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Wednesday 15 June 2016
Spring Hill Man Sentenced in Embezzlement SchemeRead the Press Release
Robert Majors, 58, of Spring Hill, Tenn., was sentenced today to 20 months in prison, followed by two years of supervised release, for embezzling more than $600,000 from his former employer, announced David Rivera, United States Attorney for the Middle District of Tennessee. U.S. District Court Judge Aleta Trauger also ordered Majors to pay $642,500.00 in restitution and to forfeit the proceeds of his crime.
Majors pleaded guilty in March 2015 to two counts of wire fraud in connection with a scheme to embezzle funds from his former employer, Irving Materials, Inc. (“IMI”). During the sentencing hearing, evidence established that while employed as Controller of IMI in Nashville, Tenn., Majors made fraudulent, electronic transfers in excess of $600,000, from an IMI bank account to his personal bank account during a seven-year period. Majors then took steps to conceal his fraud by recording the transfers as company purchases of fixed assets in the company’s journal entries. Majors admitted to using the funds derived from his scheme to, in part, pay his mortgage and other loans, pay credit card bills, make home repairs, and pay for a cruise to Italy.
The case was investigated by the Federal Bureau of Investigation. The United States is represented by Assistant U.S. Attorney Thomas J. Jaworski.
South Bay Man and Utah Man Charged with Defrauding Japanese Investors in $7 Million Ponzi SchemeRead the Press Release
SAN FRANCISCO –A federal grand jury indicted John Holdaway and Kevin Kyes yesterday with conspiracy, wire fraud, and money laundering, announced United States Attorney Brian J. Stretch, the Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
Holdaway, 72, of Sandy, Utah, and Kyes, 68, of Campbell, Calif., allegedly ran an approximately $7 million Ponzi scheme, primarily involving Japanese investors, from December 2012 through July 2015. According to the indictment, Holdaway and Kyes offered investors the opportunity to invest with a group of entities that they controlled and referred to as “Money Management Strategies,” or “MMS.” The defendants allegedly told the investors their money would be invested in currency or derivatives trading with returns of 100% annually. The defendants also allegedly told investors that their investments would be safe, in part because their principal would never leave the bank accounts into which the funds were sent and that any trading losses would be borne by MMS. Based on the representations of Holdaway and Kyes, these investors wired or otherwise transferred money to bank accounts in Northern California controlled by Holdaway and Kyes. The Japanese investors sent approximately $7 million to Holdaway and Kyes during the scheme.
The indictment alleges that in reality, Holdaway and Kyes did not invest the money as promised. Instead, they spent the money themselves, used it to fund Ponzi-type payments back to investors, spent the money to pay back prior investors from other investment programs that they had run, and spent it on gold-related businesses. In addition, Holdaway and Kyes allegedly told investors that they were receiving distributions or returns on their investment. To back up their claims, the defendants also allegedly created and sent to investors fake documents, including account statements and letters from an accountant. Holdaway also sent emails to investors under fake names, to give the appearance that multiple people worked for Holdaway and Kyes, and lied about traveling to Europe or elsewhere to work on their investments.
Holdaway and Kyes are charged with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; eighteen counts of wire fraud, in violation of 18 U.S.C. § 1343; one count of conspiracy to engage in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 1956(h); and five counts of engaging in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 1957.
Both defendants were arrested this morning and made their initial appearances in federal court, where they were released pending further hearings. Holdaway’s next scheduled appearance is at 9:30 a.m. on Tuesday, June 28, 2016, before the Honorable Laurel Beeler, U.S. Magistrate Judge. Kyes’s next scheduled appearance is at 11:00 a.m. on Friday, July 22, 2016, before the Honorable Susan Illston, U.S. District Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the maximum statutory penalty for each count of wire fraud or conspiracy to commit wire fraud is 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss resulting from the offense. The maximum statutory penalty for each count of conspiracy to engage in monetary transactions in property derived from specified unlawful activity or of engaging in monetary transactions in property derived from specified unlawful activity is 10 years’ imprisonment and a fine of $250,000 or twice the amount of property involved in the offense. Additional periods of supervised release and restitution also apply. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Benjamin Kingsley is prosecuting the case with assistance from Jessica Meegan and Daniel Charlier-Smith. The prosecution is the result of an investigation by the FBI and the IRS-Criminal Investigation.
Smithfield Man Sentenced to 84 Months for Narcotics and Firearm OffensesRead the Press Release
GREENVILLE – The United States Attorney’s Office announced that today in federal court, Senior United States District Judge Malcolm J. Howard sentenced TERRELL RICKY SETTLES, 23, of Smithfield to 84 months imprisonment, followed by 5 years of supervised release.
SETTLES was named in an Indictment filed on December 15, 2015, charging him with Possession with Intent to Distribute a Quantity of a Mixture Containing Methamphetamine and Heroin and Aiding and Abetting; Maintaining a Place for the Purpose of Manufacturing, Storing, Distributing, and Using Methamphetamine and Aiding and Abetting; and Possession of a Firearm in Furtherance of a Drug Trafficking Crime and Aiding and Abetting. On February 8, 2016, SETTLES pled guilty to these charges.
In June 2015, officers with the Smithfield Police Department, received several complaints from concerned citizens regarding possible drug activity at a residence on Boyette Circle. Detectives also received information from at least two confidential informants which indicated SETTLES was involved in the distribution of narcotics in the Smithfield area. Detectives conducted surveillance and a “trash pull” at the residence on Boyette Circle. On July 17, 2015, officers executed a search warrant at the residence. SETTLES, and two co-defendants were present at the time of the execution of the search warrant. During a search of the residence, detectives located two loaded 9mm pistols in SETTLE’S bedroom; over two hundred grams of methamphetamine; 51 bindles (1.05 grams of heroin1); 2.5 grams of marijuana; approximately 200 rounds of 9mm ammunition; $7,528; and drug packaging materials.
SETTLES is responsible for the distribution of 272.86 grams of methamphetamine and 1.05 grams of heroin. SETTLES also possessed a firearm and maintained a residence for the purpose of distributing narcotics during the commission of these crimes.
This case was part of the Project Safe Neighborhoods (PSN) initiative which encourages federal, state, and local agencies to cooperate in a unified “team effort” against gun crime, targeting repeat offenders who continually plague their communities.
Investigation of this case was conducted by the Smithfield Police Department, and the Bureau of Alcohol Tobacco Firearms and Explosives (ATF). Assistant United States Attorney S. Katherine Burnette prosecuted the case for the government.
Slidell Man Sentenced to over 9 Years in Prison for Drugs and Firearms OffensesRead the Press Release
U.S. Attorney Kenneth A. Polite announced that THOMAS BROWN, age 46, a resident of Slidell, Louisiana, was sentenced to 111 months imprisonment today on charges of possession with intent to distribute heroin, fentanyl, and cocaine, and possession of firearms in furtherance of drug trafficking.
According to court records, in July 2015, Drug Enforcement Administration agents observed BROWN supplying heroin to a targeted trafficker. After further investigation, agents obtained and executed a search warrant at BROWN’s residence and found 188 grams of acetyl fentanyl, 66 grams of heroin, 150 grams of cocaine hydrochloride, and 17.9 grams of marijuana. Most of the narcotics seized were hidden between a furnace and a wall in a hallway closet, and the drugs had been packaged for sale. Near the narcotics agents also located a loaded .45 caliber pistol, a .38 caliber revolver, and a loaded 20-guage shotgun.
U.S. District Judge Susie Morgan sentenced the defendant to a 51-month term of imprisonment for the drugs charge, to be followed by a consecutive 60-month term of imprisonment for the firearms charge. BROWN was also ordered to serve a 4-year term of supervised release following imprisonment and to pay a $200 special assessment.
U.S. Attorney Polite praised the work of the Drug Enforcement Administration in investigating this matter. Assistant United States Attorney Michael B. Redmann is in charge of the prosecution.
Seng Xiong Indicted for Defrauding Hmong EldersRead the Press Release
United States Attorney Andrew M. Luger today announced an indictment charging SENG XIONG, 48, with wire and mail fraud for operating an affinity scheme targeting Hmong elders. XIONG was arrested on Thursday, March 24, 2016, at Los Angeles International Airport, prior to boarding a flight bound for Thailand.
According to the Indictment, XIONG was conducting a fraud scheme through his organization “Hmong Tebchaws,” in which Hmong elders were being directed to deposit $3,000 to $5,000 into a bank account held in the name of SENG XIONG. In exchange for the payments, victims were allegedly promised 10 acres of land, a house, and many other benefits in a future country that would be established as a Hmong homeland somewhere in Southeast Asia.
According to the Indictment, XIONG claimed to be working with the White House and United Nations to establish the new Hmong country. He also claimed that a piece of land had already been set aside for the Hmong people somewhere in Southeast Asia.
According to the Indictment, XIONG offered several “investment” options which purported to represent varying levels of return that “founders” would be able to receive on their investment in the new country. Investments between $3,000 and $5,000 would guarantee the “investor” and his or her future generations, land, a house, free healthcare, free education, and government financial assistance for people over 65 years of age, as well as a return on that investment equal to a percentage of the income generated by the new Hmong country. Those who could not afford the $3,000 - $5,000 “founders” option could pay $20 per month, or $240 per year, which would secure their spot in the new Hmong country along with some of the benefits, although those who “enrolled” at that level would not receive a return on their investment.
If you or someone you know could be a victim, please contact the Minnesota Financial Crimes Task Force by sending an email to [email protected].
This case is the result of an investigation conducted by the Minnesota Financial Crimes Task Force, Saint Paul Police Department, United States Secret Service, Federal Bureau of Investigation and Appleton Police Department.
Special assistance was provided by the United States Attorney’s Offices for the Eastern District of California.
This case is being prosecuted by Assistant United States Attorney Amber M. Brennan.
Defendant Information:SENG XIONG, 48
Maplewood, Minn.Charges:
• Wire fraud, 1 count
• Mail fraud, 1 countSchuylkill County Man Indicted for Production of Child Pornography and Enticement of A MinorRead the Press Release
SCRANTON—The United States Attorney’s Office for the Middle District of Pennsylvania announced that a federal grand jury in Scranton returned an indictment yesterday charging a 19-year-old Pine Grove man with production of child pornography and enticement of a minor to engage in illegal sexual activity.
According to United States Attorney Peter Smith, the Indictment alleges that Josiah Ferrebee persuaded and coerced a 15-year-old girl to engage in sexually explicit conduct for the purpose of producing a visual image of such conduct, and enticed, persuaded and coerced the minor to engage in illegal sexual activity in January 2016.
The charges stem from an investigation by agents from the Department of Homeland Security and detectives from the County Sheriff’s Office in Grand Traverse Michigan.
If convicted, Ferrebee faces a mandatory minimum sentence of 15 years in prison and a potential maximum sentence of 30 years in prison for the child pornography charge, and a mandatory minimum sentence of 10 years in prison and a potential maximum sentence of life in prison for the enticement of a minor charge.
This case was brought as part of Project Safe Childhood, a nationwide initiative
launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Assistant U.S. Attorney Francis P. Sempa is prosecuting the case.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law is life imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Sayre Man Sentenced to 188 Months for Drug ConspiracyRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma announced that BUDDY KENNY ROGERS, age 36, of Sayre, Oklahoma was sentenced to 188 months imprisonment, followed by four years supervised release, for DRUG CONSPIRACY, in violation of Title 21, United States Code, Sections 841(a)(1), 841(b)(1)(B) and 841(b)(1)(C).
The charge is a result of an investigation by the Tulsa County Sheriff’s Office, Tahlequah Police Department and the Drug Enforcement Administration. The defendant was indicted in November, 2015 and pled guilty in February, 2016.
The Indictment alleged that that in or about June 2014 and continuing until on or about April 1, 2015, within the Eastern District of Oklahoma and elsewhere, the defendant, BUDDY KENNY ROGERS did knowingly and intentionally combine, conspire, confederate and agree together, and with others, known and unknown to commit offenses against the United States to possess with intent to distribute and to distribute 50 grams or more of a mixture or substance containing a detectable amount of Methamphetamine, a Schedule II controlled substance and a mixture or substance containing a detectable amount of Heroin, a Schedule I controlled substance.
Rogers was a California state inmate incarcerated within the Oklahoma Department of Corrections. While incarcerated within the Oklahoma Department of Corrections, Rogers utilized a cellular telephone to contact others in California to coordinate the delivery of methamphetamine and heroin to others outside the prison system but within the Eastern District of Oklahoma.
The Honorable Ronald A. White, District Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, presided over the hearing. The defendant will remain in the custody of the United States Marshals Service pending transportation to the designated federal facility at which he will serve his nonparoleable sentence.
Assistant United States Attorney Shannon Henson represented the United States.
Santa Fe County Man Arrested on Misdemeanor Charge for Trespassing on Nambe Pueblo LandRead the Press Release
ALBUQUERQUE – U.S. Attorney Damon P. Martinez and Special Agent in Charge William McClure of District IV of the BIA’s Office of Justice Services announced the arrest of Steve Romero, a non-Indian, on the misdemeanor charge of trespassing on Nambe Pueblo land.
Romero, a 32-year-old resident of Santa Fe County, N.M. made his initial appearance today in federal court in Albuquerque, N.M., on a criminal complaint charging him with the misdemeanor trespass offense. The complaint alleges that in Feb. 2016, the Nambe Tribal Council banished Romero from entering any land within the Nambe Pueblo boundaries. It further alleges that Romero reentered Nambe Pueblo land on four occasions between April 2016 and June 2016, in violation of the Pueblo’s banishment resolution. Romero remains in custody pending a preliminary hearing and a detention hearing, which are scheduled for tomorrow.
If convicted of the misdemeanor offense charged in the criminal complaint, Romero faces a maximum penalty of a year in federal prison. Charges in criminal complaints are merely accusations. All criminal defendants are presumed innocent unless proven guilty beyond a reasonable doubt.
This case was investigated by the Northern Pueblos Agency of the BIA’s Office of Justice Services and is being prosecuted by Assistant U.S. Attorney Raquel Ruiz-Velez.
