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12 January 2017
Navy’s “Supply Officer of the Year” Sentenced to 30 months in Expanding Bribery and Fraud InvestigationRead the Press Release
Assistant U.S. Attorneys Mark W. Pletcher (619) 546-9714 and Patrick Hovakimian (619) 546-9718
NEWS RELEASE SUMMARY – January 12, 2017
SAN DIEGO – U.S. Navy Lieutenant Commander Gentry Debord, who was named U.S. Navy Supply Officer of the Year while he was secretly accepting bribes and prostitutes from a foreign defense contractor in exchange for confidential information, was sentenced in federal court today to 30 months in prison.
Debord, 41, who pleaded guilty in October 2016 to a bribery charge, was also ordered to pay a $15,000 fine and $37,000 in restitution to the Navy. Debord has admitted that he accepted cash, luxury hotels and prostitutes from foreign defense contractor Leonard Glenn Francis between 2007 and 2013. In return he provided proprietary Navy information that benefitted Francis’ company, Singapore-based Glenn Defense Marine Asia.
During today’s hearing, U.S. District Judge Janis L. Sammartino told the defendant that he picked the wrong side. “You were clearly on their team and not the Navy’s team.”
Acting U.S. Attorney Alana Robinson said: “This is a fitting sentence for a man who sullied his stripes with such despicable behavior. We will continue to move forward in this investigation until all involved are held accountable.”
According to his plea agreement, from November 2007 to January 2013, Debord provided Francis and others with internal, proprietary U.S. Navy information; directed Francis and GDMA to inflate invoices to reflect services not rendered; advocated for the U.S. Navy to procure items from GDMA under its husbanding contracts; and otherwise used his position and influence in the U.S. Navy to advocate for and advance GDMA’s interests, as opportunities arose.
During the conspiracy, Debord was a supply officer aboard the U.S.S. Essex and later became a logistics officer for the Pacific Fleet. As a supply officer, Debord was responsible for procuring goods and services to meet the ship’s logistical and supply needs and for confirming that the U.S. Navy’s contractors provided these services. As logistics officer, he helped direct ship movements and port visits in the Western Pacific region.
As part of this conspiracy, Debord, Francis and others attempted to conceal the nature and extent of their relationship, by, among other things, using fictitious email accounts to communicate and using coded language and other means designed to obfuscate the true nature of their corrupt relationship, including referring to prostitutes as “cheesecakes” and “bodyguards.”
For example, on or about February 26, 2008, Debord emailed a GDMA executive to ask him to provide the services of prostitutes during the U.S.S. Essex’s upcoming port visit to Manila, Philippines: “[D]ouble checking to see if I will have my security for the 2nd and the 4th. I however do not want anyone to know I have a bodyguard.” The executive responded: “Bodyguards are standing by.”
About eight months later, around October 30, 2008, Debord emailed GDMA executives advising them that the U.S. Navy’s ship husbanding contract in the Philippines was “coming up for renew[al],” and asking that GDMA provide him with an apartment in conjunction with an upcoming port visit by the U.S.S. Essex to Hong Kong. Debord noted that he and another GDMA employee “had fun up [near Clark Air Force Base,] ate lots of cheesecake, even ate some in a group session.”
From May 2010 until December 2011, Debord was specially selected to attend the Naval Postgraduate School in Monterey, California, during which time he was not in direct contact with GDMA.
In December 2011, however, Debord accepted a position in Singapore, putting him again in close proximity to GDMA. On or about May 26, 2012, after recognizing Debord’s name on an email chain regarding fuel issues, GDMA’s Vice President of Global Operations Neil Peterson executive emailed another GDMA employee, “Look at who's the replenishment officer for ctf73, you remember sex crazy LT Debord from Essex!” Peterson emailed Debord on May 28, 2012 and invited him out for “cheesecake…just like the good ol days.”
So far, a total of 16 named individual defendants have been charged in connection with the GDMA corruption and fraud investigation. Of those, 11 are current or former U.S. Navy officials, including Debord, Admiral Robert Gilbeau, believed to be the first active-duty U.S. Navy flag officer charged in a federal criminal case; Captain (ret.) Michael Brooks; Commander Bobby Pitts; Captain Daniel Dusek; Commander Michael Misiewicz; Lt. Commander Todd Malaki; Commander Jose Luis Sanchez; Petty Officer First Class Daniel Layug; Naval Criminal Investigative Service Supervisory Special Agent John Beliveau; and Paul Simpkins, a former DoD civilian employee, who oversaw contracting in Singapore.
Debord, Brooks, Gilbeau, Dusek, Misiewicz, Malaki, Beliveau, Sanchez, Layug, and Simpkins have pleaded guilty. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine. On March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy. Beliveau was sentenced on October 14, 2016 to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on December 2, 2016 to 72 months in prison; Brooks, Gilbeau and Sanchez await sentencing.
Pitts were charged in May 2016 and his case are pending.
Also charged are five GDMA executives – Francis, Alex Wisidagama, Ed Aruffo and Neil Peterson and Linda Raja. Three have pleaded guilty; Wisidagama was sentenced on March 18, 2016 to 63 months and $34.8 million in restitution to the Navy. Francis and Aruffo await sentencing; Peterson and Raja were extradited from Singapore in September 2016 and their cases are pending.
In the government’s sentencing memorandum, Assistant U.S. Attorney Mark Pletcher wrote that Debord’s conduct was particularly galling considering he received a prestigious award while he was in cahoots with Francis. “Ultimately, that Debord was effectively working for GDMA and against the U.S. Navy in dereliction of his official duties at the same time as being awarded the Supply Officer of the Year Award is an unparalleled example of duplicity, even considering the high bar set by the industrious cast of defendants in this investigation.”
The Defense Criminal Investigative Service, Naval Criminal Investigative Service, and the Defense Contract Audit Agency are investigating. Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case.
Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.
DEFENDANT Case Number: 16cr1457-JLS
Lieutenant Commander Gentry Debord Age 41 San Diego
SUMMARY OF CHARGES
Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371
Maximum Penalty: 5 years in prison, a $250,000 fine,
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
Navy Officer Sentenced to 30 Months in Expanding Bribery and Fraud InvestigationRead the Press Release
A U.S. Navy Lieutenant Commander was sentenced today to 30 months in prison for accepting cash, hotel expenses and the services of a prostitute from foreign defense contractor Glenn Defense Marine Asia (GDMA) in exchange for classified Navy information.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Alana Robinson of the Southern District of California, Director Dermot O’Reilly of the Department of Defense’s (DoD) Defense Criminal Investigative Service (DCIS) and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.
In October 2016, Gentry Debord, 41, pleaded guilty to one count of conspiracy to commit bribery and admitted that in 2007 he began a corrupt relationship with Leonard Glenn Francis, the former president and CEO of GDMA, a company that provided port services to U.S. Navy ships and submarines throughout the Pacific. In addition to his prison sentence, U.S. District Judge Janis L. Sammartino of the Southern District of California ordered Debord to pay a $15,000 fine and $37,000 in restitution to the Navy.
As part of the scheme, between 2007 and 2013, Debord accepted cash, luxury hotels and the services of prostitutes from Francis in exchange for proprietary Navy information that benefitted GDMA. During this period, Debord served as a supply officer aboard the U.S.S. Essex and later as a logistics officer for the Pacific Fleet. Debord further admitted that he provided Francis and others with internal, proprietary U.S. Navy information; directed Francis and GDMA to inflate invoices to reflect services not rendered; advocated for the U.S. Navy to procure items from GDMA under its husbanding contracts; and otherwise used his position and influence in the U.S. Navy to advocate for and advance GDMA’s interests.
To date, a total of 16 individuals have been charged in connection with the scheme; of those, 10 have pleaded guilty, including Debord, Admiral Robert Gilead, Captain Michael Brooks, Commander Bobby Pitts, Captain Daniel Dusk, Commander Michael Mickiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez and U.S. Petty Officer First Class Daniel Layup.
On Jan. 21, 2016, Layup was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine. On March 25, 2016, Dusk was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Mickiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy. Beliveau was sentenced on Oct. 14, 2016, to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on Dec. 2, 2016, to 72 months in prison; Brooks, Gilbeau and Sanchez await sentencing. Pitts was charged in May 2016 and his case is pending.
DCIS, NCIS and the Defense Contract Audit Agency are investigating the case. Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.Minneapolis Man Sentenced to 195 Months in Prison for Drug Distribution and Unlawful Possession of FirearmsRead the Press Release
United States Attorney Andrew M. Luger announced the sentencing of EUGENE RYAN BOOS, 44, to 195 months in prison after pleading guilty on August 15, 2016, to conspiracy to distribute methamphetamine and possession of a firearm in furtherance of a drug-trafficking crime. BOOS was sentenced before Senior U.S. District Judge David S. Doty in U.S. District Court in Minneapolis, Minn.
“Eugene Boos is a dangerous, repeat offender,” said James Modzelewski, Bureau of Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge. “Getting him off the streets is critical to keeping our communities safe. I want to commend the Hennepin and Anoka County Sheriff’s Offices for their contributions in this case. ATF will continue to partner with all Minnesota law enforcement to reduce gun-related violent crimes.”
According to BOOS’ guilty plea and documents filed in court, on December 10, 2014, while BOOS was on felony supervised release from the Minnesota Department of Corrections for a 1994 second-degree murder conviction, officers with the Hennepin County Sheriff’s Office seized from the defendant’s home three firearms, ammunition, 132.5 grams of highly pure methamphetamine, digital scales, packaging materials, over 100 controlled substance pills, and more than $12,000 hidden in a speaker.
According to the defendant’s guilty plea and documents filed in court, in addition to the aforementioned contraband, BOOS possessed additional quantities of methamphetamine and materials commonly used to manufacture methamphetamine in the garage of the residence. In fact, the strong chemical odor of ammonia emanating from the garage was so overwhelming that officers summoned a haz-mat cleanup team to respond to the residence and properly dispose of the hazardous chemicals.
According to the defendant’s guilty plea and documents filed in court, among the firearms that BOOS illegally possessed were a .380-caliber semi-automatic handgun with an obliterated serial number and a stolen .45 caliber semi-automatic pistol.
The case was prosecuted by Assistant United States Benjamin Bejar and was the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, in collaboration with the Anoka County Sheriff’s Office and the Hennepin County Sheriff’s Office.
Defendant Information:EUGENE RYAN BOOS, 44
Minneapolis, Minn.Convicted: • Possession with intent to distribute methamphetamine, 1 count
• Possession of firearms in furtherance of a drug-trafficking crime, 1 countSentenced: • 195 months in prison
• Supervised release for a term of five yearsMexico Man Sentenced for Meth TraffickingRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Mexico, Mo., man was sentenced in federal court today for possessing methamphetamine with the intent to distribute.
Robby Dee Kesler, 54, of Mexico, Mo., was sentenced by U.S. District Judge Brian C. Wimes to 11 years and five months in federal prison without parole.
On July 19, 2016, Kesler pleaded guilty to possessing methamphetamine with the intent to distribute.
MUSTANG Task Force officers, aware that Kesler had outstanding warrants, were investigating Kesler and had him under surveillance on May 21, 2015. Kesler drove to a residence in Columbia, Mo. When a Missouri State Highway Patrol trooper approached Kesler, he got out of his vehicle and went into the residence. The residents of the home told the trooper that Kesler had entered without their consent and was hiding in the bathroom. Officers set up a perimeter around the residence, and after several hours were able to make contact. After a period of negotiations, Kesler surrendered to officers.
When taken into custody, Kesler had $1,759 in his wallet. Officers also found a large Zip-loc bag that contained approximately 370 grams of methamphetamine concealed in a canvas bag behind the driver’s seat of his car. Officers also found an additional $9,000 inside the residence.
On May 26, 2015, a search was conducted at Kesler’s mother’s residence in Mexico, Mo., where Kesler was living at the time. Officers recovered drug paraphernalia and a Walther PPK pistol.
According to court documents, Callaway County Sheriff’s deputies had conducted a search warrant at Kesler’s residence on Aug. 25, 2013. Officers recovered a number of items consistent with drug distribution, including digital scales, five grams of methamphetamine, and $16,460 in U.S. currency from his bedroom.
On Jan. 20, 2014, Kesler and two other individuals were in a vehicle that was stopped by officers. The officers recovered drug paraphernalia, bags containing suspected methamphetamine, and $20,169 from the vehicle. Officers conducted a search of Kesler’s residence in Fulton, Mo., the same day, and recovered numerous items of drug paraphernalia, a plastic bag containing suspected methamphetamine, a shotgun and $1,650. According to court documents, the residence was equipped with surveillance cameras.
This case was prosecuted by Assistant U.S. Attorney Jim Lynn. It was investigated by the Missouri State Highway Patrol, the Bureau of Alcohol, Tobacco, Firearms and Explosives and MUSTANG (the Mid-Missouri Unified Strike Team and Narcotics Group).
Man Charged with Enticing Missing Teen for Illicit SexRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a man arrested near Kansas City, Mo., has been charged in federal court with attempting to entice a missing Springfield, Mo., teen to engage in illicit sexual activity.
Dominic Keith Pearson, 25, no known address, was charged in a federal criminal complaint filed in the U.S. District Court in Springfield, Mo., on Wednesday, Jan. 11, 2017. Pearson, who was arrested on Tuesday, Jan. 10, 2017, in Jackson County, Mo., had his initial court appearance this afternoon in the U.S. District in Kansas City, Mo., and remains in federal custody pending a detention hearing.
According to an affidavit filed in support of the federal criminal complaint, the 13-year-old child victim – identified in court documents as “Jane Doe” – was reported missing from her home in Springfield on Jan. 8, 2017. Investigators found a series of messages between Pearson and Jane Doe on a cell phone, the affidavit says, indicating that Pearson was traveling to meet Jane Doe.
On Jan. 10, 2017, Pearson and Jane Doe were located in a truckers lounge at Petro Truck Stop off Interstate 70 near Oak Grove, Mo. Both Pearson and Jane Doe had luggage with them in the lounge.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Ami Harshad Miller. It was investigated by the Springfield, Mo., Police Department, the FBI, the Southwest Missouri Cyber Crimes Task Force and the Oak Grove, Mo., Police Department.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Louisiana Man Pleads Guilty to Conspiracy to Sell Devices to Cheat Vehicle Emissions TestsRead the Press Release
SYRACUSE, NEW YORK – Charles Edward Bayer, Jr. (31), of Lafayette, Louisiana, pled guilty in federal court today in Syracuse to one felony count of conspiracy to commit mail fraud and violate the Clean Air Act, announced United States Attorney Richard S. Hartunian, and Vernesa Jones-Allen, Special Agent in Charge, EPA-CID, New York Area Office.
