid to elected officials to procure or expand Redflex’s contracts with Chicago and Columbus. The investigations also resulted in the convictions of a Chicago official and a Columbus lobbyist. John Bills, a former Chicago assistant transportation commissioner, was convicted of accepting cash and benefits from Redflex in exchange for expanding the company’s business with Chicago. The lobbyist, John Raphael, pleaded guilty to extorting cash from Redflex to pass on to elected officials in Ohio in an effort to obtain red-light camera contracts.
Since the inception of the U.S. investigations, Redflex has initiated substantial additions and changes to its compliance program, policies and procedures. The company agreed in the Non-Prosecution Agreement to revise and address any deficiencies in its compliance code, policies and procedures regarding compliance with applicable anti-bribery and anti-corruption laws. Redflex agreed to adopt new policies to ensure that it maintains a rigorous anti-bribery and anti-corruption compliance code, and to install procedures designed to detect and deter violations of such laws.
During the term of the agreement, Redflex must prepare at least four follow-up reports and periodically submit them to DOJ. If DOJ determines that Redflex has violated any provision of the Non-Prosecution Agreement, Redflex would be subject to prosecution for any applicable violation of U.S. law, including perjury and obstruction of justice.
The government in the Columbus case was represented by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio. The Columbus case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, the IRS Criminal Investigation Division, and the Ohio Bureau of Criminal Investigation.
The government was represented in the Chicago case by Mr. Fardon and Assistant U.S. Attorneys Laurie Barsella and Timothy Storino of the Northern District of Illinois. The Chicago case was investigated by the FBI’s Chicago Field Office, the IRS Criminal Investigation Division, and the City of Chicago’s Inspector General’s Office.
Providence Nurse Charged in Connection with Tampering with OxycodoneRead the Press Release
BOSTON – A licensed nurse was charged today in U.S. District Court in Boston in connection with stealing oxycodone pills from a nursing home where she worked, and then attempting to conceal the theft by replacing the medication with another medication.
Charlotte Demers, 35, of Providence, R.I., was charged with tampering with a consumer product, specifically the Schedule II controlled substance oxycodone which is used for pain relief. Demers was released on conditions following an appearance before U.S. District Court Magistrate Judge Marianne B. Bowler.
The complaint alleges that between Sept. 12, 2016 and Oct. 8, 2016, while working as a Licensed Practical Nurse at Countryside Health Care in Milford, Mass., Demers tampered with blisterpacks of oxycodone that had been prescribed for residents of the nursing facility, by removing the oxycodone pills from the blisterpacks, replacing them with another medication, and then re-sealing the package.
The charging statute provides for a sentenced of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Jeffrey Ebersole, Special Agent in Charge of the U.S. Food and Drug Administration, Office of Criminal Investigations, New York Field Office; and Commissioner Monica Bharel, MD, MPH, of the Massachusetts Department of Public Health, Division of Food and Drugs, Drug Control Program, made the announcement today. Assistant U.S. Attorney Michelle L. Dineen Jerrett of Ortiz’s Worcester Branch Office is prosecuting the case.
The details contained in the complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Manhattan U.S. Attorney Announces Arrest of Macau Resident and Unsealing of Charges Against Three Individuals for Insider Trading Based on Information Hacked from Prominent U.S. Law FirmsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of IAT HONG and the unsealing today of a 13-count superseding indictment charging HONG, BO ZHENG, and CHIN HUNG (the “Defendants”). The Defendants are charged with devising and carrying out a scheme to enrich themselves by obtaining and trading on material, nonpublic information (“Inside Information”), exfiltrated from the networks and servers of multiple prominent U.S.-based international law firms with offices in New York, New York (the “Victim Law Firms”), which provided advisory services to companies engaged in corporate mergers and acquisitions (“M&A transactions”). The defendants targeted at least seven law firms as well as other entities in an effort to unlawfully obtain valuable confidential and proprietary information. HONG, a resident of Macau, was arrested on these charges on December 25, 2016, in Hong Kong and is now pending extradition proceedings. HONG was presented for an initial appearance on December 26, 2016, before a Judge in Hong Kong and is expected to have his next court appearance on January 16, 2017.
As alleged, from April 2014 through late 2015, the Defendants successfully obtained Inside Information from at least two of the Victim Law Firms (the “Infiltrated Law Firms”) by causing the networks and servers of these firms to be hacked. Once the Defendants obtained access to the law firms’ networks, the Defendants targeted email accounts of law firm partners who worked on high-profile M&A transactions. After obtaining emails containing Inside Information, the Defendants purchased stock in the target companies of certain transactions, which were expected to, and typically did, increase in value once the transactions were announced. The Defendants purchased shares of at least five publicly-traded companies before public announcements that those companies would be acquired, and sold them after the acquisitions were publicly announced, resulting in profits of over $4 million. In each case, one of the two Infiltrated Law Firms represented either the target or a contemplated or actual acquirer in the transaction.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, the defendants – including Iat Hong, who was arrested in Hong Kong on Christmas Day – targeted several major New York law firms, specifically looking for inside information about pending mergers and acquisitions. They allegedly hacked into two prominent law firms, stole the emails of their M&A partners, and made over $4 million in illegal profits. This case of cyber meets securities fraud should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking, because you have information valuable to would-be criminals.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “The subjects charged in this case allegedly stole nonpublic information through unauthorized access to law firms’ computers, and used the information for their own personal gain. The FBI works around the clock to keep these types of alleged securities fraudsters and cyber criminals from trading on stolen information, potentially manipulating the market at the cost of legitimate investors, and harm to corporations.”
According to the allegations contained in the superseding indictment (the “Indictment”)1:
The Law Firm-1 Hack and Insider Trading
At all times relevant to the Indictment, Law Firm-1 was a U.S.-based international law firm with offices in New York, New York, which, among other services, provided advisory services to companies engaged in M&A transactions.
The Contemplated Intermune Transaction
In June 2014, Law Firm-1 was retained by a company not named in the Indictment (the “Company”) in connection with a contemplated acquisition of Intermune, a publicly traded U.S.-based drug maker (the “Contemplated Intermune Transaction”). A partner in the M&A group at Law Firm-1 (“Partner-1”) was an attorney working on the Contemplated Intermune Transaction.
Beginning on July 21, 2014, the Defendants began exchanging emails concerning, among other things, particular M&A partners at Law Firm-1. In addition, on or about July 29, 2014, HONG emailed HUNG a list of eleven partners at Law Firm-1, including Partner-1.
Also beginning about July 2014, the Defendants, without authorization, caused one of Law Firm-1’s web servers (the “Law Firm-1 Web Server”) to be accessed by using the unlawfully obtained credentials of a Law Firm-1 employee. The Defendants then caused malware to be installed on the Law Firm-1 Web Server. The access to the Law Firm-1 Web Server allowed unauthorized access to at least one of Law Firm-1’s email servers (the “Law Firm-1 Email Server”), which contained the emails of Law Firm-1 employees, including Partner-1.
Between about August 1 and August 15, 2014, Partner-1 was privy to Inside Information about the Contemplated Intermune Transaction. For example, on more than one occasion between August 7 and August 15, 2014, Partner-1 obtained information, including via email, about details of the proposed transaction, including the price per share the Company was considering offering to acquire Intermune.
Between about August 1 and August 9, 2014, the Defendants caused more than 40 gigabytes of confidential data to be exfiltrated from the Law Firm-1 Email Server over the course of at least eight days.
On August 13, 2014, during the time Law Firm-1 was advising the Company on the Contemplated Intermune Transaction and after the Defendants had obtained access to confidential email data maintained at Law Firm-1, HONG used the Inside Information to purchase 7,500 shares of Intermune stock for certain trading accounts (the “Trading Accounts”). Prior to that date, none of the Trading Accounts had purchased any shares of Intermune. Later that day, HONG purchased an additional 1,000 shares of Intermune stock in the Trading Accounts.
