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Wednesday 16 December 2015
El Paso, Texas, Man Sentenced to Prison for Violating Federal Narcotics Trafficking Laws in New MexicoRead the Press Release
ALBUQUERQUE – Roberto Marquez, 38, of El Paso, Texas, was sentenced today in federal court in Las Cruces, N.M., to 168 months in prison followed by five years of supervised release for violating federal narcotics trafficking laws.
Marquez was arrested in July 2012, on two indictments charging him with separate drug trafficking offenses. One indictment charged Marquez with trafficking in methamphetamine and the other charged him with trafficking in marijuana.
On Jan. 30, 2013, Marquez pled guilty to both indictments. In pleading guilty to trafficking in methamphetamine, Marquez admitted that between May 6, 2012 and June 1, 2012, he accepted delivery of 3.99 kilograms of methamphetamine which were seized by law enforcement authorities in Las Cruces.
With respect to the indictment charging him with trafficking in marijuana, Marquez admitted that he participated in transporting a series of loads of marijuana from Texas to other locations throughout the United States. In his plea agreement, Marquez specifically identified his role in the following marijuana trafficking offenses:
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Between Oct. 14, 2011 and Oct. 16, 2011, Marquez arranged for 369.45 kilograms of marijuana to be transported from Horizon City, Texas to Oklahoma City, Okla.
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In Sept. 2011, Marquez arranged for 324.32 kilograms of marijuana to be delivered to Cedar Rapids, Iowa.
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On Feb. 7, 2012, Marquez conspired to take possession of 317.51 and 453.59 kilograms of marijuana that was to be delivered to Horizon City and loaded onto a semi-truck to be transported elsewhere, but the delivery of the marijuana never took place.
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Between March 4, 2012 and March 10, 2012, Marquez negotiated a drug deal involving 317.51 to 453.59 kilograms of marijuana that were to be delivered to Horizon City and thereafter transported to Oklahoma City.The drug deal was not consummated.
In aggregate, Marquez admitted possessing 693.77 kilograms of marijuana with intent to distribute. He further acknowledged that he conspired to possess between 1124.68 and 1600.95 kilograms of marijuana with intent to distribute.
These cases were investigated by the Las Cruces office of the DEA and the U.S. Border Patrol. Assistant U.S. Attorney Alfred Perez of the U.S. Attorney’s Las Cruces Branch Office prosecuted both cases.
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Dublin, Texas, Man Sentenced to 10 Years in Federal Prison for Sending Obscene Photo of Himself to Undercover Officer Posing Online as 14-Year-Old-GirlRead the Press Release
DALLAS — Sethaniel Winston Hampsten, 24, of Dublin, Texas, was sentenced today by U.S. District Judge Ed Kinkeade to 10 years in federal prison, following his guilty plea in September to one count of transferring obscene material to a minor, announced John Parker, U.S. Attorney for the Northern District of Texas.
According to documents filed in the case, Hampsten used his cell phone and tablet to entice someone he thought was a 14-year-old girl to engage in sexual contact with him. He also admitted sending a sexually explicit, obscene photo of himself to the minor girl.
The investigation began in September 2014 when a detective with the Garland Police Department was conducting an undercover investigation online into advertisements placed on Craigslist. The detective established an undercover profile as a 14-year-old girl. Using this undercover profile, the detective responded to an ad Hampsten placed by stating she was almost 15 years old and a freshman. Within nine minutes, a man, later identified as Hampsten, responded, asking for a picture.
Over the course of four days, Hampsten and the detective chatted and Hampsten identified himself as a man in his 20’s named Seth. Sexually explicit chats continued, with Hampsten sending a sexually explicit obscene photo of himself, and the two planned to meet in the minor girl’s apartment in Garland, Texas. On the scheduled meet date, Hampsten drove from Dublin to Garland and parked in the apartment’s parking lot. When detectives approached him in his vehicle, he had a condom in his lap.
The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 2006 by the Department of Justice, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/. For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”
The Garland Police Department and the FBI investigated. Assistant U.S. Attorney Camille Sparks was in charge of the prosecution.
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Department of Justice Appoints Veterans Law Enforcement Executive to Lead New Policing Practices and Accountability InitiativeRead the Press Release
Department of Justice, Office of Community Oriented Policing Services (COPS) Director Ronald Davis today announced the appointment of Noble Wray, retired Madison, Wisconsin, police chief, to lead its newly created Policing Practices and Accountability Initiative.
The creation of the new initiative follows a recommendation of the President’s Task Force on 21st Century Policing. The report also calls on the COPS Office to assist the field in implementing task force recommendations. Specifically, recommendation 7.3 charges the COPS Office with “assisting the law enforcement field in addressing current and future challenges” and to “create a National Policing Practices and Accountability Division.” Wray will serve as chief of this new initiative.
The new COPS Office initiative will also oversee the collaborative reform and critical response technical assistance programs and assist the law enforcement field in developing strategies to implement task force recommendations, work closely with law enforcement and elected officials to provide technical assistance, identify industry best practices and provide crisis response services.
“The recommendations from the President's Task Force on 21st Century Policing serve as a blueprint for reducing crime while building trust and legitimacy,” said Director Davis. “Chief Wray's background and extensive experience make him the ideal candidate to lead this effort.”
Wray comes to the Department of Justice’s COPS Office after serving close to 30 years at the Madison Police Department, with nine as chief of police. Wray is a widely respected law enforcement leader recognized for his community policing efforts and work to build trust between the police and the communities they serve. He has worked with the Department of Justice to provide training to more than 200 law enforcement agencies on fair and impartial policing. He has also consulted with law enforcement on topics such as “Blue Courage,” which emphasizes improving police culture and leadership; police legitimacy and procedural justice; and the “nobility of policing,” which focuses on the purpose of policing in a democratic society.
Wray has also served on a number of non-profit boards in the Madison area, including serving as interim CEO for the Urban League of Greater Madison, Wisconsin, and board president for the United Way of Dane County.
He has a Bachelor of Science in Criminal Justice from the University of Wisconsin, Milwaukee.
The COPS Office, headed by Director Ronald Davis, is a federal agency responsible for advancing community policing nationwide. Since 1995, the COPS Office has invested more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local and tribal law enforcement agencies to fund the hiring and redeployment of more than 127,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance. For additional information about the COPS Office, please visit www.cops.usdoj.gov.
Denver Man Sentenced to Lengthy Prison Term for Production of Child PornographyRead the Press Release
DENVER – Minh Thong, age 32, of Denver, Colorado, was sentenced Tuesday, December 15, 2015 by Judge Robert E. Blackburn to serve 292 months (over 24 years) in federal prison for the production of child pornography, United States Attorney John Walsh and Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge David Thompson announced. Following his prison term, Thong was ordered to serve 15 years on supervised release. The defendant, who appeared at the hearing in custody, was remanded at its conclusion.
Thong was first charged by Criminal Complaint on January 20, 2014. He was then indicted by a federal grand jury on January 27, 2014. He pled guilty before Judge Blackburn on August 14, 2015.
Thong was identified through Operation Round Table, an extensive international investigation conducted by ICE HSI and the U.S. Postal Inspection Service (USPIS). According to court records in Colorado, including the affidavit in support of the original criminal complaint as well as the stipulated facts contained in the plea agreement, on July 10, 2013, an HSI special agent in Seattle, while functioning in an undercover capacity, used the internet to connect to a Peer to Peer file sharing program (a/k/a FSP). The special agent was able to download child pornography from a specific person using a specific username at a unique IP address. The agent was not only able to download child pornography, the agent was also able to view thumbnail images before choosing which images or videos to download.
Further investigation revealed that the IP address resolved at an address in Denver, and was registered to Minh Thong. A federal search warrant for Thong’s residence was then obtained and executed. HSI found child pornography on Thong’s computer. Thong obtained child pornography from others using Peer to Peer software. He also produced child pornography by accessing video chat websites where individuals can see each other using a web cam. Thong used a program to play a video of a minor female so that the minor person on the other end of the web cam chat believed they were chatting with another minor. During those chats Thong used the video of the minor female, who undressed and fondled herself during the video, to convince users on the other end of the chats to disrobe and/or masturbate. He recorded the video chats and saved the files. Based on the computer forensic examination and additional investigation, there are at least 100 victims depicted in the child pornography videos created by Thong. Thus far, there is no evidence that Thong distributed the child pornography that he produced. Numerous minor victims have been identified during the course of the investigation. The identified victims ranged in age from 12 years old to 16 years old at the time the videos were created.
“The defendant in this case went far beyond viewing and possessing child pornography; he actively manipulated minors through lies and deceit to produce it for him,” said U.S. Attorney John Walsh. “Minh Thong victimized over 100 children young people and is facing the stern consequences for his crimes.”
"This predator used his position as a popular skateboard photographer to prey on his teen-age victims to produce child pornography," said HSI Denver Special agent in charge David A. Thompson. "Due to the egregious nature of his crime as a producer of child pornography, the court sentenced him to serve a significant federal prison term of more than 24 years. HSI has a dedicated program to investigate these crimes, pursue prosecution against these predators, and rescue their child victims." This case was investigated by Homeland Security Investigations (HSI).
Thong was prosecuted by Assistant U.S. Attorney Alecia Riewerts.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, PSC marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about PSC, please visit http://www.justice.gov/psc/ For more information about Internet safety education, please visit http://www.justice.gov/psc/resources.html and click on the tab "resources."
Defendant Sentenced for Conspiracy to Commit Theft from the Coeurd'Alene Tribe and Making Counterfeit ChecksRead the Press Release
COEUR D'ALENE - Roberta Jean Peone, 43, of Desmet, Idaho, was sentenced today in United States District Court to time served — 100 days — for conspiracy to commit theft from the Coeur d’Alene Tribe and for making counterfeit checks, U.S. Attorney Wendy J. Olson announced. United States District Judge Stanley A. Bastian, a visiting judge from the Eastern District of Washington assigned to hear some Idaho cases, also ordered Peone to serve three years of supervised release, with the first 120 days to be spent in a residential re-entry center, and to pay $20,772.32 in restitution. Peone pleaded guilty to the charge on September 15, 2015.
According to the plea agreement, Peone admitted that she and her codefendant, agreed to, and did, manufacture counterfeit checks and steal from a federally recognized tribal organization. Defendant Peone created the counterfeit checks using check making software on her laptop and check stock. After creating the checks, Peone and her codefendant recruited others to cash some of the counterfeit checks. Many of the checks were cashed at the Coeur d’Alene Casino, a federally recognized tribal organization. The recruits split the proceeds from the counterfeit checks with Peone and her codefendant. The total loss due to the counterfeit checks created by Peone and her codefendant was $20,772.32.
The case was investigated by Coeur d’Alene Tribal Police and the Federal Bureau of Investigation.
Danny Heinrich Indicted for Possession and Receipt of Child PornographyRead the Press Release
United States Attorney Andrew M. Luger today announced an indictment charging DANNY JAMES HEINRICH, 52, with 25 counts of felony child pornography offenses, including 17 counts of possession and eight counts of receipt of child pornography. HEINRICH was originally charged by criminal complaint on October 29, 2015.
According to the indictment, a search warrant was executed on July 28, 2015, at the Annandale, Minn., home of the defendant. During the execution of the search warrant, officers recovered numerous images of suspected child pornography from the residence. Those images were organized into separate collections of child pornography within multiple three-ring binders located throughout the residence.
According to the indictment, additional images of child pornography were recovered from the hard-drive of a desktop computer located in the basement of the defendant’s residence.
If you have information about this case, please contact the Stearns County Sheriff’s Office at 1-320-656-6625 or the National Center for Missing and Exploited Children at 1-800-THE-LOST.
This case is the result of an investigation conducted by the FBI, Minnesota Bureau of Criminal Apprehension and the Stearns County Sheriff’s Office.
This case is being prosecuted by Assistant United States Attorneys Julie E. Allyn and Steven L. Schleicher of the U.S. Attorney’s Office’s Special Prosecutions Unit.
Defendant Information:DANNY JAMES HEINRICH, 52
Annandale, Minn.Charges:
- Possession of child pornography – printed material, 10 counts
- Possession of child pornography – victim under 12 – printed material, 5 counts
- Possession of child pornography – morphed image – printed material, 1 count
- Possession of child pornography – digital image, 1 count
- Receipt of child pornography – digital material, 7 counts
- Receipt of child pornography – printed material, 1 count
Court of Appeals Affirms Conviction in Gun Case That Led to the Death of A Police Officer and FirefighterRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
BUFFALO, N.Y. — U. S. Attorney William J. Hochul, Jr. announced today that the United States Court of Appeals for the Second Circuit has affirmed the conviction and sentence of Dawn Nguyen. The defendant was convicted of knowingly making a false statement in connection with the purchase of firearms; selling and disposing of firearms to William Spengler, a known felon; and possession of firearms while being an unlawful user of marijuana, was sentenced to 96 months in prison.“Today’s Court of Appeals affirmation brings to a fitting end our prosecution of Dawn Nguyen,” said U.S. Attorney Hochul. “Not only did this defendant buy two firearms for William Spengler, an already convicted killer, she did so knowing that Spengler, in the words of the Court, ‘openly mused aloud about killing’ another person- his sister. While no amount of jail time will ever restore those killed and wounded by Spengler on December 24, 2012, the substantial prison term imposed upon Nguyen sends a very clear message of condemnation for this defendant’s outrageous actions.”