In pleading guilty, Bayer admitted that between 2011 and 2013 he participated in a conspiracy to design, manufacture, and sell motor vehicle simulator devices which were designed and programmed to allow vehicles to by-pass motor vehicle emissions inspections tests in a fraudulent manner. Bayer admitted that when one of his co-conspirators believed the EPA had become aware of the illegal sales of these devices, he (Bayer) purchased the remaining inventory as well as the source codes, and a customer list. Thereafter Bayer continued to sell and manufacture these devices. Ultimately, Bayer and his co-conspirators sold at least 170 such devices throughout the country. In pleading guilty, Bayer admitted that he was a leader in the conspiracy, which involved at least five others. Bayer also admitted that he understood his customers were using the devices to fraudulently bypass motor vehicle inspections and that he added a disclaimer to the instructions that the devices were for “development/off road use only” to make the devices appear legitimate.
The charge to which Bayer pled guilty carries a maximum sentence of 5 years in prison and a fine of up to $250,000. 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. Bayer will be sentenced by Senior District Judge Norman A. Mordue on May 11, 2017.
This case is being investigated by EPA-CID, the New York State Department of Environmental Conservation, and it is being prosecuted by Assistant U.S. Attorney Michael F. Perry and Senior Trial Attorney Todd Gleason.
Las Cruces Man Pleads Guilty to Federal Methamphetamine Trafficking ChargesRead the Press Release
ALBUQUERQUE – Anthony Margarito Berumen, 32, of Las Cruces, N.M., pled guilty today in federal court to methamphetamine trafficking charges. Under the terms of his plea agreement, Berumen will be sentenced within the range of three to ten years in federal prison.
Berumen was arrested on Feb. 9, 2016, on a criminal complaint charging him with possession of methamphetamine with intent to distribute on Dec. 9, 2015 and Dec. 15, 2015. The complaint alleged that Berumen committed the crimes in Dona Ana County, N.M. According to the complaint, Berumen sold a total of 4.6 grams of methamphetamine to undercover law enforcement agents during two transactions on Dec. 9, 2015, and one transaction on Dec. 15, 2015.
Berumen was indicted on Aug. 17, 2016, and charged with three counts of distributing methamphetamine. The indictment was superseded on Sept. 22, 2016, charging Berumen with distributing methamphetamine on Dec. 9, 2015 and Dec. 16, 2015, and distributing methamphetamine in the vicinity of a school on Dec. 9, 2015.
During today’s proceedings, Berumen pled guilty to the superseding indictment. In entering the guilty plea, Berumen admitted selling methamphetamine to undercover law enforcement on three occasions in Dec. 2015. He also acknowledged that the one of the drug transactions took place in a middle school parking lot in Las Cruces. Berumen remains in custody pending a sentencing hearing which has yet to be scheduled.
This case was investigated by the Las Cruces office of the FBI and the New Mexico State Police and is being prosecuted by Assistant U.S. Attorneys John Balla and Sarah M. Davenport of the U.S. Attorney’s Las Cruces Branch Office.
KC Man Indicted for Attempted Sex Trafficking of MinorRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was indicted by a federal grand jury today for the attempted sex trafficking of a minor.
Andrew Danny Freeman, 32, of Kansas City, was charged in an indictment returned by a federal grand jury in Kansas City, Mo. Today’s indictment replaces a criminal complaint that was filed against Freeman on Dec. 16, 2016. Freeman remains in federal custody without bond.
The federal indictment alleges that Freeman solicited a person he believed to be under the age of 18 to engage in prostitution on Dec. 15, 2016.
According to an affidavit filed in support of the original criminal complaint, an undercover officer received a series of text messages from Freeman on Dec. 15, 2016, in response to an online posting that was part of an undercover prostitution operation. Freeman allegedly made arrangements to meet the undercover officer and whom he believed to be her 12-year-old daughter at a local hotel. When he arrived for the meeting, the affidavit says, he gave the undercover officer $500 and was arrested.
Dickinson cautioned that the charge contained in this indictment is simply an accusation, and not evidence of guilt. Evidence supporting the charge must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Patrick D. Daly. It was investigated by the FBI and the Human Trafficking Rescue Project.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
KC Daycare Center owner, Director Indicted for $556,000 Fraud SchemeRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the owner and the director of a Kansas City, Mo., day care center were indicted by a federal grand jury today for their roles in a conspiracy to file false attendance reports in order to fraudulently receive as much as $556,000 in federal benefits.
Today’s indictment is the result of a nationwide sweep that targeted childcare center fraud schemes. The national law enforcement operation in Missouri and six other states was the result of separate, but related, federal investigations into childcare center fraud that resulted in a loss of more than $1 million to the government.
Sharif Karie, 39, of Olathe, Kan., and Sheri Beamon, 46, of Kansas City, Mo., were charged in an eight-count indictment returned by a federal grand jury in Kansas City, Mo. Karie, a naturalized U.S. citizen from Somalia, is the owner and CEO of a day care center established under two businesses and two names for the same location, with the same key employees: KARIE Day Care Center, LLC, and Tima Child Care Center, LLC, at 1019 Admiral Blvd., Kansas City, Mo. Beamon is the director of KARIE/Tima Childcare Center.
Today’s indictment alleges that Karie and Beamon participated in a conspiracy from October 2013 to June 2016 to submit false claims to the government. They allegedly billed a federal grant program to provide childcare services to low-income families for more hours and children than actually attended the daycare center. At least $100,000 and as much as $556,000 was fraudulently billed in connection with this scheme, the indictment says.
The Child Care and Development Fund provides daycare subsidies for low-income families where the parents are employed or engaged in job training. Providers contract with the Children’s Division of the Missouri Department of Health and Senior Services and submit claims electronically.
According to today’s indictment, pole cameras were installed near the day care center and captured footage of the entrances and exits of the building during two time periods in 2015 and in 2016. Timesheets and billing records were reviewed and compared to the children seen on the pole cameras being dropped off and picked up from the daycare center during that time. There were significant discrepancies, the indictment says, between the timesheets, claims submitted and the pole camera footage.
In addition to the conspiracy, Karie and Beamon are charged together in one count of theft of public money, three counts of aiding and abetting each other to commit aggravated identity theft and three counts of wire fraud. Today’s indictment also contains a forfeiture allegation, which would require Karie and Beamon to forfeit to the government any property derived from the proceeds of the alleged scheme, including at least $100,000 and as much as $556,000.
According to the indictment, the state conducted a compliance review of the daycare center’s billing for May 2014 and July 2014. The review found several attendance records missing. The review also identified 14 out of the 15 families with children at the center who had a parent employed there. With only two classrooms, the indictment says, it is improbable that parents were not caring for their own children. One of these parents reported that her job was contingent on having all of her children placed in care at KARIE Day Care Center so her child care would be paid by the state. This same 2014 audit found several discrepancies on the time sheets submitted to the state.
Subsequent unannounced inspections at KARIE Day Care Center found the facility in violation of state regulations pertaining to child care licensing rules, the indictment says, including health and safety, staff ratios and the maintaining of attendance records. Each of the inspections resulted in violation findings.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the U.S. Department of Health and Human Services – Office of Inspector General, Office of Investigations, the FBI, the Missouri Department of Social Services – Division of Legal Services Investigations and the Kansas City, Mo., Police Department.
Justice Department Settles Pregnancy Discrimination Lawsuit Against Palm Beach County, Florida, School BoardRead the Press Release
The Justice Department today filed a proposed consent decree with the Palm Beach County, Florida, School Board to resolve a pregnancy discrimination lawsuit brought by the department under Title VII of the Civil Rights Act of 1964.
According to the department’s complaint, the board discriminated on the basis of sex against Assistant Principal Anne Williams Dorsey of the Palm Beach County School District by unlawfully demoting her. The department alleges that after Dorsey became pregnant, her supervisor reassigned her to a position with less pay and benefits and filled her former position by replacing her with a male colleague she had trained. The department further alleges that Dorsey’s demotion was also unlawful retaliation against her for her efforts to report sexual harassment allegations, made by a third employee, against the male colleague who replaced her in her former position.
Under the consent decree, which still must be approved by the U.S. District Court for the Southern District of Florida, the board has agreed to pay $350,000 in back pay and compensatory damages to Dorsey. In addition, the board must review and revise its anti-discrimination policies and procedures to ensure that it protects its employees from discrimination on the basis of sex, including pregnancy, and unlawful retaliation. The board must also provide training to its employees on its anti-discrimination policies and procedures.
“No woman should face discrimination for her decision to have a family,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Women like Anne Williams Dorsey deserve the full enforcement of this nation’s employment discrimination laws, which ensure that they do not lose valuable positions, pay or benefits because of their pregnancies.”
“The U.S. Attorney’s Office is committed to preventing pregnancy discrimination and ensuring workplace equity,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “A woman should never have to choose between having a family and pursuing her professional career. We are pleased that the Palm Beach County School Board has agreed to review its policies and procedures to ensure that it promotes a professional environment that is fully compliant with Title VII. Our Office will continue to enforce the right of pregnant employees to be free from employment discrimination and retaliation.”
Title VII is a federal statute which prohibits employment discrimination on the basis of sex (including pregnancy), race, color, national origin or religion. Title VII also prohibits retaliation against an employee who opposes an unlawful employment practice, makes a charge of discrimination or participates in an investigation, proceeding or hearing under the Civil Rights Act.
Dorsey initially filed charges of sex discrimination and retaliation with the Equal Employment Opportunity Commission’s Miami Field Office, which investigated the matter, determined there was reasonable cause to believe discrimination had occurred and referred the matter to the Justice Department.
The case is being handled by Trial Attorneys Nadia Said and Louis Whitsett of the Civil Rights Division’s Employment Litigation Section and Assistant U.S. Attorney Veronica Harrell-James of the Southern District of Florida
The continued enforcement of Title VII is a priority of the Justice Department’s Civil Rights Division. Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at www.justice.gov/crt.
Justice Department Settles Pregnancy Discrimination Lawsuit Against Palm Beach County, Florida, School BoardRead the Press Release
According to the department’s complaint, the board discriminated on the basis of sex against Assistant Principal Anne Williams Dorsey of the Palm Beach County School District by unlawfully demoting her. The department alleges that after Dorsey became pregnant, her supervisor reassigned her to a position with less pay and benefits and filled her former position by replacing her with a male colleague she had trained. The department further alleges that Dorsey’s demotion was also unlawful retaliation against her for her efforts to report sexual harassment allegations, made by a third employee, against the male colleague who replaced her in her former position.
Under the consent decree, which still must be approved by the U.S. District Court for the Southern District of Florida, the board has agreed to pay $350,000 in back pay and compensatory damages to Dorsey. In addition, the board must review and revise its anti-discrimination policies and procedures to ensure that it protects its employees from discrimination on the basis of sex, including pregnancy, and unlawful retaliation. The board must also provide training to its employees on its anti-discrimination policies and procedures.
“The U.S. Attorney’s Office is committed to preventing pregnancy discrimination and ensuring workplace equity,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “A woman should never have to choose between having a family and pursuing her professional career. We are pleased that the Palm Beach County School Board has agreed to review its policies and procedures to ensure that it promotes a professional environment that is fully compliant with Title VII. Our Office will continue to enforce the right of pregnant employees to be free from employment discrimination and retaliation.”
“No woman should face discrimination for her decision to have a family,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Women like Anne Williams Dorsey deserve the full enforcement of this nation’s employment discrimination laws, which ensure that they do not lose valuable positions, pay or benefits because of their pregnancies.”
Title VII is a federal statute which prohibits employment discrimination on the basis of sex (including pregnancy), race, color, national origin or religion. Title VII also prohibits retaliation against an employee who opposes an unlawful employment practice, makes a charge of discrimination or participates in an investigation, proceeding or hearing under the Civil Rights Act.
Dorsey initially filed charges of sex discrimination and retaliation with the Equal Employment Opportunity Commission’s Miami Field Office, which investigated the matter, determined there was reasonable cause to believe discrimination had occurred and referred the matter to the Justice Department.
The case is being handled by Assistant U.S. Attorney Veronica Harrell-James of the Southern District of Florida and Trial Attorneys Nadia Said and Louis Whitsett of the Civil Rights Division’s Employment Litigation Section.
The continued enforcement of Title VII is a priority of the Justice Department’s Civil Rights Division. Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at www.justice.gov/crt.
Justice Department Seeks to Intervene in Lawsuit Against New York City Board of ElectionsRead the Press Release
The Justice Department announced today that it has filed a motion to intervene in Common Cause New York et al. v. Board of Elections in the City of New York et al, a private lawsuit alleging that the New York City Board of Elections failed to comply with Section 8 of the National Voter Registration Act of 1993 (NVRA). The lawsuit was filed by private plaintiffs on Nov. 3, 2016.
The department alleges that the New York City Board of Elections’ Brooklyn Borough Office violated the NVRA by improperly removing more than 117,000 registered voters from the voter registration rolls prior to the April 2016 primary election. According to the complaint in intervention, the Board of Elections purged these voters based solely on their failure to vote in past elections, which violates Section 8(b)(2) of the NVRA.
The department also alleges ongoing concerns with the oversight of voter list maintenance procedures by the New York City Board of Elections, in violation of federal law. Without intervention, these deficiencies could lead to the same or similar NVRA violations occurring again in the future.
“Federal law demands careful maintenance of the voter rolls to ensure lists are kept accurate, without unjustifiably and unlawfully purging eligible citizens,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “The department appreciates the continued cooperation of the New York City Board of Elections, including proactive steps taken to start remedying violations that have occurred – but more is necessary to reach full compliance with the law.”
“The right of citizens to vote is a critical part of democratic process,” said U.S. Attorney Robert L. Capers of the Eastern District of New York. “We will work tirelessly to ensure that, in the future, the New York City Board of Elections fulfills its statutory obligation to maintain the rolls properly, and provide appropriate notice to voters when it does so.”
Section 8 of the NVRA addresses voter registration list maintenance procedures in elections for federal office. Programs to maintain accurate and current voter registration lists must be uniform, nondiscriminatory and in compliance with the Voting Rights Act of 1965. Moreover, programs to maintain accurate and current voter registration lists may not remove voters solely by reason of a voter’s failure to vote.
More information about the NVRA and other federal voting laws is available on the division’s website at www.justice.gov/crt/voting. Complaints about voter registration practices may be reported to the Civil Rights Division’s Voting Section at 1-800-253-3931.