On August 16 and 17, 2014, the Defendants exploited their continued unauthorized access to email data belonging to Law Firm-1 by exfiltrating approximately 10 gigabytes of confidential data from the Law Firm-1 Email Server. Between about August 18 and August 21, 2014, HONG and ZHENG used the Inside Information to purchase additional Intermune shares in the Trading Accounts on at least five occasions, totaling an additional 9,500 shares of Intermune stock.
The Contemplated Intermune Transaction was never consummated. Instead, before the market opened on Monday, August 25, 2014, Intermune announced that it had reached an agreement to be acquired by Roche AG, a German company. On that day, Intermune’s share price increased by approximately $19 per share, or approximately 40 percent from the closing price on Friday, August 22, 2014, the last prior trading day. That same day, August 25, 2014, the Defendants sold the 18,000 shares that they had begun acquiring twelve days earlier for profits of approximately $380,000.
The Intel-Altera Transaction
In January 2015, Law Firm-1 was retained by Intel Corporation (“Intel”), a publicly traded multinational technology company, in connection with a contemplated acquisition of Altera Corporation (“Altera”), a publicly traded integrated circuit manufacturer (the “Intel-Altera Transaction”). As with the Contemplated Intermune Transaction, Partner-1 was an attorney working on the Intel-Altera Transaction.
Between January and about March 27, 2015, Partner-1 was privy to Inside Information about the Intel-Altera Transaction. On several occasions during this time period, Partner-1 obtained confidential information about the contemplated transaction via email. For example, on January 29, 2015, Partner-1 received an email with deal terms, including the proposed price per share to purchase Altera.
Between January 13, 2015, in the same month that Law Firm-1 was retained by Intel to advise on the Intel-Altera Transaction, and about February 10, 2015, the Defendants caused approximately 2.8 gigabytes of confidential data to be exfiltrated from the Law Firm-1 Email Server.
Beginning February 17, 2015, during the time Law Firm-1 was advising Intel and after the Defendants had obtained access to confidential email data maintained at Law Firm-1, the Defendants used the Inside Information to purchase shares of Altera stock in the Trading Accounts. Prior to that date, none of the Trading Accounts had purchased any shares of Altera.
To further effectuate their insider trading scheme, between February 17 and March 27, 2015, one or more of the Defendants used the Inside Information to purchase additional shares of Altera stock in the Trading Accounts on at least 26 occasions, ultimately purchasing more than 210,000 shares.
On March 27, 2015, a financial newspaper published an article reporting on confidential merger discussions between Intel and Altera (the “March 27 Newspaper Article”). Following the publication of the article, on March 27, 2015, Altera’s share price increased $9 per share, or approximately 26 percent, from Altera’s share price on March 27, 2015, just prior to the March 27 Newspaper Article. On April 10 and April 13, 2015, the Defendants sold all of their shares of Altera stock for a profit of approximately $1.4 million.
The Law Firm-2 Hack and Insider Trading
At all times relevant to this Indictment, Law Firm-2 was a U.S.-based international law firm with offices in New York, New York, which, among other services, provided advisory services to companies engaged in M&A transactions.
The Pitney Bowes-Borderfree Transaction
In December 2014, Law Firm-2 was retained by Pitney Bowes Inc., a publicly traded international business services company, in connection with a contemplated acquisition of Borderfree, Inc., a publicly traded e-commerce company headquartered in New York, New York (the “Pitney Bowes-Borderfree Transaction”). A partner in the M&A group at Law Firm-2 (“Partner-2”) was an attorney who worked on the Pitney Bowes-Borderfree Transaction.
Beginning about April 7, 2015, after Law Firm-2 had been retained to advise Pitney Bowes, the Defendants, without authorization, caused one of Law Firm-2’s web servers (the “Law Firm-2 Web Server”), located in New York, New York, to be accessed by using the unlawfully obtained credentials of a Law Firm-2 employee. The Defendants then caused malware to be installed on the Law Firm-2 Web Server. The malware on the Law Firm-2 Web Server allowed unauthorized access to at least one of Law Firm-2’s email servers, also located in New York, New York (the “Law Firm-2 Email Server”), which contained the emails of Law Firm-2 attorneys, including Partner-2.
Between about April 8 and July 31, 2015, the Defendants then caused approximately seven gigabytes of confidential data to be exfiltrated from the Law Firm-2 Email Server over the course of at least six days.
Beginning April 29, 2015, hours after the Defendants had caused data from the Law Firm-2 Email Server to be exfiltrated, HONG and HUNG used the Inside Information to purchase shares of Borderfree stock for the Trading Accounts. Prior to that date, none of the Trading Accounts had purchased any shares of Borderfree stock. To further effectuate their insider trading scheme, between April 29 and May 5, 2015, HONG and HUNG used the Inside Information to purchase additional shares of Borderfree in the Trading Accounts on at least five occasions. In total, HONG and HUNG used the Inside Information to purchase 113,000 shares of Borderfree.
On May 6, 2015, the Pitney Bowes-Borderfree Transaction became public. On that day, Borderfree’s stock price increased by approximately $7 per share, or 105 percent, from the previous day’s closing price. On May 18, 2015, HONG and HUNG sold their Borderfree shares, earning a profit of approximately $841,000.
Additional Insider Trading and Attempted Insider Trading Based on Inside Information Hacked from the Infiltrated Law Firms
In addition to trading on Inside Information in connection with the Contemplated Intermune Transaction, the Intel-Altera Transaction, and the Pitney Bowes-Borderfree Transaction, detailed above, the Defendants carried out their scheme to enrich themselves by obtaining and trading on the basis of Inside Information exfiltrated from the networks and servers of the Infiltrated Law Firms concerning at least 10 additional M&A transactions, including certain M&A transactions that were contemplated but never consummated. Several of these M&A transactions involved Partner-1 or Partner-2. In total, as a result of trading on Inside Information, the Defendants enriched themselves by at least $4 million.
Attempts to Hack Other Victim Law Firms
In addition to obtaining and trading on Inside Information concerning M&A transactions exfiltrated from the networks and servers of the Infiltrated Law Firms, the Defendants repeatedly attempted to cause unauthorized access to the networks and servers of five other Victim Law Firms using means and methods similar to those used to successfully access the Infiltrated Law Firms. For example, between March and September 2015, the Defendants attempted to cause unauthorized access to the networks and servers of these law firms on more than 100,000 occasions.
The Robotics Company Intrusions
At certain relevant times, the Defendants were also involved in a start-up robotics company (the “Robotics Company”), started by ZHENG, the defendant, which was engaged in the business of developing robot controller chips and providing control system solutions. HONG and HUNG were also involved in running the Robotics Company.
Between April 2014 and late 2015, in addition to their efforts to hack the Victim Law Firms’ networks and servers during this period, the Defendants also caused confidential information to be exfiltrated from the networks and servers of two robotics companies (the “Robotics Company Victims”) using substantially similar means and methods of exfiltration as were used to access and attempt to access and exfiltrate information from the Victim Law Firms. Specifically, certain of the same servers that were used to carry out the hacks and attempted hacks of the Victim Law Firms were used to carry out hacks of the Robotics Company Victims. Among other confidential information, the Defendants obtained confidential and proprietary information concerning the technology and design of consumer robotic products, including detailed and confidential proprietary design schematics. Following these exfiltrations from the Robotics Company Victims, the Defendants exchanged emails containing certain of the confidential information they had caused to be exfiltrated from the Robotics Company Victims, including the proprietary schematics.
Defendants and Charges
HONG, 26, and HUNG, 50, are residents of Macau. ZHENG, 30, is a resident of Changsha, China. HONG was arrested on December 25, 2016, in Hong Kong and is now pending extradition proceedings. The defendants are charged with the following offenses, which carry the maximum prison terms listed below. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.
