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4 April 2016
National Crime Victims' Rights WeekRead the Press Release
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Lincoln County pill dealer pleads guilty to Federal crimesRead the Press Release
CHARLESTON, W.Va. – A Lincoln County drug dealer pleaded guilty today to federal crimes associated with selling pain pills, announced Acting United States Attorney Carol Casto. Timothy Scott Hallam, 34, entered a guilty plea to conspiracy to distribute oxycodone and conspiracy to launder the proceeds of his drug dealing.
Hallam admitted that from May 2012 through May 2014, he obtained oxycodone pills from Lester Taylor, who resided in Florida, for distribution in Lincoln County. After Hallam sold the pills in West Virginia, he and the other co-conspirators deposited the proceeds into Taylor’s bank accounts at various banks in Barboursville and Huntington. Once the money was deposited in West Virginia, Taylor and others would withdraw the money in Florida. Hallam admitted to depositing over $40,000 in drug proceeds as part of the conspiracy.
Taylor was previously sentenced in November 2015 to 10 years in federal prison. Hallam faces up to 40 years in federal prison when he is sentenced on July 6, 2016.
This case was investigated by the West Virginia State Police, the Internal Revenue Service’s Criminal Investigation division, the Metropolitan Drug Enforcement Network Team, and the Drug Enforcement Agency. Assistant United States Attorney Monica D. Coleman is handling the prosecution. The plea hearing was held before United States District Judge John T. Copenhaver, Jr.
This case is being prosecuted as 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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Lincoln County Man Pleads Guilty to Trafficking Synthetic DrugsRead the Press Release
St. Louis, MO - Richard Gross, Winfield, Missouri, pled guilty to multiple counts involving the trafficking of synthetic drugs. He entered his plea before United States District Judge John A. Ross.
According to court documents, Richard Gross and co-defendant Paul Berra manufactured synthetic cannabinoids known on the street as "K 2" and "Incense" and synthetic cathinones known on the street as "Bath Salts." These products were sold to stores in a number of states. However, their largest customer was Gross' mother, co-defendant Pam Tabatt, who was the largest retailer of synthetic drugs in Missouri. She sold the synthetic drugs through South 94 Bait and Tackle in St. Charles County and Smoke Sensations, Nights of Rave in St. Louis County.
Gross pled guilty to one felony count each of conspiracy to distribute and possess with the intent to distribute controlled substance analogues intended for human consumption, conspiracy to fraudulently receive and distribute misbranded products in interstate commerce, conspiracy to import controlled substance analogues into the United States and conspiracy to receive, sell and facilitate transportation of smuggled goods. Sentencing has been set for July 12, 2016.
Pamela Tabatt, St. Peters, Missouri, pled guilty to related charges in March. She is scheduled for sentencing June 21, 2016. Paul Berra, Jr., Warrenton, Missouri, entered his plea in January and is schedule for sentencing May 2, 2016.
These charges carry a penalty range of 5 to 20 years in prison for each count and/or fines ranging from $250,000 to $1,000,000. In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges. Additionally, as part of his conviction, he will be required to forfeit assets and property totaling more than $500,000.
This case was investigated by US Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Internal Revenue Service Criminal Investigation, Drug Enforcement Administration, the Postal Inspection Service and the Federal Bureau of Investigation. Additional assistance was received from the St. Louis County Police Department, St. Charles County Sheriff’s Department, Missouri Lake Area Narcotics Enforcement Group, Metropolitan Enforcement Group for Southern Illinois, Southern Illinois Drug Task Force, the Illinois Attorney General’s Office, as well as the prosecuting attorney's offices in St. Louis County, Missouri; St. Charles County, Missouri; Madison County, Illinois; and St. Clair County, Missouri. Assistant United States Attorneys James Delworth and Erin Granger are handling the cases for the U.S. Attorney's Office.
Liberal Sex Offender Sentenced to 20 Years for Child PornRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a prior sex offender in Liberal, Mo., was sentenced in federal court today for receiving and distributing child pornography over the Internet.
Timothy Curless, 55, of Liberal, was sentenced by U.S. District Judge Beth Phillips to 20 years in federal prison without parole. The court also sentenced Curless to a lifetime of supervised release following incarceration. Curless has prior state convictions in Kansas for aggravated indecent liberties with a child and aggravated incest.
On Sept. 30, 2015, Curless pleaded guilty to receiving and distributing child pornography over the Internet between Nov. 4, 2012 and April 19, 2013.
According to court documents, a law enforcement officer was conducting an undercover investigation into the distribution of child pornography by suspect(s) using file-sharing software. On two separate occasions the officer downloaded images of child pornography from Curless’s computer. Among those images were children who have not reached puberty and a child as young as three years of age. When officers executed a search warrant they learned that Curless had been using his neighbor’s wi-fi network in order to access the Internet.
This case was prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the Southwest Missouri Cyber Crime Task Force.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Last week: Secretary General Stock in D.C. for Final Nuclear Security SummitRead the Press Release
On March 31st and April 1st, the White House and U.S. Department of State hosted the fourth and final Nuclear Security Summit in Washington, D.C. The purpose of the summit, attended by 53 nations and 3 non-governmental organizations, was to strengthen international commitments to the security of nuclear materials. It also provided world leaders the opportunity to discuss new initiatives for combating nuclear terrorism through improved communication, new training, and the sharing of best practices. Secretary General Jürgen Stock was the head of the delegation for INTERPOL, along with Director Geoffrey Shank, representing the U.S. National Central Bureau (USNCB).
The day before the summit, the Secretary General and USNCB leadership met with staff from the Commerce, Justice, Science, and Related Agencies Subcommittee, as well as staff from the House Homeland Security Committee later that day. Dr. Stock provided a strategic overview of his vision for INTERPOL going into 2020, emphasizing connectivity between the organization’s databases and those of its members in Europe, improving the use of biometrics, and securing borders against foreign terrorist fighter (FTF) travel. Dr. Stock also noted that though INTERPOL continues to excel in integrating security infrastructure, the rise of cybercrime poses ever greater challenges to law enforcement, and more must be done to ensure partners are communicating their intentions and addressing local administrative problems. To do so, Dr. Stock stressed, requires not only the support of a nation’s NCB, but the uncensored support of its respective government.
Kansas City, Kan., Man Sentenced to 12 Years in Drug Trafficking ConspiracyRead the Press Release
KANSAS CITY, KAN. – A Kansas City, Kan., man was sentenced Monday to 12 years in federal prison for his part in a drug trafficking organization that is alleged to have distributed large amounts of methamphetamine, U.S. Attorney Barry Grissom said.
Joshua Thomas Alvarez, 26, Kansas City, Kan., pleaded guilty to one count of conspiracy to distribute methamphetamine. In his plea, he admitted that in July 2012 the FBI identified a major drug trafficking ring operating in Kansas City, Kan. During the investigation, agents made 15 controlled purchases of methamphetamine from members of the organization. Five search warrants were executed at locations where methamphetamine and firearms were stored. Alvarez was identified as one of the conspirators who purchased methamphetamine from the leader of the organization and resold it.
Co-defendants include:
Vicencio Olea-Monarez, 38, Kansas City, Kan., who is awaiting trial.
Gabriel Agustin Lopez, 30, who is set for sentencing June 27.
Rosalio Chinchilla, 45, Kansas City, Kan., who is set for sentencing June 15.
Jose Luis Silva-Cardona, 26, Kansas City, Mo., who is set for sentencing June 13.
Lee Thomas Faulkner, 41, Topeka, Kan., who is set for sentencing July 5.
Omar Francisco Orduno-Ramirez, 37, who is awaiting trial.
Hector Javier Valdez, 36, who is awaiting trial.
Juan Carlos Alvarez, 28, who is set for sentencing June 15.
Herbert Lee Saysoff, 54, who is awaiting trial.
Grissom commended the FBI and Assistant U.S. Attorney David Zabel for their work on the case.
Justice Department Sues ValueAct for Violating Premerger Notification RequirementsRead the Press Release
ValueAct Invested Over $2.5 Billion in Halliburton and Baker Hughes, Failed to Notify Antitrust Authorities, Wrongly Claiming No Intent to Influence Companies’ Business Decisions
The Department of Justice today filed a civil antitrust lawsuit in the U.S. District Court for the Northern District of California against certain ValueAct Capital entities for violating the reporting and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The Antitrust Division’s lawsuit seeks civil penalties and an injunction against further HSR Act violations.
On Nov. 17, 2014, Baker Hughes and Halliburton – two of the three largest providers of oilfield products and services in the world – announced their plan to merge in a deal valued at $35 billion. Thereafter, ValueAct, an activist investment firm, purchased over $2.5 billion of Halliburton and Baker Hughes voting shares without complying with the HSR Act’s notification requirements. According to the complaint, ValueAct purchased these shares with the intent to influence the companies’ business decisions as the merger unfolded and therefore could not rely on the limited “investment-only” exemption to HSR notification requirements. The complaint details how ValueAct used its access to senior executives of both Halliburton and Baker Hughes to formulate merger and other business strategies with the companies.
“ValueAct’s substantial stock purchases made it one of the largest shareholders of two competitors in the midst of our antitrust review of the companies’ proposed merger, and ValueAct used its position to influence decision-making at both companies,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “ValueAct was not entitled to avoid HSR requirements by claiming to be a passive investor. Given the seriousness of the violation and ValueAct’s prior HSR violations, we will be seeking significant civil penalties and an injunction against further violations.”
The HSR Act imposes notification and waiting period requirements for transactions meeting certain size thresholds so that such transactions can undergo premerger antitrust review by the department and the Federal Trade Commission. The HSR Act has a narrow exemption for acquisitions of less than 10 percent of a company’s outstanding voting securities if that acquisition is made “solely for the purposes of investment” with no intention of participating in the company’s business decisions.
Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the department. The maximum civil penalty for an HSR violation is $16,000 per day.
ValueAct is an investment firm headquartered in San Francisco that advertises a strategy of “active, constructive involvement” in the management of the companies in which it invests. According to ValueAct’s website, ValueAct’s business model focuses on “acquiring significant ownership stakes in a limited number of companies,” and “[t]he goal in each investment is to work constructively with management and/or the company’s board to implement a strategy or strategies that maximize returns for all shareholders.” ValueAct manages over $16 billion on behalf of investors.
Jacqueline Stanfill Sentenced to Nine Years in Federal Prison for Fraud and Money LaunderingRead the Press Release
KNOXVILLE, Tenn. – On April 4, 2016, Jacqueline J. Stanfill, 58, of Knoxville, Tenn., was sentenced by the Honorable Leon Jordan, Senior U.S. District Judge, to serve 108 months in federal prison for wire fraud, mail fraud and money laundering. In January 2016, Stanfill pleaded guilty to these charges that were included in a July 2015 indictment.
In addition to her prison sentence, Stanfill was ordered to pay over $8 million in restitution to the victims of her crimes.
Stanfill was the owner and operator of Stanfill Wealth Management in Knoxville. In her plea agreement on file with the U.S. District Court Clerk, she admitted to claiming to invest her clients’ money with legitimate investment companies. However, Stanfill converted these funds to her own personal use. In order to maintain the confidence of her clients, she created phony documents that had the appearance of account statements and correspondence from Charles Schwab and Co., Inc. She further attempted to maintain the confidence of her clients by making payments either under the guise of returning invested funds and accumulated earnings, and/or by sending funds to the Internal Revenue Service to maintain the illusion that the client’s fictitious investments were tax-deferred.
This investigation was conducted by the Federal Bureau of Investigation and Internal Revenue Service. Assistant U.S. Attorneys Frank Dale and Jennifer Kolman represent the United States.
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Huntington man pleads guilty to Federal heroin chargeRead the Press Release
HUNTINGTON, W.Va. – A Huntington man who participated in a heroin distribution conspiracy in 2012 and 2013 pleaded guilty today in federal court, announced Acting United States Attorney Carol Casto. Edwin G. Simpson, 45, entered a guilty plea to maintaining a residence for the purpose of distributing and using heroin.
Between November 2012 and March 2013, Simpson was the tenant of an apartment at 1231 10th Avenue in Huntington. During that period, Simpson allowed others to store heroin at his apartment after it was transported from Detroit. Simpson also allowed others to distribute heroin from his apartment to various customers.
On March 8, 2013, agents with the Huntington FBI Drug Task Force executed a search warrant at Simpson’s apartment. During the search, agents seized heroin, a .32 caliber revolver, ammunition, and other items associated with the sale of heroin.
Multiple defendants have been convicted of drug offenses as a result of this investigation. Those sentenced to federal prison include Kenneth E. Baxter, who was sentenced to seven years and three months; Coty S. Richardson, who was sentenced to five years and ten months; Sean L. Gist, who was sentenced to five years and three months; Ramone L. Wells, who was sentenced to four years; Pricilla Lee Dylan, who was sentenced to two years and nine months; and Dustin S. Barton, who was sentenced to a year and a day. Paul A. Roberts, Jr., was sentenced to five years of probation for assisting the group in securing a residence to conduct drug deals. Warren G. Howard was also sentenced to five years of probation for distributing heroin.
The Huntington FBI Drug Task Force conducted the investigation. Assistant United States Attorney Joseph F. Adams is responsible for the prosecution. The plea hearing was held before Chief United States District Judge Robert C. Chambers.