The charges involved the purchase and disposition of the firearms that were used in the Christmas Eve shooting in December 2012 that resulted in the deaths of Webster Police Lieutenant Michael Chiapperini and West Webster Firefighter Tomasz Kaczowka, and seriously injured Firefighters Theodore Scardino and Joseph Hostetter.
Nguyen made false statements during the purchase of a Bushmaster semiautomatic rifle and a Mossberg 12 gauge shotgun at Gander Mountain in Henrietta, NY, in order to acquire those firearms on behalf of William Spengler, Jr. The defendant gave those firearms to Spengler with the knowledge that Spengler was a convicted felon. In addition, Nguyen unlawfully possessed the firearms at a time when she was an unlawful user of marijuana.
On appeal the Government was represented by First Assistant U.S. Attorney James P. Kennedy, Jr. The prosecution was handled by Assistant U.S. Attorney Jennifer M. Noto.
Cleveland man indicted on human trafficking chargesRead the Press Release
A Cleveland man was indicted on two counts related to human trafficking, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office.
Ronnie L. Pratt trafficked two underage girls. He did this by taking photos of his girls and posting the photos on www.backpage.com. Pratt handled all text communications with potential customers and transported the girls to “dates.” He kept a portion of the money they were paid for commercial sex acts, according to court documents.
One of the girls was 13 when she began working for Pratt, according to court documents
Pratt had a gun that he used to intimidate at least one of the girls, according to court documents.
The conduct took place between July and November 2015, according to the indictment. The investigation is ongoing.
This case is being prosecuted by Assistant U.S. Attorney Bridget M. Brennan following an investigation by the Federal Bureau of Investigation.
If convicted, the defendant’s sentence will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendant’s prior criminal record (if any), the defendant’s role in the offense and the characteristics of the violation.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Carbondale Man Pleads Guilty to Cocaine OffenseRead the Press Release
On December 8, 2015, Ryan L. Gibbs, a/k/a "Blood," 35, of Carbondale, pled guilty to a one-count indictment charging possession with intent to distribute cocaine, the Acting United States Attorney for the Southern District of Illinois, James L. Porter, announced today.
Evidence at the plea hearing established that Gibbs was in possession of a large amount of cocaine during a September 16, 2014, Illinois Department of Corrections compliance check at Gibbs’s Carbondale residence. The cocaine offense carries a penalty of up to 20 years in federal prison, to be followed by 3 years’ supervised release, and a fine of $1,000,000. Gibbs is currently being held without bond pending a March 22, 2016, sentencing date.
The ongoing investigation is being conducted by the Southern Illinois Enforcement Group, Carbondale Police Department, Jackson County Sheriff’s Office, and Illinois Department of Corrections. The Jackson County State’s Attorney’s Office assisted in the investigation.
The case is assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
California Man Sentenced to One Year in Prison for Illegal Sale of Black Rhinoceros HornsRead the Press Release
Lumsden W. Quan, 47, an art dealer from San Francisco, California, was sentenced today in federal court in Las Vegas, Nevada, to one year and two days in prison for conspiracy to violate the Lacey and Endangered Species Acts and to a violation of the Lacey Act for knowingly selling black rhinoceros horns to an undercover agent from the United States Fish and Wildlife Service (USFWS). Quan was also sentenced to three years of supervised release to follow his prison sentence, pay a $10,000 fine and a three year ban on work in the art and antique business.
Quan, was arrested in March 2014 as part of “Operation Crash,” a nation-wide crackdown in the illegal trafficking of rhinoceros horns, for his role in a conspiracy to knowingly sell black rhinoceros horns across state lines. In pleading guilty, Quan admitted to working with his co-defendant, Edward N. Levine, to transport two horns from California to Nevada, where they sold them to an undercover agent from Colorado for a sum of $55,000. Levine, also charged in the indictment, remains scheduled for trial on March 7, 2016, in Las Vegas. The charges in an indictment are merely allegations and the defendant is presumed innocent unless and until proven guilty.
“Wildlife trafficking has become an extremely profitable type of transnational organized crime and illicit transactions like this are fueling a global market and leading us closer to a day when rhinoceroses, elephants and countless other species are extinguished from the earth,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “The Justice Department is committed to working through our law enforcement and international partners to reverse this disturbing trend.”
“Prosecuting individuals who profit from the destruction of an ancient endangered species is critical to stopping the illegal ivory trade’” said U.S. Attorney Dan Bogden. “There are no excuses for this type of crime. Considering the devastating impact on an endangered species, the offenders should be dealt with appropriately and punished in the criminal justice system.”
“Illegal trafficking in rhino horn threatens to reverse decades of rhino conservation work in Africa and Asia, driving rhinos to the brink of extinction in the wild,” said Director Dan Ashe of the U.S. Fish and Wildlife Service. “Today’s sentencing demonstrates that the United States takes wildlife trafficking very seriously and we will do everything possible to identify and disrupt smuggling operations and hold perpetrators responsible. I’m very proud of the work of the Office of Law Enforcement for their continued diligence in bringing these criminals to justice.”
Operation Crash is a continuing investigation being conducted by USFWS in coordination with other federal and local law enforcement agencies. A “crash” is the term for a herd of rhinoceros. Operation Crash is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns. As of November 2015, the coordinated efforts of Operation Crash has prosecuted and sentenced nearly 22 subjects and received forfeiture and restitution amounts totaling $5.5 million.
The black rhinoceros is an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under U.S. and international law, including the Endangered Species Act. Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 180 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.
The investigation was handled by the USFWS’s Office of Law Enforcement, the U.S. Attorney’s Office for the District of Nevada and the Justice Department’s Environmental Crimes Section. The government is represented by Trial Attorneys Jennifer Blackwell and Ryan Connors, Assistant U.S. Attorney Kathryn Newman and paralegal Amanda Backer.
California Man Pleads Guilty to Federal Heroin Trafficking Charge in New MexicoRead the Press Release
ALBUQUERQUE – Edwin Rodriguez, 34, of Bell Gardens, Calif., pleaded guilty today to a heroin trafficking charge in federal court in Albuquerque, N.M., under a plea agreement with the U.S. Attorney’s Office.
Rodriguez was arrested on a criminal complaint charging him with a heroin trafficking offense after the DEA seized 2.3 kilograms of heroin from him during an interdiction investigation at the Greyhound Bus Station in Albuquerque on Feb. 4, 2015. The heroin was concealed in a false compartment in Rodriguez’s baggage. Rodriguez was indicted on Feb. 25, 2015, and charged with possession of heroin with intent to distribute.
During today’s proceedings, Rodriguez pled guilty to possession of heroin with intent to distribute and admitted that on Feb. 4, 2015, he possessed 2.3 kilograms of heroin, which he wrapped in bundles and concealed in his suitcase while traveling through Albuquerque on the Greyhound Bus.
At sentencing, Rodriguez faces a maximum penalty of 20 years in federal prison. A sentencing hearing has yet to be scheduled.
This case was investigated by the Interdiction Unit of the DEA’s Albuquerque office which focuses on disrupting the flow of narcotics, weapons, and the proceeds of illegal activities as they are smuggled into or through New Mexico in passenger buses, passenger trains, commercial vehicles and automobiles. Assistant U.S. Attorney Shaheen P. Torgoley is prosecuting the case.
This case is being prosecuted pursuant to the New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative. The HOPE Initiative is a collaborative effort between the U.S. Attorney’s Office and the University of New Mexico Health Sciences Center that is partnering with the Bernalillo County Opioid Accountability Initiative with the overriding goal of reducing the number of opioid-related deaths in the District of New Mexico. The HOPE Initiative comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. The law enforcement component of the HOPE Initiative is led by the Organized Crime Section of the U.S. Attorney’s Office and the DEA in conjunction with their federal, state, local and tribal law enforcement partners. Targeting members of major heroin and opioid trafficking organizations for investigation and prosecution is a priority of the HOPE Initiative.
Calhoun County Supervisor Arrested on Extortion ChargesRead the Press Release
OXFORD, Miss.- Felicia C. Adams, United States Attorney for the Northern District of Mississippi and Donald Alway, Special Agent in Charge of the Federal Bureau of Investigation in Mississippi announce that:
Ernest McKinnley Fox, 66, a Calhoun County, Mississippi Supervisor, was arrested today on charges of extortion under color of official right, in violation of 18 U.S.C. § 1951.
Fox appeared before U. S. Magistrate Judge S. Allan Alexander and was released on a $5,000 unsecured bond. His arraignment is scheduled for Monday, December 21 at 2 p.m. in Oxford, Mississippi.
If convicted Fox faces maximum possible penalties of twenty years imprisonment, a $250,000, fine, and 5 years supervised release.
The public is reminded that an indictment is not evidence of guilt and that each defendant is presumed innocent until proven guilty in a court of law.
Brooklyn Man Sentenced in Manhattan Federal Court in Connection with Multimillion-Dollar Ponzi SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that MARCELLO TREBITSCH was sentenced to two years in prison in connection with his operation of a Ponzi scheme that defrauded at least four investors of nearly $6 million over the course of seven years. Among other things, TREBITSCH lied to two of his investors by telling them that he would invest their money through an investment fund that he controlled that would generate double-digit returns with very low risk. To that end, TREBITSCH provided the investors with fake account statements and federal tax forms that reflected significant gains. In reality, TREBITSCH invested only a portion of the investors’ money, suffered enormous trading losses, and used the remainder of the investors’ money for his own personal benefit and to pay back other investors. TREBITSCH pled guilty to a one-count Information charging him with securities fraud on July 13, 2015, and was sentenced today before United States District Judge Vernon S. Broderick.
U.S. Attorney Preet Bharara said: “Marcello Trebitsch purported to be an expert investor, but in reality, he lost much of his victims’ money through poor trading and used the rest for personal gain and to pay old victims with new investors’ money. Trebitsch’s conviction and sentence holds him accountable for his crimes and keeps him from victimizing anyone else.”
According to the Complaint, the Information, other submissions filed in Manhattan federal court, and other statements made in open court:
From 2007 through 2014, TREBITSCH engaged in a multimillion-dollar fraudulent investment scheme, during which he solicited money from investors based on materially false and misleading representations. Specifically, TREBITSCH told the investors that he, through an investment fund that he created called Allese Capital LLC, would (a) create and perfect public shell companies to sell to private companies; (b) execute specific trades at the direction of an investor; and (c) purchase and sell stocks on a daily basis, with little or no money remaining invested in the market at the end of each trading day. In fact, in all cases, TREBITSCH did not invest the money as he said he would, and instead principally used the investors’ money for his own personal benefit, including to repay other investors. With respect to the portion of investor funds that he did use to purchase securities, TREBITSCH suffered net trading losses, which he did not disclose to the investors.
In 2007, TREBITSCH represented to an individual (“Victim-1”) that TREBITSCH would invest Victim-1’s money to perfect shell companies and sell them to private companies for a positive return. TREBITSCH did create and perfect shell companies, but falsely represented to Victim-1 that he sold the shell companies, when, in fact, he had not and instead later used them to create bank accounts through which he wired and concealed proceeds of his scheme.
In 2008, another individual (“Victim-2”) agreed to invest money with TREBITSCH after TREBITSCH promised to simply execute trades as instructed by Victim-2. Instead, TREBITSCH did not invest Victim-2’s money as instructed, and further sent daily account updates by email that were entirely fabricated. After Victim-2 requested a redemption of his investment and purported returns of approximately $3 million, TREBITSCH admitted his fraudulent scheme to Victim-2, informed Victim-2 that TREBITSCH had lost nearly all of the money, and agreed to repay some money to Victim-2 that TREBITSCH obtained from a subsequent investor.
In 2009, TREBITSCH obtained additional investments from another individual (“Victim-3”) by promising to invest in large cap stocks and mitigate risk by selling the entire portfolio at the end of each trading day. Further, TREBITSCH represented that Victim-3 would receive double-digit returns and falsely asserted that a major Wall Street bank had already invested $50 million with TREBITSCH. Rather than invest the money as represented, TREBITSCH used some of Victim-3’s initial investment to repay Victim-2, and further failed to invest the money as promised. Even though TREBITSCH used the money for personal gain, to repay other investors, or lost much of it through poor trading, TREBITSCH sent Victim-3 fake monthly account statements and tax forms, which falsely purported to show double-digit annual returns. Based on these apparent positive returns, Victim-3 invested approximately $6.5 million with TREBITSCH over the course of four years. Of that total investment, TREBITSCH only repaid approximately $2.2 million, some of which was obtained from a subsequent investor.
In 2014, after reviewing Victim-3’s account statements and federal tax forms related to Victim-3’s investment with TREBITSCH, Victim-3’s accountant (“Victim-4”) invested approximately $700,000 with TREBITSCH. None of this money was invested as TREBITSCH promised; rather, it was immediately diverted to Victim-3 to satisfy Victim-3’s redemption request. TREBITSCH never returned any of the $700,000 Victim-4 invested with TREBITSCH.
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As part of the sentence imposed today by Judge Broderick, TREBITSCH, 37, of Brooklyn, New York, was further sentenced to three years of supervised release and was ordered to pay forfeiture and restitution to the victims of the offense in the amount of $5,905,949.
Mr. Bharara praised the work of the Federal Bureau of Investigation.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Daniel S. Goldman and Amy Lester are in charge of the prosecution.
