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21 July 2016
Honduran National Indicted for Illegal Re-EntryRead the Press Release
U.S. Attorney Kenneth A. Polite announced that OLVIN CASTILLO-CRUZ, age 34, was charged today in a one-count Indictment for illegal reentry of a removed alien, in violation of Title 8, United States Code, Section 1326(a).
According to the Indictment, CASTILLO-CRUZ reentered the United States after he was previously deported on January 19, 2011.
If convicted, CASTILLO-CRUZ faces a maximum term of imprisonment of two years, a maximum fine of $250,000, a maximum term of supervised release of one year, and a mandatory $100 special assessment.
U. S. Attorney Polite reiterated that an Indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of the United States Department of Homeland Security in investigating this matter. Assistant U.S. Attorney Spiro G. Latsis is in charge of the prosecution.
Hillside Mail Thief Sentenced to 21 Months in JailRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced that an Anchorage man was sentenced today in federal court to 21 months in prison for mail theft and credit card fraud.
Evan Mullen, 28, resident of Anchorage, was sentenced by U.S. District Judge Sharon L. Gleason, who also ordered Mullen to pay full restitution.
According to Assistant U.S. Attorney Aunnie Steward, who prosecuted the case, that starting in December 2015, Mullen repeatedly stole mail from mailboxes of residents living in an Anchorage Hillside neighborhood. Mullen was specifically looking for credit cards but he also stole packages from these mailboxes and threw other opened mail on the ground. Mullen took the stolen credit cards and purchased gift cards and merchandise. Mullen continued this conduct up until the day before his arrest in February 2016. There were more than 10 victims of Mullen’s crimes including those who had their mail stolen and banks who absorbed the loss from the stolen credit cards. Efforts by the victims in the Hillside neighborhood to identify Mullen were extremely valuable to law enforcement in the investigation and prosecution of this case.
At sentencing, Judge Gleason noted the seriousness of the violation of the victims’ privacy when Mullen ransacked their private mail.
U.S. Attorney Loeffler commends the U.S. Postal Inspection Service and the Anchorage Police Department for the investigation of this case.
Hermon Man Pleads Guilty to Failure to Register as a Sex OffenderRead the Press Release
Contact: Andrew McCormack
Assistant United States Attorney
Tel: (207) 945-0373Bangor, Maine: United States Attorney Thomas E. Delahanty II announced that Charles Roberson, 44, of Hermon, Maine, pleaded guilty today in U.S. District Court to one count of Failure to Register as a Sex Offender.
According to court records, in 2004, Roberson was convicted in Minnesota of Criminal Sexual Conduct in the First Degree. This felony conviction made Roberson a lifetime sex offender registrant. In or about the fall of 2015, Roberson moved from Minnesota and began living and working in Hermon, Maine. He did not notify the Minnesota Predatory Offender Registration unit that he was moving. Further, up until his arrest on February 23, 2016, he made no attempt to register with the Maine State Police Sex Offender Registry.
The defendant faces up to 10 years in prison and a $250,000 fine. He will be sentenced after the completion of a presentence investigation report by the U.S. Probation Office.
The case was investigated by the United States Marshals Service.
Hartford Man Sentenced to More Than 7 Years in Federal Prison for Distributing Cocaine and CrackRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that JOSE GONZALEZ, also known as “Jo Jo,” 39, of Hartford, was sentenced today by U.S. District Judge Michael P. Shea in Hartford to 87 months of imprisonment, followed by five years of supervised release, for distributing narcotics.
According to court documents and statements made in court, on eight occasions in late 2015, GONZALEZ sold crack cocaine and/or powder cocaine to an individual working with law enforcement. In total, GONZALEZ sold or possessed with intent to sell approximately 78 grams of crack cocaine and approximately 350 grams of cocaine.
GONZALEZ has been detained since his arrest on December 11, 2015. On April 20, 2016, he pleaded guilty to one count of possession with intent to distribute, and distribution of cocaine base (“crack”).
GONZALEZ has an extensive criminal history. On August 27, 1997, he was sentenced in U.S. District Court in New Haven to 135 months of imprisonment, followed by five years of supervised release, for committing a violent crime in aid of racketeering. The conviction stemmed from GONZALEZ’s murder of 16-year-old George Hall in a gang-ordered drive-by shooting in Hartford on November 25, 1993. At the time, GONZALEZ, a 16-year-old soldier in Los Solidos, was targeting members of the rival Latin Kings gang. One of his shots struck and killed Hall, who was not affiliated with any gang.
GONZALEZ was released from prison in October 2005.
In April 2007, GONZALEZ was found in violation of multiple conditions of his supervised release, including that he report regularly to his probation officer and not associate with any persons engaged in criminal activity, or any persons associated with the Los Solidos organization. He was sentenced to an additional 24 months of imprisonment, followed by three years of supervised release.
In September 2009, members of the Hartford Police Department executed a search warrant at GONZALEZ’s residence and seized a.45 caliber pistol and several rounds of ammunition. Police also seized a photograph of GONZALEZ with members of Los Solidos. GONZALEZ claimed that he possessed the firearm for protection.
In April 2010, GONZALEZ was sentenced in New Haven federal court to five years of imprisonment for possession of a firearm by a previously convicted felon, and a consecutive 12-month sentence for violating his supervised release.
GONZALEZ was released from federal prison in January 2014. On October 18, 2014, he was arrested on state charges for carrying a dangerous weapon and, on December 10, 2014, he was placed on three years of probation.
This matter was investigated by the FBI’s Northern Connecticut Violent Crimes Task Force and the Hartford Police Department. The FBI Task Force includes members of the Hartford Police Department, East Hartford Police Department, Connecticut State Police and Connecticut Department of Correction. The case is being prosecuted by Assistant U.S. Attorney Michael J. Gustafson.
Hamburg Man Pleads Guilty to Sinking A Boat in the Black Rock CanalRead 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 Paul E. Van Voorhees, 55, of Hamburg, NY, pleaded guilty to obstruction of waterways before Magistrate Judge Michael J. Roemer Senior U.S. District Judge William M. Skretny. The charge carries a maximum penalty of one year in prison.
According to Assistant U.S. Attorney Aaron J. Mango, who is handling the case, the defendant was the Dock Master at the Buffalo Yacht Club and was responsible for maintenance of the buildings, grounds, and marina. On November 5, 2015, Van Vorhees and another employee of the Buffalo Yacht Club towed a damaged 13’ aluminum row boat that had been floating in the water in front of the Buffalo Yacht Club into the Black Rock Canal. After reaching a certain location in the canal, the defendant released the boat into the canal with the intention of sinking it in the canal. A witness alerted the United States Coast Guard (USCG). During an initial interview with USCG personnel, Van Voorhees denied releasing the boat into the canal. The boat was eventually recovered by the USCG from the Black Rock Canal. In a subsequent interview on December 23, 2015, the defendant admitted that he attempted to sink the boat in the canal.“Our area's waterways are not to be turned into someone's private junkyard,” said U.S. Attorney Hochul.
The plea is the culmination of an investigation by the United States Coast Guard, Buffalo Sector, under the direction of Captain Brian Roche, and by the Coast Guard Investigative Service, Buffalo Resident Agent Office, under the direction of Resident Agent in Charge Cindy C. Buckley.
Sentencing is scheduled for October, 19, 2016, at 10:30 a.m. before Judge Skretny.Georgia Man Sentenced for Failure to Appear and Credit Card FraudRead the Press Release
BOISE – Terrance Barimah, 28, of Lawrenceville, Georgia, was sentenced yesterday for failure to appear for sentencing and illegal possession of device-making equipment, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill sentenced Barimah to 70 months in prison and three years supervised release. Barimah was indicted by a federal grand jury in Boise on July 15, 2015.
According to the plea agreement, Barimah admitted that on April 23, 2015, he pleaded guilty to the charge of illegal possession of device-making equipment. The plea agreement further described that Barimah admitted obtaining blank stock pre-paid debit cards from his co-defendants, and encoding them with credit card numbers belonging to real individuals who had not authorized the Barimah or his co-defendants to make purchases on the accounts. Barimah provided the debit cards encoded with unauthorized credit card numbers to his co-defendants, and expected to receive cash payment and/or a portion of the proceeds of the fraud.
At the change of plea hearing, Barimah was informed that the sentencing was scheduled for July 8, 2015. On July 8, 2015, Barimah failed to appear for sentencing and the Court issued a warrant for Barimah’s arrest. On February 5, 2016, law enforcement authorities in Atlanta, Georgia, arrested Barimah on the warrant. Barimah admitted that his failure to appear for sentencing was willful.
The case was investigated by the United States Secret Service with assistance from the United States Marshals Service.
Gang Member to Federal Prison for Making False StatementsRead the Press Release
A member of the same gang as Jamal Dean, who made false statements while testifying as a witness at Dean’s sentencing, was sentenced to 24 months in federal prison yesterday.
Cesar Ramos, age 27, from Sioux City, Iowa, received the prison term July 20, 2016, after a jury found him guilty on April 12, 2016, of three counts of making false material declarations.
The evidence at trial revealed the following facts. Ramos and Dean were in the same gang and Jaime Espinoza was in another gang. After Dean shot Espinoza, Ramos – according to statements he gave to investigators – drove Dean away from the scene of the shooting. When he was asked about these observations at Dean’s sentencing he feigned a memory lapse repeatedly answering: “I don’t remember.” The jury found these answers were made under oath, were false, that Ramos knew they were false, and they were material to the district court’s sentencing inquiry; and, therefore, constituted perjury.
Ramos was sentenced in Sioux City by United States District Court Judge Leonard T. Strand. Ramos was sentenced to 24 months’ imprisonment. A special assessment of $300 was imposed. He must also serve a one-year term of supervised release after the prison term. There is no parole in the federal system.
This case was prosecuted as part of Project Safe Neighborhoods, a cooperative local, state and federal program aimed at the enhanced prosecution of gun crimes. The case was investigated by the Sioux City Police Department and the United States Department of Justice’s Bureau of Alcohol Tobacco Firearms and Explosives. The case was prosecuted by Assistant United States Attorney Forde Fairchild.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 15-4058.
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Gallup Man Pleads Guilty to Unlawfully Possessing an Unregistered Sawed-Off ShotgunRead the Press Release
ALBUQUERQUE – Billie Cotten, 59, of Gallup, N.M., pled guilty this morning in federal court in Albuquerque. N.M., to violating the federal firearms laws by unlawfully possessing an unregistered sawed-off shotgun.
Cotten was arrested on Oct. 13, 2015, on a criminal complaint charging him with possession of unregistered sawed-off shotguns on July 1, 2015, in McKinley County, N.M. According to the complaint, Cotten sold 24 OxyContin pills and a sawed-off shotgun to individuals working with law enforcement on June 19, 2015. It also charged Cotten with selling a second sawed-off shotgun to the same individual on July 1, 2015. A search of the National Firearms Registration and Transfer Record (NFRTR) confirmed that neither sawed-off shotgun was registered with the NFRTR.
Cotten was indicted on Nov. 5, 2015, and charged with distributing OxyContin on June 19, 2015, and unlawfully possessing unregistered sawed-off shotguns on June 19, 2015 and July 1, 2015.
During today’s proceedings, Cotten pled guilty to a felony information charging him with possession of an unregistered sawed-off shotgun. In entering the guilty plea, Cotten admitted that on July 1, 2015, he possessed and sold an operable sawed-off shotgun that was not registered to him in the NFRTR.
At sentencing, Cotten faces a maximum penalty of ten years in federal prison. A sentencing hearing has yet to be scheduled.
This case was investigated by the Gallup office of the FBI and is being prosecuted by Assistant U.S. Attorney Edward Han.
Fresno Woman Charged with Embezzling more than $1 Million from Food Distribution CompanyRead the Press Release
FRESNO, Calif. — A federal grand jury returned an 11-count indictment today against Leslie Michelle Hays, 49, of Fresno, charging her with wire fraud for embezzling over $1 million from her employer, Acting United States Attorney Phillip Talbert announced.
According to court documents, Hays was the director of human resources at Borges USA, a food distribution company based in Spain with regional headquarters in Fresno. Between February 2005 and April 2014 when she was terminated, Hays embezzled funds from Borges USA by misreporting her salary, expenses, and vacation time. Based on the false payroll information, the company’s payroll processor made wire transmissions via direct deposit into Hays’ bank account. In total, Hays stole more than $800,000 in inflated salary payments and $400,000 in false expenses reimbursements and vacation pay.
This case was the product of an investigation by the Federal Bureau of Investigation and the Fresno Police Department. Assistant United States Attorney Grant B. Rabenn is prosecuting the case.
If convicted, Hays faces a maximum statutory penalty of twenty years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Former ZeekRewards CEO Is Convicted of Federal Charges for Operating $900 Million Internet Ponzi SchemeRead the Press Release
CHARLOTTE, N.C. – U.S. Attorney Jill Westmoreland Rose announced that a federal jury sitting in Charlotte retuned a guilty verdict today against the former CEO of ZeekRewards for operating a $900 million Internet Ponzi scheme. Following a three-week trial, the jury convicted Burks, 69, of Lexington, N.C., of wire and mail fraud conspiracy, wire and mail fraud, and tax fraud conspiracy.
Michael Rolin, Special Agent in Charge of the United States Secret Service, Charlotte Field Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join U.S. Attorney Rose in making today’s announcement.
“For nearly two years, Burks used deceit and dishonesty to engineer an extensive Ponzi scheme that amassed millions of dollars from thousands of victims, many in the Western District of North Carolina. This massive scam is one of the largest in breadth and scope ever prosecuted by this office. I commend the United States Secret Service and the IRS agents who worked closely with our prosecutors to unravel Burk’s fraud and to obtain a conviction against the mastermind of a scheme that has left so many victims with substantial losses. I want to remind the public to steer clear of ‘get rich’ schemes and to follow the old adage that if it looks too good to be true, it likely is,” said U.S. Attorney Rose.
“Today’s verdict is the result of a joint investigative effort and it is representative of the commitment the U.S. Secret Service and our partners have towards ensuring those intent on defrauding the citizens of North Carolina and the United States are held accountable,” said Special Agent in Charge Rolin.
According to filed court documents, court proceedings, evidence introduced at trial and witness testimony:
From January 2010 through August 2012, Paul Burks was the owner of Rex Venture Group, LLC (RVG), through which he owned and operated Zeekler, a sham Internet-based penny auction company, and its purported advertising division, ZeekRewards (collectively “Zeek”). Burks and his conspirators induced more than 900,000 victims – including over 1,500 victims in the Charlotte area – to invest in their fraudulent scheme, by falsely representing that Zeekler was generating massive retail profits from its penny auctions, and that the public could share in such profits through investment in ZeekRewards. Burks and his conspirators, including Zeek’s former Chief Operating Officer Dawn Wright Olivares and her step-son and Zeek’s Senior Technology Officer Daniel C. Olivares, claimed at one point that investors would be guaranteed a 125% return on their investment.
Burks and his conspirators represented that victim-investors in ZeekRewards could participate in the Retail Profit Pool (RPP), which supposedly allowed victims collectively to share 50% of Zeek’s daily net profits. Burks and his conspirators did not keep books and records needed to calculate such daily figures. Instead, Burks simply made up the daily “profit” numbers. Contrary to the conspirators’ claims, the true revenue from the scheme did not come from the penny auction’s “massive profits.” Instead, approximately 98% of all incoming funds came from victim-investors, which were then used to make Ponzi-style payments to earlier victim investors.
In addition to promising massive returns on investments, Burks and his conspirators used a number of ways to promote Zeek to current and potential investors. For example, the conspirators hosted weekly conference calls and leadership calls, where participants could call in listen to Burks and others make false representations intended to encourage victim-investors to continue to invest money and to recruit others to invest in Zeek. Burks also organized and attended “Red Carpet Events,” where victim investors came to hear details of the scheme in person. During these events, Burks and his conspirators made false representations about the massive retail profits generated by Zeek. They also used electronic and print media, including websites, emails and journals, to make false and misleading statements about the success of Zeekler to recruit victim investors.