Statement to Lgbt CommunityRead the Press Release
The United States Attorney’s Office for the District of Columbia offers its deepest condolences in the wake of the unconscionable violence that occurred June 12, 2016 at the Pulse nightclub in Orlando, Florida. Our office condemns this horrific terrorist attack against the LGBT community and its allies. We send our thoughts and prayers to the families and friends of the victims.
As Deputy Attorney General Sally Q. Yates stated, “Words cannot express the depth of our sorrow or the measure of our grief for all those whom we lost and all those whose lives have been changed forever. What happened in Orlando … was a horrifying act of evil and of terror. For the LGBT community, Pulse was more than a place to celebrate and see friends. It was a place that promised safety, inclusion and the freedom for people to be themselves – the same promise our country has made to all of us. This was an attack on that promise. It was an attack on our values, on our country and on our national community. It was an attack on who we are as a nation and as a people. And our country as a whole stands united in its response to this cowardly and despicable act.”
The U.S. Attorney has made a concerted effort, through our Hate Bias Task Force, our participation on the Mayor’s Office on LGBT Affair’s Violence Prevention and Response Team, and other outreach efforts, to build relationships with the LGBT community. We stand in staunch support and solidarity with LGBT communities in Orlando and here in Washington, D.C.
Together with our law enforcement partners, we will do all that we can to assist the LGBT community during this troubling time and to strengthen safety and security.
Roswell Felon Facing Federal Firearms ChargesRead the Press Release
ALBUQUERQUE –This morning a U.S. Magistrate Judge sitting in Las Cruces, N.M., found probable cause to support a criminal complaint charging Michael Dalton, 33, of Roswell, N.M., with violating the federal firearms laws. The Magistrate Judge also entered an order detaining Dalton pending trial.
Dalton was arrested on June 7, 2016, on a criminal complaint charging him with being a felon in possession of firearms and ammunition. The criminal complaint alleges that Dalton committed the crime on Aug. 28, 2015, in Chaves County, N.M.
According to the criminal complaint, Roswell Police Department (RPD) officers responded to a call from Dalton’s neighbor who allegedly heard Dalton arguing with and threatening to shoot a woman. The neighbor then allegedly heard gunshots coming from Dalton’s residence. When the officers then executed a state search warrant at Dalton’s residence, they allegedly located multiple rounds of ammunition and three firearms.
The criminal complaint alleges that Dalton was prohibited from possessing firearms and ammunition on Aug. 28, 2015, because of his previous convictions for larceny, possession of a controlled substance, burglary, tampering with evidence, possession of burglary tools, breaking and entering, aggravated fleeing a law enforcement officer and forgery.
If convicted of the crimes charged in the criminal complaint, Dalton faces a statutory maximum sentence of ten years in prison. Charges in criminal complaints are merely accusations and defendants are presumed innocent unless found guilty in a court of law.
This case was investigated by the Las Cruces office of the Bureau of Alcohol, Tobacco, Firearms and Explosives and the RPD. Assistant U.S. Attorney Alexander B. Shapiro of the U.S. Attorney’s Las Cruces Branch Office is prosecuting the case.
Rochester Man Arrested for Threatening A Federal Law Enforcement OfficerRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051ROCHESTER, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Tony Ivey, 52, of Rochester, NY, was arrested and charged by criminal complaint with threatening to assault or murder a Federal law enforcement officer with the intent to interfere with the officer while performing official duties. The charge carries a maximum penalty of six years in prison and a $250,000 fine.
“Thanks to the quick work of the U.S. Marshal Service, this defendant is now is police custody and unable to carry out any of these alleged threats,” said U.S. Attorney Hochul.
“We take a zero tolerance approach when any individual threatens to commit an act of violence with a gun against a law enforcement officer or any member of our community,” said U.S. Marshal Salina.
Assistant U.S. Attorney Tiffany H. Lee, who is handling the case, stated that according to the complaint, on June 13, 2016, Ivey contacted the U.S. Attorney’s Office in Rochester and complained about the Rochester Housing Authority. During these calls, the defendant became verbally abusive and agitated.
Ivey contacted the U.S. Attorney’s Office once again on June 14, 2016. During that call, an Assistant U.S. Attorney (AUSA) attempted to advise the defendant that the U.S. Attorney’s Office would not be able to assist Ivey with his complaints but would assist in directing the defendant to other entities. Ivey became agitated and claimed his civil rights were being violated.
As the call continued, the defendant became verbally abusive and stated that he was going to go to the AUSA’s office with an assault weapon and shoot people. Ivey further stated that he was willing to die.
The United States Marshals Service tracked the defendant to a residence on Westland Parkway in Cheektowaga where he was arrested. During his arrest, Ivey told a Deputy Marshal, “you are the type of people that provoke Orlando.” The defendant further stated, “I wish I had a gun, I just don’t have access...but I would if I got them, do that (expletive) I would.”
The complaint is the result of an investigation by the United States Marshals Service, under the direction of Marshal Charles Salina and the United States Marshals Service Task Force.
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.
Rochester Brothers Plead Guilty to Armed Cocaine TraffickingRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051ROCHESTER, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Shawnta Brown, 40, and Kenya Brown, 41, both of Rochester, NY, pleaded guilty before U.S. District Judge Elizabeth A. Wolford to conspiracy to possess with intent to distribute and to distribute five kilograms or more of cocaine and 280 grams or more of crack cocaine, and possession of firearms in furtherance of a drug trafficking crime. The charges carry a mandatory minimum penalty of 15 years in prison, a maximum of life, a fine of $10,250,000, or both.
Assistant U.S. Attorney Robert A. Marangola, who is handling the case, stated that between 2006 and March 2012, the Brown brothers obtained kilogram quantities of cocaine, manufactured crack cocaine from cocaine, then broke down and packaged smaller quantities for resale. The defendants also distributed cocaine and crack cocaine directly to others, operated drug houses where they directed and supervised lower-level members of the conspiracy who sold the illegal narcotics.
The Brown brothers were arrested March 9, 2012 when officers raided 2294 Clifford Avenue, 138 Strong Street, 29 Aberdeen Street and other locations in Rochester utilized by the defendants in their drug trafficking operation. At these locations, officers seized more than five kilograms of cocaine, a quantity of crack cocaine, firearms with ammunition, paraphernalia for the packaging, processing and weighing of narcotics, and receipts for gold and silver bars. A few days later, officers raided a residence in the Town of Red Creek in Cayuga County, seizing more firearms, dozens of rounds of ammunition, $303,355 in U.S. currency, and over $23,000 in gold and silver bars and coins. The investigation continued, and resulted in the arrest of Eric Contreras, 29, the California kilogram supplier on May 15, 2012 in Whittier, California. Contreras was convicted and sentenced to 188 months in prison.
Today’s convictions are the culmination of an investigation on the part of the Rochester Police Department, under the direction of Chief Michael Ciminelli and Special Agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge James J. Hunt, New York Field Division, with assistance provided by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, under the direction of Special Agent in Charge Delano A. Reid, and the United States Marshal Service under the direction of United States Marshal Charles Salina.
Sentencing is scheduled for August 15, 2016 at 2:00 pm before Judge Wolford.
Quad/Graphics, Inc. Agrees to Pay $750,000 to United States to Settle Allegations Regarding Work for Government Publishing OfficeRead the Press Release
WASHINGTON – Quad/Graphics Inc. has agreed to pay $750,000 to the United States to resolve allegations that the firm violated security requirements involving personally identifiable information on contracts with the U.S. Government Publishing Office (GPO).
The settlement agreement was announced today by U.S. Attorney Channing D. Phillips and Michael A. Raponi, Inspector General for the U.S. Government Publishing Office.
The company, based in Sussex, Wisconsin, specializes in print solutions, such as retail inserts, publications, catalogs, direct mail, packaging, books, and directories. Since January of 2013, it provided printing services under contracts with the GPO. These contracts involved the electronic receipt and printing of Social Security Administration forms that contain personally identifiable information, protected from disclosure under the federal Privacy Act and other laws. Under the contracts, the company was to meet security requirements involving the handling of documents with personally identified information, including the handling of waste.
The agreement resolves allegations stemming from an investigation by the GPO Office of Inspector General of a company facility in Chalfont, Pennsylvania. As a result of the investigation, the United States alleged civil claims arising from its contention that Quad/Graphics failed to comply with the security requirements. For example, the government alleged, Quad/Graphics failed to dispose of waste according to GPO procedures; used malfunctioning security cameras to monitor production runs and the bale room; allowed unauthorized employees who had not undergone required background checks to work on the contracts, and altered sign-in sheets to conceal the fact that the unauthorized employees had access to the secure work area.
In addition to the $750,000 payment, Quad/Graphics has agreed to a series of changes in the way it trains its employees on the handling of documents containing personally identifiable information and in the actual physical layout of its printing facility to maximize security of personal identification information.
The claims resolved by this settlement are allegations only, and there has been no determination of liability.
The settlement was the result of a coordinated effort among the Civil Division of the U.S. Attorney’s Office of the District of Columbia and the GPO Office of Inspector General. In announcing the settlement, U.S. Attorney Philips and Inspector General Raponi commended the work of Special Agent Keith D. Olive, who investigated the case from the Inspector General’s Office, and Assistant U.S. Attorney Darrell C. Valdez of the U.S. Attorney’s Office.
Public Land Marijuana Grower Sentenced to 97 Months in Federal PrisonRead the Press Release
BOISE - Martin Diaz-Lara, 33, a Mexican National, illegally residing in Walla Walla, Washington, was sentenced today to 97 months in prison for possession of a firearm in furtherance of a drug trafficking crime and conspiracy to manufacture a controlled substance, more than 1,000 marijuana plants, with the intent to distribute it, U.S. Attorney Wendy J. Olson announced. Chief United States District Judge B. Lynn Winmill also ordered Diaz- Lara to serve three years of supervised release. Diaz-Lara will likely be deported to Mexico following completion of his prison sentence. Diaz-Lara pleaded guilty on March 8, 2016.
According to court documents, Diaz Lara was arrested on September 23, 2015, along with a co-conspirator Carlos Avalos-Cervantes, in a canyon half a mile from the North Fork of Payette River, ten miles north of Banks, in Boise County, Idaho. Agents were able to document a total of 6,870 live and harvested marijuana plants on state lands in the canyon. According to court proceedings, Diaz-Lara and Avalos-Cervantes each possessed a 9 mm handgun in furtherance of the drug trafficking crime. Agents discovered that Diaz-Lara and others working in the grow used a banned Mexican pesticide, carbofuran. Carbofuran was banned by the U.S. Environmental Protection Agency in 1991, after its use resulted in the death of millions of birds per year. The court documents also state that the marijuana operation was supported and supplied by other co-defendants. All of those responsible for the public land outdoor marijuana grow are Mexican nationals who entered the United States illegally.
Co-defendant Avalos-Cervantes pleaded guilty to the same charges as Diaz-Lara and was sentenced on April 19, 2016 to 180 months in prison. Avalos-Cervantes was believed to have been involved in another public land marijuana grow in Umatilla County, Oregon in 2007. Trial for the remaining defendants is scheduled for July 18, 2016, before Chief U.S. District Judge B. Lynn Winmill.
The arrests and complaints are the result of a joint investigation and cooperative law enforcement efforts of the Organized Crime and Drug Enforcement Task Force (OCDETF), led by the Drug Enforcement Administration, Bureau of Land Management (BLM), Nampa Police Department Special Investigations Unit (SIU). Other agencies include Ada County Sheriff’s Office, United States Forest Service (USFS), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), U. S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Boise County Sheriff’s Office, Boise Police Department, Gooding County Sheriff’s Office, Idaho Department of Fish and Game, Idaho National Guard—Counterdrug Support Office, Meridian Police Department, Milton-Freewater Police Department, Oregon State Police, Power County Sheriff’s Office, Spokane Police Department, Valley County Sheriff’s Office, Walla Walla Police Department, and Washington State Patrol.
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.
Pittsburgh Dentist Charged with Illegally Distributing PainkillersRead the Press Release
PITTSBURGH – A Monroeville resident has been indicted by a federal grand jury in Pittsburgh on charges of distribution of Oxycodone, a Schedule II controlled substance, outside the usual course of professional practice, and omitting material information from required reports, records and other documents, United States Attorney David J. Hickton announced today.
The seven-count indictment, returned on June 7 and unsealed on Monday, named Daniel Garner, 44, a dentist who practices in Pittsburgh, Pennsylvania, as the sole defendant.
According to the indictment, from Feb. 13, 2014 through June 11, 2015, Garner distributed Oxycodone on six occasions, a Schedule II controlled substance, outside the usual course of professional practice. The indictment further alleges that on Jan. 14, 2016, Garner omitted material information from an application for a Drug Enforcement Agency registration number.
The law provides for a maximum total sentence on all counts of incarceration of up to 124 years, a fine of $6,250,000, a term of supervised release of three years, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Cindy K. Chung is prosecuting this case on behalf of the government.
The Drug Enforcement Administration and the Federal Bureau of Investigation conducted the investigation that led to the prosecution of Daniel Garner.
Philadelphia man found guilty of heroin, oxycodone traffickingRead the Press Release
CLARKSBURG, WEST VIRGINIA – A federal jury convicted Keevus Weeks, 32, of Philadelphia, Pennsylvania of heroin and oxycodone trafficking today, United States Attorney William J. Ihlenfeld, II, announced.
Evidence presented at trial indicated that Weeks was involved in a drug trafficking operation in which heroin and oxycodone were transported across state lines from Philadelphia to Morgantown, West Virginia for redistribution and sale throughout the region.
Following a 3 day trial, a jury found Weeks guilty of one count of “Conspiracy to Distribute Oxycodone and Heroin,” two counts of “Distribution of Oxycodone within 1000 feet of a Protected Location,” and one count of “Distribution of Oxycodone.”
For the “Conspiracy to Distribute Oxycodone and Heroin” charge, Weeks faces up to 20 years in prison and a fine of up to $1,000,000. Weeks faces between one to 40 years in prison and a fine of up to $2,000,000 for each of the “Distribution of Oxycodone within 1000 feet of a Protected Location” charges. For the “Distribution of Oxycodone” charge, Weeks faces up to 20 years in prison and a fine of up to $1,000,000. Under the Federal Sentencing Guidelines, the actual sentence imposed for each charge will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Zelda E. Wesley prosecuted the case on behalf of the government. The West Virginia State Police Bureau of Criminal Investigation, the Federal Bureau of Investigation, and the Mon Metro Drug and Violent Crime Task Force investigated.