Brockport Man Sentenced for “Ecstasy” ConspiracyRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Gerrit Mora, 22, of Brockport, NY, who was convicted of conspiracy to distribute MDMA (“Ecstasy”), was sentenced to time-served, six months of home confinement, and two years of supervised release by Senior U.S. District Judge William M. Skretny.
Assistant U.S. Attorney Frank T. Pimentel, who handled the case, stated that on March 7, 2014, Mora took delivery in Niagara Falls, NY of a package that he had ordered online from Brussels, Belgium. The package contained nearly nine ounces of MDMA. At approximately 8:15 p.m. that evening, law enforcement officers pulled Mora over in the vehicle he was driving in West Seneca, NY and seized the package.
The sentencing is the culmination of an investigation on the part of Special Agents of Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge James C. Spero.
Brandon Man Pleads Guilty to Submitting False ClaimRead the Press Release
Jackson, Miss. – Buck Stratton Flinn entered a guilty plea on December 11, 2015, before Senior U.S. District Judge Tom S. Lee for submitting a false claim to the United States Department of Agriculture, announced U.S. Attorney Gregory K. Davis.
Flinn was the President of Community Development Leagues of America (CDL), located in Brandon, Mississippi. In 2007, CDL applied for and was awarded a $761,000.00 grant from the U.S. Department of Agriculture, Rural Development. The agreement between CDL and the Department of Agriculture provided for the construction of a wireless broadband system for the town of French Camp, Mississippi.
Flinn admitted that, on October 15, 2009, he submitted a request for reimbursement in the amount of $248,192.00 for monies which he falsely represented he had spent in furtherance of the broadband project.
Flinn will be sentenced by Senior U.S. District Judge Tom S. Lee on March 24, 2016, and faces a maximum sentence of 10 years in prison and a $250,000.00 fine.
This case was investigated by the United States Department of Agriculture Office of Inspector General. It was prosecuted by Assistant U.S. Attorneys Chris Wansley and John M. Dowdy, Jr.
Belleville Resident Sentenced for Firearm OffenseRead the Press Release
James L. Porter, Acting United States Attorney for the Southern District of Illinois, announced today that on December 11, 2015, Jared L. Seats, 25, Belleville, IL, was sentenced for Unlawful Possession of a Firearm by a Previously Convicted Felon. Seats received 92 months in federal prison, to be followed by 3 years’ supervised release, fined $250, and ordered to pay a $100 special assessment. Seats also agreed to forfeit the illegal firearm that he possessed. Seats has been detained, that is, held without bond, since August 24, 2015.
At sentencing, evidence was presented that, on January 31, 2015, when Seats’ wife and two other individuals returned to the Seats’ residence, a verbal confrontation took place between Seats, his wife and one of the other individuals. When the argument ended, the two individuals remained outside in the driveway while Seats and his wife went into the residence. The two individuals reported to the police that they heard sounds as if the two were fighting inside the residence. The two individuals were unable to leave because their vehicle had been blocked in by Seats. One of the individuals tried to get in the house, cutting his/her hand on the side door’s window in the process, to get keys to the car so that the two individuals could leave. Evidence, including a 911 call, showed that, when the other individual returned to the driveway, Seats shot at the two individuals while they were standing in his driveway.
Seats was captured when officers arrived and recovered a Ruger, 22 caliber rifle from the residence. Seats admitted that he had possessed the rifle.
Before imposing sentencing, Honorable David R. Herndon noted that the recklessness of firing a shot outside of a rear window "[wa]s stunning." He then mentioned the recent incidents where children or other innocent people have been killed by stray bullets. After considering Seats’ criminal history, lack of remorse for the crime, and the facts of the instant offense, Judge Herndon labeled Seats a "narcissist," and noted that Seats "doesn’t care much about other people."
The case was investigated by the Belleville Police Department and the Federal Bureau of Investigation. The case was assigned to Assistant United States Attorney Angela Scott.
Auburn Man Sentenced to Nine Years for Transporting a Minor for ProstitutionRead the Press Release
Contact: Julia M. Lipez
Assistant United States Attorney
Tel: (207) 780-3257Portland, Maine: United States Attorney Thomas E. Delahanty II announced that Alvin Houston, Jr., 28, of Auburn, Maine was sentenced today in U.S. District Court by Judge Jon D. Levy to nine years in prison and five years of supervised release for transporting a minor in interstate commerce with the intent that she engage in prostitution. He pleaded guilty on July 29, 2015.
Court records reveal that on December 23, 2014, Houston and Shawna Calhoun obtained a rental car in Maine and used it to drive a 13-year old girl and another individual from Maine to Boston, Massachusetts, where they stayed with Calhoun’s family. While there, Calhoun and Houston drove the 13-year old girl to various hotels in the Boston area to engage in prostitution. On December 30, 2014, Calhoun and Houston learned that the Federal Bureau of Investigation (FBI) was looking for the minor. They drove her in the rental car back to Maine and ultimately to Bangor, so that she could again engage in prostitution. Early in the morning on December 31, 2014, Calhoun and Houston drove the minor to a hotel in the Bangor area so that she could meet with a client for the purposes of prostitution. The purported client turned out to be a member of law enforcement. Calhoun and Houston were arrested outside in the parking lot,
where they were waiting in the rental car.This case was investigated by the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Human Trafficking Task Force, the Lisbon and Bangor Police Departments, and the Maine Drug Enforcement Agency.
Armed Career Criminal from Albuquerque Sentenced to Fifteen Years for Unlawful Possession of FirearmRead the Press Release
ALBUQUERQUE – Michael Scott Ponce, 38, of Albuquerque, N.M., was sentenced today in federal court to 15 years in federal prison for being an armed career criminal. Ponce will be on supervised release for three years following his term of incarceration.
The sentence was announced by U.S. Attorney Damon P. Martinez, 2nd Judicial District Attorney Kari E. Brandenburg, Special Agent in Charge Thomas G. Atteberry of the Phoenix Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Chief Gorden Eden, Jr., of the Albuquerque Police Department (APD), and Bernalillo County Sheriff Manuel Gonzales, III.
U.S. Attorney Damon P. Martinez said that Ponce was prosecuted as part of a federal anti-violence initiative that targets “the worst of the worst” offenders based primarily on their prior felony convictions for federal prosecution. At the time of his arrest in this case, Ponce had been convicted of two counts of aggravated assaults with a deadly weapon, aggravated battery with a deadly weapon causing great bodily harm, and trafficking a controlled substance in the Second Judicial Court for the State of New Mexico in Bernalillo County. Ponce also had a prior federal conviction on a cocaine trafficking charge. When arrested in this case, Ponce was also on supervised release after having served a sentence of incarceration on the federal conviction.
Ponce was arrested on July 13, 2015, on a criminal complaint alleging that he unlawfully possessed a firearm and ammunition on June 27, 2015, in Bernalillo County, N.M. According to the criminal complaint, on June 27, 2015, APD officers responding to reports of a shooting in downtown Albuquerque observed a vehicle driven by Ponce as it struck another vehicle as Ponce attempted to flee from the area. APD officers pursued Ponce into a residential neighborhood where they took him into custody. As they were arresting Ponce, the officers observed a firearm cartridge in Ponce’s vehicle. Before they arrested Ponce, the APD officers also observed Ponce throw an item from his vehicle, and later found a semiautomatic pistol in the area where they had observed Ponce throw the object.
Ponce was subsequently indicted on July 30, 2015, and charged with being a felon in possession of a firearm and ammunition.
On Sept. 16, 2015, Ponce pled guilty to the indictment and admitted that on June 27, 2015, he possessed a semi-automatic pistol even though he was prohibited from possessing firearms and ammunition due to his prior felony convictions.
The statutory maximum sentence for being a felon in possession of a firearm is ten years in prison. The sentence is enhanced to a mandatory minimum of 15 years in prison for defendants like Ponce who are deemed to be armed career criminals.
This case was investigated by the ATF office in Albuquerque and APD with assistance from the Bernalillo County Sheriff’s Office and the 2nd Judicial District Attorney’s Office.
Assistant U.S. Attorney Paul Mysliwiec prosecuted the case as part of the federal “worst of the worst” anti-violence initiative. Under this initiative, the U.S. Attorney’s Office and federal law enforcement agencies work with New Mexico’s District Attorneys and state, local and tribal law enforcement agencies to target violent or repeat offenders primarily based on their prior felony convictions for federal prosecution with the goal of removing repeat offenders from communities in New Mexico for as long as possible. Because New Mexico’s violent crime rates, on a per capita basis, are amongst the highest in the nation, New Mexico’s law enforcement community is collaborating to target repeat offenders from counties with the highest violent crime rates, including Bernalillo County, under this initiative.
Anderson man found guilty of filing fraudulent tax formsRead the Press Release
INDIANAPOLIS-United States Attorney Josh J. Minkler today announced the guilty verdict against an Anderson man who filed fraudulent forms with the IRS. Charles Petrunak, 45, Anderson, was found guilty on three counts of making and subscribing false and fraudulent forms to the IRS before U. S. District Judge William T. Lawrence.
“Mr. Petrunak filed fraudulent forms to get out of paying his taxes,” said Minkler. “I will call that what it is, stealing from everyone who obeys the law and pays taxes. Mr. Petrunak’s behavior should not be tolerated in a civilized society and his behavior will not be tolerated by this office.”
Petrunak was the president and owner of Abyss Special FX, Inc. a business which specialized in fireworks and pyrotechnic shows in Anderson, Indiana. Operating such a business requires a federal explosives license. In 2003, Petrunak lost his fireworks license following a hearing before an administrative law judge. At the administrative proceeding, two ATF inspectors testified against the defendant as to his improper storage of fireworks and other violations.
In January 2008, Petrunak sent forms to the ATF inspectors who conducted the 2003 investigation requesting their Social Security numbers. He never received the information. Later in 2008, Petrunak sent each ATF agent an IRS Forms 1099-Misc, indicating that the two inspectors had received $250,000 each from Petrunak’s company as income for services, although neither had received such income.
In 2009, Petrunak filed a Form 1096 with the IRS, where he represented to the IRS that he paid the ATF inspectors a total of $500,000 in income in tax year 2008. As a result of filing that form, one of the inspectors was investigated by the IRS for failing to report the alleged $250,000 that Petrunak represented he paid, despite the fact that he never paid the inspector anything.
Petrunak also filed a corporate tax return for his business (Form 1120-S) and his personal income tax return (From 1040), where he falsely represented on each form that he incurred over $500,000 in business losses due to his false payments to the ATF inspectors, in order to reduce his tax liability. As a result, he received a tax refund.
“I am pleased to see this case resolved,” stated Donald J. Soranno, Special Agent in Charge of ATF’s Columbus Field Division. “These industry operations investigators (IOIs) have the responsibility of holding members of the industry that we regulate accountable and ensuring they adhere to established policies and federal regulations. He didn’t and he ended up losing his federal license. No federal employee should be harassed or face retaliation for doing their job.”
“Honest, hardworking Americans pay the price when others choose to evade their tax obligations," said David Talcott, Acting Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago. “The IRS Criminal Investigation Division is committed to ensuring that all taxpayers pay their fair share. Taxpayers will soon be getting ready to prepare their tax returns. This conviction should serve as a reminder to those who might be thinking about cheating, they should think twice or they too will risk the consequences.”
According to Assistant United States Attorneys MaryAnn T. Mindrum and Nicholas J. Linder, who are prosecuting this case for the government, Petrunak could face up to 3 years on each count at sentencing. No date has been set.
Accountant for Michael ‘The Situation’ Sorrentino Admits Tax Fraud ConspiracyRead the Press Release
The former tax preparer for television personality Michael “The Situation” Sorrentino and his brother, Marc Sorrentino, today admitted filing fraudulent tax returns on their behalf, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Paul J. Fishman of the District of New Jersey announced.
Gregg Mark, 51, of Spotswood, New Jersey, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with one count of conspiracy to defraud the United States.
According to documents filed in this case and statements made in court: Mark, formerly an accountant at a Staten Island, New York-based accounting firm, admitted preparing fraudulent tax returns for the Sorrentinos for tax years 2010 and 2011, during which time the Sorrentinos and their businesses – MPS Enterprises LLC and Situation Nation Inc. – received millions of dollars in income. To reduce the taxes the Sorrentinos owed, Mark caused to be prepared and filed with the Internal Revenue Service (IRS) fraudulent business and personal tax returns. Mark admitted the Sorrentinos’ false returns defrauded the IRS out of $550,000 to $1.5 million.
On Sept. 24, a grand jury in Newark returned a seven-count indictment charging the Sorrentinos with conspiracy to defraud the United States and filing false tax returns. Michael Sorrentino was also charged with failing to file a tax return. According to the indictment, the brothers received several million dollars in connection with Michael Sorrentino’s role as a cast member on the MTV television show “Jersey Shore” and other promotional activities. The brothers are charged with failing to report all of the income they received. They are also charged with claiming personal expenses as business expenses, including payments for luxury vehicles and high-end clothing, and making distributions – or direct payments – from the businesses to personal bank accounts. Both have pleaded not guilty; a trial date has not yet been set.