As the Ponzi scheme grew in size and scope it became unsustainable and it eventually began to unravel as the outstanding liability resulting from the bogus 125% return on investment continued to rise beyond control. By August 2012, Burks and his conspirators fraudulently represented to the collective victims that their investments were worth nearly $3 billion, but had no accurate books and records to even determine how much cash on hand was available to pay such liability. Contrary to representations made to victim investors, at that time, Burks and his conspirators had only $340 million available to pay out investors. Over the course of the scheme, Burks diverted approximately $10.1 million to himself.
Burks also failed to file corporate tax returns or to make corporate tax payments for his companies, among other things. In addition, for tax year 2011, Burks issued fraudulent IRS Forms 1099s, causing victim-investors to file inaccurate tax returns for phantom income they never actually received.
Burks will remain free on bond. A sentencing date for the defendant has not been set yet. The wire and mail fraud conspiracy charge, the mail fraud charge and wire fraud charge each carry a maximum prison term of 20 years and a $250,000 fine. The tax fraud conspiracy charge carries a maximum prison term of five years and a $250,000 fine.
Burks’ co-conspirators, Dawn Wright Olivares, Zeek’s Chief Operating Officer, and her step-son and Zeek’s Senior Technology Officer, Daniel C. Olivares, pleaded guilty in December 2013 to investment fraud conspiracy. Dawn Wright Olivares also pleaded guilty to tax fraud conspiracy. Both defendants currently await sentencing.
In making today’s announcement, U.S. Attorney Rose thanked the U.S. Secret Service and IRS-CI for investigating the case, and the U.S. Securities & Exchange Commission, Division of Enforcement for its assistance with the investigation.
The prosecution is handled by Assistant United States Attorneys Jenny Grus Sugar and Corey Ellis of the U.S. Attorney’s Office in Charlotte.
Additional information and updated court filings about this and related cases filings can be accessed at the district’s website: http://www.justice.gov/usao/ncw/ncwvwa.html.
Former Wells Fargo Branch Manager and Two Others Charged with Laundering Proceeds of Trademark ScamRead the Press Release
LOS ANGELES – The former manager of a Wells Fargo Bank branch in Glendale has been arrested and arraigned on federal charges that allege he was part of a scheme to launder the proceeds of a mass mailing scam targeting holders of U.S. trademarks. Two other Los Angeles-area men had previously been charged for perpetrating the scam and committing bank fraud in furtherance of the scam.
Albert Yagubyan, 36, of Burbank, pleaded not guilty Tuesday afternoon to charges contained in a second superseding indictment filed on July 14. The indictment charges Yagubyan with one count of conspiracy to commit money laundering, four counts of concealment money laundering, one count of false bank entries and one count of witness tampering. A trial in the case was scheduled for September 13.
Artashes Darbinyan, 36, of Glendale; and Orbel Hakobyan, 41, also of Glendale, were previously charged in this case. Darbinyan and Hakobyan are charged in the second superseding indictment with conspiracy to commit money laundering. Hakobyan is also charged with three counts of concealment money laundering. Darbinyan is charged with four counts of mail fraud, three counts of aggravated identity theft, five counts of concealment money laundering and one count of bank fraud.
“The new defendant added in this case allegedly used his position of trust at a large financial institution to further a scheme that bilked trademark holders,” said United States Attorney Eileen M. Decker. “In addition, the co-schemers used stolen identities to further mask this scheme. Activities such as this scheme threaten the stability of financial transactions upon which businesses depend.”
According to the second superseding indictment, Yagubyan was the manager of a Wells Fargo branch in Glendale until October 2015. The indictment alleges that from 2013 to 2015, Yagubyan allowed Darbinyan and Hakobyan to open bogus bank accounts at the Wells Fargo branch through which proceeds of the trademark scam could be laundered in exchange for a share of the proceeds. Darbinyan and Hakobyan deposited checks from the victims of the mass mailing scam into bogus accounts at Wells Fargo, then Yagubyan allegedly instructed Wells Fargo employees to approve withdrawals by Darbinyan and Hakobyan from those accounts, even though the two men were not the signatories on the accounts, according to the second superseding indictment.
The indictment unsealed yesterday alleges that with Yagubyan’s assistance, Darbinyan and Hakobyan were able to launder $1.29 million into gold and cash through Wells Fargo.
“Let this indictment serve as a warning to all professionals, including bank managers, who open bogus bank accounts and launder the proceeds of a fraudulent scheme – you will be held accountable for your actions,” said Aimee E. Schabilion, Acting Special Agent in Charge of the IRS-Criminal Investigation’s Los Angeles Field Office. “This joint investigation continues to demonstrate our efforts to ensure that our financial institutions will not be abused by those serving their own selfish greed at the expense of others.”
Yagubyan is also charged with making false bank entries for allegedly instructing a Wells Fargo employee to open an account for Darbinyan under the identity of another person. The second superseding indictment also charges Yagubyan with witness tampering for instructing a Wells Fargo employee to withhold the truth from federal investigators.
The second superseding indictment was announced today by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; United States Attorney Eileen M. Decker; Inspector in Charge Robert Wemyss of the U.S. Postal Inspection Service (USPIS), Los Angeles Division; Inspector in Charge Maria Kelokates of the USPIS, Washington Division; and Acting Special Agent in Charge Aimee E. Schabilion of the Internal Revenue Service - Criminal Investigation (IRS-CI), Los Angeles Field Office.
Darbinyan was originally charged in October 2015 with 12 counts of mail fraud and four counts of aggravated identity theft. A first superseding indictment filed in January 2016 charged Darbinyan and Hakobyan each with conspiracy to commit bank fraud and one count of bank fraud. Darbinyan was additionally charged with mail fraud, aggravated identity and money laundering counts.
“The Postal Inspection Service aggressively pursues mail fraud suspects as well as those that help launder ill-gotten proceeds of mail fraud,” said Inspector in Charge Robert Wemyss. “Our investigations won’t end until all Postal Service customers, including U.S. trademark applicants, are protected.”
The charges and allegations in the second superseding indictment, as well as those in the original and first superseding indictments, are merely accusations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The USPIS and IRS-CI investigated the case. Justice Department Trial Attorneys William E. Johnston and Brian K. Kidd of the Criminal Division’s Fraud Section are prosecuting the case.
Former U.S. State Department Employee Convicted in $2 Million Government Contract ConspiracyRead the Press Release
ALEXANDRIA, Va. – Kenneth Apple, 65, of Beaverton, Oregon, was convicted today by a federal jury on charges related to his role in awarding $2 million in micro-dairy contracts from the U.S. government for use in Iraq.
Apple was indicted on Dec. 17, 2015. According to court records and evidence presented at trial, Apple, a former employee with the U.S. Department of State, helped to steer the sole-sourcing of $2 million in micro-dairy contracts to a company in which his son, Jonathan Apple, owned a 50 percent interest. However, Jonathan Apple and his partner had no technical experience in the industry. Kenneth Apple conspired to use his official position to pass on non-public information to his son in order to fraudulently award and administer government contracts. The conspirators further provided false information to, and concealed material details from the U.S. government.
Apple provided templates and technical specifications used in the proposal submitted by Jonathan Apple and his partner to the U.S. government. In addition, Kenneth Apple caused false and misleading statements to be made to the U.S. government regarding his experience, ownership interest, and the status of the projects. For example, Kenneth Apple directed a conspirator to keep Jonathan Apple’s name off the company’s website and any ownership documents. When federal law enforcement agents confronted Kenneth Apple about the scheme, he made false statements, including that he could not recall the owner of the company that won the micro-dairy contracts and that he did not receive any money from the contracts.
Apple faces a maximum penalty of 20 years in prison when sentenced on October 14. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office; Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU); and Robert E. Craig, Special Agent in Charge for the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office, made the announcement after the verdict was accepted by U.S. District Judge T. S. Ellis, III. Assistant U.S. Attorneys Uzo Asonye and Katherine Wong are prosecuting the case.
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. 1:15-cr-363.
Former State Treasurer Barbara Hafer Charged with Concealing Receipt of over $500,000 in Consulting Fee PaymentsRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a federal grand jury in Harrisburg has indicted the former Treasurer of Pennsylvania for concealing from federal investigators the receipt of hundreds of thousands of dollars in consulting fees.
According to United States Attorney Peter Smith, Barbara H. Hafer, age 72, of Indiana, Pennsylvania, was charged yesterday with two counts of making false statements to federal agents. In May 2016, federal agents interviewed Hafer as a part of an ongoing investigation. During the interview, Hafer allegedly concealed her financial relationship with a business person, referred to in the indictment as “Person #1”, claiming that this person did not help with her consulting business. When shown a signed contract between Hafer & Associates, LLC, and a company owned by the business person, Hafer denied receiving any payment on the contract.
According to the Indictment, Person #1 had a financial relationship with multiple businesses and had relationships, including fee sharing arrangements, with entities that provided asset management services to the Pennsylvania Treasury while Hafer served as Treasurer.
The Hafer interview took place as part of an ongoing long-term FBI-IRS investigation of alleged pay-to-play activities involving the Pennsylvania State government. The investigation revealed that in February 2005, within weeks of leaving the Office of Treasurer, a firm associated with Person #1 began making payments to Hafer’s consulting firm. For a year, Hafer & Associates received $41,667 a month, totaling the $500,000 committed in the contract. Further, the investigation found that payments began before the contract was signed by the parties.
Although Hafer allegedly claimed that this business person did not help her consulting business, the investigation revealed that the money allegedly accounted for approximately 73% of the funds Hafer & Associates earned in 2005. According to the Indictment, Person #1 allegedly helped Hafer’s business by causing the $500,000 agreement to be entered into between Hafer & Associates and a company associated with Person #1 which did not require Hafer & Associates to achieve any particular result; before the Agreement was signed by all parties, Person #1 caused a company associated with Person #1 to pay the first of 12 monthly installments of $41,667 due pursuant to the Agreement; Person #1 caused the payment of approximately $500,000 to be made under the Agreement during the first year Hafer & Associates was in operation; and Person #1 caused an additional $175,000 to be paid to Hafer’s business during calendar years 2006 and 2007.
Hafer served two terms as Pennsylvania’s elected State Treasurer from 1997 to 2005 and two terms as State Auditor General from 1989 to 1997.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service. The case is assigned to Assistant United States Attorneys Michael A. Consiglio and William S. Houser.
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 5 years of imprisonment on each count. 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 St. Joseph Business Owner Sentenced for Solar Company's $1.4 Million Fraud SchemeRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a former owner of a solar energy installation company in St. Joseph, Mo., was sentenced in federal court today for his role in a fraud scheme that totaled nearly $1.4 million in rebates through state and federal programs.
Trevor Dryden, 36, of Texas but formerly of St. Joseph, was sentenced by U.S. District Judge Beth Phillips to two years in federal prison without parole. The court also ordered Dryden to pay $1,396,956 in restitution to the victims of his fraud scheme, consisting of $464,080 payable to KCP&L for the state rebate fraud and $932,876 payable to the government for the federal rebate fraud (with the amount owed to the government jointly and severally with Richard Shonemann).
On Feb. 2, 2016, Dryden pleaded guilty to one count of participating in a conspiracy to fraudulently obtain state and federal solar rebates and to four counts of making false statements related to state and federal solar rebate programs.
Dryden was an owner of US Solar in St. Joseph, which sold and installed solar-powered panel systems to businesses and home owners in northwest Missouri. In a separate but related case, US Solar co-owner Richard Schonemann, 39, of St. Joseph, pleaded guilty on Sept. 2, 2015, to his role in the conspiracy and to one count of making false statements. Schonemann’s sentencing hearing is scheduled for Aug. 8, 2016.
Dryden admitted that he was involved in three separate fraud schemes: first, a fraud related to KCP&L state rebates; second, a fraud related to the federal rebate program; and third, a fraud related to annual updates for the federal program. The total loss from the fraudulent schemes is $1,396,956.
KCP&L State Rebate Program
From July 23, 2011, to Dec. 31, 2013, US Solar obtained fraudulent rebates from KCP&L by overstating the number of solar panels installed at approximately 27 homes or businesses so that a larger rebate would be paid to KCP&L customers, who signed the rebates over to US Solar.
KCP&L administered the state’s Solar Photovoltaic Rebate Program, which was created in 2008 by the state of Missouri and funded by a tax on power customers. The rebate allowed for a payment of $2 per watt, not to exceed $50,000, to customers that installed solar powered panel systems on their homes or businesses. US Solar was one of the larger solar powered panel system installation companies that utilized this rebate program through KCP&L. To utilize the state rebate program, US Solar submitted applications and schematic drawings on behalf of their customers via email to KCP&L. Once the application process was completed, funds were disbursed to US Solar by checks mailed from KCP&L.
One of the fraudulent rebate payments related to the St. Joseph residence of Dryden’s father. Fraudulent paperwork was submitted requesting payment for 75 extra panels not installed, resulting in a rebate overpayment of $35,250. Another fraudulent rebate payment under this program was related to Dryden’s personal home. Fraudulent paperwork was submitted to KCP&L requesting payment for 54 extra panels not installed, resulting in a rebate overpayment of $25,380.
As a result of this fraud scheme, US Solar was paid a total of $464,080 more in rebates than the company was entitled to receive.
During the investigation of the state rebate scheme, the FBI uncovered unexplained payments from the federal government to US Solar that led to the discovery of a second fraudulent scheme that was part of the conspiracy.
American Recovery and Reinvestment Act of 2009
US Solar also obtained fraudulent federal rebates authorized by the American Recovery and Reinvestment Act of 2009. Under the federal program, the government reimbursed 30 percent of the cost of the installation of a solar-powered panel system leased to the property owner. US Solar received federal funds under this program from August 2011 to September 2013, because Dryden and US Solar certified they installed systems and leased those systems to the property owners. The certification was false because the systems were owned by customers rather than leased.
US Solar submitted forged lease contracts in order to receive the federal rebates. Dryden created false paperwork and computer entries using US Solar customer information. The conspiracy involved the use of false paperwork and computer entries, including lease agreements, certification that US Solar retained ownership of the solar powered panel systems, detailed cost breakdowns on each system and usage reports.
US Solar received 34 payments from the federal government, totaling $932,876. US Solar was not eligible to receive any of the $932,876 paid under the federal program.
Annual Updates
In order to participate in the federal rebate program, US Solar was required to certify that the installed systems were still running and report the systems’ output each year after installation. Dryden provided updates showing kilowatt usage on each property to the federal government in 2012 and 2013.
During the course of the conspiracy, Dryden and Schonemann, received payments from US Solar that were described as profit distributions. A significant source for those profit distributions were funds received by US Solar from the federal rebate program.
This case was prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the FBI.
Former Social Security Administration Employee Sentenced for FraudRead the Press Release
NORFOLK, Va. – Sophia Dix, 35, of Newport News, was sentenced today to 15 months in prison for wire fraud. Dix was also sentenced to three years of supervised release and ordered to pay restitution in the amount of $97,584.94.
Dix pleaded guilty on April 25, 2016. According to court documents, from in or about April 2014, through in or about August 2015, Dix devised a scheme to defraud the Social Security Administration (SSA), where she was employed as a service representative at a district office in Norfolk. She had computer access to Social Security Administration beneficiary information, including bank account data for the direct deposit of benefit payments into the bank accounts of beneficiaries. Dix obtained monies for herself by fraudulently processing computer changes to beneficiary account information so that benefit payments would be deposited directly into prepaid reloadable debit card accounts that she opened at a financial institution in the name of a deceased beneficiary. As a result, Dix fraudulently diverted over $97,000 into the prepaid reloadable debit card accounts, which she used for her personal benefit.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Michael McGill, Special Agent-in-Charge of the Philadelphia Field Division of the SSA Office of the Inspector General, made the announcement after sentencing by U.S. District Judge Robert G. Doumar. Assistant U.S. Attorney Elizabeth M. Yusi prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:16cr32.
