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Monday 11 April 2016
Woman Sentenced for Defrauding Disabled Couple of More Than $500,000Read the Press Release
Memphis, TN – A woman has been sentenced to federal prison for defrauding a disabled couple of more than $500,000 in less than a year. Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee, announced the sentence today.
According to information presented in court, Martha Bizzell, 41, of Crump, Tennessee, served as the guardian for an elderly and disabled couple between November 2011 and July 2012.
In November 2011, James Robertson, then 81, of Peoria, Illinois, was severely beaten in a home invasion at his residence. He lived at the home with his wife, Helen, who suffered from dementia. Although James Robertson survived the attack, he was no longer able to live on his own and care for his wife.
At the time of the home invasion, the estate of the Robertsons was valued at approximately $1.5 million. The couple had more than 50 rental properties in Illinois; approximately $585,000 in Caterpillar Inc. stock; approximately $638,000 in other investment accounts; and approximately $83,000 in credit union accounts.
Shortly after the home invasion, Bizzell, a distant relative of James Robertson, was appointed as temporary guardian of the Robertsons’ estate by order of Peoria County Probate Court. She was made the couple’s plenary guardian in January 2012, and subsequently moved them to Crump, Tennessee.
Bizzell executed her scheme in several ways: Property was donated or deeded to others; stock investments were liquidated; funds were transferred from the Robertsons’ accounts to Bizzell’s personal account; and funds were transferred to two guardianship accounts Bizzell established for the Robertsons in her name.
In December 2011, the defendant had checks mailed from Bank of New York, Mellon — located in Jersey City, New Jersey — to a post office box she used in Savannah, Tennessee.
Bizzell used the Robertsons’ finances to purchase two automobiles and several properties in her name, one of which was rented to a tenant. Bizzell also purchased a commercial property in Savannah, Tennessee. The property was turned into a frozen yogurt shop called Happy Katz. The defendant’s teenage daughter ran the establishment.
In July 2015, Bizzell pleaded guilty before U.S. District Judge Samuel H. Mays Jr. to one count of executing a scheme to defraud and obtain money and property by means of false and fraudulent pretenses.
On Friday, April 8, 2016, Judge Mays sentenced Bizzell to 41 months in federal prison. She was also ordered to pay $587,207.57 in restitution.
The case was investigated by the U.S. Postal Inspection Service and the Federal Bureau of Investigation.
Assistant U.S. Attorney Debra Ireland prosecuted this case on the government’s behalf.
White River Woman Charged with Assaulting a Federal OfficerRead the Press Release
United States Attorney Randolph J. Seiler announced that a White River, South Dakota, woman has been indicted by a federal grand jury for Assaulting, Resisting, Opposing, and Impeding a Federal Officer.
Jessica Moran, age 39, was indicted on March 15, 2016. She appeared before U.S. Magistrate Judge Mark A. Moreno on April 5, 2016, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 8 years in custody and/or a $250,000 fine, 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
It is alleged that on December 10, 2015, Moran assaulted a corrections officer, while in custody at the Adult Corrections Facility in Rosebud. Moran allegedly kicked the corrections officer twice in the legs.
The charge is merely an accusation and Moran is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Carrie G. Sanderson is prosecuting the case.
Moran was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
Washington, D.C. Getaway Driver Sentenced to 8 Years in Prison for Carjacking and Gun ChargesRead the Press Release
Greenbelt, Maryland – U.S. District Judge Paul W. Grimm sentenced David Nathaniel Peebles, age 32, of Washington, D.C., late Friday, April 8, 2016 to eight years in prison followed by three years of supervised release for carjacking and being a felon in possession of a gun.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Assistant Director in Charge Paul M. Abbate of the Federal Bureau of Investigation’s Washington Field Office; Chief Hank Stawinski of the Prince George’s County Police Department; Prince George’s County State’s Attorney Angela D. Alsobrooks; Chief J. Thomas Manger of the Montgomery County Police Department; Montgomery County State’s Attorney John McCarthy; Maryland Attorney General Brian E. Frosh; Chief Alan Goldberg of the Takoma Park Police Department; Chief Ronald A. Pavlik Jr.of the Metro Transit Police Department; Chief Cathy L. Lanier of the Metropolitan Police Department; and Chief Earl L. Cook of the Alexandria (City) Police Department.
According to his plea agreement, on February 8, 2012, Peebles, Jeffrey Franklin and another co-conspirator drove to the Manchester Road area of Silver Spring, Maryland, where they spotted an individual parking a 2008 Infiniti. As the individual got out of the vehicle, Peebles remained in the car while his co-conspirators approached the individual. At gunpoint, the co-conspirators demanded the keys to the car. The co-conspirators took the victim’s purse and keys, and then drove away in the Infiniti, with Peebles following behind.
On February 12, 2012, Peebles and two co-conspirators drove to the Russell Avenue area of Mount Rainier, Maryland, looking for carjacking targets. Again, Peebles remained in the car while the two co-conspirators approached victims in a 2004 Acura TL. One co-conspirator pointed a gun at the driver’s head and demanded that the driver get out of the car. The driver complied. The second co-conspirator approached the passenger in the Acura and demanded the passenger’s purse. When the victim did not immediately comply, the co-conspirator struck the victim in the face several times. During the assault, the other co-conspirator took the victim’s property. The co-conspirators then drove away in the Acura while Peebles followed.
During the course of the conspiracy, Peebles or a co-conspirator possessed a pistol with an obliterated serial number to use in the carjackings. Peebles had at least one previous felony conviction and therefore was prohibited from possessing a firearm or ammunition.
Jeffrey Carl Franklin, age 29, of Greenbelt, Maryland, previously pleaded guilty to his role in the carjacking conspiracy and is scheduled to be sentenced on June 21, 2016 at 9:00 a.m. Another member of the conspiracy, Samuel Damien Bynum, age 25, of Washington, D.C., pleaded guilty and was sentenced to 207 months in prison for conspiring to use a gun during carjackings, using a gun during a carjacking, carjacking and being a felon in possession of a gun and ammunition.
United States Attorney Rod J. Rosenstein commended the FBI; the Prince George’s County, Montgomery County, Takoma Park, Metro Transit, Alexandria and Metropolitan Police Departments; the Prince George’s County and Montgomery County State’s Attorney’s Offices; and Maryland Attorney General’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Thomas M. Sullivan and Special Assistant Matthew L. Paeffgen, who prosecuted the case.
Visalia Man Sentenced to over 12 Years in Prison for Sex Trafficking of a MinorRead the Press Release
FRESNO, Calif. — Tyrell Richmond, 33, of Visalia, was sentenced today by U.S. District Judge Lawrence O’Neill to 12 years and seven months in prison for sex trafficking a minor, United States Attorney Benjamin B. Wagner announced.
According to court documents, on June 21, 2014, FBI’s Fresno Child Exploitation Task Force and members of the Fresno Police Department’s Vice Unit conducted undercover operations targeting prostitution rings that appeared to utilize underage victims. During the investigation, they detained three 16-year-old girls, all of whom were runaways, at a motel in Fresno. Further investigation revealed that Richmond had prostituted the girls for about one week, first in Visalia and then in Fresno. Richmond collected all of the money received by the girls, and did not permit them to leave their motel rooms, other than to get ice. Richmond pleaded guilty on December 14, 2015.
At the sentencing hearing, one of the victims delivered powerful testimony about the trauma she endured at the hands of Richmond. In imposing the sentence, Judge O’Neill described Richmond’s conduct as “horrid” and noted the serious impact it had on the victims in this case.
“Today's sentencing highlights the commitment of the FBI, the Fresno Police Department, and the Visalia Police Department to combating the commercial sexual exploitation of minors in the region and the success of Operation Cross Country,” said Supervisory Special Agent Robert Guyton of the FBI Sacramento field office Fresno resident agency's violent crime squad. “Richmond's sentence offers justice for his victims and serves as a warning to others who may attempt to exploit minors.”
This case was the product of an investigation by the Federal Bureau of Investigation, the Visalia Police Department, and the Fresno Police Department. Assistant United States Attorney Vincenza Rabenn prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about Internet safety education.
United States Attorney and IRS, Special Agent in Charge, Urge Taxpayers to Beware of Fraudulent Tax Return Preparers and Tax Scheme PromotersRead the Press Release
Remind Taxpayers To Pay Federal Income Taxes On Time And In Full
LOUISVILLE, Ky. – United States Attorney John E. Kuhn, Jr., joined by Tracey D. Montaño, Special Agent in Charge, IRS Criminal Investigation, urged the public today, to avoid dishonest tax-return preparers and their fraudulent schemes, and urged taxpayers to pay federal income taxes on time and in full, during a press conference today, at the U.S. Attorney’s Office in Louisville.
“Recently, my Office has successfully prosecuted a number of tax preparers who unlawfully falsified returns,” stated U.S. Attorney Kuhn. “As the filing deadline approaches, it is imperative the public guard against the many dishonest and fraudulent schemes of some return preparers as well as ensure their own returns are accurate and honest.”
“The U.S. Tax system is based on a principle of voluntary compliance and is the cost we pay for government services we use on a daily basis. It is important for the honest taxpayer to have confidence that when they pay their taxes, their neighbors and co-workers are doing the same,” stated Tracey D. Montaño, Special Agent in Charge. “IRS-Criminal Investigation will continue to partner with the U.S. Attorney’s Office to ensure that those committing schemes to defraud the government and the taxpaying public are caught and prosecuted for their crimes. Those Americans who file accurate, honest and timely returns can be assured that the government will hold accountable those who don't."
During the press conference, U.S. Attorney Kuhn noted several recent successful prosecutions by his Office, with investigative assistance by the IRS Criminal Investigation division, for return preparer fraud and individual income tax fraud.
Last month, Tiffany Elliott pleaded guilty to preparing fraudulent tax returns through her business, Tax Time, Inc., by creating false deductions including investment expenses, business losses, charitable deductions, and work expenses. The loss to the United States Treasury was $255,938, exclusive of penalties and interest. Tara L. Mitchell and Mechelle Blankenship, of Logan County, Kentucky, were charged with falsely claiming education credits for taxpayers who were not entitled to them. And in a Civil Complaint by the Department of Justice Tax Division against NJ Mobile Tax Service, owner and preparer Napoleon Jackson was permanently barred from tax preparation. Jackson allegedly promised customers he could increase their chances of a higher tax return. Jackson allegedly falsified charitable donations, education credits, claims of dependents, and deductions for homes not owned by taxpayers. Preparers who charge clients a percentage of their tax refund intentionally prepare false returns to increase their clients’ refund, and thus their own fees.
As in past years, the IRS has designated return preparer fraud as one of 2016’s “Dirty Dozen” tax scams to avoid during return filing season. U.S. Attorney Kuhn and S.A.C Montaño urged taxpayers to remain diligent to ensure their returns are accurate even if they are prepared by a professional, noting that taxpayers are ultimately responsible for the content of their own returns.
Further, across the nation and in the Western District of Kentucky, individuals are prosecuted for stealing social security numbers, then filing completely fictitious returns to obtain fraudulent refunds. Recently Erica Spencer, of Louisville, was sentenced to 48 months in prison, and ordered to pay $94,000 in restitution for using identities to file fraudulent federal income tax returns and receive fraudulent federal income tax refunds in their names. Also, prosecuted in the Western District of Kentucky, Fernando Herrera, who was sentenced to 48 months in prison for a scheme that included obtaining identification documents from Mexican nationals, applying for false taxpayer identification numbers, filing fictitious returns, and obtaining fraudulent refunds totaling more than $730,000.
The IRS website has information about how to guard against identity theft: Identity Protection: Prevention, Detection and Victim Assistance information on reporting tax fraud How Do You Report Suspected Tax Fraud Activity?, and how to Report Phishing and Online Scams.
U.S. Attorney Kuhn further reminded tax payers of their obligation to file accurate federal income taxes on time and to pay in full. “Unfortunately, we all too often see taxpayers themselves filing false returns. We sometimes have cases where taxpayers fail to report income, or falsely pad deductions with false entries such as business expenses, charitable contributions, educational expenses, or dependent care credits. This is against the law, and we prosecute these cases,” concluded U.S. Attorney Kuhn. Last month, a Madisonville, Kentucky business owner was sentenced to 30 months in prison and ordered to pay $649,506.15 in restitution for filing false tax returns. Gholam A. Sattar-Shamsabadi failed to report the proceeds of his admitted insurance fraud as taxable income during a six year period.
IRS, SAC Montaño emphasized the investigative work done by the IRS Criminal Investigation office, alongside the U.S. Attorney’s Office, to find dishonest preparers and shut them down. Further, Montaño warned the public of phone scams and so called phishing scams. The IRS has seen a surge of phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation and license revocation, among other things. Also, taxpayers need to be on guard against fake emails or websites looking to steal personal information. According to Montaño, the IRS will never send taxpayers an email about a bill or refund out of the blue. Montaño warned the public to not click on one claiming to be from the IRS and to be wary of strange emails and websites that may be nothing more than scams to steal personal information.
During this last week before the tax filing deadline, those in need of assistance may contact the IRS Customer Service Phone Numbers - Individuals: 800-829-1040 or Businesses:800-829-4933
U.S. taxpayers filed approximately 150 million returns in 2014. According to statistics available from the Treasury Inspector General for Tax Administration, the Internal Revenue Service (IRS) identified more than 2.1 million of those returns that claimed fraudulent refunds totaling more than $15.7 billion.
United Kingdom Man Pleads Guilty to Child PornographyRead the Press Release
FARGO - U. S. Attorney Christopher C. Myers announced that on April 11, 2016, Simon William Riley, 21, Swansea, Wales, United Kingdom, pled guilty before Judge Ralph R. Erickson to one charge of Sexual Exploitation of a Minor and two charges of Advertising Material Involving the Sexual Exploitation of Minors. All three charges carry a minimum-mandatory sentence of 15 years’ incarceration and a maximum sentence of 30 years’ incarceration.
This case came to the attention of law enforcement after the National Center for Missing and Exploited Children (NCMEC) notified members of the North Dakota Internet Crimes Against Children (ICAC) Task Force that a website on the Tor Network contained child pornographic images of a girl located in Fargo, North Dakota. Subsequently, ICAC task force members identified the 13-year-old victim who told law enforcement that she sent the sexually explicit images to another female via Kik Messenger. In reality, this “female” was Simon Riley, an adult male. After Riley obtained these images, he posted advertisements on the website found on the Tor Network. The advertisement contained a link to a file-sharing site where other Tor users could access the images depicting the victim. Law enforcement determined that the victim’s images were accessed on more than 20,000 occasions by Tor users located throughout the world.
Through further investigation, the ND Bureau of Criminal Investigations and Homeland Security Investigation agents identified Simon Riley in the United Kingdom as the individual responsible for posting the above-mentioned advertisements. Based upon information provided to them by the ND ICAC task force, the National Crime Agency in the United Kingdom executed a search warrant at Riley’s residence on September 10, 2015. Foreign law enforcement recovered evidence at Riley’s residence which linked him to the user account that posted the advertisements on the Tor Network and which contained a link to a separate file-sharing site which contained the victim’s images.
