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Friday 23 December 2016
Two Individuals Indicted on Securities and Wire FraudRead the Press Release
HAMMOND- United States Attorney David A. Capp announced today Richard E. Gearhart, 66, of Lowell, Indiana and George R. McKown, 65, of Indianapolis, Indiana, were recently charged with conspiracy to commit securities fraud, securities fraud, and wire fraud
According to documents filed in this case, it is alleged that the defendants sold securities to individuals who transferred their traditional IRSs, pensions, annuities, 401ks, and cash to invest with Gearhart and McKown, through Asset Preservation Specialists, Inc., after being guaranteed that their original investment was safe and sound and promising a guaranteed rate of return. Gearhart and McKown were not registered with the SEC or the State of Indiana to sell securities.
“Gearhart had all the warning signs of a typical Ponzi scheme; he took advantage of people he knew and wasn’t registered with my office to sell securities,” said Secretary of State Connie Lawson. Secretary Lawson also reminded all potential investors that no matter how well you think you know someone or how successful they look, always check with the Secretary of State to make sure the professional and the product are registered.
The United States Attorney's Office emphasized that an Indictment is merely an allegation and that all persons charged are presumed innocent until, and unless, proven guilty in court.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
This case was the result of a joint investigation by the United States Postal Inspection Service, the Federal Bureau of Investigation and the Indiana Secretary of State Securities Division. The case is being prosecuted by Assistant United States Attorney Toi Denise Houston.
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Tracy Resident Indicted for over 30 Counts of “H-1B” Visa Fraud and 2 Counts of Aggravated Identity TheftRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned an indictment Thursday against Abhijit Prasad, 49, of Tracy, charging him with 31 counts of visa fraud and two counts of aggravated identity theft, U.S. Attorney Phillip A. Talbert announced.
According to the indictment, Prasad filed 31 petitions for H-1B nonimmigrant visas containing false statements, made under penalty of perjury, as to purported work projects to be performed at various locations in California. The indictment further alleges that Prasad obtained two H-1B visas procured by fraud and false statements, and used the means of identification of a real person to effectuate his visa fraud scheme.
The case is the product of an investigation by the U.S. Department of State, Diplomatic Security Service’s representative to the Document and Benefit Fraud Task Force (DBFTF), overseen by the Department of Homeland Security’s Homeland Security Investigations. The DBFTF is a multi-agency task force that coordinates investigations into fraudulent immigration documents. U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security also assisted with the investigation. Assistant U.S. Attorney Nirav Desai is prosecuting the case.
If convicted, Prasad faces a maximum statutory penalty of 10 years in prison and a $250,000 fine for the visa fraud. He faces a two-year mandatory, consecutive prison sentence a $250,000 fine for the aggravated identity theft counts. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Three Okaloosa County Residents Charged with Federal Firearms OffensesRead the Press Release
PENSACOLA, FLORIDA – Darrell W. Hopkins, 21, of Mary Esther, Florida, and Anthony M. Fannin and Katelin N. Kestner, both 20, of Fort Walton Beach, were arraigned this week in federal court after a grand jury returned an indictment charging them with federal firearms offenses. Hopkins was charged with unlawfully possessing a firearm as a convicted felon and possessing an unregistered short-barreled weapon made from a shotgun. Fannin and Kestner were charged with making a false statement. The indictment was announced by Christopher P. Canova, United States Attorney for the Northern District of Florida.
The indictment alleges that Hopkins, as a convicted felon, possessed a firearm, which was also unregistered, and that Fannin and Kestner falsely stated that this firearm belonged to Kestner’s grandfather. The National Firearms Act (NFA) requires particular firearms, including machineguns, short barrel rifles, short barrel shotguns, and weapons made from rifles and shotguns, to be registered in the National Firearms Registration and Transfer Record. In this case, the firearm is classified as a “weapon made from a shotgun” because it has a barrel length of less than 18 inches, an overall length of less than 26 inches, and is modified with a pistol grip, meaning it is no longer designed to be fired from the shoulder.
These cases resulted from investigations by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Okaloosa County Sheriff’s Office. Assistant United States Attorney Alicia H. Kim is prosecuting the case.
The trial is scheduled for February 6, 2017, at the United States Courthouse in Pensacola.
An indictment is merely an allegation by a grand jury that a defendant has committed a violation of federal criminal law and is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the government’s burden to prove guilt beyond a reasonable doubt at trial.
The United States Attorney's Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. To access available public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
For more information, contact:
Amy Alexander, Public Information Officer
(850) 216-3854, [email protected]Springfield Man Pleads Guilty to Firearm ChargeRead the Press Release
BOSTON – A Springfield man pleaded guilty yesterday in U.S. District Court in Springfield to unlawfully possessing a firearm.
Mark Alexander, 26, pleaded guilty to one count of possession of a firearm and ammunition by a felon. U.S. District Court Judge Timothy S. Hillman scheduled sentencing for March 16, 2017.
On Sept.2, 2015, Alexander possessed a .22 caliber pistol. As a result of a prior felony offense, Alexander was prohibited from possessing a firearm and ammunition. Alexander and his co-defendant, Hector Nieves, worked together to sell the pistol and ammunition to a cooperating witness.
In July 2016, Nieves was sentenced to five years in prison for the same charge.
The charging statute provides for a sentence of no greater than 10 years in prison, three years of supervised release, 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; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Mickey D. Leadingham, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Boston Field Division, made the announcement today. The case was investigated by the Federal Bureau of Investigation’s Western Massachusetts Gang Task Force and the ATF. Assistant U.S. Attorney Alex J. Grant of Ortiz’s Springfield Branch Office is prosecuting the case.
Rome Man Pleads Guilty to Possessing Ammunition as a Convicted FelonRead the Press Release
SYRACUSE, NEW YORK – Alfred Laquan Thomas, 31, of Rome, New York, pled guilty today to possession of ammunition by a convicted felon, announced United States Attorney Richard S. Hartunian.
As part of his guilty plea today, Alfred Laquan Thomas admitted that he possessed two (2) 12-gauge Remington shotgun shells in his pants pocket on August 16, 2012 when encountered by Syracuse Police minutes after a shooting incident that involved several shotgun rounds fired from his car at the front of an occupied residence on West Bissell Street in Syracuse. In pleading guilty today, Alfred Laquan Thomas also admitted that he was previously convicted of Aggravated Burglary in Kansas in 2003, and was therefore prohibited from possessing ammunition under federal law.
The charge to which Alfred Laquan Thomas pled guilty today carries a maximum sentence of 10 years in prison, a fine of up to $250,000, and a term of supervised release of up to three (3) years. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.
Alfred Laquan Thomas was ordered held without bail pending sentencing, which is scheduled for April 24, 2017 in Syracuse.
This case is being investigated by The Federal Bureau of Investigation (FBI), The United States Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) and the Syracuse Police Department, and is being prosecuted by Assistant U.S. Attorney Richard R. Southwick.
Riverside Man Sentenced to 20 Years in Federal Prison for Possession of Child PornographyRead the Press Release
LOS ANGELES – A Riverside man was sentenced yesterday to 20 years in federal prison for possession of child pornography, the latest Inland Empire man to receive a substantial sentence for a child pornography offense.
Walter Klink, 42, was sentenced by United States District Judge Virginia A. Phillips to spend 240 months in prison. Following his release from custody, Klink will be on lifetime supervised release.
Klink had previously been convicted by the United States Attorney’s Office for possession of child pornography. In 2007 he was sentenced by Judge Phillips to eight years in prison. After commencing his supervised release, law enforcement received evidence that Klink once again possessed child pornography, including pornographic images of a minor relative.
“This defendant’s criminal conduct paused only while he was in federal prison,” said United States Attorney Eileen M. Decker. “Therefore, the sentence in this case will help protect the children of our community for the next two decades and will ensure the defendant is under court supervision for the rest of his life.”
This case against Klink was the result of a joint investigation by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the Riverside County District Attorney’s Sexual Assault Felony Enforcement (SAFE) team. The case was prosecuted by Assistant United States Attorney Tritia Yuen of the Riverside branch office.
Klink is the latest man from the Inland Empire who has been convicted recently or currently face federal charges related to child pornography. In the other cases:
- Jeremy Matthew Meyerett, 41, of San Bernardino, was sentenced December 12 to 20 years in federal prison for producing child pornography, including a sexually explicit pictures of a 5-year-old girl.
- James Gregory O’Neill, 58, of Riverside, was sentenced on May 2 to 10 years in federal prison for his third conviction of possessing child pornography. When authorities discovered the pictures on O’Neill’s phone, he was on parole after being convicted in Riverside Superior Court of possessing matter depicting a minor in a sexual act, a crime that led to a two-year sentence. O’Neill had also been convicted in federal court in 2003 of distributing child pornography, a conviction that brought a 40-month prison sentence.
- Andrew Harrison Fowler, 26, of Perris, a convicted sex offender who was convicted of having sex with minors in San Diego Superior Court, pleaded guilty on April 18 to possession of child pornography, with some of the images depicting victims younger than 10. Fowler came to the attention of law enforcement after his employer discovered that he was distributing and possessing child pornography while using a computer at his job in Corona. Fowler was sentenced by Judge Phillips on June 27 to 12 years in federal prison and a lifetime of supervised release. Fowler was on parole in the San Diego case when he committed the offense in the federal case. This case was investigated by the Riverside County District Attorney’s Office Sexual Assault and Felony Enforcement/Internet Crimes Against Children Unit, which includes special agents with HSI.
- Anthony Michael Scotti, 22, of Murrieta, pleaded guilty on April 4 to possession of child pornography. Scotti, who was previously convicted in Riverside Superior court of distributing lewd material to a minor, admitted that he had images on an iPod that was seized by law enforcement last August, and that he used the Kik messaging app to distribute images of children engaged in sex acts with adults. In a plea agreement, Scotti also admitted that he used text messages to convince a 15-year-old girl in another state to take sexually explicit pictures and send them to him. United States District Judge Philip S. Gutierrez is scheduled to sentence Scotti on January 23, at which time the defendant faces a mandatory minimum sentence of 10 years in federal prison, and prosecutors have recommended a sentence of 14 years. This case was investigated by HSI.
- Angelo Harper Jr., 21, of Moreno Valley, was found guilty after a two-day bench trial on charges of advertising, distributing and possessing child pornography. Trial evidence included an explicit six-minute video depicting a man with a pre-pubescent boy, as well as evidence showing that Harper used the Messenger to access a chatroom for those interested in nepiophilia, which is a sexual interest in infants and toddlers. Harper “possessed 8,260 images and 520 videos of child pornography,” according to court documents. “This collection included violent depictions of the rape and assault of babies and toddlers.” Harper was sentenced in October by United States District Judge R. Gary Klausner to 235 months in federal prison. This case was investigated by HSI and the Riverside Sexual Assault Felony Enforcement Task Force.
- Nathan Charles Longino Barba, 21, of Rancho Cucamonga, pleaded guilty in August to possessing child pornography. Barba received images and videos depicting child pornography over the Internet. “Some of the images depicted children under two years old being used for sexual acts,” prosecutors said in court papers. “Other images of child pornography portrayed sadistic or masochistic sexual conduct involving the minor children.” Barba is scheduled to be sentenced by United States District Judge Virginia A. Phillips on January 30. Prosecutors have recommended a sentence of three years in federal prison. This case was investigated by FBI.
Manhattan U.S. Attorney Announces $10 Million Civil Penalty Recovery Against New York Pharmaceutical Distributor Kinray, Llc.Read the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and James Hunt, Special Agent in Charge for the Drug Enforcement Administration (“DEA”), announced the filing and settlement of a civil lawsuit involving Controlled Substances Act (“CSA”) claims brought by the United States against Kinray, LLC. (“Kinray”), a New York-based pharmaceutical subsidiary of Cardinal Health, Inc. (“Cardinal”). The suit was filed on December 19, 2016. In the consent decree approved yesterday by U.S. District Judge Ronnie Abrams, Kinray agreed to pay $10 million to the United States, and admitted and accepted responsibility for failing to inform the DEA, as required by CSA regulations, of Kinray’s receipt of suspicious orders for certain controlled substances during the time period between January 1, 2011 and May 14, 2012.
Under CSA regulations, pharmaceutical distributors (like Kinray) have a responsibility to report suspicious orders of unusual size, orders that deviate substantially from a normal pattern, or orders of unusual frequency. The DEA relies on this requirement, and on pharmaceutical distributors in particular, as the first line of defense against dishonest medical professionals who fuel the illegal market for opioids. Pharmaceutical companies, as the makers and distributors of dangerous opioids, have a particular obligation not to fulfill shipments to medical professionals, pharmacies, or other entities that place unusual orders, oversized orders, or orders of unusual frequency. As alleged in the Complaint filed by this Office, and as admitted in the settlement agreement (the “Consent Decree”), Kinray violated this requirement.
Manhattan U.S. Attorney Preet Bharara said: “With the opioid crisis reaching epidemic proportions, pharmaceutical companies must be part of the solution, not part of the problem. When distributors like Kinray fail to alert the DEA to suspicious order activity, they end up facilitating the illegal sale and distribution of highly addictive opioids. Today’s settlement is part of our ongoing efforts to use all the tools at our disposal to combat opioid abuse.”
DEA Acting Special Agent in Charge James Hunt said: “While over 33,000 opioid-related deaths last year have drawn the attention of families and friends wanting to know more about opioid addiction; law enforcement has been red flagging pharmaceutical diversion. DEA Diversion Investigators conduct regulatory visits in order to confirm companies adhere to strict security measures and reporting responsibilities in a timely matter to deter prescription medication from being illegally distributed. This settlement is a clear message that law enforcement is looking at pharmaceutical suppliers responsible for safeguarding and distributing prescription medication as well as targeting those responsible for its diversion.”
According to the allegations in the Complaint and the terms of the Consent Decree:
Kinray, a subsidiary of Cardinal, is a pharmaceutical distributor located in Whitestone, Queens, New York. Among other things, Kinray distributes controlled substances, including Schedule II narcotics (such as oxycodone and its derivatives), to pharmacies, doctors, and medical facilities with a legitimate medical need.
Under regulations promulgated by the DEA, distributors of controlled substances must design and operate a system to disclose suspicious orders of controlled substances, and report any discovered suspicious orders to the DEA. These reporting requirements are an integral part of the DEA’s efforts to track the illicit distribution of oxycodone and other highly addictive opioids.
As alleged, during the period from January 1, 2011 to May 14, 2012, the DEA investigated pharmacies in New York City and elsewhere that had placed orders for shipments of oxycodone or hydrocodone (both Schedule II controlled substances) from Kinray that were of unusual size and/or unusual frequency. For example, the DEA’s internal tracking system revealed that during the relevant period, Kinray had shipped oxycodone or hydrocodone to more than 20 New York-area pharmacy locations that placed orders for a quantity of controlled substances many times greater than Kinray’s average sales of controlled substances to all of its customers. Such orders should have triggered “red flags” in Kinray’s ordering system, and Kinray should have reported the suspicious orders to the DEA. But for most of this time period, Kinray did not report a single suspicious order to the DEA.
In the Consent Decree entered yesterday by Judge Abrams, Kinray admitted that during the period January 1, 2011 to May 14, 2012, it failed to inform the DEA, as required, that certain orders for controlled substances it received from customers were suspicious. Kinray also agreed to pay the United States a $10 million civil penalty, and agreed to voluntarily submit to DEA inspections of its Whitestone, New York, facility at any time without condition and without advance notice.
