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17 January 2017
Ohio County man pleads guilty to illegal possession of firearmsRead the Press Release
WHEELING, WEST VIRGINIA – Mark A. Simmons, 46, of Wheeling Island, West Virginia, was convicted of illegally possessing firearms, Acting United States Attorney Betsy Steinfeld Jividen, announced.
Simmons, who had previously been convicted of the felony offense of “Failure to Register or Provide Notice of Registration” in Marshall County, admitted to possessing a Beretta pistol in Ohio County in November 2016. Simmons faces up to ten years in prison and a fine of $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Stephen L. Vogrin prosecuted the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Wheeling Police Department investigated.
Senior U.S. District Judge Frederick P. Stamp, Jr. presided.
North Carolina man pleads guilty for role in Huntington drug conspiracyRead the Press Release
HUNTINGTON, W.Va. – A North Carolina man pleaded guilty today to a federal drug crime, announced United States Attorney Carol Casto. Steven Bailey, 53, of Charlotte, entered his guilty plea to conspiracy to distribute cocaine.
From October 2014 to late February 2016, Bailey, along with codefendants Jerrell Johnson and Roger Page, both of Huntington, and codefendants Trevor Bethel and Ashara Mayes, both of Atlanta, engaged in a conspiracy to distribute cocaine in the Huntington area. Bailey admitted that on at least two occasions, he brought cocaine from Charlotte to Johnson and Page in Huntington. Bailey further admitted to having a source of drug supply in the Atlanta area.
On February 20, 2016, Bailey admitted that he was in Huntington at Johnson’s residence, along with Bethel. Bailey was later stopped by agents with the Drug Enforcement Administration and was found with over $9,000 cash. Approximately $8,000 of that currency represented proceeds from cocaine provided to Johnson earlier that evening. A search of Johnson’s residence that evening resulted in a seizure by law enforcement of approximately nine ounces of cocaine, at least part of which had recently been provided by Bailey.
Bailey faces up to 20 years in federal prison when he is sentenced on April 3, 2017. Johnson previously pleaded guilty to possession with intent to distribute 28 grams or more of crack and was sentenced to five years in federal prison. Page pleaded guilty to conspiracy to distribute 500 grams or more of cocaine and was sentenced to three years and a month in federal prison. The trial of Mayes is scheduled for March 14, 2017. Bethel is currently a fugitive. Mayes and Bethel are presumed innocent unless and until proven guilty in a court of law.
The Drug Enforcement Administration conducted the investigation. Assistant United States Attorney R. Gregory McVey is responsible for these prosecutions. Chief United States District Judge Robert C. Chambers is presiding over these cases.
These prosecutions are part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of illegal drugs. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down pill trafficking, eliminating open air drug markets, and curtailing the spread of illegal drugs in communities across the Southern District.
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New Bern Physician Charged with Unlawful Distribution of Narcotics, Money Laundering, and Possession of FirearmsRead the Press Release
GREENVILLE – The United States Attorney’s Office for the Eastern District of North Carolina announces that the federal grand jury in Greenville returned a thirty-one count indictment charging physician SANJAY KUMAR, age 50, of New Bern, with Conspiracy to Unlawfully Dispense and Distribute Oxycodone, Oxymorphone, Hydromorphone, and Alprazolam; Distribution of Oxycodone and Alprazolam; Possession of a Firearm in Furtherance of a Drug Trafficking Crime; Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity; and Laundering of Monetary Instruments.
If convicted, the maximum penalties for each charged drug count are twenty years’ imprisonment; a $1 million fine; and a term of supervised release of not less than three years following any term of imprisonment.
The maximum penalties for Possessing a Firearm in Furtherance of a Drug Trafficking Crime are no less than five years, up to life imprisonment, consecutive to any other sentence; a $250,000 fine; and up to three years supervised release following any term of imprisonment. A second or subsequent conviction for a firearms charge of this type carries a mandatory minimum term of twenty-five years imprisonment, consecutive to any other sentence.
The maximum penalties for each count of Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity are ten years’ imprisonment; a $250,000 fine; and up to three years supervised release following any term of imprisonment.
The maximum penalties for each count of Money Laundering are twenty years’ imprisonment; a $500,000 fine or twice the value of the property involved; and up to three years supervised release following any term of imprisonment.
The charges and allegations contained in the indictment are merely accusations. The defendant is presumed innocent unless and until proven guilty in a court of law.
The case is being investigated by the New Bern Police Department (NBPD), the Drug Enforcement Administration (DEA), the Internal Revenue Service (IRS) Criminal Investigations, the State Bureau of Investigation (SBI), and the Craven County Sheriff’s Office.
NCR Corporation Agrees to End Litigation and Complete Massive Superfund Cleanup at Wisconsin’s Fox RiverRead the Press Release
The Department of Justice’s Environment and Natural Resources Division and the U.S. Environmental Protection Agency announced a major settlement today that requires NCR Corporation to complete one of the nation’s largest Superfund cleanup projects at Wisconsin’s Lower Fox River and Green Bay Site. An enormous amount of cleanup and natural resource restoration work has already been done in the area under a set of partial settlements, an EPA administrative cleanup order, and court orders in a federal lawsuit brought by the United States and the State of Wisconsin. The final phase of cleanup taken on by NCR will cost up to $200 million or more over the next few years. The total cleanup costs for the Fox River Site will exceed $1 billion. The cleanup work will reduce the risks to humans and wildlife posed by polychlorinated biphenyls (PCBs) in bottom sediment of the Fox River and Green Bay.
“After years of hard fought litigation, this settlement requires NCR to take full responsibility for completing this important cleanup effort,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division. “Lawsuits and settlements like this vindicate the principle that polluters should pay the cost of Superfund cleanups, rather than the taxpayers. And, we are pleased that our co-plaintiff, the state of Wisconsin, is also a key part of this settlement.”
“Fox River is a treasure – and it’s been polluted for too long. People should be able to swim, boat, and eat fish from all parts of the river,” said Acting EPA Region 5 Administrator Robert A. Kaplan. “This cleanup will ensure that PCB levels continue to reduce downstream as they have upstream.”
The cleanup remedy for the Fox River Site was jointly-selected by EPA and the Wisconsin Department of Natural Resources. The remedy will remove much of the PCB-containing sediment from the Fox River by dredging. In other portions of the River, contaminated sediment is being contained in place with specially-engineered caps. The dredging and capping will reduce PCB exposure and greatly diminish downstream migration of PCBs to Green Bay. The sediment cleanup began in the uppermost segment of the River in 2004. Under this settlement, NCR has committed to complete the final phase of remediation by the end of 2018.
In 2010, the United States and Wisconsin sued NCR and other parties in a Superfund lawsuit to require them to continue the ongoing cleanup at the Site. The defendants in the government’s lawsuit included paper companies that contaminated the sediment when they made and recycled a particular type of PCB-containing “carbonless” copy paper. NCR and its affiliates produced that paper with PCBs from the mid-1950s until 1971.
This settlement requires NCR to take on sole responsibility for completing all remaining sediment cleanup work at the Site. NCR has done much of the dredging and capping under protest during the last several years, with some funding and assistance from two other defendants, Georgia-Pacific Consumer Products LP and P.H. Glatfelter Company. Once NCR finishes its work, Georgia-Pacific and Glatfelter will have primary responsibility for long-term monitoring and cap maintenance activities under prior court orders from the litigation. The settlement with NCR also resolves the government’s potential claims against Appvion, Inc., which purchased NCR’s paper manufacturing facilities in the Fox River Valley in the late 1970s. Appvion will not be involved in the remaining cleanup work at the Site.
The United States and Wisconsin reached prior settlements with most of the other parties that contributed to the PCB contamination at the Site. The prior settlements included $105 million for natural resource damage assessment activities and natural resource restoration projects selected jointly by federal, state, and tribal government trustees.
The proposed settlement is in the form of a consent decree that must be approved by the federal judge overseeing the legal proceedings over the Fox River Site. If approved, this settlement would end the government’s litigation with NCR and Appvion. The United States and Wisconsin would continue pursuing unresolved claims against Glatfelter for reimbursement of government costs of planning and overseeing the cleanup. Unlike Glatfelter, Georgia-Pacific previously settled with the governments and paid a share of the government’s unreimbursed costs.
The government’s settlement with NCR and Appvion also would narrow the legal claims in a separate federal lawsuit that NCR and Appvion filed against other parties for an overall allocation of the costs associated with the Fox River Site. The claims against most of the original defendants in that case have been settled, but NCR and Appvion are still litigating with Georgia-Pacific and Glatfelter. Under their proposed settlement with the government, NCR and Appvion have agreed to give up most of their claims against Georgia-Pacific and Glatfelter, and NCR and Appvion would be protected against most of the counterclaims filed against them by Georgia-Pacific and Glatfelter.
Today’s settlement, lodged with the U.S. District Court for the Eastern District of Wisconsin, will be subject to a 30-day public comment period after notice of the settlement is published in the Federal Register. To view the consent decree or to submit a comment, visit the department’s website: www.justice.gov/enrd/Consent_Decrees.html.
For more information on cleanup activities at the Lower Fox River and Green Bay Superfund Site, go to the Environmental Protection Agency’s website: https://www3.epa.gov/region5/cleanup/foxriver/
Mitchell Rales to Pay $720,000 Civil Penalty for Violating Antitrust Premerger Notification RequirementsRead the Press Release
The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Mitchell Rales for violating the premerger notification and waiting period requirements of the Hart-Scott-Rodino (HSR) Act of 1976 when he acquired voting securities of Colfax Corporation in 2011, and of Danaher Corporation in 2008. At the same time, the department filed a proposed settlement, subject to approval by the court, under which Rales has agreed to pay a $720,000 civil penalty to resolve the lawsuit.
The HSR Act imposes notification and waiting period requirements for transactions meeting certain size thresholds so that they can undergo premerger antitrust review. Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the department. The maximum civil penalty for an HSR violation increased from $16,000 per day to $40,000 per day effective Aug. 1, 2016.
Further details about this matter are described in the FTC’s press release issued today, and in the attached complaint and competitive impact statement.
Consistent with the requirements of the Tunney Act, the proposed settlement, along with the competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Daniel P. Ducore, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.
Rales Complaint Rales CIS Rales Explanation Rales Final Judgment Rales StipulationMescalero Apache Man Sentenced to Prison for Federal Child Sexual Abuse ConvictionRead the Press Release
ALBUQUERQUE – Michael Bow Smith, 32, an enrolled member of the Mescalero Apache Nation who resides in Mescalero, N.M., was sentenced today in federal court in Las Cruces, N.M., to 46 months in prison followed by five years of supervised release for sexually abusing a minor. Smith will also be required to register as a sex offender when he completes his prison sentence.
Smith was arrested on May 7, 2016, on a criminal complaint charging him with sexually abusing a minor in Otero County, N.M., on March 8, 2016.
On Aug. 29, 2016, Smith pled guilty to a felony information charging him with sexually abusing a minor. In entering the guilty plea, Smith admitted that he was 30 years old when he engaged in a sexual act with the victim who was 15 years old at the time. Smith further admitted that the abuse took place on the Mescalero Apache reservation in Otero County.
This case was investigated by the Mescalero Agency of the BIA’s Office of Justice Services. The case was prosecuted by Assistant U.S. Attorney Aaron O. Jordan of the U.S. Attorney’s Las Cruces Branch Office as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice (DOJ) to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and DOJ’s Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.
McKesson agrees to pay record $150 million settlement for failure to report suspicious orders of pharmaceutical drugsRead the Press Release
WHEELING, WEST VIRGINIA – McKesson Corporation (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), Acting United States Attorney Betsy Steinfeld Jividen and Special Agent in Charge of the Drug Enforcement Administration Karl C. Colder announced today. The Drug Enforcement Administration and the United States Attorney’s Office describe the settlement of the civil penalty claims historic and unprecedented.
Acting U.S. Attorney Betsy Steinfeld Jividen stated, "The settlement with McKesson announced today illustrates the coordinated response we are taking in addressing the prescription narcotics crisis in West Virginia and puts those who play a significant role in supplying narcotic medications in our district on clear notice that they must comply with the law and regulatory requirements or be held accountable."
The settlement resolves allegations that beginning in 2008 and continuing into 2012, McKesson’s former Landover, Maryland distribution facility routinely failed to report, and fulfilled, suspicious orders for Schedule II and III controlled substances placed by retail pharmacies, including numerous pharmacies in the Northern District of West Virginia. Acting U.S. Attorney Jividen stated, "in many instances, the suspicious orders placed by West Virginia pharmacies resulted in prescription narcotics being diverted for illegal use and abuse.” One such pharmacy was Judy’s Drug Store, located in Grant County, West Virginia. The U.S. Attorney’s Office for the Northern District of West Virginia entered into a $2 million civil penalty settlement with Judy’s Drug Store in 2014. According to Acting U.S. Attorney Jividen “the Judy’s Drug Store probe led to the investigation of McKesson and the settlement announced today.”
