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Thursday 4 February 2016
Sabol Pleads Guilty to Wire Fraud in Connection with Fraudulent Auto Leasing Scheme;Read the Press Release
SALT LAKE CITY – Nghia Thi Sabol, age 65, a Vietnamese citizen living in Salt Lake County, pleaded guilty to wire fraud in U.S. District Court Wednesday afternoon in connection with a fraudulent auto leasing program. Most of the investors in the scheme were promised returns of 4-5 percent per month on their investment, however they lost all or a majority of the funds they invested in the scheme. Restitution owed to victims in the case is $943,250.
Sabol, also known as Nia Sabol, Nghia Cano, Nghia Thi Nguyen, Nghia Wynn Sabol, and Nghia Wynn, is currently incarcerated in the Utah State Prison on unrelated securities charges. She was charged in a federal indictment returned in November with four counts of wire fraud and one count of money laundering following an investigation by the FBI and IRS Criminal Investigation.
According to documents filed in federal court, Sabol established a company called W.A.V.E., LLC (WAVE) with headquarters in Midvale. She claimed WAVE offered an automobile leasing program referred to as “WAVE’s American Evaluation Program” and solicited individuals to participate in the leasing program, promising returns of approximately 4 to 5 percent per month. She also sold investments in WAVE. Sabol represented that participants in WAVE’s automobile leasing program would receive a new automobile of their choice manufactured by one of the three major U.S. automobile manufacturers to “test drive” for one year with unlimited mileage. In return, they were required to pay a one-time, non-refundable fee of about $300, pay 10 percent of the manufacturer’s suggested retail price for the vehicle chosen, and were required to complete vehicle evaluation forms to be furnished to the manufacturer.
As a part of a plea agreement reached with federal prosecutors, Sabol admitted that she represented to investors that WAVE had contracts with three major U.S. automobile manufacturers and that WAVE would be paid a subsidy in exchange for vehicle evaluations provided by their participants, when in fact, she knew WAVE had no contracts with automobile manufacturers. She also admitted that she represented to investors that WAVE had purchased vehicles for WAVE’s auto leasing program with funds received from major automobile manufacturers, when in fact, the funds were obtained from WAVE investors. She also represented to investors that WAVE attorneys had received millions of dollars from automobile manufacturers and were awaiting distribution to WAVE, when in fact, no such funds had been provided to WAVE.
Sabol also concealed from investors that she had a previous felony conviction for fraud and was on parole, that the terms of her parole prohibited her from dealing in investments or being employed in a fiduciary position, and that most investors lost all or a majority of the funds they invested in WAVE.
Sabol’s plea to wire fraud involved the transfer of $160,000 from a victim of the fraud to WAVE’s account at a bank in Utah.
The plea agreement executed Wednesday includes a stipulated sentence of 24 months to be followed by 36 months of supervised release. The sentence is subject to the approval of and acceptance of the Court. The sentence would run concurrent with any indeterminate sentence imposed in a separate state case.
U.S. District Judge Clark Waddoups presided at the plea hearing Wednesday and is scheduled to impose the sentence in the case on April 14 at 3 p.m.
Rio Rancho Woman Sentenced to Federal Prison for Aggravated Identity Theft ConvictionRead the Press Release
ALBUQUERQUE – Amber Hilton, 33, of Rio Rancho, N.M., was sentenced this morning in federal court in Albuquerque, N.M., to 24 months in federal prison followed by one year of supervised release for her aggravated identity theft conviction. Hilton was also ordered to pay $5,260.86 in restitution to the U.S. Postal Service.
Hilton was indicted on Nov. 5, 2014, and charged with possession of a counterfeit U.S. Postal Service key to a lock box for the purpose of mail theft on Oct. 14, 2014, in Sandoval County, N.M., attempted use of a Home Depot credit card on Sept. 26, 2014, in Bernalillo County, N.M., and identity theft on Sept. 26, 2014, in Bernalillo County.
The indictment was superseded on Feb. 25, 2015, and charged Hilton with attempt to defraud Wells Fargo Bank by attempting to cash two checks which had been altered to reflect a stolen identity on Sept. 7, 2014, in Bernalillo County, identity theft on Sept. 7, 2014, in Bernalillo County, attempted use of a Best Buy credit card on Sept. 24, 2014, in Doña Ana County, N.M., attempted use of a Home Depot credit card on Sept. 25, 2014, in Sandoval County, N.M., attempted use of a Home Depot credit card on Sept. 26, 2014, in Bernalillo County, aggravated identity theft on Sept. 26, 2014, in Bernalillo County and possession of a counterfeit U.S. Postal Service key to a lock box for the purpose of mail theft on Oct. 14, 2014, in Sandoval County.
On Aug. 7, 2015, Hilton pled guilty to aggravated identity theft and admitted that on Oct. 10, 2014, in Bernalillo County, she attempted to use a Home Depot credit card and attempted to obtain more than $1,000.00 with the credit card. Hilton further admitted that she possessed identification of another person in relation to the attempted credit card fraud.
This case was investigated by the U.S. Postal Inspection Service. Assistant U.S. Attorney Norman Cairns prosecuted the case.
RTD Supervisor Found Guilty of Accepting Bribes in Connection with His Official DutiesRead the Press Release
DENVER – Following a 3-day jury trial before Chief U.S. District Court Judge Marcia S. Krieger, Kenneth P. Hardin, age 62, of Aurora, Colorado, was found guilty late yesterday of three of four counts related to accepting bribes in connection with his official duties as a senior manager at RTD, United States Attorney John Walsh, FBI Special Agent in Charge Thomas P. Ravenelle, and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Hardin, who appeared at the trial free on bond, is scheduled to be sentenced by Chief Judge Krieger on May 16, 2016. The jury deliberated for about two hours before reaching their verdicts.
Hardin was indicted by a federal grand jury on November 5, 2014. He was arrested and made his first appearance in federal court in Denver on November 12, 2014. After a series of detailed hearings, Hardin’s jury trial began on February 1, 2016. He was found guilty of three counts of Bribery concerning programs receiving federal funds, on February 3, 2016. He was found not guilty of a similar count.
According to the indictment as well as facts presented to the jury during trial, Hardin was an employee of the Regional Transportation District in Colorado (“RTD”), holding the position of Senior Manager of RTD’s Civil Rights Division. In that position, Hardin’s duties at RTD included directing and managing the operations of RTD’s Civil Rights Division, which was responsible for furthering civil rights goals through regulatory compliance, complaint investigation, community outreach, and programmatic strategy development. The Disadvantaged Business Enterprise program is one of the programs that fell under the umbrella of RTD’s Civil Rights Division. As the Senior Manager of the Civil Rights Division, Hardin also served as RTD’s Diversity Officer. RTD receives money from federal grants.
Hardin was found guilty of corruptly soliciting and accepting money, on or about the dates listed below, from a person intending to be influenced in connection with RTD business involving more than $5,000.
Date Amount of Bribe
May 15, 2014 $1,000
June 26, 2014 $1,000
September 15, 2014 $2,000
Bribery concerning programs receiving federal funds carries a penalty of not more than 10 years in federal prison, and up to a $250,000 fine per count for each of the three counts of conviction.“Public officials get paid to make other people’s lives better. When they take money to line their own pockets, we will hunt them down and punish them,” said U.S. Attorney John Walsh. “The fact that the jury took just under two hours to return guilty verdicts in this case is a testament to the exceptional skill of the federal criminal investigators and the Assistant U.S. Attorneys who handled this case.”
"The guilty verdict against Mr. Hardin shows public servants are not above the law and must be held accountable for failing to uphold their oath to maintain the public's trust," said FBI Denver Division Special Agent in Charge Thomas Ravenelle.
“Offenders who abuse the public’s trust are inherently more culpable. Mr. Hardin made a conscious decision to deceive and benefit personally at the expense of the citizens of Colorado,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “This verdict demonstrates our collective efforts to enforce the laws and ensure public trust.”
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation with substantial assistance from the U.S. Department of Transportation Office of the Inspector General. Hardin was prosecuted by Assistant U.S. Attorneys Pegeen D. Rhyne and J. Chris Larson.
Pittsburgh Man Pleads Guilty in Drug Trafficking SchemeRead the Press Release
PITTSBURGH - A Pittsburgh resident pleaded guilty in federal court to a charge of conspiracy to possess with intent to distribute and distribute 500 grams or more of cocaine, United States Attorney David J. Hickton announced today.
Devonte White, 23, pleaded guilty to one count before United States District Judge Mark R. Hornak.
In connection with the guilty plea, the court was advised that in 2013, the Federal Bureau of Investigation and other agencies joined forces in a multi-agency wiretap investigation of drug trafficking and violence in the Homewood section of Pittsburgh. The interception of wire and electronic communications began in December 2013 and continued through the end of August 2014. During that timeframe, Devonte White was intercepted over the wire conspiring with others to possess with intent to distribute and distribute cocaine, which was shipped from California to the Western District of Pennsylvania through the United States Postal Service or commercial carrier.
Judge Hornak scheduled sentencing for June 3, 2016. The law provides for a minimum sentence of five years in prison, a maximum sentence of 40 years in prison, a fine of not more than $5,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history of the defendant.
Pending sentencing, the court continued the defendant’s detention.
Assistant United States Attorney Tonya Sulia Goodman is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation, the Greater Pittsburgh Safe Streets Task Force, Wilkinsburg Police Department, Allegheny County Sheriff’s Office, Pennsylvania Office of the Attorney General, Munhall Police Department, Duquesne Police Department, Monroeville Police Department, Allegheny County Police Department, West Mifflin Police Department, Bellevue Police Department, and the Pittsburgh Police conducted the investigation that led to the prosecution of Devonte White.
Perry County Resident Sentenced for Methamphetamine OffenseRead the Press Release
On February 2, 2016, Clint D. Williams, 32, of DuQuoin, was sentenced for his involvement in a methamphetamine conspiracy, the Acting United States Attorney for the Southern District of Illinois, James L. Porter, announced today.
Williams, who had previously pled guilty to an indictment charging conspiracy to manufacture methamphetamine, was sentenced to 100 months in federal prison, to be followed by 3 years’ supervised release, and fined $350.00. The offense occurred between 2012 and September 2014, in Perry, Jackson, Randolph, Williamson, and Franklin Counties. Evidence at the plea and sentencing hearings established that Williams was involved with others in the manufacture of methamphetamine. On February 20, 2014, Williams was caught manufacturing methamphetamine at a DuQuoin residence with an 11-month old child present. At sentencing, the district court found Williams responsible for the possession of approximately 88 grams of pseudoephedrine, which was possessed for the purpose of manufacturing methamphetamine. Six co-defendants have previously been sentenced for their roles in the methamphetamine conspiracy.
The investigation was conducted by the Jackson County Sheriff’s Office, Perry County Sheriff’s Office, Perry County Drug Task Force, Murphysboro Police Department, and DuQuoin Police Department. The Pinckneyville Police Department and Illinois State Police Methamphetamine Response Team assisted in the investigation.
The case was assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
Pennsylvania man pleads guilty to participating in multi-state heroin, painkiller trafficking schemeRead the Press Release
CLARKSBURG, WEST VIRGINIA – Kalif Briggs, 33, of Upper Darby, Pennsylvania, was convicted in federal court today for his role in a multi-state heroin and oxycodone trafficking operation, United States Attorney William J. Ihlenfeld, II, announced.
Briggs participated in a drug trafficking network that cause quantities of heroin and oxycodone to be transported across state lines from Philadelphia, Pennsylvania to Morgantown, West Virginia for redistribution and sale throughout the region. The operation was disrupted in November 2014 when Briggs, along with 20 other individuals, was charged in a 65-count federal indictment.
Specifically, Briggs sold oxycodone in 2014 in Monongalia County, West Virginia. Briggs pled guilty today to one count of “Aiding and Abetting Distribution of Oxycodone.” He faces up to 20 years in prison and a fine of up to $1,000,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Zelda Wesley prosecuted the case on behalf of the government. The West Virginia State Police Bureau of Criminal Investigation, the Federal Bureau of Investigation, and the Mon Metro Drug and Violent Crime Task Force investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Pakistani National Sentenced in International Counterfeit Drug ConspiracyRead the Press Release
SHERMAN, Texas – A 52-year-old man from Karachi, Pakistan man has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Muhammad Aijaz Sarfraz was convicted by a jury on May 14, 2015 of conspiracy to manufacture and distribute controlled substances and international money laundering conspiracy. Sarfraz was sentenced to 240 months in federal prison on Feb. 3, 2016 by U.S. District Judge Amos L. Mazzant.
According to information presented in court, from March 2009 until Sarfraz’s arrest in April 2012, Sarfraz operated numerous illegal websites through which he distributed millions of illicit Schedule II, III, and IV controlled substances to Internet customers throughout the United States. Those pills included popular prescription medications such as OxyContin, Percocet, Adderall, Ritalin, Hydrocodone, Xanax, Valium, Ambien, and others. The counterfeit drugs were generally manufactured in China, Singapore, Malaysia, India, Pakistan, and Hong Kong. The pills, which were made to look like authentic prescription medications approved for use in the United States, often contained incorrect active pharmaceutical ingredients or the wrong quantity and dosage strength of those substances. No physicians or medical professionals of any kind were involved at any stage of the drug distribution process. It is estimated that the criminal enterprise may have generated as much as $100 million or more in proceeds between 2009 and 2012. Sarfraz was indicted by a federal grand jury on Apr. 12, 2012.
This case was investigated by the U.S. Drug Enforcement Administration and the Internal Revenue Service – Criminal Investigation, and was prosecuted by Assistant U.S. Attorneys Stevan Buys and Will Tatum.
Ongoing Methamphetamine Indictments AnnouncedRead the Press Release
A southern Illinois resident and St. Louis resident were indicted on February 2, 2016, for a methamphetamine offense, the Acting United States Attorney for the Southern District of Illinois, James L. Porter, announced today.
Brandon L. Watson, a/k/a "Dubb," 28, of Metropolis, and Gary M. Skinner, 61, of St. Louis, are charged in a one-count superseding indictment charging conspiracy to distribute more than 50 grams of methamphetamine. The indictment alleges that the offense occurred between May 2015 and October 26, 2015, in Williamson and Massac Counties. Both Watson and Skinner are being held without bond pending a March 28, 2016, jury trial.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge until proved guilty beyond a reasonable doubt to the satisfaction of a jury.
The methamphetamine offense carries a penalty of up to 5-40 years’ imprisonment, to be followed by 4 years’ supervised release, and a $5,000,000 fine.
The ongoing investigation is being conducted by the Southern Illinois Enforcement Group, Illinois State Police, and Drug Enforcement Administration. The Massac County State’s Attorney’s Office also assisted in the investigation.
The case is assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
Ohio Man Sentenced on Fraud ChargesRead 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 Paul Lacey, 56, of Youngstown, Ohio, who was convicted of participating in a conspiracy to engage in monetary transactions with proceeds gained from a wire fraud scheme, was sentenced to 46 months in prison and ordered to pay restitution in the amount of $337,002.65
Assistant U.S. Attorney Bradley E. Tyler, who handled the case, stated that Lacey traveled from Ohio to Georgia to open a bank account with Bank of America. Subsequently, approximately $337,002.65 was illegally transferred from individual bank accounts in New York, Colorado and Oklahoma into the account in Georgia. Lacey then withdrew or transferred large sums of cash from the Georgia account for his own personal use and use by others.
The sentencing is the result of an investigation by the Federal Bureau of Investigation, under the direction of Special Agent in Charge Adam S. Cohen.Northwest Indiana Man Arrested for Sex TraffickingRead the Press Release
HAMMOND- United States Attorney David A. Capp announced today that a criminal complaint was filed against Aleksandar Jokic, 41, of Schererville, Indiana for sex trafficking of a minor.
According to documents filed in the case, it is alleged that Jokic paid a cooperating defendant on numerous occasions to provide women to perform sex acts at his residence, and that three of the females were under the age of 18 at the time. Jokic met the cooperating defendant when he responded to an online ad for escort services. The United States alleges that, between June and October 2015, Jokic requested and received females under the age of 18 for commercial sex services.
This case was investigated by the Federal Bureau of Investigation, Homeland Security Investigations and the Lake County Sheriff’s Department. The case is being prosecuted by Assistant United States Attorney Abizer Zanzi.
