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22 February 2016
Ship Captain Pleads Guilty to Felony Obstruction Related to Pollution from Tanker Ship Traveling to CharlestonRead the Press Release
Contact: Office of Public Affairs (202) 514-2007
Washington—A Filipino citizen and the captain of the tanker ship, T/V Green Sky, pleaded guilty today to one felony count in federal court in Charleston, South Carolina, for obstructing a U.S. Coast Guard investigation into pollution crimes aboard the vessel.
Genaro Anciano, 52, who was the highest ranking officer aboard the ship, pleaded guilty to one count of Obstruction of an Agency Proceeding. The charge stems from a Coast Guard investigation in late August 2015 into the bypass of pollution prevention equipment, including the use of a “magic device,” on the Green Sky. In court papers, the defendant stated that members of the ship’s engine room, including a senior officer, admitted to illegally discharging overboard. These admissions occurred prior to the August 2015 Coast Guard inspection at the Port of North Charleston. During the investigation, Anciano made several false and misleading statements to the Coast Guard to cover up the illegal conduct.
The T/V Green Sky is a 30,263 gross ton, ocean-going vessel that operates as a petroleum and chemical tanker. The vessel is approximately 600 feet in length and is registered in Liberia. The vessel is owned by an entity incorporated in the Marshall Islands. Over the course of several days, the normal operation of the Green Sky generates thousands of gallons of bilge wastes that are contaminated with petroleum products and oil residues. These bilge wastes must be removed for the vessel to operate safely.
Both the United States and Liberia are parties to the MARPOL treaty, which regulates the overboard discharge of bilge waste. It was prohibited to discharge bilge wastes from the T/V Green Sky without first running that effluent through the ship’s oily water separator. According to the MARPOL treaty, all overboard discharges from the vessel’s bilges had to be recorded in the T/V Green Sky’s oil record book. A bypass of the oily water separator, which is not recorded in the oil record book, jeopardizes the accuracy and integrity of that document. It is a separate federal crime for oceangoing vessels to enter a U.S. port with a false oil record nook.
Anciano’s sentencing has not been scheduled.
The case was investigated by the U.S. Coast Guard Investigative Service with assistance from inspectors from Sector Charleston as well as Legal from U.S. Coast Guard in Miami. The case is being prosecuted by Christopher L. Hale of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division and Assistant U.S. Attorney Matt Austin of the U.S. Attorney’s Office for the District of South Carolina in Charleston.
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San Antonio Mother and Son Charged in Million Dollar Bank Fraud and Aggravated Identity Theft Scheme Involving Relative’s ChurchRead the Press Release
In San Antonio, a mother and son have surrendered to federal authorities based on an alleged million dollar fraud scheme involving a local church owned by a different family member announced United States Attorney Richard L. Durbin, Jr., U.S. Secret Service Special Agent in Charge Lee Dotson, and Internal Revenue Service-Criminal Investigation Special Agent in Charge William Cotter.
A 12-count federal grand jury indictment, returned last week, charges 23–year-old Brennan R. Diaz and 44–year-old Deborah A. Diaz with one count of conspiracy to commit bank fraud and one count of money laundering, The indictment also charges Brennan Diaz with four substantive counts of bank fraud, two counts of aggravated identity theft and two counts of money laundering. Deborah Diaz is charged with two substantive counts of bank fraud and one count of aggravated identity theft.
According to the indictment, between February 2015 and October 2015, the defendants conspired to defraud the La Obra Milagrosa Church (aka “The Miracle Center Church”) of more than $1 million. Both defendants were associated with the TMC Church which was owned by Brennan’s grandfather. Neither defendant had authority to sign TMC Church checks. The indictment alleges that Brennan Diaz wrote, and fraudulently forged his grandfather’s signature on, approximately 50 TMC Church business checks made payable to himself. Defendant Deborah Diaz allegedly forged her father’s signature on three TMC Church business checks made payable to herself. The total amount of those fraudulent checks is estimated to be $1,094,100.00.
Upon conviction, bank fraud calls for up to 30 years in federal prison; money laundering calls for up to ten years in federal prison; conspiracy to commit bank fraud calls for up to 30 years in federal prison; and, aggravated identity theft calls for mandatory two years in federal prison. Brennan Diaz surrendered to federal authorities this morning. He was released this afternoon on a $30,000 bond pending trial. Deborah Diaz surrendered to authorities on Friday. She is currently on a $50,000 unsecured bond pending trial.
This joint investigation is being conducted by the Financial Crimes Section of the U.S. Secret Service South Texas Regional Task Force and the Internal Revenue Service-Criminal Investigation. Other agencies involved in the Task Force include the San Antonio Police Department, Bexar County Sheriff’s Office, Bexar County District Attorney’s Office and Texas Department of Public Safety-Criminal Investigations Division. Assistant United States Attorney Thomas P. Moore is prosecuting this case on behalf of the Government.
Salem Man Pleads Guilty to Child Pornography PossessionRead the Press Release
CONCORD, NEW HAMPSHIRE: Matthew Castricone, 27, of Salem, New Hampshire, pled guilty on Monday in United States District Court for the District of New Hampshire to possessing child pornography, announced United States Attorney Emily Gray Rice.
An investigation by the Federal Bureau of Investigation and the Salem, New Hampshire Police Department resulted in the issuance of a search warrant for Castricone’s Salem residence. When that warrant was executed in October 2015, officers discovered dozens of videos of child pornography located on Castricone’s personal computer.
Scheduled for sentencing in May 2016, Castricone faces a maximum prison term of 10 years, to be followed by a term of at least 5 years of supervised release and a fine of up to $250,000.
The case was investigated by the Federal Bureau of Investigation (Boston and New Hampshire offices), and the Salem, New Hampshire Police Department. The case is being prosecuted by Assistant United States Attorney Nick Abramson.
In February 2006, the Department of Justice introduced Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Rochester Father, Two Sons Arrested and Charged with Drug Trafficking; Large Quantities of Drugs and Weapons SeizedRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051
ROCHESTER, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Blake Rivera, 31, of Greece, NY, his brother Chayanne Rivera, 25, of Gates, NY, and their father, Victor Rivera, 51, of Rochester, NY, were arrested and charged by criminal complaint with conspiracy to possess with intent to distribute and to distribute five kilograms or more of cocaine, 280 grams or more of crack cocaine and 100 grams of heroin, and possession of firearms in furtherance of drug trafficking. The charges carry a mandatory minimum 15 years in prison, a maximum of life and a $10,000,000 fine.“As all in our community know, the most deadly substances killing our residents consist of heroin and firearms,” said U.S. Attorney Hochul. “Thanks to exceptional police work, not only have massive quantities of these ‘assassins’ been removed, but even larger amounts of equally dangerous crack and powder cocaine. Any person in any way involved in trafficking these toxins should expect to be prosecuted to the fullest extent of the law.”
DEA Special Agent in Charge James Hunt stated, “An eight-month investigation into an illicit family drug business resulted in 14 firearms and 9 kilograms of cocaine seized and taken off our streets; as well as the arrest of three drug traffickers. Through collaborated efforts, law enforcement identified and arrested a major cocaine source of supply contaminating the Greater Rochester New York area.”
Assistant U.S. Attorney Everardo A. Rodriguez, who is handling the case, stated that according to the complaint, the Drug Enforcement Administration and Rochester Police have been investigating the drug trafficking activities of the three defendants for nine months. During the investigation, officers conducted multiple controlled purchases from the defendants.
On December 4, 2015, officers from the New York State Police intercepted a suspicious FedEx package addressed to a fictitious name at 164 Curtis St. The package contained approximately 612 grams of heroin. Subsequently, on February 17, 2016, four search warrants were executed at the residences of the defendants and a storage location used by the defendants.At Blake Rivera’s residence at 276 Woodsmoke Lane, officers found an assault style rifle loaded with a magazine that contained 30 rounds of ammunition and cash totaling $346, 460.
During a search of 164 Curtis Street where Victor Rivera lived and where Blake and Chayanne stored and distributed drugs, officers recovered approximately 1.5 kilograms of cocaine and 533 grams of crack cocaine. In addition officers seized a .357 magnum revolver, a 9mm handgun, and AK 47 rifle, two 12 gauge shotguns, ammunition and $3,924 in cash.
At the residence of Chayanne Rivera at 245 Colwick Road, officers seized an AK 47 style firearm among other evidence.
Inside the storage unit on Brighton Henrietta Town line Road in Rochester, officers found a 1998 BMW sedan with 6.8 kilograms of cocaine in the trunk and seven firearms: one SKS style firearm loaded; two handguns; two AK-47 style firearms; one shotgun; and one AR-15 style firearm as well as several loaded magazines and loose ammunition.
In total, officers seized:
• Approximately 8.3 kilograms of cocaine, • Approximately half a kilogram of crack cocaine, • 14 firearms, most of them loaded, and
• Approximately $375,456 in cash.Blake Rivera made an initial appearance this morning before U.S. Magistrate Judge Marian W. Payson. Victor and Chayanne Rivera will appear this afternoon. All will be held pending detention hearings later this week.
The criminal complaint is the culmination of an investigation by the Drug Enforcement Administration, under the direction of Special Agent in Charge James J. Hunt, New York Field Division, and the Rochester Police Department, under the direction of Chief Michael Ciminelli, with assistance from several law enforcement agencies including the New York State Police, under the direction of Major Craig Hanesworth; the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Delano A. Reid, New York Field Division, the Greece Police Department, under the direction of Chief Patrick Phelan, the Monroe County Sheriff’s Office, under the direction of Patrick O’Flynn, and the Monroe County District Attorney’s Office, under the direction of Sandra Doorley.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Previously Convicted Harrisburg Man Charged with Possession of A FirearmRead the Press Release
HARRISBURG- The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a federal Grand Jury in Harrisburg returned an indictment on February 3, 2016 charging Dane Burnell Merritt, age 52, with possession of a firearm after having been previously convicted of a felony offense.
According to United States Attorney Peter Smith, the indictment was unsealed February 19, 2016 following Merritt’s initial appearance before U.S. Chief Magistrate Judge Martin C. Carlson. The case arose as a result of an arrest of Merritt by Harrisburg Police in October of 2015.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Harrisburg Police Department. Prosecution has been assigned to Assistant U.S. Attorney Chelsea Schinnour.
This case was brought as part of the Violent Crime Reduction Partnership (“VCRP”), a district wide initiative to combat the spread of violent crime in the Middle District of Pennsylvania. Led by the United States Attorney’s Office, the VCRP consists of federal, state and local law enforcement agencies whose mission is to locate, apprehend, and prosecute individuals who commit violent crimes.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law is 10 years imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Paige Industrial Services Agrees to Resolve False Claims Act AllegationsRead the Press Release
Baltimore, Maryland – Government contractor Paige Industrial Services, Inc. has agreed to pay the United States between $450,000 and $675,000 to resolve allegations under the False Claims Act that the company submitted false claims to the Department of Health and Human Services. In a related parallel criminal proceeding involving a Paige subcontracting company, construction company owner Luis Alonso Valle, age 46, of Silver Spring, Maryland, pleaded guilty on February 11, 2016 to an illegal pattern and practice of hiring unauthorized aliens.
The settlement and guilty plea were 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 (DHHS); Acting Special Agent in Charge John Dolce, of the Washington Regional Office, U.S. Department of Labor - Office of Inspector General, Office of Labor Racketeering and Fraud Investigations (DOL); Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation (IRS-CI), Washington, D.C. Field Office; Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office; and Special Agent in Charge Andre R. Watson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
This settlement resolves allegations that Paige Industrial Services submitted claims from 2006 to 2013 falsely certifying that it had complied with the Davis-Bacon Act. The Davis-Bacon Act required Paige to pay certain prevailing wages and fringe benefits to its employees, or the employees of its subcontractors, while working under a government contract performing construction at the National Institute of Health (NIH) campus in Bethesda, Maryland. Paige, which provided construction and maintenance services to government agencies, allegedly failed to meet the requirements of the statute while certifying that it had. Paige denies the allegations.
“Contractors are required be truthful in their certifications to federal agencies,” said U.S. Attorney Rod J. Rosenstein.
“This office is committed to investigating allegations of fraud involving the Davis-Bacon Act, which requires that contractors and subcontractors pay prevailing wages to their workers on government projects,” stated Acting SAC John Dolce, U.S. Department of Labor’s Office of Inspector General - Washington Regional Office. “The joint criminal and civil resolutions announced today reflect the seriousness with which our agency and its law enforcement partners pursue allegations of wrongdoing that affect the American workforce.”
As part of the settlement, Paige has agreed to make additional payments above a minimum settlement payment of $450,000, depending on the financial performance of the company over the next five years.
The civil settlement resolves a lawsuit filed in the District of Maryland under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government's recovery. (U.S. ex rel. Brandon Owens and Stevan Reba v. Gilbane, Inc, Gilbane Building Company, Inc, and Paige Industrial Services, Inc.) The claims resolved by this settlement are allegations only, and there has been no determination of liability.
In a related parallel criminal proceeding, Valle Services, LLC., was a subcontractor to Paige at the NIH campus in Bethesda. According to his plea agreement, Luis Valle owned and operated Valle Services, a construction company that provided unskilled laborers to clean up after demolition projects. From at least January 2010 to June 2013, Valle paid some of his employees by handwritten checks without withholding required payroll taxes of at least $54,641. Additionally, Valle failed to pay a matching employer share of the payroll tax of at least $54,641. These wages were not included on W-2 forms distributed to the employees at the end of the year.
Furthermore, from March 2008 to August 2013, Valle hired at least 19 illegal aliens to work in the United States, and paid them weekly through checks that he typically distributed in person from his vehicle at a parking lot. Valle approved the hiring of at least five of the illegal aliens to work on a federal contract at the Bethesda NIH campus, which contract was subject to the provisions of the Davis-Bacon Act.
U.S. District Judge Paul W. Grimm sentenced Valle on February 11, 2016 to three years’ probation and imposed the condition that Valle not employ any unauthorized aliens. Judge Grimm also entered an order that Valle forfeit $57,000, which represents a $3,000 fine for each of the 19 unauthorized aliens that he illegally hired.
The settlement was a result of an investigation by the U.S. Attorney's Office for the District of Maryland, DHHS, DOL-OIG, IRS-CI, FBI and HSI Baltimore. The investigation was handled by Assistant U.S. Attorneys Thomas Barnard and Sujit Raman.
New York Man Sentenced to Federal Prison for Selling Counterfeit MerchandiseRead the Press Release
A man who sold counterfeit merchandise at a “Clearance Sale” located on 16th Ave. S.W. in Cedar Rapids, Iowa, was sentenced today to more than three years in federal prison.
Yahya Jawad, age 57, from Binghamton, New York, received the prison term after a September 29, 2015, guilty plea to one count of trafficking in counterfeit goods.
