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Tuesday 2 February 2016
South Florida Government Contractor Sentenced to Prison for Tax FraudRead the Press Release
A government contractor based in Fort Lauderdale, Florida, was sentenced to 12 months and one day in prison for filing a false income tax return, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced today.
According to court documents, Maxim Silinsky, 44, owned an aircraft-leasing and parts-supply company called Simplex Corporation. Simplex contracted with the federal government to lease Russian aircraft to the U.S. Air Force for training purposes and to supply parts and equipment to U.S. military forces deployed to Afghanistan.
Silinsky used a complex web of domestic and foreign corporate entities and financial accounts to facilitate his underpayment of both corporate and individual income tax for the years 2007 through 2010. Silinsky filed false corporate tax returns for these years that overstated Simplex’s expenses. For the years 2008 through 2010, Silinsky also filed false individual income tax returns on which he understated the amount of income he received from the business. To conceal his fraud from the Internal Revenue Service (IRS), Silinsky transferred approximately $1.7 million from Simplex to nominee bank accounts that he controlled and disguised the transfers as costs of goods sold, which led to overstated costs-of-goods-sold expenses on Simplex’s corporate returns. In 2012, during an audit of Simplex’s 2008 corporate return, Silinsky made false statements to the IRS about these expenses. Silinsky also purchased real estate using funds he diverted from the business and titled the property in nominee names to hide his involvement. Additionally, a family member served as a nominee shareholder of a shell corporation that Silinsky established to receive income from Simplex on his behalf, which allowed Silinsky to pay taxes on this money at a lower rate. In the plea documents, Silinsky also admitted that he was involved in making illicit payments to a government contractor and U.S. military personnel.
“All taxpayers are required to provide truthful information to the Internal Revenue Service, whether it be on a tax return, during an audit, or with respect to collections” said Acting Assistant Attorney General Ciraolo. “The Tax Division is committed to pursuing those taxpayers who seek to obstruct or evade the assessment and collection of federal income taxes by lying to the government about their income, expenses or assets.”
Silinsky cooperated with federal authorities in the prosecution of a federal government contractor, Victor Villalobos, and a retired senior non-commissioned Air Force officer, Trevor Smith, who have both pleaded guilty in separate cases to government contracting and tax fraud. Smith was sentenced last month to 18 months in prison and Villalobos is set to be sentenced on Feb. 17.
In addition to the prison term, Silinsky was also ordered to pay a $6,000 fine. Silinsky paid restitution to the IRS prior to his sentencing.
Acting Assistant Attorney General Ciraolo commended special agents of IRS Criminal Investigation, the U.S. Air Force’s Office of Special Investigations and the U.S. Department of Defense’s Defense Criminal Investigative Service, who investigated this case, and Trial Attorneys Charles M. Edgar Jr. and Jason H. Poole of the Tax Division, who prosecuted this case. Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Florida for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Shreveport resident sentenced to 15 years in prison for producing child pornographyRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced today that a Shreveport resident was sentenced to 15 years in prison for producing child pornography.
Jason Carl Fruge, 45, of Shreveport, was sentenced by U.S. District Judge Elizabeth E. Foote on one count of production of child pornography. The defendant was also sentenced to five years of supervised release and must register as a sex offender. According to evidence presented at the October 1, 2015 guilty plea, during the course of investigating Fruge for other offenses, agents found a video on Fruge’s computer of a minor male child engaged in a sexually explicit sex act. Fruge pretended to be an attractive female in order to convince the minor to engage in the sexual act. Fruge directed the minor child to commit the sexually explicit act and recorded the minor using an online video chat service similar to Skype on June 9, 2014.
This case is part of Project Safe Childhood, a U.S. Department of Justice nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood combines 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.
Those concerned may leave tips with the FBI at tips.fbi.gov. Tips may be submitted anonymously. The Shreveport FBI office number is (318) 861-1890.
The U.S. Department of Homeland Security/Homeland Security Investigations/Immigration & Customs Enforcement (ICE) also encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at (866) DHS-2ICE. Investigators are available at all hours to answer hotline calls. Tips or other information can also be submitted to ICE online by visiting their website at www.ice.gov/exec/forms/hsi-tips/tips.asp or through the Operation Predator smartphone application (http://www.ice.gov/predator/smartphone-app). Tips also may be submitted anonymously.
The FBI and ICE Homeland Security Investigations conducted the investigation. Assistant U.S. Attorney Robert W. Gillespie Jr. prosecuted the case.
Seven Charged in Manhattan Federal Court with Crimes Related to ATM Skimming and Counterfeit and Stolen Credit CardsRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, Diego Rodriguez, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and William J. Bratton, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment in Manhattan federal court charging GJETO PRELAJ, a/k/a “Bibi,” ERBI KAU, a/k/a “Mafia,” BLEDAR BATSKA, a/k/a “Alex,” NIKOLIN DEDUSHI, a/k/a “Niko,” ENIS MUSTAFA, and MEHMET BOGIC, a/k/a “Bogi,” with access device fraud and aggravated identity theft for their alleged roles in schemes to steal customer bank account information and to use counterfeit/stolen debit and credit cards in New York and Nevada. PRELAJ, KAU, BATSKA, DEDUSHI, and VICTOR TOMESCU were also charged with possessing, using, and trafficking devices that used “skimming” technology to secretly record the debit card and personal identification numbers of customers who used automated teller machines (“ATMs”). Such devices can be employed to steal hundreds of card numbers of ATM users, which can be encoded on new counterfeit cards and used to make thousands of dollars of fraudulent charges or withdrawals.
All the defendants were arrested and taken into custody earlier this morning. The case has been assigned to U.S. District Judge Richard J. Sullivan. PRELAJ, KAU, BATSKA, MUSTAFA, TOMESCU, and BOGIC was presented before Judge Sullivan in Manhattan federal court this afternoon. DEDUSHI, who was arrested in Las Vegas, Nevada, was presented in the U.S. District Court for the District of Nevada in Las Vegas.
Manhattan U.S. Attorney Preet Bharara said: “Today, we arrested seven defendants who allegedly stole debit and credit card numbers using sophisticated skimming devices installed on ATMs, and then used that information to defraud victims out of thousands of dollars. I want to thank the FBI, NYPD, as well as the Joint Organized Crime Task Force and FBI-NYPD Financial Cyber Crimes Taskforce, for their excellent work in this investigation.”
FBI Assistant Director-in-Charge Diego Rodriguez said: “As alleged today, the defendants participated in a plot to steal proprietary financial information from their victims. Criminals who turn a quick profit in these types of schemes exploit and manipulate the very technology we depend on to streamline the banking process. Furthermore, this system of new-age thievery has the ability to cause considerable losses to banks and their clientele. The FBI is serious about protecting banks and bank customers from the nefarious actions of cyber criminals and transnational organized crime groups who are known to engage in this type of activity. We urge the public to visit our website at www.fbi.gov for tips on how to avoid being victimized by skimming.”
Police Commissioner William J. Bratton said: “Identity theft is a crime that often has an ongoing impact on unwitting victims who are left to piece their financial lives back together. As alleged, the individuals named in this indictment engaged in a type of criminal activity that affects not only their direct victims, but financial systems as well, through the use of skimming device technology and the counterfeiting of credit cards. I commend the well-coordinated work of the investigators assigned to this case and our many law enforcement partners in dismantling this operation.”
According to the allegations in the Indictment[1] unsealed today in Manhattan federal court:
From January 2015 through December 2015, PRELAJ, KAU, BATSKA, DEDUSHI, and MUSTAFA conspired to, among other things, place skimming devices on ATMs in Las Vegas, which can be used to surreptitiously record the numbers of cards that are used in the ATM by reading the information contained on the cards’ magnetic strips. For example, on September 2, 2015, KAU removed a skimming device that was installed on an ATM in a gas station in Las Vegas. On the morning of September 12, 2015, BATSKA installed at least one skimming device on ATMs in the business center of a hotel in Las Vegas, which was later removed by KAU on the evening of the same day.
The conspiracy also involved producing and trafficking in counterfeit debit cards created with information stolen by skimming devices, and using those cards to withdraw money fraudulently from victims’ bank accounts. For example, on August 18, 2015, PRELAJ and KAU used counterfeit debit cards at an ATM in Manhattan. Also, on September 10, 2015, MUSTAFA used at least one counterfeit debit card to withdraw almost $1,000 in cash fraudulently from an ATM at a gas station in Las Vegas. In addition, on October 24, 2015, DEDUSHI mailed a magnetic card reader and writer from Las Vegas to PRELAJ in the Bronx, New York to be used to produce counterfeit cards.
In January 2015, PRELAJ and KAU sold a skimming device in Queens, New York, in exchange for $6,000 in a transaction that was brokered by TOMESCU. Furthermore, from November 2015 through December 2015, PRELAJ and BATSKA fraudulently obtained thousands of dollars of merchandise at department stores in Manhattan by using at least one credit card that had been stolen from a victim by BOGIC.
Finally, PRELAJ, KAU, BATSKA, DEDUSHI, MUSTAFA, and BOGIC were charged with aggravated identity theft for transferring, possessing, and using other persons’ debit and credit card numbers and associated personal identification numbers in connection with the felony crimes described above.
* * *
Attached are charts containing the charges against the defendants and the maximum penalties they face, as well as the defendants’ ages and residences. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the Court.
Mr. Bharara praised the outstanding investigative work of the Joint Organized Crime Task Force and FBI-NYPD Financial Cyber Crimes Task Force. He also thanked the FBI’s Las Vegas Field Office, the Las Vegas Metropolitan Police Department, the United States Postal Inspection Service, and U.S. Customs and Border Protection for their assistance throughout the investigation.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Robert Allen and Sagar K. Ravi are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty
###
United States v. Gjeto Prelaj, et al.
COUNT
CHARGE
DEFENDANTS
MAXIMUM PENALTIES
1
Conspiracy to Commit Access Device Fraud
(18 U.S.C. § 1029(b)(2))
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
ENIS MUSTAFA
Seven-and-a-half years in prison
2
Access Device Fraud —
Producing, Using, and Trafficking in Counterfeit Access Devices
(18 U.S.C. §§ 1029(a)(1) and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
ENIS MUSTAFA
10 years in prison
3
Access Device Fraud —
Fifteen and More Counterfeit and Unauthorized Access Devices
(18 U.S.C. §§ 1029(a)(3) and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
10 years in prison
4
Access Device Fraud —
Device-Making Equipment
(18 U.S.C. §§ 1029(a)(4) and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
VICTOR TOMESCU
15 years in prison
5
Access Device Fraud —
Device-Making Equipment
(18 U.S.C. §§ 1029(a)(4) and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
15 years in prison
6
Access Device Fraud — Access Devices Issued to Another Person
(18 U.S.C. §§ 1029(a)(5) and 2)
GJETO PRELAJ, a/k/a “Bibi”
BLEDAR BATSKA, a/k/a “Alex”
MEHMET BOGIC, a/k/a “Bogi”
15 years in prison
7
Aggravated Identity Theft (18 U.S.C. §§ 1028A(a)(1) & (b), and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
ENIS MUSTAFA
MEHMET BOGIC, a/k/a/ “Bogi”
Mandatory minimum: two years in prison, consecutive to any other sentence
DEFENDANT
RESIDENCE
AGE
GJETO PRELAJ, a/k/a “Bibi”
Bronx, New York
39
ERBI KAU, a/k/a “Mafia”
Queens, New York
27
BLEDAR BATSKA, a/k/a “Alex”
Queens, New York
39
NIKOLIN DEDUSHI, a/k/a “Niko”
Las Vegas, Nevada
45
ENIS MUSTAFA
Queens, New York
30
VICTOR TOMESCU
Queens, New York
62
MEHMET BOGIC, a/k/a/ “Bogi”
Bronx, New York
52
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Second St. Joseph Business Owner Pleads Guilty to Solar Company's $1.4 Million Fraud SchemeRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a second owner of a solar energy installation company in St. Joseph, Mo., pleaded guilty in federal court today to his role in a fraud scheme that totaled nearly $1.4 million in rebates through state and federal programs.
Trevor Dryden, 36, of St. Joseph, waived his right to a grand jury and pleaded guilty before U.S. District Judge Beth Phillips to a four-count information that charges him with one count of participating in a conspiracy to fraudulently obtain state and federal solar rebates and with four counts of making false statements related to state and federal solar rebate programs.
Dryden was an owner of US Solar in St. Joseph, which sold and installed solar-powered panel systems to businesses and home owners in northwest Missouri. In a separate but related case, US Solar co-owner Richard Schonemann, 38, of St. Joseph, pleaded guilty on Sept. 2, 2015, to his role in the conspiracy and to one count of making false statements.
By pleading guilty today, Dryden admitted that he was involved in three separate fraud schemes: first, a fraud related to KCP&L state rebates; second, a fraud related to the federal rebate program; and third, a fraud related to annual updates for the federal program. The total loss from the fraudulent schemes, determined by the government, is $1,396,956, although the total loss acknowledged by Dryden is $993,506.
KCP&L State Rebate Program
From July 23, 2011, to Dec. 31, 2013, US Solar obtained fraudulent rebates from KCP&L by overstating the number of solar panels installed at approximately 27 homes or businesses so that a larger rebate would be paid to KCP&L customers, who signed the rebates over to US Solar.
KCP&L administered the state’s Solar Photovoltaic Rebate Program, which was created in 2008 by the state of Missouri and funded by a tax on power customers. The rebate allowed for a payment of $2 per watt, not to exceed $50,000, to customers that installed solar powered panel systems on their homes or businesses. US Solar was one of the larger solar powered panel system installation companies that utilized this rebate program through KCP&L. To utilize the state rebate program, US Solar submitted applications and schematic drawings on behalf of their customers via email to KCP&L. Once the application process was completed, funds were disbursed to US Solar by checks mailed from KCP&L.
As a result of this fraud scheme, US Solar was paid a total of $464,080 more in rebates than the company was entitled to receive.
Dryden was, at a minimum, involved in the fraudulent rebate payments related to his father’s home and his personal home. Dryden pleaded guilty today to two counts of making false statements related to these rebate payments.
One of the fraudulent rebate payments related to the St. Joseph residence of Dryden’s father. Fraudulent paperwork was submitted requesting payment for 75 extra panels not installed, resulting in a rebate overpayment of $35,250. Another fraudulent rebate payment under this program was related to Dryden’s personal home. Fraudulent paperwork was submitted to KCP&L requesting payment for 54 extra panels not installed, resulting in a rebate overpayment of $25,380.
During the investigation of the state rebate scheme, the FBI uncovered unexplained payments from the federal government to US Solar that led to the discovery of a second fraudulent scheme that was part of the conspiracy.
American Recovery and Reinvestment Act of 2009
US Solar also obtained fraudulent federal rebates authorized by the American Recovery and Reinvestment Act of 2009. Under the federal program, the government reimbursed 30 percent of the cost of the installation of a solar-powered panel system leased to the property owner. US Solar received federal funds under this program from August 2011 to September 2013, because Dryden and US Solar certified they installed systems and leased those systems to the property owners. The certification was false because the systems were owned by customers rather than leased.
US Solar submitted forged lease contracts in order to receive the federal rebates. Dryden created false paperwork and computer entries using US Solar customer information. The conspiracy involved the use of false paperwork and computer entries, including lease agreements, certification that US Solar retained ownership of the solar powered panel systems, detailed cost breakdowns on each system and usage reports.