U.S. District Judge Irene M. Keeley presided.
Penn Hills Man Sentenced for Role in Cocaine Trafficking ConspiracyRead the Press Release
PITTSBURGH - A resident of Penn Hills, Pa., has been sentenced in federal court to five years’ probation with four months to be served in community confinement and six months’ home detention on his conviction of conspiracy to distribute cocaine, United States Attorney David J. Hickton announced today.
United States District Judge Mark R. Hornak imposed the sentence on Lavon Hudgins, 45, of Pittsburgh, PA.
According to information presented to the Court, in 2013, the Federal Bureau of Investigation and other agencies joined forces in a multi-agency wiretap investigation of drug trafficking and violence in the Homewood section of Pittsburgh. The interception of wire and electronic communications began in December 2013 and continued through the end of August 2014. During that timeframe, Lavon Hudgins was intercepted over the wire conspiring with others to possess with intent to distribute and distribute cocaine, which was shipped from California to the Western District of Pennsylvania through the United States Postal Service or commercial carrier.
Prior to imposing sentence, Judge Hornak stated that the sentence was sufficient but not greater than necessary to fulfill the purposes of sentencing.
Assistant United States Attorney Tonya Sulia Goodman prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Federal Bureau of Investigation, the Greater Pittsburgh Safe Streets Task Force, Wilkinsburg Police Department, Allegheny County Sheriff’s Office, Pennsylvania Office of the Attorney General, Munhall Police Department, Duquesne Police Department, Monroeville Police Department, Allegheny County Police Department, West Mifflin Police Department, Bellevue Police Department, and the Pittsburgh Bureau of Police for the investigation leading to the successful prosecution of Hudgins.
Overdose Investigation Leads to Heroin Distribution Charges Against Bridgeport ManRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, and Michael J. Ferguson, Special Agent in Charge of the Drug Enforcement Administration for New England, today announced that on Monday, DAQUONE JOHNSON, 24, of Bridgeport, was arrested on heroin distribution offenses. The charges stem from an ongoing statewide initiative targeting narcotics dealers who distribute heroin, fentanyl or opioids that cause death or serious injury to users.
JOHNSON is charged by criminal complaint with possession with intent to distribute, and distribution of, heroin, and conspiracy to distribute heroin. The charges carry a maximum term of imprisonment of 20 years on each count.
According the complaint, on May 9, 2016, a 30-year-old female was found unresponsive at a residence in Monroe. Police and medical personnel responded to the scene and administered multiple doses of Narcan to the victim. The victim, who did not respond to the Narcan, was transported to the hospital where she was pronounced dead. While administering aide to the victim, hospital staff located unopened heroin folds on the victim’s person. The substance within the folds later tested positive for heroin and fentanyl, and the Connecticut Office of the Medical Examiner has determined the victim’s cause of death to be acute heroin and fentanyl toxicity.
Based on an investigation that has included witness interviews and analysis of calls and text messages to and from the victim’s phone, the complaint alleges that the victim ordered heroin from JOHNSON on the day of her death.
JOHNSON was arrested on June 13, 2016, after law enforcement conducted a controlled purchase of heroin from him. He appeared yesterday before U.S. Magistrate Judge William I Garfinkel in Bridgeport and was released on a $125,000 bond.
U.S. Attorney Daly stressed that a complaint is only a charge and is not evidence of guilt. Charges are only allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Drug Enforcement Administration’s New Haven Tactical Diversion Squad, and the Monroe, Milford and Bridgeport Police Departments. The Task Force includes participants from the New Haven, Hamden, Greenwich, Shelton, Bristol, Vernon, Wilton, Milford, Monroe, Fairfield and Middlebury Police Departments, and the Connecticut State Police. The case is being prosecuted by Assistant U.S. Attorney Douglas P. Morabito.
Orange County Businessman Sentenced to over 10 Years in Federal Prison for Defrauding Investors out of nearly $50 MillionRead the Press Release
SANTA ANA, California – A former Newport Beach resident has been sentenced to 121 months in federal prison for running a Ponzi scheme through his Orange County-based company that defrauded hundreds of investors out nearly $50 million.
Joseph J. Lampariello, 62, who recently relocated to Huntington Station, New York, was sentenced Monday afternoon by United States District Judge David O. Carter.
In addition to the prison term of just over 10 years, Judge Carter ordered Lampariello to pay $39,961,859 in restitution.
Lampariello previously pleaded guilty to one felony count of wire fraud and one misdemeanor count of willfully failing to file a tax return.
Lampariello was the president and chief operating officer of Medical Capital Holdings, Inc., a medical receivables financing company that operated out of offices in Anaheim and Tustin. Medical Capital administered several entities that raised money from investors who were told their money would be used to purchase account receivables from accredited medical providers, make secured loans and provide money for general operating expenses.
Over 11 months in 2008 and 2009, Lampariello misappropriated funds invested with one of the entities and used the money to make Ponzi payments to prior investors and to pay himself administrative fees. Lampariello, through Medical Capital, defrauded over 700 investors of nearly $49 million.
“Mr. Lampariello’s sentence properly reflects the significant harm he caused to hundreds of victims,” said United States Attorney Eileen M. Decker. “This defendant’s false promises were designed only to provide wealth for himself, and he must now pay for that greed.”
“The massive monetary figures can’t begin to explain the devastation to victims in this case, some of whom were forced out of retirement, some who lost their marriage and many more who lost trust and live with despair as a result,” said Deirdre L. Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Investors must do extensive research before handing over their hard-earned savings, and must never fall for phony online profiles as a way of determining a reputable investment business.”
“When you knowingly mix deceit and trickery into the financial well-being of individuals, you create a recipe for devastation that could last a lifetime,” stated IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “Today’s sentencing demonstrates how federal law enforcement will band together to help put an end to the criminal behavior of those who prey on investors for their own personal financial gain.”
This case was the result of a joint investigation by the Federal Bureau of Investigation and IRS Criminal Investigation. The prosecution was handled by Assistant United States Attorney Jennifer L. Waier.
Murphysboro Man Sentenced on Crack Cocaine OffenseRead the Press Release
On June 14, 2016, Keenon J. Farr, a/k/a "Keeno," 32, of Murphysboro, IL, was sentenced for a crack cocaine offense, the Acting United States Attorney for the Southern District of Illinois, James L. Porter, announced today.
Farr, who had previously pled guilty to an indictment charging conspiracy to distribute 28 grams or more of crack cocaine, was sentenced to 125 months in federal prison, to be followed by 8 years’ supervised release, and fined $500.00. The offense occurred between October 2014 and July 2015, in Williamson and Jackson Counties. Evidence at the plea and sentencing hearings established that Farr was involved with others in the distribution of crack cocaine in the Marion and Carbondale areas. During the investigation, Farr sold crack cocaine to confidential sources working for law enforcement. At sentencing, the judge found that Farr was responsible for the distribution of 525.12 grams of crack cocaine and 24.78 grams of cocaine. Co-defendants Tommy T. Langston and Tammy R. Whitton have each previously been sentenced to terms of 120 months for their role in the crack cocaine conspiracy. One co-defendant has pled guilty and is awaiting sentencing. One co-defendant has pled not guilty and is awaiting trial.
The ongoing investigation is being conducted by the Southern Illinois Enforcement Group, Drug Enforcement Administration, Jackson County Sheriff’s Office, and Carbondale Police Department. The Williamson and Jackson County State’s Attorneys’ Offices also assisted in the investigation.
Monroe County Man Indicted for Sex Trafficking Conspiracy and Interstate Prostitution CrimesRead the Press Release
SCRANTON—The United States Attorney’s Office for the Middle District of Pennsylvania announced that a federal grand jury in Scranton returned an indictment on June 14, 2016, charging a 39-year-old East Stroudsburg man with conspiracy to commit sex trafficking by force and coercion, and interstate transportation of others for purposes of prostitution.
According to United States Attorney Peter Smith, the Indictment alleges that Thurman Stanley allegedly forced and coerced several women to engage in prostitution in Monroe County and elsewhere, and transported women from Pennsylvania to New York, Iowa, and North Dakota to engage in prostitution.
The charges stem from an investigation by the Federal Bureau of Investigation, the Pennsylvania State Police, and Bismarck, North Dakota detectives.
The indictment alleges that Stanley and/or his co-conspirators used social network sites to recruit females for prostitution; used cell phones to post ads on adult escort websites to solicit customers; rented hotel and motel rooms in Monroe County and elsewhere for purposes of prostitution; provided heroin and other illegal drugs to the prostitutes; and used force, threats, and coercion to carry out prostitution activities. The indictment alleges that the conduct occurred between December 2013 and December 2015.
Stanley was arrested in May 2016 on a Criminal Complaint and remains in custody.
If convicted of the charges, Stanley faces a mandatory minimum sentence of 15 years in prison and a potential maximum sentence of life in prison for the sex trafficking charge, and up to 10 years in prison on each of the interstate prostitution charges.
Assistant U.S. Attorney Francis P. Sempa is prosecuting the case.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law is life imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Michigan Tax Return Preparer Pleads Guilty to Preparing False ReturnsRead the Press Release
A Michigan man pleaded guilty in the U.S. District Court for the Eastern District of Michigan today to one count of aiding and assisting in the preparation of false tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Royal Alexander Jr., 51, who owned and operated Royal Publishing Inc., in Flint, Michigan, admitted that from 2010 through 2015, he willfully aided in the preparation and filing of 40 false individual income tax returns. According to the information, these returns were false in that they included inflated or entirely fictitious Schedules C; claimed a false dependent; claimed a false IRA deduction; falsely claimed Head of Household status for a client; and/or claimed a false education credit, all to produce larger refunds.
Alexander’s sentencing hearing is scheduled for Sept. 20. He faces a statutory maximum sentence of three years in prison and agreed in his plea to pay $98,605 in restitution to the Internal Revenue Service (IRS). Alexander also faces financial penalties and a term of supervised release.
Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Jeffrey A. McLellan and Abigail B. Chingos of the Tax Division, who are prosecuting this case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
McAlester Man Sentenced to 30 Months for Firearm PossessionRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma announced that MALCOLM DEWAYNE ELLIS, age 38, of McAlester, Oklahoma was sentenced to 30 months imprisonment, followed by 3 years supervised release, for FELON IN POSSESSION OF FIREARM, in violation of Title 18, United States Code, Sections 922(g)(1) and 924(a)(2).
The charge is a result of an investigation by the McAlester Police Department. The defendant was indicted in January, 2016 and pled guilty in February, 2016.
The Indictment alleged that on or about April 6, 2015, within the Eastern District of Oklahoma, the defendant, MALCOLM DEWAYNE ELLIS, having been convicted of a crime punishable by imprisonment for a term exceeding one year, did knowingly possess in and affecting commerce, a firearm, to-wit: One (1) Bersa, Model Mini 9 Firestorm, 9mm caliber semi-automatic pistol, serial number 621726, manufactured in Argentina, Imported by “RSA Enterprises INC”, which had been shipped and transported in interstate commerce.
The Honorable Ronald A. White, District Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, presided over the hearing. The defendant will remain in the custody of the United States Marshals Service pending transportation to the designated federal facility at which he will serve his nonparoleable sentence.
Assistant United States Attorney Dean Burris represented the United States.
McAlester Man Pleads Guilty to Methamphetamine DistributionRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma announced that LUKE AUSTIN HOMER, age 35, of McAlester, Oklahoma, pled guilty to an Information charging him with POSSESSION WITH INTENT TO DISTRIBUTE 5 GRAMS OR MORE OF METHAMPHETAMINE (Actual), in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(B).
The charge arose from an investigation by the Pittsburg County Sheriff’s Department and the Drug Enforcement Administration.
The Information alleged that on or about March 5, 2016, in the Eastern District of Oklahoma, the defendant, LUKE AUSTIN HOMER, did knowingly and intentionally possess with intent to distribute 5 grams of more of methamphetamine (Actual), a Schedule II controlled substance.
The Honorable Steven P. Shreder, Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, accepted the defendant’s guilty plea, and ordered the completion of a presentence report. Sentencing will be scheduled upon its completion. The defendant will remain in the custody of the United States Marshals Service pending sentencing.
The statutory range of punishment is up to 40 years imprisonment, a fine of up to $4,000,000.00 or both.
Assistant United States Attorney Tim Hammer represented the United States.
Maryland Health Care Provider Sentenced to 10 Years in Federal Prison for Health Care Fraud Resulting in Patient DeathsRead the Press Release
Baltimore, Maryland – U. S. District Judge James K. Bredar sentenced the owner of Alpha Diagnostics, Rafael Chikvashvili, age 69, of Baltimore, Maryland, today to 10 years in prison, followed by two years of supervised release, for charges related to a health care fraud and wire fraud conspiracy resulting in the deaths of patients, as well as false statements and aggravated identity theft, related to a scheme to defraud Medicare and Medicaid of more than $6 million. Judge Bredar also ordered that Chikvashvili pay restitution and forfeit proceeds of the fraud, with the exact amount to be determined at a later date. Chikvashvili has been detained since his conviction by a federal jury on February 17, 2016.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Nicholas DiGiulio, Office of Investigations, Office of Inspector General of the Department of Health and Human Services; and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office.
“The evidence showed that Rafael Chikvashvili failed to provide medical services to patients who needed them, and billed for services that he did not provide,” said U.S. Attorney Rod J. Rosenstein. “The jury found that two patients died because their X-rays were not reviewed by a qualified radiologist. Health care fraud has consequences, in money wasted and lives lost.”
According to the evidence presented at the two-and-a-half week trial, Chikvashvili formed Alpha Diagnostics Services, Inc., which later became Alpha Diagnostics, LLC, in 1993, and was the Managing Member, Authorized Official, Managing Employee, President and Chief Executive Officer for Alpha Diagnostics. Chikvashvili holds a PhD in mathematics, but was never a medical doctor or licensed physician. Timothy Emeigh was the Vice President in charge of Operations at Alpha Diagnostics and was a licensed radiologic technologist.