“The abuse of prescription drugs has rampantly spread throughout our communities," stated DEA Special Agent in Charge Karl C. Colder. "This abuse has directly resulted in the escalation of heroin addiction and related overdoses. Today's settlement sends a clear message to all distributors of pharmaceutical drugs that it is essential to dispense controlled substances in compliance with DEA's record keeping requirements. DEA is dedicated to combat the prescription drug abuse problem in West Virginia and throughout the country and to hold all DEA registrants accountable," said Colder.
The nationwide settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers– i.e. orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported just 16 orders as suspicious, all connected to one instance related to a recently terminated customer.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.
This was a multi-district investigation initiated by Diversion Investigator Lindsey Malocu of the Washington Division of the Drug Enforcement Administration and involving the following DEA Field Divisions: Boston, Chicago, Denver, Detroit, Miami, Newark, San Francisco, St. Louis, and also the Washington District Office. The following U.S. Attorney’s Offices participated in the case: Northern District of West Virginia, Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Eastern District of Kentucky, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, and Western District of Wisconsin.
U.S. Attorneys’ Offices for the Northern District of West Virginia and the District of Colorado, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Alan McGonigal (NDWV) and Amanda Rocque (Colorado) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill and Krista Tongring represented DEA in the investigations and negotiations. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.
McKesson Argrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
DENVER – McKesson Corporation (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), Acting U.S. Attorney Bob Troyer and DEA Denver Division Special Agent in Charge Barbra Roach announced.
“When drug distributors like McKesson fail to alert the DEA of suspicious orders of prescription drugs by pharmacies, the end result can be fatal,” said Acting U.S. Attorney Bob Troyer. “This settlement requires McKesson to comply with the law and holds the company accountable for its past conduct. Avoiding that legal obligation increases the narcotics street trade.”
“This agreement demonstrates that DEA will continue to hold all those accountable – corporations and individuals – who would disregard the public’s safety for their own profit,” said DEA Denver Division Special Agent in Charge Barbra Roach.
The nationwide settlement, led by attorneys from the U.S. Attorney’s Offices in Colorado and the Northern District of West Virginia, with substantial support from the DEA in those districts and nationally, requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers– i.e., orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported just 16 orders as suspicious, all connected to one instance related to a recently terminated customer.
According to the United States, McKesson’s distribution center in Aurora, Colorado, circumvented its own compliance system in order to avoid reporting suspicious orders to the DEA. Although the company was supposed to set thresholds on the amount of certain kinds of prescription drugs that each pharmacy could purchase every month and report any sales over that threshold to the DEA, the United States alleges that McKesson-Aurora repeatedly raised thresholds to avoid having to report orders to the DEA. Sometimes these threshold increases were done at the request of a pharmacy customer; other times, the United States claims that McKesson-Aurora would preemptively raise the threshold when it saw that a pharmacy customer was approaching the maximum amount of drugs it could purchase that month. The United States also alleges that McKesson set some thresholds so high at the outset that the pharmacy customer would never exceed it, and thus, would never trigger any internal review as to whether an order was indeed suspicious. As a result of these practices, the United States contends that orders of unusual size, orders of unusual frequency, and orders deviating from the normal pattern of the pharmacy customer’s orders did not get reported to the DEA.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.
This was a multi-district investigation that involved the following DEA Field Divisions: Boston Field Division, Chicago Field Division, Denver Field Division, Detroit Field Division, Miami Field Division, Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington District Office. The following U.S. Attorney’s Offices participated in the case: Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Eastern District of Kentucky, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit and Miami Field Divisions, and its Washington Division Office, led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado) and Alan McGonigal (NDWV) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill and Krista Tongring represented DEA in the investigations and negotiations. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.
McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
LOS ANGELES – McKesson Corporation, one of the nation’s largest distributors of pharmaceutical drugs, has agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), the Justice Department announced today.
The nationwide settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA-registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
McKesson operates a distribution center in Santa Fe Springs.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In the new case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” – orders that were unusual in their frequency, size or other patterns – for controlled substances distributed to its independent and small-chain pharmacy customers. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone, which are frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported just 16 orders as suspicious, and all of those were connected to one instance related to a recently terminated customer.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.
“The company’s practices resulted in dangerous drugs being diverted from legitimate uses into the black market and helped fuel the opioid epidemic that is causing so much damage across the nation,” said United States Attorney Eileen M. Decker. “This nationwide investigation will result in a landmark penalty, significant changes in the way that pharmaceutical drugs are distributed by the company, and the ability of the Department of Justice to monitor McKesson’s future conduct.”
This case against McKesson is the product of a multi-district investigation that involved the DEA Field Divisions in Boston, Chicago, Denver, Detroit, Miami, Newark, San Francisco, St. Louis and Washington.
The U.S. Attorney’s Office for the Central District of California participated in the case, along with U.S. Attorney’s Offices for the Eastern District of California, Colorado, the Middle District of Florida, the Eastern District of Kentucky, the Northern District of Illinois, Massachusetts, the Eastern District of Michigan, Nebraska, New Jersey, the Northern District of West Virginia, and the Western District of Wisconsin.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado) and Alan McGonigal (NDWV) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill and Krista Tongring represented DEA in the investigations and negotiations. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.
McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
McKesson Corporation (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), the Justice Department announced today.
The nationwide settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a Drug Enforcement Administration (DEA) registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers – i.e., orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported just 16 orders as suspicious, all connected to one instance related to a recently terminated customer.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.
This was a multi-district investigation that involved the following DEA Field Divisions: Boston Field Division, Chicago Field Division, Denver Field Division, Detroit Field Division, Miami Field Division, Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington District Office. The following U.S. Attorney’s Offices participated in the case: Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Eastern District of Kentucky, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit and Miami Field Divisions, and its Washington Division Office, led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado) and Alan McGonigal (NDWV) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill and Krista Tongring represented DEA in the investigations and negotiations. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.
Civil Penalty Settlement Agreement Memorandum of Agreement Compliance AddendumMcKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
SACRAMENTO, Calif. — McKesson Corporation, one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA). The settlement resolves allegations that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers.
The nationwide settlement was announced today by U.S. Attorney Phillip A. Talbert, Drug Enforcement Administration Special Agent in Charge John J. Martin and the U.S. Attorneys for 11 other federal districts.
“The abuse of prescription painkillers has become an epidemic,” said United States Attorney Talbert. “The Controlled Substances Act is a tool to assist the DEA with monitoring the movement of prescription drugs and prevent the diversion of powerful drugs to unintended users who may be injured by them. Our office will continue to work with our law enforcement partners to investigate these cases and enforce federal law.”
“Accountability is key for all DEA registrants who distribute controlled substances; detecting and reporting suspicious orders is part of the equation,” said DEA Special Agent in Charge John J. Martin. “DEA is committed to utilizing a variety of tools, which include implementing new methods for accountability, to combat the prescription drug epidemic.”
The nationwide settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers — i.e., orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported just 16 orders as suspicious, all connected to one instance related to a recently terminated customer.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance — the first independent monitor of its kind in a CSA civil penalty settlement.
This was a multidistrict investigation that involved the following DEA Field Divisions: Boston Field Division, Chicago Field Division, Denver Field Division, Detroit Field Division, Miami Field Division, Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington District Office. In addition to the Eastern District of California, the following U.S. Attorney’s Offices participated in the case: Central District of California, District of Colorado, Middle District of Florida, Eastern District of Kentucky, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado) and Alan McGonigal (NDWV) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill and Krista Tongring represented DEA in the investigations and negotiations. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS. McKesson has a branch in Sacramento. Assistant U.S. Attorneys Kelli L. Taylor and Kurt Didier handled the matter for the Eastern District of California.
McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
BOSTON – McKesson Corporation, one of the nation’s largest distributors of pharmaceutical drugs to pharmacies and other health care providers, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA). The government alleges that, from 2009 forward, McKesson failed to maintain effective controls to prevent diversion of controlled substances, including opioids such as oxycodone, and that McKesson failed to fulfill its legal obligation to report suspicious orders of controlled substances to the Drug Enforcement Administration (DEA).
“The government has launched a multi-pronged attack on the opioid epidemic that is affecting people across the country, including in Massachusetts,” said Acting U.S. Attorney William D. Weinreb. “This settlement penalizes McKesson, which distributes millions of opioid pills every year, for lax oversight and imposes tough compliance measures to ensure that opioids are dispensed only for legitimate medical purposes.”
“The DEA is committed to ensuring that all registrants are in compliance with the required regulations, which are enforceable through the Controlled Substances Act (CSA),” said Special Agent in Charge Michael J. Ferguson. “In response to the ongoing opioid epidemic in Massachusetts and throughout this Nation, DEA’s obligation is to improve public safety and health. Today’s settlement demonstrates DEA’s pledge to work with our law enforcement and regulatory partners to ensure these rules and regulations are followed.”
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report suspicious orders from independent and small chain pharmacy customers – i.e., orders that were unusual in their frequency, size, or other patterns. The government’s investigation developed evidence that, even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. At its distribution center in Methuen, Mass., for example, McKesson processed thousands of oxycodone and hydrocodone orders that were more than 10 times the average size of a pharmacy order from May 2008 through April 2013, but McKesson never reported to the DEA that any of these orders was suspicious.
In addition to the $150 million fine, the nationwide settlement requires McKesson to suspend sales of controlled substances at certain distribution centers and imposes new and enhanced compliance obligations on McKesson’s distribution system. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement. Also, as part of the acceptance of responsibility provisions of the settlement, McKesson acknowledged that, at various times, it did not identify or report to the DEA orders placed by certain pharmacies that McKesson should have detected as suspicious.
In addition to the District of Massachusetts, the following U.S. Attorney’s Offices participated in the case: Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Eastern District of Kentucky, Northern District of Illinois, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia and Western District of Wisconsin. This matter was investigated by the following DEA Field Divisions: Boston, Chicago, Denver, Detroit, Miami, Newark, San Francisco, and St. Louis Field Division and the Washington District Office.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. In Massachusetts, this matter was handled by Assistant U.S. Attorney Gregg Shapiro.
McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
Tampa, FL – McKesson Corporation (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), U.S. Attorney A. Lee Bentley, III and Special Agent in Charge Adolphus P. Wright, DEA Miami Field Division announced today.
“This landmark $150 million settlement is the latest example of our ongoing efforts to fight prescription opioid abuse in the Middle District of Florida,” said United States Attorney Bentley. “Together with the $22 million civil settlement with CVS in 2015, and the $44 million civil settlement with Cardinal Health last year, this settlement demonstrates our willingness to use all remedies at our disposal to encourage corporations and individuals involved in the prescription opioid trade to act responsibly and to punish them when they fail to do so."
“Prescription drug abuse is a public health epidemic and every day, preventable overdoses of prescription pain pills needlessly claim the lives of Floridians,” stated Special Agent in Charge Wright. “The DEA is committed to keeping our community safe from those who facilitate and enable the abuse of prescription drugs. This action is an important step toward ensuring accountability of those who supply these pills and operate without regard for the public health and safety. National drug distributors are not above the law and cannot turn a blind eye to profit from this national public health crisis.”
The nationwide settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers– i.e. orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported just 16 orders as suspicious, all connected to one instance related to a recently terminated customer. DEA investigators in the Middle District of Florida determined that McKesson had failed to report pharmacy orders at its Lakeland, Florida distribution center for hydromorphone that dramatically exceeded historical sales levels by the ordering pharmacies.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.
This was a multi-district investigation that involved the following DEA Field Divisions: Boston Field Division, Chicago Field Division, Denver Field Division, Detroit Field Division, Miami Field Division, Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington District Office. The following U.S. Attorney’s Offices participated in the case: Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Eastern District of Kentucky, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado) and Alan McGonigal (NDWV) represented the United States in the civil penalty investigations and negotiations. Assistant United States Attorney Randy Harwell represented the Middle District of Florida in the case as it pertained to the Lakeland, Florida investigation and penalty negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill and Krista Tongring represented DEA in the investigations and negotiations. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.
McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
WASHINGTON – McKesson Corp. (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, has agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), U.S. Attorney Paul J. Fishman and DEA Special Agent in Charge Carl J. Kotowski announced today.
“The epidemic of opioid abuse is carving an increasingly destructive path through our country,” U.S. Attorney Fishman said. “But nearly a decade ago, McKesson was sanctioned for violations that were contributing to the misuse of these prescription painkillers. Given a chance to implement a more robust system for monitoring the distribution of these products, the company instead chose to ignore its own compliance regime in favor of a bigger bottom-line. The consequences of McKesson's decision to circumvent its obligations are too devastating to ignore and warrant today's punishment.”
“Pharmaceutical companies are our first line of defense in the fight against prescription opioid abuse,” SAC Kotowski said. “If they turn a blind eye to suspicious orders of pharmaceutical controlled substances they are contributing to this epidemic. This settlement sends a clear message that even corporations need to do their part to fight this devastating opioid epidemic.”