In a plea agreement, Jawad admitted that on January 9, 2015, he was selling counterfeit merchandise at a “Clearance Sale.” Law enforcement officers purchased three counterfeit items from him including a pair of headphones that appeared to be “Beats Audio” headphones and two purses. One appeared to be a “Michael Kors” purse and the other a “Louis Vuitton” handbag. After confirming that these items were counterfeit, law enforcement officers returned to the “Clearance Sale” and seized additional counterfeit items, including more headphones and purses, as well as other clothing items. In total, law enforcement seized more than $150,000 worth of counterfeit merchandise. Evidence at the sentencing hearing today also established that in December 2015, while on release pending sentencing, Jawad ran a similar “Liquidation Sale” in Topeka, Kansas. Law enforcement in Kansas ultimately conducted a search of this sale and seized more than $280,000 worth of additional counterfeit merchandise.
Jawad was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Jawad was sentenced to 41 months’ imprisonment. A special assessment of $100 was imposed. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
The case was prosecuted by Assistant United States Attorney Anthony Morfitt and was investigated by the Department of Homeland Security and the Kansas Attorney General’s Office.
Court file information is available at https://ecf.iand.uscourts.gov. The case file number is 15-CR-83.
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New Haven Man Sentenced to 5 Years in Prison for Selling CrackRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that on February 19, JEBRELL CONLEY, also known as “City,” 27, of New Haven, was sentenced by U.S. District Judge Alvin W. Thompson in Hartford to 60 months of imprisonment, followed by six years of supervised release, for possessing with intent to distribute crack cocaine.
This prosecution stems from Project Longevity, a comprehensive initiative to reduce gun violence in Connecticut’s major cities. Through Project Longevity, community members and law enforcement directly engage with members of groups that are prone to commit violence. A critical component of the Project Longevity strategy is the “call-in,” a face-to-face meeting where Project Longevity partners engage group members and deliver a community message against violence, a law enforcement message about the consequences of further violence, and an offer of help for those who want it.
According to court documents and statements made in court, on February 18, 2015, New Haven police officers executed a search warrant at a residence frequented by CONLEY and seized approximately 32 grams of crack cocaine, packaging materials and Grape Street Crips regalia consisting of a number of clothing items. CONLEY was arrested on state charges at that time.
The Grape Street Crips had become the focus of heightened law enforcement scrutiny after members of the group were involved in an outbreak of gun violence in New Haven, and CONLEY had attended a Project Longevity call-in.
CONLEY has been detained since his arrest. On October 19, 2015, he pleaded guilty to one count of possession of at least 28 grams of crack cocaine with intent to distribute.
CONLEY will begin serving his federal sentence at the conclusion of a state prison term that he is serving for an unrelated offense.
This matter was investigated by the New Haven Police Department and is being prosecuted by Assistant U.S. Attorney H. Gordon Hall.
Nashville Gang Member Sentenced to Fifteen Years in Prison for Witness Tampering Connected to A Shooting in Public HousingRead the Press Release
Michael Calloway a/k/a Oso, 21, of Nashville, Tenn., was sentenced Friday to serve 15 years in prison, after previously pleading guilty to being a felon in possession of ammunition, conspiracy to tamper with a witness and attempting to obstruct justice, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.
According to the statement of facts, on the morning of April 12, 2015, Calloway and Laquanda Boyce were assaulting a woman at the J.C. Napier housing development when another person intervened and tried to protect the woman being assaulted. Later in the afternoon, Calloway and Boyce returned with Calloway carrying a firearm. Upon seeing the witness again, Calloway fired eight or nine shots at him, striking him once in the leg. The gunshot victim was treated at Vanderbilt Hospital and subsequently identified Calloway as the shooter.
Calloway was arrested the following day and learned that he would likely face federal firearms charges. He and Boyce then devised a scheme to pay the witness $1200 in exchange for his refusal to testify or for testifying that he had mistakenly identified Calloway as the person who had shot him.
Calloway and Boyce were subsequently indicted on witness tampering and obstruction charges.
In imposing the fifteen year sentence, United States District Judge Todd Campbell remarked that the offenses were serious and “goes to the heart of the criminal justice system” and that the fifteen year sentence was warranted by the egregious nature of the crime.
Laquanda Boyce, 33, also of Nashville, pleaded guilty on September 4, 2015, to conspiracy to tamper with a witness and will be sentenced on February 25, 2016.
This case was investigated by the Metropolitan Nashville Police Department and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The case is being prosecuted by Assistant United States Attorney Sunny A.M. Koshy.
Muskogee Man Sentenced to 30 Months for Failure to Register as Sex OffenderRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma, announced today that STEVE ARBY CHANDLER, II, age 45, of Muskogee, Oklahoma, was sentenced to 30 months imprisonment, followed by 5 years of supervised release for FAILURE TO REGISTER AS SEX OFFENDER, in violation of Title 18, United States Code, Sections 2250(a)(1), 2250(a)(2)(B) and 2250(a)(3).
The charge arose from an investigation by the Muskogee Police Department and the United States Marshals Service.
The Indictment alleges that from on or about April 3, 2014 until on or about July 3, 2014, in the Eastern District of Oklahoma, and elsewhere, STEVE ARBY CHANDLER, II, defendant herein, an individual required to register as a sex offender under the Sex Offender Registration and Notification Act, after having received a felony conviction from the State of Michigan on or about January 31, 1990, for the felony offense of Criminal Sexual Conduct 2nd Degree, traveled in interstate commerce and knowingly failed to register and update his registration as required by the Sex Offender Registration and Notification Act.
The Honorable James H. Payne, District Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, presided over the hearing. The defendant will remain in the custody of the United States Marshals Service pending transportation to the designated federal facility at which he will serve his nonparoleable sentence.
Assistant United States Attorney Christopher Wilson represented the United States.
Milton man pleads guilty to possessing child pornographyRead the Press Release
HUNTINGTON, W.Va. – A Milton man faces up to 20 years in federal prison after pleading guilty today to possession of over 600 images of child pornography, announced Acting United States Attorney Carol Casto. Mark Allen Angle, 47, entered his guilty plea in federal court to the child pornography crime.
Angle admitted that on March 19, 2015, he possessed images of prepubescent minors engaged in sexual acts. The images were contained on his personal computer and multiple media devices found at his residence in Milton. The investigation revealed that Angle was using peer-to-peer file sharing programs to download, receive, and distribute child pornography. The court scheduled sentencing for May 31, 2016.
The West Virginia State Police, the West Virginia Internet Crimes Against Children Task Force, and the United States Department of Homeland Security, Homeland Security Investigations, conducted the investigation. Assistant United States Attorney Lisa G. Johnston is in charge of the prosecution. The hearing was held before Chief United States District Judge Robert C. Chambers.
This case is being brought as part of the United States Attorney’s ongoing initiative to combat child sexual exploitation and abuse in the Southern District of West Virginia.
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Mexican National Sentenced to Five Years for Trafficking Methamphetamine in New MexicoRead the Press Release
ALBUQUERQUE – Francisco Calvillo, 52, a Mexican national illegally residing in El Paso, Texas, was sentenced today in federal court in Las Cruces, N.M., to 60 months in prison for his methamphetamine trafficking conviction. Calvillo will be deported following his term of incarceration.
Calvillo was arrested in April 2015, after U.S. Border Patrol agents at the Border Patrol Checkpoint on I-25 in Doña Ana County, N.M., found a handgun in the vehicle’s center console and approximately .77 kilograms (1.7 pounds) of methamphetamine concealed under Calvillo’s clothes.
On Aug. 17, 2015, Calvillo pled guilty to a felony information charging him with conspiracy to possess methamphetamine with intent to distribute. Calvillo admitted that on April 10, 2015, he drove his car to the Border Patrol checkpoint on I-25 where agents found .77 kilograms of methamphetamine in the waistband of his pants. Calvillo further admitted that he conspired with others to transport the methamphetamine from Mexico into the United States.
This case was investigated by the U.S. Border Patrol and the DEA and was prosecuted by Assistant U.S. Attorney Mark A. Saltman of the U.S. Attorney’s Las Cruces Branch Office.
Mexican National Pleads Guilty to Federal Methamphetamine Trafficking ChargeRead the Press Release
ALBUQUERQUE – Massiel Segoviano-Fierro, 24, a Mexican national illegally residing in the United States, pleaded guilty today in federal court in Albuquerque, N.M., to a methamphetamine trafficking charge.
Segoviano-Fierro and his co-defendant Juan Carlos Nieblas-Ruelas, 27, also a Mexican national illegally residing in the United States, were arrested in Nov. 2015, and charged by criminal complaint with conspiracy and possession of methamphetamine with intent to distribute on Nov. 23, 2015, in Bernalillo Country N.M. The two men were arrested after Segoviano-Fierro attempted to sell approximately ten pounds of methamphetamine to an undercover law enforcement agent.
During today’s proceedings, Segoviano-Fierro pleaded guilty to a felony information charging him with possession of methamphetamine with intent to distribute. In entering his guilty plea, Segoviano-Fierro admitted that on Nov. 23, 2015, in Bernalillo County, he attempted to sell methamphetamine to an individual who unbeknownst to him was an undercover law enforcement agent. Segoviano-Fierro further admitted that he collaborated with Nieblas-Ruelas to obtain approximately ten pounds of methamphetamine to sell and distribute in Albuquerque.
On Jan. 22, 2016, Nieblas-Ruelas plead guilty to a felony information charging him with possession of methamphetamine with intent to distribute and admitted that on Nov. 23, 2015, he retrieved methamphetamine from a trailer house in Albuquerque which he then gave to Segoviano-Fierro to distribute and sell in Albuquerque.
At sentencing, Segoviano-Fierro and Nieblas-Ruelas each face a maximum penalty of 20 years in federal prison and will be deported following their terms of incarceration. Both men remain in custody pending sentencing hearings which have yet to be scheduled.
This case was investigated by the Albuquerque office of Homeland Security Investigations and the New Mexico State Police and is being prosecuted by Assistant U.S. Attorney David M. Walsh.
Mexican National Charged with Violating Federal Narcotics Trafficking Laws in New MexicoRead the Press Release
ALBUQUERQUE – Jose Tiburcio Hernandez-Aguilar, 57, a Mexican national, made his initial appearance today in federal court in Las Cruces, N.M., on a criminal complaint charging him with violating the federal narcotics trafficking laws. Hernandez-Aguilar remains in custody pending a preliminary hearing and a detention hearing which have yet to be scheduled.
Hernandez-Aguilar was arrested on Feb. 20, 2016, by the U.S. Border Patrol and the DEA for possession of methamphetamine with intent to distribute in Doña Ana County, N.M. The criminal complaint alleges that on that day, U.S. Border Patrol Agents allegedly found 14 bundles of methamphetamine weighing approximately 3.62 kilograms (eight pounds) in a hidden compartment in Hernandez-Aguilar’s vehicle.
If convicted of the crime charged in the criminal complaint, Hernadez-Aguilar faces a statutory minimum of ten years and a maximum of life in federal prison. Charges in criminal complaints are merely accusations. All criminal defendants are presumed innocent unless proven guilty beyond a reasonable doubt.
This case was investigated by the U.S. Border Patrol and the Las Cruces office of the DEA and is being prosecuted by Assistant U.S. Attorney Luis Martinez of the U.S. Attorney’s Las Cruces Branch Office.
Man Sentenced to Federal Prison for Unlawfully Possessing Two HandgunsRead the Press Release
A man who stole two handguns and broke into five homes in Minnesota and Iowa was sentenced on February 16, 2016, to more than three years in federal prison.
Raymond Hochstetler, age 26, of Seymour, Iowa, received the prison term after a guilty plea of one count of possession of firearms by an unlawful drug user and one count of possession of stolen firearms.
In a plea agreement, Hochstetler admitted he was a regular user of marijuana and methamphetamine in April 2014. He further admitted that he stole two handguns in Minnesota, and then, on April 8, 2014, drove from Minnesota into Northern Iowa with the two guns and a juvenile girl. At the sentencing hearing, Hochstetler admitted that he also broke into five homes, three in Minnesota and two in Iowa during his April 8, 2014 trip. The judge at the sentencing hearing described Hochstetler’s trips as a “crime spree.”
Hochstetler was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Hochstetler was sentenced to 41 months’ imprisonment and fined $5,000. A special assessment of $200 was imposed. He must also serve a 3-year term of supervised release after the prison term. There is no parole in the federal system.
The case was investigated by the Mitchell County Sheriff’s Office and the Iowa Division of Criminal Investigation.
The case was prosecuted by Special Assistant United States Attorney Fedline Ferjuste.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 16-cr-02025-LRR.
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Louisville Man Charged in the Shooting of A United States Postal CarrierRead the Press Release
Louisville, Ky. – A Louisville man appeared before U.S. Magistrate Judge Dave Whalin today, charged by Criminal Complaint with the assault of a United States Postal Carrier (while engaged in the performance of his official duties) and with the discharge of a firearm during the commission of a violent offense, announced United States Attorney John E. Kuhn, Jr.
Marcus Bennett, a/k/a MIZ, was arrested Saturday, February 20, 2016, and charged in a criminal complaint, that was unsealed today in federal court. The charges are in connection with the shooting of United States Postal Carrier Da’Ron Lester on February 10, 2016. According to an Affidavit by the United States Postal Inspection Service, in support of the complaint, Bennett was seated in the passenger seat of a 2009 Pontiac G8, when his brother, Eric Bennett, allegedly opened fire on Lester. Eric Bennett, 37, was arrested February 16, 2016, by Louisville Metro Police and charged in Jefferson County Circuit Court with attempted murder and first-degree assault. Marcus Bennett lives at a residence on South 38th Street in Louisville, which is in Lester’s postal delivery area. Lester was performing his official duties as a United States Postal Service (USPS) employee when he was shot multiple times on Dearborn Avenue in Louisville. At the time of the shooting, Lester indicated that he knew the person who shot him and subsequently stated to inspectors that he was shot by Eric Bennett. A search of Lester’s cell phone found a listing for MIZ (Marcus Bennett) in his contacts.
Marcus Bennett remains in federal custody with a bond hearing scheduled for Wednesday, February 24, 2016 before Magistrate Judge Whalin. Bennett faces a mandatory minimum sentence of ten years to life in prison for the charge of discharging a firearm during the commission of a violent offense and faces up to 20 years in prison for the assault of a federal employee while engaged in the performance of his official duties.
This case is being prosecuted by Assistant United States Attorneys Scott Davis and Marisa Ford, and the United States Postal Inspection Service (USPIS) is conducting the investigation.
The charge of a person by Criminal Complaint is an accusation only and that person is presumed innocent until and unless proven guilty.
Local Bingo Operators Charged with Fraud Conspiracy, Illegal Gambling Operation, and Money LaunderingRead the Press Release
PENSACOLA, FLORIDA – Larry L. Masino, 65, of Gulf Breeze, and Dixie L. Masino, 63, of Pensacola, were arraigned today in the U.S. District Court in Pensacola after a federal grand jury returned an indictment charging them with wire fraud conspiracy, operating an illegal gambling business, money laundering conspiracy, and money laundering. The indictment was announced by Christopher P. Canova, Acting United States Attorney for the Northern District of Florida.