In addition, in a separate administrative action, on December 16, 2016, Kinray signed a Memorandum of Agreement with the DEA in which Kinray agreed to revise its standard operating procedures to improve the processes that govern its handling and delivery of controlled substances to its customers.
This settlement is part of a $44 million global resolution announced today by the Department of Justice with Kinray’s parent company, Cardinal, in which Cardinal agreed to pay an additional $34 million to the United States to resolve failure to report suspicious order claims brought by the U.S. Attorney’s Offices for the Middle District of Florida, the District of Maryland, and the Western District of Washington.
Mr. Bharara praised the outstanding investigative work of the DEA and thanked the New York City Police Department for its assistance.
The case is being handled by the Office’s Civil Frauds Unit. Assistant United States Attorney Louis A. Pellegrino is in charge of the case.
Leader of $242 Million Investment Fraud Scheme Sentenced to 18 Years in Federal PrisonRead the Press Release
Baltimore, Maryland – U.S. District Judge James K. Bredar sentenced Richard Shusterman, age 53, of Highland Beach, Florida, today to 18 years in prison, followed by three years of supervised release, for a wire fraud conspiracy and nine counts of wire fraud in connection with a complex scheme to defraud investors and lenders of $242 million by selling fraudulent investment portfolios of debts purportedly owed by hospital patients. Judge Bredar also entered orders requiring Shusterman to pay restitution of $171,383,834, and to forfeit $242,485,254.
On May 2, 2016, a federal jury convicted Shusterman, who is the fourth and final conspirator to be convicted in the scheme. At today’s sentencing, Judge Bredar enhanced Shusterman’s sentence upon finding that Shusterman was the organizer of the criminal activity. Shusterman has been in custody since his conviction.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; and Special Agent in Charge Andre R. Watson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
“Richard Shusterman and his co-conspirators perpetrated a brazen and complex Ponzi scheme that defrauded investors of more than $242 million,” said U.S. Attorney Rod J. Rosenstein. “The conspirators pretended that they were repaying investors with revenue earned by collecting debts, but they were really using the money of new victims to repay previous investors.”
According to evidence presented at his 22-day trial, Shusterman was a shareholder and president of International Portfolio, Inc. (IPI), located in Pennsylvania. Co-conspirator Robert Feldman was part owner of IPI, and president of United Consulting, Inc. Shusterman and Feldman represented that IPI had experience in the purchase, valuation, collection and resale of medical accounts receivable, comprised of past due patient accounts which the hospitals and other entities selling the accounts had been unsuccessful in collecting. Beginning on June 21, 2006, Shusterman and Feldman, through United Consulting and IPI, bought and sold consumer debt, including medical debt portfolios. From December 2006 through June 2008, IPI paid more than $25 million to purchase over $4.1 billion in medical accounts receivable, comprising more than 3,872,514 past due patient accounts.
Jonathan Rosenberg and Douglas Kuber operated Account Receivable Services, LLC (ARS) in New York, New York. They agreed to promote the sale of IPI debt portfolio to investors. Pursuant to their agreement, Shusterman, through IPI, bundled the past due patient accounts from IPI’s inventory into investment portfolios, then sold the portfolios to ARS at a discounted rate. ARS’s purchases of the medical debt portfolios from IPI came from investors who agreed to lend money to ARS in return for a high, fixed interest rate. Shusterman and IPI agreed to manage the collection activity for each debt portfolio that IPI sold. Investors were told that any funds collected by IPI were to be forwarded to escrow accounts opened and maintained by ARS, which, in turn, would use the funds to cover the periodic interest payments and outstanding balances owed to the investors.
Fraudulent Inflation of Purchase Prices for IPI Debt Portfolios to Pay Fees and Commissions
Rosenberg and Kuber misrepresented to investors that a loan secured by IPI debt portfolios would not be used to pay up-front fees and commissions associated with the investment offering. In fact, however, ARS and IPI agreed to a concealed purchase price for a debt portfolio, then told the investor that the portfolio price was 5% to 10% higher than the concealed price, in order to cover their fees and commissions. Specifically, Shusterman paid the loan proceeds in excess of the true purchase prices to Rosenberg and Kuber, characterizing these kickbacks as a refund or a rebate. From June 2007 to March 2009, Shusterman paid Kuber and Rosenberg kickbacks totaling in excess of $8 million.
In reliance on the misrepresentations of Rosenberg and Kuber, investors provided loans to ARS of approximately $145 million to purchase IPI debt portfolios, and other investors purchased approximately $122.5 million worth of IPI debt portfolios, all of which IPI managed.
Fraudulent Inflation of Collection Results to Maintain and Increase Investments
In order to induce existing investors to maintain and increase their participation in the investment scheme and to persuade new investors to join, ARS and IPI falsely represented the amount of income being generated from the collection activity for the medical debt portfolios. According to trial testimony, it became apparent almost from the start that collections were significantly inadequate, not only in their failure to cover periodic interest payments that ARS owed its investors, but also to repay the investors’ principal.
Shusterman and Rosenberg agreed that IPI would advance ARS the money needed to make ARS’s periodic interest payments to the investors. From July 2008 to December 2009, and without the investors’ knowledge, Shusterman and his co-conspirators wired approximately 209 advances from IPI into the bank accounts of the ARS debt portfolios, which were subsequently used to pay periodic interest payments due to an investor and/or inflate the collection history of the respective investor debt portfolios. Misleading collection reports were also created to deceive the investors.
After their plan to subsidize ARS with monthly advances was implemented, and to ensure a continuing flow of new funding into the investment scheme, Shusterman and his co-conspirators continued to solicit existing and prospective investors to purchase or finance IPI debt portfolios. For example, an investor was induced to fund the purchase of 12 more portfolios between July and November 2008, totaling approximately $65 million in new investments. Another investor representative living in West River, Maryland was induced to fund the purchase of a portfolio on November 8, 2008 for $10 million, and another portfolio on May 26, 2009 for $5 million. Shusterman and his co-conspirators then fraudulently used the new investor funds to make interest and resale payments in order to meet the investment benchmarks of prior investors.
As a result of the scheme, the loss to investors was $242 million.
New Jersey residents Robert Feldman, age 69, of Beach Haven; Jonathan E. Rosenberg, age 48, of West Orange; and Douglas A. Kuber, age 56, of Livingston, previously pleaded guilty to their participation in the conspiracy and were sentenced to 46 months, five years, and four years in prison, respectively. Judge Bredar also ordered: Feldman and Rosenberg to pay restitution of $148,251,859; and Kuber to pay restitution of $105,565,223.
Today’s announcement is part of the efforts undertaken 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’s 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.
United States Attorney Rod J. Rosenstein thanked the FBI and HSI Baltimore for their work in the investigation. Mr. Rosenstein praised Assistant U.S. Attorneys Martin J. Clarke and Leo J. Wise, who prosecuted the case.
Last Defendant in $48 Million Dollar Cigarette Tax Fraud Scheme SentencedRead the Press Release
The last defendant in a domestic and international, multimillion-dollar cigarette tax fraud scheme has been sentenced, the Department of Justice announced today.
On Thursday, U.S. District Judge David L. Bunning sentenced Anthony Cosica, 54, of Pinetop, Ariz., to 24 months in federal prison. Eight other defendants, including three from eastern Kentucky and two from Russia, have already been sentenced, for charges including conspiracy to commit mail fraud, wire fraud and money laundering and violations of the PACT Act.
This case marks the first prosecution in the nation for violations of the PACT Act, which is a 2010 federal law enacted to prevent trafficking in untaxed cigarettes.
According to court documents and evidence presented at trial, from 2008 to 2013, the defendants devised a scheme that defrauded federal, state and local governments across the country, out of cigarette excise taxes totaling approximately $48 million. Specifically, the defendants operated mail order and internet businesses engaged in the delivery sales of untaxed cigarettes to customers in all 50 states.
“This case represents a milestone in enforcement of the PACT Act,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Mr. Cosica and his co-conspirators devised a complex criminal enterprise of international proportions which cost public treasuries millions of dollars. Congratulations to the law enforcement agencies and our trial team for their superb work in unwinding this criminal scheme.”
The leader of the conspiracy, John Maddux Jr., 56, formerly of Russell, Ky., operated mail order/online businesses that sold the cigarettes at discount prices. Maddux executed the scheme by forming a business with two Russian nationals, Alexander Sergeev and Mikhail Serov. Sergeev and Serov shipped cigarettes from Russia directly to customers of Maddux and his co-conspirators. Evidence at trial further established that Maddux also fulfilled cigarette orders for other co-conspirators, who were also operating similar mail/online businesses. To get the cigarettes through U.S. Mail, the defendants disguised and marked the cigarettes as gift items, which is a violation of the PACT Act.
Under the PACT Act, businesses are required to register and report cigarette and tobacco sales to state tax administrators, allowing States to properly collect required excise taxes from the businesses. The defendants intentionally avoided these requirements and millions of dollars in taxes during the scheme.
The defendants received the following prison sentences: John Maddux 10 years; Christina Carmen, formerly of Russell, Ky., 60 months; David H. White, formerly of Ashland, Ky., 24 months; Julie Coscia, of Pinetop, Ariz., 36 months; Michael E. Smith, of Escondido, Calif., 42 months; Alexander Sergeev, 46 months; Mikhail Serov, 46 months; and Barbara Routh, of Prospect, Ky., two years’ probation. Under federal law, all defendants must serve at least 85 percent of their prison sentence.
Domestic and International trafficking in untaxed cigarettes via mail order or the Internet defrauds the federal and state governments of hundreds of millions of dollars in tobacco taxes and frequently funds other criminal activity.
U.S. Attorney Harvey; Stewart Lowrey, Special Agent in Charge, Louisville Field Division, Alcohol Tobacco Firearms and Explosives; Tracey Montano, Special Agent in Charge, Nashville Field Office, Internal Revenue Service-Criminal Investigations; Richard Deer, Acting Special Agent in Charge, Philadelphia Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Mark McCormack, Special Agent in Charge, Metro Washington Field Office, U.S. Food and Drug Administration, jointly announced the sentence.
The investigation was conducted by the Bureau of Alcohol Tobacco Firearms and Explosives, the Internal Revenue Service-Criminal Investigations, the United States Department of Labor, Office of Inspector General, and U.S. Food and Drug Administration. Assistant United States Attorneys Laura K. Voorhees and Wade T. Napier, and ATF Associate Chief Counsel, Jeffery A. Cohen, prosecuted this case on behalf of the federal government.
Last Defendant in $48 Million Dollar Cigarette Tax Fraud Scheme SentencedRead the Press Release
COVINGTON, Ky. — The last defendant in a domestic and international, multimillion-dollar cigarette tax fraud scheme has been sentenced.
On Thursday, U.S. District Judge David L. Bunning sentenced Anthony Cosica, 54, of Pinetop, Ariz., to 24 months in federal prison. Eight other defendants, including three from eastern Kentucky and two from Russia, have already been sentenced, for charges including conspiracy to commit mail fraud, wire fraud and money laundering and violations of the PACT Act.
This case marks the first prosecution in the nation for violations of the PACT Act, which is a 2010 federal law enacted to prevent trafficking in untaxed cigarettes.
According to court documents and evidence presented at trial, from 2008 to 2013, the defendants devised a scheme that defrauded federal, state and local governments across the country, out of cigarette excise taxes totaling approximately $48 million. Specifically, the defendants operated mail order and internet businesses engaged in the delivery sales of untaxed cigarettes to customers in all 50 states.
“This case represents a milestone in enforcement of the PACT Act,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Mr. Cosica and his co-conspirators devised a complex criminal enterprise of international proportions which cost public treasuries millions of dollars. Congratulations to the law enforcement agencies and our trial team for their superb work in unwinding this criminal scheme.”
The leader of the conspiracy, John Maddux Jr., 56, formerly of Russell, Ky., operated mail order/online businesses that sold the cigarettes at discount prices. Maddux executed the scheme by forming a business with two Russian nationals, Alexander Sergeev and Mikhail Serov. Sergeev and Serov shipped cigarettes from Russia directly to customers of Maddux and his co-conspirators. Evidence at trial further established that Maddux also fulfilled cigarette orders for other co-conspirators, who were also operating similar mail/online businesses. To get the cigarettes through U.S. Mail, the defendants disguised and marked the cigarettes as gift items, which is a violation of the PACT Act.
Under the PACT Act, businesses are required to register and report cigarette and tobacco sales to state tax administrators, allowing States to properly collect required excise taxes from the businesses. The defendants intentionally avoided these requirements and millions of dollars in taxes during the scheme.
The defendants received the following prison sentences: John Maddux 10 years; Christina Carmen, formerly of Russell, Ky., 60 months; David H. White, formerly of Ashland, Ky., 24 months; Julie Coscia, of Pinetop, Ariz., 36 months; Michael E. Smith, of Escondido, Calif., 42 months; Alexander Sergeev, 46 months; Mikhail Serov, 46 months; and Barbara Routh, of Prospect, Ky., two years’ probation. Under federal law, all defendants must serve at least 85 percent of their prison sentence.
Domestic and International trafficking in untaxed cigarettes via mail order or the Internet defrauds the federal and state governments of hundreds of millions of dollars in tobacco taxes and frequently funds other criminal activity.
U.S. Attorney Harvey; Stuart Lowrey, Special Agent in Charge, Louisville Field Division, Alcohol Tobacco Firearms and Explosives; Tracey Montano, Special Agent in Charge, Nashville Field Office, Internal Revenue Service-Criminal Investigations; Richard Deer, Acting Special Agent in Charge, Philadelphia Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Mark McCormack, Special Agent in Charge, Metro Washington Field Office, U.S. Food and Drug Administration, jointly announced the sentence.
The investigation was conducted by the Bureau of Alcohol Tobacco Firearms and Explosives, the Internal Revenue Service-Criminal Investigations, the United States Department of Labor, Office of Inspector General, and U.S. Food and Drug Administration. Assistant United States Attorneys Laura K. Voorhees and Wade T. Napier, and ATF Associate Chief Counsel, Jeffery A. Cohen, prosecuted this case on behalf of the federal government.
Garland Man Sentenced to 30 Months in Federal Prison and Fined $3,000 on Firearms ConvictionRead the Press Release
DALLAS — Melvin Yip, 31, of Garland, Texas, was sentenced today by U.S. District Judge Sam A. Lindsay to 30 months in federal prison and fined $3,000, following his guilty plea in April 2016 to one count of engaging in the business of firearms without a license. The announcement was made today by U.S. Attorney John Parker of the Northern District of Texas.
Judge Lindsay ordered that Yip surrender to the Bureau of Prisons on January 24, 2017.
According to documents filed in the case, Yip admitted that in September 2015, he was not a licensed dealer of firearms, but he did engage in the business of dealing firearms.
The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated the case. Assistant U.S. Attorney Andrew Wirmani was in charge of the prosecution.
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Florida Man Sentenced to 48 Months in Prison for Sophisticated International Cellphone Fraud SchemeRead the Press Release
A Miami Gardens, Florida, resident was sentenced to 48 months in prison in connection with a sophisticated global cell phone fraud scheme that involved compromising cellphone customers’ accounts and “cloning” their phones to make fraudulent international calls.
