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20 July 2016
Two Nurses Plead Guilty to Health Care FraudRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ERICA EDWARDS, age 31, of New Orleans, and JEFF KOON, age 43, of Lockport, each pleaded guilty today to one count of health care fraud.
On April 21, 2016, EDWARDS and KOON were charged along with 12 other defendants in a 31-count superseding indictment charging approximately $30,252,906 in Medicare fraud. According to court documents, EDWARDS and KOON worked as RNs for ABIDE. Their duties included assessing the status of their patients, initiating a plan of care, evaluating patient needs, providing comprehensive nursing care, among other things. KOON and EDWARDS pleaded guilty to fraudulently recertifying patients for home health by recording false changes in medications and exacerbations in medication conditions that did not occur and falsely documented that patients were homebound.
EDWARDS and KOON each face a maximum term of imprisonment of ten years, a $250,000 fine, and three years of supervised release following imprisonment. U.S. District Judge Susie Morgan set sentencing for February 1, 2017.
U.S. Attorney Polite praised the work of the Special Agents of the Federal Bureau of Investigation in investigating this case. Assistant U.S. Attorneys Patrice Harris Sullivan, Sharan Lieberman, and Hayden Brockett are in charge of the prosecution.
Two Colombian Nationals Plead Guilty to Making False Statements on Visa ApplicationRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ALMA DE JESUS MOJICA HERRERA, age 52, and LEONARDO SERRATO POLANIA, age 42, both of Bogota, Colombia, pled guilty today to making false statements on their U.S. Nonimmigrant Online VISA applications.
According to court records, while in Colombia, MOJICA HERRERA and SERRATO POLANIA each completed a U.S. Nonimmigrant Online Visa Application (“Visa Application”) with the U.S. Department of State (“State Department”) and did not answer truthfully questions concerning their travel companions, the persons paying for their trip, and the location of their stay. These Visa Applications were relied upon by federal agencies of the Executive Branch including by the U.S. Customs and Border Protection in New Orleans and the U.S. State Department. On September 28, 2015, MOJICA HERRERA and SERRATO POLANIA travelled from Bogota, Columbia and arrived in the United States at the New Orleans International Airport using the VISAs containing materially false statements. On September 29, 2015, MOJICA HERRERA and SERRATO POLANIA were taken into custody by special agents with the U.S. Department of Homeland Security-Homeland Security Investigations (“HSI”).
MOJICA HERRERA and SERRATO POLANIA each face a maximum term of imprisonment of five years. In addition, both face a fine of $250,000 per count and up to three years of supervised release. U.S. District Judge Sarah S. Vance set sentencing for August 24, 2016.
U.S. Attorney Polite praised the work of the U.S. Department of Homeland Security-HSI, U.S. Customs and Border Protection, and the U.S. Department of State in investigating this matter. Fraud Unit Chief, Assistant U.S. Attorney Brian M. Klebba is in charge of the prosecution.
Three St. Clair County Residents Guilty of Conspiracy to Distribute OxycodoneRead the Press Release
Gerald Tanner, 56, of Collinsville, Illinois, pleaded guilty on July 18, 2016, in US District Court to conspiracy to distribute oxycodone and methadone, the United States Attorney for the Southern District of Illinois, Donald S. Boyce, announced today.
On November 18, 2015, a federal grand jury handed down an indictment alleging that three St. Clair County residents participated in a conspiracy to distribute oxycodone and methadone into the Southern District of Illinois. Evidence discussed in court established that the St. Louis Division of the Drug Enforcement Administration began investigating Gerald Tanner for illegally distributing schedule II narcotics out of his home. The DEA obtained the assistance of a confidential source and purchased opiate-based pain medications from Ryan Koch and Lisa-Marie Sue Ketterer, who were supplied by Gerald Tanner. Koch and Ketterer resold a portion of the drugs they bought and used the remainder.
Previously, Ryan Koch, 34, and Lisa Marie Sue Ketterer, 26, both of St. Clair County pleaded guilty on June 28, 2016, and May 10, 2016, respectively. Koch will be sentenced on September 29, 2016 and Ketterer will be sentenced on August 23, 2016.
US Attorney Donald S. Boyce said, "There has been a national proliferation of opiate drug abuse. Sales of opioid pain relievers quadrupled between 1999 and 2010. And that proliferation has correlated strongly with an increase in heroin abuse and drug-related deaths. Opiates are causing tremendous damage in our community and the US Attorney’s office will continue to fight the distribution of drugs that endanger public safety."
As charged in this case, conspiracy to distribute oxycodone and methadone is punishable by not more than 20 years in federal prison, not more than a $1,000,000 fine, and not less than 5 years supervised release. However, the United States Sentencing Guidelines must be applied to the case and considered by the Court during sentencing. Tanner is scheduled to be sentenced on October 19, 2016.
The investigation is being conducted by Diversion Investigators from the Drug Enforcement Administration. The case is being prosecuted by Assistant United States Attorney Steven D. Weinhoeft.
Three Men Collectively Sentenced to More Than 400 Months for Drug Trafficking ConspiracyRead the Press Release
Memphis, TN – Three men involved in a lucrative drug trafficking conspiracy have been collectively sentenced to more than 400 months in federal prison. Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee, announced the sentences today.
The three defendants include:
• Gary Holmes, 38, of Memphis, Tennessee
• Brailon Adell, 31, of Memphis, Tennessee
• Jody Davenport, 44, of Houston, Texas
The three defendants participated in a conspiracy to transport multiple kilograms of cocaine from Houston, Texas to Memphis, Tennessee for distribution.
According to information presented in court, in January 2015, a traffic stop was conducted in Liberty County, Texas that resulted in the discovery of two kilograms of cocaine. The drugs were hidden in large food cans in the trunk of the vehicle. The drugs were worth approximately $67,000. Holmes was driving the vehicle, and had come to Houston to pick up the cocaine and transport it to Memphis for resale.
As a result of an investigation conducted following the traffic stop, law enforcement discovered that Holmes was responsible for transporting large quantities of cocaine from Houston to Memphis over a six-month period. Davenport was supplying the cocaine to Holmes, who in turn would transport it to Adell and others in the Memphis area.
Holmes and Davenport spearheaded the conspiracy. For more than six months, they conspired to transport approximately 70 kilograms of cocaine from Houston to Memphis for redistribution.
In October 2015, Holmes, Adell and Davenport all pleaded guilty before U.S. District Court Judge Jon P. McCalla to one count of conspiring to unlawfully possess with the intent to distribute and distribute more than 500 grams of cocaine.
In February 2016, Judge McCalla sentenced Adell to 60 months and Davenport to 235 months in federal prison.
On Friday, July 15, Judge McCalla sentenced Holmes to 108 months in federal prison.
This case was investigated by the Drug Enforcement Administration (DEA) and Homeland Security Special Agents in Memphis and Houston.
Assistant U.S. Attorney Jerry Kitchen prosecuted this case on the government’s behalf.
Thibodaux Man Charged with Hacking ICloud, Facebook, and Email Accounts of over 50 VictimsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that BRADER YELVERTON, age 24, of Thibodaux, was charged today in a one-count Bill of Information with obtaining unauthorized access to protected computers to acquire information.
According to the Bill of Information, between about 2013 and December 15, 2015, YELVERTON obtained access to the personal Apple iCloud, Facebook, and email accounts of not fewer than fifty victims, many of whom resided within the Eastern District of Louisiana, without their knowledge or authorization. After accessing the accounts, YELVERTON acquired copies of the contents, including personal photographs and other private information. According to the Bill of Information, the collective value of the information YELVERTON obtained without authorization was more than $5,000.
If convicted, YELVERTON faces a maximum term of imprisonment of up to five years in prison, followed by up to three years of supervised release, and a $250,000 fine.
U.S. Attorney Polite reiterated that the Bill of Information 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 Federal Bureau of Investigation in investigating this matter. Assistant United States Attorney Jordan Ginsberg is in charge of the prosecution.
Texas Woman Charged with Tax Return Preparation FraudRead the Press Release
A Greenville, Texas, resident was indicted today on 21 counts of aiding and assisting in the preparation of false tax returns, one count of mail fraud and one count of aggravated identity theft, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to the indictment, Lourdes Ramirez assisted in the preparation of fraudulent federal income tax returns for years 2011 through 2013 containing false material matters such as false education credits and Schedule C expenses. Ramirez is also charged with using the U.S. Postal Service to submit her own fraudulent 2011 federal income tax return to the Internal Revenue Service (IRS) which falsely claimed an individual as Ramirez’s dependent without that individual’s knowledge.
If convicted, Ramirez faces a statutory maximum sentence of three years in prison for each count of aiding and assisting in the preparation of a false tax return, a statutory maximum sentence of 20 years in prison for the mail fraud charge and a mandatory term of two years in prison for the aggravated identity theft charge. She also faces monetary penalties, supervised release and restitution.
An indictment merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Alexander Effendi and Melanie Smith of the Tax Division, who are prosecuting this case with assistance from the U.S. Attorney’s Office of the Northern District of Texas.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Taxidermist Sentenced for Violating Wildlife LawsRead the Press Release
CORPUS CHRISTI, Texas – A Corpus Christi taxidermist and hunting guide has been sentenced for violating the Lacey Act, the Endangered Species Act (ESA) and the Migratory Bird Treaty Act (MBTA), announced U.S. Attorney Kenneth Magidson.
Eric Martin Schmidt, 35, pleaded guilty before U.S. Magistrate Judge Jason B. Libby today. He was then ordered to pay a $2,500 community service payment to the Lacey Act Reward Fund and must serve five years of probation. Schmidt also abandoned more than 60 species of bird mounts that were illegally killed to the U.S. Fish and Wildlife Service (FWS).
Schmidt was charged by a criminal information with one count each of violating the Lacey Act, ESA and MBTA. The Lacey Act prohibits any person from knowingly importing, exporting, transporting, selling or purchasing any wildlife that was taken, possessed, transported or sold in violation of any law, statute, regulation or treaty of the United States or foreign country. The ESA prohibits any person subject to the jurisdiction of the United States to engage in the trade of any wildlife contrary to the provisions of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The MBTA prohibits any person, unless permitted by regulations, to pursue, hunt, take or capture any migratory bird included in the terms of the convention between the United States and other nations for the protection of migratory birds.
During the plea today, the court learned Schmidt is the owner of Alive Again Recreations, a taxidermy business he runs out of his residence in Corpus Christi. Schmidt is also the owner and operator of Global Game Birds (GGB). Through GGB, Schmidt offered hunting trips in Argentina, Peru, Scotland, South Africa, Australia and New Zealand to people with hunting opportunities for rarely seen species of birds.
In July 2011, Schmidt traveled from Corpus Christi to Peru and hunted approximately 30 indigenous birds including an Andean ruddy duck (Oxyura ferruginea) and a Torrent duck (Merganetta armata). At the conclusion of his hunting trip, Schmidt exported all 30 birds from Peru without an export permit.
In June 2012, Schmidt traveled to Argentina and returned to Corpus Christi with 18 birds he hunted in Argentina. Among the birds he killed and imported was one comb duck (Sarkidiornis melanotos), a species that is listed and protected under CITES.
In June 2013, Schmidt traveled to New Zealand and returned to Corpus Christi with 24 game and non-game birds he hunted in New Zealand. Among the birds he hunted, six were Pacific black ducks (Anas superciliosa) which are listed and protected under the MBTA.
FWS conducted the investigation. Assistant U.S. Attorney Hugo R. Martinez prosecuted the case.
Stephentown Man Sentenced to 30 Years for Gun and Drug ConvictionsRead the Press Release
ALBANY, NEW YORK – Joshua Stegemann, age 39, of Stephentown, New York, was sentenced today to serve 30 years of imprisonment, to be followed by lifetime supervised release, for (i) possessing cocaine, heroin, and oxycodone with the intent to distribute; (ii) possessing two handguns in furtherance of a drug trafficking crime; and (iii) unlawfully possessing three firearms and ammunition as a felon.
The announcement was made by United States Attorney Richard S. Hartunian and James J. Hunt, Special Agent in Charge, New York Division, U.S. Drug Enforcement Administration (DEA).
Stegemann was convicted in August 2015 following a jury trial. The evidence at trial showed that Stegemann, a longtime resident of Stephentown, used his house and surrounding property as a base of operation for his drug trafficking business. On April 30, 2013, investigators executed a search warrant at Stegemann’s house and surrounding property, and recovered large amounts of cocaine, heroin, and oxycodone pills, along with two loaded handguns, a loaded shotgun, and over $296,000 in U.S. currency. Most of these items were found hidden either inside of Stegemann’s house or in and around various landscaping features on his property, such as rock gardens, a stump pile and pine trees.
On May 3, 2013, investigators recovered a safe hidden by Stegemann in a Pittsfield, Mass. residence. The safe was found to contain more than $160,000 in U.S. currency. Cumulatively, investigators recovered more than 600 grams of cocaine, more than 30 grams of heroin, more than 700 oxycodone pills, three firearms, dozens of rounds of ammunition, and more than $450,000 in U.S. currency.
The investigation was initiated by the Massachusetts State Police, who were subsequently joined by the Rensselaer County Sheriff’s Office, the DEA, and the New York State Police. This case was prosecuted by Assistant United States Attorney Rick Belliss.
South Carolina Man Sentenced to Prison for Federal Firearms ViolationRead the Press Release
CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced yesterday a South Carolina to 53 months in prison on possession of a firearm by a felon charge, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Charles Traywick Randolph, 27, of Columbia, S.C, was also ordered to serve two years in supervised release after he is released from prison.