US Solar received 34 payments from the federal government, totaling $932,876. US Solar was not eligible to receive any of the $932,876 paid under the federal program.
Annual Updates
In order to participate in the federal rebate program, US Solar was required to certify that the installed systems were still running and report the systems’ output each year after installation. Dryden provided updates showing kilowatt usage on each property to the federal government in 2012 and 2013.
During the course of the conspiracy, Dryden and Schonemann, received payments from US Solar that were described as profit distributions. A significant source for those profit distributions were funds received by US Solar from the federal rebate program.
Under the terms of today’s plea agreement, the government will recommend a maximum sentence of five years in federal prison without parole. Dryden must pay between $60,630 to $464,080 in restitution to KCP&L for the state rebate fraud, as determined by the court, and no more than $932,876 in restitution for the federal rebate fraud (less any amounts paid by Schonemann), as determined by the court. A sentencing hearing will be held at 11 a.m. on June 16, 2016.
This case is being prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the FBI.
Resident of Manchester Pleads Guilty to Bank RobberyRead the Press Release
CONCORD, N.H. – Ronald Alan Cook, a 44-year-old resident of Manchester, has pleaded guilty to robbing the Bank of New Hampshire at 705 Hooksett Road in Manchester on November 10, 2015, announced United States Attorney Emily Gray Rice.
Cook entered the federally-insured bank and handed a note to a bank teller that stated, “I have a gun!! Give me all the 100, 50, 20 and 10 now and fast.” Cook also told the bank teller, “This is serious give me all your money 50, 100, 20s.” The teller took money from her teller drawer and gave it to Cook, who then ran from the bank.
A landscaper working in the vicinity of the bank saw Cook leave the bank. The landscaper provided the police with a description of what Cook was wearing. That description was broadcast to Manchester police officers, including one police officer who saw Cook riding a bicycle near the bank and detained him because he matched the description of the bank robber. While being questioned by this police officer, Cook admitted that he robbed the bank and that the stolen money was in his pants pocket. The police were able to identify the currency in Cook’s pocket as having been stolen from the bank.
Cook is facing a maximum statutory prison sentence of 20 years and a maximum fine of $250,000. A sentencing hearing has been scheduled for May 11, 2016 before United States District Court Judge Steven McAuliffe.
The case was investigated by the Manchester Police Department and the Federal Bureau of Investigation. The case was prosecuted by AUSA Robert Kinsella.
Recently-Terminated NYPD Officer Arrested for Interstate Transportation of ProstitutesRead the Press Release
Earlier today, a complaint was unsealed in Brooklyn federal court charging Eduardo Cornejo, a former officer with the New York City Police Department (NYPD) with transporting women in interstate commerce to engage in prostitution.[1] Until his termination from the NYPD on January 15, 2016, Cornejo was an 11-year veteran of the NYPD who, at the time of the charged conduct, was on modified assignment and was, prior to that, assigned to the 79th Precinct in Brooklyn. Cornejo is scheduled to be arraigned at 2 p.m. today before United States Magistrate Judge Steven M. Gold at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation (FBI), and William J. Bratton, Commissioner, NYPD.
“As alleged, the defendant betrayed the trust of the residents of the city he swore to protect,” stated United States Attorney Capers. “Rather than seeking to eradicate crime from the streets of the city, the defendant promoted prostitution and profited from his exploitation of women.” Mr. Capers praised the joint investigative efforts of the FBI and the Internal Affairs Bureau of the NYPD.
“Throughout his alleged criminal actions, Cornejo not only abused the public trust given to him as an NYPD officer, but he showed no human decency when he facilitated the exploitation of women for profit. Police officers, like all public servants, are held to a higher standard, and should not violate the very same laws they are supposed to enforce,” said FBI Assistant Director-in-Charge Rodriguez.
“I commend our Internal Affairs Bureau which takes a proactive role in investigating serious misconduct among the ranks of the NYPD and works closely with prosecutors in building cases against those who violate the very laws that they have sworn to enforce,” said NYPD Commissioner Bratton.
As detailed in the complaint, members of law enforcement observed Cornejo transporting at least ten different prostitutes he employed to motels throughout the New York metropolitan area, including parts of Long Island and New Jersey. Cornejo often engaged in this conduct directly after leaving his work with the NYPD.
As further detailed in the complaint, pursuant to a lawfully authorized wiretap, law enforcement intercepted statements by Cornejo that showed his commission of the crime. For example, in one such statement Cornejo discussed the way he divides monetary proceeds with the prostitutes he employs and also stated that, if he were to stand outside a motel door with “a bunch of girls,” law enforcement would “know what’s up real quick.”
If convicted, Cornejo faces up to ten years of incarceration.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Alexander A. Solomon and Kevin Trowel are in charge of the prosecution.
The Defendant:
EDUARDO CORNEJO
Age: 33
E.D.N.Y. Docket No. 16-M-69 (MDG)
[1] The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Parkersburg man pleads guilty to possessing child pornographyRead the Press Release
CHARLESTON, W.Va. – A Parkersburg man faces up to 20 years in prison after pleading guilty to possession of over 600 images and videos of child pornography, Acting United States Attorney Carol Casto announced. Kevin Wayne Davis, 49, entered his guilty plea today in federal court.
Davis admitted that on November 5, 2014, he possessed images and videos of prepubescent minors engaged in sexual acts. The images and videos were contained on his personal computer, and multiple media devices found at his residence in Parkersburg. The investigation revealed that Davis was using peer-to-peer file sharing programs to download, receive and distribute child pornography. The court scheduled sentencing for May 10, 2016.
The West Virginia Internet Crimes Against Children Task Force, West Virginia State Police and the Parkersburg Police Department conducted the investigation. Assistant United States Attorney Lisa G. Johnston is in charge of the prosecution. The hearing was held before United States District Judge John T. Copenhaver, Jr.
This case is being prosecuted as part of the U.S. Attorney's ongoing initiative to combat child sexual exploitation and abuse in the Southern District of West Virginia.
North Carolina Man Pleads Guilty to Tax Evasion and Serving as Pilot Without LicenseRead the Press Release
A North Carolina man pleaded guilty today to tax evasion and four counts of serving as a pilot without an airman’s certificate, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
According to court documents, from 2011 through 2014, Paul Douglas Tharp attempted to evade payment of an outstanding federal income tax debt by filing false documents, including false tax returns, with the Internal Revenue Service (IRS). After Tharp failed to file tax returns for the years 2003 through 2006, the IRS assessed federal income taxes for those years. Tharp also late-filed his 2007 income tax return. According to court documents, Tharp owed more than $300,000 in taxes for the years 2003 through 2007. In 2011, Tharp provided a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to an IRS revenue officer who was assigned to collect his unpaid taxes, on which he failed to report that he owned an airport and an investment firm, and concealed his business bank accounts and rental income he had received under penalty of perjury. In 2012 and 2014, Tharp also filed tax returns for the 2011 through 2013 tax years on which he omitted significant income that he received from his airport and rental properties.
“Collection Information Statements are an important tool that the IRS uses to determine an individual’s ability to pay his outstanding tax liability,” said Acting Assistant Attorney General Ciraolo. “When taxpayers submit false information, or willfully omit income or assets, impeding the IRS’s efforts to collect taxes due, the Tax Division stands ready to prosecute. Taxpayers who are engaged in this criminal conduct will pay a heavy price, including incarceration and monetary penalties.”
As part of his plea, Tharp also admitted that he served as a pilot without the required certification on four different occasions in 2012. Tharp surrendered his pilot certificate on Aug. 2, 2012 and after that date, he flew four flights in and out of Davidson County Airport in Lexington, North Carolina, without valid registration and while his pilot certificate was suspended in 2012.
Pursuant to the plea agreement, Tharp faces a potential statutory maximum sentence of five years in prison for the tax evasion charge and three years in prison for each count of serving as a pilot without an airman’s certificate, as well as a maximum fine of $250,000 for each count of conviction. He must also pay restitution in the amount of $281,366.62 to the IRS. The sentencing hearing is set for April 22, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Nathan Brooks of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
North Carolina Man Guilty in East Texas Fraud SchemeRead the Press Release
SHERMAN, Texas – A 27-year-old Morganton, NC man has pleaded guilty in connection with an oil and gas scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales.
Justin Spearman pleaded guilty to wire fraud today before U.S. Magistrate Judge Christine A. Nowak.
According to information presented in court, in June 2015, Spearman devised and executed a scheme to defraud another individual by filing fraudulent Assignments of Overriding Royalty Interest (ORI)s in Greeley Colorado, and attempting to do so in Cheyenne, Wyoming, that actually belonged to other persons, one of which was the owner of a royalties company located in Collin County, Texas. Spearman was indicted by a federal grand jury on July 15, 2015.
Spearman faces up to 20 years in federal prison at sentencing. 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 date has not been set.
This case is being investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Chris Eason.
New Jersey Pipe Supply Company Owner Sentenced to 32 Months in Prison for Role in Fraud and Bribery Conspiracy in Power Generation IndustryRead the Press Release
Company Sentenced to Pay a Total of Over $1.7 Million in Fines and Restitution
A New Jersey industrial pipe supply company and its owner were sentenced today for conspiring to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York in return for the manager’s efforts to steer contracts to the company, the Department of Justice announced.
Andrew Martingano, of Staten Island, New York, was sentenced by U.S. District Judge Deborah A. Batts of the Southern District of New York to 32 months and a day in prison. American Pipe Bending and Fabrication Co. Inc. of Edison, New Jersey, was sentenced to pay a $150,000 criminal fine. Martingano and American Pipe were also sentenced to pay over $1.6 million in restitution, jointly and severally with their co-conspirators, to the victim, Con Ed. The company and its owner pleaded guilty to committing wire fraud and conspiring to defraud Con Ed on Aug. 15, 2012.
According to court documents, Martingano and others agreed to pay approximately $510,000 in cash bribes to James M. Woodason, a department manager of the purchasing department at Con Ed. In exchange for the bribes, Woodason steered Con Ed industrial pipe supply contracts to American Pipe by secretly providing Martingano with confidential competitor bid information, thereby causing Con Ed to pay higher, non-competitive prices for materials. At the time of Woodason’s arrest in August 2010, Woodason had already received approximately $45,000 in cash bribes from Martingano and American Pipe.
The department said the conspiracy took place from approximately January 2009 to August 2010. In addition, Martingano and American Pipe defrauded Con Ed by requesting a 14 percent price increase and basing that request on a fake email purporting to document a “Steel Mill” price increase that American Pipe was passing on to Con Ed. These false and fraudulent price increase requests caused actual losses to Con Ed in the amount of approximately $1.4 million and intended losses of approximately $9.4 million.
Con Ed is a regulated utility headquartered in Manhattan. It provides electric service to approximately 3.2 million customers, and gas service to approximately 1.1 million customers in New York City and Westchester County, New York. Con Ed received more than $10,000 in federal funding each year between 2003 through 2010, and cooperated with the department’s investigation.
Including Martingano and American Pipe, a total of five individuals and two companies have been charged as part of this investigation and have been ordered to serve a total of more than 16 years in prison and to pay criminal fines and restitution of more than $3 million.
The charges arose from an ongoing federal antitrust investigation of bid rigging, bribery, fraud and tax-related offenses in the power generation industry. The investigation is being conducted by the Antitrust Division’s New York Office, with assistance from the FBI and the Internal Revenue Service-Criminal Investigation. Anyone with information concerning bid rigging, bribery, tax offenses or fraud in the power generation industry should contact the FBI’s New York Division at 212-384-3720 or the Antitrust Division’s New York Office at 212-335-8000, or visit www.justice.gov/atr/contact/newcase.htm.
Naples Man Sentenced for Conspiracy to Commit StructuringRead the Press Release
Fort Myers, Florida – U.S. District Judge John E. Steele has sentenced Sydney Jackson Williams, Jr. to one year and a day in federal prison for structuring financial transactions. As part of his sentence, the Court also entered a money judgment in the amount of $332,500.00, the proceeds traceable to the offense. Williams will be jointly and severally liable for the amount of the money judgment, along with his wife and co-defendant, Lorie Ann Williams, who was sentenced last week.
According to court documents, subsequent to two civil lawsuits being brought against him, Williams transferred more than $3 million in joint marital assets into an account in his wife’s name. Soon thereafter, Williams and his wife began withdrawing funds from the account in structured cash withdrawals. Between March 3, 2010, and April 22, 2010, $332,500 was withdrawn from the account in 35 separate withdrawals of $9,500 each.
Ultimately, on September 30, 2010, Sydney Jackson Williams, Jr. filed a Chapter 11 bankruptcy petition with the United States Bankruptcy Court in the Middle District of Florida.
Pursuant to the Bank Secrecy Act, financial institutions are required to file a "Currency Transaction Report" with the United States Treasury Department for each financial transaction that involves United States currency in excess of $10,000. These transactions include deposits, withdrawals, check cashing, or other transactions involving the physical transfer of currency from one person to another.
This case was investigated by the Internal Revenue Service and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys Yolande G. Viacava and Charles D. Schmitz.
North Carolina Man Pleads Guilty to Tax Evasion and Serving as Pilot Without LicenseRead the Press Release
WASHINGTON – A North Carolina man pleaded guilty today to tax evasion and four counts of serving as a pilot without an airman’s certificate, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
According to court documents, from 2011 through 2014, Paul Douglas Tharp attempted to evade payment of an outstanding federal income tax debt by filing false documents, including false tax returns, with the Internal Revenue Service (IRS). After Tharp failed to file tax returns for the years 2003 through 2006, the IRS assessed federal income taxes for those years. Tharp also late-filed his 2007 income tax return. According to court documents, Tharp owed more than $300,000 in taxes for the years 2003 through 2007. In 2011, Tharp provided a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to an IRS revenue officer who was assigned to collect his unpaid taxes, on which he failed to report that he owned an airport and an investment firm, and concealed his business bank accounts and rental income he had received under penalty of perjury. In 2012 and 2014, Tharp also filed tax returns for the 2011 through 2013 tax years on which he omitted significant income that he received from his airport and rental properties.
“Collection Information Statements are an important tool that the IRS uses to determine an individual’s ability to pay his outstanding tax liability,” said Acting Assistant Attorney General Ciraolo. “When taxpayers submit false information, or willfully omit income or assets, impeding the IRS’s efforts to collect taxes due, the Tax Division stands ready to prosecute. Taxpayers who are engaged in this criminal conduct will pay a heavy price, including incarceration and monetary penalties.”
As part of his plea, Tharp also admitted that he served as a pilot without the required certification on four different occasions in 2012. Tharp surrendered his pilot certificate on Aug. 2, 2012 and after that date, he flew four flights in and out of Davidson County Airport in Lexington, North Carolina, without valid registration and while his pilot certificate was suspended in 2012.
Pursuant to the plea agreement, Tharp faces a potential statutory maximum sentence of five years in prison for the tax evasion charge and three years in prison for each count of serving as a pilot without an airman’s certificate, as well as a maximum fine of $250,000 for each count of conviction. He must also pay restitution in the amount of $281,366.62 to the IRS. The sentencing hearing is set for April 22, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Nathan Brooks of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.
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Mother Pleads Guilty to ID Theft When She Fled the Country with DaughtersRead the Press Release
KANSAS CITY, KAN. – A Lawrence woman pleaded guilty Tuesday to forging her ex-husband’s signature on official documents when she fled to Europe with her daughters, U.S. Attorney Barry Grissom said Tuesday.