Brooklyn BOE Complaint in InterventionJustice Department Reaches Agreement with City of Baltimore to Reform Police Department’s Unconstitutional PracticesRead the Press Release
The Justice Department announced today that it has entered into a court enforceable agreement with the city of Baltimore to resolve the department’s findings that the Baltimore City Police Department (BPD) engages in a pattern and practice of conduct that violates the First, Fourth and 14th Amendments of the Constitution as well as federal anti-discrimination laws.
The consent decree, filed today in the U.S. District Court for the District of Maryland, creates a pathway toward lasting reform within BPD. The decree’s requirements focus on building community trust, creating a culture of community and problem-oriented policing, prohibiting unlawful stops and arrests, preventing discriminatory policing and excessive force, ensuring public and officer safety, enhancing officer accountability and making needed technological upgrades. Under the agreement, the parties will jointly recommend an independent monitor to the court to assess whether the requirements of the agreement are being implemented. The independent monitor will report publicly on BPD’s implementation efforts on a regular basis. In the joint motion filing the decree, the parties requested that the court provide an opportunity for members of the public and stakeholders throughout Baltimore to provide written submissions to the court about the proposed decree, and then hold a public hearing.
“Last August, we concluded that the Baltimore Police Department had engaged in conduct that deprived the people of Baltimore of the rights and protections guaranteed to every American, and that the deeply-rooted mistrust between law enforcement officers and the community they serve harmed all who call Baltimore home,” said Attorney General Loretta E. Lynch. “After thorough, good-faith negotiations, the Department of Justice and the city of Baltimore have agreed to enter into a court-enforceable consent decree to remedy the violations identified in our investigation. The reforms in this consent decree will help ensure effective and constitutional policing, restore the community’s trust in law enforcement, and advance public and officer safety. We could not be prouder to partner with the people of Baltimore on this journey towards making their city a community that protects the dignity, rights, and safety of all its people.”
“Under the consent decree, the city and BPD will implement comprehensive reforms to end the legacy of Baltimore’s ‘zero tolerance’ policing,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “In its place, BPD will empower its officers to engage in proactive, community-oriented policing. And given our experiences in many other cities, I firmly believe that when focused, measurable and detailed reforms are implemented effectively, they restore community trust and advance officer and public safety.”
Under the consent decree, the city of Baltimore and BPD will implement comprehensive reforms that will ensure that:
- Baltimore establishes a Community Oversight Task Force to recommend reforms to the current system of civilian oversight.
- BPD adopts a policing approach that is community-oriented and based on problem solving principles.
- Officers’ voluntary interactions are professional and courteous, and officers conduct all investigatory stops, searches and arrests in a manner that protects people’s rights.
- BPD provides equal protection of the law for all individuals, including providing impartial policing services.
- Officers use appropriate de-escalation techniques and attempt to resolve incidents without force when possible; use force in a manner that is proportional to the threat presented; and BPD’s use of force policies, training and review systems provide sufficient guidance, skills and accountability.
- BPD transports detainees in a manner that keeps them safe.
- Officers respect the First Amendment rights of all persons.
- BPD investigates sexual assault thoroughly and without gender bias.
- Baltimore conducts an assessment to minimize youth involvement with the juvenile and criminal justice systems, as appropriate, and that officers approach interactions with youth in a manner appropriate to their age.
- Baltimore conducts an analysis of gaps in the city’s mental health system in consultation with a committee of behavioral health experts and service providers, and BPD instructs and dispatches officers who are properly trained in interacting with people in crisis or with behavioral health disabilities when a police response is appropriate.
- Allegations of employee misconduct are fully, fairly and efficiently investigated; that all investigative findings are supported by the appropriate standard of proof and documented in writing; and that all officers who commit misconduct are held accountable pursuant to a disciplinary system that is fair, consistent and provides due process.
- Officers receive necessary equipment, policy guidance, training and support to do their jobs safely and effectively, and BPD performs a staffing study to ensure a sufficient number of officers and supervisors.
The Justice Department announced its findings in August 2016 following a thorough investigation into BPD started in May 2015. The department found that BPD made stops, searches and arrests without the required justification; used enforcement strategies that unlawfully subjected African Americans to disproportionate rates of stops, searches and arrests; used excessive force; and retaliated against individuals for their constitutionally-protected expression. The pattern or practice resulted from systemic deficiencies that persisted within BPD for many years and exacerbated community distrust of the police, particularly in African-American communities.
In October 2014, city and BPD leadership requested to enter a collaborative reform process with the Justice Department’s Office of Community Oriented Policing Services (COPS office). After the Civil Rights Division opened the pattern-or-practice investigation in May 2015, the COPS office and the Justice Department’s Office of Justice Programs have continued to offer federal resources, such as technical assistance, to the BPD, city officials and community leaders.
This investigation was conducted by the Civil Rights Division’s Special Litigation Section with the assistance of law enforcement professionals pursuant to the pattern or practice provision of the Violent Crime Control and Law Enforcement Act of 1994. Since 2009, the Special Litigation Section has opened 25 investigations into law enforcement agencies. The section is enforcing 20 agreements with law enforcement agencies, including 15 consent decrees and one post-judgment order. The division also recently released a comprehensive report that provides an overview of the police reform work done under pursuant to the Violent Crime Control and Law Enforcement Act of 1994, which can be found at the following link: https://www.justice.gov/crt/file/922421/download.
For more information on the Civil Rights Division and the Special Litigation Section, please visit www.justice.gov/crt.
Baltimore Consent Decree Baltimore Consent Decree Fact Sheet Pattern or Practice Accomplishments DocumentJury Finds Army Veteran Guilty of Theft of Nearly $300,000 and Making A False StatementRead the Press Release
Jacksonville, FL – United States Attorney A. Lee Bentley, III announces that a federal jury has found Crystel Lee Riedling (44, Lake City) guilty of theft of government property and making a false statement. She faces a maximum penalty of 15 years in federal prison. Her sentencing hearing is scheduled for April 11, 2017. Riedling was indicted on February 18, 2016.
According to evidence presented at trial, Riedling, a U.S. Army veteran, received almost $300,000 in disability benefits over the past five to six years. She began receiving the benefits after claiming that she was completely unable to use her right arm. In reality, Riedling had use of her right arm and was seen using it. Two doctors testified that Riedling was malingering and exaggerating her injuries. Statements presented at trial also included Riedling’s admission that she knew that receiving these benefits was “completely wrong.” The jury also found Riedling guilty of making false statements to the United States after she told an investigator that she was totally and permanently disabled.
This case was investigated by the United States Department of Veterans Affairs – Office of Inspector General, the Social Security Administration - Office of the Inspector General, and the U.S. Department Health and Human Services – Office of Inspector General. It is being prosecuted by Assistant United States Attorney Jason Mehta.
Jury Convicts Former Teller of Embezzling from Bank in Coffey CountyRead the Press Release
TOPEKA, KAN. B A federal jury Thursday convicted a former teller at a bank in Burlington on charges of embezzling approximately $700,000, U.S. Attorney Tom Beall said today.
Denise Christy, 48, Burlington, Kan., was convicted on one count of embezzlement, six counts of making false bank entries, six counts of filing false tax returns and six counts of money laundering.
During trial, the prosecutor presented evidence the crimes were committed while Christy worked as a retail financial services representative and backup vault teller for the Burlington branch of Central National Bank. One of Christy’s duties was to sell cash in the bank’s vault to the Federal Reserve Bank. In May 2014 auditors determined that more than $700,000 was missing from the vault. Christy falsely claimed the money was shipped to the Federal Reserve Bank via the Garda security company. An investigation showed Christy falsified bank records to cover up the embezzlement and failed to report the embezzled funds as part of her income. In addition, she unlawfully conducted financial transactions in order to spend more than $77,000 in embezzled funds to pay off loans that she and her husband maintained at Farmers State Bank in Aliceville, Kan.
Sentencing is set for April 17. The crimes carry the following penalties:
Embezzlement: A maximum penalty of 30 years in federal prison and a fine up to $1 million.
Making false bank entries: A maximum penalty of 30 years in federal prison and a fine up to $1 million on each count.
False tax returns: A maximum penalty of three years and a fine up to $100,000 on each count.
Money laundering: A maximum penalty of 20 years and a fine up to $50,000 on each count.
Beall commended the Internal Revenue Service and Assistant U.S. Attorney Rich Hathaway for their work on the case.
Indiana Man Sentenced to 20 Years in Prison for Engaging in a Child Exploitation EnterpriseRead the Press Release
A member of a highly sophisticated, global child exploitation enterprise dedicated to the sexual exploitation of children was sentenced to prison today.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina; Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division; Special Agent in Charge Harold H. Shaw of the FBI’s Boston Division; and Special Agent in Charge Paul Wysopal of the FBI’s Tampa, Florida, Division made the announcement.
Michael Fluckiger, 46, of Portland, Indiana, was sentenced to 240 months in prison for engaging in a child exploitation enterprise, along with lifetime supervised release. U.S. District Judge Richard L. Voorhees of the Western District of North Carolina imposed the sentence. Fluckiger pleaded guilty on December 2, 2015 and has remained in the custody of the U.S. Marshals Service since his arrest on March 4, 2015.
According to admissions made in connection with the plea, Fluckiger acted as the co-administrator of a highly-sophisticated global enterprise dedicated to the sexual exploitation of children, organized via a members-only website that operated on the Tor anonymity network, through which he and more than 150,000 other members authored and viewed tens of thousands of postings relating to sexual abuse of children as young as infants and toddlers. According to admissions, Fluckiger was heavily involved in the day-to-day operations of the website – including managing membership, developing and enforcing strict rules and deleting website content that did not depict or discuss child pornography. In addition, Fluckiger admitted that website members employed advanced technological means in order to undermine law enforcement’s attempts to identify them, including the use of a hidden service on the Tor anonymity network and elaborate file encryption.
On Sept. 16, 2016, a federal jury convicted co-defendant and lead administrator of the site, Steven W. Chase, 57, of Naples, Florida, of engaging in a child exploitation enterprise and related charges. A sentencing date for Chase has not yet been set. Co-defendant and global moderator of the site, David Lynn Browning, 47, of Wooton, Kentucky, pleaded guilty on Dec. 18, 2015, and is scheduled to be sentenced on Feb. 7, 2017.
As a result of the ongoing investigation, at least 48 alleged hands-on abusers have been prosecuted and 49 American children who were subjected to sexual abuse have been successfully identified or rescued.
The FBI’s Violent Crimes Against Children Section, Major Case Coordination Unit and Digital Analysis and Research Center investigated the case with assistance from the FBI’s Charlotte, Tampa, and Boston, Field Offices. Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Cortney Randall of the Western District of North Carolina prosecuted the case.
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 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.justice.gov/psc.
Indiana Man Sentenced to Prison for Engaging in A Child Exploitation EnterpriseRead the Press Release
CHARLOTTE, N.C. – A member of a highly sophisticated, global child exploitation enterprise dedicated to the sexual exploitation of children was sentenced to prison today.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina; Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division; Special Agent in Charge Harold H. Shaw of the FBI’s Boston Division; and Special Agent in Charge Paul Wysopal of the FBI’s Tampa, Florida, Division made the announcement.
Michael Fluckiger, 46, of Portland, Indiana, was sentenced to 240 months in prison for engaging in a child exploitation enterprise, along with lifetime supervised release. U.S. District Judge Richard L. Voorhees of the Western District of North Carolina imposed the sentence. Fluckiger pleaded guilty on December 2, 2015 and has remained in the custody of the U.S. Marshals Service since his arrest on March 4, 2015.
According to admissions made in connection with the plea, Fluckiger acted as the co-administrator of a highly-sophisticated global enterprise dedicated to the sexual exploitation of children, organized via a members-only website that operated on the Tor anonymity network, through which he and more than 150,000 other members authored and viewed tens of thousands of postings relating to sexual abuse of children as young as infants and toddlers. According to admissions, Fluckiger was heavily involved in the day-to-day operations of the website – including managing membership, developing and enforcing strict rules and deleting website content that did not depict or discuss child pornography. In addition, Fluckiger admitted that website members employed advanced technological means in order to undermine law enforcement’s attempts to identify them, including the use of a hidden service on the Tor anonymity network and elaborate file encryption.
On Sept. 16, 2016, a federal jury convicted co-defendant and lead administrator of the site, Steven W. Chase, 57, of Naples, Florida, of engaging in a child exploitation enterprise and related charges. A sentencing date for Chase has not yet been set. Co-defendant and global moderator of the site, David Lynn Browning, 47, of Wooton, Kentucky, pleaded guilty on December 18, 2015, and is scheduled to be sentenced on February 7, 2017.
As a result of the ongoing investigation, at least 48 alleged hands-on abusers have been prosecuted and 49 American children who were subjected to sexual abuse have been successfully identified or rescued.
The FBI’s Violent Crimes Against Children Section, Major Case Coordination Unit and Digital Analysis and Research Center investigated the case with assistance from the FBI’s Charlotte, Tampa, and Boston, Field Offices. Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Cortney Randall of the Western District of North Carolina prosecuted the case.
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 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.justice.gov/psc.
Honduran National Indicted for Illegal Re-EntryRead the Press Release
U.S. Attorney Kenneth A. Polite announced that CRISTIAN CESRE-PAZ, age 31, was charged today in a one-count Indictment for illegal reentry of a removed alien, in violation of Title 8, United States Code, Section 1326(a) & (b)(2).
According to the Indictment, CESRE-PAZ reentered the United States after he was previously deported on December 27, 2006. If convicted, CESRE-PAZ faces a maximum term of imprisonment of ten years, a maximum fine of $250,000, a maximum term of supervised release of three years, and a mandatory $100 special assessment.
U.S. Attorney Polite reiterated that an Indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of the United States Department of Homeland Security in investigating this matter. Assistant U.S. Attorney Spiro G. Latsis is in charge of the prosecution.
Home Health Agency Administrator Pleads Guilty in $7.8 Million Medicaid FraudRead the Press Release
Largest Provider Attendant Services Fraud in Texas History
The administrator of five Houston-area home health agencies pleaded guilty today to conspiring to defraud the State of Texas’ Medicaid-funded Home and Community-Based Service and the Primary Home Care Programs of more than $7.8 million. These programs provide qualified individuals with in-home attendant and community-based services that are known commonly as “provider attendant services” (PAS), and this case marks the largest PAS fraud case charged in Texas history.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge C.J. Porter of the Department of Health and Human Services Office of the Inspector General’s (HHS-OIG) Dallas Regional Office, Special Agent in Charge D. Richard Goss of the Houston Field Office of Internal Revenue Service Criminal Investigation’s (IRS-CI) Houston Field Office and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.
