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Friday 30 September 2016
Bureau of Prisons inmate convicted, sentenced on assault chargeRead the Press Release
CLARKSBURG, WEST VIRGINIA – Isaac Pettiford, 40, formerly incarcerated at the United States Penitentiary Hazelton, was convicted and sentenced to 10 months today for assaulting a registered nurse, U.S. Attorney William J. Ihlenfeld, II, announced.
In December 2015, Pettiford forcibly assaulted a registered nurse while she was engaged in her official duties at United States Penitentiary Hazelton. He pled guilty today to one count of “Assault of a Federal Employee.”
Assistant U.S. Attorney Andrew R. Cogar prosecuted the case on behalf of the government. The Federal Bureau of Prisons Special Investigations Services Unit investigated.
U.S. District Judge Irene M. Keeley presided.
Buffalo Man Pleads Guilty to Gun ChargeRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.—U.S. Attorney William J. Hochul, Jr. announced today that Darryl Bagby, 33, of Buffalo, NY, pleaded guilty before Chief U.S. District Court Judge Frank P. Geraci to being a felon in possession of ammunition. The conviction carries a maximum penalty of 10 years in prison and a $250,000 fine.
Assistant U.S. Attorney Brendan T. Cullinane, who is handling the case, stated that on November 25, 2015, the Erie County Sheriff’s Office executed a search warrant at the defendant’s residence at 116 Bidwell Parkway in Buffalo. Deputies recovered two rounds of ammunition, more than $19,000 in cash, cocaine, a digital scale, and other drug paraphernalia. Further investigation determined that the ammunition was manufactured in Russia and Minnesota. As a prior convicted felon, Babgby is prohibited from legally possessing ammunition.
The plea is the culmination of an investigation by the Erie County Sheriff’s Department, under the direction of Timothy Howard, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Acting Special Agent in Charge Charlie J. Patterson, New York Field Division.
Sentencing is scheduled for January 26, 2017 before Judge Geraci.
Broker-Dealer Gets Three Years in Prison for Trading on Inside Information Stolen from Prominent Law FirmRead the Press Release
TRENTON, N.J. – A broker-dealer was sentenced today to 36 months in prison for participating in a five-year insider trading scheme that relied on information stolen from an international law firm and yielded net profits of more than $5.6 million, U.S. Attorney Paul J. Fishman announced.
Vladimir Eydelman, 44, formerly of Colts Neck, New Jersey, previously pleaded guilty before U.S. District Judge Michael A. Shipp to an information charging him with one count of conspiracy to commit securities and tender offer fraud, one count of securities fraud, and one count of tender offer fraud. Judge Shipp imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
From 2009 to 2013, Eydelman, a broker-dealer employed first by Oppenheimer & Co. and most recently by Morgan Stanley, repeatedly traded on material nonpublic information provided to him by his brokerage client, Frank Tamayo, 43, of Brooklyn, New York, who, in turn, had obtained the inside information from his friend and former law school classmate, Steven Metro, 42, of Katonah, New York. Metro was the managing clerk of the New York office of Simpson Thacher & Bartlett LLP, one of the nation’s premier mergers and acquisitions firms.
The inside information divulged by Metro to Tamayo and, in turn, by Tamayo to Eydelman, related to corporate transactions, such as mergers and acquisitions or tender offers, in which the law firm represented a party or financial advisor to the transaction. As the law firm’s managing clerk, a litigation-related function, Metro did not personally work on most of the corporate transactions at issue. In most instances, Metro stole the inside information from the firm by scouring its computer system using search terms such as “merger agreement,” “bid letter,” “engagement letter,” “due diligence,” as well as client names and client-matter numbers.
After obtaining the information, Metro divulged it to Tamayo in person, usually meeting at a bar, coffee shop, or other location near their respective workplaces in midtown Manhattan. During such meetings, Metro provided Tamayo inside information pertaining to, among other things, the names and/or ticker symbols of the companies whose securities should be purchased, the general timing of the planned deals, and information related to how the deals would affect the issuers’ stock price once announced. Tamayo generally would write the security’s ticker symbol on a small piece of paper or napkin and commit to memory any pricing or timing information provided by Metro.
After Tamayo received the inside information from Metro, Tamayo would meet with Eydelman, usually at a location near Eydelman’s workplace, such as under the large clock in New York City’s Grand Central Terminal, where Tamayo would pass it on to Eydelman. Tamayo would show Eydelman the paper or napkin on which Tamayo had written the ticker symbol of the company whose securities should be purchased. After Eydelman memorized the ticker symbol, Tamayo then would place the paper or napkin into his mouth and chew it until it was destroyed.
After receiving the inside information provided by Metro, whom Eydelman knew as Tamayo’s source at a law firm, Eydelman purchased securities for himself, family members, friends, and clients, including Tamayo. Eydelman quickly sold the shares and covered any positions once the relevant deal was publicly announced and the stock price rose.
Throughout the course of the five-year scheme, Tamayo reinvested the approximately $7,000 in profits that Metro made on the first deal and updated Metro on the running balance of his profits from the insider trading scheme. As of October 2013, by which time the conspirators had traded ahead of at least 13 planned corporate transactions, Metro’s share of the profits had reached approximately $168,000. Metro sought to cash out his share of the accrued profits from the insider trading scheme, pressing Tamayo to “liberate some cash” during a meeting in January 2014. Eydelman paid approximately $7,000 in cash to Tamayo in February 2014, with the expectation that Tamayo would use the cash to compensate Metro for providing them inside information.
By exploiting the information that Metro had stolen from the law firm, Eydelman and conspirators Metro and Tamayo netted more than $5.6 million in illicit profits.
In addition to the prison term, Judge Shipp sentenced Eydelman to three years of supervised release, fined him $15,000, and ordered him to forfeit $1,236,657.13.
Metro and Tamayo have both pleaded guilty to their roles in the scheme. On Sept. 14, 2016 Metro was sentenced to 46 months in prison. On Sept. 21, 2016, Tamayo was sentenced to 12 months in prison.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, for the investigation leading to today’s sentencing. He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Robert Cohen and Joseph Sansone.
The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the Special Prosecutions Division of the U.S. Attorney’s Office in Newark, and R. Joseph Gribko of the U.S. Attorney’s Office in Trenton, as well as Unit Acting Chief Barbara Ward and Assistant U.S. Attorney Jafer Aftab of the Office’s Asset Forfeiture and Money Laundering Unit.
These charges are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.Defense counsel: Walter F. Timpone Esq. and John P. Leonard Esq., Morristown, New Jersey
Bossier City, Louisiana, Housing Authority Agrees to Pay $120,000 and Implement Reforms to Settle Justice Department LawsuitRead the Press Release
The Justice Department announced today that the Bossier City, Louisiana, Housing Authority (BCHA) has agreed to pay $120,000 and adopt new policies and practices to settle a lawsuit alleging that it discriminated on the basis of race and disability, in violation of the Fair Housing Act. The settlement must still be approved by the U.S. District Court for the Western District of Louisiana.
The complaint alleges that from 2007 to 2014, BCHA assigned elderly residents to housing on the basis of race, rather than by their place on the waiting list, and restricted residents with disabilities primarily to one of BCHA’s seven apartment complexes. Specifically, the Justice Department alleges that BCHA assigned white elderly residents to Patricia Plaza I or Patricia Plaza II, the two complexes that it had reserved for elderly persons. By contrast, the complaint alleges that BCHA assigned African-American elderly residents to one of its other five complexes, all of which were at least 90 percent African-American. The complaint further alleges that BCHA primarily assigned residents with disabilities to Patricia Plaza II and did not consider such residents for vacancies at BCHA’s six other properties.
“Denying housing or dictating where someone can live based on their race or disability perpetuates residential segregation and violates federal law,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “This settlement ensures equal access to federally-subsidized housing in Bossier City, and the department will continue to confront discriminatory policies or practices in the housing market throughout the country.”
“All of the residents of our district deserve to live in housing managed with policies that are free of discrimination,” said U.S. Attorney Stephanie A. Finley of the Western District of Louisiana. “In some cases, these federally-subsidized housing units are the last resort for those seeking a place to live. Their situations should not be further complicated or burdened by illegal actions taken by those tasked with meeting their needs.”
If approved by the district court, the settlement will require BCHA to implement non-discriminatory policies and procedures to ensure compliance with the Fair Housing Act and to ensure that BCHA housing units are made available for rent based on an applicant’s position on its waiting list, irrespective of race or disability. In addition, BCHA employees who are responsible for making housing decisions will receive training on the new non-discriminatory policies and procedures, the consent decree and the Fair Housing Act.
In addition, BCHA will pay $120,000 to compensate elderly persons or persons with disabilities who were passed over on the waiting list or otherwise denied the right to move into the apartment of their choice because of race or disability. Such persons who are current tenants will also be allowed to request a transfer on a priority basis. The settlement establishes a process for identifying people who are entitled to share in the settlement fund. Persons who believe they were subjected to unlawful discrimination at one of BCHA properties and may be entitled to receive compensation should contact the Justice Department toll-free at 1-800-896-7743, Mailbox 9993, or email the department at [email protected]. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.
Bossier Complaint Bossier Consent DecreeBossier City Housing Authority agrees to pay $120,000 and implement reforms as a result of Justice Department lawsuitRead the Press Release
WASHINGTON – The Justice Department and U.S. Attorney Stephanie A. Finley announced today that the Bossier City Housing Authority (BCHA) has agreed to pay $120,000 and adopt new policies and practices to settle a lawsuit alleging that it discriminated on the basis of race and disability in violation of the Fair Housing Act. The settlement must still be approved by the U.S. District Court for the Western District of Louisiana.
The complaint alleges that from 2007 to 2014, BCHA assigned its elderly residents to housing in their seven complexes on the basis of race, rather than by their place on waiting lists. BCHS also restricted residents with disabilities primarily to one of BCHA’s seven apartment complexes. Specifically, the Justice Department alleges that BCHA assigned white elderly residents to Patricia Plaza I or Patricia Plaza II, the two complexes that it had reserved for elderly persons. By contrast, the complaint alleges that BCHA assigned African-American elderly residents to one of its other five complexes, all of which were at least 90 percent African-American. The complaint further alleges that BCHA primarily assigned residents with disabilities to Patricia Plaza II and did not consider such residents for vacancies at BCHA’s six other properties.
“Denying housing or dictating where someone can live based on their race or disability perpetuates residential segregation and violates federal law,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “This settlement ensures equal access to federally-subsidized housing in Bossier City, and the department will continue to confront discriminatory policies or practices in the housing market throughout the country.”
“All of the residents of our district deserve to live in housing managed with policies that are free of discrimination,” said U.S. Attorney Stephanie A. Finley of the Western District of Louisiana. “In some cases, these federally-subsidized housing units are the last resort for those seeking a place to live. Their situations should not be further complicated or burdened by illegal actions taken by those tasked with meeting their needs.”
If approved by the district court, the settlement will require BCHA to implement non-discriminatory policies and procedures to ensure compliance with the Fair Housing Act and to ensure that BCHA housing units are made available for rent based on an applicant’s position on its waiting list, irrespective of race or disability. In addition, BCHA employees who are responsible for making housing decisions will receive training on the new non-discriminatory policies and procedures, the consent decree and the Fair Housing Act.
In addition, BCHA will pay $120,000 to compensate elderly persons or persons with disabilities who were passed over on the waiting list or otherwise denied the right to move into the apartment of their choice because of race or disability. Such persons who are current tenants will also be allowed to request a transfer on a priority basis. The settlement establishes a process for identifying people who are entitled to share in the settlement fund. Persons who believe they were subjected to unlawful discrimination at one of BCHA properties and may be entitled to receive compensation should contact the Justice Department toll-free at 1-800-896-7743, Mailbox 9993, or email the department at [email protected]. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.
Biopharmaceutical Company Executive Arrested and Charged with Insider TradingRead the Press Release
BOSTON – An executive of a California-based biopharmaceutical company was arrested yesterday and charged in U.S. District Court in Boston in connection with trading on insider information and profiting nearly $1 million.
Robert Gadimian, 46, of Burbank, Calif., was indicted on seven counts of securities fraud and insider trading.
According to the indictment, from November 2011 to October 2014, Gadimian was the Senior Director of Regulatory Affairs at Puma Technology, Inc., a biopharmaceutical company based in California whose principal focus was the development of a breast cancer drug called “neratinib.” Puma was involved in several ongoing drug trials for neratinib including one that a Massachusetts-based consulting firm was conducting for Puma.
The indictment further alleges that by virtue of his position at Puma, including his attendance at steering committee meetings and project team meetings related to ongoing drug trials, Gadimian learned sensitive, non-public information about the ongoing trials and made significant profits from trading on the inside information. Gadimian also did so in violation of Puma’s insider trading policy. Specifically, Gadimian allegedly profited approximately $95,000 in 2013 and approximately $1,060,000 in 2014.
Specifically, the indictment alleges that in July 2014, Gadimian purchased a series of short-term Puma call options in advance of a July 22, 2014 public announcement that Puma achieved positive results during one of the trials. The following day, Puma’s stock price jumped approximately 295 percent, and Gadimian then allegedly sold all the call options he purchased and profited $910,000 from his illegal trades.
The charging statute provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
The Securities and Exchange Commission, which conducted a parallel civil investigation, cooperated with criminal authorities in bringing this case.
United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Neil J. Gallagher, Jr. of Ortiz’s Economic Crimes Unit.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Baltimore Drug Dealer Sentenced to 10 Years in PrisonRead the Press Release
Baltimore, Maryland – U.S. District Judge J. Frederick Motz sentenced James Webb, Jr. age 42, of Perry Hall, Maryland today to 10 years in prison, followed by five years of supervised release, for conspiracy to distribute and possess with the intent to distribute cocaine and heroin.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Assistant Special Agent in Charge Don A. Hibbert of the Drug Enforcement Administration, Baltimore District Office; Commissioner Kevin Davis of the Baltimore Police Department; and Chief James W. Johnson of the Baltimore County Police Department.