According to the filed court documents and statements made in court, on April 8, 2015, law enforcement responded to suspicious person call at the Baymont Inn, located in Charlotte. When law enforcement arrived, they made contact with Randolph, who was wearing a backpack on his back, and determined he had an outstanding arrest warrant. Law enforcement searched Randolph’s backpack and recovered a Zastava 7.62x39 caliber semiautomatic assault rifle and a high capacity magazine loaded with 30 rounds of hollow tip 7.62 ammunition. Randolph has a prior felony conviction and is prohibited from possessing a firearm.
The investigation was handled by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Charlotte Mecklenburg Police Department. Assistant U.S. Attorney Robert Gleason prosecuted the case.
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In separate cases, three men were also sentenced yesterday on felon in possession of a firearm charges.
Roger Emanuel Reid, 39, of Charlotte, was sentenced to 51 months in prison and three years of supervised release. On January 14, 2015, law enforcement executed a search warrant at Reid’s residence. During the execution of the search warrant, Reid pointed a pistol at the first officer who entered the residence, but then immediately dropped the firearm and surrendered to law enforcement. Reid has a prior state drug conviction and is prohibited from possessing a firearm.
Thurman Armani Hill, 23, of Charlotte, was sentenced to 32 months in prison and two years of supervised release. On September 11, 2015, law enforcement conducted a traffic stop of the vehicle Hill was driving in connection with a drug trafficking investigation. During the traffic stop, law enforcement located a large bag of marijuana on the floorboard area of the front passenger seat of Hill’s vehicle. Law enforcement also seized from inside the vehicle a firearm, approximately 100 grams of marijuana, digital scales, 72 Xanax pills and $1,885 in cash. Hill’s prior conviction prohibits him from possessing a firearm.
Shamel Malik Dove, 22, of Charlotte, was sentenced to 23 months in prison and three of supervised release. According to court records, on August 12, 2015, law enforcement arrested Dove on outstanding warrants for a probation violation stemming from a robbery conviction. Over the course of the arrest, law enforcement seized a firearm, located between the driver’s seat and the center console of Dove’s vehicle. Dove’s prior conviction prohibits him from possessing a firearm.
In making today’s announcement, U.S. Attorney Rose thanked ATF and CMPD for handling the investigations. Assistant U.S. Attorney Taylor Phillips was in charge of Reid’s prosecution and Assistant U.S. Attorney Lambert Guinn prosecuted Hill and Dove’s cases.
Serial Child Rapist Sentenced to Life in PrisonRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of REX LEE FURMAN, 53, to life in prison for preying on children both online and in-person. Following a three-day trial before Senior U.S. District Judge David S. Doty, a jury on October 22, 2015, found FURMAN guilty of all the charges against him, including 13 counts of production of child pornography and related charges.
“This defendant is a determined and dangerous predator who has spent decades abusing and raping little girls,” said Assistant United States Attorney Melinda A. Williams. “As a result of today’s sentence, his days of harming the most vulnerable in our society have finally come to an end.”
As proven at trial, while residing in Federal Dam, Minn., FURMAN photographed and sexually abused two young girls who were then in his care. He also collected images and videos of child pornography, including videos of girls as young as three-years-old being sexually violated.
During a search of the Federal Dam residence, FURMAN informed law enforcement that they would probably find thousands of images of child pornography, including images that he had produced. An investigation revealed more than five hundred such videos and images, including of the two girls who had been in his care. FURMAN had equipped his room with tools to enable the abuse of children, including a mounted computer monitor over his bed, a mirror underneath the monitor and a security camera outside of his bedroom door to see anyone approaching.
FURMAN has two prior convictions for sexually abusing prepubescent girls. In 1981 FURMAN was convicted of criminal sexual conduct in the fourth degree in Wright County for sexual misconduct with a five-year-old girl. In 1999, FURMAN was convicted of criminal sexual conduct in the first degree in Hennepin County for sexually violating a developmentally disabled young girl in his care.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
In addition, if you know of any child who may have been a victim of exploitation, please contact the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com.The Minnesota BCA, which leads the Minnesota Internet Crimes Against Children Task Force, and the Minneapolis Police Department, which is a member of the FBI Child Exploitation Task Force, investigated the case.
This case was prosecuted by Assistant U.S. Attorney Melinda A. Williams and Deputy Chief Alexandra R. Gelber of the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section.
Defendant Information:REX LEE FURMAN, 53
Federal Dam, Minn.Convicted: • Production of child pornography, 13 counts
• Distribution of child pornography, 2 counts
• Possession of child pornography, 1 count
• Receipt of child pornography, 1 count
• Committing a sex offense while being required to register as a sex offender, 1 countSentenced: • Life in prison
Recidivist Child Sex Offender Sentenced to Life in Prison for Child Pornography-Related OffensesRead the Press Release
A Minnesota man with two prior convictions for sexually abusing children was sentenced today to serve life plus 10 years in prison for production, distribution, receipt and possession of child pornography, as well as committing a child sex offense while being required to register as a sex offender, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Andrew M. Luger of the District of Minnesota.
Rex Lee Furman, 52, of Federal Dam, Minnesota, was sentenced by U.S. District Judge David S. Doty of the District of Minnesota, who also ordered Furman to pay restitution in the amount of $3,000 to two victims. Furman was convicted on Oct. 21, 2015, following a three-day jury trial.
According to the evidence presented at trial, in 2013, during separate investigations by the Minnesota Bureau of Criminal Apprehension (BCA) and the Minneapolis Police Department, law enforcement officers obtained child pornography videos from an internet protocol (IP) address linked to Furman’s home. The evidence showed that during a search of his residence that was executed with the assistance of the Cass County Sheriff’s Office on Feb.13, 2014, Furman admitted that he had downloaded child pornography. According to the trial evidence, he also informed a special agent that he had produced images depicting child exploitation involving two girls who had been in his care, both of whom were younger than six years old at the time of the abuse. The trial evidence showed that subsequent forensic analysis of Furman’s computers and digital media confirmed that he produced pornographic photographs and a video of those children in 2012. According to the trial evidence, investigators also found in Furman’s possession hundreds of images and videos that depicted other children engaged in sex acts with adults.
Furman has two prior Minnesota state court convictions for engaging in sex acts with minors. In December 1981, Furman pleaded guilty to sexually abusing a five-year-old girl who was in his care. In January 1999, Furman was convicted after a bench trial of sexually abusing a 10-year-old girl in his care. As a result, he was required to register as a sex offender until 2021.
The Minnesota BCA, which leads the Minnesota Internet Crimes Against Children Task Force, and the Minneapolis Police Department, which is a member of the FBI Child Exploitation Task Force, investigated the case. Assistant U.S. Attorney Melinda A. Williams of the District of Minnesota and Deputy Chief Alexandra R. Gelber of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Previously Deported Mexican National Sentenced for Passport FraudRead the Press Release
SACRAMENTO, Calif. — Leonardo Cesar Pulido-Escamilla, 39, a Mexican national who has resided in Yuba City, Citrus Heights, Lincoln, and other cities in California, was sentenced today by United States District Judge Kimberly J. Mueller to approximately four months in prison for making a false statement in an application for a United States Passport, Acting United States Attorney Phillip A. Talbert announced.
According to court documents, Pulido-Escamilla fraudulently applied for a U.S. Passport in 2012, using another person’s name and birth certificate in connection with the application. Pulido-Escamilla was previously deported from the United States in 1997 and 2004, and on March 20, 2016, he was apprehended by border patrol agents in Arizona.
This case was the product of an investigation by the U.S. Department of State’s Diplomatic Security Service. Assistant United States Attorney Nirav Desai is prosecuted the case.
Pocatello Man Sentenced for Using Interstate Communication to Hire Someone to Harm His Ex-WifeRead the Press Release
COEUR D’ALENE – John Kent Davis, 66, of Pocatello, Idaho, was sentenced today for interstate communication of a threat of bodily injury, U.S. Attorney Wendy J. Olson announced.
Senior U.S. District Judge Edward J. Lodge sentenced Davis to 30 months in prison, three years supervised release, a $5,000 fine, and he was ordered to forfeit $2,500 in cash proceeds. Davis pleaded guilty on May 13, 2016.
The plea agreement states on July 29, 2015, Davis placed a telephone call from the state of Idaho to the state of Utah for the purpose of soliciting the physical beating of the victim. During the call, Davis spoke with an undercover Federal Bureau of Investigation special agent. Davis asked the undercover agent to badly beat the victim in a way that was “short of permanent” and a “pretty explicit display of hatred.” Davis told the undercover agent he wanted photographs to prove the victim had been beaten. Davis paid the undercover agent $2,500 to beat the victim.
The case was being investigated by Federal Bureau of Investigation (FBI) and North Idaho Violent Crimes Task Force (NIVCTF).
Pike County Physician Indicted for Unlawful Distribution of Controlled Substances, Money Laundering, and Tax EvasionRead the Press Release
SCRANTON - The United States Attorney’s Office for the Middle District of Pennsylvania announced today the indictment of a Pike County physician, Fuhai Li, age 51, on charges of unlawfully distributing controlled substances without a legitimate medical purpose, money laundering, and tax evasion. Li was taken into custody today and will appear later today before United States Magistrate Judge Joseph F. Saporito, Jr. in Wilkes-Barre for his initial appearance.
According to U.S. Attorney Peter Smith, the 24 count indictment by a Federal Grand Jury in Scranton on July 19, unsealed today, alleges that, beginning in 2011 and continuing into 2015, Li unlawfully provided prescriptions for excessive quantities of oxycodone and other narcotics to individuals who he knew were not seeking the drugs for a legitimate medical purpose. One charge specifically alleges that Li unlawfully distributed a controlled substance and caused the death of one of his patients.
Li is also charged with 15 counts of alleged unlawful distribution of controlled substance to different persons repeatedly over extended periods between 2011 and 2015. He is also charged with unlawfully distributing and dispensing a controlled substance to a pregnant individual and with opening and maintaining premises at two locations in Milford, Pennsylvania, for the purpose of distributing controlled substances outside the usual course of professional practice and without legitimate medical purpose.
Li allegedly sought and received payments in cash from recipients of the unlawfully distributed controlled substance. Many of the recipients were from outside of Pennsylvania. Some of the recipients, in turn, distributed the unlawfully obtained controlled substance to others in exchange for money.
Li’s activities were allegedly not in the usual course of medical practice in one or multiple ways, as stated in the indictment, including:
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inadequate verification of the patient’s medical complaint;
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cursory or no medical examinations by LI;
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inadequate patient medical history and no follow-up verification;
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incomplete or inadequate mental or physical examinations;
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treating patients with highly addictive controlled substances while failing to consider other treatment options;
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lack of, or inadequate, diagnostic testing;
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increasing the patients’ dosages over time unnecessarily; and
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prescribing inappropriate combinations of drugs to patients.
Li is charged with three counts of tax evasion for the years 2011 through 2013. The indictment alleges that during the execution of federal search warrants by Drug Enforcement Administration (DEA) agents at his office and residences in January 2015, more than $1,000,000 in cash was seized. The indictment alleges that for the years 2011 through 2013, Li evaded federal taxes in an amount in excess of $300,000.
Li is also charged with money laundering in connection with a $385,572 wire transfer mortgage payment on an East Stroudsburg residence and a $158,699 certified check for the purchase of a property in Milford, both allegedly involving properly derived from Li’s unlawful distribution of controlled substances.
According to the Indictment, Li is subject to forfeiture to the United States government, of any and all proceeds derived from unlawful activity as a result of the offenses alleged in the indictment, including U.S. currency and properties located in both Pike and Monroe counties.
Currently, Li continues to maintain a Pennsylvania medical license. He surrendered his DEA registration at the time the search warrants were executed.
“The allegations against Li are serious. He allegedly distributed a controlled substance that resulted in the death of one of his patients, which is troubling as physicians have an ethical obligation to uphold standards of medical practice,” said Gary Tuggle, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “In 2015, 3,383 people died across Pennsylvania from drug overdoses; 53% of those overdose deaths were the result of opioids such as oxycodone. The DEA will remain vigilant in pursuing investigations against physicians that violate their positions of trust in our communities.”
Akeia Conner, Internal Revenue Service, Special Agent in Charge, said “Today’s indictment was achieved through the tireless efforts of all the agencies involved. When a physician knowingly abandons his oath and distributes controlled substances for financial gain instead of legitimate medical purpose, the Internal Revenue Service, Criminal Investigation will provide the financial expertise in tracking and accounting for the proceeds of this unlawful activity.
The charges stem from a coordinated investigation initiated by Drug Diversion Agents located in Scranton, DEA, Scranton, and the Internal Revenue Service – Criminal Division, Scranton. Prosecution is assigned to Assistant United States Attorney Michelle Olshefski.
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 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 unlawful distribution of controlled substances is life imprisonment. The money laundering charges carry a maximum term of 20 years’ imprisonment, per count. The maximum penalty for tax evasion is 5 years’ imprisonment, per count. Each charge also carries a fine 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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Pike County Man Indicted for Striking Park Ranger with Automobile While FleeingRead the Press Release
SCRANTON- The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a federal grand jury returned an indictment on June 19, charging Damari Mykel Roulhac, of Pike County, with assaulting a National Park Service Ranger while fleeing apprehension.
According to United States Attorney Peter Smith, Damari Mykel Roulhac, age 25, was located in the Delaware Water Gap National Recreation Area when he struck a Ranger with his automobile while fleeing after being ordered to stop.
Roulhac previously was charged on July 5, 2016 with a Criminal Complaint alleging the same violations. Roulhac currently is serving a state sentence of imprisonment in Pike County for driving under the influence charges.