Samantha C. Elmer, 33, Lawrence, Kan., pleaded guilty to one count of aggravated identity theft. In her plea she admitted she forged her husband’s signature on a document giving her consent to take their two daughters to Europe. She filed the document as part of the process of getting passports for the girls.
Elmer was charged in December after she returned from Europe with the girls, 9 and 11 years old.
Sentencing will be set for a later date. She faces a maximum penalty of two years in federal prison and a fine up to $250,000.
Grissom commended the following agencies that worked on the investigation: the Lawrence Police Department, the FBI, Homeland Security Investigations, the Douglas County District Attorney’s Office, the Eudora Police Department, the Overland Park Police Department and the Johnson County District Attorney’s Office, as well as the prosecutor, Assistant U.S. Attorney Chris Oakley.
Monroe County, Kentucky, Tobacco Farmer Sentenced to Prison Term for Crop Insurance FraudRead the Press Release
Ordered to pay restitution in the amount of $711,958.00
BOWLING GREEN, Ky. - A Monroe County, Kentucky tobacco farmer was sentenced by United States District Judge Greg N. Stivers, to serve eight months in prison followed by a three year term of supervised release and ordered to pay restitution in the amount of $711,958.00 for committing crop insurance fraud, announced United States Attorney John E. Kuhn, Jr.
Tracy E. Dillard, 45, of Fountain Run, Kentucky, aided and abetted by others, previously admitted in court of knowingly making false statements and reports on insurance claims submitted to Producers Agriculture Insurance Company, a company insured by the Federal Crop Insurance Corporation (FCIC).
“The federal crop insurance program ultimately exists to provide a safety net for our farming community,” stated Acting U.S. Attorney John Kuhn. “Fraud undermines the entire program. This U.S. Attorney’s Office is committed to working with our partner federal agencies to ensure that every penny of taxpayer money is fully restored.”
The violations occurred between 2009 and March 10, 2011, in the Western District of Kentucky, including Allen, Barren, Hart and Monroe Counties in Kentucky, and Macon County in Tennessee.
Specifically, in 2009 Dillard had four separate crop insurance policies on four different crops, two in Barren County, and two in Monroe County. Aided and abetted by others, Dillard intentionally overstated crop damage for each crop by forty percent (40%) on a crop insurance claim form, resulting in a loss of $125,339.20.
Additionally, in 2010 Dillard had twelve separate tobacco crop insurance policies on twelve different crops. Dillard, aided and abetted by others, intentionally overstated crop damage by forty percent (40%) for each crop on a crop insurance claim form, resulting in a loss of $504,454.80.
Finally, in 2011 Dillard had a crop insurance policy on a crop located in Allen County. Aided and abetted by others, Dillard intentionally falsified the crop plant date on a crop insurance claim form, resulting in a loss of $82,164.
The FCIC indemnifies insurance companies for crop insurance claims.
For the 2009, 2010, and 2011 policies listed above, Dillard caused fraudulent claims to be submitted to the United States government, through claims made to ProAg and paid by the FCIC, resulting in a $711,958 loss to the United States. Dillard agreed to pay full restitution under the terms of his plea agreement.
This case was prosecuted by Assistant United States Attorney David Weiser and was investigated by the United States Department of Agriculture (USDA) Office of Inspector General (OIG) and the Risk Management Agency, Special Investigation Branch.
Michael Schmidt Sentenced to Serve 33 Months in Prison for Wire FraudRead the Press Release
GREENEVILLE, Tenn. – Michael Frank Schmidt, 60, of Jonesborough, Tenn., was sentenced on Feb. 2, 2016, by the Honorable R. Leon Jordan, U.S. District Court Judge, to serve 33 months in federal prison. Judge Jordan also imposed a three-year term of supervised release and ordered Schmidt to pay full restitution to his victims and a $100 special assessment.
Schmidt pleaded guilty in September 2015 to wire fraud. According to information included in documents on file with U.S. District Court, Schmidt devised and executed a Ponzi type investor scheme which defrauded 30 individuals of approximately $744,000, over a six-year period of time. He falsely convinced his victims that they were investing in Toner Depot, a business which had contracts with Tennessee Eastman Company.
Agencies involved in this investigation included the Tennessee Bureau of Investigation, Morristown, Tennessee Police Department, and Jonesborough, Tennessee Police Department. Suzanne Kerney-Quillen and Helen Smith, Assistant U.S. Attorneys represented the United States.
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Mexican Clinic Doctor Detained in Scheme to Commit Wire FraudRead the Press Release
McALLEN, Texas ‐ Two physicians from a family medicine clinic in Mexico have been charged in a federal indictment for their role in a scheme to submit false and fraudulent insurance claims, announced U.S. Attorney Kenneth Magidson.
According to the indictment, Dr. Mayolo Melchor, 58, and Dr. Bertha Hernandez-Melchor, 60, both of Reynosa, Tamaulipas, Mexico, conspired with policy holders of the American Family Life Insurance Company (AFLAC) to fax more than 50,000 fraudulent claim forms and accident reports to AFLAC for accidents and injuries that never occurred. The indictment charges the defendants with one count of conspiracy to commit wire fraud and eight counts of wire fraud.
The indictment was returned on June 14, 2011 and later arrested in Mexico. They were subsequently extradited to Houston and made an initial appearance on Jan. 22, 2015. Today, Hernandez-Melchor appeared before U.S. Magistrate Dorina Ramos in McAllen, at which time she was ordered into custody pending further criminal proceedings. Melchor will appear for his detention hearing Thursday, Feb. 4, 2016.
According to the indictment, policyholders for AFLAC paid the defendants to prepare and sign false reports for accidents and injuries that never occurred. The AFLAC policy holders would allegedly fill out false claims forms in the McAllen area and deliver them to the defendants’ family medicine clinic in Mexico where the defendants would prepare and sign corresponding accident reports for each fake accident and injury, according to the charges.
The indictment alleges that from September 2001 to August 2010, the defendants and the policyholders caused more than 50,000 fraudulent claim forms and accident reports to be faxed to AFLAC, resulting in the disbursement of approximately $5 million in benefit checks to the policyholders.
Conspiracy to commit wire fraud and each of the eight counts of wire fraud carry a maximum punishment of 20 years in federal prison without parole and a $250,000 fine upon conviction.
The investigation leading to the charges was conducted by the FBI. Assistant U.S. Attorneys Tina Ansari and Michael Day are prosecuting the case.
An indictment is an accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.Meth Traffickers Receive Lengthy Federal Prison SentencesRead the Press Release
FORT WORTH, Texas — Two Texas men and a woman from Florida have been sentenced to lengthy federal prison terms for their roles in a methamphetamine distribution conspiracy that operated in North Texas for approximately two years, announced U.S. Attorney John Parker of the Northern District of Texas.
James Gatlin, 40, of Garland, Texas, was sentenced on Friday afternoon by U.S. District Judge John McBryde to 320 months in federal prison. Matthew Ryan Thompson, 44, of Mineral Wells, Texas, was sentenced to 420 months. Celeste Monette Blair, 45, of Jacksonville, Florida, was sentenced to 360 months. Each pleaded guilty to one count of conspiracy to possess with intent to distribute methamphetamine.
Five other defendants convicted in the case were recently sentenced to prison terms ranging from 250 to 480 months. The last defendant, Ismael Rico, 32, of Dallas, Texas, is scheduled to be sentenced later this month.
Each pleaded guilty in August 2015 to one count of conspiracy to possess with intent to distribute methamphetamine. According to documents filed in the case, Gatlin, Thompson and Blair admitted receiving multi-ounce quantities of methamphetamine from others in the conspiracy that they distributed to others.
The Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration and the Texas Department of Public Safety investigated. Assistant U.S. Attorney Shawn Smith prosecuted.
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Mendocino National Forest Marijuana Cultivator Sentenced to More than Five Years in PrisonRead the Press Release
SACRAMENTO, Calif. — Pablo Barreto-Cruz, 39, of Mexico, was sentenced today by United States District Judge John A. Mendez to five years and three months in prison and ordered to pay $22,800 in restitution for cultivating marijuana on public land and depredation of public lands and resources, United States Attorney Benjamin B. Wagner announced.
According to court documents, between March 2015 and May 2015, Barreto-Cruz grew 2,998 marijuana plants in the Mendocino National Forest. The marijuana cultivation operation caused significant harm to the habitat and water quality of the National Forest.. Following Barreto-Cruz’s arrest on May 12, 2015, authorities searched the marijuana cultivation site and discovered approximately 1,000 pounds of irrigation pipe, approximately 1,000 pounds of camp debris, and several fertilizers and pesticides, including the highly toxic pesticide Carbofuran, which is dangerous to both humans and animals. The U.S. Forest Service estimates that the marijuana cultivation site diverted approximately 18,000 gallons of water per day.
This case was the product of an investigation by the United States Forest Service, the Glenn County Sheriff’s Office and the California Department of Fish and Wildlife. Assistant United States Attorney Christiaan Highsmith prosecuted the case.
Marijuana Grower Pleads GuiltyRead the Press Release
BOISE - Carlos Avalos-Cervantes, 31, of Walla Walla, WA, and originally from Mexico, pleaded guilty today to one count of conspiracy to manufacture a controlled substance with intent to distribute it, the substance being more than 1,000 marijuana plants; and one count of possession of a firearm in furtherance of drug trafficking, U.S. Attorney Wendy J. Olson announced. Avalos-Cervantes was charged by superseding indictment on December 8, 2015.
According to court documents, Avalos-Cervantes was arrested on September 23, 2015, along with a co-conspirator Martin Diaz-Lara, in a remote, timbered canyon north of Banks, in Boise County, Idaho. Agents were able to document a total of 6,870 live and harvested marijuana plants on state lands in the canyon. According to court proceedings, Avalos-Cervantes and his co-conspirator each possessed a 9mm handgun in furtherance of the drug trafficking crime. The court documents also state that the marijuana operation was supported and supplied by other co-defendants. Avalos-Cervantes and his co-conspirator are Mexican nationals who entered the United States illegally.
Diaz-Lara, along with co-defendants Javier Avila-Contreras, Rogelio Arevalo-Villasenor, and David Becerra-Saucedo are scheduled for trial on April 19, 2016, before Chief U.S. District Judge B. Lynn Winmill.
The maximum penalty for manufacturing more than 1,000 marijuana plants with intent to distribute the drug is not less than 10 years and may extend up to life in prison, as well as a $10,000,000 fine. The maximum penalty for possessing a firearm in furtherance of drug trafficking crimes is not less than five years imprisonment consecutive to any other penalty, and a $250,000 fine.
The arrests and complaints are the result of a joint investigation and cooperative law enforcement efforts of the Organized Crime and Drug Enforcement Task Force (OCDETF), led by the Drug Enforcement Administration, Bureau of Land Management (BLM), and Nampa Police Department Special Investigations Unit (SIU). Other agencies include Ada County Sheriff’s Office, United States Forest Service (USFS), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), U. S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Boise County Sheriff’s Office, Boise Police Department, Gooding County Sheriff’s Office, Idaho Department of Fish and Game, Idaho National Guard—Counterdrug Support Office, Meridian Police Department, Milton-Freewater Police Department, Oregon State Police, Power County Sheriff’s Office, Spokane Police Department, Valley County Sheriff’s Office, Walla Walla Police Department, and Washington State Patrol.
The OCDETF program is a federal multi agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Man Sentenced to over 3 Years in Prison for Post Office RobberyRead the Press Release
Acting United States Attorney Kenneth Elser
Western District of Arkansas_______________________________________________________
FOR IMMEDIATE RELEASE CONTACT: Joyce Snow
February 2, 2016 PHONE: (479) 494-4066TWITTER: @WDARnews
MAN SENTENCED TO OVER 3 YEARS IN PRISON FOR POST OFFICE ROBBERY
Hot Springs, Arkansas - Kenneth Elser, Acting United States Attorney for the Western District of Arkansas, announced that James Calk, age 38, of Norphlet, Arkansas, was sentenced to 46 months in prison and three years supervised release for Robbery of a Post Office. The Honorable Susan O. Hickey presided over the sentencing hearings in the United States District Court in Hot Springs.
According to court records, on or about October 2, 2014, officers responded to a robbery at a Hot Springs post office. During the robbery, a man later identified as Calk approached the clerk as a customer and then demanded all of the cash in the drawer. The clerk initially refused, but then complied after Calk indicated that he had a gun. Calk pleaded guilty to the charge on June 26, 2015.
This case was investigated by the Hot Springs Police Department and United States Postal Inspectors. Assistant United States Attorney Sydney Butler 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
MEDIA ADVISORY: Acting US Attorney and IRS announce criminal forfeiture awards to law enforcementRead the Press Release
CHARLESTON, W.Va. – Acting United States Attorney Carol Casto and Internal Revenue Service (IRS) Special Agent in Charge Thomas Jankowski will present several local law enforcement agencies with over $1 million in forfeited assets from an investigation of a Barboursville pharmacy owner. The presentation of the forfeiture awards will take place at a press conference in the U.S. Attorney's Office in the Robert C. Byrd United States Courthouse in Charleston at 10:00 A.M.
The agencies receiving a share of the forfeiture for their role in the investigation are the Charleston Police Department, the Huntington Police Department, and the Boone County Sheriff's Department. Their successful investigation helped stop the illegal pain pill distribution at A+ Care Pharmacy in Barboursville and resulted in federal prison time for the pharmacy owner, as well as the forfeiture of significant cash derived from the criminal activity.
Forfeiture proceeds are shared with law enforcement agencies as a result of their direct participation in investigations resulting in forfeiture. This event will recognize the work of these local law enforcement agencies that keeps drugs out of our communities and puts the forfeited assets to good use.
WHO: Acting United States Attorney Carol Casto
Assistant United States Attorney Monica Coleman
IRS Special Agent in Charge Thomas Jankowski
Supervisory Special Agent Jason GandeeWHAT: Press conference to announce significant forfeiture awards to local law enforcement agencies
WHERE: U.S. Attorney's Office – large conference room
Robert C. Byrd United States Courthouse
300 Virginia Street, East, Room 4000
Charleston, WV 25301WHEN: Wednesday, February 3, 2015, at 10 A.M.
MCC Construction Company Agrees to Pay Nearly $1.8 Million for Conspiring to Illegally Obtain Federal Contracts Meant for Small, Disadvantaged BusinessesRead the Press Release
The Justice Department announced today that MCC Construction Company (MCC) has agreed to pay $1,769,294 in criminal penalties and forfeiture for conspiring to commit fraud on the United States by illegally obtaining government contracts that were intended for small, disadvantaged businesses.
The court agreement was announced today by Assistant Attorney General William J. Baer of the Justice Department’s Antitrust Division, U.S. Attorney Channing D. Phillips of the District of Columbia, Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office, Inspector General Peggy E. Gustafson of the Small Business Administration (SBA), Inspector General Carol Fortine Ochoa of the U.S. General Services Administration (GSA), Special Agent in Charge Brian J. Reihms of the Defense Criminal Investigative Service’s (DCIS) Central Field Office and Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).
“This conspiracy defrauded the government and denied small, disadvantaged businesses the opportunity to compete to do business with the United States,” said Assistant Attorney General Baer. “We will continue to work with U.S. Attorney Phillips and his talented colleagues to protect the integrity of the government contracting process.”
“This prosecution shows that there will be consequences for companies that violate federal contracting rules meant to assist small, disadvantaged businesses,” said U.S. Attorney Phillips. “MCC Construction Company secured millions of dollars in contracts by hiding behind two small businesses that did not perform labor on the projects. Its conduct took away opportunities that could have gone to companies that truly are socially and economically disadvantaged and deserving of the work.”