Former San Francisco Unified School District Teacher Charged with Possession of Child PornographyRead the Press Release
OAKLAND –Christian Lancaster appeared in court today and was arraigned on charges he possessed child pornography, announced United States Attorney Brian Stretch and Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin. The appearance follows an indictment handed down by a federal grand jury on July 14, 2016, and unsealed earlier today.
According to the indictment, Lancaster is alleged to have knowingly possessed or knowingly accessed with intent to view one or more images of prepubescent minors engaging in sexually explicit conduct. Until January 2016, Lancaster was a teacher with the San Francisco Unified School District.
Lancaster voluntarily surrendered and was arraigned on the indictment today. Lancaster was remanded into the custody of the U.S. Marshal pending a bail hearing. The defendant’s next scheduled appearance is at Wednesday, July 27, 2016, before the Honorable Donna M. Ryu for a hearing on bail.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of Possession of Child Pornography, in violation of 18 U.S.C. § 2252(a)(4), the defendant faces a maximum sentence of 20 years, a fine of $250,000, plus restitution if appropriate. However, any sentence following conviction will 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.
AUSAs Denise Marie Barton is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Trina Khadoo. The prosecution is the result of an investigation by the United States Department of Homeland Security.
If members of the public have any information relevant to this investigation or to suspected child predators or suspicious activity, HSI encourages them to contact HSI through the toll-free Tip Line at 1-866-DHS-2-ICE or by completing its online tip form at https://www.ice.gov/webform/hsi-tip-form. Both are staffed around the clock by investigators. Suspected child sexual exploitation or missing children may also be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.
Former Prison Guard Sentenced to Prison for Having Sex with InmatesRead the Press Release
HOUSTON – A former correctional officer has been ordered to federal prison following his conviction of sexual abuse of a ward, announced U.S. Attorney Kenneth Magidson. James Graves, 45, pleaded guilty May 2, 2016, admitting he engaged in a sexual relationship with two inmates while he was employed at the Federal Prison Camp (FPC) in Bryan.
Today, U.S. District Judge Sim Lake ordered Graves serve a total sentence of 21 months in federal prison to be immediately followed by 10 years of supervised release. He was further ordered to register as a sex offender.
During the summer of 2014, Graves engaged in multiple sex acts with an inmate at FPC on more than one occasion. She reported the incidents to authorities and advised she believed he had done so with another inmate as well.
The second woman denied any sexual contact with Graves, but he ultimately admitted to the sexual encounters with both women while they were inmates under his control.
The Department of Justice – Office of Inspector General conducted the investigation. Assistant United States Attorneys Ruben R. Perez and Jill Stotts prosecuted the case.
Former Prison Guard Sentenced to 50 Months for Contraband SmugglingRead the Press Release
PHILADELPHIA – John Wesley Herder, 50, of Philadelphia, PA, was sentenced today to 50 months in prison for delivering contraband to inmates at the Curran-Fromhold Correctional Facility (CFCF), in Philadelphia, where he worked at the time. On October 16, 2013, Herder smuggled past prison security at the CFCF a cellular telephone and 100 pills, represented to contain OxyContin, in exchange for $1,000. Then, on January 15, 2015, Herder again smuggled past prison security at the CFCF 100 pills, represented to contain OxyContin, in exchange for $1,000. When the FBI questioned Herder about his contraband smuggling activities, Herder falsely stated that he had never brought contraband into the CFCF. On January 20, 2016, Herder pleaded guilty to one count of attempted extortion under color of official right, one count of attempted distribution of controlled substances, and one count of making false statements to federal law enforcement officers.
In addition to the prison term, U.S. District Court Mark A. Kearney ordered a $1,000 fine, three years of supervised release, a $1,000 forfeiture money judgment, and a $300 special assessment.
The case was investigated by the Federal Bureau of Investigation with assistance from the Philadelphia Department of Corrections. It is being prosecuted by Assistant United States Attorney Kevin R. Brenner.
Former HARC CEO Indicted for Conspiracy to Defraud and Make Materially False Statements to the Social Security AdministrationRead the Press Release
Tampa, FL – United States Attorney A. Lee Bentley, III announced today the return of an indictment charging Richard Lilliston (69, Brooksville) with conspiracy to defraud two Social Security Administration (“SSA”) programs, and to make false statements to the SSA programs. If convicted, he faces a maximum penalty of five years in federal prison and a fine of $250,000.
Three former Hillsborough Achievement and Resource Centers (HARC) employees have previously pleaded guilty to related charges. HARC CFO Frank Pannullo pleaded guilty to conspiracy on June 6, 2016, for his role in the criminal conduct at HARC (Case No. 8:16-cr-222-T-35JSS). Marsha Weisse, a former HARC controller and CFO, pleaded guilty on December 10, 2015, to submitting a false statement to the SSA and is awaiting sentencing (Case No. 8:15-cr-486-T-26JSS). Sandra Shepherd, a former HARC client finance manager, also pleaded guilty to submitting a false statement to the SSA. Shepherd was sentenced on March 24, 2016 (Case No. 8:15-cr-400-T-36TBM).
According to Lilliston’s indictment and other related court documents, HARC, formerly the Hillsborough Association for Retarded Citizens, was established in 1953 to positively impact the future for people living with developmental disabilities, such as Alzheimer’s disease and Down syndrome. HARC opened and operated group homes that served its target client population and also spearheaded various community programs for its clients, focused on inclusion activities for youths, adults, and seniors with disabilities.
Many of the HARC clients received SSA benefits from the Supplemental Security Income and the Old Age, Survivors’ and Disability Insurance programs due to various developmental disabilities. For certain HARC clients who lacked the capacity to manage their own SSA program benefits, SSA approved one or more HARC officials to act as a “Representative Payee” to receive the client’s benefits and to use them exclusively for that client’s benefit. As a Representative Payee, the HARC official was required to complete and submit to the SSA a “Representative Payee Report” (or “Form SSA-6234”). The SSA Form SSA-6234 required that basic financial information relating to each HARC client who was an SSA program beneficiary be submitted annually to the SSA. The required financial information included, among other information: (1) how much had been spent for the beneficiary's food and housing during the relevant period; (2) how much had been spent on other items and services—such as clothing, education, medical and dental expenses, recreation, or personal items—directly for the beneficiary; and (3) how much, if any, had been saved for the beneficiary as of the end of the relevant period.
The indictment alleges that in or about January 2001, through November 2011, the conspirators engaged in a scheme to defraud the SSA. Specifically, in January 2001, HARC opened an account at SunTrust bank, commonly referred to within HARC as the "Endowment Account." That account was purportedly established to maintain and safeguard the HARC clients' funds for each client’s relevant needs. However, shortly after the creation of the account, Lilliston and Pannullo, HARC’s CEO and CFO, respectively, began wrongfully diverting HARC clients’ funds from the Endowment Account into the HARC operating account, to cover various expenditures unrelated to any particular HARC client's personal needs or use. As a result of the diversion of client funds, substantially all of the Form SSA-6234s submitted to the SSA for the affected HARC clients contained false and fraudulent information. Also, early in the conspiracy, CFO Pannullo and one or more conspirators developed an "Endowment Account Worksheet" that purportedly tracked each HARC client's balance within the Endowment Account. In other words, a HARC client's Endowment Account worksheet balance was to be increased whenever funds were transferred into the account from that client's personal bank account (or from any other source) and correspondingly decreased when funds were extracted to pay for that client's personal needs and use. However, the wrongful diversions by the conspirators from the Endowment Account to the operating account were not recorded in any manner on the Endowment Account worksheet. Thus, while the worksheet made it appear as if funds in the Endowment Account were being maintained and safeguarded—and readily available—for the HARC clients' personal needs and use, such was not the case.
In another effort to conceal that HARC client funds had been, and were being, wrongfully diverted from the Endowment Account, and to make it appear as if the account had been properly established and maintained since at least 2007, Lilliston directed others at HARC to secure signatures from the developmentally disabled HARC clients on a document titled "Pooled Trust Joinder Agreement." Many, if not most of, the developmentally disabled clients who signed the document did not have the necessary capacity to understand the full import of the document. Lilliston and others at HARC signed and dated the documents as if they had been executed in April 2007, when in truth they were actually executed in late November 2009.
In June 2013, the U.S. Attorney’s Office filed a Verified Complaint for Forfeiture In Rem in a related case (Case No. 8:13-Cv-1601-T-17TBM), seeking the forfeiture of $87,000 held in a Synovus Bank account. That complaint raised like allegations—that HARC clients’ SSA benefits had been wrongfully diverted from the clients and used by HARC for other purposes—and was supported by facts contained in the sworn affidavit of a special agent with the U.S. Department of Health and Human Services - Office of Inspector General. On September 30, 2013, the district court entered a Default Judgment of Forfeiture in which the Court ordered the forfeiture of the $87,000 to the United States.
This case is being investigated by the Social Security Administration - Office of the Inspector General, the U.S. Department of Health and Human Services - Office of the Inspector General, and the Florida Department of Law Enforcement, along with the State of Florida’s Department of Financial Services - Office of Fiscal Integrity. It is being prosecuted by Assistant United States Attorney Jay G. Trezevant.
Former Counselor at the Luzerne County Correctional Facility Pleads Guilty to Extortion and A Firearm ChargeRead the Press Release
SCRANTON - The United States Attorney’s Office for the Middle District of Pennsylvania announced that Louis Elmy, age 51, of Wilkes-Barre, pleaded guilty before United States District Court Judge Edwin M. Kosik today in Scranton to extortion and a firearms violation.
According to United States Attorney Peter Smith, Elmy was charged in a Criminal Information filed in June 2016 in the U.S. District Court in Scranton, with extortion and possession of a firearm in furtherance of drug trafficking, specifically, the possession of and intent to distribute crack cocaine. The Information was filed pursuant to a plea agreement between the United States and Elmy.
While acting in his official capacity as the work release counselor at the Luzerne County Correctional Facility, Elmy extorted money and other items of value from inmates on work release in exchange for giving them special privileges and unauthorized furloughs.
In order to have documentation for the furloughs that would appeared legitimate, Elmy created court orders by cutting and pasting a Luzerne County Judge’s signature from an older order onto the fraudulent order, and then photocopied the document for the file. Elmy engaged in the conduct between November 2013 and February 2016.
Elmy was arrested in February 2016 on a criminal complaint relating to the firearms charge.
Elmy was employed by Luzerne County for approximately 20 years, including work as a corrections officer at the correctional facility prior to being a work release counselor. Elmy also served as a member and president of the Wilkes-Barre Area School Board prior to the time period when the alleged criminal conduct occurred.
The charges are the result of an ongoing investigation by the Scranton Office of the Federal Bureau of Investigation. Prosecution is assigned to Assistant United States Attorney Michelle Olshefski.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute for the extortion charge is 20 years’ imprisonment. The firearms charge carries a maximum term of life, with a mandatory minimum sentence of five years’ imprisonment. Each charge also carries a fine of $250,000 and a term of supervised release following any period of incarceration. 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 Canadian Moneygram and Western Union Agent Pleads Guilty to Fraud and Money Laundering Conspiracy ChargesRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a former Western Union and MoneyGram agent in Canada has pleaded guilty to charges that he conspired to defraud hundreds of American residents out of more than $900,000 via mass marketing consumer fraud schemes.
According to United States Attorney Peter Smith, Chima Nneji, age 55, of Toronto, Canada, entered his guilty plea today before U.S. District Court Chief Judge Christopher C. Conner in Harrisburg. Nneji pleaded guilty to conspiracy to commit mail fraud, wire fraud and money laundering.
According to the Indictment by a Middle District of Pennsylvania grand jury in September 2012, Chima Nneji conspired with his codefendant brother, William Nneji, codefendant Alex Mgbolu, and other unnamed individuals between July of 2002 and May of 2010 to commit the crimes. Chima Nneji was extradited to the United States from Canada and was arraigned on his charges in Harrisburg in July 2015.
According to the Indictment, Chima Nneji was the owner/operator of a Western Union agency called Advanced Computer and a MoneyGram agency known as Hallmark Services, in Toronto, Canada. Between November 2004 and April of 2007, international mass marketing fraudsters instructed hundreds of consumer fraud victims across the United States to send Western Union and MoneyGram money transfers to Advanced Computer Service and Hallmark Services. The transfers were then paid out by Chima Nneji, and his brother. Nneji and his brother cashed out the money transfers in a manner that maintained the anonymity of the fraudsters, by entering false names and identification data into the Western Union and MoneyGram computer data bases. Analysts from the Toronto Police Service and U.S. Postal Inspection Service determined that over 90% of the payee addresses and identification numbers entered at Advanced Computer Service and Hallmark Services were invalid. For his role in the scheme, Chima Nneji retained a portion of the money transfers before sending the balance of the funds on to the fraudsters.
Law enforcement personnel sent questionnaires to hundreds of MoneyGram customers in the United States whose $1,000 plus money transfers were paid out at Hallmark Services. Not a single sender reported that their transfer was sent for a legitimate purpose. 198 customers reported that their money transfers, which totaled $579,436, were fraud-induced. The known total dollar loss associated with all consumer fraud induced money transfers paid out at Advanced Computer Service and Hallmark Services is $915,978.
Codefendant William Nneji is a fugitive from justice. Codefendant Alex Mgbolu is scheduled for trial before Judge Conner on August 15, 2016. No date has been scheduled as yet by Judge Conner for Nneji’s sentencing.
The case is part of an ongoing investigation by the Harrisburg Office of the U.S. Postal Inspection Service and is being prosecuted by Assistant United States Attorney Kim Douglas Daniel.
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 5 years imprisonment, a term of supervised release following imprisonment, and a $250,000 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 Branch Manager Sentenced to Federal Prison and Ordered to Pay over $210,000 Restitution for Bank FraudRead the Press Release
El Dorado, Arkansas – Kenneth Elser, United States Attorney for the Western District of Arkansas, announced that Melinda Gwin, age 49, of Hamburg, Arkansas, was sentenced to 21 months in federal prison followed by three (3) years supervised release on one count of Bank Fraud. The Honorable Susan O. Hickey presided over the sentencing hearing in the United States District Court in El Dorado. The court also ordered her to pay $210,875 in restitution to First National Bank of Crossett.
According to court records, the defendant, Melinda Gwin had been employed by First National Bank of Crossett (FNBC) from at least as early as January, 2009 through August 20, 2015, first as a teller and then as a manager of their Hamburg Branch. As part of her duties and responsibilities, she was given access to the bank vault. On August 20, 2015, an audit was conducted at the Hamburg Branch that revealed missing cash and inconsistencies. Later that day, she surrendered her keys to FNBC officials, admitted that she was responsible for the missing funds and resigned her position. Law Enforcement was notified and the Federal Bureau of Investigation began an investigation. A review of video surveillance from the bank showed her pretending to deposit funds into the vault but instead concealing cash on her person and leaving with it. Over the course of several interviews, Gwin admitted to investigators that she concealed cash on her person while in the bank vault and later used those funds for her benefit and for the benefit of members of her family. She stated that she had been doing this for approximately five (5) years predominately by taking cash in two to three thousand dollar increments while switching out ATM drawers and not entering the cash back into the vault as she should have. Gwin was indicted by a federal grand jury in September, 2015 and pleaded guilty to the charge December 1, 2015.
“The sentencing of Gwin reflects fitting punishment for an individual who abused her position of trust at the First National Bank of Crossett for personal gain and caused irreparable harm to the institution,” said Special Agent in Charge Diane Upchurch of the FBI Little Rock Field Office. “The FBI and the United States Attorney’s Office (USAO) in the Western Division are firmly committed to helping ensure the integrity of our Nation’s banks. We value the cooperative working relationships with the USAO in the Western Division which brings about such successful outcomes.”