Alpha Diagnostics was a portable diagnostic services provider, principally of X-rays, but also provided ultrasound tests, and cardiologic examinations. Alpha Diagnostics’ clients included nursing homes whose patients were covered by Medicare and Medicaid. Alpha Diagnostics operated in Maryland, Delaware, Pennsylvania, Virginia and the District of Columbia, but was headquartered in Owings Mills, Maryland, where Chikvashvili worked full time.
Based on the evidence, the jury found that from 1997 through October 2013, Chikvashvili conspired with others to defraud Medicare and Medicaid by: creating false radiology, ultrasound and cardiologic interpretation reports; by submitting insurance claims for medical examination interpretations that were never completed by licensed physicians; by falsely representing to Medicare and Medicaid, as well as to treating physicians, that the interpretations had, in fact, been completed by actual licensed physicians; by submitting insurance claims for radiology, ultrasound and cardiologic examinations (and their associated costs) that were never performed and/or were not ordered by the treating physician; and by submitting claims for transportation and other charges that Alpha Diagnostics was not entitled to receive.
According to witness testimony, Chikvashvili instructed his non-physician employees, including Emeigh, to interpret X-rays, ultrasounds and cardiologic examinations instead of licensed radiologists. For example, in June 2012, Emeigh traveled to Jamaica for a vacation. The evidence showed that Chikvashvili directed Emeigh, through text messages and telephone calls, to view medical images using his personal laptop in his hotel room and then draft false physician interpretation reports. Alpha Diagnostics personnel subsequently submitted false claims to Medicare for these images and fraudulent physician reports.
The evidence showed that Chikvashvili also caused employees to draft licensed physician’s examination reports. Chikvashvili, in turn, caused a copy of the handwritten signature of the actual physician to be affixed to the report, or forged the physician’s signature himself, creating the appearance that a licensed physician had performed the medical interpretation.
According to the testimony provided at trial, two patients died because their X-rays were not interpreted by a qualified radiologist. Instead, non-physician Alpha Diagnostics employees reviewed the images and failed to detect congestive heart failure. As a result of the incorrect reading the her chest X-ray, the first patient with congestive heart failure was not transferred to an acute care facility for treatment, as is standard medical practice, but remained in a rehabilitative nursing home. The patient died four days after unqualified Alpha Diagnostics personnel misinterpreted her chest X-ray. Witnesses testified that had the patient been transferred, her symptoms could have been addressed. The second patient was scheduled to undergo elective surgery and the chest X-ray was a pre-operation test to determine if the patient could safely have surgery. According to the evidence presented at trial, although the patient’s X-ray revealed mild congestive heart failure, the non-physician Alpha Diagnostics employee failed to detect it. A patient in congestive heart failure is at an increased risk of bleeding during and after surgery. As a result of the incorrect reading of the chest X-ray, the patient was cleared for elective surgery and experienced significant bleeding after the elective surgery, and the worsening of her congestive heart failure. Six days after unqualified Alpha Diagnostics personnel misinterpreted her chest X-ray, the patient died.
Subsequently, Alpha Diagnostics submitted claims to Medicare falsely representing that licensed radiologists had interpreted both patients’ chest X-rays. Medicare paid Alpha Diagnostics $8.87 for the first claim and $218.36 for the second claim.
The evidence showed that over the course of the conspiracy, Chikvashvili and Alpha Diagnostics received more than $6 million from fraudulent claims submitted to Medicare and Medicaid.
Timothy Emeigh, age 51, of York Springs, Pennsylvania previously pleaded guilty to health care fraud and is scheduled to be sentenced on June 17, 2016.
United States Attorney Rod J. Rosenstein praised the HHS-OIG and the FBI for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Leo J. Wise and P. Michael Cunningham, who prosecuted the case.
Manager and Two Debt Collectors Plead Guilty in $31 Million Fraudulent Debt Collection SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that HEATHER GASTA, a/k/a “Heather Brez,” a former manager of a Buffalo, New York-based debt collection company (the “Company”), pled guilty today to participating in a scheme to coerce thousands of victims across the country through false threats and representations into paying a total of more than $31 million to the Company to resolve debts these victims purportedly owed. Earlier this week, COLUMBUS SIMMONS, a/k/a “Timothy Ham,” and WILLIAM CLARK, a/k/a “John Harvey,” two former debt collectors at the Company, also pled guilty for their roles in the debt collection scheme. GASTA, SIMMONS, and CLARK each pled guilty to one count of conspiracy to commit wire fraud and one count of wire fraud before U.S. District Judge Katherine Polk Failla. To date, nine former employees of the Company have pled guilty to participating in the scheme.
U.S. Attorney Preet Bharara said: “As they admitted in court this week, these defendants were key members of a band of predatory debt collectors, or as they called themselves, ‘the elite team.’ Armed with telephones and a litany of threatening lies, they and others at the Company coerced thousands of desperate, debt-ridden victims to send them tens of millions of dollars. In a practice they called ‘juicing the balance,’ these defendants also falsely inflated the debt owed by the victims so they could collect even more.”
According to the allegations contained in the Indictment to which GASTA, SIMMONS, and CLARK pled guilty and statements made during their plea proceedings:
Between 2010 and February 2015, GASTA, SIMMONS, CLARK, and their co-defendants (collectively, the “defendants”) routinely attempted to trick and coerce thousands of victims throughout the United States into paying millions of dollars in consumer debts through a variety of false statements and false threats. The defendants, using a variety of aliases, falsely told victims, among other things, that: (1) the Company was affiliated with local government and law enforcement agencies, including the “county” and the district attorney’s office; (2) the consumers had committed criminal acts, such as “wire fraud” or “check fraud,” and if they did not pay the debt immediately, warrants or other process would be issued, at which point they would be arrested or hauled into court; (3) the victims would have their driver’s licenses suspended if they did not pay their debts immediately; (4) the Company was a law firm or mediation firm and that the Company’s employees were working with lawyers, a law firm, mediators, or arbitrators; and (5) a civil lawsuit would be filed, or was pending, against the victims for failing to pay their debts.
As a further part of the scheme, the defendants lied to victims by falsely inflating the balances of the debts so that they could collect more money from the victims than the victims actually owed, a practice known within the Company as “juicing” balances.
GASTA, SIMMONS, and CLARK were members of the Company’s so-called “elite team,” which used particularly aggressive and egregious tactics in attempting to trick consumers into paying debts. GASTA also served as a Company manager.
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GASTA, 41, SIMMONS, 46, and CLARK, 30, all of Buffalo, New York, each pled guilty to one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison and three years of supervised release. The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
GASTA, is scheduled to be sentenced on September 30, SIMMONS on September 23, and CLARK on September 29, 2016, respectively, before Judge Failla.
In total, nine former employees of the Company have pled guilty to defrauding consumers as part of this debt collection scheme. In addition to the pleas of GASTA, SIMMONS and CLARK, former Company mangers Mark Lavin and John Salatino and debt collectors Jessica Mann, Charles Starks, Michael Calandra, and Jennifer Sherk each pled guilty for their roles in the fraud. The other defendants who have not pled guilty are presumed innocent unless and until proven guilty.
On or about May 20, 2016, Mann was sentenced by Judge Failla to a prison term of one year and one day. The sentencing of the other defendants who have pled guilty is pending.
Mr. Bharara praised the efforts of the Office’s Criminal Investigators.
The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Edward A. Imperatore and Jordan L. Estes are in charge of the prosecution.
MEDIA ADVISORY-- HOPE Initiative Partners to Co-Host KANW/Albuquerque Journal Public Forum on New Mexico’s Heroin and Opioid EpidemicRead the Press Release
ALBUQUERQUE – HOPE Initiative partners, U.S. Attorney Damon P. Martinez and Executive Vice Chancellor Richard Larson, UNM Health Sciences Center, will co-host the KANW/Albuquerque Journal public forum on New Mexico’s heroin and opioid epidemic which will be broadcast by KANW 89.1 FM from 7:00 pm to 9:00 pm tonight. During the public forum, which will be moderated by Albuquerque Journal Editor-in-Chief Kent Walz and Albuquerque Journal Investigative Reporter Mike Gallagher, more than 20 experts from law enforcement, the medical profession, local government and community organizations will respond to questions about the epidemic from New Mexico residents. A list of the experts participating in the public forum is attached.
WHO:
U.S. Attorney Damon P. Martinez
Executive Vice Chancellor Richard Larson, UNM Health Sciences Center
Kent Walz, Editor-in-Chief, Albuquerque Journal
Mike Gallagher, Investigative Reporter, Albuquerque Journal
WHAT:
Live Public Forum on New Mexico’s Heroin and Opioid Epidemic
WHEN:
WEDNESDAY, JUNE 15, 2016 FROM 7:00 PM TO 9:00 PM
WHERE:
KANW 89.1FM
The New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative was launched in Jan. 2015 by the UNM Health Sciences Center and the U.S. Attorney’s Office in response to the national heroin and 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, Bernalillo County Opioid Accountability Initiative, Healing Addiction in our Community (HAC) 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 Initiative is comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. The new community education program is part of the prevention and education component of the HOPE Initiative. Learn more about the New Mexico HOPE Initiative at http://www.HopeInitiativeNM.org.
HOPE Forum Expert List
Lancaster Resident Sentenced to 18 Months in Prison for Unemployment Compensation Benefits FraudRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced that Angel Luis Carrasco-Rivera, age 54, was sentenced to 18 months in prison by Chief United States District Court Judge Christopher C. Conner in Harrisburg for fraudulently obtaining unemployment benefits.
According to U.S. Attorney Peter Smith, Carrasco-Rivera, Lancaster, was charged in a Criminal Information with mail fraud in January 2016. The charge stemmed from Carrasco-Rivera filing claims for unemployment compensation benefits from 2008 through late 2012 with the Pennsylvania Department of Labor and Industry in Harrisburg. Carrasco-Rivera knew he was not entitled to those benefits because he was employed full time when he applied for and received them. Carrasco-Rivera obtained more than $102,000 in benefits to which he was not entitled during that four-year period.
Carrasco-Rivera pled guilty in February 2016 pursuant to a plea agreement. Chief Judge Conner ordered Carrasco-Rivera to pay $89,500 in restitution to the Pennsylvania Department of Labor and Industry.
The case was investigated by the United States Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, with assistance from the Pennsylvania Department of Labor and Industry, Internal Audits Division. Assistant U.S. Attorney James T. Clancy prosecuted the case.
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LRGP Member Pleads Guilty to Rico Conspiracy Involving Murder and Drug ConspiracyRead 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 Philip Brown, 24 of Buffalo, NY, pleaded guilty before U.S. District Judge Richard J. Arcara to RICO conspiracy. Keys faces a mandatory minimum penalty of 20 years in prison and a $250,000 fine.
“Today’s conviction brings to an end a violent chapter on Buffalo's East Side, perpetrated by the gang formerly called LRGP,” said U.S. Attorney Hochul. “Thanks to this prosecution, numerous murderers- including a woman who lured a victim to his death - have been brought to justice, and multiple acts of violence solved. Most importantly, justice for the victims and residents alike have been served. And as is the case with federal RICO prosecutions brought by this Office, the gang no longer exists.”
Assistant U.S. Attorneys Thomas S. Duszkiewicz and Joel L. Violanti, who are handling the case, stated that between 2009 and January 23, 2012, Brown was an associate of the LRGP gang which operates primarily in the area of Lombard, Rother, Gibson and Playter Streets in the City of Buffalo. It is alleged to be an organization engaged in violent criminal activity, including the distribution of cocaine and crack cocaine and the use of firearms.
In April 2011, the defendant and others, while at 318 Sobieski Street in Buffalo, agreed that a member of the Cold Springs Gang, a rival criminal organization, should be murdered in retaliation for the killing Alonzo Scott, in March 2011. Scott was the brother of LRGP leader Dewayne Gray. The individuals settled upon killing Amir Chambers, whom they believed to be associated with the Cold Springs Gang, and who had an ongoing social relationship with Alexis Mills.
After a failed attempt by Mills to poison Amir Chambers, it was agreed that co-defendant Fred Keys would kill Chambers by shooting him. Mills was to use her relationship with Chambers to get the victim to open his residence door. On April 20, 2011, Keys, Mills, Timothy Finch and the defendant went to a residence at 111 Mills Street in Buffalo where they dropped off Fred Keys and Alexis Mills. Chambers opened the residence door upon seeing Alexis Mills at which time Keys killed Chambers by shooting him in the head. Mills, for her part, kicked the victim in the head following the shooting to ensure that Chambers was in fact deceased. Keys later called 911 to report that there was a “body” at 111 Mills Street.
Philip Brown is the final defendant out of 17 individuals to be convicted in this case.
The plea is the result of an investigation by the Federal Bureau of Investigation Safe Streets Task Force, under the direction of Special Agent in Charge Adam S. Cohen, the Drug Enforcement Administration, under the direction of Special Agent in Charge James J. Hunt, New York Field Office, the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Delano A. Reid, New York Field Office and the Buffalo Police Department, under the direction of Commissioner Daniel Derenda.
Brown will be sentenced on September 22, 2016 at 12:30 p.m. before Judge Arcara.Iowa Businessman Pleads Guilty for Failing to Pay Employment Taxes and Violating Clean Water ActRead the Press Release
An Iowa businessman pleaded guilty yesterday in federal court to failing to pay employment taxes and violating the Clean Water Act, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Kevin W. Techau of the Northern District of Iowa.
Randy Less, 49, of Hopkinton, Iowa, was charged in an indictment in January 2016 with multiple counts of willfully failing to collect, truthfully account for and pay federal income, social security and Medicare taxes that were withheld from the wages of employees of Permeate Refining Inc., an ethanol production business in Hopkinton.
“Mr. Less made the choice to ignore his employment tax obligations, and will now pay a price for his criminal conduct,” said Acting Assistant Attorney General Ciraolo. “We are committed to holding accountable those employers who take advantage of their employees, their competitors and the U.S. Treasury.”