“An uneven marketplace is created when businesses engage in illegal backroom deals to fraudulently obtain government contracts, placing competitors at an unfair disadvantage,” said Assistant Director in Charge Abbate. “In this case, the FBI and our partners moved to protect the American taxpayer and ensure the integrity of the process. Together, we will continue to work to protect federal contract opportunities for socially and economically disadvantaged businesses within our communities from unlawful conduct.”
“Fraudulently passing work through eligible small businesses to a large business does not provide taxpayers the best value and certainly does not support the role of small businesses as engines of economic development and job creation,” said Inspector General Gustafson. “In fact, it subverts the purpose of SBA’s preferential contracting programs and harms the small businesses the programs are designed to assist. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their leadership and dedication to serving justice.”
“We will continue our work on behalf of taxpayers and legitimate small business owners to expose and punish nationwide small business fraud schemes such as this,” said Inspector General Ochoa.
“The Defense Criminal Investigative Service is committed to working with our partner agencies to combat fraud impacting the Department of Defense’s vital programs and operations and maintain the integrity of the procurement system,” said Special Agent in Charge Reihms.“This settlement is a testament to our steadfast and continued commitment to working closely with our law enforcement partners in rooting out this type of activity,” said Director Robey.
MCC was a construction management company and general contractor headquartered in Colorado.
A criminal information was filed last month in the U.S. District Court for the District of Columbia charging MCC with one count of knowingly and willfully conspiring to commit major fraud on the United States. MCC waived the requirement of being charged by way of federal indictment, agreed to the filing of the information and accepted responsibility for its criminal conduct and that of its employees. U.S. District Judge Ketanji B. Jackson accepted the company’s guilty plea today. The plea agreement is subject to the court’s approval at a sentencing hearing scheduled for March 15, 2016.
According to court documents, MCC conspired with two companies that were eligible to receive federal government contracts set aside for small, disadvantaged businesses with the understanding that MCC would, illegally, perform all of the work. In so doing, MCC was able to win 27 government contracts worth over $70 million from 2008 to 2011. The scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate small and disadvantaged businesses.
Under the illegal agreement, the companies awarded these government contracts were allowed to keep 3 percent of the value of the contracts for allowing MCC to use the companies small business status to win the contracts.
Court documents state that MCC violated the provisions of the SBA 8(a) program. The SBA 8(a) development program is designed to award contracts to businesses that are owned by “one or more socially and economically disadvantaged individuals.” To qualify for the 8(a) program, a business must be at least 51 percent owned and controlled by a U.S. citizen (or citizens) of good character who meet the SBA’s definition of socially and economically disadvantaged. The firm must also be a small business (as defined by the SBA) and show a reasonable potential for success. Participants in the 8(a) program are subject to regulatory and contractual limits. Also, under the program, the disadvantaged business is required to perform a certain percentage of the work. For the types of contracts under investigation here, the SBA 8(a)-certified companies were required to perform 15 percent or more of the work with its own employees.
MCC, along with the two 8(a) companies used to illegally obtain the contracts, engaged in and executed a scheme to defraud the SBA by, among other things:
- Allowing the two 8(a) companies to retain a guaranteed percentage of each contract for simply obtaining the contracts for MCC;
- Allowing the two 8(a) companies to perform no labor on these projects;
- Performing the accounting and government reporting for the two 8(a) companies on certain projects;
- Falsely representing to the government that MCC employees were in fact employees of the 8(a) companies;
- Obtaining certain contracts on behalf of the 8(a) companies without first informing those 8(a) companies prior to bidding; and
- Conspiring with the 8(a) companies to hire straw employees for the 8(a) companies whose labor and salaries were paid for by MCC.
For the contracts obtained through this scheme on which MCC made a profit, MCC’s profit was at least $1,269,294. The criminal penalty in this case includes a $500,000 fine and a forfeiture money judgment of $1,269,294.
The investigation is being conducted by the FBI’s Washington Field Office, the Inspector General for the SBA, the Inspector General of the U.S. GSA, the DCIS’ Central Field Office, and the MPFU.
MCC Construction Company Agrees to Pay Nearly $1.8 Million for Conspiring to Illegally Obtain Federal Contracts Meant for Small, Disadvantaged BusinessesRead the Press Release
WASHINGTON – The Justice Department announced today that MCC Construction Company (MCC) has agreed to pay $1,769,294 in criminal penalties and forfeiture for conspiring to commit fraud on the United States by illegally obtaining government contracts that were intended for small, disadvantaged businesses.
The court agreement was announced by U.S. Attorney Channing D. Phillips of the U.S. Attorney’s Office for the District of Columbia; Assistant Attorney General William J. Baer of the Justice Department’s Antitrust Division; Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office; Peggy E. Gustafson, Inspector General for the Small Business Administration (SBA); Carol Fortine Ochoa, Inspector General of the U.S. General Services Administration (GSA); Brian J. Reihms, Special Agent in Charge of the Central Field Office of the Defense Criminal Investigative Service (DCIS), and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).
“This prosecution shows that there will be consequences for companies that violate federal contracting rules meant to assist small, disadvantaged businesses,” said U.S. Attorney Phillips. “MCC Construction Company secured millions of dollars in contracts by hiding behind two small businesses that did not perform labor on the projects. Its conduct took away opportunities that could have gone to companies that truly are socially and economically disadvantaged and deserving of the work.”
“This conspiracy defrauded the government and denied small, disadvantaged businesses the opportunity to compete to do business with the United States,” said Assistant Attorney General Baer of the Antitrust Division. “We will continue to work with U.S. Attorney Phillips and his talented colleagues to protect the integrity of the government contracting process.”
“An uneven marketplace is created when businesses engage in illegal backroom deals to fraudulently obtain government contracts, placing competitors at an unfair disadvantage,” said Assistant Director in Charge Abbate. “In this case, the FBI and our partners moved to protect the American taxpayer and ensure the integrity of the process. Together, we will continue to work to protect federal contract opportunities for socially and economically disadvantaged businesses within our communities from unlawful conduct.”
“Fraudulently passing work through eligible small businesses to a large business does not provide taxpayers the best value and certainly does not support the role of small businesses as engines of economic development and job creation. In fact, it subverts the purpose of SBA’s preferential contracting programs and harms the small businesses the programs are designed to assist,” said SBA Inspector General Gustafson. “I want to thank the U.S. Attorney’s Office and our law enforcement partners for their leadership and dedication to serving justice.”
“We will continue our work on behalf of taxpayers and legitimate small business owners to expose and punish nationwide small business fraud schemes such as this,” said GSA Inspector General Ochoa.
“The Defense Criminal Investigative Service is committed to working with our partner agencies to combat fraud impacting the Department of Defense's vital programs and operations and maintain the integrity of the procurement system," said Special Agent in Charge Reihms.“This settlement is a testament to our steadfast and continued commitment to working closely with our law enforcement partners in rooting out this type of activity, " said Director Robey.
MCC was a construction management company and general contractor headquartered in Colorado.
A criminal Information was filed last month in the U.S. District Court for the District of Columbia charging MCC with one count of knowingly and willfully conspiring to commit major fraud on the United States. MCC waived the requirement of being charged by way of federal indictment, agreed to the filing of the Information, and accepted responsibility for its criminal conduct and that of its employees. U.S. District Judge Ketanji B. Jackson accepted the company’s guilty plea today. The plea agreement is subject to the Court’s approval at a sentencing hearing scheduled for March 15, 2016.
According to court documents, MCC conspired with two companies that were eligible to receive federal government contracts set aside for small, disadvantaged businesses with the understanding that MCC would, illegally, perform all of the work. In so doing, MCC was able to win 27 government contracts worth over $70 million from 2008 to 2011. The scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate small and disadvantaged businesses.
Under the illegal agreement, the companies awarded these government contracts were allowed to keep 3 percent of the value of the contracts for allowing MCC to use the companies small business status to win the contracts.
Court documents state that MCC violated the provisions of the SBA 8(a) program. The SBA 8(a) development program is designed to award contracts to businesses that are owned by “one or more socially and economically disadvantaged individuals.” To qualify for the 8(a) program, a business must be at least 51% owned and controlled by a U.S. citizen (or citizens) of good character who meet the SBA’s definition of socially and economically disadvantaged. The firm must also be a small business (as defined by the SBA) and show a reasonable potential for success. Participants in the 8(a) program are subject to regulatory and contractual limits. Also, under the program, the disadvantaged business is required to perform a certain percentage of the work. For the types of contracts under investigation here, the SBA 8(a)-certified companies were required to perform 15 percent or more of the work with its own employees.
MCC, along with the two 8(a) companies used to illegally obtain the contracts, engaged in and executed a scheme to defraud the SBA by, among other things:
- Allowing the two 8(a) companies to retain a guaranteed percentage of each contract for simply obtaining the contracts for MCC;
- Allowing the two 8(a) companies to perform no labor on these projects;
- Performing the accounting and government reporting for the two 8(a) companies on certain projects;
- Falsely representing to the government that MCC employees were in fact employees of the 8(a) companies;
- Obtaining certain contracts on behalf of the 8(a) companies without first informing those 8(a) companies prior to bidding; and
- Conspiring with the 8(a) companies to hire straw employees for the 8(a) companies whose labor and salaries were paid for by MCC.
For the contracts obtained through this scheme on which MCC made a profit, MCC’s profit was at least $1,269,294. The criminal penalty in this case includes a $500,000 fine and a forfeiture money judgment of $1,269,294.
The investigation is being conducted by the FBI’s Washington Field Office, the Inspector General for the Small Business Administration (SBA), the Inspector General of the U.S. General Services Administration (GSA), the Central Field Office of the Defense Criminal Investigative Service (DCIS), and the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).
The prosecution is being handled by Assistant U.S. Attorneys Matt Graves and John Marston of the U.S. Attorney’s Office for the District of Columbia and Assistant Chief Craig Y. Lee and Trial Attorneys Kevin B. Hart and Justin P. Murphy of the Antitrust Division.
Liverpool, New York Man Pleads Guilty to Receipt and Possession of Child PornographyRead the Press Release
SYRACUSE, NEW YORK – Christopher Filippi, 48, of Liverpool, New York, pled guilty today to the entirety of a four-count indictment charging him with the receipt and possession of child pornography, announced United States Attorney Richard S. Hartunian. In entering his guilty pleas before United States District Judge Brenda K. Sannes, Filippi admitted he received and possessed thousands of photographs and videos containing child pornography. A jury trial in the case was to begin on February 9, 2016.
At sentencing on May 27, 2016, Filippi faces a mandatory minimum term of five years in prison and a maximum term of up to twenty years in prison on each count. Sentences are imposed by a judge based upon the particular statute the defendant is charged with violating, the United States Sentencing Guidelines and other factors. In addition to a term of incarceration, Filippi will be required to register as a sex offender and to pay restitution to the victims depicted in the child pornography images he possessed. He will also forfeit the computer equipment used in his crimes and be required to serve a term of supervised release for a minimum of five years and up to life.
The case was investigated by the Federal Bureau of Investigation ("FBI") with assistance from the Syracuse Police Department, and is being prosecuted by Assistant U.S. Attorney Nicolas Commandeur.
Las Vegas Airport Employee Sentenced to 36 Months in Prison for Role in Large-Scale Drug Trafficking ConspiracyRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that a Las Vegas man has been sentenced by U.S. District Judge Sharon Gleason to serve 36 months in prison for using his employment at McCarran International Airport to aid drug traffickers in sneaking large quantities of cocaine past security and onto Alaska-bound flights.
Bryan M. Bledsoe, of Las Vegas, previously pled guilty to conspiring with others to distribute cocaine. As part of his guilty plea, Bledsoe, an airline employee, admitted that he personally took bags full of cocaine through the secure area of McCarran International Airport and then delivered the drugs to co-conspirators who then transported the drugs to Anchorage for distribution. Overall, Bledsoe admitted being involved in the shipment of between five and fifteen kilograms of cocaine during the pendency of the conspiracy.
According to Assistant U.S. Attorney Stephanie C. Courter, who handled the sentencing hearing, the conspiracy began as early as 2012 and continued until June 2014. During that time, conspirators worked to import multiple kilograms of cocaine into Alaska from Las Vegas for distribution. After the drugs were sold, the conspirators then secreted more than one million dollars in cash proceeds out of Alaska and back to the Lower 48.
Bledsoe, an airline employee working at the airport, was recruited by conspirators to help them bypass security with the cocaine. On a regular basis, co-conspirators provided Bledsoe with bags containing multiple kilograms of cocaine. Bledsoe then used his airport employee credentials to bring the drugs into the airport without having to pass through security screening. Once in the secure area of the airport, Bledsoe then returned the un-scanned bags of cocaine to his co-conspirators who then boarded Alaska-bound flights to deliver the drugs.
On June 1, 2014, investigators actually observed Bledsoe and his co-conspirators in action. On that day, co-defendant Dewane Blue gave Bledsoe a bag containing ten kilograms of cocaine. Bledsoe then carried the drugs past security checkpoints and returned them to Blue. Blue then gave the drugs to a third co-conspirator, Daren Cole, who was scheduled to travel to Anchorage that afternoon. Before Cole boarded his flight, however, his carry-on was seized and agents recovered approximately ten kilograms of cocaine from inside.
During the sentencing hearing, Judge Gleason focused on the fact that Bledsoe had used his job as an airline employee to help perpetrate the drug trafficking scheme. She noted the seriousness of the offense and the need for the public to be protected, particularly when flying. She also focused on the need to deter others in the future from using their security clearances at airports to help commit crimes.
Bledsoe is the latest in a string of sentencing hearings related to this drug trafficking scheme. To date, the following individuals have been sentenced as part of this case:
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Daren Cole:previously sentenced to 64 months in prison;
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Michael Langdon: previously sentenced to 60 months in prison; and
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Antonio Beckwith:previously sentenced to 24 months in prison
Two other defendants, including the leader of the conspiracy, are set to be sentenced in the coming months.
This case was investigated as part of the Organized Crime Drug Enforcement Task Force (OCDETF). In announcing the sentence, U.S. Attorney Loeffler praised the work of the law enforcement agencies involved, including the Drug Enforcement Administration (DEA), the Internal Revenue Service Criminal Investigation (IRS-CI), and the U.S. Postal Inspection Service (USPIS). These agencies were assisted by the FBI Anchorage Safe Streets Task Force, the Anchorage Police Department, the Las Vegas Metropolitan Police Department, the Henderson Police Department, the North Las Vegas Police Department and the Clark County Department of Aviation.
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KC Man Sentenced to 15 Years for Child PornRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was sentenced in federal court today for possessing child pornography while he was under court-ordered supervision for a prior conviction for receiving child pornography.
John T. Beyers, 46, of Kansas City, was sentenced by U.S. District Judge Beth Phillips to 15 years in federal prison without parole. Today’s sentence includes 10 years for possessing child pornography and a consecutive five years for the revocation of his supervised release, which he was serving at the time of the offense for a prior child pornography conviction.
On Feb. 27, 2007, Beyers pleaded guilty in the U.S. District Court for the Southern District of Florida to receiving child pornography and was sentenced to seven years and four months in federal prison. He was released to a halfway house in Kansas City in May 2012. One of the conditions of Beyers’ supervised release was that Beyers could obtain only one computer, and that computer had to have monitoring software installed for supervision of his Internet activity by the probation officer. Other conditions included that Beyers could not obtain any type of pornography, including adult pornography, and Beyers could not violate any state or federal laws.