This case was investigated by Federal Bureau of Investigation. Assistant United States Attorney Ben Wulff prosecuted the case for the United States.
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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
Folcroft Man Charged with Child PornographyRead the Press Release
Jeffrey Keagle, 48 of, Folcroft, PA was charged today by Indictment1 of distribution, receipt, and possession of a collection of more than 75,000 images and videos of children being sexually abused and in sexually explicit positions on various dates in 2015 and 2016 announced United States Attorney Zane David Memeger. Keagle is currently incarcerated in Delaware County on local charges and will be transported for his initial appearance in Magistrate Court in the Eastern District of Pennsylvania.
If convicted the defendant faces a maximum possible sentence of 80 years’ incarceration, a 5 year mandatory minimum, $1,000,000 in fines, and a $60,000 mandatory special assessment.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by the Delaware County District Attorney’s Office Criminal Investigation Division and the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Michelle Rotella.
[1] An Information, Indictment or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Final Defendant Pleads Guilty in New Haven to Bangor Drug Conspiracy CaseRead the Press Release
Contact: Joel B. Casey
Assistant United States Attorney
Tel: (207) 945-0373Bangor, Maine: United States Attorney Thomas E. Delahanty II announced that Wendell White, 52, of Rumford, Maine (formerly of Bangor) pleaded guilty today U.S. District Court to conspiring to distribute and possess with the intent to distribute cocaine base, commonly known as crack.
Between about January 2010 and August 2013, the defendant conspired with Christian Turner, a/k/a “P” and Rodrigo Ramirez, a/k/a “Rico” and others to distribute over 280 grams of crack cocaine throughout the greater Bangor area. The drugs were obtained in the New Haven, Connecticut area and transported to the Bangor area by others. The defendant obtained the drugs from Turner and Ramirez and sold it for $100 per gram and $50 per half-gram. He also allowed Turner, Ramirez and others to use his apartment on Sanford Street in Bangor as a place where crack could be sold and used. Members of the conspiracy from New Haven included members of the Red Side Guerilla Brims, a violent street gang affiliated with the Almighty Blood Nation, a national street gang.
The defendant faces up to 20 years in prison, a $1,000,000 fine and between three years and life on supervised release. He will be sentenced after the completion of a presentence investigation report by the U.S. Probation Office.
The case was investigated by the Maine Drug Enforcement Agency; the New Haven Office of Bureau of Alcohol, Tobacco, Firearms and Explosives; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Falmouth Man Sentenced to 5 Years for Trafficking Heroin That Resulted in DeathRead the Press Release
Contact: Daniel J. Perry
Assistant United States Attorney
Tel: (207) 780-3257Portland, Maine: United States Attorney Thomas E. Delahanty II announced that Adam Norton, 32, of Falmouth, Maine, was sentenced today in U.S. District Court by Judge Jon D. Levy to five years in prison, to be followed by three years of supervised release for distributing heroin that resulted in death. Norton pled guilty to the charge on January 26, 2016.
According to court records, in October 2014, Norton distributed heroin to a man that resulted in his death. Only days after the death, Norton supplied heroin to a family member who overdosed on it, but who was resuscitated with Narcan, an opiate antidote.
At the sentencing, Judge Levy commented that this “case presents circumstances that are the most heartbreaking” he has encountered. The Court noted that Norton’s drug trafficking was related to his heroin addiction that started from his use of medication that had been prescribed him. The Court added, however, that “being an addict is not an excuse for drug trafficking.”
This case results from an investigation conducted by the Maine Drug Enforcement Agency.
FBI Arrests Dallas Technology Company’s Former Lead Systems Engineer on Mail Fraud and Money Laundering ChargesRead the Press Release
DALLAS — Albert Shih-Der Chang, a former Lead Systems Engineer for a Dallas technology company known as One Technologies, was arrested at his residence in Fairview, Texas, this morning by special agents with the FBI on an indictment charging federal felony offenses stemming from his approximate $2.4 million theft or embezzlement from the company, announced U.S. Attorney John Parker of the Northern District of Texas.
A federal grand jury in Dallas returned the 11-count indictment yesterday charging Chang with 10 counts of mail fraud and one count of money laundering. Chang, 35, made his initial appearance in federal court this afternoon before U.S. Magistrate Judge Renée Harris Toliver and was released on bond with conditions.
According to the indictment, from approximately October 4, 2004, through August 15, 2014, Chang worked for One Technologies, initially as its Network/Systems Administrator and later as its Lead Systems Engineer.
The indictment alleges that from approximately June 2008 through August 2014, Chang devised and ran a scheme to defraud One Technologies by causing the company to pay more than $2.4 million as a result of his false and fraudulent pretenses, representations and promises. Chang caused One Technologies to transfer funds, based on material representations, to financial accounts he controlled, and Chang caused One Technologies to purchase products, purportedly for the company’s use, that Chang later converted to his own use.
To carry out his scheme, Chang allegedly created fictitious companies and opened bank accounts or PayPal accounts for them, rented mailboxes for them, and contracted for virtual offices for them with mail forwarding services. He also created and submitted fictitious purchase requisitions, orders, invoices, and receipts that One Technologies paid.
The money laundering count alleges that from approximately April 15, 2013, until May 30, 2013, Chang wired-transferred nearly $300,000 from his joint account at Chase Bank to a title company to purchase a residence on Stone Hinge Drive in Fairview, and that funds transfer involved the proceeds of the fraud.
An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty. However, if convicted, the maximum statutory penalty for each mail fraud count is 20 years in federal prison and a $250,000 fine. The money laundering count, upon conviction, carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine. Restitution could also be ordered. The indictment also includes a forfeiture allegation that would require the defendant, upon conviction, to forfeit any property that constitutes or was derived from proceeds traceable to the fraud, including his residence in Fairview.
The FBI is in charge of the investigation and the Fairview Police Department assisted with the arrest. Assistant U.S. Attorney C.S. Heath is in charge of the prosecution.
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Corpus Christi Man Pleads Guilty to Transferring Obscene Material to a MinorRead the Press Release
CORPUS CHRISTI, Texas – A 32-year-old local man has been convicted of transferring obscene material to a 14-year-old girl, announced U.S. Attorney Kenneth Magidson. Brandon Guthrie, of Corpus Christi, entered his plea today before U.S. District Judge Nelva Gonzales Ramos.
During the hearing, the court heard that Guthrie met a 14-year-old female at a movie theater in Corpus Christi and began communicating with her via a messaging application. The minor’s parents discovered the communications and contacted the authorities. An undercover officer assumed control of the minor’s messaging account and continued to communicate with Guthrie, during which time Guthrie sent several videos of himself engaging in sexual explicit conduct.
Judge Ramos has set sentencing for Nov, 1, 2016, at which time Guthrie faces up to 10 years in federal prison as well as a possible $250,000 fine. Upon completion of any prison term imposed, Guthrie also faces a maximum of life on supervised release during which time the court can impose a number of special conditions designed to protect children including sex offender registration.
The charges are the result of the investigative efforts of the FBI and Corpus Christi Police Department—Internet Crimes Against Children Task Force.
This case, prosecuted by Assistant U.S. Attorney Hugo R. Martinez, 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."
Conspirator Sentenced to over 13 Years in Federal Prison for Robbing Four BanksRead the Press Release
Baltimore, Maryland – U.S. District Judge Richard D. Bennett sentenced Andre Antoine Walker, age 23, of Temple Hills, Maryland, today to 162 months in federal prison, followed by three years of supervised release, for bank robbery conspiracy, bank robbery, armed bank robbery and brandishing a firearm in relation to a bank robbery. Judge Bennett also ordered Walker to pay restitution of $10,593.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office; Chief James W. Johnson of the Baltimore County Police Department; Chief Hank Stawinski of the Prince George’s County Police Department; Kent County Sheriff John F. Price IV; Loudoun County Sheriff Michael L. Chapman; and Colonel William M. Pallozzi, Superintendent of the Maryland State Police.
According to his plea agreement, Walker and co-defendant Malcolm Green robbed three banks in Maryland and one bank in Virginia. On July 1, 2015, Walker and Green entered the BB&T Bank on Allentown Road in Camp Springs, Maryland. Walker passed a note to a teller demanding money in large and small bills. When the bank teller stated that she did not have large bills, Walker patted his waistband with his hand. The teller believed that this motion was meant to indicate that Walker had a weapon. The teller provided money and the defendants left.
On July 13, the defendants presented a demand note to a teller at the Essex Bank on Ingleside Road in Baltimore. The teller provided cash and the defendants left with approximately $100. A dye pack ignited in Green’s pants, burning his legs and ruining the money.
On July 17, the defendants walked into the BB&T Bank on Cypress Avenue in Millington, Maryland. Green passed the teller a note demanding money, and threatening to come back shooting if his demands were not met. When the teller hesitated, Walker pulled out a gun from his waistband, brandishing it several times. The teller provided cash and the defendants left.
On July 24, 2015, the defendants entered the BB&T Bank in Lovettsville, Virginia. Green brandished a gun and gave the teller a note demanding money and no dye packs. The teller provided money and the defendants left.
The total amount that the defendants stole from the banks was in excess of $10,590.
Investigators identified the defendants through fingerprint analysis on a robbery note, law enforcement databases and surveillance footage of the robberies. Walker and Green were arrested on August 3, 2015.
Malcolm Xavier Green, age 24, of Temple Hills, Maryland, pleaded guilty to his participation in the conspiracy and was sentenced to 154 months in federal prison on May 31, 2016.
United States Attorney Rod J. Rosenstein commended the FBI, Baltimore County Police Department, Prince George’s County Police Department, Kent County Sheriff’s Office, Loudoun County Sheriff’s Office and the Maryland State Police for their work in the investigation. Mr. Rosenstein thanked the Loudoun County Commonwealth’s Attorney’s Office for their assistance, and Assistant United States Attorney Aaron S. J. Zelinsky, who prosecuted the case.
Cleveland man pleads guilty to distribution of heroin and fentanylRead the Press Release
WHEELING, WEST VIRGINIA – Shawn L. McClain, 37, of Cleveland, Ohio, pled guilty today to distributing heroin mixed with fentanyl, United States Attorney William J. Ihlenfeld, II, announced.
McClain admitted to selling the heroin in Ohio County, WV, specifically within 1,000 feet of Madison Elementary School. He pled guilty to one count of “Conspiracy to Distribute Heroin and Fentanyl,” one count of “Distribution of Heroin & Fentanyl within 1,000 Feet of a Protected Location,” and one count of “Distribution of Heroin & Fentanyl.”
McClain faces up to twenty years in prison and a fine of up to $1,000,000 conspiracy charge; up to forty years in prison and a fine up to $2,000,000 for the distribution near a protected location charge; and up to twenty years in prison and a fine of up to $1,000,000 for the distribution charge. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
U.S. Attorney William J. Ihlenfeld, II and Assistant U.S. Attorney Randolph J. Bernard prosecuted the case on behalf of the government. The Drug Enforcement Administration and the Ohio Valley Drug Task Force investigated.
Senior U.S. District Judge Frederick P. Stamp, Jr. presided.
Ch2m Hill Completes Payment of Half a Million Dollars Towards Accountability Systems at HanfordRead the Press Release
Richland – This week CH2M HILL Companies Ltd., and its subsidiaries CH2M Hill Hanford Group Inc., and CH2M Hill Plateau Remediation Company, (“CH2M”) completed the payment of $500,000 for accountability systems at the Hanford Nuclear Site as required by the Non-Prosecution Agreement (“NPA”) that it entered into with the United States Attorney’s Office for the Eastern District of Washington in March of 2013. In 2013 CH2M admitted that between 1999 and 2008 CH2M Hill Hanford Group Inc. (“CHG”) participated in a widespread criminal conspiracy with its own employees, at all levels, to defraud the Department of Energy (“DOE”) through systemic timecard fraud. CHG’s fraud directly cost DOE and the federal tax payer millions of dollars.
In March of 2013 CH2M entered into the NPA to resolve CHG’s criminal liability and fully admitted to CHG’s criminal conduct. In addition, at that time CH2M entered into a settlement agreement with the Department of Justice resolving CHG’s civil liability for that same conduct under the False Claims Act.
While CH2M has continuing obligations to cooperate with ongoing investigations under the NPA, it has successfully completed the following requirements:
- Payment of a total of $18.5 million dollars to resolve CHG’s civil and criminal liability;
- Hired and paid for an independent corporate monitor for 3 years, gave her full access to all CH2M Hill Plateau Remediation (“CHPRC”) personnel, systems, and locations to ensure that similar violations would not occur;
- Cooperated extensively in the investigation and prosecution of co-conspirators; and
- Payment of a total of $500,000 for accountability systems at the Hanford Site to further ensure the detection and deterrence of timecard fraud.
Michael C. Ormsby said, “CH2M admitted to the egregious criminal conduct of CH2M Hill Hanford Group Inc., and took the concrete steps to try to make things right as required by the NPA. In particular, the CH2M subsidiary remaining at Hanford (CHPRC) has fully lived up to its obligations under the NPA and we have every reason to expect it will continue to do so.”
Under the terms of the NPA CH2M, through CHPRC, was required to pay $500,000 for accountability systems to detect and deter timecard fraud. CHPRC spent $29,301.57 instituting and implementing modifications to the Time Information System (“TIS”) creating an automated verification of time worked by CHPRC employees. These modifications to TIS were reviewed and approved by the CHPRC independent corporate monitor. The remaining $470,698.43, was paid directly to DOE and has been earmarked for use for additional accountability systems anywhere on the Hanford Site in order to detect and deter timecard fraud and abuse. Further, the NPA requires CH2M to provide a full accounting to the United States Attorney’s Office of the $500,000 to ensure that it came from CH2M’s own money and was not charged directly or indirectly to the federal government. The goal of everyone in this region is to make sure that money allocated to the clean-up of the Hanford Nuclear Reservation is effectively expended for that purpose. The installment of accountability systems to help prevent similar misconduct by contractors in the future was particularly important to the United States Attorney’s Office.
Michael C. Ormsby noted “The investigation of CH2M Hill Hanford Group’s systemic timecard fraud revealed a disturbing culture of fraud that has infected various areas of the Hanford Site.” USA Ormsby went on to state, “While the vast majority of people working at Hanford are law abiding, my office, and its law enforcement partners, remain committed to doing all we can to root out and hold accountable all persons and entities guilty of stealing federal tax payer dollars. We are also committed, as the NPA shows, to assisting in instituting solutions that will deter such conduct in the future. We are pleased that CH2M, through the NPA process, has become an ally in these efforts and we hope that other contractors at Hanford will follow its lead without the need for the direct involvement of law enforcement.”
This case was investigated by the United States Department of Energy’s Office of Inspector General, Richland, WA and the Federal Bureau of Investigation. Tyler H.L. Tornabene, an Assistant United States Attorney for the Eastern District of Washington, and Daniel Hugo Fruchter, an attorney with the Department of Justice, Civil Frauds Section, represented the United States in this matter.
Cedar Rapids Man Charged with Sexual Exploitation of Children and Enticement of MinorsRead the Press Release
Tyler Konigsmark, age 20, of Cedar Rapids, Iowa, has been charged with sexual exploitation of children and enticement of minors. The charges are contained in an Indictment unsealed today in United States District Court in Cedar Rapids.
The Indictment alleges that, between April and May 2016, Konigsmark persuaded and attempted to persuade, induce, and entice minors to engage in sexually explicit conduct for the purposes of producing visual depictions and engaging in sexual activity.
If convicted, Konigsmark faces a mandatory minimum sentence of 15 years’ imprisonment and a possible maximum sentence of life imprisonment, a $500,000 fine, a $200 special assessment, and at least five years and up to life on supervised release following any imprisonment.
Konigsmark appeared today in federal court in Cedar Rapids and was held without bond. Konigsmark’s next appearance for a detention hearing is set for July 26, 2016, at 10:00 a.m.
As with any criminal case, a charge is merely an accusation and a defendant is presumed innocent until and unless proven guilty.