The nationwide settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers – orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported just 16 orders as suspicious, all connected to one instance related to a recently terminated customer.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.
This was a multi-district investigation that involved DEA Field Divisions in the following locations: Boston, Chicago, Denver, Detroit, Miami, Newark, San Francisco, St. Louis, and the Washington District Office. The following U.S. Attorney’s Offices participated in the case: Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Eastern District of Kentucky, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.
In the District of New Jersey, the government was represented by Senior Litigation Counsel Anthony J. LaBruna and Assistant U.S. Attorney Mark Orlowski of the Civil Division of the U.S. Attorney’s Office.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement.
Marlboro Resident Arrested on Child Pornography ChargesRead the Press Release
ALBANY, NEW YORK – Thomas Albright, age 71, of Marlboro, New York, was arrested January 12 on charges of distributing, 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.
Albright appeared on January 13 in Albany before United States Magistrate Judge Daniel J. Stewart and was detained pending further proceedings.
The charges in the complaint filed against Albright are merely accusations. He is presumed innocent until proven guilty.
If convicted on all charges, Albright faces at least 5 years and up to 20 years in prison, at least 5 years and up to a life term of post-imprisonment supervised release, and a maximum $250,000 fine. Albright would also have to register as a sex offender. 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.
This case is being investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Sahar Amandolare.
Leader of Camden, New Jersey, Drug Trafficking Organization Pleads Guilty to Distribution Conspiracy and Firearm OffensesRead the Press Release
CAMDEN, N.J. - A Camden man today admitted his role in a crack cocaine distribution conspiracy operating in Camden, U.S. Attorney Paul J. Fishman announced.
Jason Boyd, a/k/a “Teddy,” a/k/a “Teddy Reek,” and a/k/a “Fatboy,” 36, pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to an information charging him with one count of conspiracy to distribute and to possess with intent to distribute cocaine base and one count of possession of a firearm in furtherance of a drug trafficking crime.
According to documents filed in this case and statements made in court:
Boyd admitted that he sold, and directed others to sell, crack cocaine in and around the 1100 block of Lansdowne Avenue in Camden. Boyd also admitted that he provided crack cocaine to other members of the conspiracy and collected proceeds from the sales.
Boyd, who was one of the leaders of the conspiracy, was charged along with seven others in September 2016 following an investigation by the FBI’s South Jersey Violent Offender and Gang Task Force. During the investigation, law enforcement recovered a .40 caliber handgun that was kept by the conspirators in connection with their drug trafficking activities.
The distribution conspiracy charge carries a maximum potential penalty of 20 years in prison and a $1 million fine. The firearms charge carries a mandatory minimum sentence of five years in prison to be served consecutively to the conspiracy charge. Sentencing is scheduled for April 28, 2017.
Codefendant Derek Stallworth, a/k/a “AK” and a/k/a “A,” 20, of Camden, pleaded guilty to his role in the conspiracy on Dec. 8, 2016 and is scheduled to be sentenced on March 24, 2017.
U.S. Attorney Fishman credited special agents of the FBI’s South Jersey Violent Offender and Gang Task Force, South Jersey Resident Agency, under the direction of Special Agent in Charge Michael Harpster; the Camden County Police Department, under the direction of Chief J. Scott Thomson; the Camden County Prosecutor’s Office, under the direction of Prosecutor Mary Eva Colalillo; and the N.J. State Police, under the direction of Col. Rick Fuentes, with the investigation.
He also thanked the Camden County Sheriff’s Department, the Cherry Hill Police Department, and the U.S. Department of Homeland Security Investigations (HSI) for their assistance.
The government is represented by Assistant U.S. Attorney Gabriel J. Vidoni of the U.S. Attorney’s Office Criminal Division in Camden.
Defense counsel: Jose Ongay Esq., Mount Ephraim, New Jersey
Lancaster Man Charged with Possesion and Distribution of Child PornographyRead the Press Release
Irvin Randall Newswanger, 48, of Lancaster, PA, was charged January 12, 2017, by Indictment1 with possession and distribution of child pornography announced Acting United States Attorney Louis D. Lappen.
If convicted the defendant faces a maximum possible sentence of 40 years’ imprisonment, with a mandatory minimum of 5 years imprisonment, lifetime supervised release, a $500,000 fine and a $200 special assessment.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Roberta Benjamin.
1An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Knoxville Resident Sentenced to over 15 Years in Prison for Possessing and Distributing Child PornographyRead the Press Release
KNOXVILLE, Tenn. – On Jan. 17, 2017, Andrew Scott Conard, 30, of Knoxville, Tenn., was sentenced by the Honorable Thomas Varlan, Chief U.S. District Judge, to serve 188 months in federal prison. Additionally, upon his release from prison, he will be supervised by the U.S. Probation office for 15 years.
In June 2016, Conard pleaded guilty to one count of possessing child pornography and one count of distribution of child pornography, which were charges contained in a federal indictment. In the plea agreement on file with the U.S. District Court, Conard admitted that he maintained a collection of child pornography on his computer, which he downloaded over the internet, and knowingly made available to other persons through a peer-to-peer file-sharing network, with the anticipation of being able to obtain additional child pornography on the same file-sharing network.
In March 2014, an investigator with the Knoxville Internet Crimes Against Children Task Force (ICAC) downloaded a child pornography video from Conard’s computer over the internet, though the file sharing network set up by Conard. Federal investigators executed a warrant at Conard’s residence in May 2016 and seized his computer. A subsequent forensic examination of the computer revealed 91 images and 164 videos of child pornography, some of which contained known child victims.
This case was investigated by the Knoxville ICAC. Assistant U.S. Attorney Frank Dale represented the United States.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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Justice Department, EPA and the Navajo Nation Announce Settlement for Cleanup of 94 Abandoned Uranium Mines on the Navajo NationRead the Press Release
The United States and the Navajo Nation have entered into a settlement agreement with two affiliated subsidiaries of Freeport-McMoRan, Inc, for the cleanup of 94 abandoned uranium mines on the Navajo Nation. Under the settlement, valued at over $600 million, Cyprus Amax Minerals Company and Western Nuclear, Inc., will perform the work and the United States will contribute approximately half of the costs. The settlement terms are outlined in a proposed consent decree filed today in federal court in Phoenix, Arizona. With this settlement, funds are now committed to begin the cleanup process at over 200 abandoned uranium mines on the Navajo Nation.
The work to be conducted is subject to oversight of the U.S. Environmental Protection Agency (EPA), in collaboration with the Navajo Nation Environmental Protection Agency.
“This remarkable settlement will result in significant environmental restoration on Navajo lands and will help build a healthier future for the Navajo people,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “We appreciate the extraordinary commitment by Freeport’s affiliated subsidiaries to clean up 94 mines, and to achieve this settlement without litigation. The Justice Department is always ready to work cooperatively with the Navajo Nation and responsible private parties to address the legacy of uranium mining on Navajo lands.”
“This historic settlement will clean up almost twenty percent of the abandoned mines on the Navajo Nation,” said Acting Regional Administrator, Alexis Strauss for the EPA Pacific Southwest. “Cleaning up the uranium contamination continues to be a top environmental priority for our Regional office.”
The Navajo Nation encompasses more than 27,000 square miles within Utah, New Mexico and Arizona in the Four Corners area. The unique geology of the region makes the Navajo Nation rich in uranium, a radioactive ore in high demand after the development of atomic power and weapons at the close of World War II. Many private entities, including Cyprus Amax (a successor-in-interest to Vanadium Corporation of America and Climax Uranium Company) and Western Nuclear, mined approximately thirty million tons of uranium ore on or near the Navajo Nation between 1944 and 1986. The federal government, through the Atomic Energy Commission (AEC), was the sole purchaser of uranium until 1966, when commercial sales of uranium began. The AEC continued to purchase ore until 1970. The last uranium mine on the Navajo Nation shut down in 1986.
Many Navajo people worked in and near the mines, often living and raising families in close proximity to the mines and mills where ore was processed. Since 2008, federal agencies—including EPA, the Department of Energy, the Bureau of Indian Affairs, the Department of the Interior, the Nuclear Regulatory Commission and the Indian Health Service—have collaborated to address uranium contamination on the Navajo Nation. The federal government has invested more than $130 million to address the legacy of abandoned uranium mines on Navajo lands. EPA has also compiled a list of 46 “priority mines” for cleanup and performed stabilization or cleanup work at 9 of those mines. Further, EPA’s cleanup efforts have generated over 100 jobs for Navajo citizens and work for several Navajo owned businesses. The settlement announced today includes 10 priority mines and is expected to create many jobs for Navajo workers.
This settlement agreement resolves the claims of the United States on behalf of EPA against Cyprus Amax and Western Nuclear; of the Navajo Nation against the United States, and against Cyprus Amax and Western Nuclear; and of Cyprus Amax and Western Nuclear against the United States. Cyprus Amax and Western Nuclear agree to perform removal site evaluations, engineering evaluations and cost analyses, and cleanups at the 94 mines. In return for that commitment, the United States, on behalf of the Department of the Interior and the Department of Energy, agrees to place $335 million into a trust account to help fund the cleanup.
In April 2014, the Justice Department and EPA announced in a separate matter that approximately $985 million of a multi-billion dollar settlement of litigation against subsidiaries of Anadarko Petroleum Corp. will be paid to EPA to fund the clean-up of approximately 50 abandoned uranium mines in and around the Navajo Nation, where radioactive waste remains from Kerr-McGee mining operations. EPA commenced field work with the proceeds from this settlement last year. In addition, the United States previously entered into two settlement agreements with the Navajo Nation to fund cleanups at 16 priority mines and investigations at an additional 30 mines for which no viable responsible private party has been identified.
The proposed consent decree, lodged in the U.S. District Court for the District of Arizona, is subject to a 30-day public comment period and approval by the federal court. Information about submitting a public comment is available at: www.justice.gov/enrd/consent-decrees
Justice Department Settles Immigration-Related Discrimination Claim Against J.E.T. Holding Co. Inc.Read the Press Release
The Justice Department reached a settlement today to resolve the department’s claims that J.E.T. Holding Co. Inc. discriminated against U.S. citizens and certain work-authorized immigrants in violation of the Immigration and Nationality Act (INA). J.E.T. is a company based in Saipan, Commonwealth of the Northern Mariana Islands (CNMI), that operates a restaurant, bowling alley and an amusement center.
The department’s investigation found evidence that between approximately January 2016 and June 2016, J.E.T. engaged in a pattern or practice of refusing to hire U.S. citizens and other work-authorized individuals, including lawful permanent residents, for several dishwasher positions. The department concluded that J.E.T. failed to consider qualified U.S. citizen applicants and others based on their citizenship or immigration status because of a preference for hiring non-immigrant foreign workers with CW-1 visas. The CW-1 visa grants temporary work authorization to its beneficiaries and is only available in the CNMI. CNMI employers may apply to the CNMI Department of Labor for permission to hire workers under the CW-1 visa program after advertising vacant positions and certifying that no qualified local workers are available for hire.
Under the terms of the settlement, J.E.T. will pay a civil penalty of $12,000, establish a back pay fund of $40,000 to compensate qualified claimants for any lost wages through a claims process, train its workers on the anti-discrimination provision of the INA and be subject to department monitoring.
“This settlement reflects the Justice Department’s firm commitment to ensuring that we protect the rights of workers in all U.S. jurisdictions,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “We commend J.E.T. for its cooperation in achieving this settlement and for taking steps to ensure that workers don’t face discriminatory barriers in the hiring process. ”
“The U.S. Attorney’s Office is committed to protecting the civil rights of all workers and ensuring that employers are not discriminating against individuals based on their citizenship or national origin or immigration status, in violation of the anti-discrimination provision of the INA,” said U.S. Attorney Alicia A.G. Limtiaco of the Districts of Guam and the Northern Mariana Islands. “We all have the right to be treated equally and fairly.”The U.S. Attorney’s Office in the CNMI coordinated with the Justice Department’s Civil Rights Division in its investigative efforts, and will provide assistance during the back pay claims process.
Potential back pay claimants include those who applied for a dishwasher position with J.E.T. between Dec. 13, 2015, and May 14, 2016. Individuals who believe they are potential claimants should contact [email protected] or 202-307-3092, or [email protected] or 671-479-4139.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. The law prohibits, among other things, citizenship, immigration status and national origin discrimination in hiring, firing or recruitment or referral for a fee; unfair documentary practices in employment eligibility verification; retaliation and intimidation.
To learn more about the protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php; email [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.
Applicants or employees who believe they were subjected to: different documentary requirements based on their citizenship status, immigration status or national origin; or discrimination based on their citizenship status, immigration status or national origin in hiring, firing or recruitment or referral, should contact the worker hotline above for assistance.