The United States Attorney's Office emphasized that a Complaint is merely an allegation and that all persons charged are presumed innocent until and unless proven guilty in court.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
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Northeastern Pennsylvania Man Sentenced to 97 Months in Prison for $1.8 Million Investment FraudRead the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a former Bartonsville man was sentenced today to 97 months in prison by United States District Court Judge Sylvia H. Rambo in Harrisburg to a charge stemming from an investment fraud.
According to United States Attorney Peter Smith, Joseph Gallardo, age 48, Bartonsville, previously plead guilty to mail fraud in September 2014. Gallardo was a registered investment advisor with investment firms in New Jersey and Pennsylvania. He persuaded clients with those investment firms to invest in Blue Meadow Group LLL, his personal real estate venture. Victims were guaranteed attractive rates of return and were falsely told that their money was invested in and protected by real estate. Contrary to what was represented to the victims, Blue Meadow Group was not a real estate investment trust and its securities were not registered with the Pennsylvania and New Jersey Securities Commissions.
In fact, victims’ monies were used to purchase a gas station and convenience store and to fund Gallardo’s on-line day trading account that lost a substantial amount of money. Investigators determined that victims of Gallardo’s criminal activity lost approximately $1.8 million.
During July 2009, the Pennsylvania Securities Commission issued a cease and desist order ordering Gallardo to stop offering or selling investment properties in Pennsylvania. After the cease and desist order, Gallardo solicited additional victims who invested money with him.
Gallardo was indicted by a federal grand jury in September 2014 as a result of an investigation by the United States Postal Inspection Service. Assistant U.S. Attorney Christy H. Fawcett prosecuted the case.
Judge Rambo ordered the defendant to pay restitution in the amount of $1,792,170 to victims and to serve a three-year term of supervised release following his incarceration.
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Minnesota Chiropractor Indicted for Tax EvasionRead the Press Release
A federal grand jury sitting in Minneapolis returned an indictment on Feb. 1, which was unsealed today, charging a chiropractor with one count of tax evasion and one count of passing a fictitious obligation, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Andrew Luger of the District of Minnesota announced today.
According to the allegations in the indictment, Donald Gibson failed to file federal income tax returns with the Internal Revenue Service (IRS) for the years 2004 through 2010 to report his income from his work as a chiropractor. In May 2012, the IRS informed Gibson that he owed approximately $330,000 in federal income taxes for those years. Gibson allegedly evaded paying his federal income taxes for 2004 through 2010 by, among other things, cashing his business checks at a check-cashing facility, purchasing money orders and directing his income onto stored-value debit cards. Gibson is further alleged to have used Sovereign Christian Mission, a nonprofit corporation he registered with the Oregon Secretary of State, to hide his income and pay his personal expenses. The indictment also charges Gibson with submitting a fake bond that he claimed to be valued at $300 million to the Department of the Treasury to pay off his tax liabilities.
If convicted, Gibson faces a statutory maximum sentence of five years in prison for the tax evasion charge and a statutory maximum sentence of 25 years in prison for the passing a fictitious obligation charge.
An indictment is not a finding of guilt. The individual charged in the indictment is presumed innocent until proven guilty beyond a reasonable doubt.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Luger thanked special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Ryan R. Raybould of the Tax Division and Assistant U.S. Attorney Joseph Thompson of the District of Minnesota, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website
Minnesota Chiropractor Indicted for Tax EvasionRead the Press Release
WASHINGTON – A federal grand jury sitting in Minneapolis returned an indictment on Feb. 1, which was unsealed today, charging a chiropractor with one count of tax evasion and one count of passing a fictitious obligation, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Andrew Luger of the District of Minnesota announced today.
According to the allegations in the indictment, Donald Gibson failed to file federal income tax returns with the Internal Revenue Service (IRS) for the years 2004 through 2010 to report his income from his work as a chiropractor. In May 2012, the IRS informed Gibson that he owed approximately $330,000 in federal income taxes for those years. Gibson allegedly evaded paying his federal income taxes for 2004 through 2010 by, among other things, cashing his business checks at a check-cashing facility, purchasing money orders and directing his income onto stored-value debit cards. Gibson is further alleged to have used Sovereign Christian Mission, a nonprofit corporation he registered with the Oregon Secretary of State, to hide his income and pay his personal expenses. The indictment also charges Gibson with submitting a fake bond that he claimed to be valued at $300 million to the Department of the Treasury to pay off his tax liabilities.
If convicted, Gibson faces a statutory maximum sentence of five years in prison for the tax evasion charge and a statutory maximum sentence of 25 years in prison for the passing a fictitious obligation charge.
An indictment is not a finding of guilt. The individual charged in the indictment is presumed innocent until proven guilty beyond a reasonable doubt.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Luger thanked special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Ryan R. Raybould of the Tax Division and Assistant U.S. Attorney Joseph Thompson of the District of Minnesota, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website
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Media Advisory: Town Hall Meeting Prescription Pain Killers and the Heroin EpidemicRead the Press Release
CEDAR RAPIDS, IA – The United States Attorney’s Office has scheduled a Town Hall Meeting on February 10th to discuss prescription pain killers and the heroin epidemic. Every day, 44 people in the U.S. die from overdose of prescription painkillers. Yearly, overdose deaths exceed motor vehicle deaths and firearms deaths. The most recent data available indicates that in 2013, over 46,000 people in the U.S. died from drug overdoses with more than half of that number being caused by prescription painkillers and heroin. The wife of a correctional officer that died as a result of his addiction to painkillers will discuss the family tragedy.
Viewed as a national challenge requiring a community solution, the meeting will bring together community leaders and members, clergy, law enforcement, educators, health care professionals, business leaders, employers and employees to exchange information and strategies to address the epidemic plaguing eastern Iowa.
Topics include an examination of the national threat, opioid-based deaths in Iowa, heroin in Iowa in urban and rural communities, heroin then and now, responding to the addictions, and prevention education in schools, businesses and our communities. Visit www.faceboook.com/EasternIowaHeroinInitiative to learn more.
U.S. Attorney Kevin W. Techau will be present. The event is open to the public.
Event Details
When: February 10, 2016 (flyer is attached)
Where: Cedar Rapids Downtown Public Library (Whipple Aud.), 450 5th Ave SE
Time: Begins at 7:00 p.m., and ends at 9:00 p.m.
Press wishing to attend should contact AUSA Steve Young at 319-731-4037, or by emailing him at [email protected].
Manhattan U.S. Attorney Announces Criminal Charges Against Bank Julius Baer of Switzerland with Deferred Prosecution Agreement Requiring Payment of $547 Million, as Well as Guilty Pleas of Two Julius Baer BankersRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Caroline D. Ciraolo, Acting Assistant Attorney General of the Justice Department’s Tax Division, and Richard Weber, Chief, Internal Revenue Service – Criminal Investigation, (“IRS-CI”), announced the filing of criminal charges against Bank Julius Baer & Co., Ltd. (“JULIUS BAER” or the “Company”), a financial institution headquartered in Zurich, Switzerland. JULIUS BAER is charged with conspiring with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide billions of dollars in offshore accounts from the United States Internal Revenue Service (the “IRS”) and to evade U.S. taxes on the income earned in those accounts.
Mr. Bharara also announced a deferred prosecution agreement with JULIUS BAER (the “Agreement”) under which the Company admits that it knowingly assisted many of its U.S. taxpayer-clients in evading their tax obligations under U.S. law. The admissions are contained in a detailed Statement of Facts attached to the Agreement. The Agreement requires JULIUS BAER to pay a total of $547 million by no later than February 9, 2016, including through a parallel civil forfeiture action also filed today in the Southern District of New York.
The criminal charge is contained in an Information (the “Information”) alleging one count of conspiracy to (1) defraud the IRS, (2) to file false federal income tax returns and (3) to evade federal income taxes. If JULIUS BAER abides by all of the terms of the Agreement, the Government will defer prosecution on the Information for three years and then seek to dismiss the charges.
In addition, two Julius Baer client advisers, DANIELA CASADEI and FABIO FRAZZETTO, pled guilty in Manhattan federal court today. CASADEI and FRAZZETTO were originally charged in 2011 and remained at large until February 2, 2016, when they each made initial appearances before the Honorable Gabriel W. Gorenstein, United States Magistrate Judge for the Southern District of New York.
CASADEI and FRAZZETTO each pled guilty to an Information (collectively, with the JULIUS BAER Information, the “Informations”) before U.S. District Judge Laura Taylor Swain charging them with conspiring with U.S. taxpayer-clients and others to help U.S. taxpayers hide their assets in offshore accounts and to evade U.S. taxes on the income earned in those accounts.
Manhattan U.S. Attorney Preet Bharara said: “Bank Julius Baer not only turned a blind eye to tax avoiders, but actually conspired with them to break the law. Together with our partners at the IRS, we will continue to prosecute financial institutions and individuals who facilitate tax evasion.”
Acting Assistant Attorney General Caroline D. Ciraolo said: “Today’s resolution with Bank Julius Baer and the guilty pleas entered by two bank employees reflect the department’s continued commitment to hold accountable those financial institutions who conspired with U.S. taxpayers to conceal assets abroad and evade U.S. tax obligations, as well as those individuals responsible for such crimes. The deferred prosecution agreement filed today makes it clear that there is a heavy price to pay for this conduct, and that there is a significant benefit in fully cooperating with the department.”
IRS Chief Richard Weber said: “In taking responsibility for their actions, Bank Julius Baer has agreed to cooperate and pay a substantial penalty for their role in circumventing offshore disclosure laws. The agreement – as well as the guilty pleas of client advisors Daniela Casadei and Fabio Frazzetto – sends a strong message to the international banking community as well as U.S. taxpayers who think they can outsmart the system by hiding their money in these international banks. The consequences of not reporting your foreign accounts and paying the taxes you owe will be significant for those who do not heed the warnings that agreements like this yield.”
According to the Informations, statements made during the proceedings today, and other documents filed in Manhattan federal court, including the Statement of Facts to the Agreement:
The Offense Conduct
From at least the 1990s through 2009, JULIUS BAER helped many of its U.S. taxpayer-clients evade their U.S. tax obligations, file false federal tax returns with the IRS, and otherwise hide accounts held at JULIUS BAER from the IRS (hereinafter, “undeclared accounts”). JULIUS BAER did so by opening and maintaining undeclared accounts for U.S. taxpayers and by allowing third-party asset managers to open undeclared accounts for U.S. taxpayers at JULIUS BAER. CASADEI and FRAZZETTO, bankers who worked as client advisers at JULIUS BAER, directly assisted various U.S. taxpayer-clients in maintaining undeclared accounts at JULIUS BAER in order to evade their obligations under United States law. At various times, CASADEI, FRAZZETTO, and others advised those U.S. taxpayer-clients that their accounts at JULIUS BAER would not be disclosed to the IRS because JULIUS BAER had a long tradition of bank secrecy and no longer had offices in the U.S., making JULIUS BAER less vulnerable to pressure from U.S. law enforcement authorities than other Swiss banks with a presence in the U.S.
In furtherance of the scheme to help U.S. taxpayers hide assets from the IRS and evade taxes, JULIUS BAER undertook, among other actions, the following:
- Entering into “code word agreements” with U.S. taxpayer-clients under which JULIUS BAER agreed not to identify the U.S. taxpayers by name within the bank or on bank documents, but rather to identify the U.S. taxpayers by code name or number, in order to reduce the risk that U.S. tax authorities would learn the identities of the U.S. taxpayers.
- Opening and maintaining accounts for many U.S. taxpayer-clients held in the name of non-U.S. corporations, foundations, trusts, or other legal entities (collectively, “structures”) or non-U.S. relatives, thereby helping such U.S. taxpayers conceal their beneficial ownership of the accounts.
JULIUS BAER was aware that many U.S. taxpayer-clients were maintaining undeclared accounts at JULIUS BAER in order to evade their U.S. tax obligations, in violation of U.S. law. In internal JULIUS BAER correspondence, undeclared accounts held by U.S. taxpayers were at times referred to as “black money,” “non W-9,” “tax neutral,” “unofficial,” or “sensitive” accounts.
JULIUS BAER also advised its bankers to take certain steps to avoid scrutiny from U.S. authorities when travelling to the U.S., as well as steps to avoid U.S. law enforcement identifying JULIUS BAER clients. In a memo entitled “U.S. Clients Do’s & Don’ts,” circulated internally in 2006, a JULIUS BAER employee provided client advisers with advice regarding travel to the U.S., including:
- “At Immigration . . . When asked by Officer what will you do while in the USA, say Business and of course some leisure, trying to take some time to enjoy your beautiful country. Proud government employees usually love this type of statement.One can throw in skydiving or another fun sport/activity.This tends to shift the questioning away from the business purpose to the ‘fun time’ part of the trip (carrying a tennis racket also puts the emphasis on “fun and games,” and not on business).”
- "In regard to communicating while in the U.S.:“Only use mobile phone[s] registered in and operating from Switzerland.Avoid phone calls from hotel to clients.It is recommended to purchase a telephone calling card from the post office, grocery stores, or electronic shops.This allows you to use practically any phone with no specific link left behind.The best is to pay for the calling card in cash.For ex: a 400 minutes local calling card costs less than $50, but the rates can vary.Most cards can also be used to call anywhere abroad.”
At its high-water mark in 2007, JULIUS BAER had approximately $4.7 billion in assets under management relating to approximately 2,589 undeclared accounts held by U.S. taxpayer-clients. From 2001 through 2011, JULIUS BAER earned approximately $87 million in profit on approximately $219 million gross revenues from its undeclared U.S. taxpayer accounts, including accounts held through structures.
Julius Baer’s Blocked Effort to Self-Report, Acceptance of Responsibility, and
Cooperation in the Government Investigation
Notwithstanding its lucrative criminal conduct, by at least 2008, JULIUS BAER began to implement institutional policy changes to cease providing assistance to U.S. taxpayers in violating their U.S. legal obligations. For example, by November 2008, the Company began an “exit” plan for U.S. client accounts that lacked evidence of U.S. tax compliance. In that same month, JULIUS BAER imposed a prohibition on opening accounts for any U.S. clients without an IRS Form W-9.
Additionally, in November 2009, before JULIUS BAER became aware of any U.S. investigation into its conduct, JULIUS BAER decided proactively to approach U.S. law enforcement authorities regarding its conduct relating to U.S. taxpayers. Prior to self-reporting to the United States Department of Justice, JULIUS BAER notified its regulator in Switzerland of its intention to contact U.S. law enforcement authorities. This Swiss regulator requested that JULIUS BAER not contact U.S. authorities in order not to prejudice the Swiss government in any bilateral negotiations with the U.S. on tax-related matters. Accordingly, JULIUS BAER did not, at that time, self-report to U.S. law enforcement authorities.
After ultimately engaging with U.S. authorities, JULIUS BAER has taken exemplary actions to demonstrate acceptance and acknowledgement of responsibility for its conduct. JULIUS BAER conducted a swift and robust internal investigation, and furnished the U.S. Government with a continuous flow of unvarnished facts gathered during the course of that internal investigation. As part of its cooperation, JULIUS BAER also, among other things, (1) successfully advocated in favor of a decision provided by the Swiss Federal Council in April 2012 to allow banks under investigation by the United States Department of Justice to legally produce employee and third-party information to the Department, and subsequently produced such information immediately upon issuance of that decision; and (2) encouraged certain employees, including FRAZZETTO and CASADEI, to accept responsibility for their participation in the conduct at issue and cooperate with the ongoing investigation.
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CASADEI, 52, a Swiss citizen, and FRAZZETTO, 42, an Italian and Swiss citizen, each pled guilty to one count of conspiracy to defraud the IRS, to evade federal income taxes, and to file false federal income tax returns. CASADEI and FRAZZETTO each face a maximum sentence of five years in prison. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentences imposed on the defendants will be determined by the judge.
CASADEI and FRAZZETTO are each scheduled to be sentenced before Judge Swain on August 12, 2016.
Mr. Bharara praised the outstanding investigative work of IRS-CI, and thanked the Justice Department’s Tax Division for their significant assistance in the investigation. Mr. Bharara also thanked the Department of Homeland Security for their assistance with the case.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Jason H. Cowley and Sarah E. Paul are in charge of the prosecution.