This case is being prosecuted by Assistant United States Attorney Mark Tremmel and is being investigated by the Iowa Division of Criminal Investigation, the Hiawatha Police Department, and the Cedar Rapids Police Department.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is CR 16-57.
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Catron County Man Found Guilty of Misdemeanor Offense for Failing to Follow Direction of U.S. Forest Service OfficerRead the Press Release
ALBUQUERQUE – Yesterday afternoon following a one-day bench trial, a U.S. Magistrate Judge sitting in Las Cruces, N.M., found Alvin Brent Laney, 28, guilty of the misdemeanor offense of failing to stop his vehicle when directed to do so by a U.S. Forest Service officer. The U.S. Magistrate Judge acquitted Laney of a second misdemeanor offense, interfering with a U.S. Forest Service officer. U.S. Attorney Damon P. Martinez and Special Agent in Charge Robin Poague, Southwest Region, U.S. Forest Service Law Enforcement & Investigations, announced the verdict.
Laney, a resident of Luna, N.M., was charged in a two-count misdemeanor information with interfering with a U.S. Forest Service officer engaged in the performance of his duties, and failing to stop a vehicle when directed to do so by a U.S. Forest Service officer. According to the misdemeanor information, Laney committed the two offenses in Catron County, N.M., on Jan. 11, 2015.
During the one-day bench trial, a U.S. Forest Service officer testified that while he was on duty in a marked patrol car in the Gila National Forest in Catron County on Jan. 11, 2015, Laney tailgated his patrol car for approximately four miles before illegally passing the officer’s patrol car and another vehicle on a blind curve. The officer activated his patrol car’s emergency lights and sirens, and pursued Laney along U.S. Highway 180. Laney failed to stop his vehicle and continued to drive for at least a mile and a half, while passing areas where he could have safely pulled over, even though the officer was pursuing him with lights and sirens. Laney finally came to a stop and parked his vehicle next to a Catron County deputy sheriff’s patrol car.
The U.S. Forest Service officer testified that when he approached Laney, Laney claimed that the officer did not have the authority to pull him. Laney, who testified in his own defense, claimed that he did not remember what he said to the officer. The evidence at trial included a video recording from the deputy sheriff’s lapel camera that captured part of the exchange between the U.S. Forest Service officer and Laney, including a statement by Laney questioned the officer’s authority to pull him over.
After rendering the verdict, the U.S. Magistrate Judge ordered Laney to pay $135 in fines and court costs.
The case was investigated by the Reserve Ranger District of the Gila National Forest of the U.S. Forest Service and was prosecuted by Assistant U.S. Attorneys Alexander B. Shapiro and Luis A. Martinez of the U.S. Attorney’s Las Cruces Branch Office.
California Man Sentenced to over 11 Years in Federal Prison for Drug TraffickingRead the Press Release
El Dorado, Arkansas - Kenneth Elser, United States Attorney for the Western District of Arkansas, announced that Mario McGeilberry, age 29 of Rialto, California, was sentenced yesterday to 140 months in federal prison followed by four (4) years of supervised release on one count of Conspiracy to Distribute Controlled Substances with the Intent to Distribute. The Honorable Susan O. Hickey presided over the sentencing hearing in the United States District Court in El Dorado.
According to the Defendant’s Plea Agreement, beginning in September, 2014, agents with the FBI and the 13th Judicial Drug Task Force initiated an investigation into a drug trafficking organization in Camden and elsewhere in the Western District of Arkansas. Mario McGeilberry was identified as a multikilogram supplier of methamphetamine in that area. During the course of the investigation in January, 2015 cooperating targets discussed the acquisition of several pounds of methamphetamine from a source of supply in California, who was later identified by law enforcement as Mario McGeilberry. Mail records confirmed multiple shipments from individuals in San Bernardino, California to a known narcotics distributor in the Western District of Arkansas.
On February 11, 2015, McGeilberry was arrested by an Arkansas state trooper in Lake Village, Arkansas and was found to have in his possession approximately five (5) ounces of methamphetamine and a half pound of marijuana. He disclosed that the methamphetamine he was apprehended with was destined to be delivered in the Western District of Arkansas. He further stated that he was engaged in trafficking methamphetamine through the mail. He estimated that seven (7) pounds of methamphetamine were shipped to the Western District of Arkansas during the course of his dealings here. The substance seized in his traffic stop was sent to the Arkansas State Crime lab where it was tested and found to be over 50 grams of a mixture or substance containing methamphetamine.
McGeilberry was indicted by a Federal Grand Jury on February 25, 2015 and pleaded guilty to the charge on December 1, 2015.
“The success of this investigation is a tribute to strong partnerships which demonstrates our combined impact on targeting and dismantling drug trafficking organizations that peddle dangerous drugs to our neighborhoods,” said Special Agent in Charge Diane Upchurch of the FBI Little Rock Field Office. “We appreciate the efforts of the 13th Judicial Drug Task Force and the United States Attorney’s Office.”
This case was investigated by the Federal Bureau of Investigation (FBI) and the 13th Judicial Drug Task Force. Assistant United States Attorney Ben Wulff prosecuted the case for the United States.
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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
Caddo Parish Commissioner Michael Williams sentenced to 14 months for stealing from nonprofitRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced today that Caddo Parish Commissioner Michael Dwayne Williams was sentenced to 14 months in prison for stealing from a nonprofit meant to help at-risk youth.
Williams, 55, of Shreveport, was sentenced by U.S. District Judge S. Maurice Hicks Jr. on 11 counts of wire fraud. He was also sentenced to three years of supervised release, and he was ordered to pay $8,584.68 restitution, a $10,000 fine and $1,100 to the Crime Victims Fund. According to evidence presented at the four-day trial that ended on March 10, 2016, Williams took more than $8,000 from a nonprofit’s bank account from October 1, 2012 through July 1, 2014. Williams urged the parish commission to appropriate public funds for the nonprofit SWAG Nation. Once those funds were allocated from the parish’s budget to SWAG Nation, Williams caused a bank debit card to be issued for the nonprofit. Between April of 2013 and July of 2014, Williams used the card to remove money on numerous occasions. According to the indictment, he took $100 to $200 each time that he made a withdrawal. Evidence presented at trial showed the defendant used the card in excess of 45 times for cash withdrawals and purchases. SWAG Nation’s declared purpose is to partner with local institutions to help mentor and counsel at-risk individuals ages 7 to 17 so that they can better function in society.
“Mr. Williams put greed before the needs of his constituents by stealing money from a program set up to help at-risk youth,” stated Finley. “His actions are a betrayal of the public trust and his oath of office.”
“Stealing is bad enough, but when you’re an elected official, you are stealing from the taxpayers who put their faith and trust in you,” Caddo Parish Sheriff Steve Prator said. “Mr. Williams violated the public’s trust and should now be held accountable.”
The FBI and the Caddo Parish Sheriff’s Office conducted the investigation. Assistant U.S. Attorneys Joseph G. Jarzabek and Brandon B. Brown prosecuted the case.
Butler County Man Pleads Guilty to Possessing Sexual Images of ChildrenRead the Press Release
PITTSBURGH - A resident of West Sunbury, Pennsylvania, pleaded guilty in federal court to charges of possession of material depicting the sexual exploitation of a minor, United States Attorney David J. Hickton announced today.
Steven R. Lawniczak, 48, of West Sunbury, Pennsylvania, pleaded guilty to one count before United States District Judge Terrence F. McVerry.
In connection with the guilty plea, the court was advised that Lawniczak, on March 4, 2014 and December 2, 2014, unlawfully possessed in computer graphics files, photographs and videos depicting minors engaged in sexually explicit conduct.
Judge McVerry scheduled sentencing for Oct. 21, 2016. The law provides for a maximum total sentence of 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Lawniczak remains detained pending sentencing.
Assistant United States Attorneys Carolyn J. Bloch and Shaun E. Sweeney are prosecuting this case on behalf of the government.
The Federal Bureau of Investigation conducted the investigation that led to the prosecution of Lawniczak.
Attorney General Lynch Names Rupa Bhattacharyya as Special Master of the September 11th Victim Compensation FundRead the Press Release
Attorney General Loretta E. Lynch today announced that she has chosen Rupa Bhattacharyya to head the September 11th Victim Compensation Fund (VCF) after current VCF Special Master Sheila L. Birnbaum steps down later this month.
Special Master Birnbaum will continue to the full-time practice of law at Quinn Emanuel, LLP, where she is a partner. Bhattacharyya, who currently serves as Director of the Justice Department’s Constitutional and Specialized Tort Litigation Section in the Civil Division’s Torts Branch, will assume her new position on July 21.
“Rupa Bhattacharyya is an exceptional administrator and a devoted public servant, and I am delighted to name her as the new Special Master of the VCF,” said Attorney General Lynch. “Throughout her career at the Treasury and Justice Departments, she has earned a reputation for fairness, efficiency and integrity. I am confident that under her leadership, the VCF will continue to guarantee that those whose lives were forever changed by the events of September 11th, 2001, can receive the compensation they deserve. I thank outgoing Special Master Sheila Birnbaum for her outstanding leadership of the VCF over the last five years and I welcome Ms. Bhattacharyya to her new post.”
“As a life-long New Yorker, serving as Special Master of the VCF has been perhaps the most personally rewarding work of my career,” said Special Master Birnbaum. “My goal from the beginning was to establish a program that is fair, transparent and easy to navigate and I believe we have accomplished this and more over the past five years. It has been a true privilege to work on behalf of the victims of 9/11 and their resilience is inspiring. As the VCF moves into a new chapter following the reauthorization, I know the team is well poised to continue to succeed in compensating those most impacted by the events of Sept. 11, 2001.”
Birnbaum has served as VCF Special Master since May 2011, after the fund created under the James Zadroga 9/11 Health & Compensation Act (Zadroga Act) was signed into law by President Obama on Jan. 2, 2011. The VCF was reauthorized in December 2015 and under Birnbaum’s leadership has rendered award decisions on more than 10,000 claims and paid over $1.8 billion to first responders, recovery workers and residents who suffered physical harm or were killed as a result of the terrorist-related aircraft crashes of Sept. 11, 2001, or the debris removal efforts that took place in the immediate aftermath.
The VCF accomplishments under Birnbaum’s leadership include:
- Drafting and issuing the final rule to reflect the Zadroga Act when the VCF first re-opened in 2011 and then issuing the revised rule to reflect the December 2015 Reauthorization statute;
- Establishing collaborative, ongoing working relationships with “partner” entities such as the WTC Health Program (NIOSH), local, state and federal agencies, key employers such as FDNY and NYPD and advocacy groups focused on 9/11 issues, all in an effort to ease the burden on claimants and ensure efficient claims processing;
- Establishing an ongoing focus on outreach and communications with claimants, including the VCF website (available in four languages), a toll-free Helpline, town hall meetings and pro bono legal clinics in coordination with the New York City Bar;
- Developing productive working relationships with law firms representing VCF claimants, including frequent conference calls and meetings to keep attorneys updated on VCF progress and activity;
- Design and implementation of the initial claim form and redesign of a simpler form to meet the reauthorization mandate, as well as enhancements to the online system;
- Continuous efforts to improve the quality of claim submissions to support faster review and decision-making and simplify and streamline the claim review process as it evolved;
- Conducting extensive outreach for the Oct. 3, 2013, filing deadline to ensure all potential claimants knew of the deadline and had an easy way to register to preserve their right to file a future claim;
- Hiring of VCF staff and expansion of team to meet claimants’ needs, including identifying and personally training hearing officers to conduct hearings; and
- Improving transparency by providing various public reports on a weekly, quarterly and annual basis, along with frequent “Messages from the Special Master” providing updates on the VCF.
“I am honored to be selected by the Attorney General for this important service,” Bhattacharyya said. “I look forward to working alongside the dedicated VCF staff to ensure that 9/11 claimants promptly receive the payments to which they are entitled.”
Prior to Bhattacharyya’s selection to run the 9/11 VCF, she has served as the Justice Department’s Constitutional and Specialized Torts Branch Director since April 2012. As Director, Bhattacharyya oversees separate groups of attorneys and professional staff for the Vaccine Injury Compensation Program, which has paid in excess of $3.4 billion to more than 4,700 people since the Program’s 1988 inception under the National Childhood Vaccine Injury Act; the Radiation Exposure Compensation Act program, which has awarded more than $2 billion in compassionate compensation to eligible claimants under the Radiation Exposure Compensation Act; and the Constitutional Torts staff, which defends constitutional tort claims brought against federal officials sued in their individual capacities in federal district courts and reviews and makes determinations on requests for individual capacity representation from federal employees. Bhattacharrya has also served informally as an advisor to the Civil Division on matters related to the 9/11 VCF, including implementation of the reauthorizing legislation and promulgation of the associated regulations. She additionally serves as an advisor to other government components on compensation and representation programs, including the newly created U.S. Victims of State Sponsored Terrorism Fund, administered by the Department’s Criminal Division.
Bhattacharyya also served for nearly four years as the Deputy Assistant General Counsel for International Affairs at the U.S. Department of the Treasury, providing legal and legislative advice on a broad range of international economic and financial matters as well as administrative matters including hiring and budget. In 2012, she received an Exceptional Service Award from the Secretary of the Treasury for playing a critical role in framing the legal contours of key national security objectives of the Treasury Department, for contributing significantly to the implementation of the Dodd-Frank Act, particularly with respect to its international implications and for deploying information technology resources to enhance information sharing and streamlining procedures for processing Freedom of Information Act requests.
She previously worked for nearly 12 years as an attorney in the Justice Department’s Civil Division, mostly in the Federal Programs Branch. She was awarded the Attorney General’s John Marshall Award for Outstanding Legal Achievement for Trial Litigation, as well as three Special Commendations from the Assistant Attorney General of the Civil Division for Outstanding Service. Before coming to the Justice Department, Bhattacharyya clerked for then Chief Judge Julia Smith Gibbons of the U.S. District Court for the Western District of Tennessee.
Bhattacharyya received her J.D. from Harvard Law School, a Masters of Arts in Law and Diplomacy (M.A.L.D.) from the Fletcher School of Law and Diplomacy at Tufts University and her B.A. from Tulane University.
For additional information on the Victim Compensation Fund, please visit: www.vcf.gov.
Attorney General Lynch Names Rupa Bhattacharyya as Special Master of the September 11th Victim Compensation FundRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
WASHINGTON – Attorney General Loretta E. Lynch today announced that she has chosen Rupa Bhattacharyya to head the September 11th Victim Compensation Fund (VCF) after current VCF Special Master Sheila L. Birnbaum steps down later this month.
Special Master Birnbaum will continue to the full-time practice of law at Quinn Emanuel, LLP, where she is a partner. Bhattacharyya, who currently serves as Director of the Justice Department’s Constitutional and Specialized Tort Litigation Section in the Civil Division’s Torts Branch, will assume her new position on July 21.“Rupa Bhattacharyya is an exceptional administrator and a devoted public servant, and I am delighted to name her as the new Special Master of the VCF,” said Attorney General Lynch. “Throughout her career at the Treasury and Justice Departments, she has earned a reputation for fairness, efficiency and integrity. I am confident that under her leadership, the VCF will continue to guarantee that those whose lives were forever changed by the events of September 11th, 2001, can receive the compensation they deserve. I thank outgoing Special Master Sheila Birnbaum for her outstanding leadership of the VCF over the last five years and I welcome Ms. Bhattacharyya to her new post.”
“As a life-long New Yorker, serving as Special Master of the VCF has been perhaps the most personally rewarding work of my career,” said Special Master Birnbaum. “My goal from the beginning was to establish a program that is fair, transparent and easy to navigate and I believe we have accomplished this and more over the past five years. It has been a true privilege to work on behalf of the victims of 9/11 and their resilience is inspiring. As the VCF moves into a new chapter following the reauthorization, I know the team is well poised to continue to succeed in compensating those most impacted by the events of Sept. 11, 2001.”