Idia Oriakhi, 33, of Richmond, Texas, pleaded guilty before U.S. District Judge Sim Lake of the Southern District of Texas to one count of conspiracy to commit health care fraud. She is scheduled to be sentenced by Judge Lake on April 20, 2017.
From 2009 through 2016, Idia Oriakhi’s parents owned and operated Aabraham Blessings, LLC; Baptist Home Care Providers, Inc.; Community Wide Home Health, Inc.; Four Seasons Home Healthcare, Inc. and Kis Med Concepts, Inc., all of which were home health agencies located in and around Houston. Idia Oriakhi admitted that she, her father Godwin Oriakhi and others obtained patients for her family’s home health agencies by paying illegal kickback payments to patient recruiters and physicians for referring and certifying Medicaid patients for PAS services that were medically unnecessary and often not provided. PAS services are for qualified individuals with intellectual disabilities or who have an approved medical need for assistance with personal care tasks. In total, Idia Oriakhi admitted that she and her family submitted approximately $8,372,991 in fraudulent PAS claims to Medicaid and received approximately $7,894,135 on those claims.
In addition to the PAS services fraud scheme, Idia Oriakhi admitted that she and others engaged in a scheme to defraud Medicare through the submission of fraudulent claims for home health care services. Idia Oriakhi admitted that as a result of both the home healthcare and PAS services fraud schemes, she and others submitted over $10 million in fraudulent claims to Medicare and Medicaid.
To date, Jermaine Doleman, a patient recruiter, has pleaded guilty and is awaiting sentencing for his role in the home healthcare fraud scheme. Godwin Oriakhi and Charles Esechie, a registered nurse, were charged previously with conspiracy, health care fraud, paying illegal kickbacks and money laundering offenses for their roles in the home health care and PAS services fraud schemes. They are scheduled for trial on Feb. 6, 2017. The charges are merely accusations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the FBI, HHS-OIG, IRS-CI and MFCU and brought by the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas. The case is being prosecuted by Senior Trial Attorney Jonathan T. Baum and Trial Attorneys William S.W. Chang and Aleza S. Remis of the Fraud Section.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 3,000 defendants who collectively have billed the Medicare program for over $10 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Haughton man sentenced to more than 12 years in prison for methamphetamine distribution chargeRead the Press Release
SHREVEPORT, La. – U.S. Attorney Stephanie A. Finley announced that a Haughton man was sentenced last week to 151 months in prison for possessing methamphetamine with intent to distribute.
David Brian Bullock, 55, of Haughton, La., was sentenced January 6 by U.S. District Judge Elizabeth E. Foote on one count of possession with intent to distribute methamphetamine. He was also sentenced to five years of supervised release. According to the September 14, 2016 guilty plea, during an ongoing investigation Bullock was identified as a transporter of methamphetamine from Texas to Louisiana. His vehicle was stopped in Haughton for a traffic violation on March 18, 2016. Bullock’s vehicle was searched, and 72.8 grams of methamphetamine were found in one set of containers and 645.1 grams of methamphetamine were found in another container. His home was searched later an even more methamphetamine was found.
The DEA and the Bossier Parish Sheriff’s Office conducted the investigation. Assistant U.S. Attorney Brandon B. Brown prosecuted the case.
Honolulu Man Sentenced to 24 Months in Jail for Fraudulent Tax Return SchemeRead the Press Release
HONOLULU – Richard Lee Derrick, Jr., 52, a resident of Honolulu, Hawaii, was sentenced on January 10 to 24 months in federal prison for aggravated identity theft, announced Florence T. Nakakuni, United States Attorney for the District of Hawaii.
According to court documents, Derrick engaged in a scheme by which he filed numerous fraudulent federal and state income tax returns using the personal information of others. Derrick pled guilty to aggravated identity theft on September 19, 2016. During that court proceeding, he admitted to filing one such fraudulent federal tax return using his deceased wife’s social security number on February 20, 2014. As part of a plea agreement, Derrick pled guilty to only one offense, but agreed that he was responsible for fraudulently obtaining $241,897.60 in refunds from the State of Hawaii.
During Tuesday’s sentencing proceedings, United States District Judge Derrick K. Watson noted that Derrick’s use of the personal identifiers of deceased people was particularly "sinister" because his victims could not detect his conduct or protect themselves from it. Judge Watson further noted that identity theft not only causes financial harm, but also gives rise to numerous other problems, as victims must often spend significant time and effort attempting to repair the damage caused by the release and use of their personal information. In addition to the 24 month term of imprisonment, Judge Watson ordered the payment of $241,897.60 in restitution to the State of Hawaii Department of Taxation.
The case was investigated by the Internal Revenue Service - Criminal Investigation; the Social Security Administration, Office of Inspector General; and the United States Postal Inspection Service; with the assistance of the State of Hawaii Department of Taxation, Criminal Investigation Section, and is being prosecuted by Assistant U.S. Attorney Amalia Fenton.
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Guatemalan Man Charged with Illegal Reentry After DeportationRead the Press Release
Morel Geronimo Bail, a/k/a “Ivan Antonio Velasquez-Vasquez,” of Quarryville, PA, was charged today by Indictment with illegal reentry after deportation, announced Acting United States Attorney Louis D. Lappen. The indictment alleges that on or about December 14, 2016, Bail, an alien, and native and citizen of Guatemala, was found in the United States after having been deported from the United States on or about April 2, 2014.
If convicted the defendant faces a maximum possible sentence of ten years.
The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Eric L. Gibson.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Greer Man Pleads Guilty to Child Porn ChargesRead the Press Release
Contact Person: Lance Crick (864) 282-2100
Columbia, South Carolina ---- United States Attorney Beth Drake stated today that Scott Linnell, age 36, of Greer, pled guilty yesterday in federal court in Greenville, to possession of child pornography, a violation of Title 18, United States Code, Section 2252A. United States District Judge Bruce Howe Hendricks of Charleston accepted the plea and will impose sentence after she has reviewed the presentence report which will be prepared by the U.S. Probation Office.
Evidence presented at the change of plea hearing established that on March 10, 2015, an undercover law enforcement officer signed into the undercover Kik user account in order to conduct child exploitation investigations on the Kik Messenger application. On that same day, the undercover saw that user “phx_medic” had posted sexually explicit material in the Kik Messenger chat room “#lolitalovers” on March 8, 2015. At this time, the undercover agent observed that user “phx_medic” had posted fourteen images into the Kik chat room. The undercover agent was able to download and save these images to an undercover device.
Based on this incident and others, further investigation traced the IP address involved in the illicit activity to Linnell’s home. On May 27, 2014, a federal search warrant was executed at the home. Computers and other devices were seized. A forensic exam of the devices seized revealed 6000 still images and 16 videos containing child pornography.
Ms. Drake stated the maximum penalty Linnell can receive is a fine of $250,000 and/or imprisonment for 20 years, plus a special assessment of $100.
The case was investigated by agents of the United States Postal Inspection Service. Assistant United States Attorney Bill Watkins of the Greenville office handled the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorney’s Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information, please visit www.projectsafechildhood.gov.
#####Greenville Man Pleads Guilty to Child Porn ChargesRead the Press Release
Contact Person: Lance Crick (864) 282-2100
Columbia, South Carolina ---- United States Attorney Beth Drake stated today that Alton Davis, age 47, of Greenville, pled guilty yesterday in federal court in Greenville, to possession of child pornography, a violation of Title 18, United States Code, Section 2252A. United States District Judge Bruce Howe Hendricks of Charleston accepted the plea and will impose sentence after she has reviewed the presentence report which will be prepared by the U.S. Probation Office.
Evidence presented at the change of plea hearing established that on October 14, 2015, an undercover officer downloaded from defendant two child porn images using peer-to-peer software. Based on this download, law enforcement determined his IP address, street address, and obtained a search warrant.
On November 10, 2015, the warrant was executed at Defendant’s home. He was present and agreed to talk. He admitted to using his computer and the internet to search for pornography and using search terms associated with child pornography. He admitted to viewing images of child porn on his computer.
Ms. Drake stated the maximum penalty Davis can receive is a fine of $250,000 and/or imprisonment for 20 years, plus a special assessment of $100. He is subject to a mandatory minimum sentence of 10 years because of a prior child pornography conviction.
The case was investigated by agents of the Department of Homeland Security, Office of Investigations. Assistant United States Attorney Bill Watkins of the Greenville office handled the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorney’s Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information, please visit www.projectsafechildhood.gov.
#####Greek Shipping Companies Sentenced to Pay $2.7 Million for Ocean PollutionRead the Press Release
Two Greek shipping companies were sentenced yesterday to pay corporate penalties totaling $2.7 million after being convicted for obstructing justice, violating the Act to Prevent Pollution from Ships (APPS), tampering with witnesses and conspiracy. Each company was ordered to pay part of its penalty to Gray’s Reef National Marine Sanctuary in recognition of the threat posed by illegal discharges of oily waste to the marine environment.
The case stems from an inspection of the M/V Ocean Hope, a large cargo ship, conducted by the U.S. Coast Guard at the Port of Wilmington, North Carolina in July 2015. During that inspection, senior engineers for the companies tried to hide that the vessel had been dumping oily wastes into the ocean for months.
Oceanfleet Shipping Limited, the vessel’s operator, was sentenced to pay a $1,350,000 fine and make a $450,000 community service payment to Gray’s Reef. Oceanic Illsabe Limited, the vessel’s corporate owner, was sentenced to pay a $675,000 fine and make a $225,000 community service payment to the reef. Each company was placed on a five-year term of probation and barred from sending ships to United States ports until its financial penalty has been satisfied.
The sentence was announced by Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division and U.S. Attorney John Stuart Bruce of the Eastern District of North Carolina.
“We are pleased with the substantial penalties imposed by the court, which reinforces that pollution doesn’t pay,” said Assistant Attorney General Cruden. “We will continue to protect United States ports and waters, and uphold our treaty obligations, by vigorously prosecuting companies that dump oil at sea and then try to mislead U.S. Coast Guard inspectors with false statements and documents.”
The operation of commercial marine vessels generates large quantities of waste oil, oil-contaminated waste water and oil sludge. International and U.S. law forbid the discharge of oily wastes into the ocean. Should any overboard discharges occur, they must be documented in an official oil record book that is regularly inspected by the U.S. Coast Guard.
The evidence at trial demonstrated that the companies maintained a lax “paper” compliance regime focused on avoiding liability rather than adequately training and supervising engineers. The companies failed to follow their own environmental policies and also ignored important red flags, such as the vessel’s failure to offload oil sludge for many months and its rare use of a pollution prevention device known as an oil-water separator. The regular dumping of tons of bilge water into the ocean continued for at least six months. In addition, and on at least two occasions, senior engineers conspired to connect a flexible hose, known in the industry as a “magic pipe,” to discharge tons of heavy oil sludge. The most recent discharge occurred in June 2015, as the vessel headed for United States waters. Coast Guard inspectors and laboratory testing confirmed the presence of heavy oils in the vessel’s overboard discharge piping.
When the Ocean Hope arrived at the Port of Wilmington, the companies’ engineers ordered subordinates to lie to Coast Guard inspectors and to cover up evidence. The vessel’s Chief Engineer presented inspectors with a doctored oil record book, in which false accountings of the ship’s production and disposal of oily wastes were recorded.
“Our office was pleased to partner with the Department of Justice’s Environment and Natural Resources Division in this significant case and, pleased that the corporations responsible for this pollution were held accountable,” said U.S. Attorney John Stuart Bruce for the Eastern District of North Carolina. “We will continue to vigorously enforce federal laws designed to prevent the pollution of the world’s oceans.”
Though managed from Greece, Oceanic is registered in Liberia and had no significant assets besides the Ocean Hope, which was sold for scrap shortly after the indictment of this case. Oceanic and Oceanfleet are believed to be closely affiliated companies controlled by the same corporate principles out of Athens, Greece. During the period when the Ocean Hope was dumping oil into the ocean, Oceanfleet managed between ten and eleven vessels.
The vessel’s two top engineers were previously convicted and sentenced to serve prison sentences in connection with these crimes.
This case was investigated by the U.S. Coast Guard Sector North Carolina, the Coast Guard Investigative Service and U.S. Coast Guard District Five. Civil Chief Norman Acker and Assistant U.S. Attorney Michael Anderson of the Eastern District of North Carolina provided additional expertise and assistance with the pretrial phase of the case. The attorneys prosecuting the case were Senior Trial Attorney Kenneth Nelson and Trial Attorney Brendan Selby, of the Department of Justice’s Environmental Crimes Section and Banu Rangarajan of the U.S. Attorney’s Office of the Eastern District of North Carolina.
Gainesville Child Pornographer sentenced to 27 Years in Federal PrisonRead the Press Release
GAINESVILLE, Ga. - Michael Cannon has been sentenced to 27 years in federal prison for producing child pornography. Cannon photographed, and posted online, pornographic images of a minor. He then produced and provided to viewers who requested them via e-mail, additional images of him molesting two minor victims that were living in his home.
“This defendant not only molested two young girls living in his household, he further victimized them by recording his sexual abuse and then posting the images on the Internet,” said U.S. Attorney John Horn. “Thankfully the two girls have been rescued. We hope that this case will heighten awareness of child exploitation and deter others from committing such heinous crimes.”
“The victims in this case were stripped of their innocence and dignity, viciously abused and egregiously exploited countless times as a result of being abused and recorded for the pleasure of monstrous predators,” said Special Agent in Charge Nick Annan, ICE Homeland Security Investigations (HSI) in Atlanta. “The defendant truly deserves every day he will sit in a federal prison cell… every day and more.”
According to U.S. Attorney Horn, the charges and other information presented in court: In mid-December 2012, Cannon posted several images of a ten-year-old girl on a foreign-based website where people could post and share photographs. At least one of the images was child pornography. Several individuals posted comments on Cannon’s photographs and asked about trading photos. Cannon gave them his e-mail address and, when they wrote him, he sent them explicit photographs showing him in the act of molesting two young girls. In return, he received dozens of e-mails containing images and videos of other children being sexually abused.
As part of their investigation, agents determined the true identities of the two minor victims that Cannon photographed and posted online. Both were living in the same house as Cannon. The girls were rescued and removed from the household.
Cannon, 34, of Gainesville, Georgia, has been sentenced to 27 years in prison to be followed by a lifetime of supervised release. Cannon was convicted of these charges on June 16, 2014, after he pleaded guilty. There is no parole in the federal system.
This case was investigated by the 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 home page for the U.S. Attorney’s Office for the Northern District of Georgia Gainesville Division is http://www.justice.gov/usao/gan/.
Franklin County Man Admits Guilt in $2M Fraud SchemeRead the Press Release
JOHNSTOWN, Pa. - A resident of Chambersburg, Pa., pleaded guilty in federal court to charges of wire fraud, Acting United States Attorney Soo C. Song announced today.