According to information presented to the court at Webb’s plea and sentencing hearings, from May through November 2015, Webb distributed cocaine and heroin which he obtained from co-conspirators in Houston, Texas. The co-conspirators made regular trips from Houston to Baltimore, bringing with them kilograms of cocaine and heroin, and then returning to Houston with the cash proceeds of those sales.
As a result of the DEA investigation, which included a court-ordered wiretap on Webb’s cellphone, on November 8, 2015, Webb was arrested and a search warrant was executed at Webb’s stash house in Parkville, Maryland. From that location, investigators recovered a hydraulic press intended for the repackaging of narcotics, packaging material, and other paraphernalia associated with drug distribution. From a storage unit in the basement of this apartment building, investigators seized more than five kilograms of cocaine and more than one kilogram of heroin. The co-conspirators had brought these drugs to Webb from Houston and they had left the stash house to return to Houston just prior to the searches conducted by police.
At today’s hearing, the government argued that during the course of the conspiracy, Webb obtained more than 15 kilograms but less than 50 kilograms of cocaine (including its equivalent in heroin) which was intended for distribution.
United States Attorney Rod J. Rosenstein praised the DEA, Baltimore Police Department and Baltimore County Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys James G. Warwick and Joshua T. Ferrentino, who prosecuted this Organized Crime Drug Enforcement Task Force case.
Albion Man Sentenced to 240 Years in Prison for Sexually Exploiting ChildrenRead the Press Release
GRAND RAPIDS, MICHIGAN – Jeffrey Duane Cox, 44, of Albion, Michigan was sentenced to 240 years in federal prison for sexual exploitation of children and possession of child pornography, U.S. Attorney Patrick A. Miles, Jr. announced today. In addition to the prison term, Chief U.S. District Judge Robert J. Jonker ordered Cox to pay $4,916 in restitution. Cox must also register as a sex offender, and, if he is ever released from prison, he will be subject to a lifetime term of supervised release.
Earlier this year, a jury convicted Cox of seven counts of Sexual Exploitation of a Child and two counts of Possession of Child Pornography, after hearing testimony and reviewing evidence during a six-day trial. The evidence presented at trial showed that Cox sexually abused and exploited seven children during 2012, 2013, and 2014. He lured the children into his home, convinced them to trust him, and then sexually abused and exploited them. Cox photographed and videotaped the children engaged in sexually explicit conduct in his home, personally taking photographs and setting up video cameras to record the exploitation, and sometimes using another person to take the photographs. Cox stored the images and video on multiple devices in his home in Albion.
In its sentencing memorandum, the U.S. Attorney’s Office noted that the seriousness of Cox’s crimes could not be overstated. "Children are amongst the most vulnerable of victims, and the children in this case were particularly vulnerable to the defendant for a host of reasons." These children "will bear the emotional and psychological scars from his abuse their entire lives." The sentencing memorandum further noted that Cox remains unrepentant and will continue to pose a risk to children unless he remains incarcerated.
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney's Office, county prosecutor's offices, the Internet Crimes Against Children task force (ICAC), federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following web site: www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement officials.
This case was investigated by a consortium of law enforcement agencies and departments, including the Department of Homeland Security, Homeland Security Investigations (HSI), Albion Department of Public Safety, Emmett Township Department of Public Safety, Battle Creek Police Department, and Calhoun County Sheriff’s Office. Assistant U.S. Attorney Sean M. Lewis prosecuted the case.
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ATF and Pueblo Police Department Arrest Two Following Jail Murder-for-Hire PlotRead the Press Release
DENVER – Reina Ashley Gonzales, age 28, of Pueblo, and Ricardo Estevan Suazo, age 26, who was is in the Pueblo County Detention Facility, have been charged by Criminal Complaint with Conspiracy to Commit a Murder-for-Hire facilitated by interstate commerce (land line phones and cell phones), the U.S. Attorney’s Office, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Pueblo Police Department announced. Both defendants appeared before a Magistrate Judge in U.S. District Court in Denver this afternoon, where they were advised of their rights as well as the charges pending against them. They are due back in federal court in Denver for a preliminary hearing and a detention hearing on October 5, 2016. Pending that hearing, both will remain in federal custody.
According to the affidavit in support of the Criminal Complaint, on September 9, 2016, an ATF Task Force Officer and Pueblo Police Department Detective learned from a former confidential informant that an inmate in the Pueblo County Detention Facility planned to hire an individual to kill a witness in his state criminal case. That inmate was later identified as Ricardo Estevan Suazo. Suazo had previously shot the murder target in the stomach, and was being held in custody for that crime. Suazo had unsuccessfully tried to hire another individual named “Crazy” to commit the murder.
The ATF Task Force Officer, working in an undercover capacity, talked by phone with Suazo, who instructed the agent to contact “his girl” on the outside for instructions on a job (the murder for hire). The undercover task force officer made contact with “the girl,” who turned out to be Reina Gonzales, who talked about hiring the undercover officer to kill the witness scheduled to testify against Suazo. Gonzales said they would pay the undercover $10,000 to pull off the job. Later, the offered amount changed a number of times to carry out the murder.
Eventually Gonzales disengaged the undercover officer, only to later to be directed by Suazo to help bond out another individual incarcerated in the Detention Center who would carry out the murder-for-hire. That individual did not bond out of the facility. Both Suazo and Gonzales were then charged with the murder-for-hire plot.
This case is being investigated by the ATF and the Pueblo Police Department. The defendants are being prosecuted by Assistant U.S. Attorneys Rebecca Weber and Caroline Friedman.
Anyone accused of committing a felony federal offense has a Constitutional right to be indicted by a grand jury. The charged contained in the complaint are allegations, and the defendants are presumed innocent unless and until proven guilty
Thursday 29 September 2016
Williamsville Man Charged with Possession of Child PornographyRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Troy Malecki, 48, of Williamsville, NY, was charged by criminal complaint with possession of child pornography depicting minors less than 12 years of age. The charge carries a maximum penalty of 20 years in prison and a fine of $250,000.
Assistant U.S. Attorney Scott S. Allen, Jr., who is handling the case, stated that according to the complaint, Malecki was part of an online community dedicated to the exchange and discussion of child pornography. On September 18, 2015, Special Agents from the Federal Bureau of Investigation executed a search warrant at the defendant’s residence and seized his cellular phone. A forensic examination revealed Malecki was in possession of more than 850 images of child pornography, some of which depicted prepubescent children less than 12 years of age.
Malecki made an initial appearance before U.S. Magistrate Judge Michael J. Roemer and was ordered to abide by the conditions of the Home Confinement Program, which requires that he be electronically monitored.
The criminal complaint is the result of an investigation by the Federal Bureau of Investigation, Violent Crimes Against Children Program, under the direction of Special Agent in Charge Adam S. Cohen.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.Wheeling Island man pleads guilty to heroin distributionRead the Press Release
WHEELING, WEST VIRGINIA – Justin Thomas Mann, 28, of Wheeling Island, pled guilty to heroin distribution in federal court in Wheeling today, United States Attorney William J. Ihlenfeld, II, announced.
Mann pled guilty to one count of “Distribution of Heroin.” He admitted to selling heroin in Ohio County during February 2016. He faces up to twenty years in prison and a fine up to $1,000,000.
Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Randy J. Bernard and Special Assistant U.S. Attorney Anthony Martin, also of the West Virginia Attorney General’s Office, prosecuted the case on behalf of the government. The Ohio Valley Drug and Violent Crime Task Force investigated.
Senior U.S. District Judge Frederick P. Stamp, Jr. presided.
Virginia Man Convicted Following A Jury Trial of International Parental KidnappingRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that a federal jury has found Philip Zodhiates, 61, of Waynesboro, Virginia, guilty of international parental kidnapping and conspiracy to commit international parental kidnapping. The charges carry a maximum sentence of eight years in prison and a $500,000 fine.
Assistant U.S. Attorneys Paul Van de Graaf and Michael DiGiacomo, who handled the prosecution of the case, stated that beginning in 2009, the defendant conspired with Lisa Miller to take Miller’s then seven year old daughter from Virginia to Nicaragua. Zodhiates transported Miller and the child to the Buffalo area where the two crossed over the Rainbow Bridge Port of Entry into Canada. Miller and the child then flew from Toronto, Ontario to Nicaragua. After arriving in Nicaragua, Miller was sheltered and assisted by others who were recruited by Zodhiates. Miller and the child have not been seen since.
According to evidence presented by the Government, the kidnapping was an attempt to obstruct the parental rights of Miller’s former partner from a civil union that took place in the State of Vermont. The child was born during the period of the civil union and the State of Vermont accordingly governed the parental rights of both Miller and her former partner.
Lisa Miller is also charged with international parental kidnapping and conspiracy to commit international parental kidnapping but remains a fugitive. Also charged in this case is Timothy Miller (no relation) from Nicaragua. He was recently arrested after being deported by Nicaragua and is due to appear in the Western District of New York at a later date.
A fourth defendant, Kenneth Miller (also not related) from Virginia, was charged and convicted of international parental kidnapping in the District of Vermont in 2012. Kenneth Miller is currently serving a 27 month prison sentence.
The verdict is the culmination of an investigation by the Vermont Office of the United States Marshal’s Service, under the direction of David Damag, and the Vermont Office of the Federal Bureau of Investigation, under the direction of Andrew Vale, Special Agent in Charge.
Sentencing is scheduled for January 30, 2017 at 1:00 p.m. before U.S District Judge Richard J. Arcara who presided over the trial of the case.Vibra Healthcare to Pay $32.7 Million to Resolve Claims for Medically Unnecessary ServicesRead the Press Release
Allegations included admitting patients to Southern Kentucky Rehabilitation Hospital, located in Bowling Green, who did not qualify for admission
WASHINGTON - Vibra Healthcare LLC (Vibra), a national hospital chain headquartered in Mechanicsburg, Pennsylvania, has agreed to $32.7 million, plus interest, to resolve claims that Vibra violated the False Claims Act by billing Medicare for medically unnecessary services, the Department of Justice announced today.
“Medicare beneficiaries are entitled to receive care that is determined by their clinical needs and not the financial interests of healthcare providers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “All providers of taxpayer-funded federal healthcare services, whether contractors or direct billers, will be held accountable when their actions cause false claims for medically unnecessary services to be submitted.”
“Pursuing and recovering fraudulent billing for unnecessary services is a priority of my office,” stated U.S. Attorney John E. Kuhn Jr. for the Western District of Kentucky. “This significant case against Vibra Healthcare is but one example of the vigorous work against healthcare fraud taking place in the Western District of Kentucky and across the nation.”
Vibra operates approximately 36 freestanding long term care hospitals (LTCHs) and inpatient rehabilitation facilities (IRFs) in 18 states, including Southern Kentucky Rehabilitation Hospital (SKY), located in Bowling Green, Kentucky. LTCHs provide inpatient hospital services for patients whose medically complex conditions require long hospital stays and programs of care. IRFs are intended for patients needing rehabilitative services that require hospital-level care.
The government alleged that between 2006 and 2013, Vibra admitted numerous patients to five of its LTCHs and to one of its IRFs (SKY) who did not demonstrate signs or symptoms that would qualify them for admission. Moreover, Vibra allegedly extended the stays of its LTCH patients without regard to medical necessity, qualification and/or quality of care. In some instances, Vibra allegedly ignored the recommendations of its own clinicians, who deemed these patients ready for discharge.
As part of the settlement, Vibra also agreed to enter into a chain-wide corporate integrity agreement with the Inspector General of the U.S. Department of Health and Human Services.
“Medical necessity is fundamental if health providers wish to claim taxpayer funds for medical care,” said Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG). “OIG is committed to protecting precious Medicare dollars and ensuring that beneficiaries receive quality, necessary long term care.”
Part of the allegations resolved by this settlement were originally filed under the qui tam or whistleblower provisions of the False Claims Act by Sylvia Daniel, a former health information coder at Vibra Hospital of Southeastern Michigan. Daniel filed her suit in the Southern District of Texas, where one of Vibra’s LTCHs was located. Under the False Claims Act, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery. Daniel will receive at least $4 million.
This settlement illustrates the government’s emphasis on combating healthcare fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team 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 $30.7 billion through False Claims Act cases, with more than $18.5 billion of that amount recovered in cases involving fraud against federal healthcare programs.
This matter was handled by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Southern District of Texas in Houston and for the Western District of Kentucky; and the HHS-OIG. The qui tam case is captioned United States ex rel. Daniel v. Vibra Healthcare, LLC, Civil Action No. 10-5099 (S.D. Tex.).
The claims resolved by the settlements are allegations only and there has been no determination of liability.
Vallejo Kidnapping Defendant Pleads GuiltyRead the Press Release
SACRAMENTO, Calif. — Matthew Muller, 39, of South Lake Tahoe, pleaded guilty today to one count of kidnapping, Acting United States Attorney Phillip A. Talbert announced.
According to court documents, on March 23, 2015, between 3:00 a.m. and 5:00 a.m., Muller broke into a home on Mare Island in Vallejo and using a stun gun and a simulated firearm, ordered the occupants, Aaron Quinn and Denise Huskins, to lie still while he bound them, blindfolded them, and had them drink a sleep-inducing liquid. Muller played a prerecorded message to the victims that threatened that any noncompliance would be punished by face cutting or electric shock. Muller then placed Huskins in the trunk of a car and drove her to his residence in South Lake Tahoe where he kept her under his control for two days, at times bound and blindfolded. Muller sent Quinn emails demanding ransom amounts totaling $17,000, but ultimately released Huskins in Huntington Beach on March 25, 2015, with no ransom ever being paid.
During and after the kidnapping, Muller sent emails to a reporter in San Francisco, that claimed, among other things, that the kidnapping had been carried out by a group of elite criminals who were perfecting their kidnapping-for-ransom tactics.