Birnbaum has served as VCF Special Master since May 2011, after the fund created under the James Zadroga 9/11 Health & Compensation Act (Zadroga Act) was signed into law by President Obama on Jan. 2, 2011. The VCF was reauthorized in December 2015 and under Birnbaum’s leadership has rendered award decisions on more than 10,000 claims and paid over $1.8 billion to first responders, recovery workers and residents who suffered physical harm or were killed as a result of the terrorist-related aircraft crashes of Sept. 11, 2001, or the debris removal efforts that took place in the immediate aftermath.
The VCF accomplishments under Birnbaum’s leadership include:
• Drafting and issuing the final rule to reflect the Zadroga Act when the VCF first re-opened in 2011 and then issuing the revised rule to reflect the December 2015 Reauthorization statute; • Establishing collaborative, ongoing working relationships with “partner” entities such as the WTC Health Program (NIOSH), local, state and federal agencies, key employers such as FDNY and NYPD and advocacy groups focused on 9/11 issues, all in an effort to ease the burden on claimants and ensure efficient claims processing; • Establishing an ongoing focus on outreach and communications with claimants, including the VCF website (available in four languages), a toll-free Helpline, town hall meetings and pro bono legal clinics in coordination with the New York City Bar; • Developing productive working relationships with law firms representing VCF claimants, including frequent conference calls and meetings to keep attorneys updated on VCF progress and activity; • Design and implementation of the initial claim form and redesign of a simpler form to meet the reauthorization mandate, as well as enhancements to the online system; • Continuous efforts to improve the quality of claim submissions to support faster review and decision-making and simplify and streamline the claim review process as it evolved; • Conducting extensive outreach for the Oct. 3, 2013, filing deadline to ensure all potential claimants knew of the deadline and had an easy way to register to preserve their right to file a future claim; • Hiring of VCF staff and expansion of team to meet claimants’ needs, including identifying and personally training hearing officers to conduct hearings; and
• Improving transparency by providing various public reports on a weekly, quarterly and annual basis, along with frequent “Messages from the Special Master” providing updates on the VCF.“I am honored to be selected by the Attorney General for this important service,” Bhattacharyya said. “I look forward to working alongside the dedicated VCF staff to ensure that 9/11 claimants promptly receive the payments to which they are entitled.”
Prior to Bhattacharyya’s selection to run the 9/11 VCF, she has served as the Justice Department’s Constitutional and Specialized Torts Branch Director since April 2012. As Director, Bhattacharyya oversees separate groups of attorneys and professional staff for the Vaccine Injury Compensation Program, which has paid in excess of $3.4 billion to more than 4,700 people since the Program’s 1988 inception under the National Childhood Vaccine Injury Act; the Radiation Exposure Compensation Act program, which has awarded more than $2 billion in compassionate compensation to eligible claimants under the Radiation Exposure Compensation Act; and the Constitutional Torts staff, which defends constitutional tort claims brought against federal officials sued in their individual capacities in federal district courts and reviews and makes determinations on requests for individual capacity representation from federal employees. Bhattacharrya has also served informally as an advisor to the Civil Division on matters related to the 9/11 VCF, including implementation of the reauthorizing legislation and promulgation of the associated regulations. She additionally serves as an advisor to other government components on compensation and representation programs, including the newly created U.S. Victims of State Sponsored Terrorism Fund, administered by the Department’s Criminal Division.
Bhattacharyya also served for nearly four years as the Deputy Assistant General Counsel for International Affairs at the U.S. Department of the Treasury, providing legal and legislative advice on a broad range of international economic and financial matters as well as administrative matters including hiring and budget. In 2012, she received an Exceptional Service Award from the Secretary of the Treasury for playing a critical role in framing the legal contours of key national security objectives of the Treasury Department, for contributing significantly to the implementation of the Dodd-Frank Act, particularly with respect to its international implications and for deploying information technology resources to enhance information sharing and streamlining procedures for processing Freedom of Information Act requests.
She previously worked for nearly 12 years as an attorney in the Justice Department’s Civil Division, mostly in the Federal Programs Branch. She was awarded the Attorney General’s John Marshall Award for Outstanding Legal Achievement for Trial Litigation, as well as three Special Commendations from the Assistant Attorney General of the Civil Division for Outstanding Service. Before coming to the Justice Department, Bhattacharyya clerked for then Chief Judge Julia Smith Gibbons of the U.S. District Court for the Western District of Tennessee.
Bhattacharyya received her J.D. from Harvard Law School, a Masters of Arts in Law and Diplomacy (M.A.L.D.) from the Fletcher School of Law and Diplomacy at Tufts University and her B.A. from Tulane University.
For additional information on the Victim Compensation Fund, please visit: www.vcf.gov.
Anchorage Resident Indicted for Health Care Fraud SchemeRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that an Anchorage woman was indicted in federal court on one count of committing a health care fraud scheme against the State of Alaska Medicaid program.
Mee Chong Collins, 70, a resident of Anchorage, was charged with executing a scheme involving the submission of numerous fraudulent timesheets beginning in February 2009 through June 2013, falsely claiming that her family members had provided personal care attendant services to four Medicaid recipients. According to the indictment, the services were not provided. It is further alleged that the fraudulent timesheets caused the payment of approximately $337,149.68 in Medicaid funds.
Medicaid is a joint federal and state program that covers health care expenses for low-income and disabled people. Personal care attendants enable Medicaid recipients to remain in their homes, rather than move to an assisted living facility.
The investigation leading to the indictment in this case was conducted by federal and state agencies, including the Federal Bureau of Investigation, the United States Department of Health and Human Services – Office of Inspector General, the Department of Homeland Security, and the State of Alaska Medicaid Fraud Control Unit.
An arraignment date for the defendant has not been set yet by the court.
An indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
Allentown Woman Sentenced to Three Years Prison for Straw PurchasesRead the Press Release
Nickaury DeJesus, a/k/a Nickaury DeJesus-Montanez, 22 years old, of Allentown, Pennsylvania, was sentenced late yesterday to 36 months in prison for straw purchasing five firearms in Lehigh County. DeJesus had pleaded guilty to five counts of making false statements to a federalfirearms licensee in connection with the purchase of five semi-automatic pistols. As she admitted in her guilty plea, DeJesus falsely certified when buying each of the pistols that she was the actual purchaser when, in fact, she was buying them for another person or persons.
Over an approximately month-and-a-half period in April and May 2015, DeJesus straw purchased the five handguns at two federal firearms licensees in Breinigsville and Whitehall, Pennsylvania. Two of those firearms were subsequently recovered during arrests of persons in Allentown and Brooklyn, New York. Another two of the firearms straw purchased by DeJesus were charged in a federal indictment, in which DeJesus was not charged, alleging seven armed robberies of commercial establishments in Allentown in May 2015.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Allentown Police Department and was prosecuted by Assistant United States Attorney Eric Boden with assistance provided by the Lehigh County District Attorney’s Office.
Additional Charges of Sex Trafficking in “Sinful Innocence” Prostitution CaseRead the Press Release
BOSTON – A Springfield couple was charged in U.S. District Court in Springfield today with additional crimes of sex trafficking in connection with operating a prostitution business advertised as Sinful Innocence.
Milford Lewis, 35, and Tiana Lewis, 31, were charged in a superseding indictment with conspiracy to commit sex trafficking, sex trafficking, interstate transportation to engage in prostitution, interstate inducement to engage in prostitution, and extortionate threats.
In January 2016, Milford and Tiana Lewis were originally charged in a ten count indictment with conspiracy to commit sex trafficking, sex trafficking, interstate transportation to engage in prostitution, interstate inducement to engage in prostitution, and extortionate threats. The superseding indictment contains eight additional charges relating to five additional sex trafficking victims.
According to charging documents, beginning in August 2015, Milford and Tiana Lewis were the CEOs of Sinful Innocence, which purported to be a talent agency for the adult entertainment industry. Through the purported talent agency, the Lewis’s recruited and induced young women to work as models, adult entertainers, adult pornography actors, and escorts. It is alleged that the Lewis’s convinced the women to travel to Springfield from other states, and in one case, they picked a woman up from Connecticut and drove her to Springfield. The young women were quickly put to work as prostitutes at a house in Springfield and in motels in West Springfield, sometimes without receiving pay. Women who wanted to leave or who broke the rules of Sinful Innocence were subjected to beatings and threats to kill or harm them. The women were also allegedly threatened with violence when they were unable to pay a termination fee imposed by Sinful Innocence.
The charge of sex trafficking and conspiracy to commit sex trafficking each provides for a sentence of no greater than a lifetime in prison, five years of supervised release and a fine of $250,000. The sex trafficking statute also imposes a mandatory minimum sentence of 15 years in prison for offenses committed by means of force, threats of force, fraud, or coercion. The charge of interstate inducement to engage in prostitution provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine $250,000. The charge of interstate transportation to engage in prostitution provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine $250,000. The charge of extortionate threats provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000.
United States Attorney Carmen M. Ortiz; Hampden County District Attorney Anthony D. Gulluni; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; West Springfield Police Chief Ronald Campurciani; and Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police, made the announcement today. The case is being prosecuted by Alex J. Grant of Ortiz’s Springfield Branch Office.
The details contained in the charging documents are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case is brought as a result of the investigative collaboration of the Western Massachusetts Human Trafficking Working Group, which includes the United States Attorney’s Office, the Massachusetts Attorney General’s Office, and the Hampden County District Attorney’s Office, as well as federal, state, and local law enforcement agencies. The Working Group began meetings in August 2015 to work cooperatively to address crimes involving commercial sex trafficking in Western Massachusetts.
A Dominican National Indicted for Illegally Re-Entering the U.S.Read the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a federal grand jury in Harrisburg indicted Jose Ricardo Pena yesterday for illegally re-entering the United States after having been previously deported.
According to U.S. Attorney Peter Smith, Pena, a 50 year old Dominican national was arrested by officers of U.S. Immigration and Customs Enforcement on May 4, 2016 as a result of a May 2016 conviction for felony drug trafficking in Dauphin County, Pennsylvania. Pena had previously been deported after an Immigration Judge ordered his removal following a conviction for drug offenses in Boston, MA.
The matter was investigated by the U.S. Department of Homeland Security/ Immigration and Customs Enforcement and Removal Operations and the case is being prosecuted by Assistant U.S. Attorney Meredith A. Taylor.
Indictments 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 for this offense under federal law is 10 years of imprisonment, a term of supervised release following imprisonment, and a $250,000 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.
# # #
20 July 2016
Zuni Pueblo Man Pleads Guilty to Federal Firearms and Residential Burglary ChargesRead the Press Release
ALBUQUERQUE – John David Lee Bacy, 24, a member and resident of Zuni Pueblo, N.M., pled guilty today to firearms and residential burglary charges.
Bacy was charged in a three-count indictment filed on March 23, 2016, with unlawfully possessing stolen firearms on Aug. 13 and 14, 2014, and with residential burglary on Aug. 13, 2014. According to the indictment, Bacy committed these crimes on Zuni Pueblo in McKinley County, N.M.
During today’s proceedings, Bacy pled guilty to unlawfully possessing stolen firearms and committing a residential burglary on Aug. 13, 2014. In entering the guilty plea, Bacy admitted entering a residence on the Zuni Indian Reservation, prying open a gun safe, and taking firearms without the owner’s authorization. Bacy also admitted that he attempted to pawn three of the firearms the next day.
At sentencing, Bacy faces a maximum penalty of ten years in federal prison for possessing stolen firearms and a maximum penalty of three years for residential burglary. Bacy remains in federal custody pending a sentencing hearing which has yet to be scheduled.
This case was investigated by the Zuni Pueblo Tribal Police Department and the McKinley County Sheriff’s Office. Assistant U.S. Attorney Joseph Spindle is prosecuting the case.
West Coast Crips Street Gang Member Sentenced to Life in Prison for Racketeering Conspiracy Involving Murders, Sex Trafficking and RobberyRead the Press Release
Contact Assistant U.S. Attorneys Todd Robinson (619) 546-7994 and David Leshner (619) 546-7921
NEWS RELEASE SUMMARY – July 20, 2016
SAN DIEGO, CA – West Coast Crips gang member Wilbert Ross was sentenced in federal court today to life in prison for his role in a racketeering enterprise involving execution-style murders, a takeover robbery, witness intimidation and sex trafficking.
Ross is the first of four West Coast Crips members to be sentenced following conviction by a federal jury in March. The jury found defendants Ross, Terry Carry Hollins, Jermaine Gerald Cook and Marcus Anthony Foreman guilty of Conspiracy to Conduct Enterprise Affairs through a Pattern of Racketeering Activity at the conclusion of a five-week trial and about eight hours of deliberations. The jury also found Ross guilty of two counts of sex trafficking.
U.S. District Judge Dana Sabraw sentenced Ross to life on the RICO conspiracy count, 10 years for sex trafficking of a minor and 15 years for sex trafficking by force, fraud or coercion. The judge also ordered Ross to pay $42,803 in restitution resulting from multiple homicides.
Hollins is scheduled to be sentenced on Wednesday July 27 at 9:30 a.m.; Cook and Foreman are set for sentencing on August 26 at 1 p.m., all before U.S. District Judge Dana M. Sabraw,
The four convicted defendants were arrested and charged in 2014 as part of a larger investigation involving 36 other defendants. Thirty-four have pleaded guilty. One, Cleotha Young, went to trial in June 2015, was convicted by a jury and sentenced to 20 years in prison. The lead defendant, Randy Graves, was convicted by a jury on April 4, 2016, and is scheduled to be sentenced on July 26 at 9:30am.
“It’s a relief to know that this ruthless gang member will never again bring violence into San Diego neighborhoods,” said U.S. Attorney Laura Duffy. “This life sentence is a strong signal to gangs that you are not invincible, and you will be held accountable.”
“Today’s life sentence sends a strong message to all gang members who commit acts of violence and threaten the safety of our community,” said FBI Special Agent in Charge, Eric S. Birnbaum. “The FBI will continue to work tirelessly to dismantle violent street gangs that victimize our community.”
The federal racketeering statute known as “RICO” historically has been used to prosecute mobsters and organized crime, but federal prosecutors have been using the statute on street gangs in recent years because the gangs are increasingly acting as organized criminal enterprises.
During this trial, prosecutors set out to show the jury how the defendants worked together as a criminal enterprise to commit six murders, to use a 15-year-old girl and another female as prostitutes, and to commit robbery on behalf of the West Coast Crips.
The government called about 100 witnesses, including several street gang members, a shooting victim, friends and associates of the defendants, representatives from the Medical Examiner’s Office and dozens of San Diego Police Department homicide and gang detectives, police officers and criminalists.
The evidence presented by the government included court-authorized wiretap interceptions and recordings of telephone, cell phone and jailhouse conversations between the defendants and others, as well as cell phone videos of the defendants celebrating their West Coast Crips membership and discussing the crimes they were committing.
This case was prosecuted by Assistant U.S. Attorneys Todd Robinson, David Leshner, Jose Castillo and Stephen Wong.
These guilty verdicts are the fruit of the collaborative work of the FBI’s East County Regional Gang Task Force and the Violent Crimes Gang Task Force, the San Diego Police Department’s gang and homicide units; the ATF; the El Cajon Police Department; the La Mesa Police Department; San Diego County Probation; the IRS; U.S. Postal Inspectors; the San Diego County Sheriff’s Department; and the California Highway Patrol.
This investigation was coordinated by an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's
battle against major drug trafficking rings, drug kingpins, and money launderers.
DEFENDANTS
Case Number: 14mj1494
Wilbert Ross Age: 32 Chula Vista
Terry Carry Hollins Age: 33 San Diego
Jermaine Gerald Cook Age: 31 San Diego
Marcus Anthony Foreman Age: 28 San Diego
SUMMARY OF CHARGES
All Defendants:
Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, in violation of Title 18, U.S.C. Section 1962 (d)
Maximum Penalty, based on the underlying racketeering crimes: Up to life in prison.