U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement.
Edwin Fana, 37, was sentenced yesterday by U.S. District Judge Daniel T.K. Hurley of the Southern District of Florida. He pleaded guilty on Aug. 29 to one count of conspiracy to commit wire fraud, access device fraud, the use, production or possession of modified telecommunications instruments and the use or possession of hardware or software configured to obtain telecommunications services; one count of wire fraud and one count of aggravated identity theft.
According to the plea agreement, Fana and his co-conspirators participated in a scheme to steal access to and fraudulently open new cellphone accounts using the personal information of individuals around the United States. Fana admitted that the conspirators then trafficked in the cellphone customers’ telecommunication identifying information, using that data as well as other software and hardware to reprogram cellphones that they controlled to transmit thousands of international calls to Cuba, Jamaica, the Dominican Republic and other countries with high calling rates. The calls were billed to the victims’ compromised accounts, he admitted.
In addition, Fana admitted that his role in the scheme included operating a “call site” in his residence in Miami Gardens. He would receive telecommunication identifying information associated with victims’ accounts from his co-conspirators and use that data to re-program cellphones that he controlled. Fana’s co-conspirators would then transmit international calls over the internet to Fana’s residence, where he would route them through the re-programmed cellphones. In October 2012, the FBI executed a search warrant on Fana’s residence and discovered approximately 88 cellphones connected to networking equipment and actively routing calls.
Law enforcement seized nearly 11,000 telecommunications identifying numbers from Fana and he admitted that the scheme caused at least $1 million in losses.
Fana is the first defendant to be sentenced in the case. Jose Santana and Farintong Calderon have also pleaded guilty in connection with the scheme; Santana is scheduled to be sentenced on Jan. 4, 2017, and Calderon is scheduled to be sentenced on Feb. 21, 2017.
The FBI investigated the case, dubbed Operation Toll Free, which is part of the FBI’s ongoing effort to combat large-scale telecommunications fraud. Senior Counsel Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Jared M. Strauss of the Southern District of Florida are prosecuting the case.
Florida Man Sentenced to 48 Months in Prison for Sophisticated International Cellphone Fraud SchemeRead the Press Release
A Miami Gardens, Florida, resident was sentenced to 48 months in prison in connection with a sophisticated global cell phone fraud scheme that involved compromising cellphone customers’ accounts and “cloning” their phones to make fraudulent international calls.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement.
Edwin Fana, 37, was sentenced yesterday by U.S. District Judge Daniel T.K. Hurley of the Southern District of Florida. He pleaded guilty on Aug. 29 to one count of conspiracy to commit wire fraud, access device fraud, the use, production or possession of modified telecommunications instruments and the use or possession of hardware or software configured to obtain telecommunications services; one count of wire fraud and one count of aggravated identity theft. Fana received a reduced prison sentence due to his cooperation in the government’s investigation.
According to the plea agreement, Fana and his co-conspirators participated in a scheme to steal access to and fraudulently open new cellphone accounts using the personal information of individuals around the United States. Fana admitted that the conspirators then trafficked in the cellphone customers’ telecommunication identifying information, using that data as well as other software and hardware to reprogram cellphones that they controlled to transmit thousands of international calls to Cuba, Jamaica, the Dominican Republic and other countries with high calling rates. The calls were billed to the victims’ compromised accounts, he admitted.
In addition, Fana admitted that his role in the scheme included operating a “call site” in his residence in Miami Gardens. He would receive telecommunication identifying information associated with victims’ accounts from his co-conspirators and use that data to re-program cellphones that he controlled. Fana’s co-conspirators would then transmit international calls over the internet to Fana’s residence, where he would route them through the re-programmed cellphones. In October 2012, the FBI executed a search warrant on Fana’s residence and discovered approximately 88 cellphones connected to networking equipment and actively routing calls.
Law enforcement seized nearly 11,000 telecommunications identifying numbers from Fana and he admitted that the scheme caused at least $1 million in losses.
Fana is the first defendant to be sentenced in the case. Jose Santana and Farintong Calderon have also pleaded guilty in connection with the scheme; Santana is scheduled to be sentenced on Jan. 4, 2017, and Calderon is scheduled to be sentenced on Feb. 21, 2017.
The FBI investigated the case, dubbed Operation Toll Free, which is part of the FBI’s ongoing effort to combat large-scale telecommunications fraud. Senior Counsel Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Jared M. Strauss of the Southern District of Florida are prosecuting the case.
Federal Jury Convicts Indialantic Man of Armed Bank Robbery and Other OffensesRead the Press Release
Orlando, Florida – United States Attorney A. Lee Bentley, III announces that a federal jury yesterday found Skyler Christian Awad (27, Indialantic) guilty of bank robbery, carrying a firearm during and in relation to a crime of violence, attempted robbery affecting interstate commerce, possession of a firearm by a convicted felon, and other related firearm offenses. He faces a maximum penalty of 20 years, followed by a mandatory consecutive sentence of at least 5 years, in federal prison. A sentencing hearing is scheduled for March 13, 2017.
Awad was indicted on September 15, 2016.
According to testimony and evidence presented at trial, between May 12, 2016, and May 16, 2016, Awad went on a crime spree in Brevard County, when he stole a loaded .22 caliber revolver from a residence in West Melbourne. Four days later, he entered a Subway restaurant in Melbourne and attempted to rob the establishment while armed with a knife. Later that same day, he entered and robbed a TD Bank by threatening to shoot a bank teller. Law enforcement subsequently located Awad, where he then led them on a high-speed chase through residential areas and across busy intersections until he was stopped. Upon apprehension, officers recovered the stolen .22 caliber revolver and the bank money from Awad’s vehicle. As a convicted felon, Awad was prohibited from possessing a firearm or ammunition under federal law.
This case was investigated by the Federal Bureau of Investigation, with assistance from the Melbourne Police Department, the Brevard County Sheriff’s Office, the Palm Bay Police Department, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. It is being prosecuted by Assistant United States Attorneys Andrew C. Searle and Chauncey A. Bratt.
East St. Louis Man Sentenced for Heroin and Firearms OffensesRead the Press Release
Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced that Brandy C. Anderson, age 33, of East St. Louis, Illinois, was sentenced today to 100 months’ imprisonment for Possession With Intent to Distribute Heroin, and Felon In Possession of a Firearm.
Anderson pled guilty to the two federal charges on June 17, 2016. At his change of plea hearing in June, Anderson admitted that on November 24, 2015, he was arrested in a car in East St. Louis with six grams of heroin (1/4 ounce), and a loaded .45 caliber Colt pistol. Anderson also admitted that he had been convicted of a felony prior to his arrest on November 24, 2016.
The investigation which resulted in Anderson’s arrest and conviction was conducted by the East St. Louis Police Department and by the Bureau of Alcohol, Tobacco, and Firearms.
The case was prosecuted by Assistant United States Attorney Robert L. Garrison.
Cedar Rapids Man Pleads Guilty to Sexual Exploitation of a Child and Possession of Child PornographyRead the Press Release
A man who produced and possessed child pornography pled guilty on December 22, 2016, in federal court in Cedar Rapids.
Michael Bordman, age 23, from Cedar Rapids, Iowa, was convicted of one count of sexual exploitation of a child and one count of possession of child pornography. At the plea hearing, Bordman admitted that, between 2015 and 2016, he knowingly used a child to produce child pornography. He also admitted that he possessed child pornography on a cell phone.
Sentencing before United States District Court Chief Judge Linda R. Reade will be set after a presentence report is prepared. Bordman remains in custody of the United States Marshal pending sentencing. Bordman faces a mandatory minimum sentence of 15 years’ imprisonment and a possible maximum sentence of 50 years’ imprisonment, $500,000 in fines, $10,200 in special assessments, and supervised release for 5 years to life following any imprisonment.
This case is being prosecuted by Assistant United States Attorney Mark Tremmel and is being investigated by the Cedar Rapids Police Department, the Iowa Division of Criminal Investigation, and Homeland Security Investigations.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is CR 16-81.
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Cardinal Health Agrees to $44 Million Settlement for Alleged Violations of Controlled Substances ActRead the Press Release
Baltimore, Maryland – Cardinal Health, Inc. agreed to pay $44,000,000 to the United States to resolve allegations that it violated the Controlled Substances Act (CSA) in Maryland, Florida and New York by failing to report suspicious orders of controlled substances to pharmacies located in those states. The settlement also resolves a civil investigation in the Western District of Washington concerning alleged violations of CSA record keeping requirements. Contemporaneously, the Southern District of New York has entered into a separate settlement agreement with Cardinal in which Cardinal agreed to resolve allegations that Kinray, Inc., a subsidiary distributor, failed to report suspicious orders by pharmacies in the Kinray service area.
The settlement agreement was announced today by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration - Washington Field Division.
“Pharmaceutical suppliers violate the law when they fill unusually large or frequent orders for controlled substances without notifying the DEA,” said U.S. Attorney for the District of Maryland Rod J. Rosenstein. “Abuse of pharmaceutical drugs is one of the top federal law enforcement priorities. Cases such as this one, as well as our $8 million settlement with CVS in February 2016, reflect the federal commitment to prevent the diversion of pharmaceutical drugs for illegal purposes.”
“DEA is responsible for ensuring that all controlled substance transactions take place within DEA’s regulatory closed system. All legitimate handlers of controlled substances must maintain strict accounting for all distributions and Cardinal failed to adhere to this policy,” stated Special Agent-in-Charge Karl C. Colder of the Drug Enforcement Administration’s Washington Division. “Oxycodone is a very addictive drug and failure to report suspicious orders of oxycodone is a serious matter. The civil penalty levied against Cardinal should send a strong message that all handlers of controlled substances must perform due diligence to ensure the public safety,” stated Colder.
The CSA requires distributors of pharmaceuticals, such as Cardinal, to identify and report suspicious orders of controlled substances, such as orders of unusual size, unusual frequency or those that substantially deviate from a normal pattern. If the distributor fails to report suspicious orders to the DEA, civil penalties can be imposed against the distributor.
The settlement resolves allegations arising from an investigation in Maryland as well as an administrative proceeding related to conduct in Florida. According to the settlement agreement, Cardinal admitted that from January 1, 2009 to May 14, 2012, it failed to report suspicious orders to the DEA as required by the CSA. The settlement also resolves allegations that Cardinal failed to maintain effective controls against diversion.
U.S. Attorney Rod J. Rosenstein commended the DEA’s Office of Diversion Control, Washington Division, Baltimore District Office for its work in the investigation. U.S. Attorney Rosenstein also thanked U.S. Attorney for the Middle District of Florida A. Lee Bentley, III and Division Chief, Katherine Ho and Civil Chief, Randy Harwell; as well as U.S. Attorney for the Southern District of New York Preet Bharara, and Assistant United States Attorney Tony Pellegrino for their collaborative work. Mr. Rosenstein thanked Assistant United States Attorney Thomas F. Corcoran, who handled the case for the District of Maryland.
Albany Man Pleads Guilty to Oxycodone ConspiracyRead the Press Release
ALBANY, NEW YORK – Nicholas M. Signore, age 26, of Albany, New York, pled guilty today to conspiring to distribute oxycodone.
The announcement was made by U.S. Attorney Richard S. Hartunian and Special Agent in Charge James J. Hunt, New York Division, U.S. Drug Enforcement Administration (DEA).
Signore faces up to 20 years in prison and 3 years of post-imprisonment supervised release when he is sentenced on April 20, 2017 by U.S. District Judge Mae A. D’Agostino. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines, and other factors.
As part of his plea, Signore admitted that in 2015, he obtained approximately 896 oxycodone tablets from a co-conspirator, for resale in the Northern District of New York.
This case was investigated by the DEA and is being prosecuted by Assistant U.S. Attorney Jeffrey C. Coffman.
Thursday 22 December 2016
West Haven Man Admits to Falsely Certifying Asbestos Abatement Supervisor Course CompletionRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, and Tyler C. Amon, Special Agent in Charge of EPA’s Criminal Investigation Division in New England, Patricia Ferrick, Special Agent in Charge of the Federal Bureau of Investigation in Connecticut, Thomas Muskett, Special Agent in Charge of EPA’s Office of Inspector General for the Washington Field Office, and Matthew J. Etre, Special Agent in Charge of Homeland Security Investigations for the Boston Division, today announced that GUIDO A. CORTES-RODRIGUEZ, 64, of West Haven, pleaded guilty yesterday in Hartford federal court to one count of making a false statement to the federal government.
According to court documents and statements made in court, CORTES was a training instructor at North Star Center For Human Development (“North Star”), an organization that offered a variety of training courses and certification to individuals working with lead paint and asbestos. CORTES was the training manager and a primary instructor for those courses.
North Star’s lead and asbestos training courses were subject to regulation under the training provider accreditation requirements of the federal Toxic Substances Control Act (TSCA). TSCA allowed states to obtain U.S. Environmental Protection Agency (EPA) authorization to administer and enforce the standards, regulations and other requirements of the TSCA’s lead and asbestos programs, including the approval of training courses. The State of Connecticut received such authorization for asbestos and lead programs. Individuals in Connecticut who perform or supervise asbestos abatement activities must be certified by the Connecticut Department of Public Health (CT DPH). To obtain certification, an individual must successfully complete an approved 40-hour asbestos abatement supervisor initial training course. North Star applied for and received approval from CT DPH to offer a wide range of lead and asbestos training courses, including asbestos abatement supervisor initial and refresher courses.
On December 16, 2015, CORTES sent notice to the CT DPH that an asbestos abatement supervisor initial training course would be conducted at North Star’s facility in Hartford from December 27, 2015 to January 2, 2016. Further, he advised that a 32-hour lead abatement worker initial course would be conducted from January 3 to January 6, 2016 at the same location. CORTES was identified as the training manager and primary course instructor for both courses.
An undercover FBI agent attempted to attend the second course under a fictitious identity, seeking a lead abatement worker initial course completion certificate. The agent skipped the first three days of the course, and attempted to attend on January 6, 2016. Upon arrival at the facility, the agent learned that no course was being conducted at North Star that day, and further, that no classes had been conducted for weeks.
The agent called the instructor, CORTES, who agreed to meet him at the North Star facility the following day. When the agent met with CORTES on January 7, 2016, the agent indicated he was interested in trying to get work as soon as possible. CORTES provided him with a list of items he would need from the agent, including his name, mailing address, Social Security number, passport-type photos and $1,260.
Later that day, the agent returned to CORTES’s office with the listed items and CORTES met with him in a cubicle. CORTES asked various biographical questions of the agent, filled out paperwork, and provided the agent with three certificates issued to A.R.: a 40-Hour Asbestos Abatement Supervisor Initial Certification, a 32-Hour Lead Abatement Worker Initial Certification, and an OSHA 10-Hour Construction Safety Training Course. CORTES accepted $1,260 cash in payment from the agent. The agent attended no classes conducted by CORTES at North Star, received no training from CORTES in these subject areas, and did not take any examinations. The false certificates issued by CORTES to the agent were signed by CORTES, bore an individual certificate number, and otherwise appeared to meet the requirements of Connecticut’s approved lead and asbestos accreditation programs, and therefore, the federal accreditation requirements. Subsequent investigation determined that CORTES provided fraudulent training certificates on multiple occasions.