Riley was later arrested on September 11, 2015, while vacationing in Orlando, Florida.
Judge Erickson has set sentencing for July 13, 2016, at the U. S. District Court, Fargo, ND.
This case is being investigated by the Department of Homeland Security - Homeland Security Investigations in Grand Forks, ND, as well as the North Dakota Bureau of Criminal Investigation and the Fargo Police Department.
Assistant U. S. Attorney Jennifer Puhl is prosecuting the case.
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by U.S. Attorneys’ Offices throughout the nation, Project Safe Childhood, in conjunction with Internet Crimes Against Children Task Force (ICAC), help federal, state, and local law enforcement agencies enhance their investigative responses to offenders who use the Internet, online communications systems, or computer technology to sexually exploit children. The ICAC Program is a national network of 61 coordinated task forces engaging in proactive investigations, forensic investigations, and criminal prosecutions. Project Safe Childhood also helps to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
U.S. Court of Appeals for the Third Circuit Denies Former Lackawanna County Commissioner’s Latest AppealRead the Press Release
HARRISBURG- The United States Attorney’s Office for the Middle District of Pennsylvania announced today that the U.S. Court of Appeals for the Third Circuit denied former Lackawanna County Commissioner Robert C. Cordaro’s latest appeal regarding his 2011 conviction on multiple public corruption charges. Specifically, the Court of Appeals denied Cordaro’s request for a Certificate of Appealability of U.S District Court Judge A. Richard Caputo’s August 18, 2015, denial of Cordaro’s motion for a new trial based on ineffective assistance of counsel. The Appellate Court also denied Cordaro’s motion for release from custody.
In it’s Order denying Cordaro’s appeal, the Appellate Court stated:
The application for a Certificate of Appealability is denied because [Mr. Cordaro] has not made a substantial showing of the denial of a Constitutional right. For the reasons given by the District Court, [Mr. Cordaro] has not shown that jurists of reason would debate the denial of his claims. In particular, jurists of reason would not debate whether [Mr. Cordaro] failed to establish prejudice for any of his claims of ineffective assistance of counsel.
Cordaro was convicted in 2011, along with former Lackawanna County Commissioner Anthony Munchak, on multiple charges including racketeering and other public corruption offenses relating to the Commissioner’s demands for payments and other benefits from individuals and entities doing business with Lackawanna County. Cordaro was sentenced on January 30, 2012, to serve 132 months’ imprisonment and the Third Circuit affirmed the conviction and sentence on May 31, 2013.
After the conviction and sentenced were affirmed, Cordaro filed a motion to vacate his conviction and sentence based on alleged ineffective assistance of his trial counsel. A three-day hearing was held in January 2015 and the District Court denied the motion in August 2015.
Cordaro appealed that ruling and the decision today by the Third Circuit Court of Appeals affirmed the District Court’s August 2015 ruling.
The case was investigated by the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service. At trial, the government was represented by Assistant United States Attorneys Lorna N. Graham, William S. Houser and Bruce Brandler.
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Two men sent to prison for role in forced-labor scheme that exploited Guatemalan minors at Ohio egg farmRead the Press Release
Conrado Salgado Soto, 53, of Mexico, was sentenced to 51 months in prison today in the Northern District of Ohio for his role in luring Guatemalan minors and adults into the United States on false pretenses, then using threats of physical harm to compel their labor at egg farms in Ohio.
The announcement was made by Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division; Acting U.S. Attorney Carole S. Rendon of the Northern District of Ohio and Special Agent in Charge Stephen D. Anthony of the FBI’s Cleveland Division.
Salgado Soto pleaded guilty to the labor-trafficking conspiracy in August 2015.
According to the indictment, which was unsealed on July 2, 2015, members of the labor-trafficking conspiracy recruited workers from Guatemala, some as young as 14 or 15 years old, falsely promising them good jobs and a chance to attend school in the United States. Salgado’s co-conspirators then smuggled and transported the workers to a trailer park in Marion, Ohio, where he and his co-conspirators ordered them to live in dilapidated trailers and to work at physically demanding jobs at Trillium Farms for up to 12 hours a day for minimal amounts of money. The work included cleaning chicken coops, loading and unloading crates of chickens, de-beaking chickens and vaccinating chickens. Eight minors and two adults were identified in the indictment as victims of the forced labor scheme.
Another co-defendant, Pablo Duran Jr., was sentenced today to 14 months in prison for alien harboring. Duran Jr. pleaded guilty in December 2015.
“The defendants operated a criminal enterprise that exploited the hopes and dreams of young people eager to make better lives for themselves here in the United States,” said Principal Deputy Assistant Attorney General Gupta. “The Department of Justice will continue to vigorously prosecute and hold accountable those who target innocent men, women and children for trafficking and threaten violence to assert their illegal control.”
“These defendants preyed upon vulnerable children with false promises of a better life and instead forced them into manual labor in horrific conditions on an egg farm for little or no pay,” said Acting U.S. Attorney Rendon. “We will continue to prosecute human traffickers, whether they force children into the commercial sex industry or enslave them in rural parts of our district. Protecting the most vulnerable people in our communities will always remain a top priority.”
“These defendants preyed upon vulnerable children and families,” said Special Agent in Charge Anthony. “This investigation revealed how they used threats, humiliation, deprivation and other means to keep these minors working and enriching the defendants.”
Aroldo Castillo-Serrano, 33, led the conspiracy and pleaded guilty in December 2015 to the labor-trafficking conspiracy, forced labor, witness tampering and alien harboring. He will be sentenced on June 27, 2016. Ana Angelica Pedro Juan, 22, pleaded guilty in February 2016 to the trafficking conspiracy and her sentencing hearing is set for June 27. Pedro Juan’s role in the scheme included falsely representing herself to government officials as a family friend of the minor victims in order to have them released to her custody, as well as overseeing the trailers where the victims were housed and arranging for their wages to be transferred to co-conspirators in Guatemala and elsewhere.
Two other co-defendants, Conrado Salgado-Borbon and Bartolo Dominguez, pleaded guilty to immigration offenses in connection with this case and were sentenced to six and 12 months, respectively.
The investigation is ongoing. The case is being investigated by the FBI Cleveland Division’s Mansfield Resident Agency, the Department of Homeland Security, the Marion Police Department and the Marion County Sherriff’s Office. The case is being jointly prosecuted by Trial Attorney Dana Mulhauser of the Civil Rights Division and Assistant U.S. Attorney Chelsea Rice of the Northern District of Ohio.
Two charged with heroin traffickingRead the Press Release
WHEELING, WEST VIRGINIA – A federal grand jury has returned an indictment charging Shawn Lamont McClain, 36, of Lisbon, Ohio, and Angel Rae Klein, 27, of Wheeling, with heroin trafficking, United States Attorney William J. Ihlenfeld, II, announced.
Klein and McClain are alleged to have possessed and sold heroin throughout late 2014 and early 2015 in Ohio County, West Virginia. In several instances, the defendants allegedly sold heroin containing fentanyl. McClain, also known as “Gucci,” is specifically alleged to have sold heroin in February 2015 near Madison Elementary School in Wheeling. He was previously sentenced to ten years in prison in the Northern District of West Virginia for heroin trafficking in March 2015.
Both defendants are charged with one count of “Conspiracy to Distribute Heroin and Fentanyl.” Klein is further charged with two counts of “Distribution of Heroin,” one count of “Distribution of Heroin and Fentanyl,” and one count of “Possession with Intent to Distribute Heroin.” McClain is further charged with one count of “Distribution of Heroin and Fentanyl” and one count of “Distribution of Heroin and Fentanyl within 1,000 feet of a Protected Location.” McClain faces between one and forty years in prison and a fine of up to $2,000,000 on the protected location charge. The defendants each face up to 20 years in prison and a fine of up to $1,000,000 on each of the other counts. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendants.
United States Attorney William Ihlenfeld is prosecuting the case on behalf of the government. The Ohio Valley Drug and Violent Crime Task Force, a HIDTA-funded initiative, is investigating.
An indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.
Two Plead Guilty to Tax Refund ConspiracyRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that two defendants have pleaded guilty in federal court to their roles in a tax refund conspiracy.
Theresa R. Gee, 45, of Kansas City, Mo., pleaded guilty today before U.S. District Judge Gary A. Fenner to one count of conspiracy to defraud the government. Co-defendant Nathaniel J. Justice, 43, formerly of Kansas City, Mo., pleaded guilty to the same charge on Thursday, April 7, 2016.
By pleading guilty, Gee and Justice admitted that they participated in a conspiracy from March 29, 2011, to Feb. 10, 2013, to submit false claims for federal income tax refunds.
The tax refund scheme involved the creation of false and fraudulent Form W-2s. The false W-2 forms reported fictitious employer information, fictitious income, fictitious income tax withholdings, fictitious dependents and other false information. Gee and Justice provided false W-2 forms to others (“filers”) who would then use the false W-2s to fraudulently file for federal and state income tax returns. Sometimes they would escort the filer inside H&R Block and assist the filer in the preparation of the fraudulent tax forms.
Gee and Justice recruited filers into the conspiracy through family relationships, friendships and other personal contacts. Conspirators promised each filer a portion or percentage of the illegally obtained refund. Gee and Justice also paid a fee – typically $500 – to those who referred a filer who was willing to participate in the scheme.
At the completion of the tax preparation process Gee and Justice retained the filer’s Emerald Card. (The Emerald Card would access an ATM account upon which the return would automatically be down-loaded.) Gee and Justice withdrew the refunds, gave a portion of each refund to the filer and kept a substantial portion for themselves.
The loss attributable to Gee and Justice is as much as $160,000. Gee and Justice are jointly and severally liable for restitution.
Under federal statutes, both Gee and Justice are subject to a sentence of up to 10 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office.
This case is being prosecuted by Senior Litigation Counsel Gregg Coonrod. It was investigated by IRS-Criminal Investigation.
Two Defendants Sentenced for Role in Forced Labor Scheme that Exploited Guatemalan Minors at Ohio Egg FarmsRead the Press Release
Conrado Salgado Soto, 53, of Mexico, was sentenced to 51 months in prison today in the Northern District of Ohio for his role in luring Guatemalan minors and adults into the United States on false pretenses, then using threats of physical harm to compel their labor at egg farms in Ohio.
The announcement was made by Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division; Acting U.S. Attorney Carole S. Rendon of the Northern District of Ohio and Special Agent in Charge Stephen D. Anthony of the FBI’s Cleveland Division.
Salgado Soto pleaded guilty to the labor-trafficking conspiracy in August 2015.
According to the indictment, which was unsealed on July 2, 2015, members of the labor-trafficking conspiracy recruited workers from Guatemala, some as young as 14 or 15 years old, falsely promising them good jobs and a chance to attend school in the United States. Salgado’s co-conspirators then smuggled and transported the workers to a trailer park in Marion, Ohio, where he and his co-conspirators ordered them to live in dilapidated trailers and to work at physically demanding jobs at Trillium Farms for up to 12 hours a day for minimal amounts of money. The work included cleaning chicken coops, loading and unloading crates of chickens, de-beaking chickens and vaccinating chickens. Eight minors and two adults were identified in the indictment as victims of the forced labor scheme.
Another co-defendant, Pablo Duran Jr., was sentenced today to 14 months in prison for alien harboring. Duran Jr. pleaded guilty in December 2015.
“The defendants operated a criminal enterprise that exploited the hopes and dreams of young people eager to make better lives for themselves here in the United States,” said Principal Deputy Assistant Attorney General Gupta. “The Department of Justice will continue to vigorously prosecute and hold accountable those who target innocent men, women and children for trafficking and threaten violence to assert their illegal control.”
“These defendants preyed upon vulnerable children with false promises of a better life and instead forced them into manual labor in horrific conditions on an egg farm for little or no pay,” said Acting U.S. Attorney Rendon. “We will continue to prosecute human traffickers, whether they force children into the commercial sex industry or enslave them in rural parts of our district. Protecting the most vulnerable people in our communities will always remain a top priority.”
“These defendants preyed upon vulnerable children and families,” said Special Agent in Charge Anthony. “This investigation revealed how they used threats, humiliation, deprivation and other means to keep these minors working and enriching the defendants.”
Aroldo Castillo-Serrano, 33, led the conspiracy and pleaded guilty in December 2015 to the labor-trafficking conspiracy, forced labor, witness tampering and alien harboring. He will be sentenced on June 27, 2016. Ana Angelica Pedro Juan, 22, pleaded guilty in February 2016 to the trafficking conspiracy and her sentencing hearing is set for June 27. Pedro Juan’s role in the scheme included falsely representing herself to government officials as a family friend of the minor victims in order to have them released to her custody, as well as overseeing the trailers where the victims were housed and arranging for their wages to be transferred to co-conspirators in Guatemala and elsewhere.
Two other co-defendants, Conrado Salgado-Borbon and Bartolo Dominguez, pleaded guilty to immigration offenses in connection with this case and were sentenced to six and 12 months, respectively.
The investigation is ongoing. The case is being investigated by the FBI Cleveland Division’s Mansfield Resident Agency, the Department of Homeland Security, the Marion Police Department and the Marion County Sherriff’s Office. The case is being jointly prosecuted by Trial Attorney Dana Mulhauser of the Civil Rights Division and Assistant U.S. Attorney Chelsea Rice of the Northern District of Ohio.
Three Eagle Butte Men Charged with Assault with a Dangerous Weapon and Assault Resulting in Serious Bodily InjuryRead the Press Release
United States Attorney Randolph J. Seiler announced that three Eagle Butte, South Dakota, men have been indicted by a federal grand jury for Assault with a Dangerous Weapon and Assault Resulting in Serious Bodily.
Tahlon Ducheneaux, age 23, Raymond Uses The Knife, III, a/k/a Yamni Uses The Knife, III, age 25, and Chase Dolphus, age 21, were indicted on February 17, 2016. All three made initial appearances before U.S. Magistrate Judge Mark A. Moreno, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 20 years in custody and/or a $500,000 fine, 6 years of supervised release, and $200 to the Federal Crime Victims Fund. Restitution may also be ordered.
The Indictment alleges that on or about July 25, 2015, Ducheneaux, Uses The Knife, and Dolphus unlawfully assaulted another human being, resulting in serious bodily injury.
The charges are merely accusation and Ducheneaux, Uses The Knife, and Dolphus are presumed innocent until and unless proven guilty.
The investigation is being conducted by the Cheyenne River Sioux Tribe. Assistant U.S. Attorney Jay Miller is prosecuting the case.
Ducheneaux and Dolphus were released on bond pending trial. Uses The Knife was remanded to the custody of the U.S. Marshals Service pending trial, which has been set for April 26, 2016.
Tennessee Tax Return Preparer Charged with Filing False Tax ReturnsRead the Press Release
A federal grand jury sitting in Nashville, Tennessee, returned an indictment on April 6, which was unsealed today, against a Nashville woman charging her with six counts of assisting in the preparation of false tax returns, two counts of filing false personal tax returns and one count of obstructing the due administration of the internal revenue laws, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney David Rivera for the Middle District of Tennessee.