Defendant Ross:
Sex Trafficking of a Minor, in violation of 18 USC 1591
Maximum Penalty: Life in prison
Sex Trafficking by Force, Fraud or Coercion, in violation of 18 USC 1591
Maximum Penalty: Life in prison
INVESTIGATING AGENCIES
San Diego Police Department Gang and Homicide Units
East County Regional Gang Task Force
Violent Crimes Task Force - Gang Group
Task Force agencies include:
FBI
San Diego Police Department
ATF
El Cajon Police Department
La Mesa Police Department
San Diego County Probation
IRS
U.S. Postal Inspectors
San Diego County Sheriff’s Department
California Highway Patrol.
Used Car Dealership Owner Sentenced for Defrauding Navy FederalRead the Press Release
NORFOLK, Va. – Andysheh Ayatollahi, 36, formerly of Virginia Beach, Virginia, was sentenced today to 74 months in prison, followed by 4 years of supervised release, and ordered to pay $980,541.43 in restitution for conspiracy to commit financial institution fraud and filing a false tax return.
Ayatollahi pleaded guilty on March 14, 2016. According to court documents, in July 2007 Ayatollahi purchased a 50 percent interest in the Car Store, a used car dealership located in Virginia Beach. From then until May 2008, when the Car Store closed, Ayatollahi conspired with others, including Car Store personnel, to defraud Navy Federal Credit Union (NFCU). Ayatollahi and his co-conspirators engaged in fraudulent practices that included using individuals as straw buyers/borrowers to apply to NFCU for car loans because the actual buyers were not sufficiently creditworthy to qualify for a car loan. Ayatollahi also submitted fraudulent car loan applications to NFCU with false supporting documents; made telephone calls to NFCU impersonating buyers applying for car loans; provided false employer telephone numbers to NFCU and then impersonated the employer while verifying the applicant’s employment and wages; and fraudulently inflated the true purchase price of vehicles and split the excess with the buyers. In total, Ayatollahi fraudulently caused NFCU to issue 61 car loans with a total loan amount of $1,168,904.97. Most of these loans went into default, resulting in a loss to NFCU of approximately $867,448.43. Additionally, Ayatollahi filed false tax returns with the IRS that underreported his income for tax years 2005-2007, resulting in a tax loss of $113,093.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; John S. Adams, Special Agent in Charge of the FBI’s Norfolk Field Office; and Thomas Jankowski, Special Agent in Charge, Washington Field Office, IRS-Criminal Investigation (IRS-CI), made the announcement after sentencing by U.S. District Judge Raymond A. Jackson. Assistant U.S. Attorney Alan M. Salsbury prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:10cr15.
United States, Enbridge Reach $177 Million Settlement After 2010 Oil Spills in Michigan and IllinoisRead the Press Release
The Department of Justice and the U.S. Environmental Protection Agency today announced a settlement with Enbridge Energy Limited Partnership and several related Enbridge companies to resolve claims stemming from its 2010 oil spills in Marshall, Michigan, and Romeoville, Illinois. Enbridge has agreed to spend at least $110 million on a series of measures to prevent spills and improve operations across nearly 2,000 miles of its pipeline system in the Great Lakes region. Enbridge will also pay civil penalties totaling $62 million for Clean Water Act violations -- $61 million for discharging at least 20,082 barrels of oil in Marshall and $1 million for discharging at least 6,427 barrels of oil in Romeoville.
In addition, the proposed settlement will resolve Enbridge’s liability under the Oil Pollution Act, based on Enbridge’s commitment to pay over $5.4 million in unreimbursed costs incurred by the government in connection with cleanup of the Marshall spill, as well as all future removal costs incurred by the government in connection with that spill. Today’s settlement includes an extensive set of specific requirements to prevent spills and enhance leak detection capabilities throughout Enbridge’s Lakehead pipeline system - a network of 14 pipelines spanning nearly 2,000 miles across seven states. Enbridge must also take major actions to improve its spill preparedness and emergency response programs. Under the settlement, Enbridge is also required to replace close to 300 miles of one of its pipelines, after obtaining all necessary approvals. Enbridge’s Lakehead System delivers approximately 1.7 million barrels of oil in the United States each day.
“This settlement will make the delivery of our nation’s energy resources safer and more environmentally responsible,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “It requires Enbridge to take robust measures to improve the maintenance and monitoring of its Lakehead pipeline system, protecting lakes, rivers, land and communities across the upper midwest, as well as pay a significant penalty.”
In addition to payments required under the proposed settlement, Enbridge has already reimbursed the government for $57.8 million in cleanup costs from the Marshall spill and $650,000 for cleanup costs from the Romeoville spill and Enbridge reportedly incurred costs in excess of $1 billion for required cleanup activities relating to the Marshall and Romeoville spills.
“This agreement puts in place advanced leak detection and monitoring requirements to make sure a disaster like this one doesn’t happen again,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “This comprehensive program – including an independent third party to audit compliance – will protect our waterways and the people who depend on them.”
“My office is pleased with this settlement, which not only provides financial accountability for the environmental harm caused by the oil spill in Marshall but also puts in place significant measures to protect the people and vital natural resources of this district going forward,” said U.S. Attorney Patrick Miles Jr. for the Western District of Michigan. “Prevention of future pipeline leaks and immediate detection and repair of problem areas are critical when protecting health and the environment. With the EPA and our other federal partners, the U.S. Attorney’s Office will vigorously enforce the Clean Water Act and other federal environmental laws in this district.”
“This was one of the largest inland oil spills in U.S. history when Enbridge discharged one million gallons of oil to Talmadge Creek near Marshall,” said Acting EPA Regional Administrator Robert Kaplan. “Together with our state and local emergency responders, EPA was able to contain the spill before it reached the Great Lakes. After 22 months of arduous cleanup work, the Kalamazoo River finally reopened for recreational activities.”
Under the settlement, Enbridge is committing to the following measures, which it estimates will cost at least $110 million:
- Implement an enhanced pipeline inspection and spill prevention program;
- Implement enhanced measures to improve leak detection and control room operations;
- Commit to additional leak detection and spill prevention requirements for a portion of Enbridge’s Line 5 that crosses the Straits of Mackinac in Michigan;
- Create and maintain an integrated database for its Lakehead Pipeline System;
- Enhance its emergency spill response preparedness programs by conducting four emergency spill response exercises to test and practice Enbridge’s response to a major inland oil spill;
- Improve training and coordination with state and local emergency responders by requiring incident command system training for employees, provide training to local responders, participate in area response planning and organize response exercises;
- Hire an independent third party to assist with review of implementation of the requirements in the settlement agreement;
The government’s complaint alleges that Enbridge owned or operated a 30 inch-pipeline, known as Line 6B, that ruptured near Marshall on July 25, 2010, discharging oil into the environment. Although the Line 6B rupture triggered numerous alarms in Enbridge’s control room, Enbridge failed to recognize a pipeline had ruptured until at least 17 hours later. In the meantime, Enbridge had restarted Line 6B on two separate occasions on July 26, 2010, pumping additional oil into the ruptured pipeline causing additional discharges of oil into the environment. Ultimately, Line 6B discharged at least 20,082 barrels of crude oil, much of which entered Talmadge Creek and flowed into the Kalamazoo River which flows to Lake Michigan. Flooding caused by heavy rains pushed the discharged oil over the river's banks into its flood plains and accelerated its migration over 35 miles downstream before it was contained. Enbridge later replaced Line 6B, which originates in Griffith, Ind., crosses the lower peninsula of Michigan and ends in Sarnia, Canada, with a new, larger pipeline, also known as Line 6B. The rupture and discharges were caused by stress corrosion cracking on the pipeline, control room misinterpretations and other problems and pervasive organization failures at Enbridge.
The complaint also alleges that on Sept. 9, 2010, another Enbridge pipeline, known as Line 6A, discharged at least 6,427 barrels of oil which Romeoville, much of which flowed through a drainage ditch into a retention pond in Romeoville.
There will be a 30 day public comment period on the consent decree lodged today. Information on how to comment on the consent decree will be available in the Federal Register and on the Department of Justice’s website: www.justice.gov/enrd/consent-decrees.
- Implement an enhanced pipeline inspection and spill prevention program;
United States, Enbridge Reach $177 Million Settlement After 2010 Oil Spills in Michigan and IllinoisRead the Press Release
Settlement Requires Action to Prevent Future Spills
WASHINGTON - The Department of Justice and the U.S. Environmental Protection Agency today announced a settlement with Enbridge Energy Limited Partnership and several related Enbridge companies to resolve claims stemming from its 2010 oil spills in Marshall, Michigan, and Romeoville, Illinois. Enbridge has agreed to spend at least $110 million on a series of measures to prevent spills and improve operations across nearly 2,000 miles of its pipeline system in the Great Lakes region. Enbridge will also pay civil penalties totaling $62 million for Clean Water Act violations-- $61 million for discharging at least 20,082 barrels of oil in Marshall and $1 million for discharging at least 6,427 barrels of oil in Romeoville.
In addition, the proposed settlement will resolve Enbridge's liability under the Oil Pollution Act, based on Enbridge's commitment to pay over $5.4 million in unreimbursed costs incurred by the government in connection with cleanup of the Marshall spill, as well as all future removal costs incurred by the government in connection with that spill. Today's settlement includes an extensive set of specific requirements to prevent spills and enhance leak detection capabilities throughout Enbridge's Lakehead pipeline system- a network of 14 pipelines spanning nearly 2,000 miles across seven states. Enbridge must also take major actions to improve its spill preparedness and emergency response programs. Under the settlement, Enbridge is also required to replace close to 300 miles of one of its pipelines, after obtaining all necessary approvals. Enbridge's Lakehead System delivers approximately 1.7 million barrels of oil in the United States each day.
"This settlement will make the delivery of our nation's energy resources safer and more environmentally responsible," said Assistant Attorney General John C. Cruden for the Justice Department's Environment and Natural Resources Division. "It requires Enbridge to take robust measures to improve the maintenance and monitoring of its Lakehead pipeline system, protecting lakes, rivers, land and communities across the upper midwest, as well as pay a significant penalty."
In addition to payments required under the proposed settlement, Enbridge has already reimbursed the government for $57.8 million in cleanup costs from the Marshall spill and $650,000 for cleanup costs from the Romeoville spill and Enbridge reportedly incurred costs in excess of $1 billion for required cleanup activities relating to the Marshall and Romeoville spills.
"This agreement puts in place advanced leak detection and monitoring requirements to make sure a disaster like this one doesn't happen again," said Assistant Administrator Cynthia Giles for EPA's Office ofEnforcement and Compliance Assurance. "This comprehensive program - including an independent third party to audit compliance - will protect our waterways and the people who depend on them."
"My office is pleased with this settlement, which not only provides financial accountability for the environmental harm caused by the oil spill in Marshall but also puts in place significant measures to protect the people and vital natural resources of this district going forward," said U.S. Attorney Patrick Miles Jr. for the Western District of Michigan. "Prevention of future pipeline leaks and immediate detection and repair of problem areas are critical when protecting health and the environment. With the EPA and our other federal partners, the U:S. Attorney's Office will vigorously enforce the Clean Water Act and other federal environmental laws in this district."
"This was one of the largest inland oil spills in U.S. history when Enbridge discharged one million gallons of oil to Talmadge Creek near Marshall," said Acting EPA Regional Administrator Robert Kaplan. "Together with our state and local emergency responders, EPA was able to contain the spill before it reached the Great Lakes. After 22 months of arduous cleanup work, the Kalamazoo River finally reopened for recreational activities."
Under the settlement, Enbridge is committing to the following measures, which it estimates will cost at least $110 million:
• Implement an enhanced pipeline inspection and spill prevention program;
• Implement enhanced measures to improve leak detection and control room operations;
• Commit to additional leak detection and spill prevention requirements for a portion of
Enbridge's Line 5 that crosses the Straits of Mackinac in Michigan;
• Create and maintain an integrated database for its Lakehead Pipeline System;
• Enhance its emergency spill response preparedness programs by conducting four emergency spill response exercises to test and practice Enbridge's response to a major inland oil spill;
• Improve training and coordination with state and local emergency responders by requiring incident command system raining for employees, provide training to local responders, participate in area response planning and organize response exercises;
• Hire an independent third party to assist with review of implementation of the requirements in the settlement agreement;
The government's complaint alleges that Enbridge owned or operated a 30 inch-pipeline, known as Line 6B, that ruptured near Marshall on July 25, 2010, discharging oil into the environment. Although the Line 6B rupture triggered numerous alarms in Enbridge's control room, Enbridge failed to recognize a pipeline had ruptured until at least 17 hours later. In the meantime, Enbridge had restarted Line 6B on two separate occasions on July 26, 2010, pumping additional oil into the ruptured pipeline causing additional discharges of oil into the environment. Ultimately, Line 6B discharged at least 20,082 barrels of crude oil, much of which entered Talmadge Creek and flowed into the Kalamazoo River which flows to Lake Michigan. Flooding caused by heavy rains pushed the discharged oil over the river's banks into its flood plains and accelerated its migration over 35 miles downstream before it was contained. Enbridge later replaced Line 6B, which originates in Griffith, Ind., crosses the lower peninsula of Michigan and ends in Sarnia, Canada, with a new, larger pipeline, also known as Line 6B. The rupture and discharges were caused by stress corrosion cracking on the pipeline, control room misinterpretations and other problems and pervasive organization failures at Enbridge.
The complaint also alleges that on Sept. 9, 2010, another Enbridge pipeline, known as Line 6A, discharged at least 6,427 barrels of oil which Romeoville, much of which flowed through a drainage ditch into a retention pond in Romeoville.
There will be a 30 day public comment period on the consent decree lodged today. Information on how to comment on the consent decree will be available in the Federal Register and on the Department of Justice's website: www.justice.gov/enrd/consent-decrees.
END
16-838
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United States Seeks to Recover more than $1 Billion Obtained from Corruption involving Malaysian Sovereign Wealth FundRead the Press Release
LOS ANGELES – The Justice Department announced today the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than $1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund.
More than $3.5 billion in funds belonging to 1Malaysia Development Berhad (1MDB) was allegedly misappropriated by high-level officials of 1MDB and their associates from 2009 through 2015, according to the 16 complaints filed today in United States District Court in Los Angeles. With today’s complaints, the United States seeks to recover more than $1 billion laundered through the United States and traceable to the conspiracy.
1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people. Instead, as detailed in the complaints, 1MDB officials and their associates allegedly misappropriated more than $3 billion.
Attorney General Loretta E. Lynch announced the filing of the complaints this morning at a news conference in Washington, D.C. The Attorney General was joined in the announcement by United States Attorney Eileen M. Decker, Assistant Attorney General Leslie R. Caldwell, FBI Deputy Director Andrew G. McCabe and Chief Richard Weber of the Internal Revenue Service - Criminal Investigation.
Today’s complaints represent the largest single action ever brought under the Justice Department’s Kleptocracy Asset Recovery Initiative.
“The Department of Justice will not allow the American financial system to be used as a conduit for corruption,” said Attorney General Lynch. “With this action, we are seeking to forfeit and recover funds that were intended to grow the Malaysian economy and support the Malaysian people. Instead, they were stolen, laundered through American financial institutions and used to enrich a few officials and their associates. Corrupt officials around the world should make no mistake that we will be relentless in our efforts to deny them the proceeds of their crimes.”
“Stolen money that is subsequently used to purchase interests in music companies, artwork or high-end real estate is subject to forfeiture under U.S. law,” said U.S. Attorney Decker. “Today’s actions are the result of the tremendous dedication of attorneys in my office and the Department of Justice, as well as law enforcement agents across the country. All of us are committed to sending a message that we will not allow the United States to become a playground for the corrupt, a platform for money laundering or a place to hide and invest stolen riches.”