“Government regulations related to asbestos and lead abatement exist for a very important reason: To ensure that this work is done properly and safely without endangering the public health,” said U.S. Attorney Daly. “Individuals who game the system, especially those who illegally profit from it, will be prosecuted.”
“Asbestos and lead removal training providers are entrusted with keeping safe the supervisors, workers and the public that hire them,” said Special Agent in Charge Amon. “Trainers who cheat and provide false certificates will continue to be a focus for EPA enforcement since they pose too great a risk to the public health.”
CORTES is scheduled to be sentenced by U.S. District Judge Robert N. Chatigny on April 18, 2016, at which time CORTES faces a maximum term of imprisonment of five years and a fine of up to $250,000.
This matter has been investigated by the U.S. Environmental Protection Agency, Criminal Investigation Division and Office of Inspector General, Federal Bureau of Investigation, and Homeland Security Investigations. The case is being prosecuted by Assistant U.S. Attorney Anastasia E. King and Special Assistant U.S. Attorney Peter Kenyon.
W. Warwick Resident Facing Child Pornography ChargesRead the Press Release
PROVIDENCE – Joseph Seymour, 38, of West Warwick, made an initial appearance in federal court in Providence on Wednesday charged with possessing and distributing child pornography. It is alleged that Seymour stored more than 8,000 images of child pornography on a digital storage device which he mailed via a commercial courier.
Seymour, charged by way of a federal criminal complaint with possession of child pornography and distribution of child pornography, was released on $10,000 unsecured bond following an appearance before U.S. District Court Magistrate Judge Patricia A. Sullivan.
Seymour’s arrest and the federal charges brought in this matter are announced by United States Attorney Peter F. Neronha; Shelly A. Binkowski, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division; and Colonel Ann C. Assumpico, Superintendent of the Rhode Island State Police.
According to information presented to the court, it is alleged that in July 2016, a Tempe, Arizona computer repair service notified the Tempe, Arizona Police Department that they discovered images on a digital hard drive that appeared to be child pornography. The hard drive had been sent to the Tempe, Arizona repair service via a Rhode Island-based manufacturer of electronic products. The Arizona company is often used by the Rhode Island-based manufacturer as a sub-contractor for computer repair services. It is alleged that the digital storage device owned by Seymour, and which allegedly contained images of child pornography, was mailed via a commercial courier.
According to court documents, the Tempe Police Department reviewed some of the material on the hard drive, and, after determining that some of the contents they reviewed allegedly depicted child pornography, they contacted that Rhode Island State Police Internet Crimes Against Children (ICAC) Task Force. The hard drive was transferred to the ICAC Task Force and then to the U.S. Postal Inspection Service (USPIS) for further examination.
It is alleged that in addition to numerous documents and other files allegedly containing identifying information belonging to Joseph Seymour, a forensic examination by a USPIS Digital Evidence Unit revealed over 8,000 images of alleged child pornography stored in more than 160 subfolders.
On Wednesday, USPIS agents and members of the ICAC Task Force executed a court authorized search of Seymour’s residence and seized numerous computers and digital storage devices.
A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S. Attorney Ronald R. Gendron.
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Contact:
Jim Martin (401) 709-5357
email: [email protected]
on Twitter @USAO_RI
Virginia Man Charged with Attempting to Provide Material Support to ISILRead the Press Release
Lionel Nelson Williams, 26, of Suffolk, Virginia was charged today with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization. Williams was arrested yesterday in Suffolk.
Acting Assistant Attorney General for National Security Mary B. McCord, U.S. Attorney Dana J. Boente for the Eastern District of Virginia and Special Agent in Charge Martin W. Culbreth of the FBI’s Norfolk, Virginia Field Office made the announcement.
According to the affidavit in support of the criminal complaint, in October and November 2016, Williams sent money to a person he believed was collecting money for ISIL to purchase weapons and ammunition for ISIL fighters. Williams also posted content on social media indicating his support for ISIL and attacks targeting police officers, military and armed civilians. In addition, the investigation revealed that Williams ordered an AK-47 assault rifle the day after the terror attack in San Bernardino, California, in December 2015. Two firearms, including a semi-automatic rifle consistent with the appearance of an AK-47, were recovered in a post-arrest search of Williams’ residence.
Williams faces a maximum penalty of 20 years in prison if convicted. 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.
This case was investigated by the Norfolk Joint Terrorism Task Force and the Suffolk Police Department.
Assistant U.S. Attorneys Joseph E. DePadilla and Andrew C. Bosse for the Eastern District of Virginia and Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section are prosecuting the case.
Williams AffidavitUnited States Sues Barclays Bank to Recover Civil Penalties for Fraud in the Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
The United States Department of Justice today filed a civil complaint in the Eastern District of New York against Barclays Bank PLC and several of its United States affiliates (together, Barclays), alleging that Barclays engaged in a fraudulent scheme to sell residential mortgage-backed securities (RMBS) supported by defective and misrepresented mortgage loans. As alleged in the complaint, from 2005 to 2007, Barclays personnel repeatedly misrepresented the characteristics of the loans backing securities they sold to investors throughout the world, who incurred billions of dollars in losses as a result of the fraudulent scheme. The suit also names as defendants two former Barclays executives: Paul K. Menefee, of Austin, Texas, who served as Barclays’ head banker on its subprime RMBS securitizations, and John T. Carroll, of Port Washington, New York, who served as Barclays’ head trader for subprime loan acquisitions.
The detailed allegations in the complaint describe Barclays’, Menefee’s, and Carroll’s misconduct in connection with RMBS securitizations Barclays underwrote between 2005 and 2007. The complaint alleges violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud, wire fraud, bank fraud, and other misconduct. FIRREA authorizes the Attorney General to seek civil penalties up to the amount of the gain to the violator or the losses suffered by persons other than the violator.
“Financial institutions like Barclays occupy a position of vital public trust,” said Attorney General Loretta E. Lynch. “Ordinary Americans depend on their assurances of transparency and legitimacy, and entrust these banks with their valuable savings. As alleged in this complaint, Barclays jeopardized billions of dollars of wealth through practices that were plainly irresponsible and dishonest. With this filing, we are sending a clear message that the Department of Justice will not tolerate the defrauding of investors and the American people.”
“The widespread fraud that investment banks like Barclays committed in the packaging and sale of residential mortgage-backed securities injured tens of thousands of investors and significantly contributed to the Financial Crisis of 2008,” said Principal Deputy Associate Attorney General Bill Baer. “Millions of homeowners were left with homes they could not afford, leaving entire neighborhoods devastated. The government’s complaint alleges that Barclays fraudulently sold investors RMBS full of mortgages it knew were likely to fail, all while telling investors that the mortgages backing the securities were sound. Today’s complaint makes clear that the Department of Justice will continue to hold financial institutions, and the individuals who work for them, fully accountable for harming investors and the American public.”
“What is now often referred to as the ‘Great Recession’ started with the bursting of the housing bubble, followed by an enormous drop in U.S. home values, hundreds of bank failures, significant turbulence in financial markets, trillions of dollars of losses to investors, and, most devastatingly, a huge wave of home foreclosures,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division. “All of these injuries, and more, were caused at least in part by the type of misconduct alleged in this lawsuit. We will continue holding both banks and their executives responsible for their role in contributing to this unfortunate period in our history.”
“Investors who bought RMBS from Barclays, and who suffered catastrophic losses as a result, included individuals and institutions that form the backbone of our community,” said Robert L. Capers, United States Attorney for the Eastern District of New York. “Credit unions, pension plans, charitable and religious organizations, university endowments, and financial institutions, among others, including many in this District, invested tens of billions of dollars in securities that Barclays repeatedly assured them were safe investments. Instead of ensuring that their representations to investors were accurate and transparent, so that investors could make properly informed investment decisions, Barclays and its employees repeatedly misled investors and kept to themselves critical information about the loans in the deals. Time and again, they knowingly chose to put investors at risk of harm in pursuit of additional profits. Barclays must be held accountable for its rampant fraud in marketing and selling these RMBS, and so must the individuals at the heart of the fraudulent scheme.”
“As the complaint alleges, Barclays knowingly sold investors RMBS backed by loans it knew were made to borrowers who were not creditworthy and which were supported by house appraisals it knew were inflated,” said Steven Perez, Special Agent in Charge at the Federal Housing Finance Agency Office of the Inspector General (FHFA-OIG). “The massive losses caused by the fraudulent behavior alleged in the complaint deeply affected not only banks and other financial institutions, including Federal Home Loan Banks, Fannie Mae, and Freddie Mac, but also the American taxpayer. We will continue to work with our law enforcement partners to hold those who have engaged in misconduct fully accountable for their actions.”
As alleged in the complaint, from 2005 through 2007, Barclays, through Menefee and Carroll among others, fraudulently sold tens of billions of dollars of RMBS, and repeatedly misled investors about the quality of the mortgages backing those deals. The alleged scheme involved no fewer than 36 RMBS deals, securitizing over $31 billion worth of subprime and Alt-A mortgage loans. The complaint alleges that in publicly-filed offering documents and in direct communications with investors and rating agencies, Barclays systematically and intentionally misrepresented key characteristics of the loans it included in these RMBS deals.
The United States alleges that in selling certificates in these deals, Barclays assured investors that it had excluded “unacceptable” loans and that the loans in the deals had been underwritten under loan origination guidelines intended to ensure the borrowers’ ability to pay. The complaint alleges Barclays represented to investors that property appraisals were reliable and that the properties were worth enough to avoid loss in the event of default. Barclays told investors that it conducted “robust,” “thorough,” and “comprehensive” due diligence on the loan pools it securitized, and that it did not securitize non-compliant, delinquent, or “scratch and dent” loans.
As alleged in the complaint, these statements were false. In reality, the complaint alleges, Barclays’ due diligence on these RMBS deals was a sham. When it did not skip due diligence altogether, Barclays routinely ignored or kept to itself due diligence results that showed the bank that a considerable percentage of the loans in the deals did not conform to the representations it made to investors. According to the complaint, Barclays sought to maximize the number of loans it securitized, regardless of how poor the quality of the loans.
The United States alleges that Barclays securitized thousands of loans (worth billions of dollars) that its due diligence vendors graded as materially defective, as well as hundreds more that were delinquent or in default at the time of securitization. Its vendors told it that large percentages of the loans they reviewed violated the lenders’ underwriting guidelines or the relevant law, or involved borrowers who lacked the ability to repay. Its vendors also told Barclays that the appraised values of significant percentages of the mortgaged properties were overstated and that thousands of those properties were underwater when they were securitized – meaning the properties were worth less than the loans on the properties. The complaint alleges that Barclays employees, including Menefee and Carroll, ignored or knowingly overrode these findings, waiving thousands of bad loans into the deals. On a number of occasions, Barclays even recycled into its deals defective loans it had kicked out of previous deals, without conducting any additional due diligence on the loans.
In general, the borrowers whose loans backed these deals were significantly less creditworthy than Barclays represented, and these loans defaulted at exceptionally high rates early in the life of the deals. In addition, as alleged in the complaint, mortgaged properties were systematically worth less than what Barclays represented to investors. The deals were dismal failures, as more than half of the underlying residential mortgages defaulted, resulting in billions of dollars in losses to investors. Even investors in AAA-rated tranches of these securities, which were rated as safe as investments in U.S. Treasury bonds, suffered or will suffer significant losses.
Menefee and Carroll were central to Barclays’ allegedly fraudulent scheme. Menefee was the head banker in charge of due diligence and securitization on all of Barclays’ subprime deals, and he decided which loans would be subject to due diligence, as well as which loans would be removed from loan pool purchases. Carroll was the head trader on all of Barclays’ principal subprime deals, and he determined which subprime loan pools Barclays would bid on, at what price, and on what terms. As alleged in the complaint, both men made representations about the characteristics of the loans backing the securities that they knew were false when they made them.
In charge of the case for the government are F. Franklin Amanat, Senior Counsel at the United States Attorney’s Office for the Eastern District of New York, along with Katharine E.G. Brooker, Evan P. Lestelle, and Josephine M. Vella, all Assistant United States Attorneys in Brooklyn.
To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.
United States Sues Barclays Bank to Recover Civil Penalties for Fraud in the Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
BROOKLYN, NY – Earlier today, this Office filed a civil complaint against Barclays Bank plc and several of its United States affiliates (together, Barclays), alleging that Barclays caused billions of dollars of losses to investors by engaging in a fraudulent scheme to sell residential mortgage-backed securities (RMBS) supported by defective and misrepresented mortgage loans. As alleged in the complaint, from 2005 to 2007, Barclays personnel repeatedly misrepresented the characteristics of the loans backing securities they sold to investors throughout the world, who incurred billions of dollars in losses as a result of the fraudulent scheme. The suit also names as defendants two former Barclays executives: Paul K. Menefee, of Austin, Texas, who served as Barclays’ head banker on its subprime RMBS securitizations, and John T. Carroll, of Port Washington, New York, who served as Barclays’ head trader for subprime loan acquisitions.
The filing was announced by Attorney General Loretta E. Lynch, Robert L. Capers, United States Attorney for the Eastern District of New York, Bill Baer, Principal Deputy Associate Attorney General, Benjamin C. Mizer, Principal Deputy Assistant Attorney General for the Department of Justice’s Civil Division, and Steven Perez, Special Agent in Charge at the Federal Housing Finance Agency Office of the Inspector General (FHFA-OIG).
The detailed allegations in the complaint describe Barclays’, Menefee’s, and Carroll’s misconduct in connection with RMBS securitizations Barclays underwrote between 2005 and 2007. The complaint alleges violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud, wire fraud, bank fraud, and other misconduct. FIRREA authorizes the Attorney General to seek civil penalties up to the amount of the gain to the violator or the losses suffered by persons other than the violator.
“Financial institutions like Barclays occupy a position of vital public trust,” said Attorney General Lynch. “Ordinary Americans depend on their assurances of transparency and legitimacy, and entrust these banks with their very livelihood. As alleged in this complaint, Barclays jeopardized billions of dollars of wealth through practices that were plainly irresponsible and dishonest. With this filing, we are sending a clear message that the Department of Justice will not tolerate the defrauding of investors and the American people.”
“Investors who bought RMBS from Barclays, and who suffered catastrophic losses as a result, included individuals and institutions that form the backbone of our communities,” said United States Attorney Capers. “Credit unions, pension plans, charitable and religious organizations, university endowments, and financial institutions, among others, including many in this district, invested tens of billions of dollars in securities that Barclays repeatedly assured them were safe investments. Instead of ensuring that their representations to investors were accurate and transparent, so that investors could make properly informed investment decisions, Barclays and its employees repeatedly misled investors and kept to themselves critical information about the loans in the deals. Time and again, they knowingly chose to put investors at risk of harm in pursuit of additional profits. Barclays must be held accountable for its rampant fraud in marketing and selling these RMBS, and so must the individuals at the heart of the fraudulent scheme.”
“The widespread fraud that investment banks like Barclays committed in the packaging and sale of residential mortgage-backed securities injured tens of thousands of investors and significantly contributed to the Financial Crisis of 2008,” said Principal Deputy Associate Attorney General Baer. “Millions of homeowners were left with homes they could not afford, leaving entire neighborhoods devastated. The government’s complaint alleges that Barclays fraudulently sold investors RMBS full of mortgages it knew were likely to fail, all while telling investors that the mortgages backing the securities were sound. Today’s complaint makes clear that the Department of Justice will continue to hold financial institutions, and the individuals who work for them, fully accountable for harming investors and the American public.”