This case is being prosecuted as 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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Former United States Tax Court Judge and Husband Indicted for Conspiracy to Commit Tax Evasion and Obstruction of an IRS AuditRead the Press Release
Diane Kroupa Filed Fraudulent Tax Returns While a Sitting U.S. Tax Court Judge
Kroupa and Her Husband Conspired to Evade More Than $400,000 in Federal Taxes
U.S. Attorney Andrew M. Luger for the District of Minnesota today announced a federal indictment charging Diane L. Kroupa, 60, and her husband, Robert E. Fackler, 62, with conspiring with each other to evade assessment of taxes. Each defendant is charged with conspiracy, tax evasion, making and subscribing false tax returns and obstruction of an Internal Revenue Service (IRS) audit. The defendants are expected to appear later this week in U.S. District Court in Minneapolis, Minnesota.
“The allegations in this indictment are deeply disturbing,” said U.S. Attorney Andrew Luger. “The tax laws of this country apply to everyone, and those of us appointed to federal positions must hold ourselves to an even higher standard.”
“As a former tax court judge, Kroupa dealt regularly with individuals who cheated on their taxes, which makes these allegations particularly troubling,” said Chief Richard Weber of the IRS-Criminal Investigation. “Reporting personal expenses as business expenses on your tax returns is not tolerated, regardless of your job or position. We expect all taxpayers to follow the law –whether you are a business owner, individual, or government official – we all must play by the same rules and pay our fair share.”
According to the indictment and documents filed in court, between 2004 and 2012, Kroupa and Fackler conspired to evade their tax obligations. Kroupa was appointed to the U.S. Tax Court on June 13, 2003, for a term of 15 years, but she retired on June 16, 2014. During the same period, Fackler was a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. From 2004 to 2013, Kroupa and Fackler owned a home in Minnesota. From 2007 to 2013, they also leased a second residence in Maryland.
According to the indictment and documents filed in court, as part of the conspiracy to defraud the United States, Kroupa and Fackler fraudulently claimed personal expenses as Grassroots Consulting business deductions. They fraudulently claimed the following personal expenses as deductible business expenses: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, the Bahamas, China, England, Greece, Hawaii, Mexico and Thailand.
According to the indictment and documents filed in court, Kroupa and Fackler made a series of other false claims on their tax returns, including failing to report approximately $44,520 that Kroupa received from a 2010 land sale in South Dakota. The defendants falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income.
According to the indictment and documents filed in court, in 2006, Kroupa and Fackler concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit. During a second audit in 2012, Kroupa and Fackler caused misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting.
According to the indictment and documents filed in court, between 2004 and 2010, Kroupa and Fackler purposely understated their taxable income by approximately $1 million and purposely understated the amount of tax they owed by at least $400,000.
This case is the result of an investigation conducted by the IRS-Crimination Investigation and the United States Postal Inspection Service.
Assistant U.S. Attorneys Benjamin Langner and Timothy Rank are prosecuting the case.
Former United States Tax Court Judge and Husband Indicted for Conspiracy to Commit Tax Evasion and Obstruction of an IRS AuditRead the Press Release
United States Attorney Andrew M. Luger today announced a federal indictment charging DIANE L. KROUPA, 60, and her husband, ROBERT E. FACKLER, 62, with conspiring with each other to evade assessment of taxes.[1] Each defendant is charged with conspiracy, tax evasion, making and subscribing false tax returns and obstruction of an IRS audit. The defendants are expected to appear later this week in U.S. District Court in Minneapolis, Minn.
“The allegations in this indictment are deeply disturbing,” said United States Attorney Andrew Luger. “The tax laws of this country apply to everyone, and those of us appointed to federal positions must hold ourselves to an even higher standard.”
“As a former tax court judge, Kroupa dealt regularly with individuals who cheated on their taxes, which makes these allegations particularly troubling,” said Richard Weber, Chief, IRS - Criminal Investigation. “Reporting personal expenses as business expenses on your tax returns is not tolerated, regardless of your job or position. We expect all taxpayers to follow the law –whether you are a business owner, individual, or government official – we all must play by the same rules and pay our fair share.”
According to the indictment and documents filed in court, between 2004 and 2012, KROUPA and FACKLER conspired to evade their tax obligations. KROUPA was appointed to the United States Tax Court on June 13, 2003 for a term of 15 years, but she retired on June 16, 2014. During the same period, FACKLER was a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. From 2004 to 2013, KROUPA and FACKLER owned a home in Minnesota. From 2007 to 2013, they also leased a second residence in Maryland.
According to the indictment and documents filed in court, as part of the conspiracy to defraud the United States, KROUPA and FACKLER fraudulently claimed personal expenses as Grassroots Consulting business deductions. They fraudulently claimed the following personal expenses as deductible business expenses: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, The Bahamas, China, England, Greece, Hawaii, Mexico and Thailand.
According to the indictment and documents filed in court, KROUPA and FACKLER made a series of other false claims on their tax returns, including failing to report approximately $44,520 that KROUPA received from a 2010 land sale in South Dakota. The defendants falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income.
According to the indictment and documents filed in court, in 2006, KROUPA and FACKLER concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit. During a second audit in 2012, KROUPA and FACKLER caused misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting.
According to the indictment and documents filed in court, between 2004 and 2010, KROUPA and FACKLER purposely understated their taxable income by approximately $1,000,000 and purposely understated the amount of tax they owed by at least $400,000.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the United States Postal Inspection Service.
Assistant U.S. Attorneys Benjamin Langner and Timothy Rank are prosecuting the case.
Defendant Information: DIANE L. KROUPA, 60
Minnetonka, Minn.Charges:
- Conspiracy to defraud the United States, 1 count
- Tax evasion, 2 counts
- Making and subscribing, 2 counts
- Obstruction of an IRS audit, 1 count
ROBERT E. FACKLER, 62
Minnetonka, Minn.
Charges:
- Conspiracy to defraud the United States, 1 count
- Tax evasion, 2 counts
- Making and subscribing, 2 counts
- Obstruction of an IRS audit, 1 count
Former Operative of Boston “Boiler Room” Sentenced to Prison for Fraud and Conspiracy ChargesRead the Press Release
BOSTON – A former Boston resident was sentenced today in U.S. District Court in connection with his participation in a fraudulent “boiler room” operation that misled investors and caused over $4 million in losses.
Jonathan Fraiman, 36, was sentenced by U.S. District Court Judge F. Dennis Saylor, IV to six years in prison, three years of supervised release, and ordered to pay restitution of $3,800,466. Following an 11-day trial in December 2015, Fraiman was convicted of mail fraud and conspiracy to commit mail and wire fraud
In December 2007, Fraiman joined Envit Capital LLC (Envit), a company which, with its various related entities, purported to invest in and manage a hedge fund and private equity funds. Envit originally operated in Boston, and later opened an office in Boca Raton, Fla. Upon joining Envit, and through August 2009, Fraiman conspired with Envit’s CEO and Chairman, co-defendant Edward Laborio, to solicit investments, by, among other things, making fraudulent misrepresentations about the historical rate of return of certain Envit entities and falsely promising certain investors quarterly fixed dividends on their investments. As part of the scheme, Fraiman purported to act as some investors’ investment adviser, a position he exploited to convince his clients to invest monies, including retirement assets and trust monies, in Envit through bogus promises of guaranteed dividends and false assurances regarding the financial health of the company. As part of the conspiracy, Fraiman and Laborio periodically rolled out new Envit “offerings,” which invariably were based on deceptive representations about the company, to both existing and new investors in order to raise more funds for Envit, from which they both personally profited. Investors lost over $4 million through their investment in Envit and its related entities.
Laborio, who was also charged in the indictment, was a fugitive and was found deceased in Barcelona, Spain in summer 2015.
In imposing sentence, Judge Saylor noted the “coldhearted” nature of the crimes of which Fraiman was convicted, particularly given that some of the victims were elderly individuals who had lost retirement savings in the scheme.
United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement. The U.S. Attorney’s Office also acknowledges the valuable assistance provided by the U.S. Securities and Exchange Commission, Boston Regional Office. The case was prosecuted by Assistant U.S. Attorneys Vassili Thomadakis and Eric P. Christofferson of Ortiz’s Criminal Division.
Former Insurance Agency Owner Pleads Guilty to Defrauding Clients Out of More Than $500,000Read the Press Release
TULSA, Okla.–A former insurance agent and owner of Grand Lake Investments and Insurance in Grove, Oklahoma, pleaded guilty today to implementing a fraudulent scheme that caused his clients to lose $505,126.43, announced United States Attorney Danny C. Williams Sr. for the Northern District of Oklahoma, Special Agent in Charge R. Damon Rowe of the Internal Revenue Service-Criminal Investigation and Oklahoma Insurance Commissioner John D. Doak.
“The defendant perpetrated a scheme to defraud his clients who entrusted him with their annuities,” said U.S. Attorney Williams. “My office and our law enforcement partners are committed to an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. We are committed to ensuring that justice is provided for the victims.”
“Taking away an individual’s peace of mind by manipulating his or her retirement nest egg is unconscionable,” stated SAC Rowe. “Retirees obviously count on every penny of hard-earned money being there when it is needed, and they should not be subjected to the greed of trusted insurance agents who line their own pockets with dollars manipulated away from clients who have literally placed a portion of their future in the hands of thieves. It is deceitful, it is shameful, and it is just plain wrong. That is exactly why IRS Criminal Investigation is very proud and willing to team up with agencies like the Oklahoma Insurance Department who share our goal of putting people like Mr. Hibbing out of business, and punishing them for their financial misdeeds.”
“Fraud is something I will not tolerate,” said Oklahoma Insurance Commissioner Doak. “It is imperative that consumers be able to trust their insurance agent or broker. I want to thank the U.S. Attorney for the Northern District of Oklahoma, the IRS and the Arkansas Insurance Department for their assistance in this case. It was truly a team effort.”
Gary Edward Hibbing, 52, of Chino, California, and formerly of Grove, Oklahoma, pleaded guilty before U.S. District Court Chief Judge Gregory K. Frizzell to two counts of wire fraud and two counts of unlawful monetary transactions. Hibbing was indicted on August 12, 2015. Sentencing is scheduled on July 12, 2016.
According to admissions made in court, Hibbing defrauded his victims through a scheme called “twisting.” Twisting is an insurance industry term that refers to the fraudulent practice by an insurance agent of convincing a client to surrender an existing annuity in exchange for a new one. Because there is usually a penalty for early termination of an annuity, the client often loses money while the agent makes money on a new commission.
Hibbing admitted that he lied to clients to convince them to surrender their existing annuities and immediately purchase new ones. He intentionally failed to disclose early termination penalties. He also provided false information to insurance companies to facilitate his twisting scheme.
At the time of sentencing, Hibbing faces imprisonment terms up to 20 years on the wire fraud counts and up to 10 years on the unlawful monetary transaction counts. The defendant also faces entry of a criminal forfeiture money judgment in the amount of $505,126.43 representing proceeds obtained as a result of his wire fraud scheme.
The case was investigated by the Internal Revenue Service-Criminal Investigation and the Oklahoma Insurance Department’s Anti-Fraud Unit. The case is being prosecuted by Assistant U.S. Attorneys Kevin C. Leitch, Clemon D. Ashley, and Catherine Depew.
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Former Cheyenne, Wyoming Resident Christopher Sean Koegl Sentenced for False Statement and Fraud to Obtain Federal Employees' CompensationRead the Press Release
Cheyenne – U.S. Attorney Christopher A. Crofts announced today that forty-five year old Colonial Heights, Virginia, resident Christopher Sean Koegl was sentenced on March 28, 2016, by United States District Court Judge Alan Johnson to serve thirty-six (36) months of probation and to pay approximately $31,090 in restitution to the United States government for making false and fraudulent statements to obtain federal workers’ compensation benefits. In addition to this sentence, Koegl will no longer receive federal workers’ compensation benefits as a result of this felony conviction.
Koegl is a former resident of Cheyenne, Wyoming, and a former U.S. Postal Service employee who injured his knee on the job and began receiving federal workers’ compensation benefits in 2010. These benefits were paid by the U.S. Department of Labor. As a federal workers’ compensation beneficiary, Koegl was required to immediately report if he returned to work or obtained new employment. Koegl was also required to immediately return any benefit payment which he received for a period in which he worked.
In September 2014, Wyoming Division of Criminal Investigation agents served a search warrant on Koegl’s Cheyenne residence and seized evidence of drug distribution. When interviewed by agents, Koegl admitted selling heroin in Cheyenne beginning around July 2013. Following the interview, Koegl was arrested and charged with possession of heroin with intent to deliver in violation of Wyoming state law. Koegl pleaded guilty and was sentenced by the state court to 5 years’ probation.
As charged in the indictment, on April 15, 2014, Koegl submitted a false form to the Department of Labor which reported that he was not self-employed or involved in any business activities between January 2013 and April 2014. This statement was false because Koegl was selling heroin in Cheyenne between July 2013 and April 2014.
"The Office of Inspector General is committed to working with our law enforcement partners to ensure that those who defraud Department of Labor programs, in this case the Federal Employees' Compensation Act program, are held accountable," stated Steven Grell, Acting Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.