According to the indictment, Tracey Brown operated a tax return preparation business, Total Tax Services, from her residence. It is alleged that between 2006 and 2010, she filed false tax returns on behalf of her clients. On these returns, Brown claimed a variety of fraudulent deductions, including medical expenses, charitable contributions and unreimbursed employee expenses. After one of her clients was audited, Brown provided false documentation to the Internal Revenue Service (IRS). Brown is also alleged to have under-reported the gross receipts and sales figures on her personal income tax returns for the years 2008 and 2009.
If convicted, Brown faces a statutory maximum sentence of three years in prison for each count. She also faces substantial monetary penalties, supervised release and restitution.
An indictment merely alleges that crimes have been committed. Defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rivera commended special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Tom Jaworski and Trial Attorneys Alex Effendi and Nathan Brooks of the Tax Division, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
St. Louis Area Man Sentenced for Role in Cocaine ConspiracyRead the Press Release
Keith Harris, 60, of St. Louis, Missouri, was sentenced on April 8, 2016, in federal court, for his role as being courier for a drug distribution organization that funneled cocaine from Houston, Texas, to the Metro-East area, between April 2011 and February 2013, the Acting United States Attorney for the Southern District of Illinois, James L. Porter, announced today. Harris was sentenced to 32 months in prison, 2 years’ supervised release, ordered to pay a $200 fine and a $100 special assessment. To date, all ten other individuals charged as a result of this investigation have been convicted and sentenced.
Evidence in support of the sentencing was obtained in an investigation which was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF initiative is designed to bring federal, state, and local law enforcement agencies and resources together to identify, target and dismantle large national and international drug trafficking organizations. This case was investigated by the Drug Enforcement Administration (DEA). This case was prosecuted by Assistant United States Attorney Laura V. Reppert and Assistant United States Attorney Jonathan S. Drucker.
Shreveport man pleads guilty to drug and firearm chargesRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced that a Shreveport man pleaded guilty last week to possession of marijuana with intent to distribute and possession of firearms in furtherance of drug trafficking.
Latrenton D. Washington, 28, of Shreveport, pleaded guilty Friday before U.S. District Judge Elizabeth E. Foote to one count of possession with intent to distribute marijuana and one count of possession of a firearm in furtherance of a drug trafficking crime. According to the guilty plea, while executing a warrant for another defendant at Washington’s residence on August 12, 2014, Shreveport police and Louisiana Probation and Parole agents discovered marijuana, scales and packaging items along with a loaded Romarm WASR-10 semi-automatic rifle with a drum magazine holding 65 rounds of 7.62x39 mm ammunition and a loaded Taurus .45 caliber pistol in Washington’s bedroom.
Washington faces up to five years in prison on the possession with intent to distribute marijuana count and an additional mandatory sentence of five years to life in prison for the possession of a firearm in the furtherance of the drug trafficking count. The five year sentence for the firearm is mandatory and runs consecutive to his sentence on the possession with intent to distribute marijuana count. Additionally, he faces five years of supervised release and a $250,000 fine for each count. A sentencing date of August 4, 2016 was set.
This investigation and prosecution is part of Project Safe Neighborhoods, which is a Department of Justice initiative to promote firearm safety and to reduce firearm crimes by preventing the possession and use of firearms by dangerous and persistent felons and others not authorized to possess a firearm.
The ATF, Louisiana State Probation and Parole, and Shreveport Police Department conducted the investigation. Assistant U.S. Attorney Robert W. Gillespie Jr. is prosecuting the case.
San Antonio Accountant Pleads Guilty to Obstructing the IRSRead the Press Release
In San Antonio, Richard Molina Soto, owner of RMS & Associates, pleaded guilty to corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws by failing to pay over $280,000 to the Internal Revenue Service on behalf of his clients, announced United States Attorney Richard L. Durbin, Jr., and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge William Cotter.
Appearing before United States Magistrate Judge Pamela Mathy this afternoon, Soto pleaded guilty to one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws.
According to court records, from November 2009 to November 2011, Soto convinced his clients that he was a Certified Public Accountant who could prepare their income tax returns. Once the tax forms had been completed, Soto told his clients their balance due and provided them with the option of paying through RMS what they owed the IRS. Ultimately, Soto stole monies from clients who chose to pay through RMS. The total amount which Soto should have, but failed to pay to the IRS on behalf of his clients, was $282,107.01.
Soto, who remains on bond pending sentencing, faces up to three years in federal prison. Sentencing is scheduled for 9:00am on July 5, 2016, before Senior United States District Judge David Alan Ezra.
This case was investigated by special agents with the Internal Revenue Service-Criminal Investigation. Assistant United States Attorney William R. Harris is prosecuting this case on behalf of the Government.
Rapid City Man Indicted for Failure to Register as a Sex OffenderRead the Press Release
United States Attorney Randolph J. Seiler announced that a Rapid City, South Dakota, man has been indicted by a federal grand jury for Failure to Register as a Sex Offender.
Joseph Hatchett, age 39, was indicted on March 22, 2016. Hatchett appeared before U.S. Magistrate Judge Daneta Wollmann on April 4, 2016, and pleaded not guilty to the Indictment.
The maximum penalty upon conviction is up to 10 years in custody and/or a $250,000 fine, a lifetime of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The charge relates to Hatchett failing to register and update his registration as a convicted sex offender between January 15, 2016, and March 10, 2016.
The charge is merely an accusation and Hatchett is presumed innocent until and unless proven guilty.
The investigation is being conducted by the U.S. Marshals Service. Assistant U.S. Attorney Eric Kelderman is prosecuting the case.
Hatchett was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has been set for June 7, 2016.
Previously Convicted Felon Exiled to Eight Years in Prison for Gun and Drug OffensesRead the Press Release
Greenbelt, Maryland – U.S. District Judge Theodore D. Chuang sentenced Deon Thornton, age 32, of Suitland, Maryland, today to eight years in prison, followed by four years of supervised release, for distribution of crack cocaine and for possession of a firearm by a convicted felon.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Michael B. Boxler of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Washington Field Division; Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration - Washington Field Division; Chief M. Jay Farr of the Arlington County, Virginia Police Department; and Chief Earl L. Cook of the Alexandria, Virginia Police Department.
According to his plea agreement, on May 28 and June 10, 2015, the ATF and DEA used a confidential source to purchase 56 grams and 62 grams of crack cocaine, respectively, from Thornton. On June 9, 2015, ATF and DEA used an undercover officer to purchase a .357 caliber revolver from Thornton. On June 23, 2015, a confidential source for ATF and DEA purchased two guns, a 9mm pistol and a .22 caliber pistol, both with obliterated serial numbers, from Thornton.
Thornton has previous felony drug and gun convictions and is therefore prohibited from possessing a gun or ammunition.
United States Attorney Rod J. Rosenstein commended the ATF, DEA, Alexandria Police Department and Arlington Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Lindsay Eyler Kaplan, who prosecuted the case.
Premiertox Pays U.S. and Tennessee $2.5 Million to Resolve False Claims Act LawsuitRead the Press Release
PremierTox 2.0, Inc. has paid $2.5 million to resolve alleged violations of the False Claims Act, announced David Rivera, United States Attorney for the Middle District of Tennessee. PremierTox previously did business in Tennessee under the name Nexus and is a company that provides drug urine screening services to citizens of Tennessee and Kentucky. The government alleged that PremierTox submitted false claims when billing Medicare, TennCare and Kentucky Medicaid for drug urine screening services.
“Enforcement of the False Claims Act continues to be a top priority of the U.S. Attorney’s Office,” said U.S. Attorney David Rivera. “We will continue to intervene in these matters when the protection of taxpayers’ interest and integrity of our nation’s healthcare industry becomes necessary.”
The settlement resolves the government’s allegations that PremierTox and Nexus submitted three types of false claims during the period of September 2011 through June 2014, while PremierTox was under its former ownership and management. The government alleged that PremierTox had a swapping arrangement, in which Nexus gave below cost discounts on its urine drug screen tests to patients in Tennessee without insurance, in exchange for physicians’ referring their patients with Medicare or TennCare coverage to Nexus. The government also contended that, in Tennessee, Nexus submitted excessive claims to Medicare and TennCare for laboratory testing that was beyond what was medically reasonable and necessary. In addition, the government claimed that, in Kentucky, PremierTox provided point of care testing cups to medical offices free of charge to induce those providers to use PremierTox’s services.
“Our office will continue to work with our state and federal partners to combat healthcare fraud,” said Attorney General Herbert H. Slatery III. “In order to protect Tennessee tax dollars, it is imperative that we pursue those individuals attempting to take advantage of the system.”
Under the settlement agreement, PremierTox paid a total of $2,500,000. Of that amount, $2,125,000 covers the conduct in Tennessee, and $325,000 covers the conduct in Kentucky. The United States will receive $1,757,300 under the settlement, and Tennessee will receive $325,200.
"Medically unnecessary lab tests and financial incentives from labs to doctors in exchange for referrals are costing the taxpayers millions of dollars," said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. "This settlement is one of many that are sending a strong message to the lab industry that they need to clean up their act."
The allegations resolved by today’s settlement were originally raised in two lawsuits filed against PremierTox in Tennessee and Kentucky under the qui tam, or whistleblower provision of the False Claims Act. This provision allows private citizens to bring civil suits on behalf of the government and to share in any recovery.
The lawsuit in Tennessee was filed by a former office manager of a pain clinic in Cookeville. The relator in this case will receive $361,250. The relator who brought the lawsuit in Kentucky is the former CEO of PremierTox and will receive and $56,250.
The Tennessee lawsuit remains pending against several other defendants whom the United States and Tennessee allege violated the False Claims Act and the Tennessee Medicaid False Claims Act. The remaining claims include allegations that Lenoir City chiropractor Matthew Anderson operated the Cookeville Center for Pain Management as a pill mill in which a nurse practitioner wrote prescriptions that Medicare and TennCare paid for, that had no legitimate medical purpose; and that Dr. David Florence likewise operated a pill mill at his Center for Advanced Medicine in Manchester, Tennessee.
This case was investigated by the U.S. Department of Health & Human Services Office of Inspector General and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit. The United States is represented in these cases by Assistant U.S. Attorneys Ellen Bowden McIntyre for the Middle District of Tennessee and Ben Schecter of the Western District of Kentucky. The State of Tennessee is represented by Assistant Attorney General Phillip Bangle.
The two cases are docketed as United States ex rel. Norris v. Anderson, No. 2:13-cv-00035 (M.D. Tenn.) and United States ex rel. Duncan v. Nexus Lab, Inc., No. 1:14-cv-89-R (W.D. Ky.). The claims settled by this agreement are allegations only, and there has been no determination of liability.
Pine Ridge Man Indicted for AssaultRead the Press Release
United States Attorney Randolph J. Seiler announced that a Pine Ridge, South Dakota, man has been indicted by a federal grand jury for Assault with a Dangerous Weapon and Assault Resulting in Serious Bodily Injury.
Franklin Long Black Cat, a/k/a Franklin Long, age 22, was indicted on March 22, 2016. He appeared before U.S. Magistrate Judge Daneta Wollman on March 25, 2016, and pled not guilty to the Indictment.
The maximum penalty upon conviction on Count I and II is up to 10 years in custody and/or a $250,000 fine, 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The charges relate to an incident that occurred on February 14, 2016, where Long Black Cat assaulted the victim with a dangerous weapon, resulting in serious bodily injury.
The charge is merely an accusation and Long Black Cat is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Bureau of Indian Affairs Office of Justice Services. Assistant U.S. Attorney Megan Poppen is prosecuting the case.
Long Black Cat was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has been set for May 31, 2016.
One Fresno Defendant Sentenced to Federal Prison, Another Enters Guilty Plea for Structuring Financial Transactions Involving Drug Trafficking ProceedsRead the Press Release
FRESNO, Calif. B Aseel Al-Saber, 24, of Fresno, was sentenced today by United States District Judge Lawrence J. O’Neill to one year and a day in federal prison for conspiring to structure cash transactions, United States Attorney Benjamin B. Wagner announced. In addition, co-defendant Brandon Thomas, 26, of Fresno, pleaded guilty today to conspiring to structure cash transactions. He is scheduled to be sentenced on August 29, 2016, before Judge O’Neill.
According to court documents, Al-Saber and seven co-defendants opened and maintained bank accounts for the purpose of funneling cash proceeds of marijuana trafficking from Florida and other states back to California. Al-Saber’s bank account was used to deposit and withdraw more than $72,000 in cash in amounts of $10,000 or less to prevent Currency Transaction Reports from being filed by the banks on those transactions. The cash funneled through Al-Saber’s bank account was the proceeds marijuana trafficking. In addition, Al-Saber recruited two other individuals to have more than $30,000 in proceeds of marijuana trafficking funneled through their respective bank accounts.
According to his plea agreement, over $700,000 passed through accounts opened and maintained by Thomas in structured transactions. In total, the government alleges that members of the conspiracy involving Al-Saber and Thomas structured more than $7.5 million in cash that was the proceeds of marijuana trafficking.
This case is being brought as part of Operation Footprint, a nationwide law enforcement initiative led by the U.S. Attorney’s Offices, the Internal Revenue Service- Criminal Investigation, the Drug Enforcement Administration, and the United States Postal Inspection Service. Operation Footprint targets large drug trafficking organizations by identifying the transfer of drug proceeds through financial institutions, bulk cash smuggling and other forms of money transfers. Operation Footprint is focused on bringing criminal charges based on Bank Secrecy Act violations in addition to violations of the Controlled Substances Act and the Money Laundering Control Act.
This case is also the product of the Organized Crime Drug Enforcement Task Force (OCDETF), a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies. Assistant U.S. Attorney Grant B. Rabenn is prosecuting the case.
Previously, co-defendant Chad Riffle was sentenced to five years imprisonment and co-defendant Jeremy Murphy was sentenced to fifteen months in prison. In addition, co-defendants Peter Capodieci, Miguel Gonzalez and Bree Benson have pleaded guilty to conspiring to structure financial transactions and are awaiting sentencing. The maximum statutory penalty for conspiracy to structure is five years in prison and a $250,000 fine. The actual sentences, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Co-defendant Ashley Starling Thomas is scheduled for trial on May 24, 2016. The charges against Ashley Thomas are only allegations; she is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Okreek Man Charged with Involuntary ManslaughterRead the Press Release
United States Attorney Randolph J. Seiler announced that an Okreek, South Dakota, man has been indicted by a federal grand jury for Involuntary Manslaughter.
Donovan Wright, age 48, was indicted on February 17, 2016. He appeared before U.S. Magistrate Judge Mark A. Moreno on April 5, 2016, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 8 years in custody and/or a $250,000 fine, 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
It is alleged that on January 30, 2016, in Todd County, South Dakota, Wright killed a man by operating a motor vehicle in a grossly negligent manner.
The charge is merely an accusation and Wright is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Rosebud Sioux Tribe Law Enforcement Services and Federal Bureau of Investigation. Assistant U.S. Attorney Kirk W. Albertson is prosecuting the case.