The investigation was conducted by the National Park Service Rangers. The case is being prosecuted by Assistant United States Attorney Phillip J. Caraballo.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law for the most severe charge is a, eight-year term of imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Philadelphia Foreclosure Attorney Charged with Federal Tax FraudRead the Press Release
Drew Alia, 40, a Philadelphia attorney, was charged today in a Criminal Information[1] with willfully failing to file federal income tax returns announced United States Attorney Zane David Memeger.
According to the Information, Drew Alia, was who licensed to practice law in the Commonwealth of Pennsylvania during the period of 2010 through 2013, operated a home mortgage rescue service which offered professional services to home owners who were facing a mortgage foreclosure by obtaining financing to prevent a foreclosure on the home owner’s mortgage. For these services, Drew Alia received fees which he failed to report as gross income on federal income tax returns that he was required, by law, to file for tax years 2010 through 2013.
If convicted the defendant faces a maximum possible sentence 4 years, a fine of $400,000 and a special assessment of $100.00.
The case was investigated by the Internal Revenue Service’s Criminal Investigation Division and is being prosecuted by Assistant United States Attorney Floyd J. Miller.
[1] An Information, Indictment or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Owner of Most-Visited Illegal File-Sharing Website Charged with Criminal Copyright InfringementRead the Press Release
CHICAGO — Federal authorities in Chicago 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.
ARTEM VAULIN, 30, of Kharkiv, Ukraine, allegedly owns and operates Kickass Torrents, or KAT, a commercial website that since 2008 has enabled users to illegally reproduce and distribute hundreds of millions of copies of copyrighted motion pictures, video games, television programs, musical recordings and other electronic media, collectively valued at more than $1 billion, according to a criminal complaint filed in U.S. District Court in Chicago. KAT receives more than 50 million unique monthly visitors and is estimated to be the 69th most frequently visited website on the Internet, according to the complaint.
Vaulin was arrested today by authorities in Poland. The complaint charges Vaulin 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.
The complaint and arrest were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Executive Associate Director Peter T. Edge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI); and Richard Weber, Chief, Internal Revenue Service Criminal Investigation. Substantial assistance was provided by 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 Public Prosecutor’s Office.
“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.”
“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.”
“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.”
KAT operates in approximately 28 languages, according to the complaint. 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. KAT has moved its domain 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, the complaint states.
In addition to the charges, a federal court in Chicago ordered the seizure of seven domain names associated with the alleged KAT conspiracy. The site relies on a network of computer servers around the world, including servers located in Chicago, and has operated at various times under the domains kickasstorrents.com, kat.ph, kickass.to, kastatic.com, kickass.so, thekat.tv and kat.cr, according to the complaint.
According to the complaint, movies that were still in theaters have consistently been made available for download by the KAT conspiracy. Films that KAT recently made available for download include “Captain America: Civil War,” “Now You See Me 2,” “Independence Day: Resurgence,” and “Finding Dory,” according to the complaint.
Vaulin, who used the online screen name “tirm,” was involved in designing KAT’s original website and oversaw KAT’s operations, according to the complaint. During the latter part of the conspiracy, Vaulin allegedly operated KAT under the auspices of a Ukrainian-based front company called Cryptoneat.
Criminal copyright infringement and conspiracy to commit criminal copyright infringement carry a maximum sentence of five years in prison. Conspiracy to commit money laundering is punishable by up to 20 years.
The public is reminded that a complaint is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is represented by Assistant U.S. Attorneys William E. Ridgway and Devlin N. Su of the U.S. Attorney’s Office for the Northern District of Illinois; and Senior Counsel Ryan K. Dickey of the Criminal Division’s Computer Crime & Intellectual Property Section.
Complaint
Nishikawa Agrees to Plead Guilty and Pay $130 Million Criminal Fine for Fixing Prices of Automotive PartsRead the Press Release
Nishikawa Rubber Co. Ltd. (Nishikawa) has agreed to plead guilty and pay a $130 million criminal fine for its role in a conspiracy to fix the prices of and rig the bids for automotive body sealing products installed in cars sold to U.S. consumers, the Justice Department announced today.
According to charges filed today in U.S. District Court for the Eastern District of Kentucky, Nishikawa conspired from at least as early as January 2000 until at least September 2012 to fix the prices and rig bids of automotive body sealing products sold to Honda Motor Company Ltd., Toyota Motor Corporation, Fuji Heavy Industries Ltd. (Subaru) and certain of their subsidiaries and affiliates in the United States and elsewhere. Automotive body sealing products consist of body-side opening seals, door-side weather-stripping, glass-run channels, trunk lids and other smaller seals, which are installed into automobiles to keep the interior dry from rain and free from wind and exterior noises. Nishikawa agreed to cooperate in the department’s ongoing investigation. The plea agreement will be subject to court approval.
“Nishikawa has agreed to pay a steep price for its participation in a conspiracy that victimized consumers in both the United States and Canada,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division. “However, Nishikawa deserves credit for acknowledging their conduct, accepting responsibility and charting a new path toward compliance and remediation.”
“The FBI is committed to aggressively investigating companies and individuals who engage in criminal conduct that corrupts the global marketplace,” said Special Agent in Charge Howard S. Marshall of the FBI’s Louisville office. “We will continue our work with the Department of Justice Antitrust Division to uncover schemes aimed at creating an unfair competitive advantage by way of price fixing, bid rigging or other illegal means.”
The division worked closely with the Competition Bureau of Canada throughout this investigation pursuant to the Agreement Between the Government of Canada and the Government of the United States of America Regarding the Application of their Competition and Deceptive Marketing Practices Laws. In part through that cooperation, the Antitrust Division and the Canadian Competition Bureau were able to identify affected sales of automotive body sealing products manufactured in the United States and then shipped to Canada for assembly into automobiles that were imported into the United States. These sales were included as affected commerce for purposes of calculating Nishikawa’s fine. Because of the particular facts of this case, including that Nishikawa’s conduct primarily targeted the United States and because the fine imposed today is an effective remedy in the United States and Canada, once final judgment is entered in this case, the Commissioner of the Competition Bureau of Canada will exercise his discretion to not pursue further enforcement action against Nishikawa in Canada for this conduct.
“Today’s resolution is only the most recent and visible example of cooperation that routinely occurs between the Competition Bureau and U.S. Department of Justice,” said Deputy Assistant Attorney General Snyder. “We greatly appreciate and value the working relationship our two agencies have developed over many years of pursuing a shared mission to protect competition in our markets and the consumers who benefit from it.”
“Strong cooperation among law enforcers is crucial to detect and deter cartel activities that span beyond our borders,” said Senior Deputy Commissioner Matthew Boswellof the Cartels and Deceptive Marketing Practices Branch of the Competition Bureau of Canada. “We achieved great results through cooperation with our US partners in this international investigation into bid-rigging in the auto parts industry. The Bureau continues to work closely with partners, in the US and elsewhere, to crack down on cartels.”
Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. Including Nishikawa, 45 companies and 64 executives have been charged in the division’s ongoing investigation and have agreed to pay a total of more than $2.8 billion in criminal fines. Nishikawa is being prosecuted by the Antitrust Division’s Chicago Office and the FBI’s Louisville Field Office, Covington Resident Agency, with assistance from the U.S. Attorney’s Office of the Eastern District of Kentucky. Anyone with information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Louisville Field Office at 502-263-6000.
Nine Former Winnebago Tribal Council Members IndictedRead the Press Release
United States Attorney Deborah R. Gilg announced today that the federal grand jury has returned an eleven count indictment against nine former members of the Winnebago Tribal Council. John Blackhawk (age 61), Darwin Snyder (age 49), Thomas Snowball, Jr. (age 55), Louis Houghton (age 69), Lawrence Payer (age 70), Travis Mallory (age 38), Charles Aldrich (age 48), Morgan Earth (age 70), and Ramona Wolfe (age 76) were each charged with conspiracy, theft and misapplication of funds belonging to an Indian gaming establishment, and wire fraud. An arraignment date for each of the defendants will be set by the Clerk of the District Court, but the arraignment hearing is anticipated to be in early August.
A conspiracy conviction is punishable by up to five years of imprisonment and/or a $250,000 fine. A conviction for theft or misapplication of funds belonging to an Indian gaming establishment is punishable by up to ten years of imprisonment and/or a $250,000 fine. A wire fraud conviction is punishable by up to 20 years of imprisonment and/or a fine of $250,000.
According to the Indictment, each defendant received a salary in excess of $80,000 in 2013, and a salary in excess of $87,000 in 2014. Those tribal council salaries had been increased by approximately 35% in February 2013 retroactive to October 1, 2012. Because of the retroactive nature of the salary increase, on February 22, 2013, lump sum distributions were given to the defendants in the following amounts: (a) general members of the tribal council $8,288.56; (b) vice-chairman, secretary, and treasurer $9,945.74; and (c) chairman $11,602.92. Additionally, each of the defendants received five separate bonuses totaling $5,955.62 in 2013, and six separate bonuses totaling $11,019.23 in 2014. The defendants also received additional paychecks for unused vacation time. Defendants Aldrich, Blackhawk, Houghton, Payer, and Snyder also received longevity pay for continuous employment ranging from $3,200 to $5,000 per person per year.
Despite the fact that the defendants had received such large salary and bonus payments from the Winnebago Tribe, the Indictment alleges the defendants devised, executed, and aided and abetted the execution of a plan to receive additional funds directly from the WinneVegas Casino without accounting for same through the payroll department of the Winnebago Tribe and without approving the distribution of such funds at a regular meeting of the Tribal Council. The Indictment further alleges these distributions were contrary to the policies of the Tribe and the casino and that the disbursements were not approved by the Winnebago Gaming Commission.
According to the Indictment, distributions to the defendants were in the form of gift certificates issued by the casino and multiple loads to pre-paid debit cards paid for by the casino. No monies were paid for the issuance of the gift certificates, but the defendants were able to cash them at the casino or otherwise redeem them for merchandise. The total amount of gift certificates issued to the defendants in 2013 and 2014 was $87,000. The total amount loaded to the debit cards of the defendants in 2013 and 2014 was $240,500. These distributions were recorded on the books of the casino as miscellaneous administrative expenses.
The Indictment alleges that when the distribution of these monies became known to members of the Tribe, the defendants attempted to justify the distribution by claiming the funds paid were additional salary or stipends to members of the Tribal Council to compensate them for additional oversight duties they were allegedly required to perform regarding the operation of the casino during 2014. However, the Indictment further alleges that: (a) oversight of the casino was already a part of the duties of all Tribal Council members for which they received a salary from the Tribe; (b) not all defendants performed additional duties relating to the business of the casino; (c)Stipends paid to Tribal Council members for work performed relating to sitting on boards of directors of other economic entities of the Tribe were considerably lower and were typically just $200 per meeting; (d) Tribal Council members were not licensed vendors authorized to receive payments directly from the casino; (e) the Winnebago Gaming Commission had not approved such disbursements to the defendants; and (f) the disbursement of such funds was contrary to the bylaws of the Tribe because the description of the alleged work to be performed, the justification for same and the amount of compensation therefore were not approved by the Tribal Council at any regular meeting nor was the disbursement of said funds over and above the tribal budget for fiscal years 2013 and 2014 approved at any regular meeting of the Tribal Council.
As a result of the actions of the defendants, the total loss to the WinneVegas Casino was $327,500.
This case was investigated by the Federal Bureau of Investigation.
FBI Supervisory Agent in Charge Randy Thysse stated: “These individuals used their elected official positions to enrich themselves and in the process betrayed the trust of their peers and those they were elected to serve. The FBI Omaha Division will remain steadfast in aggressively investigating those responsible for perpetrating schemes like this and will continue to pursue all allegations of public corruption.”
Niagara Falls Man Sentenced for Assaulting A Probation OfficerRead 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 Monsuru Giwa, 24, of Niagara Falls, NY, who was convicted of assaulting a federal officer, was sentenced to 30 months in prison by Senior U.S. District Judge William M. Skretny.
Assistant U.S. Attorney Michael J. Adler, who handled the case, stated that on November 24, 2015, U.S. Probation Officers attempted to search the defendant’s Niagara Falls residence. An officer approached Giwa on the porch and directed the defendant to put his hands behind his back. As the officer attempted to place handcuffs on Giwa, he attempted to break free causing the officer to be pulled off the porch and onto the ground suffering leg lacerations. Giwa then fled the scene.
The sentencing is the culmination of an investigation on the part of the United States Probation Department, under the direction of Anthony SanGiacomo and the Federal Bureau of Investigation, under the direction of Special Agent in Charge Adam S. Cohen.
New York Man Admits Role in Cocaine Trafficking ConspiracyRead the Press Release
NEWARK, N.J. – A New York man today admitted his role in a conspiracy to traffic approximately two kilograms of cocaine from Puerto Rico to New Jersey, U.S. Attorney Paul J. Fishman announced.
Ramis Esteves, 33, pleaded guilty before U.S. District Court Judge Claire C. Cecchi to an information charging him with one count of conspiring to distribute cocaine.
According to documents filed in this case and statements made in court:
Esteves was arrested on March 24, 2015 in Bergen County after he accepted delivery of approximately two kilograms of cocaine which had been sent by mail from Puerto Rico. Esteves admitted today that he conspired with a co-defendant, Sasha Melendez, 37, of Bergenfield, New Jersey, to distribute the cocaine.
The conspiracy charge to which Esteves pleaded guilty today carries a maximum potential penalty of 20 years in prison and a $1 million fine. Sentencing is scheduled for Nov. 29, 2016.
Melendez pleaded guilty to conspiracy to distribute cocaine on June 22, 2016 and awaits sentencing.