The U.S. Postal Service Office of Inspector General’s Executive Special Agent in Charge Joanne Yarbrough said, "The American public trusts that U.S. Postal Service employees will obey the law. When an employee of the Postal Service violates that trust, the U.S. Postal Service Office of Inspector General (USPS OIG) thoroughly investigates those matters. It should be noted the overwhelming majority of Postal Service employees are honest, hardworking, and trustworthy individuals who would never consider engaging in any criminal behavior. The behavior described in this sentencing is not tolerated within the Postal Service. Workers' compensation benefits are for those who are truly injured and this sentencing sends a clear message that workers' compensation fraud is a federal crime, which carries serious consequences. The USPS OIG, along with our law enforcement partners and the U.S. Attorney's Office, remain committed to safeguarding the integrity of the Worker's Compensation program and ensuring the accountability and integrity of U.S. Postal Service employees."
Former Carlsbad Resident Jailed for Sale of Unapproved “Energy Wave” Medical DevicesRead the Press Release
Assistant U.S. Attorney Melanie K. Pierson (619) 546-7976
NEWS RELEASE SUMMARY – April 4, 2016
SAN DIEGO – Former Carlsbad resident David Perez was sentenced in federal court today to 30 months in custody for selling unapproved “Energy Wave” medical devices over the internet and mailing them to customers throughout the United States.
According to admissions in his plea agreement, Perez marketed the “Energy Wave” device using the website www.myenergywave.com. The Energy Wave device consists of a micro-current frequency generator with a digital readout, two stainless steel cylinders, two personal application plates with connectors and lead wire for the cylinders and plates. Users were provided with an operating manual and a list of Auto Codes that set forth over 450 digital settings for the device, directed to treat specific conditions from abdominal pain, AIDS and diabetes to stroke, ulcer and worms. The Auto Codes and Manuel advised users to connect the cylinders or plates to the machine, and touch them to the body for a recommended run time to treat each condition.
David Perez admitted selling each device for approximately $1,200-$1,500, and receiving gross proceeds of approximately $271,000. He also acknowledged that he intended to defraud and mislead the Food and Drug Administration by attempting to evade the agency’s oversight of medical claims made regarding the Energy Wave device by maintaining a separate website (rifecodes.com) to which he referred customers who needed to obtain the auto codes that allegedly were used to treat the various medical conditions. Perez admitted that he knew or should have known a number of his customers were vulnerable because they had purchased the device in an attempt to cure cancer, and that they were marketing the device without the proper FDA approvals.
“It’s unconscionable to sell useless medical devices to critically ill people who are hoping for a miracle,” said U.S. Attorney Laura Duffy. “This sentence reflects the serious nature of this crime, and our commitment to protecting those who are most vulnerable to being preyed upon by heartless predators.”
“This investigation uncovered a serious public health threat and should serve as a warning to those who put consumers at risk for their own financial gain,” said Dave Shaw, special agent in charge for HSI San Diego. “HSI agents will continue to work with our law enforcement partners, both here and abroad, to investigate medical-related fraud over the Internet, especially when it involves an online marketing scam, such as this case in which unregulated medical devices were sold under false pretense.”
“The U.S. Postal Inspection Service will continue to work with our partners in law enforcement to ensure that the U.S. Postal Service isn't used as a conduit for those criminals who seek to perpetrate medical quackery upon the American consumer,” said Robert Wemyss, Inspector in Charge of the U.S. Postal Inspection Service - Los Angeles Division. “This type of crime takes advantage of the most vulnerable segment of the population to include the elderly and terminally ill. The protection of our citizens remains the cornerstone of our mission.”
“Consumers rely on the FDA to ensure that the medical products they use, including medical devices, actually treat the diseases or conditions they claim to. When criminals sell misbranded devices not cleared by the FDA, they put users’ health at risk,” said Lisa L. Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations’ Los Angeles Field Office. “We will continue to devote our resources to removing such threats to the public’s health from the U.S. marketplace.”
DEFENDANT Criminal Case No. 15cr0360-BEN
David Perez Age: 60 Medford, Oregon
SUMMARY OF CHARGES
Conspiracy– Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison and $250,000 fine
AGENCIES
Immigration and Customs Enforcement’s Homeland Security Investigations
Postal Inspection Service
Food and Drug Administration, Office of Criminal Investigations
Former Baggage Handlers at LAX Arrested on Federal Drug Charges for Allegedly Using Credentials to Bring Cocaine Past SecurityRead the Press Release
LOS ANGELES – Two former baggage handlers who worked at Los Angeles International Airport were arrested today by law enforcement authorities investigating the use of employee credentials to breach airport security.
Adrian Ponce, 27, and Alberto Preciado Gutierrez, 26, both of South Gate, were arrested this morning without incident by law enforcement officers with the Drug Enforcement Administration, the Federal Bureau of Investigation, the Los Angeles World Airports Police Department, and the Los Angeles Police Department. Both defendants are scheduled to make their initial appearances this afternoon at 2:00.
The two defendants are charged in a federal criminal complaint with conspiracy to possess with intent to distribute and to distribute cocaine. Both men are expected to make their initial court appearances this afternoon in United States District Court in Los Angeles.
According to an affidavit by a detective with the Los Angeles Airport Police, who is working with an anti-narcotics trafficking task force at LAX, Ponce and Preciado “were engaged in a nationwide conspiracy to possess with intent to distribute and to distribute cocaine.” As part of this conspiracy, Ponce and Preciado facilitated the ability of third-party couriers to use commercial airlines to smuggle kilogram “samples” of cocaine from Los Angeles to drug customers on the East Coast. At the time of the conspiracy, Preciado was a supervisory baggage handler employed by Swissport International at LAX.
“These defendants are charged with abusing their privileged access on behalf of drug dealers,” said United States Attorney Eileen M. Decker. “This case is yet another example of employees associated with airports assisting drug traffickers.”
Less than two weeks ago, authorities arrested a JetBlue flight attendant who allegedly attempted to bring nearly 70 pounds of cocaine through security at LAX (see: http://go.usa.gov/cM6aW). Marsha Gay Reynolds, who was arrested in New York, has arrived in Los Angeles, and is expected to make her initial appearance in United States District Court this afternoon at 2:00.
As part of the investigation into the former baggage handlers, law enforcement seized a kilogram of cocaine in Preciado’s possession on December 16, 2015. According to the affidavit, the seizure was made in a restroom in Terminal 3 at LAX, where Preciado was delivering the cocaine to a courier, a man identified as “J.C.,” who was holding a boarding pass to travel on a JetBlue flight to New York only an hour later. After this incident, Preciado was terminated by Swissport.
The following day, law enforcement interviewed Ponce, who had been taken into custody while waiting for Preciado in a vehicle outside Terminal 3. According to the affidavit, Ponce gave a written statement in which he admitted that “on multiple occasions,” he and Preciado had used Preciado’s supervisory status as an LAX employee to smuggle drugs to out-of-state drug customers by using third-party couriers, such as J.C., who had booked flights from LAX to the East Coast, and were willing to take the drugs on a commercial flight in exchange for payment.
In another statement given to law enforcement officials in January, Ponce allegedly admitted working with a large-scale drug supplier, and he explained how couriers with travel documents would pass through normal airport security, and would be provided with kilogram quantities of cocaine by Preciado, who had used his employee credentials to bypass security screening. According to the affidavit, Ponce told law enforcement that if East Coast customers liked the cocaine “sample,” then large shipments – more than 100 kilograms – would be delivered by driving the drugs across the country, and Ponce allegedly admitted actually driving trucks laden with drugs, also in exchange for payment.
Ponce previously worked at LAX for a baggage handling service that was recently acquired by Swissport.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If they are convicted of the narcotics trafficking offense, Ponce and Preciado would face a mandatory minimum sentence of 10 years in federal prison, and a statutory maximum sentence of life.
This investigation was conducted by the DEA Los Angeles International Airport Narcotics Task Force, an inter-agency task force based at LAX. In addition to the Drug Enforcement Administration, the Task Force is made up of representatives from the Federal Bureau of Investigation, the Los Angeles World Airports Police Department, the Los Angeles Police Department, and the Los Angeles County Sheriff’s Department. The Task Force also works closely with the United States Customs and Border Protection and the Transportation Security Administration.
The DEA Los Angeles International Airport Narcotics Task Force is providing a coordinated law enforcement effort to target airport/airline internal criminal enterprises that use the aviation system to transport large amounts of illicit drugs throughout the United States, and throughout the world.
Swissport International cooperated in the investigation.
Federal Jury Convicts Three Mexican Nationals in Plan to Smuggle over $150,000,000 Worth of CocaineRead the Press Release
Tampa, Florida – United States Attorney A. Lee Bentley, III announces that a federal jury has found Lucio Molina Marroquin (38, Mexico), Robison Perez Montez (39, Mexico), and Javier Noyola Ruiz (40, Mexico) guilty of conspiring to possess five kilograms or more of cocaine with the intent distribute it while onboard a vessel subject to the jurisdiction of the United States. Each faces a mandatory minimum penalty of ten years, up to life, in federal prison. A sentencing hearing has been set for July 1, 2016.
According to evidence presented at trial, on July 6, 2015, a self-propelled semi-submersible (SPSS) vessel piloted by four Colombian nationals departed Colombia with more than 6,000 kilograms of cocaine. The vessel then traveled over 1,000 miles before arriving at its final destination, a point 200 nautical miles south of Puerto Escondido, Mexico. The vessel waited there for Mexican vessels to arrive to offload the drugs at sea.
Marroquin, Montez, and Ruiz were members of an advance team sent to verify the SPSS vessel’s arrival, check for law enforcement presence in the area, and then contact the organizers in Mexico so additional boats could be sent to rendezvous with the SPSS vessel and offload the cocaine. On July 18, 2015, before the offload could occur, the SPSS vessel was detected by a United States maritime patrol aircraft and interdicted by a boarding team from United States Coast Guard Cutter STRATTON.
This case was investigated by the Panama Express South Strike Force, a standing Organized Crime Drug Enforcement Task Force (OCDETF), comprised of agents and analysts from the Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Drug Enforcement Administration, the United States Coast Guard Investigative Service, the Naval Criminal Investigative Service, and U.S. Southern Command's Joint Interagency Task Force South. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply. This case is being prosecuted by Special Assistant United States Attorney James Zoll and Assistant United States Attorney Christopher F. Murray.
Federal Indictments Result in Charges Against 16 in Gregg CountyRead the Press Release
TYLER, Texas - U.S. Attorney John M. Bales announced today that 16 individuals have been charged in a federal firearms and drug trafficking conspiracy in the Eastern District of Texas.
According to the three indictments, which were returned by a federal grand jury on Mar. 16, 2016, the 16 defendants are alleged to be involved in a conspiracy by either members or associates of the Aryan Brotherhood and criminal street gangs to violate federal firearms and narcotics laws in the Gregg County, Texas area. Those named in the indictments from Longview include:
Haley Still, 29; Courtney Crim-Gross, 39; James Todd Harrington, Jr., 34; David Wayne Williams, 30; Chad David Dunaway, 23; Brandon Scott Cheatum, 34; Brandon Michael Allen, 31; Jason Ray Ragan, 26; Erick Lamar Addison, 37; James Lamar Fountain, 34; Charles Tarez Rollins, 41; Alvin Lee Thompson, 42; Kenneth Ray Addison, 41; and
Gena Elizabeth Rowley, 36.Also indicted was Timothy Paul Morales, 23, of Galveston, Texas.
The defendants are charged with conspiring to distribute methamphetamine and cocaine from at least January 2014. Many of the defendants are also charged with firearms violations such as being felons in possession of a firearm and possession of a firearm during a drug trafficking crime. If convicted, they face penalties of from five years to Life in federal prison.
This operation used confidential informants, search warrants, traffic stops, and other investigative tools to seize over 15 firearms and 650 grams of methamphetamine.
This 10-month, multi-agency investigation was led by the Tyler Texas Bureau of Alcohol, Tobacco, Firearms and Explosives Field Office and Tyler Texas Federal Bureau of Investigation Field Office with assistance provided by the Gregg County CODE Unit, Longview Police Department, Gregg County Sherriff’s Office, and the Tyler Texas Drug Enforcement Administration Field Office. This case is being prosecuted by Assistant U.S. Attorney Jim Middleton.
District Court Enters Injunction Against Michigan Cheese Manufacturer and Its Owners to Prevent Distribution of Adulterated CheeseRead the Press Release
The U.S. District Court for the Eastern District of Michigan entered an injunction against S. Serra Cheese Company (Serra Cheese), of Clinton Township, Michigan, and its co-owners, Stefano Serra and Fina Serra, to prevent the distribution of adulterated cheese, the Department of Justice announced today.
The department filed a complaint on Aug. 8, 2014, in the U.S. District Court for the Eastern District of Michigan, at the request of the U.S. Food and Drug Administration (FDA). According to the complaint, S. Serra Cheese Company prepares, processes and distributes several varieties of pasteurized, ready-to-eat cheeses, such as ricotta, provolone, mozzarella and primo sale. The complaint alleged that the company’s Italian cheeses are manufactured in insanitary conditions and that the company’s procedures are inadequate to ensure the safety of its products.