“The United States takes very seriously its obligation to ensure that employers collect, account for and pay taxes withheld from the wages of their employees,” said U.S. Attorney Techau. “Environmental crimes that involve polluting Iowa’s waterways are serious matters. Violations of our environmental laws impact our communities both now and in years to come.”
“Business owners have a responsibility to withhold income taxes for their employees and then remit those taxes to the Internal Revenue Service (IRS),” said Special Agent in Charge Karl Stiften of IRS Criminal Investigation. “The failure to pay over withheld taxes is a serious offense. IRS Criminal Investigation vigorously pursues anyone who collects taxes and fails to timely remit those taxes.”
“Iowa’s waterways are not dumping grounds,” said Assistant Special Agent in Charge Justin Oesterreich of the U.S. Environmental Protection Agency’s (EPA) criminal enforcement program in Iowa. “Mr. Less admitted that he knowingly discharged or caused to be discharged production wastewater into a tributary of the Maquoketa River without a permit to do so, putting public health, wildlife and the environment at risk. This case demonstrates that EPA takes seriously its commitment to protect our natural resources and the communities that rely upon them.”
At his guilty plea proceeding, Less admitted that as the majority owner, general partner and general manager of Permeate Refining, he had the responsibility to collect, truthfully account for and pay over to the IRS the taxes withheld from his employees’ wages.
Less also pleaded guilty yesterday to an information, which the government filed the same day, charging him with violations of the Clean Water Act. Less admitted that in July 2013, he knowingly discharged or caused to be discharged ethanol, a pollutant, from Permeate Refining Inc. into an unnamed tributary of the Maquoketa River without a permit to do so.
A sentencing date has not yet been set. Less faces a statutory maximum sentence of five years in prison and a fine of up to $250,000 for the tax charge and a statutory maximum sentence of three years in prison and a fine of up to $250,000 on the Clean Water Act charge.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Techau thanked special agents of the IRS-Criminal Investigation, FBI, U.S. Postal Inspection Service and EPA, who investigated the case, and Assistant U.S. Attorney Tim Vavricek of the Northern District of Iowa and Trial Attorney Matthew Hoffman of the Tax Division, who are prosecuting the case.
Iowa Businessman Pleads Guilty for Failing to Pay Employment Taxes and Violating Clean Water ActRead the Press Release
CEDAR RAPIDS, IA – An Iowa businessman pled guilty yesterday in federal court to failing to pay employment taxes and violating the Clean Water Act, announced U.S. Attorney Kevin W. Techau of the Northern District of Iowa and Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Randy Less, 49, of Hopkinton, Iowa, was charged in an Indictment in January 2016 with multiple counts of willfully failing to collect, truthfully account for and pay federal income, social security and Medicare taxes that were withheld from the wages of employees of Permeate Refining Inc., an ethanol production business in Hopkinton.
At his guilty plea proceeding, Less admitted that as the majority owner, general partner and general manager of Permeate Refining, he had the responsibility to collect, truthfully account for and pay over to the Internal Revenue Service (IRS) the taxes withheld from his employees’ wages.
Less also pled guilty yesterday to an Information charging him with violations of the Clean Water Act that the government filed on the same day. Less admitted that in July 2013, he knowingly discharged or caused to be discharged ethanol, a pollutant, from Permeate Refining Inc. into an unnamed tributary of the Maquoketa River without a permit to do so.
“The United States takes very seriously its obligation to ensure that employers collect, account for, and pay taxes withheld from the wages of their employees,” stated United States Attorney Kevin W. Techau. He further added, “Environmental crimes that involve polluting Iowa’s waterways are serious matters. Violations of our environmental laws impact our communities both now and in years to come.”
“Mr. Less made the choice to ignore his employment tax obligations, and will now pay a price for his criminal conduct,” said Acting Assistant Attorney General Ciraolo. “We are committed to holding accountable those employers who take advantage of their employees, their competitors, and the U.S. Treasury.”
“Business owners have a responsibility to withhold income taxes for their employees and then remit those taxes to the Internal Revenue Service,” said Karl Stiften, Special Agent in Charge of IRS Criminal Investigation. “The failure to pay over withheld taxes is a serious offense. IRS Criminal Investigation vigorously pursues anyone who collects taxes and fails to timely remit those taxes.”
“Iowa’s waterways are not dumping grounds,” said Assistant Special Agent in Charge Justin Oesterreich of the U.S. Environmental Protection Agency’s (EPA) criminal enforcement program in Iowa. “Mr. Less admitted that he knowingly discharged or caused to be discharged production wastewater into a tributary of the Maquoketa River without a permit to do so, putting public health, wildlife and the environment at risk. This case demonstrates that EPA takes seriously its commitment to protect our natural resources and the communities that rely upon them.”
A sentencing date has not yet been set. Less faces a statutory maximum sentence of five years in prison and a fine of up to $250,000 for the tax charge and a statutory maximum sentence of three years in prison and a fine up to $250,000 on the Clean Water Act charge.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Techau thanked special agents of the IRS Criminal Investigation, FBI, U.S. Postal Inspection Service and U.S. Environmental Protection Agency, who investigated the case, and Assistant U.S. Attorney Tim Vavricek of the Northern District of Iowa and Trial Attorney Matthew Hoffman of the Tax Division, who are prosecuting the case.
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Indictment Unsealed Charging Heroin and Cocaine Conspiracy in St. Charles and St. John the Baptist ParishesRead the Press Release
U.S. Attorney Kenneth A. Polite announced the recent unsealing of a Superseding Indictment charging an array of federal narcotics and firearm violations by members of a drug trafficking organization operating in south Louisiana. The Superseding Indictment, which was returned by the grand jury on May 26, 2016 and unsealed today, charges eight defendants with conspiring to distribute controlled dangerous substances in the parishes of St. Charles and St. John the Baptist. The Superseding Indictment names the following defendants: ANDRE STAGGERS, a/k/a “Dre,” age 42, COREY SESSION, age 42, GREGORY LONDON, JR., a/k/a “Lil Gregg,” age 40, TERRANCE ANDERSON, a/k/a “City,” age 34, KIRK BALLARD, age 34, LEONARD MORRISON, a/k/a “Leonard London,” age 33, CHRISTOPHER OLAVARRIETA, age 30, and KIRKLAND JEROME STERLING, age 42.
According to the Superseding Indictment, these defendants conspired together, from approximately January 2015 through May 2016, to distribute heroin, cocaine, and marijuana in the Eastern District of Louisiana and elsewhere. The scope of the conspiracy encompassed at least five kilograms or more of cocaine and one kilogram or more of heroin. During the course of this investigation, federal and state law enforcement officers seized various drugs, including cocaine, heroin, marijuana, and methamphetamine. According to court documents, search warrants executed on February 25, 2016, at two residences used by COREY SESSION resulted in the seizure of two AK-style rifles, approximately $10,000 in cash, and a half kilogram of cocaine. A search warrant executed the same day at the residence of ANDRE STAGGERS resulted in the seizure of an AR-15 rifle, a half kilogram of heroin, and over $400,000 in cash.
If convicted for violating federal drug conspiracy laws, the defendants face the following penalties. STAGGERS, SESSION, LONDON Jr., ANDERSON, and BALLARD each face a maximum of life imprisonment, a $10,000,000 fine, and at least five years of supervised release. MORRISON faces a maximum of 40 years imprisonment, a $5,000,000 fine, and at least four years of supervised release. OLAVARIETTA and STERLING could receive a maximum of twenty years in prison, a $1,000,000 fine, and at least three years of supervised release.
STAGGERS and SESSION also are charged with federal firearms violations. STAGGERS is charged with possession of a firearm as a felon, for which he could receive up to ten years of imprisonment, a $250,000 fine, and up to three years of supervised release. SESSION is charged with possession of a firearm as an armed career criminal, for which he could receive a minimum of fifteen years in prison and a maximum of life imprisonment, a $250,000 fine, and up to five years of supervised release. Both STAGGERS and SESSION are also charged with possession of a firearm in furtherance of a drug trafficking crime, for which they each face a minimum of five years in prison consecutive to any other sentence, a $250,000 fine, and up to five years of supervised release.
U.S. Attorney Polite reiterated that the Superseding Indictment is merely a charge and that the guilt of the defendants must be proven beyond a reasonable doubt.
This indictment represents a coordinated effort of federal and state law enforcement authorities within the Drug Enforcement Administration’s Gulf Coast High Intensity Drug Trafficking Area (HIDTA) Program. The DEA’s HIDTA Group #11, operating out of the New Orleans Field Division, includes members of the Louisiana State Police, Jefferson Parish Sheriff’s Office, and other local agencies. Agents and officer with the DEA HIDTA Group arrested GREGORY LONDON Jr., TERRANCE ANDERSON, LEONARD MORRISON, CHRISTOPHER OLAVARRIETA, and KIRKLAND JEROME STERLING on June 15, 2016. KIRK BALLARD was arrested on August 23, 2015, on state charges that were incorporated into the federal indictment. ANDRE STAGGERS and COREY SESSION were both arrested after the February 25, 2016 search warrants that were executed at their respective residences.
The prosecution is being handled by Assistant United States Attorney Matthew Payne and Special Assistant United States Attorney Andre Gaudin, who is assigned from the Orleans Parish District Attorney’s Office to the DEA HIDTA Group.
Indiana Man Sentenced to Eleven Years in Federal Prison for Methamphetamine Trafficking Conviction in New MexicoRead the Press Release
ALBUQUERQUE – Rashad Travon Woods, 28, of Indianapolis, Ind., was sentenced today to 132 months in prison followed by five years of supervised release for his conviction on a methamphetamine trafficking charge in federal court in Albuquerque, N.M.
Woods was arrested on a criminal complaint charging him with a methamphetamine trafficking offense after the DEA seized 2.4 kilograms (5.28 pounds) of methamphetamine from him during an interdiction investigation at the Amtrak Train Station in Albuquerque on Oct. 30, 2015. The methamphetamine was concealed in clothes in Woods’ backpack. Woods was indicted on the same charge on Nov. 17, 2015.
On Feb. 29, 2016, Woods pled guilty to the indictment and admitted that on Oct. 30, 2015, in Bernalillo County, N.M., he was in possession of 2.40 gross kilograms of methamphetamine while traveling through Albuquerque.
This case was investigated by Albuquerque office of the DEA and was prosecuted by Assistant U.S. Attorney Edward Han.
ISIL-Linked Hacker Pleads Guilty to Providing Material SupportRead the Press Release
Ardit Ferizi, aka Th3Dir3ctorY, 20, a citizen of Kosovo, pleaded guilty today before U.S. District Judge Leonie M. Brinkemaof the Eastern District of Virginia to providing material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, and accessing a protected computer without authorization and obtaining information.
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office and Special Agent in Charge Michelle S. Klimt of the FBI’s Jacksonville, Florida, Division made the announcement.
“Ferizi admitted to stealing the personally identifiable information of over 1,000 U.S. servicemembers and federal employees, and providing it to ISIL with the understanding that they would incite terrorist attacks against those individuals,” said Assistant Attorney General Carlin. “The case against Ferizi is the first of its kind, representing the nexus of the terror and cyber threats. The National Security Division will continue to use an all-tools approach to combat this ever-evolving blended threat, and we will identify, disrupt and prosecute any individual who provides material support to ISIL, no matter how they do so.”
“Ferizi endangered the lives of over 1,000 Americans,” said U.S. Attorney Boente. “Cyber terrorism has become an increasingly prevalent and serious threat here in America, both to individuals and businesses. However, cyber terrorist are no different from other terrorists: No matter where they hide, we will track them down and seek to bring them to the United States to face justice.”
“Ardit Ferizi launched a cyberattack to gain access to the identities of U.S. military personnel, which he shared with members of ISIL in an attempt to incite terror attacks,” said Assistant Director in Charge Abbate. “No matter how a person supports a terrorist group like ISIL, whether on the battlefield or in the cyber world, the FBI will identify, disrupt and bring them to justice for placing lives at risk.”
“This case demonstrates the importance of strong partnerships with law enforcement agencies worldwide,” said Special Agent in Charge Michelle S. Klimt. “Cybercrime knows no boundaries and our efforts to dismantle these operations would be impossible without international collaboration. The FBI will continue to vigorously investigate these crimes and work with our international partners to track down and arrest those who steal from our nation and citizens.”
Ferizi, who was detained by Malaysian authorities on a provisional arrest warrant on behalf of the United States, was charged by criminal complaint on Oct. 6, 2015. The criminal complaint was unsealed on Oct. 15, 2015. Ferizi subsequently waived extradition.
Ferizi admitted that on or about June 13, 2015, he gained administrator-level access to a server that maintained the website of a victim company located in the United States, which also contained databases with personally identifiable information (PII) belonging to tens of thousands of the victim company’s customers. Between June and August 2015, Ferizi provided unlawfully-obtained PII to ISIL member Junaid Hussain, aka Abu Hussain al-Britani, he admitted. According to the statement of facts, on Aug. 11, 2015, in the name of the Islamic State Hacking Division (ISHD), Hussain posted a tweet that contained a document with the PII of approximately 1,300 U.S. military and other personnel that Ferizi had taken from the victim company and provided to Hussain. The document stated, in part, that “we are in your emails and computer systems, watching and recording your every move, we have your names and addresses, we are in your emails and social media accounts, we are extracting confidential data and passing on your personal information to the soldiers of the khilafah, who soon with the permission of Allah will strike at your necks in your own lands!” Ferizi admitted that he provided the PII to ISIL with the understanding that ISIL would use the PII to “hit them hard.”
At sentencing on Sept. 16, 2016, Ferizi faces a maximum sentence of 20 years in prison for providing material support to ISIL and a maximum sentence of five years for accessing a protected computer without authorization and obtaining information. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. As part of the plea, Ferizi also agreed to a stipulated order of removal to Kosovo, his country of citizenship, upon completion of his criminal sentence.
The FBI’s Washington Field Office and Jacksonville Division investigated the case. The case is being prosecuted by Special Assistant U.S. Attorney Brandon Van Grack of the Eastern District of Virginia and Trial Attorney Gregory Gonzalez of the National Security Division’s (NSD) Counterterrorism Section, with assistance from Trial Attorney Vincent A. Citro of NSD’s Counterterrorism Section and Trial Attorney Matthew Walczewski of NSD’s Counterintelligence and Export Control Section. The Malaysian authorities and the Justice Department’s Office of International Affairs also provided significant assistance.