Man Sentenced to 60 Months for Alien SmugglingRead the Press Release
SYRACUSE, NEW YORK –Ronaldo Reyes, age 39, of Quebec, Canada, was sentenced yesterday to 60 months in prison following a September 2015 trial in which he was found guilty of alien smuggling offenses.
The announcement was made by United States Attorney Richard S. Hartunian, John C. Pfeifer, Chief Patrol Agent, United States Border Patrol, and James Spero, Special Agent in Charge, Homeland Security Investigations.
The evidence at trial demonstrated that Reyes acted as a smuggler for 12 aliens who entered the United States without inspection at Champlain, NY and Beecher Falls, VT.
Witnesses testified they each paid Reyes thousands of dollars in U.S. and Canadian cash in order to be brought to the United States illegally. Reyes would then walk the aliens across the international border at night to a prearranged pickup vehicle, before fleeing north to Canada on foot. Reyes was indicted and extradited from Canada in 2015. He was convicted by a jury on September 23, 2015, following a three-day trial in Albany presided over by Senior United States District Judge Frederick J. Scullin.
This case was investigated by the United States Border Patrol and Homeland Security Investigations, and was prosecuted by Assistant U.S. Attorneys Douglas Collyer and Katherine Kopita.
Man Pleads Guilty to Armed RobberyRead the Press Release
James L. Porter, Acting United States Attorney for the Southern District of Illinois, announced that Wallace B. Carson, 48, of East St. Louis, Illinois, pled guilty today in United States District Court in East St. Louis to a three-count indictment charging him with Interference with Commerce by Robbery, Brandishing a Firearm in Furtherance of a Crime of Violence, and Unlawful Possession of a Firearm by a Previously Convicted Felon.
Facts revealed in Court were that on September 2, 2015, Carson entered the Walgreens located on 2510 State Street, East St. Louis, Illinois, pulled out a gun and committed an armed robbery. In addition, Carson had a prior felony conviction punishable by imprisonment by a term exceeding more than one year, thus he was prohibited from possessing a firearm.
The investigation was led by the East St. Louis Police Department and the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Deirdre A. Durborow.
Macon County Federal Firearms Licensee Sentenced to 2.5 Years in Prison for Selling Firearms to A Prohibited PersonRead the Press Release
ASHEVILLE, N.C. – A Macon County federal firearms licensee was sentenced today to a 30-month prison term for selling firearms to a prohibited person, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Philip Nelson Elliott, 55, of Franklin, N.C., was also ordered by U.S. District Judge Max O. Cogburn, Jr. to serve three years under court supervision following his prison term.
U.S. Attorney Rose is joined in making today’s announcement by C.J. Hyman, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division.
“Federally-licensed firearms dealers are expected to be one of our first lines of defense to deprive convicted felons from purchasing firearms. Recent events underscore the importance of keeping guns out of the wrong hands. My office will vigorously prosecute gun dealers who put personal gain ahead of public safety,” said U.S. Attorney Rose.
“This case is an example of the types of investigations ATF conducts on a daily basis to keep our communities safe. ATF will continue to work with our investigative partners to keep firearms out of the hands of criminals and aggressively seek to bring individuals who provide firearms to criminals to justice,” said ATF Special Agent in Charge Hyman.
According to the filed court documents and today’s sentencing hearing, Philip Elliott was a federal firearms licensee who operated “Mountain Top Coins, Guns and Ammo” (Mountain Top), a firearms business located in Franklin. Court records show that Philip Elliott’s brother, Donald Eugene Elliott, also worked at Mountain Top. According to court records, from March to July 2014, Philip Elliott sold multiple firearms to a convicted felon and was therefore prohibited from possessing a firearm. Court records show that in addition to selling the firearms, Philip Elliott discussed selling the felon rocket-propelled grenade launchers and told the felon he was willing to buy stolen goods, including stolen firearms.
While executing a search warrant at Mountain Top, ATF agents seized approximately 20 firearms in the store which were “off the books,” meaning they were not included in the ATF Acquisition and Disposition Records as required of federal firearms licensees. Philip Elliott pleaded guilty in July 2015 to one count of selling a firearm to a prohibited person.
Law enforcement also seized seven firearms and ammunition from Donald Elliott’s residence. Donald Elliott’s previous felony conviction prohibits him from owning a firearm. He pleaded guilty to one count of felon in possession of a firearm and was sentenced in December 2015 to six months in prison and two years of supervised release.
The investigation was handled by ATF. Assistant U.S. Attorney Don Gast of the U.S. Attorney’s Office in Asheville prosecuted the case.
Las Vegas, N.M., Man Sentenced for Falsely Impersonating a Federal OfficerRead the Press Release
ALBUQUERQUE – Leon Herrera, 37, of Las Vegas, N.M., was sentenced today in federal court in Albuquerque, N.M., to a year of probation for falsely impersonating a federal officer. Herrera was also ordered to perform 250 hours of community service.
On Oct. 16, 2015, Herrera entered his guilty plea to a felony information charging him with impersonating a Special Agent of the DEA on Dec. 15, 2014, in Colfax County, N.M. In his plea agreement, Herrera admitted that he committed the crime at the behest of a friend who was then employed as a deputy sheriff in Colfax County (friend).
According to Herrera’s plea agreement, on Dec. 15, 2014, Herrera received a call from his friend while the friend was conducting a traffic stop on motorists he believed to be drug traffickers. The friend reported to Herrera that he found approximately $8,000.00 cash in the motorists’ vehicle. The friend then asked Herrera to speak with one of the motorists and tell him that he was a DEA Special Agent and intended to seize the currency as proceeds of criminal activity. Herrera acquiesced to his friend’s request and had a conversation with one of the motorists during which he falsely identified himself as a representative of the DEA and would be seizing the money for law enforcement purposes. The plea agreement states that the friend told him that he intended to keep the currency for his personal use, and offered to give $1,000.00 to Herrera for assisting him.
In his plea agreement, Herrera acknowledges that he later learned that the motorists were undercover law enforcement officers and that the currency seized from their vehicle, $7,500.00, belonged to the FBI.
This case was investigated by the Santa Fe and Albuquerque offices of the FBI and the New Mexico State Police. Assistant U.S. Attorney Sean J. Sullivan prosecuted the case.
Las Vegas Woman Sent to Prison for Telemarketing Scam That Defrauded Southern Illinois ResidentsRead the Press Release
James L. Porter, Acting United States Attorney for the Southern District of Illinois, announced that this morning, United States District Judge Nancy J. Rosenstengel sentenced Elpenike Eddy-Aldava, 74, of Las Vegas, NV, to one year and one day in federal prison on her conviction for telemarketing fraud. On October 9, 2015, after a four day trial, a federal jury in East St. Louis found Eddy-Aldava guilty of conspiracy to commit mail fraud and wire fraud. The fraud scheme that Eddy-Aldava participated in victimized individuals throughout the United States, including Southern Illinois.
Evidence at trial showed that for more than 5 years, Eddy-Aldava worked as a telemarketer for a telemarketing business in Las Vegas. Although the business frequently changed names, the two primary names of the business were Showcase Resorts and Vacation Max. Telemarketers from Showcase Resorts and Vacation Max called timeshare owners throughout the United States and offered to help them sell their timeshares. The telemarketers then falsely represented that they had found corporate buyers interested in acquiring blocks of timeshare units and that the victims’ timeshare units could be included in these blocks. In order to participate in this "corporate block," however, the telemarketers told the victims that they had to pay upfront fees, which usually ranged from $2,000 to $3,000. The telemarketers falsely told the victims that these fees were needed to pay closing costs. Instead, the fees were used as revenues for Showcase Resorts and Vacation Max. In addition, the telemarketers were paid a large commission for each fraudulent sale. These commissions typically ranged from 40% to 50%.
Because Showcase Resorts and Vacation Max had no corporate buyers, no timeshares were ever sold to any corporations. Showcase Resorts and Vacation Max employed individuals known as "Updaters" to handle all of the calls from customers who called in to ask why their timeshares had not been sold as had been promised. The job of these Updaters was to provide false excuses to the victims in order to string them along and prevent them from contacting their credit card companies and demanding their money back.
The scheme operated from at least December 5, 2006 until January 24, 2012. The losses caused by the scheme exceeded $11,000,000.
"Unfortunately, these telemarketing scams take place far too often," Acting U.S. Attorney Porter stated. "Hopefully, today’s sentence will send a message to other telemarketers that when they defraud citizens of Southern Illinois, they are going to be prosecuted and they will most likely go to prison. I’d also like to remind our citizens that when someone contacts them on the telephone with an offer that sounds too good to be true, it usually is."
In May 2013, the owner of Vacation Max, Michael Patrick Sullivan, was indicted. Sullivan pled guilty and on January 9, 2015, was sentenced to 5 years in prison. Three other telemarketers from the scheme (John Nicosia, Robert Kelly Mathews, and Rebecca Marrs), as well as one of the Updaters (Patrick Nosack) were also charged. Nicosia, Mathews, and Nosack all pled guilty and were sentenced to prison. Rebecca Marrs’ trial is scheduled to begin on April 5, 2016.
As part of today’s sentence, the court also ordered Eddy-Aldava to pay $647,015 in restitution to the victims she defrauded. When she completes her prison sentence, Eddy-Aldava will serve a period of 2 years of supervised release.
The case against Eddy-Aldava is one of approximately 80 cases prosecuted by the U.S. Attorney's Office for the Southern District of Illinois relating to timeshare resale fraud and part of an ongoing investigation by the St. Louis Field Office of the Chicago Division of the United States Postal Inspection Service.
The prosecution of this case was handled by Assistant United States Attorney Scott Verseman and Special Assistant United States Attorney Vanessa Lu.
Kentucky Man Pleads Guilty to Kidnapping ConspiracyRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Danville, Ken., man who carjacked a vehicle in Kansas City, Mo., and forced its owner to accompany him as he drove across the state, pleaded guilty in federal court today.
Robert C. Caldwell, 26, of Danville, pleaded guilty before U.S. District Judge Beth Phillips to participating in a kidnapping conspiracy, one count of kidnapping, one count of carjacking, one count of using a firearm during a crime of violence and one count of being a felon in possession of a firearm.
Caldwell and an unindicted co-conspirator (who is considered a juvenile in the federal system but has been charged as an adult in state court) lay in wait outside the home of a 67-year-old Kansas City, Mo., man at about 5:30 a.m. on Jan. 22, 2015. They abducted the victim at gunpoint as he was leaving his home. He was forced to hand over his keys to his van, his wallet and cash. The victim was forced into his van, a 1998 Chevrolet CK 1500. He was beaten by Caldwell and his accomplice and struck in the head with the handgun, a Cobra .380-caliber semi-automatic pistol.
The victim told law enforcement officers that he was driven around to multiple ATMs, but he was covered with a blanket most of the time and was unable to see the locations where the carjackers attempted to use his debit card. He couldn’t remember his PIN number so they were unable to get cash, which made them angry. They repeatedly threatened his life and that of his wife. The kidnappers pretended to be on the phone with an accomplice who was holding his wife hostage; at one point after another failed ATM attempt, they informed him they had killed his wife, which was false.
According to court documents, they continued to drive and stopped at a drive-through restaurant, where one of the men sat next to the victim and shoved the barrel of the gun into his mouth, breaking his teeth, and told him that he would kill him if he moved. After getting food, they tied his hands together with a boot strap and had him lying in the floor with a blanket over his face so he couldn’t see. They continued driving and made several stops for purchases with the victim’s credit and debit cards.
Law enforcement authorities, who had been contacted by the victim’s wife, were tracking the use of the victim’s credit and debit cards as they were used or attempted to be used along I-70 eastbound. Investigators obtained surveillance photos and video from some of the locations.
When they arrived at a rest stop, according to court documents, one of the carjackers told the other to watch the victim while the carjacker slept. The victim managed to untie his hands and retrieve a homemade 45-pound weight from under the seat of the van. He struck both of the carjackers in the head (causing a gash above the eye of one of them) and made an attempt to escape, but was unsuccessful. He was then beaten heavily by both men.
They began driving again, and the victim pretended to be knocked out. The driver of the van was having trouble maneuvering the large van while holding the gun, so he sat the gun on the floorboard so he could use both hands to steer the vehicle. The victim lunged for the handgun and pointed it at the two carjackers as he demanded they pull over. When the vehicle pulled over, the driver made a move towards the victim, who pulled the trigger of the loaded gun, but it failed to fire. The victim quickly racked the slide to chamber a round, but both men had fled from the vehicle with the keys.
The victim also ran from the vehicle. As he ran down the street in Jennings, Mo., he turned and saw the two carjackers had returned to the vehicle and were slowly driving in his direction. The victim hid between several houses as he watched them drive away in his van. He then contacted the police.
The stolen van was recovered on Jan. 23, 2015, in Nelson County, Ken., after it was involved in an accident and the kidnappers fled. Caldwell was arrested in Kentucky on Jan. 27, 2015, following a pursuit by officers with the Kentucky State Police and the Lincoln County, Ken., Sheriff’s Department.
Under federal statutes, Caldwell is subject to a sentence of up to life in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing is scheduled for June 30, 2016.
This case is being prosecuted by U.S. Attorney Tammy Dickinson and First Assistant U.S. Attorney David M. Ketchmark. It was investigated by the FBI and the Kansas City, Mo., Police Department.
Jury Convicts Fresno County Man of Enticement of a MinorRead the Press Release
FRESNO, Calif. — After a two–day trial, a federal jury found John Torres, 28, of Firebaugh, guilty today of one count of enticement of a minor, United States Attorney Benjamin B. Wagner announced. The trial was held before United States District Judge Anthony W. Ishii.
According to evidence presented at trial, Torres was the director of the Firebaugh Boys and Girls Club. Torres was supervising a 14 year-old boy who often came to that Boys and Girls Club after school, and who was volunteering at the Boys and Girls Club to complete 120 hours of community service. Torres sent the boy messages over Facebook that offered to shortcut his community-service-hours requirement if the boy would agree to sexual acts with Torres. The boy reported the messages to law enforcement.
This case was the product of an investigation by the Firebaugh Police Department, Fresno County Sheriff’s Office, and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorneys Michael Tierney and Vincenza Rabenn prosecuted the case.
Torres is presently in state custody on other charges. Torres is scheduled to be sentenced by Judge Ishii on May 9, 2016. He faces a statutory penalty of no less than 10 years and up to life in prison years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Husband and Wife Sentenced to Prison for Running a Tax Fraud SchemeRead the Press Release
Raul Sosa and Maura Sosa were sentenced to terms of imprisonment of 78 months and 48 months, respectively, by United States District Court Chief Judge K. Michael Moore, following their convictions by a Miami jury for criminal tax offenses arising out of a five-year scheme to defraud the Internal Revenue Service. Judge Moore also ordered the defendants to pay $1,488,213.85 in restitution and serve three years of supervised release following their release from prison.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.
The defendants were convicted on November 10, 2015, following a six-day trial before Judge Moore. According to evidence presented at trial, starting in 2003, the defendants, who are married to one another, operated Accion 1 Auto Sales, Inc., an automobile salvage and recycling business in Hialeah. After purchasing junked and non-functioning cars, the defendants would strip the cars, sell the usable parts and components to businesses in the secondary auto parts market, and then sell the remaining metal as scrap to a local metal recycler. On some occasions, the defendants would resell whole cars, without stripping them.
The defendants’ fraud scheme revolved around their underreporting of Accion 1’s annual sales revenue on the businesses’ federal income tax returns. Through this scheme, Raul and Maura Sosa depressed the net profits reported on the businesses’ returns, the income reported on their individual returns, and their federal income tax owed.
From 2004 through 2008, the defendants’ business had sales of over $28.6 million. However, the defendants reported only approximately 14% of their sales, or $3.9 million, on the businesses’ federal income tax returns during that period. Evidence introduced at trial included records and witness testimony indicating that the defendants’ spending in 2008, on automobiles, real estate, jewelry, and credit card payments exceeded the total income reported on their joint individual income tax return by at least $900,000.
The court found that after the defendants learned they were under investigation, they caused the filing false amended tax returns in an attempt to minimize the seriousness of their tax offenses. Based upon this conduct, Judge Moore enhanced the sentences of both defendants for obstruction of justice.