Wright was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
New York man pleads guilty to role in credit card fraud schemeRead the Press Release
WHEELING, WEST VIRGINIA – Dante Callum, 38, originally from New York, pled guilty to credit card fraud in federal court, United States Attorney William J. Ihlenfeld, II, announced.
Callum unlawfully purchased stolen credit card numbers. He then conspired with another individual to fabricate debit cards using the stolen credit card numbers. Callum would use the fabricated debit cards to purchase legitimate gift cards from a variety of retail outlets. He would then sell the gift cards in exchange for authentic United States currency.
Callum pled guilty to an Information charging him with one count of “Fraud Related to Access Devices.” He faces up to 10 years in prison and a fine of up to $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney David Perri prosecuted the case on behalf of the government. The Ohio County, West Virginia Sheriff’s Department and the United States Secret Service investigated.U.S. Magistrate Judge James E. Seibert presided.
Multiple defendants headed to prison for Federal heroin crimesRead the Press Release
HUNTINGTON, W.Va. – Three defendants were sentenced to federal prison today for heroin crimes, announced Acting United States Attorney Carol Casto. Eddie William Randall, 36, of Detroit, was sentenced to ten years in federal prison for possession with intent to distribute 100 grams or more of heroin and for possession of a firearm in furtherance of a drug trafficking crime. Krishauna Deshay Brown, 37, of Huntington, was sentenced to a year and three months in federal prison for possession with intent to distribute heroin. In a separate drug prosecution, Terrance Donte Hensley, 20, of Huntington, was sentenced to three years and a month in federal prison for distribution of heroin.
From December 2014 until their arrests in 2015, Randall, Brown, and others conspired to distribute heroin that was transported from Detroit to the Huntington area. Brown resided at 209 West 9th Avenue in Huntington, and she allowed Randall to store and distribute heroin from her residence. On February 26, 2015, officers with the Huntington FBI Drug Task Force executed a search warrant at Brown’s residence and seized heroin, along with other paraphernalia used to sell heroin. Brown admitted that she possessed the heroin at her residence and intended to distribute it.
On June 25, 2015, officers executed search warrants at 2736 Rear 4th Avenue and 1128 25th Street in Huntington. Officers utilized a confidential informant to make several controlled purchases of heroin from Randall in and around those residences leading up to the search. Officers located Randall inside the 4th Avenue residence and seized approximately 40 grams of heroin, a loaded 9mm pistol, and $13,030 in cash. During the search of the 25th Street residence, officers seized approximately 280 grams of heroin and a loaded .45 caliber pistol. Randall admitted that he possessed the heroin from both residences for distribution and that he possessed the pistols in an effort to protect himself from theft or robbery of heroin or cash.
As the result of a separate drug investigation, Terrance Donte Hensley admitted that on five occasions between June 26 and July 9, 2015, he distributed heroin at various locations in Hurricane and Huntington to a confidential informant working with law enforcement.
The investigation of Brown and Randall was conducted by the Huntington FBI Drug Task Force, the Huntington Police Department, and the Cabell County Sheriff’s Department. Assistant United States Attorney Joseph F. Adams is responsible for the prosecutions of Brown and Randall. The investigation of Hensley was conducted by the Metropolitan Drug Enforcement Network Team, the Huntington Police Department, and the DEA Task Force. Assistant United States Attorney Jennifer Rada Herrald is in charge of the prosecution of Hensley. Chief United States District Judge Robert C. Chambers imposed the sentences.
These cases are part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs and heroin. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin in communities across the Southern District.
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Morgantown, WV man sentenced for unlawful possession of stolen firearmsRead the Press Release
CLARKSBURG, WEST VIRGINIA – William Dennison, 24, of Morgantown, West Virginia, was sentenced today to 33 months in prison for unlawful possession of stolen firearms, United States Attorney William J. Ihlenfeld, II, announced.
Dennison was discovered in Monongalia County, West Virginia in possession of two stolen firearms, including a .38 caliber revolver and a .22 caliber pistol. He pled guilty in November 2015 to one count of “Possession of Stolen Firearms.”
Assistant U.S. Attorney David Perri prosecuted the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated.
U.S. District Judge Irene M. Keeley presided.
Modesto Developer Sentenced for Mortgage Fraud SchemeRead the Press Release
FRESNO, Calif. — United States District Judge Anthony W. Ishii sentenced Aruna Kumari Chopra, 66, of Modesto, today to one year and one day in prison, to be followed by a year of home confinement, for her mail fraud conviction in connection with a mortgage fraud scheme, United States Attorney Benjamin B. Wagner announced.
According to court documents, in 2008, Chopra purchased property on Dale Road in Modesto that she intended to develop into a shopping center to be called “The Plaza at Dale.” She defrauded lenders by filing documents with the Stanislaus County Recorder=s Office that contained forged signatures in an attempt to conceal liens on the property from her lenders. The loans made by the defrauded lenders on the property totaled approximately $8.9 million. Chopra pleaded guilty on November 30, 2015.
This case was the product of an investigation by the Federal Bureau of Investigation, the Stanislaus County District Attorney’s Office, and the Federal Housing Finance Office, Office of Inspector General, working together through the San Joaquin Mortgage Fraud Task Force. The U.S. Attorney and the FBI created the San Joaquin Valley Mortgage Fraud Task Force in 2009 to further the prosecution of mortgage fraud cases arising out of the southern half of the Central Valley. Assistant United States Attorney Mark J. McKeon prosecuted the case.
Mission Man Charged with Aggravated Sexual Abuse of a ChildRead the Press Release
United States Attorney Randolph J. Seiler announced that a Mission, South Dakota, man has been indicted by a federal grand jury for Aggravated Sexual Abuse of a Child.
Jeremiah Jay Swalley, age 33, was indicted on March 22, 2016. He appeared before U.S. Magistrate Judge Mark A. Moreno on April 8, 2016, and pled not guilty to the Indictment.
The maximum penalty upon conviction is thirty years up to life in custody and/or a $250,000 fine, up to life of supervised release, $100 to the Federal Crime Victims Fund, and a $5,000 assessment to the Domestic Trafficking Fund. Restitution may also be ordered.
The Indictment alleges that between July 1, 2015, and July 31, 2015, Swalley knowingly engaged in and attempted to engage in a sexual act, by the use of force, with a child who had not attained the age of 16 years, and was, at least, four years younger than Swalley.
The charge is merely an accusation and Swalley is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation and the Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Kirk W. Albertson is prosecuting the case.
Swalley was remanded to the custody of the U.S. Marshals Service pending trial, which has been set for June 7, 2016.
Media Advisory: Town Hall Meeting Prescription Pain Killers and the Heroin EpidemicRead the Press Release
CEDAR RAPIDS, IA – The United States Attorney’s Office, in partnership with the Mercy Medical Center and the Eastern Iowa Heroin Initiative, has scheduled a Town Hall Meeting on April 13th to discuss prescription pain killers and the heroin epidemic making its way into Eastern Iowa. Drug overdose is the leading cause of accidental death in the U.S., with 47,055 lethal drug overdoses in 2014. Opioid addiction is driving this epidemic, with 18,893 overdose deaths related to prescription pain relievers, and 10,574 overdose deaths related to heroin in 2014. Dubuque joins other Iowa cities facing this threat.
Viewed as a national challenge requiring a community solution, the meeting will bring the community together to exchange information and to discuss strategies to address the epidemic plaguing our state.
Visit www.facebook.com/EasternIowaHeroinInitiative to learn more. You can also join us at #HeroinTownHall.
U.S. Attorney Kevin W. Techau will be present. The event is open to the public.
Event Details
When: April 13, 2016 (flyer is attached)
Where: Grand River Center (Ballroom), 500 Bell Street, Dubuque, Iowa
Time: Begins at 6:00 p.m. - 8:00 p.m.
Link to flyer: /media/827151/dl?inline
Press wishing to attend should contact AUSA Steve Young at 319-731-4037, or by emailing him at [email protected]. Interview opportunities will be available.
Follow us on Twitter @USAO_NDIA.
Mass. Man Charged with Attempted Coercion and Enticement of a Minor in AlbanyRead the Press Release
ALBANY, NEW YORK – David Rancourt, age 61, of Palmer, Massachusetts, was arrested and charged on Saturday with attempting to meet a 14-year-old boy for sex.
The announcement was made by United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent in Charge of the Albany Division of the Federal Bureau of Investigation.
Rancourt faces at least 10 years and up to life in prison on the charge of attempted coercion and enticement of a minor. He also faces a term of post-imprisonment supervised release of at least 5 years and up to life, a fine of up to $250,000, and mandatory registration as a sex offender. Today, United States Magistrate Judge Daniel J. Stewart ordered Rancourt detained pending trial.
The charges in the complaint are merely accusations. The defendant is presumed innocent until proven guilty.
According to the criminal complaint, Rancourt posted an online advertisement titled "Dad looking for a son," in which he solicited sexual role-play encounters. Following email exchanges with a Colonie Police Department officer acting undercover, Rancourt travelled to Albany in order to meet at a prearranged time and place to engage in sexual activities with a person he believed to be a 14-year-old boy.
This case is being investigated by the Federal Bureau of Investigation and the Colonie Police Department, and is being prosecuted by Assistant U.S. Attorney Solomon B. Shinerock.
This case is prosecuted as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys’ Offices, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.
Maryland Business Owner Sentenced to Two Years in Prison for Failing to Pay over $1.4 Million in TaxesRead the Press Release
WASHINGTON – A Maryland man was sentenced today to 24 months in prison for failing to pay over $1.4 million in federal personal income tax and employment taxes, announced U.S. Attorney Channing D. Phillips, Special Agent in Charge Thomas Jankowski of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI), and Assistant Director in Charge Paul M. Abbate, of the FBI’s Washington Field Office.
James T. Redding, 48, of Reistertown, Md., pled guilty in August 2015 to one count of attempted tax evasion and one count of willful failure to collect or pay over tax. He was sentenced by the Honorable Senior Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia. Following his prison term, he will be placed on three years of supervised release. Redding also must pay a total of $1,473,054 in restitution to the IRS.
“James Redding was a serial tax evader who committed numerous violations over a five-year period, resulting in a $1.4 million loss to the federal government,” said U.S. Attorney Phillips. “This investigation and prosecution show that there are significant consequences for those who try to avoid paying their fair share of taxes. Hopefully this case will deter others from committing such crimes.”
“For years, Mr. Redding defrauded the American tax system through deceptive personal and corporate tax returns,” said Assistant Director in Charge Abbate. “By evading his income tax and payroll tax obligations, he cheated the hard-working taxpayers in this country for his own personal gain. The FBI and the IRS will vigorously pursue justice against those individuals who commit tax fraud and evasion.”
“Today, Mr. Redding has to face the consequences of failing to report all of his income on his federal tax returns and paying the tax he owed,” said Special Agent in Charge Jankowski. “In today’s economic environment, it is imperative the American taxpayer feel confident that everyone is paying their fair share. When criminals evade their taxes, honest Americans end up having to pay more.”
According to court documents, Redding was the president, sole shareholder and sole director of James T. Redding, Inc., doing business as JTR Inc., JTR Finishing Contractors, and JTR Construction. The company was primarily engaged in the business of interior construction in the District of Columbia and Maryland.
Redding filed false and fraudulent tax returns for James T. Redding, Inc., for the 2009 and 2010 calendar years. He did not file returns for the corporation for the 2011, 2012, and 2013 calendar years.
Redding was required to report all of the corporation’s income on his personal tax returns and pay taxes for the income. For the tax years of 2009 through 2012, according to court documents, Redding filed false and fraudulent U.S. personal income tax returns on behalf of himself and his spouse. He and his spouse did not file a personal income tax return for the 2013 calendar year. The total income tax due and owing from the defendant and his spouse to the United States for the tax years 2009 through 2013 was approximately $600,000.
Finally, from the beginning of the fourth quarter of the 2010 calendar year through the fourth quarter of the 2012 calendar year, Redding willfully failed to pay over all of the federal income tax and Federal Insurance Contributions Act (FICA) taxes withheld from JTR employees. Instead of paying over the taxes that he knew were due, he used those funds to pay JTR creditors and for the benefit of himself and his family members. In total, JTR did not pay over $873,054 that was due to the IRS.
This case was investigated by IRS-Criminal Investigation and the FBI’s Washington Field Office, with assistance from the Office of Labor Racketeering and Fraud Investigations, Office of Inspector General, of the U.S. Department of Labor. Assistance also was provided by Criminal Investigator Juan Juarez, Financial Analyst Bryan Snitselaar, and Paralegal Specialists C. Rosalind Pressley and Toni Donato, all of the U.S. Attorney’s Office for the District of Columbia. The case was prosecuted by Assistant U.S. Attorney Anthony Saler, of the U.S. Attorney’s Office for the District of Columbia. Assistance was provided by Trial Attorney Kenneth C. Vert, of the Department of Justice’s Tax Division.
Man Sentenced to 365 Months in Prison for Carjacking That Resulted in Murder in October of 2010Read the Press Release
SAN JUAN, Puerto Rico – Kenneth Ubiles-Rosario was sentenced to 365 months in prison for a carjacking that resulted in death, announced United States Attorney for the District of Puerto Rico Rosa Emilia Rodríguez-Vélez. Ubiles-Rosario pleaded guilty on January 13, 2015 before U.S. Magistrate Judge Bruce McGiverin.
The indictment, filed on November 6, 2013, charged Ubiles-Rosario and a coconspirator with carjacking and possession of a firearm during the commission of a crime of violence. According to the statement of facts in the plea agreement, defendant Ubiles Rosario and his co-defendant met on October 21, 2010 and agreed to commit a robbery. The next day they intercepted the victim, Luis Anibal Torres-González, a local businessman, as he drove along his customary route. The defendants forced the victim to a stop and Ubiles exited his own car and forced the victim at gunpoint into the passenger seat. Ubiles and his co-defendant took the victim to a secluded spot by the side of a cliff near the Lago Dos Bocas in Arecibo, PR and forced the victim out of the car at gunpoint. Ubiles shot the victim once in the back of the head with a revolver and left the victim at the bottom of a cliff. Afterwards the defendants abandoned the victim’s car in an urbanization in Arecibo.
The case was investigated by FBI and the Puerto Rico Police Department and was prosecuted by Assistant US Attorney Nicholas Cannon.
Lower Brule Man Sentenced for Failure to Register as a Sex OffenderRead the Press Release
United States Attorney Randolph J. Seiler announced that a Lower Brule, South Dakota, man convicted of Failure to Register as a Sex Offender was sentenced on April 11, 2016, by U.S. District Judge Roberto A. Lange.
Glen Eagle Thunder, age 41, was sentenced to 21 months of custody, followed by 5 years of supervised release, and a special assessment to the Federal Crime Victims Fund of $100.
Eagle Thunder was indicted by a federal grand jury on December 18, 2015. He pled guilty on February 9, 2016.