JET Settlement AgreementInmate Sentenced for Rioting in a Federal PrisonRead the Press Release
Jackson, Miss. - Juan Geraldo Arredondo, 37, originally from Parral, Mexico, was sentenced by Senior U.S. District Judge David Bramlette III on January 10, 2017, to 120 months in prison for his participation in a prison riot which took place at the Adams County Correctional facility on May 20, 2012, announced U.S. Attorney Gregory K. Davis and FBI Special Agent in Charge Christopher Freeze. Arredondo was also ordered to pay restitution jointly and severally in the amount of $1,382,313. He is subject to deportation following his release from prison.
The cause of the riot was what the inmates perceived to be inadequate food, medical conditions and disrespectful staff members. During the riot, prison fences were destroyed, windows were broken, prison property was stolen, hostages were taken, correctional officers were assaulted, and one corrections officer was killed. Geraldo is the twenty-fourth and final defendant to be sentenced in this case.
"Federal inmates are protected by the constitution from cruel and unusual punishment within correctional facilities, but when they riot inside one of these facilities, it poses a risk to those sworn to protect them and to our society as a whole," said Christopher Freeze, special agent in charge of the FBI in Mississippi. "Almost five years ago, Corrections Officer Catlin Carithers had his life taken while trying to protect others. As this case draws to an end, we hope the sentences of the 24 individuals involved in this riot sends a strong message to those who are incarcerated: rioting is unacceptable, murder is unconscionable and consequences are significant."
The case was investigated by the Federal Bureau of Investigations and prosecuted by Deputy Criminal Chief, Patrick Lemon.
Illinois Business Owner Sentenced to Prison for Stealing Identities to File False Tax ReturnsRead the Press Release
A Northern District of Illinois resident was sentenced to 60 months in prison today announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Zachary T. Fardon for the Northern District of Illinois.
From approximately January 2011 through April 2015, Carlos Smith stole personal identifying information obtained from individuals who sought credit repair or credit card processing services through CLS Financial Services Inc. (CLS), a business Smith operated, and used the information to file false individual income tax returns. Smith also stole identities of individuals who worked for Chicago’s Board of Education and used this information to file false individual income tax returns. Smith filed approximately 92 fraudulent income tax returns, claiming more than $1 million in refunds. Smith directed the fraudulently obtained tax refunds to prepaid debit cards, addresses, and bank accounts he controlled, including accounts opened in the names of individuals whose identities he had stolen. Smith also filed his own false individual income tax returns for 2012 through 2014.
On Oct. 19, 2016, Smith pleaded guilty to aggravated identity theft and theft of government funds. In addition to the term of prison imposed, Smith was ordered to serve two years of supervised release and to pay $ 633,884 in restitution to the IRS.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Fardon commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys John T. Mulcahy and Sonia M. Owens, and former Tax Division Trial Attorney Assistant U.S. Attorney Ryan R. Raybould, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Historic Case Involving the Civil Rights of Psychiatric Patients at Kings County Hospital Center Comes to A CloseRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York, today announced the closing of its case against New York City over conditions of patient care and treatment in NYC Health + Hospitals/Kings County, also known as Kings County Hospital Center’s Behavioral Health Service (“BHS”). In a letter dated January 10, 2017 to the Honorable Kiyo A. Matsumoto, Mr. Capers requested that Judge Matsumoto close the case because the BHS is in substantial compliance with the requirements of a January 2010 Consent Judgment between the United States and the City of New York. The Court granted that motion today.
The Consent Judgment was entered after the United States conducted an investigation of the BHS in 2008 and 2009 and concluded that it was failing to properly assess, diagnose, supervise, monitor, and treat its patients. The investigation also revealed violations of patients’ rights, including the improper use of chemical and physical restraints. Hospital Police assaulted patients and handcuffed them to beds and radiators. In a tragic incident in 2008, a patient, Esmin Green, was left unattended and died on the floor as clinical staff and hospital police ignored her. BHS also discharged patients to the community without adequate plans for their care. As a result, large numbers of patients returned to the facility. In addition, the facility was dilapidated and filthy.
In January 2010, the United States and the City entered into the Consent Judgment for the purpose of bringing about a complete overhaul of the BHS, including its initial triage procedures, its assessment and diagnostic procedures, and its treatment planning, as well as its medication management, nursing, discharge planning, and fire and life safety planning. Significantly, the Consent Judgment also included provisions for the reform of KCHC’s Hospital Police force.
In the seven years since the parties signed the Consent Judgment, the BHS has become a model acute care psychiatric facility. The BHS now addresses the critical needs of the vulnerable, mentally ill population that it serves. Its treatment plans and mental health care are individualized, person-centered, and recovery oriented. It has also developed clinical approaches to identify and address potential patient aggression and self-harm. As a result, suicide attempts and self-harm have dropped significantly. Nurses are more attentive and play a significant and assistive role in helping patients get better. Medication is used only for the purpose of treating patients and not for the purpose of controlling their behavior. In addition, the rate of recidivism has dropped sharply as a result of robust discharge planning. And, the BHS is now housed in a new building, which is well-lit, sanitary, and safe.
“This Office takes great pride in the transformation of the Kings County Hospital Center’s Behavioral Health Service and the dramatic improvements in patient care that have resulted from our collaboration with the City,” said U.S. Attorney Capers. “The remarkable changes at the BHS should ensure that tragedies like the death of Esmin Green never occur again.”
The case was handled by Michael J. Goldberger, Chief of Civil Rights in the Office’s Civil Division.
Four Salt Lake City Men Charged with Robberies, Firearms Violations After September Robberies in Salt Lake ValleyRead the Press Release
SALT LAKE CITY – Four residents of Salt Lake City have initial appearances in federal court Wednesday afternoon after a grand jury returned an indictment charging them with violations of federal law in connection with a string of robberies in the Salt Lake Valley during September 2016. A silver handgun was used during each of the robberies.
The hearing is at 1 p.m. before U.S. Magistrate Judge Dustin B. Pead. The grand jury returned the indictment last week. The robbery counts are charged under the federal Hobbs Act.
Charged in the indictment are Tyrell Anthony James, age 23; Damon Keith Grigsby, age 19; Isaiah Alexander Jones, age 19; and Tristan Melchizadek Walker, age 20 – all of Salt Lake City.
Three counts of the indictment charge the defendants in connection with three robberies that occurred on Sept. 10, 2016. The indictment alleges James, Grigsby and Jones participated in a robbery at a 7-Eleven store located at 510 East 1300 South in Salt Lake City. James, Grigsby, Walker and Jones are charged with robbing a Subway store located at 3197 South Redwood Road in West Valley City and James and Grigsby are charged with a robbery of the CVS Pharmacy located at 3148 West 3500 South in West Valley, also on Sept. 10.
James is charged with using, carrying and brandishing a firearm in relation to a crime of violence during the alleged 7-Eleven robbery. James and Grigsby are charged with using, carrying, and brandishing a firearm in connection with the alleged Subway robbery. Both are also charged with using the firearm in the CVS Pharmacy robbery. During the CVS robbery, a shot was fired in the direction of an employee, so the count reads using, carrying, brandishing, and discharging a firearm during a crime of violence.
The indictment also charges James and Grigsby with three alleged robberies that occurred on Sept. 12, 2016, in Salt Lake City, West Jordan, and South Salt Lake City. James and Grigsby are charged with robberies at a 7-Eleven store located at 1692 West North Temple in Salt Lake City, the Nike Factory Store located at 3736 West Center Park Drive in West Jordan, and the Maverick store located at 514 West 3900 South in South Salt Lake City.
James and Grigsby are also charged with using, carrying and brandishing a firearm during the robberies.
The final count of the indictment charges James with possession a firearm after a felony conviction. Federal law prohibits individuals convicted of a felony from possessing a firearm.
After the first robbery, law enforcement officers received information from a witness about a car the suspects were driving. This information ultimately helped officers locate the defendants.
The potential maximum penalty for each count of robbery is 20 years in prison. James is facing a mandatory 130 years in federal prison for using a firearm during the commission of a violent crime and 10 years for the felon in possession count. Grigsby is facing a mandatory 105 years on the firearms counts in the indictment. (James –five years for first count, 25 years for each of the next five. Grigsby – is charged with aiding and abetting the firearms violations, but the penalty is the same – five years for the first count and 25 five years for each of the next four counts. The penalties for each of these counts run consecutive to any other sentence.)
Jones and Walker are not charged with firearms counts and face up to 20 years on each of the robbery counts. Jones is charged with two robberies and Walker is charged with one robbery.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
The case is being prosecuted by the U.S. Attorney’s Office in Salt Lake City and is being investigated by special agents of the FBI with assistance from police departments in Salt Lake City, West Valley City, West Jordan, and South Salt Lake City.
Former U.S. Postal Service Employee Sentenced for Conviction on Destruction of Mail ChargeRead the Press Release
ALBUQUERQUE – Alonzo Gallegos, 33, of Pena Blanca, N.M., pled guilty today in federal court in Albuquerque, N.M., to a destruction of mail charge. After entering his guilty plea, Gallegos was sentenced to six months of probation and ordered to pay a $250 fine.
Gallegos was charged in a misdemeanor information on Nov. 30, 2016, with unlawful delay and destruction of mail while employed as a U.S. Postal Service officer. According to the information, Gallegos committed the crime between Sept. 24, 2016 and Sept. 27, 2016, in Santa Fe County, N.M.
During today’s proceedings, Gallegos pled guilty to the information and admitted that from Sept. 24, 2016 through Sept. 27, 2016, he delayed or destroyed mail and newspapers.
This case was investigated by the U.S. Postal Inspection Service and is being prosecuted by Assistant U.S. Attorney Eva M. Fontanez.
Former U.S. Postal Employee Sentenced to Probation for Conviction on Misdemeanor Destruction of Mail ChargeRead the Press Release
ALBUQUERQUE – Christopher P. Vigil, 30, of Albuquerque, N.M., pled guilty today in federal court to a misdemeanor destruction of mail charge, and was sentenced to one year of probation and ordered to pay a $200 fine. At the time he committed the crime, Vigil was employed by the U.S. Postal Service.
Vigil was charged in an information on Nov. 16, 2016, with the misdemeanor offense of opening and destroying mail not directed to him. According to the information, Vigil committed the crime on Aug. 15, 2016, in Bernalillo County, N.M.
During today’s proceedings, Vigil pled guilty to the information and admitted that on Aug. 15, 2016, he intentionally opened mail not directed to him, and used his position as an employee of a postal unit to steal a gift card.
This case was investigated by the U.S. Postal Inspection Service and is being prosecuted by Edward Han.
Former Physician Pleads Guilty to Health Care Fraud SchemeRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a former Kansas City, Mo., physician who lost his medical license due to an earlier fraud scheme, pleaded guilty in federal court today to his role in a fraud scheme that involved disability examinations of veterans.
Wayne W. Williamson, 74, of Kansas City, waived his right to a grand jury and pleaded guilty before U.S. District Judge Howard F. Sachs to a federal information that charges him with health care fraud.
Williamson was a medical consultant at Industrial Medical Center (IMC) during various periods beginning at least as early as 2013 through at least March 2015. IMC was a medical clinic in Independence, Mo.; among other things, it was a drug and DNA testing center, had contracts with various entities to provide medical services to patients, and provided drug testing and physical examinations for drivers of commercial motor vehicles.
Williamson was formerly a medical doctor but voluntarily surrendered his medical license in 2010 after he pled guilty to health care fraud; conspiracy to distribute Oxycotin, Percocet, and Xanax; and harassing or attempting to harass an investigator with the Missouri State Board of Healing Arts. Williamson was sentenced to three years in federal prison and permanently excluded from participation in Medicare or Medicaid programs.
Williamson performed disability examinations for the Department of Veterans Affairs under IMC’s contract with Logistics Health, Inc., to determine the extent of veterans’ impairments and eligibility for benefits. This was done in violation of Logistic Health’s contract with the Department of Veterans Affairs, which required that disability examinations be conducted by credentialed providers and that the examiners must have a clear and unrestricted license and not be excluded from participation in the Medicare or Medicaid programs. However, after the only trained and licensed provider at IMC left on July 16, 2013, Williamson conducted the examinations.
IMC falsely represented that a physician had completed and electronically signed the Disability Benefits Questionnaires. IMC submitted invoices to Logistics Health to be paid for 209 disability examinations on 53 veterans. In turn, Logistics Health submitted invoices to the Department of Veterans Affairs for the disability examinations performed by its subcontractor, IMC. The Department of Veteran’s Affairs paid Logistics Health $39,155 for the disability examinations performed by its subcontractor, IMC.
Under the terms of today’s plea agreement, Williamson must forfeit $39,155 to the government.
In April 2014, Logistics Health contacted the Department of Veterans Affairs—Office of Inspector General hotline and reported the fraudulent activity. Because a credentialed provider did not conduct the disability examinations, the Department of Veterans Affairs had to re-adjudicate all those claims. Some veterans had to be physically re-examined, and others had their claim file reviewed.