ISIL-Linked Hacker Pleads Guilty to Providing Material SupportRead the Press Release
ALEXANDRIA, Va. – Ardit Ferizi, aka Th3Dir3ctorY, 20, a citizen of Kosovo, pleaded guilty today to charges of providing material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, and accessing a protected computer without authorization and obtaining information.
“Ferizi endangered the lives of over 1,000 Americans,” said Dana J. Boente, U.S. Attorney for the Eastern District of Virginia. “Cyber terrorism has become an increasingly prevalent and serious threat here in America, both to individuals and businesses. However, cyber terrorist are no different from other terrorists: No matter where they hide, we will track them down and seek to bring them to the United States to face justice.”
“Ferizi admitted to stealing the personally identifiable information of over 1,000 U.S. servicemembers and federal employees, and providing it to ISIL with the understanding that they would incite terrorist attacks against those individuals,” said John Carlin, Assistant Attorney General for National Security. “The case against Ferizi is the first of its kind, representing the nexus of the terror and cyber threats. The National Security Division will continue to use an all-tools approach to combat this ever-evolving blended threat, and we will identify, disrupt and prosecute any individual who provides material support to ISIL, no matter how they do so.”
“Ardit Ferizi launched a cyber attack to gain access to the identities of U.S. military personnel, which he shared with members of ISIL in an attempt to incite terror attacks,” said Paul M. Abbate, Assistant Director in Charge pf the FBI’s Washington Field Office. “No matter how a person supports a terrorist group like ISIL, whether on the battlefield or in the cyber world, the FBI will identify, disrupt and bring them to justice for placing lives at risk.”
Ferizi, who was detained by Malaysian authorities on a provisional arrest warrant on behalf of the United States, was charged by criminal complaint on Oct. 6, 2015. The criminal complaint was unsealed on Oct. 15, 2015. Ferizi subsequently waived extradition.
In a statement of facts filed with the plea agreement, Ferizi admitted that on or about June 13, 2015, he gained administrator-level access to a server that maintained the website of a victim company located in the United States, which also contained databases with personally identifiable information (PII) belonging to tens of thousands of the victim company’s customers. Between June and August 2015, Ferizi provided unlawfully-obtained PII to ISIL member Junaid Hussain, aka Abu Hussain al-Britani, he admitted. According to the statement of facts, on Aug. 11, 2015, in the name of the Islamic State Hacking Division (ISHD), Hussain posted a tweet that contained a document with the PII of approximately 1,300 U.S. military and other personnel that Ferizi had taken from the victim company and provided to Hussain. The document stated, in part, that “we are in your emails and computer systems, watching and recording your every move, we have your names and addresses, we are in your emails and social media accounts, we are extracting confidential data and passing on your personal information to the soldiers of the khilafah, who soon with the permission of Allah will strike at your necks in your own lands!” Ferizi admitted that he provided the PII to ISIL with the understanding that ISIL would use the PII to “hit them hard.”
Ferizi faces a maximum penalty of 25 years in prison when sentenced on September 16. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors. As part of the plea, Ferizi also agreed to a stipulated order of removal to Kosovo, his country of citizenship, upon completion of his criminal sentence.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; John P. Carlin, Assistant Attorney General for National Security; and Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office; and Michelle S. Klimt, Special Agent in Charge of the FBI’s Jacksonville, Florida, Division, made the announcement after the plea was accepted by U.S. District Judge Leonie M. Brinkema.
This case is being prosecuted by Special Assistant U.S. Attorney Brandon Van Grack and Trial Attorney Gregory Gonzalez of the National Security Division’s (NSD) Counterterrorism Section, with assistance from Trial Attorney Vincent A. Citro of NSD’s Counterterrorism Section and Trial Attorney Matthew Walczewski of NSD’s Counterintelligence and Export Control Section.
The Malaysian authorities and the Justice Department’s Office of International Affairs also provided significant assistance.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:16-cr-42.
Hedge Fund Portfolio Manager Sanjay Valvani and Former Portfolio Manager Stefan Lumiere Charged in Manhattan Federal CourtRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Diego Rodriguez, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Elton Malone, Special Agent in Charge, Special Investigations Branch, U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced today charges against SANJAY VALVANI and STEFAN LUMIERE, a portfolio manager and former portfolio manager, respectively, at a healthcare-focused hedge fund in New York, New York (“Investment Adviser-A”).
VALVANI was charged with participating in a scheme, from in or about 2005 through in or about January 2011, to convert United States property, to defraud the United States, and to commit securities fraud and wire fraud relating to VALVANI’s agreement with GORDON JOHNSTON, a political intelligence consultant and former senior official at the Food and Drug Administration (“FDA”), to unlawfully obtain highly confidential and material nonpublic information from the FDA about the agency’s approval of pending generic drug applications and convert it to VALVANI’s use, including by using the information to execute profitable securities transactions. VALVANI is also charged with passing certain highly confidential and material nonpublic information to CHRISTOPHER PLAFORD, a former portfolio manager at Investment Adviser-A, who also executed trades based on the information. In addition, Mr. Bharara announced today the unsealing of charges against JOHNSTON and PLAFORD, who both pled guilty and admitted to their participation in the scheme. As part of the scheme, for example, at VALVANI’s direction, JOHNSTON obtained highly confidential and material nonpublic information from a senior FDA official about the status and approval of a generic drug called enoxaparin, which information JOHNSTON passed to VALVANI. VALVANI used this information to trade in the securities of two pharmaceutical companies likely to be affected by an approval of a generic enoxaparin application, earning approximately $25 million in trading profits when the FDA announced its first such approval. VALVANI also tipped PLAFORD with this information. VALVANI surrendered to authorities this morning.
Separately, LUMIERE was charged with participating in a scheme with PLAFORD, from in or about June 2011 through in or about September 2013, to commit securities and wire fraud relating to the mismarking of securities in a fixed-income fund for which PLAFORD was the portfolio manager at the time, which inflated the net asset value (“NAV”) of the fund and overstated the fund’s liquidity. LUMIERE surrendered to authorities this morning. PLAFORD also pled guilty to his participation in this scheme, as well as an additional scheme involving another political intelligence consultant.
VALVANI will be presented and arraigned later today before United States District Judge Sidney H Stein. LUMIERE will be presented later today before U.S. Magistrate Judge James C. Francis IV. JOHNSTON’s case is assigned to U.S. District Judge Andrew L. Carter, Jr., and PLAFORD’s case is assigned to U.S. District Judge Ronnie Abrams.
In separate actions, the Securities and Exchange Commission (“SEC”) filed civil charges against VALVANI, LUMIERE, JOHNSTON, and PLAFORD.
U.S. Attorney Preet Bharara said: “As alleged, Valvani, Johnston, and Plaford conspired to extract highly confidential and tightly guarded information about pending applications for generic drug approvals from the FDA, and traded on such information, reaping millions of dollars in illegal profits. Lumiere and Plaford also allegedly conspired to mismark securities held by their fund, lying to their investors and unjustly enriching themselves in the process.”
FBI Assistant Director-in-Charge Diego Rodriguez said: “As alleged, the defendants conspired and schemed over six years to obtain insider information from the FDA on the status of approvals for generic drugs in order to take that information and use it to make securities trades. Additionally, some of those same defendants schemed to defraud investors from an fixed-income fund by deceptively mismarking the value of certain securities. Sadly these are schemes we see time and time again, where lies and use of nonpublic information profits those conducting the crimes and everyday investors lose out.”
HHS-OIG Special Agent in Charge Elton Malone said: “Trading on confidential, non-public FDA information corrupts the carefully guarded drug approval process and simply will not be tolerated. People hoping to profit from insider data will be aggressively prosecuted for their crimes.”
According to the allegations in the charging documents unsealed today in Manhattan federal court, including the Indictment charging VALVANI and the Complaint charging LUMIERE,[1] and statements made in court proceedings:
At all relevant times, Investment Adviser-A managed hedge funds specializing in healthcare-related investments. One such fund focused on long-short equity investments in healthcare companies (“Fund-1”). Another fund, which operated from in or about 2009 until in or about September 2013, invested primarily in debt instruments issued by healthcare companies (“Fund-2”).
VALVANI served as a partner in Investment Adviser-A and one of Fund-1’s portfolio managers, managing the specialty pharmaceuticals portfolio within Fund-1. From in or about May 2009 through in or about September 2013, PLAFORD served as a partner in Investment Adviser-A and as Fund-2’s portfolio manager. LUMIERE served under PLAFORD as the Fund-2 portfolio manager for special situations, which represented a portion of Fund-2’s portfolio.
The Scheme to Convert and Use Confidential FDA Information
The Scheme
As alleged in the Indictment, from in or about 2005 through in or about January 2011, VALVANI, JOHNSTON, PLAFORD, and others participated in a scheme to convert to their own use confidential and material nonpublic information from the FDA concerning, among other things, the FDA’s internal deliberations regarding the approval of generic drug applications for the purpose of making profitable securities transactions.
During this time period, Investment Adviser-A retained JOHNSTON as a consultant who provided “political intelligence” related to, among other things, the likelihood and timing of the FDA’s approval of generic drugs. JOHNSTON primarily consulted for VALVANI, and Investment Adviser-A paid JOHNSTON hundreds of thousands of dollars in total for his consulting work. Before becoming a consultant, JOHNSTON had served as the Deputy Director of the FDA’s Office of Generic Drugs (“OGD”), an office within the FDA charged with, among other things, approving generic drugs. In addition to serving as consultant to Investment Adviser-A, JOHNSTON worked for a trade association for manufacturers and distributors of generic drugs (the “Trade Association”). As a result of his long employment with the FDA, as well as his ongoing work with the Trade Association, JOHNSTON maintained close relationships with FDA insiders.
VALVANI tasked JOHNSTON with obtaining highly confidential and material nonpublic information from the FDA about pending generic drug ANDAs and related citizen petitions, information that FDA employees were not authorized to disclose to the public. An ANDA, or Abbreviated New Drug Application, is the process by which a pharmaceutical company can apply to the FDA for approval to sell a generic version of a brand name drug. In many cases, the brand name drug company files a citizen petition with the FDA challenging the generic drug company’s ANDA and arguing that the FDA should deny it. The FDA’s decision to approve a generic drug ANDA typically has a positive impact on the stock price of the company receiving approval, and a negative impact on the stock price of the company producing the brand name drug.
The Enoxaparin ANDA Approval
As alleged in the Indictment, at the direction of VALVANI, JOHNSTON improperly obtained confidential and material nonpublic information concerning the FDA’s approval of a generic version of an anticoagulant drug called enoxaparin and passed this information to VALVANI, which VALVANI used to make profitable securities trades. Beginning in the mid-1990s, Sanofi-Aventis S.A. (“Sanofi”) manufactured and sold enoxaparin under the brand name Lovenox. By 2005, three groups of publicly traded pharmaceutical companies had filed ANDAs with the FDA seeking approval to sell a generic version of Lovenox, including one such application filed by a publicly traded pharmaceutical company that had partnered with Momenta Pharmaceuticals, Inc. (“Momenta”) (the “Momenta ANDA”). After the first two ANDAs were filed, Sanofi filed a citizen petition with the FDA opposing the approval of a generic version of Lovenox. These three ANDAs were pending with the OGD for years, during which time it was unclear whether OGD would approve a generic version of Lovenox.
Beginning in or about 2005, VALVANI directed JOHNSTON to gather confidential and material nonpublic information from FDA employees about the FDA’s consideration of the enoxaparin ANDAs. JOHNSTON, in turn, improperly obtained such information from a senior OGD official (“Individual-1”), who was close friends with and a former colleague of JOHNSTON’s. Individual-1 participated in internal, confidential meetings regarding the Momenta ANDA. As part of the ANDA review and approval process, OGD maintained an internal document tracking the progress of ANDAs, including the Momenta ANDA, and estimating the likelihood and timing of their approval (the “Tracking Document”). The information contained in the Tracking Document was highly confidential and not intended to be disclosed to anyone outside the FDA. Nonetheless, Individual-1 disclosed confidential and material nonpublic information about the status of the approval of a generic Lovenox ANDA, including information from the highly confidential Tracking Document, to JOHNSTON. JOHNSTON breached a duty of trust to Individual-1 by passing the information to VALVANI, as JOHNSTON knew that Individual-1 expected him to keep the information confidential based on their history of sharing and keeping such confidences.
For example, in or about late December 2009 or early January 2010, JOHNSTON told VALVANI, in sum and substance, that he had learned that the Tracking Document reflected that OGD was moving toward approval of a generic Lovenox ANDA. This was information that was not known to the public and was not supposed to be known by anyone outside of the FDA. Based on his prior role at OGD, JOHNSTON understood this to mean that the ANDA approval was highly likely and could occur in a matter of months, which information JOHNSTON shared with VALVANI. VALVANI asked JOHNSTON to continue to contact his FDA sources to obtain additional updates about the agency’s internal deliberations related to the approval of a generic Lovenox ANDA.
Beginning on or about January 4, 2010, after receiving the tip from JOHNSTON, VALVANI requested that Investment Adviser-A give JOHNSTON a raise. In a January 6, 2010, email to Investment Adviser-A’s chief financial officer, VALVANI sought to justify providing a raise to JOHNSTON by stressing how important JOHNSTON was to him: “[JOHNSTON] is without question the most valuable consultant I’ve ever worked with and I’m pushing to reinforce the value of the relationship and encourage him to continue to go above and beyond for our team.”
The next day, on or about January 7, 2010, VALVANI caused Fund-1 to begin to increase its long position in Momenta by four-fold. By on or about July 23, 2010, Fund-1 held an approximately 2,962,715-share long position in Momenta stock valued at approximately $35 million. Beginning on or about January 14, 2010, VALVANI caused Fund-1 to short Sanofi securities. By on or about July 23, 2010, Fund-1 held an approximately 1,320,454-share short position in Sanofi’s European-traded stock and an approximately 509,854-share short position in Sanofi’s American Depository Receipts (“ADRs”), together valued at approximately $78 million.