Count
Defendants
Charge
Maximum Prison Term
One
HONG, ZHENG, HUNG
Conspiracy to Commit Securities Fraud: Insider Trading
5 years
Two
HONG
Securities Fraud: Insider Trading – Intermune
20 years
Three
ZHENG
Securities Fraud: Insider Trading – Intermune
20 years
Four
HONG
Securities Fraud: Insider Trading – Altera
20 years
Five
HUNG
Securities Fraud: Insider Trading – Altera
20 years
Six
ZHENG
Securities Fraud: Insider Trading - Altera
20 years
Seven
HONG
Securities Fraud: Insider Trading - Borderfree
20 years
Eight
HUNG
Securities Fraud: Insider Trading - Borderfree
20 years
Nine
HONG, ZHENG, HUNG
Conspiracy to Commit Wire Fraud
20 years
Ten
HONG, ZHENG, HUNG
Wire Fraud
20 years
Eleven
HONG, ZHENG, HUNG
Conspiracy to Commit Computer Intrusion
5 years
Twelve
HONG, ZHENG, HUNG
Computer Intrusion – Unlawful Access – Law Firm-2
10 years
Thirteen
HONG, ZHENG, HUNG
Computer Intrusion – Intentional Damage – Law Firm-2
10 years
* * *
Mr. Bharara praised the investigative work of the FBI, and thanked the Securities and Exchange Commission for their assistance. Mr. Bharara also thanked the Office of International Affairs and Hong Kong law enforcement for their assistance in the arrest and apprehension of HONG. He added that the investigation is continuing.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force and the Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Andrea M. Griswold, Daniel B. Tehrani, and Kristy J. Greenberg are in charge of the prosecution.
The allegations contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
NOTE: 1- As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Manhattan U.S. Attorney Announces Arrest of Macau Resident and Unsealing of Charges Against Three Individuals for Insider Trading Based on Information Hacked from Prominent U.S. Law FirmsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of IAT HONG and the unsealing today of a 13-count superseding indictment charging HONG, BO ZHENG, and CHIN HUNG (the “Defendants”). The Defendants are charged with devising and carrying out a scheme to enrich themselves by obtaining and trading on material, nonpublic information (“Inside Information”), exfiltrated from the networks and servers of multiple prominent U.S.-based international law firms with offices in New York, New York (the “Victim Law Firms”), which provided advisory services to companies engaged in corporate mergers and acquisitions (“M&A transactions”). The defendants targeted at least seven law firms as well as other entities in an effort to unlawfully obtain valuable confidential and proprietary information. HONG, a resident of Macau, was arrested on these charges on December 25, 2016, in Hong Kong and is now pending extradition proceedings. HONG was presented for an initial appearance on December 26, 2016, before a Judge in Hong Kong and is expected to have his next court appearance on January 16, 2017.
As alleged, from April 2014 through late 2015, the Defendants successfully obtained Inside Information from at least two of the Victim Law Firms (the “Infiltrated Law Firms”) by causing the networks and servers of these firms to be hacked. Once the Defendants obtained access to the law firms’ networks, the Defendants targeted email accounts of law firm partners who worked on high-profile M&A transactions. After obtaining emails containing Inside Information, the Defendants purchased stock in the target companies of certain transactions, which were expected to, and typically did, increase in value once the transactions were announced. The Defendants purchased shares of at least five publicly-traded companies before public announcements that those companies would be acquired, and sold them after the acquisitions were publicly announced, resulting in profits of over $4 million. In each case, one of the two Infiltrated Law Firms represented either the target or a contemplated or actual acquirer in the transaction.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, the defendants – including Iat Hong, who was arrested in Hong Kong on Christmas Day – targeted several major New York law firms, specifically looking for inside information about pending mergers and acquisitions. They allegedly hacked into two prominent law firms, stole the emails of their M&A partners, and made over $4 million in illegal profits. This case of cyber meets securities fraud should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking, because you have information valuable to would-be criminals.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “The subjects charged in this case allegedly stole nonpublic information through unauthorized access to law firms’ computers, and used the information for their own personal gain. The FBI works around the clock to keep these types of alleged securities fraudsters and cyber criminals from trading on stolen information, potentially manipulating the market at the cost of legitimate investors, and harm to corporations.”
According to the allegations contained in the superseding indictment (the “Indictment”)[1]:
The Law Firm-1 Hack and Insider Trading
At all times relevant to the Indictment, Law Firm-1 was a U.S.-based international law firm with offices in New York, New York, which, among other services, provided advisory services to companies engaged in M&A transactions.
The Contemplated Intermune Transaction
In June 2014, Law Firm-1 was retained by a company not named in the Indictment (the “Company”) in connection with a contemplated acquisition of Intermune, a publicly traded U.S.-based drug maker (the “Contemplated Intermune Transaction”). A partner in the M&A group at Law Firm-1 (“Partner-1”) was an attorney working on the Contemplated Intermune Transaction.
Beginning on July 21, 2014, the Defendants began exchanging emails concerning, among other things, particular M&A partners at Law Firm-1. In addition, on or about July 29, 2014, HONG emailed HUNG a list of eleven partners at Law Firm-1, including Partner-1.
Also beginning about July 2014, the Defendants, without authorization, caused one of Law Firm-1’s web servers (the “Law Firm-1 Web Server”) to be accessed by using the unlawfully obtained credentials of a Law Firm-1 employee. The Defendants then caused malware to be installed on the Law Firm-1 Web Server. The access to the Law Firm-1 Web Server allowed unauthorized access to at least one of Law Firm-1’s email servers (the “Law Firm-1 Email Server”), which contained the emails of Law Firm-1 employees, including Partner-1.
Between about August 1 and August 15, 2014, Partner-1 was privy to Inside Information about the Contemplated Intermune Transaction. For example, on more than one occasion between August 7 and August 15, 2014, Partner-1 obtained information, including via email, about details of the proposed transaction, including the price per share the Company was considering offering to acquire Intermune.
Between about August 1 and August 9, 2014, the Defendants caused more than 40 gigabytes of confidential data to be exfiltrated from the Law Firm-1 Email Server over the course of at least eight days.
On August 13, 2014, during the time Law Firm-1 was advising the Company on the Contemplated Intermune Transaction and after the Defendants had obtained access to confidential email data maintained at Law Firm-1, HONG used the Inside Information to purchase 7,500 shares of Intermune stock for certain trading accounts (the “Trading Accounts”). Prior to that date, none of the Trading Accounts had purchased any shares of Intermune. Later that day, HONG purchased an additional 1,000 shares of Intermune stock in the Trading Accounts.
On August 16 and 17, 2014, the Defendants exploited their continued unauthorized access to email data belonging to Law Firm-1 by exfiltrating approximately 10 gigabytes of confidential data from the Law Firm-1 Email Server. Between about August 18 and August 21, 2014, HONG and ZHENG used the Inside Information to purchase additional Intermune shares in the Trading Accounts on at least five occasions, totaling an additional 9,500 shares of Intermune stock.
The Contemplated Intermune Transaction was never consummated. Instead, before the market opened on Monday, August 25, 2014, Intermune announced that it had reached an agreement to be acquired by Roche AG, a German company. On that day, Intermune’s share price increased by approximately $19 per share, or approximately 40 percent from the closing price on Friday, August 22, 2014, the last prior trading day. That same day, August 25, 2014, the Defendants sold the 18,000 shares that they had begun acquiring twelve days earlier for profits of approximately $380,000.
The Intel-Altera Transaction
In January 2015, Law Firm-1 was retained by Intel Corporation (“Intel”), a publicly traded multinational technology company, in connection with a contemplated acquisition of Altera Corporation (“Altera”), a publicly traded integrated circuit manufacturer (the “Intel-Altera Transaction”). As with the Contemplated Intermune Transaction, Partner-1 was an attorney working on the Intel-Altera Transaction.
Between January and about March 27, 2015, Partner-1 was privy to Inside Information about the Intel-Altera Transaction. On several occasions during this time period, Partner-1 obtained confidential information about the contemplated transaction via email. For example, on January 29, 2015, Partner-1 received an email with deal terms, including the proposed price per share to purchase Altera.
Between January 13, 2015, in the same month that Law Firm-1 was retained by Intel to advise on the Intel-Altera Transaction, and about February 10, 2015, the Defendants caused approximately 2.8 gigabytes of confidential data to be exfiltrated from the Law Firm-1 Email Server.
Beginning February 17, 2015, during the time Law Firm-1 was advising Intel and after the Defendants had obtained access to confidential email data maintained at Law Firm-1, the Defendants used the Inside Information to purchase shares of Altera stock in the Trading Accounts. Prior to that date, none of the Trading Accounts had purchased any shares of Altera.