Muller was identified as a suspect in the Vallejo kidnapping following an investigation into a home-invasion burglary that occurred in Alameda County on June 5, 2015. Dublin Police Services of the Alameda County Sheriff’s Department arrested Muller and searched his South Lake Tahoe residence. They located and seized evidence from the Vallejo kidnapping. An officer of the Vallejo Police Department located Muller’s Vallejo storage locker and a search revealed aerial drones that Muller referred to in his emails to the reporter.
FBI analysis of Muller’s computers uncovered a sound recording that simulated people whispering to each other, a sound recording consistent with the instructions given to Aaron Quinn and Denise Huskins, and a video recording of Muller together with Huskins in Muller’s residence. She was blindfolded and fully under Muller’s control.
This case is the product of an investigation by the FBI, the Dublin Police Services of the Alameda County Sheriff’s Office, and the Vallejo Police Department. Assistant United States Attorneys Matthew D. Segal and Heiko P. Coppola are prosecuting the case.
Acting U.S. Attorney Phillip A. Talbert said, “Muller committed a serious and violent crime that terrorized the victims in this case. He violated the sanctity of their home and caused fear and panic for all those affected by the kidnapping. My office is grateful that Alameda County authorities responded so effectively to the Alameda County break-in and then provided the information that led to the investigation and charges in this case. The high quality of the work by the Alameda County Sheriff’s Office, the Alameda County District Attorney, the Vallejo Police Department, and the FBI is reflected in the two guilty pleas Muller has entered, first in Alameda County and now in the Eastern District of California. We are committed to continuing to seek justice in this case as it continues to sentencing.”
Muller is scheduled to be sentenced by U.S. District Judge Troy L. Nunley on January 19, 2017 at 1:30 p.m. Muller faces a maximum statutory penalty of life in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
As long as Muller accepts responsibility and adheres to his promises in the plea agreement, the plea agreement provides that the Government will recommend a sentence of no more than forty years of imprisonment. There is no parole in the federal system. Under the plea agreement, upon release, Muller should be subject to the most intensive supervision, surveillance, and monitoring that is technologically available at the time of his release. The plea binds only the United States Attorney’s Office for the Eastern District of California and cannot bind any other federal, state, or local prosecuting, administrative, or regulatory authorities.
U.S. Attorney Announces More Than $800,000 in DOJ Grants to TBI and MPDRead the Press Release
Memphis, TN – Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee, announced today that the Tennessee Bureau of Investigation (TBI) and the Memphis Police Department (MPD) have both received Department of Justice (DOJ) grants that collectively amount to more than $800,000.
The TBI is one of eight agencies nationwide selected to receive funding from the DOJ’s Community Oriented Policing Services’ (COPS) Anti-Methamphetamine Program. Under the program, the TBI received $446,802 to investigate illicit activities related to the manufacture and distribution of methamphetamine.
Additionally, the MPD is among multiple law enforcement agencies selected to receive funding from the DOJ’s Office of Justice Programs. The MPD has been awarded $401,193 as part of the Department’s Technology Innovation for Public Safety (TIPS) Program. The TIPS funding will enable the MPD to reduce violent crime, enhance mobile operation and increase community participation in its crime-reduction efforts. The proposed intervention will expand information sharing and analysis through license-plate recognition, and also expand MPD Real Time Crime Center (RTCC) assistance.
"The DOJ funding allotted to both the TBI and MPD will enable them to further their unwavering efforts in crime and drug prevention," said U.S. Attorney Stanton. "Totaling more than $800,000 collectively, these grants underscore the DOJ’s commitment to keeping our citizens and communities safe."
Two Sentenced to Federal Prison for Defrauding El Paso Federal Credit Union Leading to its FailureRead the Press Release
In El Paso, a former El Paso Federal Credit Union (EPFCU) manager and an assistant manager have been sentenced to federal prison for their roles in a scheme to steal millions of dollars from the financial institution which lead to the credit union’s failure announced United States Attorney Richard L. Durbin, Jr., and Federal Bureau of Investigation Special Agent in Charge Douglas Lindquist, El Paso Division.
This morning, United States District Court Judge Philip Martinez sentenced 53-year-old former EPFCU assistant manager Hilda Simental Mendoza of El Paso to 121 months in federal prison followed by five years of supervised release. In addition to the prison term, Judge Martinez ordered that Mendoza perform 100 hours of community service.
On September 21, 2016, Judge Martinez sentenced 59–year-old former EPFCU manager Maria Guadalupe Hernandez to 188 months in federal prison followed by five years of supervised release. In addition to the prison term, Judge Martinez ordered Hernandez to pay a $10,000 fine.
At sentencing, Judge Martinez ordered both defendants to pay $18,376,542 in restitution to the National Credit Union Administration (NCUA) representing the loss generated by their scheme.
On May 24, 2016, the defendants pleaded guilty to an eleven-count indictment which included charges of bank fraud, wire fraud and conspiracies to commit both bank and wire fraud.
According to court records, beginning in August 2007, the defendants sold more than 100 EPFCU share certificates to other credit unions. The defendants did not record the sale of these share certificates in the credit union records, but kept a log of them is a secret ledger. Monies generated by the unrecorded sales of EPFCU share certificates were placed into accounts created and controlled by the defendants using relatives accounts, dormant customer accounts, and even active accounts belonging to deceased individuals. The defendants used the generated funds from newly sold EPFCU share certificates to pay out dividends to investors and principal payments to prior purchasers of EPFCU share certificates. Hernandez used the monies generated by the EPFCU share certificate sales for personal benefit to included travel, purchase real estate and vacations.
The defendants created fraudulent EPFCU records to conceal their scheme from auditors, but were unsuccessful. In September 2011, an examiner from the NCUA discovered accounting irregularities in the amount of EPFCU’s undivided earnings in that month’s Call Reports. In June 2012, examiners performed a detailed audit of EPFCU records and discovered additional accounting irregularities. During an audit follow-up, examiners discovered a hidden binder inside the credit union which contained an accounting of all of the unrecorded EPFCU share certificates sold by the defendants. On September 28, 2012, the NCUA delivered the liquidation order to EPFCU’s Board of Directors and thereafter, liquidated EPFCU.
This investigation was conducted by the FBI with assistance from the NCUA. Assistant United States Attorney Chris Skillern prosecuted this case on behalf of the Government.
Two Newark Men Plead Guilty to Two Armed Carjackings and One Attempted Armed CarjackingRead the Press Release
NEWARK, N.J. – Two Newark men admitted today that they carried out two armed carjackings and one attempted carjacking during a five-day span in September 2013, U.S. Attorney Paul J. Fishman announced.
Dion Hines, 23, pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to a four-count information charging him with attempted carjacking, carjacking (two counts), and using a firearm during a crime of violence. Roosevelt Robinson, 25, pleaded guilty to a three-count information charging him with attempted carjacking, carjacking, and using a firearm during a crime of violence.
According to documents filed in this case and statements made in court:
At 10:30 p.m. on Sept. 22, 2013, Hines, Robinson, and another male conspirator approached a Mercedes Benz sedan that was parked in a residential driveway in Newark. Hines brandished a silver revolver and ordered the driver to get out of the vehicle. Hines, Robinson, and the other conspirator pulled on the driver’s side door, but the victim resisted. Robinson said: “Shoot that [expletive].” The victim eventually got out of the Mercedes Benz and Robinson sat in the driver’s seat.
After Hines and the other conspirator fled on foot, the victim pulled Robinson from the Mercedes Benz, got back into the vehicle and reversed the car. Hines returned and fired two shots at the Mercedes Benz, striking the rear driver side door. Hines, Robinson, and the other conspirator then ran down the block and jumped into a car waiting nearby. The victim pursued them in the Mercedes Benz, striking both the getaway car and Robinson before Robinson entered the vehicle. A car chase ensued, during which Hines fired two additional shots at the Mercedes Benz.
At 9:25 p.m. on Sept. 26, 2013, Hines approached a vehicle parked in a lot near a Newark residence. After the driver exited the vehicle, Hines pointed a black revolver and stated: “Give me your car keys or I’ll shoot.” Around this time, another victim, who had just parked a late-model Acura sedan in the parking lot, walked over to where Hines and the other victim were standing. Hines then pointed the revolver at owner of the Acura and demanded the car keys. The owner of the Acura complied and Hines got into the car and fled.
At 4:45 a.m. on Sept. 27, 2013, a dark-colored SUV driven by an unknown person pulled in front of a Range Rover stopped at an intersection in Belleville, New Jersey, blocking the Range Rover’s path. Hines jumped out of the passenger side of the dark-colored SUV and pointed a black handgun at the victim. Robinson, who followed the dark-colored SUV in a separate vehicle, pulled over and stood watch. Hines approached the driver’s door, pulled the victim out of the vehicle, and demanded the car keys. The victim complied, and Hines then got into the Range Rover and fled, followed by the dark-colored SUV and Robinson’s vehicle.At 2:20 p.m. that day, law enforcement located the Range Rover in Newark. A brief car chase ensued, during which the Range Rover rammed multiple police vehicles before getting trapped and stopping. Law enforcement officers surrounded the Range Rover with their guns drawn. Hines and Robinson both exited the Range Rover and ran. Law enforcement officers arrested them shortly thereafter. The third occupant was taken into custody immediately. After arresting the three men, law enforcement officers searched the Range Rover and discovered a loaded black revolver in the vehicle.
The carjacking and attempted carjacking counts to which Hines and Robinson pleaded guilty each carry a maximum penalty of 15 years’ imprisonment and a fine of $250,000. The count of using a firearm during a crime of violence to which they pleaded guilty carries a mandatory minimum sentence of seven years in prison, a maximum sentence of life imprisonment, and a fine of $250,000. Sentencing for Hines is scheduled for Jan. 11, 2017, and for Robinson, Jan. 12, 2017.
U.S. Attorney Fishman credited special agents of the U.S. Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Terence S. Opiola in Newark; and the Newark, Elizabeth, and Belleville police departments with the investigation leading to today’s guilty pleas.
The government is represented by Assistant U.S. Attorney J. Jamari Buxton of the U.S. Attorney’s Office Organized Crime/Gangs in Newark.
Two Georgia Men Indicted for Access-Device Fraud and Identity TheftRead the Press Release
BIRMINGHAM – A federal grand jury today indicted two Georgia men for access-device fraud and aggravated identity theft, announced U.S. Attorney Joyce White Vance and U.S. Secret Service Special Agent in Charge Craig Caldwell.
An indictment filed in U.S. District Court charges GREGORY SIMEON and CLAUDELL RALPH PETIT, both 29, with possessing 15 or more unauthorized access devices – credit and bank debit cards – and aggravated identity theft in Jefferson County in August 2015. SIMEON is charged alone with one count of each crime, and the men are charged jointly with another count of fraud and identity theft.
Upon conviction, access-device fraud carries a maximum sentence of 10 years in prison and a $250,000 fine for each count, and aggravated identity theft carries a two-year prison term and $250,000 fine for each count.
The U.S. Secret Service, Birmingham Police Department and Jefferson County District Attorney’s Office investigated the case, which Assistant U.S. Attorney Melissa K. Atwood is prosecuting.
Members of the public are reminded that the indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.
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Two Charged with Conspiracy to Distribute Methamphetamine and Possession of FirearmRead the Press Release
United States Attorney Randolph J. Seiler announced that two men have been indicted by a federal grand jury for Conspiracy to Distribute a Controlled Substance. One of the men was also indicted for Possession of a Firearm by a Prohibited Person.
Indicted on August 16, 2016, were: Monte Dinehdeal, a/k/a Monte Dineh Deal, age 41, from Tuba City, Arizona, and Louis Anthony Good Shield, age 27, from Winner, South Dakota. Good Shield appeared before U.S. Magistrate Judge Mark A. Moreno on August 24, 2016. Dinehdeal appeared before U.S. Magistrate Judge Daneta Wollmann on September 27, 2016. Both have pled not guilty to the Indictment.
The maximum penalty upon conviction for the charges against Dinehdeal is up to life in custody, a $10,000,000 fine, or both, at least 5 years and up to life of supervised release, $100 to the Federal Crime Victims Fund, and restitution. The maximum penalty upon conviction for the charges against Good Shield is 20 years in custody, a $1,000,000 fine, or both, at least 3 years and up to life of supervised release; and $100 to the Federal Crime Victims Fund, and restitution.
Dinehdeal stands to forfeit the weapon and ammunition seized during the investigation.
The charges are merely an accusation and Dinehdeal and Good Shield are presumed innocent until and unless proven guilty.
The indictment alleges that between January 1, 2013, and September 17, 2015, Dinehdeal and Good Shield knowingly and intentionally combined, conspired, confederated and agreed with other persons to knowingly and intentionally distribute and to possess with intent to distribute methamphetamine in South Dakota. The indictment specifically alleges that Dinehdeal knowingly and intentionally possessed with the intent to distribute 500 grams or more of methamphetamine in South Dakota. The indictment further alleges that on or about September 17, 2015, Dinehdeal knowingly possessed a firearm, even though he was prohibited from doing so because he had previously been convicted of a felony and was an unlawful user of and addicted to a controlled substance.
The investigation is being conducted by the Rosebud Sioux Tribe Law Enforcement Services and the Northern Plains Safe Trails Drug Enforcement Task Force. Assistant U.S. Attorney SaraBeth Donovan is prosecuting the case.
Dinehdeal was remanded to the custody of the U.S. Marshals Service pending trial. Good Shield was released on bond pending trial. A jury trial has been set for November 1, 2016.
Tulsa Probate Attorney Charged for Embezzling $587,000 from Multiple Estate AccountsRead the Press Release
TULSA, Okla.—A Tulsa County probate attorney made his initial appearance today in U.S. District Court on charges stemming from his embezzling $587,000 from probate estate accounts he controlled. United States Attorney Danny C. Williams Sr. of the Northern District of Oklahoma and Special Agent in Charge R. Damon Rowe of the IRS-CI’s Dallas Office announced the criminal charges at a news conference held this morning.
Christopher Ivor Mansfield, 38, was charged with one count each of bank fraud and money laundering before United States District Magistrate Judge Paul Cleary.