U.S. Attorney Fishman credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Cynthia L. Shoffner, and special agents of the DEA, under the direction of Special Agent in Charge Carl J. Kotowski, with the investigation.
The government is represented by Assistant U.S. Attorney Jonathan M. Peck of the U.S. Attorney’s Office General Crimes Unit.
Defense Counsel: Paul Brenner, Esq.
Nampa Woman Sentenced for Selling MethamphetamineRead the Press Release
BOISE – Veronica Cantu, 27, of Nampa, Idaho, was sentenced today for distributing methamphetamine, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill sentenced Cantu to 38 months in prison and three years of supervised release. Cantu pleaded guilty to the charge on April 25, 2016.
According to the plea agreement, the co-defendant, Tara Rivera, 30, of Nampa, Idaho, arranged to distribute methamphetamine to a person working with law enforcement as an informant. When the informant arrived to purchase the methamphetamine, Rivera introduced the informant to Cantu, who was also present. Cantu then sold the informant approximately one-quarter ounce of methamphetamine on March 4, 2014, in Nampa, Idaho. Cantu was indicted by a federal grand jury on November 14, 2014. She was a fugitive with an outstanding warrant for her arrest until she was arrested in Michigan in November 2015. On June 17, 2015, Rivera was sentenced to 24 months in prison for distributing methamphetamine.
This case and other related cases are the result of an investigation by the Treasure Valley Metro Violent Crimes Task Force, which focused on the “Norteno” Northside gang that is active in Nampa and other parts of the Treasure Valley. Fourteen individuals were indicted on drug and gun charges as a result of the investigation.
These cases are the result of a joint investigation by the Treasure Valley Metro Violent Crime Task Force and the Organized Crime and Drug Enforcement Task Force (OCDETF). The Treasure Valley Metro Violent Crime Task Force is comprised of federal, state and local agencies, including the Federal Bureau of Investigation; Bureau of Alcohol, Tobacco, Firearms and Explosives; Boise Police Department; Ada County Sheriff’s Office; Caldwell Police Department; Nampa Police Department; Meridian Police Department; Canyon County Sheriff’s Office; and Idaho Department of Probation and Parole. The Organized Crime and Drug Enforcement Task Force (OCDETF), includes the cooperative law enforcement efforts of the Federal Bureau of Investigation; Drug Enforcement Administration; Bureau of Alcohol, Tobacco, Firearms and Explosives; U. S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Internal Revenue Service-Criminal Investigation; and U.S. Marshals Service. The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
These cases are being prosecuted by the Special Assistant U.S. Attorney hired by the Treasure Valley Partnership, the Canyon County Prosecuting Attorney’s Office, and the State of Idaho to address gang crimes. The Treasure Valley Partnership is comprised of a group of elected officials in southwest Idaho dedicated to regional coordination, cooperation, and collaboration on creating coherent regional growth. For more information, visit treasurevalleypartners.org.
Mississippi Doctor Charged with Bribery of Former Corrections CommissionerRead the Press Release
Jackson, Miss – Dr. Carl Reddix, 57, of Jackson, was charged today with paying bribes and kickbacks to former Mississippi Department of Corrections (MDOC) Commissioner Christopher B. Epps in exchange for receiving contracts involving the MDOC and its operations, announced Acting United States Attorney Harold Brittain and FBI Special Agent in Charge (SAC) Donald Alway.
Dr. Reddix was charged in a seven count indictment returned by a federal grand jury with conspiracy to commit honest services wire fraud and with six counts of bribery. According to the indictment returned against Reddix, starting in 2012 and continuing until October, 2014, Dr. Reddix gave Epps bribes and kickbacks in exchange for the awarding and retention of MDOC contracts for Dr. Reddix’s company, Health Assurance, LLC to provide inmate health care services at four facilities: Walnut Grove Correctional Facility; East Mississippi Correctional Facility; Marshall County Correctional Facility; and, Wilkinson County Correctional Facility. The contracts were valued at over $29,000,000.
The indictment also alleges that Dr. Reddix made cash payments to Epps ranging from $8,000 to 9,500 per month from May through October of 2014.
"This indictment alleges a pattern of fraud and deceit based on greed," said Acting U.S. Attorney Harold Brittain. "Corrupt individuals who place the integrity of government contracts at risk will be held accountable for their actions. The U.S. Attorney’s Office and our law enforcement partners remain unwavering in our commitment to root out public corruption at all levels and to restore the public trust."
FBI Special Agent in Charge Donald Alway applauded the investigators and prosecutors, whose hard work and determined efforts revealed these additional participants in this conspiracy of public corruption and led to the charges announced today. "Individuals and companies who do business with the government are held to a high standard of accountability," said Alway. "When these individuals decide to use the government to supplement themselves at the public’s expense, they can expect the FBI to come knocking to hold them accountable. The FBI in Mississippi will continue to work alongside our local, state and federal law enforcement partners to identify and investigate those that criminally exploit the government."
Dr. Reddix is scheduled to make his initial appearance before U.S. Magistrate Judge F. Keith Ball today at 2:00 p.m. He faces a maximum penalty of 20 years in prison and a
$250,000.00 fine for the conspiracy count, and a maximum of 10 years in prison and a $250,000.00 fine for each of the bribery counts.
This case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Deputy Criminal Chief Darren LaMarca, Assistant United States Attorney Patrick Lemon, and financial analyst Kim Mitchell.
The public is reminded that an indictment is merely a charge and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.
Menominee Indian Reservation Men Indicted on Assault ChargeRead the Press Release
Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin, announced that on July 19, 2016, a federal grand jury returned an indictment against Johnny L. Kinney (age: 22) of Neopit, Wisconsin, and Bo Peters (age: 20) of Keshena, Wisconsin, charging them with Assault Resulting in Serious Bodily Harm in violation of 18 United States Code Sections 113(a)(6) and 1153(a). If convicted of the offense, the defendants each face a sentence of up to 10 years’ imprisonment, a $250,000 fine, and up to 3 years of Supervised Release.
According to the indictment, Kinney and Peters, assaulted a male on April 17, 2016, leading to the male suffering a broken nose and damaged sinuses. The incident occurred in Neopit on the Menominee Indian Reservation.
The case was investigated by the Menominee Tribal Police Department and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Andrew J. Maier.
An indictment is only a charge and not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
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Little Falls Man Pleads Guilty to Distributing Child PornographyRead the Press Release
ALBANY, NEW YORK – Eric Jaquays, age 53, of Little Falls, New York, pled guilty today to distributing child pornography.
The announcement was made by United States Attorney Richard S. Hartunian and James Spero, Special Agent in Charge of the Buffalo Field Office of Homeland Security Investigations (HSI).
As part of his guilty plea, Jaquays admitted that between December 27, 2014 and December 12, 2015, while in his Little Falls residence, he used the Internet and a peer-to-peer file sharing program to distribute 27 video files containing child pornography.
As a result of his conviction, Jaquays faces at least 5 years and up to 20 years in prison, a fine of up to $250,000, a term of supervised release of at least 5 years and up to life, and mandatory registration as a sex offender. Sentencing is scheduled for November 17, 2016 before U.S. District Judge David N. Hurd in Utica. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.
This case was investigated by Homeland Security Investigations and the Saratoga Springs Police Department, and is being prosecuted by Assistant U.S. Attorney Rick Belliss.
Las Cruces Man Pleads Guilty to Violating Federal Firearms LawsRead the Press Release
ALBUQUERQUE – Richard Isaac Quezada, 33, of Las Cruces, N.M., pled guilty today in federal court to violating the federal firearms laws. Under the terms of his plea agreement, Quezada will be sentenced to 60 months in federal prison followed by a term of supervised release to be determined by the court.
Quezada was arrested in March 2016, on a criminal complaint charging him with being a felon in possession of firearms and ammunition on March 14, 2016, in Doña Ana County, N.M. According to the complaint, Quezada was arrested after he discharged a firearm in front of a residence, striking a vehicle. During a search incident to arrest, the officers found that Quezada was in possession of a loaded firearm and ammunition.
Today Quezada pled guilty today to a felony information charging him with being a felon in possession of a firearm. In entering the guilty plea, Quezada admitted that on March 14, 2016, he possessed a loaded handgun and additional amounts of ammunition. Quezada admitted that he was prohibited from possessing firearms or ammunition because he previously had been convicted of importation of marijuana. Quezada remains in federal custody pending a sentencing hearing which has yet to be scheduled.
This case was investigated by the Las Cruces office of the FBI and the Las Cruces Police Department. Assistant U.S. Attorney Sarah M. Davenport of the U.S. Attorney’s Las Cruces Branch Office is prosecuting the case.
LaPorte Man Sentenced to 151 Months for Child PornographyRead the Press Release
SOUTH BEND – United States Attorney for the Northern District of Indiana, David Capp, announced that Ronald E. Wheaton, 35, of LaPorte, Indiana was sentenced before Judge Jon E. DeGuilio for distribution of child pornography.
Wheaton was sentenced to 151 months’ imprisonment and 5 years of supervised release.
According to documents filed in this case, on March 17, 2014, Wheaton distributed child pornography to an undercover Indiana State Police officer using a peer-to-peer file sharing system online. When officers executed a search warrant at his home on July 7, 2014, they discovered additional child pornography.
This case was prosecuted as a result of an investigation by the Federal Bureau of Investigation and the Indiana State Police. This case was prosecuted by Assistant United States Attorney John M. Maciejczyk
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Keshena Man Indicted on Sexual Abuse ChargeRead the Press Release
Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin, announced that on July 19, 2016, a federal grand jury returned a one-count indictment against Matthew T. White, Jr. (age: 27) of Keshena, Wisconsin, charging him with Sexual Abuse of a Minor Under the Age of 16 in violation of 18 United States Code Sections 2243(a) and 1153(a). If convicted of the offense, the defendant faces a sentence of up to 15 years’ imprisonment, a $250,000 fine, and a period of Supervised Release of at least five years and up to the rest of the defendant’s life.
According to the indictment, White, engaged in a sex act with a 13-year girl at a location outside Keshena on the Menominee Indian Reservation.
The case was investigated by the Menominee Tribal Police Department and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Andrew J. Maier.
An indictment is only a charge and not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
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Kentucky Resident Pleads Guilty to Role in Staged Automobile Accident Insurance Fraud RingRead the Press Release
GRAND RAPIDS, MICHIGAN — U.S Attorney Patrick Miles announced that Gustavo Ramiro Acuna-Rosa, a resident of Kentucky, and formerly of Wyoming and Lansing, Michigan, pled guilty in United States District Court in Grand Rapids, Michigan, to conspiracy to commit mail fraud and health care fraud. The conspiracy count carries a maximum term of imprisonment of 20 years and the health care fraud count a maximum term of imprisonment of 10 years. Acuna-Rosa’s sentencing hearing is scheduled for November 28, 2016. He currently remains in federal custody.
Acuna-Rosa’s guilty pleas arise out of his involvement in a sophisticated automobile accident insurance fraud ring that operated in Kent and Ingham Counties from at least 2012 through May 2015. In the plea agreement, Acuna-Rosa admitted that he first participated in the insurance fraud ring in 2012 when owners of Revive Therapy Center in Wyoming, Michigan, paid him $1,000 to participate in a staged automobile accident. Thereafter, Acuna-Rosa sought treatment at Revive Therapy Center, and his automobile insurance company was billed for false and fraudulent claims related to his unnecessary medical treatment.
In 2013, Acuna-Rosa, with the assistance of others, opened his own physical therapy clinic in Lansing, Michigan, under the name Renue Therapy Center. While operating this therapy clinic, Acuna-Rosa used recruiters who paid other individuals to participate in staged automobile accidents or to agree to seek treatment at his clinic for injuries that they falsely claimed to have suffered as a result of their real automobile accidents. Acuna-Rosa’s therapy clinic then billed automobile insurance companies for treatment that was unnecessary or that it did not actually provide to these individuals. Acuna-Rosa further admitted to submitting false insurance claims to automobile insurance companies totaling between $250,000 and $550,000.
U.S. Attorney Miles stated that, "Those who seek to personally benefit by defrauding the system with false automobile accidents and false insurance claims will be prosecuted to the fullest extent under the law."
A federal indictment remains pending against three additional individuals that have been charged with involvement in the ring: Yoisler Herrera-Enriquez and Dolis Rojas-Lopez, both from Wyoming, Michigan, and Antonio Ramon Martinez-Lopez, from Port Richey, Florida.
The investigation is being handled by the Grand Rapids offices of the Department of Homeland Security-Homeland Security Investigations and the Federal Bureau of Investigation.
The prosecution is being handled by Assistant United States Attorney, Ronald M. Stella.
The charges in an indictment are merely accusations, and a defendant is presumed innocent until and unless proven guilty in a court of law.
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KCK Man Pleads Guilty in Robbery at Stilwell, Kan., BankRead the Press Release
KANSAS CITY, KAN. - A Kansas City, Kan., man pleaded guilty Wednesday to federal charges that he took part in an armed robbery at a Stillwell bank before leading police on a high speed chase with a child in his car, Acting U.S.
Gary Jordan, 39, Kansas City, Kan., pleaded guilty to one count of bank robbery, one count of brandishing a firearm during a robbery and one count of unlawful possession of a firearm following a felony conviction. Last week, co-defendant Jacob L. Smith, 18, Kansas City, Kan., pleaded guilty to one count of bank robbery and one count of brandishing a firearm during a robbery.
In his plea, Jordan admitted that on March 9, 2016, he and Smith were armed with handguns when they entered the First National Bank at 7460 W. 199th Street in Stilwell, Kan. They held tellers at gunpoint before fleeing with cash stuffed in a backpack. Jordan took the wheel of the getaway car.