The conspiracy charge to which Mark pleaded guilty carries a statutory maximum sentence of five years in prison and a $250,000 fine. Sentencing is scheduled for March 24, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Jonathan W. Romankow of the U.S. Attorney’s Office Criminal Division in Newark and Assistant Chief Tino M. Lisella and Trial Attorneys Yael T. Epstein and Jeffrey B. Bender of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Accountant for Michael ‘The Situation’ Sorrentino Admits Tax Fraud ConspiracyRead the Press Release
NEWARK, N.J. – The former tax preparer for television personality Michael “The Situation” Sorrentino and his brother, Marc Sorrentino, today admitted filing fraudulent tax returns on their behalf, U.S. Attorney Paul J. Fishman and Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.
Gregg Mark, 51, of Spotswood, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with one count of conspiracy to defraud the United States.
According to documents filed in this case and statements made in court:
Mark, formerly an accountant at a Staten Island-based accounting firm, admitted preparing fraudulent tax returns for the Sorrentinos for tax years 2010 and 2011, during which time the Sorrentinos and their businesses – MPS Entertainment LLC and Situation Nation Inc. – received millions of dollars in income. To reduce the taxes the Sorrentinos owed, Mark caused to be prepared and filed with the IRS fraudulent business and personal tax returns. Mark admitted the Sorrentinos’ false returns defrauded the IRS out of $550,000 to $1.5 million.
On Sept. 24, 2015, a grand jury in Newark returned a seven-count indictment charging the Sorrentinos with conspiracy to defraud the United States and filing false tax returns. Michael Sorrentino was also charged with failing to file a tax return. According to the indictment, the brothers received several million dollars in connection with Michael Sorrentino’s role as a cast member on the MTV television show “Jersey Shore” and other promotional activities. The brothers are charged with failing to report all of the income they received. They are also charged with claiming personal expenses as business expenses, including payments for luxury vehicles, high-end clothing, and making distributions – or direct payments – from the businesses to personal bank accounts. Both have pleaded not guilty; a trial date has not yet been set.
The conspiracy charge to which Mark pleaded guilty carries a statutory maximum penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for March 24, 2016.
U.S. Attorney Fishman and Acting Assistant Attorney General Ciraolo credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Jonathan W. Romankow of the U.S. Attorney’s Office Criminal Division in Newark as well as Assistant Chief Tino M. Lisella and Trial Attorneys Yael T. Epstein and Jeffrey B. Bender of the Tax Division of the U.S. Department of Justice.
Defense counsel: Jack Arseneault Esq. and John Roberts Esq., Chatham, New Jersey
Tuesday 15 December 2015
Virginia Woman Sentenced to 24 Months in Federal Prison for Aggravated Identity TheftRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that Adrea Cannon, age 22, of Portsmouth, Virginia was sentenced today to 24 months’ imprisonment by District Court Judge A. Richard Caputo in Scranton. She was also ordered to pay restitution in the amount of $6,104.41.
According to United States Attorney Peter Smith, Cannon was charged in a Criminal Complaint in April 2014. On January 30, 2015, Cannon appeared in federal court in Wilkes-Barre and pleaded guilty to a Criminal Information alleging that on March 12, 2014, Cannon possessed and used the identity of another person during the crime of access device fraud.
The investigation was conducted by the United States Secret Service and was prosecuted by Assistant United States Attorney Michelle Olshefski.
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U.S. Attorney's Office for the District of Columbia Secures over $462 Million in Financial Recoveries in Fiscal 2015Read the Press Release
WASHINGTON - The U.S. Attorney’s Office for the District of Columbia collected more than $462.4 million in criminal and civil actions and asset forfeitures during the most recent fiscal year, U.S. Attorney Channing D. Phillips announced today.
All told, the U.S. Attorney’s Office for the District of Columbia has collected over $2.6 billion in criminal and civil actions and asset forfeitures over the past six fiscal years.
The totals for Fiscal Year 2015 include over $261.9 million collected in criminal actions and over $28.9 million in civil actions. Another $171.4 million was collected in criminal and civil asset forfeiture actions. Additionally, the U.S. Attorney’s Office for the District of Columbia worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect another $173.3 million in civil actions cases pursued jointly with these offices.
“Our enforcement efforts have restored over $2.6 billion in recent years to taxpayers and victims of crime,” said U.S. Attorney Phillips. “Those who break federal laws or who try to cheat the government contracting process should take note. Working with our law enforcement partners, we will continue to pursue criminal and civil actions to achieve justice.”
Attorney General Loretta E. Lynch earlier announced that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015. The more than $23.1 billion in collections in FY 2015 represents more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 94 U.S. Attorneys’ offices and the main litigating divisions in that same period.
Nationally, the largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration, and Department of Education.
Additionally, the U.S. Attorneys’ offices nationwide, working with partner agencies and divisions, collected over $5.3 billion in asset forfeiture actions in FY 2015.
The U.S. Attorneys’ offices, along with the department’s litigating divisions, are responsible for enforcing and collecting criminal and civil debts owed to the United States and criminal debts owed to federal crime victims. In the District of Columbia, the Financial Litigation Unit in the Civil Division of the U.S. Attorney’s Office aggressively handles these responsibilities. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
“The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse,” said Attorney General Lynch, adding that the collections “demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
Collections in Civil Actions
The collections in civil actions by the U.S. Attorney’s Office for the District of Columbia included more than $94 million generated by a consent decree between auto manufacturers and the EPA for violation of the Clean Air Act. Defendants sold, offered for sale, introduced into commerce, delivered for introduction into commerce, or imported into the United States new 2012 and 2013 motor vehicles that failed to conform to the design specifications in their applications for Certificates of Conformity that purportedly covered these vehicles. In essence, defendants overstated fuel efficiency and greenhouse gas emissions levels.
The amount also included $58 million, plus interest, paid by the Volvo Truck Corporation, to resolve a District Court judgment and an appellate decision. The United States Court of Appeals for the District Of Columbia Circuit affirmed the District Court’s final judgment finding that Volvo Truck violated the stipulated consent decree for violating the Clean Air Act. On April 13, 2012, the District Court ordered Volvo Truck to pay the stipulated penalties. The defendant’s appeal of this decision was unsuccessful.
In another case, Children’s Hospital, Children’s National Medical Center Inc. and Children’s Research Institute, collectively Children’s National Medical Center (CNMC), paid $12.6 million to resolve allegations that they violated the False Claims Act by submitting false cost reports and other applications to the components and contractors of the Department of Health and Human Services (HHS), as well as to Virginia and District of Columbia Medicaid programs. The settlement resolved allegations brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by a former employee of CNMC.
Collections in Criminal Actions
The collections in criminal actions by the U.S. Attorney’s Office for the District of Columbia included $155,138,904 paid in a criminal fine by Schlumberger Oilfield Holdings Ltd. (SOHL), a wholly-owned subsidiary of Schlumberger Ltd. This payment covered a portion of a $232,708,356 penalty that the company must pay the United States for conspiring to violate the International Emergency Economic Powers Act (IEEPA) by willfully facilitating illegal transactions and engaging in trade with Iran and Sudan. The company pled guilty in March 2015 and the penalty was part of a plea agreement later approved by the Court. The monetary penalty also includes an additional payment of $77,569,452 in criminal forfeiture. The criminal fine represents the largest criminal fine in connection with an IEEPA prosecution.
The collections also included $7.3 million paid on restitution through forfeiture in an investigation that uncovered the largest domestic bribery and bid-rigging scheme in the history of federal contracting cases. The lead defendant was an employee of the U.S. Army Corps of Engineers (USACE), a branch of the United States Army. As part of his official duties, Kerry Khan was responsible for placing orders for products and services for the USACE through federal government contracts and for certifying that products and services provided through government contracts were received by the USACE. From in or about the spring of 2007 through Oct. 4, 2011, Khan along with his co-conspirators devised schemes to obtain USACE contracts from corrupt contractors who paid bribes to receive government contracts. Khan and his co-conspirators defrauded over $30 million from the government. A total of 20 individuals and one corporation, Nova Datacom, LLC, have pled guilty to federal charges. All defendants consented to forfeit properties acquired from their ill-gotten gains. Khan is now serving a prison term of 19 years and seven months for his role in the scheme.
The amount also included $242,000 from defendant Gerry D. Mathews, who was a book keeper working at a law firm and had the responsibilities for managing certain partners’ professional corporations. Beginning in 1995 and continuing every year until May 2005, the defendant embezzled money from the partners and their professional corporations in a variety of ways. Mathews had pleaded guilty and was ordered to pay restitution in the amount of $312,260. The Financial Litigation Unit filed writs of garnishments to collect from her 401k, prior employment unused vacation leave and pension.
In another case, defendant Lindsay Branson III, a former background investigator for the U.S. Office of Personnel Management (OPM), paid $139,819 in restitution. Branson had pleaded guilty to making a false statement, stemming from his falsification of work on background investigations of federal employees and contractors. According to the government’s evidence, in 2010 and 2011, Branson represented that he had interviewed a source or reviewed a record regarding the subject of a background investigation. In fact, he had not conducted the interviews or obtained the records of interest. These reports were utilized and relied upon by federal agencies requesting background investigations to determine whether the subjects were suitable for positions having access to classified information, for positions impacting national security, or for receiving or retaining security clearances. This amount was collected from Branson’s Thrift Savings Plan account and through Treasury Offset Program collections.
Collections in Forfeiture Cases
The U.S. Attorney’s Office for the District of Columbia has emphasized the importance of asset forfeiture to fight crime and criminal organizations and to seek justice for victims. Asset forfeiture is a powerful tool that can deprive criminals and criminal organizations of illegal proceeds and instrumentalities of crimes, recover property that may be used to compensate victims, and deter crime. Federal law provides authority to seize and forfeit the proceeds of virtually all serious federal offenses. Forfeited assets are deposited into the Department of Justice Asset Forfeiture Fund and Department of Treasury Asset Forfeiture Fund and are used to restore funds to crime victims and for a variety of law enforcement purposes.
In addition to the $77,569,452 in forfeiture collected in the case involving Schlumberger Oilfield Holdings Ltd., the Office’s Asset Forfeiture and Money Laundering Section collected $92 million in fiscal 2015 under a deferred prosecution agreement with Commerzbank AG, a global financial institution headquartered in Frankfurt, and its U.S. branch, Commerzbank AG New York Branch (Commerz New York). All told, Commerzbank agreed in March 2015 to forfeit a total of $563 million and pay a $79 million fine under the agreement with the Justice Department for violations of the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA). According to admissions contained in the deferred prosecution agreement, from 2002 to 2008, Commerzbank knowingly and willfully moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese entities subject to U.S. economic sanctions. Commerzbank engaged in this criminal conduct using numerous schemes designed to conceal the true nature of the illicit transactions from U.S. regulators.
U.S. Attorney Statement: Fear No Reason for Backlash Against MuslimsRead the Press Release
By Barry Grissom, U.S. Attorney for the District of Kansas
The Paris attacks, and then San Bernardino, have raised people’s anxieties and concerns about terrorism. But as Americans we must not let fear drive us to hateful and divisive acts toward Muslims in this country.
As U.S. Attorney for the District of Kansas, keeping the American people safe is my top priority. At the same time, I urge Kansans not to turn against one another by letting this fight be defined as a war between America and Islam. That is what the terrorists want and it is the only way they can succeed -- by manipulating us into betraying our own values.
Just as it is the responsibility of Muslims around the world to root out misguided ideals that lead to radicalization, it is the responsibility of all Americans of every faith to reject discrimination. At the Department of Justice, we always have a concern when we see rhetoric cross the line and become threats or violence. So we are monitoring any potential backlash and will respond where we see action that violates our country’s protections against hate crimes.
Let me also make this clear: Decisions as to the resettlement of refugees within the United States are part of the federal government’s constitutional and statutory authority over immigration. Various federal laws prohibit discrimination on the basis of national origin, and the Department of Justice takes very seriously its responsibility to ensure that those laws are enforced in appropriate circumstances.
Barry Grissom is the United States Attorney for the District of Kansas.
Two Orthodox Jewish Rabbis Sentenced to Prison for Conspiring to Kidnap Jewish Husbands, Force Them to Consent to Religious DivorcesRead the Press Release
TRENTON, N.J. - Two Orthodox Jewish Rabbis were sentenced to prison today for conspiring to kidnap Jewish men in an effort to force them to give their wives religious divorces, referred to as “gets,” U.S. Attorney Paul J. Fishman announced.
Rabbis Mendel Epstein, 70, of Lakewood, New Jersey, and Binyamin Stimler, 40, of Brooklyn, New York, were sentenced to 120 and 39 months in prison, respectively. They were both convicted at trial of Count One of an indictment charging them with conspiracy to commit kidnapping. Stimler was additionally convicted on Count Five of the indictment, attempted kidnapping. Judge Wolfson imposed both sentences today in Trenton federal court.
According to documents filed in this case and the evidence at trial:
On Dec. 1, 2009, in Lakewood, an Orthodox Jewish man, Israel Markowitz, was assaulted, placed in a van, tied up, beaten and shocked with a stun-gun until he agreed to give his wife a get.
On Oct. 16, 2010, in Lakewood, another Orthodox Jewish man, Ysrael Bryskman, was assaulted, tied up and beaten until he agreed to give his wife a get.
On Aug. 22, 2011, in Brooklyn, another Orthodox Jewish man, Usher Chaimowitz, and his roommate, Menachem Teitlebaum, were assaulted, tied up and beaten until Chaimowitz agreed to give his wife a get.