The U.S. Probation Office conducted a search of Beyers’s apartment on May 17, 2013, and found three unauthorized and unmonitored computers, a thumb drive and an external hard drive. A probation officer also found a receipt for a $1,000 wire transfer. When asked about it, Beyers said a Russian national was extorting $5,000 from him to keep Beyers’s illicit Internet activities from being reported to U.S. authorities.
Investigators found more than 100 images of child pornography and several movies of child pornography on the computers, the thumb drive and the external hard drive. Internet history indicates that Beyers did the bulk of his viewing of child pornography in the cloud, which minimized the available record of his child pornography activity.
This case was prosecuted by Assistant U.S. Attorney Catherine Connelly. It was investigated by U.S. Probation Office and the FBI.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Justice Department and Consumer Financial Protection Bureau Reach Settlement to Resolve Allegations of Auto Lending Discrimination by ToyotaRead the Press Release
WASHINGTON – The Department of Justice and the Consumer Financial Protection Bureau (CFPB) announced today a settlement to resolve allegations that Toyota Motor Credit Corporation (Toyota) engaged in a pattern or practice of discrimination against African-American and Asian/Pacific Islander borrowers in auto lending. Toyota, based in Torrance, California, is the nation’s largest captive auto lender, and the fifth largest auto lender overall.
Through the settlement, Toyota agrees to limit significantly the discretion of car dealers to charge interest rate markups on Toyota loans. Notably, Toyota has also committed that it will not increase the interest rates it quotes to car dealers in order to fund additional nondiscretionary dealer compensation implemented as part of the settlement. The settlement also provides $19.9 million in compensation for borrowers who took out loans between January 2011 and January 2016 and paid higher markup based on the alleged discrimination. Additionally, Toyota will pay up to $2 million to African-American and Asian/Pacific Islander borrowers with markup disparities while Toyota is preparing to implement the new policies. The new policies must be in place by August 2016.
“Toyota’s reforms will level the playing field to ensure that all eligible borrowers – regardless of their race or national origin – can sign auto loans with fair terms and reasonable interest rates,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “While dealerships deserve fair compensation for the valuable customer service they provide, federal law protects consumers against higher price markups simply because of what they look like or where they come from. We commend Toyota for crafting a new compensation system that strikes an appropriate balance for dealers and consumers.”
Toyota is known as an indirect auto lender because, rather than taking applications directly from consumers, the company makes most of its loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Toyota. It is also a captive auto lender because it is owned by an auto manufacturer and provides consumers with financing for the primary purpose of facilitating sales by the manufacturer and its associated franchised dealers. Toyota’s business practice, like most other major auto lenders, allows car dealers discretion to vary a loan’s interest rate from the price Toyota initially sets based on the borrower’s objective credit-related factors. Dealers receive greater payments from Toyota on loans that include a higher interest rate markup. The coordinated investigations by the department and the CFPB that preceded today’s settlement determined this system of subjective and unguided pricing discretion directly results in Toyota’s qualified African-American and Asian/Pacific Islander borrowers paying more than qualified non-Hispanic white borrowers.
To address this system, Toyota has agreed in today’s settlement to change the way it prices its loans by limiting dealer markup to 125 basis points (or 1.25 percentage points) for loans of 60 months or less, and to 100 basis points (or 1 percentage point) for loans greater than 60 months. The department and CFPB anticipate that Toyota’s new caps on discretionary markups will substantially reduce or eliminate disparities in markups based on race or national origin.
The settlement resolves claims by the department and the CFPB that Toyota discriminated by charging thousands of African-American and Asian/Pacific Islander borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Toyota charged borrowers higher interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination, and the average Asian/Pacific Islander victim was obligated to pay over $100 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Toyota’s settlement with the Justice Department, which is subject to court approval, was filed today in the U.S. District Court of the Central District of California in conjunction with the Justice Department’s complaint. Toyota resolved the CFPB’s claims by entering into a public administrative settlement.
“We are dedicated to promoting fair and equal access to credit in the auto finance marketplace,” said Director Richard Cordray of CFPB. “Toyota Motor Credit is among the largest indirect auto lenders, and we commend its industry leadership in shifting to reduced discretion to address the significant fair lending risks.”
“No consumer should be forced to pay more money for a loan because of their race or national origin,” said U.S. Attorney Eileen M. Decker of the Central District of California. “This settlement resolves our claims by providing compensation for affected consumers and seeking to ensure that future loans funded by Toyota reflect equal terms.”
In addition to the payments of at least $19.9 million to African-American and Asian/Pacific Islander borrowers, the settlement also requires Toyota to improve its monitoring and compliance systems. The settlement allows Toyota to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results. The department commends Toyota for working cooperatively to reach an appropriate resolution of this case.
The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the CFPB identify as victims of Toyota’s discrimination. The department and the CFPB will make a public announcement and post information on their websites once more details about the compensation process become available. Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the CFPB at this time.
The Civil Rights Division, the U.S. Attorney’s Office of the Central District of California and the CFPB are members of the Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information about the task force, please visit www.StopFraud.gov.
The Justice Department’s enforcement of fair lending laws and the Servicemembers Civil Relief Act (SCRA) is conducted by the Housing and Civil Enforcement Section in the Civil Rights Division. Since 2010, the Civil Rights Division has provided approximately $1.4 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the SCRA. The Attorney General’s annual reports to Congress regarding ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications.
Justice Department and Consumer Financial Protection Bureau Reach Settlement to Resolve Allegations of Auto Lending Discrimination by ToyotaRead the Press Release
The Department of Justice and the Consumer Financial Protection Bureau (CFPB) announced today a settlement to resolve allegations that Toyota Motor Credit Corporation (Toyota) engaged in a pattern or practice of discrimination against African-American and Asian/Pacific Islander borrowers in auto lending. Toyota, based in Torrance, California, is the nation’s largest captive auto lender, and the fifth largest auto lender overall.
Through the settlement, Toyota agrees to limit significantly the discretion of car dealers to charge interest rate markups on Toyota loans. Notably, Toyota has also committed that it will not increase the interest rates it quotes to car dealers in order to fund additional nondiscretionary dealer compensation implemented as part of the settlement. The settlement also provides $19.9 million in compensation for borrowers who took out loans between January 2011 and January 2016 and paid higher markup based on the alleged discrimination. Additionally, Toyota will pay up to $2 million to African-American and Asian/Pacific Islander borrowers with markup disparities while Toyota is preparing to implement the new policies. The new policies must be in place by August 2016.
“Toyota’s reforms will level the playing field to ensure that all eligible borrowers – regardless of their race or national origin – can sign auto loans with fair terms and reasonable interest rates,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “While dealerships deserve fair compensation for the valuable customer service they provide, federal law protects consumers against higher price markups simply because of what they look like or where they come from. We commend Toyota for crafting a new compensation system that strikes an appropriate balance for dealers and consumers.”
Toyota is known as an indirect auto lender because, rather than taking applications directly from consumers, the company makes most of its loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Toyota. It is also a captive auto lender because it is owned by an auto manufacturer and provides consumers with financing for the primary purpose of facilitating sales by the manufacturer and its associated franchised dealers. Toyota’s business practice, like most other major auto lenders, allows car dealers discretion to vary a loan’s interest rate from the price Toyota initially sets based on the borrower’s objective credit-related factors. Dealers receive greater payments from Toyota on loans that include a higher interest rate markup. The coordinated investigations by the department and the CFPB that preceded today’s settlement determined this system of subjective and unguided pricing discretion directly results in Toyota’s qualified African-American and Asian/Pacific Islander borrowers paying more than qualified non-Hispanic white borrowers.
To address this system, Toyota has agreed in today’s settlement to change the way it prices its loans by limiting dealer markup to 125 basis points (or 1.25 percentage points) for loans of 60 months or less, and to 100 basis points (or 1 percentage point) for loans greater than 60 months. The department and CFPB anticipate that Toyota’s new caps on discretionary markups will substantially reduce or eliminate disparities in markups based on race or national origin.
The settlement resolves claims by the department and the CFPB that Toyota discriminated by charging thousands of African-American and Asian/Pacific Islander borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Toyota charged borrowers higher interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination, and the average Asian/Pacific Islander victim was obligated to pay over $100 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Toyota’s settlement with the Justice Department, which is subject to court approval, was filed today in the U.S. District Court of the Central District of California in conjunction with the Justice Department’s complaint. Toyota resolved the CFPB’s claims by entering into a public administrative settlement.
“We are dedicated to promoting fair and equal access to credit in the auto finance marketplace,” said Director Richard Cordray of CFPB. “Toyota Motor Credit is among the largest indirect auto lenders, and we commend its industry leadership in shifting to reduced discretion to address the significant fair lending risks.”
“No consumer should be forced to pay more money for a loan because of their race or national origin,” said U.S. Attorney Eileen M. Decker of the Central District of California. “This settlement resolves our claims by providing compensation for affected consumers and seeking to ensure that future loans funded by Toyota reflect equal terms.”
In addition to the payments of at least $19.9 million to African-American and Asian/Pacific Islander borrowers, the settlement also requires Toyota to improve its monitoring and compliance systems. The settlement allows Toyota to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results. The department commends Toyota for working cooperatively to reach an appropriate resolution of this case.
The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the CFPB identify as victims of Toyota’s discrimination. The department and the CFPB will make a public announcement and post information on their websites once more details about the compensation process become available. Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the CFPB at this time.
The Civil Rights Division, the U.S. Attorney’s Office of the Central District of California and the CFPB are members of the Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information about the task force, please visit www.StopFraud.gov.
The Justice Department’s enforcement of fair lending laws and the Servicemembers Civil Relief Act (SCRA) is conducted by the Housing and Civil Enforcement Section in the Civil Rights Division. Since 2010, the Civil Rights Division has provided approximately $1.4 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the SCRA. The Attorney General’s annual reports to Congress regarding ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications.
Toyota ComplaintToyota Consent Order
Jury Convicts Traverse City Man, Jerry M. Stauffer, of Fraud and Money Laundering in Connection with Foreign Currency Trading OperationsRead the Press Release
GRAND RAPIDS, MICHIGAN — Jerry M. Stauffer, 66, of Traverse City, Michigan, was convicted of wire fraud and money laundering at the conclusion of a jury trial, U.S. Attorney Patrick Miles announced today.
U.S. Attorney Miles commented that "Stauffer used his position as a respected financial expert in Traverse City to defraud his friends and neighbors, as well as people living around the world. As a result, some people lost their life savings. This kind of crime causes long-lasting harm and will be punished whenever we find it."
During a four-day trial that began on January 26, 2016, the jury heard that Stauffer engaged in a fraudulent investment scheme between 2009 and 2015, using interstate communications to take a total of approximately $1.9 million from more than a dozen victims. He advised his "investors" that he could earn substantial profits for them with invested funds by trading in fluctuations in foreign currencies. In fact, Stauffer never invested the money as promised, but used it to pay his own expenses and make the payments necessary to keep the fraudulent scheme afloat. Two families lost $400,000 each in the scheme. Stauffer continued to persuade his investors that his actions were legitimate even after he was indicted, as a group of investors were persuaded to put up the funds he wanted to hire an attorney. The jury also heard that Stauffer laundered some of the proceeds of his crime through a bank to purchase a boat.
Stauffer now faces up to 20 years in prison for the wire fraud conviction and up to ten years in prison for the money laundering conviction. Sentencing has been scheduled for June 14, 2016 before Chief Judge Robert J. Jonker. Stauffer was permitted to remain on bond pending his sentencing.
"Mr. Stauffer’s appearance of success was masked by a tangled financial web of lies," said Jarod J. Koopman, Special Agent in Charge of IRS-Criminal Investigation. "Ponzi schemes can thrive for a short period of time based on the fraudulent claims that money is being invested and legitimate returns provided. However, that time has come to an end, and as this verdict shows, Mr. Stauffer will now face his judgment."
The Traverse City office of the FBI and the IRS-Criminal Investigation office investigated the case. Assistant U.S. Attorneys Tim VerHey and Nicole Mazzocco prosecuted it.
END
Jordanian Weapons Smuggler Sentenced to PrisonRead the Press Release
Tampa, Florida – U.S. District Judge Elizabeth A. Kovachevich has sentenced Mahmoud Abdel-Ghani Mohammad Assaf (47, Amman, Jordan) to 33 months in federal prison for conspiring to export firearms and attempting to export firearms without a license, in violation of federal export control and firearms laws. The Court also ordered Assaf to forfeit the firearms and vehicles that had been involved in the offenses. He pleaded guilty on March 24, 2015.
According to court documents, Assaf was part of a network of individuals involved in smuggling firearms from the United States to the Middle East. The firearms were concealed in vehicles that had been purchased at used car auctions in Central Florida. The vehicles were then scheduled for export to Jordan.
Two of Assaf’s co-conspirators, Eyad Farah (Barrington, TX) and Yasser Ahmad Obeid (St. Petersburg, FL and Lebanon), previously pleaded guilty to their roles in the conspiracy. Farah was sentenced to 37 months and Obeid was sentenced to 51 months in federal prison.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Defense Criminal Investigative Service, with assistance from the Department of Justice’s Office of International Affairs. It was prosecuted by Assistant United States Attorneys Josephine W. Thomas and Adam M. Saltzman.
"HSI, with our domestic and international law enforcement partners, is dedicated to making communities safer by bringing criminals to justice and seizing firearms before they fall into the hands of transnational criminal organizations who pose a threat to public safety both here and abroad,” said Susan L. McCormick, special agent in charge of HSI Tampa.
Jefferson County Man Sentenced in Carjacking DeathRead the Press Release
BEAUMONT, Texas – A 22-year-old Beaumont, Texas man has been sentenced to federal prison for a fatal carjacking in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
River Shynette Gobert pleaded guilty on Aug. 26, 2015 to carjacking resulting in death and was sentenced to 30 years in federal prison today by U.S. District Judge Thad Heartfield. This sentence will run consecutive to a state prison sentence he is already serving.
According to information presented in court, early on the morning of June 23, 2013, Gobert and Jonathan Demond Patton entered a self-service laundry on Florida Avenue in Beaumont intending to rob the sole occupant. When the victim refused to hand over his car keys, Gobert shot him in the leg at Patton’s direction. Patton and Gobert fled the laundry in their vehicle without the victim’s keys. They drove by an apartment complex on Woodrow Avenue where they encountered Daryl Dwayne Fontenot asleep in his vehicle. A struggle ensued when Patton and Gobert attempted to steal the vehicle and Fontenot was shot twice in the chest killing him. Patton and Gobert fled in their vehicle after they were unable to locate Fontenot’s keys. A short time later, law enforcement officers stopped Patton and Gobert because their vehicle matched the vehicle reported in the self-service laundry shooting. Patton and Gobert fled the vehicle but left the weapon used to shoot the two men behind. Patton and Gobert were arrested and each gave statements indicating the other was responsible for the shootings. On Sep. 23, 2013, a Jefferson County grand jury indicted Patton and Gobert for the self-service laundry shooting. Gobert pleaded guilty and was sentenced to seven years in state prison. Patton pleaded guilty and was sentenced to 10 years in state prison. On Mar. 5, 2015, a federal grand jury indicted Patton and Gobert charging them for the carjacking murder of Fontenot. Patton was sentenced to 40 years in federal prison for this charge on Dec. 10, 2015.