VALVANI also passed to PLAFORD the information that he had obtained from JOHNSTON, so that PLAFORD could execute securities trades in Fund-2, which he did. PLAFORD understood this information to be highly confidential and material nonpublic information of the most sensitive kind that had been obtained from JOHNSTON’s source in the FDA.
On or about July 23, 2010 – approximately seven years after the first ANDA was filed – the FDA approved the Momenta ANDA (and denied Sanofi’s related citizen petition). This approval was positive news for Momenta, as Momenta was the first company to receive generic Lovenox approval, and the company’s stock price increased by nearly 100 percent in one day. The approval of the Momenta ANDA was negative news for Sanofi, which no longer had a monopoly on the drug, and the price of Sanofi’s stock and ADRs declined. Following the FDA’s announcement, VALVANI caused Fund-1 to sell the Momenta shares it held and to close out its short positions in Sanofi ADRs and stock, yielding a total profit of approximately $25 million.
In or about early January 2011, VALVANI called JOHNSTON and stated, in sum and substance, that Investment Adviser-A had decided to end its relationship with JOHNSTON in the wake of news reports of insider trading investigations.
The Scheme to Mismark Securities
As alleged in the Complaint, from in or about June 2011 through in or about September 2013, LUMIERE, PLAFORD, and others participated in a scheme to defraud Fund-2’s investors and potential investors by deceptively mismarking each month the value of certain securities held by Fund-2. The objective of the scheme was two-fold: (1) to inflate Fund-2’s NAV; and (2) to mislead investors about the liquidity of Fund-2’s holdings. Investment Adviser-A assessed performance fees to be paid by investors each year based on Fund-2’s profits and losses. LUMIERE’s mismarking was in violation of Investment Adviser-A’s internal valuation procedures and contrary to Investment Adviser-A’s representations to investors. The effect of the scheme was to overstate Fund-2’s NAV, often by tens of millions of dollars as calculated at the end of each month, which resulted in higher payments to Investment Adviser-A and higher bonuses for LUMIERE, among other benefits. The effect of the scheme was also to deceive investors into believing that certain securities were properly categorized as Level II, or securities with a quoted price but in a more inactive market, when, in fact, these securities were highly illiquid Level III investments.
As to the first form of the scheme, LUMIERE, PLAFORD, and others solicited, obtained, and relied on false and fraudulent price quotes from employees of broker-dealers in order to improperly override prices calculated by Fund-2’s administrator and artificially inflate Fund-2’s NAV each month. For each month-end valuation, LUMIERE and/or PLAFORD would begin by reviewing an inventory of Fund-2’s investments and proposed valuations for each prepared by Fund-2’s administrator and Investment Adviser-A’s back office. LUMIERE and/or PLAFORD would then identify those relatively illiquid securities as to which they disagreed with or disliked the proposed price, and create a list reflecting the price at which they wanted each security to be marked for month-end valuation purposes. That price was often significantly higher or lower than the price available from public price data. LUMIERE, PLAFORD, and others would then contact one or two “friendly” brokers and dictate to the friendly brokers the price quotes that they needed. The brokers would then parrot back the price quotes from their Bloomberg email account, giving the price quotes the appearance that they had come from an independent broker, and thus were in compliance with Fund-2’s pricing methodology. PLAFORD then submitted the friendly brokers’ sham quotes as purportedly independent bases for that security’s valuation to Investment Adviser-A’s accounting department, for the eventual submission to Fund-2’s administrator.
By obtaining these sham quotes, LUMIERE and PLAFORD caused a number of Fund-2’s securities to be misclassified in order to mislead investors about the liquidity of the securities (i.e., how actively traded the securities were). Specifically, for a number of illiquid bonds, LUMIERE and PLAFORD fraudulently caused Investment Adviser-A to assign a classification that led investors to believe that the bonds were relatively liquid, when in fact they were entirely illiquid. This was done contrary to disclosures to investors about Fund-2’s percentage of illiquid investments, in order to induce investors to invest in or keep their money in Fund-2.
As to the second form of the scheme, LUMIERE and PLAFORD purchased additional quantities of certain securities – in which Fund-2 had an established position – at a deceptively inflated price, markedly higher than the prevailing market was offering that security, in a practice known as “painting the tape.” PLAFORD would then report that inflated price to Investment Adviser-A’s accounting department for NAV purposes. In both cases – the sham broker quotes and the inflated purchase prices – it was LUMIERE and PLAFORD’s intent to increase the price of certain securities in order to inflate Fund-2’s month-end valuation.
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VALVANI, 44, of Brooklyn, New York, is charged with five counts: one count of conspiracy to convert United States property, to commit securities fraud and to defraud the United States; two counts of securities fraud; one count of conspiracy to commit wire fraud; and one count of wire fraud. Count One carries a maximum sentence of five years in prison. Counts Two through Five each carry a maximum sentence of 20 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.
LUMIERE, 45, of New York, New York, is charged with three counts: one count of conspiracy to commit securities fraud and wire fraud; one count of securities fraud; and one count of wire fraud. Count One carries a maximum sentence of five years in prison. Counts Two and Three each carry a maximum sentence of 20 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.
On June 9, 2016, PLAFORD, 38, of Bedford, New York, pled guilty before Judge Abrams to seven counts: one count of conspiracy to commit securities fraud and wire fraud; one count of securities fraud; one count of conspiracy to defraud the United States and to convert United States property; one count of conversion of United States property; one count of conspiracy to convert United States property, to commit securities fraud, and to defraud the United States; one count of securities fraud; and one count of conspiracy to commit wire fraud. Counts One, Three, and Five each carry a maximum sentence of five years in prison. Counts Two, Six, and Seven each carry a maximum sentence of 20 years in prison. Count Four carries a maximum sentence of 10 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.
On June 13, 2016, JOHNSTON, 64, of Olney, Maryland, pled guilty before Magistrate Judge James C. Francis IV to four counts: one count of conspiracy to convert United States property, to commit securities fraud, and to defraud the United States; one count of securities fraud; one count of conspiracy to commit wire fraud; and one count of wire fraud. Count One carries a maximum sentence of five years in prison. Counts Two through Four each carry a maximum sentence of 20 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Bharara praised the work of the FBI and HHS-OIG, and thanked the SEC for its assistance.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Ian McGinley, Damian Williams, and Joshua A. Naftalis are in charge of the prosecution.
The allegations contained in the Indictment and the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the Complaint, and the description of the Indictment and the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Harahan Man Sentenced for Conspiracy to Sell Identification DocumentsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that DAMIAN R. RODRIGUEZ, age 38, of Harahan, was sentenced today after previously pleading guilty to conspiracy to transfer identification documents in violation of 18 U.S.C. § 1028(f).
U.S. District Judge Sarah S. Vance sentenced RODRIGUEZ to four months imprisonment to be followed by two years of supervised release.
According to court documents, RODRIGUEZ conspired with two other individuals to sell a social security card and birth certificate to a confidential informant working with Special Agents of the Department of Homeland Security.
U.S. Attorney Polite praised the work of the United States Department of Homeland Security, Homeland Security Investigations, in investigating this matter. Assistant U.S. Attorney Spiro G. Latsis was in charge of the prosecution.
Halifax County Man Sentenced for Cocaine and Marijuana ConspiracyRead the Press Release
GREENVILLE – The United States Attorney’s Office for the Eastern District of North Carolina announced that in federal court today, Senior United States District Judge Malcolm J. Howard, sentenced STERLING DELAND MOODY, 47, of Weldon, North Carolina, to 72 months in prison and 5 years of supervised release for conspiracy to distribute and possess with the intent to distribute 5 kilograms or more of cocaine and 50 kilograms or more of marijuana. MOODY previously pled guilty to this charge on August 10, 2015.
On September 10, 2014, DEA arrested MOODY near Weldon, N.C., after MOODY met with an informant to purchase two kilograms of cocaine for $36,000 per kilogram. MOODY told the informant that he had enough money nearby to purchase two additional kilograms of cocaine. Upon MOODY’S arrest, investigators seized $68,000 from MOODY’S vehicle. Investigators also seized $71,867 and two handguns from MOODY’S residence. The investigation, revealed that MOODY was responsible for distributing 158 kilograms of cocaine and 90 kilograms of marijuana.
The investigation of this case was conducted by the Drug Enforcement Administration and the Halifax County Sheriff’s Office. The federal prosecution was handled by Special Assistant United States Attorney Glenn Perry. Mr. Perry is a prosecutor with the Pitt County District Attorney’s Office. Pitt County District Attorney Kimberly Robb has assigned Mr. Perry to the United States Attorney’s Office to prosecute federal Organized Crime Drug Enforcement Task Force criminal matters. Mr. Perry’s assignment to the United States Attorney’s Office has been made possible by grants funded by the Governor’s Crime Commission.
Grand Rapids Man Sentenced to 15 Years for Bank RobberyRead the Press Release
GRAND RAPIDS, MICHIGAN — Michael Dewayne Winbush, 53, of Grand Rapids, was sentenced on June 14 to 180 months in federal prison to be followed by 3 years of supervised release, U.S. Attorney Patrick A. Miles, Jr. announced today.
On November 30, 2015, Winbush entered the Flagstar Bank on 44th Street in Grand Rapids and handed a teller a note indicating that he had a gun and demanding money. He obtained $5,505 and fled on foot. He was later identified through tips called in to Silent Observer. On February 1, 2016, Winbush pled guilty to robbing the bank. As part of the plea agreement, he will not be prosecuted for a robbery he committed at Lake Michigan Credit Union in Wyoming, Michigan on November 27, 2015. Winbush was ordered to pay restitution to both institutions. Winbush has previously been convicted of bank robberies in the U.S. District Court for the Eastern District of Michigan in 2001 and in Genesee County Circuit Court in 2005. At sentencing, U.S District Judge Robert Holmes Bell chided Winbush for repeatedly resorting to bank robbery despite being educated, articulate, and having the skills and ability to be productive.
The Federal Bureau of Investigation, Grand Rapids Police Department, and Wyoming Police Department investigated the robberies. The case was prosecuted by Assistant U.S. Attorney Alexis M. Sanford.
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Golden Valley Man Convicted of Leading Multi-Million Dollar Cell Phone Trafficking ConspiracyRead the Press Release
United States Attorney Andrew M. Luger and Special Agent in Charge of the United States Secret Service Minneapolis Division Louis Stephens today announced the conviction of ZIBO LI, 31, for conspiring to traffic in stolen cell phones. LI led a conspiracy to traffic more than $3.8 million in stolen cellular devices throughout the United States and Hong Kong.
“Zibo Li led an organization that used the stolen identities of ordinary people to perpetrate a multi-million-dollar fraud,” said Assistant United States Attorney Manda M. Sertich. “Honest consumers bear the cost of the illegal activity of retail thieves like Li and his conspirators. We would like to thank the jury for its service during this trial and for returning a just verdict.”
“At its core, this case is about widespread identity theft, contact fraud and financial crimes,” said Louis Stephens, Special Agent in Charge of the United States Secret Service Minneapolis Field Office. “The collaborative approach of talented local and federal law enforcement officers and prosecutors ended a multi-year criminal conspiracy adept at widespread victimization of Minnesota based victims and businesses.”
As proven at trial, between 2011 and 2014, ZIBO LI and eight co-conspirators fraudulently obtained mobile cellular devices for steeply reduced rates by entering into service contacts, often using stolen identities. ZIBO LI ultimately sold the stolen merchandise to contacts in Hong Kong, where a new Apple iPhone could, at the time of the conspiracy, retail for as much as $2,000.
As proven at trial, three co-conspirators who have already pleaded guilty served as middlemen in LI’s organization. They purchased stolen or fraudulently obtained phones from buyers, and subsequently sold them to ZIBO LI. LI paid the middlemen in cash and by depositing cash directly into their bank accounts.
As proven at trial, buyers for the organization were responsible for obtaining discounted phones from retailers by agreeing to a two-year service contract. Among the methods employed to obtain phones was “credit muling,” a scheme through which buyers, or those acting at their direction, signed cellular telephone service contracts, often using stolen identities, to obtain reduced cost phones in other people’s names, but never intended to or did honor those contracts. Some of the buyers also recruited people residing in homeless shelters to sign up for cell phone contracts and obtain reduced cost phones, in exchange for nominal payments or goods.
This case is the result of an investigation conducted by the United States Secret Service, Saint Paul Police Department, Minnesota Bureau of Criminal Apprehension, Minnesota Financial Crimes Task Force, University of Minnesota Police Department, and Plymouth Police Department.
This case is being prosecuted by Assistant United States Attorneys Manda M. Sertich and Steven L. Schleicher.
Defendant Information:ZIBO LI, 31
Golden Valley, Minn.Convicted:
• Conspiracy to traffic unauthorized access devices, 1 count
• Fraud and related activity in connection with access devices, 2 countsGeorgia Man Pleads Guilty to Attempting to Smuggle 8.5 Kilograms of Marijuana to the Virgin IslandsRead the Press Release
St. Thomas, USVI – On Wednesday, June 15, 2016, Bert Donadelle, Jr., 26, of Georgia, pleaded guilty in District Court on St. Thomas to possession of marijuana with intent to distribute, United States Attorney Ronald W. Sharpe announced.
According to the plea agreement filed with the court, on April 3, 2016, at the Cyril E. King Airport, St. Thomas, Virgin Islands, a U.S. Customs and Border Protection (CBP) K-9 detected narcotics in a checked bag belonging to Donadelle, who had arrived on a Delta Airlines flight from Atlanta. CBP officers examined the contents of the bag, resealed it, and placed it on the carousel for retrieval. Donadelle retrieved the bag, and a second checked bag bearing his name, from the baggage claim area. CBP officers seized and field-tested a total of approximately 8.5 kilograms or more of marijuana from Donadelle’s bags.
District Court Judge Curtis V. Gomez permitted Donadelle to remain on release pending his November 3, 2016, sentencing date. Donadelle faces a maximum sentence of five years’ imprisonment and a maximum fine of $250,000.
This case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). It is being prosecuted by Assistant United States Attorney Kim L. Chisholm.