Based upon these incidents, the FBI began an undercover operation in August 2013 in which two FBI agents posed as a wife who was seeking a get from her recalcitrant husband, and her brother, who was trying to help her obtain the get. Over the next several weeks, the undercover agents had multiple recorded phone calls and in-person meetings with defendant Epstein. In those meetings, Epstein arranged to have his team kidnap the husband at a warehouse in exchange for $60,000.
On October 9, 2013, Stimler and others – including Jay Goldstein, 61, Moshe Goldstein, 32, Avrohom Goldstein, 36, Simcha Bulmash, 32, David Hellman, 33, and Sholom Shuchat, 31, all of Brooklyn, and Ariel Potash, 42, of Monsey, New York – traveled from New York to a warehouse in Middlesex County, New Jersey, to execute the planned kidnapping of the husband to force him to give the get.
They arrived at the warehouse in two dark minivans shortly after 8:00 p.m. Some of the kidnap team members put on masks and entered the warehouse office with the undercover agent posing as the brother. The remaining kidnappers walked around the outside with flashlights. Over the next 15 minutes, members of the kidnap team went in and out of the warehouse office wearing disguises, including ski masks, Halloween masks and bandanas. They discussed their plan for kidnapping and assaulting the husband, how they planned to grab him, pull him down, tie him up, and take his phone. Members of the kidnap team brought with them to the warehouse a 30-foot nylon rope, a blindfold, vodka, license plates they had switched out, and items used to ceremonially record the get.
At 8:23 p.m., law enforcement moved into the warehouse office and arrested the eight men, including Stimler. Epstein was arrested at his Brooklyn home the same night.
In addition to the prison terms, Judge Wolfson sentenced both Epstein and Stimler to five years of supervised release.
Avrohom Goldstein, Potash, Shuchat, Moshe Goldstein, Hellman, and Bulmash have all pleaded guilty to one count of traveling in interstate commerce to commit extortion. Avrohom Goldstein and Potash were sentenced Nov. 19, 2015 to 45 and 14 months in prison, respectively. Shuchat was sentenced to time served on Nov. 19, 2015. Moshe Goldstein was sentenced Nov. 16, 2015 to 48 months in prison. Hellman and Bulmash were sentenced Nov. 17, 2015 to 44 and 48 months in prison, respectively. Martin Wolmark, 57, of Monsey, previously pleaded guilty to conspiracy to travel in interstate commerce to commit extortion and was sentenced yesterday to 38 months in prison.
Jay Goldstein, who was convicted at trial of conspiracy to commit kidnapping and attempted kidnapping, is scheduled for sentencing tomorrow.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and the Lakewood Police Department with the investigation.
The government is represented by Assistant U.S. Attorneys R. Joseph Gribko and Sarah M. Wolfe of the U.S. Attorney’s Office in Trenton.
Defense counsel:
Mendel Epstein: Robert G. Stahl Esq. and Laura Gasiorowski Esq., Westfield, New Jersey
Binyamin Stimler: Nathan Lewin Esq., Washington, D.C.
Three Mexican Brothers Sentenced for Sex TraffickingRead the Press Release
Earlier today, in federal court in Brooklyn, New York, three brothers were sentenced to prison terms following their pleas of guilty to sex trafficking charges. Jorge Estrada-Tepal and Victor Leonel Estrada-Tepal were each sentenced to 17½ years of imprisonment to be followed by five years of supervised release, and Ricardo Estrada-Tepal was sentenced to 15 years of imprisonment to be followed by five years of supervised release. The defendants were also ordered to pay, jointly and severally, $1,033,336 in restitution to the victims.
The defendants, who are Mexican nationals, transported Mexican females from Mexico to the United States illegally, forcing them to work as prostitutes in New York City and elsewhere. They were arrested in Queens, New York, in January 2014 and pled guilty to trafficking charges in January 2015. Today’s sentences are the latest in the Office’s comprehensive anti-trafficking program, which has to date indicted over 65 defendants in sex trafficking cases and provided assistance to over 130 victims, including 36 minors.
The sentences were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Glenn Sorge, Acting Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York.
“The lengthy sentences imposed today reflect the seriousness of the defendants’ crimes and underscore our Office’s resolve to seek justice for their victims,” stated United States Attorney Capers. “The defendants have now been held to account for the daily horrors they inflicted on their victims for years. We hope that these sentences bring some measure of closure to the victims and their families.” Mr. Capers thanked HSI and other entities that assisted with the successful prosecution of this case.
“The defendants received sentences commensurate with their heinous crimes, abusing and exploiting innocent victims to satisfy their own greed,” said Glenn Sorge, acting special agent in charge of HSI New York. “It is a priority of HSI to rescue and assist victims of human trafficking while making every effort to destroy these international criminal syndicates that show little respect for basic human rights.”
The sex trafficking involved at least five victims (identified as Jane Does 1 through 5), and the defendants used various means to cause these women to work in prostitution, including threats of violence, assaults, and psychological coercion. During the guilty plea proceedings in January 2015, defendant Jorge Estrada-Tepal admitted that, starting in 2007, he and his brothers entered into a conspiracy to transport women from Mexico to Queens to engage in prostitution and that threats of force were used against the victims. Ricardo Estrada-Tepal admitted that he and his brothers did not tell the women the truth about why they were coming to the United States. Victor Leonel Estrada-Tepal admitted that he agreed with his brothers to force women to work in prostitution, including Victor’s wife, Jane Doe 4, who was 17 years old at the time he brought her from Mexico to Queens.
Jane Doe 1 was primarily trafficked by her husband, the defendant Jorge Estrada-Tepal (“Jorge”). After marrying in Mexico, Jorge forced Jane Doe 1 to work in prostitution in Mexico. After being smuggled into the United States, Jane Doe 1 was required to work in prostitution almost daily for a period of approximately four years. Jorge used a variety of means to force Jane Doe 1 to work, including physical assaults and threats. Jane Doe 1 was required to give Jorge all of the money she earned. In addition, Jorge forced Jane Doe 1 to take pills to induce abortions on two occasions even though she wanted to keep her children.
Jane Doe 2 was recruited by the defendant Ricardo Estrada-Tepal (“Ricardo”), who engaged in a romantic relationship with her, despite already being in a relationship with another victim in the case, Jane Doe 3. After becoming involved with Ricardo in Mexico, Jane Doe 2 was forced into prostitution and then smuggled into the United States. In Queens, Jane Doe 2 resided with defendant Victor Leonel Estrada-Tepal, who also pressured her to work in prostitution by demanding repayment of Jane Doe 2’s smuggling debt. Ricardo also threatened to harm Jane Doe 2’s family if she did not work in prostitution. Jane Doe 2 worked in prostitution for approximately two months before she was able to escape. During that time, Ricardo raped Jane Doe 2, threatened her, and forced her to give him all of her earnings.
Jane Doe 3 was recruited by the defendant Ricardo Estrada-Tepal (“Ricardo”), who was engaged in a romantic relationship with her. Ricardo pressured her into working in prostitution, in part by verbally abusing and physically assaulting her. She worked in prostitution in Mexico for several years before becoming pregnant with Ricardo’s child in 2011. After the birth of her child, Ricardo pressured Jane Doe 3 to move to the United States, assuring her that she would be able to work in a restaurant. She was smuggled into the United States in April 2013 and lived in Queens with Ricardo. Shortly after her arrival, Ricardo informed Jane Doe 3 that she had to start working in prostitution. When she balked, Ricardo threatened to hit her. Out of fear, Jane Doe 3 began working in prostitution until she was located by HSI agents at the time of the defendants’ arrests in January 2014. During the periods of time Jane Doe 3 worked in prostitution, Ricardo took virtually all of the money that she earned.
Jane Doe 4 was a minor when she was trafficked to the United States by her husband, Victor Leonel Estrada-Tepal. After her arrival in the United States, Jane Doe 4 worked as a prostitute and also provided information about how to work as a prostitute to other victims of the Estrada-Tepal brothers.
Jane Doe 5 was recruited in Mexico to work in prostitution by the defendants’ brother, Juan Carlos Estrada-Tepal (“Juan Carlos”), with whom Jane Doe 5 became romantically involved in approximately 2009, when Jane Doe 5 was 19. Subsequently, Juan Carlos told Jane Doe 5 that she had to start working in prostitution, telling her that his brothers’ women worked as prostitutes, and they made more money than she did. Jane Doe 5 felt that she had no choice because Juan Carlos was violent. She then worked in prostitution for a period of time in Mexico prior to coming to the United States with Jane Doe 2 in the summer of 2011, at which time she left her son with Juan Carlos in Mexico. After Jane Doe 5’s arrival in the United States, she worked in prostitution for approximately two years. During this time, she gave birth to Juan Carlos’s daughter, after which she was instructed to send her daughter to Mexico to live with Juan Carlos. She ultimately sent her daughter to Mexico out of fear that refusing to do so would cause her never to see her son again. Thereafter, Juan Carlos threatened Jane Doe 5 that she would not be able to see her children again if she did not continue working in prostitution and sending him money.
Since 2009, the Department of Justice and ICE’s Homeland Security Investigations (HSI) have collaborated with Mexican law enforcement counterparts in a Bilateral Human Trafficking Enforcement Initiative aimed at strengthening high-impact prosecutions under both U.S. and Mexican law. The initiative is aimed at dismantling human trafficking networks operating across the U.S.-Mexico border, bringing human traffickers to justice, reuniting victims with their children, and restoring the rights and dignity of human trafficking victims held under the trafficking networks’ control. These efforts have resulted in successful prosecutions in both Mexico and the United States, including U.S. federal prosecutions of over 50 defendants in multiple cases in New York, Georgia, Florida, and Texas since 2009, and numerous Mexican federal and state prosecutions of associated sex traffickers.
United States Attorney Capers extended his grateful appreciation to the Department of Justice’s Office of International Affairs for its assistance in the investigation of the case and the Government of Mexico for its assistance in locating and rescuing Jane Doe 5’s children, with whom she was reunited as a result of law enforcement’s efforts in this case. Mr. Capers also thanked the many victim service providers and advocates for their dedicated efforts to restore and improve the lives of survivors of trafficking, in particular, Sanctuary for Families, the Urban Justice Center, Safe Horizon, LifeWay Network, the New York City Bar Justice Center, RestoreNYC, New York Presbyterian - Weill Cornell Medical Center, the law firm of Simpson Thacher & Bartlett LLP and the Law Offices of Anthony Scarpati.
The sentences were imposed by United States District Judge Margo K. Brodie.
The government’s case was prosecuted by Assistant United States Attorneys Taryn A. Merkl and Melody Wells.
The Defendants:
RICARDO ESTRADA-TEPAL
Age: 34
Queens, NYVICTOR LEONEL ESTRADA-TEPAL
Age: 30
Queens, NYJORGE ESTRADA-TEPAL
Age: 38
Queens, NYE.D.N.Y. Docket No. CR-14-105 (MKB)
Three Men Arrested in Hacking and Spamming Scheme; Targeted Personal Information of 60 Million PeopleRead the Press Release
NEWARK, N.J. – Three men from Florida, New Jersey, and Maryland were charged today with a wide-ranging computer hacking and identity theft scheme that compromised the personally identifiable information (PII) of millions of people and generated more than $2 million in illegal profits, U.S. Attorney Paul J. Fishman announced.
Timothy Edward Livingston, 30, of Boca Raton, Florida; Tomasz Chmielarz, 32, of Rutherford, New Jersey; and Devin James McArthur, 27, of Ellicott City, Maryland, are charged by indictment with conspiracy to commit fraud and related activity in connection with computers and conspiracy to commit wire fraud. Livingston and Chmielarz are also charged with conspiracy to commit fraud and related activity in connection with electronic mail.
According to the indictment:
Beginning as early as 2011, Livingston and others allegedly operated A Whole Lot of Nothing LLC — a business that specialized in sending unsolicited, or “spam,” emails on behalf of its clients. Livingston’s clients included legitimate businesses, such as insurance companies that wished to send bulk emails to advertise their businesses, as well as illegal entities, such as online pharmacies that sold narcotics without prescriptions. Typically, Livingston charged $5 to $9 for each spam email that resulted in a completed transaction for a client.
Many internet service providers used spam filters to prevent spam from reaching their customers’ email accounts. Beginning in January 2012, Livingston allegedly solicited Chmielarz to write computer programs to send spam in a manner that would conceal the true origin of the email and bypass spam filters. Livingston and Chmielarz started using proxy servers to send out spam messages using botnets to hide the true origin of the spam, help them remain anonymous, and to evade anti-spam filters and other spam blocking techniques. Livingston also registered certain websites used in the spam campaigns in the name of his alias, “Mark Lloyd,” to avoid detection.
Livingston and Chmielarz allegedly hacked into the email accounts of individuals and compromised and seized control of the mail servers of some of the corporate victims to further their spam campaigns. They created custom software designed to hack into the email accounts of customers of a company identified in the indictment as “Corporate Victim 1.” Once the email account software gained access to a Corporate Victim 1 user’s account, it created sub-accounts on the account and used them to send out spam. Livingston and Chmielarz programmed the email account software to access the mail server of Corporate Victim 1 through proxy servers to obscure their true identities. This allowed them to send out massive amounts of spam without identifying themselves as the senders, and instead using Corporate Victim 1’s mail servers and customer accounts.
Livingston and Chmielarz also allegedly created custom software that leveraged vulnerabilities in the websites of a number of corporations, including one identified in the indictment as “Corporate Victim 2” (the web form software), which allowed Livingston and Chmielarz to use Corporate Victim 2’s email servers to send out spam that appeared to be from Corporate Victim 2, but in reality was from Livingston and his conspirators.