“What is now often referred to as the ‘Great Recession’ started with the bursting of the housing bubble, followed by an enormous drop in U.S. home values, hundreds of bank failures, significant turbulence in financial markets, trillions of dollars of losses to investors, and, most devastatingly, a huge wave of home foreclosures,” said Principal Deputy Assistant Attorney General Mizer, the head of the Justice Department’s Civil Division. “All of these injuries, and more, were caused at least in part by the type of misconduct alleged in this lawsuit. We will continue holding both banks and their executives responsible for their role in contributing to this unfortunate period in our history.”
“As the complaint alleges, Barclays knowingly sold investors RMBS backed by loans it knew were made to borrowers who were not creditworthy and which were supported by house appraisals it knew were inflated,” said Special Agent in Charge Perez of FHFA-OIG. “The massive losses caused by the fraudulent behavior alleged in the complaint deeply affected not only banks and other financial institutions, including Federal Home Loan Banks, Fannie Mae, and Freddie Mac, but also the American taxpayer. We will continue to work with our law enforcement partners to hold those who have engaged in misconduct fully accountable for their actions.”
As alleged in the complaint, from 2005 through 2007, Barclays, through Menefee and Carroll among others, fraudulently sold tens of billions of dollars of RMBS, and repeatedly misled investors about the quality of the mortgages backing those deals. The alleged scheme involved no fewer than 36 RMBS deals, securitizing over $31 billion worth of subprime and Alt-A mortgage loans. The complaint alleges that in publicly-filed offering documents and in direct communications with investors and rating agencies, Barclays systematically and intentionally misrepresented key characteristics of the loans it included in these RMBS deals.
The United States alleges that in selling certificates in these deals, Barclays assured investors that it had excluded “unacceptable” loans and that the loans in the deals had been underwritten under loan origination guidelines intended to ensure the borrowers’ ability to pay. The complaint alleges Barclays represented to investors that property appraisals were reliable and that the properties were worth enough to avoid loss in the event of default. Barclays told investors that it conducted “robust,” “thorough,” and “comprehensive” due diligence on the loan pools it securitized, and that it did not securitize non-compliant, delinquent, or “scratch and dent” loans.
As alleged in the complaint, these statements were false. In reality, the complaint alleges, Barclays’ due diligence on these RMBS deals was a sham. When it did not skip due diligence altogether, Barclays routinely ignored or kept to itself due diligence results that showed the bank that a considerable percentage of the loans in the deals did not conform to the representations it made to investors. According to the complaint, Barclays sought to maximize the number of loans it securitized, regardless of how poor the quality of the loans.
The United States alleges that Barclays securitized thousands of loans (worth billions of dollars) that its due diligence vendors graded as materially defective, as well as hundreds more that were delinquent or in default at the time of securitization. Its vendors told it that large percentages of the loans they reviewed violated the lenders’ underwriting guidelines or the relevant law, or involved borrowers who lacked the ability to repay. Its vendors also told Barclays that the appraised values of significant percentages of the mortgaged properties were overstated and that thousands of those properties were underwater when they were securitized – meaning the properties were worth less than the loans on the properties. The complaint alleges that Barclays employees, including Menefee and Carroll, ignored or knowingly overrode these findings, waiving thousands of bad loans into the deals. On a number of occasions, Barclays even recycled into its deals defective loans it had kicked out of previous deals, without conducting any additional due diligence on the loans.
In general, the borrowers whose loans backed these deals were significantly less creditworthy than Barclays represented, and these loans defaulted at exceptionally high rates early in the life of the deals. In addition, as alleged in the complaint, mortgaged properties were systematically worth less than what Barclays represented to investors. The deals were dismal failures, as more than half of the underlying residential mortgages defaulted, resulting in billions of dollars in losses to investors. Even investors in AAA-rated tranches of these securities, which were rated as safe as investments in U.S. Treasury bonds, suffered or will suffer significant losses.
Menefee and Carroll were central to Barclays’ allegedly fraudulent scheme. Menefee was the head banker in charge of due diligence and securitization on all of Barclays’ subprime deals, and he decided which loans would be subject to due diligence, as well as which loans would be removed from loan pool purchases. Carroll was the head trader on all of Barclays’ principal subprime deals, and he determined which subprime loan pools Barclays would bid on, at what price, and on what terms. As alleged in the complaint, both men made representations about the characteristics of the loans backing the securities that they knew were false when they made them.
The government’s case is being handled by this Office’s Civil Division. Senior Counsel F. Franklin Amanat, and Assistant United States Attorneys Katharine E.G. Brooker, Evan P. Lestelle, and Josephine M. Vella are in charge of the prosecution. They are assisted by the Fraud Section of the Commercial Litigation Branch of the Justice Department’s Civil Division, as well as attorneys, analysts, and other individuals assigned to the Department of Justice’s RMBS Working Group, which also includes special agents from the FHFA-OIG. Mr. Capers thanks the FHFA-OIG for its assistance in conducting the investigation in this matter.
The complaint was filed under the auspices of the President’s Financial Fraud Enforcement Task Force, which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. Since its formation, the Task Force has made great strides in facilitating investigation and prosecution of financial crimes; in enhancing coordination and cooperation among federal, state, and local authorities; in addressing discrimination in the lending and financial markets; and in conducting outreach to the public, to victims, to financial institutions, and to other organizations.
The RMBS Working Group, part of the Task Force, was established by the Attorney General in late January 2012. The Working Group has been dedicated to initiating, organizing, and advancing new and existing investigations by federal and state authorities into fraud and abuse in the RMBS market that helped precipitate the 2008 Financial Crisis. The Working Group has to date recovered tens of billions of dollars in civil penalty settlements and consumer relief from banks and other entities that are alleged to have committed fraud in connection with the issuance of RMBS. To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.
The Individual Defendants:
PAUL K. MENEFEE
Age: 47
Residence: Austin, TexasJOHN T. CARROLL
Age: 49
Residence: Port Washington, New YorkE.D.N.Y. Docket No. 16-CV-7057 (KAM/RLM)
U.S. Attorney Reaches Settlements for Violations of the Federal Disadvantaged Business Enterprise RegulationsRead the Press Release
PHILADELPHIA – Louis D. Lappen, First Assistant United States Attorney for the Eastern District of Pennsylvania, announced today that the United States had reached a civil settlement with Ernest Bock and Sons, Inc. (“EBS”) resolving civil claims concerning EBS’ improper use of United States Department of Transportation (“DOT”) funds for two Southeastern Pennsylvania Transportation Authority (“SEPTA”) construction projects. In addition, he announced that the United States filed a civil lawsuit and entered into a consent judgment with Atrium International (“Atrium”), the DBE who improperly received USDOT funds in connection with the two SEPTA construction projects. To resolve the government’s civil claims against it, EBS has paid the United States $450,000 pursuant to the settlement agreement; Atrium has agreed to pay $45,000 pursuant to the consent judgment.
First Assistant Lappen stated: “EBS and Atrium subverted the aims of the U.S. Department of Transportation’s Disadvantaged Business Enterprise program and thus denied qualified DBEs the opportunity to participate in the program and to do the work that SEPTA commissioned. These civil resolutions demonstrate the Department of Justice’s commitment to ensure that contractors who receive federal funds will follow the law.”
“As evidenced by this settlement agreement entered into by EBS and the consent judgement with Atrium, we remain steadfast in our commitment to maintaining the integrity of the DOT’s DBE program,” said Douglas Shoemaker, regional Special Agent-in-Charge of DOT’s Office of Inspector General. “DBE fraud harms the integrity of the DBE program and law-abiding contractors, including many small businesses, by defeating efforts to ensure a level playing field in which all firms can compete fairly for contracts. Working with the Secretary of Transportation and other DOT leaders, and our law enforcement and prosecutorial colleagues, we will continue to protect the taxpayers’ investment in our nation’s infrastructure from fraud, waste, abuse and violations of law.”
Background for the DOT’s DBE Programs
Beginning in 1980, the U.S. Department of Transportation issued regulations to increase the participation of minority and disadvantaged business enterprises in federally-funded construction contracts. To become certified as a DBE, a company must be owned and controlled by socially and economically disadvantaged individuals. Recipients of DOT construction grants, such as SEPTA, must establish a DBE program that sets goals for the percentage of a project’s work that should be awarded to DBEs (“DBE goals”).
General contractors may only count funds paid to DBEs toward the attainment of DBE goals if the DBEs performed a “commercially useful function.” A DBE does not perform a “commercially useful function” if its “role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of DBE participation.” A DBE subcontractor performs a “commercially useful function” when it is responsible for the execution of the work of the contract; it actually performs, manages, and supervised the work involved; and it furnishes the supervision, labor and equipment necessary to perform its work.
EBS’ and Atrium’s Fraud
EBS and Atrium served as the general contractor and DBE contractor, respectively, on two projects commissioned by SEPTA that were funded by DOT: 1) the renovation of the Folcroft, Clifton-Alden and Morton rail stations (S788407) and 2) the R5 signage project (S781109). The DBE goals for the two projects were 13 percent and 7 percent, respectively.
Although Atrium was listed as the DBE on these two SEPTA projects, it never performed any useful commercial functions on the projects between 2010 and 2011. Instead, EBS selected and used a non-DBE subcontractor to complete the duties that Atrium was supposed to perform. Atrium was aware of this arrangement and accepted a commission for improperly lending its DBE status and acting as a “pass-through” on these projects. EBS falsely certified to SEPTA that Atrium was performing the delegated DBE tasks on the projects. Furthermore, Atrium submitted certified payrolls to the Department of Labor that falsely claimed that the individuals performing the work were its employees and acting under its supervision when that was not true. Atrium and EBS pursued that false reporting after they had been criticized in a 2010 Philadelphia Office of Comptroller’s Report for violating Philadelphia Minority Business Enterprise during a construction project at the Philadelphia Airport.
As part of its settlement, EBS has paid the government $450,000. Atrium International has agreed to pay the government $45,000 in connection with a stipulated consent judgment entered on December 21, 2016 by Judge O’Neill.
For the United States Attorney’s Office for the Eastern District of Pennsylvania, this investigation and settlement was handled by Assistant United States Attorney Eric D. Gill.
The claims settled by this settlement agreement and consent judgment are allegations only, and there has been no determination of liability.
Two Men Charged with Illegal Firearm Following Police Chase, CollisionRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that two men were charged in federal court today with illegally possessing a firearm following a head-on collision with a police vehicle in a Quik Trip parking lot while attempting to flee from officers.
Curlie Pruitt, III, 36, and Roy L. House, 38, addresses unknown, were charged in a criminal complaint filed in the U.S. District Court in Kansas City, Mo. Pruitt and House remain in federal custody pending a detention hearing, which has not yet been scheduled.
Today’s federal criminal complaint charges Pruitt and House with being felons in possession of a firearm.
According to an affidavit filed in support of the criminal complaint, Independence police officers were contacted by an employee at the Super 8 Hotel, 4031 S. Lynn Court Drive, Independence, at approximately 8:36 p.m. on Tuesday, Dec. 20, 2016, in regard to two men – later identified as Pruitt and House – who were acting suspiciously. The employee feared the men were going to rob the hotel, the affidavit says. They left the hotel but returned at approximately 9:05 p.m.
When officers arrived at the hotel, the affidavit says, Pruitt and House were in a blue Ford 500 and were leaving the area, with Pruitt driving. A police officer activated the emergency equipment on his patrol vehicle to initiate a traffic stop, however, Pruitt allegedly accelerated the vehicle and drove through the parking lot of the Quik Trip at 4024 S. Noland Road, Independence. As Pruitt’s vehicle continued at a high rate of speed through the parking lot, traveling toward S. Noland Road, it collided head-on with the patrol vehicle of another officer who was responding to assist. The collision was severe enough to disable both vehicles.
Pruitt immediately attempted to exit his vehicle and flee, the affidavit says, but was trapped by a third police vehicle that pinned the driver’s side door closed. Pruitt and House were placed under arrest. Officers found a loaded American Tactical .45-caliber semi-automatic handgun on the floor board of the front passenger seat area.
According to the affidavit, Pruitt and House are suspected of the armed robberies of the Road Star Gas Station, 11100 E. US 40 Hwy., Independence, on Dec. 11, 2016; Beeline Mini-Mart, 1005 Isley Blvd., Excelsior Springs, Mo., on Dec. 15, 2016; and Discount Smoke Shop, 4718 N.E. Vivion Rd., Kansas City, Mo., on Dec. 18, 2016.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Pruitt has prior felony convictions for assault and robbery, as well as a prior federal conviction for being a felon in possession of a firearm for which he was sentenced to three years and one month in federal prison. House has prior convictions for assault and robbery as well as a federal conviction for carjacking for which he was sentenced to 11 years and five months in federal prison. House is currently serving a term of supervised release for that federal conviction.
Dickinson cautioned that the charge contained in this complaint is simply an accusation, and not evidence of guilt. Evidence supporting the charge must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Bruce Rhoades. It was investigated by the Independence, Mo., Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Two Indicted for Conspiracy to Commit Public Assistance FraudRead the Press Release
United States Attorney Andrew M. Luger announced an indictment charging KYLE LEWIS KIRSCHMAN, 52, and HOLLY KAY BLOOM, 37, with conspiring to commit public assistance fraud. The indictment was filed in U.S. District Court in Minneapolis on December 21, 2016.
According to the indictment, KIRSCHMAN owned a house in Mankato, Minn. The house was divided into two apartments. KIRSCHMAN occupied apartment 1. On June 13, 2006, KIRSCHMAN and BLOOM entered into a lease for BLOOM and her family to reside in apartment 2. KIRSCHMAN filed an application to have the apartment designated as Section 8 housing under the US Department of Housing and Urban Development (HUD) Section 8 program. Among the requirements for Section 8 approval were that no member of BLOOM and KIRSCHMAN’s immediate families were related and that apartment 2 was the BLOOM family’s only residence. Around the same time, BLOOM applied for the Supplemental Nutrition Assistance Program (SNAP) and Medical Assistance (MA) benefits. She did not list KIRSCHMAN as a member of her household.
According to the indictment, BLOOM claimed for at least six years that she lived in apartment 2. However, from at least June 2007 through February 2014, KIRSCHMAN and the BLOOM family lived together in Apartment 1 and 2. During this time, KIRSCHMAN was an immediate family member of a member of the BLOOM family and the BLOOM family lived in both apartments 1 and 2, so KIRSCHMAN unlawfully received Section 8 rental subsidies. Additionally, BLOOM unlawfully received SNAP and MA benefits during this time because KIRSCHMAN was a member of her household, was continuously employed, and earned an income that disqualified the household for any such benefits.
During the relevant time period, KIRSCHMAN and BLOOM received Section 8 rental subsidies for apartment 2 in the amount of $35,221. BLOOM received SNAP benefits totaling $25,216 and MA benefits totaling $14,624.
This case is the result of an investigation conducted by the Blue Earth County Sheriff’s Office Welfare Fraud Investigator and US Department of Housing and Urban Development OIG.
This case is being prosecuted by Assistant U.S. Attorney Manda Sertich.