Under federal statutes, Williamson is subject to a sentence of up to 10 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorneys Cindi S. Woolery and Jane Pansing Brown. It was investigated by the Department of Veterans Affairs—Office of Inspector General, the Department of Transportation—Office of Inspector General, the Department of Labor—EBSA and the Department of Health and Human Services—Office of Inspector General.
Former Pharmaceutical Salesman Pleads Guilty in $13 Million Money Laundering Conspiracy Involving 2 Million Doses of OxycodoneRead the Press Release
A former pharmaceutical salesman pled guilty on January 13, 2017, for his role in a $13 million money laundering conspiracy involving more than 2 million dosage units of oxycodone.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Adolphus P. Wright, Special Agent in Charge, Drug Enforcement Administration (DEA), Ric L. Bradshaw, Sheriff, Palm Beach Sheriff’s Office, Albert Arenal, Chief, Coconut Creek Police Department, and Daniel C. Alexander, Chief, Boca Raton Police Department, made the announcement.
Jonathan Sendor, 60, of Aurora, Colorado, pled guilty to one count of conspiracy to commit money laundering involving criminally derived property valued greater than $10,000, in violation of Title 18, United States Code, Sections 1956(h) and 1957. Sentencing is scheduled for March 14, 2017 at 2:00 p.m. At sentencing, Sendor faces up to ten years in prison.
According to court documents, between March 2010 and June 2011, Sendor’s co-conspirators operated six pain clinics in Broward and Palm Beach counties with the purpose of unlawfully dispensing oxycodone that had not been prescribed for a legitimate medical purpose. Approximately 2,007,695 oxycodone 30 mg pills were dispensed and distributed through the pain clinics before they were closed following the execution of search warrants in June 2011. The co-conspirators operated the clinics to ensure that the maximum amount of oxycodone would be prescribed without regard to a legitimate medical need, and purely for the sake of profit. The pain clinics failed to comply with Florida standards for the use of controlled substances. The pain clinics generated approximately $13,466,598 from the unlawful prescribing and dispensing of oxycodone.
For his role in the scheme, Sendor created multiple companies, building upon the connections he had formed as a pharmaceutical salesman, to act as a quasi-broker between the doctors of the pain clinics needing oxycodone and the wholesalers. Sendor misled the wholesale pharmaceutical companies and told them that he would function as an inspector and check whether any prospective customer pain clinic was operating a pill mill by conducting site visits and by requiring the clinic manager/doctor to complete a site survey. Sendor misrepresented the results of the site survey and directed the doctors, pain clinic managers, owners and other coconspirators to lie on the survey form.
In October 2010 the law changed and clinics were prohibited from dispensing oxycodone on-site. Sendor then assisted in opening two pharmacies – one in Boca Raton, Florida and another pharmacy in Orlando, Florida. Patients of the pain clinics were then directed to these pharmacies for oxycodone.
This case is the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF) a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.
Mr. Ferrer commended the investigative efforts of IRS-CI, the DEA, PBSO, Coconut Creek Police Department, and Boca Raton Police Department. Mr. Ferrer also recognized the South East Regional Task Force (SERTF) and the Palm Beach Sheriff's Office Multi-Agency Diversion Task Force (PBSO MAADTF). SERTF is headed by the DEA and includes representatives from the Fort Lauderdale Police Department, Pembroke Pines Police Department, Hallandale Beach Police Department, Lauderhill Police Department, Margate Police Department, and Coconut Creek Police Department. PBSO MAADTF is headed by the Palm Beach County Sheriff's Office and includes representatives from the Boca Raton Police Department, Boynton Beach Police Department, DEA, Delray Beach Police Department, Florida Department of Health, Greenacres Police Department, IRS-CI, Jupiter Police Department, Riviera Beach Police Department, Palm Beach County State Attorney’s Office, PBSO, Palm Beach Gardens Police Department and West Palm Beach Police Department. This case is being prosecuted by Assistant U.S. Attorney Donald F. Chase, II.
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.
Former ICON Communication Senior Vice President Admits to Stealing Company FundsRead the Press Release
LITTLE ROCK—Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced today that Blaine Francis Houser, 52, of Dover, the former Senior Vice President of ICON Communications of Russellville, pleaded guilty to mail fraud after admitting that he used company funds for personal reasons.
Houser pleaded guilty on Tuesday before United States District Court Judge Kristine G. Baker to a one-count federal Information charging him with mail fraud. His scheme to defraud ICON Communications began in September 2012, when Houser was Senior Vice President, and continued through April 2015. According to the Information, in September 2012, Houser opened a commercial credit application in the name of ICON Communications with Blue Tarp Financial, Inc. of Portland, Maine. He then made a purchase of tools by mail order from Northern Tool & Equipment Company. He had the invoice sent to ICON Communications at their office in Russellville, but had the tools shipped to his house in Dover. Once the invoice arrived at ICON, the bill was paid with monies from the company.
Following this purchase there were other instances of mail fraud committed by Houser, who agreed as part of a plea agreement to pay restitution in the amount of $255,606.52 to ICON.
Houser will be sentenced by Judge Baker at a later date. Mail fraud carries a maximum statutory sentence of 20 years’ imprisonment, a $250,000 fine, three years of supervised release and $100 special assessment. The case was investigated by the United States Secret Service and is being prosecuted by First Assistant United States Attorney Patrick C. Harris.
Former Fresno Business CEO Pleads Guilty to Embezzling over $500,000 from Pension PlanRead the Press Release
FRESNO, Calif. — Mary Williams, 70, of Fresno, pleaded guilty today to embezzling from a pension plan, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Williams was the Chief Executive Officer of Aeroplate Corporation, an engineering and contracting firm in Fresno. From June 2011 to November 2016, Williams embezzled approximately $509,000 from a pension plan that Aeroplate established for its employees. One of the fund’s assets was a set of real estate parcels in Fresno that at one point was appraised at over $900,000 in value.
Under federal law, assets that belong to pension plans can only be used to fund the plan, which must pay future benefits to employees, and not the business that started the plan.
According to the plea agreement, Williams and the company used the properties to raise money for the company. Eventually, the company was unable to repay its loans, and the properties were foreclosed on. The fund became insolvent because it did not have enough money to pay expected benefit claims. However, the plan’s benefits are federally insured by the Pension Benefit Guaranty Corporation, which protects employees from losing their benefits when their plans are insolvent.
This case is the product of an investigation by the U.S. Department of Labor’s Employee Benefit Security Administration. Assistant U.S. Attorney Michael G. Tierney is prosecuting the case.
Williams is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on April 3, 2017. Williams faces a maximum statutory penalty of five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Former Boy Scout Leader Pleads Guilty to Child Pornography ChargeRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y. -- Acting U.S. Attorney James P. Kennedy, Jr. announced today that Daniel Huzinec, 25, of Buffalo, NY, pleaded guilty to receipt of child pornography before U.S. District Court Judge Lawrence J. Vilardo. The charge carries a mandatory minimum sentence of five years in prison, a maximum of 20 years, and a $250,000 fine.
Assistant U.S. Attorney Stephanie Lamarque, who is handling the case, stated that the investigation began in December 2014 when the defendant shared photographs of children engaged in sexually explicit conduct on a peer to peer website. This conduct included the sexual abuse of children by adults and children engaging in sexual activity with other children.
On January 27, 2015, agents from Homeland Security Investigations executed a search warrant at Huzinec’s Marilla St. residence. Numerous items were seized from the residence including a laptop computer. During the execution of the warrant, the defendant, an Assistant Scout Master, waived his Miranda rights and admitted that in January 2015, while chaperoning a Boy Scout camping trip, he took several sexually explicit pictures of a sleeping 16-year-old boy with his cell phone.
A subsequent forensic evaluation of the electronic evidence seized from the defendant’s residence determined that such evidence contained images and videos of child pornography, including the sexually explicit pictures of the sleeping child that the defendant had admitted to taking. In addition, law enforcement officers discovered that in November 2014, Huzinec enticed a 15-year-old boy, a former member of the defendant’s Boy Scout troop, to send him sexually explicit pictures by creating a fake email account and posing as a teenage girl. Those pictures were also found on the defendant’s computer. As part of the plea agreement, the defendant admitted to the production of images of child pornography of the 15 and 16-year-old boys.
Sentencing is scheduled for April 27, 2017, at 12:30 p.m. before Judge Vilardo.
The plea is the culmination of an investigation by Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Acting Special Agent-in-Charge Kevin Kelly.
Former Belleville Doctor's Office Manager Sentenced to Fifty-One Months in Prison for EmbezzlementRead the Press Release
Jerry L. Akin, 61, formerly from Belleville, Illinois, was sentenced to fifty-one months in prison on two counts of wire fraud involving a scheme to embezzle funds from a doctor's office, Don Boyce, United States Attorney for the Southern District of Illinois, announced today. Akin was also ordered to pay restitution of $256,563 and serve three years supervised release. Restitution was less than the total amount embezzled due to an amount taken from Akin’s retirement account. Akin was sentenced on January 12, 2017.
Akin charged personal purchases to the company's credit card that included Cardinal baseball season tickets, concert tickets, medical bills and personal travel expenses. Akin paid personal credit card bills using the business checking account, and he attempted to conceal the payments by altering the payee of the checks in the business's QuickBooks accounting software. The total loss was $369,000.
The successful prosecution is the result of an investigation conducted by the Federal Bureau of Investigation, with the assistance of the doctor's office. The case was prosecuted by Assistant United States Attorney Norman R. Smith.
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Florida Residents Charged with Conspiracy and Wire FraudRead the Press Release
OAKLAND, Calif. - A federal grand jury indicted Karl James Stehlin and Gregory Scott Winters charging them each with conspiracy to commit wire fraud and wire fraud, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. According to the indictment unsealed last Friday, January 13, 2017, the defendants allegedly engaged in a scheme to defraud a victim in Walnut Creek, Calif., into paying in excess of $5,000,000 for fake invoices reflecting goods sold to non-existent customers, including several businesses purportedly in the equine industry.
According to the indictment, Stehlin, 57, of Seminole, Fla., and Winters, 45, a resident of Ocala Fla., at the relevant time, were part of a conspiracy that sold millions of dollars’ worth of fake invoices to a Walnut Creek company that provides accounts receivable collateralized lending services, also called “factoring.” Factoring is a financial transaction in which a business sells its accounts receivable (invoices) to a third party (the factor) at a discount. The factor advances a percentage of the face amount of the invoice to the business and then collects the full amount from the customers of the business in due course. Following collection from the customers, the factor deducts its commission and other fees and then pays the balance to the business.
Stehlin, Winters, and their co-conspirators allegedly created multiple shell entities, including Nature’s Own Pharmacy, a company they claimed sold equine supplements, as well as many other shell companies that were represented to be Nature’s Own Pharmacy’s customers but in fact did no legitimate business with Nature’s Own Pharmacy. According to the indictment, the defendants then created fake invoices that gave the appearance of the sale of goods from Nature’s Own Pharmacy to the fake customers of Nature’s Own Pharmacy. The defendants then allegedly sold the invoices to the Walnut Creek factoring company. The defendants allegedly used false names, virtual office addresses, and other false information to execute their scheme. The fake customers of Nature’s Own Pharmacy supposedly received goods shipped from Nature’s Own Pharmacy to locations in various states around the country including Florida, California, Arizona, and Texas. In reality, the indictment alleges, Nature’s Own Pharmacy sold neither goods nor services, and none of the purported customers bought any goods or services from Nature’s Own Pharmacy; the invoices sold were allegedly completely fake.
Stehlin is in the custody of the Bureau of Prisons on other charges and will be transported to the Northern District of California to make his initial appearance in this case. Winters is scheduled to make an initial appearance before U.S. Magistrate Judge Donna M. Ryu on February 2, 2017.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of twenty (20) years in prison, a three-year term of supervised release, a fine of $250,000 or twice the gross gain or loss (whichever is greater), plus restitution, and a $100 special assessment for each count. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney William Gullotta is prosecuting the case with the assistance of Michelle Alter Eck and Trina Khadoo. The prosecution is the result of an investigation by the FBI.
Five Springfield Residents Indicted for Meth Conspiracy, Illegal FirearmsRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that five Springfield, Mo., residents were indicted by a federal grand jury today for their roles in a conspiracy to distribute methamphetamine in Greene County and Webster County, Mo., and for illegally possessing firearms.
Randy G. Dabney, 53, James O. Mitchell, 45, Christopher R. Mays, 35, Michael J. Boehm 22, and Kayla A. Morrill, 40, all of Springfield, were charged in a 25-count indictment returned by a federal grand jury in Springfield.
Today’s indictment alleges that all five co-defendants participated in a conspiracy to distribute methamphetamine from Nov. 24, 2015, to Sept. 28, 2016.