The conviction stems from Eagle Thunder failing to register as a sex offender between September 1, 2015, and November 10, 2015.
This case was investigated by the U.S. Marshals Service. Assistant U.S. Attorney Meghan N. Dilges prosecuted the case.
Eagle Thunder was immediately turned over to the custody of the U.S. Marshals Service.
Judge Gives Former Pittsburgh Man 70-Month Prison Sentence for Marijuana TraffickingRead the Press Release
ERIE, Pa. - A former resident of Pittsburgh, Pennsylvania, has been sentenced in federal court to 70 months in jail and ordered to forfeit a 2008 BMW X5 SUV, a 2007 Lexus GS 350 Sedan, several cellular phones, a tablet computer and a laptop on his conviction of violating federal drug laws, United States Attorney David J. Hickton announced today.
United States District Judge David S. Cercone imposed the sentence on Vincent Jamal Carter, 38.
According to information presented to the court, from in and around September 2013 to in and around January 2015, Carter conspired with three co-defendants to possess with intent to distribute and distribute kilograms of marijuana that had been shipped to Erie from California.
Assistant United States Attorney Marshall J. Piccinini prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Homeland Security Investigations, the Drug Enforcement Administration, the Pennsylvania State Police, U.S. Border Patrol, the Internal Revenue Service, Criminal Investigation; the Pennsylvania Office of Attorney General Organized Crime Section, the U.S. Postal Inspection Service, the U.S. Marshals Service, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives for the investigation leading to the successful prosecution of Carter.
Jefferson County, Kentucky, Tax Return Preparer Charged with Aiding in the Preparation of False Tax ReturnsRead the Press Release
Falsified taxpayer deductions
Owes Internal Revenue Service $255,938
LOUISVILLE, Ky. – A Jefferson County, Kentucky tax preparer pleaded guilty in United States District Court, on March 28, 2016, before Magistrate Judge Colin H. Lindsay, to aiding in the preparation of false tax returns, announced United States Attorney John E. Kuhn, Jr.
Defendant Tiffany Elliott admitted to preparing fraudulent tax returns through her business, Tax Time, Inc., between January 5, 2010, and February 15, 2013, by creating false deductions for certain items, including losses from a sole proprietorship, or by creating false earned income from a sole proprietorship, while knowing that the taxpayers were not entitled to claim the specified deductions or earned income from a sole proprietorship.
As a term of the plea, Elliott signed and executed Internal Revenue Service (IRS) Form 870 to acknowledge she owes $255,938 to the IRS, exclusive of penalties and interest. Further, the charges carry a combined maximum prison term of 48 years, a combined fine of $1,600,000 and a one year term of supervised release.
Sentencing before Chief Judge Joseph H. McKinley Jr. is scheduled for July 5, 2016, in Louisville at 11:00am.
Assistant United States Attorney Amanda E. Gregory is prosecuting the case. The Internal Revenue Service (IRS) Criminal Investigation office is conducting the investigation.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2016. The IRS has some tips on its website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on here. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Jamaican national pleads guilty to identity theftRead the Press Release
CHARLESTON, W.Va. – A Jamaican national pleaded guilty today to identity theft, announced Acting United States Attorney Carol Casto. Roland Jason Duckett, 31, admitted that he used another person’s identity in a fraudulent attempt to obtain a United States passport.
Duckett admitted that he entered the United States from Jamaica in 2007 and then remained in the United States after his visa expired. In August 2015, he paid another individual for the use of identification documents, including that person’s birth certificate and Social Security card. Duckett used these documents to obtain a West Virginia driver’s license in the other individual’s name. Duckett admitted that in November 2015 he mailed a passport application from Charleston in an attempt to obtain a United States passport. His passport application was flagged for fraud by the United States Department of State and Duckett never received a U.S. passport. Agents with the Diplomatic Security Service of the United States Department of State uncovered the fraud and determined Duckett’s true identity.
Duckett faces up to five years in federal prison when he is sentenced on July 8, 2016.
The investigation of this case was conducted by the United States Department of State, Diplomatic Security Service, with the assistance of the West Virginia State Police. Assistant United States Attorney Blaire L. Malkin is in charge of the prosecution. The plea hearing was held before United States District Judge John T. Copenhaver, Jr.
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Investment Advisor Sentenced for Near $2 Million FraudRead the Press Release
PHILADELPHIA - Michael Donnelly, 47, of Lecanto, Florida, was sentenced today to 99 months in prison for an investment scheme that bilked his friends and clients of nearly $2 million. Donnelly pleaded guilty on December 21, 2015, to one count of wire fraud and with one count of securities fraud. In addition to the prison term, U.S. District Court Judge Edward G. Smith ordered restitution in the amount of $1,990,150.24, three years of supervised release, and a $200 special assessment.
Donnelly was an investment advisor and registered representative who served as president of Donnelly, Steen & Company, doing business as Coastal Investment Advisors, Inc., Coastal Equities, Inc., and Donnelly Advisors Group, which he also owned. Between November 2007 and August of 2014, Donnelly persuaded about a dozen investors, many of whom were senior citizens, to allow him to invest their money in securities or certificates of deposit. But instead of investing his clients’ money, Donnelly appropriated the investment funds for his own use.
Donnelly provided at least one client with brokerage account statements belonging to another client who held dozens of large cap stocks, in an effort to conceal that he had appropriated the monies for his own use. When an investing couple asked Donnelly for their funds, he persuaded another investor to partially liquidate an annuity under the guise that there was an opportunity to buy out another investor. His plan was to use those funds to pay the investing couple rather than buying out an investment held by another client.
The case was investigated by the FBI with assistance from the Securities and Exchange Commission Division of Enforcement. It was prosecuted by Assistant U.S. Attorney Linwood C. Wright, Jr.
Ice Methamphetamine Prosecution Sends 23 Individuals to Federal PrisonRead the Press Release
ABINGDON, VIRGINIA – The investigation into a major ice methamphetamine conspiracy that distributed large amounts of the drug into southwest Virginia, North Carolina, Tennessee, and elsewhere concluded last week with the sentencing of the final defendant, United States Attorney John P. Fishwick Jr. announced today.
Antonio Hernandez Mohedano, of Barstow, California, previously pled guilty to conspiracy to distribute methamphetamine. Last week in District Court, Mohedano was sentenced to 210 months of federal incarceration.
“These individuals brought numerous pounds of a very pure form of methamphetamine into our area from western states—methamphetamine most likely made in Mexico. They imported this poison into our communities simply to make a profit, without any regard for the devastating damage it causes to those addicted to this drug and the broader community,” United States Attorney John P. Fishwick Jr. said today. “These major drug investigations take significant time and resources, and the law enforcement agencies that participated in dismantling this conspiracy should be commended for their important work.”
Mohedano is the last of 24 defendants convicted as a result of a long-running investigative operation headed by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, and U.S. Drug Enforcement Administration. The operation dismantled a methamphetamine distribution network that brought numerous pounds of “ice” methamphetamine—a particularly pure form of that drug—into the area between approximately 2011 and 2014. Most of this ice methamphetamine was brought into southwest Virginia and elsewhere from sources of supply in Arizona or California. The ice methamphetamine was transported to the area in a variety of ways, including by being hidden in live animals and transported over interstate highways, and via common carriers, like UPS. Return payment to the sources of supply out west occurred through hand-to-hand cash payments and various types of electronic money transactions, including “Green Dot” prepaid cards.
The District Court sentenced 23 defendants in this case to a term of imprisonment. In addition, the District Court ordered various defendants in the case to forfeit money and property, including real property used in the crime, firearms, and ammunition.
The investigation of the case was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Washington County Sheriff’s Office, the Russell County Sheriff’s Office, the Tazewell County Sheriff’s Office, the Smyth County Sheriff’s Office, the Bristol, Virginia Sheriff’s Office, the Abingdon Police Department, the Bristol, Virginia Police Department, the Virginia State Police, the U.S. Marshals Service and the U.S. Drug Enforcement Administration. Special Assistant United States Attorney Kevin L. Jayne prosecuted the case for the United States.
Husband and Wife Owners of Chicago Physical Therapy Company Indicted in Schemes to Defraud Medicare and Force LaborRead the Press Release
A Chicago couple was charged in an indictment with a scheme to use their health care business to defraud Medicare out of millions of dollars, while also conspiring to employ a woman against her will.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zachary T. Fardon of the Northern District of Illinois, Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Division, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office, Special Agent in Charge James D. Robnett of the Internal Revenue Service-Criminal Investigation (IRS-CI) Chicago Field Office, Acting Special Agent in Charge James M. Gibbons of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Chicago Field Office, Special Agent in Charge James Vanderberg of the U.S. Department of Labor’s Office of Inspector General-Office of Labor Racketeering and Fraud Investigations Chicago Region and Cook County State’s Attorney Anita Alvarez made the announcement.
Richard Tinimbang, 38, and his wife, Maribel Tinimbang, 40, both of Chicago, were charged with participating in a $45 million fraud scheme involving three Lincolnwood, Illinois, based home health care companies owned by Richard Tinimbang’s mother, Josephine Tinimbang. The companies allegedly paid bribes and kickbacks to obtain Medicare beneficiaries, ignored doctors who refused to certify beneficiaries as being in need of home health care and falsified medical records to make patients appear sicker than they actually were.
This indictment is part of a larger health care fraud investigation in which 13 others have been charged. Three defendants have pleaded guilty and await sentencing; the 10 others, including Josephine Tinimbang, are awaiting trial. Richard and Maribel Tinimbang’s business, Patients First Physical Therapy Inc., purportedly provided in-home therapy services to patients of three home health care companies – Donnarich Home Health Care Inc., Josdan Home Health Care Inc. and Pathways Home Health Services LLC. According to the indictment, several individuals who worked at Donnarich, Josdan and Pathways conspired to commit health care fraud and laundered money to conceal the scheme. From 2008 through 2014, the scheme resulted in $45 million in losses to Medicare, according to the indictment.
Richard Tinimbang also allegedly submitted fraudulent forms to the U.S. Department of Homeland Security in order to allow a Filipino woman to legally work in the United States, stating that the woman would be hired as a business analyst at Josdan, thus qualifying her for an H-1B visa. However, according to the indictment, when the woman arrived in the United States, Richard Tinimbang put her to work full time as a nanny and housekeeper for him, his wife and others. The couple allegedly attempted to induce the woman to sign a servitude contract that provided for payment of $66 per day – regardless of the number of hours worked – for a term of seven years. According to allegations in the indictment, the contract further provided that if the woman quit before the seventh year, she would be required to pay $25,000 in damages. The couple allegedly threatened to send her back to the Philippines without being paid for the work she had already performed in order to force her to sign the contract and surrender her passport.
The couple and Josephine Tinimbang used proceeds from the fraud to make numerous personal purchases, including shares of stock, vehicles, real estate and jewelry, according to the indictment. The indictment alleges that the couple concealed the money they had pocketed by falsely making it appear to be business expenses.
Richard Tinimbang is charged with one count of conspiracy to defraud Medicare, one count of conspiracy to pay or receive health care kickbacks, two counts of paying kickbacks to induce referrals of Medicare beneficiaries, one count of money laundering conspiracy, one count of conspiracy to obtain forced labor and one count of presenting false statements in an immigration document. Maribel Tinimbang is charged with one count of conspiracy to defraud Medicare, one count of money laundering conspiracy and one count of conspiracy to obtain forced labor.
An indictment is merely a charge and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The Medicare Fraud Strike Force and the Cook County Human Trafficking Task Force investigated the case. Trial Attorney Brooke Harper of the Criminal Division’s Fraud Section is prosecuting the case.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Husband and Wife Owners of Chicago Physical Therapy Company Indicted in Scheme to Bilk Medicare and Employ Housekeeper Against Her WillRead the Press Release
CHICAGO — A Chicago couple used their health care business to bilk Medicare out of millions of dollars while also conspiring to force a housekeeper to work against her will, according to an indictment returned in federal court in Chicago.
RICHARD TINIMBANG and his wife, MARIBEL TINIMBANG, participated in a $45 million fraud scheme involving three Lincolnwood-based home health care companies owned by Richard Tinimbang’s mother, according to the indictment. The companies paid bribes and kickbacks to obtain Medicare beneficiaries, ignored doctors who refused to certify beneficiaries as being in need of home health care, and falsified medical records to make patients appear sicker than they actually were, the indictment states. The couple and Richard Tinimbang’s mother, JOSEPHINE TINIMBANG, allegedly used proceeds from the fraud to make numerous personal purchases, including shares of stock, vehicles, real estate, and jewelry.
Richard Tinimbang, 38, of Chicago, is charged with one count of conspiracy to defraud Medicare, one count of conspiracy to pay or receive health care kickbacks, two counts of paying kickbacks to induce referrals of Medicare beneficiaries, one count of money laundering conspiracy, one count of conspiracy to obtain forced labor, and one count of presenting false statements in an immigration document.
Maribel Tinimbang, 40, of Chicago, is charged with one count of conspiracy to defraud Medicare, one count of money laundering conspiracy, and one count of conspiracy to obtain forced labor.
An arraignment date has not yet been set.
The charges against Richard and Maribel Tinimbang are contained in a third superseding indictment returned last week in U.S. District Court in Chicago. The case is part of a larger health care fraud investigation that previously resulted in charges against 13 others. Three defendants have pleaded guilty and are awaiting sentencing, while the other ten, including Josephine Tinimbang, are awaiting trial. The investigation found that several individuals who worked at three related home health care companies – Donnarich Home Health Care Inc., Josdan Home Health Care Inc., and Pathways Home Health Services LLC – conspired to commit health care fraud and laundered money to conceal the scheme. The fraud started in 2008 and continued into 2014, resulting in a loss to Medicare of $45 million, according to the indictment.
Richard and Maribel Tinimbang’s business, Patients First Physical Therapy Inc., purported to provide in-home therapy services to patients of the three companies. The indictment states the couple concealed the money they had pocketed by falsely making it appear to be business expenses, then used it to purchase personal items, including a 5,000-square-foot residence in Lincolnwood.
In addition to the health care fraud charges, Richard Tinimbang is accused of submitting fraudulent forms to the U.S. Department of Homeland Security to allow a Filipino woman to legally work in the United States. Richard Tinimbang stated in the form that the woman would be hired as a business analyst at Josdan, thus qualifying her for an H-1B visa. When the woman arrived in the United States, Richard Tinimbang put her to work full time as a nanny and housekeeper for him, his wife and others, the indictment states.
The couple allegedly attempted to induce the woman to sign a servitude contract that provided for payment of $66 per day – regardless of the number of hours worked – for a term of seven years. The contract further provided that if the woman quit before the seventh year, she would be required to pay $25,000 in damages, the indictment states. To force the woman to surrender her passport and sign the contract, the couple threatened to send her back to the Philippines without being paid for the work she had already performed, according to the indictment.
The indictment was 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; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Lamont Pugh III, Special Agent-in- Charge of the Chicago Regional Office of the U.S. Department of Health and Human Services Office of Inspector General; James D. Robnett, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago; James M. Gibbons, Acting Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); James Vanderberg, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Cook County State’s Attorney Anita Alvarez.