Douglas A. Stahl, age 54, of Chambersburg, Pa., pleaded guilty to seven counts before United States District Judge Kim R. Gibson.
In connection with the guilty plea, the United States presented information to the Court which established that between January 2008 and December 2013, Stahl devised and executed a scheme to fraudulently obtain more than $2 million dollars from various investors.
Judge Gibson scheduled sentencing for April 27, 2017, at 10 a.m. The law provides for a maximum total sentence of 140 years in prison, a fine of $1,750,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney John J. Valkovci, Jr., is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation, and the Pennsylvania State Police conducted the investigation that led to the prosecution of Stahl.
Fort Smith Man Sentenced to Five Years in Federal Prison for Defrauding Insurance CustomersRead the Press Release
Fort Smith, Arkansas - Kenneth Elser, United States Attorney for the Western District of Arkansas, announced that Samuel Bowron Phillips, age 41 of Fort Smith, Arkansas, was sentenced yesterday to 60 months in federal prison followed by three years of supervised release on one count each of Mail Fraud, Wire Fraud, and Money Laundering; the sentences are to run concurrent with each other. Phillips was ordered to pay approximately $1,600,000 in restitution to his victims. The Honorable Chief Judge P. K. Holmes, III presided over the sentencing hearing in the United States District Court in Fort Smith.
According to court records, Phillips devised and executed a scheme to defraud customers of his insurance business by withdrawing funds from their annuity and insurance policies without their consent and knowledge. He then used that money for his own personal benefit and gain. The investigation began after a complaint was filed in October, 2015, with the Arkansas Insurance Commission by business owners and residents after discovering the annuities Phillips sold them were nonexistent, statements he had given them were fabricated, and the money they had given him to invest for their retirement was gone. Evidence gathered by investigators revealed that from March, 2013, through November, 2015, twenty-one (21) of Phillip’s customers lost a total of over $1,600,000 they had invested in annuity contracts and insurance policies purchased from him.
Phillips admitted that he had created two sham companies, Stevens Financial Asset Management and Paradigm Financial Partners LLC, and opened accounts for those entities. He used a fake name to conceal his connection to the fraudulent transactions and admitted he rented post office boxes in Fort Smith and Barling to receive mail for the two bogus companies he created to steal his customer’s money. Phillips was indicted by a federal grand jury in March, 2016 and pleaded guilty in June, 2016.
"Illegal activity involving the investment industry has brought financial ruin to many Americans,” stated Tracey D. Montaño, Special Agent in Charge. “IRS Criminal Investigation is committed to using our forensic accounting skills to help unravel complex fraud and money laundering schemes. We are proud to work with our law enforcement partners to investigate and prosecute individuals who attempt to enrich themselves by fraudulent means, and to help put a stop to this and other types of white collar crime."
“Today’s sentencing of Phillips reflects a fitting punishment for an individual who committed wire fraud, mail fraud and money laundering. Phillips deceived and stole from his customers who trusted him and believed in him,” stated L. Diane Upchurch, Special Agent in Charge of the FBI’s Little Rock Field Office. “We appreciate the hard work that brings about successful outcomes and the commitment of our partners at the United States Attorney’s Office for the Western District of Arkansas, the IRS, the Postal Inspection Service, the Arkansas Department of Insurance, and the Fayetteville Police Department.”
This case was investigated by the FBI, the IRS Criminal Investigation Division, the Postal Inspection Service, the Arkansas Department of Insurance, and the Fayetteville Police Department. Assistant United States Attorney Kyra Jenner prosecuted the case for the United States.
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Former Talbot County Man Sentenced to over 28 Years in Federal Prison for Sexually Exploiting a Child to Produce Child PornographyRead the Press Release
Baltimore, Maryland – U.S. District Judge George L. Russell III sentenced Patrick Shawn Sutphin, age 44, formerly of Easton, Maryland, today to 345 months in prison, followed by lifetime supervised release, after Sutphin pleaded guilty to sexual exploitation of a child to produce child pornography. Judge Russell also ordered that upon his release from prison Sutphin must register as a sex offender in the place where he resides, where he is an employee, and where he is a student, under the Sex Offender Registration and Notification Act (SORNA). Judge Russell ordered that Sutphin’s federal sentence is to be served concurrently to the sentence imposed in a related case in the Circuit Court for Talbot County.
The guilty plea and sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Andre R. Watson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Talbot County Sheriff Joseph Gamble; and Talbot County State’s Attorney Scott G. Patterson.
According to his plea agreement, between August and November 2015, Sutphin engaged in sexual acts with a 13 year old girl. Sutphin purchased gifts for the girl, including jewelry and clothing. At one point Sutphin transported the girl to Pennsylvania, where he also engaged in sexual acts with the victim. Sutphin communicated with the girl using text messages, video chat and social media applications. In some of his communications Sutphin discussed the sexual conduct he had engaged in with the victim, and the conduct he wished to engage in in the future. On a number of occasions, Suphin used his cellular phone to take sexually explicit pictures of the victim.
On November 3, 2015, Sutphin’s abuse of the victim was reported to law enforcement officers and the next day a search warrant was executed at Sutphin’s residence. Law enforcement seized Sutphin’s cellular phone and a subsequent search revealed many images of the victim engaged in sexually explicit conduct.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc. For more information about internet safety education, please visit www.justice.gov/psc and click on the "resources" tab on the left of the page.United States Attorney Rod J. Rosenstein commended HSI Baltimore, Talbot County Sheriff’s Office, and the Talbot County State’s Attorney’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Zachary A. Myers, who prosecuted the federal case.
Former Manager at HBO Sentenced to 30 Months in Federal PrisonRead the Press Release
LOS ANGELES – A San Fernando Valley woman who pleaded guilty to three felony charges stemming from a scheme in which she submitted fraudulent bills and illegally collected approximately $1 million from HBO was sentenced this morning to 30 months in federal prison.
Jennifer Choi, 39, of Valley Village, who formerly worked as manager in HBO’s Talent Relations Department, was sentenced by United States District Judge John A. Kronstadt.
Choi pleaded guilty last year to two counts of wire fraud and one count of tax evasion for failing to report the ill-gotten gains to the Internal Revenue Service.
In addition to the prison term, Judge Kronstadt today ordered Choi to pay $1,285,742 in restitution – just over $1 million to HBO and $283,706 to the IRS.
When she was terminated by HBO in September 2014, Choi had worked at the company for nearly 10 years. As part of her job, Choi was responsible for scheduling services – such as hairstyling, wardrobe and make-up – for actors associated with HBO. Choi set up a company called Shine Glossy, LLP, which she used to submit bogus invoices to HBO for style and make-up services supposedly provided to actors. To make the invoices appear real, Choi listed real actors and real stylists on the invoices.
The style services were never actually provided, and HBO funds instead went directly into a bank account Choi had established. Through Shine Glossy, Choi submitted nearly 300 fraudulent invoices that led HBO to pay approximately $940,000.
Choi also admitted in court that she used a car service for herself, her family and her friends and provided HBO’s account information, which led the car service to bill HBO for the unauthorized rides. In this part of the scheme, Choi fraudulently obtained approximately $63,000 in car services that were paid for by HBO.
“This defendant engaged in a sophisticated fraud scheme that resulted in the theft of approximately $1 million from the victim company and nearly $300,000 from American taxpayers,” said United States Attorney Eileen M. Decker. “The criminal conduct in this case continued for years, and the pace of the theft accelerated over time. This was a crime motivated by greed and a desire to fund an extravagant lifestyle.”
“Jennifer Choi took advantage of a coveted position of trust by failing to resist temptation in order to attain a glamourous lifestyle,” said Deirdre Fike, the Assistant Director in Charge of the FBI's Field Office. “Defendant Choi, in defrauding her employer of $1 million, subjected herself to a substantial sentence during which she will pay for her criminal activity.”
When she pleaded guilty, Choi admitted that she failed to file federal income tax returns for 2011, 2013 and 2014, even though she earned hundreds of thousands of dollars during those years. She also admitted significantly under-reporting her income when she did file tax returns for the years 2010 and 2012.
“Choi allowed greed to color her judgment and now she will be paying the price,” stated IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “Today’s sentencing reinforces our commitment to every American taxpayer to vigorously investigate individuals who line their pockets with fraudulently obtained funds and then file fraudulent tax returns.”
The investigation into Choi was conducted by the Federal Bureau of Investigation and IRS – Criminal Investigation.
This case was prosecuted by Assistant United States Attorney Jeffrey M. Chemerinsky of the Violent and Organized Crime Section.
Former IRS Employee Sentenced in Tax Fraud SchemeRead the Press Release
PHILADELPHIA - Modestine Gillette, a/k/a/ “Cookie,” 48, of Philadelphia was sentenced today to twelve months and one day imprisonment for carrying out three separate schemes that defrauded her former employer – the Internal Revenue Service (“IRS”). Gillette pleaded guilty on November 6, 2015.
Between October 2008 and March 2012, Gillette was employed on an as needed basis by the IRS as a Contact Representative. A Contact Representative provides administrative and technical assistance to individuals and businesses who wish to ask the IRS about their tax related questions. It is a violation of IRS regulations for an IRS employee to assist other persons in filing their taxes for compensation.
During her time of employment, Gillette arranged for the deposit of multiple tax refunds into a bank account that she controlled. Among the deposits to this account was a false federal income tax return in the name of a real person, identified here as JB. JB did not file a 2009 tax return because she was in and out of jail, homeless shelters, and rehabilitation centers, and therefore did not have any income to report. The return that Gillette filed in JB’s name falsely reported $9,975 in business income as a hair stylist, falsely claimed the maximum Earned Income Tax Credit of $3,043, and falsely sought a refund of $2,975. JB never saw that return, had no knowledge of it, and did not authorized it to be filed.
Gillette also prepared and filed federal tax returns for SH for 2009 and 2010. Both of those returns featured false and inflated refund requests. From the resulting 2009 refund Gillette kept for herself $3,836. Gillette kept the entirety of the 2010 refund. Other than a preparation fee of $400, SH was not aware that Gillette kept any of the refunds claimed in her name.
Gillette also filed a 2009 federal income tax return for RH. That return featured a false and inflated refund request. Gillette kept $1,000 out of the total refund. RH was not aware that these funds had been taken by Gillette.
Gillette prepared and filed a 2009 federal income tax return for VW. That tax return also included an inflated claim for a refund. Of the total refund, $1,400 was deposited into the account controlled by Gillette. VW did not authorize Gillette or anyone else to receive any portion of her tax refund.
Gillette prepared 2010 and 2011 federal income tax returns for KD. In both cases, the returns claimed false and inflated requests for refunds. Gillette kept $3,100 from the 2010 refund in KD’s name, and $1,000 from KD’s 2011 refund. KD did not authorize Gillette or anyone else to receive any portion of her tax refund. KD understood that Gillette was to receive only a fee of $50 as payment for preparing each return.
These false and fraudulent returns are summarized below:
Claimed Refund Amount True Refund Owed Amount deposited into Victim account Amount Given to Victim Amount Kept by Gillette1
SH 2009
$5,036.00
$630.00
$0.00
$600.00
$4,436.00
2
SB 2010
$1,933.00
$533.00
$0.00
$0.00
$1,933.00
3
JB 2009
$2,975.00[1]
$0.00
$0.00
$0.00
$0.00
4
RH 2009
$5,216.00
$706.00
$4,216.00
$0.00
$1,000.00
5
VW 2009
$6,616.00
$2,924.00
$5,216.00
$0.00
$1,400.00
6
KD 2010
$4,402.00
$904.00
$1,302.00
$0.00
$3,100.00
7
KD 2011
$4,054.00
$3,127.00
$3,054.00
$0.00
$1,000.00
$12,869.00
1 The IRS did not release the refund.
In addition, because she was a seasonal employee there were periods when Gillette was not working for the IRS. Despite the fact that she owned and operated a child daycare business, Gillette filed for and received unemployment benefits for the following time periods:
- 9-1-09 to 2-15-11; and
- 8-13-11 to 7-7-12; and 9-1-12 to 6-15-13.
As a result of this fraud, Gillette obtained unemployment benefits totaling approximately $46,322, to which she was not entitled.
Finally, for tax year 2011, Gillette filed a federal joint income tax return, in which she failed to report: (i) approximately $5,033.00 that she stole from S.H. and K.D., individuals for whom she prepared 2010 tax returns; (iii) about $35,138.00, that she received as income from the child care business; and (iii) about $3,929.54 that her spouse received as income from the child care business.
The case was investigated by the Treasury Inspector General for Tax Administration, the Department of Labor Office of Inspector General, and the Internal Revenue Service Criminal Investigations. It was prosecuted by Assistant United States Attorney Paul G. Shapiro.
Former Greenville Postmaster Pleads Guilty to Wire Fraud ConspiracyRead the Press Release
Contact Person: Lance Crick (864) 282-2100
Columbia, South Carolina ---- United States Attorney Beth Drake stated today that Patricia G. Sullivan, age 66, and Sharon D. Johnson, age 50, both of Columbia, pled guilty yesterday in federal court in Greenville, to a conspiracy to commit wire fraud, a violation of Title 18, United States Code, Section 1349. United States District Judge Bruce Howe Hendricks of Charleston accepted the plea and will impose sentence after she has reviewed the presentence report which will be prepared by the U.S. Probation Office.
Evidence presented at the change of plea hearing established that Patricia Sullivan, who formerly served as postmaster for Greenville County, and Sharon Johnson were co-conspirators in a scheme to defraud various individuals. Sullivan operated a company called HYPD Publishing (“HYPD”). In March 2009, HYPD published The Struggle of Love written by Sharon Johnson.
Shortly after publication of Johnson’s book, Sullivan and Johnson began to spin a story that the producer Tyler Perry had bought the rights to The Struggle of Love and would be making a movie or reality TV show staring Johnson. Victims were told that Sullivan and Johnson were on the verge of great wealth, but needed bridge loans or some other form of financial assistance until the project with Perry reached fruition. Sullivan and Johnson promised the victims large returns in exchange for the loans and/or investments.
To make themselves look the part of successful individuals, Sullivan and Johnson squatted in several mansions, took photos, and posted them to Facebook. They also created fictitious documents from an accounting firm that “documented” the sale of the book and a huge payout to come, as well as a bogus Wells Fargo statement that showed millions of dollars as pending.
Of course, there was no book deal with Tyler Perry and the victims lost the money loaned and/or invested. Law enforcement estimates that the loss to the victims is approximately $300,000.