In addition to the conspiracy, Dabney is charged with three counts of possessing methamphetamine with the intent to distribute, one count of possessing a firearm in furtherance of a drug-trafficking conspiracy, five counts of being a felon in possession of firearms and one count of illegally possessing a sawed-off rifle. Dabney, who has a prior felony conviction, allegedly was in possession of a Rock Island Armory .45-caliber semi-automatic pistol on April 14, 2016; a Ruger .22-caliber rifle on April 26, 2016; a Star B. Echevarria 9mm semi-automatic pistol on May 4, 2016; a Colt .45-caliber semi-automatic pistol on May 24, 2016; and a Jimenez Arms 9mm semi-automatic pistol, a Taurus .45-caliber semi-automatic pistol and an O.F. Mossberg and Sons 12-gauge shotgun on June 1, 2016. Dabney allegedly was in possession of a sawed-off Ruger .22-caliber rifle on April 26, 2016.
Mitchell and Morrill are also charged together in one count of aiding and abetting one another to possess methamphetamine with the intent to distribute.
Mitchell is also charged with one count of distributing methamphetamine, three counts of possessing methamphetamine with the intent to distribute, one count of possessing a firearm in furtherance of a drug-trafficking crime and two counts of being a felon in possession of firearms. Mitchell, who has a prior felony conviction, allegedly was in possession of a Springfield Armory .40-caliber semi-automatic pistol on April 1, 2016; and a Jimenez Arms .32-caliber semi-automatic pistol and a Cobra .380-caliber semi-automatic pistol on June 8, 2016.
Mays is also charged with one count of possessing methamphetamine with the intent to distribute, one count of possessing a firearm in furtherance of a drug-trafficking conspiracy and one count of being a felon in possession of a firearm. Mays, who has a prior felony conviction, allegedly was in possession of a Taurus Millennium 9mm semi-automatic pistol on March 4, 2016.
Boehm is also charged with one count of possessing methamphetamine with the intent to distribute, one count of possessing firearms in furtherance of a drug-trafficking conspiracy and one count of being a felon in possession of firearms. Boehm, who has been convicted of a felony, allegedly was in possession of a Norinco 7.62 x 39mm semi-automatic rifle, a Beretta 9mm semi-automatic pistol, a Smith and Wesson .22-caliber semi-automatic rifle, a Winchester .30-.30-caliber lever-action rifle and a Winchester .300-caliber bolt-action rifle on March 25, 2016.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Special Assistant U.S. Attorney Jody M. Larison and Assistant U.S. Attorney Nhan D. Nguyen. It was investigated by the Drug Enforcement Administration, the Springfield, Mo., Police Department, COMET (the Combined Ozarks Multijurisdictional Enforcement Team) and the Webster County, Mo., Sheriff’s Office.
Fayetteville Man Sentenced to 10 Years for Arranging to have sex with a MinorRead the Press Release
ATLANTA - John Katz has been sentenced to 10 years in prison for communicating with a minor on the Internet for the purpose of engaging in illegal sexual activity with her. Katz drove more than 30 miles to meet the minor and was arrested when he showed up at a pre-arranged site to meet her for sex.
“This case shines a light on some of the darkest corners of the Internet, where predators troll for the opportunity to victimize children,” said U. S. Attorney John Horn. “This was not Katz’s first attempt to reach out from the Internet to actually have sexual contact with a minor. This case prevents him from further attempts to make the Internet a dangerous place for children.”
“Identifying and stopping the sexual abuse of underage victims is one of this agency’s highest investigative priorities,” said Special Agent in Charge of ICE Homeland Security Investigations Atlanta Nick Annan. “Underage children cannot consent to sexual activity -- period. This sentencing clearly illustrates that anyone who seeks out sex with an underage person can and will face serious criminal charges and an extensive period of time behind bars.”
“This conviction illustrates the great work of law enforcement to investigate and prosecute crimes against children. The Georgia Bureau of Investigation is committed to working with our local, state, and federal partners to combat the epidemic of child sexual exploitation and abuse cases,” said Vernon Keenan, Director, Georgia Bureau of Investigation.
According to U.S. Attorney Horn, the charges and other information presented in court: In February 2014, Katz posted an ad on Craigslist that was titled “Daddy looking for teenage slut.” In the ad, Katz expressed his interest in finding a young girl to act out his sexual fantasies. An agent with the Georgia Bureau of Investigation (GBI) posed as a 15-year-old girl and responded to his ad. She wrote that she was “too young” for him but just wanted “to say hey!” Katz continued communicating with the girl and was graphic in his descriptions of the sex acts that he wanted to have with her.
At the same time, Katz was also communicating over the Internet with a 14-year-old girl and was trying to make arrangements to meet with her for the purpose of having sex with her. This 14-year-old girl in reality was another GBI agent acting in an undercover capacity.
On February 28, 2014, Katz drove from his home in Fayetteville to Lithonia, Georgia, to meet the 15-year-old girl. He was arrested when he showed up at a pre-arranged site. Additionally, he had condoms and a number of sex toys with him. After his arrest, he admitted that several years earlier he had actually had sex with a 15-year-old girl when he lived in Ohio and that he knew her age at the time they met.
John Katz, 32, of Fayetteville, Georgia, was sentenced to 10 years in prison to be followed by eight years of supervised release. Katz was convicted of these charges on November 3, 2016, after he pleaded guilty.
This case was investigated by the Georgia Bureau of Investigation and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Assistant United States Attorney Paul R. Jones prosecuted the case.
This case is being brought as part of Project Safe Childhood. In February 2006, the Attorney General launched Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorney’s Offices around the country, Project Safe Childhood marshals federal, state and local resources to apprehend and prosecute individuals who exploit children. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
East Chicago Man Sentenced to 60 Months ImprisonmentRead the Press Release
HAMMOND- United States Attorney David A. Capp announced that Victor Castro, 37, of East Chicago, Indiana was sentenced before Chief Judge Philip Simon on January 13, 2017 for distribution of over 500 grams of cocaine.
Castro was sentenced to 60 months imprisonment and 4 years supervised release.
According to documents in this case, in December of 2014, an investigation by the Drug Enforcement Administration revealed that Castro distributed a kilogram of cocaine to a DEA confidential informant at Castro’s place of business, Castro Trucking Service, in Gary, Indiana.
This case was the result of an investigation by the Drug Enforcement Administration. The case was handled by Assistant United States Attorney Thomas M. McGrath.
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Deutsche Bank Agrees to Pay $7.2 Billion for Misleading Investors in its Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
The Justice Department, along with federal partners, announced today a $7.2 billion settlement with Deutsche Bank resolving federal civil claims that Deutsche Bank misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2006 and 2007. This $7.2 billion agreement represents the single largest RMBS resolution for the conduct of a single entity. The settlement requires Deutsche Bank to pay a $3.1 billion civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Under the settlement, Deutsche Bank will also provide $4.1 billion in relief to underwater homeowners, distressed borrowers and affected communities.
“This resolution holds Deutsche Bank accountable for its illegal conduct and irresponsible lending practices, which caused serious and lasting damage to investors and the American public,” said Attorney General Loretta E. Lynch. “Deutsche Bank did not merely mislead investors: it contributed directly to an international financial crisis. The cost of this misconduct is significant: Deutsche Bank will pay a $3.1 billion civil penalty, and provide an additional $4.1 billion in relief to homeowners, borrowers, and communities harmed by its practices. Our settlement today makes clear that institutions like Deutsche Bank cannot evade responsibility for the great cost exacted by their conduct.”
“This $7.2 billion resolution – the largest of its kind – recognizes the immense breadth of Deutsche Bank’s unlawful scheme by demanding a painful penalty from the bank, along with billions of dollars of relief to the communities and homeowners that continue to struggle because of Wall Street’s greed,” said Principal Deputy Associate Attorney General Bill Baer. “The Department will remain relentless in holding financial institutions accountable for the harm their misconduct inflicted on investors, our economy and American consumers.”
“In the Statement of Facts accompanying this settlement, Deutsche Bank admits making false representations and omitting material information from disclosures to investors about the loans included in RMBS securities sold by the Bank. This misconduct, combined with that of the other banks we have already settled with, hurt our economy and threatened the banking system,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “To make matters worse, the Bank’s conduct encouraged shoddy mortgage underwriting and improvident lending that caused borrowers to lose their homes because they couldn’t pay their loans. Today’s settlement shows once again that the Department will aggressively pursue misconduct that hurts the American public.”
“Investors who bought RMBS from Deutsche Bank, and who suffered catastrophic losses as a result, included individuals and institutions that form the backbone of our community,” said U.S. Attorney Robert L. Capers for the Eastern District of New York. “Deutsche Bank repeatedly assured investors that its RMBS were safe investments. Instead of ensuring that its representations to investors were accurate and transparent, so that investors could make properly informed investment decisions, Deutsche Bank repeatedly misled investors and withheld critical information about the loans it securitized. Time and again, the bank put investors at risk in pursuit of profit. Deutsche Bank has now been held accountable.”
“Deutsche Bank knowingly securitized billions of dollars of defective mortgages and subsequently made false representations to investors about the quality of the underlying loans,” said Special Agent In Charge Steven Perez of the Federal Housing Finance Agency, Office of the Inspector General. “Its actions resulted in enormous losses to investors to whom Deutsche Bank sold these defective Residential Mortgage-Backed Securities. Today’s announcement reaffirms our commitment to working with our law enforcement partners to hold accountable those who deceived investors in pursuit of profits, and contributed to our nation’s financial crisis. We are proud to have worked with the U.S. Department of Justice and the U.S Attorney’s Office for the Eastern District of New York.”
As part of the settlement, Deutsche Bank agreed to a detailed Statement of Facts. That statement describes how Deutsche Bank knowingly made false and misleading representations to investors about the characteristics of the mortgage loans it securitized in RMBS worth billions of dollars issued by the bank between 2006 and 2007. For example:
- Deutsche Bank represented to investors that loans securitized in its RMBS were originated generally in accordance with mortgage loan originators’ underwriting guidelines. But as Deutsche Bank now acknowledges, the bank’s own reviews confirmed that “aggressive” revisions to the loan originators’ underwriting guidelines allowed for loans to be underwritten to anyone with “half a pulse.” More generally, Deutsche Bank knew, based on the results of due diligence, that for some securitized loan pools, more than 50 percent of the loans subjected to due diligence did not meet loan originators’ guidelines.
- Deutsche Bank also knowingly misrepresented that loans had been reviewed to ensure the ability of borrowers to repay their loans. As Deutsche Bank acknowledges, the bank’s own employees recognized that Deutsche Bank would “tolerate misrepresentation” with “misdirected lending practices” as to borrower ability to pay, accepting even blocked-out borrower pay stubs that concealed borrowers’ actual incomes. As a Deutsche Bank employee stated, “What goes around will eventually come around; when performance (default) begins affecting profits and/or the investors who purchase the securities, only then will Wall St. take notice. For now, the buying continues.”
- Deutsche Bank concealed from investors that significant numbers of borrowers had second liens on their properties. In one instance, a supervisory Deutsche Bank trader specifically instructed his team that if investors asked about second liens, “‘[t]ell them verbally . . . [b]ut don’t put in the prospectus.’” Deutsche Bank knew that these second liens increased the likelihood that a borrower would default on his or her loan.
- Deutsche Bank purchased and securitized loans with substantial defects to provide “flexibility” to the mortgage originators on whom Deutsche Bank’s RMBS program depended for a continued supply of loans. Indeed, after the president of a large mortgage originator told Deutsche Bank he was “very upset with the rejection percentage,” Deutsche Bank’s diligence team was instructed, on three separate occasions, to clear loans it previously determined should be rejected.
- While Deutsche Bank conducted due diligence on samples of loans it securitized in RMBS, Deutsche Bank knew that the size and composition of these loan samples frequently failed to capture loans that did not meet its representations to investors. In fact, Deutsche Bank knew “the more you sample, the more you reject.”
- Deutsche Bank knowingly and intentionally securitized loans originated based on unsupported and fraudulent appraisals. Deutsche Bank knew that mortgage originators were “‘giving’ appraisers the value they want[ed]” and expecting the resulting appraisals to meet the originators’ desired value, regardless of the actual value of the property. Deutsche Bank concealed its knowledge of pervasive and consistent appraisal fraud, instead representing to investors home valuation metrics based on appraisals it knew to be fraudulent. Deutsche Bank misrepresented to investors the value of the properties securing the loans securitized in its RMBS and concealed from investors that it knew that the value of the properties securing the loans was far below the value reflected by the originator’s appraisal.
- By May 2007, Deutsche Bank knew that there was an increasing trend of overvalued properties being sold to Deutsche Bank for securitization. As one employee noted, “We are finding ourselves going back quite often and clearing large numbers of loans [with inflated appraisals] to bring down the deletion percentages.” Deutsche Bank nonetheless purchased and securitized such loans because it received favorable prices on the fraudulent loans. Ultimately, Deutsche Bank enriched itself by paying reduced prices for risky loans while representing to investors valuation metrics based on appraisals the Bank knew to be inflated.