To further effectuate their insider trading scheme, between February 17 and March 27, 2015, one or more of the Defendants used the Inside Information to purchase additional shares of Altera stock in the Trading Accounts on at least 26 occasions, ultimately purchasing more than 210,000 shares.
On March 27, 2015, a financial newspaper published an article reporting on confidential merger discussions between Intel and Altera (the “March 27 Newspaper Article”). Following the publication of the article, on March 27, 2015, Altera’s share price increased $9 per share, or approximately 26 percent, from Altera’s share price on March 27, 2015, just prior to the March 27 Newspaper Article. On April 10 and April 13, 2015, the Defendants sold all of their shares of Altera stock for a profit of approximately $1.4 million.
The Law Firm-2 Hack and Insider Trading
At all times relevant to this Indictment, Law Firm-2 was a U.S.-based international law firm with offices in New York, New York, which, among other services, provided advisory services to companies engaged in M&A transactions.
The Pitney Bowes-Borderfree Transaction
In December 2014, Law Firm-2 was retained by Pitney Bowes Inc., a publicly traded international business services company, in connection with a contemplated acquisition of Borderfree, Inc., a publicly traded e-commerce company headquartered in New York, New York (the “Pitney Bowes-Borderfree Transaction”). A partner in the M&A group at Law Firm-2 (“Partner-2”) was an attorney who worked on the Pitney Bowes-Borderfree Transaction.
Beginning about April 7, 2015, after Law Firm-2 had been retained to advise Pitney Bowes, the Defendants, without authorization, caused one of Law Firm-2’s web servers (the “Law Firm-2 Web Server”), located in New York, New York, to be accessed by using the unlawfully obtained credentials of a Law Firm-2 employee. The Defendants then caused malware to be installed on the Law Firm-2 Web Server. The malware on the Law Firm-2 Web Server allowed unauthorized access to at least one of Law Firm-2’s email servers, also located in New York, New York (the “Law Firm-2 Email Server”), which contained the emails of Law Firm-2 attorneys, including Partner-2.
Between about April 8 and July 31, 2015, the Defendants then caused approximately seven gigabytes of confidential data to be exfiltrated from the Law Firm-2 Email Server over the course of at least six days.
Beginning April 29, 2015, hours after the Defendants had caused data from the Law Firm-2 Email Server to be exfiltrated, HONG and HUNG used the Inside Information to purchase shares of Borderfree stock for the Trading Accounts. Prior to that date, none of the Trading Accounts had purchased any shares of Borderfree stock. To further effectuate their insider trading scheme, between April 29 and May 5, 2015, HONG and HUNG used the Inside Information to purchase additional shares of Borderfree in the Trading Accounts on at least five occasions. In total, HONG and HUNG used the Inside Information to purchase 113,000 shares of Borderfree.
On May 6, 2015, the Pitney Bowes-Borderfree Transaction became public. On that day, Borderfree’s stock price increased by approximately $7 per share, or 105 percent, from the previous day’s closing price. On May 18, 2015, HONG and HUNG sold their Borderfree shares, earning a profit of approximately $841,000.
Additional Insider Trading and Attempted Insider Trading Based on Inside Information Hacked from the Infiltrated Law Firms
In addition to trading on Inside Information in connection with the Contemplated Intermune Transaction, the Intel-Altera Transaction, and the Pitney Bowes-Borderfree Transaction, detailed above, the Defendants carried out their scheme to enrich themselves by obtaining and trading on the basis of Inside Information exfiltrated from the networks and servers of the Infiltrated Law Firms concerning at least 10 additional M&A transactions, including certain M&A transactions that were contemplated but never consummated. Several of these M&A transactions involved Partner-1 or Partner-2. In total, as a result of trading on Inside Information, the Defendants enriched themselves by at least $4 million.
Attempts to Hack Other Victim Law Firms
In addition to obtaining and trading on Inside Information concerning M&A transactions exfiltrated from the networks and servers of the Infiltrated Law Firms, the Defendants repeatedly attempted to cause unauthorized access to the networks and servers of five other Victim Law Firms using means and methods similar to those used to successfully access the Infiltrated Law Firms. For example, between March and September 2015, the Defendants attempted to cause unauthorized access to the networks and servers of these law firms on more than 100,000 occasions.
The Robotics Company Intrusions
At certain relevant times, the Defendants were also involved in a start-up robotics company (the “Robotics Company”), started by ZHENG, the defendant, which was engaged in the business of developing robot controller chips and providing control system solutions. HONG and HUNG were also involved in running the Robotics Company.
Between April 2014 and late 2015, in addition to their efforts to hack the Victim Law Firms’ networks and servers during this period, the Defendants also caused confidential information to be exfiltrated from the networks and servers of two robotics companies (the “Robotics Company Victims”) using substantially similar means and methods of exfiltration as were used to access and attempt to access and exfiltrate information from the Victim Law Firms. Specifically, certain of the same servers that were used to carry out the hacks and attempted hacks of the Victim Law Firms were used to carry out hacks of the Robotics Company Victims. Among other confidential information, the Defendants obtained confidential and proprietary information concerning the technology and design of consumer robotic products, including detailed and confidential proprietary design schematics. Following these exfiltrations from the Robotics Company Victims, the Defendants exchanged emails containing certain of the confidential information they had caused to be exfiltrated from the Robotics Company Victims, including the proprietary schematics.
Defendants and Charges
HONG, 26, and HUNG, 50, are residents of Macau. ZHENG, 30, is a resident of Changsha, China. HONG was arrested on December 25, 2016, in Hong Kong and is now pending extradition proceedings. The defendants are charged with the following offenses, which carry the maximum prison terms listed below. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.
Count
Defendants
Charge
Maximum Prison Term
One
HONG, ZHENG, HUNG
Conspiracy to Commit Securities Fraud: Insider Trading
5 years
Two
HONG
Securities Fraud: Insider Trading – Intermune
20 years
Three
ZHENG
Securities Fraud: Insider Trading – Intermune
20 years
Four
HONG
Securities Fraud: Insider Trading – Altera
20 years
Five
HUNG
Securities Fraud: Insider Trading – Altera
20 years
Six
ZHENG
Securities Fraud: Insider Trading - Altera
20 years
Seven
HONG
Securities Fraud: Insider Trading - Borderfree
20 years
Eight
HUNG
Securities Fraud: Insider Trading - Borderfree
20 years
Nine
HONG, ZHENG, HUNG
Conspiracy to Commit Wire Fraud
20 years
Ten
HONG, ZHENG, HUNG
Wire Fraud
20 years
Eleven
HONG, ZHENG, HUNG
Conspiracy to Commit Computer Intrusion
5 years
Twelve
HONG, ZHENG, HUNG
Computer Intrusion – Unlawful Access – Law Firm-2
10 years
Thirteen
HONG, ZHENG, HUNG
Computer Intrusion – Intentional Damage – Law Firm-2
10 years
* * *
Mr. Bharara praised the investigative work of the FBI, and thanked the Securities and Exchange Commission for their assistance. Mr. Bharara also thanked the Office of International Affairs and Hong Kong law enforcement for their assistance in the arrest and apprehension of HONG. He added that the investigation is continuing.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force and the Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Andrea M. Griswold, Daniel B. Tehrani, and Kristy J. Greenberg are in charge of the prosecution.
The allegations contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Lincoln County Man Sentenced to More Than Seven Years for Illegally Possessing FirearmRead the Press Release
Contact: Darcie N. McElwee
Assistant United States Attorney
Tel: (207) 780-3257Portland, Maine: United States Attorney Thomas E. Delahanty II announced that Daniel Colby, Jr., 34, formerly of Wiscasset, Maine, was sentenced today in U.S. District Court by Judge George Z. Singal to more than seven years in prison for being a felon in possession of a firearm. Following a two-day jury trial, he was found guilty of that offense on June 2, 2016.
According to court records and trial evidence, on March 17, 2015, Colby, who had previously been convicted of multiple felonies, broke into the home of a neighbor armed with a stolen .38 caliber revolver and threatened the neighbor. The revolver was later recovered from Colby’s property in Wiscasset.