Ms. Drake stated the maximum penalty defendants can receive is a fine of $250,000 and/or imprisonment for 20 years, plus a special assessment of $100.
The case was investigated by agents of the United States Postal Inspection Service. Assistant United States Attorney Bill Watkins of the Greenville office handled the case.
#####Former Government Contractor Sentenced to Five Years for Bribing an Officer and Smuggling Aliens for Financial GainRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Lara A. Stingley (619)546-8403
NEWS RELEASE SUMMARY – January 12, 2017
SAN DIEGO – Irma Perez, a former government contractor who worked in the lunchroom at the San Ysidro Port of Entry, was sentenced in federal court today to five years in prison for bribing a U.S. Customs and Border Protection officer to allow her to smuggle undocumented aliens into the U.S.
Perez pleaded guilty in August of 2016, admitting that she offered to pay approximately $4,000 per alien if Perez could use the officer’s lane to smuggle people into the United States. After the initial meeting, the officer immediately reported Perez’s bribery attempt to CBP-Office of Professional Responsibility. The officer continued to work with law enforcement, which led to Perez’s arrest during a smuggling event on May 16, 2016.
“This officer showed strength of character and bravery in coming forward to immediately report this crime,” said Acting U.S. Attorney Alana Robinson. “The officer put our nation’s security first, and as a result a smuggler who boldly attempted to corrupt a public official will be locked up for years.”
Perez’s arrest on May 16, 2016 stemmed from an investigation conducted by the Border Corruption Task Force (BCTF), which is composed of agents and officers working at the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Office of Field Operations, and U.S. Border Patrol.
During Perez’s change of plea hearing, she admitted that she knowingly bribed a U.S. Customs and Border Protection Officer to allow her to smuggle aliens through that officer’s lane without inspection on February 22 and May 16 of 2016. These smuggling events involved one Chinese national (on February 22, 2016) and three Brazilian nationals (on May 16, 2016). Perez later brought one of her children with her to meet with the CBP officer to pay the $4,000 bribery payment for the February 22, 2016 smuggling event. She also admitted that she used her children’s U.S. passports for the undocumented aliens.
In addition to the prison term, U.S. District Judge Janis L. Sammartino ordered Perez to pay a $15,400 special assessment and forfeiture of $4,000 for the bribery payment Perez paid the CBP officer on February 22, 2016. Judge Sammartino ordered that Perez be taken into custody at the conclusion of the sentencing hearing.
“The FBI, along with our law enforcement partners on the San Diego Border Corruption Task Force, will continue to leverage our resources to combat those who attempt to influence the security at our borders,” stated Special Agent in Charge Eric S. Birnbaum. “Let this case be a reminder that officers on the line uphold their duties with integrity and honor and attempts to tarnish that honor will not be tolerated.”
The FBI encourages the public to report allegations of public corruption to our hotline at (877) NO-BRIBE (662-7423).
“Because this CBP officer came forward, Perez is being brought to justice for attempting to corrupt our officer and for her alien smuggling activities,” said CBP Director of Field Operations for San Diego, Pete Flores. “We count on CBP employees and officers to perform their duties with honor and distinction, working tirelessly every day to keep our country safe, and this CBP officer is no exception. This officer’s work and cooperation with the investigation after being approached, is exemplary.”
DEFENDANT Criminal Case No. 16CR1189-JLS
Irma Perez, Chula Vista, CA Age: 32
SUMMARY OF CHARGES:
Count 1 – Bribery of a Public Official (18 U.S.C. § 201(b)(1)(A) and (C))
Maximum Penalties: maximum of 15 years in prison; maximum fine of $250,000; mandatory special assessment of $100; maximum term of supervised release for 3 years
Counts 12 and 13 – Bringing in Certain Aliens for Financial Gain (8 U.S.C. § 1324(a)(2)(B)(ii))
Maximum Penalties: mandatory minimum of 3 years in prison; maximum sentence of 10 years in prison; maximum fine of $250,000 per count; maximum term of supervised release of 3 years per count; mandatory special assessment of $100; additional special assessment of $5,000 per count
Count 14 – Bringing in Unlawful Aliens for Financial Gain (8 U.S.C. § 1324(a)(2)(B)(ii))
Maximum Penalties: mandatory minimum of 5 years in prison; maximum sentence of 15 years in prison; maximum fine of $250,000; maximum term of supervised release of 3 years; special assessment of $100; additional special assessment of $5,000
INVESTIGATING AGENCIES
The Border Corruption Task Force (BCTF) is composed of the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Office of Field Operations, U. S. Border Patrol.
Federal jury finds South Carolina man guilty of sexually exploiting juvenileRead the Press Release
ALEXANDRIA, La. – United States Attorney Stephanie A. Finley announced that a federal jury found a South Carolina man guilty last week of producing child pornography and traveling to Louisiana to have sex with a juvenile.
Frankie Maldonado, 50, of Reeseville, S.C., was found guilty on January 4 of two counts of production of child pornography and one count of traveling in interstate commerce for the purpose of engaging in illicit sexual conduct with a minor. After the conclusion of the two-day trial, the jury deliberated for an hour and a half before delivering the guilty verdict. United States District Judge Dee D. Drell presided over the trial.
According to the evidence presented, Maldonado began communicating with a 15-year-old girl. The girl’s father was a friend of Maldonado. Maldonado sent sexually explicit pictures of himself to the juvenile using text messaging in June of 2014. Thereafter he requested that she send sexually explicit pictures of herself. He also traveled to Louisiana on June 22, 2014 where he picked up the juvenile, brought her to a motel, took sexually explicit pictures and engaged in sexual activity with her.
Maldonado faces up to 15 to 30 years in prison for the child pornography production counts and 30 years in prison for the traveling to engage in sexual conduct count. He also faces and five years of supervised release and a $250,000 fine. He is also required to register as a sex offender. Sentencing was set for March 24, 2017.
Homeland Security Investigations, Louisiana State Police and Natchitoches Parish Sheriff’s Office investigated the case. Assistant U.S. Attorneys John Luke Walker and Jamilla A. Bynog are prosecuting the case.
This case is part of Project Safe Childhood, a U.S. Department of Justice nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse. 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.
The U.S. Department of Homeland Security and U.S. Immigration & Customs Enforcement (ICE) also encourage the public to report suspected child predators and any suspicious activity through its toll-free hotline at (866) 347-2423. Investigators are available at all hours to answer hotline calls. Tips or other information can also be submitted to ICE online by visiting their website at www.ice.gov/exec/forms/hsi-tips/tips.asp or through the Operation Predator smartphone application www.ice.gov/predator/smartphone-app. Tips may be submitted anonymously.
Federal jury finds Roane County man guilty of gun crimeRead the Press Release
CHARLESTON, W.Va. – A federal jury sitting in Charleston returned a guilty verdict yesterday in the trial of a Roane County man for being a felon in possession of a firearm, announced United States Attorney Carol Casto. William Leon Rhodes, 50, of Gandeeville, was convicted following a one-and-a-half-day jury trial.
Witnesses for the United States testified that on June 17, 2016, Rhodes gave consent to law enforcement to search his residence. Officers discovered a loaded Heritage .22 caliber revolver under the pillow in Rhodes’ bedroom. Officers additionally discovered a box for the gun on the night stand in the bedroom and a box of .22 caliber ammunition in the living room. The evidence showed that in an interview with law enforcement after his arrest, Rhodes admitted that he knew the gun was in his bedroom and he referred to the firearm as “my pistol.”
Rhodes was prohibited from possessing any firearm under federal law because of a 1990 conviction for grand larceny in Jackson County Circuit Court and a 2012 conviction for being a felon in possession of a firearm in the United States District Court for the Southern District of West Virginia. Additionally, Rhodes was on federal supervised release at the time he possessed the Heritage revolver.
Rhodes faces up to 10 years in federal prison when he is sentenced on April 12, 2017.
The Bureau of Alcohol, Tobacco, Firearms and Explosives, the West Virginia State Police, and the Roane County Sheriff’s Office conducted the investigation. Assistant United States Attorneys Meredith George Thomas and R. Gregory McVey are in charge of the prosecution and tried the case before a federal jury. United States District Judge John T. Copenhaver, Jr., presided over the trial.
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Federal and State Authorities Arrest 21 Individuals Based on San Antonio Federal Drug Trafficking IndictmentRead the Press Release
This morning, federal, state and local authorities arrested 15 individuals without incident, including San Antonio-based ringleaders Francisco Cerda and John Paul Flores, on federal drug charges stemming from a methamphetamine and cocaine trafficking investigation announced United States Attorney Richard L. Durbin, Jr.; Drug Enforcement Administration Special Agent in Charge Joseph M. Arabit, Houston Division; and, Federal Bureau of Investigation Special Agent in Charge Christopher Combs, San Antonio Division.
A federal grand jury indictment unsealed today charges those arrested today, along with six additional defendants who were previously arrested, with one count of conspiracy to possess with intent to distribute methamphetamine. The defendants, with the exception of Romero-Zelaya, Alvarez-Torres, Sosa, Robinson, Rios and Olivas, are also charged with one count of conspiracy to possess with intent to distribute cocaine. Cerda also faces eight substantive drug distribution charges. Below is a list of the defendants.
In addition to the arrests, authorities have seized approximately 22 kilograms of methamphetamine, four kilograms of cocaine, and over $91,000 in U.S. Currency attributed to this organization during this investigation.
Upon conviction of either conspiracy to distribute methamphetamine or conspiracy to distribute cocaine, the defendants face sentences of up to 20 years in federal prison.
“The success of Operation Tango and Cash and the corresponding arrests serve as an example of the exceptional teamwork among law enforcement agencies in the San Antonio region. This operation dismantled the activities of a dangerous criminal organization that was responsible for smuggling and distributing large quantities of narcotics throughout the State of Texas. The DEA will continue to focus our resources on drug trafficking organizations that oversee, coordinate, and facilitate the transportation and distribution of illegal drugs in our communities,” stated DEA Special Agent in Charge Joseph M. Arabit.
This investigation was conducted by the DEA, FBI, Texas Department of Public Safety, U.S. Customs and Border Protection (CBP), United States Marshals Service, Bexar County Sheriff’s Office, Bexar County District Attorney’s Office, San Antonio Police Department, Live Oak Police Department, Seguin Police Department, New Braunfels Police Department, and the Texas National Guard Counter Drug.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendants are presumed innocent until proven guilty in a court of law.
U.S. v. Romero-Zelaya, et al. SA16cr799
Name, Age, Residence, Arrest Date, Remains in Custody
Francisco Cerda, 43, San Antonio, 1.12.17, Yes
Jon Paul Flores, 29, San Antonio, 1.12.17, Yes
Pedro Sosa, 40, San Antonio, 1.12.17, Yes
Pablo Rios, 43, San Antonio, 1.12.17, Yes
Frank Montejano, 32, San Antonio, 1.12.17, Yes
Andrew Flores, 33, San Antonio, 1.12.17, Yes
Jorge Navarro, 32, San Antonio, 1.12.17, Yes
Edward Saucedo, 33, San Antonio, 1.12.17, Yes
Jesse Flores, 30, San Antonio, 1.12.17, Yes
Isaac Hernandez, 33, San Antonio, 1.12.17, Yes
Joseph Acevedo, 22, San Antonio, 1.12.17, Yes
Maribel Rios, 37, San Antonio, 1.12.17, Yes
Quintin Vega, 29, San Antonio, 1.12.17, Yes
Alan Ramirez, 26, San Antonio, 1.12.17, Yes
Joel Olivas, 44, Arlington, TX, 1.12.17, Yes
Laura Romero-Zelaya, 38, Houston, TX, 10.4.16, On Bond
Jose Luis Alvarez-Torres, 29, San Antonio, 10.4.16, Yes
Victor Lamont Robinson, 29, San Antonio, 1.10.17, Yes
Frank Zepeda, 22, San Antonio, 1.10.17, Yes
Manuel Roel Castillo, 40, San Antonio, 1.10.17, Yes
San Juanita Rodriguez, 34, San Antonio, 1.10.17, On Bond
Federal Correctional Officer and the Girlfriend of an Inmate Charged with BriberyRead the Press Release
A criminal complaint was unsealed today in federal court in the Eastern District of New York charging Armando Moronta, a federal correctional officer employed by the United States Bureau of Prisons (BOP) at the Metropolitan Detention Center in Brooklyn, New York (MDC), and Alicia Alonso, the girlfriend of an inmate being held at the MDC, with carrying out a bribery scheme to bring contraband into the MDC for inmates.
The defendants’ initial appearances are scheduled for this afternoon before United States Magistrate Judge Marilyn D. Go at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Ronald G. Gardella, Special Agent in Charge, United States Department of Justice, Office of the Inspector General, New York Field Office (OIG), and William F. Sweeney, Jr., Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI).
As set forth in the complaint, Alonso provided Moronta with contraband, including cellular telephones, the narcotic Suboxone, and the synthetic narcotic “K2,” together with thousands of dollars in bribe payments. Moronta, using his position as a federal correctional officer, then smuggled the contraband into the MDC on approximately twelve occasions between March 2016 and December 2016 and distributed it to inmates under his guard for their use and further distribution.
“As alleged in the complaint, Moronta abused his position of trust as a federal correctional officer thereby compromising a vital component of our criminal justice system and potentially endangering the safety and well-being of other MDC employees and inmates. Such reckless and illegal acts will not be tolerated. Those who commit, or assist others in committing, these crimes will be aggressively investigated and prosecuted to the full extent of the law,” stated United States Attorney Capers. Mr. Capers expressed his grateful appreciation to the OIG and FBI.
OIG Special Agent in Charge Gardella stated, “Whether you are a federal correctional officer, a police officer, or anyone else in a position of authority and public trust, you should know that we vigorously investigate all allegations of individuals betraying their oath of office, and we will bring you to justice.”
FBI Assistant Director in Charge Sweeney stated, “Smuggling drugs into a federal prison is not only illegal, it’s inherently dangerous and puts peoples’ lives at risk. The fact that a corrections officer is alleged to have done so in exchange for money violates the oath he swore to uphold. His badge does not allow him special privilege, or put him above the law.”
The charges in the complaint are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants each face a maximum sentence of fifteen years’ imprisonment.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Kevin Trowel, Nadia Shihata, and Andrew C. Gilman are in charge of the prosecution.
The Defendants:
ARMANDO MORONTA
Age: 38
Brooklyn, New York
ALICIA ALONSO
Age: 31
Woodbridge, New Jersey
El Paso, Texas Men Plead Guilty to Federal Cocaine Trafficking Charge in New MexicoRead the Press Release
ALBUQUERQUE – Ever Omar Valdez, 26, and Javier Cruz 26, both of El Paso, Texas, pled guilty yesterday in federal court in Las Cruces, N.M., to cocaine trafficking charges arising from the seizure of six kilograms (13.2 pounds) of cocaine at a U.S. Border Patrol checkpoint near Alamogordo, N.M., in Oct. 2016.