The indictment alleges that, between 2006 and 2015, Larry and Dixie Masino conspired to defraud local charities out of millions of dollars. The Masinos operated Racetrack Bingo Inc. in Fort Walton Beach on behalf of a number of charitable organizations in Okaloosa County. According to the indictment, Racetrack Bingo Inc. was an illegal gambling business in violation of Florida law because the Masinos compensated themselves and their employees, instead of using bona fide charity members, to run bingo games. The indictment further alleges that the Masinos charged the charities grossly inflated lease fees. By law, those proceeds should have gone to the charities. The indictment also alleges that Larry and Dixie Masino conspired to launder more than $5.8 million in proceeds of their illegal bingo operation through the deposit of profit distribution checks from Racetrack Bingo Inc. The trial is scheduled for April 18, 2016.
This case resulted from a joint investigation by the Florida Department of Law Enforcement, the Internal Revenue Service—Criminal Investigation, the Federal Bureau of Investigation, and the Okaloosa County Sheriff’s Office. Assistant United States Attorney Alicia H. Kim is prosecuting the case.
An indictment is merely an allegation by a grand jury that a defendant has committed a violation of federal criminal law and is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the government’s burden to prove guilt beyond a reasonable doubt at trial.
The U.S. Attorney’s Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. The office strives to protect and serve the citizens of the Northern District of Florida through the ethical, vigorous, and impartial enforcement of the laws of the United States, to defend the national security, to improve the safety and quality of life in our communities through the protection of civil rights, and to protect the public funds and financial assets of the United States. To access public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the U.S. Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
For more information, contact: Amy Alexander, Public Information Officer
(850) 216-3854, [email protected]Loan Officer Pleads Guilty to Concealing Mortgage Fraud ConspiracyRead the Press Release
SACRAMENTO, Calif. — Christian Parada-Renteria, 40, of Woodland, pleaded guilty today to one count of concealing a widespread conspiracy to commit wire fraud and one count of concealing a mail fraud transaction in connection with a mortgage fraud scheme, United States Attorney Benjamin B. Wagner announced.
According to court documents, Parada-Renteria was a loan officer at Delta Homes and Lending Inc., a Sacramento-based real estate and mortgage lending company. Delta Homes opened one office in 2003 and eventually had five offices in Sacramento and Woodland.
Between October 2004 and May 2007, Delta Homes’ founder and president Moctezuma Tovar, 46, and other real estate agents, loan officers, and loan processors engaged in a mortgage fraud conspiracy. Parada-Renteria, a loan officer, assisted the conspirators with loan applications that contained lies, including false statements regarding a borrower’s income, employment, rent history, credit rating, etc. Parada-Renteria concealed the scheme by taking steps to make sure the truthfulness of the loan applications and supporting documentation provided by Delta Homes was not questioned by the lenders.
According to the plea agreement, in August or September 2006, Parada-Renteria handled the loan file for the purchase of a Citrus Heights property. The borrower did not have sufficient funds required by the lender to fund the loan. Parada-Renteria concealed the fraudulent loan of $6,000 by a co-conspirator to the borrower that would inflate the borrower’s bank account balance so that the lender would fund the loan. Once the loan had closed, Parada-Renteria took the repayment from the borrower and reimbursed the co-conspirator from his own bank account.
The aggregate sales price of the homes involved in the conspiracy was in excess of $10 million, and as a result of the conspiracy, mortgage lenders and others suffered losses of at least $4 million.
Parada-Renteria is scheduled to be sentenced by Senior U.S. District Judge William B. Shubb on June 6, 2016, along with co-defendants, Tovar and Manuel Herrera, 36, both of Sacramento, Sandra Hermosillo, 53, of Woodland, and Jun Michael Dirain, 43, of Antelope, who have already pleaded guilty in this case. Parada-Renteria faces a maximum statutory penalty of six years in prison and a $500,000 fine. Each of the other defendants faces a maximum statutory penalty of 30 years in prison and a $1 million fine. The actual sentences, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Co-defendants Jaime Mayorga, 36, and Ruben Rodriguez, 38, both of Sacramento, have a trial date of April 5, 2016. The charges against Mayorga and Rodriguez are only allegations; they are presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorneys Jean M. Hobler and Brian A. Fogerty are prosecuting the case.
Leader of Multimillion-Dollar Tax Fraud Scheme Involving the Use of Children’s Identities Sentenced to Nine Years in PrisonRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that NOEL CUELLO, the former operator of a tax preparation business with multiple locations in the Bronx, New York, was sentenced today in Manhattan federal court to nine years in prison for leading a large-scale identity theft and tax fraud scheme through which identifying information of minors, including Social Security numbers, was obtained through corrupt payments to a former fraud investigator with the New York City Human Resources Administration. The identifying information was then used to file thousands of fraudulent tax returns, resulting in millions of dollars in loss to the United States Treasury. Sentence was imposed by U.S. District Judge Richard J. Sullivan.
U.S. Attorney Preet Bharara said: “Noel Cuello ran a criminal tax preparation business, raking in big fees by helping thousands of taxpayers to commit tax fraud. Using identity information stolen from the City’s Human Resources Administration, Cuello enabled taxpayers to falsely claim dependent children, resulting in millions of dollars in lost tax revenue for the government.”
According to the Complaint, Indictment, and information presented in connection with sentencings in the case:
Under federal law, taxpayers may be entitled to claim certain tax credits, including the Earned Income Tax Credit (“EITC”), which is available to qualifying low and moderate income working individuals and families. If the taxpayer claims the EITC based on having a child, the individual must list the name and Social Security number (“SSN”) of the child on his or her tax return, along with a separate schedule that contains the child’s name, SSN, year of birth, relationship to the taxpayer, and how many months the child lived with the taxpayer during the tax year.
Between at least approximately 2009 and spring 2014, through a tax preparation business in the Bronx, New York, with multiple locations, conspirators charged individual taxpayers a cash fee in return for which the business would prepare and file tax returns that falsely claimed that the taxpayer had one or more minor dependents, to take fraudulent advantage of the EITC. The business filed thousands of such returns, resulting in refunds totaling millions of dollars.
The business, which used several names over the years, was principally operated by NOEL CUELLO and his girlfriend, Luz C. Ricardo, with the assistance of his brother, Arismendy Cuello, and Jonathan Orbe, Catherine Ricart, and Joel Vargas, who played various roles, including bringing taxpayers to the business, preparing fraudulent returns, and receiving cash payments from clients.
To obtain SSNs and other information of minors to be used in the scheme, NOEL CUELLO repeatedly bribed Francisco Abreu, who worked at the time as a fraud investigator with the New York City Human Resources Administration.
The scheme continued even after law enforcement executed multiple search warrants of the business, with Orbe claiming to have purchased the business from NOEL CUELLO, and Ricart establishing new electronic filer accounts with the Internal Revenue Service, and opening new bank accounts, which were used to continue the scheme.
In addition to accepting cash in return for assisting other taxpayers to file fraudulent returns, Ricardo, Arismendy Cuello, Orbe, Ricart, and Vargas filed their own fraudulent returns in multiple years, falsely claiming to have one or more minor dependents.
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In addition to his prison term, NOEL CUELLO, who previously pled guilty to conspiracy to commit wire fraud, was sentenced to three years of supervised release, ordered to forfeit $3.5 million, and ordered to pay $3.5 million in restitution.
NOEL CUELLO, 32, of the Bronx, New York, was indicted in April 2015, along with Ricardo, 34, Arismendy Cuello, 29, Orbe, 26, Ricart, 38, and Vargas, 29, all also of the Bronx, New York. All of the defendants subsequently pled guilty and have been sentenced.
On January 7, 2016, Judge Sullivan sentenced Ricardo, who pled guilty to conspiracy to commit wire fraud and multiple counts of filing a false personal tax return, to 66 months in prison.
On January 14, 2016, Judge Sullivan sentenced Vargas, who pled guilty to conspiracy to commit wire fraud and multiple counts of filing a false personal tax return, to 24 months in prison.
On January 22, 2016, Judge Sullivan sentenced Arismendy Cuello, who pled guilty to conspiracy to commit wire fraud and multiple counts of filing a false personal tax return, to 36 months in prison.
On January 28, 2016, Judge Sullivan sentenced Orbe, who pled guilty to conspiracy to commit wire fraud and multiple counts of filing a false personal tax return, to 60 months in prison.
On January 29, 2016, Judge Sullivan sentenced Ricart, who pled guilty to conspiracy to commit wire fraud and multiple counts of filing a false personal tax return, to 36 months in prison.
Abreu, 44, of the Bronx, New York, who had previously been indicted separately for unrelated robbery and firearm offenses, pled guilty in August 2015 to those unrelated offenses, along with accepting bribes, fraud, and theft counts related to his participation in the scheme. He is scheduled to be sentenced at a future date by U.S. District Judge Naomi Reice Buchwald.
Mr. Bharara praised the outstanding work of the Internal Revenue Service-Criminal Investigation. Mr. Bharara also thanked the New York City Department of Investigation and the Social Security Administration-Office of Inspector General for their assistance in the investigation, which he noted is ongoing.
The case is being prosecuted by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Daniel C. Richenthal, Sarah K. Krissoff, and Amanda K. Houle are in charge of the prosecution.
Kane County Woman Convicted of Witness Tampering for Hindering a Federal Investigation into Sham MarriageRead the Press Release
CHICAGO — A Kane County woman was convicted of witness tampering today for impeding a wide-ranging federal investigation into visa fraud and a sham marriage she had arranged for a Mongolian relative.
After a five-day trial in federal court in Chicago, the jury convicted ENKHCHIMEG ULZIIBAYAR EDWARDS, also known as “Eni Edwards,” on two counts of witness tampering and two counts of making false statements in a matter within the jurisdiction of the Executive Branch of the United States government. Each count of witness tampering is punishable by up to 20 years in prison, while the false statement counts each carry a maximum sentence of five years.
The jury trial was conducted before Judge Richard A. Posner of the U.S. Court of Appeals for the Seventh Circuit, who sat in the district court by designation. Judge Posner scheduled a sentencing hearing for May 26, 2016, at 10:00 a.m.
Edwards, 38, of Carpentersville, is a U.S. citizen of Mongolian descent. Evidence at trial revealed that she arranged a sham marriage in 2003 to allow her cousin, a Mongolian immigrant, to marry Edwards’ friend and seek permanent residency in the United States. In 2008 she served as the vice president of the American Mongolian Association and personally vouched for Mongolians attempting to enter the United States.
Edwards subsequently was hired as an officer of the U.S. Customs and Border Protection. In her employment application and background check, Edwards denied having close or continuing contact with foreign nationals.
During her time at CBP, Edwards was assigned to a team of federal law enforcement authorities conducting a broad investigation into visa fraud involving Mongolian immigrants. In the course of the investigation, authorities began looking into the role that Edwards played in the sham marriage. On at least two occasions during the investigation, Edwards attempted to corruptly persuade her friend to lie to investigators regarding the true reason for marrying Edwards’ cousin.
The jury verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois. The investigation was carried out by the U.S. Department of State, Diplomatic Security Service Chicago Field Office. The U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the U.S. Department of Homeland Security’s Office of Inspector General assisted in the investigation.
The government is represented by Assistant United States Attorneys Peter S. Salib and Megan Cunniff Church.
Justice Department Sues to Shut Down Houston Tax PreparerRead the Press Release
Before Incarceration, Defendants Used False Art Appraisals to Purportedly Reduce Customers’ Liabilities
The United States has filed a lawsuit asking a federal district court in Houston, Texas, to permanently bar two men from preparing false tax returns, the Justice Department announced today. The defendants named in the lawsuit are John E. Carter, individually and doing business as Midwestern Financial Group Inc., and Sulayman Mamadou Jarra, individually and doing business as African Art Appraisal Services.
According to the complaint, Carter promoted a tax evasion scheme to his clients, telling them they could reduce their federal tax liability by supposedly donating African tribal art to an educational institution or museum. The complaint states that Carter provided his clients with an appraisal by Jarra that substantially overvalued the art, and that for many of the returns, the signature was forged on the Internal Revenue Service (IRS) form where the institution purportedly acknowledged receipt of the art. Carter then used the false appraisal to prepare tax returns for his customers, claiming false deductions for charitable donations, according to the complaint.
Carter was convicted in 2014 of five counts of willfully aiding and assisting in the preparation and presentation of false tax returns. He was sentenced to 41 months in prison. In 2013, Jarra pleaded guilty to one count of aiding and assisting in the preparation and presentation of false tax returns; he received a sentence of probation.
Return preparer fraud is one of the Internal Revenue Service’s Dirty Dozen Tax Scams for 2016. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Jury convicts former Lafayette postal service employee for stealing from U.S. mailRead the Press Release
LAFAYETTE, La. – United States Attorney Stephanie A. Finley announced today that, after a one-day trial, a federal jury found a Lafayette woman guilty of stealing from U.S. mail.
After deliberating for 17 minutes, a federal jury found Cate A. Plauche, 49, of Lafayette, guilty on 11 counts of theft of mail. United States District Judge Donald E. Walter presided over the trial. Plauche stole hundreds of dollars from mail in April of 2015 while employed as a mail carrier at a Lafayette Post Office.
Plauche faces five years in prison, three years of supervised release, restitution and a $250,000 fine for each count. The U.S. Postal Service, Office of Inspector General, conducted the investigation. Assistant U.S. Attorneys Dominic A. Rossetti and John Luke Walker prosecuted the case.
Jefferson City Man Sentenced for Distributing HeroinRead 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 distributing heroin.
Brian Boykin, also known as “Denormus Okain” and “B,” 38, of Jefferson City, was sentenced by U.S. District Judge Brian C. Wimes to eight years and two months in federal prison without parole. Today’s sentence reflects an upward variance to a longer term of imprisonment than what is recommended under the federal sentencing guidelines, due to Boykin’s criminal history.
On July 27, 2015, Boykin pleaded guilty to two counts of distributing heroin and one count of possessing heroin with the intent to distribute.
While on parole from a 15-year sentence imposed in St. Louis City Circuit Court, Boykin twice sold heroin to a confidential police informant in November 2013 on or near the property of the Jefferson City Housing Authority. On Feb. 13, 2014, Boykin was arrested for the two sales to the confidential informant. At the time of his arrest in front of a JCHA property, Boykin was in possession of 12 grams of heroin and 1 gram of crack cocaine.
Boykin admitted that he distributed heroin to approximately 10 people in Jefferson City, and estimated that he had distributed between 10 and 20 grams of heroin each week since October 2013. Boykin would have netted $500 on 10 grams and $1,000 on 20 grams sold per week. Over a period of 18 weeks, Boykin would have netted $9,000 on 180 grams sold and $18,000 on 360 grams sold.