As alleged in the complaints, the members of the conspiracy – which included officials at 1MDB, their relatives and other associates – allegedly diverted more than $3.5 billion in 1MDB funds. Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and fraudulent shell companies with bank accounts located in the Singapore, Switzerland, Luxembourg and the United States. These transactions were allegedly intended to conceal the origin, source and ownership of the funds, and were ultimately processed through U.S. financial institutions and were used to acquire and invest in assets located in the United States.
In seeking recovery of more than $1 billion, the complaints detail the alleged misappropriation of 1MDB’s assets as it occurred over the course of at least three schemes. In 2009, the complaints allege that 1MDB officials and their associates embezzled approximately $1 billion that was intended to be invested to exploit energy concessions purportedly owned by a foreign partner. Instead, the funds were transferred through shell companies and were used to acquire a number of assets, as set forth in the complaints. The complaints also allege that the co-conspirators misappropriated more than $1.3 billion in funds raised through two bond offerings in 2012 and $1.2 billion following another bond offering in 2013. As further detailed in the complaints, the stolen funds were laundered into the United States and used by the co-conspirators to acquire and invest in various assets.
These assets allegedly included high-end real estate and hotel properties in New York and Los Angeles, a $35 million jet aircraft, works of art by Vincent Van Gogh and Claude Monet, an interest in the music publishing rights of EMI Music and the production of the 2013 film The Wolf of Wall Street.
“According to the allegations in the complaints, this is a case where life imitated art,” said Assistant Attorney General Caldwell. “The associates of these corrupt 1MDB officials are alleged to have used some of the illicit proceeds of their fraud scheme to fund the production of The Wolf of Wall Street, a movie about a corrupt stockbroker who tried to hide his own illicit profits in a perceived foreign safe haven. But whether corrupt officials try to hide stolen assets across international borders – or behind the silver screen – the Department of Justice is committed to ensuring that there is no safe haven.”
“The United States will not be a safe haven for assets stolen by corrupt foreign officials,” said FBI Deputy Director McCabe. “Public corruption, no matter where it occurs, is a threat to a fair and competitive global economy. The FBI is committed to working with our foreign and domestic partners to identify and return these stolen assets to their legitimate owners, the Malaysian people. I want to thank the FBI and IRS investigative team who worked with the prosecutors and our international partners on this case.”
“Today’s announcement underscores the breadth of the alleged corruption and money laundering related to the 1MDB fund,” said IRS-CI Chief Weber. “We cannot allow the massive, brazen and blatant diversion of billions of dollars to be laundered through U.S. financial institutions without consequences.”
The FBI’s International Corruption Unit and IRS-CI investigated the case. Los Angeles-based Assistant U.S. Attorneys John Kucera and Christen Sproule, along with Deputy Chief Woo S. Lee and Trial Attorney Kyle R. Freeny of the Criminal Division’s Asset Forfeiture and Money Laundering Section, are prosecuting the case. The Criminal Division’s Office of International Affairs provided additional assistance.
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered asset to benefit the people harmed by these acts of corruption and abuse of office. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] or https://tips.fbi.gov/.
United States Seeks to Recover More Than $1 Billion Obtained from Corruption Involving Malaysian Sovereign Wealth FundRead the Press Release
Attorney General Loretta E. Lynch announced today the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than $1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund. Today’s complaints represent the largest single action ever brought under the Kleptocracy Asset Recovery Initiative.
Attorney General Lynch was joined in the announcement by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, FBI Deputy Director Andrew G. McCabe and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI).
According to the complaints, from 2009 through 2015, more than $3.5 billion in funds belonging to 1Malaysia Development Berhad (1MDB) was allegedly misappropriated by high-level officials of 1MDB and their associates. With today’s complaints, the United States seeks to recover more than $1 billion laundered through the United States and traceable to the conspiracy. 1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people. Instead, as detailed in the complaints, 1MDB officials and their associates allegedly misappropriated more than $3 billion.
“The Department of Justice will not allow the American financial system to be used as a conduit for corruption,” said Attorney General Lynch. “With this action, we are seeking to forfeit and recover funds that were intended to grow the Malaysian economy and support the Malaysian people. Instead, they were stolen, laundered through American financial institutions and used to enrich a few officials and their associates. Corrupt officials around the world should make no mistake that we will be relentless in our efforts to deny them the proceeds of their crimes. ”
“According to the allegations in the complaints, this is a case where life imitated art,” said Assistant Attorney General Caldwell. “The associates of these corrupt 1MDB officials are alleged to have used some of the illicit proceeds of their fraud scheme to fund the production of The Wolf of Wall Street, a movie about a corrupt stockbroker who tried to hide his own illicit profits in a perceived foreign safe haven. But whether corrupt officials try to hide stolen assets across international borders – or behind the silver screen – the Department of Justice is committed to ensuring that there is no safe haven.”
“Stolen money that is subsequently used to purchase interests in music companies, artwork or high-end real estate is subject to forfeiture under U.S. law,” said U.S. Attorney Decker. “Today’s actions are the result of the tremendous dedication of attorneys in my office and the Department of Justice, as well as law enforcement agents across the country. All of us are committed to sending a message that we will not allow the United States to become a playground for the corrupt, a platform for money laundering or a place to hide and invest stolen riches.”
“The United States will not be a safe haven for assets stolen by corrupt foreign officials,” said Deputy Director McCabe. “Public corruption, no matter where it occurs, is a threat to a fair and competitive global economy. The FBI is committed to working with our foreign and domestic partners to identify and return these stolen assets to their legitimate owners, the Malaysian people. I want to thank the FBI and IRS investigative team who worked with the prosecutors and our international partners on this case.”
“Today’s announcement underscores the breadth of the alleged corruption and money laundering related to the 1MDB fund,” said Chief Weber. “We cannot allow the massive, brazen and blatant diversion of billions of dollars to be laundered through U.S. financial institutions without consequences.”
As alleged in the complaints, the members of the conspiracy – which included officials at 1MDB, their relatives and other associates – allegedly diverted more than $3.5 billion in 1MDB funds. Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and fraudulent shell companies with bank accounts located in the Singapore, Switzerland, Luxembourg and the United States. These transactions were allegedly intended to conceal the origin, source and ownership of the funds, and were ultimately processed through U.S. financial institutions and were used to acquire and invest in assets located in the United States.
In seeking recovery of more than $1 billion, the complaints detail the alleged misappropriation of 1MDB’s assets as it occurred over the course of at least three schemes. In 2009, the complaints allege that 1MDB officials and their associates embezzled approximately $1 billion that was intended to be invested to exploit energy concessions purportedly owned by a foreign partner. Instead, the funds were transferred through shell companies and were used to acquire a number of assets, as set forth in the complaints. The complaints also allege that the co-conspirators misappropriated more than $1.3 billion in funds raised through two bond offerings in 2012 and $1.2 billion following another bond offering in 2013. As further detailed in the complaints, the stolen funds were laundered into the United States and used by the co-conspirators to acquire and invest in various assets. These assets allegedly included high-end real estate and hotel properties in New York and Los Angeles, a $35 million jet aircraft, works of art by Vincent Van Gogh and Claude Monet, an interest in the music publishing rights of EMI Music and the production of the 2013 film The Wolf of Wall Street.
The FBI’s International Corruption Unit and the IRS-CI investigated the case. Deputy Chief Woo S. Lee and Trial Attorney Kyle R. Freeny of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorneys John Kucera and Christen Sproule of the Central District of California prosecuted the case. The Criminal Division’s Office of International Affairs provided additional assistance.
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered asset to benefit the people harmed by these acts of corruption and abuse of office. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] or https://tips.fbi.gov/.
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Documents: Documents and Resources from the July 20, 2016 Press Conference Announcing Significant Kleptocracy Enforcement Action to Recover More Than $1 Billion Obtained from Corruption Involving Malaysian Sovereign Wealth Fund
Video: Attorney General Lynch Announces a Kleptocracy Enforcement Action to Recover More Than $1 Billion Obtained from Corruption Involving Malaysian Sovereign Wealth Fund
U.S. Authorities Charge Owner of Most-Visited Illegal File-Sharing Website with Copyright InfringementRead the Press Release
U.S. authorities have charged the alleged owner of today’s most visited illegal file-sharing website with criminal copyright infringement and have seized domain names associated with the website.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zachary T. Fardon of the Northern District of Illinois, Executive Associate Director Peter T. Edge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.
Artem Vaulin, 30, of Kharkiv, Ukraine, was arrested today in Poland and is charged by criminal complaint, filed in U.S. District Court in Chicago, with one count of conspiracy to commit criminal copyright infringement, one count of conspiracy to commit money laundering and two counts of criminal copyright infringement. The United States will seek to extradite Vaulin to the United States.
“Vaulin is charged with running today’s most visited illegal file-sharing website, responsible for unlawfully distributing well over $1 billion of copyrighted materials,” said Assistant Attorney General Caldwell. “In an effort to evade law enforcement, Vaulin allegedly relied on servers located in countries around the world and moved his domains due to repeated seizures and civil lawsuits. His arrest in Poland, however, demonstrates again that cybercriminals can run, but they cannot hide from justice.”
“Copyright infringement exacts a large toll, a very human one, on the artists and businesses whose livelihood hinges on their creative inventions,” said U.S. Attorney Fardon. “Vaulin allegedly used the Internet to cause enormous harm to those artists. Our Cybercrimes Unit at the U.S. Attorney’s Office in Chicago will continue to work with our law enforcement partners around the globe to identify, investigate and prosecute those who attempt to illegally profit from the innovation of others.”
“Artem Vaulin was allegedly running a worldwide digital piracy website that stole more than $1 billion in profits from the U.S. entertainment industry,” said Executive Associate Director Edge. “Protecting legitimate commerce is one of HSI’s highest priorities. With the cooperation of our law enforcement partners, we will continue to aggressively bring to justice those who enrich themselves by stealing the creative work of U.S. artists.”
“Investigating cyber-enabled schemes is a top priority for CI,” said Chief Weber. “Websites such as the one seized today brazenly facilitate all kinds of illegal commerce. Criminal Investigation is committed to thoroughly investigating financial crimes, regardless of the medium. We will continue to work with our law enforcement partners to unravel this and other complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their income and use the Internet to mask their true identity.”
According to the complaint, Vaulin allegedly owns and operates Kickass Torrents or KAT, a commercial website that has enabled users to illegally reproduce and distribute hundreds of millions of copyrighted motion pictures, video games, television programs, musical recordings and other electronic media since 2008. The copyrighted material is collectively valued at well over $1 billion, according to the complaint. The complaint alleges that KAT receives more than 50 million unique visitors per month and is estimated to be the 69th most frequently visited website on the internet.
In addition, a federal court in Chicago ordered the seizure of one bank account and seven domain names associated with the alleged KAT conspiracy.
According to the complaint, KAT has consistently made available for download movies that were still in theaters and displayed advertising throughout its site. KAT’s net worth has been estimated at more than $54 million, with estimated annual advertising revenue in the range of $12.5 million to $22.3 million, according to the complaint. The complaint alleges that the site operates in approximately 28 languages. KAT has moved its domains several times due to numerous seizures and copyright lawsuits, and it has been ordered blocked by courts in the United Kingdom, Ireland, Italy, Denmark, Belgium and Malaysia, according to the complaint. KAT has allegedly operated at various times under the domains kickasstorrents.com, kat.ph, kickass.to, kickass.so and kat.cr, and relied on a network of computer servers located around the world, including in Chicago.
Several motion pictures currently available for download and sharing on KAT are still showing in theatres, including “Captain America: Civil War,” “Now You See Me 2,” “Independence Day: Resurgence” and “Finding Dory,” according to the complaint. The complaint alleges that Vaulin, who used the screen name “tirm,” was involved in designing KAT’s original website, oversaw KAT’s operations and, during the latter part of the conspiracy, Vaulin allegedly operated KAT under the auspices of a Ukrainian-based front company called Cryptoneat.
The charges and allegations contained in the complaint are merely accusations. The defendant is presumed innocent until and unless proven guilty.
HSI and IRS-CI investigated the case with substantial assistance from the International Organized Crime Intelligence and Operations Center, the National Intellectual Property Rights Coordination Center, the Criminal Division’s Office of International Affairs and the Polish Border Guard and National Prosecutor’s Office.
Senior Counsel Ryan K. Dickey of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys William E. Ridgway and Devlin N. Su of the Northern District of Illinois are prosecuting the case. The Criminal Division’s Office of International Affairs also provided significant assistance in this case.
Two Stock Promoters Charged with Securities Fraud in Connection with Scheme to Fraudulently Register Shell Companies and Secretly Sell StockRead the Press Release
Two stock promoters were charged with conspiracy to commit securities fraud in connection with a scheme to fraudulently register shell companies with the U.S. Securities and Exchange Commission (SEC), issue shares in the companies that they and other conspirators secretly controlled, and sell the shares to the investing public at a profit.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George Piro, Special Agent in Charge, Federal Bureau of Investigation(FBI), Miami Field Office, and Eric I. Bustillo, Director, U.S. Securities and Exchange Commission (SEC), Miami Regional Office, made the announcement.
Daniel McKelvey, 49, of Foster City, California, and Jeffrey L. Lamson, 51, formerly of El Dorado Hills, California, were charged by criminal information with one count of conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 1348 and Title 18, United States Code, Section 1350. McKelvey and Lamson face a maximum statutory sentence of five years in prison and a fine up to $250,000. The case is assigned to U.S. District Judge Robert N. Scola Jr. in Miami.
According to court documents, McKelvey, Lamson and other conspirators, including persons located in the Southern District of Florida, would recruit individuals to serve as straw chief executive officers (CEOs) for shell companies. The conspirators would inform the straw CEO that they would have no further role with the company and would only be paid when the business was later sold. McKelvey, Lamson and other conspirators would prepare corporate documents for the shell companies, such as board meeting minutes, stock certificates and shareholder lists, all of which were false and fraudulent. The conspirators would submit these documents, as well as other false information, to the SEC on Form S-1 in order to register securities offerings in the name of the shell companies. The false filings would include representations as to the role of the straw CEO in the company and the intent and purpose of the company itself.
Once a company’s registration was effective, McKelvey, Lamson and other conspirators would recruit individuals to serve as nominee shareholders, to make it appear that there was a group of shareholders that were unaffiliated with the company. This was done in order to create a class of unrestricted shares that could later be publicly traded. In reality, these nominee shareholders were promised a fixed amount of money once the company was ready to be sold, in exchange for allowing their names to be used as shareholders on subscription agreements. By obtaining control of all or nearly all of the purportedly unrestricted shares of the company without disclosure to the SEC or the public, the conspirators were in a position to subsequently sell or transfer the shares to others, or to the investing public, while avoiding the SEC’s prohibitions against insider trading or undisclosed trading by persons who exercise control over a public company.
The conspirators would also solicit broker-dealers to submit information to the Financial Industry Regulatory Authority (FINRA) to obtain authorization for the company’s shares to be publicly traded (traded “over the counter”). Forms and other materials submitted to FINRA, would falsely describe the companies and conceal the roles of the conspirators. Once FINRA gave authorization for the shares to be traded over the counter in the penny stock markets, the conspirators would transfer control of unrestricted, or publicly tradeable shares, into accounts they controlled.
The conspirators would then seek buyers who would acquire control of the shell companies as well as the secretly controlled unrestricted shares. The buyer’s acquisition of the company would typically take the form of a “reverse merger,” and be publicly disclosed. The secretly controlled unrestricted shares would typically be transferred to a third party or other account designated by the buyer, and would not be disclosed to the SEC or the public. In this way, the buyer would be in a position immediately to engage in stock swindles or other manipulation schemes.
Mr. Ferrer commended the investigative efforts of the FBI. Mr. Ferrer also thanked the U.S. Securities and Exchange Commission’s Miami Regional Office, which previously filed a civil enforcement action against McKelvey and Lamson. The matter is being prosecuted by Assistant U.S. Attorney Jerrob Duffy.
An Information is merely an allegation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.