Valdez and Cruz were arrested in Oct. 2016, on a criminal complaint charging them with possessing approximately six kilograms of cocaine in Otero County, N.M. According to the complaint, Valdez and Cruz were arrested on Oct. 6, 2016, after U.S. Border Patrol agents at the U.S. Border Patrol checkpoint near Alamogordo seized approximately six kilograms of cocaine that was concealed in the vehicle in which Valdez and Cruz were traveling.
During yesterday’s proceedings, Valdez and Cruz each entered guilty pleas to a felony information charging them with conspiracy to possess cocaine with intent to distribute. Valdez and Cruz each admitted that on Oct. 6, 2016, they entered the U.S. Border Patrol checkpoint on Highway 54 in a vehicle containing six kilograms of cocaine concealed inside the vehicle’s rear bumper, which was found by Border Patrol agents during a routine inspection. Valdez and Cruz admitted knowing that the cocaine was in the vehicle and that they intended to deliver the cocaine to other individuals in exchange for money.
At sentencing, Valdez and Cruz each face a statutory mandatory minimum penalty of ten years and a maximum of life in federal prison. Both men remain in custody pending sentencing hearings which have yet to be scheduled.
This case was investigated by the Las Cruces office of the DEA and the U.S. Border Patrol. Assistant U.S. Attorney Clara N. Cobos is prosecuting the case.
East St. Louis Man Sentenced for Federal Drug and Gun Trafficking OffensesRead the Press Release
Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced today that David L. Bradford, 33, of East St. Louis, Illinois, formerly of Madison, Illinois, was sentenced on Wednesday, January 11, 2017, for drug and gun trafficking offenses following a jury trial that concluded on August 8, 2016. The jury found Bradford guilty of the following offenses: Count 1 - Conspiracy to Distribute and Possess with Intent to Distribute Controlled Substances (cocaine base and marihuana); Count 3 - Transfer of a Firearm and Ammunition to a Previously Convicted Felon; Counts 5 and 6 – Distribution of Cocaine Base; Count 7 – Possession with Intent to Distribute Marihuana; and Count 8: Unlawful Possession of a Firearm by a Previously Convicted Felon. The terms of imprisonment faced by Bradford were: Counts 1 and 6 - not less than 10 years up to life; Count 3 - up to 10 years; Count 5 – up to 30 years; Count 7 – up to 10 years; and Count 8 – not less than 15 years up to life.
Bradford was sentenced to the following terms of imprisonment: Counts 1, 6, and 8 – 420 months of imprisonment; Counts 3 and 7 – 10 years; Count 5 - 360 months; all terms to run concurrently. There is no parole in the federal system. Bradford must also serve 8 years of supervised release to follow imprisonment. He was ordered to pay a fine of $1,800.00 and a special assessment of $600.00
According to evidence adduced at trial, Bradford was a leader, manager or supervisor of a conspiracy to distribute cocaine base, commonly known as “crack,” and marihuana, that operated in St. Clair and Madison Counties from February 2014, to June 9, 2014 (Count 1). During the course of the conspiracy, audio/video recordings established that Bradford distributed crack cocaine on March 4 and April 18, 2014, from his East St. Louis residence (Counts 5 and 6). Also during the course of the conspiracy, marihuana Bradford intended to distribute was found in his bedroom during the execution of a search warrant on June 9, 2014 (Count 7). On June 9, 2014, law enforcement also recovered an SKS 7.62 x 39 m caliber rifle propped against the wall in Bradford’s bedroom, and a Volunteer Enterprises Inc., Model Commando Mark III, .45 caliber rifle and a Mossberg International, 715T .22 LR caliber rifle, both hidden behind a makeshift wall in the basement of the residence (Count 8). All guns had extended magazines and were loaded. Finally, evidence established that Bradford aided and abetted the Transfer of a Romarm Cugir Draco, 7.62x39 mm caliber semi-automatic pistol, and ammunition for the pistol, to himself. More than eight firearms were linked to Bradford during the trial. As a previously convicted felon, Bradford cannot possess firearms.
“ATF will continue to work hand in hand with our law enforcement partners to ensure that Armed Violent Offenders are held accountable for their illicit activities and this particular investigation highlights our commitment to do so”, stated ATF Acting, Special Agent in Charge George Lauder.
Information leading to the charges against Beard-Hawkins and Bradford was obtained in an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case is being handled by Assistant United States Attorney Kit Morrissey.
###Defendant Sentenced for Involuntary Manslaughter in Shooting Death at Fort RileyRead the Press Release
TOPEKA, KAN. – A 19-year-old man was sentenced Thursday to 18 months in federal prison for involuntary manslaughter in the shooting death of a 16-year-old boy on Fort Riley, U.S. Attorney Tom Beall said. The defendant also was ordered to pay $5,000 in restitution for funeral expenses.
Juwuan D. Jackson, 19, who lived on the Fort Riley base at the time, pleaded guilty to one count of involuntary manslaughter. He admitted that on Sept. 11, 2015, he handled a firearm in a reckless manner, resulting in the shooting death of 16-year-old Kenyon Givens, Jr., who also lived on Fort Riley.
According to court records, when military police responded to the shooting Jackson told them an unknown intruder wearing a mask had forced his way into the home and shot Givens. Paramedics were not allowed to enter and treat Givens until military police had searched the house for an intruder. At the same time, police began searching the neighborhood to find the weapon and the masked shooter.
Investigators eventually learned that Jackson had been playing with a loaded .22 caliber handgun before the shooting. Jackson spun the chamber while holding the trigger. The revolver discharged and a bullet struck Givens in the chest.
Beall commended the Army Criminal Investigations Division and the FBI, Special Assistant U.S. Attorney Robin Graham and Assistant U.S. Attorney Tony Mattivi for their work on the case.
Cuban National Sentenced for Conspiring to Steal Credit Card Numbers, Aggravated Identity TheftRead the Press Release
U.S. Attorney Kenneth A. Polite announced that JESUS ENRIQUE GONZALES TORRES, 24, a Cuban national who had resided in Florida before traveling to the New Orleans area to steal credit card information, was sentenced after previously pleading guilty to conspiracy to commit access device fraud and aggravated identity theft. In April 2016, GONZALES TORRES and two codefendants were arrested in the Southern District of Florida on bond violations after they were found in the Florida Strait between Florida and Cuba by the United States Coast Guard. All three have been detained since then as flight risks.
U.S. District Judge Nannette Jolivette Brown sentenced GONZALEZ TORRES to 30 months imprisonment, to be followed by 3 years of supervised release. Additionally, GONZALES TORRES was ordered to pay restitution of $7,873.97 jointly and severally with his codefendants and a $100 special assessment.
In all, six defendants have pleaded guilty in the case to conspiring among themselves and with others to with possessing fifteen or more unauthorized and counterfeit access devices, as well as producing, possessing, and trafficking device-making equipment. According to court records, the defendants traveled from Florida in late July, 2015 and agreed to place card skimming devices on gas pumps in the New Orleans area. They also admitted to, among other things, possessing a card encoding machine, a card embossing machine, and a laptop computer containing stolen credit card information. GONZALES TORRES is the first defendant to be sentenced in the matter.
U.S. Attorney Polite commended the work of Jefferson Parish Sheriff’s Office, the United States Secret Service, and Homeland Security Investigations, who are investigating the case. Assistant U.S. Attorney Hayden Brockett was in charge of the prosecution.
Convicted Felon from Chicago Sentenced to More Than Five Years in Federal Prison for Illegally Possessing and Trafficking Two Dozen HandgunsRead the Press Release
CHICAGO — A convicted felon from Chicago has been sentenced to more than five years in federal prison for illegally possessing and trafficking two dozen handguns, most of which had been stolen from a shipment of firearms at a railyard on the South Side.
WARREN GATES possessed 24 stolen firearms, 17 of which he illegally purchased from co-defendants who had stolen approximately 111 firearms from a railroad car in Chicago in the early morning hours of April 12, 2015. Gates admitted purchasing the 17 stolen firearms for purposes of reselling them for a profit, and he sold eleven of them prior to his arrest. The stolen firearms were aboard a cargo train en route from a Ruger factory in New Hampshire to Spokane, Wash. The train was parked overnight on the South Side of Chicago when the co-defendants broke locks and seals on a train car and walked off with the guns.
Gates, 49, pleaded guilty last year to one count of possession of a firearm by a prohibited person. U.S. District Judge John J. Tharp Jr. imposed the 63-month sentence Wednesday in federal court in Chicago.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and George Lauder, Acting Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. The Chicago Police Department and the Norfolk Southern Railroad Police Department provided valuable assistance.
“The defendant purchased these stolen firearms for the purpose of reselling them to those in our community who would be most interested in purchasing stolen, unregistered and untraceable firearms from an unlicensed firearms dealer,” Assistant U.S. Attorney Christopher Parente argued in the government’s sentencing memorandum. “Those individuals who are willing to pay premiums for firearms on the black market are the individuals who cannot legally purchase firearms and those individuals who cause the most damage to this city by their possession of illegal firearms.”
There were approximately 111 firearms stolen from the cargo train. To date law enforcement has recovered 16 of those firearms at various locations and crime scenes in the Chicago area.
The government is represented by Mr. Parente.
Connecticut Home Health Agency and its Owners Pay $5.25 Million to Settle False Claims Act ViolationsRead the Press Release
United States Attorney Deirdre M. Daly and Connecticut Attorney General George Jepsen today announced that Family Care Visiting Nurse and Home Care Agency, LLC (Family Care VNA), and David A. Krett and Rita C. Krett, R.N., B.S.N., owners of Family Care VNA, have entered into a civil settlement with the federal and state governments in which they will pay approximately $5.25 million to resolve allegations that they violated the federal and state False Claims Acts. Family Care VNA has offices in Stratford, Woodbridge, Norwalk and Meriden, and provides home health services in Fairfield, New Haven, Hartford and Middlesex Counties.
“Home Health Care providers and other providers who fraudulently bill the Medicaid program drive up the cost of health care for all of us,” said U.S. Attorney Daly. “The U.S. Attorney’s office is committed to working with our state counterparts to vigorously pursue health care providers that submit fraudulent claims to government health care programs.”
“Medicaid providers who choose to participate in the Connecticut Medical Assistance Program have a responsibility to ensure that they are in compliance with all applicable laws and regulations and are truthful when they submit claims for payment for services to the Medicaid program,” Attorney General Jepsen said. “We will continue to work to hold accountable those who seek to defraud our taxpayer-funded healthcare programs. I am grateful to our partners in this investigation, especially the U.S. Attorney's Office for the District of Connecticut, the U.S. Department of Health and Human Services Office of Inspector General and Office of Investigations, the Connecticut Medicaid Fraud Control Unit and the Connecticut Department of Social Services Office of Quality Assurance, for their coordination and work in this case, and for the continued cooperation between agencies, both state and federal, as we work to protect our public healthcare programs.”
The allegations against Family Care VNA involve fraudulent billing to Medicaid for certain home health services. The services in question included 60-day assessments, billed pursuant to the Healthcare Common Procedure Coding System code S9123. According to the Healthcare Common Procedure Coding System, this service must be performed by a registered nurse.
It is alleged that Family Care VNA regularly billed S9123 codes when a registered nurse did not provide the assessments as required by Medicaid. Family Care VNA, with the knowledge and at the direction of its owners, regularly billed S9123 claims to Medicaid knowing a registered nurse had not performed the 60-day assessment as required by Medicaid. Additionally, it is alleged Family Care VNA, with the knowledge of its owners, submitted claims to Medicaid for patients who were or may have been dually eligible for Medicare and Medicaid, without first following required procedures for submitting claims to Medicare.
To settle allegations under the federal and state False Claims Acts, Family Care VNA, David Krett and Rita Krett have paid $5,253,908.54, which covers the time period from January 1, 2009 through April 30, 2016. Family Care, VNA, David Krett and Rita Krett also have entered into a Corporate Integrity Agreement with the Office of Inspector General for the U.S. Department of Health and Human Services.
This matter was investigated by Lawrence Marini, Forensic Fraud Examiner for the Connecticut Attorney General’s Office, with the assistance of the Connecticut Department of Social Services, and by the Office of Inspector General for the U.S. Department of Health and Human Services. The case was prosecuted by Assistant Attorney General Karla Turekian and Assistant Attorney General Antonia Conti of the Connecticut Office of the Attorney General, and by Assistant U.S. Attorney Anne F. Thidemann and Auditor Kevin Saunders of the U.S. Attorney’s Office.
U.S. Attorney Daly encouraged individuals who suspect health care fraud to report it by calling the Health Care Fraud Task Force at (203) 785-9270 or 1-800-HHS-TIPS.
Confederated Tribes of the Colville Reservation Enter into False Claims Act and Voluntary Compliance Agreements Regarding Challenged Youth Counseling ServicesRead the Press Release
Spokane, WA – Today, the Confederated Tribes of the Colville Reservation (CCT) and the United States of America, acting through the U.S. Department of Justice (DOJ) and on behalf of the Office of Inspector General of the Department of Health and Human Services (OIG-HHS), announced a voluntary settlement agreement reached by the parties relative to allegations that the Colville Tribes submitted false claims to Medicaid seeking the reimbursement of mental health counseling services that was purportedly provided by the Tribe’s Behavioral Health Unit – Youth Counseling services.
The CCT is a federally recognized, sovereign Indian tribe, with tribal offices located at Nespelem, Washington, on the Tribes’ reservation. In furtherance of the goals of the Indian Health Care Improvement Act (IHCIA) and to fulfill the United States’ trust and treaty obligations to the CCT’s members, the Secretary of HHS and the CCT entered into a Title I Contract and Annual Funding Agreement, on a government-to-government basis, to provide health and social services to tribal members and other eligible individuals. Thus, the CCT is entitled to bill federal health care programs for provided services.
Under the agreement, the Confederated Tribes of the Colville Reservation have agreed to pay $245,860 (Two Hundred Forty-Five Thousand, Eight Hundred Sixty Dollars) to resolve false claims allegations arising out of the Tribes’ billing irregularities that occurred from January 2010 through August 2010.
During that time, the CCT contracted with an independent mental health contractor to provide youth counseling services. The contractor submitted invoices to the CCT for payment of child mental health encounter sessions. The CCT used these invoices to generate claims that it submitted to the Washington State Medicaid Program for reimbursement. Medicaid administered payment of these encounter session claims with federal funds.