The injunction announced today followed an Oct. 20, 2015, decision by the district court that Serra Cheese violated the Food, Drug and Cosmetic Act by distributing adulterated, ready-to-eat cheese products. The company sells these products to customers in Michigan, Illinois, New York and Pennsylvania.
“The Department of Justice is committed to preventing the unlawful distribution of adulterated food and enforcing laws designed to protect consumer health and safety,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Department of Justice’s Civil Division. “The Department of Justice will continue to work with the FDA to enforce laws designed to protect the American people from adulterated food.”
The district court’s Oct. 20, 2015, decision concluded that inspections by the FDA in 2013 showed that Serra Cheese repeatedly introduced adulterated cheese into interstate commerce and caused the cheese to become adulterated while held for sale after shipment in interstate commerce. The inspections, which occurred in January and November 2013, resulted in the collection of samples that showed that Listeria innocua was present in numerous locations throughout Serra Cheese’s facility. Analysis of other samples showed significant levels of non-pathogenic E. coli in the finished cheese products, indicating exposure of the products, directly or indirectly, to feces.
Furthermore, according to the district court’s Oct. 20, 2015, decision, Serra Cheese’s own testing, conducted in March 2015, revealed the presence of Listeria spp. at multiple locations in the company’s facility, including on its production floor.
The injunction requires Serra Cheese to take specific steps to remedy the violations found by the court. The defendants are required to submit a written plan to test the cheese in its existing inventory to detect the presence of certain microorganisms. In addition, defendants are required to conduct ongoing testing of certain finished cheese products pursuant to a plan approved by FDA. If, as part of the ongoing testing of finished cheese products, any such product tests positive for L. mono or pathogenic E. coli, defendants must immediately cease production and distribution and notify FDA that production and distribution have ceased.
In addition, under the injunction, the defendants must submit to the FDA a sanitation program that establishes adequate methods, facility and controls for receiving, preparing, processing, packing, holding, and distributing articles of food to minimize the risk of introduction of pathogenic Listeria or any other poisonous or deleterious substances, or contamination with filth, to ensure that defendants’ foods are not adulterated under the Act. For example, the plan must include thoroughly cleaning, sanitizing, renovating and rendering the facility and all equipment suitable for use in receiving, preparing, processing, packing, holding and distributing articles of food to prevent such articles from becoming adulterated and instituting standard sanitation operating procedures to ensure that the facility and equipment are continuously maintained in a sanitary condition.
The government is represented by Trial Attorney David A. Frank of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Peter Caplan of the Eastern District of Michigan, with the assistance of Associate Chief Counsel Yen Hoang of the U.S. Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Dallas Man is Sentenced to Serve a Total of 25 Years in Federal Prison on Drug and Firearm ConvictionsRead the Press Release
DALLAS — A Dallas man who was convicted at trial last year on all counts of a superseding indictment charging drug trafficking and firearm offenses was sentenced on Thursday to a lengthy federal prison term, announced U.S. Attorney John Parker of the Northern District of Texas and U.S. Attorney John M. Bales of the Eastern District of Texas.
Thomas Earl Wright, 34, was sentenced by U.S. District Judge Jane J. Boyle to serve a total of 300 months in federal prison. He was convicted, following a five-day trial in September 2015, on one count of possession with intent to distribute five kilograms or more of cocaine, one count of possession with intent to distribute marijuana, one count of possessing a firearm in furtherance of a drug trafficking crime and one count of being a felon in possession of a firearm.
According to documents filed in the case and evidence presented at trial, officers with the Dallas Police Department responded to a welfare complaint about children coming and going from a narcotics stash house on Packard Street in Dallas. When officers arrived at the residence, they encountered Wright, with bundles of cash stuffed in his pockets, leaving the residence through its back door. When Wright’s co-defendant, Eric Tyrone Harris, opened the front door to the residence when officers knocked, officers noted a strong odor of marijuana emitting from the residence. A juvenile was at the front door with Harris, and officers removed the child from the residence and released him to a parent.
Law enforcement secured a search warrant and found multiple kilograms of cocaine located in a suitcase in a utility room, more than 100 pounds of marijuana in a bedroom closet and approximately $30,000 in cash — $3,000 in Wright’s pockets and $27,000 in cash beneath a mattress. In addition, they located three firearms in the residence.
Harris pleaded guilty in April 2015 to one count of possession with intent to distribute cocaine and was sentenced last month by Judge Boyle to 100 months in federal prison.
The Dallas Police Department, U.S. Secret Service, Drug Enforcement Administration, Bureau of Alcohol, Tobacco, Firearms and Explosives and the Plano Police Department investigated. Assistant U.S. Attorney Errin Martin of the Northern District of Texas and Assistant U.S. Attorney Heather Rattan of the Eastern District of Texas prosecuted the case.
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Colombian Arms Trafficker Sentenced to 13 Years in PrisonRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JHON JAIRO CRUZ TREJOS, a/k/a “Mellizo,” a citizen of Colombia, was sentenced today to 13 years in prison for conspiring to import cocaine into the United States and a related weapons offense. CRUZ TREJOS’s conviction on these charges resulted from his efforts to broker weapons deals on behalf of Colombian paramilitary groups, including exchanging cocaine for surface-to-air missiles and machine guns, and attempting to obtain highly enriched uranium to be used in an attack on a United States Embassy. CRUZ TREJOS pled guilty to cocaine importation and weapons charges in November 2015 before U.S. District Judge Naomi Reice Buchwald, who imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Jhon Jairo Cruz Trejos conspired to broker multimillion-dollar cocaine deals on behalf of Colombian terrorist organizations. Cruz Trejos negotiated those deals to fund the purchase of machine guns and surface-to-air missiles, and he tried to obtain uranium for a ‘dirty bomb’ to be used against a U.S. embassy. For his serious crimes, Cruz Trejos has been sentenced to 13 years in prison.”
According to the allegations contained in the superseding Indictment to which CRUZ TREJOS pled guilty, other documents filed in Manhattan federal court, and statements made during court proceedings:
Beginning in 2010, CRUZ TREJOS and others attempted to broker a weapons deal involving two Colombian paramilitary groups, which are also U.S.-designated foreign terrorist organizations: the Fuerzas Armadas Revolucionarias de Colombia (“FARC”) and the Ejército de Liberación Nacional (“ELN”). CRUZ TREJOS expressed interest in purchasing highly enriched uranium, missiles, machine guns, grenades, and explosives on behalf of the FARC and the ELN. During meetings in February and March 2010, for example, CRUZ TREJOS and another individual explained that the FARC wanted to use uranium to manufacture a “dirty bomb” targeting the United States Embassy in Bogotá, Colombia. CRUZ TREJOS also stated that FARC personnel planned to use the weapons in attacks on military bases and naval ships in an effort to disrupt drug interdiction efforts by the governments of Colombia and the United States.
During a recorded meeting in Barbados in December 2010, CRUZ TREJOS and others discussed a multimillion-dollar transaction involving the uranium, as well as 480 missiles, remote-detonated explosives, grenades, and Kalashnikov rifles for use in paramilitary “incursions.” In late 2011, Franklin Ramos Sanchez, who also was a charged defendant in this case, later told a confidential source (the “CS”), who was acting at the direction of the Federal Bureau of Investigation (“FBI”), that the FARC leadership was evaluating the terms of the deal and considering other options. In April 2013, Sanchez told the CS that the FARC had postponed its plan to attack the U.S. Embassy in Bogota.
In September 2012, Sanchez escorted the CS to a remote part of Colombia and introduced him to an ELN commander. The ELN commander expressed interest in exchanging cocaine for weapons, and explained that CRUZ TREJOS would represent him in the transaction going forward. In April 2013, CRUZ TREJOS discussed transporting cocaine to the United States, with the expectation that the proceeds would be used to pay for the weapons. Between June 2013 and February 2014, CRUZ TREJOS and Sanchez negotiated terms on a deal that was to involve financing the purchase of at least 60 AK-101 machine guns, 30 Dragunov rifles, 10 PKM machine guns, and several Igla surface-to-air missiles through the importation and distribution of cocaine in the United States. In furtherance of the deal, on November 22, 2013, CRUZ TREJOS provided 17 kilograms of cocaine and the equivalent of approximately $43,000 to another confidential source acting at the direction of the FBI in Barranquilla, Colombia.
On February 13, 2014, CRUZ TREJOS and Sanchez were arrested at a mall in Cartagena, Colombia. In a post-arrest statement, CRUZ TREJOS admitted that he had previously provided cocaine to an associate with the expectation that the proceeds would be used to purchase AK-101s, Dragunovs, and Igla missiles, and that he further planned to sell the weapons to either the FARC or the ELN.
CRUZ TREJOS and Sanchez were subsequently extradited to the United States. CRUZ TREJOS arrived in the Southern District of New York on or about April 30, 2015.
* * *
On November 5, 2015, CRUZ TREJOS pled guilty to all three Counts of the superseding Indictment: (1) conspiring to import five or more kilograms of cocaine into the United States; (2) distributing five or more kilograms of cocaine, knowing and intending that the narcotics would be imported into the United States; and (3) conspiring to use and carry machine guns during and in furtherance of a drug-trafficking crime.
In addition to his prison term, CRUZ TREJOS, 44, was sentenced to five years of supervised release, and ordered to pay a $300 special assessment.
Mr. Bharara praised the outstanding investigative work of the FBI’s New York Field Office and Weapons of Mass Destruction Directorate. Mr. Bharara also thanked the U.S. Department of Justice’s Office of International Affairs, and the Colombian National Police.
The prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Emil J. Bove III and Edward Y. Kim are in charge of the prosecution.
Chelmsford Man Charged with Attempting to Destroy Power Lines in Tyngsborough with Incendiary DeviceRead the Press Release
BOSTON – A previously-convicted Chelmsford man was charged today in U.S. District Court in Boston in connection with attempting to destroy high-voltage power lines with an incendiary device.
Danny M. Kelly, 61, was charged in a complaint with attempting to maliciously destroy and damage property used in interstate and foreign commerce and in an activity affecting interstate and foreign commerce by means of fire. Kelly was detained following an appearance before U.S. District Court Magistrate Judge Page Kelley today.
According to the complaint, on March 30, 2016, a brush fire broke out near Locust Avenue in Tyngsborough, Mass., in the vicinity of high-voltage power lines that bring power to the greater Boston area from Canada. After fire crews extinguished the fire, emergency and National Grid officials observed several suspicious objects dangling from the power lines. The objects were rendered safe by law enforcement officials and determined to be homemade incendiary devices containing materials which together make thermite, a substance that can cut through metal objects, such as power lines. At least one of the devices had been activated and fell to the ground and ignited the brush fire.
According to the complaint, federal agents also found a typed note on one of the high-voltage grid poles. The unsigned note took credit for cutting the lines, threatened future attacks, and threatened to disseminate on terrorist and anarchist websites the instructions on how to make the thermite devices.
As alleged in the complaint, federal law enforcement agents quickly recognized several similarities between this attack on the power infrastructure and an extortionate scheme in 2004-2005 in which Kelly had cut approximately 18 cable and telephone lines. The FBI also learned of recent shipments to Kelly’s residence of chemicals from which thermite can be made. During the search of Kelly’s residence, the FBI found an additional thermite device as well as additional chemicals and other materials related to the crime.
Kelly was convicted in federal court for the 2004-2005 crime, and has a long history of grievances with the court system, the immigration system, and the Town of Chelmsford.
The charge provides for a mandatory minimum sentence of five years and no greater than 20 years in prison, five years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Colonel Richard McKeon, Superintendent of the Massachusetts State Police; Chief James Spinney of the Chelmsford Police Department; and Chief Richard Howe of the Tyngsborough Police Department, made the announcement today. The Bureau of Alcohol, Tobacco, Firearms and Explosives, National Guard Civil Support Team, Massachusetts Department of Fire Services, National Grid and Tyngsborough Fire Department are also assisting in the investigation. The case is being prosecuted by Assistant U.S. Attorney Aloke Chakravarty of Ortiz’s National Security Unit.
The details contained in the complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Cheektowaga Woman Pleads Guilty to Access Device Fraud and Aggravated Identity TheftRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
BUFFALO, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Danielle Hamilton, 27, of Cheektowaga, NY, pleaded guilty to conspiring to commit access device fraud and aggravated identity theft before U.S. District Judge Lawrence J. Vilardo. The access device fraud charge carries a maximum penalty of five years and a $250,000 fine. Aggravated identity theft carries a mandatory penalty of two years which must be served consecutive to any penalty imposed on the access device fraud charge.Assistant U.S. Attorneys MaryEllen Kresse and Elizabeth R. Moellering, who are handling the case, stated that from October 2013 to January 2014, the defendant and others traveled to Walmart stores and other retail establishments in Western New York and Pennsylvania where they used unauthorized credit cards. The credit cards were obtained without the true account holder’s knowledge or authority. Hamilton and others purchased $500 store gift cards and other merchandise totaling in excess of $300,000.
The plea is the culmination of an investigation on the part of the United States Postal Inspection Service under the direction of Boston Division Inspector in Charge Shelly A. Binkowski, and the United States Secret Service under the direction of Special Agent in Charge C. Todd Laster.
Sentencing is scheduled for June 13, 2016 at 9:00 a.m. before Judge Vilardo.