During the next 25 minutes, the robbers were pursued by the Kansas Highway Patrol, the Leawood Police Department and other law enforcement agencies as they fled across the Kansas/Missouri state line. During the chase, Smith fired at officers six times from the car. After the car overturned on a sharp turn, the defendants were arrested. Throughout the chase, co-defendant Danille Morris, 26, Kansas City, Kan., and her 19-month-old child were in the car. She has scheduled a change of plea hearing for Aug. 8.
Jordan and Smith are set for sentencing Dec. 19. The crimes carry the following penalties: Up to 25 years in federal prison and a fine up to $250,000 for robbery, not less than 10 years and a fine up to $250,000 for discharging firearms in a robbery, and up to 10 years and a fine up to $250,000 for unlawful possession a firearm by a felon.
Beall commended all the agencies that assisted in the investigation including the FBI, the Johnson County Sheriff’s Office, the Kansas Highway Patrol, the Leawood Police Department, the Kansas City, Kan., Police Department and the Kansas City, Mo., Police Department, as well as the prosecutor, Assistant U.S. Attorney Chris Oakley.
Justice Department Requires Anheuser-Busch InBev to Divest Stake in MillerCoors and Alter Beer Distributor Practices as Part of SABMiller AcquisitionRead the Press Release
Settlement Maintains Competition between Bud and Miller Beers, Prohibits ABI from Disadvantaging Rivals with Distributors and Provides for Review of Future ABI Craft Beer Acquisitions
The Department of Justice announced today that it has agreed to a settlement with Anheuser-Busch InBev (ABI) that will permit ABI to proceed with its acquisition of SABMiller. The settlement requires ABI to divest SABMiller’s entire U.S. business – including SABMiller’s ownership interest in MillerCoors, the right to brew and sell certain SABMiller beers in the United States and the worldwide Miller beer brand rights. This settlement will prevent any increase in concentration in the U.S. beer industry.
The settlement also prohibits ABI from instituting or continuing practices and programs that limit the ability and incentives of independent beer distributors to sell and promote the beers of ABI’s rivals, including high-end craft and import beers. Moreover, the settlement precludes ABI from acquiring beer distributors or brewers – including non-HSR reportable craft brewer acquisitions – without allowing for department review of the acquisition’s likely competitive effects.
“The remedy we secured will help preserve and promote competition in the multi-billion dollar U.S. beer industry,” said Deputy Assistant Attorney General Sonia Pfaffenroth of the Justice Department’s Antitrust Division. “The two largest U.S. brewers – ABI and MillerCoors – will now remain independent competitors after the deal. The settlement also preserves the ability of smaller brewers – including brewers of craft and import beers – to compete against ABI by protecting their access to important distribution networks. Independent distributors that sell ABI’s beer will have the freedom to sell and promote the variety of beers that many Americans drink.”
The department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the $107 billion transaction, along with a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit. The department’s complaint alleges that the proposed transaction would substantially lessen competition in the national market for the sale of beer in the United States and in at least 58 local markets in the United States.
According to the department’s complaint, through its acquisition of SABMiller, ABI would gain a majority interest in MillerCoors. ABI and MillerCoors jointly account for approximately 70 percent of beer sold in the United States. The acquisition would create many highly concentrated local geographic markets, with some combined shares in excess of 90 percent. As a result, under the terms of the proposed settlement, the companies are required to divest SABMiller’s entire ownership stake in MillerCoors. The companies will also divest the right to brew and sell all SABMiller beer brands currently imported or licensed for sale in the United States. Finally, the companies will divest all rights to SABMiller’s Miller-branded beer worldwide.
According to a Competitive Impact Statement (CIS) also filed by the department, the divesture of SABMiller’s interest in MillerCoors to Molson Coors alone was insufficient to remedy the competitive harm arising from the transaction. As explained in the CIS, Molson Coors and ABI have interactions outside the United States which present opportunities to facilitate coordination in the United States – opportunities that MillerCoors does not presently have. To address this competitive concern, the settlement provides additional relief aimed at protecting the competitive constraint that other brewers provide – in particular, brewers of high-end craft and import beers – on ABI’s and Molson Coors’ ability to raise prices, either unilaterally or through coordination, on their beers. Among other things, the settlement prohibits ABI from instituting or continuing practices and programs that disincentivize distributors from selling and promoting the beers of ABI’s high-end and other rivals.
In conducting its investigation, the department cooperated with its counterparts in a number of jurisdictions that also reviewed the transaction. “We thank our enforcement partners around the world, especially from the European Commission, Canada and China, for their close and constructive collaboration on this matter,” added Deputy Assistant Attorney General Pfaffenroth.
ABI is a corporation organized and existing under the laws of Belgium, with its headquarters in Leuven, Belgium. ABI owns and operates 19 breweries in the United States. ABI owns more than 40 major beer brands sold in the United States, including Bud Light – the top-selling beer brand in the United States – and other popular beer brands, such as Budweiser, Busch, Michelob, Natural Light, Stella Artois, Shock Top, Goose Island and Beck’s.
SABMiller is a corporation organized and existing under the laws of the United Kingdom, with its headquarters in London, England. SABMiller operates in the United States through its 58 percent ownership interest in the MillerCoors joint venture.
MillerCoors is a limited liability company organized and existing under the laws of the State of Delaware, with its principal place of business in Chicago. Under MillerCoors’ corporate governance structure, SABMiller and Molson Coors, through their designated representatives, have an equal right to govern MillerCoors. MillerCoors owns and operates 12 breweries in the United States. MillerCoors has the sole right to produce and sell in the United States more than 40 major brands of beer, including Coors Light and Miller Lite—the second- and fourth-highest selling beer brands in the United States. MillerCoors also has the right to produce and sell in the United States other popular beer brands, such as Miller Genuine Draft, Coors Banquet and Blue Moon. In addition, MillerCoors has the exclusive right to import into and sell in the United States certain beer brands owned by SABMiller, including Peroni, Grolsch and Pilsner Urquell.
The proposed settlement, along with the department’s CIS, will be published in the Federal Register, consistent with the requirements of the Antitrust Procedures and Penalties Act. At such time, any person may submit written comments concerning the proposed settlement during a 60-day comment period to Peter J. Mucchetti, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.
Anheuser-Busch CIS
Anheuser-Busch Complaint
Anhueser-Busch Explanation
Anheuser-Busch Hold Separate
Anheuser-Busch PFJ
Jury Convicts Defense Contractor of Mail Fraud, False ClaimsRead the Press Release
COLUMBUS, Ohio – A United States District Court jury convicted Stephan D. Boggs, 63, of Columbus with four counts of mail fraud and 21 counts of false claims.
Benjamin C. Glassman, Acting United States Attorney for the Southern District of Ohio and Brian J. Reihms, Special Agent in Charge, Defense Criminal Investigative Services (DCIS), Central Field Office, announced the verdict reached yesterday, which was returned following a trial that began on July 11 before U.S. District Judge James L. Graham.
According to court documents and testimony, Boggs served as the president of Boggs & Associates, Inc., a Department of Defense (DoD) contractor who sold and supplied a variety of parts used by the military.
From approximately April 2010 through January 2014, the DoD issued purchase orders to Boggs & Associates for a variety of military parts and components used on various military weapons systems including aircraft, vehicles and vessels. The parts were required to meet certain military specifications. The majority of these parts are considered critical application items. A critical application item is defined as an item essential to weapon system performance or operation, or the preservation of life or safety of operating personnel, as determined by military services.
Boggs knowingly supplied non-conforming parts to the DoD through purchase orders issued by the Defense Logistics Agency.
The Agency’s testing center found that parts from 30 different purchase orders were non-conforming. Specifically, the parts were made from unauthorized substituted material, were dimensionally defective, used unauthorized inferior fittings, not heat treated properly, not plated properly and/or did not pass specified testing requirements.
During trial, the evidence showed that the inspection reports and certifications he signed and submitted to the government contained false and fraudulent representations.
“Contractors who provide defective and nonconforming parts place the reliability of U.S. military equipment in jeopardy,” Acting U.S. Attorney Glassman said. “That in turn puts our men and women in uniform in danger. That’s why I think it’s crucial that contractors like Boggs are held accountable for their crimes, and the jury’s verdict does so.”
Mail fraud is a crime punishable by up to 20 years in prison and each count of false claims carries a maximum potential penalty of five years in prison.
Acting U.S. Attorney Glassman commended the investigation of this case by DCIS, and Assistant United States Attorneys Jessica W. Knight and J. Michael Marous, who prosecuted the case.
July Grand JuryRead the Press Release
United States Attorney Deborah R. Gilg announced the federal Grand Jury for the District of Nebraska has returned 9 indictments charging 10 defendants. Indictments are charging documents that contain one or more individual counts that are merely accusations, and every defendant is presumed innocent unless and until proven guilty.
* Uriel Cabrera-Reyes, age 25, of Omaha, is charged with illegal reentry into the United States on or about July 11, 2016. The maximum possible penalty if convicted is 2 years imprisonment, a $250,000 fine, a 1 year term of supervised release and a $100 special assessment.
* Arturo Garcia, age 34, of Walthill, is charged with assault by strangulation of an intimate partner or spouse on or about July 5, 2016. The maximum possible penalty if convicted is 10 years imprisonment, a $250,000 fine, a 3 year term of supervised release and a $100 special assessment.
* Abel Lopez-Perez, age 46, of Grand Island, is charged with illegal reentry into the United States on or about February 8, 2016. The maximum possible penalty if convicted is 2 years imprisonment, a $250,000 fine, a 1 year term of supervised release and a $100 special assessment.
* James Manske, age 28, of Omaha and Alex Pearson, age 28, of Elkhorn, are charged in a two-count Indictment. Counts I and II of the Indictment charge the defendants with harboring illegal aliens on or about July 18, 2016 and continuing to on or about March 17, 2016 and on or about April 8, 2016. The maximum possible penalty if convicted is 10 years imprisonment, a $250,000 fine, a 3 year term of supervised release and a $100 special assessment for each count.
* Wyatt Metoyer, age 19, of Omaha, is charged with user in possession of a firearm on or about May 30, 2016. The maximum possible penalty if convicted is 10 years imprisonment, a $250,000 fine, a 3 year term of supervised release, and a $100 special assessment.
* Sergio Rodriguez Ruiz, age 29, of Omaha, is charged with illegal reentry into the United States after an aggravated felony conviction on or about July 7, 2016. The maximum possible penalty if convicted is 20 years imprisonment, a $250,000 fine, a 3 year term of supervised release and a $100 special assessment.
* Eric Sayer, age 27, of Lincoln, is charged with failure to register as a sex offender between on or about May 2015 and June 2016. The maximum possible penalty if convicted is 10 years imprisonment, a $250,000 fine, supervised release for life and a $100 special assessment.
* Justo Soria-Andrade, age 47, is charged with illegal reentry into the United States on or about May 9, 2016. The maximum possible penalty if convicted is 2 years imprisonment, a $250,000 fine, a 1 year term of supervised release and a $100 special assessment.
* James Washington, a/k/a James Plunkett; a/k/a James A. Plunkett; a/k/a James A. Plunkett, Jr.; a/k/a James A. Plunkett III, age 30, of Omaha, is charged with felon in possession of a firearm on or about June 14, 2016. The maximum possible penalty if convicted is 10 years imprisonment, a $250,000 fine, a 3 year term of supervised release, and a $100 special assessment.
John Galanis Pleads Guilty in Manhattan Federal Court to Market ManipulationRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JOHN GALANIS, a/k/a “Yanni,” pled guilty today to manipulating the market for Gerova Financial Group, Ltd. (“Gerova”), a publicly traded company listed on the New York Stock Exchange, and to defrauding the shareholders of that company. GALANIS pled guilty to conspiracy to commit securities fraud and securities fraud before U.S. Magistrate Judge Sarah Netburn.
U.S. Attorney Preet Bharara said: “John Galanis helped develop and execute an elaborate plan to secretly obtain undisclosed control of millions of shares of Gerova Financial Group stock, falsely pump up the demand, and then cash out, making millions in ill-gotten profits. For John Galanis, this is just the latest chapter in a lifetime of fraud that has included three prior convictions, including one that resulted in a prison sentence of 27 years.”
According to the allegations contained in the Indictment filed against JOHN GALANIS and his co-conspirators and statements made in related court filings and proceedings[1]:
From 2009 to 2011, JOHN GALANIS, along with his co-conspirators Jason Galanis, Jared Galanis, Gary Hirst, Derek Galanis, Ymer Shahini, and Gavin Hamels, engaged in a scheme to defraud the shareholders of a publicly traded company called Gerova Financial Group, Ltd. (“Gerova”), and the investing public, by obtaining secret control over millions of shares of Gerova stock and then manipulating the market for the stock as the defendants caused their secretly held shares to be sold. As part of the scheme, the defendants fraudulently generated demand for Gerova stock by bribing investment advisers to purchase for client accounts the Gerova stock that was sold by the defendants, thereby enabling the defendants to cash out from the scheme and make millions in illegal profits.
As a part of the scheme to defraud, Jason Galanis obtained control over Gerova so as to be able to cause Gerova to enter into transactions of his design, and for his benefit, including the issuance of Gerova stock. Jason Galanis obtained this control without identifying himself as an officer or director of Gerova to avoid the SEC-imposed bar that prohibited him from holding such positions at publicly traded companies. Among other means and methods, Jason Galanis, with the assistance of Hirst, caused more than 5 million shares of Gerova stock, which represented nearly half the company’s public float and which were intended for Jason Galanis’s ultimate benefit, to be issued to and held in the name of Shahini, who knowingly served as a foreign nominee for Jason Galanis. Jason Galanis, JOHN GALANIS, Jared Galanis, Derek Galanis, Hirst, and Shahini understood that the purpose of the stock grant to Shahini was to disguise Jason Galanis’s ownership interest in the stock, and to evade the SEC’s regulations for issuing unregistered shares of stock.