“Mr. Mansfield chose to violate and abuse his position of trust as a probate attorney. As a result, he embezzled $587,030 from eleven probate estates or guardianships,” said U.S. Attorney Williams.
At the time of the alleged crimes, Mansfield was a licensed attorney in the State of Oklahoma who was court-appointed in probate cases. He served as a personal representative in probate cases and was responsible for overseeing the financial affairs of multiple probate estates.
According to court documents, it is alleged that, from August 2012 to October 2015, Mansfield knowingly executed and attempted to execute a scheme to obtain money or property entrusted to the Bank of Oklahoma by means of fraudulent pretenses. It is further alleged that Mansfield fraudulently diverted estate assets from various estate accounts using unauthorized checks made payable to himself; unauthorized transfers of funds from the estates; and the unauthorized depositing of checks into his business and personal accounts.
Mansfield used the stolen money on personal expenses, mainly American Express credit card purchases and to support his drug habit.
At the time of sentencing, Mansfield will face a maximum penalty of 30 years in prison and a $1,000,000 fine for the bank fraud charge and a maximum penalty of 10 years in prison and a $250,000 fine for the unlawful monetary transaction charge. In addition, he will face a restitution order and a criminal forfeiture money judgment in the amount of $587,030.
The case is being investigated by the Internal Revenue Service-Criminal Investigation and the Federal Bureau of Investigation; and prosecuted by Assistant United States Attorney Charles McLoughlin and Catherine Depew.
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Tomball Business Executive Convicted in $13 Million False Invoicing SchemeRead the Press Release
HOUSTON – The owner of Tinkle Management Inc. (TMI) has entered a guilty plea to charges of wire fraud and money laundering, announced U.S. Attorney Kenneth Magidson.
John Blake Tinkle, 60, of Tomball, admitted today that from 2008 through 2015, he falsely invoiced Houston-based Westlake Chemical Corporation for approximately $13 million in shipping supplies that TMI never delivered.
“For seven years, this defendant cheated local companies out of millions of dollars, using false invoices and fraudulent financing,” said Magidson. “Thanks to the hard work of the FBI and IRS-Criminal Investigation, his scheme was detected and ended. We will continue to aggressively investigate and prosecute corporate fraud, both in the energy industry and across our community.”
TMI was Westlake’s supplier of plastic shipping bags that Westlake used to ship its chemical products internationally. TMI delivered the shipping bags to Packwell Inc., a packaging and logistics company in La Porte. Packwell then used the bags to package Westlake’s chemical products and ship those products through the Houston ship channel. In addition to invoicing Westlake for bags that had actually been delivered, Tinkle submitted false invoices to Westlake for deliveries of bags to Packwell that, in reality, had not occurred.
Tinkle supported his false invoices to Westlake by attaching Packwell receiving reports Tinkle doctored to purportedly show the undelivered bags had actually been received by Packwell. To obtain financing, Tinkle then caused the fraudulent invoices to be presented to Charter Capital, a Houston factoring company, that relied on the invoices in providing funding to TMI. Westlake and Charter Capital paid TMI millions of dollars based on deliveries that never occurred.
U.S. District Judge Alfred Bennett accepted the plea today and has set sentencing for Dec. 8, 2016. At that time, Tinkle faces up to 20 years in federal prison for the wire fraud and 10 years for money laundering. He could also be ordered to pay a $250,000 fine. He was permitted to remain on bond pending that hearing.
The FBI and IRS-Criminal Investigation conducted the investigation. Assistant U.S. Attorney Robert S. Johnson is prosecuting the case.
Three Florida Men Charged in Mortgage Fraud SchemeRead the Press Release
Orlando, FL – United States Attorney A. Lee Bentley, III announces the return of an indictment charging Marek Harrison (53, Plant City), Brian Allard (45, Seminole), and Scot Rounds (44, Winter Garden) with bank fraud and conspiracy to commit bank fraud. If convicted, each faces a maximum penalty of 30 years in federal prison on each count. The indictment also notifies the defendants that the United States is seeking a forfeiture money judgment in the amount of the proceeds of the charged criminal conduct.
According to the indictment, Harrison and Allard created and executed a mortgage fraud scheme involving Saratoga Resort Villas, a condo conversion of a former hotel located in Kissimmee. The scheme involved kickbacks of mortgage proceeds to buyers and co-conspirators and misrepresentations regarding the source of down payment funds. None of the incentives and kickbacks were disclosed to the mortgage lenders. Harrison and Allard recruited the buyers and found individuals to front down payment money for those buyers. Rounds, a mortgage broker, brokered the loans for the transactions, recruited straw purchasers, and distributed kickbacks to buyers.
An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by the Federal Housing Finance Agency – Office of Inspector General. It will be prosecuted by Special Assistant United States Attorney Chris Poor and Assistant United States Attorney Vincent Chiu.
Suspect Sentenced for Starting Cedar Fire in Sequoia National ForestRead the Press Release
BAKERSFIELD, Calif. — A defendant pleaded guilty to misdemeanor charges brought earlier today in a criminal complaint and was immediately sentenced to a total of 13 months in prison, Acting United States Attorney Phillip A. Talbert announced.
U.S. Magistrate Judge Jennifer L. Thurston sentenced Angel Gilberto Garcia-Avalos, (Garcia), 29, of Michoacán, Mexico, to six months in prison for causing a fire on federal land that resulted in the Cedar Fire that has been burning in Kern and Tulare Counties. Judge Thurston also sentenced him to seven months in prison for two separate counts of making false statements to U.S. Forest Service law enforcement officers. The sentences are to be served consecutively for a total of 13 months. The maximum possible sentence for each of the three charges was six months in prison. Garcia was also ordered to pay $61 million in restitution.
In sentencing Garcia, Judge Thurston noted that Garcia demonstrated “significant negligence” and took no action to get help after the fire started.
According to the complaint, the Cedar Fire started on August 16, 2016, when Garcia was driving off-road in the Sequoia National Forest. Garcia falsely represented to a Forest Service law enforcement officer on the day the fire started that his vehicle had been stolen after he parked it on the side of California Highway 155. Two weeks later, Garcia falsely represented to a special agent of the Forest Service that his vehicle was taken when he parked it on the paved road and that he had not driven his vehicle off the highway onto a dirt road.
According to the complaint, the Cedar Fire started in the area of the Cedar Creek Campground in the Sequoia National Forest in Kern County and spread to Tulare County. Garcia drove his vehicle off of Highway 155 onto an unimproved, rough dirt road in the forest. As he was driving on the dirt road, his car got stuck while attempting to drive over a berm and rolled back hitting a tree. The muffler and catalytic converter of the vehicle were in direct contact with dead grass and sparked the Cedar Fire. To date, the Cedar Fire has destroyed approximately 29,332 acres of National Forest land, including at least six residences.
This case was the product of an investigation by the U.S. Forest Service, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and Enforcement and Removal Operations (ERO), the Kern County Fire Department, and the Kern County Probation Department. Assistant United States Attorney Karen A. Escobar prosecuted the case.
St. Louis County Man Sentenced to 14 Years on Child Enticement ChargesRead the Press Release
St. Louis, MO – Ian Mackie was sentenced to 14 years in prison on multiple child enticement charges.
According to court documents filed at the time of the plea, Mackie used several social media sites, email and text messages to communicate and entice two males, 13 and 15 years old, respectively, to engage in sex acts with him.
Mackie, Ballwin, MO, pled guilty in June to one felony count each of attempted receipt of child pornography; online enticement of a minor; receipt of child pornography and attempted online enticement of a minor. He appeared today for sentencing before United States District Judge Rodney W. Sippel.
This case was investigated by the St. Louis County Police Department, the Missouri Internet Crimes Against Children Task Force and the Federal Bureau of Investigation. Assistant United States Attorney Colleen Lang handled the case for the U.S. Attorney's Office.
Six Men, Including Three Local Law Enforcement Officers, Charged with Trafficking in Contraband CigarettesRead the Press Release
U.S. Attorney Kenneth A. Polite announced that JADALLAH SAED, age 30; ANWAR ABDELMAJID-AHMAD, a/k/a Tony, age 29, both of Gretna; ATALLA ATALLA, a/k/a Tommy, age 38, of Wilmington, North Carolina; JUSTIN BROWN, age 29; JOSHUA CARTHON, age 32, and GARRETT PARTMAN, age 31, all of New Orleans, were arrested yesterday in connection with the unsealing of an Indictment charging them with conspiring to traffic in contraband cigarettes and evading the federal excise tax imposed on tobacco; trafficking in contraband cigarettes, and interstate transportation in aid of racketeering enterprises, in Title 18, United States Code, Sections 371 and 1952(a)(3), respectively.
According to previously filed court documents, defendants would illegally receive, possess, and purchase contraband cigarettes and cigars in order to evade applicable taxes and receive higher profits for the retail sale of the tobacco products. New Orleans Police Officers JUSTIN BROWN and JOSHUA CARTHON and Orleans Parish Sheriff’s deputy GARRETT PARTMAN, were utilized to protect and transport the shipment of contraband cigarettes across state lines. The defendants would then distribute and sell the contraband cigarettes in North Carolina and other states where the cigarette taxes are higher than Louisiana, resulting in a substantial total tax loss to both federal and state governments.
The maximum penalties are as follows: as to Count 1, Conspiracy To Traffic In Contraband Cigarettes and Evade the Federal Excise Tax Imposed on Tobacco (18 U.S.C. § 371), 5 years imprisonment, $250,000 fine, 3 years supervised release. As to Counts 2, 4, 6, and 7, Trafficking in Contraband Cigarettes (18 U.S.C. § 2342(a)), 5 years imprisonment, $250,000 fine, 3 years supervised release for each count. As to Counts 3 and 5, Interstate Transportation in Aid of Racketeering Enterprises (18 U.S.C. § 1952(a)(3)), 5 years imprisonment, $250,000 fine, 3 years supervised release for each count.
U.S. Attorney Polite reiterated that the Indictment is merely a charge and that the guilt of the defendants must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigation New Orleans Division, Immigration and Customs Enforcement, Homeland Security Investigations, the New Orleans Police Department’s Public Integrity Bureau, Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Department of Defense, Defense Criminal Investigative Service. Assistant United States Attorneys Tracey N. Knight and Irene Gonzalez are in charge of the prosecution.
Sanford Man Sentenced to 46 Months for Possession with IntentRead the Press Release
Orlando, Florida – U.S. District Judge Paul G. Byron today sentenced Joshua Warner (26, Sanford) to 46 months in federal prison for possession with intent to distribute ethylone, commonly marketed as the street drug “Molly,” and Alpha-PVP, commonly marketed as the street drug “Flaka.” Warner pleaded guilty on May 19, 2016.
According to court documents and testimony presented at sentencing, in late December 2014, U.S. Customs and Border Protection agents intercepted two packages with Warner as the named addressee. One package contained approximately 500 grams of ethylone, and was addressed to Warner’s residence in Sanford. A second package contained 497 grams of Alpha-PVP and was addressed to the home of Warner’s friend, also in Sanford. On January 7, 2015, agents conducted controlled deliveries of both packages to the respective addresses. Immediately after the deliveries, agents executed search warrants at both residences. At Warner’s home, agents found additional amounts of ethylone and a handgun inside Warner’s car located in the garage. During an interview with agents, Warner admitted that he was receiving the ethylone and the Alpha-PVP to sell to customers.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Vincent S. Chiu.
Reading Man Charged with Illegal ReentryRead the Press Release
Salvador Ortiz-Uresti, 41 of Reading, PA, was charged today by Indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger. The indictment alleges that on or about November 13, 2015, Ortiz-Uresti, an alien, and native and citizen of Mexico, was found in the United States after having been deported from the United States on or about April 26, 2001.
If convicted the defendant faces a maximum possible sentence of twenty years.
The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”) and is being prosecuted by Assistant United States Attorney Jonathan B. Ortiz.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Rapid City Woman Indicted in Death of ChildRead the Press Release
United States Attorney Randolph J. Seiler announced that a Rapid City, South Dakota, woman has been indicted by a federal grand jury for Tampering with Evidence, Accessory to First Degree Murder, False Statement, and Misprision of a Felony.
Sonya Dubray, age 47, was indicted on September 20, 2016. She appeared before U.S. Magistrate Judge Daneta Wollmann on September 28, 2016, and pleaded not guilty to the Indictment. The maximum penalty upon conviction is 20 years of imprisonment. 3 years of supervised release, and/or a $250,000 fine and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The charges relate to Dubray’s involvement in covering up the death of a two-and-a-half-year-old child at Porcupine. The charges are merely an accusation and Dubray is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation, the Bureau of Indian Affairs, Office of Justice Services, and the Oglala Sioux Tribe Department of Public Safety. Assistant U.S. Attorneys Sarah B. Collins and Megan J. Poppen are prosecuting the case.
Dubray was remanded to the custody of the U.S. Marshals Service pending trial.
Pine Ridge Woman Indicted for TheftRead the Press Release
United States Attorney Randolph J. Seiler announced that a Martin, South Dakota, woman has been indicted by a federal grand jury for Larceny and Theft of Government Property.
Amy N. Garcia, age 32, was indicted on July 26, 2016, and appeared before U.S. Magistrate Judge Daneta Wollmann on September 28, 2016. She pleaded not guilty to the Indictment.
The maximum penalty upon conviction is ten years of imprisonment, a $250,000 fine, or both, three years of supervised release, and a $100 assessment to the Federal Crime Victims Fund. Restitution may also be ordered.
The charges relate to Garcia altering and cashing payroll checks belonging to Dakota Plains Legal Services in Mission. The charges are merely an accusation and Garcia is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Legal Services Corporation -Office of Inspector General. Assistant U.S. Attorney Ben Patterson is prosecuting the case.
Garcia was released pending trial. A trial date has not been set.
Philadelphia Man Charged with Passport FraudRead the Press Release
Alcides Rosario-Betances, 56, of Philadelphia, Pennsylvania was charged today by Indictment with three counts of passport fraud, announced United States Attorney Zane David Memeger.