Livingston, Chmielarz and McArthur also worked together to steal the confidential business information of the corporate victims, including databases containing the PII of millions of Americans, so that they could use that information in spam campaigns. In May of 2013, Livingston and Chmielarz discussed stealing confidential business information from “Corporate Victim 3,” as identified in the indictment. In an online chat, Livingston told Chmielarz, “here is the site I need scrapped (sic),” and provided Chmielarz with an address for Corporate Victim 3’s website and the login credentials for an employee. “Scraping” is a technique employed to extract large amount of data from websites.
In another online chat, Livingston told Chmielarz that the database they were going to steal from Corporate Victim 3 contained 10 million records. Livingston subsequently paid Chmielarz to write a computer program to steal the database.
From February 2014 through February 2015, McArthur worked as a sales representative at a corporation identified in the indictment as “Corporate Victim 4.” In a series of online chats in August 2014, Livingston, Chmielarz, and McArthur discussed using McArthur’s position at Corporate Victim 4 to steal confidential business information, including the PII of millions of the company’s customers.
On Aug.11, 2014, McArthur allegedly provided Livingston with access to a remote administration tool on a computer with access to the computer network of Corporate Victim 4 without authorization from his employer. McArthur gave Livingston and Chmielarz access to Corporate Victim 4’s computer network using the remote administration tool to steal the names, addresses, phone numbers, and email addresses of potential customers, current customers, and former customers. The defendants and others could use that information to send spam to those individuals.
Livingston told defendant Chmielarz that he estimated that Corporate Victim 4’s database had records for 50 million people; Livingston also discussed the technical challenges associated with stealing such a large volume of data from Corporate Victim 4.
In an online chat dated Sept. 3, 2014, Livingston and McArthur discussed the contents of the database that they had stolen from Corporate Victim 4. McArthur estimated that they had succeeded in stealing 24.5 million records.
The maximum potential penalties for each count are as follows:
Count
Defendants
Violation
Maximum Penalty
1
Livingston
Chmielarz
McArthur
Conspiracy to Commit Fraud and Related Activity in Connection with Computers
Five years in prison and a fine in an amount the greater of $250,000 or twice the gain or loss from the offense
2
Livingston
Chmielarz
McArthur
Conspiracy to Commit Wire Fraud
20 years in prison and a fine in an amount the greater of $250,000 or twice the gain or loss from the offense
3
Livingston
Chmielarz
Conspiracy to Commit Fraud and Related Activity in Connection with Electronic Mail
Five years in prison and a fine in an amount the greater of $250,000 or twice the gain or loss from the offense
The indictment also notices the forfeiture of $299,653 from several bank accounts, a 2006 Ferrari F430 two-door Spider Convertible and a 2009 Cadillac Escalade SUV.U.S. Attorney Fishman credited special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to today’s arrests.
The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit and Peter Gaeta of the Asset Forfeiture-Money Laundering Unit.
The charges and allegations contained in the indictment are merely accusations and the defendants are considered innocent unless and until proven guilty.
Defense counsel:
Livingston: Jeffrey Cox Esq., Boca Raton, Florida
Chmielarz: Michael Koribanics Esq., Clifton, New Jersey
Three Brownsville Residents Sent to Prison in Five-Year Drug ConspiracyRead the Press Release
BROWNSVILLE, Texas – A father and daughter and another defendant have all been ordered to federal prison following their convictions in a long-running effort to smuggle drugs via the United Parcel Service (UPS), announced U.S. Attorney Kenneth Magidson.
The three Brownsville residents - Mario Enrique Patlan, 46, Cristina Patlan, 24, and Reymundo Abel Brown Jr., 28 - entered guilty pleas Feb. 12, 2015. Mario Patlan and Brown pleaded guilty to conspiracy to possess with intent to distribute more than 100 kilograms of marijuana and 500 grams of cocaine, while Mario Patlan’s daughter - Cristina Patlan - entered her plea to possessing 37 kilograms of marijuana with intent to distribute in November 2011.
Today, U.S. District Judge Andrew Hanen, who accepted the guilty pleas, handed Mario Patlan a 48-month sentence, while Brown was ordered to serve 24 months. Both will also serve three years of supervised release following completion of their prison terms. Cristina Patlan will also serve a 48-month sentence to be immediately followed by three years of supervised release. At the hearing today, the court forfeited both of Mario Patlan’s houses to the United States. In handing down the sentences, Judge Hanen noted the defendants’ episode of illegal activity and the ruthless individuals associated with drug activity in the area.
Evidence presented in support of the pleas demonstrated that Mario Patlan and Brown used their positions at UPS to receive and forward drug-laden packages via UPS air and ground transportation. The packages were received in the area of Cameron County and were shipped throughout the U.S. During the time of the conspiracy – from 2007 to 2012 - more than 1000 kilograms of marijuana was shipped via UPS to states such as Minnesota, Indiana, Pennsylvania, Georgia, Florida, Ohio, Michigan and New York.
As part of her plea, Cristina Patlan admitted she worked as a recruiter or go-between for her father and various drug trafficking organizations.
The trio will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The charges are the result of an investigation by the Drug Enforcement Administration and Internal Revenue Service-Criminal Investigation with assistance from the United States Border Patrol. Assistant U.S. Attorneys (AUSA) David A. Lindenmuth, Carrie Wirsing and Lori Roth prosecuted the case along with former AUSA Charles Lewis.
Three Bakersfield Residents Sentenced on Monday for Drug Trafficking OffensesRead the Press Release
FRESNO, Calif. — Three Bakersfield men were sentenced in two separate cases on Monday by United States District Judge Lawrence J. O'Neill for conspiracies to traffic marijuana and methamphetamine, United States Attorney Benjamin B. Wagner announced.
In the first case, Baltazar Castenada Garcia, 25, was sentenced to 10 years and one month in prison for conspiring to possess methamphetamine and conspiring to cultivate and distribute marijuana. According to court documents, Garcia grew marijuana for distribution at his residence in Bakersfield and at a second Bakersfield residence. Additionally, Garcia sold methamphetamine with the assistance of his co-defendants, using a residence in Arvin to store and package controlled substances for distribution.
This case was the product of an investigation by the Drug Enforcement Administration, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Bakersfield Police Department, Kern County Sheriff’s Office, and Kern County Probation Department. Assistant United States Attorney Laurel J. Montoya prosecuted the case.
In the second case, Guillermo Magallanes, 36, who pleaded guilty to conspiracy to distribute methamphetamine, received a sentence of seven years in prison, and Pasqual Gonzales Magallanes, 44, who pleaded guilty to distribution of methamphetamine, received a sentence of 10 years and one month in prison.
According to court documents, these defendants conspired with Juan Lascano Jr., 32, of Bakersfield, to distribute pound quantities of methamphetamine in the Bakersfield area. Judge O’Neill also ordered the forfeiture of $31,242, a 2014 Lexus IS250 F Sport and a 2012 Acura TL sedan as proceeds of the illegal drug trafficking activity. On October 19, 2015, co-defendant Lascano was sentenced to 10 years in prison for his role in the case.
This case was the product of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation by the Drug Enforcement Administration, the Federal Bureau of Investigation, the Kern County Sheriff’s Office, and the Bakersfield Police Department. Assistant United States Attorney Brian Delaney prosecuted the case.
Tax Preparer Convicted of Bank Fraud Scheme Worth $3 MillionRead the Press Release
BATON ROUGE, LA – United States Attorney Walt Green announced that SHEDRICK MAYWEATHER, age 68, of Baton Rouge, Louisiana, pled guilty before U.S. District Judge John W. deGravelles to conspiracy to commit bank fraud. While employed as a tax preparer, MAYWEATHER admitted to accepting money in exchange for preparing numerous fraudulent documents using figures provided to him by another person.
From approximately 2004 until 2011, Mayweather created fraudulent W-2 wage and tax statements, balance sheets, profit and loss statements, and personal and business tax returns. These documents reflected inflated income and net worth figures. These fraudulent documents were submitted to several financial institutions in the Baton Rouge area to obtain loans and lines of credit worth a cumulative amount of approximately $3,000,000. Some of these loans were defaulted on and, consequently, some of these financial institutions charged off these loans and experienced losses.
This ongoing investigation is being conducted by the Federal Bureau of Investigation. This matter is being prosecuted by Assistant United States Attorney John B. Casey.
Staten Island Physician’s Assistant Sentenced in Manhattan Federal Court to 11 Years in Prison for Massive Oxycodone Distribution ConspiracyRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that LEONARD MARCHETTA, a physician’s assistant, was sentenced in Manhattan federal court to 11 years in prison for conspiring to distribute large quantities of oxycodone out of his Staten Island-based medical clinic. MARCHETTA was charged in September 2014 and pled guilty in January 2015 before U.S. District Judge P. Kevin Castel, who also imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Leonard Marchetta was responsible for the illegal distribution of more than 125,000 medically unnecessary oxycodone pills. With his criminal distribution of highly addictive and dangerous drugs, Marchetta helped fuel the prescription pill epidemic plaguing our community.”
According to the allegations contained in the Indictment and statements made in connection with sentencing:
As a physician’s assistant, MARCHETTA, under the supervision of a physician or surgeon, was able to diagnose and treat illnesses and prescribe medications. From at least 2012 until the time he was arrested, MARCHETTA was employed by and oversaw the day-to-day operations of a Staten Island-based medical clinic (the “Clinic”), which advertised itself to the public as a family medical clinic.
During an approximately three-year period, MARCHETTA prescribed oxycodone to individuals claiming to be “patients,” who had no medical need for oxycodone and no legitimate medical record documenting an ailment for which oxycodone would be prescribed. MARCHETTA’s fee for his participation in the scheme was typically approximately $250 in cash for “doctor visits” that usually lasted just a minute or two, involved no actual physical examination, and consistently resulted in the issuance of a prescription for large doses of oxycodone, typically 150 30-milligram tablets. MARCHETTA also received a separate fee of approximately $500 in cash for each medically unnecessary oxycodone prescription he issued. On a number of occasions, MARCHETTA issued prescriptions in the names of fictitious individuals or individuals whom MARCHETTA never saw in exchange for cash. In total, MARCHETTA wrote medically unnecessary prescriptions for more than 125,000 30-milligram oxycodone pills during a period of approximately three years.
After MARCHETTA issued a medically unnecessary oxycodone prescription in the name of the “patient,” the “patient” was taken or referred to a pharmacy to fill the oxycodone prescription – that is, to obtain the oxycodone tablets – in part for distribution. The patients were paid, typically $150 to $200 in cash, for obtaining and handing over the oxycodone tablets that MARCHETTA had prescribed to them. At times, the “patients,” some of whom were addicted to oxycodone, were paid with oxycodone tablets for their services.
* * *
In addition to his prison term, MARCHETTA, 48, of Staten Island, New York, was sentenced to three years of supervised release, and ordered to pay forfeiture in the amount of $1,870,680. MARCHETTA has been detained since his arrest in September 2014.
Two other defendants, Gregory Zaccagnino and William Tagliaferro, previously pled guilty for their roles in the oxycodone distribution scheme. Zaccagnino was sentenced by Judge Castel to six years in prison. Tagliaferro has yet to be sentenced.
Mr. Bharara thanked the United States Department of Health and Human Services, the New York State Department of Financial Services, and the DEA Tactical Diversion Squad New York (TDS-NY), comprising agents and officers from the DEA, the New York City Police Department, Town of Orangetown Police Department and Westchester County Police Department, for their work in the investigation, which he noted is ongoing.
The case is being prosecuted by the Office’s Narcotics Unit. Assistant U.S. Attorney Edward A. Imperatore is in charge of the prosecution.
Springfield Man Pleads Guilty to Federal Firearm ChargeRead the Press Release
BOSTON – Joshua Ortiz, 23, of Springfield, pleaded guilty yesterday to being a felon in possession of a firearm and ammunition. U.S. District Judge Mark G. Mastroianni scheduled sentencing for March 25, 2016.
On Oct. 10, 2014, Ortiz possessed a HiPoint Model JHP .45 caliber firearm and eight rounds of .45 caliber ammunition. After being spotted with the firearm by law enforcement officers, Ortiz fled and was later arrested when he appeared in Court on an unrelated matter.
The charge of being a felon in possession of a firearm provides a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Springfield Police Commissioner John Barbieri made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Deepika Bains Shukla of Ortiz’s Springfield Branch Office.
Southeast Texas Women Sentenced for Inmate Income Tax SchemeRead the Press Release
BEAUMONT, Texas –Two Southeast Texas women have been sentenced to federal prison in connection with an income tax return scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Stasha Franchell Anderson, 34, of Jasper, Texas, pleaded guilty on July 1, 2015 to aiding in the preparation of a false tax return and was sentenced to 36 months in federal prison today by U.S. District Judge Marcia Crone. Jessica Bellis, 43, of Baytown, Texas, pleaded guilty on July 9, 2015 to conspiracy to commit wire fraud and was sentenced to 30 months in federal prison today by Judge Crone.