U.S. Attorney Ferrer stated, “Our tax system depends upon taxpayers honestly meeting their obligations. When people, like the defendants sentenced in this case, file false tax returns and fail to pay the taxes they owe, they cheat the entire community out of monies to which they are rightfully owed. Our office will continue to hold tax offenders accountable for their crimes in a court of law.”
IRS-CI Special Agent in Charge Kelly R. Jackson stated, “In this scheme, the defendants underreported their income to avoid paying taxes to the IRS. As we are in the beginning of tax filing season, let me warn others contemplating similar conduct not to be tempted by greed. We are all responsible to report all of our income and file correct and accurate tax returns. Today’s sentencing is an important victory for America’s taxpayers who play by the rules and have no tolerance for those who shun their tax responsibilities.”
Mr. Ferrer commended the investigative efforts of IRS-CI. The case was prosecuted by Assistant United States Attorneys Michael Davis and John Byrne.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Hot Springs Woman Sentenced to over Seven Years in Federal Prison for Drug TraffickingRead the Press Release
Hot Springs - Kenneth Elser, Acting United States Attorney for the Western District of Arkansas, announced that Susan Marie Sheets, age 42, of Hot Springs, was sentenced this week to 87 months in federal prison followed by three years of supervised release on one count of Distribution of Methamphetamine. The Honorable Susan O. Hickey presided over the sentencing hearing in the United States District Court in Hot Springs.
According to court records, on or about October 16, 2013, law enforcement conducted a controlled purchase of $2,400 worth of methamphetamine from Sheets that occurred at her residence in Hot Springs, Arkansas.
This case was investigated by the Drug Enforcement Administration, and the 18th Judicial District East Drug Task Force. Assistant United States Attorneys Aaron Jennen and David Harris prosecuted the case for the United States.
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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
Horseheads Man Sentenced for Production of Child PornographyRead 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 Daniel Sayre, 31, of Horseheads, NY, who was convicted of production of child pornography, was sentenced to 228 months (19 years) in prison and 30 years supervised release by U.S. District Judge Charles J. Siragusa.
Assistant U.S. Attorney Tiffany H. Lee, who handled the case, stated that between January 2014 and February 2015, the defendant produced a sexually explicit video and still images of a minor related to him who was under the age of 12. The defendant used a computer and a Samsung camera to produce these images.
The sentencing is the result of an investigation by the Federal Bureau of Investigation Child Exploitation Task Force which includes the Monroe County Sheriff’s Office, the Rochester Police Department, and U.S. Immigration and Customs Enforcement-Homeland Security Investigations, the New York State Police, under the direction of Major Craig Hanesworth, and the Chemung County District Attorney’s Office, under the direction of Weedon Wetmore.Honduran National Sentenced for Illegal ReentryRead the Press Release
U.S. Attorney Kenneth A. Polite announced that MARVIN LOPEZ-PINEDA, age 29, a citizen of Honduras, was sentenced today after previously pleading guilty to illegal reentry of removed alien.
U.S. District Judge Carl J. Barbier sentenced LOPEZ-PINEDA to time served, followed by one year of supervised release, and a $100 special assessment. LOPEZ-PINEDA will be surrendered to the custody of the U.S. Immigration and Customs Enforcement for removal proceedings.
According to court documents, on or about September 24, 2015, LOPEZ-PINEDA was found in the United States after having been officially deported and removed on or about May 30, 2014.
U.S. Attorney Polite praised the work of the United States Department of Homeland Security, Immigration Enforcement in investigating this matter. Assistant United States Attorney Irene González is in charge of the prosecution.
Hartford Man Sentenced to 6 Years in Federal Prison for Distributing Crack CocaineRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that COURTNEY BYRD, also known as “Buck,” 32, of Hartford, was sentenced today by U.S. District Judge Michael P. Shea in Hartford to 72 months of imprisonment, followed by four years of supervised release, for distributing crack cocaine.
According to court documents and statements made in court, in February and March 2015, BYRD distributed approximately 98 grams of crack cocaine to an individual working with law enforcement.
On March 5, 2015, BYRD twice fled at a high rate of speed from law enforcement officers who were attempting to stop his vehicle, first in East Hartford and then in Hartford. During his second flight, BYRD hit a pedestrian in the area of Ann Uccello Street and Church Street in Hartford. The victim suffered a broken leg. A six-year-old child was in BYRD’s car at the time.
On March 19, 2015, an individual working with law enforcement ordered an ounce of crack cocaine from BYRD. BYRD was arrested as he came out of his residence to consummate the transaction.
BYRD has been detained since his arrest. On August 26, 2015, he pleaded guilty to one count of distribution of cocaine base (“crack cocaine”).
BYRD’s criminal history includes multiple felony convictions
This prosecution stems from Project Longevity, a comprehensive initiative to reduce gun violence in Connecticut’s major cities. Through Project Longevity, community members and law enforcement directly engage with members of groups that are prone to commit violence. A critical component of the Project Longevity strategy is the “call-in,” a face-to-face meeting where Project Longevity partners engage group members and deliver a community message against violence, a law enforcement message about the consequences of further violence and an offer of help for those who want it.
BYRD is alleged to be a member of a Garden Street group known as the Chicken Coop. On April 1, 2014, BYRD and other members of the Chicken Coop attended a call-in in Hartford. The following day, a Chicken Coop member who attended the call-in is alleged to have shot an individual in Hartford. BYRD’s associate is being prosecuted in state court for that offense, and also in federal court in Massachusetts for a heroin trafficking offense.
Five additional members of the Chicken Coop are being prosecuted in federal court in Connecticut for drug trafficking and firearms offenses, and five are being prosecuted in state court for assault and drug offenses.
This matter is being investigated by the Federal Bureau of Investigation’s Northern Connecticut Violent Crimes Task Force, the U.S. Marshals Service and the Hartford Police Department. The case is being prosecuted by Assistant U.S. Attorney Michael J. Gustafson.
Glendora Doctor Pleads Guilty to Distributing Addictive Painkillers and Transferring Proceeds to an Off-Shore Bank AccountRead the Press Release
LOS ANGELES – A medical doctor who served as the face of a sham Los Angeles clinic pleaded guilty today to federal drug trafficking and money laundering charges connected to her illegal distribution of the powerful painkiller best known by the brand name OxyContin.
Dr. Madhu Garg, 64, of Glendora, pleaded guilty to one count of illegally distributing oxycodone and one count of money laundering for transferring the proceeds of criminal activity to a Malaysian bank account.
Garg pleaded guilty before Untied States District Judge John A. Kronstadt, who scheduled a sentencing hearing for May 26. As a result of today’s guilty pleas, Garg faces a statutory maximum sentence of 30 years in federal prison.
Garg was arrested in January 2015, along with the other operators of the now-defunct Southfork Medical Clinic in Los Angeles. A federal grand jury indictment charged seven defendants with conspiring to sell medically unnecessary prescriptions for drugs that included oxycodone, hydrocodone (commonly sold under the brand names Vicodin, Norco and Lortab), alprazolam (best known by the brand name Xanax), carisoprodol (a muscle relaxant sold under the brand name Soma) and promethazine with codeine (a cough syrup sold on the street as “purple drank” and “sizzurp”).
As part of her guilty plea, Garg admitted that she issued prescriptions for those drugs to Southfork “patients” at the instructions of the owner of the clinic, Jagehauel Gillespie, and that she knew the “patients” did not actually need the drugs. In a plea agreement filed in United States District Court, Garg “acknowledges that she intentionally prescribed the drugs outside the usual course of professional practice and without a legitimate medical purpose.”
“Doctors are duty-bound to do everything they can to protect the health of their patients,” said United States Attorney Eileen M. Decker. “Issuing prescriptions for powerful and addictive drugs for no medical purpose undermines this basic principle. Medical professionals who violate federal law by trafficking narcotics put lives at risk and compromise our health care system.”
Records maintained by the State of California show that Garg issued more than 10,000 prescriptions for controlled drugs – the vast majority of which were for hydrocodone or alprazolam – over the year-long period that she worked at Southfork. Financial records show that, over the same time period, Garg received more than $300,000 in cash and transferred more than $90,000 to bank accounts held in Thailand and Malaysia.
“When doctors abuse their professional license for financial gain they put the public at risk, in this case by dispensing highly addictive controlled substances,” stated IRS Criminal Investigation’s Special Agent in Charge Erick Martinez. “IRS Criminal Investigation is proud to contribute our financial expertise in an effort to halt the illegal sale and distribution of prescription drugs.”
During the investigation, Garg issued prescriptions for oxycodone and promethazine with codeine to undercover agents on eight occasions. During one of the meetings, Garg gave a prescription to an undercover witness, and then Garg agreed to issue a new prescription to the witness the following week under a false name.
“The abuse of prescriptions drugs continue to take a horrific toll on public health and safety in our communities,” said Stephen G. Azzam, Acting Special Agent in Charge of DEA’s Los Angeles Field Division. “The DEA will continue to work with our partner agencies to identify and investigate doctors who are using their medical licenses to illegally deal drugs.”
The conspirators also used Los Angeles as a base of operations to acquire and deliver bulk shipments of prescription drugs to Texas, according to court documents. Furthermore, according to court records, Garg continued to assist Gillespie in acquiring oxycodone from international wholesalers even after the Medical Board of California revoked Garg’s license in December 2013.
Previously in this case, five of the other defendants have pleaded guilty, including Gillespie, who was sentenced by Judge Kronstadt in November to six years in federal prison. One other defendant is pending trial, which is scheduled for later this year.
The investigation into Garg was conducted by the Drug Enforcement Administration’s Los Angeles and Houston field divisions, IRS - Criminal Investigation, the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the California Department of Justice, and the Texas Department of Public Safety.
Freedom Industries and former Freedom Industries plant manager sentenced for roles in chemical spillRead the Press Release
CHARLESTON, W.Va. – Freedom Industries, Inc., and a former plant manager at Freedom Industries were sentenced today for environmental crimes connected to the 2014 Elk River chemical spill, announced Acting United States Attorney Carol Casto. Freedom Industries (Freedom) was sentenced to a fine of $900,000, to be paid after all other claims against Freedom are satisfied, for negligently discharging a pollutant, unlawfully discharging refuse matter, and knowingly violating an environmental permit. Freedom has been in bankruptcy since shortly after the chemical spill. Michael E. Burdette, of Dunbar, was sentenced to three years of probation and a $2,500 fine for negligently discharging a pollutant. Both Freedom and Burdette previously pleaded guilty in March 2015. Burdette is one of six former officials of Freedom Industries, in addition to Freedom Industries itself as a corporation, to be prosecuted for federal crimes associated with the chemical spill.
On January 9, 2014, a major chemical leak was discovered in Charleston at the above-ground storage tank area owned and operated by Freedom Industries (Freedom) on the Elk River. Freedom used these storage tanks to keep and process chemicals, and the leak consisted primarily of 4-methylcyclohexane methanol (MCHM), a chemical used in the coal mining industry as a cleansing agent. A significant amount of MCHM leaked into the Elk River, flowed into a water treatment plant, and contaminated the water supply of Charleston and the surrounding areas for several days. Freedom did not have a permit required by law that would have allowed the company to discharge MCHM into the Elk River.
Freedom had a permit issued by West Virginia’s Department of Environmental Protection (DEP) that allowed for the discharge of storm water and groundwater subject to monitoring and reporting requirements. However, this permit did not allow for the discharge of MCHM, and required the development and maintenance of a storm water plan and a groundwater plan. Generally, storm water and groundwater plans identify potential sources of pollution and outline steps to prevent, contain, and reduce pollutants.
Freedom admitted that it should have taken reasonable steps to ensure that MCHM did not leak into the Elk River. Freedom did not maintain the containment area that was supposed to prevent a chemical spill from reaching the Elk River. Freedom also failed to inspect and maintain the storage tank holding MCHM. In spite of the permit requirements, Freedom also failed to implement and maintain a storm water and groundwater plan. Furthermore, Freedom did not conduct the necessary training to ensure all personnel were working in compliance with environmental laws. When the chemical spill occurred, Freedom did not have adequate spill prevention material on hand and instead, had on hand a mere two bags of absorbent material and no booms or other materials to stem the flow of MCHM. Freedom admitted that its failure in all of these essential areas was a proximate cause of the chemical spill.
Burdette worked as a plant manager for Freedom’s facility on the Elk River. In that role, Burdette was responsible for operating and maintaining Freedom’s facility in a safe manner and in compliance with environmental laws. He was also responsible for making sure the employees he supervised were properly trained in environmental compliance. Burdette admitted he should have known Freedom was required to implement and maintain a storm water and groundwater plan as required by the permit. He also admitted he knew the measures Freedom had in place to handle a chemical spill were inadequate, and that Freedom should have had proper containment structures to contain a spill from the largest storage tank for 72 hours. Burdette further admitted that his failure to implement these required safety measures was a proximate cause of the chemical spill.
Including Freedom and Burdette, four defendants have been sentenced as part of the investigation into the chemical spill. Robert J. Reynolds, of Apex, North Carolina, who worked as an environmental consultant with Freedom, was sentenced on Monday for negligently discharging a pollutant. Charles E. Herzing, of McMurray, Pennsylvania, a former owner and vice president of Freedom, was sentenced on Tuesday for unlawfully discharging refuse matter.
William E. Tis, of Verona, Pennsylvania, a former owner of Freedom, pleaded guilty in March 2015 to the unlawful discharge of refuse matter. Tis is scheduled to be sentenced on February 8, 2016.
Dennis P. Farrell, of Charleston, a former Freedom president and owner, pleaded guilty in August 2015 to violating the federal Refuse Act and violating a permit by failing to have a pollution prevention plan. Farrell is scheduled to be sentenced on February 11, 2016.
Gary Southern, of Marco Island, Florida, the president of Freedom at the time of the spill, pleaded guilty in August 2015 to violating the Clean Water Act, unlawfully discharging refuse matter in violation of the Refuse Act, and violating a permit by failing to have a pollution prevention plan. Southern is scheduled to be sentenced on February 17, 2016.
The investigation of the chemical spill was conducted by the Federal Bureau of Investigation and the Environmental Protection Agency’s Criminal Investigation Division. Assistant United States Attorneys Philip H. Wright, Larry R. Ellis, and Eric P. Bacaj, as well as the Environmental Protection Agency’s Regional Criminal Enforcement Counsel Perry D. McDaniel, are handling the prosecutions. United States District Judge Thomas E. Johnston imposed the sentence, and will preside over the remaining sentencing hearings associated with the chemical spill.
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Four people and Toledo company indicted for fraudulently using job-training money for personal expensesRead the Press Release
A 29-count federal indictment was filed charging four people and a Toledo company with defrauding federal, state and county government by artificially inflating costs and invoices associated with operating job training programs, and instead using the money to pay for real estate, cars, vacations, cosmetic surgery and other personal purchases, said U.S. Attorney Steven M. Dettelbach and Guy A. Ficco, Acting Special Agent in Charge, IRS-Criminal Investigation.
Indicted are: Daniel E. Morris, 66, of Maumee; James D. Moody, 55, Victoria Hawkins, 28, and Angela Bowser, 44, all of of Toledo, and Business Rehabilitation Informed Decisions Guiding Employment Strategies, Inc. d/b/a B.R.I.D.G.E.S., Inc., a Toledo-based corporation.
The charges relate to program fraud, mail fraud, aggravated identity theft, money laundering, failure to pay over payroll taxes, and obstruction of justice from 2004 through 2015.
“These defendants took advantage of economic hardship in Northwest Ohio to enrich themselves,” Dettelbach said. “They stole taxpayer dollars and blew the money on vacations, tattoos and other frivolous expenses. We have zero tolerance for misuse of taxpayer money.”
“These government-funded programs were designed to help the men, women and children of Lucas County, and these individuals defrauded them for their own personal gain,” Ficco said. “The conduct detailed in this indictment is egregious and exposed these individuals for what they really are, thieves.”
According to the indictment:
BRIDGES operated at 242 Reynolds Road and 310 Reynolds Road. The company was in the business of providing work placement and work training services to public assistance recipients, and nearly all of its revenue came from public funds.
Morris was the founder and general manager of BRIDGES. Moody was the registered agents and shareholder along with Morris. Hawkins was an employee from 2008 through 2013, while Bowser was an employee from 2008 through 2014.