The government filed a motion for the court to sentence Boykin to a longer term of incarceration than the maximum 87 months recommended by the federal sentencing guidelines. This case represents Boykin’s sixth felony prosecution. In his five previous cases, he has been convicted of distribution of a controlled substance in 1998, attempted vehicle theft in 1999, distribution of crack cocaine near a school in 2000, possession of heroin and cocaine in 2007, and trafficking in crack cocaine in 2007. For all of this criminal activity, Boykin was sentenced by various state courts to an aggregate total of 40 years’ imprisonment. However, between a suspended imposition of sentence, multiple suspended execution of sentences, unsuccessful treatment programs, and failed drug courts, Boykin has served only a total of approximately five years and three months in state prison.
Boykin was incarcerated between June 2009 and May 2013. During that period, he completed Missouri’s long-term treatment program and was released to parole. He committed the federal drug-trafficking offenses within six months of his release.
This case was prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. It was investigated by the Drug Enforcement Administration and the Jefferson City, Mo., Police Department.
Indiana Man Found Guilty of Muscatine Bank RobberyRead the Press Release
DAVENPORT, IA – On February 11, 2016, Thomas Alexander Davis, III, 40, of Anderson, Indiana, was found guilty of bank robbery following a four-day jury trial, announced Acting United States Attorney Kevin E. VanderSchel. Davis was found guilty of committing a robbery at the US Bank in Muscatine on November 28, 2012. A sentencing date will be set by Chief District Court Judge John A. Jarvey at a later date.
Davis faces a potential prison sentence of up to twenty years in prison, a maximum $250,000 fine, and up to three years of supervised release following any prison term. This matter was investigated by the Federal Bureau of Investigation and the Muscatine Police Department. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Illinois Man Sentenced to 35 Years in Federal Prison for Sexual Offense with a MinorRead the Press Release
Fayetteville, Arkansas – Kenneth Elser, Acting United States Attorney for the Western District of Arkansas, announced that David S. Duffin, age 44, of Chicago, Illinois, was sentenced to 420 months in prison followed by supervised release for life and a $15,000 fine on one count of Transportation of a Minor with Intent to Engage in Criminal Activity. Duffin was found guilty of the charge following a three day jury trial in August, 2015. Duffin was sentenced on February 19, 2016 by the Honorable Timothy L. Brooks in the United States District Court in Fayetteville.
According to evidence presented at the trial, on April 4, 2015, a 13-year-old female was reported missing from her home in Chicago, Illinois. The Chicago Police Department later developed evidence that the minor was with Duffin, who had driven her from her home in Chicago to a motel in Bentonville, Arkansas. On April 9, 2015, the Benton County Sheriffs’ Office located Duffin and the minor in Benton County. Evidence at trial showed that Duffin had created a Facebook profile of a teenage boy which he used to meet and communicate with the minor victim and that he had engaged in sexual intercourse with the minor victim both in Chicago and later after bringing her to Arkansas.
This case was investigated by the Federal Bureau of Investigation (FBI), the Benton County Sheriff’s Office, and the Chicago Police Department. Assistant United States Attorneys Kyra Jenner and Dustin Roberts 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
Hugo Man Sentenced to 18 Months for Possession of ExplosiveRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma, announced that CARNEY SCOTT HOOD, age 26, of Hugo, Oklahoma was sentenced to 18 months imprisonment, followed by 3 years of supervised release for POSSESSION OF EXPLOSIVE WHILE UNDER INFORMATION OR INDICTMENT, in violation of Title 18, United States Code, Sections 842(i)(1), 844(a)(1) and 2.
The Indictment alleged that in or about January 2014, within the Eastern District of Oklahoma, the defendant, while under an Information in the District Court of Choctaw County, State of Oklahoma, Case No. CF-2011-152, for a crime punishable by imprisonment for a term exceeding one year, did knowingly possess in and affecting commerce, an explosive, to-wit: ATLAS SF Electric Blasting Caps, which had been shipped and transported in interstate commerce.
The charge was the result of an investigation by the Hugo Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The Honorable James H. Payne, District Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, presided over the hearing. The defendant was remanded into custody of the United States Marshals Service pending transportation to the designated federal facility at which he will serve his nonparoleable sentence.
Assistant United States Attorneys Christopher Wilson represented the United States.
Hobbs Man Pleads Guilty to Federal Cocaine Trafficking ChargesRead the Press Release
ALBUQUERQUE – Jestin White, 23, of Hobbs, N.M., pled guilty on Friday afternoon in federal court in Las Cruces, N.M., to cocaine trafficking charges under a plea agreement with the U.S. Attorney’s Office.
White was arrested in May 2015, on a criminal complaint charging him with distribution of cocaine on May 19, 2015, in Lea County, N.M. According to the complaint, White distributed cocaine to an undercover law enforcement agent from Aug. 25, 2014 through May 19, 2015.
White was subsequently charged in a five-count indictment that was filed on Aug. 19, 2015. The indictment charged White with distributing cocaine on Sept. 4, 2014, Sept. 9, 2014, Oct. 23, 2014, Nov. 6, 2014, and May 19, 2015. The crimes charged in the indictment took place in Lea County. The indictment also included forfeiture allegations requiring White to forfeit $8,050.00 to the United States.
During Friday’s proceedings, White pled guilty to the indictment and admitted selling a total of 461 grams of cocaine to an undercover agent during five separate drug deals. More specifically White admitted selling the following quantities of cocaine to the agent: 2.1 grams on Sept. 4, 2014; 57 grams on Sept. 9, 2014; 57.5 grams on Oct. 23, 2014; 62 grams on Nov. 6, 2014; and 283 grams on May 19, 2015.
At sentencing, White faces a maximum penalty of 20 years in federal prison followed by not less than three years of supervised release. White remains in custody pending a sentencing hearing which has yet to be scheduled.
This case was investigated by the Las Cruces office of the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Lea County Drug Task Force. Assistant U.S. Attorney Maria Y. Armijo of the U.S. Attorney’s Las Cruces Branch Office is prosecuting the case.
The Lea County Drug Task Force is comprised of officers from the Lea County Sheriff’s Office, Hobbs Police Department, Lovington Police Department, Eunice Police Department the Tatum Police Department and the Jal Police Department, and is part of the NM HIDTA Region VI Drug Task Force. The High Intensity Drug Trafficking Areas (HIDTA) program was created by Congress with the Anti-Drug Abuse Act of 1988. HIDTA is a program of the White House Office of National Drug Control Policy (ONDCP) which provides assistance to federal, state, local and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States and seeks to reduce drug trafficking and production by facilitating coordinated law enforcement activities and information sharing.
Hell’s Angels Member and Wife Plead Guilty to Methamphetamine TraffickingRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051
ROCHESTER, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that James Henry McAuley, Jr., 66, of Oakfield, NY, pleaded guilty to conspiracy to possess with intent to distribute, and to distribute, 500 grams or more of methamphetamine, before U.S. District Judge Charles J. Siragusa. The charge carries a mandatory minimum penalty of 10 years in prison, a maximum penalty of life, and a $4,000,000 fine. In addition, McAuley’s wife Donna Boon, 50, of Oakfield, NY, pleaded guilty to conspiracy to possess with intent to distribute, and to distribute, methamphetamine, also before Judge Siragusa. That charge carries a maximum penalty of 20 years in prison and a $1,000,000 fine.Assistant U.S. Attorney Brett A. Harvey, who is handling the case, stated that between 2002 through July 9, 2010, McAuley – at the time a member and Vice President of the Rochester Hell’s Angels – was the leader of a methamphetamine trafficking network. In 2002, McAuley located a source of methamphetamine supply in the Monterey, California area. The defendant and other members of the conspiracy traveled to California on numerous occasions to obtain pound-size quantities of methamphetamine from the supplier they then transported or shipped from California to the Rochester area where another member of the conspiracy would sell it to their customers.
In April 2007, McAuley was arrested on federal racketeering charges in the Northern District of New York. After his arrest and incarceration, McAuley continued to maintain control over the methamphetamine trafficking operation. The defendant used another co-conspirator to arrange for obtaining quantities of methamphetamine from the Monterey, California-based source of supply. Other members of the conspiracy sold the methamphetamine to individuals in the Rochester area, Genesee County, and other locales. McAuley admitted to trafficking up to 15 kilograms of methamphetamine.
McAuley’s wife, Donna Boon, distributed quantities of methamphetamine to others, including an individual in Genesee County, who further distributed the drugs to customers in the Genesee County area. Boon admitted to trafficking up to 30 grams of methamphetamine.
These pleas are part of a larger investigation that resulted in the indictment and arrest of members and associates of the Rochester and Monterey (California) Hell's Angels for drug trafficking and racketeering-related offenses in February 2012. Along with McAuley and Boon, Monterey (California) Hell's Angels President Richard W. Mar, and Jeffrey A. Tyler, were charged with conspiracy to possess with intent to distribute, and to distribute, 500 grams or more of methamphetamine. Three other defendants -- Paul Griffin, Richard E. Riedman, and Gordon L. Montgomery – were convicted for their roles in the methamphetamine conspiracy. Judge Siragusa sentenced Griffin to probation and Riedman to 37 months in prison, Montomgery is awaiting sentencing.Rochester Hell's Angels member Robert W. Moran, Jr., along with Gina Tata, are charged in the same indictment with assault with a dangerous weapon in aid of racketeering activity, and Moran and Tata are charged with conspiracy to commit assault with a dangerous weapon in aid of racketeering activity. In addition, Tata is charged with being an accessory after the fact to the assault and conspiracy. Another defendant, Timothy M. Stone, was convicted and of being an accessory after the fact to the assault and conspiracy, and was sentenced to 12 months in prison.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
The plea is the culmination of an investigation on the part of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Adam Cohen, the Genesee County Sheriff's Office, under the direction of Sheriff Gary T. Maha, the Drug Enforcement Administration, under the direction of Special Agent in Charge James J. Hunt, New York Field Division, the New York State Police, under the direction of Major Craig Hanesworth, the City of Batavia Police Department, under the direction of Chief Sean Shawn Heubusch, and the Village of LeRoy Police Department.
Sentencing for McAuley and Boon is scheduled for May 24, 2016, at 10:00 a.m. and 11:00 a.m. respectively, both before Judge Siragusa.
Hampton Man Pleads Guilty to Coercion and Enticement of a ChildRead the Press Release
NEWPORT NEWS, Va. – William Rollie Armstrong, 50, of Hampton, pleaded guilty today to charges of coercion and enticement of a child, and receipt of child pornography.
According to the statement of facts filed with the plea agreement, the parents of Jane Doe, a 12 year-old child from Michigan, contacted law enforcement to report that Armstrong was having inappropriate chats with their daughter. During the course of the investigation, federal agents were able to determine that the Armstrong befriended Jane Doe through a social networking site, InterPals, by pretending to be a 13 year-old boy from New York. Armstrong sent Jane Doe sexually explicit photos and also asked the child to engage in sexual conduct that would be a crime in Virginia. Agents executed a search warrant on Armstrong’s home in Hampton and seized electronic devices. Armstrong cooperated with agents and admitted that he used a profile picture of a young boy on InterPals. He also admitted to chatting with young girls, including Jane Doe, on various social media websites, and asked them to send him nude pictures of themselves. A forensic exam of the electronic devices revealed that Armstrong had images of child pornography as well as images of Jane Doe.
Armstrong faces a maximum penalty of life in prison when sentenced on May 19, 2016. He faces a mandatory minimum of 10 years in prison on the coercion and enticement of a child charge, and a mandatory minimum of 15 years in prison on the receipt of child pornography charge due to the fact that he is a convicted sex offender. 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.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and John S. Adams, Special Agent in Charge of the FBI’s Norfolk Field Office, made the announcement after the plea was accepted by U.S. District Judge Mark S. Davis. Assistant U.S. Attorney Lisa R. McKeel is prosecuting the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 4:15-cr-85.
Grandville Man, Gary Alan Hoekstra, Sentenced for Wire FraudRead the Press Release
KALAMAZOO, MICHIGAN — U.S. Attorney Patrick A. Miles, Jr. announced today that Gary Alan Hoekstra of Grandville, Michigan was sentenced to one year and one day confinement by U.S. District Court Judge Janet T. Neff for wire fraud. Hoekstra pleaded guilty to the charge in November of 2015.
Between January 2010 and October 2012, Hoekstra opened at least ten credit card accounts in the name of three victims by entering their personal identifying information into online credit applications using a computer in his home. Accounts were approved with Credit One Bank, Discover Financial, Bank of America, Chase Bank, Citibank, and American Express, and Hoekstra ran up balances on each of these accounts to total $49,439.00 so that he could obtain money, services, and other things of value. The fraud was discovered when one of the victims began receiving unpaid balance calls from the banks.
In addition to the one year and one day sentence of confinement, Judge Neff imposed a restitution order to compensate the victims for their losses, three years of supervised release to follow Mr. Hoekstra’s release from prison, and a special assessment of $100.
The U.S. Attorney’s Office for the Western District of Michigan was assisted in the investigation by the U.S. Postal Inspection Service.
U.S. Attorney Patrick A. Miles cautioned those who would use identity theft to defraud individuals and financial institutions. "Identity theft is a continuing challenge and a crime that worries almost everyone. I hope word gets out that perpetrators are being caught and sent to jail."
Assistant Inspector in Charge Cynthia Mormon, U.S. Postal Inspection Service, further stated, "Mr. Hoekstra took financial advantage of three individuals in his community. The U.S. Postal Inspection Service will pursue those who use the Postal Service to victimize and steal the identities of others for personal gain."
This case was prosecuted by Assistant U.S. Attorney Clay M. West.
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Freeport Resident Sentenced to 33 Months in Federal Prison for Tax FraudRead the Press Release
ROCKFORD — A Freeport resident was sentenced today in federal court on a federal tax fraud charge.
The defendant, DOMINIQUE CASTLE, 29, was sentenced by U.S. District Judge Frederick J. Kapala to 33 months in federal prison, and ordered to serve 3 years of supervised release following her term of imprisonment. Castle was previously sentenced for fraud related charges in Stephenson County and the federal sentence of imprisonment will be served consecutively to her state prison sentence. Judge Kapala also ordered Castle to pay $94,044 in restitution to the IRS and to four states.
On Nov. 3, 2015, Castle pleaded guilty to making a false claim to the IRS by filing a fraudulent income tax return. She also admitted to filing a total of 54 fraudulent income tax returns with the IRS and an additional 17 fraudulent income tax returns with four different states. Castle admitted in her plea agreement that in filing these returns, she obtained and used names of individuals, their Social Security account numbers, and their dates of birth in order to prepare and file the tax returns. Castle admitted that in the tax returns, she would claim fictitious amounts of income and of income taxes purportedly withheld.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Criminal Investigations Division of the IRS. The government was represented by Assistant U.S. Attorney John G. McKenzie.
Four-time Bank Robber Sentenced to 92 Months in PrisonRead the Press Release
PROVIDENCE, R.I. – Vaughn Watrous, 39, of Providence, was sentenced on Thursday to 92 months in federal prison for robbing four banks in four days in February 2013.
At sentencing, U.S. District Court Judge John J. McConnell, Jr., also ordered Watrous to serve one year of supervised release upon completion of his prison term and to pay restitution totaling $4,850 dollars to the banks he admitted to robbing. Watrous pleaded guilty on October 16, 2015 to four counts of bank robbery.