If convicted the defendant Alcides Rosario-Betances faces a maximum possible sentence of 30 years imprisonment, three years supervised release, a $750,000 fine, and $300 special assessment.
The case was investigated by the Diplomatic Security Service and Immigration and Customs Enforcement and is being prosecuted by Assistant United States Attorney Christopher Diviny.
Philadelphia Man Charged with Illegal Reentry After DeportationRead the Press Release
Gerson Joel Rivera-Suchite, a/k/a “Jerson Suchite,” 22, of Philadelphia, Pennsylvania, was charged today by Indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger. The indictment alleges that on or about April 5, 2016, Rivera-Suchite, 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 July 5, 2012.
If convicted the defendant faces a maximum possible sentence of two years.
The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Robert E. Eckert.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Owner of Buffalo Deli Sentenced for Food Stamp FraudRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Samir Hassan, 36, of Buffalo, NY, who was convicted of food stamp fraud, was sentenced to 12 months in prison by U.S. District Judge Frank P. Geraci. The defendant was also ordered to pay restitution totaling $192,447.00.
Assistant U.S. Attorney Marie P. Grisanti, who handled the case, stated that Hassan was the owner and operator of City Market & Deli and City Market in Buffalo. Between November 1, 2010 and August 31, 2012, the defendant directed his employees to purchase food stamp benefits for less than their full value in exchange for cash from eligible beneficiaries.
The sentencing is the result of an investigation by the United States Department of Agriculture, Office of Inspector General, under the direction of Special Agent in Charge William Squires.
Och-Ziff Capital Management Admits to Role in Africa Bribery Conspiracies and Agrees to Pay $213 Million Criminal FineRead the Press Release
Och-Ziff Enters into Three-Year Deferred Prosecution Agreement; Subsidiary Pleads Guilty to Conspiracy to Violate the Foreign Corrupt Practices Act
A New York-based alternative investment and hedge fund manager, Och-Ziff Capital Management Group LLC (Och-Ziff), and its wholly-owned subsidiary, OZ Africa Management GP LLC (OZ Africa), entered into resolutions to resolve criminal charges and agreed to pay a criminal penalty of more than $213 million in connection with a widespread scheme involving the bribery of officials in the Democratic Republic of Congo (DRC) and Libya.
Principal Deputy Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) New York Field Office made the announcement.
“This case marks the first time a hedge fund has been held to account for violating the Foreign Corrupt Practices Act,” said Principal Deputy Assistant Attorney General Bitkower. “In its pursuit of profits, Och-Ziff and its agents paid millions in bribes to high-level officials across Africa. By exposing corruption in this industry, the Criminal Division’s Fraud Section continues to root out wrongdoing of all types in the financial sector.”
“Och-Ziff, one of the largest hedge funds, positioned itself to profit from the corruption that is sadly endemic in certain parts of Africa, including in Libya, the Democratic Republic of the Congo, Chad and Niger,” said U.S. Attorney Capers. “Despite knowing that bribes were being paid to senior government officials, Och-Ziff repeatedly funded corrupt transactions. One Och-Ziff employee was so bold as to order the removal of language from their African joint venture’s internal audit report that called for an investigation of suspected bribery payments by a business partner. Today’s corporate resolutions, which include a more than $213 million criminal penalty and an independent compliance monitor, hold Och-Ziff accountable for placing profits above the law and will help ensure that the conduct brought to light here never happens again at this company.”
“Gaining the upper hand in a business venture by engaging in corrupt practices is bribery in its purest form,” said Assistant Director in Charge Sweeney. “Doing so with the intention of influencing a foreign official in his or her capacity is nothing short of corruption. In this scheme, payments of millions of dollars were paid out to senior officials within certain parts of Africa in exchange for access to profitable investment opportunities. This type of behavior can’t and won’t be tolerated. I commend the investigators and prosecutors who continue to work together at home and abroad to vigorously enforce the law within the confines of the Foreign Corrupt Practices Act.”
“Today’s plea and deferred prosecution agreement result from the unraveling of complex financial transactions orchestrated by Och-Ziff Capital Management Group LLC and its subsidiary to facilitate illegal payments to foreign government officials,” said Chief Weber. “IRS-CI will continue to investigate pervasive bribery schemes used by corporations in the pursuit of attractive international investment opportunities.”
Och-Ziff entered into a deferred prosecution agreement in connection with a criminal information charging the company with two counts of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA), one count of falsifying its books and records and one count of failing to implement adequate internal controls. Pursuant to its agreement with the department, Och-Ziff agreed to pay a total criminal penalty of $213,055,689. Och-Ziff also agreed to implement rigorous internal controls, retain a compliance monitor for a term of three years and cooperate fully with the department’s ongoing investigation, including its investigation of individuals.
OZ Africa pleaded guilty to a one-count criminal information filed today and assigned to U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York, charging the company with a conspiracy to violate the anti-bribery provisions of the FCPA. Sentencing has been scheduled for March 29, 2017.
In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Och-Ziff Capital Management Group LLC and OZ Management LP, whereby Och-Ziff agreed to pay approximately $199 million in disgorgement to the SEC, including prejudgment interest. Thus, the combined total amount of U.S. criminal and regulatory penalties paid by Och-Ziff is approximately $412 million.
The DRC Bribery Scheme
According to the companies’ admissions, in late 2007, Och-Ziff employees began discussions with a businessman operating in the DRC about entering into a partnership based on special access to lucrative investment opportunities in the DRC involving the country’s diamond and mining sectors. Och-Ziff employees learned that the businessman gained access to these attractive investment opportunities by making corrupt payments to senior government officials in the DRC, the companies admitted. According to the plea agreement, between 2008 and 2012, Och-Ziff entered into several DRC-related transactions in conjunction with the businessman, understanding that Och-Ziff’s funds would be used, in part, to pay substantial sums of money to high-ranking DRC officials to secure access to, and preference for, the investment opportunities. In late 2008, after an Och-Ziff employee was alerted that an audit of the businessman’s records revealed payments to DRC officials, that employee instructed that any references to those payments be removed from a final report of the audit, the companies admitted. According to the plea agreement, the businessman paid tens of millions of dollars in bribes to DRC officials in exchange for investment opportunities that resulted in more than $90 million in profits for Och-Ziff.
The Libya Bribery Scheme
Och-Ziff also admitted that, beginning in 2007, it engaged a third-party agent to assist the company in securing an investment from the Libyan Investment Authority (LIA), that country’s sovereign wealth fund, knowing the agent would need to pay bribes to Libyan officials. The agent was engaged without formal approval or any due diligence, according to court documents. The company admitted that, beginning in February 2007, the agent worked on behalf of Och-Ziff to obtain an asset placement from the LIA, including setting up a meeting between a senior Och-Ziff employee and the Libyan official empowered to make investment decisions for the LIA. According to court documents, in late November 2007, Och-Ziff received a $300 million investment from the LIA into the company’s hedge funds. Och-Ziff admitted that it subsequently entered into an agreement to pay the agent a “finder’s fee” of $3.75 million, knowing that all or a portion of the fees would be paid to Libyan officials in return for their assistance in obtaining the LIA’s investment. In addition, Och-Ziff admitted that it falsified its books and records and attempted to conceal and disguise the bribes paid through the agent by paying the “finder’s fee” through a sham consulting agreement.
Internal Controls Failures and Falsified Books and Records
Och-Ziff also failed to implement and maintain adequate internal accounting controls, which allowed its employees, agents and business partners to misappropriate assets, the company admitted. As a result of its failure to conduct due diligence on its partners and the lack of financial controls, Och-Ziff failed to prevent bribe payments from being made in the DRC, Libya, as well as in Chad and Niger, where an Och-Ziff joint venture made mining-related investments, according to admissions in court documents.
The Corporate Resolutions
The department entered into this resolution in part due to Och-Ziff’s failure to voluntarily self-disclose the companies’ misconduct to the department. The resolution also reflects the seriousness of the companies’ conduct, including the high value of the bribes paid to foreign officials and the involvement of a high level employee within Och-Ziff. Notwithstanding, the criminal penalty reflects a 20 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range because of Och-Ziff’s cooperation with the government’s investigation.
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In connection with the government’s investigation, Samuel Mebiame, 43, a Gabonese national, was charged on Aug. 16, 2016, with conspiring to bribe foreign government officials to obtain mining rights in Chad, Niger and Guinea. According to the criminal complaint, Mebiame allegedly worked as a “fixer” for a mining company owned by a joint venture between Och-Ziff and an entity incorporated in Turks and Caicos. The complaint alleges that Mebiame paid bribes to high-ranking government officials in Niger and Chad to obtain mining rights for the joint venture. The charges against Mebiame are merely allegations, and he is presumed innocent unless and until proven guilty.
The FBI’s New York Field Office and IRS-CI’s New York office are investigating the case. The department appreciates the significant cooperation and assistance provided by the SEC in this matter. The Swiss Federal Office of Justice, the British Virgin Islands Central Authority, the Maltese judicial authorities and authorities in Jersey and Guernsey also provided assistance.
Assistant Deputy Chief Leo Tsao and Trial Attorney James P. McDonald of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys James P. Loonam, Jonathan P. Lax and David Pitluck of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case. The Criminal Division’s Office of International Affairs also provided significant assistance.
The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Och-Ziff Capital Management Admits to Role in Africa Bribery Conspiracies and Agrees to Pay $213 Million Criminal FineRead the Press Release
BROOKLYN, NY – The U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division, Fraud Section are prosecuting a New-York alternative investment and hedge fund manager, Och-Ziff Capital Management Group, LLC (Och-Ziff), which has agreed to pay a $213 million criminal penalty and enter into multiple criminal resolutions with the Department of Justice to resolve charges related to widespread bribery of officials in Libya and the Democratic Republic of Congo. As part of the resolution, Och-Ziff, the publicly traded parent company, entered into a three-year deferred prosecution agreement (DPA) with the Department of Justice. An Och-Ziff subsidiary, OZ Africa Management GP, LLC (OZ Africa), pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA). Today’s guilty plea and proceedings in connection with the DPA took place before United States District Judge Nicholas G. Garaufis in the U.S. District Court for the Eastern District of New York. Sentencing for OZ Africa has been scheduled for March 29, 2017, at 2:00pm.
U.S. Attorney Robert L. Capers of the Eastern District of New York, Principal Deputy Assistant Attorney David Bitkower of the Justice Department’s Criminal Division, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Richard Weber, Chief, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.
“Och-Ziff, one of the largest hedge funds, positioned itself to profit from the corruption that is sadly endemic in certain parts of Africa, including in Libya, the Democratic Republic of the Congo, Chad, and Niger. Despite knowing that bribes were being paid to senior government officials, Och-Ziff repeatedly funded corrupt transactions. One Och-Ziff employee was so bold as to order the removal of language from their African joint venture’s internal audit report that called for an investigation of suspected bribery payments by a business partner. Today’s corporate resolutions, which include a more than $213 million criminal penalty and an independent compliance monitor, hold Och-Ziff accountable for placing profits above the law and will help ensure that the conduct brought to light here never happens again at this company,” stated United States Attorney Capers.
“This case marks the first time a hedge fund has been held to account for violating the Foreign Corrupt Practices Act,” said Principal Deputy Assistant Attorney General Bitkower. “In its pursuit of profits, Och-Ziff and its agents paid millions in bribes to high-level officials across Africa. By exposing corruption in this industry, the Criminal Division’s Fraud Section continues to root out wrongdoing of all types in the financial sector.”
“Gaining the upper hand in a business venture by engaging in corrupt practices is bribery in its purest form,” said FBI Assistant Director in Charge Sweeney. “Doing so with the intention of influencing a foreign official in his or her capacity is nothing short of corruption. In this scheme, payments of millions of dollars were paid out to senior officials within certain parts of Africa in exchange for access to profitable investment opportunities. This type of behavior can’t and won’t be tolerated. I commend the investigators and prosecutors who continue to work together at home and abroad to vigorously enforce the law within the confines of the Foreign Corrupt Practices Act.”
“Today’s plea and deferred prosecution agreement result from the unraveling of complex financial transactions orchestrated by Och-Ziff Capital Management Group, LLC and its subsidiary to facilitate illegal payments to foreign government officials,” said IRS-CI Chief Weber. “IRS-CI will continue to investigate pervasive bribery schemes used by corporations in the pursuit of attractive international investment opportunities.”
Under the DPA, Och-Ziff admitted to multiple conspiracy charges in a four-count criminal information, including two counts of conspiracy to violate the anti-bribery provisions of the FCPA, one count of falsifying its books and records and one count of failing to implement adequate internal controls. Additionally, OZ Africa pleaded guilty to conspiring to bribe senior officials in the Democratic Republic of Congo in connection with obtaining valuable mining concessions. Collectively, Och-Ziff and OZ Africa agreed to pay a criminal penalty of $213,055,689, and Och-Ziff agreed to retain an independent compliance monitor for a period of three years.
The DRC Bribery Scheme
Between 2005 and 2012, a businessman operating in the DRC with significant interests in the diamond and mining sectors in the DRC paid more than one-hundred million dollars in bribes to DRC officials for special access to attractive investment opportunities. In late 2007, Och-Ziff employees began discussions to partner with the businessman based upon his special access to these investment opportunities. Between 2008 and 2011, Och-Ziff entered into several DRC-related transactions with this businessman despite the fact that at least two Och-Ziff employees knew, and a senior Och-Ziff employee believed it was likely, that the businessman gained access to these attractive investment opportunities by making corrupt payments to government officials. Och-Ziff personnel funded these transactions understanding that Och-Ziff’s funds would be used in part to pay substantial sums of money to high ranking DRC officials to secure access to and preferential treatment for the investment opportunities. In late 2008, after an Och-Ziff employee was alerted that an audit of the businessman’s records revealed payments for DRC officials, that employee instructed that any references to those payments be removed from a final report of the audit. The businessman did, in fact, make corrupt payments to and for the benefit of DRC officials to secure the investment opportunities.