The Temporary Assistance for Needy Families program was a welfare program that provided cash assistance to qualifying households with minor children or pregnant women. TANF provided federal block grants to states each year to cover benefits, administrative expenses and services targeted to needy families.
One of TANF’s goals was reducing the dependency of needy parents by promoting job preparation, work and marriage. TANF recipients must work as soon as they are job ready and no later than two years after commencing assistance.
BRIDGES received more than $15.7 million in funding from several entities between 2004 and 2015, including the Ohio Department of Job and Family Services, the Lucas County Department of Job and Family Services, Ohio Works First and others. This funding was based in part on BRIDGES’ grant proposals. The majority of BRIDGES’ stated administrative costs were payroll and transportation.
BRIDGES provided job training and work placement services but at substantially lower costs than those stated in its budgets and invoices. The defendants fraudulently inflated BRIDGES payroll costs, transportation and mileage.
Morris, BRIDGES and others maintained false personnel files, timesheets, mileage records and reimbursement forms for nonexistent employees. They included fake, former or nonexistent employees on the payroll. For example, BRIDGES paid Moody a salary even though he did not work there, and later continued to pay him by issuing payroll checks to Moody’s wife.
BRIDGES, Morris, Moody, Hawkins and Bowser used TANF funds to pay for personal living expenses including groceries, dental care, medical care, resort vacations, pharmaceuticals, clothing, toys, designer bags, furniture, video streaming services, credit card bills, legal fees unrelated to BRIDGES’ business, tattoos, cosmetic surgery, real estate, vehicles, investments and jewelry, according to the indictment.
For example, between February 2013 and October 2014, Hawkins used a debit card linked to a BRIDGES account to make approximately $18,200 in cash withdrawals.
Each defendant is charged in a conspiracy to commit program fraud and mail fraud. Each defendant is also charged in a conspiracy to commit money laundering offenses.
Morris is charged with four counts of program fraud, five counts of mail fraud, two counts of aggravated identity theft, nine counts of money laundering, six counts of failure to pay over withheld income tax and one count of obstruction of justice.
Moody is charged with four counts of program fraud, five counts of mail fraud, two counts of aggravated identity theft, nine counts of money laundering, six counts of failure to pay over withheld income tax and one count of obstruction of justice
Moody is charged with one count of program fraud and three counts of money laundering.
Hawkins is charged with two counts of program fraud and four counts of money laundering.
Bowser is charged with one count of program fraud and two counts of money laundering.
If convicted, the defendants’ sentences will be determined by the Court after reviewing factors unique to this case, including the defendants’ prior criminal records, if any, the defendants’ roles in the offenses and the characteristics of the violations. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The case is being prosecuted by Assistant U.S. Attorneys Noah P. Hood and Gene Crawford following an investigation by the Internal Revenue Service-Criminal Investigations, Toledo, Ohio, and the Office of Auditor of State (Ohio), Toledo, Ohio. .
An indictment is only a charge and is not evidence of guilt. Defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Four defendants appear on Federal drug charges in BluefieldRead the Press Release
BLUEFIELD, W.Va. – Four defendants appeared in federal court today on drug charges, announced Acting United States Attorney Carol Casto.
Steven Andrew Short, 30, of Bluefield, was sentenced to four years in federal prison for using a phone to facilitate the distribution of hydromorphone. Short previously pleaded guilty in November 2015 to the federal drug crime. Short admitted that on April 8, 2015, he used a phone to help set up a drug deal with a confidential informant working with law enforcement. Later that same day, Short distributed hydromorphone pills to the informant near Rock in Mercer County. Short also admitted that he distributed more than 1800 hydromorphone pills.
Adam Christopher Skeens, 45, of Princeton, pleaded guilty to distribution of hydromorphone, admitting that on February 23, 2015, he distributed hydromorphone pills to a confidential informant in Princeton. Stephen Wayne Steele, 42, of Bluefield, pleaded guilty to distribution of hydromorphone, admitting that on April 7, 2015, he distributed hydromorphone pills to a confidential informant in Green Valley in Mercer County. Terrance Dewayne Hayes, 30, of Welch, pleaded guilty to distribution of heroin, and admitted that on June 16, 2015, he distributed heroin to a confidential informant near Havaco in McDowell County.
Each of the defendants faces up to 20 years in federal prison and a $1 million fine when they are sentenced on May 17, 2016.
The cases were investigated by the Southern Regional Drug and Violent Crime Task Force and the West Virginia State Police Bureau of Criminal Investigations. Assistant United States Attorney John File handled the prosecutions. The hearings were conducted by Senior United States District Judge David A. Faber.
These case were prosecuted as part of the Bluefield Pill Initiative, 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 Fulton Bank Employee Charged with Stealing $13,325Read the Press Release
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a former Fulton Bank employee has been charged with stealing $13,325 from Fulton Bank in York, Pennsylvania
According to United States Attorney Peter Smith, Donna S. Miller, age 45 of Felton, is charged with bank larceny in a one count Information filed in U.S. District Court in Harrisburg.
Miller allegedly stole $13, 325 from the Fulton Bank, S. Queen Street branch in York between September 2013 and November 2014. Miller was terminated in November 2014 and has made full restitution to Fulton Bank.
The government also filed a plea agreement with the defendant which is subject to approval by the court. No date has yet been scheduled for Miller’s guilty plea.
The case was investigated by the Harrisburg Office of the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Kim Douglas Daniel.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law is 10 years of imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Former DoD Contractor Sentenced in Contracting Kickbacks CaseRead the Press Release
ALEXANDRIA, Va. – Robert W. Gannon, 54, of Bangkok, the former director of operations of a Department of Defense contracting company in Washington, D.C., was sentenced today to 12 months and one day in prison for soliciting and receiving $193,665 in kickback proceeds in return for steering U.S. government subcontracts to a U.K. company. Gannon was also ordered to depart the U.S. immediately following completion of his prison sentence; not return to the U.S. without permission; pay a fine of $193,665; and is prohibited from employment with or work with the U.S. military.
Gannon pleaded guilty on Nov. 4, 2015. According to court documents, Gannon’s job responsibilities included identifying, evaluating and monitoring subcontracts. Gannon admitted that he used his position to arrange with executives of a U.K.-based company that they would make kickback payments to Gannon in return for a series of purchase orders Gannon’s company awarded in August 2009 with a total value of nearly $6 million. Those orders called for the provision of explosive ordinance disposal equipment to U.S. and NATO forces in Afghanistan. In return for his efforts, Gannon admitted that the U.K. company wired funds with a total value of almost $200,000 from bank accounts in the United Kingdom to Gannon’s account in Singapore.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; John F. Sopko, Special Inspector General for Afghanistan Reconstruction; Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office; and Robert Craig, Special Agent in Charge for Defense Criminal Investigative Service Mid-Atlantic Field Office, made the announcement after sentencing by U.S. District Judge James C. Cacheris.
This case was investigated by the Special Inspector General for Afghanistan Reconstruction, the FBI’s Washington Field Office, and the Defense Criminal Investigative Service Mid-Atlantic Field Office. Assistant U.S. Attorney Mark Lytle of the Eastern District of Virginia and Trial Attorney Wade Weems of the Criminal Division’s Fraud Section 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. 1:15-cr-277.
Former Connecticut Resident Sentenced to Three Years for Crack Distribution ConspiracyRead the Press Release
Contact: Joel B. Casey
Assistant United States Attorney
Tel: (207) 945-0373Bangor, Maine: United States Attorney Thomas E. Delahanty II announced that Torrence Benton, a/k/a “T-Black,” a/k/a “Scotty,” 28, formerly of New Haven, Connecticut was sentenced today in U.S. District Court by Judge John A. Woodcock, Jr. to three years in prison and three years of supervised release for conspiracy to possess with the intent to distribute and to distribute cocaine base, commonly referred to as “crack.” This sentence is in addition to the 34 months that Benton has already served in the Maine State Prison on a related state charge.
According to court records, the defendant was a member of the Red Side Guerilla Brims (“RSGB”), a New Haven based street gang affiliated with the Bloods street gang. Between January 2010 and August 2013, Benton conspired with other RSGB gang members and Bangor area residents to distribute crack in Bangor area. In early 2013, he came to the Bangor area and began distributing crack. He obtained crack from other members of the conspiracy who brought it to Maine from New Haven and he was held responsible for distributing over 62 grams of it for $50 per half gram and $100 per gram. On April 7, 2013, the defendant was arrested by Old Town Police on state charges and found to be in possession of about 10 grams of crack.
The case was investigated by the Maine Drug Enforcement Agency; the Bureau of Alcohol, Tobacco, Firearms and Explosives (New Haven Office); the New Haven Police Department; and the Old Town Police Department.A related racketeering case against other members of RSGB is being prosecuted by Assistant U.S. Attorneys Robert Spector and Peter Markle in the District of Connecticut.
Former Chief Financial Officer of Restaurant Chain Pleads Guilty to Wire Fraud and Embezzlement from Bankruptcy EstateRead the Press Release
BATON ROUGE, LA - United States Attorney Walt Green announced today that WILLIAM “WIL” ROS, age 45, of Cortez, Florida, pled guilty to wire fraud and embezzlement from a bankruptcy estate. The guilty pleas arise from his management and operation of Fundamental Provisions, LLC, a local company which operated 30 Popeyes’ Fried Chicken restaurants in Louisiana, Alabama, and Florida.
According to the factual summary presented at his guilty plea hearing, Fundamental Provisions, LLC was a business based in Gonzales, Louisiana. Fundamental owned and operated 30 Popeyes’ Fried Chicken and Biscuits franchise restaurants in Alabama, Florida, and Louisiana. Fundamental had gross annual revenues in excess of $20,000,000.
ROS was the Chief Financial Officer of Fundamental. As CFO, ROS was responsible for the daily management and operations of multiple Popeyes restaurants located in Alabama and Florida, including supervision of, and frequent communication with various store managers. ROS was also responsible for assuring that funds generated by each restaurant were used for the benefit of Fundamental.
In December 2009, in the United States Bankruptcy Court for the Middle District of Louisiana, Fundamental sought, and received, bankruptcy protection which authorized the company to reorganize its management and restructure its debt so that it could continue operating its business and thereafter pay debts it owed to numerous creditors.
A Chief Restructuring Officer was employed in January 2010 and authorized by the Bankruptcy Court to control all business operations, including disbursements of company funds, employment of key personnel, and incurrence of debt. The CRO employed and paid ROS to act as Fundamental’s CFO.
According to the facts presented at his re-arraignment hearing, because the reorganized company was unable to make payments to its creditors as promised in December 2011, Fundamental was placed in involuntary bankruptcy in March 2012. A Trustee was appointed by a Bankruptcy Judge for the purpose of liquidating the company’s assets in order to pay substantial debts owed by Fundamental to its creditors. With approval of the Bankruptcy Judge, the Trustee appointed a Chief Operating Officer to assist with the liquidation process. The COO continued ROS’s employment as Fundamental CFO until in or about May 2012.
From August 2009 through May 2012, ROS engaged in a scheme to defraud Fundamental and obtain company money by means of materially false and fraudulent pretenses, promises, and representations. According to the factual recitation at the re-arraignment hearing, the purpose of the scheme was to enrich himself using funds he diverted from Fundamental, and to conceal his diversions of company funds from officials administering Fundamental’s Bankruptcy Court proceedings.
ROS executed his scheme by using his position as Fundamental’s CFO to cause restaurant managers to divert restaurant revenues to his personal benefit. He also allegedly caused store managers to mischaracterize and cause the recording of fictitious purchases to disguise the fact that he had caused managers to remove funds from the restaurants’ cash registers for his personal benefit.
Beginning in August 2009, ROS directed an Alabama store manager to remove monies from restaurant cash registers and either deliver it to him (ROS) or mail FedEx packages of cash to persons identified by ROS.
Beginning in March 2010, ROS directed a second Alabama store manager to remove monies from restaurant cash registers and deposit the monies into bank accounts controlled by ROS, including ROS’s girlfriend, his golf club supplier, and family friend.
ROS also used the store managers to divert restaurant funds and directed them to send packages of cash to various persons, including his girlfriend, his golf club supplier, and the seller of a Ford GT race car.
In total, ROS embezzled approximately $966,257 from the Alabama restaurants during the course of the pending bankruptcy proceedings. According to the indictment, ROS allegedly enjoyed the stolen funds by purchasing a $225,000 race car and upgrading, renovating, and furnishing his Florida home.
U.S. Attorney Green stated: “Corporate executives who fleece their employers in order to finance their self-indulgence and greed will be aggressively pursued by this office. Such fraud threatens to jeopardize the fiscal integrity of our businesses and the livelihoods of those who work for them. I commend the dedicated efforts of the FBI agents and prosecutors who worked to ensure that justice was done in this case.”
FBI Special Agent-in-Charge Jeffrey S. Sallet stated: “The FBI’s Baton Rouge Resident Agency aggressively pursues those individuals who seek to unjustly enrich themselves at the expense of others. The FBI, with the exemplary support of our partners in the United States Attorney’s Office, will continue our work ensuring the integrity of the bankruptcy system and delivering those individuals responsible for corporate fraud to justice.”
The matter is being handled by the United States Attorney’s Office for the Middle District of Louisiana and the Baton Rouge office of the Federal Bureau of Investigation, along with assistance from the Region 5 Office of the United States Trustee. It is being prosecuted by Assistant United States Attorneys Rene Salomon and Ryan Crosswell.
Five Chicago Men Arrested in Connection with Violent KidnappingRead the Press Release
CHICAGO — Five men have been arrested on kidnapping charges for allegedly abducting a Berwyn man in broad daylight and holding him for ransom in a North Side auto body shop.
The kidnapping went awry after the abductors realized they had snatched the wrong man, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago. The victim was the brother of the intended target. He was blindfolded and held at gunpoint for nearly two days in an auto body shop in Chicago’s Avondale neighborhood, before being released, the complaint states.
Federal authorities arrested the five defendants yesterday. Charged with conspiracy to commit kidnapping are ANTONIO SALGADO, 34; ARMANDO DELGADO, 36; OCTAVIO ALEJANDRE JR., 33; JAIME GUTIERREZ, 22; and MUNAF ABDULRAZAK MUSA, 22; all of Chicago. The charge carries a maximum sentence of life in prison.
All five defendants were ordered held without bond during initial court appearances yesterday before U.S. Magistrate Judge Susan E. Cox. Musa’s next court appearance is scheduled for Feb. 5, 2016, while the other defendants will next appear on Feb. 8, 2016.
According to the complaint, the abduction occurred on the afternoon of May 30, 2015, when the victim was kidnapped at gunpoint outside of his Berwyn home. The victim was forced into a sport-utility vehicle and taken to the auto repair shop. While being held, one of the kidnappers pushed a gun into the victim’s body and threatened him, while another kidnapper placed a knife on the victim’s fingers and threatened to cut them off, the complaint states.
Early the next morning, the victim’s uncle received telephone calls from an unidentified man who stated he was holding the victim, according to the complaint. The caller demanded approximately 25 kilograms of narcotics. At one point the victim was placed on the phone and instructed to tell his uncle to cooperate, the complaint states.
Unbeknownst to the defendants, several of their phones had previously been intercepted by federal authorities who were conducting an unrelated investigation, the complaint states. In a recorded call between Salgado and Delgado on the night of May 31, 2015, Delgado told Salgado, “There is a little situation. It’s the wrong guy because it’s his brother of the one that we’re trying to get.” According to the complaint, Salgado allegedly replied, “Let the guy go, but beat the [expletive] out of him.”
On the morning of June 1, 2015, the victim appeared at a bus station in Chicago, according to the complaint. The victim told police that he had walked to the bus station after being released from captivity during the night.
The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Dennis A. Wichern, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration; Jim Ritz, Chief of the Berwyn Police Department; and John Escalante, Acting Superintendent of the Chicago Police Department.
The public is reminded that a complaint is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Kartik K. Raman.