Defendant Information:KYLE LEWIS KIRSCHMAN, 52
Mankato, Minn.Charges:
• Conspiracy to commit public assistance fraud, 1 countHOLLY KAY BLOOM, 37
Mankato, Minn.Charges:
• Conspiracy to commit public assistance fraud, 1 countThe charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Troy Man Charged with Receiving and Possessing Child PornographyRead the Press Release
ALBANY, NEW YORK – Joshua C. Lozo, age 35, of Troy, New York, was ordered detained yesterday following his arrest on December 15 on charges of receiving and possessing child pornography.
The announcement was made by United States Attorney Richard S. Hartunian and Special Agent in Charge Andrew W. Vale of the Albany Division of the Federal Bureau of Investigation (FBI).
A criminal complaint alleges that between December 15, 2011 and December 15, 2016, Lozo used a peer-to-peer file-sharing program and the Internet to download multiple child pornography movies. The charges in the complaint are merely accusations. The defendant is presumed innocent until proven guilty.
On December 21, 2016, Lozo appeared in federal court in Albany before United States Magistrate Judge Christian F. Hummel, who ordered Lozo detained pending trial.
If convicted of receiving child pornography, Lozo faces at least 5 years and up to 20 years in prison. If convicted of possessing child pornography, Lozo faces up to 10 years in prison. Conviction on either charge carries a fine of up to $250,000, a term of post-imprisonment supervised release of at least 5 years and up to life, and mandatory registration as a sex offender. Sentences are imposed by a judge based on the particular statute the defendant is charged with violating, the United States Sentencing Guidelines and other factors.
This case is being investigated by the FBI and the New York State Police, and is being prosecuted by Assistant U.S. Attorney Rick Belliss.
Three People Indicted in Illegal Gambling OperationRead the Press Release
St. Louis, MO – Three individuals were indicted today in an indictment alleging that they organized and ran an illegal high-stakes sports betting operation, in part by utilizing a website on the internet.
The three individuals are also accused of engaging in money laundering and unlawful monetary transactions, including the purchase of a house and a vehicle using the proceeds of their crimes.
The indictment alleges that two of these individuals filed false tax returns trying to conceal their crimes, and a third committed perjury by filing a false declaration before the United States District Court for the Eastern District of Missouri.
Samuel Douglas Hazer, Florence, Alabama; Carol Jean Hazer, Farmington, Missouri; and Joseph Mahfood, St. Louis, Missouri; were indicted on multiple charges including illegal gambling business, interstate activity in furtherance of gambling, money laundering, unlawful monetary transactions, perjury and filing false tax returns.
If convicted, these charges carry maximum penalties up to 20 years in prison and/or fines up to $250,000. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation. Assistant United States Attorney Richard Finneran is handling the case for the U.S. Attorney’s Office.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Teva Pharmaceutical Industries Ltd. Agrees to Pay More Than $283 Million to Resolve Foreign Corrupt Practices Act ChargesRead the Press Release
Companies Agree to Pay Nearly $520 Million to U.S. Criminal and Regulatory Authorities, Representing the Largest Criminal Fine Imposed Against a Pharmaceutical Company for Violations of the FCPA
WASHINGTON – Teva Pharmaceutical Industries Ltd. (Teva), the world’s largest manufacturer of generic pharmaceutical products, and its wholly-owned Russian subsidiary, Teva LLC (Teva Russia), agreed to resolve criminal charges and to pay a criminal penalty of more than $283 million in connection with schemes involving the bribery of government officials in Russia, Ukraine and Mexico in violation of the Foreign Corrupt Practices Act (FCPA).
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Assistant Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement.
“Teva and its subsidiaries paid millions of dollars in bribes to government officials in various countries, and intentionally failed to implement a system of internal controls that would prevent bribery,” said Assistant Attorney General Caldwell. “Companies that compete fairly, ethically and honestly deserve a level playing field, and we will continue to prosecute those who undermine that goal.”
“No matter where corruption occurs, the FBI and our global partners are committed to diligently rooting out the corruption that betrays the public trust and threatens a fair economy for all,” said Special Agent in Charge Piro.
According to the companies’ admissions, Teva executives and Teva Russia employees paid bribes to a high-ranking Russian government official intending to influence the official to use his authority to increase sales of Teva’s multiple sclerosis drug, Copaxone, in annual drug purchase auctions held by the Russian Ministry of Health. The corrupt arrangement occurred at the same time that the Russian government was seeking to reduce the amount spent on costly foreign pharmaceutical products, such as Copaxone. Between 2010 and at least 2012, pursuant to an agreement with a repackaging and distribution company owned by the Russian government official, Teva earned more than $200 million in profits on Copaxone sales to the Russian government. Moreover, the Russian official earned approximately $65 million in corrupt profits through inflated profit margins granted to the official’s company.
Teva also admitted to paying bribes to a senior government official within the Ukrainian Ministry of Health to influence the Ukrainian government’s approval of Teva drug registrations, which were necessary for the company to market and sell its products in the country. Between 2001 and 2011, Teva engaged the official as the company’s “registration consultant,” paid him a monthly fee and provided him with travel and other things of value totaling approximately $200,000. In exchange, the official used his official position and influence within the Ukrainian government to influence the registration in Ukraine of Teva pharmaceutical products, including Copaxone and insulins.
In addition, Teva admitted that it failed to implement an adequate system of internal accounting controls and failed to enforce the controls it had in place at its Mexican subsidiary, which allowed bribes to be paid by the subsidiary to doctors employed by the Mexican government. Teva admitted that its Mexican subsidiary had been bribing these doctors to prescribe Copaxone since at least 2005. Teva executives in Israel responsible for the development of the company’s anti-corruption compliance program in 2009 had been aware of the bribes paid to government doctors in Mexico. Nevertheless, Teva executives approved policies and procedures that they knew were not sufficient to meet the risks posed by Teva’s business and were not adequate to prevent or detect payments to foreign officials. Teva also admitted that its executives put in place managers to oversee the compliance function who were unable or unwilling to enforce the anti-corruption policies that had been put in place.
Teva entered into a deferred prosecution agreement (DPA) in connection with a criminal information, filed today in the Southern District of Florida, charging the company with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of failing to implement adequate internal controls. Pursuant to its agreement with the department, Teva will pay a total criminal penalty of $283,177,348. Teva also agreed to continue to cooperate with the department’s investigation, enhance its compliance program, implement rigorous internal controls and retain an independent corporate compliance monitor for a term of three years.
Teva Russia has signed a plea agreement in which it has agreed to plead guilty to a one-count criminal information, also filed today in the Southern District of Florida, charging the company with conspiring to violate the anti-bribery provisions of the FCPA. The plea agreement is subject to court approval. The case was assigned to U.S. District Judge Kathleen M. Williams of the Southern District of Florida and Teva Russia's initial court appearance has been scheduled for January 12, 2017.
In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Teva, whereby the company agreed to pay approximately $236 million in disgorgement to the SEC, including prejudgment interest. Thus, the combined total amount of U.S. criminal and regulatory penalties to be paid by Teva is nearly $520 million.
The Criminal Division’s Fraud Section reached this resolution based on a number of factors, including the fact that Teva did not timely voluntarily self-disclose the conduct, but did cooperate with the department’s investigation after the SEC served it with a subpoena. Teva received a 20 percent discount off the low end of the U.S. Sentencing Guidelines fine range because of its substantial cooperation and remediation. The company, however, did not receive full cooperation credit because of issues that resulted in delays to the early stages of the Fraud Section’s investigation, including vastly overbroad assertions of attorney-client privilege and not producing documents on a timely basis in response to certain Fraud Section document requests. Because many of the company’s compliance enhancements were more recent, and therefore have not been tested, the DPA imposes an independent compliance monitor for a term of three years.
The FBI’s International Corruption Unit and Miami Field Office investigated the case. Fraud Section Trial Attorneys Rohan A. Virginkar and John-Alex Romano prosecuted the case. The Fraud Section appreciates the significant cooperation and assistance provided by the SEC in this matter. The Criminal Division’s Office of International Affairs and the Mexican Attorney General’s Office (Procuradura General de la República or PGR) also provided assistance in this matter.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Teva Pharmaceutical Industries Ltd. Agrees to Pay More Than $283 Million to Resolve Foreign Corrupt Practices Act ChargesRead the Press Release
Teva Pharmaceutical Industries Ltd. (Teva), the world’s largest manufacturer of generic pharmaceutical products, and its wholly-owned Russian subsidiary, Teva LLC (Teva Russia), agreed to resolve criminal charges and to pay a criminal penalty of more than $283 million in connection with schemes involving the bribery of government officials in Russia, Ukraine and Mexico in violation of the Foreign Corrupt Practices Act (FCPA).
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Director Stephen Richardson of the FBI’s Criminal Investigative Division, and Assistant Special Agent in Charge William J. Maddalena of the FBI’s Miami Field Office made the announcement.
“Teva and its subsidiaries paid millions of dollars in bribes to government officials in various countries, and intentionally failed to implement a system of internal controls that would prevent bribery,” said Assistant Attorney General Caldwell. “Companies that compete fairly, ethically and honestly deserve a level playing field, and we will continue to prosecute those who undermine that goal.”
“No matter where corruption occurs, the FBI and our global partners are committed to diligently rooting out the corruption that betrays the public trust and threatens a fair economy for all,” said FBI Assistant Director Stephen Richardson.
“As demonstrated by this case, the Foreign Corrupt Practices Act has a long reach,” said William J. Maddalena, Assistant Special Agent in Charge, FBI Miami. “Teva’s egregious attempt to enrich themselves failed and they will now pay a tough penalty.”
According to the companies’ admissions, Teva executives and Teva Russia employees paid bribes to a high-ranking Russian government official intending to influence the official to use his authority to increase sales of Teva’s multiple sclerosis drug, Copaxone, in annual drug purchase auctions held by the Russian Ministry of Health. The corrupt arrangement occurred at the same time that the Russian government was seeking to reduce the amount spent on costly foreign pharmaceutical products, such as Copaxone. Between 2010 and at least 2012, pursuant to an agreement with a repackaging and distribution company owned by the Russian government official, Teva earned more than $200 million in profits on Copaxone sales to the Russian government. Moreover, the Russian official earned approximately $65 million in corrupt profits through inflated profit margins granted to the official’s company.
Teva also admitted to paying bribes to a senior government official within the Ukrainian Ministry of Health to influence the Ukrainian government’s approval of Teva drug registrations, which were necessary for the company to market and sell its products in the country. Between 2001 and 2011, Teva engaged the official as the company’s “registration consultant,” paid him a monthly fee and provided him with travel and other things of value totaling approximately $200,000. In exchange, the official used his official position and influence within the Ukrainian government to influence the registration in Ukraine of Teva pharmaceutical products, including Copaxone and insulins.
In addition, Teva admitted that it failed to implement an adequate system of internal accounting controls and failed to enforce the controls it had in place at its Mexican subsidiary, which allowed bribes to be paid by the subsidiary to doctors employed by the Mexican government. Teva admitted that its Mexican subsidiary had been bribing these doctors to prescribe Copaxone since at least 2005. Teva executives in Israel responsible for the development of the company’s anti-corruption compliance program in 2009 had been aware of the bribes paid to government doctors in Mexico. Nevertheless, Teva executives approved policies and procedures that they knew were not sufficient to meet the risks posed by Teva’s business and were not adequate to prevent or detect payments to foreign officials. Teva also admitted that its executives put in place managers to oversee the compliance function who were unable or unwilling to enforce the anti-corruption policies that had been put in place.
Teva entered into a deferred prosecution agreement (DPA) in connection with a criminal information, filed today in the Southern District of Florida, charging the company with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of failing to implement adequate internal controls. Pursuant to its agreement with the department, Teva will pay a total criminal penalty of $283,177,348. Teva also agreed to continue to cooperate with the department’s investigation, enhance its compliance program, implement rigorous internal controls and retain an independent corporate compliance monitor for a term of three years.
Teva Russia has signed a plea agreement in which it has agreed to plead guilty to a one-count criminal information, also filed today in the Southern District of Florida, charging the company with conspiring to violate the anti-bribery provisions of the FCPA. The plea agreement is subject to court approval. The case was assigned to U.S. District Judge Kathleen M. Williams of the Southern District of Florida and Teva Russia's initial court appearance has been scheduled for January 12, 2017.
In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Teva, whereby the company agreed to pay approximately $236 million in disgorgement to the SEC, including prejudgment interest. Thus, the combined total amount of U.S. criminal and regulatory penalties to be paid by Teva is nearly $520 million.
The Criminal Division’s Fraud Section reached this resolution based on a number of factors, including the fact that Teva did not timely voluntarily self-disclose the conduct, but did cooperate with the department’s investigation after the SEC served it with a subpoena. Teva received a 20 percent discount off the low end of the U.S. Sentencing Guidelines fine range because of its substantial cooperation and remediation. The company, however, did not receive full cooperation credit because of issues that resulted in delays to the early stages of the Fraud Section’s investigation, including vastly overbroad assertions of attorney-client privilege and not producing documents on a timely basis in response to certain Fraud Section document requests. Because many of the company’s compliance enhancements were more recent, and therefore have not been tested, the DPA imposes an independent compliance monitor for a term of three years.
The FBI’s International Corruption Unit and Miami Field Office investigated the case. Fraud Section Trial Attorneys Rohan A. Virginkar and John-Alex Romano prosecuted the case. The Fraud Section appreciates the significant cooperation and assistance provided by the SEC in this matter. The Criminal Division’s Office of International Affairs and the Mexican Attorney General’s Office (Procuradura General de la República or PGR) also provided assistance in this matter.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Suffolk Man Charged with Attempting to Provide Material Support to ISILRead the Press Release
NORFOLK, Va. – Lionel Nelson Williams, 26, of Suffolk, was charged today with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization. Williams was arrested yesterday in Suffolk and will have his detention and preliminary hearings on Tuesday morning at the federal courthouse in Norfolk.
According to the affidavit in support of the criminal complaint, in October and November 2016, Williams sent money to a person he believed was collecting money for ISIL to purchase weapons and ammunition for ISIL fighters. Williams also posted content on social media indicating his support for ISIL and attacks targeting police officers, military, and armed civilians, according to the complaint affidavit. In addition, the investigation revealed that Williams ordered an AK-47 assault rifle the day after the terror attack in San Bernardino, California, in December 2015, and two firearms, including an AK-47 and a semi-automatic handgun, were recovered in a post-arrest search of Williams’ residence.
Williams faces a maximum penalty of 20 years in prison if convicted. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Mary B. McCord, Acting Assistant Attorney General for National Security; and Martin W. Culbreth, Special Agent in Charge of the FBI’s Norfolk Field Office, made the announcement. Assistant U.S. Attorneys Joseph E. DePadilla and Andrew C. Bosse and Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section are prosecuting the case.
This case was investigated by the Norfolk Joint Terrorism Task Force and the Suffolk Police Department.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:16-mj-524.
Southern Illinois Residents Sentenced for Methamphetamine OffenseRead the Press Release
Troy A. Smith, 45, of Jonesboro, and Jeremiah Lee Jae Sadler, a/k/a "Jeremiah L. Sadler," 37, of Marion, were recently sentenced to federal prison on methamphetamine charges, Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced today.