The Libya Bribery Scheme
Separately, but also beginning in 2007, a senior Och-Ziff employee engaged a third-party agent to assist the company in securing an investment from the Libyan sovereign wealth fund, the Libyan Investment Authority (LIA). At the time of the engagement, the senior Och-Ziff employee knew that the agent would need to make corrupt payments to Libyan officials to secure that investment. The agent was engaged without formal approval by Och-Ziff and without any due diligence conducted on the agent by Och-Ziff. From February 2007, the agent worked on behalf of Och-Ziff to obtain an asset placement from the LIA, including setting up a meeting between the senior Och-Ziff employee and the Libyan official who was empowered to make investment decisions for the LIA. In late November 2007, Och-Ziff received a $300 million investment from the LIA into Och-Ziff hedge funds. Shortly thereafter, Och-Ziff entered into a consulting agreement to pay a sham “finder’s fee” of $3.75 million, knowing that all or a portion of the fee would be paid to Libyan officials in return for their assistance in obtaining the LIA’s investment. The agent did in fact make corrupt payments to and for the benefit of Libyan officials to influence the LIA’s investment.
Internal Controls Failures and Falsified Books and Records
Further, Och-Ziff admitted that it knowingly and willfully falsified and caused to be falsified records related to its retention and payment of the agent in Libya. The falsified records concealed the true purpose of the payments, which purported to be for consulting purposes, but which actually would be used for corrupt payments to Libyan officials in return for their assistance in obtaining the LIA’s investment. Och-Ziff also failed to implement and maintain an adequate system of internal accounting controls designed to detect and prevent the misappropriation of assets by its employees, agents, and business partners. As a result, the company failed to prevent bribe payments from being made in the DRC, Libya, as well as in Chad and Niger, where an Och-Ziff joint venture made mining-related investments. For all the criminal conduct included in these resolutions, Och-Ziff reaped more than $210 million in illegal profits.
The Corporate Resolutions
The Department entered into this resolution, in part, due to Och-Ziff’s failure to voluntarily self-disclose the offense conduct and the seriousness of the conduct including the high-dollar amount of bribes paid to foreign officials and involvement by a high level employee within Och-Ziff. Notwithstanding, Och-Ziff received a 20 percent reduction off the bottom of the U.S. Sentencing Guidelines range for its cooperation with the government’s investigation. Och-Ziff also committed to continue to enhance its compliance program and internal controls, to cooperate with the Department in ongoing investigations, and to retain an independent compliance monitor pursuant to the terms outlined in the DPA.
* * *
In connection with the government’s investigation, Samuel Mebiame, a Gabonese national, was charged on August 16, 2016, by criminal complaint with conspiring to bribe foreign government officials to obtain mining rights in Chad and Niger, as well as Guinea.[1] According to documents filed in court, Mebiame worked as a “fixer” for a mining company that was owned by a joint venture between Och-Ziff and a Turks & Caicos incorporated entity. In that capacity, Mebiame paid bribes to high-ranking government officials in Niger and Chad to obtain the mining rights. During the charged conspiracy, Mebiame repeatedly traveled to the United States to further the scheme, including to meet with coconspirators at the Plaza Hotel in New York and to start companies and open bank accounts through which he could receive international wire transfers from coconspirators.
* * *
In a parallel proceeding announced today, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Och-Ziff Capital Management Group LLC and OZ Management LP, whereby Och-Ziff agreed to pay approximately $199 million in disgorgement to the SEC, including prejudgment interest. The total amount of the global resolution is thus approximately $412 million.
The FBI’s New York Field Office and IRS-CI’s New York office are investigating the case. The department appreciates the significant cooperation and assistance provided by the SEC in this matter. The Swiss Federal Office of Justice, the British Virgin Islands Central Authority, the Maltese judicial authorities and authorities in Jersey and Guernsey also provided assistance.
* * *
The case is being prosecuted by Assistant U.S. Attorneys James P. Loonam, Jonathan P. Lax, and David Pitluck of the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York, and Assistant Deputy Chief Leo Tsao and Trial Attorney James P. McDonald of the Criminal Division’s Fraud Section. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.
[1] The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure AuctionsRead the Press Release
A Northern California real estate investor pleaded guilty for his role in a conspiracy to rig bids at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
Stephan Florida, a real estate investor of Danville, California, pleaded guilty to one count of bid rigging in the U.S. District Court for the Northern District of California in Oakland yesterday. The defendant was charged in an indictment returned by a federal grand jury in the Northern District of California on November 19, 2014.
According to court documents, between May 2008 and December 2010, Florida conspired with others not to bid against one another and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County. Florida made and received payoffs for the agreements not to bid, diverting money that would have otherwise gone to mortgage holders and other beneficiaries.
Yesterday’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office, in connection with the president’s Financial Fraud Enforcement Task Force.
The president established the task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.
For more information about the task force, please visit www.StopFraud.gov. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300 or call the FBI tip line at 415-553-7400.
New York Man Pleads Guilty to Conspiring to Illegally Manufacture Designer SteroidsRead the Press Release
ABINGDON, VIRGINIA – A Skaneateles, New York, man who was involved in the manufacture of illegal pro-hormones/designer steroids, pled guilty today in the United States District Court for the Western District of Virginia in Abingdon. James William Mills, age 50, entered a guilty plea to conspiring to commit various offenses including misbranding a drug and impeding the Food and Drug Administration in its function of regulating drugs.
United States Attorney John P. Fishwick indicated “Our office will continue to hold accountable those who manufacture these dangerous products.”
“Distributing unapproved prescription drugs disguised as a dietary supplements is illegal and puts American consumers at risk,” said Special Agent in Charge Mark McCormack of the FDA Office of Criminal Investigations’ Metro Washington Field Office. “Our office is fully committed to working with the Department of Justice to assure that dietary supplements do not contain any drugs or other prohibited substances.”
Mills was part of an operation that involved the illegal importation of raw drug powder from China to the Danville, Virginia, area. The powders were then shipped to various locations throughout the United States including a manufacturing facility at which Mills worked in Skaneateles. The illegal product contained methasterone, commonly known as Superdrol. The product was illegally marketed as a nutritional supplement when, in fact, it was a dangerous drug.
As part of the plea agreement, Mills agreed to an enhancement in his sentencing guideline level for obstruction of justice based on his false testimony before a federal grand jury. Mills falsely testified about his knowledge of Superdrol and the large cash payment involved in the deal. He also falsely testified that he had retired on good terms from the Syracuse Police Department when, in fact, he resigned pursuant to plea negotiations concerning a perjury investigation.
United States District Judge James P. Jones scheduled Mills sentencing for December 15, 2016 at 10:30 a.m. in Abingdon. At sentencing, Mills faces a maximum sentence of imprisonment for a term of five years.
The investigation of the case was conducted by the Food and Drug Administration – Office of Criminal Investigations. Assistant United States Attorney Randy Ramseyer is prosecuting the case for the United States.
New York Man Convicted for Sex Trafficking Conspiracy and Sex Trafficking of a MinorRead the Press Release
Baltimore, Maryland – A federal jury today convicted Raymond Idemudia Aigbekaen, age 29, of Amityville, New York, for conspiracy to commit sex trafficking, sex trafficking of a minor and other charges related to the trafficking of a 16 year-old female for prostitution in Maryland, Virginia, and New York.
The conviction 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); Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office; Harford County Sheriff Jeffrey R. Gahler and the Harford County Child Advocacy Center (HCCAC); and Colonel William M. Pallozzi, Superintendent of the Maryland State Police;.
According to information presented at his nine-day trial, from late February through April 12, 2015, Aigbekaen and his co-defendant, Marcell Greene, trafficked a 16 year-old girl for prostitution. On April 12, 2015, the victim called 911 from a motel room in Bel Air, Maryland. Members of the Harford County Child Advocacy Center responded and the victim eventually advised that she had been taken to Virginia and Maryland from New York by two men, one named Marcell and another named “Raymond” who was Nigerian. The victim advised that commercial sex ads of her were posted on a webpage, and that she engaged in commercial sex acts with prostitution dates. Law enforcement was able to identify Aigbekaen as the person who rented the hotel room where victim was staying.
Items, such as tissues and used condoms, were recovered from the trash cans of the hotel room used by Aigbekaen, Greene and the victim on April 11-12, 2015. Some of these items were found to contain DNA evidence, including DNA evidence that matched the co-defendant, Greene. Aigbekaen was determined to be a potential contributor to stains on the victim’s underwear. Hotel records also show that Aigbekaen also rented rooms on March 30, 2015 to April 1, 2015 and from April 2, 2015 to April 4, 2015. Hotel records also showed that Aigbekaen rented rooms at other hotels in Maryland and Fredericksburg, Virginia and Virginia Beach, Virginia.
Law enforcement were able to locate internet prostitution advertisements advertising the victim for prostitution using Aigbekaen’s email accounts. These advertisements were posted in the Long Island, New York, Maryland, and Virginia areas in February and March 2015. At least some of these advertisements listed Aigbekaen’s phone number. Photos of the victim that were used in the ads were also found on Aigbekaen’s computer. Finally, historical cell site records for Aigbekaen’s phones showed him travelling in Maryland and Virginia and puts him in vicinity of Maryland and Virginia hotels that were used when the victim was engaging in commercial sex acts.
As a result of this conviction, upon his release from prison Aigbekaen will be required to 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).
Aigbekaen faces a minimum mandatory sentence of 10 years in prison and a maximum of life in prison. U.S. District Judge James K. Bredar has scheduled sentencing for February 7, 2017, at 10:00 a.m. Aigbekaen remains detained.
Marcell Greene, age 28, of Wyandanch, New York, previously pleaded guilty to conspiracy to commit sex trafficking and sex trafficking of a minor. Greene also faces a minimum mandatory sentence of 10 years in prison and a maximum of life in prison. U.S. District Judge James K. Bredar has scheduled sentencing for Greene on October 14, 2016, at 3:00 p.m. Greene remains detained.
This case was investigated by the Maryland Human Trafficking Task Force, formed in 2007 to discover and rescue victims of human trafficking while identifying and prosecuting offenders. Members include federal, state and local law enforcement, as well as victim service providers and local community members. For more information about the Maryland Human Trafficking Task Force, please visit http://www.justice.gov/usao/md/priorities_human.html.
Report suspected instances of human trafficking to HSI's tip line at 866-DHS-2ICE (1-866-347-2423) or by completing its online tip form. Both are staffed around the clock by investigators.
United States Attorney Rod J. Rosenstein commended HSI-Baltimore, the Harford County Sheriff’s Office, Harford County Child Advocacy Center, Maryland State Police, FBI, for their work in the investigation and thanked U.S. Customs and Border Protection – New York for its assistance. The HCCAC is a task force comprised of the Harford County Sheriff’s Office, Maryland State Police – Bel Air Barrack, Aberdeen, Bel Air, and Havre de Grace Police Departments, Harford County State’s Attorney’s Office, Harford County Department of Social Services – Child Protective Services, and Family and Children’s Services of Central Maryland, which investigates allegations of child maltreatment while also providing services and resources for the abused child and his/her family. Mr. Rosenstein thanked Assistant U.S. Attorneys Ayn B. Ducao and Matthew J. Maddox, who are prosecuting the case.
More Than Twenty Face Federal and State Charges in and Around Sampson County for Drug and Firearm ChargesRead the Press Release
RALEIGH – The United States Attorney’s Office for the Eastern District of North Carolina and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) announce the arrests of five defendants pursuant to Federal Criminal Complaints for Narcotics Conspiracy today in Sampson County.
- Antonio McKoy, 30, of Garland, NC
- James Daniel McKoy, 51, of Garland, NC
- Bryant Carr, 37, of Roseboro, NC
- Andrekia Parker, 23, of Garland, NC
- Anthony Barnes, 30, of Turkey, NC
The individual below also charged by Criminal Complaint is still at large.
- Tony Chevallier, 30, of Turkey, NC
Over 20 federal and state arrest warrants were executed today in and around Sampson County as part of a yearlong investigation into a violent multi-defendant drug trafficking organization. During this investigation, law enforcement was able to seize over 11 pounds of cocaine and purchase several firearms.
The charges and allegations contained in the Compliants are merely accusations. The defendants are considered innocent unless and until proven guilty in a court of law.
The case is a federal Organized Crime Drug Enforcement Task Force (OCDETF) criminal matter being investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), the Sampson County Sheriff’s Office, Internal Revenue Service Criminal Investigation, Jacksonville Police Department, Onslow County Sheriff’s Office, New Hanover County Sheriff’s Office, U.S. Probation Office, the North Carolina State Bureau of Investigation and the North Carolina Departments of Revenue and Emergency Management.
Monroe Prison Guard Charged with Extortion and Attempted Drug TraffickingRead the Press Release
A prison guard at the Washington State Monroe Correctional Complex was arrested at the prison today on a federal complaint alleging he accepted bribes for smuggling contraband into the prison, announced U.S. Attorney Annette L. Hayes. MICHAEL W. BOWDEN, 31, of Everett, Washington is charged with three counts of extortion under color of official right and one count of attempted distribution of methamphetamine. The arrest follows a six month FBI investigation. BOWDEN will make his initial appearance on the criminal complaint in U.S. District Court in Seattle at 2:00 PM tomorrow, September 29, 2016.
“Our state prisons are no place for illegal drugs and other contraband,” said U.S. Attorney Annette L. Hayes. “The Washington State Department of Corrections and the FBI have worked diligently to uncover sources of contraband flowing into the Monroe Correctional Complex. This arrest should send a clear message that anyone involved in smuggling prohibited items into our state prison system will face serious consequences for their criminal conduct.”
According to the criminal complaint, the Department of Corrections Intelligence and Investigations Unit asked the FBI to become involved in the investigation of contraband smuggling in December 2015. Using confidential sources inside and outside the Monroe Correctional Complex, agents determined BOWDEN was accepting bribes of up to $1,000 to smuggle contraband into the prison. On three different occasions between July and September 2016, BOWDEN smuggled tobacco, a SIM card, and what he believed was methamphetamine into an inmate at the prison. In each of those three instances, the inmate turned the contraband over to investigators.