According to information presented in court, Derek Cornelius Briscoe, 36, held himself out as a tax preparer sometimes doing business as “Thaferrets Tax Service” from his residence in Jasper, Texas. Briscoe maintained contacts with the female inmates at the Jefferson County Jail in Beaumont, Texas. Briscoe offered those inmates a fee in exchange for personally identifying information of other inmates that could be used to facilitate the filing of false tax returns. Anderson and Bellis were inmates who supplied Briscoe with the personally identifiable information of other inmates to file false tax returns. The two women emailed or telephoned Briscoe to give him the inmates’ personal information, which was then used to electronically file fraudulent tax returns for the years 2009, 2010, and 2011. The false tax returns consisted of fictitious employment information, income, and deductions for educational expenses. The refunds were deposited in bank accounts controlled by Briscoe. Briscoe was previously sentenced for his part in the scheme. During times when Anderson was not incarcerated, she also aided Briscoe in the preparation of the false tax returns. Anderson, Bellis, and Briscoe were involved in the preparation of over 500 false tax returns.
Briscoe was sentenced to 57 months in federal prison on Nov. 19, 2015. Additionally, Anderson was ordered to pay restitution of $156,519 to the IRS while Bellis was ordered to pay restitution in the amount of $30,000. Both women are jointly and severally liable for $1,127,193 in total restitution along with defendant Briscoe.
This case was investigated by Internal Revenue Service-Criminal Investigation and prosecuted by Assistant U.S. Attorney Lesley Anne Bartow.
South Texas Man Sentenced for Trafficking 20 Kilos of Pure MethRead the Press Release
CORPUS CHRISTI, Texas – A 40-year-old Brownsville man has been ordered to federal prison following his conviction of possession with the intent to distribute methamphetamine, announced U.S. Attorney Kenneth Magidson. Ricky Joe Urenda pleaded guilty Sept. 3, 2015.
Today, U.S. District Judge Nelva Gonzalez Ramos ordered Urenda to serve 168 months in federal prison to be followed by five years of supervised release.
On June 26, 2015, Urenda arrived at the U.S. Border Patrol checkpoint near Sarita driving a Dodge Avenger bound for Florida. A routine K-9 exam resulted in an alert which prompted agents to refer Urenda and his vehicle to secondary for further inspection. That inspection resulted in the discovery of 25 bundles in a hidden compartment in the vehicle which tested positive for methamphetamine. Laboratory analysis determined the drugs had a purity level of 99.3% resulting in 20 kilograms of pure methamphetamine.
In federal custody since his arrest, Urenda will remain there pending transfer to a U.S. Bureau of Prisons facility to be designated in the near future.
The conviction stems from an investigation by the Drug Enforcement Administration and Border Patrol. Assistant U.S. Attorney Lance Watt is prosecuting the case.
Secret Service Investigation Leads to Prison Sentence for Illinois ManRead the Press Release
PITTSBURGH -- A resident of Chicago, Illinois, has been sentenced in federal court to 52 months imprisonment, to be followed by 3 years supervised release on his conviction of conspiracy, using unauthorized access devise in aggregate of $1,000, possessing device-making equipment, and possessing 15 or more access devices, United States Attorney David J. Hickton announced today.
Senior United States District Judge Donetta W. Ambrose imposed the sentence on Joel M. Cosey, age 27.
According to information presented to the court, on or about August 9, 2013, Cosey conspired, possessed device-making equipment, possessed 15 or more access devices, and used unauthorized access devices in aggregate of $1,000.
Assistant United States Attorney Shardul S. Desai prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the United States Secret Service for the investigation leading to the successful prosecution of Cosey.
Santa Rosa Couple Convicted of Conspiracy to Defraud the United StatesRead the Press Release
SAN FRANCISCO – A federal jury convicted Jay Scott Soderling and Jessica Lynn Soderling today, a married couple from Santa Rosa, on one count of conspiracy to defraud the United States announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Andrew Toth. The jury also convicted Mr. Soderling of one count of tax evasion.
The verdict follows a five-day jury trial before the Honorable Vince Chhabria, United States District Judge. The evidence at trial showed that the defendants were both involved in efforts to conceal assets from the IRS to avoid payment of Mr. Soderling’s tax liabilities. Specifically, during 2004 and 2005, Jay Soderling evaded payment of his tax liabilities by hiding money and assets belonging to him in the name of a corporation. Subsequently, in 2008 and 2009, after the IRS discovered he was keeping his personal assets in the corporation, The Soderlings worked together to further conceal assets by, among other things, moving money from the corporation’s account into a bank account opened for this purpose in Mrs. Soderling’s name. Jay Soderling originally was indicted on August 9, 2011, for a single count of tax evasion, in violation of 26 U.S.C. § 7201. A superseding indictment was later filed adding the 18 U.S.C. § 371 conspiracy charge against the couple.
In finding Jay and Jessica Soderling guilty of conspiracy, the jury concluded that the evidence demonstrated the defendants obstructed the lawful functions of the IRS by deceitful or dishonest means as charged in the indictment. In addition, the evidence produced at trial demonstrated that Mr. Soderling willfully evaded payment of taxes he owed to the United States. According to papers filed with the court, beginning in July 2004, the IRS began attempting to collect Mr. Soderling’s tax liabilities. Mr. Soderling admitted owing the IRS approximately $90,000, but he made written and oral statements to IRS employees misrepresenting his ability to pay the debt. Among other things, Jay Soderling told the IRS he had no significant assets, that he had negligible income, and that he did not expect his financial situation to change. In reality, Mr. Soderling knew that he was well on his way to receiving an enormous financial windfall from several real-estate transactions. The government also demonstrated Mr. Soderling failed to disclose his use of corporate funds to purchase a Dodge Viper, a new boat, and other personal items.
The maximum statutory penalty for conspiracy to defraud the United States, in violation of 18 U.S.C § 371, is five years in prison and a fine of $250,000. The maximum statutory penalty for each count of tax evasion, in violation of 26 U.S.C § 7201, is five years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant United States Attorneys Michael G. Pitman and Jose A. Olivera are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Rockford Man Pleads Guilty to Illegally Possessing A FirearmRead the Press Release
ROCKFORD — A Rockford man pleaded guilty today in federal court before U.S. District Judge Frederick J. Kapala to illegally possessing a firearm as a convicted felon. CLIFFORD HORTON, 28, of Rockford, Ill., admitted that on November 4, 2014, having previously been convicted of a felon, he possessed a Taurus .380 caliber pistol.
Horton is scheduled to be sentenced on March 18, 2016, at 2:30 p.m. Horton faces a maximum sentence of up to 10 years’ imprisonment, a term of supervised release of up to 5 years following imprisonment, and a fine of up to $250,000. The actual sentence will be determined by the United States District Court, guided by the advisory United States Sentencing Guidelines.
The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Jeffery Magee, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; Gary Caruana, Winnebago County Sheriff; and, Patrick Hoey, Interim Chief of the Rockford Police Department.
The government is represented by Assistant U.S. Attorney Scott R. Paccagnini.
Plea Agreement
Prairieville Woman Pleads Guilty to Embezzling More Than $77,000 from the U.S. Department of Veterans AffairsRead the Press Release
BATON ROUGE, LA - United States Attorney Walt Green announced the conviction of MICHELLE AKRIDGE, age 45, of Prairieville, Louisiana, who pled guilty today before U.S. District Judge James J. Brady to theft of government funds, in violation of Title 18, United States Code, Section 641.
According to the factual basis presented to the Court in connection with her plea, AKRIDGE stole over $77,000 in United States Department of Veterans’ Affairs (VA) Dependency and Indemnity Compensation (DIC) benefits that were intended for her mother. Following her mother’s death, AKRIDGE failed to report the death of her mother and withdrew the funds for her own personal use. At her re-arraignment hearing, AKRIDGE admitted that she had fraudulently obtained more than $77,000 in VA DIC benefits over a four-year period.
U.S. Attorney Green stated: “This kind of criminal conduct is an affront to all those who have served honorably in this country’s armed services. We appreciate the VA-OIG’s efforts to identify this type of fraudulent conduct and bring it to this Office’s attention so that we may take action.”
This investigation is being conducted by the Department of Veterans’ Affairs Office of Inspector General. The matter is being prosecuted by Assistant United States Attorney Jessica M.P. Thornhill.
Post Falls Man Pleads Guilty to Murder for Hire and Drug ChargesRead the Press Release
COEUR D'ALENE - Darin Kyle Taylor, 55, of Post Falls, Idaho, pleaded guilty today in two related cases to use of interstate facilities in the commission of murder for hire, and possession with intent to distribute methamphetamine, U.S. Attorney Wendy J. Olson announced. On August 18, 2015, Taylor was indicted for the federal drug charge. On December 4, 2015, Taylor waived his right to be indicted grand jury and agreed to be charged with murder for hire in federal court.
According to the plea agreements, on June 17 and June 30, 2015, the Idaho State Police worked with a confidential informant to purchase methamphetamine from Taylor at his Post Falls, residence. On July 1, 2015, Idaho State Police detectives served a search warrant at Taylor’s residence and seized methamphetamine, cocaine, heroin, marijuana, cash, and firearms.
On August 19, 2015, the day after Taylor was indicted by a federal grand jury on drug charges, Taylor met with a confidential informant working with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Taylor solicited this ATF confidential informant to murder another person promising to pay cash. Taylor was arrested on the federal drug charge shortly after his conversation and has been in federal custody since.
The murder for hire charge is punishable by up to ten years in prison, supervised release up to three years, and a maximum fine of $250,000. The methamphetamine charge is punishable by not less than five years and no more than forty years in prison, supervised release of not less than four years, and a maximum fine of $5,000,000.
Sentencing is set for March 1, 2016, before Senior U.S. District Judge Edward J. Lodge at the federal courthouse in Coeur d'Alene.
The cases were investigated by the Idaho State Police, Drug Enforcement Administration, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Pittsburgh Felon Charged with Illegally Possessing a FirearmRead the Press Release
PITTSBURGH- A Pittsburgh resident has been indicted by a federal grand jury in Pittsburgh on a charge of possession of a firearm by a convicted felon, United States Attorney David J. Hickton announced today.
The one-count indictment named Tiawan Harper, 31, as the sole defendant.
According to the indictment, Harper was found in possession of a firearm on or about Sept. 18, 2015, following a felony conviction in 2010. Federal law prohibits a person convicted of a crime punishable by in excess of one year imprisonment from possessing a firearm or ammunition.
The law provides for a maximum total sentence of 10 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history of the defendant.
Assistant United States Attorney Ryan K. Hart is prosecuting this case on behalf of the government.
This case is being prosecuted under Project Safe Neighborhoods, a collaborative effort by federal, state, and local law enforcement agencies, prosecutors, and communities to prevent, deter, and prosecute gun crimes. The Bureau of Alcohol, Tobacco, Fire, and Explosives, the United States Marshals Service, and the Pittsburgh Police Department conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Perry Housing Project Ringleader Pleads Guilty to Drug, Money Laundering and Firearm ChargesRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
BUFFALO, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Tyshawn Bradley, 29, of Buffalo, NY, pleaded guilty to conspiracy to distribute 280 grams or more of crack cocaine within 1000 feet of the Perry Housing Projects, conspiracy to commit money laundering and possession of an unregistered, sawed off rifle before U.S. District Judge Lawrence J. Vilardo. The charges carry a mandatory minimum sentence of 10 years in prison, a maximum of life, a minimum of 10 years supervised release and a $20,000,000 fine“Through his criminal conduct, the defendant turned a public housing project into a virtual prison for seniors, children, and those most in need of assistance,” said U.S. Attorney Hochul. “Thanks to today’s conviction, the defendant will soon experience the sort of confinement he inflicted upon these innocent residents. We are committed to prosecuting all gang and narcotics traffickers, wherever they are found.”
Assistant U.S. Attorneys Timothy C. Lynch and Michael J. Adler, who are handling the prosecution, stated that the defendant was the head of a narcotics trafficking ring that operated primarily in the Perry Housing Projects in Buffalo. Bradley maintained several apartments on the grounds of the projects, operated by the Buffalo Municipal Housing Authority, where members of his organization sold crack cocaine on a daily basis.The defendant was arrested along with nine others on April 3, 2013 following the execution of search warrants several locations in the City of Buffalo and Cheektowaga, including at 124 Fulton Street and 305 Perry Street, which are located at the Perry Housing Projects. During the searches at the Perry Housing Projects, officers recovered over 300 grams of crack cocaine and 700 grams of powered cocaine as well as a sawed-off, 9mm semiautomatic rifle that belong to Bradley.
In addition, between October 2011 and April 3, 2013, the defendant conspired with others to purchase multiple houses in the City of Buffalo using the proceeds of his crack cocaine distribution organization. As part of the money laundering conspiracy, the properties were purchased by co-defendant Nannette Brown to conceal Bradley as the true owner of the properties.
To date, nine of the 10 charged defendants have been convicted.
Today’s plea is the culmination of an investigation on the part of the Federal Bureau of Investigation Safe Streets Task Force, under the direction of Special Agent in Charge Adam S. Cohen. The task force includes representatives of the Amherst Police Department; the Buffalo Police Department; U.S. Border Patrol, the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Cheektowaga Police Department; the Erie County Sheriff’s Department; the Hamburg Police Department; the Lancaster Police Department; the Niagara Frontier Transportation Authority Police; the New York State Department of Correctional Services; the New York State Police; and U.S. Immigration and Customs Enforcement, Homeland Security Investigations. Additional assistance was provided by the Drug Enforcement Administration; U.S. Customs and Border Protection, the United States Marshal Service, the Lackawanna Police Department, and the Niagara County Sheriff’s Department. Assistant U.S. Attorney Michael J. AdlerSentencing is scheduled for March 29, 2016 at 10:00 a.m. before Judge Vilardo.