The investigation was conducted by the Wiscasset and Augusta Police Departments, the Sagadahoc and Lincoln County Sheriff’s Offices and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
Four Fulton Men Plead Guilty to $6.6 Million K2 ConspiracyRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that four Fulton, Mo., men have pleaded guilty in federal court to their roles in drug-trafficking and money-laundering conspiracies related to the distribution of more than $6.6 million of synthetic cannabinoids, also known as K2, at Callaway County, Mo., businesses.
Shawn Michael Browning, 26, Timothy Christopher Sandfort, 30, and Brandon Derek Rader, 32, all of Fulton, pleaded guilty today in an appearance before U.S. Magistrate Judge Matt J. Whitworth. Joshua Adam Sheets, 30, of Fulton, pleaded guilty on Tuesday, Dec. 20, 2016.
Browning, Sandfort, Sheets and Rader each pleaded guilty to participating in a mail fraud conspiracy from Dec. 18, 2012, to July 16, 2015, and to participating in a money-laundering conspiracy during that time; both conspiracies were related to the distribution of synthetic cannabinoids.
Browning, Sandfort, Sheets, and Rader are among seven co-defendants who have pleaded guilty in this case. Dara Leanne Shirley, 30, of Fulton, pleaded guilty to participating in the money-laundering conspiracy. Casey Dewayne Miller, 32, of Columbia, and Billie L. Bruce, 36, of Jefferson City, each pleaded guilty to distributing synthetic cannabinoids.
According to court documents, the drug-trafficking conspiracy generated $6,656,843 in gross proceeds. Rader and Sandfort each acknowledged that his conduct directly contributed to the generation of approximately $4,544,700 of that total; under the terms of today’s plea agreements, they must forfeit a money judgment of that amount to the government. Browning and Sheets each acknowledged that his conduct directly contributed to the generation of approximately $2,112,142 of that total; under the terms of today’s plea agreement, they must forfeit a money judgment of that amount to the government.
Sandfort, Rader, Shirley, Miller and others operated First Stop Last Stop Pawn & Aromatherapy, Inscentives Resale and Inscentives Auto. First Stop Last Stop Pawn & Aromatherapy represented itself as a “pawn shop” and “potpourri store.” Inscentives Resale was represented to be a “buy, sell, and trade business.” Inscentives Auto held a Missouri motor vehicle dealer’s license. Browning, Sheets, Bruce and others operated Esscentials Resale and S&J Tobacco.
These businesses purchased synthetic cannabinoids from co-conspirators in California and Nevada. At least 251 shipments of synthetic cannabinoids were made via FedEx and UPS. Inscentives Resale sold synthetic cannabinoids from locations in Auxvasse, Mo., and Fulton. Esscentials Resale and S&J Tobacco sold synthetic cannabinoids from locations in Holts Summit, Mo.
Browning, Sandfort, Sheets, Rader and others obtained packages of synthetic cannabinoids from co-conspirators and periodically supplied each other with packages of synthetic cannabinoids for resale.
The packages of synthetic cannabinoids bore misbranded labels that misidentified the contents as “incense,” “aroma therapy” or “potpourri” that were “not for human consumption.” In fact, these products were drugs intended for human consumption as a drug. Conspirators mislabeled packages of synthetic cannabinoids for the purpose of avoiding government regulation over these drugs, and to protect the continued sale of these drugs.
This case is being prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. It was investigated by the DEA Task Force – Jefferson City, DEA Sacramento, Calif., DEA Reno, Nev., IRS-Criminal Investigation, the Missouri State Highway Patrol, the MUSTANG Drug Task Force, the Callaway County, Mo., Sheriff’s Department, the Cole County, Mo., Sheriff’s Department, the Jefferson City, Mo., Police Department, the Fulton, Mo., Police Department and the Holts Summit, Mo., Police Department.
Four Businessmen and Two Foreign Officials Plead Guilty in Connection with Bribes Paid to Mexican Aviation OfficialsRead the Press Release
Charges were unsealed against six individuals, all of whom have pleaded guilty for their involvement in schemes to bribe Mexican officials in order to secure aircraft maintenance and repair contracts with government-owned and controlled entities, and two for conspiring to launder the proceeds of the schemes.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Mark Dawson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in Houston, Special Agent in Charge Shane Folden of ICE-HSI in San Antonio and Special Agent in Charge Rick Goss of Internal Revenue Service-Criminal Investigation’s (IRS-CI) Houston Field Office made the announcement.
“The six convictions announced today demonstrate the department’s commitment to holding accountable those who further official corruption through bribery,” said Assistant Attorney General Caldwell. “These convictions are the result of a coordinated effort by prosecutors and agents who built the cases brick by brick using traditional law enforcement techniques.”
“HSI special agents and our law enforcement partners will continue to aggressively investigate financial crimes committed by corrupt foreign officials,” said Special Agent in Charge Folden. “This case serves as a reminder that HSI will use all its resources to identify, investigate and dismantle these criminal networks wherever they operate.”
“The individuals involved in this scheme paid millions of dollars in bribes to foreign officials in exchange for aviation contracts that placed legitimate businesses at a significant competitive disadvantage,” said Special Agent in Charge Goss. “IRS-CI’s role in unraveling this scheme assisted in facilitating the guilty pleas that were announced today.”
Douglas Ray, 55, of Magnolia, Texas, and Victor Hugo Valdez Pinon, 54, a citizen of Mexico, pleaded guilty on Oct. 28 and Oct. 26, 2016, respectively, before U.S. District Judge Alfred H. Bennett of the Southern District of Texas to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and conspiracy to commit wire fraud. Kamta Ramnarine, 69, and Daniel Perez, 69, both of Brownsville, Texas, both pleaded guilty on Nov. 2, 2016, before U.S. District Judge Ricardo H. Hinojosa of the Southern District of Texas to one count of conspiring to violate the FCPA. Ramnarine and Perez are scheduled to be sentenced on Jan. 30, 2017. Ray and Valdez Pinon are scheduled to be sentenced Feb. 23, 2016.
Ernesto Hernandez Montemayor, 55, and Ramiro Ascencio Nevarez, 58, both of whom are citizens of Mexico and were previous officials of Mexican state government entities, each pleaded guilty to one count of conspiracy to commit money laundering. Hernandez Montemayor pleaded guilty before Judge Bennett on Dec. 9, 2015, and is scheduled to be sentenced on Jan. 12, 2017. Nevarez pleaded guilty before Judge Hinojosa on March 4, 2016, and was sentenced to 15 months in prison on May 27, 2016.
According to the defendants’ plea agreements, between 2006 and 2016, Ray conspired with Valdez and others to bribe Mexican officials. The defendants and their co-conspirators, who owned or were associated with companies in the United States that provided aircraft maintenance, repair, overhaul and related services to customers from the United States and Mexico, paid the bribes in order to secure parts and servicing contracts with Mexican government-owned customers. Ray agreed to pay bribes to at least seven different foreign officials, including Hernandez Montemayor, sometimes paying the bribes via wire transfer and checks to accounts in the United States controlled by the officials. As part of his guilty plea, Hernandez Montemayor admitted that while employed by a Mexican state government, he accepted bribes from Ray, Ramnarine, Perez and others in exchange for taking certain actions to assist companies they owned in winning business with Hernandez Montemayor’s state government employer. Hernandez Montemayor also admitted that he conspired with Ray, Ramnarine, Perez and others to launder the proceeds of the bribery scheme.
Ramnarine and Perez admitted that, in addition to bribing Hernandez Montemayor, they also conspired to pay bribes to several other foreign officials between 2007 and 2015 to ensure that their Brownsville-based company won aircraft parts and services contracts with Mexican government-owned customers. As part of his guilty plea, Nevarez admitted that while employed by a Mexican public university, he accepted bribes from Ramnarine and Perez in exchange for taking certain actions to assist their company in winning business with the university. Nevarez also admitted that he conspired with Ramnarine, Perez and others to launder the proceeds of the bribery scheme.