Four Charged with Armed Robbery of Several Area Meat MarketsRead the Press Release
HOUSTON – Four men have been indicted on charges associated with the armed robbery of multiple La Michoacana meat markets in December 2015, announced U.S. Attorney Kenneth Magidson.
A federal grand jury returned the 13-count indictment today against Billie Hawkins, 20, Laroderick Martin, 19, Jirron Curtis, 21, and Marcus Malbro, 18, all of Houston. They are currently in state custody and are expected to make their initial appearances before a U.S. magistrate judge in the near future.
The indictment alleges the four men robbed Houston-area La Michoacana meat markets and the Barri Financial Group Kiosks within the stores in December 2015. In each robbery, they were armed, masked and often fired shots into the stores and/or the ceilings, according to the charges. On some occasions they also allegedly assaulted employees. The indictment further indicates the men would drive a stolen vehicle to commit the robberies, then would meet a co-conspirator to depart in a “switch” vehicle.
Locations were scouted prior to the robberies to ensure there were no guards or security, according to the indictment.
The targeted locations included La Michoacana Meat Market and Barri kiosk at 8501 Gulf Freeway, La Michoacana Meat Market at 3910 Aldine Mail Road, La Michoacana Meat Market at 15707 Westpark Road and La Michoacana Meat Market on 1424 Spring Cypress Road in Spring.
Each defendant faces up to 20 years imprisonment for aiding and abetting interference of commerce by robbery, upon conviction. For aiding and abetting the discharge of a firearm during a crime of violence, the possible punishment is up to 10 years in federal prison. Further, if convicted of aiding and abetting the brandishing of a firearm during a crime of violence, a defendant faces another mandatory and consecutive seven years. Each subsequent conviction for the use of a firearm is another 25 years which must be served consecutively to each other and to any other prison term imposed.
The Bureau of Alcohol, Tobacco, Firearm and Explosives conducted the investigation along with FBI, Houston Police Department and Harris County Sheriff’s Office. Assistant U.S. Attorney Celia Moyer is prosecuting the case.
An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.Former U.S. Probation Officer Charged with Obstruction of InvestigationRead the Press Release
HARRISBURG - The United States Attorney's Office for the Middle District of Pennsylvania announced that a Criminal Information was filed today in U.S. District Court in Pittsburgh charging Rachel Lynn Howze with obstructing an official federal proceeding while serving as a U.S. Probation Officer in Pittsburgh.
According to United States Attorney Peter Smith, Howze, age 30, Pittsburgh, attempted to obstruct and impede an investigation of an individual serving a term of federal supervised release. Howze allegedly attempted to obstruct an investigation by intentionally disclosing to unauthorized persons the existence of a state criminal investigation involving the individual under federal supervision.
Together with the Criminal Information, the government filed a plea agreement in the case which is subject to the approval of the court. Howze is no longer employed by the U.S. Probation Office.
The U.S. Attorney’s Office for the Western District of Pennsylvania, which would otherwise be prosecuting the case, is recused under U.S. Department of Justice policy because the defendant was an employee under the supervision of the U.S. District Court in Pittsburgh at the time of the alleged activity.
This investigation was conducted by the Pittsburgh Office of the Federal Bureau of Investigation. Assistant United States Attorney Joseph J. Terz has been assigned to prosecute the case.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law is 20 years of imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Former U.S. Postal Employee Sentenced to Probation for Federal Theft ConvictionRead the Press Release
ALBUQUERQUE – Gary J. Devine, 51, of Albuquerque, N.M., was sentenced today in federal court to two years of probation for his conviction on a theft of government funds charge.
Devine was charged in a misdemeanor information filed in Oct. 2015, with theft of government funds. The charge arose from Devine allegedly keeping money belonging to the U.S. Postal Service (USPS) for sales of USPS stamps. At the time, Devine committed the crime, he was employed as Sales and Service Associate at a U.S. Post Office in Albuquerque.
Devine pled guilty on March 8, 2016, to a misdemeanor information charging him with theft of public money and admitted that from May 28, 2015 through May 31, 2015, in Bernalillo County, N.M., he intentionally stole money from the United States by selling USPS stamps to customers and keeping the money for himself rather than turning it in to the Post Office.
This case was investigated by the U.S. Postal Service Office of the Inspector General and was prosecuted by Assistant U.S. Attorney Paul Mysliwiec.
Former Miami Beach Resident Pled Guilty to $207 Million Dollar Mail Fraud SchemeRead the Press Release
On June 10, 2016, a former Miami Beach resident pled guilty for his participation in a $207 million dollar mail fraud scheme.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.
John Utsick, 73, formerly of Miami Beach, Florida, pled guilty to one count of mail fraud, in violation of Title 18, United States Code, Section 1341. Utsick faces a maximum statutory sentence of 20 years in prison. Utsick is scheduled to be sentenced by U.S. District Court Judge Cecilia M. Altonaga on August 23, 2016.
According to the court record, Utsick was charged by superseding indictment with mail fraud related to his operation of two entertainment companies called The Entertainment Group Fund, Inc. (“TEGFI”) and Worldwide Entertainment, Inc. (“Worldwide) from approximately January 1996 through January 2006. Utsick was extradited from Brazil to the Southern District of Florida in December 2014.
During the plea hearing, Utsick admitted that, from January 1996 through December 2005, he devised a scheme to defraud investors by making false representations regarding his concert promotion business. Utsick represented to investors that he would use their money to invest in various concerts, tours, and other entertainment opportunities, and that the investors would receive the greater of guaranteed 10% returns or shares of profits from the various concert ventures. Relying on those representations, individuals sent Utsick money to invest. Utsick provided the investors with account balance statements, purporting to show investment profits -often in the range of 10% to 30% profit.
Contrary to those representations, however, TEGFI and Worldwide lost money from 1995 through 2005, and by mid-2005, Utsick and his companies’ owed investors hundreds of millions of dollars. Utsick knew that his companies were not profitable and that he could not compensate investors as promised based on the current earnings or the assets of the companies. Nevertheless, Utsick invested millions of dollars of investor money in stock options trading. Utsick did not disclose that he intended to use the investors’ money for that purpose, that the stock option trading had nothing to do with the regular activities of Utsick’s concert promotion business, and that he had lost the majority of the investors’ money through stock option trading. Additionally, Utsick used some of the investor money for his own personal benefit and for the benefit of others, without permission or consent.
In total, based upon Utsick’s misrepresentations regarding the stability of his companies and the guaranteed return rates, the defendant obtained approximately $253,942,517 from approximately 2,928 individuals. In 2006, at the time the court-appointed receiver took over to operate Utsick’s companies, the defendant had not reimbursed investors a total of $203,477,335. Following the receivership and liquidated assets, the balance unpaid to the investors totaled $169,177,338.
Pursuant to Utsick’s plea agreement, the United States Attorney’s Office for the Southern District of Florida has agreed to recommend a sentence of 210 months in prison. Utsick has agreed that the relevant loss value is $207,185,420 and has agreed to pay restitution in the amount of $169,177,338. A final sentencing determination will be made by U.S. District Judge Altonaga.
Mr. Ferrer commends the investigative efforts of the FBI. The case is being prosecuted by Assistant U.S. Attorneys John P. Gonsoulin and H. Ron Davidson.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Former Insurance Agent/Broker Senenced on Wire Fraud ChargeRead the Press Release
St. Louis, MO – Donald Novak, former licensed insurance agent and broker for various insurance companies, was sentenced to 29 months in prison on charges involving wire fraud. The sentence also included orders of restitution and criminal forfeiture.
According to court documents, between July 28, 2011 and July 30, 2015, Novak devised a scheme to defraud a distant relative, who suffered from certain mental limitations, of inherited assets. The fraud involved the investment, by Novak, of the victim’s funds in annuities which Novak, in turn, surrendered, misappropriated and converted for his own personal use.
"Donald Novak liquidated his client’s retirement assets only to benefit himself and not his client," said Special Agent in Charge William Woods of the FBI St. Louis Division. "This type of fiduciary abuse is on the FBI’s radar, especially going forward with new federal regulations that require financial advisors and brokers to act in the best interest of their clients."
Novak, Ellisville, Missouri, pled guilty in March 2016 to one felony count of wire fraud. He appeared today for sentencing before United States District Judge Ronnie L. White.
The case was investigated by the Postal Inspection Service and Federal Bureau of Investigation. Assistant United States Attorney Charles Birmingham handled the case for the U.S. Attorney’s Office.
Former Fairbanks Chiropractor Sentenced to 17 Years in Prison for Soliciting the Murder of a Witness and Federal Law Enforcement OfficersRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that Guy Christopher Mannino, 57, of Fairbanks, was sentenced today in Anchorage to 17 years in federal prison for his convictions for soliciting the murders of a witness and two federal law enforcement agents.
Mannino, a former chiropractor who practiced for several years in Fairbanks, was indicted by a federal grand jury in July 2015 for soliciting several murders while he was in custody at the Fairbanks Correctional Center on an earlier federal prosecution. Mannino had been indicted by another federal grand jury in August 2013 for a number of felony charges related to the unlawful possession and transfer of prohibited weapons, including a machinegun and silencers. While in custody on that case, Mannino solicited another prisoner to murder the principal witness against him, as well as some of the federal law enforcement agents who had been involved in the investigation of the first case.
Mannino proceeded to trial on the murder solicitation charges in February 2016 in Fairbanks, and, following a four-day jury trial, he was found guilty on three of the five counts charged. As a result of those convictions, Mannino faced a statutory maximum sentence of 20 years on each of the counts of conviction.
In imposing the 17-year sentence on Mannino, Senior U.S. District Judge Ralph R. Beistline noted that Mannino had engaged in extremely dangerous conduct in soliciting the murders, and that the trial jury concluded that he intended that these murders actually occur, rather than his conduct simply being “jail house talk” between inmates as Mannino had contended.
The Federal Bureau of Investigation (FBI), the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and the Alaska State Troopers (AST) conducted the investigation leading to the indictment and convictions in this case.
Former Cumberland County Attorney Charged with Income Tax EvasionRead the Press Release
HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a Criminal Information was filed in U.S. District Court in Harrisburg on June 14, 2016, charging a former Cumberland County attorney with tax evasion and failure to file a federal tax return.
According to United States Attorney Peter Smith, in 2012, Karl E. Rominger, age 43, an attorney in Carlisle, Pennsylvania, attempted to evade federal income taxes due and owing for the calendar years 2006, 2007, 2008, 2009 and 2010, all years in which Rominger received taxable income. Rominger allegedly made false statements to agents of the Internal Revenue Service (IRS) concerning the location of his business operating accounts, with the intent to evade and defeat the actions of the IRS.
Rominger is also charged with willful failure to file a federal income tax return for the calendar year 2012.
The government also filed a plea agreement with the defendant which is subject to the approval of the court.
The charges stem from an investigation by the Internal Revenue Service. The case is being prosecuted by Assistant United States Attorney Joseph J. Terz.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law is 6 years of imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Former CEO of Scranton Area Federal Credit Union Charged with Bank FraudRead the Press Release
SCRANTON – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that the former Chief Executive Officer (“CEO”) of Scranton-based Valor Federal Credit Union (“Valor”), formerly known as Tobyhanna Federal Credit Union, has been charged in an Information with bank fraud and attempted bank fraud.
According to United States Attorney Peter Smith, the charges filed in U.S. District Court in Scranton allege that Sean E. Jelen, age 33, committed and attempted to commit a series of fraudulent activities from July 2014 to August 2015. During the majority of that time, Jelen served as the CEO of Valor. All of the alleged fraudulent activities were associated with Valor and many allegedly involved forged and altered documents created by Jelen.
The Information charges Jelen with executing a scheme to defraud Valor of approximately $718,000, some of which went to pay for his personal credit card, his graduate tuition, his spouse’s birthday party, and a golf tournament sponsorship.
The Information also charges Jelen with rigging elections held for the Valor Board of Directors, whereby he elected and subsequently impersonated fictitious members of the Board of Directors and its Supervising Committee.
The Information further charges Jelen with attempting to obtain an additional approximate $1,146,000 through fraudulent means, and with creating a forged severance contract that would be triggered by his termination.
Valor is a federal credit union, its assets are insured by the National Credit Union Administration (NCUA) which also supervises and regulates it.
The Information seeks forfeiture of property obtained as a result of the fraud, including a residence located in New York. The government also filed a plea agreement with Jelen to the alleged charges, which is subject to approval of the court. A date for his initial appearance has not been set. Valor terminated Jelen’s employment in August.
The investigation was conducted by the Federal Bureau of Investigation (FBI). The case is being prosecuted by Assistant United States Attorneys John Gurganus, Evan Gotlob and Phil Caraballo. Valor’s current management is cooperating with the FBI and the U.S. Attorney’s Office.
Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law for the charges is 60 years of imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Felon Who Possessed Stolen Guns Sentenced to Six Years in Federal PrisonRead the Press Release
EUGENE, Ore. – Anthony Dominic Whiley, 27, a former resident of Douglas County, Oregon, was sentenced by U.S. District Judge Ann Aiken to a six-year prison term for being a felon in possession of firearms. In January 2016, Whiley, pled guilty to possessing three stolen guns after having been previously convicted in 2008 for burglarizing and attempting to burglarize residences in Snohomish County, Washington.
On December 21, 2013, Douglas County deputies responded to a call of burglary in progress at a home in Glide, Oregon. Deputies arrived and arrested a man and woman, but were informed that a third suspect, identified as Whiley, had fled. Later that night, a deputy spotted Whiley walking on a rural road and attempted to arrest him. Whiley ran off the road into a river and fled into the darkness. Three loaded stolen handguns were found near nearby. Whiley was subsequently found and arrested for the burglary a few hours later. In conjunction with the burglary charges brought by the Douglas County District Attorney’s Office, Whiley disclosed where he had hidden ten other stolen firearms.
On February 19, 2014, Whiley was indicted on federal firearm charges. The United States Attorney’s Office and the Douglas County District Attorney’s Office worked together in achieving a joint resolution of Whiley’s federal and state charges.
The investigation of this case was conducted by the Bureau of Alcohol, Firearms and Tobacco and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney Frank R Papagni, Jr. with the assistance of Douglas County District Attorney Rick Wesenberg.