At the same time, and as a further part of the scheme to defraud, JOHN GALANIS, among others, with the knowledge and approval of Jason Galanis, opened and managed brokerage accounts in the name of Shahini (the “Shahini Accounts”), effected the sale of Gerova stock from the Shahini Accounts, and received and concealed the proceeds, knowing that this activity was designed to conceal from the investing public Jason Galanis’s ownership of and control over the Gerova stock.
Jason Galanis, among others, also fraudulently induced investment advisers, including Gavin Hamels and others, to purchase shares of Gerova stock in the investment advisers’ client accounts by offering compensation and/or other benefits to the respective investment adviser. By causing the purchase of Gerova stock at the time, quantity, and/or price of their choosing, Jason Galanis and others were able to, among other things, effectuate the sale of large quantities of Gerova stock from the Shahini Accounts that Jason Galanis controlled while artificially maintaining the price of Gerova stock through coordinated match trading. Such coordinated trading served to manipulate the market for Gerova stock and deceive the investing public. As a result, Jason Galanis and his co-conspirators reaped nearly $20 million in profits.
The present case represents JOHN GALANIS’s fourth conviction. In 1973, JOHN GALANIS was convicted in this District on charges of securities fraud and bribery and was sentenced to six months in prison. In 1988, JOHN GALANIS was convicted in this District of multiple counts of racketeering, tax fraud, securities fraud, bank fraud, and bribery and was sentenced to 27 years in prison. That same year, JOHN GALANIS was convicted in New York County Supreme Court of Grand Larceny and was sentenced to seven to 17 years in prison.
* * *
JOHN GALANIS, 73, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; and one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5,000,000 or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.
Gavin Hamels, 40, pled guilty on March 22, 2016, to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5,000,000 or twice the gross gain or loss from the offense; and one count of investment adviser fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.
Trial against defendants Jason Galanis, Gary Hirst, Derek Galanis, and Jared Galanis is scheduled to commence on September 12, 2016 on charges of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, and wire fraud, and with regard to Jason Galanis and Jared Galanis, on charges of investment advisor fraud. Defendant Ymer Shahini remains a fugitive. The allegations contained in the Indictment as to those defendants are merely accusations, and they are presumed innocent unless and until proven guilty.
Mr. Bharara praised the work of the U.S. Postal Inspection Service and the Federal Bureau of Investigation, and thanked the SEC.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Aimee Hector, and Rebecca Mermelstein are in charge of the prosecution.
[1] As for the defendants who have not pled guilty (Jason Galanis, Gary Hirst, Derek Galanis, and Jared Galanis) the description of the charges set forth herein constitute only allegations.
IARA Pleads Guilty to Transferring Nearly $1.4 Million to Iraq in Violation of SanctionsRead the Press Release
JEFFERSON CITY, Mo. B Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the Islamic American Relief Agency (IARA), formerly headquartered in Columbia, Mo., pleaded guilty in federal court today to transferring nearly $1.4 million to Iraq in violation of federal sanctions.
IARA, through a representative of the board of directors, pleaded guilty before U.S. District Judge Nanette K. Laughrey to one count of conspiracy to violate the International Emergency Economic Powers Act, one count of conspiracy to commit money laundering and one count of obstructing the administration of internal revenue laws, which were contained in an Oct. 21, 2008, federal indictment.
IARA served as the U.S. office of the Islamic Relief Agency (ISRA), an international organization headquartered in Khartoum, Sudan. IARA took in between $1 million and $3 million in contributions annually from 1991 to 2003. It also received funds from the United States Agency for International Development (USAID). IARA employed approximately six full-time employees and 10-12 part-time employees.
IARA was closed in October 2004 after being identified by the U.S. Treasury Department as a specially designated global terrorist organization. IARA was reconstituted in order to resolve this criminal matter. When this case is resolved, IARA will dissolve itself as a corporation for all time. IARA and its board of directors agree that it will not form a new corporation to conduct the activities that IARA formerly conducted.
By pleading guilty today, IARA admitted that it secretly funneled $1,375,000 to Iraq in violation of United States economic sanctions. President George H.W. Bush declared a national emergency with respect to Iraq in August 1990, which resulted in sanctions against sending or transferring money, funds or goods directly or indirectly to any person in Iraq or to the government of Iraq. In violation of the Iraqi sanctions, IARA collected funds that were illegally transferred to Iraq with the assistance of a Jordanian national. According to today’s plea agreement, this individual either took the cash into Iraq or purchased items in Jordan and transported them into Iraq.
IARA corruptly endeavored to impair and impede the due administration of the Internal Revenue laws by using its tax-exempt status to solicit funds, representing that they were legitimate charitable contributions, and to misuse part of those funds by transferring those funds to Iraq, a purpose prohibited by law. During the entire period in which the Iraq sanctions were in effect, IARA solicited donations through various means, including pamphlets, flyers, newsletters and personal correspondence, requesting contributions to pay for projects in Iraq. IARA did not disclose the fact that the organization had provided funds for projects and persons in Iraq in its annual filings with the Internal Revenue Service.
Several officials and employees of IARA have previously pleaded guilty and been sentenced.
IARA Executive Director Mubarak Hamed, a naturalized U.S. citizen originally from Sudan, was sentenced to four years and 10 months in federal prison without parole. Hamed pleaded guilty to conspiring to illegally transfer more than $1 million to Iraq in violation of federal sanctions. Hamed also pleaded guilty to obstructing the administration of the laws governing tax‑exempt charities by misusing IARA=s tax‑exempt status, providing false information to the IRS, and lying to federal agents.
IARA fundraiser Abdel Azim El-Siddig was sentenced to two years of probation. El-Siddig pleaded guilty to conspiring to lobby for IARA=s removal from a Senate Finance Committee list of charities suspected of having terrorist ties, while concealing this advocacy and not registering with the proper authorities.
IARA board member Ali Mohamed Bagegni, a native of Libya who is a naturalized U.S. citizen, and IARA fundraiser Ahmad Mustafa, a citizen of Iraq and a lawful permanent resident alien, were each sentenced to six months of probation. Federal prosecutors asked the court to give Bagegni and Mustafa credit for their substantial assistance to the government in the investigation and prosecution of the case. Bagegni pleaded guilty to his role in the conspiracy to illegally transfer funds to Iraq in violation of federal sanctions. Mustafa was a fundraiser for IARA from 1996 until it was closed in 2004, but at the time he worked for the organization he was unaware it had no permission to send funds to Iraq. Mustafa pleaded guilty to illegally transferring funds to a family member in Iraq in violation of federal sanctions.
Hamed and El‑Siddig hired Mark Deli Siljander in 2004 to lobby for IARA=s removal from a U.S. Senate Finance Committee list of charities suspected of funding international terrorism, and its reinstatement as an approved government contractor. IARA lost its status as an approved government contractor in 1999, when the U.S. Agency for International Development (USAID) terminated grants for two relief projects in Mali, Africa.
Siljander, who operated a Washington, D.C. consulting business called Global Strategies, Inc., had been a member of the U.S. House of Representatives from Michigan and was a U.S. Ambassador to the United Nations General Assembly. Earlier in 2004, Siljander had assisted IARA in hiring another former congressman and lobbyist (identified as “R.P.H.”), who was paid $15,000 to advocate for IARA’s removal from the list and reinstatement as an approved government contractor.
Siljander, Hamed and El‑Siddig agreed with each other to conceal Siljander=s efforts on IARA=s behalf. In order to do so, Siljander instructed Hamed and El‑Siddig to transfer $75,000 of IARA=s funds to him by funneling them through nonprofit entities. El-Siddig carried at least three checks issued to Siljander=s charities from Chicago to Washington, D.C., and gave them to Siljander.
In exchange for the payments, during the summer of 2004, Siljander acted as an agent for IARA by contacting persons at the U.S. Senate Finance Committee, USAID, the Department of Justice, and the Department of the Army, in an effort to have IARA removed from the USAID list of debarred entities, and to remove IARA from the Senate Finance Committee=s list of charities suspected of funding terrorism. Federal law requires anyone who serves as an agent of a foreign entity, including an organization, to register with the U.S. Attorney General.
Siljander admitted that in two separate interviews he repeatedly lied to FBI agents and prosecutors acting on behalf of a federal grand jury. Siljander obstructed justice by falsely denying that he was hired to advocate for IARA, and by falsely claiming that the payments from IARA were charitable donations intended to assist him in writing a book about bridging the gap between Islam and Christianity.
Siljander was sentenced to one year and one day in federal prison without parole after pleading guilty to obstruction of justice and acting as an unregistered foreign agent.
Under the terms of today’s plea agreement, the government will recommend that no fines be assessed as the organization will voluntarily be terminated and divest itself of all its funds and property. The plea agreement acknowledges that, due to its designation as a specially designated global terrorist and the subsequent blocking of all its property, IARA has no funds readily available to it to pay any fine.
This case is being prosecuted by Assistant U.S. Attorneys Anthony P. Gonzalez, Steven M. Mohlhenrich, and Brian Casey from the U.S. Attorney=s Office for the Western District of Missouri, and Trial Attorney Paul G. Casey from the National Security Division of the U.S. Department of Justice. The case was investigated by the FBI, IRS-Criminal Investigation and U.S. Agency for International Development, Office of the Inspector General.
Heroin Dealers Sentenced to PrisonRead the Press Release
EUGENE, Ore. – Nicholas Jacobson and his twin brother Matthew Jacobson, 30, of Jackson County Oregon, were sentenced to prison on Wednesday, July 20, 2016, by U.S. District Judge Ann Aiken for conspiracy to distribute 100 grams or more of heroin. Nicholas Jacobson was sentenced to 97 months in prison, and Matthew Jacobson was sentenced to 78 months in prison. Following their release from prison, both defendants will be on supervised release for five years.
In July 2014, the Douglas Interagency Narcotics Team (DINT) and the DEA began investigating the Jacobson brothers who were well known to DINT as having been involved in dealing heroin in Douglas and Jackson counties for years. Assisted by a confidential informant, DINT and the DEA began making controlled buys of heroin from the Jacobson brothers, who lived in Jackson County on a large rural property.
A search warrant was executed at the Jacobsons’ property in Jackson County on October 9, 2014. Approximately four pounds of heroin and $20,000 was located, along with body armor, night vision googles and 17 firearms. The firearms—most of which were loaded—included multiple assault rifles and pistols, along with extended capacity magazines. Most of the heroin and firearms were located in the main residence where Nicholas lived, although a large amount of heroin paraphernalia, $1237 and two pistols were located in Matthew’s trailer. Law enforcement determined that the brothers worked together to deal heroin but that Nicholas had more involvement than Matthew.
Within a month after being charged in federal court and placed on pre-trial release, the Jacobsons absconded. They were arrested four months later in Medford, Oregon at a residence where officers also found approximately six ounces of heroin and $10,000.
The investigation of this case was conducted by the Douglas Interagency Narcotics Team and the Drug Enforcement Administration, with assistance by the Medford Area Drug and Gang Enforcement Task Force. The case was prosecuted by Assistant U.S. Attorney Jeffrey Sweet.
Grand Rapids Man Sentenced for Distribution of Child Pornography on the Dark WebRead the Press Release
GRAND RAPIDS, MICHIGAN — U.S. Attorney Patrick A. Miles, Jr., announced today that Seth Edward Piccolo, 44, of Grand Rapids, was sentenced to 60 months’ imprisonment for his role as a member of a dark website for the distribution of child pornography, including images of very young prepubescent children being sexually assaulted. Piccolo pled guilty to charges of possession and access with intent to view child pornography in April of this year, followed by a guilty plea to distribution of child pornography in May. The pleas were accepted and the sentence imposed by U.S. District Judge Robert Holmes Bell.
Piccolo was a member of a website that operated on the "dark web." The dark web is a description given to websites that are only accessible through specialized software that utilizes layers of encryption to hide the identity of the users. Australian law enforcement authorities, in cooperation with the FBI, discovered the illegal website that was dedicated to trading child pornography. Piccolo established his membership credentials by uploading images from his own collection of child pornography. Once admitted, he was able to access and download images from the website and images posted by other users. The FBI and Australian authorities identified hundreds of members who were scattered across the globe leading to Piccolo’s apprehension and conviction. Piccolo made further attempts to conceal his activities by utilizing encryption and evidence destroying software on his home computer.
"The dark web is no sanctuary for criminal activity," U.S. Attorney Miles said. "Law enforcement in the Western District of Michigan is committed to tracking down criminals who try to use technology to evade detection of their crimes, including child exploitation offenses."
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney’s Office, county prosecutors’ offices, the Internet Crimes Against Children task force ("ICAC"), federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following web site: www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement officials.
The case was investigated by the FBI’s WEBCHEX Task Force and the Australian Queensland Police Service’s Task Force Argos. Assistant U.S. Attorney Justin M. Presant prosecuted the case.
END
Global Head of HSBC’s Foreign Exchange Cash-Trading Desks Arrested for Orchestrating Multimillion-Dollar Front Running SchemeRead the Press Release
Charges Also Unsealed Against Former Head of Foreign Exchange Cash-Trading Desk for Europe, Middle East and Africa
The head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), and HSBC’s former head of foreign exchange cash trading for Europe, the Middle East and Africa were charged with conspiring to defraud a client of HSBC through a scheme commonly referred to as “front running.”