Catherine McKinney Imprisoned for Large Law Firm EmbezzlementRead the Press Release
The United States Attorney for the District of Vermont announced that Catherine McKinney, 62, of Hartland, was sentenced today in United States District Court in Rutland to 36 months of imprisonment following her guilty plea to a charge of mail fraud. U.S. District Judge Geoffrey Crawford ordered that McKinney serve a one-year term of supervised release following her release from prison and pay restitution of about $903,000. At the conclusion of the hearing, McKinney was remanded to the custody of the U.S. Marshal to begin serving her sentence.
According to court records, on June 17, 2015, a federal grand jury in Rutland returned a three-count indictment charging McKinney with mail and wire fraud and interstate transportation of stolen money. The indictment alleges that, beginning no later than 2008 and continuing until early 2015, McKinney embezzled at least $690,000 from her employer, Myers Associates PLLC, a law firm in Lebanon which represents clients in both Vermont and New Hampshire. According to the indictment, McKinney wrote law firm checks to herself and to her creditors on which she forged the signature of her attorney employer. She deposited more than $90,000 in forged checks into her Vermont bank account. McKinney allegedly also caused electronic transfers of firm funds to pay her obligations, including large credit card bills. McKinney pled guilty to the mail fraud charge last December. Further investigation after the indictment established that the total loss suffered by Myers Associates was actually $962,000. McKinney recently liquidated the 401(k) retirement plan that had been set up by Myers Associates and turned over the net proceeds, about $64,000, as partial payment toward her restitution obligation.
This case was investigated by the United States Secret Service.
McKinney is represented by Assistant Federal Public Defender Elizabeth Quinn. The prosecutor is Assistant U.S. Attorney Gregory Waples.
Blaine Man Sentenced to 15 Years for Transporting Child PornographyRead the Press Release
Contact: Chris Ruge
Assistant United States Attorney
Tel: (207) 945-0373Bangor, Maine: United States Attorney Thomas E. Delahanty II announced that Robert Kinney, Jr., 41, of Blaine, Maine, was sentenced today in U.S. District Court by Judge John A. Woodcock, Jr. to 15 years in prison and 15 years of supervised release for transporting child pornography. The defendant was also ordered to pay $6,000 in restitution. He pled guilty on September 2, 2015.
According to court records, on about August 20 and 21, 2014, Kinney emailed at least nine videos and 15 images of child pornography as he traded with others over the internet. The defendant’s trade in child pornography supported, and was supported by, his personal collection of images and videos depicting the sexual exploitation of young children.
In announcing the sentence, Judge Woodcock described the defendant’s conduct as “chilling to any parent, grandparent, or anyone who cares about children.”
The investigation was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Maine State Police.
Attorney General Loretta E. Lynch Statement on Judicial Approval of Historic Settlement with BP over the Deepwater Horizon Oil SpillRead the Press Release
Following the order today by U.S. District Judge Carl J. Barbier to enter the consent decree settling United States of America v. BP Exploration & Production Inc., et al., Attorney General Loretta E. Lynch released the following statement:
“The approval of this agreement will open a final, hopeful chapter in the six-year story of the Deepwater Horizon tragedy,” said Attorney General Loretta Lynch. “Today’s action holds BP accountable with the largest environmental penalty of all time while launching one of the most extensive environmental restoration efforts ever undertaken. I want to thank everyone who made this outcome possible, including my predecessor, Attorney General Eric Holder, and the federal agencies and states that developed the comprehensive restoration plan. The Department of Justice will continue to stand with the people of the Gulf as they seek to rebuild and protect the marine life, coastal systems, and beautiful beaches that have made the region a treasured natural resource.”
Anderson Man Sentenced for Bank RobberyRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that an Anderson, Mo., man was sentenced in federal court today for robbing the Arvest Bank in Anderson.
Perry D. Abercrombie, 59, of Anderson, was sentenced by U.S. District Judge Beth Phillips to two years and nine months in federal prison without parole. The court also ordered Abercrombie to pay $699 in restitution.
On Aug. 3, 2015, Abercrombie pleaded guilty to robbing Arvest Bank, 607 N. Highway 71, Anderson, on May 18, 2015.
According to court documents, Abercrombie passed a handwritten note to a bank teller, indicating that he was robbing the bank and had a weapon. The teller retrieved $2,210 from her drawer and placed the money on the counter. Abercrombie took the money and the note and put them in his pocket, then left the bank.
A Missouri Highway Patrol trooper notified deputies from the McDonald County Sheriff’s Department that he had seen a pickup in the vicinity of the bank earlier that day. The trooper thought the pickup was suspicious and requested registration information for the vehicle to ensure there were no alerts for the driver or the vehicle. Deputies identified Abercrombie as the vehicle’s owner and retrieved his information, including a photograph. They showed Abercrombie’s driver’s license photo to bank employees, who said he resembled the man who had robbed the bank.
After identifying Abercrombie as a suspect in the bank robbery, a deputy drove to Abercrombie’s residence. After a short time, Abercrombie arrived at the residence. He was questioned by law enforcement officers and eventually admitted that he robbed the bank. He showed officers a cash box in his bedroom where he had put the money stolen from the bank.
Abercrombie also admitted that he had been watching several local financial institutions to determine which bank had the most lax security. He indicated he took these additional steps to ensure he successfully robbed the Arvest Bank, as well as carry out future bank robberies. Investigators were able to confirm Abercrombie’s information about “casing” additional banks after obtaining bank surveillance videos showing Abercrombie in his vehicle in the parking lot of those businesses.
This case was prosecuted by Assistant U.S. Attorney Patrick Carney. It was investigated by the McDonald County, Mo., Sheriff’s Department and the FBI.
Anchorage Plastic Surgeon sentenced to prison for wire fraud and tax evasionRead the Press Release
Anchorage, Alaska – U.S. Attorney for the District of Alaska, Karen L. Loeffler, and Acting Assistant Attorney General of the Justice Department’s Tax Division, Caroline D. Ciraolo announced today that an Anchorage plastic surgeon was sentenced to 48 months in prison for wire fraud and tax evasion.
Dr. Michael D. Brandner, 67, of Anchorage, Alaska, was convicted by a federal jury in November 2015 of four counts of wire fraud and three counts of tax evasion. The charges arose from a scheme to conceal over $5 million of assets in secret bank accounts in Panama and Costa Rica from the Internal Revenue Service (IRS) and Dr. Brandner’s wife. According to the indictment and evidence introduced at trial, shortly after his wife filed for divorce in late 2007, Dr. Brandner collected millions of dollars in marital assets and secretly drove from Tacoma, Washington, to Costa Rica in Central America. In Costa Rica, he opened two bank accounts into which he deposited over $350,000 in cash and hid a thousand ounces of gold in a safe deposit box. He then traveled to Panama where he opened an account under the name of a sham corporation and deposited $4.6 million into the account in 2008.
Dr. Brandner concealed both the existence of the bank accounts and the interest income he earned on those accounts from the court in the divorce proceedings and from the IRS. Dr. Brandner owed the IRS $500,000 in additional taxes for the 2008 through the 2010 tax years. In 2011, Dr. Brandner repatriated over $4.6 million once the divorce was final only to have the funds seized by U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE HSI) special agents. He then lied to federal agents about his control of the funds.
In addition to the prison term, U.S. District Judge Sharon L. Gleason ordered Dr. Brandner to serve two years of supervised release and pay $25,922.95 toward the costs of prosecution. The judge will also consider the government’s request for restitution for Dr. Brandner’s ex-wife.
“Tax evasion and financial crimes undermine the system of laws that govern this country and demean the vast majority of citizens that pay their taxes and deal honestly and openly with the rules governing a whole array of judicial procedures,” said U.S. Attorney Loeffler. “I appreciate the hard work of the investigators and prosecutors who put the case together and presented it to the jury resulting in these verdicts.”
“Tax evasion knows no geographic bounds,” said Acting Assistant Attorney General Ciraolo. “This case demonstrates that there is no longer any country where it is safe for a defendant like Dr. Brandner to hide money from the government. The Department of Justice, along with its law enforcement partners, will continue to aggressively pursue individuals who conceal assets and income abroad in an effort to evade our nation’s tax laws.”
"Unchecked greed causes financial ruin to those left in its wake and creates an uneven playing field for those who would circumvent the law. Our mission at IRS-CI is to be that check to the fraudulently greedy," stated Special Agent in Charge Teri Alexander of IRS-Criminal Investigation. "Michael Brandner effectively stole from the US treasury and attempted to hide assets and money from the courts in an attempt to skirt the tax laws. We are grateful that the Department of Justice partnered with us to bring Brandner to justice and protect the integrity of our nation's tax system."
U.S. Attorney Loeffler and Acting Assistant Attorney General Ciraolo commend the special agents of IRS-Criminal Investigation and HSI, who investigated the case, as well as prosecutors, Assistant U.S. Attorney Bryan Schroder, and Trial Attorney Ignacio Perez de la Cruz of the Tax Division.
Alleged Drug Trafficker Extradited from Mexico to Eastern District of CaliforniaRead the Press Release
SACRAMENTO, Calif. — On Friday, April 1, 2016, Alvaro Rios-Madrid, 57, of Guamuchil, Sinaloa, Mexico, was formally extradited to the United States by Mexico to face federal narcotics charges, United States Attorney Benjamin B. Wagner announced.
On December 13, 2012, a federal grand jury in Sacramento indicted Rios-Madrid on one count of conspiring to distribute cocaine and two counts of using phones to facilitate the distribution of narcotics.
According to court documents, the government alleges that Rios-Madrid regularly exported large quantities of cocaine from Mexico to the United States and used a U.S.-based distribution cell to move his cocaine through a nationwide network of couriers to several states including Utah, Minnesota, Indiana, Ohio, Massachusetts, and California. Rios-Madrid is alleged to have regularly smuggled multi-kilogram quantities of cocaine into the United States through various ports of entry, including Nogales, Arizona, and San Ysidro, California. The cash proceeds from the sale of Rios-Madrid’s cocaine totaled, on average, between $500,000 and $1.3 million every month. Operatives in the United States arranged for those proceeds to be sent to Rios-Madrid in Mexico. As a result of a long-term investigation, the DEA and other state and federal agencies seized large quantities of cocaine and over $1 million in cash.
This case is the product of an investigation by the U.S. Drug Enforcement Administration; the United States Marshals Service; the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); the Department of Homeland Security, U.S. Customs and Border Patrol; the Sacramento County Sheriff’s Department; the Central Valley HIDTA; the Sacramento Police Department; the California Department of Justice (Cal MMET); the San Joaquin County Metropolitan Narcotics Task Force; the Elk Grove Police Department; the San Joaquin County Sheriff’s Department; the Stockton Police Department; the Los Angeles County Sheriff’s Department; the Galt Police Department; the California Highway Patrol; the Nevada State Highway Patrol; the Minnesota Highway Patrol; the Kansas State Highway Patrol; the Massachusetts State Highway Patrol; and the Iowa State Highway Patrol. The U.S. Department of Justice’s Office of International Affairs provided assistance with the extradition. Assistant United States Attorneys Michael M. Beckwith and Paul A. Hemesath are prosecuting the case.
If convicted of the conspiracy, Rios-Madrid faces a maximum statutory penalty of 10 years to life in prison, a $10 million fine, and five years to life of supervised release. If convicted of using a cellphone to facilitate a drug trafficking offense, Rios-Madrid faces a maximum statutory penalty of four years in prison and a $250,000 fine for each count. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Albuquerque Men Ordered Detained Pending Trial on Federal Bank Robbery ChargesRead the Press Release
ALBUQUERQUE – This morning a U.S. Magistrate Judge sitting in Albuquerque, N.M., found probably cause to support a criminal complaint charging Greg Miera, 50, Martin Huerta, 43, Christian Herrera, 20, Isaiah Gallegos, 20, and Christopher Gallegos, 31, all of Albuquerque, with bank robbery. The Magistrate Judge ordered Miera, Huerta and Christopher Gallegos detained pending trial, and released Herrera and Isaiah Gallegos to a half-way house under pretrial supervision and other conditions of release.
Miera, Huerta, Herrera, Isaiah Gallegos and Christopher Gallegos were arrested on March 30, 2016, by the FBI and Albuquerque Police Department after a source identified the men as the individuals involved in robbing the US Bank located at 5620 Wyoming Blvd. NE in Albuquerque, on March 30, 2016. The complaint alleged that APD officers conducted surveillance as a vehicle with four men pulled up to the US Bank on the afternoon of March 30, 2016. Three of the men remained outside in the vehicle while the fourth entered the US Bank, threatened to shoot the bank employees, and demanded that two bank tellers place cash into a plastic bag.
APD officers continued to conduct surveillance as the fourth man reentered the vehicle and the vehicle was driven to a residence in the North Valley of Albuquerque where the officers later allegedly observed Miera throw a plastic bag containing cash over a fence into a vacant lot. Thereafter, the FBI executed a search warrant at the residence and also retrieved the plastic bag with cash that allegedly was discarded by Miera.
If convicted of the crimes charged in the criminal complaint, Miera, Huerta, Herrera, Isaiah Gallegos and Christopher Gallegos each face a maximum of 20 years in federal prison. Charges in criminal complaints are merely accusations. All criminal defendants are presumed innocent unless proven guilty beyond a reasonable doubt.