Watrous’ sentence is announced by United States Attorney Peter F. Neronha, Cranston Police Chief Colonel Michael J. Winquist, Providence Police Chief Colonel Hugh T. Clements, Jr., and Harold H. Shaw, Special Agent in Charge of the Boston Field Office of the FBI.
At the time of his guilty plea, Watrous admitted to the court that on consecutive dates beginning on February 11, 2013, he robbed Sovereign Bank branch offices on North Main Street in Providence, Atwells Avenue in Providence, and on Reservoir Avenue in Cranston. He also admitted that on February 14, 2013, he robbed a Citizens Bank branch office located inside a supermarket on Garfield Avenue in Cranston.
In each instance, Watrous passed a note to a bank teller announcing the robbery, demanding large bills and instructing tellers not to trigger the bank alarm. Cranston police officers responding to the robbery of the Citizens Bank branch office observed the defendant in the vicinity of the bank and detained him. As they did, a large pile of cash fell to the ground. Additionally, officers recovered $690 hidden inside Watrous’ left shoe and $320 from his pockets.
The case was prosecuted by Assistant U.S. Attorney John P. McAdams, with the assistance of Assistant U.S. Attorney Lee H. Vilker.
The robberies were investigated by officers and detectives from the Cranston and Providence Police Departments, with the assistance of agents from the FBI.
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Four Pennsylvania-Based Companies and Two Individuals Agree to Pay $3 Million to Settle False Claims Act Suit Alleging Evaded Customs DutiesRead the Press Release
Corporation Pleads Guilty to Criminal Charges and Sentenced
The Department of Justice announced today that three importers and their owners – Ameri-Source International Inc., Ameri-Source Specialty Products Inc., Ameri-Source Holdings Inc., Ajay Goel and Thomas Diener – and a related importer, SMC Machining LLC, incorporated at Goel’s direction and formerly owned by his wife, have agreed to pay $3 million to resolve a lawsuit brought by the United States under the False Claims Act. The lawsuit alleged that the defendants had engaged in a scheme to evade customs duties on imports of small-diameter graphite electrodes from the People’s Republic of China (PRC). Small-diameter graphite electrodes are columns of synthetic graphite with diameters of around 16 inches or less that are used as fuel in electric arc and ladle furnaces, such as those used in steel manufacturing. The companies are all based in Pennsylvania.
“The nation’s customs laws are designed to protect domestic manufacturers from foreign products that enter the country at below-market prices due to unfair practices abroad,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “This settlement shows that the Department of Justice is committed to pursuing claims against anyone involved in a scheme to seek an unfair advantage in U.S. markets by evading duties on imported goods, including the individuals who run the companies and knowingly participate in such schemes.”
The Department of Commerce assesses and the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) collects duties to protect U.S. manufacturers from unfair competition abroad by leveling the playing field for domestic products. The particular duties at issue in this case are antidumping duties, which protect domestic manufacturers against foreign companies’ “dumping” products on U.S. markets at prices below cost. Imports of PRC-manufactured small-diameter graphite electrodes have been subject to antidumping duties since Aug. 21, 2008.
The settlement announced today resolves claims that Ameri-Source International Inc. evaded antidumping duties on 15 shipments of small-diameter graphite electrodes from the PRC from December 2009 to March 2012. The United States contended that Ameri-Source International misclassified the size of the electrodes to avoid paying the duties. There are no antidumping duties on larger diameter graphite electrodes. The United States also alleged that Goel, Diener and the other companies caused and conspired in the misrepresentation to evade duties. Ameri-Source International also waived indictment and pleaded guilty today to two counts of smuggling goods into the United States. In U.S. District Court in the Western District of Pennsylvania, Ameri-Source International admitted that on April 27, 2011 and June 9, 2011, the company falsely declared imported cargo from the PRC as being graphite rods greater than 16 inches in diameter. Chief Judge Joy Flowers Conti immediately sentenced the corporation to pay a $250,000 criminal fine within 10 days and applied the payment of the $3 million to the loss of antidumping duties of $2,137,420.00.
“We are committed to protecting U.S. jobs and industries from those who seek an unfair advantage in the U.S. marketplace,” said U.S. Attorney David J. Hickton for the Western District of Pennsylvania. “This office’s aggressive criminal and civil enforcement efforts to combat and prosecute the evasive practices of both the corporations and individuals who perpetrated this scheme demonstrate our resolve to ensure a level playing field for all.”
“Antidumping duties level the playing field for U.S. manufacturers,” said CBP Commissioner R. Gil Kerlikowske. “This is a prime example of how U.S. Customs and Border Protection partners with the Department of Justice, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) and the U.S. Department of Commerce to enforce antidumping duty laws.”
“This settlement underscores one of HSI’s primary efforts, which is to ensure a level playing field for companies engaged in legitimate trade and commerce with the United States,” said Special Agent in Charge John Kelleghan of Homeland Security Investigations (HSI) Philadelphia. “HSI special agents will continue to protect the revenue of the United States and aggressively investigate individuals and companies who attempt to operate outside our laws and regulations.”
“The Department of Commerce Office of Inspector General is dedicated to supporting bureaus such as the International Trade Administration in protecting the U.S. economy from the type of criminal activity disclosed in this case,” said Special Agent in Charge Duane E. Townsend of the U.S. Department of Commerce Office of Inspector General. “We greatly appreciate the cooperation and efforts of HSI and the U.S. Attorney’s Office that resulted in this agreement.”
The allegations resolved by the settlement were originally brought by whistleblower Graphite Electrode Sales Inc. under the qui tam provisions of the False Claims Act. The act permits private parties to sue on behalf of the government those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct. The United States may intervene in and take over the lawsuit, as it has done here. The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit. Graphite Electrode Sales Inc. will receive approximately $480,000 as its share of today’s settlement.
The case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Pennsylvania, CBP, ICE HSI and the Department of Commerce’s International Trade Administration and Office of Inspector General.
The lawsuit is captioned United States ex rel. Graphite Electrode Sales, Inc. v. Ameri-Source Holdings, Inc., et al., Case No. 13-cv-0474 (W.D. Pa.). The claims resolved by this settlement are allegations only; there has been no determination of liability except as admitted in the criminal proceedings.
Four Pennsylvania-Based Companies and Two Individuals Agree to Pay $3 Million to Settle False Claims Act Suit Alleging Evaded Customs DutiesRead the Press Release
WASHINGTON – The Department of Justice announced today that three importers and their owners – Ameri-Source International Inc., Ameri-Source Specialty Products Inc., Ameri-Source Holdings Inc., Ajay Goel and Thomas Diener – and a related importer, SMC Machining LLC, incorporated at Goel’s direction and formerly owned by his wife, have agreed to pay $3 million to resolve a lawsuit brought by the United States under the False Claims Act. The lawsuit alleged that the defendants had engaged in a scheme to evade customs duties on imports of small-diameter graphite electrodes from the People’s Republic of China (PRC). Small-diameter graphite electrodes are columns of synthetic graphite with diameters of around 16 inches or less that are used as fuel in electric arc and ladle furnaces, such as those used in steel manufacturing. The companies are all based in Pennsylvania.
“The nation’s customs laws are designed to protect domestic manufacturers from foreign products that enter the country at below-market prices due to unfair practices abroad,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “This settlement shows that the Department of Justice is committed to pursuing claims against anyone involved in a scheme to seek an unfair advantage in U.S. markets by evading duties on imported goods, including the individuals who run the companies and knowingly participate in such schemes.”
The Department of Commerce assesses and the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) collects duties to protect U.S. manufacturers from unfair competition abroad by leveling the playing field for domestic products. The particular duties at issue in this case are antidumping duties, which protect domestic manufacturers against foreign companies’ “dumping” products on U.S. markets at prices below cost. Imports of PRC-manufactured small-diameter graphite electrodes have been subject to antidumping duties since Aug. 21, 2008.
The settlement announced today resolves claims that Ameri-Source International Inc. evaded antidumping duties on 15 shipments of small-diameter graphite electrodes from the PRC from December 2009 to March 2012. The United States contended that Ameri-Source International misclassified the size of the electrodes to avoid paying the duties. There are no antidumping duties on larger diameter graphite electrodes. The United States also alleged that Goel, Diener and the other companies caused and conspired in the misrepresentation to evade duties. Ameri-Source International also waived indictment and pleaded guilty today to two counts of smuggling goods into the United States. In U.S. District Court in the Western District of Pennsylvania, Ameri-Source International admitted that on April 27, 2011 and June 9, 2011, the company falsely declared imported cargo from the PRC as being graphite rods greater than 16 inches in diameter. Chief Judge Joy Flowers Conti immediately sentenced the corporation to pay a $250,000 criminal fine within 10 days and applied the payment of the $3 million to the loss of antidumping duties of $2,137,420.00.
“We are committed to protecting U.S. jobs and industries from those who seek an unfair advantage in the U.S. marketplace,” said U.S. Attorney David J. Hickton for the Western District of Pennsylvania. “This office’s aggressive criminal and civil enforcement efforts to combat and prosecute the evasive practices of both the corporations and individuals who perpetrated this scheme demonstrate our resolve to ensure a level playing field for all.”
“Antidumping duties level the playing field for U.S. manufacturers,” said CBP Commissioner R. Gil Kerlikowske. “This is a prime example of how U.S. Customs and Border Protection partners with the Department of Justice, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) and the U.S. Department of Commerce to enforce antidumping duty laws.”
“This settlement underscores one of HSI’s primary efforts, which is to ensure a level playing field for companies engaged in legitimate trade and commerce with the United States,” said Special Agent in Charge John Kelleghan of Homeland Security Investigations (HSI) Philadelphia. “HSI special agents will continue to protect the revenue of the United States and aggressively investigate individuals and companies who attempt to operate outside our laws and regulations.”
“The Department of Commerce Office of Inspector General is dedicated to supporting bureaus such as the International Trade Administration in protecting the U.S. economy from the type of criminal activity disclosed in this case,” said Special Agent in Charge Duane E. Townsend of the U.S. Department of Commerce Office of Inspector General. “We greatly appreciate the cooperation and efforts of HSI and the U.S. Attorney’s Office that resulted in this agreement.”
The allegations resolved by the settlement were originally brought by whistleblower Graphite Electrode Sales Inc. under the qui tam provisions of the False Claims Act. The act permits private parties to sue on behalf of the government those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct. The United States may intervene in and take over the lawsuit, as it has done here. The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit. Graphite Electrode Sales Inc. will receive approximately $480,000 as its share of today’s settlement.
The case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Pennsylvania, CBP, ICE HSI and the Department of Commerce’s International Trade Administration and Office of Inspector General.
The lawsuit is captioned United States ex rel. Graphite Electrode Sales, Inc. v. Ameri-Source Holdings, Inc., et al., Case No. 13-cv-0474 (W.D. Pa.). The claims resolved by this settlement are allegations only; there has been no determination of liability except as admitted in the criminal proceedings.
Four Ordered to Prison for Sex Trafficking of MinorsRead the Press Release
HOUSTON – A total of four people who were residing in Houston have been sentenced to federal prison for their respective roles related to the sex trafficking of minors, announced U.S. Attorney Kenneth Magidson.
Luisa Vargas, a legal permanent resident residing in Houston, was convicted of sex trafficking of a minor and harboring illegal aliens following a bench trial June 19, 2015, while Dolores Vargas, also a legal permanent resident in Houston; Blasina Vargas, a naturalized U.S. citizen residing in Houston; and Ignacio Escandon, a citizen of Cuba, had previously pleaded guilty to engaging in the sex trafficking of minors.
Today, U.S. District Judge Lynn N. Hughes ordered Luisa Vargas to serve 120 months in federal prison. Blasina and Delores each received a sentence of 60 months, while Escandon will serve an 87-month term of imprisonment.
From at least February 2012, the defendants employed women and a girl less than age 18 as prostitutes in the Westview apartments being used as a brothel. These women and young girl were instructed as to how much money to charge their clients for commercial sex. Approximately half of the proceeds were given to the defendants. As a general practice, the price paid was $40 for 15 minutes of sex. The defendants knew that most, if not all, of the ladies employed for the purpose of prostitution were aliens illegally within the United States.
All will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the future.
The charges were the of an investigation by Homeland Security Investigations, FBI, Houston Police Department and Harris County Sheriff’s Office. Assistant U.S. Attorneys Doug Davis and Julie Searle prosecuted the case.
Former Systems Administrator Convicted of Hacking into Industrial Facility Computer SystemRead the Press Release
BATON ROUGE, LA – United States Attorney Walt Green announced the conviction of a former systems administrator who hacked into the computer system of an industrial facility to disrupt and damage its operations.
On February 4, 2016, BRIAN A. JOHNSON, age 44, of Baton Rouge, Louisiana, pled guilty before Chief U.S. District Judge Brian A. Jackson to intentionally damaging a protected computer. JOHNSON faces possible imprisonment, fines, restitution orders, and a term of supervised release following imprisonment. Sentencing is scheduled for 9:30 a.m. on May 19, 2016, before Chief Judge Jackson.
JOHNSON worked as an information technology specialist and systems administrator for a large manufacturing facility in Port Hudson, Louisiana. During the guilty plea hearing, JOHNSON admitted that, on February 27, 2014, several days after his employment was terminated, JOHNSON remotely accessed the plant’s computer system and intentionally transmitted code and commands which resulted in significant damage to the plant’s operations.
The crime for which JOHNSON has been convicted only requires that the value of the damage exceed $5,000. Oftentimes, however, the actual value of such activity far exceeds this minimum amount. In determining the appropriate sentence and amount of restitution, the Court will determine the actual value of the damage caused by JOHHSON during the sentencing hearing.
U.S. Attorney Green stated: “Cybercrime poses a very real threat and danger to businesses and individuals alike. External threats loom large, but insiders and former insiders can also be the source of such criminal activity. We commend the victim on its quick response and cooperation with our office and the FBI. The harsh reality is that no business or individual is immune from such an attack. We must therefore unite as a community to confront these threats.”
FBI New Orleans Special Agent in Charge (SAC) Jeff Sallet stated: “The FBI New Orleans Division’s Cyber Squad should be commended for their outstanding efforts throughout this investigation. Cyber cases are extremely challenging cases to investigate, mainly due to the complex nature of the internet and logistics in identifying the location of the person attempting to sabotage corporate networks.”
The U.S. Attorney’s Office leads the Middle District of Louisiana Cyber Initiative which includes the U.S. Department of Justice’s Computer Crimes and Intellectual Property Section, the Federal Bureau of Investigation, the U.S. Secret Service, the U.S. Department of Homeland Security, the U.S. Department of Treasury, the U.S. Department of Education, the Louisiana State Police, the East Baton Rouge Parish Sheriff’s Office, and the East Baton Rouge Parish District Attorney’s Office.
This matter was investigated by the Federal Bureau of Investigation’s Cybercrimes Squad. It is being prosecuted by Assistant U.S. Attorney M. Patricia Jones, who serves as the office’s Appellate Chief, and Assistant U.S. Attorney Ryan Crosswell.