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Robert L. Capers of the Eastern District of New York, Acting Inspector General Frederick W. Gibson of the Federal Deposit Insurance Corporation (FDIC) and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement.
Mark Johnson, 50, a U.K. citizen and U.K. and U.S. resident, and Stuart Scott, 43, a U.K. citizen and resident, were charged by complaint with conspiracy to commit wire fraud. Johnson was arrested last night at JFK International Airport in Queens, New York, and will be arraigned later today before U.S. Magistrate Judge Lois Bloom of the Eastern District of New York.
“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said Assistant Attorney General Caldwell. “This case demonstrates the Criminal Division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”
“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” said U.S. Attorney Capers. “When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades. The charges and arrest announced today reflect our steadfast commitment to hold accountable corporate executives and licensed professionals who use their positions to fraudulently enrich themselves.”
“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to join the Department of Justice and our law enforcement colleagues in announcing this arrest,” said Acting Inspector General Gibson. “Our collective efforts help ensure public confidence in the financial markets. It is critically important to hold individuals accountable for their actions, particularly those who abuse their positions of public trust. We will continue to pursue justice for those involved as this case moves forward.
“These individuals are accused of defrauding clients by misusing confidential information to manipulate currency prices for the benefit of the bank and themselves,” said Assistant Director in Charge Abbate. “The FBI will continue to work aggressively with our partners to prevent, investigate and prosecute criminal fraud in the financial markets.”
According to the complaint, in November and December 2011, Johnson and Scott misused information provided to them by a client that hired HSBC to execute a foreign exchange transaction related to a planned sale of one of the client’s foreign subsidiaries. HSBC was selected to execute the foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011. HSBC’s agreement with the client required the bank to keep the details of the client’s planned transaction confidential. Instead, Johnson and Scott allegedly misused confidential information they received about the client’s transaction. On multiple occasions, Johnson and Scott allegedly purchased Pound Sterling for HSBC’s “proprietary” accounts, which they held until the client’s planned transaction was executed. The complaint alleges that, as part of the scheme, both Johnson and Scott made misrepresentations to the client about the planned foreign exchange transaction that concealed the self-serving nature of their actions. Specifically, the complaint alleges that Johnson and Scott caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to spike the price of the Pound Sterling, to the benefit of HSBC and at the expense of their client. In total, HSBC allegedly generated profits of roughly $8 million from its execution of the FX Transaction for the Victim Company, including profits generated from the front running conduct by Johnson, Scott, and other traders whom they directed.
The investigation is being conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office. Trial Attorney Melissa Aoyagi and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jacquelyn Kasulis of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The charges in this case were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
Global Head of HSBC’S Foreign Exchange Cash-Trading Desks Arrested for Orchestrating Multimillion-Dollar Front Running SchemeRead the Press Release
BROOKLYN, N.Y. – The head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), and HSBC’s former head of foreign exchange cash trading for Europe, the Middle East and Africa, were charged with conspiring to defraud a client of HSBC through a scheme commonly referred to as “front running.”
U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting Inspector General Frederick W. Gibson of the Federal Deposit Insurance Corporation (FDIC), and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office, made the announcement.
Mark Johnson, 50, a U.K. citizen and U.K. and U.S. resident, and Stuart Scott, 43, a U.K. citizen and resident, were charged by complaint with conspiracy to commit wire fraud. Johnson was arrested last night at JFK International Airport in Queens, New York, and will be arraigned later today before U.S. Magistrate Judge Lois Bloom of the Eastern District of New York.
“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” stated United States Attorney Capers. “When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades. The charges and arrest announced today reflect our steadfast commitment to hold accountable corporate executives and licensed professionals who use their positions to fraudulently enrich themselves.”
“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said Assistant Attorney General Caldwell. “This case demonstrates the Criminal Division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”
“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to join the Department of Justice and our law enforcement colleagues in announcing this arrest,” said FDIC Acting Inspector General Gibson. “Our collective efforts help ensure public confidence in the financial markets. It is critically important to hold individuals accountable for their actions, particularly those who abuse their positions of public trust. We will continue to pursue justice for those involved as this case moves forward.”
“These individuals are accused of defrauding clients by misusing confidential information to manipulate currency prices for the benefit of the bank and themselves,” said Assistant Director in Charge Abbate. “The FBI will continue to work aggressively with our partners to prevent, investigate and prosecute criminal fraud in the financial markets.”
According to the complaint, in November and December 2011, Johnson and Scott misused information provided to them by a client that hired HSBC to execute a foreign exchange transaction related to a planned sale of one of the client’s foreign subsidiaries. HSBC was selected to execute the foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011. HSBC’s agreement with the client required the bank to keep the details of the client’s planned transaction confidential. Instead, Johnson and Scott allegedly misused confidential information they received about the client’s transaction. On multiple occasions, Johnson and Scott allegedly purchased Pound Sterling for HSBC’s “proprietary” accounts, which they held until the client’s planned transaction was executed. The complaint alleges that, as part of the scheme, both Johnson and Scott made misrepresentations to the client about the planned foreign exchange transaction that concealed the self-serving nature of their actions. Specifically, the complaint alleges that Johnson and Scott caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to spike the price of the Pound Sterling, to the benefit of HSBC and at the expense of their client. In total, HSBC allegedly generated profits of roughly $8,000,000 from its execution of the FX Transaction for the Victim Company, including profits generated from the front running conduct by Johnson, Scott, and other traders whom they directed.
* * *
The investigation is being conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office. Trial Attorney Melissa Aoyagi and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jacquelyn Kasulis of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
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The charges in this case were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
Franklinville Man Pleads Guilty to Gun Charge; Violating Supervised ReleaseRead 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 Salvatore Faliero, 53, of Franklinville, NY, pleaded guilty to being a felon in possession of a firearm before Senior U.S. District Judge William M. Skretny. The charge carries a maximum penalty of 10 years in prison and a $250,000 fine. In addition, the defendant, who is currently on federal supervised release following a 2009 conviction of accessory after the fact, also plead guilty to violation of supervised release which could carry an additional 24 months in prison.
According to Assistant U.S. Attorneys Michael J. Adler and Thomas S. Duszkiewiz, who handled the case, on November 29, 2015, New York State Troopers began investigating a complaint that the defendant was shooting a firearm from his vehicle.
• One witness stated that Faliero admitted to him that he had shot a gun.
• Another witness stated that on December 1, 2015, he saw the defendant put a gun into his vehicle.
• On December 3, 2015, troopers received another report of the defendant using a firearm.Soon after this third complaint, troopers observed the defendant driving his red Honda CRV and stopped the vehicle. Troopers discovered a loaded Marlin, Model 336W, 30-30 caliber lever action rifle on the back seat of the vehicle. Ammunition for the firearm was found on the center console. Faliero admitted that he had been using the rifle.
In September 1985, the defendant was convicted in state court of Attempted Criminal Possession of a Controlled Substance. In October 1998, Faliero was convicted in Cattaraugus County Court of Attempted Burglary followed by his 2009 federal conviction. As a result, the defendant is prohibited from legally possessing a firearm.
The plea is the culmination of an investigation by the New York State Police, under the direction of Major Steven Nigrelli and the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Delano A. Reid.
Sentencing is scheduled for October 26, 2016 at 11:00 a.m. before Judge Skretny.
Four St. Joseph Family Members Indicted for $1.5 Million Tax FraudRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that four St. Joseph, Mo., residents were indicted by a federal grand jury today for their roles in a $1.5 million tax fraud scheme as well as individual tax fraud.
Dinorah Stoll-Weaver, 48, her sister, Dawn Langlais (formerly Ankrom-Brown), 58, her husband, Thad Weaver, 45, and Langlais’s daughter, Jennifer Sturgis, 37, all of St. Joseph, were charged in a 23-count indictment returned by a federal grand jury in Kansas City, Mo.
From 2001 through early 2010, Stoll-Weaver owned, and with the assistance of Langlais, operated Homeward Bound Health Services, Inc., a home health provider located in St. Joseph. In 2010, Stoll-Weaver changed Homeward Bound’s name to Silver Linings, Inc., and put in place nominee owners. According to the indictment, these nominee owners signed the checks but made no business decisions; Stoll-Weaver and Langlais maintained control and continued to operate Silver Linings, which closed in 2013.
Stoll-Weaver and Langlais employed other relatives at Homeward Bound and Silver Linings, including Weaver and Sturgis.
Today’s indictment alleges that Stoll-Weaver and Langlais participated in a conspiracy to willfully fail to pay over employment taxes to the IRS and to steal from a health care benefit program from Oct. 1, 2009, to Jan. 31, 2013. Stoll-Weaver and Langlais withheld $508,088 in employment taxes from the paychecks of their employees, the indictment says, but instead of forwarding those taxes to the government, took them as additional income for themselves and for relatives.
According to the indictment, between 2009 - 2012, when the employment taxes were withheld but not paid to the IRS, Stoll-Weaver and Langlais personally spent approximately $868,565 from business accounts by transferring funds to their own account for personal expenses. They also wrote checks to cash and made cash withdrawals.
Homeward Bound and Silver Linings allegedly withheld and collected $341,996 in federal income taxes, Social Security taxes, and Medicare taxes from employees from 2010 to 2012 and then kept those withheld taxes instead of paying them.
Additionally, Homeward Bound allegedly failed to pay the employer portion of Social Security and Medicare taxes from 2010 to 2012 totaling $166,091. Homeward Bound allegedly failed to pay federal income tax withholdings, and both the employee and employer portions of Social Security tax and Medicare tax, for years prior to 2010. Total employment taxes due and owing for Homeward Bound and Silver Linings from 2005 to 2010 are $765,748.
Homeward Bound and Silver Linings allegedly failed to pay federal unemployment taxes for 2002 to 2009 totaling $24,049. Homeward Bound and Silver Linings allegedly withheld and failed to pay over Missouri state income taxes from 2007 to 2010 totaling $291,204. In like manner, Homeward Bound and Silver Linings withheld from employee paychecks and kept child support payments, employee IRA contributions and medical and dental insurance payments. The theft of these payments from employees had negative collateral consequences for their employees.
The total criminal tax loss for failure to pay employment taxes due and owing from 2001 to 2012 is $1,502,760.
All of the defendants allegedly failed to declare and properly report their income on their personal federal income tax returns.
From at least 2009 to 2012, Stoll-Weaver, Langlais, Weaver and Sturgis all received income from Homeward Bound and Silver Linings, the indictment says, which they failed to report on their individual federal income tax forms, and as a result, underpaid their federal income taxes. According to the indictment, Langlais has not filed an income tax return since 2008. Additionally, from 2009 to 2012, Stoll-Weaver, Weaver, and Sturgis each allegedly claimed personal federal income tax refunds, knowing that Homeward Bound and Silver Linings had not paid any income taxes to the IRS.
In addition to the conspiracy, Stoll-Weaver and Langlais are charged together in one count of theft from a health care benefit program and 11 counts of willful failure to pay over taxes totaling $282,056.
Stoll-Weaver and Weaver are also charged together in four counts of making false statements on tax returns by failing to report a total of $257,826 of unreported income. Sturgis is charged with three counts of making false statements on tax returns by failing to report a total of $150,192 of unreported income. Langlais is also charged with three counts of failing to file tax returns for tax years 2010, 2011 and 2012.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Kathleen D. Mahoney. It was investigated by IRS – Criminal Investigation.
Four More Plead Guilty in Dexter Area 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 Mark Tasker, a/k/a “Mackie”, 49, of Dexter, Maine; Greg Tasker, 28, of Stetson, Maine; and Eugene Moulton, 67, and Antoinette Perreault, a/k/a “Toni”, 48, both of Harmony, Maine, pleaded guilty today U.S. District Court to conspiring to distribute and possess with the intent to distribute oxycodone and cocaine.
According to court records, between January 2002 and November 2014, the defendants conspired to distribute oxycodone and/or five kilograms or more of cocaine in the Dexter area. The drugs were acquired in Rhode Island. Father and son, Mark and Greg Tasker, distributed oxycodone and cocaine. Moulton and Perreault distributed cocaine. Mark Tasker also pled guilty to maintaining a drug-involved premises for allowing his Liberty Street residence in Dexter to be used for drug distribution activities.
Co-defendants John Williams, Cynthia Williams, Whitney Chadbourne, and Corey Pomerleau pled guilty in the case on January 25, 2016 and await sentencing.
Mark Tasker faces between 10 years and life in prison, a $10,000,000 fine, and between five years and life on supervised release on the conspiracy charge and up to 20 years in prison, a $500,000 fine and three years of supervised release on the premises charge. Greg Tasker, Moulton and Perreault face up to 20 years in prison, a $1,000,000 fine and between three years and life on supervised release.
The case was investigated by the U.S. Drug Enforcement Administration and the Maine Drug Enforcement Agency, with assistance provided by the Dexter Police Department, and the Penobscot County and Piscataquis County Sheriff’s Offices.
Four Area Residents, Mexican National Indicted for Drug Trafficking Resulting in MurderRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that three Nixa, Mo., residents, a Springfield, Mo., resident and a Mexican national were indicted by a federal grand jury today for their roles in a conspiracy to distribute methamphetamine, which resulted in the murder of a Mexican national, Oscar Adan Martinez-Gaxiola.
Brooke Danielle Beckley, 19, Nathaniel Austin Lee, 18, and Jourdan Ashley McGinnis, 27, all of Nixa, Anthony Edward Donovan, 19, of Springfield, and Yovanny Aroldo Mendivil-Balderrama, 22, a citizen of Mexico, were charged in a four-count indictment returned by a federal grand jury in Springfield. These defendants were originally charged by Webster County Prosecuting Attorney Ben Berkstresser; those state charges will be dismissed in lieu of federal prosecution.