In 2010, the Federal Bureau of Investigation (FBI), along with the Medicaid Fraud Control Unit (MFCU) and the U.S. Attorney’s Office, began an investigation into allegations that the contractor falsely documented weekly billing invoices for alleged encounter sessions, which the contractor submitted to the CCT for child mental health counseling sessions which were either not provided or were not medically indicated or necessary.
The investigation found that the contractor conducted a 10-week summer group course, with the same curriculum, year after year, and for the same children. The contractor allegedly submitted invoices to the CCT indicating mental health sessions had been individually provided to each of the children. As alleged, the CCT submitted claims for payment of these false individual counseling sessions to Medicaid based on the falsified invoices.
The investigation determined that the group sessions were not clinically directed, did not address the patients’ diagnoses, and had little to no clinical value. The CCT was allegedly complacent in its supervision and review of their counseling contractor’s work.
While the CCT did not admit any wrongdoing, the Office of Inspector General for the U.S. Department of Health and Human Services (OIG-HHS) and the CCT agreed to a settlement that provides for performance of a Voluntary Tribal Compliance Agreement (VTCA), on a government‐to‐government basis, not only aims to enhance the health care services provided to CCT’s tribal members, but also supports CCT in fulfilling its’ obligations under applicable federal law. Per the VTCA, among other things, the CCI will designate a compliance officer and committee, will have an annual review performed by an independent review organization, will establish internal policies and procedures, and will annual reports with the OIG-HHS.
“This settlement shows both our commitment to protect tax payer dollars and the Colville Tribes’ commitment to providing quality and responsible health and health education services for its’ members,” said Michael C. Ormsby, United States Attorney for the Eastern District of Washington.
“Fraudulent schemes such as those alleged here drain scarce Medicaid dollars and jeopardize the program’s ability to provide necessary medical care,” said OIG-HHS’s Special Agent in Charge Steven J. Ryan. “Today’s settlement with CCT will help protect tribal children and the program upon which they depend.”
This case was investigated by the FBI, OIG-HHS, Washington State’s Medicaid Fraud Control Unit (MFCU), and federal prosecutors in the United States Attorney’s Office for the Eastern District of Washington.
See related case United States v. Debra Van Bunt-Oreiro, Cause No. 13-CR-00110-RMP (2014) and related press release at https://www.justice.gov/usao-edwa/pr/omak-mental-health-counselor-sentenced-five-years-probation-filing-false-income-tax
Attachment: Settlement Agreement, January 10, 2017Centralia Resident Pleads Guilty to Conspiracy to Possess and Sell Stolen FirearmsRead the Press Release
Michael Rink, 34, of Centralia, Illinois, pleaded guilty today, in United States District Court to a conspiracy to possess and sell stolen firearms, the United States Attorney for the Southern District of Illinois, Donald S. Boyce, announced today. Rink faces up to five years in federal prison.
Rink was investigated following his role in the November 29, 2014, burglary of Buchheit’s of Centralia. In that burglary, forty firearms and more than a thousand of rounds of ammunition were stolen. Dakota Moss, also of Centralia, was sentenced to 248 months of imprisonment on September 11, 2015, for committing that burglary. A juvenile accomplice was prosecuted separately in state court.
Court records established that Michael Rink drove his co-defendants around helping conceal and transport the stolen firearms between locations. Rink agreed to accept money for providing transportation while the stolen guns were being moved from place to place and for agreeing to drive co-defendant Justin Gibson for the purpose of selling stolen firearms. Two of the guns stolen during the Buchheit’s burglary were eventually transferred from the juvenile accomplice to co-defendant Terrell Cleggett. Cleggett later sold the two firearms to his friend and co-defendant, Brandon Hoskins.
Thirty-eight of the stolen firearms were eventually recovered by law enforcement officials, including the two firearms included in this prosecution. Co-defendant Hoskins was sentenced to 60 months of imprisonment on December 13, 2016. Co-defendant Cleggent is awaiting sentencing which is currently scheduled for February 21, 2017. Co-defendant Justin Gibson also recently pleaded guilty and is scheduled to be sentenced on April 20, 2017.
The investigation is being conducted by agents from the Bureau of Alcohol, Tobacco and Explosives, the Centralia Police Department, along with the Clinton County States Attorney’s Office. The case is being prosecuted by Assistant United States Attorney Steven D. Weinhoeft.
###
Canadian Sentenced to Ten Years’ Imprisonment for International Trafficking of CocaineRead the Press Release
Tampa, Florida – U.S. District Judge Elizabeth A. Kovachevich today sentenced Simon Peter Danielson (37, Vancouver, British Columbia) to 10 years in federal prison for his role in a scheme to transport 250 kilograms of cocaine by boat from the Caribbean to the east coast of Canada. Danielson pleaded guilty in May 2016.
According to court documents, Danielson was piloting the sailing vessel (“SV”) Liberty in international waters when he was intercepted by a Royal Netherlands Navy ship approximately 82 miles northwest of Aruba. While preparing to board the SV Liberty, members of the United States Coast Guard Law Enforcement Detachment (“LEDET”) 405 aboard the Dutch vessel witnessed Danielson dumping kilogram-sized bricks into the water. Upon boarding the SV Liberty, the LEDET team recovered nine bales of cocaine, with a total weight of approximately 250 kilograms.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Drug Enforcement Administration, and the Federal Bureau of Investigation, with assistance from the U.S. Coast Guard, the Royal Netherlands Navy, and the Royal Canadian Mounted Police. It was prosecuted by Assistant United States Attorney Eric K. Gerard.
Buffalo Man Sentenced on Gun and Drug Charges Involving A HomicideRead 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 Alexander Duarte, 23, of Buffalo, NY, who was convicted of discharge of a firearm in furtherance of drug trafficking and conspiracy to distribute heroin, was sentenced to 330 months in prison by U.S District Judge Lawrence J. Vilardo.
Assistant U.S. Attorneys Thomas S. Duszkiewicz and Joel L. Violanti, who handled the case, stated that in June 2012, Duarte, co-defendant Jose L. Ramirez-Merced, and others sold heroin on the West Side of Buffalo. On July 15, 2012, the group planned a home invasion robbery targeting the residence of suspected heroin dealer Jose Rivera. However, the defendants and others invaded the wrong residence and stole cocaine and cash.
As a result, Rivera began making threats against individuals in the group and attempted to kill one of the individuals known as L.B. In response, the group decided to murder Rivera. On July 31, 2012, Duarte and Merced obtained two guns and proceeded to a residence on West Avenue in Buffalo where they opened fire, killing Rivera and wounding a female.
Merced was convicted and sentenced to 240 months in prison.
Today’s sentencing is the result of an investigation by the Federal Bureau of Investigation Safe Streets Task Force, under the direction Special Agent-in-Charge Adam S. Cohen and the Buffalo Police Department, under the direction of Commissioner Daniel Derenda.
British and American Men Indicted for “Swatting”Read the Press Release
Baltimore, Maryland – A federal grand jury has indicted Zachary Lee, age 25, of Catonsville, Maryland, and Robert Walker McDaid, age 19, of Coventry, England, United Kingdom, on charges related to a scheme to provide false information to cause an emergency services response, a practice known as “swatting.” The indictment was returned on January 11, 2017, and unsealed today upon the arrest of Lee.
The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Chief Gary Gardner of the Howard County Police Department; and Howard County State’s Attorney Dario Broccolino.
“We are working with officials in the United Kingdom to insure that Robert Walker McDaid is held accountable for his alleged actions because the alleged criminal activity represents a grave threat to public safety,” said U.S. Attorney Rod J. Rosenstein.
According to the three-count indictment, between February 17 and February 18, 2015, Lee and McDaid conspired to convey false information about a hostage situation that would cause armed law enforcement officers to be dispatched to the home of an acquaintance of Lee (the victim).
Specifically, the indictment alleges that on February 17, 2015, Lee messaged McDaid via an internet telephone service and stated, “I have someone I need sw@tted.” At McDaid’s request, Lee provided McDaid with the address of the victim and McDaid responded to Lee, “il do it when im up.” On February 18, 2015, a call from McDaid’s internet telephone account was made to the Maryland Coordination and Analysis Center’s (MCAC) Terrorism Hotline. Lee, McDaid, and another co-conspirator were participants in that call. The indictment alleges that the caller pretended to be the victim and stated that he had a loaded gun, several bags of plastic explosives, and three hostages. The caller demanded $15,000 in cash be delivered in a red bag to the victim’s address. The caller stated that he would start executing the hostages in 15 minutes if his demands were not met. Shortly after police arrived at the address, Lee allegedly posted on his Facebook account, “Love my team.”
At the time the call was made, authorities were not aware that the emergency call was false. A Howard County Police Department (HCPD) Tactical team went to the address provided by the callers, and ultimately shot the victim with rubber bullets in the chest and face. Investigators subsequently discovered that the victim was not in possession of loaded firearms or explosives, did not make the emergency call, and there were no hostages at the residence.
The defendants face a maximum sentence of five years in prison for the conspiracy; a maximum of 20 years in prison for false information and hoax; and a mandatory two years in prison, consecutive to any other sentence imposed for aggravated identity theft. An initial appearance has been scheduled for Lee in U.S. District Court in Baltimore today at 2:15 p.m.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Rod J. Rosenstein commended the FBI, Howard County Police Department, and Howard County State’s Attorney’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys Lauren E. Perry and Zachary A. Myers, who are prosecuting the case.
Boone County heroin dealer sentenced to federal prison for drug crimeRead the Press Release
Charleston, W.Va. – A Boone County man who sold heroin to an informant was sentenced today to two and a half years in federal prison for a drug crime, announced United States Attorney Carol Casto. Christopher Priestley, 38, of Bloomingrose, previously pleaded guilty to distribution of heroin.
On four occasions from July to December 2015, Priestley sold heroin to an informant working with the U.S. 119 Drug Task Force. Priestley was a low-level distributor for a larger drug ring supplied by sources in Detroit that was operating in and around Seth in Boone County. Other defendants who have pleaded guilty as a result of this investigation and are awaiting sentencing include Daymeon Johnson, of Detroit, and Joyce Ann Zornes, Robert Buzzard, and Gregory Runion, all of Boone County.
This case was investigated by the U.S. 119 Drug Task Force. Assistant United States Attorney Joshua Hanks handled the prosecution. United States District Judge Joseph R. Goodwin imposed the sentence.
This prosecution is 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 prescription drugs and heroin. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of pills and heroin in communities across the Southern District.
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Baxter Healthcare Corporation to Pay More Than $18 Million to Resolve Criminal and Civil Liability Relating to Sterile ProductsRead the Press Release
Healthcare company Baxter Healthcare Corporation (Baxter) has agreed to pay $18.158 million to resolve its criminal and civil liability arising from Baxter’s failure to follow current Good Manufacturing Practices (cGMP) when manufacturing sterile drug products in North Carolina, the Department of Justice announced today. Today’s resolution includes a deferred prosecution agreement and penalties and forfeiture totaling $16 million and a civil settlement under the False Claims Act (FCA) with the federal government totaling approximately $2.158 million. Baxter is a Delaware corporation and subsidiary of Baxter International Inc., headquartered in Deerfield, Illinois, with many manufacturing facilities throughout the United States and the world, including one in Marion, North Carolina (North Cove).
In a criminal information filed today in the Western District of North Carolina, the government charged that, between July 2011 and November 2012, Baxter introduced into interstate commerce drugs that were adulterated under the Federal Food, Drug, and Cosmetic Act (FDCA) because Baxter did not follow cGMP when making those products. At North Cove, Baxter manufactured large-volume sterile intravenous (IV) solutions in a clean room that had high-efficiency particulate absorption (HEPA) filters installed in the ceiling. Air was pushed into the clean room through the HEPA filters. As alleged in the information, during the relevant time period, a Baxter employee reported the presence of mold on the HEPA filters to plant management. However, Baxter continued to manufacture IV solutions in that clean room for months while the filters the employee had identified as moldy remained in place. Subsequent testing of the filters following an unannounced U.S. Food and Drug Administration (FDA) inspection revealed several mold species on the filters. There was no evidence of impact on the IV solutions from the mold found on the filters.
In a deferred prosecution agreement to resolve the charge, Baxter admitted that it distributed products in interstate commerce that were adulterated in violation of the FDCA. Under the terms of the deferred prosecution agreement, Baxter will pay a total of $16 million in monetary penalties and forfeiture and will implement enhanced compliance provisions, including periodic certifications to the government concerning its implementation of those provisions. The deferred prosecution agreement will not be final until accepted by the U.S. District Court.
“Following current Good Manufacturing Practices is essential to ensure the safety and efficacy of our drugs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Today’s settlement shows that the government will continue to hold companies accountable for failing to fulfill this critically important responsibility.”
“Despite notification by an employee of potential contamination concerns, Baxter was poorly focused on instituting sufficient safety standards for their products,” said U.S. Attorney Jill Westmoreland Rose for the Western District of North Carolina (WDNC). “Today’s resolution reflects WDNC’s commitment to hold accountable drug companies that violate manufacturing standards and wrongly profit from those violations.”
“FDA’s manufacturing standards are designed to ensure the quality, safety, and efficacy of drugs distributed to American consumers, and FDA expects pharmaceutical companies to correct deficiencies in an expedited manner,” said Special Agent in Charge Justin Green of FDA’s Office of Criminal Investigations, Miami Field Office. “We will remain vigilant in our efforts to protect the U.S. public health from potentially dangerous products.”
In addition, Baxter will pay approximately $2.158 million to resolve allegations that the company violated the FCA by submitting false claims to the Department of Veterans Affairs based upon Baxter’s failure to follow cGMPs.
The civil settlement resolves a lawsuit filed by Christopher Wall, an employee of Baxter, under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The civil lawsuit was filed in the Western District of North Carolina and is captioned United States ex rel. Christopher Wall v. Baxter International, Inc. et al., No. 13cv42 (W.D.N.C.). Mr. Wall will receive $431,535.99 from the proceeds of the civil settlement.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement with Baxter was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of North Carolina and the Civil Division’s Consumer Protection Branch and Commercial Litigation Branch, with assistance from the FDA’s Office of Chief Counsel. The criminal investigation was conducted by the FDA’s Office of Criminal Investigations.
Except as to conduct admitted in connection with the deferred prosecution agreement, the claims settled by the civil agreement are allegations only and there has been no determination of civil liability.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information on the Commercial Litigation Branch’s Fraud Section, visit https://www.justice.gov/civil/fraud-section. For more information about the U.S. Attorney’s Office for the Western District of North Carolina, visit https://www.justice.gov/usao-wdnc.