Former State Magistrate Judge Pleads Guilty to Embezzling $24,000Read the Press Release
WICHITA, KAN. – A former state district magistrate judge in southeast Kansas pleaded guilty Monday to embezzling approximately $24,000, U.S. Attorney Barry Grissom said.
Bill W. Lyerla, 64, Galena, Kan., pleaded guilty to six counts of wire fraud. In his plea, Lylera admitted he embezzled the money from the Kansas District Magistrate Judges Association while he served as an elected treasurer for the organization. In the state system, magistrate judges conduct first appearances and preliminary examinations of felony charges and hear felony arraignments, as well as performing other judicial duties. Lyerla was a magistrate judge for the state’s Eleventh Judicial District from 1991 to his resignation in 2014.
In his plea, he admitted that as treasurer for the judges association he had authority to write checks to pay for the organization’s legitimate expenses. He used that power to fraudulently write checks payable to himself on the association’s bank account.
Sentencing is set for July 6. He faces a maximum penalty of 30 years in federal prison and a fine up to $1 million on each count. Grissom commended the FBI and Assistant U.S. Attorney Debra Barnett for their work on the case.
Former School Administrator and Retired Colonel Found Guilty of Failing to Report Child Abuse at Bluegrass Challenge AcademyRead the Press Release
LOUISVILLE, Ky. – A retired Colonel in the Kentucky National Guard and the former Director of Bluegrass Challenge Academy was found guilty last week in United States District Court of failing to report child abuse, announced United States Attorney John E. Kuhn, Jr.
Following a three-day trial, a federal jury deliberated approximately two hours before finding John Wayne Smith, 65, guilty of the charge.
Smith was charged in a federal superseding indictment on April 22, 2015, with violating Title 18, United States Code, Section 2258. The statute applies to facilities and individuals on federal lands and requires that individuals in certain positions, such as school administrators, report to law enforcement or child protective services as soon as possible if they learn of facts that give reason to suspect child abuse. While the statute was enacted in 1990, this appears to be the first trial under the statute.
According to the evidence presented at trial, from 2003 to December 2013, Smith was the Director of Bluegrass Challenge Academy, a quasi-military school for students at-risk of not finishing high school. The Academy is located on Fort Knox military base. In early-February 2013, Smith learned that a 17-year-old female student at the Academy had alleged Stephen Miller, one of the staff members, forced her to touch his clothed penis. Around the same time, Smith also learned that another female student had accused Miller of touching her inappropriately. There was an internal investigation and Miller was reprimanded, but continued to work at the school, where his office was on the same hall where the female cadets showered and slept. Smith did not report the matter to law enforcement or child protective services. Law enforcement only became aware of the allegations through the investigation of an August 2013 incident, in which another female student accused a staff member of forcing her to perform oral sex on him.
In July 2015, Stephen Miller pled guilty to conduct related to both February 2013 incidents, as well as the August 2013 incident. Before Smith hired Miller to work with female students at the Academy, Miller worked as a police officer in Leitchfield, Kentucky. He resigned the position following complaints of inappropriate conduct toward two women. On February 1, 2016, Miller was sentenced to 48 months for conduct related to four separate incidents at the Academy.
Smith is scheduled to be sentenced on May 19, 2016.He faces a sentence of up to one year in prison and a $100,000 fine.
Assistant United States Attorneys Amanda E. Gregory and Stephanie M. Zimdahl are prosecuting the case. The Federal Bureau of Investigation (FBI) with assistance from the Army Criminal Investigation Division conducted the investigation.
Former Sailor and Convicted Serial Rapist Sentenced for 2010 AttackRead the Press Release
NORFOLK, Va. – Amin Jason Carl Garcia, 27, of New York, New York, a convicted serial rapist and former U.S. Navy sailor, was sentenced today to 240 months in prison for attacking a former Army officer while she was taking a shower at Camp Arifjan in Kuwait in 2010. This sentence is to be served consecutive to the state prison sentence Garcia is currently serving.
According to court documents, on April 29, 2010, the U.S. Army Criminal Investigative Division (CID) Kuwait, was contacted regarding the assault and attempted rape of a U.S. Army officer in the female shower trailer on board Camp Arifjan, Kuwait. According to the victim, approximately three minutes into her shower, an unknown black male whose face was almost fully covered by a military tan undershirt, pulled her from the shower to the opposite end of the trailer and ordered her to face away from him. The victim resisted her attacker, who subsequently cut her numerous times with a box cutter type knife and punched her several times in the head. At one point during the attack, the attacker stated that he “guessed” he would have to kill her. Eventually, the victim complied with her attacker and stated that she would do what he wanted to do, but begged that he not cut her any more. Shortly after the comment, the attacker fled the scene on foot and the victim ran to her tent to get help before being transported to the medical facility in Camp Arifjan where she received numerous stitches to her face, arm and hand.
According to court documents, while processing the crime scene, investigators recovered a shirt covered in what appeared to be blood. That shirt was believed to be the shirt that was covering the face of the attacker. Also discovered at the crime scene was what appeared to be a trail of blood that led from the female shower trailer to a male washroom. Army CID collected blood from the trail. U.S. Criminal Investigative Laboratory (USACIL) tested the blood samples and determined that they came from two different DNA profiles: one DNA profile was that of the known female victim, and the other was identified as from an unknown male with Type A blood.
According to court documents, the unknown male’s DNA also was a match for DNA recovered at the scene of a sexual assault on a Norfolk woman in 2008. The same rapist returned to the victim’s home one month after the initial assault and raped the victim’s daughter. In addition to the DNA, the Norfolk Police Department (NPD) also recovered latent fingerprints from the crime scenes. NCIS and NPD began to work together to try to identify the rapist.
According to court documents, subsequent investigative steps identified Garcia as a possible suspect in the assaults. These steps included a check of military records, which confirmed that Garcia was in the U.S. Navy Reserves, lived approximately one mile from the 2008 Norfolk victims during the time of their attacks, and was assigned to Camp Arifjan at the time of the 2010 attack.
According to court documents, in December 2013, Garcia was still in the U.S. Navy Reserves. On the weekend of Dec. 14, 2013, when Garcia was serving his reserve drill period at the Navy Operational Support Center (NOSC), Bronx, New York, NCIS investigators shadowed him. After Garcia ate lunch on base, agents seized the fork, two cups, and banana to recover swabs for DNA analysis. The analysis of the DNA seized by investigators revealed that it matched the DNA that was obtained from the assault of the victim at Camp Arifjan in April 2010 and the 2008 assaults in Norfolk. Further analysis revealed that the latent fingerprints recovered from the 2008 Norfolk crime scenes matched Garcia’s fingerprints.
Garcia pleaded guilty in federal court to the Kuwait assault on Nov. 20, 2015. In August 2014, Garcia was convicted of the 2008 rapes in Norfolk Circuit Court and was sentenced to life in prison.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and [NCIS], made the announcement after sentencing by U.S. District Judge Raymond A. Jackson. Assistant U.S. Attorneys Elizabeth M. Yusi and Benjamin L. Hatch prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:14-cr-134.
Former SEC Senior Associate Chief Settles Conflict of Interest AllegationsRead the Press Release
PLANO, Texas – A 73-year-old former SEC accountant from Denton, Texas, has entered into a settlement concerning conflict of interest allegations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Edmund W. Bailey, Jr., now residing in Mesquite, Nevada, signed a civil settlement agreement today resolving federal conflict of interest allegations arising from an expert report he prepared after his retirement from the Securities and Exchange Commission (SEC) in 2012.
According to court documents, in March 2012, Bailey, a Senior Associate Chief Accountant, retired from the SEC. On June 3, 2013, Bailey prepared and submitted an expert report to KPMG, LLP, conveying his expert opinion as to whether certain KPMG policies and procedures were inconsistent with SEC auditor independence rules. KPMG then submitted the report to the SEC as part of a “Wells Submission,” which is information provided to the SEC by a potential defendant advocating why the agency should not institute an enforcement action in a particular matter. The United States alleged that Bailey’s expert report constituted a prohibited communication to the SEC in violation of United States post-employment conflict of interest restrictions under 18 U.S.C. § 207. Bailey has agreed to pay a civil fine of $40,000 (out of an applicable maximum of $50,000) to resolve the allegations. Bailey has denied any allegations of wrongdoing.
Today’s settlement marks the second time in four years that the U.S. Attorney’s Office for the Eastern District of Texas has pursued and resolved conflict of interest allegations against senior SEC personnel under 18 U.S.C. § 207. The prior 2012 press release can be located at http://www.justice.gov/archive/usao/txe/News/2012/edtx-barasch-011312.html.
“The public expects that its federal employees will honor and abide by the stringent conflict of interest prohibitions and ethical standards required by law,” said U.S. Attorney Bales. “Our office intends to ensure that those expectations are met.”
This case was investigated by the Securities and Exchange Commission Office of Inspector General and the U.S. Attorney’s Office for the Eastern District of Texas. The settlement was negotiated by Assistant U.S. Attorneys Randi Russell and Joshua Russ. The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Former Managing Partner and CFO of Morris, Hardwick, Schneider Law Firm, and Land Castle Title, Indicted for Multi-Million Dollar EmbezzlementRead the Press Release
ATLANTA – A federal indictment unsealed today charges Nathan E. Hardwick IV and Asha R. Maurya with conspiracy, wire fraud, and related crimes in connection with Hardwick’s alleged theft of over $20 million from the attorney escrow accounts and operating accounts of Morris Hardwick Schneider and LandCastle Title, an Atlanta-based law firm and title agency in which Hardwick and Maurya once served as top executives. In addition to charges against Maurya for assisting with Hardwick’s theft, the indictment also charges Maurya with stealing approximately $900,000 from the firm’s accounts to pay her own personal expenses.
“The indictment alleges an embezzlement scheme dating back years,” said U.S. Attorney John Horn. “Along the way, Mr. Hardwick is alleged to have repeatedly lied to his clients, law partners, banks and others. The allegations are especially troubling given that the actions were orchestrated by a lawyer who swore an oath to uphold the law and to represent his clients with integrity.”
“The magnitude of theft as alleged in the federal indictments of these two defendants clearly merited the resulting federal investigation and prosecution. The allegations describe a trusted corporate officer and attorney in personal financial troubles conspiring with another corporate officer to steal from their employer, primarily through escrow accounts entrusted to their company. Today’s federal grand jury indictments will now move those allegations into federal court,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated.
According to U.S. Attorney Horn, the indictment, and other information presented in court: Morris Hardwick Schneider and LandCastle Title (“MHS”) was a law firm and title insurance agency headquartered in Atlanta, Georgia. MHS employed approximately 80 lawyers and 800 non-lawyer employees in 16 states. MHS’s law practice specialized in residential real estate closings and default and foreclosure matters. MHS’s title insurance business involved selling title insurance policies in connection with residential real estate closings.
During periods of high activity in the real estate market, MHS performed thousands of residential real estate closings per month, and received hundreds of millions of dollars in closing funds that it was required to hold in trust in attorney escrow accounts until disbursed in accordance with its clients’ closing instructions for each transaction. At any given time, a single MHS attorney escrow account might contain millions of dollars. MHS also had operating accounts for purposes of funding its operations. MHS’s accounting and escrow account operations were based out of the firm’s Atlanta headquarters.
From MHS’s formation in 2005 until Hardwick’s resignation in August 2014, Hardwick served as managing partner of the law firm and Chief Executive Officer of the title insurance agency. Hardwick was also the majority shareholder of MHS. Hardwick worked out of MHS’s Atlanta headquarters, supervised virtually all of MHS’s day-to-day operations, and had virtually unlimited access to, and control over, MHS’s financial affairs.
Maurya was an accounting department employee of MHS from April 2009 until her termination in November 2014. Maurya was hired to be MHS’s Escrow Account Controller and was eventually promoted to the position of Chief Financial Officer of MHS’s closing division. Maurya managed MHS’s attorney escrow account operations and other accounting operations under Hardwick’s supervision.
Hardwick allegedly began experiencing severe financial problems in the late 2000s, when a sharp decline in the residential real estate market made MHS less profitable, and he was subject to a July 2008 divorce decree requiring him to pay his ex-wife over $550,000 per year in alimony and other payments for five years. Hardwick’s legitimate income could not keep pace with his lavish lifestyle, which included private jet travel; multi-million dollar homes; high-end retail goods and services; gambling at casinos in Louisiana, Mississippi, New Jersey, and Nevada; and payments to bookies and girlfriends.
The Alleged Embezzlement Conspiracy
To maintain the illusion of wealth and success despite his financial problems, and to continue to live beyond his means, in or about 2011, Hardwick allegedly began directing Maurya to make millions of dollars in shareholder distributions, bonuses, and other payments for Hardwick’s benefit, directly out of MHS’s bank accounts, in amounts that exceeded the share of MHS’s profits to which Hardwick was entitled. This occurred at times when no shareholder bonuses or distributions were scheduled to be made, and without causing or directing proportionate bonuses or distributions to be made to the other MHS shareholders. The excess bonuses, distributions, and payments to and for Hardwick’s benefit included payments to casinos, private jet charter companies, credit card issuers, and other creditors and accounts.
To fund the vast majority of these illicit payments, Hardwick and Maurya allegedly caused millions of dollars to be wire transferred to and for Hardwick’s benefit out of MHS’s attorney escrow accounts. Hardwick and Maurya fraudulently concealed Hardwick’s excess payments from the other MHS shareholders, MHS employees, outside auditors, title insurance underwriters, and others through false statements, half-truths, and by the omission of material facts, and by distributing false and misleading financial information and records.
According to the indictment and based on information presented in court, when other MHS shareholders, MHS employees, and one of MHS’s title insurance underwriters began to uncover the conspiracy in July and August 2014, Hardwick and Maurya took further steps to conceal the illicit payments and to delay and obstruct the discovery of their scheme, including by making false statements about the nature, amount, and cause of the excess payments and any resulting escrow account shortages. In particular, Maurya allegedly provided excuses and denials that attempted to attribute any problems to bank error.
Before the other MHS shareholders and employees knew the full extent of the scheme, Hardwick also allegedly tried to conceal the amount of his illicit payments and the severity of the resulting escrow account shortages by lying to obtain and to attempt to obtain loans from various individuals and entities to repay part of the money that he had stolen.
The indictment also charges Hardwick with lying to obtain over $3.5 million in loans from federally-insured banks in 2009, 2011, 2013, and 2014.
Maurya’s Alleged Embezzlement
In addition to charges against Maurya for her assistance with Hardwick’s alleged theft of over $20 million, the indictment charges Maurya separately with a scheme to defraud MHS by tricking MHS into issuing checks to pay off her personal credit card bills. Maurya is alleged to have diverted over $900,000 from MHS’s attorney escrow accounts and operating accounts to pay off her credit card bills and home mortgages.