The investigation was carried out by the Medicare Fraud Strike Force, which consists of agents from the FBI and the U.S. Department of Health and Human Services, and prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the Justice Department and HHS to prevent fraud and enforce anti-fraud laws around the country.
The case was also investigated by the Cook County Human Trafficking Task Force, a multi-disciplinary unit that brings law enforcement agencies together to work on human trafficking cases.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are 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 U.S. Sentencing Guidelines.
The government is represented by Trial Attorney Brooke Harper of the Justice Department’s Criminal Division Fraud Section.
To report healthcare fraud or to learn more about it, logon to: StopMedicareFraud.gov.
Indictment
Home Health Care Agency Owner Pleads Guilty in $4 Million Detroit-Area Medicare Fraud SchemeRead the Press Release
The owner and operator of a Detroit-area home health care agency pleaded guilty today for his participation in a $4 million health care fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.
Naseem Minhas, 49, of West Bloomfield, Michigan, pleaded guilty before U.S. District Judge Nancy G. Edmonds of the Eastern District of Michigan to count of conspiracy to commit health care fraud. Sentencing has been scheduled for Sept. 6, 2016, before Judge Edmonds.
According to his plea agreement, Minhas was the owner and operator of TriCounty Home Care Services Inc. (TriCounty), a home health care agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries in the greater Detroit metropolitan area. According to admissions made as part of his plea agreement, Minhas paid a physician and recruiters to refer Medicare beneficiaries to TriCounty and sign medical documents falsely certifying that they required home health care. Minhas, a licensed physical therapist, also admitted that he assisted in creating fake patient files to make it appear as though the patients needed and received services that were unnecessary or not provided.
Between February 2009 and November 2013, Medicare paid TriCounty $4 million as a result of these false and fraudulent claims, Minhas admitted.
The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of Michigan. Fraud Section Trial Attorneys Elizabeth Young and Thomas Tynan, Fraud Section Special Trial Attorney Katie R. Fink and Assistant U.S. Attorney Katherine Wagner of the Eastern District of Michigan are prosecuting the case.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Grant County, WV woman pleads guilty to painkiller traffickingRead the Press Release
ELKINS, WEST VIRGINIA – Mary Kimble, 34, of Cabins, West Virginia, pled guilty to selling morphine, United States Attorney William J. Ihlenfeld, II, announced.
Kimble sold morphine near Petersburg City Park, a playground in Grant County, West Virginia. She pled guilty to one count of “Distribution of Morphine within 1,000 feet of a Protected Location – Aiding and Abetting.” She faces between one and forty years in prison and a fine of up to $2,000,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Stephen Warner prosecuted the case on behalf of the government. The Potomac Highlands Drug and Violent Crime Task Force investigated.U.S. Magistrate Judge Michael John Aloi presided.
Goldman Sachs to Pay More than $5 Billion for Misconduct Relating to Mortgage-Backed SecuritiesRead the Press Release
SACRAMENTO, Calif. – The Justice Department, along with federal and state partners, announced today a $5.06 billion settlement with Goldman Sachs related to Goldman’s conduct in the packaging, securitization, marketing, sale, and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. The resolution announced today requires Goldman to pay a $2.385 billion in a civil penalty under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and also requires the bank to provide $1.8 billion in consumer relief, including relief to underwater homeowners, distressed borrowers, and affected communities in the form of loan forgiveness and financing for affordable housing. Goldman will also pay $875 million to resolve claims by other federal entities and state claims. Investors, including federally insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Goldman between 2005 and 2007.
The FIRREA penalty announced today is the largest recovery ever in a case handled by the U.S. Attorney’s Office for the Eastern District of California. The settlement is the latest in a string of five multibillion dollar settlements announced by the RMBS Working Group. Of those five, two have been handled by the Eastern District of California — today’s settlement and the $2 billion FIRREA penalty obtained from JPMorgan Chase as part of the $13 billion settlement with the RMBS Working Group announced in November 2013.
“Today’s settlement is yet another acknowledgment by one of our leading financial institutions that it did not live up to the representations it made to investors about the products it was selling,” said U.S. Attorney Benjamin B. Wagner. “Goldman’s conduct in exploiting the RMBS market contributed to an international financial crisis that people across the country, including many in the Eastern District of California, continue to struggle to recover from. I am gratified that this office has developed investigations, first against JPMorgan Chase and now against Goldman Sachs, that have led to significant civil settlements that hold bad actors in this market accountable. The results obtained by this office and other members of the RMBS Working Group continue to send a message to Wall Street that we remain committed to pursuing those responsible for the financial crisis.”
The $2.385 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. The settlement expressly preserves the government’s ability to bring criminal charges against Goldman, and does not release any individuals from potential criminal or civil liability. In addition, as part of the settlement, Goldman agreed to fully cooperate with any ongoing investigations related to the conduct covered by the agreement.
Of the $875 million Goldman has agreed to pay to settle claims by various other federal and state entities, Goldman will pay: $575 million to settle claims by the National Credit Union Administration, $37.5 million to settle claims by the Federal Home Loan Bank of Des Moines as successor to the Federal Home Loan Bank of Seattle, $37.5 million to settle claims by the Federal Home Loan Bank of Chicago, $190 million to settle claims by the state of New York, $25 million to settle claims by the state of Illinois, and $10 million to settle claims by the state of California.
Goldman will pay out the remaining $1.8 billion in the form of relief to aid consumers harmed by its unlawful conduct. $1.52 billion of that relief will be paid out pursuant to an agreement with the United States that Goldman will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country, as well as financing for affordable rental and for-sale housing throughout the country. This agreement represents the largest commitment in any RMBS agreement to provide financing for affordable housing—a crucial need following the turmoil of the financial crisis. $280 million will be paid out by Goldman pursuant to an agreement separately negotiated with the state of New York.
The settlement includes a statement of facts to which Goldman has agreed. That statement of facts describes how Goldman made false and misleading representations to prospective investors about the characteristics of the loans it securitized and the ways in which it would protect investors in Goldman RMBS from harm (the quotes in the following paragraphs are from that agreed-upon statement of facts, unless otherwise noted):
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Goldman told investors in offering documents that “[l]oans in the securitized pools were originated generally in accordance with the loan originator’s underwriting guidelines,” other than possible situations where “when the originator identified ‘compensating factors’ at the time of origination.” But Goldman has today acknowledged that, “Goldman received information indicating that, for certain loan pools, significant percentages of the loans reviewed did not conform to the representations made to investors about the pools of loans to be securitized.”
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Specifically, Goldman has now acknowledged that, even when the results of its due diligence on samples of loans from those pools “indicated that the unsampled portions of the pools likely contained additional loans with credit exceptions, Goldman typically did not . . . identify and eliminate any additional loans with credit exceptions.” Goldman has acknowledged that it “failed to do this even when the samples included significant numbers of loans with credit exceptions.”
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Goldman’s Mortgage Capital Committee, which included senior mortgage department personnel and employees from Goldman’s credit and legal departments, was required to approve every RMBS issued by Goldman. Goldman has now acknowledged that “[t]he Mortgage Capital Committee typically received . . . summaries of Goldman’s due diligence results for certain of the loan pools backing the securitization,” but that “[d]espite the high numbers of loans that Goldman had dropped from the loan pools, the Mortgage Capital Committee approved every RMBS that was presented to it between December 2005 and 2007.” As one example, in early 2007, Goldman approved and issued a subprime RMBS backed by New Century loans, after Goldman’s due diligence process found that one of the loan pools to be securitized included loans originated with “[e]xtremely aggressive underwriting,” and where Goldman dropped 25 percent of the loans from the due diligence sample on that pool without reviewing the unsampled 70 percent of the pool to determine whether those loans had similar problems.
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Goldman has acknowledged that, for one August 2006 RMBS, the due diligence results for some of the loan pools resulted in an “unusually high” percentage of loans with credit and compliance defects. The Mortgage Capital Committee was presented with a summary of these results and asked “How do we know that we caught everything?” One transaction manager responded “we don’t.” Another transaction manager responded, “Depends on what you mean by everything? Because of the limited sampling . . . we don’t catch everything . . .” Goldman has now acknowledged that the Mortgage Capital Committee approved this RMBS for securitization without requiring any further due diligence.
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Goldman made detailed representations to investors about its “counterparty qualification process” for vetting loan originators, and told investors and one rating agency that Goldman would engage in ongoing monitoring of loan sellers. Goldman has now acknowledged however, that it “received certain negative information regarding the originators’ business practices” and that much of this information was not disclosed to investors.
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For example, Goldman has now acknowledged that in late 2006 it conducted an internal analysis of the underwriting guidelines of Fremont Investment & Loan (an originator), which found many of Fremont’s guidelines to be “off market” or “at the aggressive end of market standards.” Instead of disclosing its view of Fremont’s underwriting, Goldman has acknowledged that it “[u]ndertook a significant marketing effort” to tell investors about what Goldman called Fremont’s “commitment to loan quality over volume” and “significant enhancements to Fremont underwriting guidelines.” Fremont was shut down by federal regulators within several months of these statements.
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In another example, Goldman was aware in early-mid 2006 of certain issues with Countrywide Financial Corporation’s origination process, including a pattern of non-responsiveness and inability to provide sufficient staff to handle the numerous loan pools Countrywide was selling. In April 2006, while Goldman was preparing an RMBS backed by Countrywide loans for securitization, a Goldman mortgage department manager circulated a “very bullish” equity research report that recommended the purchase of Countrywide stock. Goldman’s head of due diligence, who had just overseen the due diligence on six Countrywide pools, responded “If they only knew …”
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The Eastern District of California’s investigation into Goldman’s conduct in connection with RMBS was led by Assistant U.S. Attorneys Colleen Kennedy and Kelli Taylor, with the support of the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
“Goldman Sachs had a fiduciary responsibility to investors, which they blatantly side stepped,” said Deputy Inspector General for Investigation Rene Febles for the FHFA-OIG. “They knowingly put investors at risk and in so doing contributed significantly to the financial crisis. The losses caused by this irresponsible behavior deeply affected not only financial institutions but also taxpayers and one can only hope that Goldman Sachs has learned the difference between risk and deceit. Two Federal Home Loan Banks suffered significant losses so we are pleased to see both entities receive a portion of this settlement. We will continue to work with our law enforcement partners to hold those accountable who have engaged in misconduct.”
“Goldman took $10 billion in TARP bailout funds knowing that it had fraudulently misrepresented to investors the quality of residential mortgages bundled into mortgage backed securities,” said Special Inspector General Christy Goldsmith Romero for TARP. “Many of these toxic securities were traded in a taxpayer funded bailout program that was designed to unlock frozen credit markets during the crisis. While crisis investigations take time, SIGTARP is committed to working with our law enforcement partners to protect taxpayers and bring accountability and justice.”
The settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered tens of billions of dollars on behalf of American consumers and investors for claims against large financial institutions arising from misconduct related to the financial crisis. The RMBS Working Group brings together attorneys, investigators, analysts, and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the U.S. Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, SIGTARP, the Federal Reserve Board’s OIG, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country. The RMBS Working Group is led by Director Joshua Wilkenfeld and five co-chairs: Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Andrew Ceresney of the SEC’s Division of Enforcement, U.S. Attorney John Walsh of the District of Colorado, and New York Attorney General Eric Schneiderman.
Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at www.StopFraud.gov.
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Goldman Sachs Agrees to Pay More than $5 Billion in Connection with Its Sale of Residential Mortgage Backed SecuritiesRead the Press Release
The Justice Department, along with federal and state partners, announced today a $5.06 billion settlement with Goldman Sachs related to Goldman’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. The resolution announced today requires Goldman to pay $2.385 billion in a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and also requires the bank to provide $1.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing. Goldman will also pay $875 million to resolve claims by other federal entities and state claims. Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Goldman between 2005 and 2007.
“This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” said Acting Associate Attorney General Stuart F. Delery. “This $5 billion settlement includes a $1.8 billion commitment to help repair the damage to homeowners and communities that Goldman acknowledges resulted from its conduct, and it makes clear that no institution may inflict this type of harm on investors and the American public without serious consequences.”
“Today’s settlement is another example of the department’s resolve to hold accountable those whose illegal conduct resulted in the financial crisis of 2008,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Viewed in conjunction with the previous multibillion-dollar recoveries that the department has obtained for similar conduct, this settlement demonstrates the pervasiveness of the banking industry’s fraudulent practices in selling RMBS, and the power of the Financial Institutions Reform, Recovery and Enforcement Act as a tool for combatting this type of wrongdoing.”
“Today’s settlement is yet another acknowledgment by one of our leading financial institutions that it did not live up to the representations it made to investors about the products it was selling,” said U.S. Attorney Benjamin B. Wagner of the Eastern District of California. “Goldman’s conduct in exploiting the RMBS market contributed to an international financial crisis that people across the country, including many in the Eastern District of California, continue to struggle to recover from. I am gratified that this office has developed investigations, first against JPMorgan Chase and now against Goldman Sachs, that have led to significant civil settlements that hold bad actors in this market accountable. The results obtained by this office and other members of the RMBS Working Group continue to send a message to Wall Street that we remain committed to pursuing those responsible for the financial crisis.”
The $2.385 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. The settlement expressly preserves the government’s ability to bring criminal charges against Goldman, and does not release any individuals from potential criminal or civil liability. In addition, as part of the settlement, Goldman agreed to fully cooperate with any ongoing investigations related to the conduct covered by the agreement.
Of the $875 million Goldman has agreed to pay to settle claims by various other federal and state entities: Goldman will pay $575 million to settle claims by the National Credit Union Administration, $37.5 million to settle claims by the Federal Home Loan Bank of Des Moines as successor to the Federal Home Loan Bank of Seattle, $37.5 million to settle claims by the Federal Home Loan Bank of Chicago, $190 million to settle claims by the state of New York, $25 million to settle claims by the state of Illinois and $10 million to settle claims by the state of California.
Goldman will pay out the remaining $1.8 billion in the form of relief to aid consumers harmed by its unlawful conduct. $1.52 billion of that relief will be paid out pursuant to an agreement with the United States that Goldman will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country, as well as financing for affordable rental and for-sale housing throughout the country. This agreement represents the largest commitment in any RMBS agreement to provide financing for affordable housing—a crucial need following the turmoil of the financial crisis. $280 million will be paid out by Goldman pursuant to an agreement separately negotiated with the state of New York.
The settlement includes a statement of facts to which Goldman has agreed. That statement of facts describes how Goldman made false and misleading representations to prospective investors about the characteristics of the loans it securitized and the ways in which Goldman would protect investors in its RMBS from harm (the quotes in the following paragraphs are from that agreed-upon statement of facts, unless otherwise noted):
- Goldman told investors in offering documents that “[l]oans in the securitized pools were originated generally in accordance with the loan originator’s underwriting guidelines,” other than possible situations where “when the originator identified ‘compensating factors’ at the time of origination.” But Goldman has today acknowledged that, “Goldman received information indicating that, for certain loan pools, significant percentages of the loans reviewed did not conform to the representations made to investors about the pools of loans to be securitized.”