This case was prosecuted as part of the Project Safe Neighborhoods Initiative. Project Safe Neighborhoods is aimed at reducing gun and gang violence, deterring illegal possession of guns, ammunition and body armor, and improving the safety of residents in the Eastern District of Texas. Participants in the initiative include community members and organizations as well as federal, state and local law enforcement agencies.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Beaumont Police Department and prosecuted by Assistant U.S. Attorney John B. Ross.
Jefferson City Man Sentenced for MethRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Jefferson City, Mo., man was sentenced in federal court today for possessing methamphetamine with the intent to distribute.
Cody Dean Williams, 49, of Jefferson City, was sentenced by U.S. District Judge Brian C. Wimes to 13 years and four months in federal prison without parole.
On Sept. 17, 2015, Williams pleaded guilty to possessing methamphetamine with the intent to distribute. Williams was sentenced as a career offender due to his prior felony convictions.
Williams was charged after having sold approximately 12.4 grams of methamphetamine to informants and undercover officers. Williams was arrested on March 5, 2013, when he was found to be driving on an expired license. An inventory search of his car revealed that he was carrying four bags of methamphetamine, a bag of marijuana, a bag with 11 hydrocodone pills and a bag with methamphetamine residue, which weighed approximately 8.5 grams. Williams was charged in Cole County, Mo., with felony possession of a controlled substance, among other felonies. He was released on bond.
An Eldon, Mo., police officer – acting on information that a suspected drug dealer was traveling towards Eldon – saw Williams’s truck stopped on the side of the road near the intersection of Hwy. Y and Hwy 52 on June 26, 2014. An officer searched the truck and found six syringes and a set of digital scales that field-tested positive for methamphetamine. Williams also had a small plastic bag containing marijuana in his pocket. During another search of the truck, law enforcement officers found seven grams of methamphetamine inside a hidden compartment in the dash.
Williams admitted that he had been distributing methamphetamine throughout mid-Missouri for several months. Williams stated that he sold approximately a pound each week, and purchased each pound for around $13,000. He made around $300 profit for each ounce sold. According to court documents, Williams is responsible for the distribution of approximately 8.32 kilograms of methamphetamine.
On July 18, 2014, officers were informed that there was an active arrest warrant for Williams. When officers attempted to stop him, Williams attempted to elude them by speeding, running stop signs and driving in the grass. During their pursuit, officers observed Williams throw items out of the car which the officers thought were controlled substances. The interior of Williams’s car was found to have methamphetamine residue and some residue of smoked marijuana. A later search of the chase route did not produce the baggies that officers believed were thrown from the car.
This case was prosecuted by Assistant U.S. Attorney Anthony P. Gonzalez. It was investigated by the Drug Enforcement Administration, MUSTANG (the Mid-Missouri Unified Strike Team And Narcotics Group), the Mid-Missouri Multi-Jurisdictional Drug Task Force and the Eldon, Mo., Police Department.
Jefferson City Man Sentenced for Distributing, Possessing Child PornRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Jefferson City, Mo., man was sentenced in federal court today for possessing and distributing child pornography over the Internet.
Dominic J. Veit, 40, Jefferson City, was sentenced by U.S. District Judge Brian C. Wimes to eight years and nine months in federal prison without parole.
On April 6, 2015, Veit pleaded guilty to distributing child pornography and to possessing child pornography.
An FBI agent in New York, working on the national Innocent Images investigation in January 2011, identified Veit’s computer as using a peer-to-peer file-sharing network to distribute child pornography. The agent downloaded 31 images of child pornography from Veit’s computer.
On March 3, 2011, a federal search warrant was executed at Veit’s residence. Veit was questioned by law enforcement officers and admitted that he used the file-sharing program to download child pornography over the Internet. Veit had 30 to 40 friends on his network, most of whom had images of child pornography they shared with him in exchange for gaining access to the child pornography files on Veit’s computer.
Investigators discovered thousands of images and four videos of child pornography, including four images of bestiality which depicted bondage, on Veit’s computer.
This case was prosecuted by Assistant U.S. Attorney Lawrence E. Miller. It was investigated by the FBI.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Jacksonville Man Indicted for Attempted Online Enticement, Attempted Production, and Advertising for Child PornographyRead the Press Release
Jacksonville, Florida – United States Attorney A. Lee Bentley, III announces the return of a superseding indictment charging Jon Christopher Stoune (44, Jacksonville) with attempted online enticement of an individual he believed to be a minor child, advertising for child pornography, and attempted production of child pornography. If convicted, he faces a mandatory minimum of 10 years, up to life, in federal prison on the attempted enticement charge. The advertising and attempted production charges each carry a penalty of at least 15 years, up to 30 years, in federal prison. Stoune has been in custody since his arrest on April 21, 2015.
An indictment is merely a formal charge that a defendant has violated one or more federal criminal laws, and every defendant is presumed innocent until, and unless, proven guilty.
This case was investigated by the St. Johns County Sheriff’s Office and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney D. Rodney Brown.
It is another case brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Jackson Man Sentenced to Prison for Possession of a Firearm by a Convicted FelonRead the Press Release
Jackson, Miss. – Antoine Johnson, 26, of Jackson, was sentenced today by U.S. District Judge Carlton W. Reeves, to 18 months in prison followed by three years of supervised release for possessing a firearm after having been previously convicted of a felony, announced U.S. Attorney Gregory K. Davis.
On August 9, 2015, members of the Jackson Police Department received information that Johnson was causing a disturbance in the area of Lawnview Place in Jackson. Officers encountered Johnson in the area and determined that he was in possession of a firearm. Johnson’s previous conviction was for business burglary in Madison County in 2013.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosive and the Jackson Police Department. It was prosecuted by Assistant U.S. Attorney Patrick Lemon.
Indictment: Retired Wichita Police Lt. Lied About Training He Was Paid to ProvideRead the Press Release
WICHITA, KAN. - A retired Wichita police lieutenant who was paid $56,400 to provide armed engagement training for law enforcement officers was indicted Tuesday on charges of embezzling federal grant funds.
Kevin P. Vaughn, 51, Wichita, Kan., who retired in March 2015 after 28 years with the Wichita Police Department, is charged with one count of embezzling U.S. Department of Homeland Security funds, one count of mail fraud, three counts of wire fraud and one count of money laundering.
The indictment alleges Vaughn falsified reports to make it appear his company, Red Mist Tactical, had completed all of 15 eight-hour classes the company agreed to provide. The money for the training came from a grant by the U.S. Department of Homeland Security/Federal Emergency Management Agency (DHS/FEMA) to the Kansas Highway Patrol and the North Central Regional Planning Commission.
The indictment alleges Vaughn:
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Falsely reported conducting training in McPherson, Kan., on May 27 and May 28, 2015. In fact, the training sessions took place on June 3 and 4, 2015, after the deadline for the training to be completed. In addition, the training sessions were four hours long, not the eight hours Vaughn’s company had agreed to provide. Vaughn submitted falsified sign-up sheets with forged officers’ signatures.
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Falsely reported conducting eight hours of training on May 22, 2015, during the Wichita Police Department Ladies Range Day. In fact, the training lasted four hours and it was not approved by the police department.
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Falsely reported offering training in Sumner County on April 27 and May 1, 2015. In fact, there was no training on those days. Vaughn submitted fabricated sign-up sheets for those dates.
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Falsely reported offering training in Sumner County on April 20, 21, 22, 23 and 24, 2015. In fact, there was no training on those days. He submitted fabricated sign-up sheets for those dates.
Upon conviction, the crimes carry the following penalties:
Count 1 (embezzlement): A maximum penalty of 10 years and a fine up to $250,000.
Count 2 and 6 (mail fraud): A maximum penalty of 20 years and a fine up to $250,000.
Counts 3, 4 and 5 (wire fraud): A maximum penalty of 20 years and a fine up to $250,000 on each count.
Count 7 (Money laundering): A maximum penalty of 10 years and a fine up to $250,000.
The FBI and the Wichita Police Department investigated. Assistant U.S. Attorney Debra Barnett is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
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Idaho Residents are Targets of Telephone ScammersRead the Press Release
BOISE – The United States Attorney’s Office and the United States Marshals Service are advising Idaho residents to be aware of telephone calls threatening individuals of a pending arrest warrant. During the call, unsuspecting citizens are given the choice to avoid a federal arrest warrant by paying a fine to settle out of court. The individual may be instructed to wire money. The caller may provide a false case number. Because the telephone calls are continuing to occur, the United States Attorney wants the public to be aware of these scam calls. Officers do not notify people of arrest warrants by phone. A valid arrest warrant would be served in person by a Deputy U.S. Marshal or other law enforcement officer. Persons receiving such a telephone call are cautioned not to provide any information and to notify the U.S. Marshals Service immediately.
It was recently reported that an Idaho resident received a phone call from a person claiming that the U.S. Attorney for the District of Idaho had issued a federal warrant for the citizen’s arrest. The call came from someone who identified herself as “Leslie” and claimed to be an investigator with the “Tate Law Firm” in Texas. Leslie told the citizen that she could pay $2,700 to have the arrest warrant cancelled. When the citizen did not agree, “Leslie” transferred her to someone who posed as a lawyer and tried to convince the citizen to pay the $2,700 amount. When the citizen still would not agree, the lawyer transferred her back to “Leslie” who offered to resolve the matter for approximately $1,500.
“I urge everyone who receives this type of phone call to be very skeptical,” said Brian T. Underwood, United States Marshal for the District of Idaho. “Those who receive similar calls should contact the local U.S. Marshal’s office to verify, as this is not a typical way or resolving warrant related matters.”
It is a crime for an individual to falsely represent himself or herself as a federal official or Deputy United States Marshal. Accordingly, this scam and any similar fraudulent conduct will be investigated by the U.S. Marshals Service, in partnership with the FBI.
Hayden Septic Waste Business Sentenced for Clean Water Act ViolationRead the Press Release
COEUR D'ALENE - The Rooter Guy, LLC, and its founder Ben Broyles, 62, of Hayden, Idaho, were sentenced today in federal court for violating the Clean Water Act, U.S. Attorney Wendy J. Olson announced. The Rooter Guy, LLC was sentenced to three years organization probation. Ben Broyles, the majority owner and operator of The Rooter Guy, LLC was also sentenced to three years of probation. Chief U.S. District Judge B. Lynn Winmill also ordered that Broyles and his corporation pay a $17,000 fine and $4,000 in restitution to the City of Hayden, and to perform 100 hours of community service. Guilty pleas were entered on November 18, 2015.
According to the plea agreements, between March 17, 2014, and May 16, 2014, the defendants violated the Clean Water Act by pumping septic waste into the City of Hayden’s municipal sewer system operated by the Hayden Area Regional Sewer Board. Although The Rooter Guy LLC is licensed to collect septic waste from commercial and residential customers, it is required to dispose of septic waste at facilities designed to collect and treat waste in accordance with environmental considerations and EPA regulation. Hayden’s municipal sewer system is not designed to accept and treat septic waste.
"Enforcement of federal criminal environmental laws promotes healthy safe communities for all of us,” U.S. Attorney Wendy Olson observed. “Unfortunately, The Rooter Guy LLC put its bottom line above its obligation to conduct its business in a way that protects public safety. The successful investigation and prosecution in this case sends a clear message that businesses who put profits ahead of public safety will be brought to justice."
“Dumping unpermitted septic waste into a wastewater treatment plant not only damages expensive equipment, but can sicken or injure people,” said Scot Adair, Acting Special Agent in Charge of EPA’s criminal enforcement program in Idaho. “By refusing to comply with the law, the defendants jeopardized the health and safety of an entire community. Today’s guilty plea shows that those who ignore this country’s environmental laws can expect to face the consequences in court.”
The case was investigated by the Environmental Protection Agency with the assistance of the City of Hayden, the Hayden Area Regional Sewer Board, Federal Bureau of Investigation, U.S. Forest Service, U.S. Secret Service, and the Kootenai County Sheriff’s Office.
Hammond Woman Pleads Guilty to Mail Fraud and Aggravated Identity Theft for Role in Tax Fraud SchemeRead the Press Release
U.S. Attorney Kenneth A. Polite announced that RAVEN HUGHES, age 28, of Hammond, pled guilty today to mail fraud and aggravated identity theft for engaging in a multi-year tax fraud scheme.
According to court documents, HUGHES obtained the name and social security number of unsuspecting individuals and used that information without their knowledge or authorization to prepare false tax returns that claimed large tax refunds. The refund checks were mailed to numerous Post Office Boxes throughout Louisiana that were opened by HUGHES, including HUGHES’s residence in Hammond. Refund checks were also sent electronically via wire into one of HUGHES’s four bank accounts.
Once the tax refund checks were received, HUGHES falsely endorsed the checks and cashed them. HUGHES also arranged for some of the refunds to be transmitted electronically into bank accounts under her control. In total, HUGHES caused not fewer than 148 federal income tax returns to be submitted in the names of at least 103 different individuals without their knowledge or authorization. As a result of the conduct described above, between 2009 and 2012 HUGHES received approximately $199,050.
HUGHES faces a maximum term of imprisonment of not more than twenty years, followed by up to three years of supervised release, and a $250,000 fine for the count of mail fraud. HUGHES also faces a mandatory consecutive two-year sentence for the commission of aggravated identity theft. U.S. District Judge Susie Morgan set sentencing for May 18, 2016.
U.S. Attorney Polite praised the work of the Internal Revenue Service – Criminal Investigation in investigating this matter. Assistant United States Attorney Jordan Ginsberg is in charge of the prosecution.
Grand Forks Man Sentenced to 20 Years in Prison for Role in Fentanyl ConspiracyRead the Press Release
FARGO - U. S. Attorney Christopher C. Myers announced that on February 1, 2016, Ryan Jon Jensen, 20, was sentenced in U.S. District Court in Fargo to 240 months in prison by Chief U.S. District Judge Ralph Erickson. Jensen was ordered to pay $17, 264.93 in restitution for funeral expenses and was also ordered to serve up to five years supervised release after his sentence.
Jensen had previously pled guilty on February 27, 2015, to the following charges:
1) Conspiracy to Possess with Intent to Distribute and Distribution of Controlled Substances Resulting in Serious Bodily Injury and Death.
2) Distribution of a Controlled Substance Resulting in Serious Bodily Injury
3) Distribution of a Controlled Substance Resulting in Serious Bodily Injury
4) Distribution of a Controlled Substance Resulting in Death
5) Money Laundering Conspiracy
U.S. Attorney Chris Myers noted: "This is a tragic case. There are two kids dead and a number of kids were sent to the hospital from the poison this defendant was distributing in the city of Grand Forks. These substances were readily available for purchase on the Dark Web with the use of a computer. We all need to work together to combat this problem. It is not just a law enforcement problem, but a community problem that needs a community solution. I applaud the steps taken thus far by our state and local partners in Grand Forks to engage the public through education, discussion, and action – we must continue to hold the line together to save lives."
This case is being investigated by the Grand Forks Police Department, Department of Homeland Security - Homeland Security Investigations, the Drug Enforcement Administration, the Royal Canadian Mounted Police, and the Portland (OR) Police Department.
U. S. Attorney Christopher C. Myers and AUSA Scott Schneider are prosecuting the case.
Glen Burnie Woman Sentenced for Writing Fraudulent Prescriptions for OxycodoneRead the Press Release
Baltimore, Maryland – U.S. District Judge J. Frederick Motz sentenced Robin McClosky Andrews, age 51, of Glen Burnie, Maryland today to a year and a day in prison followed by three years of supervised release for conspiring to distribute and possess with intent to distribute oxycodone.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Nicholas DiGiulio, Office of Investigations, Office of Inspector General of the Department of Health and Human Services; Assistant Special Agent in Charge Don A. Hibbert of the Drug Enforcement Administration, Baltimore District Office; and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office.