Today’s indictment alleges that Beckley, Donovan, Lee, McGinnis and Mendivil-Balderrama participated in a conspiracy to distribute methamphetamine in Greene County, Dallas County, Webster County and Christian County, Mo., from April 28, 2015, to April 26, 2016.
In addition to the conspiracy, Beckley, Donovan, Lee and Mendivil-Balderrama are charged together with using firearms in relation to a drug-trafficking crime, resulting in the murder of Martinez-Gaxiola on April 25, 2016 in Webster County. A Stoeger .40-caliber pistol, a Glock .40-caliber handgun and a Taurus 9mm handgun allegedly were used during the drug-trafficking conspiracy.
Beckley and McGinnis are also charged together in one count of possessing methamphetamine with the intent to distribute. Beckley is also charged with possessing a firearm in furtherance of a drug-trafficking crime. Beckley allegedly was in possession of a Sears Roebuck & Company 20-gauge bolt-action shotgun with a sawed-off barrel and stock and a Phoenix Arms .22-caliber pistol on April 8, 2016, in furtherance of the drug-trafficking conspiracy.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Timothy A. Garrison. It was investigated by the U.S. Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Missouri State Highway Patrol, the Christian County, Mo., Sheriff’s Department, the Greene County, Mo., Sheriff’s Department, the Lawrence County, Mo., Sheriff’s Department, the Webster County, Mo., Sheriff’s Department, the Seymour, Mo., Police Department, the Rogersville, Mo., Police Department, the Springfield, Mo., Police Department and the Combined Ozarks Multijurisdictional Enforcement Team (COMET).
Former Wells Fargo Branch Manager and Two Others Charged with Laundering Proceeds of Trademark ScamRead the Press Release
Charges against the former manager of a Wells Fargo Bank branch in Glendale, California, were unsealed late yesterday, alleging that he was part of a scheme to launder the proceeds of a mass mailing scam targeting holders of U.S. trademarks. Two other California men had previously been charged for perpetrating the scam and committing bank fraud in furtherance of the scam.
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, 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 made the announcement.
Albert Yagubyan, 36, of Burbank, California; Artashes Darbinyan, 36, of Glendale; and Orbel Hakobyan, 41, of Glendale, were charged with one count of conspiracy to commit money laundering in a second superseding indictment filed on July 14, 2016, in the Central District of California. Yagubyan was also charged with four counts of concealment money laundering, one count of false bank entries and one count of witness tampering. Hakobyan was charged with three counts of concealment money laundering. Darbinyan was 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.
According to the second superseding indictment, Yagubyan was the manager of a Wells Fargo branch in Glendale until October 2015. The second superseding 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.
Yagubyan is charged with a separate count of 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.
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 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. Trial Attorneys William E. Johnston and Brian K. Kidd of the Criminal Division’s Fraud Section are prosecuting the case.
Former Montromgery Lawyer Pleads Guilty to Defrauding HUDRead the Press Release
Montgomery, Ala. – A Georgia resident who was previously a practicing attorney in Montgomery, Alabama pled guilty Thursday, July 14, 2016 to wire fraud affecting a financial institution, announced the United States Attorney’s Office. Christopher B. Pitts, 46, now of Atlanta, Georgia, admitted to operating a scheme to defraud the United States Department of Housing and Urban Development (HUD).
According to court documents, between 2005 and 2008 Pitts served as a closing attorney for the sales of all homes owned by HUD in northern and central Alabama. As the closing attorney, it was Pitts’s responsibility to receive purchase money, pay closing costs, and transmit to HUD the remaining purchase money. In court yesterday, Pitts admitted that, on numerous occasions, he did not actually remit payments to HUD. As a result of Pitts’s fraud, HUD never received the money it was owed for the sales of HUD-owned houses. Pitts was arrested on February 8, 2016 following a federal grand jury indictment on this charge.
A date for sentencing has yet to be scheduled. Pitts faces a maximum sentence of 30 years in prison, as well as substantial monetary penalties.
This case was investigated by HUD’s Office of Inspector General. Assistant U.S. Attorney Jonathan S. Ross is prosecuting the case.
Former Manager of HD York Federal Credit Union Sentenced for Evading Federal Income Taxes on Embezzled FundsRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Sherry Garner, age 54, Red Lion, PA, the former CEO-Manager of the HD York Federal Credit Union in York, Pennsylvania was sentenced by United States District Court Judge John E. Jones, III in Harrisburg to 24 months in federal prison for evading federal income taxes on money she embezzled from the Credit Union.
According to United States Attorney Peter Smith, Garner previously pled guilty on February 19, 2016, to a Criminal Information charging her with bank larceny and tax evasion. Garner embezzled $252,106 from the HD York Credit Union between 2010 and 2013 and failed to report $70,983 in stolen income on her federal income tax return for 2011, thereby evading $19,069 in federal income taxes.
In a plea agreement filed with the Information, Garner also admitted the total tax loss to the IRS on her unreported $252,106 income ($58,034 in 2010, $70,983 in 2011, $64,308 in 2012, and $58,780 in 2013) was $62,704. Garner agreed to make restitution to both the York Federal Credit Union and the IRS as ordered by the Court.
Judge Jones ordered Garner to pay $252,106 in restitution to CUMIS Insurance Society, Inc. and $62,704 to the IRS. Garner is to surrender to the Bureau of Prisons on September 19, 2016.
The case was investigated by the Harrisburg Offices of the Internal Revenue Service and the Federal Bureau of Investigation and was prosecuted by Assistant U.S. Attorney Kim Douglas Daniel.
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Former Leader of FAM Mob Sentenced for Violating RICO ActRead the Press Release
Memphis, TN – The former leader of notorious street gang FAM Mob has been sentenced to federal prison for violating the RICO Act. Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee, announced the sentence today.
According to information presented in court, James Earl McCracken, 28, of Memphis, Tennessee, served as the head governor of FAM Mob. The street gang has a presence throughout the Northern section of Memphis and Shelby County, including Frayser, Northhaven, Raleigh and Millington. FAM Mob's hierarchy consists of a head governor, governors, CEOs, "big homies" and "little homies."
As head governor of FAM Mob, McCracken was responsible for calling membership meetings and enforcing violations of the gang's rules.
Alleged racketeering acts associated with FAM Mob include robberies, drug trafficking, and murder.
The RICO Act prohibits persons associated with a criminal enterprise from engaging in unlawful activities, such as robbery, murder, drug trafficking, and other crimes affecting interstate and foreign commerce.
One example of McCracken’s criminal activity took place in July 2011. Along with other members of FAM Mob, McCracken robbed a drug dealer who was trafficking narcotics manufactured outside of the district.
In November 2014, McCracken was indicted for violating the Hobbs Act, which makes it a federal crime to commit a robbery that interferes with interstate commerce.
Following McCracken’s 2014 indictment, Jarvis Lewis became the new head governor of FAM Mob. Lewis was later arrested for felony firearm possession, and convicted by a federal jury of the crime in November 2015. Lewis was sentenced to 120 months in federal prison in February 2016.
In December 2015, McCracken pleaded guilty before U.S. District Judge John T. Fowlkes Jr. to one count of racketeering conspiracy.
In July 2016, Jude Fowlkes sentenced McCracken to 120 months in federal prison.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Multi-Agency Gang Unit.
Assistant U.S. Attorneys Kevin Whitmore and Reagan Taylor prosecuted this case on the government’s behalf.
Former Lawrence Hall of Science Employee Sentenced to 18 Months in Prison for EmbezzlementRead the Press Release
OAKLAND - DeSondra Michell Ward was sentenced yesterday to 18 months in prison, and ordered to pay $389,948.57 in restitution for stealing from and defrauding the University of California, Berkeley’s Lawrence Hall of Science, announced United States Attorney Brian J. Stretch and FBI Special Agent in Charge John F. Bennett.
Ward pleaded guilty on February 9, 2016, to five counts of theft from a program receiving federal funds. According to the plea agreement, Ward admitted to stealing $389,948.57 while working at U.C. Berkeley, a public university, from 2008 through 2014. Ward worked at U.C. Berkeley’s Lawrence Hall of Science, first as an administrative assistant with the Full Option Science System (“FOSS”) program and later as a financial analyst with budget and finance responsibilities over FOSS. Ward admitted to using the university’s travel systems to arrange personal air travel for herself, her family, and her friends, and also purchasing tickets which she sold to individuals for her own profit. She also admitted that she used her university-issued procurement card for personal transactions and processed vouchers to generate payments to herself, her family, and her friends.
The Lawrence Hall of Science’s FOSS program developed and maintains a science curriculum for elementary and middle school students. FOSS also undertakes research projects to improve the learning and teaching of science. Each year U.C. Berkeley receives funding and other benefits from the federal government. In fact, 25% of the Lawrence Hall of Science’s annual budget is comprised of federal funding.
Ward, 45, formerly of Pinole, California, was charged in an information filed on November 16, 2015. She was charged with five counts of theft from programs receiving federal funds in violation of 18 U.S.C. § 666(a)(1)(A). The sentence was handed down by The Honorable Jeffrey S. White, U.S. District Court Judge, following Ward’s guilty pleas to all five charged counts. Judge White also sentenced the defendant to a three-year period of supervised release and ordered her to forfeit $308,817.58. Ward is currently out of custody on bond, but was ordered to surrender and begin serving her sentence on October 20, 2016.
Andrew S. Huang is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Vanessa Quant and Stephanie Mitchell. The prosecution is the result of an investigation by the Federal Bureau of Investigation, with significant assistance from the University of California Police Department and U.C. Berkeley’s Audit and Advisory Services.
Former Healthcare Employee Pleads Guilty to Participating in Stolen Identity Tax Refund Fraud Conspiracy Using Patient InformationRead the Press Release
A Montgomery, Alabama, resident pleaded guilty today to one count of a multi-object conspiracy to commit identity theft and wire fraud and one count of aggravated identity theft, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.
According to court documents, Alana Wells worked at a healthcare company where she had access to patient information protected from disclosure under the Health Insurance Portability and Accountability Act of 1996. Wells admitted that she stole the names, dates of birth and social security numbers of patients from her employer’s database and provided these identities to co-conspirator Fredrick Hill. Hill then provided the stolen personal identification information to another co-conspirator, Christopher Davis, who, along with others, used it to file fraudulent federal tax returns with the Internal Revenue Service (IRS) requesting tax refunds. Hill and Davis were previously prosecuted and sentenced to 74 months and 60 months in prison, respectively.
A date for Wells’ sentencing hearing has not yet been set. She faces a maximum sentence of five years in prison for conspiracy and a mandatory two-year prison sentence for aggravated identity theft, as well as a term of supervised release and monetary penalties.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Jason H. Poole and Kathryn A. Kimball of the Tax Division and Assistant U.S. Attorney Jonathan S. Ross of the Middle District of Alabama, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Former Federal Employee Labor Union President Sentenced in White Plains Federal Court for Stealing Union FundsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that WILLIAM DAVIS, the former president of the Federation of Government Employees (“AFGE”) Local 1119 (the “Union”), was sentenced today to 15 months in prison in connection with embezzling approximately $150,000 of the Union’s funds. DAVIS pled guilty on April 6, 2016, and was sentenced today in White Plains federal court by U.S. District Judge Kenneth M. Karas.
According to the allegations in the Indictment:
The AFGE is a national labor union that represents approximately 670,000 workers employed by the federal government across all agencies and departments. The Union is a local union chapter of AFGE that represents approximately 300 employees of the Veterans Affairs Medical Center-Montrose (the “Hospital”), and maintains offices on the Hospital’s campus in Montrose, New York. At all times relevant to the Indictment, the Union maintained a checking account (the “Union Bank Account”) for Union funds, including members’ dues payments.
From at least January 2008 through in or about October 2012, DAVIS served as the elected president of the Union. As the president, it was DAVIS’s duty to preside over the Union’s meetings and conduct the day-to-day affairs of the Union. During that time period, DAVIS used a debit card for the Union Bank Account (the “Union Debit Card”) issued to a deceased former Union officer to make hundreds of charges and cash withdrawals for non-Union expenses and without the authorization of the Union. For example, DAVIS used the Union Debit Card at stores and online retailers including Apple, Best Buy, Wal-Mart, and Radio Shack, purchasing items for his personal benefit including electronics, music downloads, video games, cellphones, men’s clothing, gasoline, and cigarettes. DAVIS purchased money orders using the Union Debit Card that totaled at least $30,000 from the United States Post Office in Montrose, New York. On several occasions, DAVIS paid for rent for his residence using the money orders he purchased with the Union Debit Card. DAVIS also used the Union Debit Card to make over 900 cash withdrawals from ATM machines in the Southern District of New York and elsewhere, in the process incurring thousands of dollars of ATM fees and fees for insufficient funds. Between January 2008 and June 2012, the unauthorized purchases and cash withdrawals that DAVIS made with the Union Debit Card totaled in excess of $120,000.
In order to conceal his misuse and theft of Union funds, DAVIS also made false statements and omissions in annual Department of Labor Office of Labor-Management Standards reports for the fiscal years 2008, 2009, 2010, and 2011, reporting a total of only $7,000 in allowances and disbursements to himself as president.
In addition to the prison sentence, DAVIS, 56, of Wappingers Falls, New York, was sentenced to two years of supervised release. The Court further ordered that Davis pay $150,000 in restitution.
Mr. Bharara thanked and praised the U.S. Department of Labor Office of Labor-Management Standards and the U.S. Department of Veterans Affairs, Office of the Inspector General for their work in this investigation.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorney Jessica K. Feinstein is in charge of the prosecution.