- Deutsche Bank represented to investors that disclosed borrower FICO scores were accurate as of the “cut-off date” of the RMBS issuance. However, Deutsche Bank knowingly represented borrowers’ FICO scores as of the time of the origination of their loans despite the bank’s knowledge that these scores had often declined materially by the cut-off date.
Assistant U.S. Attorneys Edward K. Newman, Matthew R. Belz, Jeremy Turk, and Ryan M. Wilson of the U.S. Attorney’s Office for the Eastern District of New York investigated Deutsche Bank’s conduct in connection with the issuance and sale of RMBS between 2006 and 2007. The investigation was conducted with the Office of the Inspector General for the Federal Housing Finance Agency.
The $3.1 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. It is one of the largest FIRREA penalties ever paid. The settlement does not release any individuals from potential criminal or civil liability. As part of the settlement, Deutsche Bank has agreed to fully cooperate with investigations related to the conduct covered by the agreement.
Deutsche Bank will also provide $4.1 billion in the form of relief to aid consumers harmed by its unlawful conduct. Specifically, Deutsche Bank will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country. It will also provide financing for affordable rental and for-sale housing throughout the country. Deutsche Bank’s provision of consumer relief will be overseen by an independent monitor who will have authority to approve the selection of any third party used by Deutsche Bank to provide consumer relief.
To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.
About the RMBS Working Group:
The RMBS Working Group, part of the Financial Fraud Enforcement 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’s efforts to date have resulted in settlements providing for tens of billions of dollars in civil penalties and consumer relief from banks and other entities that are alleged to have committed fraud in connection with the issuance of RMBS.
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- Deutsche Bank represented to investors that loans securitized in its RMBS were originated generally in accordance with mortgage loan originators’ underwriting guidelines. But as Deutsche Bank now acknowledges, the bank’s own reviews confirmed that “aggressive” revisions to the loan originators’ underwriting guidelines allowed for loans to be underwritten to anyone with “half a pulse.” More generally, Deutsche Bank knew, based on the results of due diligence, that for some securitized loan pools, more than 50 percent of the loans subjected to due diligence did not meet loan originators’ guidelines.
Deutsche Bank Agrees to Pay $7.2 Billion for Misleading Investors in Its Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
WASHINGTON --The Justice Department, along with federal partners, announced today a $7.2 billion settlement with Deutsche Bank resolving federal civil claims that Deutsche Bank misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2006 and 2007. This $7.2 billion agreement represents the single largest RMBS resolution for the conduct of a single entity. The settlement requires Deutsche Bank to pay a $3.1 billion civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Under the settlement, Deutsche Bank will also provide $4.1 billion in relief to underwater homeowners, distressed borrowers and affected communities.
“This resolution holds Deutsche Bank accountable for its illegal conduct and irresponsible lending practices, which caused serious and lasting damage to investors and the American public,” said Attorney General Loretta E. Lynch. “Deutsche Bank did not merely mislead investors: it contributed directly to an international financial crisis. The cost of this misconduct is significant: Deutsche Bank will pay a $3.1 billion civil penalty, and provide an additional $4.1 billion in relief to homeowners, borrowers, and communities harmed by its practices. Our settlement today makes clear that institutions like Deutsche Bank cannot evade responsibility for the great cost exacted by their conduct.”
“This $7.2 billion resolution – the largest of its kind – recognizes the immense breadth of Deutsche Bank’s unlawful scheme by demanding a painful penalty from the bank, along with billions of dollars of relief to the communities and homeowners that continue to struggle because of Wall Street’s greed,” said Principal Deputy Associate Attorney General Bill Baer. “The Department will remain relentless in holding financial institutions accountable for the harm their misconduct inflicted on investors, our economy and American consumers.”
“In the Statement of Facts accompanying this settlement, Deutsche Bank admits making false representations and omitting material information from disclosures to investors about the loans included in RMBS securities sold by the Bank. This misconduct, combined with that of the other banks we have already settled with, hurt our economy and threatened the banking system,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “To make matters worse, the Bank’s conduct encouraged shoddy mortgage underwriting and improvident lending that caused borrowers to lose their homes because they couldn’t pay their loans. Today’s settlement shows once again that the Department will aggressively pursue misconduct that hurts the American public.”
“Investors who bought RMBS from Deutsche Bank, and who suffered catastrophic losses as a result, included individuals and institutions that form the backbone of our community,” said U.S. Attorney Robert L. Capers for the Eastern District of New York. “Deutsche Bank repeatedly assured investors that its RMBS were safe investments. Instead of ensuring that its representations to investors were accurate and transparent, so that investors could make properly informed investment decisions, Deutsche Bank repeatedly misled investors and withheld critical information about the loans it securitized. Time and again, the bank put investors at risk in pursuit of profit. Deutsche Bank has now been held accountable.”
“Deutsche Bank knowingly securitized billions of dollars of defective mortgages and subsequently made false representations to investors about the quality of the underlying loans,” said Special Agent In Charge Steven Perez of the Federal Housing Finance Agency, Office of the Inspector General. “Its actions resulted in enormous losses to investors to whom Deutsche Bank sold these defective Residential Mortgage-Backed Securities. Today’s announcement reaffirms our commitment to working with our law enforcement partners to hold accountable those who deceived investors in pursuit of profits, and contributed to our nation’s financial crisis. We are proud to have worked with the U.S. Department of Justice and the U.S Attorney’s Office for the Eastern District of New York.”
As part of the settlement, Deutsche Bank agreed to a detailed Statement of Facts. That statement describes how Deutsche Bank knowingly made false and misleading representations to investors about the characteristics of the mortgage loans it securitized in RMBS worth billions of dollars issued by the bank between 2006 and 2007. For example:
-
Deutsche Bank represented to investors that loans securitized in its RMBS were originated generally in accordance with mortgage loan originators’ underwriting guidelines. But as Deutsche Bank now acknowledges, the bank’s own reviews confirmed that “aggressive” revisions to the loan originators’ underwriting guidelines allowed for loans to be underwritten to anyone with “half a pulse.” More generally, Deutsche Bank knew, based on the results of due diligence, that for some securitized loan pools, more than 50 percent of the loans subjected to due diligence did not meet loan originators’ guidelines.
-
Deutsche Bank also knowingly misrepresented that loans had been reviewed to ensure the ability of borrowers to repay their loans. As Deutsche Bank acknowledges, the bank’s own employees recognized that Deutsche Bank would “tolerate misrepresentation” with “misdirected lending practices” as to borrower ability to pay, accepting even blocked-out borrower pay stubs that concealed borrowers’ actual incomes. As a Deutsche Bank employee stated, “What goes around will eventually come around; when performance (default) begins affecting profits and/or the investors who purchase the securities, only then will Wall St. take notice. For now, the buying continues.”
-
Deutsche Bank concealed from investors that significant numbers of borrowers had second liens on their properties. In one instance, a supervisory Deutsche Bank trader specifically instructed his team that if investors asked about second liens, “‘[t]ell them verbally . . . [b]ut don’t put in the prospectus.’” Deutsche Bank knew that these second liens increased the likelihood that a borrower would default on his or her loan.
-
Deutsche Bank purchased and securitized loans with substantial defects to provide “flexibility” to the mortgage originators on whom Deutsche Bank’s RMBS program depended for a continued supply of loans. Indeed, after the president of a large mortgage originator told Deutsche Bank he was “very upset with the rejection percentage,” Deutsche Bank’s diligence team was instructed, on three separate occasions, to clear loans it previously determined should be rejected.
-
While Deutsche Bank conducted due diligence on samples of loans it securitized in RMBS, Deutsche Bank knew that the size and composition of these loan samples frequently failed to capture loans that did not meet its representations to investors. In fact, Deutsche Bank knew “the more you sample, the more you reject.”
-
Deutsche Bank knowingly and intentionally securitized loans originated based on unsupported and fraudulent appraisals. Deutsche Bank knew that mortgage originators were “‘giving’ appraisers the value they want[ed]” and expecting the resulting appraisals to meet the originators’ desired value, regardless of the actual value of the property. Deutsche Bank concealed its knowledge of pervasive and consistent appraisal fraud, instead representing to investors home valuation metrics based on appraisals it knew to be fraudulent. Deutsche Bank misrepresented to investors the value of the properties securing the loans securitized in its RMBS and concealed from investors that it knew that the value of the properties securing the loans was far below the value reflected by the originator’s appraisal.
-
By May 2007, Deutsche Bank knew that there was an increasing trend of overvalued properties being sold to Deutsche Bank for securitization. As one employee noted, “We are finding ourselves going back quite often and clearing large numbers of loans [with inflated appraisals] to bring down the deletion percentages.” Deutsche Bank nonetheless purchased and securitized such loans because it received favorable prices on the fraudulent loans. Ultimately, Deutsche Bank enriched itself by paying reduced prices for risky loans while representing to investors valuation metrics based on appraisals the Bank knew to be inflated.
-
Deutsche Bank represented to investors that disclosed borrower FICO scores were accurate as of the “cut-off date” of the RMBS issuance. However, Deutsche Bank knowingly represented borrowers’ FICO scores as of the time of the origination of their loans despite the bank’s knowledge that these scores had often declined materially by the cut-off date.
Assistant U.S. Attorneys Edward K. Newman, Matthew R. Belz, Jeremy Turk, and Ryan M. Wilson of the U.S. Attorney’s Office for the Eastern District of New York investigated Deutsche Bank’s conduct in connection with the issuance and sale of RMBS between 2006 and 2007. The investigation was conducted with the Office of the Inspector General for the Federal Housing Finance Agency.
The $3.1 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. It is one of the largest FIRREA penalties ever paid. The settlement does not release any individuals from potential criminal or civil liability. As part of the settlement, Deutsche Bank has agreed to fully cooperate with investigations related to the conduct covered by the agreement.
Deutsche Bank will also provide $4.1 billion in the form of relief to aid consumers harmed by its unlawful conduct. Specifically, Deutsche Bank will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country. It will also provide financing for affordable rental and for-sale housing throughout the country. Deutsche Bank’s provision of consumer relief will be overseen by an independent monitor who will have authority to approve the selection of any third party used by Deutsche Bank to provide consumer relief. To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html
About the RMBS Working Group:
The RMBS Working Group, part of the Financial Fraud Enforcement 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’s efforts to date have resulted in settlements providing for tens of billions of dollars in civil penalties and consumer relief from banks and other entities that are alleged to have committed fraud in connection with the issuance of RMBS.
Download Settlement Agreement
- Download Annex 1 -- Statement of Facts
- Download Annex 1A -- Statement of Facts Appendices A through D
- Download Annex 2 -- Consumer Relief
- Download Annex 3 -- RMBS Covered by the Settlement
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Detroit, Michigan Woman Pleads Guilty to Distribution of Cocaine, HeroinRead the Press Release
MUSKOGEE, OKLAHOMA – The United States Attorney’s Office for the Eastern District of Oklahoma announced that ALEXANDRA ELAINE BURRIS, age 27, of Detroit, Michigan, pled guilty to POSSESSION WITH INTENT TO DISTRIBUTE HEROIN, in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(C), punishable by no more than 20 years imprisonment, and up to a$1,000,000.00 fine or both; and to POSSESSION WITH INTENT TO DISTRIBUTE COCAINE, in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(C), punishable by no more than 20 years imprisonment, and up to a$1,000,000.00 fine or both.
The Indictment alleged that on or about August 11, 2016, within the Eastern District of Oklahoma, the defendant, did knowingly and intentionally possess with intent to distribute a mixture or substance containing a detectable amount of heroin, a Schedule I controlled substance.
The Indictment further alleged that on or about August 11, 2016, within the Eastern District of Oklahoma, the defendant, ALEXANDRA ELAINE BURRIS, did knowingly and intentionally possess with intent to distribute a mixture or substance containing a detectable amount of cocaine, a Schedule II controlled substance.
The charges arose from an investigation by the McAlester Police Department, and the Drug Enforcement Administration.
The Honorable Steven P. Shreder, Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, accepted the plea and ordered the completion of a presentence investigation report. The defendant will remain in custody pending a sentencing hearing.
Assistant United States Attorney Rob Wallace represented the United States.
Detainee Indicted on Escape ChargeRead the Press Release
PROVIDENCE – A federal grand jury in Providence today returned an indictment charging James Morales, 35, with escape from the custody of the Attorney General, announced United States Attorney Peter F. Neronha.
It is alleged in the indictment that on December 31, 2016, Morales escaped from the custody of the Wyatt Detention Facility in which he was confined by direction of the Attorney General and her authorized representative, by virtue of an Order of detention of a United States Magistrate Judge for the District of Massachusetts.
Morales was captured in Somerville, Massachusetts on January 5, 2017, by Massachusetts State Police and returned to federal custody.
James Morales is scheduled to be arraigned on the indictment before U.S. District Court Magistrate Judge Patricia A. Sullivan on Thursday, January 19, 2017, at 11:00 AM. An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Escape from the custody of the Attorney General is punishable by statutory penalties of up to 5 years imprisonment followed by up to 3 years supervised and a fine of up to $250,000.