Complaint
Federal Jury Convicts Four Individuals for International Fraud and Money Laundering Scheme Involving Sale of GoldRead the Press Release
Tampa, Florida – United States Attorney A. Lee Bentley, III announces that a federal jury yesterday found Naadir Cassim (40, Barcelona, Spain and Orlando, FL), Jon Craig Nelson (69, Houston, TX), Michael Skillern (49, Houston, TX), and Adriana Maria Camargo, a/k/a Adriana Palomino (37, Barcelona, Spain) guilty of conspiracy, money laundering conspiracy, and mail fraud. Each faces a maximum penalty of 5 years in federal prison on the conspiracy count, 20 years’ imprisonment on the money laundering conspiracy count, and 20 years in prison for each mail fraud count. Cassim, Nelson, and Skillern were also convicted of wire fraud charges, and face up to 20 years in federal prison for each charge. Additionally, the jury found Cassim guilty of an illegal monetary transaction charge that carries a maximum penalty of 10 years’ imprisonment. The sentencing hearing has been set for May 24, 2016.
The individuals were indicted on February 18, 2014.
According to evidence presented at trial, from August 2011 through February 2014, Cassim, Nelson, Skillern, and Camargo, along with others, engaged in a fraud scheme where they directed and caused the sale of purported but nonexistent gold ore or gold doré from mines owned or controlled by them, through a company called OWN GOLD, LLC. The conspirators’ victims were located both inside and outside of the United States, including the United Kingdom. To facilitate the scheme, the conspirators paid telemarketers to place unsolicited calls to potential and existing victims outside the United States. The conspirators used the victims' funds to perpetuate the scheme and for their own personal enrichment. During the course of the fraud scheme, approximately 440 victims wired more than $7.3 million to the conspirators.
“The defendants defrauded more than 400 victims and collected more than $7 million through an elaborate scheme to sell nonexistent gold ore and gold doré,” said Susan L. McCormick, special agent in charge of HSI Tampa. “Entrusted with a unique international authority and assisted by the efforts of our foreign law enforcement partners, HSI dismantled this transnational criminal organization.”
The case was investigated by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the U.S. Secret Service, with assistance from law enforcement partners in the United Kingdom, Spain and Cyprus, and the U.S. Department of Interior’s Bureau of Land Management. The Justice Department’s Office of International Affairs provided assistance in the extradition and mutual legal assistance requests in this case. It is being prosecuted by Assistant United States Attorneys Sara C. Sweeney and Rachelle DesVaux Bedke.
Federal Judge Finds Ironworkers’ Pension Plan Violates Rights of Returning VeteransRead the Press Release
BOSTON – A federal judge in Boston ruled on Monday, Feb. 1, 2016, that the Iron Workers violate the rights of servicemembers by failing to give them credit for time serving on active duty oversees.
In October 2013, U.S. Attorney Carmen M. Ortiz’s Office filed a civil rights complaint alleging that the Iron Workers violated USERRA (Uniformed Services Employment and Reemployment Rights Act of 1994) by failing to credit U.S. Navy Reserve Member Thomas Shea, a member of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 7, with service time while he was serving multiple tours of duty in the armed forces in Iraq, Afghanistan (twice), Bahrain, and Kuwait. On Monday, U.S. District Court Judge Nathaniel M. Gorton denied the Iron Worker’s motion for summary judgment, which essentially sought to have the case dismissed, and granted portions of the government’s summary judgment motion.
The Court issued a 28-page decision finding that the Iron Workers’ Pension Plan violates USERRA because it places requirements on servicemembers that are not placed on non-servicemembers. The Court also scheduled several issues related to Shea’s specific claims for trial, including whether Shea properly applied for reemployment following each of his five deployments to Iraq, Afghanistan (twice), Bahrain, and Kuwait. The trial is scheduled for April 25, 2016. Shea remains on active military duty and is currently deployed overseas.
USERRA requires that servicemembers who leave their civilian jobs to serve in the military be treated as not having incurred a break in service with regard to their pension plans and other employment benefits. USERRA further provides that each period served by a servicemember shall, upon reemployment, be deemed to constitute service with the employer maintaining the plan for the purpose of determining the non-forfeitability of the person's accrued benefits and the accrual of benefits under the plan.
The government has alleged that the Iron Workers violated USERRA by refusing to grant Shea pension credits that he earned while on military duty unless and until he (1) worked at least 300 hours in the one-year period following his discharge from the military; and (2) accrued 2.5 pension credits, which is equal to 3,000 hours, in the subsequent five-year period following his release from active duty. Both of these requirements exceed the requirements placed on other members of the pension fund who do not take military leave. The Court found that these requirements violate USERRA. The complaint seeks to have the Iron Workers credit Shea with pension credits he earned while on active military duty and back payment of annuity contributions that were not made while Shea was on active duty.
United States Attorney Carmen M. Ortiz and Delora Kennebrew, Chief of the Employment Litigation Section of the Justice Department’s Civil Rights Division, made the announcement today. The case was investigated by the U.S. Department of Labor’s Veterans Employment and Training Service with the assistance of the Department of Labor’s Office of Regional Solicitor. This case is being handled by Assistant U.S. Attorney Jennifer Serafyn of Ortiz’s Civil Rights Unit and Andrew Braniff, Assistant Director of the Servicemembers and Veterans Initiative of the Justice Department’s Civil Rights Division and Attorney Nadia Said of the Justice Department’s Civil Rights Division, Employment Section.
The protection of servicemembers’ rights is a priority for the U.S. Attorney’s Office. Additional information about USERRA can be found at www.usdoj.gov/crt/emp, www.servicemembers.gov and www.dol.gov/vets/programs/userra/main.htm.
Federal Grand Jury Criminal Indictments AnnouncedRead the Press Release
TULSA, Okla.— The results of the February 2016 Federal Grand Jury were announced today by Danny C. Williams Sr., United States Attorney for the Northern District of Oklahoma.
The following individuals have been charged with violations of United States law in indictments returned by the Grand Jury. The return of an indictment is a method of informing a defendant of alleged federal crimes which must be proven in a court of law beyond a reasonable doubt to overcome a defendant’s presumption of innocence.
Bryan Sean Koch. Felon in Possession of a Firearm. Koch, 26, of Miami, Oklahoma, is charged with possession of a .40 caliber pistol after a prior felony conviction. If convicted, the statutory maximum penalty is 10 years in prison and a $250,000 fine. In addition, Koch will forfeit the firearm involved in the firearm offense. The Bureau of Indian Affairs is the investigating agency.
Mauricio Arevalo-Magana. Alien Unlawfully in the United States in Possession of Firearms, Possession of Marijuana with Intent to Distribute, and Possession of Firearms in Furtherance of a Drug Trafficking Crime. Arevalo-Magana, 25, unlawfully in the United States, is charged with possession of firearms; possession of marijuana with intent to distribute; and possession of firearms in furtherance of a drug trafficking crime. If convicted, Arevalo-Magana faces a statutory maximum penalty of 10 years in prison and a $250,000 fine for being an alien unlawfully in the United States in possession of firearms; not more than five years and a $250,000 fine for possession of marijuana with intent to distribute; and not less than five years and up to life in prison and a $250,000 fine for possession of firearms in furtherance of a drug trafficking crime. The Bureau of Alcohol, Tobacco, Firearms and Explosives is the investigating agency.
John Stephen Mashunkashey. Possession of Methamphetamine with Intent to Distribute, Possession of Marijuana with Intent to Distribute, and Felon in Possession of Firearms. Mashunkashey, 30, of Pawhuska, is charged with possession of methamphetamine and marijuana with intent to distribute, and possession of firearms after prior felony convictions. If convicted, Mashunkashey faces the statutory maximum penalty of 20 years in prison and a $1,000,000 fine for possession of methamphetamine with intent to distribute; not more than five years in prison and a $250,000 fine for possession of marijuana with intent to distribute; and up to life in prison for the felon in possession of firearms charge. The Bureau of Indian Affairs and the Osage Nation Police Department are the investigating agencies.
Jermaine Mayes. Drug Conspiracy, Distribution of Cocaine Base, and Use of a Communication Facility in Committing, Causing and Facilitating the Commission of a Drug Trafficking Felony. Mayes, 32, of Tulsa, is charged with conspiring to possess with intent to distribute 280 grams or more of cocaine; 12-counts of distributing cocaine base; and seven-counts of using a telephone in committing drug trafficking felonies. If convicted, the statutory maximum penalty is 10 years and up to life in prison and a $10,000,000 fine for drug conspiracy; not more than 20 years in prison and a $1,000,000 fine for distribution of cocaine base; and not more than 4 years in prison and a $250,000 fine for use of a communication facility in committing, causing and facilitating the commission of a drug trafficking felony. The Federal Bureau of Investigation and the Tulsa Police Department are the investigating agencies.
Erika Suzanne McLaughlin and Eric Davis. Theft From Indian Lands in Excess of $1,000. McLaughlin, 35, and Eric Davis, 33, both of Broken Arrow, are charged with stealing from Indian Country in excess of $1,000 of personal property belonging to an Indian female. If convicted, the statutory maximum penalty is five years in prison and a $250,000 fine. The Cherokee Nation Marshals and the Federal Bureau of Investigation are the investigating agencies.
Roque Ponciano-Calles. Reentry of Removed Alien. Ponciano-Calles, 25, is charged with having returned to the United States unlawfully after being deported in April 2015 near Del Rio, Texas. If convicted, the statutory maximum penalty is 20 years in prison and a $250,000 fine. United States Immigration and Customs Enforcement is the investigating agency.
Ellen M. Quinn. Theft of Government Funds. Quinn, 67, of Afton, is charged with stealing approximately $95,408 in United States Department of Veterans Affairs Dependency and Indemnity Compensation. If convicted, Quinn faces the statutory maximum penalty of 10 years in prison and a $250,000 fine. In addition, Quinn will face entry of a criminal forfeiture judgment in the amount of $95,658 representing proceeds obtained as a result of the theft of government funds offense. United States Department of Veterans Affairs-Office of the Inspector General’s Criminal Investigation Division is the investigating agency.
Cody Jacob Wheeler. Felon in Possession of Firearm and Ammunition, Possession of Methamphetamine with Intent to Distribute, and Carrying a Firearm During and in Relation to a Drug Trafficking Crime. Wheeler, 30, of Afton, is charged with possession of firearms and ammunition after a prior felony conviction. In addition, Wheeler is charged with possession of methamphetamine with intent to distribute and carrying a firearm during and in relation to a drug trafficking crime. If convicted, Wheeler faces the statutory maximum penalty of 10 years in prison and a $250,000 fine for felon in possession of firearm and ammunition; not more than 20 years in prison and a $1,000,000 for possession of methamphetamine with intent to distribute; and not less than five years and up to life in prison and a $250,000 for carrying a firearm during and in relation to a drug trafficking crime. The Bureau of Alcohol, Tobacco, Firearms and Explosives is the investigating agency.
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Federal Court Orders Delaware Donut Business and Its Owner to Pay Federal Payroll Taxes on TimeRead the Press Release
A federal court has ordered Chel-C Ventures Inc., which operated Donut Connection stores in Milford, Georgetown, and Harbeson, Delaware, to file its federal payroll tax returns on time and pay federal payroll taxes as they become due, the Justice Department announced. Although Chel-C Ventures has said that it closed the stores after the United States filed its civil complaint in this case, the court’s order directs Chel-C Ventures and its owner, Elva Davidson of Sussex County, Delaware, to file the returns and pay the taxes on time if the business starts operating again. The injunction is effective immediately.
According to the United States’ civil complaint in the case, Chel-C Ventures repeatedly failed over a period of years to fully pay its payroll taxes. The court’s order also determined that Chel-C Ventures was liable for more than $645,000 in federal payroll taxes, penalties and interest and that Davidson was personally liable to the United States for more than $250,000. Chel-C Ventures and Davidson agreed to entry of the court’s order, but did not admit to the allegations in the United States’ civil complaint in the case.
Acting Assistant Attorney General Caroline D. Ciraolo of the Tax Division thanked the revenue officer of Internal Revenue Service’s Field Collection for investigating and preparing the civil case.
Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
Federal Authorities Arrest Crystal City Officials and a Texas Businessman in Connection with a Bribery and Kickback SchemeRead the Press Release
This morning, authorities arrested five current and former Crystal City, TX, officials and a Texas businessman on federal bribery charges in a scheme involving city contracts announced United States Attorney Richard Durbin, Jr., and FBI Special Agent in Charge Christopher Combs, San Antonio Division.
A federal grand jury indictment, returned yesterday and unsealed today, charges City Manager and City Attorney William James Jonas, III, age 54; Mayor Ricardo Lopez, age 40; Mayor Pro-Tem Rogelio Mata, age 43; City councilman Roel Mata, age 44, and former City Councilman Gilbert Urrabazo, age 45; and, Ngoc Tri Nguyen, age 38, with one count of conspiracy to commit bribery involving an entity receiving over $10,000 in federal funds. Jonas is also charged with three substantive federal programs bribery charges; the remaining defendants, with one substantive federal programs bribery charge each.
The indictment alleges that since February 2015, Jonas, Lopez, Rogelio Mata, Roel Mata and Urrabazo used their official positions to enrich themselves by soliciting and accepting bribes from persons seeking to do business in Crystal City. According to the indictment, Jonas managed the bribery scheme, in which a contractor provided bribes totaling more than $12,000 to Jonas, Rogelio Mata, Roel Mata, and Urrabazo, in exchange for their votes for a City contract. The indictment also alleges that Nguyen provided payment directly to Lopez, including $6,000, in exchange for various official acts from Lopez and Jonas. The indictment further alleges that Jonas proposed a kickback scheme to an attorney, in which that attorney would pay Jonas a portion of the legal fees paid by an entity seeking a contract with the City. In exchange for Jonas securing these bribes, Lopez, Rogelio Mata, Roel Mata, and Urrabazo allegedly voted to award Jonas a lucrative contract to serve as both City Manager and City Attorney.
“This case represents our continuing commitment to investigate and punish those who corrupt the process of fair and open government, and to root out the corrosive effect of government officials who sell their office and the public trust they hold for their personal gain,” stated United States Attorney Richard L. Durbin, Jr.
“While most public officials faithfully promote the interests of the communities they serve, today’s arrests should serve as a powerful reminder that officials who abuse their authority will be held accountable,” said FBI Special Agent in Charge Christopher Combs. “Public corruption is one of the most insidious crimes confronting our communities today. It contributes to the cynicism we are seeing from members of the public who often feel as though all politicians are corrupt and the government does not serve the needs of those citizens who can’t pay for access to their elected officials.”
“Public corruption erodes the trust that citizens place in government officials. We are glad to work together with our federal partners to investigate and arrest those who violate that trust,” stated San Antonio Police Chief William McManus.
Upon conviction, each defendant faces up to ten years in federal prison and up to a $250,000 fine. All of the defendants, with the exception of Jonas, Urrabazo and Nguyen, were arrested this morning in Crystal City without incident and taken to the federal courthouse in Del Rio for their initial appearance. Jonas and Urrabazo were arrested this morning in San Antonio. Nguyen was arrested this morning in Keller, TX.
This ongoing joint investigation is being conducted by the FBI and the San Antonio Police Department with assistance from the Texas Department of Public Safety Criminal Investigative Division and the Texas Rangers. Individuals who have first-hand information about corruption, fraud, or bribery related to Crystal City are urged to contact the FBI at (210) 225-6741.
Assistant United States Attorneys Jay Hulings and William R. Harris are prosecuting this case on behalf of the Government.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendants are presumed innocent until proven guilty in a court of law.
Father and Son Found Guilty in Manhattan Federal Court in Connection with Multimillion-Dollar Vending Machine “Business Opportunity” SchemeRead the Press Release
Scheme Victimized More Than 1,000 Individuals Throughout the United States
Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division and U.S. Attorney Preet Bharara of the Southern District of New York, announced that Kenneth Levin, the owner of a company that purported to sell lucrative vending machine “business opportunities,” and his son and manager at the company, Taylor Levin, were found guilty yesterday for their participation in a nearly $11 million scheme that victimized at least 1,300 consumers across the country. Kenneth Levin and Taylor Levin were convicted after a three-week jury trial before the Honorable Katherine B. Forrest. The defendants were arrested in March 2015 along with five other co-conspirators who have all pleaded guilty.