Overview of The Charges
The indictment charges Hardwick and Maurya with one count of conspiracy to commit wire fraud and 18 counts of wire fraud. It charges Hardwick with one count of bank fraud and three counts of making false statements to federally-insured financial institutions. The indictment charges Maurya with 11 counts of mail fraud. The conspiracy, wire fraud, and mail fraud charges against Hardwick and Maurya each carry a maximum sentence of 20 years in prison and a fine of up to $250,000 per count. The bank fraud and false statements charges against Hardwick each carry a maximum sentence of 30 years in prison and a fine of up to $1 million per count. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
A federal grand jury in Atlanta returned the sealed indictment against Hardwick, 50, formerly of Atlanta, and Maurya, 40, of Atlanta, on February 9, 2016. Both defendants made their initial appearances today before U.S. Magistrate Judge Justin S. Anand.
Members of the public are reminded that the indictment only contains charges. The defendants are presumed innocent of the charges and it will be the government’s burden to prove each defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by Special Agents of the FBI. Valuable assistance has also been provided by Special Agents of the Criminal Investigation Division of the IRS.
Assistant United States Attorneys David M. Chaiken and J. Russell Phillips are prosecuting the case.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 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’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
Former Manager of Marietta Hair Products Company Sentenced for Embezzling over $3.3 MillionRead the Press Release
ATLANTA - Veria Fields, a former employee of Bronner Bros., Inc., a hair care products company in Marietta, Georgia, has been sentenced to serve two years and four months in federal prison on charges of mail fraud relating to a theft from her former employer.
“Small businesses depend on their finance and accounting personnel to safeguard the financial health of the company,” said U.S. Attorney John Horn. “Instead, Fields violated the company’s trust by stealing millions of dollars for herself.”
“Today’s sentencing of Ms. Fields to federal prison will provide her with significant time to reflect on her ill-conceived greed driven theft scheme that diverted over three million dollars from her company to her own bank account. The FBI will continue to dedicate its investigative resources toward those individuals engaged in such unbridled and damaging white collar based criminal schemes as seen here,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office.
According to U.S. Attorney Horn, the charges and other information presented in court: Fields was the Accounts Receivable Manager for Bronner Bros. Inc., a wholesaler of African-American hair care products headquartered in Marietta, Georgia. Fields also informally performed customer service functions for the company.
From 2006 through 2010, Fields embezzled over $3.3 million from Bronner Bros. by offering customers unauthorized discounts of five to15 percent in exchange for customers making account payments to her in cash. Rather than applying the discounted payments to the customers’ accounts as the customers expected, Fields instead pocketed the cash for herself. To conceal the unauthorized discounts and the thefts, Fields used her position as the company’s Accounts Receivable Manager to allocate portions of the payments from other Bronner Bros. customers to cover the shortfalls she created. She also wrote off portions of the bills owed by the customers.
Veria Fields, 54, of Atlanta, Georgia, has been sentenced to two years, four months in federal prison, to be followed by three years of supervised release, and to pay restitution of $3,330,828.02. Fields was convicted of these charges on November 20, 2015, after she pleaded guilty.
This case was investigated by the Federal Bureau of Investigation.
Assistant United States Attorney Bernita B. Malloy prosecuted this case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao/gan/.
Former Insurance Agent Sentenced to Prison for Investment Fraud Scheme and Tax FraudRead the Press Release
Contact Person: Dean Secor (843) 727-4381
The case was investigated by agents of the Federal Bureau of Investigation (FBI) and the Internal Revenue Service-Criminal Investigation (IRS-CI). Assistant United States Attorney Dean H. Secor of the Charleston office prosecuted the case. #####
Columbia, South Carolina---- United States Attorney Bill Nettles stated today that Timothy David Mays, age 51, of Walterboro, South Carolina was sentenced in federal court in Charleston, South Carolina, for Wire Fraud, a violation of 18 U.S.C. § 1343, and Willfully Filing a False Income Tax Return, a violation of 26 U.S.C. § 7206(1). United States District Judge David C. Norton of Charleston sentenced Mays on the wire fraud count to 42 months imprisonment to be followed by 3 years of supervised release, and on the tax count to 36 months imprisonment to be followed by one year of supervised release, with the sentences to run concurrently.
According to court documents and evidence presented in open court, from late 2008 through 2011, Timothy “David” Mays was an insurance agent licensed to sell life insurance and accident/health insurance who also touted himself as a “licensed” investor and CEO of Life Trust Financial, LLC, and MaysGroup Financial, investment companies located in Summerville, South Carolina. During that period, Mays represented that he provided financial services, including the sale of annuities and Certificates of Deposit (CD’s). Mays placed advertisements in local publications, including those for senior citizens and retirees, for the sale of CD’s that he claimed were being facilitated through local banks. Mays promised the investors that they would receive the advertised rate of return on the CD’s even if the bank rate was lower than he had advertised. Mays also promised that investors would receive bonuses for 401/IRA conversions and rollovers to CD’s if they met threshold investment funding amounts. Mays made all these representations knowing that he did not have any working relationship with the named banks to sell CD’s or any investment products.
Mays received approximately $1,089,000 from investors under the false pretenses that the money provided would be invested by Mays on behalf of the investors as advertised and promised. Mays only invested $200,000 of the funds for one client, and he returned approximately $203,000 to some of the clients who complained to him and asked for their money back. Mays spent approximately $583,000 on a variety of personal and business expenditures, and he turned over approximately $104,000 of funds that he had left in his accounts to federal authorities during the investigation.
Mays also filed a false U.S. Individual Income Tax Return in February 2007 for calendar year 2006 that understated his total income, and he willfully failed to file U.S. Individual Income Tax Returns for calendar years 2007, 2008, and 2009.
In addition to his prison sentence, Judge Norton also ordered Mays to pay restitution in the total amount of $710,138.41 ($583,087.41 to the victims of the fraud scheme and $127,051 to the IRS).Former IRS Employee Sentenced for $326,000 Fraud Scheme, Identity TheftRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a former employee of the Internal Revenue Service was sentenced in federal court today for using stolen identities in a scheme to receive $326,000 in fraudulent tax refunds.
Demetria Michele Brown, 39, of Birmingham, Ala., was sentenced by U.S. District Judge Brian C. Wimes to two years and six months in federal prison without parole. The court also ordered Brown to pay $326,000 in restitution to the state of Missouri and the IRS.
On June 1, 2015, Brown pleaded guilty to two counts of wire fraud and one count of aggravated identity theft. Brown admitted that she engaged in a scheme to submit hundreds of false and fraudulent state and federal income tax returns in order to generate refunds from 2008 to 2011.
Brown, formerly of Fairview Heights, Ill., worked at an IRS office in St. Louis, Mo., during the fraud scheme. While employed by the IRS, Brown unlawfully obtained the personally identifiable information of at least 120 persons. Brown had direct access to taxpayers’ personally identifiable information; however, rather than risk detection by using that information to commit her fraud, Brown obtained the identities of taxpayers in the Metro-East area of St. Louis and Birmingham through illicit sources.
Brown filed more than 120 fraudulent federal tax returns, resulting in a loss of approximately $211,000. Brown filed at least 236 fraudulent state tax returns, resulting in a loss of approximately $115,000, for an aggregate loss amount of approximately $326,000.
The scheme involved Brown obtaining personal identification information, including names, Social Security numbers, and dates of birth of other persons without their knowledge or consent. Brown completed U.S. individual income tax returns and Missouri state income tax returns for persons using the personal identification information she had obtained, adding other information which was false and fraudulent, including the address, place of employment, wages earned, taxes withheld and the fact that a refund was due.
This case was prosecuted by Assistant U.S. Attorney Anthony P. Gonzalez. It was investigated by the FBI, IRS-Criminal Investigation, the Missouri Department of Revenue – Compliance and Investigation Bureau and the Missouri Department of Revenue – Criminal Investigation Bureau.
Former Executive Director of Charity Sentenced to 21 Months in Prison for Stealing over $1 Million from Employer and Laundering over $220,000 of ProceedsRead the Press Release
WASHINGTON – Byron Fogan, 43, has been sentenced to 21 months in prison on a federal charge stemming from the embezzlement of over $1 million from a private charitable foundation where he worked as executive director, announced U.S. Attorney Channing D. Phillips, Thomas Jankowski, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI), and Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office.
Fogan, of Columbia, Md., pled guilty in November 2015 in the U.S. District Court for the District of Columbia to one count of money laundering involving the laundering of approximately $220,000 of the proceeds of the embezzlement scheme. He was sentenced on Feb. 19, 2016, by the Honorable Judge Rosemary M. Collyer. Following his prison sentence, Fogan will be placed on three years of supervised release. He also must pay $223,568 in restitution to the charitable foundation as well as a forfeiture money judgment in the amount of $223,568.
According to a statement of offense submitted at the plea hearing, Fogan was the executive director of the Oasis Foundation, a private charitable foundation located in the District of Columbia. The Board of Directors of the Oasis Foundation was comprised of Fogan, a professor, and a priest. The Oasis Foundation’s purpose was to make financial donations to various non-profit and charitable organizations that worked in educational development, innovation in science and technology, the promotion of arts and culture, developing families and strong communities, and the promotion of environmental awareness and protection.
Fogan enjoyed exclusive access to, and control of, the Oasis Foundation’s finances, including all bank accounts. From on or about Jan. 1, 2011, to at least May 31, 2013, Fogan illegally obtained in excess of $1 million from the Oasis Foundation. Oasis Foundation accounts were replenished as Fogan continued to spend down the balances in each account.
Fogan spent at least $1 million of the illegally obtained funds at casinos. Spending the funds in such fashion was contrary to the purpose and mission of the organization. The Board was unaware of such spending, and would not have approved of it. Fogan continued in the unlawful spending of these funds until he was caught by law enforcement.
Of the numerous illegal transactions Fogan conducted, seven were for amounts in excess of $10,000, which comprise the money laundering charge. These seven transactions totaled $223,568.
During this time period, the defendant made some legitimate expenditures related to the Oasis Foundation, which resulted in the commingling of funds.
In announcing the sentence, U.S. Attorney Phillips, Special Agent in Charge Jankowski and Assistant Director in Charge Abbate commended the work of those who investigated the case from IRS-CI and FBI. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including former Assistant U.S. Attorney David Johnson, Paralegal Specialist Taryn McLaughlin, and Assistant U.S. Attorneys Zia Faruqui, Alessandra Stewart, and Maia L. Miller.
Former Employees Plead Guilty to Conspiracy to Commit Wire and Mail Fraud in Connection with Alleged $70 Million Ponzi SchemeRead the Press Release
DAYTON, Ohio – Rebekah Riddell, 30, of Dayton, Ohio, pleaded guilty to one count of conspiracy to commit mail fraud, and Rebekah Fairchild, 53, also of Dayton, Ohio, pleaded guilty to conspiracy to commit wire fraud today in U.S. District Court. Riddell’s and Fairchild’s guilty pleas were both in connection with an alleged $70 million Ponzi scheme.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Guy A. Ficco, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Christopher White, Assistant Inspector in Charge, U.S. Postal Inspection Service, James Vanderberg, U.S. Department of Labor Office of Inspector General, the U.S. Department of Labor Employee Benefits Security Administration, and Brian Peters, Enforcement Attorney, Ohio Department of Commerce Division of Securities, announced their guilty pleas entered into Friday before Judge Thomas M. Rose.
Riddell and Fairchild pleaded guilty in connection to the case involving William M. Apostelos, 54, and Connie M. Apostelos, 50, both formerly of Springboro, Ohio. A grand jury in the Southern District of Ohio returned a multi-count indictment against William and Connie Apostelos in October 2015. An indictment merely contains allegations, and the defendants are presumed innocent unless proven guilty in a court of law. William and Connie Apostelos’ trial is currently scheduled to begin in May 2016.
The indictment alleges that beginning in 2009, and continuing for at least five years, the couple and others orchestrated a Ponzi scheme in the Dayton area in which nearly 480 investors lost more than $30 million collectively. William Apostelos operated and oversaw multiple purported investment and asset management companies in the Dayton area, including WMA Enterprises, LLC, Midwest Green Resources, LLC and Roan Capital. He allegedly falsely reported that he held a degree in mathematics and was a registered securities broker.
Connie Apostelos, also known as Connie Coleman, also operated and oversaw multiple companies in the Dayton area, including Coleman Capital, Inc. and Silver Bridle Racing, LLC. These companies were allegedly financed through improper use of investor funds that were intended to be invested with and through William Apostelos’ companies.
The couple allegedly recruited investors from 37 states to invest in WMA and Midwest Green, telling the investors that their money would be used for acquiring stocks or securities, purchasing real estate or land, providing loans to business and buying gold and silver.
Riddell and Fairchild were employed at Midwest Green and WMA from at least August 2009 until October 2014. In order to perpetuate the scheme, they engaged in a variety of activities, including wiring later investors’ money into earlier investors’ bank accounts and providing investors (at the direction of William and Connie Apostelos) with false and fraudulent excuses for non-payment to investors.
Riddell and Fairchild each face a potential maximum sentence of five years in prison.
U.S. Attorney Stewart commended the investigation of this case by law enforcement, and Assistant United States Attorneys Brent G. Tabacchi and Alex R. Sistla, who are prosecuting the case.
Former Employee of New Mexico Human Services Department Sentenced to Prison for Defrauding Federal Food Stamp ProgramRead the Press Release
ALBUQUERQUE – A former employee of the Income Support Division of the New Mexico Human Services Department was sentenced for defrauding the federal food stamp program. Joseph Martin Padilla, 34, of Albuquerque, N.M., was sentenced in federal court today to one year and a day in prison followed by three years of supervised release. Padilla was also ordered to pay $181,398.76 in restitution to the U.S. Department of Agriculture.
Padilla is one of six defendants charged with defrauding the Food Stamp Program in a 32-count indictment that was filed in Aug. 2014. The indictment alleged that between Sept. 2009 to May 2010, Padilla, conspired with Wilfredo Lopez, 47, Joshua Moya, 33, Justin Quintana, 29, Sergio Escobedo, 36, and Veronica Hernandez, 41, to defraud the United States through the unauthorized use of Food Stamp benefits, which are currently called Supplemental Nutrition Assistance Program (SNAP) benefits. During this time, Padilla worked as a Family Assistance Analyst for the Income Support Division of the New Mexico Human Services Department (HSD) where he was responsible for determining applicants’ eligibility and benefit level for SNAP benefits.
SNAP is funded by the U.S. Department of Agriculture and is administered by the States. The program was created to alleviate hunger and malnutrition, and permits low income households to obtain more nutritious diet by increasing the food purchasing power for eligible households. In New Mexico, individuals qualify to participate in SNAP based on income and need by completing an application with the Income Support Division of HSD. Once an applicant is deemed eligible for SNAP benefits by a Family Assistance Analyst, the Analyst establishes a SNAP account in the applicant’s name and electronic benefit transfers (EBT), which are determined based on income, resources and household size, are deposited into the account on a monthly basis.