In total, Ray, Valdez Pinon, Ramnarine, Perez and their co-conspirators paid more than $2 million in bribes to Mexican officials, including Hernandez Montemayor and Nevarez, in order to secure aviation maintenance, repair and overhaul contracts.
ICE-HSI and IRS-CI are investigating the case. Trial Attorneys Christopher Cestaro and Kevin R. Gingras of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jesse Salazar and Arthur Jones of the Southern District of Texas are prosecuting the case. The Criminal Division’s Office of International Affairs also provided significant assistance.
The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Four Businessman and Two Foreign Officials Plead Guilty in Connection with Bribes Paid to Mexican Aviation OfficialsRead the Press Release
HOUSTON - Charges have been unsealed against six individuals, all of whom have pleaded guilty for their involvement in schemes to bribe Mexican officials in order to secure aircraft maintenance and repair contracts with government-owned and controlled entities, and two for conspiring to launder the proceeds of the schemes.
U.S. Attorney Kenneth Magidson, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Mark Dawson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in Houston, Special Agent in Charge Shane Folden of ICE-HSI in San Antonio and Special Agent in Charge Rick Goss of Internal Revenue Service-Criminal Investigation’s (IRS-CI) Houston Field Office made the announcement.
“The six convictions announced today demonstrate the department’s commitment to holding accountable those who further official corruption through bribery,” said Caldwell. “These convictions are the result of a coordinated effort by prosecutors and agents who built the cases brick by brick using traditional law enforcement techniques.”
“HSI special agents and our law enforcement partners will continue to aggressively investigate financial crimes committed by corrupt foreign officials,” said Folden. “This case serves as a reminder that HSI will use all its resources to identify, investigate and dismantle these criminal networks wherever they operate.”
“The individuals involved in this scheme paid millions of dollars in bribes to foreign officials in exchange for aviation contracts that placed legitimate businesses at a significant competitive disadvantage,” said Goss. “IRS-CI’s role in unraveling this scheme assisted in facilitating the guilty pleas that were announced today.”
Douglas Ray, 55, of Magnolia, and Victor Hugo Valdez Pinon, 54, a citizen of Mexico, pleaded guilty on Oct. 28 and Oct. 26, 2016, respectively, before U.S. District Judge Alfred H. Bennett of the Southern District of Texas to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and conspiracy to commit wire fraud. Kamta Ramnarine, 69, and Daniel Perez, 69, both of Brownsville, pleaded guilty on Nov. 2, 2016, before U.S. District Judge Ricardo H. Hinojosa of the Southern District of Texas to one count of conspiring to violate the FCPA. Ramnarine and Perez are scheduled to be sentenced on Jan. 30, 2017. Ray and Valdez Pinon are scheduled to be sentenced Feb. 23, 2016.
Ernesto Hernandez Montemayor, 55, and Ramiro Ascencio Nevarez, 58, both of whom are citizens of Mexico and were previous officials of Mexican state government entities, each pleaded guilty to one count of conspiracy to commit money laundering. Hernandez Montemayor pleaded guilty before Judge Bennett on Dec. 9, 2015, and is scheduled to be sentenced on Jan. 12, 2017. Nevarez pleaded guilty before Judge Hinojosa on March 4, 2016, and was sentenced to 15 months in prison on May 27, 2016.
According to the defendants’ plea agreements, between 2006 and 2016, Ray conspired with Valdez and others to bribe Mexican officials. The defendants and their co-conspirators, who owned or were associated with companies in the United States that provided aircraft maintenance, repair, overhaul and related services to customers from the United States and Mexico, paid the bribes in order to secure parts and servicing contracts with Mexican government-owned customers. Ray agreed to pay bribes to at least seven different foreign officials, including Hernandez Montemayor, sometimes paying the bribes via wire transfer and checks to accounts in the United States controlled by the officials. As part of his guilty plea, Hernandez Montemayor admitted that while employed by a Mexican state government, he accepted bribes from Ray, Ramnarine, Perez and others in exchange for taking certain actions to assist companies they owned in winning business with Hernandez Montemayor’s state government employer. Hernandez Montemayor also admitted that he conspired with Ray, Ramnarine, Perez and others to launder the proceeds of the bribery scheme.
Ramnarine and Perez admitted that, in addition to bribing Hernandez Montemayor, they also conspired to pay bribes to several other foreign officials between 2007 and 2015 to ensure that their Brownsville-based company won aircraft parts and services contracts with Mexican government-owned customers. As part of his guilty plea, Nevarez admitted that while employed by a Mexican public university, he accepted bribes from Ramnarine and Perez in exchange for taking certain actions to assist their company in winning business with the university. Nevarez also admitted he conspired with Ramnarine, Perez and others to launder the proceeds of the bribery scheme.
In total, Ray, Valdez Pinon, Ramnarine, Perez and their co-conspirators paid more than $2 million in bribes to Mexican officials, including Hernandez Montemayor and Nevarez, in order to secure aviation maintenance, repair and overhaul contracts.
ICE-HSI and IRS-CI are investigating the case. Assistant U.S. Attorneys Jesse Salazar and Arthur Jones are prosecuting the case along with Trial Attorneys Christopher Cestaro and Kevin R. Gingras of the Criminal Division’s Fraud Section. The Criminal Division’s Office of International Affairs also provided significant assistance.
The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Former Ballard County Treasurer Guilty of Bank and Wire FraudRead the Press Release
Admitted to obtaining $450,000 in unauthorized loans for the county and then concealing the proceeds from the Fiscal Court; also personally received at least $27,000 in fraudulent medical reimbursement payments.
PADUCAH, Ky. – United States Attorney John E. Kuhn, Jr., announced today a guilty plea by the former Treasurer of Ballard County, Kentucky, for participating in a scheme that involved obtaining approximately $450,000 in bank loans using a $500,000 Ballard County Certificate of Deposit as collateral, all without authorization from the Ballard County Fiscal Court; guilty pleas were also entered due to her theft of at least $27,000 in fraudulent medical reimbursement payments while employed as the County’s treasurer.
Belinda Janean Foster, 50, pled guilty today in United States District Court, before Senior U.S. District Judge Thomas B. Russell, to all five of her charges stemming from a November 15, 2016, grand jury indictment that included a single count of bank fraud and four counts of wire fraud.
According to the plea agreement, Foster admitted that she intended to deceive the Ballard County Fiscal Court about the loans by intentionally not making it aware of the loans and concealing the proceeds of the loans.
Beginning sometime in April of 2014, Foster, then employed as Ballard County Treasurer, told her supervisor, Ballard County Judge Executive Vickie Viniard, that Ballard County needed funds in the county operating account in order to cover expenses and payroll. According to Foster, Viniard stated that she would obtain a loan until the county road funds were received.
In April 2014, Viniard subsequently secured a $300,000 loan from First Community Bank in Wickliffe, Kentucky, using a Ballard County Certificate of Deposit valued at approximately $500,000 as collateral. In June 2014, Viniard and Foster obtained another loan, as co-signers, again from First Community Bank in the amount of $150,000 and again used the same CD as collateral.
After receiving the funds from the two loans, Foster was required, by Kentucky Statute, to account for this income on the Ballard County financial and accounting records and report these loans to the Kentucky Department for Local Government. However, Foster, in order to conceal the loans, and at the direction of Viniard, never reported these loans to the state government and intentionally labeled $350,000 from the loans as “payroll tax” instead of accounting for the income as loan proceeds while wiring the remaining $100,000 across interstate lines from First Community Bank in Wickliffe, Kentucky to Huntington National Bank in Columbus, Ohio – not accounting for that amount at all.
Prior to obtaining the two loans, neither Viniard or Foster ever made the Ballard County Fiscal Court aware of these loans nor did Viniard or Foster make the Ballard County Fiscal Court aware that a $500,000 CD was pledged as collateral for the loans. Furthermore, neither Viniard or Foster informed First Community Bank that Viniard had not requested or obtained authority from the Ballard County Fiscal Court to apply for the loans.
In addition to the fraudulent loans listed above, Foster admitted to regularly writing herself checks for fraudulent medical reimbursement payments to which she knew she was not entitled. These fraudulent medical reimbursement payments totaled at least $27,000.