This case was investigated by the Albuquerque office of the FBI and the Albuquerque Police Department. Assistant U.S. Attorney Paul Mysliwiec is prosecuting the case.
Alaska Plastic Surgeon Sentenced to Prison for Wire Fraud and Tax EvasionRead the Press Release
Defendant Concealed Bank Accounts in Panama and Costa Rica from the IRS
An Anchorage, Alaska, plastic surgeon was sentenced to 48 months in prison on Friday for wire fraud and tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Karen L. Loeffler of the District of Alaska.
“Tax evasion knows no geographic bounds,” said Acting Assistant Attorney General Ciraolo. “This case demonstrates that there is no longer any country where it is safe for a defendant like Dr. Brandner to hide money from the government. The Department of Justice, along with its law enforcement partners, will continue to aggressively pursue individuals who conceal assets and income abroad in an effort to evade their responsibilities under our nation’s tax laws.”
Dr. Michael D. Brandner, 67, was convicted by a federal jury in November 2015 of four counts of wire fraud and three counts of tax evasion. The charges arose from a scheme to conceal over $5 million of assets in secret bank accounts in Panama and Costa Rica from the Internal Revenue Service (IRS) and Dr. Brandner’s wife. According to the indictment and evidence introduced at trial, shortly after his wife filed for divorce in late 2007, Dr. Brandner collected millions of dollars in marital assets and secretly drove from Tacoma, Washington, to Costa Rica in Central America. In Costa Rica, he opened two bank accounts into which he deposited over $350,000 in cash and hid a thousand ounces of gold in a safe deposit box. He then traveled to Panama where he opened an account under the name of a sham corporation and deposited $4.6 million into the account in 2008.
Dr. Brandner concealed both the existence of the bank accounts and the interest income he earned on those accounts from the court in the divorce proceedings and from the IRS. Dr. Brandner owed the IRS $500,000 in additional taxes for the 2008 through the 2010 tax years. In 2011, Dr. Brandner repatriated over $4.6 million once the divorce was final only to have the funds seized by U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE HSI) special agents. He then lied to federal agents about his control of the funds.
In addition to the prison term, U.S. District Judge Sharon Gleason in Anchorage ordered Dr. Brandner to serve two years of supervised release, and pay $25,922.95 toward the costs of prosecution.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Loeffler thanked special agents of IRS-Criminal Investigation and HSI, who investigated the case and Trial Attorney Ignacio Perez de la Cruz of the Tax Division and Assistant U.S. Attorney Bryan Schroder of the District of Alaska, who jointly prosecuted the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Abington Man Sentenced for Stealing Social Security BenefitsRead the Press Release
BOSTON – An Abington man was sentenced today in U.S. District Court in Boston for stealing $65,311 in Social Security benefits.
Mark Gardner, 57, was sentenced by U.S. District Court Senior Judge Mark L. Wolf to three years of probation, including six months of home confinement, and was ordered to pay $65,311 in restitution to the Social Security Administration and a fine of $6,000. In November 2015, Gardner pleaded guilty to stealing public money.
Gardner’s mother died in 2009, but her monthly Social Security benefits continued to be directly deposited into a bank account held jointly in her name and Gardner’s name. Although Gardner was not entitled to this money, he routinely withdrew the Social Security money for his own use. In total, from 2009 to 2014, Gardner took $65,311 in Social Security funds to which he was not entitled.
This case was brought as part of an ongoing effort by the U.S. Attorney’s Office, in partnership with the Social Security Administration, to investigate and prosecute the posthumous fraud of Social Security benefits. In many of these cases, family members, knowing they are not entitled to government benefits, continue to withdraw and spend the funds after a relative has died. In the past year, the U.S. Attorney’s Office has prosecuted several similar cases involving a total of more than $1 million in stolen government money.
Last month, Lucy Girard, of Townsend, Mass., pleaded guilty to stealing $208,068 from Social Security; Brian Sandiford, of Jamaica Plain, was sentenced for stealing $70,811 from Social Security; and Shirley Warner, of Haydenville, Mass., pleaded guilty to stealing $45,491 from Social Security. Next week, Richard Alan Hersey, of Winthrop, will be sentenced for stealing $444,287 in Social Security and federal pension benefits.
United States Attorney Carmen M. Ortiz and Scott Antolik, Special Agent in Charge of the Social Security Administration, Office of Inspector General, Office of Investigations, Boston Field Division, made the announcement today. The Gardner case was prosecuted by Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.
1 April 2016
Wounded Knee Man Indicted on Sexual Abuse and Contact ChargesRead the Press Release
United States Attorney Randolph J. Seiler announced that a Wounded Knee, South Dakota, man has been indicted by a federal grand jury for Sexual Abuse and Abusive Sexual Contact.
Kelly Tyrell Bell, a/k/a Kelly Thunder Horse, age 26, was indicted on March 22, 2016. Bell appeared before U.S. Magistrate Judge Daneta Wollmann on March 25, 2016, and pleaded not guilty to the Indictment.
The maximum penalty upon conviction is life 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 charges relate to Bell engaging in a sexual act with an incapacitated person on January 22, 2016, at Kyle.
The charges are merely accusations and Bell is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Bureau of Indian Affairs, Office of Justice Services, and the Federal Bureau of Investigation. Assistant U.S. Attorney Eric Kelderman is prosecuting the case.
Bell was released on bond pending trial. A trial date has been set for May 31, 2016.
Winner Man Sentenced for Aggravated IncestRead the Press Release
United States Attorney Randolph J. Seiler announced that a Winner, South Dakota, man convicted of Aggravated Incest was sentenced on March 28, 2016 by U.S. District Judge Roberto A. Lange.
Clinton Pierce, age 40, was sentenced to 54 months in custody, followed by 3 years of supervised release, a $5,000 fine, and a $100 special assessment to the Federal Crime Victims Fund.
Pierce was indicted for Aggravated Incest by a federal grand jury on July 14, 2015. He pled guilty on January 7, 2016.
Between September l, 2013, and June 23, 2015, Pierce and the victim were checking cattle together and driving around the family ranch in Todd County, South Dakota. While in the vehicle, Pierce sexually assaulted the victim, and the sexual touching happened for several minutes. The victim was under 18 years of age at the time.
This case was investigated by the Division of Criminal Investigation and Federal Bureau of Investigation. Assistant U.S. Attorney Carrie G. Sanderson prosecuted the case.
Pierce was immediately turned over to the custody of the U.S. Marshals Service.
Two Sentenced in Aggravated Identity Theft and Wire Fraud SchemeRead the Press Release
HOUSTON – Two Houston residents have been ordered to federal prison following their convictions of wire fraud and aggravated identity theft, announced U.S. Attorney Kenneth Magidson. Chloe McClendon, 27, and Domonique Thomas, 25, pleaded guilty Oct. 9, 2015.
Today, U.S. District Judge David Hittner upwardly departed from the U.S. sentencing guidelines in ordering Thomas to prison. He received 72 months for wire fraud as well as a mandatory 24 months for the aggravated identity theft which must be served consecutively for a total of 96 month in federal prison. Judge Hittner ordered McClendon to serve a total of 65 months – 41 months for the wire fraud and a consecutive 24 months on the identity theft. Both defendants were also ordered to serve three years of supervised release and must pay restitution in the amount of $267,253.43. In handing down the sentences, Judge Hittner read excerpts from statements of some of the 1,526 identified victims in the case.
The defendants were able to engage in this scheme through the theft of personal identifying information (PII) of individuals from the Department of State Passport Agency where McClendon had worked. They used the stolen and unlawfully obtained PII of true persons to create counterfeit identification documents. The defendants then recruited other individuals to assume the stolen identities and use the counterfeit documents to obtain commercial lines of credit and purchase iPhones, iPads and other electronics merchandise.
Previously released on bond, McClendon was taken into custody following the sentencing today where she will remain pending transfer to a U.S. Bureau of Prisons facility. Thomas has been and will remain in custody.
A third co-defendant - Alicia Myles, 31 - who had also pleaded guilty, will be sentenced June 1, 2016. She remains in custody.
The investigation leading up to the arrest was conducted by the Department of State, Diplomatic Security Service, Houston Field Office and Criminal Fraud Investigations Division and the Houston Police Department. Assistant U.S. Attorneys Ted Imperato and Alamdar Hamdani are prosecuting this case.
Two Members of International Child Exploitation Conspiracy SentencedRead the Press Release
Two members of an international child exploitation conspiracy were sentenced today for their participation in two websites that were operated for the purpose of coercing and enticing minors as young as eight years old to engage in sexually explicit conduct on web camera.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Section Chief Calvin Shivers of the FBI’s Violent Crimes Against Children Section (VCACS) made the announcement.
Stephen R. Funk, 35, of Milwaukee, and James E. Hancock, 45, of Boston, Georgia, were sentenced to 252 and 90 months in prison, respectively, by U.S. District Judge T.S. Ellis III of the Eastern District of Virginia. Both Funk and Hancock will be required to register as sex offenders. In December 2015, Funk and Hancock each pleaded guilty to one count of conspiracy to distribute and receive child pornography. The investigation, Operation Subterfuge, identified more than 300 minor victims in the United States and an estimated 1,600 minor victims were lured to the websites.
In connection with their guilty pleas, the defendants admitted that they and other members of the conspiracy created false profiles on social networking sites, such as YouTube, posing as young teenagers to lure children to the websites they controlled. Once on the conspirators’ websites, the conspirators showed the children pre-recorded videos of prior minor victims, often engaging in sexually explicit conduct, to make the new victims think that they were chatting with another minor. Using these videos, the conspirators coerced and enticed children to engage in sexually explicit activity on their own web cameras, which the website automatically recorded. Conspirators earned points based on their contribution to the success of website objectives, which allowed them access to the sexually exploitative videos of children. Law enforcement agencies have disabled both websites.
Trial Attorney Lauren Britsch of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Tracy Doherty-McCormick of the Eastern District of Virginia prosecuted the case. CEOS Trial Attorney Ravi Sinha assisted with the prosecution.
VCACS special agents led the investigation with the assistance of the FBI’s Operation Rescue Me and the FBI’s Digital Analysis and Research Center. The South Africa Police Service, Family Violence, Child Protection and Sexual Offenses, Gauteng; Dutch Police Service Agency, KLPD; Royal Canadian Mounted Police, National Child Exploitation Coordination Centre; and the Australian Federal Police, Child Protection Operations, Sydney were active partners in the investigation. The U.S. Attorneys’ Offices of the Eastern District of Wisconsin and the Middle District of Georgia contributed to the investigation and the prosecution.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Tennessee Woman Sentenced to Prison for Tax Fraud SchemeRead the Press Release
NORFOLK, Va. – Marsha King, 38, of Lakeland, Tennessee, was sentenced today to 100 months in prison for theft of government money and aggravated identity theft.
On July 30, 2015, after a week-long jury trial, King was found guilty of two counts of theft of government property and 12 counts of identity theft. According to court documents and evidence presented at trial, King resided with her sister in Memphis, Tennessee. King’s sister was employed as a school teacher in Memphis and actively engaged in various extra-curricular programs. At various times, King’s sister would print out rosters of her students and bring them home. On these rosters were various means of identification of the students in King’s sister’s class. Unbeknownst to King’s sister, the names and means of identification of these students were used by Marsha King to file false and fraudulent federal income tax returns and fraudulently receive income tax refunds.
The income tax returns were filed electronically from Memphis, and according to IRS records, a number of the false and fraudulent income tax returns can be traced back to IP addresses that originated from Marsha King’s Sprint account and her University of Memphis student account. Marsha King was a student at the University of Memphis and had a student account and access to the University of Memphis intranet system. Based upon the instructions on the false and fraudulent income tax returns, the IRS made direct deposits into a number of different bank accounts. At least one of these accounts was in the name of Marsha King. Other accounts were in the name of Marsha King’s friends and family members, including her ex-husband who was in prison.
During this time period, Marsha King had another sister who lived in Norfolk. Some of the funds obtained from these false and fraudulent tax returns were deposited into accounts in the name of King’s sister. When Marsha King traveled to Norfolk to visit her sister, she ultimately withdrew in excess of $140,000 of the fraudulently obtained income tax refunds. In total, King filed approximately 500 fraudulent returns for approximately $611,000 in loss to the government.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Thomas Jankowski, Special Agent in Charge, Washington D.C. Field Office, IRS-Criminal Investigation, made the announcement after sentencing by U.S. District Judge Raymond A. Jackson. Assistant U.S. Attorneys Stephen Haynie and Joseph Kosky prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:14-cr-65.
Stevensville Man Convicted of Manufacturing and Dealing Firearms Without a LicenseRead the Press Release
MISSOULA – Following a three day federal trial, a Montana jury found Kyle Robert Wick, 31, of Stevensville, guilty of manufacturing and dealing in firearms without a license. The charges stemmed from Wick’s advertisement and sale of “Uzi parts kits” on a gun sale website. Sentencing has been set for July 22, 2016.
Wick was originally indicted by a grand jury in October of 2015, for transfer of firearms not registered in the National Firearms Registration and Transfer Record. A superseding indictment containing additional counts, including manufacturing and dealing firearms without paying tax, registering as a dealer, or having a license, was filed in March 2016. The Jury acquitted on counts related to transfer of unregistered firearms and failing to pay tax or register as a dealer, but found Wick guilty of dealing firearms without a license.