“Prison officials and staff abusing their authority betrays the public’s trust and threatens the integrity of the justice system,” said Special Agent in Charge Jay S. Tabb, Jr., of the FBI’s Seattle Field Office. “The FBI launched a Prison Corruption Initiative in 2014 to expose criminal conduct by prison officials, particularly contraband smuggling in exchange for bribe payments. The Washington Department of Corrections is a critical partner in this initiative, and the FBI is committed to working with the DOC to identify those who abuse their trusted positions.”
“The men and women who serve as dedicated officers within our state’s correctional facilities are devoted to providing safety and security to those incarcerated by the judicial system. Unfortunately, there are occasionally those who betray our trust in providing the safety we are sworn to uphold and we are committed to finding these bad actors so that they don’t compromise security or the integrity of our correctional system,” said Department of Corrections Secretary Richard Morgan. “We appreciate the strong partnerships we have with our fellow law enforcement agencies, such as the FBI and the U.S. Attorney’s Office, in investigating and purging these individuals for whom we have zero tolerance so that we can maintain the safe and secure facilities expected of us by the law and our citizens.”
Extortion under color of official right is punishable by up to twenty years in prison and a $250,000 fine. Attempted distribution of methamphetamine is punishable by up to twenty years in prison and a $1,000,000 fine. These are maximum possible sentences that could be imposed on individual counts in this case. They are not a statement of what the United States will recommend if the defendant is convicted, nor do they reflect the impact of the United States sentencing guidelines and other applicable law on any term of imprisonment.
The charges contained in the complaint are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the FBI in partnership with the Washington State Department of Corrections Intelligence and Investigations Unit. The case is being prosecuted by Assistant United States Attorney Justin Arnold.
Miami Developer Indicted on Conspiracy and Bank Fraud ChargesRead the Press Release
UPDATE
The defendant in this case, Rebecca Gheiler , was acquitted of the charges alleged in the indictment described in the press release below.
Orlando, FL – United States Attorney A. Lee Bentley, III announces the unsealing of an indictment charging Rebecca Gheiler (49, Miami) with conspiracy to commit bank and wire fraud and six counts of bank fraud. If convicted, she faces a maximum penalty of 30 years in federal prison on each count. The indictment also notifies Gheiler that the United States is seeking a forfeiture money judgment.
According to the indictment, Tribute Residential, LLC (“Tribute”), which was controlled by Gheiler, owned and sold condominium communities. To entice buyers to purchase condominium units in these communities, Gheiler developed a program of incentives. As part of this program, buyers were promised that Tribute would pay the mortgage and homeowners' association dues during the buyer’s first two years of occupancy. Other incentives developed and paid for by Gheiler included upfront cash to close and/or kickbacks to buyers after closing. During each transaction, the HUD-1 Settlement Statement, signed by Gheiler as the seller, contained falsified information regarding the terms of each transaction, including the actual down payment amount paid by the buyer. In order to conceal the incentives from the mortgage lenders, Gheiler directed her co-conspirator, Angel Garcia-Oliver, to form companies that received monies from Tribute that were eventually paid to buyers and entities controlled by other co-conspirators.
Garcia-Oliver previously pleaded guilty for his role in this case. His sentencing hearing is scheduled for January 9, 2017.
An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by Federal Housing Finance Agency – Office of Inspector General, the Florida Office of Financial Regulation, and the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorney Vincent Chiu and Special Assistant United States Attorney Chris Poor.
Mexican National Sentenced for Trafficking MethamphetamineRead the Press Release
McALLEN, Texas – Manuel Ivan Reina-Ruiz, of Sonora, Mexico, has been sentenced to 78 months imprisonment for importing methamphetamine into the United States from Mexico, announced U.S. Attorney Kenneth Magidson.
At the time of his guilty plea, he admitted that on Jan. 16, 2016, he had driven a vehicle from Mexico into the United States through the Progreso port of entry, knowing the vehicle contained a controlled substance. Upon inspection, Customs and Border Protection (CBP) officers discovered methamphetamine hidden within the quarter panels and all four tires of the vehicle. Agents seized numerous bricks of the drug weighing approximately 62 kilograms.
Reina has been in custody without bond since his arrest in January 2016, where he will remain pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The case was investigated by Immigration and Customs Enforcement’s Homeland Security Investigations and CBP. Assistant U.S. Attorney Linda Requénez prosecuted the case.
Metairie Doctor Indicted for Illegally Dispensing Oxycodone and Threatening to Kill Law EnforcementRead the Press Release
U.S. Attorney Kenneth A. Polite announced that SHANNON CHRISTOPHER CEASAR, M.D., age 43, a physician and former co-owner of the now defunct Gulf South Physicians Group in Metairie, was charged today in a two count Indictment related to violations of the Federal Controlled Substances Act and threatening to assault or murder federal law enforcement officers.
According to the indictment, CEASAR conspired with others to distribute and to dispense, outside the scope of professional practice and not for a legitimate medical purpose, quantities of oxycodone, a Schedule II drug controlled substance. In addition, CEASAR was charged with threatening to assault and/or murder federal law enforcement officers with the intent to impede, intimidate, or interfere with such law enforcement officers while engaged in the performance of official duties, or with the intent to retaliate against such law enforcement on account of the performance of official duties.
If convicted on the drug charge pursuant to Title 21, United States Code, Sections 841(a)(1), 841(b)(1)(C) and 846, CEASAR will face a maximum of not more than 20 years in prison, a fine of up to $1,000,000, and at least three years of supervised release following any term of imprisonment. If convicted on the threat charge pursuant to Title 18, United States Code, Section 115(a)(1)(B), CEASAR will face a maximum of not more than 10 years in prison, a fine of up to $250,000 and at least 3 years supervised following any term of imprisonment.
CEASAR was arrested by way of a criminal complaint on July 22, 2016. He made his initial appearance before U.S. Magistrate Court Judge Daniel E. Knowles, III and was ordered detained after a hearing before U.S. Magistrate Court Judge Karen Wells Roby on July 25, 2016.
U. S. Attorney Kenneth Allen Polite, Jr. reiterated that the 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 Special Agents of the Federal Bureau of Investigations, U.S. Department of Health and Human Services OIG, and the Drug Enforcement Administration in investigating this matter. Assistant United States Attorneys Shirin Hakimzadeh, Jordan Ginsberg, and Myles Ranier are in charge of the prosecution
Man Who Defrauded United Auburn Indian Community Sentenced to 8.5 Years in PrisonRead the Press Release
SACRAMENTO, Calif. — Bart Wayne Volen, 54, of San Diego and Haiku, Hawaii, was sentenced today by United States District Judge Troy L. Nunley, to eight years and six months in prison for defrauding the United Auburn Indian Community, conspiring to launder monetary instruments, and filing a false tax return, Acting United States Attorney Phillip A. Talbert announced.
At sentencing, Judge Nunley noted that Volen had stolen from people who had become “like family members” to him.
“Bart Volen and his co-defendants used their trusted positions to steal millions of dollars from the UAIC,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “Rather than stopping the fraud, Mr. Volen chose to benefit from it. Today’s sentencing should send a clear message that those involved in these types of schemes will be held accountable for their actions.”
According to court documents, between October 2006 and December 2007, Volen, Gregory Scott Baker, of Newcastle, and Darrell Patrick Hinz, 48, of Cameron Park, engaged in a scheme to defraud the UAIC. An indictment from August 2012 charged the defendants with conspiring to commit mail and wire fraud and various money laundering violations. A superseding indictment from April 2013 added additional charges, alleging that Volen and Hinz filed false tax returns in 2006 and 2007, and that Baker filed false tax returns from 2006 through 2009. The defendants ultimately stole over $18 million from the UAIC through their scheme.
According to court documents, in October 2006, the UAIC hired Volen, a developer, to finish construction on a school, a community center, and administrative offices on UAIC‑owned property on Indian Hills Road in Auburn. Volen submitted false and inflated invoices to the UAIC, and Baker and Hinz, both UAIC employees, approved the fraudulent invoices based on a kickback agreement between the three men. Volen supported his invoices with inflated cost proposals from his general contractor’s company, Sequoia Pacific Builders (SPB), and, at times, inflated invoices from various subcontractors. At Volen’s direction, over 160 SPB cost proposals were fraudulently inflated.
Baker was the UAIC tribal administrator whose duties included overseeing the Indian Hills office project. In this position of trust, he was subordinate only to the UAIC tribal council. Hinz was a contract employee hired by the UAIC to manage the construction at the Indian Hills office project site. Both Baker and Hinz were required to approve all invoices before the UAIC tribal council would sign checks to pay for completed work. During the scheme to defraud the tribe, both Baker and Hinz engaged in conduct to ensure that the tribal council would pay for the inflated and fraudulent invoices submitted by Volen. They were later paid by Volen for their participation in the scheme.
In order to disguise the proceeds of the fraud, Hinz sent a number of fraudulent invoices to Volen. These invoices were for consulting work that Hinz claimed he did for Volen. After the issuance of the false invoices, Volen sent Hinz 29 checks, totaling approximately $7.5 million. Hinz paid Baker indirectly for his assistance in the scheme, using money he received from Volen.
According to court documents, Hinz paid for a $12,500 weekend trip that he and Baker took in Hawaii and for certain obligations owed by Baker. Hinz also purchased a number of things for Baker, including various assets, personal property — a $70,000 BMW and a mobile home — several investment properties, a vacation condominium in South Lake Tahoe, and various improvements to property, such as a $54,000 pool at his primary residence. All of these transactions were conducted for the purpose of concealing and disguising the proceeds from the UAIC fraud. During the course of the scheme, Baker received over $1.4 million.
With regard to the tax offense, according to court documents, Volen filed tax returns in which he falsely claimed personal expenses as business deductions. As a result, the United States suffered a tax loss of over $4.3 million.
Volen, Baker and Hinz have agreed to pay at least $17 million in restitution to the UAIC. Eatough has agreed to pay between $600,000 and $950,000 in restitution to the UAIC.
This case was the product of an investigation by the Internal Revenue Service, Criminal Investigation. Assistant United States Attorneys Michael M. Beckwith, John K. Vincent and Kevin C. Khasigian prosecuted the case.
Chris W. Eatough, the owner of Sequoia Pacific Builders, previously pleaded guilty to a felony related to this case on June 20, 2013. Mr. Eatough was charged in case number 2:13-cr-214 TLN. Eatough is scheduled to be sentence by Judge Nunley on December 8, 2016. Any sentences issued in Mr. Eatough’s case will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Man Charged with Robbery of Kensington Bank and Attempted Robbery of South Philadelphia BankRead the Press Release
William Minson, 49 of Philadelphia was charged today by Indictment[1] with one count of bank robbery and one count of attempted bank robbery, announced U.S. Attorney Zane David Memeger. The indictment charges that Minson robbed the Hyperion Bank, located at 199 West Girard Avenue in Philadelphia, Pennsylvania, on August 19, 2016, and attempted to rob the Wells Fargo Bank, located at 2300 Snyder Avenue in Philadelphia, Pennsylvania on August 22, 2016.
If convicted, Minson faces a maximum sentence of 40 years' imprisonment, a $500,000 fine, three years supervised release, and a $200 special assessment.
This case has been investigated by the Federal Bureau of Investigation and the Philadelphia Police Department. The case has been assigned to Assistant United States Attorney Thomas M. Zaleski.
[1]An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Major Player in Drug Trafficking Organization Sentenced to Twelve and One-Half Years in Federal PrisonRead the Press Release
Fort Smith, Arkansas - Kenneth Elser, United States Attorney for the Western District of Arkansas, announced that Jose Mendez-Alvarado, age 39 of Fort Smith, was sentenced today to 150 months in federal prison followed by five (5) years of supervised release on one count of Possession with Intent to Distribute More than 50 Grams of Actual Methamphetamine, Aiding and Abetting. Twelve other defendants who were a part of this drug trafficking organization in the Fort Smith area were previously sentenced to federal prison. 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, in November 2014, law enforcement in Fort Smith learned that large quantities of methamphetamine were being distributed in the area by Jose Mendez-Alvarado, and other members of a drug trafficking organization. Over the course of the next several months, investigators conducted six separate controlled purchases from Mendez-Alvarado and his associates. In early June 2015, Mendez-Alvarado traveled to California to pick up a large amount of methamphetamine and bring it back to Fort Smith for distribution. On his way back from California in mid-June, Mendez-Alvarado was stopped for a traffic violation in Fort Smith and approximately 11 pounds of methamphetamine was seized by law enforcement. Each of the defendants was indicted by a federal grand jury in September, 2015.
Listed below are the other defendants, their charges, and their sentences:
- Armando Picazo, age 30 of Fort Smith, was sentenced to 240 months in federal prison and five years of supervised release on each of two counts of Possession with Intent to Distribute More than 50 Grams of Actual Methamphetamine, Aiding and Abetting. The sentences will run concurrent with each other.
- Ascencion Salas-Macias, age 31, of Fort Smith, was sentenced to 151 months in federal prison and five years of supervised release for Possession with Intent to Distribute More than 50 Grams of Actual Methamphetamine, Aiding and Abetting
- Amber Nicole Cottrell, age 28 of Fort Smith, was sentenced to 30 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine
- Casey Allen Cottrell, age 31, of Fort Smith, was sentenced to 70 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine
- John Wayne Davis, age 41, of Cabot, was sentenced to 51 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine
- Aris Orellana, age 29, of Fort Smith, was sentenced to 46 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine
- Erick Padilla, age 35, of Oklahoma City, Oklahoma, was sentenced to 87 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine
- Maria D. Jesus Martinez, age 33, of Fort Smith, was sentenced to 120 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine
- Joseph Glenn Kutter, age 31 of Van Buren, was sentenced to 70 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine
- Jose Quinones, age 37, of Fort Smith, was sentenced to 24 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine
- Melinda Sue Quinones, age 39, of Fort Smith, was sentenced to 24 months in federal prison and two years of supervised release for Conspiracy to Distribute Methamphetamine
- Noel Ramirez-Osorio, age 31, of Oklahoma City, Oklahoma, was sentenced to 51 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine
- Roxana Cardona, age 32, of Revere, Massachusetts, was sentenced to 46 months in federal prison and three years of supervised release for Conspiracy to Distribute Methamphetamine.