Smith and Sadler had previously pled guilty to a one-count indictment charging them with conspiracy to distribute methamphetamine. On December 20, 2016, Smith was sentenced to 135 months imprisonment, 3 years supervised release, and was fined $200.00. On December 21, 2016, Sadler was sentenced to 121 months imprisonment, 3 years supervised release, and was fined $200.00. At sentencing, the District Court found Smith was responsible for the distribution of 1.24 kilograms of "ice" and that Sadler was responsible for the distribution of 389 grams of "ice." Ice is methamphetamine which has a purity level of at least 80%. The offense occurred between 2015 and February 2016, in Union and Williamson Counties.
The investigation was conducted by the Southern Illinois Enforcement Group, Southern Illinois Drug Task Force, and Drug Enforcement Administration. The Union and Williamson County States Attorney’s Offices also assisted in the investigation.
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Sentencings for December 19 - December 21, 2016Read the Press Release
Travis James Stevenson, 33, was sentenced by Chief Federal District Court Judge Nancy D. Freudenthal on December 21, 2016, for being a felon in possession of a firearm. Stevenson was arrested in Laramie, Wyoming. He received 30 months of imprisonment, to be followed by three years of supervised release, and was ordered to pay a $100.00 special assessment. This case was investigated by the Laramie Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Lizandro Pelico-Sontay, 30, of Guatemala, was sentenced by Chief Federal District Court Judge Nancy D. Freudenthal on December 21, 2016, for illegal re-entry of a previously deported alien into the United States. Pelico-Sontay was arrested in Jackson, Wyoming. He received time served, plus ten days, was ordered to pay a $100.00 special assessment, and is subject to deportation upon release from custody. This case was investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement.
Juan De Dios Guerrero-Villanueva, 34, of Mexico, was sentenced by Chief Federal District Court Judge Nancy D. Freudenthal on December 19, 2016, for illegal re-entry of a previously deported alien into the United States. Guerrero-Villanueva was arrested in Cheyenne, Wyoming. He received time served, plus ten days, was ordered to pay a $100.00 special assessment, and is subject to deportation upon release from custody. This case was investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement.
San Francisco, New York, and Granite Bay Residents Charged in Bid-Rigging Conspiracy Involving Government ContractsRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned an indictment today against John Brewer, 47, of San Francisco; Brent Vinch, 47, of Manorville, New York; and Loraine Dixon, 55, of Granite Bay, charging them with a bid-rigging conspiracy involving state contracts, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Brewer and Vinch were the owners of and senior executives for a company called Expert Network Consultants, which submitted bids to the State of California for various government contracts. From 2008 through early 2012, it is alleged that Brewer, Vinch and Dixon conspired with each other and others to rig the State’s competitive bidding process by creating inflated bids for submission by co-conspirators to state contracting agencies in an effort to ensure that Expert Network Consultants received the contracts.
This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the California Attorney General’s Office. Assistant U.S. Attorneys Jared C. Dolan and Matthew M. Yelovich are prosecuting the case.
If convicted, Brewer, Vinch, and Dixon face a maximum statutory penalty of 10 years in prison and a $1 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Sacramento Man Charged with Distribution of Child PornographyRead the Press Release
SACRAMENTO, Calif. — Mark Corum, 60, of Sacramento, was arraigned today in Sacramento on an indictment charging him with distribution of child pornography, U.S. Attorney Phillip A. Talbert announced.
According court documents, on June 23, 2016, Corum transmitted images of prepubescent children engaged in sexually explicit conduct to another person via the internet.
This case was investigated by the Sacramento Internet Crimes Against Children (ICAC) Task Force, a federally and state-funded task force managed by the Sacramento Sheriff’s Department with agents from federal, state, and local agencies. The Sacramento ICAC investigates online child exploitation crimes, including child pornography, enticement, and sex trafficking. Assistant U.S. Attorney Katherine T. Lydon is prosecuting the case.
Corum is in custody and is scheduled to appear before U.S. District Judge Kimberly J. Mueller on January 25, 2017 at 9:00 a.m.
If convicted, Corum faces a maximum statutory penalty of 20 years in prison and a maximum statutory fine of $250,000. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc.
Rochester Man Pleads Guilty to Smuggling Contraband into JailRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051ROCHESTER, N.Y. -- Acting U.S. Attorney James P. Kennedy, Jr. announced today that Hoeub Chan, 35, of Rochester, NY, pleaded guilty to smuggling narcotics into jail, before Chief U.S. District Judge Frank P. Geraci. The charge carries a maximum penalty of 10 years in prison and a fine of up to $250,000.
Assistant U.S. Attorney Craig R. Gestring, who is handling the case, stated that Chan was sentenced to federal prison in January of 2016, following his conviction for conspiracy to commit mail fraud. After being taken into custody, law enforcement officers discovered that the defendant smuggled Oxycodone and Dextroamphetamine into his place of incarceration in the seams of his shirt, socks, and hidden in his shoes. Chan made multiple false statements in which he denied possessing any contraband to Deputy United States Marshals while being processed.
Chan’s incarceration stemmed from his conviction for conspiring to commit mail fraud for engaging in a scheme with others to defraud Rochester Electric and Gas by re-routing closed account payments. As a result of that scheme, the defendant obtained over $72,000, which he was ordered to repay.
Today’s plea is the culmination of an investigation conducted by the United States Marshals Service, under the direction of Marshal Charles Salina.
Sentencing is scheduled for April 5, 2017, at 3:30 p.m. before Judge Geraci.
Repeat Drug Trafficker Sentenced to 17 Years in Postal StingRead the Press Release
PHILADELPHIA – Angel Catalino Ivostraza-Torres, 53, of North Philadelphia, PA, was sentenced today to 204 months in federal prison in connection with an undercover investigation conducted by the U.S. Postal Inspection Service. Ivostraza-Torres pleaded guilty on August 11, 2016, to attempted possession with intent to distribute 500 grams or more of cocaine.
During the investigation, Ivostraza-Torres was caught transporting a U.S. mail package that had contained nearly a kilogram of cocaine hidden inside of a printer. Ivostraza-Torres delivered the package to an auto detailing business located in the Fairhill section of Philadelphia before being arrested by postal inspectors. A laboratory test confirmed that the net weight of the cocaine that had been inside the package was 991 grams. Prior to his arrest in this case, Ivostraza-Torres had been convicted of drug trafficking four other times.
In addition to the prison term of 17 years, U.S. District Court Judge Mitchell S. Goldberg ordered 8 years of supervised release.
This case was investigated by the U.S. Postal Inspection Service and prosecuted by Assistant U.S. Attorneys Jerome M. Maiatico and Clare Putnam Pozos
Providence Resident Admits to Possessing Child PornographyRead the Press Release
PROVIDENCE – David A. Skally, 57, of Providence, pleaded guilty in federal court in Providence on Tuesday to possession & access with the intent to view child pornography, announced United States Attorney Peter F. Neronha; Matthew J. Etre, Special Agent in Charge of Homeland Security Investigations (HSI) for New England; and Colonel Ann C. Assumpico, Superintendent of the Rhode Island State Police.
According to information presented to the court, in September 2015, the HSI Child Exploitation Unit became involved in an ongoing child pornography investigation into multiple individuals, believed to be residing across the United States as well as abroad, who are members of an Internet-based bulletin board. Users of the bulletin board were provided a link to a file sharing site from which child pornography could be accessed, viewed and downloaded.
In January 2016 and March 2016, the United States District Court for the District of Columbia issued orders directing the file sharing site to disclose certain records and other information relating to a list of unique links that contained child pornography files. In response to that order, the file sharing site produced business records which included information connected to the downloading of the child pornography files. These records showed, among other things, that child pornography, including sexually explicit images of prepubescent girls, were downloaded using an IP address associated with the Skally’s Providence residence.
A court authorized search of the defendant’s computers at his residence in June 2016 by members of HSI and the Rhode Island State Police Internet Crimes Against Children Task Force resulted in the discovery of child pornography. A further forensic examination of the computers resulted in the discovery of approximately 284 videos and 418 images of child pornography.
Skally, who was released to home confinement following his guilty plea on Tuesday, is scheduled to be sentenced by Chief Judge William E. Smith on March 9, 2017.
The case is being prosecuted by Assistant U.S. Attorney John P. McAdams.
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Contact:
Jim Martin (401) 709-5357
email: [email protected]
on Twitter @USAO_RI
Point Arena Couple Indicted for Sex Trafficking of a MinorRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned a two-count indictment today against Tion Makeise Foster, 21, and Monica Merlin Morales, 25, both of Point Arena, charging them with sex trafficking a minor and conspiracy to traffic a minor, U.S. Attorney Phillip A. Talbert announced.
According to court documents, the defendants transported a 16-year-old female victim to various places in the Eastern District of California and the Bay Area in August 2016 so that she could engage in commercial sex acts for their financial benefit. They subsequently conspired to traffic her again in November and December.
This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the Yuba County Sheriff’s Office. Assistant U.S. Attorney Michele Beckwith is prosecuting the case.
If convicted, Foster and Morales face a maximum statutory penalty of life in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Philadelphia Man Charged with Intent to DistributeRead the Press Release
Eddie Baez, 31 of Philadelphia, Pennsylvania, was charged today by Indictment with one count of possession with intent to distribute 500 grams or more of cocaine, one count of possession with intent to distribute 500 grams or more of cocaine within 1000 feet of a playground and one count of attempt to possess with intent to distribute 500 grams or more of cocaine, all in violation of Title 21, United States Code, Sections 841(b)(1)(B), 846, and 860, announced United States Attorney Zane David Memeger.
If convicted the defendant faces a maximum of 120 years imprisonment, a mandatory minimum of 5 years imprisonment, a period of supervised release, a $10 million dollar fine, and a $200 special assessment.
The case was investigated by the United States Postal Inspection Service and is being prosecuted by Assistant United States Attorney Priya De Souza.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Man Charged with Assaulting A Postal Service EmployeeRead the Press Release
Kenneth Stalling, age 34, of Philadelphia, Pennsylvania, was charged today by indictment[1] with one count of assaulting a federal employee, that is a United States Postal Service employee while he was engaged in his official duties, on or about October 19, 2016, in Philadelphia, Pennsylvania, announced United States Attorney Zane David Memeger.
If convicted of all counts, Stalling faces a maximum sentence of 20 years’ imprisonment, a $250,000 fine, three years’ supervised release, and a $100 special assessment.
This case has been investigated by the United States Postal Inspection Service, and the Philadelphia Police Department. The case has been assigned to Assistant United States Attorney Thomas M. Zaleski.
[1]An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Pharmacist Admits Illegally Distributing Oxycodone from Medford, New Jersey ‘Pill Mills’Read the Press Release
CAMDEN, N.J. – A Burlington County, New Jersey, pharmacist today admitted his role in a long-running conspiracy to illegally distribute and dispense large quantities of oxycodone and other controlled substances from two pharmacies located in Medford, New Jersey, U.S. Attorney Paul J. Fishman announced.
David Goldfield, 58, of Medford Lakes, pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to Count 1 of an indictment charging him with conspiracy to illegally distribute and dispense oxycodone and other Schedule II controlled substances, and Counts 10 through 15, which charge him with multiple substantive counts of illegal distribution and dispensing of oxycodone.
The guilty plea comes just six weeks after Goldfield and Michael Ludwikowski, 44, of Medford, were arrested on Nov. 14, 2016.
According to documents filed in this case and statements made in court:
Goldfield was employed by Ludwikowski at Olde Medford Pharmacy and Medford Family Pharmacy. Goldfield admitted that from January 2010 through August 2013, he conspired with Ludwikowski to distribute and dispense oxycodone for individuals they knew were obtaining the pain killers for resale or for non-medical use.
Goldfield admitted, based upon his training and experience, as well as the “red flags” he observed, it was obvious that many of the oxycodone prescriptions that Goldfield and Ludwikowski filled were fraudulent. These red flags included prescriptions for oxycodone that appeared to have been “washed” or “bleached.” According to the indictment, this was achieved through a chemical process that removed the original writing for a non-narcotic substance. The customers then rewrote the prescriptions for their drug of choice, including oxycodone.
Other red flags included customers who were believed to be drug addicts, or believed to be selling or abusing the oxycodone; customers seeking oxycodone with residential addresses far from the Medford area, including for example, Camden, New Jersey; the same customer presenting oxycodone prescriptions in numerous different names, including the names of both men and women; and customers presenting oxycodone prescriptions for a 30-day supply multiple times a week.
On occasions that Goldfield had suspicions about the legitimacy of particular prescriptions, Ludwikowski allegedly told Goldfield to fill some of those prescriptions anyway. In addition, Goldfield admitted that he and Ludwikowski stored bottles of oxycodone in a pull-out drawer to which pharmacy employees working at the front counter would have easy access, rather than in a locked safe.
When Ludwikowski became concerned with the high number of oxycodone prescriptions that were being filled, Ludwikowski and Goldfield – in an attempt to evade law enforcement – turned away customers who were bringing in fraudulent prescriptions by telling them that the Drug Enforcement Administration (DEA) had reduced their supply of oxycodone.
The conspiracy charge and each substantive count of illegal distribution and dispensing of oxycodone charge to which Goldfield pleaded guilty carry a maximum potential penalty of 20 years in prison and a $1 million fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for March 31, 2017.
The allegations against Ludwikowski are merely accusations, and he is innocent unless and until proven guilty.
U.S. Attorney Fishman credited special agents of the FBI’s Newark Field Office, under the direction of Special Agent in Charge Timothy Gallagher; the DEA New Jersey Division, under the direction of Special Agent in Charge Carl J. Kotowski; the Medford Police Department under the direction of Chief Richard J. Meder; the Moorestown Police Department under the direction of Chief Lee R. Lieber; the Florence Police Department under the direction of Chief John Bunce; and the Lumberton Police Department under the direction of Chief Tony Diloreto, with the investigation leading to the charges.
The government is represented by Assistant U.S. Attorney Justin C. Danilewitz and Senior Litigation Counsel Jason M. Richardson of the U.S. Attorney’s Office in Camden, as well as Assistant U.S. Attorney Sarah Devlin of the Office’s Asset Forfeiture and Money Laundering Unit.
Defense counsel: Gilbert J. Scutti, Esq.
Palm Beach County Sheriff’s Deputy Arrested for His Role in an Identity Theft SchemeRead the Press Release
A Palm Beach County Sheriff’s deputy was arrested yesterday for his role in an identity theft scheme.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), Sean Scheller, Chief, Town of Lantana Police Department, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Ric Bradshaw, Sheriff, Palm Beach County Sheriff’s Office, made the announcement.
Frantz Felisma, 42, of Boynton Beach, a deputy with the Palm Beach County Sheriff’s Office, was arrested on a federal criminal complaint, which charged him with participating in an identity theft scheme, in violation of Title 18, United States Code, Sections 1028A (Aggravated Identity Theft); 1029(a)(2) (Access Device Fraud); 1030(a)(4) (Access of a Protected Computer in Furtherance of a Fraud); and 1029(b)(2) (Conspiracy to Commit Identity Theft).
As alleged in the criminal complaint, over the span of approximately 18 months, Deputy Felisma used his police department issued laptop computer to access a law enforcement database in order to obtain personal identification information belonging to numerous individuals. Felisma sold this information to his co-conspirator, who then used the identities of at least 15 of these victims to set up credit card and bank accounts, stealing tens of thousands of dollars in the names of the victims.