“Kenneth and Taylor Levin preyed upon the entrepreneurial resolve of thousands of victims across the country, deceiving them with promises of business assistance and giant windfalls, when instead they were duping the victims out of over $10 million,” said Manhattan U.S. Attorney Bharara. “This three-week trial and the unanimous verdict made clear that the business opportunities Kenneth and Taylor Levin were actually selling their victims was for themselves alone. I want to thank the U.S. Postal Inspection Service and the Consumer Protection Branch of the Justice Department for their assistance in this prosecution.”
“The defendants convicted in this case twisted the American entrepreneurial spirit to their advantage, luring consumers with the prospect of starting their own business and being their own boss,” said Principal Deputy Assistant Attorney General Mizer, head of the Justice Department’s Civil Division. “Justice Department prosecutors will continue to team together and work with law enforcement to ensure that the crime of business opportunity fraud, in all of its forms, is stopped and perpetrators are prosecuted.”
As established by the evidence at trial:
From January 2005 to December 2011, Kenneth Levin and Taylor Levin and their co-conspirators perpetrated a scheme to defraud consumers by making material misrepresentations in an effort to induce those consumers to invest thousands of dollars in purported vending machine “business opportunities.” Through a company located in Manhattan, New York (Company-1) and its successor companies (together, the Business Opportunity Companies), the defendants and other employees falsely promised customers that if they purchased packages of five or 10 vending machines, the customers would be provided access to established, high-profit locations for the machines and would be connected with experienced “locators,” who would facilitate placing the vending machines in those pre-determined locations.
The defendants and other employees further falsely promised to provide training and ongoing customer assistance on how to operate a successful vending machine business and misled customers about the features of the vending machines – including purposefully concealing the fact that the machines were manually operated and accepted only exact change, rather than automatic machines that accept bills and provide change. Despite the defendants’ claims, there were no pre-determined locations available, locators were inexperienced and ill-equipped to find profitable locations for the vending machines and the Business Opportunity Companies delivered little or no follow-up service or assistance to their customers.
The defendants also misled prospective customers about the profits customers could earn from the machines. Prospective customers were assured that they would earn significant profits from the vending machines in a relatively short period of time. Customers were also misled into believing that certain employees of the Business Opportunity Companies personally owned vending machines that were profitable. The defendants and their co-conspirators made these assertions knowing that there were scores of dissatisfied customers who, rather than making any profit, had lost their entire investment. Through their scheme, the Business Opportunity Companies obtained nearly $11 million from more than 1,300 customers throughout the United States.
The Business Opportunity Companies also encouraged prospective customers to contact the locators to verify that the purported locations were available. The locators were directed to echo the false statements made to customers and affirm that high-traffic and therefore profitable, locations had already been found and were waiting in the prospective customers’ respective geographic areas. In reality, the locators who worked with the Business Opportunity Companies did not have high-traffic locations or routes waiting in the prospective customer’s area. The locators had no special skills, tools, or expertise in finding locations and generally placed consumers’ machines wherever they could, often in businesses that had not consented to housing the machines or that soon demanded that the machines be removed. The vending machines generated little money and customers lost nearly all, if not all, of their investments.
Kenneth Levin, the founder and President of the Business Opportunity Companies, operated and controlled the Business Opportunity Companies’ day-to-day operations. To acquire customers, the Business Opportunity Companies placed advertisements in newspapers throughout the country, claiming that the Business Opportunity Companies had high-profit locations available for the placement of vending machines. Prospective customers responding to the advertisements were sent misleading promotional materials and also spoke by telephone with representatives of the Business Opportunity Companies, including Kenneth Levin’s son, Taylor Levin. Both defendants made various misrepresentations as described above to induce customers to buy the vending machine “business opportunity.” The defendants further concealed from prospective customers the fact that the Business Opportunity Companies received numerous complaints from customers about the lack of profitability of the vending machine “business opportunities” they were selling and the locators’ complete failure to place the vending machines in profitable locations. In an effort to conceal customer complaints from prospective customers, the Business Opportunity Companies changed their name regularly, both to avoid association with previous complaints, and to evade a federal law requiring them to provide prospective customers with a list of recent customers.
* * *
Kenneth Levin, 69, and Taylor Levin, 34, both of Manhattan, were found guilty of all three counts in the Indictment: one count of conspiracy to commit mail fraud and wire fraud and one count each of mail fraud and wire fraud. Each count carries a maximum sentence of 20 years in prison. Kenneth Levin’s sentencing is scheduled for April 1, 2016, and Taylor Levin’s sentencing is scheduled for April 15, 2016, both before Judge Forrest. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of Kenneth Levin and Taylor Levin will be determined by a Judge.
The five other individuals arrested along with Kenneth Levin and Taylor Levin on March 5, 2015, pleaded guilty for their respective roles in this scheme.
Sears Hobbs pleaded guilty on Jan. 4, 2016, and is scheduled to be sentenced on March 11, 2016.
James Conley pleaded guilty on Oct. 22, 2015, and is scheduled to be sentenced on Feb. 11, 2016.
Marcel Harris pleaded guilty on Oct. 26, 2015, and is scheduled to be sentenced on Feb. 26, 2016.
Stephen Friedman pleaded guilty on Oct. 27, 2015, and is scheduled to be sentenced on Feb. 26, 2016.
Jonathan Campbell pleaded guilty on Sept. 17, 2015, and is scheduled to be sentenced on Feb. 12, 2016.
U.S. Attorney Bharara praised the United States Postal Inspection Service for their outstanding work in the investigation. U.S. Attorney Bharara also thanked the Consumer Protection Branch of the Justice Department’s Civil Division for its valuable contributions to this case.
This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Janis Echenberg and Jennifer Beidel are in charge of the case.
Father and Son Found Guilty in Manhattan Federal Court in Connection with Multimillion-Dollar Vending Machine “Business Opportunity” SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Benjamin C. Mizer, the Principal Deputy Assistant Attorney General of the Justice Department’s Civil Division, announced that KENNETH LEVIN, the owner of a company that purported to sell lucrative vending machine “business opportunities,” and his son and manager at the company, TAYLOR LEVIN, were found guilty yesterday for their participation in a nearly $11 million scheme that victimized at least 1,300 consumers across the country. KENNETH LEVIN and TAYLOR LEVIN were convicted after a three-week jury trial before the Honorable Katherine B. Forrest. The defendants were arrested in March 2015 along with five other co-conspirators who have all pled guilty.
Manhattan U.S. Attorney Preet Bharara said: “Kenneth and Taylor Levin preyed upon the entrepreneurial resolve of thousands of victims across the country, deceiving them with promises of business assistance and giant windfalls, when instead they were duping the victims out of over ten million dollars. This three-week trial and the unanimous verdict made clear that the business opportunities Kenneth and Taylor Levin were selling to their victims were actually for themselves alone. I want to thank the U.S. Postal Inspection Service and the Consumer Protection Branch of the Justice Department for their assistance in this prosecution.”
Principal Deputy Assistant Attorney General Benjamin C. Mizer said: “The defendants convicted in this case twisted the American entrepreneurial spirit to their advantage, luring consumers with the prospect of starting their own business and being their own boss. Justice Department prosecutors will continue to team together and work with law enforcement to ensure that the crime of business opportunity fraud, in all of its forms, is stopped and perpetrators are prosecuted.”
As established by the evidence at trial:
From January 2005 to December 2011, KENNETH LEVIN and TAYLOR LEVIN and their co-conspirators perpetrated a scheme to defraud consumers by making material misrepresentations in an effort to induce those consumers to invest thousands of dollars in purported vending machine “business opportunities.” Through a company located in Manhattan, New York (“Company-1”), and its successor companies (together, the “Business Opportunity Companies”), the defendants and other employees falsely promised customers that if they purchased packages of five or 10 vending machines, the customers would be provided access to established, high-profit locations for the machines, and would be connected with experienced “locators,” who would facilitate placing the vending machines in those pre-determined locations. The defendants and other employees further falsely promised to provide training and ongoing customer assistance on how to operate a successful vending machine business, and misled customers about the features of the vending machines – including purposefully concealing the fact that the machines were manually operated and accepted only exact change, rather than automatic machines that accept bills and provide change. Despite the defendants’ claims, there were no pre-determined locations available, locators were inexperienced and ill-equipped to find profitable locations for the vending machines, and the Business Opportunity Companies delivered little or no follow-up service or assistance to their customers.
The defendants also misled prospective customers about the profits customers could earn from the machines. Prospective customers were assured that they would earn significant profits from the vending machines in a relatively short period of time. Customers were also misled into believing that certain employees of the Business Opportunity Companies personally owned vending machines that were profitable. The defendants and their co-conspirators made these assertions knowing that there were scores of dissatisfied customers who, rather than making any profit, had lost their entire investment. Through their scheme, the Business Opportunity Companies obtained nearly $11 million from more than 1,300 customers throughout the United States.
The Business Opportunity Companies also encouraged prospective customers to contact the locators to verify that the purported locations were available. The locators were directed to echo the false statements made to customers and affirm that high-traffic, and therefore profitable, locations had already been found and were waiting in the prospective customers’ respective geographic areas. In reality, the locators who worked with the Business Opportunity Companies did not have high-traffic locations or routes waiting in the prospective customers’ areas. The locators had no special skills, tools, or expertise in finding locations and generally placed consumers’ machines wherever they could, often in businesses that had not consented to housing the machines or that soon demanded that the machines be removed. The vending machines generated little money and customers lost nearly all, if not all, of their investments.
KENNETH LEVIN, the founder and President of the Business Opportunity Companies, operated and controlled the Business Opportunity Companies’ day-to-day operations. To acquire customers, the Business Opportunity Companies placed advertisements in newspapers throughout the country, claiming that the Business Opportunity Companies had high-profit locations available for the placement of vending machines. Prospective customers responding to the advertisements were sent misleading promotional materials and also spoke by telephone with representatives of the Business Opportunity Companies, including KENNETH LEVIN’s son, TAYLOR LEVIN. Both defendants made various misrepresentations as described above to induce customers to buy the vending machine “business opportunity.” The defendants further concealed from prospective customers the fact that the Business Opportunity Companies received numerous complaints from customers about the lack of profitability of the vending machine “business opportunities” they were selling and the locators’ complete failure to place the vending machines in profitable locations. In an effort to conceal customer complaints from prospective customers, the Business Opportunity Companies changed their names regularly, both to avoid association with previous complaints, and to evade a federal law requiring them to provide prospective customers with a list of recent customers.
* * *
KENNETH LEVIN, 69, and TAYLOR LEVIN, 34, both of Manhattan, New York, were found guilty of all three counts in the Indictment: one count of conspiracy to commit mail fraud and wire fraud, and one count each of mail fraud and wire fraud. Each count carries a maximum sentence of 20 years in prison. KENNETH LEVIN’s sentencing is scheduled for April 1, 2016, and TAYLOR LEVIN’s sentencing is scheduled for April 15, 2016, both before Judge Forrest. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of KENNETH LEVIN and TAYLOR LEVIN will be determined by the court.
The five other individuals arrested along KENNETH LEVIN and TAYLOR LEVIN on March 5, 2015, have pled guilty before Judge Forrest for their respective roles in this scheme.
Sears Hobbs pled guilty on January 4, 2016, and is scheduled to be sentenced on March 11, 2016.
James Conley pled guilty on October 22, 2015, and is scheduled to be sentenced on February 11, 2016.
Marcel Harris pled guilty on October 26, 2015, and is scheduled to be sentenced on February 26, 2016.
Stephen Friedman pled guilty on October 27, 2015, and is scheduled to be sentenced on February 26, 2016.
Jonathan Campbell pled guilty on September 17, 2015, and is scheduled to be sentenced on February 12, 2016.
Mr. Bharara praised the United States Postal Inspection Service (“USPIS”) for their outstanding work in the investigation. Mr. Bharara also thanked the Consumer Protection Branch of the Justice Department’s Civil Division for its valuable contributions to this case.
This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Janis Echenberg and Jennifer Beidel are in charge of the case.
East Hartford Man Pleads Guilty to Arson, Insurance Fraud, Gambling and Extortion OffensesRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that JOHN A. BARILE, 52, of East Hartford, pleaded guilty today in Hartford federal court to arson, insurance fraud, gambling and extortion offenses.
According to court documents and statements made in court, BARILE was a co-owner of Enzo’s Restaurant and Lounge, which was located on Main Street in Middletown. By 2009, Enzo’s was facing financial difficulty. Beginning in approximately November 2009, BARILE and others engaged in conversations about planning to cause a fire at Enzo’s in order to collect the insurance proceeds. BARILE informed his co-owner of the plan and sought information from at least one individual on how to start the fire to make it look like an accident.
On the evening of January 9, 2010, BARILE participated in conversations with others at Enzo’s about causing the fire the next morning and mentioned that he had placed greasy rags around the fryolators and had applied grease to the walls. Later in the evening, after the restaurant had closed, BARILE was aware that a fire was burning in the kitchen. He intentionally did not extinguish the fire, transferred it to one or more of the greasy rags, allowed the fire to burn further, and then left the restaurant. BARILE did not alert the fire department or anyone else about the fire he had left burning in the restaurant.
The co-owner was inside Enzo’s at the time of the fire, and two individuals were inside a restaurant next door. The Middletown Fire Department arrived a short time later, forced entry, rescued the co-owner and put out the fire.
After the fire, BARILE sought payment from an insurance company for losses suffered as a result of the fire, and concealed his role in the fire from the insurance company and law enforcement. The insurance company ultimately paid $189,787.69 to BARILE to settle the insurance claims related to the fire.
From at least 2010 through approximately January 2014, BARILE also conducted an illegal sports-related bookmaking operation. In the course of the gambling business, BARILE paid out or received cash from sub-bookmakers and certain bettors. During this time period, BARILE did not have any employment or source of income other than the illegal sports-related bookmaking business. At times, the gambling business grossed more than $2,000 per day.
One bettor who repeatedly placed bets with BARILE’s gambling business eventually owed him approximately $50,000 from unpaid gambling losses. On November 8, 2011, BARILE, along with two associates, met the bettor at a parking lot in Hartford. At the meeting, BARILE tased the bettor with a Taser or similar device in order to punish him for not paying his debts and enforce collection of the payment.
BARILE pleaded guilty to one count of arson, one count of mail fraud, one count of conducting an illegal gambling business and one count of collecting an extension of credit by extortionate means. He is scheduled to be sentenced by U.S. District Judge Alvin W. Thompson on May 6, 2016, at which time he faces a mandatory minimum term of imprisonment of five years and a maximum term of imprisonment of 65 years.
BARILE was arrested on January 5, 2015, and is released on a $350,000 bond under electronic monitoring. He is currently residing with a family member in Enfield.
On November 16, 2012, the government seized pursuant to a civil seizure warrant $165,287.69 in U.S. currency from BARILE’s bank account.
This matter is being investigated by the Federal Bureau of Investigation, with the assistance of the Middletown Police Department and the Connecticut State Police. This case is being prosecuted by Assistant U.S. Attorneys Anastasia E. King and Neeraj N. Patel.
Delaware County Man Charged with Possession of Child PornographyRead the Press Release
PHILADELPHIA - John Porter, 63, of Marple Township, Pennsylvania, was charged today by indictment with one count of receipt of child pornography and one count of possession of child pornography, announced United States Attorney Zane David Memeger. The indictment alleges that on July 24, 2014 and June 3, 2015, Porter received and possessed images of child pornography.
If convicted the defendant faces a mandatory minimum sentence of five years in prison with a maximum possible sentence of 30 years in prison, supervised release, a $200 special assessment, and a possible fine.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by Immigration and Customs Enforcement Homeland Security Investigations (“HSI”) and is being prosecuted by Special Assistant United States Attorney Josh A. Davison.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Criminal Charges Filed Against Bank Julius Baer of Switzerland with Deferred Prosecution Agreement Requiring Payment of $547 Million, as Well as Guilty Pleas of Two Julius Baer BankersRead the Press Release
Bank Admits to Helping U.S. Taxpayer-Clients Hide Billions of Dollars in Offshore Accounts
Bankers Daniela Casadei and Fabio Frazzetto, Fugitives Since 2011, Surrender and Plead Guilty to Felony Tax Charges
Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Preet Bharara of the Southern District of New York, and Chief Richard Weber of the Internal Revenue Service – Criminal Investigation, (IRS-CI), announced the filing of criminal charges against Bank Julius Baer & Co. Ltd. (Julius Baer or the company), a financial institution headquartered in Zurich, Switzerland. Julius Baer is charged with conspiring with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide billions of dollars in offshore accounts from the IRS and to evade U.S. taxes on the income earned in those accounts.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Bharara also announced a deferred prosecution agreement with Julius Baer (the agreement) under which the company admits that it knowingly assisted many of its U.S. taxpayer-clients in evading their tax obligations under U.S. law. The admissions are contained in a detailed Statement of Facts attached to the agreement. The agreement requires Julius Baer to pay a total of $547 million by no later than Feb. 9, 2016, including through a parallel civil forfeiture action also filed today in the Southern District of New York.