At trial, the government introduced evidence that in April of 2013, agents with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), found an advertisement for an “Uzi parts kit” for sale on the website gunbroker.com. In May of 2013, a confidential informant made contact with the seller, who was located in Stevensville, Montana. The seller identified himself as Kyle Wick. The informant purchased an Uzi parts kit from Wick for $1,200. Wick explained to the informant how to machine the parts to assemble them as a semi-automatic weapon.
The parts kit was turned over to ATF. An ATF officer was able to reassemble the parts into a functioning machinegun configuration. The ATF conducted a search for Kyle Robert Wick in the National Firearms Registration and Transfer Record (NFRTR), and failed to locate his name. The Uzi parts kit likewise was not registered with the NFRTR. ATF agents conducted a search of Wick’s Stevensville residence in March of 2014 and seized firearms parts and computers.
The agents interviewed Wick during the search of his residence. Wick said that he had conducted sales on gunbroker.com for approximately four years. He acknowledged that he did not have a license to manufacture firearms or machineguns. He stated that he had sold “at least several dozen” Uzi parts kits in addition to the one purchased by the informant. He said that he did all of the welding work in his garage. The ATF recovered numerous additional kits that Wick had sold online, which contained parts capable of assembling semi-automatic or fully automatic machineguns. Wick did not possess a license to manufacture or deal in firearms as required by the Gun Control Act of 1968.
“The US Department of Justice is dedicated to enforcing our existing gun laws and to ensuring that gun sales are conducted only by reputable dealers in compliance with the law,” said U.S. Attorney Michael Cotter. “The Jury’s verdict in this case reinforces the truth that nobody is above these laws, and that individuals like Mr. Wick, who attempt to circumvent them, will be held accountable.”
“Wick intentionally bypassed federal regulations by manufacturing and dealing firearms without a license,” said ATF Special Agent in Charge Ken Croke. “These federal firearms regulations were enacted to protect American citizens by restricting criminals’ access to guns and assisting law enforcement investigations related to violent gun crime.”
The case was prosecuted by Assistant U.S. Attorney Paulette Stewart and Special Assistant U.S. Attorney Adam Duerk. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives.
St. Louis Man Sentenced in Craigslist Counterfeit ConspiracyRead the Press Release
James L. Porter, Acting United States Attorney for the Southern District of Illinois, announced today, that Lewis Johnson, 38, of St. Louis, Missouri, was sentenced in the District Court in East Saint Louis, Illinois, on the charge of Conspiracy to Manufacture, Possess and Pass Counterfeit United States Currency. The Court sentenced Johnson to 36 months in federal prison to be followed by 3 years of supervised release.
Johnson pled guilty on December 29, 2015. During his plea, Johnson admitted that he, along with several others, had engaged in an agreement to use counterfeit United States currency to buy vehicles off of sellers using Craigslist. Once in possession of the vehicles they would then resell them for genuine currency. During his sentencing on March 31, 2016, the District Court Judge found that Johnson had engaged in the manufacturing of counterfeit currency in addition to passing the counterfeit.
During August of 2013, the group contacted a person in Sandoval, Illinois, who had listed his vehicle for sale on Craigslist. Johnson, along with the other conspirators then met with the seller and purchased the vehicle for $2,400 in counterfeit $100 Federal Reserve Notes. Johnson and others involved in the conspiracy were arrested a short time after the fraudulent purchase.
The investigation in this case was conducted by the Carlyle and Sandoval Police Departments, the Clinton County Sheriff’s Office, and the United States Secret Service. The case is being prosecuted by Assistant United States Attorney Ranley R. Killian.
School Construction Authority General Contractor Sentenced to 96 Months in Prison for Long-Running Scheme to Deprive Workers of the Prevailing WageRead the Press Release
Earlier today in Brooklyn federal court, Muzaffar Nadeem, the owner of SM&B Construction Co., Inc. (SM&B), was sentenced to 96 months’ imprisonment, ordered to pay more than $1.3 million in restitution to the IRS, and ordered to forfeit to the government over $7.1 million in criminal proceeds, following his convictions on May 8, 2015, after a four-week jury trial, for mail and wire fraud, structuring financial transactions, federal programs bribery, making illegal cash payments to a union official, money laundering, unlawful monetary transactions over $10,000, subscribing to false tax returns, and multiple related conspiracy charges.
The convictions arose out of Nadeem’s leadership role in a long-running scheme to pay SM&B’s workers a fraction of the prevailing wage on projects funded by the New York City School Construction Authority (SCA), as SM&B was legally and contractually required to do. Nadeem’s co-conspirators Zainul Syed, Afzaal Chaudry and Irfan Muzaffar were also convicted at trial of various crimes for their participation in this scheme. Muzaffar was previously sentenced to 18 months’ imprisonment, and Chaudry was previously sentenced time served, following approximately ten months of imprisonment. Syed is awaiting sentencing. The sentencing proceedings were held before U.S. District Judge Brian M. Cogan.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Shantelle P. Kitchen, Special-Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York; and Jonathan Mellone, Acting Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.
“Contractors who perform public works in New York City and New York State are on notice that if they line their pockets by cheating workers out of the wages to which they are entitled will be vigorously prosecuted,” stated United States Attorney Capers. Mr. Capers expressed his grateful appreciation to the Office of the New York State Attorney General and that office’s Organized Crime Task Force, the New York City Department of Investigation, the New York City School Construction Authority, Office of Inspector General, the New York City Police Department, and the New York County District Attorney’s Office for their assistance in the investigation and prosecution of the defendant.
IRS Special Agent-in-Charge Kitchen stated, “The conviction of Mr. Nadeem and his co-conspirators and now, the sentencing of Mr. Nadeem, will hopefully give the hard working individuals who were defrauded in this multi-million dollar scheme a feeling that justice has been served. Additionally, this investigation should send a reassuring message to the taxpayers, who ultimately fund School Construction Authority projects, that law enforcement will investigate and prosecute such frauds, as well as send a message of deterrence to anyone contemplating taking advantage of public works projects.”
DOL-OIG Special Agent-in-Charge Mellone stated, “Today’s sentencing underscores the Office of Inspector General’s continued commitment to bring to justice those who would bribe Union officials and falsify payroll records to cheat the American worker out of the required prevailing wage to which they are entitled.”
Nadeem owned and operated SM&B, which received over $36 million in fraud-induced payments from the SCA since 2007. Evidence at trial established that SM&B paid workers, including bricklayers and laborers, cash wages on its projects at rates that were a small fraction of the prevailing wage. The defendant and his co-conspirators Syed and Chaudry then falsely certified to the SCA that the workers had been paid the prevailing wage.
To conceal the scheme, and to obtain cash to pay the illegally low wages to workers, Nadeem, Syed and Muzaffar illegally structured financial transactions, cashing hundreds of checks in amounts less than $10,000 for the purpose of avoiding federal reporting requirements. Since July 2006, Nadeem and others acting his direction wrote more than $4.1 million in structured checks on SM&B’s account.
Nadeem and Syed arranged for the payment of $30,000 in cash bribes to an undercover SCA Inspector, and over $7,000 in cash bribes to Russell Argila, a shop steward for Local 1 of Bricklayers. Argila previously pleaded guilty to accepting those bribes. Nadeem also laundered approximately $7 million in proceeds of the scheme by funneling it through shell companies, and sent millions of dollars through these shell companies to Pakistan to invest in an amusement park and resort complex named “Wayzgoose Park.”
Finally, Nadeem filed false tax returns for SM&B and himself that fraudulently inflated SM&B’s business expenses and reduced its profits by more than $4 million.
The government’s case is being prosecuted by the Office’s Public Integrity Section. Assistant United States Attorneys Lan Nguyen, Gina M. Parlovecchio and Nathan Reilly are in charge of the prosecution. Assistant United States Attorney Claire Kedeshian is handling the forfeiture aspects of the case.
The Defendant:
MUZAFFAR NADEEM
Age: 60
Brooklyn, New YorkE.D.N.Y. Docket No. 13-CR-424 (BMC)
Savannah Man Sentenced to Nearly Thirteen Years in Federal Prison for Armed Bank RobberyRead the Press Release
Savannah, GA: Jerald A. Bowman, 40, was sentenced on Wednesday, March 30, 2016, by Chief United States District Court Judge Lisa Godbey Wood to 155 months imprisonment for the February 3, 2015 armed robbery of the Navy Federal Credit Union in Richmond Hill, Georgia. Bowman was also found to be responsible for armed robberies of the Georgia’s Own Credit Union in Savannah on September 30, 2014; the Wells Fargo Bank on Waters Road in Savannah on November 12, 2014; the Heritage Bank in Savannah on December 4, 2014; and the Wells Fargo Bank on Abercorn Street in Savannah on March 19, 2015.
Evidence showed that Bowman, who disguised his appearance during the robberies, conducted surveillance of the banks and used items such as rocks and door stops to hold the banks’ doors open. He distracted tellers with questions about deposit slips or money orders, then pulled out a gun and demanded money. In total, Bowman stole $15,055.00.
A military veteran, Bowman requested leniency from the Court based upon his service in the U.S. Army. Evidence presented at the sentencing hearing, however, showed Bowman was involuntarily separated from the Army with an Other Than Honorable Discharge following a series of assaults and drug use. Bowman insisted he suffered from mental stress as a result of combat deployments, but service records revealed Bowman never served in a theater of combat operations. “Some people have earned the right to wrap themselves in the flag,” said Chief Judge Wood. “But you, Mr. Bowman, are not one of them.”
United States Attorney Edward J. Tarver said, “Criminals who commit violent acts and endanger the lives of innocent parties should be sentenced to the harshest penalties provided by law. Protection of the American people is the Department of Justice’s number one priority. This U. S. Attorney’s Office will continue its aggressive efforts to prosecute dangerous criminals and remove them from our communities.”
J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated, “The partnership formed between the FBI’s Southeast Georgia Violent Crime Task Force and local police to advance the investigation resulted in this sentencing and removed a dangerous individual from the streets of Savannah. The FBI’s Task Force continues to partner every day with our local, state and federal partners to identify, investigate and arrest violent offenders to mitigate the threat they pose and to make our community a safer place.”
In addition to his prison sentence, Bowman was ordered to pay restitution and serve a period of supervised release after he is released from prison. Regarding the length of the prison sentence, Tarver noted that there is no parole in the federal system.
U. S. Attorney Tarver commended the efforts of the FBI Southeast Georgia Violent Crime Task Force, the Richmond Hill Police Department, the Savannah-Chatham Metropolitan Police Department, and the Savannah Department of Community Service. Assistant United States Attorneys Carlton Bourne, Jennifer Solari and Scarlett Nokes prosecuted the case. For additional information, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.
Sabattus Man Sentenced to over 11 Years for Receiving Child PornographyRead the Press Release
Contact: Craig M. Wolff
Assistant United States Attorney
Tel: (207) 780-3257Portland, Maine: United States Attorney Thomas E. Delahanty II announced that Jody G. Moczara, 35, of Sabattus, Maine, was sentenced today in U.S. District Court by Judge George Z. Singal to 135 months in prison to be followed by 10 years of supervised release for receiving child pornography. Moczara pleaded guilty to the charge on October 14, 2015.
According to court records, in June of 2015, Moczara used the internet and a file sharing program to download several child pornography videos to his computer. Information obtained from his computer showed that he used the file-sharing program to search for child pornography. The computer contained large numbers of child pornography video files and still images, including images depicting children in bondage, in pain or discomfort, and engaging in bestiality.
The investigation was conducted by the Maine State Police Computer Crimes Unit and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Romanian National “Guccifer” Extradited to Face Hacking ChargesRead the Press Release
Marcel Lehel Lazăr, 44, of Arad, Romania, allegedly the hacker “Guccifer,” made his initial appearance today in federal court in Alexandria, Virginia.
Lazăr had been temporarily surrendered from Romania to face U.S. charges relating to unauthorized access of protected computers, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office, Principal Deputy Assistant Secretary Bill A. Miller of the U.S. Department of State Bureau of Diplomatic Security (DSS) and Special Agent in Charge James M. Murray of the U.S. Secret Service’s Washington Field Office.
“Marcel Lazar is the latest of a dozen high-level cybercriminals who have recently been extradited to face justice in the United States,” said Assistant Attorney General Caldwell. “Old-fashioned investigative work, enhanced international law enforcement relationships, and a long memory can ensure that foreign-based hackers have no safe haven even in the remote corners of the globe. As the saying goes, ‘they can run, but they can’t hide.’”
“Mr. Lazar violated the privacy of his victims and thought he could hide behind the anonymity of the Internet,” said U.S. Attorney Boente. “No matter where they are in the world, those who commit crimes against U.S. citizens will be held accountable for their actions, pursued by our investigators and prosecutors and brought to justice.”
“As a direct result of relentless investigative efforts and cooperation with our international partners, Marcel Lazar, also known as Guccifer, will begin answering for his alleged cyberhacking activities today in the U.S. judicial system,” said Assistant Director in Charge Abbate. “I commend the dedicated work of the agents, analysts, prosecutors and our federal partners to identify Guccifer, who is alleged to have gained unauthorized access to on-line accounts and violated the privacy of victims, while attempting to hide unsuccessfully behind the anonymity of the Internet.”