If convicted at trial, Foster could have been sentenced to a combined maximum prison term of 110 years, ordered to pay a fine of $2,000,000 and serve a five-year term of supervised release. Foster is scheduled for sentencing before Senior Judge Russell in Paducah, on April 21, 2017.
This case is being prosecuted by Assistant United States Attorney Nute Bonner and is being investigated by the Kentucky Attorney General’s Office and the Federal Bureau of Investigation (FBI).
Friday 23 December 2016
United States Reaches $34 Million Settlement with Cardinal Health for Civil Penalties under the Controlled Substances ActRead the Press Release
Seattle -- Cardinal Health has agreed to pay $34 million in civil penalties to resolve allegations that the Lakeland, Florida-based distributor failed to report to the DEA suspicious orders of Class II controlled substances by pharmacies located in central Florida and Maryland. The settlement also resolves a civil investigation in the Western District of Washington into Cardinal Health’s failure to maintain adequate records concerning Class II controlled substances in that district.
Separately, the United States Attorney for the Southern District of New York announced that Cardinal Health has agreed to pay an additional $10 million to resolve allegations that its subsidiary, Kinray, Inc., failed to report suspicious orders by pharmacies operating in the Kinray service area. In the settlement resolving the Florida and Maryland investigations, Cardinal Health acknowledged that, from January 1, 2009, to May 14, 2012, it failed to comply with regulations requiring reports of pharmacies’ suspicious orders of certain narcotic medications. Cardinal did not admit to the recordkeeping allegations in the Western District of Washington, but chose to resolve the case along with the other investigations.
“I am pleased to join with the U.S. Attorneys from Maryland, New York and the Middle District of Florida to hold Cardinal Health accountable for improperly securing the drug distribution chain,” said U.S. Attorney Annette L. Hayes. “Our investigation, which uncovered recordkeeping violations, is resolved along with more wide-ranging violations identified in the other districts.”
The Controlled Substances Act imposes civil penalties when DEA registrants fail to report suspicious pharmacy orders for Class II narcotic medications. The settlement announced today imposes a civil monetary sanction for the conduct addressed in Cardinal Health’s administrative settlement executed with the DEA in 2012, which suspended Cardinal’s registration to distribute Class II narcotic medications for a period of two years. The DEA returned Cardinal’s registration in May 2014 while the civil penalty negotiations that led to today’s announcement were pending.
The Western District of Washington investigation was conducted by the Drug Enforcement Administration’s Diversion Group, with negotiations handled by Assistant U.S. Attorney David East.
United States Reaches $34 Million Settlement with Cardinal Health for Civil Penalties Under the Controlled Substances ActRead the Press Release
The Recovery Is Part of a $44 Million Nationwide Civil Penalty Settlement with Payment to Be Made to the United States by Cardinal Health, Inc. and its Subsidiary, Kinray, LLC
Orlando, FL – United States Attorney A. Lee Bentley, III and Adolphus P. Wright, Special Agent in Charge, Drug Enforcement Administration (DEA) - Miami Field Division announce that Cardinal Health has agreed to pay $34 million in civil penalties to resolve allegations that the Lakeland, Florida-based distributor failed to report to the DEA suspicious orders of Class II by pharmacies located in central Florida and Maryland. The settlement also resolves a civil investigation in the Western District of Washington into Cardinal Health’s failure to maintain adequate records concerning Class II controlled substances in that district.
Separately, the United States Attorney for the Southern District of New York announced that Cardinal Health has agreed to pay an additional $10 million to resolve allegations that its subsidiary, Kinray, Inc., failed to report suspicious orders by pharmacies operating in the Kinray service area. In the settlement resolving the Florida and Maryland investigations, Cardinal Health acknowledged that, from January 1, 2009, to May 14, 2012, it failed to comply with regulations requiring reports of pharmacies’ suspicious orders of certain narcotic medications.
The Controlled Substances Act imposes civil penalties when DEA registrants fail to report suspicious pharmacy orders for Class II narcotic medications. The settlement announced today imposes a civil monetary sanction for the conduct addressed in Cardinal Health’s administrative settlement executed with the DEA in 2012, which suspended Cardinal’s registration to distribute Class II narcotic medications for a period of two years. The DEA returned Cardinal’s registration in May 2014 while the civil penalty negotiations that led to today’s announcement were pending.
“Today’s settlement with Cardinal Health, along with last year’s $22 million settlement with CVS, illustrates the coordinated response we have taken to Florida’s pill mill crisis,” stated U.S. Attorney Bentley. “Those who play a significant role in supplying Class II medications in our district must meet regulatory requirements or be held accountable.”
U.S. Attorney Bentley also thanked his colleagues U.S. Attorney Rod Rosenstein (District of Maryland), U.S. Attorney Preet Bharara (Southern District of New York), Deputy Civil Chief Tom Corcoran, Assistant U.S. Attorney Tony Pellegrino, and U.S. Attorney Annette Hayes (Western District of Washington) for their collaborative work and assistance with this investigation and settlement. In addition, the investigative work of the DEA - Orlando Field Office, under the supervision of Assistant Special Agent in Charge Jeff Walsh, played a major role in the Florida investigation.
“National pharmaceutical drug companies are not exempt from following the law,” stated Adolphus P. Wright, Special Agent in Charge for the DEA Miami Field Division. “This settlement sends out a clear message that all drug companies will be held accountable when they violate the law and threaten public health and safety. The DEA will continue its efforts to work with our registrants and our law enforcement partners to combat pharmaceutical drug abuse and diversion in Florida.”
The Middle District of Florida investigation was conducted by the Drug Enforcement Administration’s Diversion Group, with negotiations handled by Assistant U.S. Attorneys Randy Harwell and Katherine M. Ho.
U.S. Attorney General’s Smart on Crime Initiative Successfully Implemented in the Eastern District of TennesseeRead the Press Release
KNOXVILLE, Tenn.- At the direction of the U.S. Attorney General, in early 2013 the U.S. Department of Justice (Department) launched a comprehensive review of the criminal justice system in order to identify reforms that would ensure federal laws are enforced more fairly and—in an era of reduced budgets—more efficiently. Five goals were identified as a part of this review:
- To ensure finite resources are devoted to the most important law enforcement priorities;
- To promote fairer enforcement of the laws and alleviate disparate impacts of the criminal justice system;
- To ensure just punishments for low-level, nonviolent offenders;
- To bolster prevention and reentry efforts to deter crime and reduce recidivism; and,
- To strengthen protections for vulnerable populations.
This initiative, which the Department named “Smart on Crime” (SOCI), was implemented locally by the U.S. Attorney’s Office for the Eastern District of Tennessee, partnering with the Chief of the U.S. Probation and Pretrial Services Office, Tony Anderson, and his staff. The local program focused on ways to make the district safer by providing federal ex-offenders with the resources necessary to successfully re-enter the community and reduce recidivism.
Over the past year, stakeholders and others have assisted ex-offenders participating in the SOCI program by connecting them with much needed resources such as: educational programs at community colleges and universities; relationship building skills; furniture to aid with independent living; and a welcoming church to facilitate faith-based healing.
Stakeholders who contributed to the Chattanooga effort included: the Bureau of Alcohol, Tobacco, Firearms and Explosives; Bureau of Prisons Half-Way House; United Way 2-1-1; Tennessee Department of Human Services, Pastor Ternae Jordan and Mt. Canaan Baptist Church; Career Center; Chattanooga State Community College; BlueCross BlueShield; the Marion County Chaplain; Labor and Workforce Development; and Johnson Mental Health. Stakeholders contributing to the Knoxville reentry effort included: Knoxville Leadership Foundation; Tennessee Department of Safety; Knoxville Area Rescue Ministries; Knox County Health Department; Knoxville Police Department; Federal Bureau of Investigation; Susannah House; Helen Ross McNabb; Cokesbury Church; the office of Knoxville Mayor Madeline Rogero; and Pastor James Davis and Eternal Life Harvest Center. Finally, stakeholders who contributed to the Johnson City reentry effort included: Grace Fellowship Church; Summit Leadership Foundation; Frontier Health; Families Free; East Tennessee State University; First Christian Church; Grace Fellowship Church; Christ The Savior Greek Orthodox Church; Tri-Cities Baptist Church; St. Mary’s Catholic Church; Calvary Church; Boone’s Creek Christian Church; Faith Miracle Sanctuary; Dr. Tim Dunn and Spine and Sports Chiropractic; Carrabba’s Italian Grill; Drug Enforcement Administration, and the Johnson City Police Department. This impressive group of stakeholders represented only a select sample of the community leaders who dedicated time and resources to this effort.