- Specifically, Goldman has now acknowledged that, even when the results of its due diligence on samples of loans from those pools “indicated that the unsampled portions of the pools likely contained additional loans with credit exceptions, Goldman typically did not . . . identify and eliminate any additional loans with credit exceptions.” Goldman has acknowledged that it “failed to do this even when the samples included significant numbers of loans with credit exceptions.”
- Goldman’s Mortgage Capital Committee, which included senior mortgage department personnel and employees from Goldman’s credit and legal departments, was required to approve every RMBS issued by Goldman. Goldman has now acknowledged that “[t]he Mortgage Capital Committee typically received . . . summaries of Goldman’s due diligence results for certain of the loan pools backing the securitization,” but that “[d]espite the high numbers of loans that Goldman had dropped from the loan pools, the Mortgage Capital Committee approved every RMBS that was presented to it between December 2005 and 2007.” As one example, in early 2007, Goldman approved and issued a subprime RMBS backed by loans originated by New Century Mortgage Corporation, after Goldman’s due diligence process found that one of the loan pools to be securitized included loans originated with “[e]xtremely aggressive underwriting,” and where Goldman dropped 25 percent of the loans from the due diligence sample on that pool without reviewing the unsampled 70 percent of the pool to determine whether those loans had similar problems.
- Goldman has acknowledged that, for one August 2006 RMBS, the due diligence results for some of the loan pools resulted in an “unusually high” percentage of loans with credit and compliance defects. The Mortgage Capital Committee was presented with a summary of these results and asked “How do we know that we caught everything?” One transaction manager responded “we don’t.” Another transaction manager responded, “Depends on what you mean by everything? Because of the limited sampling . . . we don’t catch everything . . .” Goldman has now acknowledged that the Mortgage Capital Committee approved this RMBS for securitization without requiring any further due diligence.
- Goldman made detailed representations to investors about its “counterparty qualification process” for vetting loan originators, and told investors and one rating agency that Goldman would engage in ongoing monitoring of loan sellers. Goldman has now acknowledged, however, that it “received certain negative information regarding the originators’ business practices” and that much of this information was not disclosed to investors.
- For example, Goldman has now acknowledged that in late 2006 it conducted an internal analysis of the underwriting guidelines of Fremont Investment & Loan (an originator), which found many of Fremont’s guidelines to be “off market” or “at the aggressive end of market standards.” Instead of disclosing its view of Fremont’s underwriting, Goldman has acknowledged that it “[u]ndertook a significant marketing effort” to tell investors about what Goldman called Fremont’s “commitment to loan quality over volume” and “significant enhancements to Fremont underwriting guidelines.” Fremont was shut down by federal regulators within several months of these statements.
- In another example, Goldman was aware in early-mid 2006 of certain issues with Countrywide Financial Corporation’s origination process, including a pattern of non-responsiveness and inability to provide sufficient staff to handle the numerous loan pools Countrywide was selling. In April 2006, while Goldman was preparing an RMBS backed by Countrywide loans for securitization, a Goldman mortgage department manager circulated a “very bullish” equity research report that recommended the purchase of Countrywide stock. Goldman’s head of due diligence, who had just overseen the due diligence on six Countrywide pools, responded “If they only knew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .”
- Meanwhile, as Goldman has acknowledged in this statement of facts, “[Around the end of 2006], Goldman employees observed signs of uncertainty in the residential mortgage market [and] by March 2007, Goldman had largely halted new purchases of subprime loan pools.”
Assistant U.S. Attorneys Colleen Kennedy and Kelli Taylor of the Eastern District of California investigated Goldman’s conduct in connection with RMBS, with the support of the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
“Goldman Sachs had a fiduciary responsibility to investors, which they blatantly side stepped,” said Deputy Inspector General for Investigation Rene Febles of FHFA-OIG. “They knowingly put investors at risk and in so doing contributed significantly to the financial crisis. The losses caused by this irresponsible behavior deeply affected not only financial institutions but also taxpayers and one can only hope that Goldman Sachs has learned the difference between risk and deceit. Two Federal Home Loan Banks suffered significant losses so we are pleased to see both entities receive a portion of this settlement. We will continue to work with our law enforcement partners to hold those accountable who have engaged in misconduct.”
“Goldman took $10 billion in TARP bailout funds knowing that it had fraudulently misrepresented to investors the quality of residential mortgages bundled into mortgage backed securities,” said Special Inspector General Christy Goldsmith Romero for TARP. “Many of these toxic securities were traded in a taxpayer funded bailout program that was designed to unlock frozen credit markets during the crisis. While crisis investigations take time, SIGTARP is committed to working with our law enforcement partners to protect taxpayers and bring accountability and justice.”
The settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered tens of billions of dollars on behalf of American consumers and investors for claims against large financial institutions arising from misconduct related to the financial crisis. The RMBS Working Group brings together attorneys, investigators, analysts and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the U.S. Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, SIGTARP, the Federal Reserve Board’s OIG, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country. The RMBS Working Group is led by Director Joshua Wilkenfeld and five co-chairs: Principal Deputy Assistant Attorney General Mizer, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Andrew Ceresney of the SEC’s Division of Enforcement, U.S. Attorney John Walsh of the District of Colorado and New York Attorney General Eric Schneiderman. This settlement is the fifth multibillion-dollar RMBS settlement announced by the working group.
Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at www.StopFraud.gov.
Four Individuals Recognized as part of National Crime Victims’ Rights Week, April 10-16Read the Press Release
United States Attorney Randolph J. Seiler announced that four individuals will be awarded Department of Justice Certificates of Appreciation as part of National Crime Victims’ Rights Week 2016. The U.S. Attorney’s Office will present the honorees with their awards and provide brief remarks in recognition of their outstanding dedication, service, and contributions on behalf of crime victims.
National Crime Victims’ Rights Week honors and celebrates the achievements of the past thirty years in securing rights, protections, and services for victims. The bipartisan Victims of Crime Act (VOCA), passed by Congress in 1984, created a national fund to ease victims’ suffering. Financed by fines and penalties paid by offenders, the Crime Victims Fund supports services for victims of all types of crime, including assistance for homicide survivors, survivors of child sexual abuse, and victims of human trafficking, as well as rape crisis centers and domestic violence programs among others. VOCA also funds victim compensation programs that pay victims’ out-of-pocket expenses - such as counseling, funeral expenses, and lost wages.
The first ceremony will be held in Pine Ridge on Friday, April 15, 2016, at the Justice Center for the People, located at 977 Horse Thief Road. It will be held prior to the Multidisciplinary Task Force Meeting at 10:00 a.m. MST. The individual honored at this event will be Cheryl Renee Bourque. Ms. Bourque is an enrolled citizen of the Muscogee (Creek) Nation of Oklahoma. She is currently a Victim Specialist with the Bureau of Indian Affairs, Office of Justice Services, assigned to the Pine Ridge Agency in South Dakota.
Ms. Bourque has over 13 years of experience dealing with victims of crime in Indian country, working on several different reservations, including Oklahoma’s complex jurisdiction. For the last 25 months, she has been assigned to the Pine Ridge Agency where she has helped literally hundreds of crime victims. The victims have benefitted from her extensive knowledge and experience in dealing with violent crimes, as she guided them through some of the most traumatic times in their lives. Ms. Bourque’s experience as an advocate and law enforcement officer provides a unique perspective on systems’ response in addressing victim’s needs. She has held several different positions on boards and task forces and has been a leading voice in helping to raise awareness about the unique issues facing victims in Indian country.
Ms. Bourque has held positions as the Executive Director for the Oklahoma Tribal Coalition, as a state and tribal domestic violence/sexual assault advocate, and as a law enforcement officer. She is a contract/adjunct instructor with the Federal Law Enforcement Training Center, based in Glynco, Georgia, and she has traveled across the nation to instruct on issues pertaining to domestic violence, and sexual assault and stalking, with an emphasis on serving victims of crime in Indian country.
The second ceremony will be in Eagle Butte on Thursday, April 28, 2016. It will also be held prior to the Multidisciplinary Task Force Meeting at 10:00 a.m. MST. The two award recipients will be Cheyenne River Sioux Tribe Detective Russell Leaf and Federal Bureau of Investigation Special Agent James Asher.
Cheyenne River Sioux Tribe Criminal Investigator Russell Leaf has served the public as a law enforcement officer since 1985, making him one of the longest serving law enforcement officers in South Dakota. He began his law enforcement career as a military police officer stationed in Fort Carson, Colorado and in Germany. Since leaving military service, Criminal Investigator Leaf has served people in Indian country since 1987. He has worked for Tribal and Bureau of Indian Affairs Police Departments in Standing Rock, Yankton, Winnebago and Omaha (Nebraska), Crow Agency (Montana), Fort Duchesne (Utah), and Red Lake (Minnesota). Criminal Investigator Leaf began his career in Tribal law enforcement working for the Cheyenne River Sioux Tribe. He returned there in 2002, where he has spent the last 14 years of his career, and has been a Criminal Investigator for the Cheyenne River Sioux Tribe since 2008.
Special Agent (SA) James Asher graduated from Cedarville University in Ohio in 2002. After graduating from college, SA Asher joined the military and was an Army Infantry Officer in the 82nd Airborne Division from 2002 until 2008. In 2008, SA Asher joined the Federal Bureau of Investigation. He initially worked in Kansas City and Los Angeles, where he specialized in investigations involving gangs and narcotics. In April of 2015, SA Asher transferred to the Pierre Resident Agency, where he investigates sexual assault cases and other violent crimes in Indian country.
The fourth recipient, Cynthia Johanson, a Probation Officer with the Flandreau Santee Sioux Tribal Court, will be honored at a ceremony in Flandreau on May 5, 2016.
For additional information about this year’s National Crime Victims’ Rights Week, visit: http://www.ovc.gov/
Four Charged in Cocaine Distribution ConspiracyRead the Press Release
Baltimore, Maryland – A federal criminal complaint has been filed charging four individuals for a conspiracy to possess with intent to distribute cocaine. The criminal complaint was filed this afternoon, following the defendants’ arrests on Friday evening, April 8, 2016. Charged in the criminal complaint are:
Hector M. Hernandez-Villapando, age 63, of Hanover, Maryland;
Enixae Hernandez-Barba, age 33, of Linthicum Heights, Maryland;
Hector L. Hernandez-Barba, age 39, of Las Vegas, Nevada; and
William Frederick Cornish, age 52, of Abingdon, Maryland.The charges were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration - Washington Field Division; Colonel Woodrow Jones, Chief of the Maryland Transportation Authority Police; Commissioner Kevin Davis of the Baltimore Police Department; Chief James W. Johnson of the Baltimore County Police Department; Anne Arundel County Police Chief Tim Altomare; Chief Michael A. Pristoop of the Annapolis Police Department; Colonel William M. Pallozzi, Superintendent of the Maryland State Police; Chief Richard McLaughlin of the Laurel Police Department; Harford County Sheriff Jeffrey R. Gahler; and Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
According to the affidavit filed in support of the criminal complaint, in August 2015, DEA received information about a group that was trafficking large amounts of cocaine into Maryland and utilizing a warehouse on Golden Ring Road in Baltimore. Investigation showed that the business using that location, KMKJ Trucking, LLC, had been evicted by July 31, 2015. Over the next six months, investigators identified Hernandez-Villapando and his sons, E. Hernandez-Barba and H. Hernandez-Barba as the individuals believed to have been using the Golden Ring Road warehouse. The investigation subsequently identified a warehouse on Hammonds Ferry Road in Linthicum Heights, Maryland, as the new location being used by those individuals.
According to the affidavit, on April 6, 2016, a tractor trailer with the KMKJ logo arrived at the Hammonds Ferry Road warehouse and backed up to the rear bay door of the unit. Investigators observed items being unloaded from the tractor trailer into the warehouse. A short time later, law enforcement observed a van occupied by E. Hernandez-Barba and H. Hernandez-Barba traveling around the parking lot and warehouse building, conducting counter-surveillance of the area. The Hernandez-Barba brothers then entered the warehouse, where they remained for approximately two hours before returning to E. Hernandez-Barba’s residence.
On the evening of April 8, 2016, investigators saw H. Hernandez-Barba, E. Hernandez-Barba and Hernandez-Villapando arrive at the Linthicum Heights warehouse. E. Hernandez-Barba then left in a black Honda, followed by a silver F-150 pickup truck. After a conversation on a nearby street between E. Hernandez-Barba and the driver of the pickup truck, they returned to the warehouse. E. Hernandez Barba went into the warehouse and the F-150 entered the warehouse through the bay door, which was then closed. A few minutes later, the bay door re-opened and the F-150 drove out of the warehouse. The truck, driven William Cornish, was stopped by law enforcement shortly after leaving the warehouse area. A narcotics detection dog was brought to the scene. The dog scanned the truck resulting in a positive response for the presence of illegal drugs. Law enforcement recovered 31 kilograms of cocaine from a box in the back seat of the truck. Law enforcement also stopped Hernandez-Villapando, H. Hernandez-Barba and E. Hernandez-Barba as they left the warehouse.
Search warrants were obtained and executed at the warehouse and at the residences of E. Hernandez-Barba, Hernandez-Villapando, and Cornish. Law enforcement recovered three large duffel bags in the basement of Hernandez-Barba’s home containing large amounts of cash. The money was vacuum sealed in plastic bags marked with the amount of cash on the outside of each plastic bag. Based on those amounts, law enforcement believes the duffel bags contain approximately $2.4 million. Investigators also recovered a drug/money ledger in the home documenting just over $2.4 million in receipts from the sale of illegal drugs. From Cornish’s home, law enforcement recovered a money counter, colored rubber bands, latex gloves and a digital scale, typically used in the narcotics trade to count and package money and to weigh drugs prior to distribution. Investigators also recovered a radio frequency detector that is commonly used by drug traffickers to “sweep” cars, people, and other items for hidden transmitters and electronic devices that are often used by law enforcement while investigating the distribution of illegal drugs.
The defendants face a minimum mandatory sentence of ten years and up to life in prison. The defendants are expected to have initial appearances today beginning at 4:00 p.m. before U.S. Magistrate Judge Beth P. Gesner in U.S. District Court in Baltimore.
A criminal complaint is not a finding of guilt. An individual charged by criminal complaint is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Rod J. Rosenstein commended DEA, the Maryland Transportation Authority Police, Baltimore Police Department, Baltimore County Police Department, Anne Arundel County Police Department, Annapolis Police Department, Maryland State Police, Laurel Police Department, Harford County Task Force, and IRS Criminal Investigation for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys James G. Warwick and Joshua T. Ferrentino, who are prosecuting the case.
Fort Hall Woman Pleads Guilty to AssaultRead the Press Release
POCATELLO – Tanisha Phelps, 19, of Fort Hall, Idaho, pleaded guilty today in United States District Court to assault with a dangerous weapon, U.S. Attorney Wendy J. Olson announced. Phelps was indicted by the federal grand jury in Pocatello on January 27, 2015.