- Jose Christian Lemus-Vanegas, age 34, of Houston, Texas pleaded guilty to Conspiracy to Distribute Methamphetamine in May, 2016 and is awaiting sentencing.
“The successful prosecution and sentencing of members of this drug trafficking organization, to include Jose Mendez-Alvarado, should be a warning to anyone thinking of polluting our communities with this addictive substance,” said DEA Special Agent in Charge Stephen G. Azzam. “DEA, along with our law enforcement partners, are committed to investigating illegal organizations that profit from the distribution of methamphetamine as well as educating the public as to the dangers of this deadly scourge.”
Agencies that took part in the investigation were the Drug Enforcement Administration (DEA), the Fort Smith Police Department, The Sebastian County Sheriff’s Office, and the 12th Judicial District Drug Task Force. Assistant United States Attorney Candace Taylor prosecuted the case for the United States.
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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
- Armando Picazo, age 30 of Fort Smith, was sentenced to 240 months in federal prison and five years of supervised release on each of two counts of Possession with Intent to Distribute More than 50 Grams of Actual Methamphetamine, Aiding and Abetting. The sentences will run concurrent with each other.
Local Man Convicted of Sexual Exploitation of Children and Tax FraudRead the Press Release
HOUSTON – Benjamin Douglas Guidry has entered a guilty plea to two counts of sexual exploitation of children and for knowingly making a false claim in the nature of preparing and filing a false tax return, announced U.S. Attorney Kenneth Magidson along with Special Agent in Charge D. Richard Goss of IRS-Criminal Investigation (CI) and Special Agent in Charge Perrye K. Turner of the FBI.
“The diligent investigative efforts of IRS-CI special agents not only uncovered evidence of tax crimes but also discovered something much, much, worse, beginning with the discovery of disturbing images on this defendant’s computer,” said Goss. “The collaborative effort between IRS-CI and the FBI ultimately led to Guidry pleading guilty not only to the tax crimes in question but also to the sexual exploitation of children.”
According to the plea agreement filed in the record of the case and to statements made in court, the IRS had been investigating Guidry for possible tax offenses. In May 2015, authorities executed a search warrant at Guidry’s place of business, Financial Precision Group, at which time they seized several computers and boxes of documents. Agents noticed, among other things, that several files on Guidry’s external hard drive had titles that led the IRS to believe they may contain child pornography. Authorities also noticed text messages on his cell phone that appeared to be inappropriate communications with a minor and a video of a minor.
The FBI joined the investigation and later executed a search warrant at Guidry’s residence. During that search, authorities found items present in the video on Guidry’s cell phone, including clothes worn by one of identified minor victims in the video. They also seized a cell phone and multiple computers.
Guidry was arrested at that time.
On two of Guidry’s external hard drives, authorities ultimately discovered a total of at least 164 images and 28 videos of child pornography. Additionally, a cell phone contained at least three videos of child pornography. One of the videos shows one of the minor victims being penetrated by an adult male. That video contains sounds from the victim demonstrating that the minor, who was protesting what was being done to her, was under the influence of a drug or was deeply sleeping. Another victim discovered she had been recorded on two separate occasions, once via a cell phone propped on the back of a toilet and again by an iPad propped up in the same location.
As to the tax offense, Guidry also agreed in the plea agreement that the intended income tax loss was between $250,000 and $550,000.
U.S. District Judge George C. Hanks Jr. accepted the plea today and has set sentencing for Jan. 5, 2017. At that time, Guidry faces a minimum of 15 and up to 30 years for each of the sexual exploitation charges as well as a maximum of five years for the tax fraud. Each conviction also carries a possible fine of $250,000.
FBI and IRS-Criminal Investigation conducted the investigation. Assistant U.S. Attorneys Sherri L. Zack and Charles J. Escher are prosecuting the case.
Letcher Man Sentenced for Unlawful Taking of Bald Eagle and Unlawful Use of PesticideRead the Press Release
United States Attorney Randolph J. Seiler announced that a Letcher, South Dakota, man who was found guilty of Unlawful Taking of Bald Eagle and Unlawful Use of Pesticide after a two day jury trial in April of 2016 was sentenced on September 27, 2016, by U.S. District Judge Lawrence L. Piersol.
Theodore Nelson, Jr., a/k/a Ted Nelson, age 69, was sentenced to 8 months in custody on the Unlawful Taking of a Bald Eagle charge, with 6 months to run concurrent with a prior federal tax evasion sentence and 2 months to run consecutive, and one year of supervised release, with a condition that Nelson must pay $2,500 in restitution. Nelson was also sentenced to 30 days in custody on the Unlawful Use of Pesticide charge to run concurrent with the sentence imposed on the above count. Nelson was ordered to pay a special assessment to the Federal Crime Victims Fund in the amount of $35 for both offenses.
“Today’s sentence reaffirms our commitment to the protection of eagles and other wildlife in the District of South Dakota.” said United States Attorney Randy Seiler. “We will continue to prosecute and hold accountable those who intentionally and recklessly kill eagles and other protected wildlife in the District of South Dakota”
Nelson was indicted by a federal grand jury on September 9, 2015.
The conviction stemmed from incidents between January 1, 2015, and May 12, 2015, when Nelson, who is a landowner in Sanborn County, without being permitted to do so, knowingly and with wanton disregard for the consequences of his actions, injected a poison, Carbofuran, also known as Furadan 4F, into the carcasses of cows in order to kill predators, including coyotes. Carbofuran is a restricted use pesticide that is extremely toxic to wildlife, including birds. Use of this pesticide for baiting purposes is strictly prohibited, and the label of the Carbofuran’s container says so.
As a result of Nelson’s actions, area animals, including coyotes, and an adult Bald eagle, died of Carbofuran poisoning. Laboratory results from the National Fish & Wildlife Forensic Laboratory in Ashland, Oregon, confirmed that the eagle died of Carbofuran poisoning, after eating coyote carcasses that were poisoned with Carbofuran poisoning in its system.
“The purposeful misapplication of a pesticide like Furadan 4F to kill coyotes and other predators can be devastating to all wildlife up and down the food chain, including eagles” said U.S Fish and Wildlife Service Mountain-Prairie Region Assistant Special Agent in Charge Dan Rolince. "This conviction and sentence send a clear message that intentional and unlawful activities that result in the death of federally protected species will not be tolerated."
"The defendant intentionally and illegally used a restricted use pesticide as bait, which put people, wildlife and the environment at risk,” said Jeffrey D. Martinez, Special Agent in Charge of EPA’s criminal enforcement program in South Dakota. “Today's sentence sends a strong signal that individuals who misuse restricted use pesticides will be prosecuted."
This case was investigated by the U.S. Fish & Wildlife Service, the Environment Protection Agency and the South Dakota Department of Game, Fish and Parks. Assistant U.S. Attorney Meghan N. Dilges prosecuted the case.
Nelson was immediately turned over to the custody of the U.S. Marshals Service.
Lawrence Man Pleads Guilty to Heroin and Fentanyl Distribution ConspiracyRead the Press Release
CONCORD, N.H. – Jose Casellas, 39, a citizen of the Dominican Republic most recently residing in Lawrence, Massachusetts, pleaded guilty in United States District Court for the District of New Hampshire to a federal indictment charging him with conspiracy to distribute heroin and fentanyl, announced United States Attorney Emily Gray Rice.
According to court documents, the defendant was arrested while attempting to deliver approximately three kilograms of fentanyl to a confidential informant. A search of Casellas’s residence resulted in the seizure of $12,000, a holster, and some ammunition. Through additional investigation, law enforcement obtained the address of a stash house and processing mill used by the defendant. Law enforcement officers then obtained a search warrant for the address and found approximately 898 grams of heroin, one kilogram of fentanyl, nine kilograms of a cutting agent, and three firearms. The stash house was used primarily for preparing drugs as it contained kilogram and finger presses, numerous blenders, cutting agents, and a ventilation system. The doors and windows were fortified. The defendant sold drugs that were ultimately distributed in New Hampshire since at least 2014.
Casellas’s plea agreement includes a binding stipulated sentence of 204 months in prison. It also provides for the forfeiture of any property constituting or derived from the conspiracy. A sentencing hearing has been scheduled for January 12, 2017, in front of United States District Judge Landya B. McCafferty. At that time, the Court will decide whether to accept the plea agreement and impose the agreed-upon period of incarceration, as well as any other conditions of Casellas’s sentence.
“Prosecuting those individuals who introduce heroin and fentanyl into New Hampshire is a priority of my office,” stated United States Attorney Emily Gray Rice. “This case is an example of a very successful collaboration between local, state, and federal law enforcement partners across state lines. I commend the Manchester Police Department, the Massachusetts State Police, and the DEA for their tireless efforts and cooperation on this case.”
According to statistics maintained by the State of New Hampshire, over half of the drug overdose deaths in New Hampshire in 2015 were related to fentanyl. Because a single gram of heroin or fentanyl can be used to create multiple individual dosage units that can be sold “on the street,” the quantity of fentanyl involved in this case could have generated hundreds of individual doses of fentanyl, each of which had the potential to cause a fatal overdose.
“Opiate abuse is at epidemic levels in New Hampshire and throughout New England,” said Special Agent in Charge Michael J. Ferguson. “Fentanyl is causing overdose deaths across the Granite State, and DEA is committed to aggressively pursue trafficking organizations or individuals who are coming from out of state to distribute fentanyl to areas of New Hampshire in order to profit and destroy people’s lives, and wreak havoc in our communities. This investigation demonstrates the strength and continued commitment of our local, state and federal law enforcement partners.”
This case was supported by the Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations. The case was investigated by the Manchester Police Department, the Massachusetts State Police, and the Drug Enforcement Administration and was prosecuted by Assistant United States Attorneys Georgiana L. Konesky and Donald Feith.
Las Cruces Woman Pleads Guilty to Federal Drug Trafficking Charges Arising Out of Seizure of 12 Pounds of Meth and 2.4 Pounds of HeroinRead the Press Release
ALBUQUERQUE – Jeanne J. Barron, 24, of Las Cruces, N.M., pled guilty today in federal court in Albuquerque, N.M., to methamphetamine and heroin trafficking charges.
Barron was arrested in July 2015, on a criminal complaint charging her with possession of methamphetamine and heroin with intent to distribute on July 10, 2015, in Bernalillo County, N.M.. According to the complaint, law enforcement officers located a bag containing several individual packages containing 5.37 kilograms (11.98 pounds) of methamphetamine and two packages containing 1.08 kilograms (2.4 pounds) of heroin in Barron’s vehicle during a traffic stop. Barron was subsequently indicted on the same charges on July 30, 2015.
During today’s proceedings, Barron pled guilty to a felony information charging her with possession of methamphetamine and heroin with intent to distribute. In entering the guilty plea, Barron admitted that on July 10, 2015, she was stopped by law enforcement officers while traveling from Phoenix, Ariz., to Oklahoma City, Okla. Barron further admitted that the law enforcement officers found ten packages containing 11.98 pounds of methamphetamine and two packages containing 2.4 pounds of heroin in the trunk of her vehicle during the traffic stop.
At sentencing, Barron faces a statutory maximum penalty of 20 years in federal prison. A sentencing hearing has yet to be scheduled.
This case was investigated by the Albuquerque office of Homeland Security Investigations and the Bernalillo County Sheriff’s Office. Assistant U.S. Attorney Rumaldo R. Armijo is prosecuting the case as part of the New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative. The HOPE Initiative was launched in January 2015 by the UNM Health Sciences Center and the U.S. Attorney’s Office in response to the national opioid epidemic, which has had a disproportionately devastating impact on New Mexico. Opioid addiction has taken a toll on public safety, public health and the economic viability of our communities. Working in partnership with the DEA, the Bernalillo County Opioid Accountability Initiative, Healing Addiction in our Community (HAC), the Albuquerque Public Schools and other community stakeholders, HOPE’s principal goals are to protect our communities from the dangers associated with heroin and opioid painkillers and reducing the number of opioid-related deaths in New Mexico.
The HOPE Initiative is comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. HOPE’s law enforcement component is led by the Organized Crime Section of the U.S. Attorney’s Office and the DEA in conjunction with their federal, state, local and tribal law enforcement partners. Targeting members of major heroin and opioid trafficking organizations for investigation and prosecution is a priority of the HOPE Initiative. Learn more about the New Mexico HOPE Initiative at http://www.HopeInitiativeNM.org.
Las Cruces Man Sentenced to 70 Months in Federal Prison for Illegal Possession of a GrenadeRead the Press Release
ALBUQUERQUE – Keyton Wayne Lieber, 37, of Las Cruces, N.M., was sentenced yesterday afternoon in federal court to 70 months in prison for unlawfully possessing a destructive device. Lieber will be on supervised release for two years after completing his prison sentence.
Lieber was arrested on Jan. 21, 2016, on a criminal complaint charging him with possessing a destructive device, an explosive grenade, on April 21, 2015, in Doña Ana County, N.M. According to the complaint, New Mexico State Police (NMSP) officers found the grenade in Lieber’s residence while executing a search warrant. Upon discovering the grenade, the NMSP Bomb Team and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) were contacted to safely dispose of the destructive device.
On June 28, 2016, Lieber pled guilty to possessing a destructive device, which was not registered to him. Court documents indicate that inquiry into the National Firearms Registration and Transfer Record (NFRTR) notified law enforcement that Lieber had no firearms or devices registered to him in the NFRTR.
This case was investigated by the Las Cruces office of the ATF and the NMSP. Assistant U.S. Attorney Randy M. Castellano of the U.S. Attorney’s Las Cruces Branch Office prosecuted the case.