In the United States, Lazăr is charged in a nine-count indictment with three counts of wire fraud, three counts of gaining unauthorized access to protected computers, and one count each of aggravated identity theft, cyberstalking and obstruction of justice. Lazăr's case will be heard before U.S. District Judge James C. Cacheris of the Eastern District of Virginia.
According to the indictment, from December 2012 to January 2014, Lazăr hacked into the email and social media accounts of high-profile victims, including a family member of two former U.S. presidents, a former U.S. Cabinet member, a former member of the U.S. Joint Chiefs of Staff and a former presidential advisor. After gaining unauthorized access to their accounts, Lazăr publicly released his victims’ private email correspondence, medical and financial information and personal photographs. The indictment also alleges that in July 2013 and August 2013, Lazar impersonated a victim after compromising the victim’s account.
The charges and allegations contained in an indictment are merely accusations. The defendant is presumed innocent until and unless proven guilty.
The FBI’s Washington Field Office, the DSS and the U.S. Secret Service are investigating the case with assistance from the Romanian National Police.
Senior Counsels Ryan K. Dickey and Peter V. Roman of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Jay V. Prabhu and Maya D. Song of the Eastern District of Virginia are prosecuting the case. The Criminal Division’s Office of International Affairs has provided significant assistance.
Romanian National “Guccifer” Extradited to Face Hacking ChargesRead the Press Release
ALEXANDRIA, Va. – The hacker "Guccifer," alleged to be Marcel Lehel Lazăr, 44, of Arad, Romania, made his initial appearance today here in federal court on charges relating to unauthorized access of protected computers.
According to the indictment, from December 2012 to January 2014, Lazăr hacked into the email and social media accounts of high-profile victims, including a family member of two former U.S. presidents, a former U.S. Cabinet member, a former member of the U.S. Joint Chiefs of Staff and a former presidential advisor. After gaining unauthorized access to their accounts, Lazăr publicly released his victims’ private email correspondence, medical and financial information and personal photographs. The indictment also alleges that in July 2013 and August 2013, Lazar impersonated a victim after compromising the victim’s account.
“Mr. Lazar violated the privacy of his victims and thought he could hide behind the anonymity of the Internet,” said Dana J. Boente, U.S. Attorney for the Eastern District of Virginia. “No matter where they are in the world, those who commit crimes against U.S. citizens will be held accountable for their actions, pursued by our investigators and prosecutors, and brought to justice.”
Lazăr had been temporarily surrendered from Romania to face U.S. charges relating to unauthorized access of protected computers. In the United States, Lazăr is charged in a nine-count indictment with three counts of wire fraud, three counts of gaining unauthorized access to protected computers, and one count each of aggravated identity theft, cyberstalking and obstruction of justice. If convicted, he faces a maximum of 20 years in prison, with a two-year mandatory minimum for the aggravated identity theft charges. Lazăr’s next court appearance will be a detention hearing on Tuesday at 2 p.m.
“Marcel Lazar is the latest of a dozen high-level cybercriminals who have recently been extradited to face justice in the United States,” said Leslie R. Caldwell, Assistant Attorney General of the Justice Department’s Criminal Division. “Old-fashioned investigative work, enhanced international law enforcement relationships, and a long memory can ensure that foreign-based hackers have no safe haven even in the remote corners of the globe. As the saying goes, ‘they can run, but they can’t hide.’”
"As a direct result of relentless investigative efforts and cooperation with our international partners, Marcel Lazar, also known as Guccifer, will begin answering for his alleged cyberhacking activities today in the U.S. judicial system,” said Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office. “I commend the dedicated work of the agents, analysts, prosecutors, and our federal partners to identify Guccifer, who is alleged to have gained unauthorized access to on-line accounts and violated the privacy of victims, while attempting to hide unsuccessfully behind the anonymity of the Internet."
The FBI’s Washington Field Office, the DSS and the U.S. Secret Service are investigating the case with assistance from the Romanian National Police.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Leslie R. Caldwell, Assistant Attorney General of the Justice Department’s Criminal Division; Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office; Bill A. Miller, Principal Deputy Assistant Secretary of the U.S. Department of State Bureau of Diplomatic Security (DSS); and James M. Murray, Special Agent in Charge of the U.S. Secret Service’s Washington Field Office, made the announcement.
The case is being prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Maya D. Song, along with Senior Counsel Ryan K. Dickey and Trial Attorney Peter V. Roman of the Criminal Division’s Computer Crime and Intellectual Property Section. The Criminal Division’s Office of International Affairs has provided significant assistance.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:14-cr-213.
Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
Rochester Man Pleads Guilty to Sex Trafficking of A MinorRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051ROCHESTER, N.Y.—U.S. Attorney William J. Hochul, Jr, announced today that Harris Hickman, 33, of Rochester, NY, pleaded guilty before the U.S. District Judge Elizabeth A. Wolford to sex trafficking of a minor. The charge carries a mandatory minimum penalty of 10 years in prison, a maximum of life imprisonment and a fine of $250,000.
Assistant U.S. Attorney Tiffany H. Lee, who is handling the case, stated that in March 2014, Hickman trafficked a 15 year old minor using by posting photographs of the minor in advertisements on Backpage.com., knowing that the minor was only 15 years old and would be caused to engage in prostitution activity. Hickman also benefitted financially from the prostitution activities of the minor by getting part of the proceeds.
The plea is the culmination of an investigation on the part of the Federal Bureau of Investigation's Cyber Crimes Task Force, which includes the Monroe County Sheriff's Office, under the direction of Sheriff Patrick O'Flynn, the Rochester Police Department under the direction of Chief Michael Ciminelli, Special Agents of the FBI, under the direction of Special Agent in Charge Adam S. Cohen, and Special Agents of Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge James C. Spero.Retired Funeral Director Pleads Guilty to Submitting Fraudulent Claims to the Veterans AdministrationRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Karen Schlager, 60, of Snyder, NY, pleaded guilty to submitting false and fraudulent claims to the Department of Veterans Affairs before U.S. District Judge Lawrence J. Vilardo. The charge carries a maximum penalty of five years in prison and a $250,000 fine.
Assistant U.S. Attorney MaryEllen Kresse, who is handling the case, stated that the defendant, who was the funeral director at Schlager Funeral Home in Amherst, submitted claims to the VA seeking payment for death benefits, including transportation costs, burial services, and funeral costs, that she knew had not provided to veterans or their families. As a result of the defendant’s actions, the VA suffered a loss of approximately $13,800.
The plea is the culmination of an investigation on the part of Special Agents of the United States Veterans Administration, Office of Inspector General, Criminal Investigations Division, under the direction of Special Agent-in-Charge Jeffrey G. Hughes.
Sentencing is scheduled for July 7, 2016 at 10:00 a.m. before Judge Vilardo.Realtor Sentenced to Prison for Defrauding Vacationers Out of More Than $200,000Read the Press Release
Tampa, Florida – U.S. District Judge Steven D. Merryday has sentenced Michael Carleton (53, Bradenton) to 21 months in federal prison for mail fraud. As part of his sentence, the Court also entered a money judgment in the amount of $200,000, which constitutes the proceeds of the mail fraud. In addition, the Court entered an order requiring Carleton to pay restitution to the identified victims of the offense in the total amount of $136,098.96.
Carleton pleaded guilty on November 25, 2015.
According to court documents, from at least April 2012 through July, 2013, more than 70 individuals and families had entered into rental contracts via email with Carleton to rent vacation properties on Anna Maria Island. The contracts called for the renters to pay for the rental period prior to taking possession of the property. As the vacation rental dates approached, many victims were contacted by Carleton and given various excuses for why they could not be placed in their rental property, including that the properties needed repairs, or that he was filing bankruptcy and all monies needed to be secured by the trustee. In some cases, the victims (accompanied by family or friends) physically arrived at the rental properties, only to find another family already utilizing the property. In many cases, Carleton would rent and receive up-front payment from numerous renters for the same rental properties, for the same period of time. Victims arrived in Florida from all over the country, including one victim from as far away as Germany.
Over the course of the scheme, Carleton fraudulently received more than $200,000 from his victims. Some ultimately received refunds, only after threatening to or actually contacting the properties’ owners, or the Holmes Beach Police Department.
This case was investigated by the United States Postal Inspection Service. It was prosecuted by Assistant United States Attorney Rachel Jones.
R.I. Businessman Indicted for Arson, Wire FraudRead the Press Release
PROVIDENCE, R.I. – Daniel E. Saad, 50, of Spencer, Mass., pleaded not guilty in U.S. District Court in Providence, R.I., on Thursday to arson and wire fraud charges, for allegedly devising a executing a scheme to set fire to his business in Glocester, R.I., in an effort to collect insurance.
Appearing before U.S. District Court Magistrate Judge Patricia A. Sullivan, Saad pleaded not guilty to a federal indictment charging him with one count of arson, one count of use of fire to commit wire fraud, and two counts of wire fraud. Saad was released on unsecured bond following his arraignment.
The indictment, returned on Tuesday and unsealed on Thursday following Saad’s arrest and arraignment, is announced by United States Attorney Peter F. Neronha, Glocester Police Chief Joseph S. DelPrete, Daniel J. Kumor, Special Agent in Charge of the Boston Field Division of ATF, and Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police.
According to the indictment and information presented to the court, it is alleged that in late November 2014, Saad, who was encountering significant debt, devised a scheme to collect insurance payments by setting fire to his business, Snow’s Clam Box Restaurant and Pub, and then filing a claim with his insurance company for any damages caused by the fire.
It is alleged in the indictment that on November 30, 2014, Saad intentionally set fire to his business, causing significant damage, and that later the same day he filed an insurance claim with his insurance carrier.
An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The matter was investigated by the Glocester Police Department, the Rhode Island State Fire Marshal’s Office, and ATF, with the assistance of the Rhode Island Department of the Attorney General.
The case is being prosecuted by Assistant U.S. Attorney William J. Ferland.
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Contact:
Jim Martin (401) 709-5357
email: [email protected]
on Twitter @USAO_RI
Patient Recruiter and Staffing Company Employee Convicted of $2 Million Home Health Care Fraud SchemeRead the Press Release
A patient recruiter for several Miami-area home health agencies was convicted today for his role in a fraud and kickback scheme that resulted in the submission of millions of dollars in false and fraudulent claims to Medicare.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Division and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.
Carlos Rodriguez Nerey, 45, of Miami, was convicted after trial of one count of conspiracy to defraud the United States and pay and receive health care kickbacks and one count of receiving health care kickbacks.
According to evidence presented at trial, Nerey claimed to work at a staffing company called Sweet Life Staffing Inc. but was in fact a patient recruiter for D&D&D Home Health Inc. (D&D&D) and Mercy Home Care, Inc. (Mercy), two fraudulent home health care agencies in Miami. Evidence at trial demonstrated that Nerey worked for a number of fraudulent home health care companies in Miami before he began accepting kickbacks from D&D&D and Mercy. The defendant created a shell company for the purpose of accepting kickbacks from Mercy and D&D&D and received approximately $250,000 as a result of his role in the scheme, evidence at trial showed.
The evidence introduced at trial showed that Medicare paid more than $2 million to D&D&D and Mercy for those claims.
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 Southern District of Florida. Fraud Section Trial Attorneys Lisa H. Miller and Elizabeth W. Young 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 nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 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.
Omaha Woman Sentenced for Wire FraudRead the Press Release
United States Attorney Deborah R. Gilg announced that on April 1, 2016, Patricia Walker-Halstead of Omaha, Nebraska, age 70, was sentenced for wire fraud. The Honorable Joseph F. Bataillon, Senior United States District Court Judge, sentenced Walker-Halstead to a term of twelve (12) months and one (1) day imprisonment. After her release from prison, Walker-Halstead will begin a term of supervised release of 2 years. Walker-Halstead was also ordered to make restitution in the amount of $500,000.
An investigation conducted by the United States Secret Service and the Nebraska State Patrol determined that from March, 2011, and continuing through November, 2012, Walker-Halstead transmitted false and fraudulent email communications as part of a scheme to obtain money. During this time period Walker-Halstead operated a private investigation company named Walker Investigations. The scheme arose out of Walker-Halstead’s professional relationship with a client who hired Walker Investigations to provide investigative work to the client.
Between March, 2011, and continuing through November, 2012, Walker-Halstead sent email communication to the client which appeared as though they were sent from an Investigator named “Scott.” Walker-Halstead represented to the client that “Scott” worked for the Nebraska State Patrol and was assisting with investigative work being performed by Walker Investigations. Emails sent by Walker-Halstead to the client suggested “Scott” was having financial troubles related to medical expenses, legal expenses, business expenses, and personal expenses and that “Scott” needed the client’s financial assistance. As a result of the emails, Walker-Halstead obtained $500,000 in numerous payments which she represented was then given to “Scott” to assist with his financial needs. Investigators confirmed “Scott” was a person made up by Walker-Halstead and who has never existed. Money received by Walker-Halstead for the purported benefit of “Scott” was used by Walker-Halstead for her personal benefit.
The Court determined that the loss amount relating to the scheme totaled $500,000.
This case was investigated by the United States Secret Service and the Nebraska State Patrol.