Between January and December 2016, participants in the SOCI program substantively engaged the stakeholders and used provided resources to facilitate their successful re-entry. In addition to completing the program through attendance and stakeholder use and engagement, participants stayed in substantial compliance with their supervised release conditions imposed by the courts.
U.S. Attorney Nancy Stallard Harr is pleased to announce that approximately 31 ex-offenders successfully completed the SOCI program in 2016. “As a result, these ex-offenders are in a better positon to become productive members of our communities, making east Tennessee a safer and better place to live. Our efforts in this area will continue into 2017 with a special emphasis on juvenile offenders,” said U.S. Attorney Harr. “I would further like to commend Assistant U.S. Attorney Brooklyn Sawyers for her leadership, dedication, and coordination of the SOCI program for the district,” added U.S. Attorney Harr.
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U.S. Attorney Files Civil Rights Suit Against Bronx Developer to Remedy Pattern and Practice of Inaccessible Design and Construction of Apartment BuildingsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has filed a federal civil rights lawsuit against ABRAHAM STRULOVITCH to require him to remedy conditions at two rental complexes in the Bronx and in Orange County to make them accessible to people with disabilities and to ensure that two rental complexes currently under construction by STRULOVITCH in the Bronx will be accessible.
Manhattan U.S. Attorney Preet Bharara said: “The Fair Housing Act’s accessibility provisions were enacted to ensure that people with disabilities have the same access to housing as everyone else. With today’s lawsuit, we seek to ensure that Strulovitch fixes the current inaccessible conditions at Riverdale Parc and Bluestone Commons as well as at his ongoing construction projects. This Office will continue to use all available tools to enforce the FHA’s promise of accessibility for people with disabilities.”
The Fair Housing Act’s (“FHA”) accessible design and construction provisions require multifamily housing complexes constructed after January 1993 to have basic features accessible to persons with disabilities. According to the allegations in the Complaint, STRULOVITCH has engaged in a pattern and practice of discriminatory conduct, as evidenced by the numerous inaccessible conditions at Riverdale Parc, a 54-unit rental complex in the Riverdale section of the Bronx designed and constructed in 2014, and Bluestone Commons, a 70-unit rental complex for senior residents in Maybrook, New York, designed and constructed in 2015. The inaccessible conditions alleged include, for example, an excessively high threshold at the main entrance to Riverdale Parc, as well as insufficiently wide doorways within the rental units at both Riverdale Parc and Bluestone Commons. Other inaccessible conditions include excessively high thresholds to balconies within the rental units at Bluestone Commons and inaccessible locations of thermostats or other environmental controls in the rental units at Riverdale Parc and Bluestone Commons.
The Complaint further alleges that STRULOVITCH currently is actively involved in designing and constructing two other rental complexes in the Bronx – 640 West 238th Street and 3707 Blackstone Avenue – that will contain a total of more than 90 rental units. In the Complaint, the United States also seeks a court order requiring STRULOVITCH to take steps necessary to ensure that both 640 West 238th Street and 3707 Blackstone Avenue will be constructed in compliance with the Fair Housing Act’s accessibility requirements.
The case is being handled by the Office’s Civil Rights Unit. Assistant U.S. Attorneys Li Yu, Jacob Lillywhite, Jessica Jean Hu, and Natasha Teleanu are in charge of the case.
Two Key Figures of Illegal Prescription Drug Distribution Operation Found GuiltyRead the Press Release
Philadelphia - Following a three-week jury trial, a federal jury convicted two key players in a prescription drug conspiracy that illegally distributed more than 380,000 Oxycodone pills, as well as Alprazolam, into communities in the Eastern District of Pennsylvania. Leon Little, the head of the “Little Drug Operation” (LDO), was convicted yesterday in federal court of 50 counts, including 1 count of conspiracy to distribute controlled substances, 24 counts of distribution of oxycodone, 9 counts of acquiring a controlled substance by fraud, and 16 counts of money laundering, announced United States Attorney Zane David Memeger. Additionally, one of Little’s accomplices, Colise Harmon, was convicted of 34 counts, including 1 count of conspiracy to distribute controlled substances, 15 counts of distribution of oxycodone, and 4 counts of acquiring a controlled substance by fraud. Little faces up to 846 years’ imprisonment and Harmon faces up to 336 years’ imprisonment.
“Like the rest of the nation, the Eastern District of Pennsylvania has been greatly impacted by the prescription drug abuse epidemic,” said United States Attorney Zane David Memeger. “Heroin and opiate-based prescription medication – such as oxycodone – are two of the most abused drugs in this area. And just like street drugs, prescription drug abuse produces the same problems: addiction, crime, and broken families. Today’s convictions reflect the great work of our law enforcement partners to use the criminal justice system, one of the many weapons available, to curb this epidemic.”
“The illegal diversion and sale of prescription opioids such as oxycodone has caused considerable damage to communities and the loss of numerous lives across our region,” said Gary Tuggle, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “Leon Little and Colise Harmon have been convicted of running a pill distribution network responsible for distributing over 380,000 dosage units of oxycodone. For that, the penalties are severe.”
"All financial transactions leave a trail and we have the unique expertise to follow those leads" said Akeia Conner, Special Agent in Charge, IRS Criminal Investigation. "The special agents of IRS Criminal Investigation are committed to taking the profit away from drug traffickers and putting those individuals in jail. The convictions of Leon Little and Colise Harmon should serve as a warning to those who are considering similar conduct."
Between July 2010 and August 2012, the LDO recruited and paid 55 individuals to pose as patients in order to acquire prescription drugs, such as oxycodone and alprazolam (otherwise known as Xanax), from a physician in Bala Cynwyd, Pennsylvania. Many of these “pseudo-patients” were recruited from the Raymond Rosen Projects, a government-assisted housing development located in north Philadelphia. The pseudo-patients primarily received prescriptions for 10 milligram and 30 milligram tablets of oxycodone in exchange for money. The LDO also paid for the doctor’s visit and the costs for filling the prescriptions. Little also collected and stored the filled prescriptions, packaged the drugs for re-distribution, and distributed them to his customers in Philadelphia.
Harmon served as a driver for the LDO who facilitated the coordination of pseudo-patients. Little paid Harmon, along with two others to drive pseudo-patients to the doctor and to specific pharmacies in Philadelphia, PA to have the prescriptions filled, as well as to serve as pseudo-patients.
Little orchestrated the entire scheme by paying the doctor’s receptionist and sole employee to schedule the pseudo-patients’ appointments, write prescriptions for oxycodone using the doctor’s prescription pad and without the doctor’s consent, and distribute the forged prescriptions to the LDO. She also falsely verified with pharmacies that the forged prescriptions received from LDO pseudo-patients were legitimate. Little and Harmon also distributed the oxycodone pills to customers and resellers.
Based on the average retail sale price of the oxycodone tablets on the street, the LDO took in more than $3.3 million dollars. Little used the proceeds from the illegal pill scheme to purchase jewelry, designer clothes, and vehicles, including a Can-Am Spyder valued at over $17,000 and to gamble approximately $1.9 million at various casinos. Little also facilitated the laundering of $85,000 in drug proceeds in an attempt to conceal the proceeds of his drug trafficking.
The case was investigated by the Drug Enforcement Administration, Internal Revenue Service Criminal Investigation Division, Federal Bureau of Investigation Health Care Fraud Task Force, Philadelphia Police Department, and North Coventry Police Department. It was prosecuted by Assistant United States Attorney Tomika N.S. Patterson.