The indictment charged Padilla with abusing his position as a Family Assistance Analyst by conspiring with his co-defendants to defraud the United States through the unauthorized use of SNAP benefits. It alleged that Padilla used names and personal identifiers he obtained from his co-defendants to establish fraudulent SNAP accounts, sometimes in exchange for cash or other things of value. It also charged Padilla with establishing and using a fraudulent SNAP account to fraudulently obtain approximately $1,468.00 in SNAP benefits for himself. According to the indictment, Padilla fraudulently established 25 separate SNAP accounts through which the United States was defrauded of approximately $45,263.00 in SNAP benefits. Additionally, Padilla, aided and abetted by his co-defendants, fraudulently established SNAP accounts that were used to fraudulently obtain an aggregate of $12,705.00 in SNAP benefits.
On Nov. 23, 2015, Padilla pled guilty two counts of the indictment and admitted that he was previously employed by HSD and despite his awareness of the policies and procedures of HSD, he processed numerous applications for SNAP benefits in a fraudulent manner in exchange for cash payments. Padilla acknowledged that his illegal conduct resulted in an aggregate loss to the U.S. Department of Agriculture and the State of New Mexico of approximately $181,398.76.
On May 19, 2015, Lopez entered a guilty plea to one count of the indictment and admitted that he completed fraudulent applications for SNAP benefits in his name, another for himself in a pseudonym, and in the names of two other individuals. Lopez paid $100.00 to process each of the applications. Lopez was sentenced on Jan. 14, 2016, to four years of probation and was ordered to pay $8,382.00 in restitution to the USDA.
On May 18, 2015, Quintana pled guilty to one count of the Indictment, and admitted meeting Padilla through Moya, and knowing that Padilla had the ability to register people to receive food stamps. Quintana admitted that he agreed to pay Padilla a fee in exchange for arranging for him to receive food stamps unlawfully. Quintana obtained $486.00 in SNAP benefits through his illegal conduct. He also received a fee for collecting SNAP applications from six other people and delivering the completed applications to Padilla for the purpose of assisting them in obtaining SPA benefits unlawfully. Quintana acknowledged that his criminal conduct caused a monetary loss to the U.S. Department of Agriculture of $9,384.00. Quintana was sentenced on Aug. 17, 2015, to three years of probation and was ordered to pay $9,384.00 in restitution.
On March 9, 2015, Moya pled guilty to one count of the indictment and admitted that he fraudulently obtained SNAP benefits to which he was not entitled. Moya admitted that in early Dec. 2009, Padilla provided him with an application to obtain food stamps. Moya completed the application and returned it to Padilla for processing even though he knew that he was not entitled to SNAP benefits. Moya admitted unlawfully receiving $866.00 in SNAP benefits. Moya also admitted providing another application for SNAP benefits to a family member and that his relative unlawfully received $1,578.00 in SNAP benefits. On May 6, 2015, Moya was sentenced to six months in prison, or time served, followed by three years of supervised release. Moya also was ordered to pay $2,444.00 in restitution.
Escobedo and Hernandez have entered not guilty pleas to the charges in the indictment. Charges in indictments are merely accusations and defendants are presumed innocent unless found guilty beyond a reasonable doubt.
This case was investigated by the Office of Inspector General for the U.S. Department of Agriculture and the Office of Inspector General for New Mexico Human Services, and is being prosecuted by Assistant U.S. Attorney Sean J. Sullivan.
Former Deportation Officer Indicted for Accepting Bribes, Harboring an Undocumented Immigrant and Lying to U.S. Immigration AuthoritiesRead the Press Release
NEWARK, N.J. – A federal grand jury today indicted a Somerset, New Jersey, man for allegedly accepting cash bribes and sex in exchange for providing employment authorization documents and for concealing his employment of an undocumented immigrant at a hair salon he owned, U.S. Attorney Paul J. Fishman announced.
Arnaldo Echevarria, 38, a former deportation officer with Immigration and Customs Enforcement (ICE), is charged by indictment with seven counts of accepting bribes, one count of harboring an undocumented immigrant and one count of making false statements to immigration authorities. Echevarria will be arraigned in federal court on a date to be determined. He was originally charged by complaint on Apr. 9. 2015.
According to the documents filed in this case:
As a deportation officer, Echevarria enforced immigration and customs laws by identifying, locating, arresting and removing undocumented immigrants from the United States and by supervising certain undocumented immigrants who had not yet been deported. Undocumented immigrants subject to a deportation order often were able to obtain employment authorization documents which allowed them to legally work in the United States for a one-year period and which could be renewed annually.
Between 2012 and 2014, Echevarria agreed to obtain employment authorization documents for approximately seven undocumented immigrants who were not lawfully present in the country. In return, Echevarria demanded and received approximately $78,000 in cash bribes. In order to conceal them from immigration authorities, Echevarria falsely stated that they had been granted temporary protected status, which allows nationals from certain countries experiencing environmental disaster, ongoing armed conflict, or other extraordinary conditions to lawfully remain in the United States. None of the individuals who bribed Echevarria had actually applied for, or received, temporary protected status.
In addition to the cash bribes, Echevarria also allegedly demanded and received sex from two of the individuals, one of whom became pregnant with Echevarria’s child. Despite Echevarria encouraging her to have an abortion, the woman delivered the child, and Echevarria told her that no one could find out that he was the child’s father. Afterwards, Echevarria continued to have sex with this individual in exchange for his help with her employment authorization documents.
In December 2012, Echevarria received permission from his superiors at ICE to open a hair salon in West Orange, New Jersey. Echevarria certified to ICE that the hair salon would not conflict with ICE matters and would not involve undocumented workers. However, Echevarria employed his girlfriend at the time, an undocumented immigrant, to manage the salon. Echevarria’s girlfriend had entered the United States illegally, using the name and identification of an individual in Puerto Rico to obtain a Pennsylvania identification card.
Echevarria allegedly knew his girlfriend resided in the United States illegally. Prior to opening the hair salon, Echevarria queried the name and date of birth of his girlfriend’s alias in various law enforcement databases. After opening the salon, Echevarria allegedly ensured that his girlfriend’s illegal status remained a secret by signing the lease for her apartment and by placing her cable and electric bills in his name. In addition to driving his girlfriend and other employees to and from the salon each day, Echevarria also paid the employees in cash and never asked them to fill out employment eligibility paperwork.
The seven bribery counts each carry a maximum potential penalty of 15 years in prison and a $250,000 fine, twice the gross gain or loss from the offense, or three times the monetary equivalent of the things of value accepted by the defendant. The charges of harboring and making false statements are each punishable by a maximum potential penalty of five years in prison and $250,000 fine, or twice the gross gain or loss arising from the offense.
U.S. Attorney Fishman credited special agents of ICE, Office of Professional Responsibility, under the direction of Acting Special Agent in Charge John McCabe, with the investigation leading to today’s indictment.
The government is represented by Assistant U.S. Attorney Rahul Agarwal of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Defense counsel: Michael Koribanics Esq., Clifton, New Jersey
Former Daycare Owner Pleads Guilty to Failing to Pay $891,000 in TaxesRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the former owner of two daycare businesses in Parkville, Mo., and Platte City, Mo., pleaded guilty in federal court today to failing to pay $891,572 in payroll and other taxes to the Internal Revenue Service.
Lynn Jordan, 47, of Parkville, Mo., waived her right to a grand jury and pleaded guilty before U.S. District Judge Howard F. Sachs to a federal information that charges her with failing to pay over taxes to the IRS.
Jordan operated daycare businesses at two locations. The first daycare business, Growing Places, Inc., in Parkville, opened in 1999 and closed in 2011, after which Jordan opened South Platte Early Educational Center, LLC, using the same business location, clients, assets, employees, etc. Jordan closed this business in 2012. The second daycare business, Growing Places Platte City, Inc., in Platte City, opened in 2006 and closed in 2009, after which Jordan opened GPPC, Inc., using the same business location, clients, assets and employees, but with a different employer identification number. She did this because she was having problems paying business expenses, owed a lot of money to the IRS and needed a fresh start. Jordan closed this business in 2010.
By pleading guilty today, Jordan admitted the total federal criminal tax loss is $891,572.
From 2009 to 2012, Jordan withheld employment taxes from her employees’ paychecks totaling $211,704. But Jordan failed to pay over the trust fund taxes she collected from her employees to the IRS. Jordan also failed to pay over the employer’s portion of Social Security tax and Medicare tax from 2009 to 2012, totaling $123,906. Additionally, Jordan failed to pay over employment taxes from 2004 to 2008 totaling $506,588. She also failed to pay over federal unemployment taxes from 2004 to 2012 totaling $22,294. In addition to the payroll taxes, Jordan failed to file tax returns for three years from 2009 to 2012. The balance due on those tax returns totals $27,079.
During this time, Jordan spent a total of $320,738 on a large number of personal expenses from the business bank accounts. According to today’s plea agreement, Jordan withdrew more than $150,000 in cash and paid more than $50,000 on the mortgage of her personal residence from the business bank accounts. She made large ATM withdrawals and personal charges, including for lunches, salons, manicures, pedicures, travel, credit card and loan payments, checks and transfers to her personal bank accounts (in addition to her paychecks), retail stores, vehicle expenses, gas station purchases, clothing stores, medical and health expenses, restaurants, travel, expenses related to her children and credit score companies.
Under federal statutes, Jordan is subject to a sentence of up to five years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by IRS-Criminal Investigation.
Former Cay Clubs Chief Executive Officer Sentenced to 40 Years in Prison in Connection with $300 Million Dollar Scheme to Defraud InvestorsRead the Press Release
The former Cay Clubs Chief Executive Officer was sentenced to 40 years in prison, by United States District Judge Jose E. Martinez in Key West, for his participation in a $300 million dollar vacation rental fraud scheme.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Timothy Mowery, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), made the announcement.
Fred Davis Clark, Jr., a/k/a Dave Clark, 57, formerly of Monroe County, was convicted on December 11, 2015 after a five-week trial, of three counts of bank fraud, and three counts of making a false statement to a financial institution, all in connection with a $300 million dollar fraud scheme involving sales of vacation rental units. The scheme involved sales at Cay Clubs Resorts and Marinas (Cay Clubs), to approximately 1,400 investors in the Florida Keys and elsewhere. Clark also was convicted of obstruction of the U.S. Securities and Exchange Commission (SEC), in connection with the SEC’s efforts to investigate his conduct related to Cay Clubs. Clark was sentenced to 480 months’ imprisonment and the Court entered forfeiture money judgments against Clark, including in the amount of $303,800,000 for the bank fraud and $3,300,000 for the SEC obstruction. In addition, the Court ordered forfeiture of specific assets, located overseas, totaling approximately $2.6 million dollars.
U.S. Attorney Wifredo A. Ferrer stated, “Dave Clark was the leader and orchestrator of an elaborate fraud scheme, that deceived nearly 1,400 Cay Clubs investors and lenders, in order to reap millions of dollars for his own personal benefit. Today, Dave Clark was held accountable in a court of law, for his extensive deceit and the long-standing harm he caused to others.”
Kelly R. Jackson, Special Agent in Charge, IRS Criminal Investigation (IRS-CI), stated, “Promoters of Ponzi schemes prey upon trusting investors and then steal their hard earned money. Mr. Clark made a conscious decision to deceive others, and he benefitted personally at the expense of the citizens of the Keys and elsewhere. We are pleased with today’s sentence, as justice is served for those victims of Mr. Clark’s elaborate scheme.”
“In lieu of providing honest services to thousands of investors, Dave Clark decided to deceive and swindle them out of their hard earned money,” stated Timothy Mowery, Special Agent in Charge, FHFA-OIG. “Today he is being held accountable for his actions and being afforded the opportunity to reflect on his own character.”
According to evidence submitted in court, Clark was the Chief Executive Officer of Cay Clubs, which operated from 2004 through 2008 from offices in the Florida Keys and Clearwater. Cay Clubs marketed vacation rental units for 17 locations in Florida, Las Vegas and the Caribbean, to investors throughout the United States. Cay Clubs raised more than $300 million from investors by promising to develop dilapidated properties into luxury resorts, and promising investors an upfront “leaseback” payment of 15 to 20% of the sales price of the unit at the time of closing. Evidence at trial showed that, in reality, Cay Clubs never developed the properites it had promised to investors and it came to operate as a Ponzi scheme, using proceeds from sales to new investors to pay overdue obligations to earlier investors.
Evidence showed that by at least September 2006, Cay Clubs experienced serious financial difficulties. In order to meet Cay Clubs’ financial obligations and obtain funds for himself, evidence at trial showed that Clark engaged in a serious of fraudlent mortgage transactions totalling more than $20 million worth of bank loans. According to documents and testimony introduced at trial, during these sham transactions, Clark sold units Cay Clubs had acquired, to himself, while increasing the sales price. On paper, Clark sold the units to family members and certain insiders, while causing various lending institutions to fund the transactions. Clark directed his administrative assistant and his bookkeeper to forge signatures on loan documents and falsely notarize mortgage paperwork to make it appear that family members and other insiders listed on paperwork, were in fact executing the documents. In reality, Clark was providing the deposits and down payments, directing his subordinates to execute the loan documents, and then using the proceeds of the transactions to fund Cay Club’s operations and for his own personal benefit. The financial institutions that funded the fraudulently obtained loans were insured by the FDIC.
Evidence at trial showed that while Cay Clubs continued to experience significant financial difficulties, Clark lived a lavish lifestyle, extracting more than $22 million from the operations of Cay Clubs between 2005 and 2007. Clark also obtained a personal portfolio of properties he valued at $23 million but that were held in the names of other persons. Clark also used proceeds from the investor sales to purchase a gold mine, a coal reclamation project and a rum distillery for his personal benefit.
After the collapse of Cay Clubs, the SEC began an investigation into alleged securities fraud at Cay Clubs. According to evidence presented in court, Clark engaged in conduct aimed at thwarting the SEC’s investigation, including by concealing the location of assets under his control and providing false sworn testimony before the SEC in May 2011. In March 2013, after the SEC filed a civil fraud action against him, Clark transferred more than $2.5 million to accounts he controlled in Honduras. After these transfers, U.S. law enforcement and authorities in Honduras were able to abtain a court order freezing these funds.
Clark was expelled from Panama in June 2014, and returned to the United States by Panamanian authorities at the request of U.S. law enforcement in connection with the charges set forth in the indictment.
In related cases, former Cay Clubs executives Barry J. Graham, 59, and Ricky Lynn Stokes, 54, both of Ft. Myers, Florida pleaded guilty to conspiracy to commit bank fraud, in connection with the scheme to defraud Cay Clubs investors. Graham, who was Director of Sales, was sentenced on March 30, 2015, and Stokes, who was the Director of Investor Relations, was sentenced on March 24, 2015. Each was sentenced to 60 months’ imprisonment, and was ordered to pay restitution of $163,530,377.21 to numerous individual and financial institution victims.
Mr. Ferrer commended the investigative efforts of the IRS-CI and FHFA-OIG, and the extensive assistance of the SEC’s Miami Regional Office. The matter is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy, Thomas A. Watts-FitzGerald and Alison Lehr, and Special Assistant U.S. Attorney Michael Padula. Mr. Ferrer also commended the efforts of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Key West Regional Office, for its assistance with this matter.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.