According to her plea agreement, from 2009 until 2012, Andrews stole prescription slips from a doctor she worked for, and wrote fraudulent prescriptions for oxycodone in a number of different names. Her husband had individuals fill the prescriptions at pharmacies and provide him with the pills. The individuals were generally paid $100 for each prescription they filled. The oxycodone pills were then sold to co-defendant Michael Cudnik and others.
More than 350 fraudulent prescriptions were written. Most of the prescriptions were for 90 Percocet 10 milligram pills, totaling 300,000 milligrams of oxycodone. Accordingly, Robin Andrews was responsible for the distribution of at least 300,000 milligrams of oxycodone.
Michael Joseph Cudnik, age 57, of Baltimore, has pleaded guilty to his role in the conspiracy and is scheduled to be sentenced on February 12, 2016 at 10:00 a.m. Robin Andrews’ husband passed away on October 21, 2015.
United States Attorney Rod J. Rosenstein commended the HHS Office of Inspector General, DEA and FBI for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Kenneth S. Clark, who prosecuted the case.
Former White House Employee Pleads Guilty to Taking Part in Time/Attendance SchemeRead the Press Release
WASHINGTON – The former director of switchboard operations at the White House pled guilty today to a charge of theft of government property for a scheme in which she stole over $5,000 through altered time and attendance records, announced U.S. Attorney Channing D. Phillips and Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office.
Andrea Turk, 46, of Upper Marlboro, Md., pled guilty in the U.S. District Court for the District of Columbia. The Honorable Senior Judge Gladys Kessler scheduled sentencing for April 20, 2016. The charge, a felony, carries a statutory maximum of 10 years in prison and potential financial penalties. Under the advisory federal sentencing guidelines, Turk faces up to six months of incarceration and a fine of up to $20,000. She has agreed to pay restitution as well as a forfeiture money judgment of $5,015.
According to a statement of offense, signed by the defendant as well as the government, Turk was the director of switchboard operations at the White House from October 2009 until her termination in August 2013. She was responsible for managing approximately 15 switchboard operators, including oversight of their work schedules and approval of overtime hours. Additionally, she was responsible for final entry and approval of all time and attendance records of the switchboard operators, including one identified in court documents as “Employee A.”
Beginning at least as early as June 2, 2012, through July 27, 2013, Turk used her supervisory position to alter the time and attendance records of “Employee A” to reflect overtime hours that were not actually worked. In turn, “Employee A” paid Turk money generated through the scheme. Over that time-frame, “Employee A” was paid approximately $12,475 for 396 overtime hours, but only actually worked and legitimately earned less than approximately 50 of these hours. As a result, “Employee A” received approximately $10,900 in overtime pay from the United States government to which “Employee A” was not entitled. “Employee A” thereafter paid approximately $5,015 to Turk, mostly through a series of bank transfers.
No other charges were filed in the investigation.
In announcing the plea, U.S. Attorney Phillips and Assistant Director in Charge Abbate commended the work of those who investigated the case from the FBI’s Washington Field Office. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Tasha Harris, Legal Assistant Angela Lawrence, and Assistant U.S. Attorney Diane Lucas, who assisted with forfeiture issues. Finally, they expressed appreciation for the work of Assistant U.S. Attorney David A. Last, who investigated and prosecuted the matter.
Former U.S. Nuclear Regulatory Commission Employee Pleads Guilty to Attempted Spear-Phishing Cyber-Attack on Department of Energy ComputersRead the Press Release
Charles Harvey Eccleston, 62, a former employee of the U.S. Department of Energy (DOE) and the U.S. Nuclear Regulatory Commission (NRC), pleaded guilty today to a federal offense stemming from an attempted e-mail “spear-phishing” attack in January 2015 that targeted dozens of DOE employee e-mail accounts.
The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Channing D. Phillips of the District of Columbia and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office.
Eccleston pleaded guilty in the U.S. District Court for the District of Columbia to one count of attempted unauthorized access and intentional damage to a protected computer. In his guilty plea, Eccleston admitted scheming to cause damage to the computer network of the DOE through e-mails that he believed would deliver a computer virus to particular employees. An e-mail spear-phishing attack involves crafting a convincing e-mail for selected recipients that appears to be from a trusted source and that, when opened, infects the recipient’s computer with a virus.
“Eccleston admitted that he attempted to compromise, exploit and damage U.S. government computer systems that contained sensitive nuclear weapon-related information with the intent of allowing foreign nations to gain access to that information or to damage essential systems,” said Assistant Attorney General Carlin. “Protecting our national assets from cyber intrusions is one of our highest priorities. We must continue to evolve and remain vigilant in our efforts and capabilities to confront cyber-enabled threats and aggressively detect, disrupt and deter them.”
“This prosecution underscores our commitment to prosecute those who carry out or plan cyber-attacks against our government, whether they are in the United States or in remote locations overseas,” said U.S. Attorney Phillips. “Thanks to the work of the FBI, this former federal employee was arrested before he could do any damage and he now is being held accountable for actions that could have threatened our national security.”
“Charles Harvey Eccleston is a former U.S. Government employee who, motivated by greed, was thwarted in his attempt to sell information to a foreign intelligence service to enable a cyber-attack against our information systems,” said Assistant Director in Charge Abbate. “Today’s guilty plea is a testament to the dedication of the FBI and prosecutorial team, along with our federal and foreign partners, to relentlessly pursue and bring to justice an individual who sought to misuse his position to betray the country.”
Eccleston, a U.S. citizen who had been living in Davao City in the Philippines since 2011, was terminated from his employment at the NRC in 2010. He was detained by Philippine authorities in Manila, Philippines, on March 27, 2015, and deported to the United States to face U.S. criminal charges. He has been in custody ever since.
According to court documents, Eccleston initially came to the attention of the FBI in 2013 after he entered a foreign embassy in Manila and offered to sell a list of over 5,000 e-mail accounts of all officials, engineers and employees of a U.S. government energy agency. He said that he was able to retrieve this information because he was an employee of a U.S. government agency, held a top secret security clearance and had access to the agency’s network. He asked for $18,800 for the accounts, stating they were “top secret.” When asked what he would do if that foreign country was not interested in obtaining the U.S. government information the defendant was offering, the defendant stated he would offer the information to China, Iran or Venezuela, as he believed these countries would be interested in the information.
Thereafter, Eccleston met and corresponded with FBI undercover employees who were posing as representatives of the foreign country. During a meeting on Nov. 7, 2013, he showed one of the undercover employees a list of approximately 5,000 e-mail addresses that he said belonged to NRC employees. He offered to sell the information for $23,000 and said it could be used to insert a virus onto NRC computers, which could allow the foreign country access to agency information or could be used to otherwise shut down the NRC’s servers. The undercover employee agreed to purchase a thumb drive containing approximately 1,200 e-mail addresses of NRC employees; an analysis later determined that these e-mail addresses were publicly available. The undercover employee provided Eccleston with $5,000 in exchange for the e-mail addresses and an additional $2,000 for travel expenses.
Over the next several months, Eccleston corresponded regularly by e-mail with the undercover employees. A follow-up meeting with a second undercover employee took place on June 24, 2014, in which Eccleston was paid $2,000 to cover travel-related expenses. During this meeting, Eccleston discussed having a list of 30,000 e-mail accounts of DOE employees. He offered to design and send spear-phishing e-mails that could be used in a cyber-attack to damage the computer systems used by his former employer.
Over the next several months, the defendant identified specific conferences related to nuclear energy to use as a lure for the cyber-attack, then drafted emails advertising the conference. The emails were designed to induce the recipients to click on a link which the defendant believed contained a computer virus that would allow the foreign government to infiltrate or damage the computers of the recipients. The defendant identified several dozen DOE employees whom he claimed had access to information related to nuclear weapons or nuclear materials as targets for the attack.
On Jan. 15, 2015, Eccleston sent the e-mails he drafted to the targets he had identified. The e-mail contained the link supplied by the FBI undercover employee which Eccleston believed contained a computer virus, but was, in fact, inert. Altogether, the defendant sent the e-mail he believed to be infected to approximately 80 DOE employees located at various facilities throughout the country, including laboratories associated with nuclear materials.
Eccleston was detained after a meeting with the FBI undercover employee, during which Eccleston believed he would be paid approximately $80,000 for sending the e-mails.
The charge of attempted unauthorized access and intentional damage to a protected computer carries a maximum sentence of 10 years in prison and potential financial penalties. Under the advisory federal sentencing guidelines, Eccleston faces a prison term of 24 to 30 months and a fine of up to $95,000. Sentencing before U.S. District Judge Randolph D. Moss of the District of Columbia is scheduled for April 18, 2016.
The investigation was conducted by the FBI’s Washington Field Office with assistance from the NRC and DOE. The case is being prosecuted by Assistant U.S. Attorney Thomas A. Gillice of the District of Columbia and Trial Attorney Julie A. Edelstein of the National Security Division’s Counterintelligence and Export Control Section. Trial Attorney Scott Ferber of the National Security Division’s Counterintelligence and Export Control Section assisted in the investigation of this matter. The Department of Justice’s Office of International Affairs and the government of the Philippines also provided significant assistance.
Eccleston Plea Agreement
Eccleston Statement of Offense
Former U.S. Nuclear Regulatory Commission Employee Pleads Guilty to Attempted Spear-Phishing Cyber-Attack on Department of Energy ComputersRead the Press Release
WASHINGTON – Charles Harvey Eccleston, 62, a former employee of the U.S. Department of Energy (DOE) and the U.S. Nuclear Regulatory Commission (NRC), pleaded guilty today to a federal offense stemming from an attempted e-mail “spear-phishing” attack in January 2015 that targeted dozens of DOE employee e-mail accounts.
The guilty plea was announced by U.S. Attorney Channing D. Phillips of the District of Columbia, Assistant Attorney General for National Security John P. Carlin, and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office.
Eccleston pleaded guilty in the U.S. District Court for the District of Columbia to one count of attempted unauthorized access and intentional damage to a protected computer. In his guilty plea, Eccleston admitted scheming to cause damage to the computer network of the DOE through e-mails that he believed would deliver a computer virus to particular employees. An e-mail spear-phishing attack involves crafting a convincing e-mail for selected recipients that appears to be from a trusted source and that, when opened, infects the recipient’s computer with a virus.
“This prosecution underscores our commitment to prosecute those who carry out or plan cyber-attacks against our government, whether they are in the United States or in remote locations overseas,” said U.S. Attorney Phillips. “Thanks to the work of the FBI, this former federal employee was arrested before he could do any damage and he now is being held accountable for actions that could have threatened our national security.”
“Eccleston admitted that he attempted to compromise, exploit and damage U.S. government computer systems that contained sensitive nuclear weapon-related information with the intent of allowing foreign nations to gain access to that information or to damage essential systems,” said Assistant Attorney General Carlin. “Protecting our national assets from cyber intrusions is one of our highest priorities. We must continue to evolve and remain vigilant in our efforts and capabilities to confront cyber-enabled threats and aggressively detect, disrupt and deter them.”
“Charles Harvey Ecceleston is a former U.S. Government employee who, motivated by greed, was thwarted in his attempt to sell information to a foreign intelligence service to enable a cyber-attack against our information systems,” said Assistant Director in Charge Abbate. “Today’s guilty plea is a testament to the dedication of the FBI and prosecutorial team, along with our federal and foreign partners, to relentlessly pursue and bring to justice an individual who sought to misuse his position to betray the country.”
Eccleston, a U.S. citizen who had been living in Davao City in the Philippines since 2011, was terminated from his employment at the NRC in 2010. He was detained by Philippine authorities in Manila, Philippines, on March 27, 2015, and deported to the United States to face U.S. criminal charges. He has been in custody ever since.
According to court documents, Eccleston initially came to the attention of the FBI in 2013 after he entered a foreign embassy in Manila and offered to sell a list of over 5,000 e-mail accounts of all officials, engineers and employees of a U.S. government energy agency. He said that he was able to retrieve this information because he was an employee of a U.S. government agency, held a top secret security clearance and had access to the agency’s network. He asked for $18,800 for the accounts, stating they were “top secret.” When asked what he would do if that foreign country was not interested in obtaining the U.S. government information the defendant was offering, the defendant stated he would offer the information to China, Iran or Venezuela, as he believed these countries would be interested in the information.
Thereafter, Eccleston met and corresponded with FBI undercover employees who were posing as representatives of the foreign country. During a meeting on Nov. 7, 2013, he showed one of the undercover employees a list of approximately 5,000 e-mail addresses that he said belonged to NRC employees. He offered to sell the information for $23,000 and said it could be used to insert a virus onto NRC computers, which could allow the foreign country access to agency information or could be used to otherwise shut down the NRC’s servers. The undercover employee agreed to purchase a thumb drive containing approximately 1,200 e-mail addresses of NRC employees; an analysis later determined that these e-mail addresses were publicly available. The undercover employee provided Eccleston with $5,000 in exchange for the e-mail addresses and an additional $2,000 for travel expenses.
Over the next several months, Eccleston corresponded regularly by e-mail with the undercover employees. A follow-up meeting with a second undercover employee took place on June 24, 2014, in which Eccleston was paid $2,000 to cover travel-related expenses. During this meeting, Eccleston discussed having a list of 30,000 e-mail accounts of DOE employees. He offered to design and send spear-phishing e-mails that could be used in a cyber-attack to damage the computer systems used by his former employer.
Over the next several months, the defendant identified specific conferences related to nuclear energy to use as a lure for the cyber-attack, then drafted emails advertising the conference. The emails were designed to induce the recipients to click on a link which the defendant believed contained a computer virus that would allow the foreign government to infiltrate or damage the computers of the recipients. The defendant identified several dozen DOE employees whom he claimed had access to information related to nuclear weapons or nuclear materials as targets for the attack.
On Jan. 15, 2015, Eccleston sent the e-mails he drafted to the targets he had identified. The e-mail contained the link supplied by the FBI undercover employee which Eccleston believed contained a computer virus, but was, in fact, inert. Altogether, the defendant sent the e-mail he believed to be infected to approximately 80 DOE employees located at various facilities throughout the country, including laboratories associated with nuclear materials.
Eccleston was detained after a meeting with the FBI undercover employee, during which Eccleston believed he would be paid approximately $80,000 for sending the e-mails.
The charge of attempted unauthorized access and intentional damage to a protected computer carries a maximum sentence of 10 years in prison and potential financial penalties. Under the advisory federal sentencing guidelines, Eccleston faces a prison term of 24 to 30 months and a fine of up to $95,000. Sentencing before U.S. District Judge Randolph D. Moss of the District of Columbia is scheduled for April 18, 2016.
The investigation was conducted by the FBI’s Washington Field Office with assistance from the NRC and DOE. The case is being prosecuted by Assistant U.S. Attorney Thomas A. Gillice of the District of Columbia and Trial Attorney Julie A. Edelstein of the National Security Division’s Counterintelligence and Export Control Section. Trial Attorney Scott Ferber of the National Security Division’s Counterintelligence and Export Control Section assisted in the investigation of this matter. The Department of Justice’s Office of International Affairs and the government of the Philippines also provided significant assistance.