Felisma made his initial appearance today before U.S. Magistrate Judge William Matthewman. A pre-trial detention hearing is scheduled for Wednesday, December 28, 2016 at 10 a.m.
If convicted, Felisma faces a mandatory minimum of two years’ imprisonment, to run consecutive to any other term of imprisonment imposed, as to the aggravated identity theft charge; a maximum of ten years’ imprisonment as to the access device fraud charge; and a maximum of five years’ imprisonment as to each of the access of a protected computer in furtherance of a fraud and conspiracy to commit identity theft charges.
Mr. Ferrer commended the investigative efforts of ICE-HSI, Lantana Police Department, IRS-CI and Palm Beach County Sheriff’s Office. This case is being prosecuted by Assistant United States Attorneys Lauren Jorgensen and Rinku Tribuiani.
A criminal complaint is only an accusation and a defendant is presumed innocent unless and until proven guilty in a court of law.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Owner of Harrisburg Healthcare Services Firm Sentenced for False Statements, Money Laundering and Identity TheftRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Rose Umana, age 49, of Mechanicsburg, Pennsylvania, was sentenced on December 21, 2016, by United States District Court Judge Sylvia H. Rambo to 36 months in prison for making false statements relating to health care matters, engaging in monetary transactions involving criminally-derived property, and identity theft.
According to United States Attorney Bruce D. Brandler, between January 2012 and January 2014, Umana, the owner and operator of Vision Healthcare Services, Inc., Harrisburg, Pennsylvania, created false identification documents and fictitious occupational licenses for workers. In executing the scheme, Umana then (1) submitted bills to Medicaid for medical services not provided by the workers, (2) billed Medicaid for services provided by someone other than the person claimed to be the provider, and (3) billed Medicaid for services not provided or provided by someone not qualified to provide the service.
Medicaid is the joint federal–state program that provides health care and nursing home coverage to low asset/income individuals. Medicaid in Pennsylvania is administered by the Department of Human Services. Vision Healthcare Services, Inc., is a medical staffing company and home care services provider servicing Dauphin, Cumberland, Perry and York Counties and has been enrolled under Medicaid since 2006.
The total loss resulting from Umana’s conduct was $1,184,224. In addition to the three- year-term of imprisonment, Judge Rambo also ordered Umana to pay $1,184,224 in restitution and ordered the forfeiture of $656,421. Judge Rambo ordered Umana to report to the Bureau of Prisons on January 23, 2017.
The case was investigated by the Office of Inspector General, U.S. Department of Health and Human Services; Internal Revenue Service Criminal Investigations; and, the Medicaid Fraud Control Section of the Pennsylvania Office of Attorney General. Special Assistant U.S. Attorney Heather M. Albright of the Pennsylvania Attorney General’s Office, and Assistant U.S. Attorney Joseph J. Terz prosecuted the case.
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Oregon US Attorney's Office Collects over $19 Million in Civil and Criminal Actions in Fiscal Year 2016Read the Press Release
PORTLAND, Ore. – Billy J. Williams, United States Attorney for the District of Oregon, announced today that the District of Oregon collected $19.1 million in criminal and civil actions in Fiscal Year 2016. Of this amount, $7.5 million was collected in criminal actions and $11.5 million was collected in civil actions.
Additionally, the District of Oregon worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $306,163 in cases pursued jointly. Finally, the District of Oregon, working with partner agencies and divisions, collected $2.39 million in asset forfeiture actions. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
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. These collections represent 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.”
“The District of Oregon’s Asset Recovery and Money Laundering Division is dedicated to holding accountable those who seek to profit from illegal activities across the state and beyond,” said U.S. Attorney Williams. “Civil and criminal collections demonstrate the significant return on investment that federal law enforcement programs deliver. In fact, our 2016 collections are nearly twice that of our annual operating budget. I want to thank the hardworking public servants in our Asset Recovery and Money Laundering Division” continued Williams, “for their deep commitment to aggressively pursuing financial compensation for victims of crimes, and for protecting government programs from financial exploitation and abuse.”
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 assistance programs.
The District of Oregon Financial Litigation Unit’s (FLU) efforts to collect restitution for victims of crimes involves regular review of a defendant’s changing financial circumstances and ability to pay. When defendants resist efforts to set up a voluntary and reasonable payment schedule, the FLU pursues wage garnishment, bank accounts, and retirement accounts; depositions; and the seizure and sale of real estate that can be applied to the defendant’s debt.
One example of the district’s recent restitution collection efforts was in the case of U.S.v. Carol Landesman, a Gresham, Oregon psychologist who created false invoices to send to a Catholic diocese for counseling services she did not actually provide. The defendant was ordered to pay restitution in the amount of $113,770, all of which was paid in full at sentencing. Not all cases result in such swift collections, however, and the FLU often spends years pursuing restitution payments from defendants who attempt to hide assets and evade their obligations to fully repay their victims.
One such example of a case requiring ongoing collection efforts over the past year is in the case of U.S. v. Pavel Tokar, who was sentenced in 2006 for fraud and ordered to pay over $90,000 in restitution. After ten years, the defendant had paid less than $10,000 back to his victims. After reviewing several questionable property transactions and scheduling the defendant’s spouse for a deposition to more fully probe the defendant’s financial circumstances, the defendant paid the remaining $81,000 balance in full to avoid further collection efforts.
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 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.
The single largest civil collection over the past year came from the office’s resolution of a civil fraud case against Holiday Corporation, which operated senior living facilities throughout the country. The investigation, which was prompted by allegations brought by former employees, revealed improper receipt by Holiday of veteran’s benefit payments for care that was not provided, and for care to ineligible veterans. For example, it revealed that Holiday Corporation had falsified information indicating that veterans were entitled to benefits for assistance with their daily living, when in fact those funds were actually paid to Holiday for rent. The settlement agreement included collection of $8.86 million from Holiday.
In another example of civil collections, the U.S. Attorney’s Office and the Oregon State Department of Justice worked jointly to resolve both civil and criminal matters against Tran Pharmacy and its owner for billing Medicare and Medicaid for prescriptions that were filled with generic fish oil capsules. As part of the settlement, the defendant paid over $800,000 to federal and state agencies. One final example includes a civil fraud case against Skamania Public Utility District, which was accused of overstating power line miles to the Bonneville Power Administration (BPA), thereby causing BPA to provide Skamania with a greater discount on its power costs than Skamania was entitled to receive. As part of its settlement, Skamania paid $725,236 to the government.
Oklahoma Consultant Charged with Defrauding Real Estate Developers of More Than $1.5 MillionRead the Press Release
BROOKLYN, N.Y. – Stephen Holsey, a senior consultant to Strategic Development Corporation (SDC), an Oklahoma corporation, was arrested yesterday on charges of wire fraud conspiracy in connection with a more than $1.5 million “advance fee” scheme. Essentially, Holsey and his co-conspirators offered loans through SDC to developers who were looking to finance large-scale construction projects, in exchange for a ten-percent fee, even though SDC lacked the necessary funds to finance these projects. Holsey’s initial appearance for removal proceedings to the Eastern District of New York took place yesterday before United States Magistrate Judge Steven P. Shreder at the United States Courthouse, 101 North 5th Street, Muskogee, Oklahoma.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office (FBI).
“As alleged, the defendant and his co-conspirators used lies and deceit to induce unsuspecting real estate developers in need of financing for their projects to pay more than $1.5 million in fees in exchange for loans that conspirators knew they could never finance,” stated United States Attorney Capers. “We are committed to holding accountable fraudsters who seek to prey on businesses for personal gain.” Mr. Capers extended his appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.
“In a time when new construction projects meant potential jobs and employment for many, the subjects in this case allegedly dangled that prospect in front of companies so they could finance their lavish lifestyles. Fraud and theft take on many forms, and the FBI and our partners are focused on finding these crimes wherever scammers try to hide them,” stated FBI Assistant Director-in-Charge Sweeney.
According to the complaint unsealed yesterday, between May 2010 and March 2012, Holsey and his co-conspirators offered loans through SDC to developers to finance large-scale construction projects. Specifically, Holsey and his co-conspirators told developers that: (i) SDC had funds available to provide financing for the developers’ projects in exchange for a fee, payable in advance, of ten percent of the loan amount; (ii) the ten-percent fee would be placed in an attorney escrow account until the loan closed; and (iii) the ten-percent fee would be refunded if SDC did not fund the project. Contrary to these representations: (i) SDC did not have the funds necessary to provide financing for the developers’ projects; (ii) the ten-perfect fees were transferred almost immediately, prior to the loan closings, from the attorney escrow account to accounts controlled by Holsey and his co-conspirators; and (iii) despite the lack of funding, the fees were not refunded to the developers and the developers’ associates when SDC did not fund the projects. In sum, Holsey and his co-conspirators collected approximately $1.5 million in the form of fees and investments from approximately 15 individuals and corporate entities and used those funds to, among other things, pay for personal living expenses and funnel money to other businesses owned or controlled by Holsey and his co-conspirators.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Holsey faces a maximum sentence of 20 years’ imprisonment.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Tyler Smith is responsible for the prosecution.
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.
The Defendant:
STEPHEN HOLSEY
Age: 69
Beggs, OklahomaE.D.N.Y. Docket No. 16-M-1113
North Suburban Man Charged with Fraud in Connection with Ponzi-Type Scheme That Swindled Elderly InvestorsRead the Press Release
CHICAGO — A north suburban man defrauded more than a dozen clients, some of whom were elderly and had pledged their retirement savings, in a Ponzi-type scheme that netted him at least $1 million, according to a criminal complaint filed in federal court in Chicago.
RICHARD K. BOOY, the founder of Principal Financial Strategies LLC and the now-defunct Safe Financial Strategies Inc., used the promise of no-risk investments and guaranteed returns to persuade at least 15 clients to hand over at least $1 million, the complaint states. Although Booy claimed to be affiliated with the widely known investment firm Principal Financial Group, he had no actual relationship with the firm and was not authorized to invest client funds with it. Instead of investing the funds as promised to clients, Booy used the victims’ money to cover personal expenses, including credit card debt and purchases at Best Buy and DirecTV, and to pay earlier investors through Ponzi-type payments, the complaint states.
The complaint was filed Wednesday in U.S. District Court in Chicago. It charges Booy, 48, of Vernon Hills, with one count of mail fraud. He is scheduled to make an initial appearance today at 3:00 p.m. before U.S. Magistrate Judge M. David Weisman.
The complaint was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; E.C. Woodson, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; Jeffrey A. Monhart, Regional Director of the Chicago Regional Office of the U.S. Department of Labor, Employee Benefits Security Administration; and Tanya Solov, Director of the Illinois Securities Department of the Illinois Secretary of State.
The complaint alleges that the fraud scheme began in approximately June 2014 and remained ongoing as of this month. Most of Booy’s victims are elderly, and some paid him their entire life savings or funds from retirement accounts, the complaint states. The victims include a Chicago pastor, a retired painter, a retired government worker, and an individual who suffers from Parkinson’s Disease. Booy often met personally with the victims in their homes, misrepresenting to them that their investments were guaranteed to return a profit, the complaint states.
Booy continued his investment scheme even after Principal Financial Group in September obtained a temporary restraining order against him that led to a court-authorized seizure of his computer and other evidence from Booy’s home, according to the complaint.
The public is reminded that a complaint contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Mail fraud carries a maximum sentence of 20 years in prison. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Matthew Ebert.
North Hills Man Produced Child PornographyRead the Press Release
PITTSBURGH - A former resident of Allegheny County, Pennsylvania, pleaded guilty in federal court to a charge of production of material depicting the sexual exploitation of a minor, Acting United States Attorney Soo C. Song announced today.
Travis Glies, age 38, of Allison Park, Pennsylvania, pleaded guilty before United States District Judge Mark R. Hornak .
In connection with the guilty plea, from January of 2016 to February of 2016, Glies produced visual depictions of the sexual exploitation of a minor. Judge Hornak scheduled sentencing for April 25, 2017.
The law provides for a mandatory minimum sentence of 15 years and a maximum sentence of 30 years for the production of child pornography. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Jessica Lieber Smolar is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation, the Allegheny County District Attorney’s Office, and the Allegheny County Police Department conducted the investigation leading to the prosecution of Glies.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals, who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
New Jersey Resident Charged with Sex Assault on AirplaneRead the Press Release
NEWARK, N.J. – A Mercer County, New Jersey, man appeared in federal court today to face charges that he sexually abused a woman on a flight from India to Newark Liberty International Airport, U.S. Attorney Paul J. Fishman announced.
Ganesh Parkar, 40, of Windsor, New Jersey, was charged by criminal complaint with one count of abusive sexual contact on an airplane. Parkar, who is an Indian citizen, had his initial appearance this afternoon before U.S. Magistrate Judge Mark Falk in Newark federal court and was released on $50,000 unsecured bond, home detention with electronic monitoring and surrender of his passport and all travel documents.
According to the complaint:
While on a Dec. 21, 2016, Air India flight from Mumbai to Newark, Parkar moved from his ticketed seat in the business class section of the plane to the economy class section and sat next to a female passenger seated in a center row. When the woman fell asleep, Parkar placed his hand on her breast without her consent.
The abusive sexual contact charge carries a statutory maximum of up to two years in prison and a $250,000 fine.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; special agents of Immigration and Customs Enforcement’s Homeland Security Investigations, Newark Division, under the direction of Special Agent in Charge Terence S. Opiola; and the Port Authority Police Department of New York-New Jersey, with the investigation leading to today’s arrest.
The government is represented by Assistant U.S. Attorney Jihee G. Suh of the U.S. Attorney’s Criminal Division in Newark.
New Haven Man Sentenced to More Than 8 Years in Federal Prison for Trafficking HeroinRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that ELIO DELIMA, also known as “Victor Cuevas” and “Ely,” 39, of New Haven, was sentenced yesterday by U.S. District Judge Victor A. Bolden in Bridgeport to 105 months of imprisonment, followed by four years of supervised release, for supplying heroin to a New Haven-based drug trafficking ring.
This matter stems from a joint investigation headed by the DEA New Haven Task Force, FBI and New Haven Police Department into the distribution of heroin in New Haven. The investigation, which included the use of court-authorized wiretaps, physical surveillance and controlled purchases of heroin, revealed that Wilson Vasquez, also known as “Will” and “Pancho,” obtained bulk quantities of heroin from DELIMA and others, processed and packaged the drug with several co-conspirators, and then distributed the drug through a network of street-level distributors operating in the area of Ferry Street, Grand Avenue and Blatchley Avenue in New Haven’s Fair Haven neighborhood.
During the investigation, law enforcement seized approximately 500 grams of raw heroin, three handguns and five vehicles. In addition, bank accounts containing more than $300,000 have been frozen.
Seventeen individuals were charged as a result of this investigation. All 17 pleaded guilty.
DELIMA has been detained since his arrest on July 15, 2015. On September 15, 2016, he pleaded guilty to one count of conspiracy to possess with intent to distribute, and to distribute, 100 grams or more of heroin.
Vasquez awaits sentencing.
The DEA New Haven Task Force includes participants from the New Haven, Hamden, West Haven, North Haven, East Haven, Branford, Ansonia, Meriden and Derby Police Departments, and the U.S. Marshals Service.
This case is being prosecuted by Assistant U.S. Attorneys H. Gordon Hall and Patrick Caruso.