The case is being prosecuted by Assistant U.S. Attorney Lee H. Vilker.
District of Arizona, Acting U.s. Attorney AnnouncedRead the Press Release
PHOENIX – Elizabeth A. Strange, the current First Assistant United States Attorney, has been named as Acting United States Attorney for the District of Arizona effective upon the announced resignation of United States Attorney John S. Leonardo, on Jan. 20, 2017. Ms. Strange will maintain that position pending the appointment of a new United States Attorney by the new administration.
RELEASE NUMBER: 2017-003_USA_Acting
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.
Convicted Felon Charged with Possession of A FirearmRead the Press Release
Hyneith Harmon, 24, of Philadelphia, PA, was charged today by Indictment[1] with 2 counts of possession of a firearm by a convicted felon, announced Acting United States Attorney Louis D. Lappen. The indictment alleges that on or about November 3, 2015, Harmon, who has a prior felony conviction, possessed a Kimber .45 caliber pistol, and on December 12, 2015, he possessed a Colt .38 revolver.
If convicted the defendant faces a maximum of 20 years imprisonment.
The case was investigated by the Bureau of Alcohol Tobacco and Firearms, and is being prosecuted by Assistant United States Attorney Virgil B. Walker.
[1]An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Construction Company Owner Charged with Paying over $1 Million in Bribes for City of Atlanta ContractsRead the Press Release
ATLANTA - Elvin R. Mitchell, Jr., has been arraigned on conspiratorial bribery and money laundering charges for paying over $1 million to obtain City of Atlanta contracts.
“Mitchell brazenly sought to buy government contracts,” said U.S. Attorney John A. Horn. “Contractors who bribe their way into public work undermine the integrity of the system and ultimately cost taxpayers more money to get important projects done.”
“This case clearly demonstrates that those individuals who attempt to illegally influence our public officials can easily find themselves the subject of a federal investigation and prosecution. Because of the vast harm caused by public corruption, the FBI continues to make it our number one priority within our criminal investigative program and we ask that the public promptly report any information regarding this type of activity to their nearest FBI field office,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office.
“The public contracting process should be one of integrity and fairness,” stated Special Agent in Charge Veronica F. Hyman-Pillot. “Those who elect to pay illegal bribes to further their business interests should know that they are not beyond the reach of the law.”
According to U.S. Attorney Horn, the charges, and other information presented in court: Elvin R. Mitchell, Jr. serves as the owner and operator of E.R. Mitchell Company, Cascade Building System, LLC., E.R. Mitchell Group, Inc. and EC & WT Construction Company, Inc., d/b/a E.R. Mitchell Construction Co.
In an effort to obtain construction-related contracts with the City of Atlanta, Mitchell and another person in the construction industry agreed to pay, and did pay an individual to obtain government contracts. From approximately 2010 to August 2015, Mitchell paid over $1,000,000 to an individual in exchange for City of Atlanta contracts, believing that some of the money would be paid to city official/s who exercised influence over the contracting process.
Mitchell also laundered the money received from the City of Atlanta by attempting to conceal the source of the money and by attempting to evade federal currency transaction reporting requirements by withdrawing cash in amounts under $10,000.
Elvin R. Mitchell, Jr., 63, of Atlanta, Georgia, was charged by information and is expected to plead guilty to the charge later this month.
This case is being investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation.
First Assistant United States Attorney Kurt R. Erskine and Assistant United States Attorney Jeffrey W. Davis are prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
Congressional Staffer Sentenced to Prison for Failure to File Income Tax ReturnsRead the Press Release
A congressional staffer was sentenced to prison today for willfully failing to file an individual income tax return, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Dana J. Boente for the Eastern District of Virginia.
According to documents filed with the court, Issac Lanier Avant, a resident of Arlington, Virginia, has been employed by the U.S. House of Representatives as a Chief of Staff since 2002. In December 2006, Avant assumed the additional role of Democratic Staff Director for the House Committee on Homeland Security. Despite earning more than $165,000, Avant failed to timely file his 2009 through 2013 individual income tax returns, causing a tax loss of $153,522. Avant had no federal income withheld during those years because in May 2005, he caused a form to be filed with his employer that falsely claimed he was exempt from federal income taxes. Avant did not have any federal tax withheld from his paycheck until the Internal Revenue Service (IRS) mandated that his employer begin withholding in January 2013. Avant did not file tax returns until after he was interviewed by federal agents.
The court imposed a prison term of approximately 4 months, consisting of 30 days incarceration, followed by incarceration every weekend for 12 months. Avant was also ordered to serve a one-year term of supervised release and to pay restitution in the amount of $149,962 to the IRS.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Boente thanked special agents of IRS-Criminal Investigation and the FBI, who conducted the investigation, and Assistant U.S. Attorney Jack Hanly and Assistant Chief Todd Ellinwood of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Calaveras County Man Sentenced to over 15 Years in Prison for Child Pornography OffenseRead the Press Release
SACRAMENTO, Calif. — Miguel Angel Morales, 32, of Valley Springs, was sentenced today by U.S. District Judge John A. Mendez to 15 years and 8 months in prison for receipt of child pornography, U.S. Attorney Phillip A. Talbert announced.
According to court documents, between August 16, 2013, and September 30, 2013, Morales used a smart phone application to induce and entice a 15-year-old girl to produce pornographic photos and videos of herself and to send those images to Morales. During chats with the minor victim, Morales discussed her age and the fact that he would face serious trouble if their activities were discovered. According to court documents, at the time of the offense, Morales had a prior conviction from 2010 for unlawful sex with a minor. After serving his prison term, Morales will serve 10 years of supervised release.
This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorney Matthew G. Morris prosecuted the case.
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. Click on the “resources” tab for information about internet safety education.
Brooklyn Resident Sentenced to 42 Months in Prison for Firearms Trafficking and Illegally Possessing WeaponsRead the Press Release
Earlier today at the federal courthouse in Brooklyn, New York, Troy Barrow, a resident of Brooklyn, was sentenced to 42 months in prison and three years of supervised release, following his July 11, 2016 guilty plea to two counts of an indictment charging him with firearms trafficking, in violation of 18 U.S.C. § 922(a), and being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g).
The sentencing was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Ashan M. Benedict, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) New York Field Division, and James P. O’Neill, Commissioner, New York City Police Department.
According to public court filings, Barrow was arrested after an undercover investigation by the ATF’s Joint Firearms Task Force between September 2014 and December 2015. During the investigation, Barrow sold fourteen firearms and ammunition to undercover law enforcement officers in twelve different sales. The firearms included a mix of semiautomatic pistols and revolvers. The defendant also offered to procure additional weapons, including an AK-47 assault rifle and a machine pistol with a high capacity magazine. During one conversation recorded by law enforcement using a hidden video camera, the defendant expressed an interest in getting a revolver for himself because it was less likely to leave behind shell casings that could be used to investigate a shooting. And during another recorded conversation, the defendant explained that, if arrested, he would not cooperate with the government against others and would instead “do a bid”—go to jail. The defendant then added: “I know what I’m getting myself in.”
“Criminals like the defendant who brazenly and illegally sell guns on our streets pose a great threat to the safety of our local communities,” stated U.S. Attorney Capers. “We will never cease in our efforts to disrupt such dangerous dealings through determined investigation and prosecution.”
Special Agent in Charge Benedict said, “Troy Barrow, acting with a wanton and callous disregard for how they might be used, trafficked firearms acquired outside New York into our communities in New York City. Through the efforts of the Joint Firearms Task Force and the United States Attorney’s Office, Barrow has earned a lengthy sentence in federal prison as a just reward for his actions.”
The sentence was imposed by United States District Judge Jack B. Weinstein.
Assistant United States Attorney David K. Kessler is in charge of the prosecution.
The Defendant:
TROY BARROW
Age: 48E.D.N.Y. Docket No. 16-CR-94 (JBW)
Brooklyn Man Pleads Guilty to Conspiring to Distribute Heroin on the Dark WebRead the Press Release
FRESNO, Calif. — Chaudhry Ahmad Farooq, 24, of Brooklyn, New York, pleaded guilty today to one count of conspiring to distribute heroin, U.S. Attorney Phillip A. Talbert announced.
According to court documents, from approximately November 2015 through August 2016, Farooq conspired with co-defendant Abdullah Almashwali to distribute heroin on AlphaBay, a dark web marketplace. Under the moniker “DarkApollo,” Farooq distributed more than 600 grams of heroin in exchange for more than $145,000 in Bitcoin.
Dark web marketplaces are operated on computer networks designed to conceal the true Internet Protocol (IP) address of the computers accessing the network. Dark web marketplaces allow for payments to be made only in the form of digital currency, most commonly Bitcoin. While not inherently illegal, digital currency is used by dark web marketplaces because online transactions in digital currency can be completed without a third-party payment processor and are therefore perceived to be more anonymous and less vulnerable to law enforcement scrutiny.
This case is the product of an investigation by the Drug Enforcement Administration, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service, Criminal Investigation, the U.S. Postal Inspection Service, and the Fresno Police Department. Assistant U.S. Attorneys Grant B. Rabenn and Ross Pearson are prosecuting the case.
Both Farooq and Almashwali are in federal custody. Almashwali is scheduled for trial on April 18, 2017. The charges against him are only allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Farooq is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on May 17, 2017. Farooq faces a maximum statutory penalty of 20 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
This case was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
Bozeman Man Sentenced to Four Years in Prison for Possession of Child PornographyRead the Press Release
MISSOULA—Zachary Thomas Armstrong, 25, of Bozeman, was sentenced to 48 months in prison, 15 years supervised release, and a $5,100 special assessment by Chief United States District Court Judge Dana L. Christensen on Thursday, January 5, 2017. The sentence stems from Armstrong’s plea to guilty in August of last year. The defendant also has to pay $9,000 in restitution.
The investigation found that the defendant reported that his iPad had been stolen from his apartment in Bozeman. The next day an individual turned the iPad into the Bozeman Police Department stating the device contained images of child pornography. A forensic examiner searched the data and located approximately 1700 images of children, some under the age of 12, engaged in sexually explicit conduct.
Assistant U.S. Attorney Cyndee Peterson prosecuted the case which was investigated by the Internet Crimes Against Children Task Force and the Bozeman Police Department
Barbour County man pleads guilty to methamphetamine distributionRead the Press Release
ELKINS, WEST VIRGINIA – Tyler Robinson, 21, of Belington, West Virginia, was convicted of methamphetamine distribution today, Acting United States Attorney Betsy Steinfeld Jividen, announced.
Robinson pled guilty to one count of “Possession with Intent to Distribute Methamphetamine.” He faces up to twenty years in prison and a fine of up to $1,000,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Stephen D. Warner prosecuted the case on behalf of the government. The Mountain Region Drug and Violent Crime Task Force investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Bank Robber Sentenced to 29 Years in Federal Prison for Firing Gun at Teller and Customer in Orland Park HeistRead the Press Release
CHICAGO — A convicted bank robber has been sentenced to 29 years in federal prison for firing a gun at a teller and customer during a robbery in Orland Park.
CARL P. WILSON pocketed $20,000 from the Oct. 13, 2014, robbery of First Midwest Bank, 11200 W. 143rd St., in Orland Park. During the robbery, Wilson fired a black semi-automatic handgun at a teller and customer, narrowly missing both of them. Wilson, who had an account at the bank, was arrested nine days later after a traffic stop in Joliet.
Wilson, 28, of Joliet, pleaded guilty last year to one count of armed bank robbery, one count of discharging a firearm during the robbery, and one count of being a felon in possession of a firearm. U.S. District Judge Thomas M. Durkin imposed the 29-year sentence Thursday in federal court in Chicago.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Joliet Police Department provided valuable assistance.
“While any bank robbery is a serious offense, an armed bank robbery in which the perpetrator discharges a firearm is exceptionally serious,” Assistant U.S. Attorney Ankur Srivastava argued in the government’s sentencing memorandum. “Defendant’s crime was violent, motivated by greed, and put lives in danger.”
According to the charges, Wilson entered the bank wearing a dark hood over his head and a dark cloth draped across his face. Displaying the handgun, Wilson jumped over the teller counter and yelled, “Give me the [expletive] money!” As the teller quickly walked to the cash dispenser, Wilson fired the gun, narrowly missing her. Wilson then shot at a customer who was walking into the bank, barely missing him also. After obtaining the money, Wilson jumped back over the counter, exclaiming, “Have a great [expletive] day!” while waiving his gun in the air.
Wilson also admitted robbing a First Midwest Bank branch in Bolingbrook on Aug. 11, 2014. During the Bolingbrook robbery, Wilson opened fire on a teller within approximately five seconds of entering the bank, striking her in the arm.
At the sentencing hearing in federal court, the victim in the Bolingbrook robbery and several witnesses from the Orland Park robbery testified about their harrowing experiences.
The government was represented by Mr. Srivastava.