Former Reno Mortgage Broker Sentenced to Five Years in PrisonRead the Press Release
RENO – A former Reno mortgage broker was sentenced today to five years in prison, three years of supervised release, 150 hours of community service, and ordered to pay restitution for embezzling $260,000 from a Reno company’s employee pension plan, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
Marcilin Anne Benvin, 56, currently a resident of Douglas, Alaska, pleaded guilty last September to one count of embezzlement and theft from an employee benefit plan, and was sentenced today by U.S. District Judge Larry R. Hicks. Benvin must self-report to federal prison by May 6 at noon.
“The investigation and prosecution of financial crimes, including loan and investment fraud, is currently a top priority of the District,” said U.S. Attorney Bogden. “We work with our local, state and federal law enforcement partners to ensure that individuals who commit this type of crime are brought to justice.”
From approximately 1996 to 2008, Benvin lived and worked as a mortgage broker in Reno, and was the President and operator of Cetus Mortgage, Ltd. (Cetus). Cetus was in the business of providing and servicing loans made by private investors to borrowers, primarily for residential construction and development projects. A Reno painting service company had been investing its employee pension plan money with Cetus for more than 20 years. In November 2006, Benvin told one of the trustees for the pension plan that one of its investment loans had matured. Benvin asked the trustee whether the pension plan wanted to rollover the $260,000 principal into another loan. The plan agreed, and was provided documents, including a promissory note and deed of trust, stating that it was being invested in Maverick Development. As it turned out, the documents were forged and Benvin had failed to invest the loan monies as promised, and had misappropriated the investor funds for herself. To date, the pension plan has not received back any of the $260,000 that it provided to Cetus through Benvin. Cetus closed its business and filed for bankruptcy in 2008.
The case was investigated by the FBI, IRS Criminal Investigation, and the U.S. Department of Labor Employee Benefits Security Administration, and is being prosecuted by Assistant U.S. Attorney Brian L. Sullivan.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.com.
Former Private School Coach Sentenced for Secretly Filming Students Undressing on School Ski TripsRead the Press Release
The former cross country ski coach at a Seattle private school was sentenced today in U.S. District Court in Seattle to eight years in prison for transportation with intent to engage in criminal sexual activity, announced U.S. Attorney Annette L. Hayes. JASON CHRISTOPHER PAUR, 45, of Seattle was arrested by the Royal Canadian Mounted Police in December 2013 at Silver Star ski area in British Columbia, Canada. The arrest came after female students on a school sponsored field trip discovered a video camera had been hidden in their bedroom. The camera had been positioned to video-tape the young students while they got dressed after showering. PAUR pleaded guilty in November 2015. At the hearing U.S. District Judge John C. Coughenour sentenced PAUR to 15 years of supervised release to follow the eight year prison term.
“This betrayal of trust is every parent’s nightmare,” said U.S. Attorney Annette L. Hayes. “I commend the victims, their families and the school who have remained steadfast in the pursuit of justice in this case.”
According to records in the case, the investigation revealed that PAUR had secretly recorded students while on the annual school ski trip in 2011, 2012, and 2013. The camera seized in Canada contained images of students between the ages of 14 and 17 being filmed while changing clothes or after exiting the shower. In addition, PAUR secretly filmed students changing while on a cross country running trip in 2012, and in 2013, and filmed a student changing in a storage room at the private school. PAUR used the pictures for his own sexual gratification. PAUR traveled with the students to Canada knowing that he planned to film them for his own sexual gratification.
PAUR was immediately removed from the field trip by the chaperones who notified police. PAUR was fired by the school, which has fully cooperated with law enforcement. Since his arrest in 2013, PAUR has been in custody either in Canada or in the Federal Detention Center at SeaTac.
The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). The case was prosecuted by Assistant United States Attorney Kate Vaughan.
Press contact for the U.S. Attorney’s Office on February 2, 2016 is First Assistant United States Attorney Micki Brunner at (206) 553-7970.
Former Judge-Disbarred Lawyer Pleads Guilty to Federal Fraud ChargesRead the Press Release
ALBUQUERQUE – A former New Mexico Workers’ Compensation Administrative Law Judge (ALJ) and disbarred lawyer pleaded guilty today in federal court to defrauding the Social Security Administration (SSA) of more than $40,000.00 and an estate and its beneficiaries of almost $572,000.00. Juanita Roibal-Bradley, 60, of Albuquerque, N.M., entered guilty pleas to one count of failing to disclose an event affecting the continued right to Social Security benefit payments and twelve counts of wire fraud. Under the terms of her plea agreement, Roibal-Bradley will be sentenced to a prison term not to exceed 39 months and will be ordered to pay restitution in an amount to be determined by the court to the victims of her crimes.
The guilty plea was announced by U.S. Attorney Damon P. Martinez, Special Agent in Charge Terry Wade of the FBI’s Albuquerque Division, and Special Agent in Charge Robert Feldt of the Social Security Administration, Office of the Inspector General.
In announcing the guilty plea, U.S. Attorney Damon P. Martinez said, “To protect the public and its faith in our judicial system, the U.S. Attorney’s Office will vigorously prosecute officers of the court who abuse their positions of trust and take advantage of the public.”
“Criminals who prey on innocent victims and cheat a government program that helps retirees and the disabled deserve serious penalties. When an offender is a former judge and attorney, law enforcement and prosecutors need to be even more aggressive to restore public confidence in our legal system,” said Special Agent in Charge Terry Wade of the FBI’s Albuquerque Division. “The FBI thanks the Social Security Administration’s Office of Inspector General for its hard work on this case, and congratulates the U.S. Attorney’s Office on a successful prosecution.”
“The Social Security Administration, Office of Inspector General will vigorously investigate individuals committing fraud against Social Security programs. This instant case represents cooperation amongst agencies to bring to justice those who take advantage of government programs and innocent victims,” said Special Agent in Charge Robert Feldt of the Social Security Administration, Office of the Inspector General.
Roibal-Bradley was charged in a 23-count indictment on Sept. 10, 2015, with one count of defrauding the SSA, twelve counts of wire fraud and ten counts of money laundering. According to the indictment, between Sept. 2007 and March 2011, Roibal-Bradley defrauded the SSA of more than $40,000.00 in disability benefits by failing to disclose that she was employed as a mediator and supervising attorney by the New Mexico Workers’ Compensation Administration and thus not entitled to disability benefits. Roibal-Bradley previously had served as an ALJ at the New Mexico Workers’ Compensation Administration from 2003 to 2007.
The indictment’s wire fraud counts alleged that between March 2012 and June 2013, Roibal-Bradley devised and executed a scheme to defraud an estate and its beneficiaries of almost $571,948.98. In furtherance of the scheme, Roibal-Bradley falsely represented herself to be an attorney authorized to practice law and agreed to provide legal services in administering an estate at a time when New Mexico Supreme Court had prohibited her from the private practice of law. The Court subsequently disbarred Roibal-Bradley in March 2014. As part of the scheme, Roibal-Bradley falsely promised to distribute the estate’s funds to its beneficiaries but instead transferred the funds into her personal bank account and used wire transfers to facilitate the transfer of funds. The indictment alleges that, between April 2012 and Aug. 2012, Roibal-Bradley facilitated eleven wire transfers ranging in amounts of $5,000.00 to $389,503.33 from the estate’s bank account to her personal bank account.
The indictment also charged Roibal-Bradley with laundering the proceeds she derived from her wire fraud activity by transferring those assets to others, including members of her family. The indictment alleges that Roibal-Bradley facilitated eleven transfers of proceeds from her wire fraud activities ranging in amounts of $12,000.00 to 131,492.77 between May 2012 and July 2012.
During today’s change of plea hearing, Roibal-Bradley pleaded guilty to defrauding the SSA and to the twelve wire fraud charges. In her plea agreement, Roibal-Bradley admitted she applied for SSA disability benefit payments in Sept. 2011, and claimed that she had a disability that prevented her from working. The SSA continued to pay Roibal-Bradley disability benefits between March 2008 and March 2011, even though she was working full-time as a mediator and supervising attorney for the New Mexico Workers’ Compensation Administration. In entering her guilty plea, Roibal-Bradley admitted that she failed to notify the SSA that she was capable of full-time gainful employment.
Roibal-Bradley’s plea agreement also details the scheme by which she defrauded an estate and its heirs of almost $572,000.00. In the plea agreement, Roibal-Bradley admitted that she did not tell the administrator of the estate that she was prohibited from engaging in the private practice of law. She also admitted fraudulently transferring $571,948.98 from the estate’s bank accounts into her own bank account between April 2012 and Aug. 2012.
Roibal-Bradley continues to be released on conditions of release and pretrial supervision pending her sentencing hearing, which has yet to be scheduled.
The case was investigated by the Albuquerque office of the FBI and the Social Security Administration’s Office of Inspector General based on a referral from the Disciplinary Board of the New Mexico Supreme Court. Assistant U.S. Attorneys Holland S. Kastrin and Kristopher N. Houghton are prosecuting the case.
Former Jefferson City Bank Officer Sentenced for Stealing $410,000Read the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Jefferson City, Mo., woman was sentenced in federal court today for embezzling $410,000 from the bank where she was employed.
Katherine Nicholle Brown, 29, of Jefferson City, was sentenced by U.S. District Judge Brian C. Wimes to 15 months in federal prison without parole. The court also ordered Brown to pay $410,000 in restitution. Brown voluntary surrendered to begin serving her sentence on Oct. 1, 2015, and remains in federal custody.
Brown was previously employed as the head teller at Hawthorn Bank in Jefferson City. On Sept. 15, 2015, Brown pleaded guilty to the misappropriation of funds by a bank officer. Brown admitted that she embezzled $410,000 from December 2012 to Sept. 19, 2014, by taking money from the bank vault for her personal use. According to court documents, Brown used the money she embezzled to buy various vehicles, make home improvements and upgrade her wedding rings.
Brown was employed at Hawthorn Bank from April 9, 2007, through Sept. 30, 2014. Brown became head teller and, on Jan. 26, 2010, she became responsible for managing the vault at the main branch of the bank. She was also responsible for ordering money from the Federal Reserve Bank. Additionally, if any of the bank’s branches in Jefferson City, Columbia or California needed money for their branch, they would contact Brown and she would ship the funds to them. Brown was also responsible for daily and monthly audits of the vault.
Brown admitted that she began taking money from the vault when her husband had shoulder surgery in 2012 and could not work. She took the money in small amounts, and would place it in her pockets. Brown then plugged in certain amounts in the vault book to cause the vault book total to match the vault balance in the bank’s computer accounting system. Brown also admitted that, when the bank underwent an internal audit in December 2012, she made false entries into the computer system to conceal the fact that the vault did not match the computer system.
On Sept. 19, 2014, just prior to taking maternity leave, Brown prepared and shipped five bags of cash of varying denominations to the Federal Reserve Bank. She prepared and labeled the bags, which were bar-coded and tamper proof. She reported that the total amount of cash shipped to the Federal Reserve Board was $844,000; however, when the Federal Reserve Board received and counted the money, they found it to be only $434,000.
The Federal Reserve Board reported the shortage to the bank, which conducted an audit of the vault. The audit revealed that certain entries made in the vault book reflecting cash amounts sent to Columbia, Mo., and California, Mo., bank branches were $200,000 higher than the branches had actually ordered. As a result, the vault did not contain as much cash as had been reported on the bank’s computer accounting system. Auditors concluded that Brown had to report to the Federal Reserve Board that $844,000 had been shipped so that it would balance to the bank’s accounting system.
This case was prosecuted by Assistant U.S. Attorney Jim Lynn. It was investigated by the FBI.
Former Freedom Industries owner sentenced for role in chemical spillRead the Press Release
CHARLESTON, W.Va. – A former owner of Freedom Industries was sentenced today to three years of probation and ordered to pay a $20,000 fine for a Refuse Act violation connected to the 2014 Elk River chemical spill, announced Acting United States Attorney Carol Casto. Charles E. Herzing, of McMurray, Pennsylvania, previously pleaded guilty in March 2015 to unlawfully discharging refuse matter. Herzing 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.
Herzing, along with co-defendants Dennis P. Farrell and William E. Tis, owned Freedom until December 2013, when they sold their shares to a Pennsylvania corporation. From 2004 until the 2013 sale, Herzing served as the Vice President of Freedom. In this role, Herzing had the responsibility and the authority to ensure that Freedom and its facility on the Elk River complied with the law.
Freedom had a permit issued by West Virginia’s Department of Environmental Protection 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.
Herzing admitted that he was aware of the permit and was put on notice that Freedom was required to have a storm water plan. He further admitted that he had the responsibility to ensure that Freedom complied with the permit by having a storm water and groundwater plan in place. During Herzing's tenure as a corporate officer, Freedom never developed a storm water or groundwater plan, which was a contributing cause to the chemical spill.
Herzing is the second defendant 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 yesterday for a Clean Water Act violation.
Freedom itself, which has been in bankruptcy since shortly after the chemical spill, pleaded guilty to violating the Clean Water Act, the unlawful discharge of refuse matter in violation of the Refuse Act, and violating an environmental permit. Freedom is scheduled to be sentenced on February 4, 2016.
William E. Tis, of Verona, Pennsylvania, a former owner of Freedom, pleaded guilty in March 2015 to the unlawful discharge of refuse matter in violation of the Refuse Act. Tis is scheduled to be sentenced on February 8, 2016.
Michael E. Burdette, of Dunbar, a plant manager for Freedom, pleaded guilty in March 2015 to violating the Clean Water Act by negligently discharging a pollutant, and is scheduled to be sentenced on February 4, 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.
Former Evansville man indicted on forgery and money laundering chargesRead the Press Release
Evansville –United States Attorney Josh J. Minkler announced today that a former Evansville resident who worked as the business manager of a Carmi, Illinois, oil and gas company was indicted on one count of making forged securities and four counts of money laundering. Kent W. Cutchin, 60, formerly of Evansville, was indicted by a federal grand jury last week and had his initial appearance before a federal magistrate on Monday.
“The United States Attorney’s Office is cracking down on white collar crime,” said Minkler. “Even if you use sophisticated means to steal $837,000, you are still a thief and thieves need to go to federal prison.”
Cutchin was the office manager for R Energy, a company headquartered in Carmi, Illinois, which performs oil and gas field services in multiple states, including Indiana. Cutchin was responsible for paying bills, maintaining office payroll, ordering supplies, and purchasing inventory.
Between December 2011 and February 2015, Cutchin is alleged to have forged the signature of R Energy’s company president on over 500 checks. He is alleged to have written the checks to himself and purchased items for his personal use rather than buying items in the ordinary course of business. The indictment alleges that he used these fraudulently obtained funds to make improvements on his home in Evansville and to purchase an all-terrain utility vehicle. In total, the amount of theft is alleged to total approximately $837,251.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation.
IRS Criminal Investigation Division Special Agent in Charge, James Robnett, stated, “Together with the United States Attorney’s Office, we are committed to following the money. Money laundering constitutes a serious threat to the integrity of our financial system and honest hardworking Americans are paying the price.”
FBI Special Agent in Charge W. Jay Abbott said, “The FBI will continue to work with our law enforcement partners, specifically the Internal Revenue Service (IRS), to focus our efforts on these white collar subjects and ensure they are brought to justice.”
According to Assistant United States Attorney Kyle M. Sawa, who is prosecuting the case for the government, Cutchin could face up to 10 years imprisonment on each count if convicted.
An indictment is merely a charge and not evidence of guilt. All defendants are presumed innocent until proven otherwise in federal court.