The criminal charge is contained in an Information (the information) alleging one count of conspiracy to (1) defraud the IRS, (2) to file false federal income tax returns and (3) to evade federal income taxes. If Julius Baer abides by all of the terms of the agreement, the government will defer prosecution on the Information for three years and then seek to dismiss the charges.
In addition, two Julius Baer client advisers, Daniela Casadei and Fabio Frazzetto, pleaded guilty in Manhattan federal court today. Casadei and Frazzetto were originally charged in 2011 and remained at large until Feb. 1, when they each made initial appearances before the Honorable Gabriel W. Gorenstein, U.S. Magistrate Judge for the Southern District of New York.
Casadei and Frazzetto each pleaded guilty to an Information (collectively, with the Julius Baer information, the informations) before U.S. District Judge Laura Taylor Swain charging them with conspiring with U.S. taxpayer-clients and others to help U.S. taxpayers hide their assets in offshore accounts and to evade U.S. taxes on the income earned in those accounts.
“Today’s resolution with Bank Julius Baer and the guilty pleas entered by two bank employees reflect the department’s continued commitment to hold accountable those financial institutions who conspired with U.S. taxpayers to conceal assets abroad and evade U.S. tax obligations, as well as those individuals responsible for such crimes,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “The deferred prosecution agreement filed today makes it clear that there is a heavy price to pay for this conduct, and that there is a significant benefit in fully cooperating with the department.”
“Bank Julius Baer not only turned a blind eye to tax avoiders, but actually conspired with them to break the law,” said U.S. Attorney Bharara. “Together with our partners at the IRS, we will continue to prosecute financial institutions and individuals who facilitate tax evasion.”
“In taking responsibility for their actions, Bank Julius Baer has agreed to cooperate and pay a substantial penalty for their role in circumventing offshore disclosure laws, said IRS-CI Chief Weber. “The agreement – as well as the guilty pleas of client advisors Daniela Casadei and Fabio Frazzetto – sends a strong message to the international banking community as well as U.S. taxpayers who think they can outsmart the system by hiding their money in these international banks. The consequences of not reporting your foreign accounts and paying the taxes you owe will be significant for those who do not heed the warnings that agreements like this yield.”
According to the informations, statements made during the proceedings today and other documents filed in Manhattan federal court, including the statement of facts to the agreement:
The Offense Conduct
From at least the 1990s through 2009, Julius Baer helped many of its U.S. taxpayer-clients evade their U.S. tax obligations, file false federal tax returns with the IRS and otherwise hide accounts held at Julius Baer from the IRS (hereinafter, undeclared accounts). Julius Baer did so by opening and maintaining undeclared accounts for U.S. taxpayers and by allowing third-party asset managers to open undeclared accounts for U.S. taxpayers at Julius Baer. Casadei and Frazzetto, bankers who worked as client advisers at Julius Baer, directly assisted various U.S. taxpayer-clients in maintaining undeclared accounts at Julius Baer in order to evade their obligations under U.S. law. At various times, Casadei, Frazzetto and others advised those U.S. taxpayer-clients that their accounts at Julius Baer would not be disclosed to the IRS because Julius Baer had a long tradition of bank secrecy and no longer had offices in the United States, making Julius Baer less vulnerable to pressure from U.S. law enforcement authorities than other Swiss banks with a presence in the United States.
In furtherance of the scheme to help U.S. taxpayers hide assets from the IRS and evade taxes, Julius Baer undertook, among other actions, the following:
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Entering into “code word agreements” with U.S. taxpayer-clients under which Julius Baer agreed not to identify the U.S. taxpayers by name within the bank or on bank documents, but rather to identify the U.S. taxpayers by code name or number, in order to reduce the risk that U.S. tax authorities would learn the identities of the U.S. taxpayers.
- Opening and maintaining accounts for many U.S. taxpayer-clients held in the name of non-U.S. corporations, foundations, trusts, or other legal entities (collectively, structures) or non-U.S. relatives, thereby helping such U.S. taxpayers conceal their beneficial ownership of the accounts.
Julius Baer was aware that many U.S. taxpayer-clients were maintaining undeclared accounts at Julius Baer in order to evade their U.S. tax obligations, in violation of U.S. law. In internal Julius Baer correspondence, undeclared accounts held by U.S. taxpayers were at times referred to as “black money,” “non W-9,” “tax neutral,” “unofficial,” or “sensitive” accounts.
Julius Baer also advised its bankers to take certain steps to avoid scrutiny from U.S. authorities when travelling to the United States, as well as steps to avoid U.S. law enforcement identifying Julius Baer clients. In a memo entitled “U.S. Clients Do’s & Don’ts,” circulated internally in 2006, a Julius Baer employee provided client advisers with advice regarding travel to the United States, including:
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“At Immigration . . . When asked by Officer what will you do while in the USA, say Business and of course some leisure, trying to take some time to enjoy your beautiful country. Proud government employees usually love this type of statement.One can throw in skydiving or another fun sport/activity.This tends to shift the questioning away from the business purpose to the ‘fun time’ part of the trip (carrying a tennis racket also puts the emphasis on “fun and games,” and not on business).”
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In regard to communicating while in the U.S.:“Only use mobile phone[s] registered in and operating from Switzerland.Avoid phone calls from hotel to clients.It is recommended to purchase a telephone calling card from the post office, grocery stores, or electronic shops.This allows you to use practically any phone with no specific link left behind.The best is to pay for the calling card in cash.For ex: a 400 minutes local calling card costs less than $50, but the rates can vary.Most cards can also be used to call anywhere abroad.”
At its high-water mark in 2007, Julius Baer had approximately $4.7 billion in assets under management relating to approximately 2,589 undeclared accounts held by U.S. taxpayer-clients. From 2001 through 2011, Julius Baer earned approximately $87 million in profit on approximately $219 million gross revenues from its undeclared U.S. taxpayer accounts, including accounts held through structures.
Julius Baer’s Blocked Effort to Self-Report, Acceptance of Responsibility, and Cooperation in the Government Investigation
Notwithstanding its lucrative criminal conduct, by at least 2008, Julius Baer began to implement institutional policy changes to cease providing assistance to U.S. taxpayers in violating their U.S. legal obligations. For example, by November 2008, the company began an “exit” plan for U.S. client accounts that lacked evidence of U.S. tax compliance. In that same month, Julius Baer imposed a prohibition on opening accounts for any U.S. clients without a Form W-9.
Additionally, in November 2009, before Julius Baer became aware of any U.S. investigation into its conduct, Julius Baer decided proactively to approach U.S. law enforcement authorities regarding its conduct relating to U.S. taxpayers. Prior to self-reporting to the Department of Justice, Julius Baer notified its regulator in Switzerland of its intention to contact U.S. law enforcement authorities. This Swiss regulator requested that Julius Baer not contact U.S. authorities in order not to prejudice the Swiss government in any bilateral negotiations with the United States on tax-related matters. Accordingly, Julius Baer did not, at that time, self-report to U.S. law enforcement authorities.
After ultimately engaging with U.S. authorities, Julius Baer has taken exemplary actions to demonstrate acceptance and acknowledgement of responsibility for its conduct. Julius Baer conducted a swift and robust internal investigation, and furnished the U.S. government with a continuous flow of unvarnished facts gathered during the course of that internal investigation. As part of its cooperation, Julius Baer also, among other things, (1) successfully advocated in favor of a decision provided by the Swiss Federal Council in April 2012 to allow banks under investigation by the U.S. Department of Justice to legally produce employee and third-party information to the department, and subsequently produced such information immediately upon issuance of that decision; and (2) encouraged certain employees, including specifically Frazzetto and Casadei, to accept responsibility for their participation in the conduct at issue and cooperate with the ongoing investigation.
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Casadei, 52, a Swiss citizen, and Frazzetto, 42, an Italian and Swiss citizen, each pleaded guilty to one count of conspiracy to defraud the IRS, to evade federal income taxes and to file false federal income tax returns. Casadei and Frazzetto each face a statutory maximum sentence of five years in prison. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentences imposed on the defendants will be determined by the judge.
Casadei and Frazzetto are each scheduled to be sentenced before Judge Swain on Aug. 12, 2016.
This case is being handled by the U.S. Attorney’s Office of the Southern District of New York Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Jason H. Cowley and Sarah E. Paul are in charge of the prosecution. Acting Assistant Attorney General Ciraolo and U.S. Attorney Bharara praised the outstanding investigative work of IRS-CI and thanked the U.S. Department of Homeland Security for its assistance with the case.
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Craigslist Robbery Crew Member Convicted on Multiple CountsRead the Press Release
OAKLAND – Michael Anthony Martin was convicted by a federal jury today of conspiracy to commit robbery affecting interstate commerce and robbery affecting interstate commerce announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The jury found that Martin robbed victims on four separate occasions and conspired to rob victims selling jewelry on Craigslist.org.
The guilty verdict followed a jury trial before the Honorable Jeffrey S. White, U.S. District Judge. Evidence at trial showed that Martin, 42, of Tracy, was part of a robbery crew that targeted individuals selling high-end jewelry, such as diamonds and Rolex watches, on Craigslist. The robbery crew targeted victims located nationwide and was responsible for numerous robberies and attempted robberies between November 2012 and December 2013.
Crew members frequently posed as music producers or pretended to be in the market for diamond engagement rings when they contacted their intended victims. In each case, a crew member contacted their victims by e-mail or cell phone and negotiated a price to purchase the jewelry item. The conspirators then lured their victims to the Bay Area, sometimes by paying for the victim’s airplane ticket or promising to reimburse the victim for travel. Often, a robbery crew member posed as an airport limousine driver and picked up the victim at the airport using a rented SUV. The victims, believing they were going to meet the buyer at a jewelry store or bank to complete the sale, were instead delivered to a different, predetermined location where two or more additional crew members robbed them. Crew members used guns and physical violence to rob their victims of jewelry items and other personal property. It is estimated the robbery crew stole more than $500,000 worth of jewelry from victims traveling from more than six states, including Arizona, California, Colorado, Oregon, Washington, and Wisconsin.
Martin was indicted by a grand jury on April 10, 2014. He was charged with conspiracy to commit robbery, in violation of 18 U.S.C. § 1951(a), and four counts of interference with interstate commerce by robbery, in violation of 18 U.S.C. § 18 U.S.C. 1952(a) and 2.
Martin is currently in federal custody. His sentencing hearing is scheduled for April 19, 2016, before Judge White in Oakland. The maximum statutory penalty for each of the five counts for which Martin was found guilty is 20 years’ imprisonment and a fine of $250,000. Additional fines, restitution and periods of supervised release also may be imposed. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Brigid S. Martin and Claudia A. Quiroz are prosecuting the case with the assistance of Melissa Dorton, Katie Turner, and Patty Lau. The prosecution is the result of an investigation by the Federal Bureau of Investigation (San Francisco Division, assisted by Sacramento, St. Louis, San Antonio, and Mobile, Alabama Divisions); U.S. Bureau of Prisons; Fremont Police Department; California Department of Corrections; El Cerrito Police Department; Richmond Police Department; San Francisco Police Department; Alameda County Sheriff’s Office; Oakland Police Department; Berkeley Police Department; Danville Police Department; Concord Police Department; Livermore Police Department; Manteca Police Department; Tracy Police Department; Contra Costa Sheriff’s Office; Hayward Police Department; Burlingame Police Department; San Leandro Police Department; Berkeley, Missouri Police Department; Olivette, Missouri Police Department; and the Northern California Regional Intelligence Center (NICRIC).
Colorado Woman Pleads Guilty to Federal Cocaine Trafficking Charge in New MexicoRead the Press Release
ALBUQUERQUE – Yolanda Gonzalez, 35, of Denver, Colo., pleaded guilty today in federal court in Las Cruces, N.M., to a cocaine trafficking charge under a plea agreement with the U.S. Attorney’s Office.
Gonzalez was arrested in July 2015, after U.S. Border Patrol agents at the Border Patrol Checkpoint on I-25 north of Las Cruces, found approximately 2.72 kilograms of cocaine concealed in the car battery of Gonzalez’s vehicle during a routine inspection. Gonzalez was subsequently indicted on Oct. 15, 2015, and charged with possession of cocaine with intent to distribute on July 26, 2015, in Doña Ana County, N.M.
During today’s proceedings, Gonzalez pled guilty to the indictment and admitted that on July 26, 2015, she drove her car to the Border Patrol checkpoint on I-25 where agents found 2.72 kilograms of cocaine hiding in her car. Gonzalez further admitted that she intended to deliver the cocaine to someone else for distribution in the United States.
At sentencing, Gonzalez faces a minimum of five years and a maximum of 40 years in federal prison followed by not less than four years of supervised release. A sentencing hearing has yet to be scheduled.
This case was investigated by the U.S. Border Patrol and the DEA and is being prosecuted by Assistant U.S. Attorneys Anna R. Wright and Luis A. Martinez of the U.S. Attorney’s Las Cruces Branch Office.
Chris Myers to Continue as United States AttorneyRead the Press Release
FARGO - Effective Feb. 6, 2016, the Honorable U. S. District Court Chief Judge Ralph R. Erickson has continued the appointment of Christopher C. Myers as the United States Attorney for the District of North Dakota.
Myers stated that, "I have been honored and privileged to serve as U.S. Attorney for the District of North Dakota for the past ten months. I am excited to continue leading this dedicated and talented group of attorneys and support staff at the U.S. Attorney’s Office. We strive every day to do our very best to serve the citizens of North Dakota and continue to work shoulder-to-shoulder with our federal, state, local, and tribal partners to ensure public safety. Violent crime, especially those crimes perpetrated against children, remain a priority as will the fight against organized crime.
"While violent and sophisticated criminal organizations attempt to prey on North Dakotans throughout the State, our collective law enforcement response will be swift and sure. Rest assured, we will retain the quality of life we enjoy in North Dakota. Criminal organizations will find North Dakota a particularly unfavorable place to do business."
Myers has been with the U.S. Attorney's office for nearly 14 years. Since 2013 he has served as the First Assistant U.S. Attorney until becoming Acting U.S. Attorney on March 13, 2015. Prior to becoming an Assistant U.S. Attorney in 2002, Myers served as the Chief Assistant Clay County Attorney from 1998-2002, and also served as an Assistant Cass County States Attorney and a Special Agent with the North Dakota Bureau of Criminal Investigation.
Myers will serve as United States Attorney until the President of the United States nominates a new U.S. Attorney for North Dakota and the United States Senate confirms the nominee pursuant to Title 28, United States Code, Section 541.
Chalmette Man Pleads Guilty to Violating the Federal Controlled Substances ActRead the Press Release
U.S. Attorney Kenneth A. Polite announced that DAMIEN WILSON, age 35, a resident of Chalmette, pled guilty today to violations of the Federal Controlled Substances Act.
According to court records, WILSON conspired with others known and unknown to possess with the intent to distribute and to distribute one kilogram or more of a mixture or substance containing a detectable amount of heroin, a Schedule I drug controlled substance. WILSON was caught on video during two heroin transactions with a confidential source. The government also developed evidence that WILSON was laundering his drug proceeds by purchasing dilapidated houses, renovating them, and selling them for a profit. The government is seizing the houses and/or proceeds from their sale, as well as two vehicles that contained secret compartments used to transport narcotics.
WILSON faces a sentence of at least twenty years to life because of his prior drug offenses, a fine of up to $20,000,000 and at least ten years of supervised release following any term of imprisonment. U.S. District Judge Carl J. Barbier set sentencing for May 12, 2016.
U.S. Attorney Polite praised the work of the Drug Enforcement Administration in investigating this matter. Assistant United States Attorney David Haller is in charge of the prosecution.