According to the plea agreement, on December 14, 2014, Fort Hall Police were called to a residence on the Fort Hall Indian Reservation regarding a possible stabbing. Officers arrived and found that the defendant had cut the victim, a 72 year old female in a wheelchair, on her forearm with a knife. The victim told police that the defendant was mad because her music had been turned off. The victim told the defendant to go outside and “cool off.” The defendant punched the victim in the forehead with her fist and the defendant grabbed two kitchen knives. The defendant then cut the victim’s forearm with the knife and caused it to bleed. The defendant was interviewed by police and admitted cutting the victim with the knife.
The charge of assault with a dangerous weapon is punishable by up to 10 years in prison, up to three years of supervised release, and a fine of up to $250,000.
Phelps is scheduled to be sentenced on June 23, 2016, before Chief U.S. District Judge B. Lynn Winmill at the federal courthouse in Pocatello.
The case was investigated by the Fort Hall Police Department and the Federal Bureau of Investigation.
Fort Hall Man Pleads Guilty to AssaultRead the Press Release
POCATELLO – Lyle Plentywounds, Sr., 60, of Fort Hall, Idaho, pleaded guilty today in United States District Court to assault on an officer, U.S. Attorney Wendy J. Olson announced. Plentywounds was indicted by the federal grand jury in Pocatello on July 28, 2015.
On June 23, 2015, officers from the Fort Hall Police Department responded to a residence on the Fort Hall Indian Reservation on a report that the Plentywounds was causing a disturbance at that location. Officers arrived at the location and found Plentywounds to be intoxicated, which is a violation of Tribal law. Officers took Plentywounds into custody. While officers were taking him to the patrol car, Plentywounds struggled with the officers and kicked an officer in the leg. Under the specific federal law that Plentywounds pled guilty to violating, Fort Hall police officers are considered “federal officers.”
The charge of assault on an officer is punishable by up to eight years in prison, up to three years of supervised release, and a fine of up to $250,000.
Plentywounds is scheduled to be sentenced on June 22, 2016, before Chief U.S. District Judge B. Lynn Winmill at the federal courthouse in Pocatello.
The case was investigated by the Fort Hall Police Department and the Federal Bureau of Investigation.
Former U.S. Nuclear Regulatory Commission Employee Sentenced to Prison for Attempted Spear-Phishing Attack on Department of Energy ComputersRead the Press Release
Charles Harvey Eccleston, 62, a former employee of the U.S. Department of Energy (DOE) and the U.S. Nuclear Regulatory Commission (NRC), was sentenced today to 18 months in prison on a federal charge stemming from an attempted e-mail “spear-phishing” attack in January 2015 that targeted dozens of DOE employee e-mail accounts.
The sentencing was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Channing D. Phillips of the District of Columbia and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office.
Eccleston pleaded guilty on Feb. 2, 2016, in the U.S. District Court for the District of Columbia, to one count of attempted unauthorized access and intentional damage to a protected computer. In his guilty plea, Eccleston admitted scheming to cause damage to the computer network of the DOE through e-mails that he believed would deliver a computer virus to particular employees. An e-mail spear-phishing attack involves crafting a convincing e-mail for selected recipients that appears to be from a trusted source and that, when opened, infects the recipient’s computer with a virus.
In addition to the prison time, U.S. District Judge Randolph D. Moss ordered Eccleston to forfeit $9,000, an amount equal to the sum the FBI provided to Eccleston during the course of the undercover investigation.
“Eccleston’s sentence holds him accountable for his attempt to compromise, exploit and damage U.S. government computer systems that contained sensitive nuclear weapon-related information with the intent of allowing foreign nations to gain access to that information or to damage essential systems,” said Assistant Attorney General Carlin. “One of our highest priorities in the National Security Division remains protecting our national assets from cyber intrusions. We must continue to evolve and remain vigilant in our efforts and capabilities to confront cyber-enabled threats and aggressively detect, disrupt and deter them.”
“Charles Harvey Eccleston is a scientist and former government employee who was willing to betray his country and his former employer out of spite,” said U.S. Attorney Phillips. “His attempts to sell access to sensitive computer networks demonstrate why the government must be so vigilant to prevent cyber-attacks. Thanks to the FBI, this defendant was apprehended before he could do any damage. Together with our law enforcement partners, we will continue to make the detection and prevention of cyber-crimes a top priority.”
“Today’s sentencing sends a powerful message that no one will be allowed to sabotage the U.S. Government’s cyber infrastructure or threaten our national security through the illicit sale of information to a foreign intelligence service,” said Assistant Director in Charge Abbate. “The FBI will continue to investigate and pursue those who attempt to disclose sensitive knowledge about our nation’s information systems and bring them to justice.”
Eccleston, a U.S. citizen who had been living in Davao City in the Philippines since 2011, was terminated from his employment at the NRC in 2010. He was detained by Philippine authorities in Manila, Philippines, on March 27, 2015, and deported to the United States to face U.S. criminal charges. He has been in custody ever since.
According to court documents, Eccleston initially came to the attention of the FBI in 2013 after he entered a foreign embassy in Manila and offered to sell a list of over 5,000 e-mail accounts of all officials, engineers and employees of a U.S. government energy agency. He said that he was able to retrieve this information because he was an employee of a U.S. government agency, held a top secret security clearance and had access to the agency’s network. He asked for $18,800 for the accounts, stating they were “top secret.” When asked what he would do if that foreign country was not interested in obtaining the U.S. government information the defendant was offering, the defendant stated he would offer the information to China, Iran or Venezuela, as he believed these countries would be interested in the information.
Thereafter, Eccleston met and corresponded with FBI undercover employees who were posing as representatives of the foreign country. During a meeting on Nov. 7, 2013, he showed one of the undercover employees a list of approximately 5,000 e-mail addresses that he said belonged to NRC employees. He offered to sell the information for $23,000 and said it could be used to insert a virus onto NRC computers, which could allow the foreign country access to agency information or could be used to otherwise shut down the NRC’s servers. The undercover employee agreed to purchase a thumb drive containing approximately 1,200 e-mail addresses of NRC employees; an analysis later determined that these e-mail addresses were publicly available. The undercover employee provided Eccleston with $5,000 in exchange for the e-mail addresses and an additional $2,000 for travel expenses.
Over the next several months, Eccleston corresponded regularly by e-mail with the undercover employees. A follow-up meeting with a second undercover employee took place on June 24, 2014, in which Eccleston was paid $2,000 to cover travel-related expenses. During this meeting, Eccleston discussed having a list of 30,000 e-mail accounts of DOE employees. He offered to design and send spear-phishing e-mails that could be used in a cyber-attack to damage the computer systems used by his former employer.
Over the next several months, the defendant identified specific conferences related to nuclear energy to use as a lure for the cyber-attack, then drafted emails advertising the conference. The emails were designed to induce the recipients to click on a link which the defendant believed contained a computer virus that would allow the foreign government to infiltrate or damage the computers of the recipients. The defendant identified several dozen DOE employees whom he claimed had access to information related to nuclear weapons or nuclear materials as targets for the attack.
On Jan. 15, 2015, Eccleston sent the e-mails he drafted to the targets he had identified. The e-mail contained the link supplied by the FBI undercover employee which Eccleston believed contained a computer virus, but was, in fact, inert. Altogether, the defendant sent the e-mail he believed to be infected to approximately 80 DOE employees located at various facilities throughout the country, including laboratories associated with nuclear materials.
Eccleston was detained after a meeting with the FBI undercover employee, during which Eccleston believed he would be paid approximately $80,000 for sending the e-mails.
The investigation was conducted by the FBI’s Washington Field Office with assistance from the NRC and DOE. The case is being prosecuted by Assistant U.S. Attorney Thomas A. Gillice of the District of Columbia and Trial Attorney Julie A. Edelstein of the National Security Division’s Counterintelligence and Export Control Section. Trial Attorney Scott Ferber of the National Security Division’s Counterintelligence and Export Control Section assisted in the investigation of this matter. The Department of Justice’s Office of International Affairs and the government of the Philippines also provided significant assistance.
Former U.S. Nuclear Regulatory Commission Employee Sentenced to Prison for Attempted Spear-Phishing Cyber-Attack on Department of Energy ComputersRead the Press Release
WASHINGTON – Charles Harvey Eccleston, 62, a former employee of the U.S. Department of Energy (DOE) and the U.S. Nuclear Regulatory Commission (NRC), was sentenced today to 18 months in prison on a federal charge stemming from an attempted e-mail “spear-phishing” attack in January 2015 that targeted dozens of DOE employee e-mail accounts.
The sentencing was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Channing D. Phillips of the District of Columbia, and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office.
Eccleston pleaded guilty on Feb. 2, 2016, in the U.S. District Court for the District of Columbia, to one count of attempted unauthorized access and intentional damage to a protected computer. In his guilty plea, Eccleston admitted scheming to cause damage to the computer network of the DOE through e-mails that he believed would deliver a computer virus to particular employees. An e-mail spear-phishing attack involves crafting a convincing e-mail for selected recipients that appears to be from a trusted source and that, when opened, infects the recipient’s computer with a virus.
In addition to the prison time, U.S. District Judge Randolph D. Moss ordered Eccleston to forfeit $9,000, an amount equal to the sum the FBI provided to Eccleston during the course of the undercover investigation. Following his prison term, Eccleston will be placed on three years of supervised release.
“Eccleston’s sentence holds him accountable for his attempt to compromise, exploit and damage U.S. government computer systems that contained sensitive nuclear weapon-related information with the intent of allowing foreign nations to gain access to that information or to damage essential systems,” said Assistant Attorney General Carlin. “One of our highest priorities in the National Security Division remains protecting our national assets from cyber intrusions. We must continue to evolve and remain vigilant in our efforts and capabilities to confront cyber-enabled threats and aggressively detect, disrupt and deter them.”
“Charles Harvey Eccleston is a scientist and former government employee who was willing to betray his country and his former employer out of spite,” said U.S. Attorney Phillips. “His attempts to sell access to sensitive computer networks demonstrate why the government must be so vigilant to prevent cyber-attacks. Thanks to the FBI, this defendant was apprehended before he could do any damage. Together with our law enforcement partners, we will continue to make the detection and prevention of cyber-crimes a top priority.”
“Today’s sentencing sends a powerful message that no one will be allowed to sabotage the U.S. Government’s cyber infrastructure or threaten our national security through the illicit sale of information to a foreign intelligence service,” said Assistant Director in Charge Abbate. “The FBI will continue to investigate and pursue those who attempt to disclose sensitive knowledge about our nation’s information systems and bring them to justice.”
Eccleston, a U.S. citizen who had been living in Davao City in the Philippines since 2011, was terminated from his employment at the NRC in 2010. He was detained by Philippine authorities in Manila, Philippines, on March 27, 2015, and deported to the United States to face U.S. criminal charges. He has been in custody ever since.
According to court documents, Eccleston initially came to the attention of the FBI in 2013 after he entered a foreign embassy in Manila and offered to sell a list of over 5,000 e-mail accounts of all officials, engineers and employees of a U.S. government energy agency. He said that he was able to retrieve this information because he was an employee of a U.S. government agency, held a top secret security clearance and had access to the agency’s network. He asked for $18,800 for the accounts, stating they were “top secret.” When asked what he would do if that foreign country was not interested in obtaining the U.S. government information the defendant was offering, the defendant stated he would offer the information to China, Iran or Venezuela, as he believed these countries would be interested in the information.
Thereafter, Eccleston met and corresponded with FBI undercover employees who were posing as representatives of the foreign country. During a meeting on Nov. 7, 2013, he showed one of the undercover employees a list of approximately 5,000 e-mail addresses that he said belonged to NRC employees. He offered to sell the information for $23,000 and said it could be used to insert a virus onto NRC computers, which could allow the foreign country access to agency information or could be used to otherwise shut down the NRC’s servers. The undercover employee agreed to purchase a thumb drive containing approximately 1,200 e-mail addresses of NRC employees; an analysis later determined that these e-mail addresses were publicly available. The undercover employee provided Eccleston with $5,000 in exchange for the e-mail addresses and an additional $2,000 for travel expenses.
Over the next several months, Eccleston corresponded regularly by e-mail with the undercover employees. A follow-up meeting with a second undercover employee took place on June 24, 2014, in which Eccleston was paid $2,000 to cover travel-related expenses. During this meeting, Eccleston discussed having a list of 30,000 e-mail accounts of DOE employees. He offered to design and send spear-phishing e-mails that could be used in a cyber-attack to damage the computer systems used by his former employer.
Over the next several months, the defendant identified specific conferences related to nuclear energy to use as a lure for the cyber-attack, then drafted emails advertising the conference. The emails were designed to induce the recipients to click on a link which the defendant believed contained a computer virus that would allow the foreign government to infiltrate or damage the computers of the recipients. The defendant identified several dozen DOE employees whom he claimed had access to information related to nuclear weapons or nuclear materials as targets for the attack.
On Jan. 15, 2015, Eccleston sent the e-mails he drafted to the targets he had identified. The e-mail contained the link supplied by the FBI undercover employee which Eccleston believed contained a computer virus, but was, in fact, inert. Altogether, the defendant sent the e-mail he believed to be infected to approximately 80 DOE employees located at various facilities throughout the country, including laboratories associated with nuclear materials.
Eccleston was detained after a meeting with the FBI undercover employee, during which Eccleston believed he would be paid approximately $80,000 for sending the e-mails.
The investigation was conducted by the FBI’s Washington Field Office with assistance from the NRC and DOE. The case is being prosecuted by Assistant U.S. Attorney Thomas A. Gillice of the District of Columbia and Trial Attorney Julie A. Edelstein of the National Security Division’s Counterintelligence and Export Control Section. Trial Attorney Scott Ferber of the National Security Division’s Counterintelligence and Export Control Section assisted in the investigation of this matter. The Department of Justice’s Office of International Affairs and the government of the Philippines also provided significant assistance.
Former President of Louisville Debt Relief Business Charged with Tax CrimesRead the Press Release
Kimberley L. Gordon charged with failing to pay $173,264 in taxes
LOUISVILLE, Ky. – The former president of a Louisville debt relief business was recently charged with willful failure to account for and pay employment taxes collected over a two year period, announced United States Attorney John E. Kuhn, Jr.
The indictment alleges that Kimberley L. Gordon, 53, of Louisville, while president of Debt Restructuring of America deducted and collected $173,264 in federal income and Federal Insurance Contributions Act (FICA) taxes from the wages of employees from January 1, 2010, through December 31, 2011, but did not pay over that money to the Internal Revenue Service (IRS).
The charges against Gordon carry a maximum penalty of 40 years in prison and $80,000 in fines. Gordon was indicted by federal grand jury on April 5, 2016, and is scheduled for arraignment before Magistrate Judge Dave Whalin on April 28, 2016, in Louisville.
This tax case is being prosecuted by Assistant United States Attorney Jason Snyder, and is being investigated by the Internal Revenue Service – Criminal Investigation Division.
The charge of a person by Federal Indictment is an accusation only and that person is presumed innocent until and unless proven guilty.