Payroll Service Company Owner Admits to Stealing Money Set Aside by Clients to Pay Federal and State TaxesRead the Press Release
Baltimore, Maryland – Beverly Carden, age 53, formerly of Bel Air, Maryland, pleaded guilty today to mail fraud and filing a false tax return, arising from a scheme to steal money from her clients and the IRS.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation.
“Beverly Carden falsely told clients that their money was being used to pay their taxes, when in fact she was stealing it,” said U.S. Attorney Rod J. Rosenstein. “Customers who hire payroll services companies expect that they will not have to worry, but this case is a reminder that people always need to be vigilant when they trust someone with their money.”
According to her plea agreement, until its closure in March 2013, Beverly Carden owned and operated AccuPay, Inc. which provided payroll and payroll tax services to small and medium businesses. Her husband, Kevin Carden, ran the company’s “tax department,” which was responsible for handling the employment tax portion of the business. AccuPay received funds from its clients that it held in trust to pay over to the IRS and the Comptroller of Maryland for AccuPay’s clients’ employment taxes.
During the course of the fraud scheme, AccuPay withdrew from the clients’ funds the full amount of payroll taxes owed, but then paid the taxing authorities only a portion of such funds. While AccuPay falsely represented to its clients that it paid all of the taxes owed, in fact, Beverly Carden diverted a large portion of those funds to a personal bank account for her personal use.
In 2012, a client of AccuPay confronted representatives of AccuPay with the fact that the company had failed to pay over $300,000 in taxes owed from 2008 to 2012. In response, AccuPay paid the client’s tax deficiencies.
AccuPay sent a letter to their clients stating that they had hired a CFO to audit all tax deposits and filings for all tax clients back to 2009. In fact, that individual was not AccuPay’s CFO, but rather was an independent tax preparer who Beverly Carden had hired primarily to prepare personal taxes and the corporate taxes of AccuPay, rather than those of the clients. Additionally, in order to contact the IRS about her clients’ employment tax issues without her clients’ knowledge, Beverly Carden copied client signatures on IRS power of attorney forms onto forms for more recent periods without the clients’ permission.
Carden admits that the amount of loss reasonably foreseeable to her arising from this scheme is between $380,000 and $600,000.
Carden also admits that she filed a false individual tax return for 2011 in which she did not report the amount of payroll taxes that she had diverted from AccuPay’s clients to her personal account. She also failed to file a tax return for 2012. Beverly Carden admits that the amount of loss reasonably foreseeable to her arising from this tax fraud scheme is between $40,000 and $100,000.
Beverly Carden faces a maximum penalty of 20 years in prison for mail fraud, and a maximum of three years in prison for filing a false tax return. U.S. District Judge Marvin J. Garbis scheduled sentencing for March 23, 2016, at 10:00 a.m.
A federal grand jury indicted co-defendant Kevin Carden, age 55, of Bel Air on charges arising the schemes. Kevin Carden has pleaded not guilty. An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings
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 the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
United States Attorney Rod J. Rosenstein commended the IRS - Criminal Investigation and FBI for their work in the investigation. Mr. Rosenstein praised the Bel Air Police Department for their assistance in the investigation, and thanked Assistant U.S. Attorneys Evan T. Shea and Jefferson M. Gray, who are prosecuting the case.
Palmer Alaska Man Sentenced for Ponderay Credit Union RobberyRead the Press Release
COEUR D'ALENE - Karl Erik Erickson, 33, of Palmer, Alaska, was sentenced today in United States District Court to 48 months in prison followed by three years supervised release for his robbery of a Ponderay credit union, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Stanley Bastian, a visiting judge from the Eastern District of Washington assigned to hear some Idaho cases, also ordered Erickson to pay $3,410 in restitution. Erickson pleaded guilty to the charge on September 15, 2015.
According to court documents, Erickson admitted that in July 2015, he went into the Horizon Credit Union in Ponderay, Idaho, and told the teller it was a robbery. He demanded money and took $3,410, and then fled the credit union. Erickson was arrested three days later. Erickson had one prior robbery.
The case was investigated by Bonner County Sheriff’s Department, Idaho State Police and the Federal Bureau of Investigation.
Owner of Medical Billing Company Indicted on Health Care Fraud and Aggravated Identity Theft Charges for Stealing Millions from MedicaidRead the Press Release
CHARLOTTE, N.C. – A Charlotte grand jury has indicted Jason Adam Townsend, 39, of Raeford, N.C., on health care fraud and aggravated identity theft charges, in connection with a scheme that defrauded Medicaid of millions of dollars, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. The 10-count indictment was unsealed today, following Townsend’s appearance in court.
U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division.
According to allegations contained in the indictment, in or about 2011, Townsend and another unindicted individual created Townhall Enterprises, LLC (Townhall), located in Raeford. Townhall provided billing services and credentialing services to mental health companies and other health providers. The indictment alleges that as third-party billing provider, Townhall received information from its clients detailing claim information to be submitted to insurance companies and health care benefit programs, including Medicaid.
The indictment alleges that from in or about 2011 to in or about 2013, and at the direction of Cynthia Harlan, Townhall entered into contractor agreements with client agencies to provide billing services, including submitting claims to Medicaid, and in return receiving 5-7% of the reimbursed claims. According to court records, Harlan owned and operated Heartland Consulting and Marketing, LLC (“Heartland”) in Charlotte, and held herself out as a consultant specializing in the operation of mental health companies and Medicaid reimbursement. Harlan was indicted on health care fraud conspiracy and related charges in September 2015. Townhall’s other client agencies included New Choices Youth and Family Services, operated by Sakeenah Davis and Kino Williams, Life Impact Solutions, LLC, owned and operated by Zaria Humphries, and Aliya Boss, all of whom have pleaded guilty federal charges in connection with the scheme.
According to allegations contained in the indictment, Townsend and Townhall received billing instructions for clients, such as Boss, Life Impact Solutions, LLC and others, directly from Harlan or others acting on Harlan’s behalf. The indictment alleges that these instructions generally were contained in billing spreadsheets, which Harlan provided, containing relevant claim information, such as the Medicaid beneficiary name, date of birth, Medicaid ID number, the alleged dates of services, the alleged types of services and company that allegedly provided the services. The indictment alleges that Townsend generally did not follow the instructions provided by Harlan and the client agencies, and instead he frequently billed two or three times the amount of services he was instructed to submit to Medicaid. For example, the indictment alleges that instead of submitting claims to Medicaid requesting reimbursement for approximately 268 dates of therapy allegedly provided to 14 Medicaid beneficiaries, Townsend made up different claims, and increased the number of dates of service to over 400.
The indictment alleges that Townsend submitted millions of dollars in false claims, for which Medicaid reimbursed the providers. Townsend and Townhall were compensated by the client agencies for submitting the fraudulent claims. The indictment also alleges that during the same time period, Townhall’s primary source of income was the fees it charged to clients obtained through Harlan.
Townsend is charged with five counts of health care fraud conspiracy and five counts of aggravated identity theft and had his initial appeared today before U.S. Magistrate Judge David S. Cayer. He was released on conditions from the court. His detention hearing will be scheduled by the court in the coming days. The health care fraud conspiracy charge carries a maximum prison term of 10 years and a $250,000 fine per count. The aggravated identity theft charge carries a mandatory prison term of two years, consecutive to any other term of imprisonment.
An indictment is merely an allegation and Townsend is presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law.
The FBI conducted the investigation. In making today’s announcement, U.S. Attorney Rose also thanked the North Carolina Medicaid Investigations Division for their assistance in this case.
The prosecution of the cases is handled by Assistant U.S. Attorney Kelli Ferry of the U.S. Attorney’s Charlotte Office.
The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force. The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all whistle blower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations. The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.
If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447-8477 (1-800-HHS-TIPS), or E-Mail at [email protected].
Operator of Third Party Payroll Company Sentenced to More Than 11 Years in Prison for Embezzling $17 Million from Client CompaniesRead the Press Release
CHARLOTTE, N.C. – James William Staz was sentenced today to 135 months in prison for embezzling more than $17 million from clients of the third-party payroll company he operated, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney also sentenced Staz to two years of supervised release and ordered him to pay over $17 million as restitution. Staz pleaded guilty in March 2015 to wire fraud, transactional money laundering and tax evasion.
U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
According to court documents and today’s sentencing hearing, Staz operated a third-party payroll company, “Employee Services.Net, Inc.” (ESN), that provided various services to client companies, including processing payroll, collecting and paying employment taxes, and preparing and filing employment tax forms. Court records show that Staz was ESN’s vice president and later the company’s president, and at its height, ESN had approximately 500 client companies nationwide. According to court documents, ESN had access to the clients companies’ bank accounts and could draft directly the funds needed to cover expenses associated with the services it provided.
Court records indicate that from 2008 to March 2014, Staz defrauded at least 113 ESN clients of approximately $17 million dollars intended for payroll and employment tax payments and used it to support his personal lifestyle. Staz stole at least $3.7 million in client funds and used the money to pay for alcohol, strip club entertainment to include leaving a $5,000 tip, jewelry, a Mercedes Benz and a luxury home. To conceal his embezzlement, court records show that Staz made false entries into ESN’s accounting system to make it appear as though the funds were used for legitimate client expenses.
At today’s sentencing hearing, Judge Whitney said that Staz “victimized a lot of people, across the socio-economic spectrum and across the country,” including “non-profits that operate on a very tight budget.” Judge Whitney also said that the defendant “probably victimized more individuals and legal entities than any other fraud scheme this court has ever seen,” adding, “that kind of reckless disregard for spending people’s money is horrifying.”
James Staz has been in custody since his arrest in October 2014. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
At today’s sentencing hearing Judge Whitney granted the government’s motion to dismiss the charges against James Staz’s father and former codefendant, William James Staz, who is now deceased.
The investigation for the case was handled by the FBI and IRS-CI. Assistant U.S. Attorney Kelli H. Ferry of the U.S. Attorney’s Office, in Charlotte, prosecuted the case.
Olathe Man Sentenced for Armed Bank RobberyRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that an Olathe, Kan., man was sentenced in federal court today for the armed robbery of the Bank of Weston.
Marcus Aurellius Moon, 30, of Olathe, was sentenced by U.S. District Judge DeanWhipple to 11 years and three months in federal prison without parole.
On Aug. 11, 2015, Moon pleaded guilty to armed bank robbery and to brandishing a firearm during a crime of violence. Moon admitted that he stole $26,427 from the Bank of Weston,18255 45 Highway, on Oct. 22, 2014.
Moon entered the bank wearing a silver ski mask and carrying a semi-automatic handgun. Moon walked up to a teller and demanded money. The teller complied and another teller behind her, who had been loading currency into an ATM machine, also complied.
The Platte County Sheriff’s Department broadcast to neighboring jurisdictions about the robbery, including a vehicle description and a description of the suspect. Officers with the Atchison, Kan., Police Department set up surveillance around the Amelia Earhart Bridge. They saw Moon driving a vehicle that matched the description given in the broadcast and tried to stop it. However, Moon placed the vehicle in reverse, striking police vehicles and escaping. During Moon’s attempts to flee, an Atchison police officer fired his gun. Moon was not struck and was able to escape. Atchison police pursued the suspect for several blocks until his vehicle got stuck in a residential area and Moon was taken into custody.
Officers found a loaded SCCY 9mm handgun inside the vehicle, along with a silver ski mask and the money taken from the bank.
This case was prosecuted by Assistant U.S. Attorney Bruce Rhoades. It was investigated by the Atchison, Kan., Police Department, the Weston, Mo., Police Department, the Platte County, Mo., Sheriff’s Department, the Kansas Bureau of Investigation and the FBI.
Oklahoma City Woman Sentenced to 77 Months for Drug ConspiracyRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma, announced today that JESSICA SUZANNE FELIX, age 33, of Oklahoma City, Oklahoma, was sentenced to 77 months imprisonment, followed by 5 years of supervised release for Drug Conspiracy, in violation of Title 21, United States Code, Sections 846.
The charge is a result of an investigation by the Drug Enforcement Administration and coordinated by the Organized Crime Drug Enforcement Task Force (OCDETF) of the Eastern District of Oklahoma. OCDETF is an initiative led and coordinated by the United States Attorney’s Office. The defendant was indicted in April, 2015 and pled guilty in June, 2015.
The Indictment alleged that beginning in or about July 2014, the exact date being unknown to the Grand Jury, and continuing until on or about the date of the Indictment, within the Eastern District of Oklahoma and elsewhere, the defendant did knowingly and intentionally conspire, confederate and agree together and with others, known and unknown to the Grand Jury, to possess with intent to distribute and to distribute 50 grams or more of methamphetamine (actual) and 500 grams or more of a mixture or substance containing a detectable amount of methamphetamine, a Schedule II controlled substance.
The Honorable Ronald A. White, 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 Marshal Service pending transportation to the designated federal prison at which she will serve her nonparolable sentence.
Assistant United States Attorney Shannon Henson represented the United States.
Ohio man sentenced to 140 months for heroin, cocaine, painkiller traffickingRead the Press Release
WHEELING, WEST VIRGINIA – Donald White, 41, of Cleveland, Ohio, was sentenced today to 140 months in prison for heroin, cocaine, and oxycodone trafficking, United States Attorney William J. Ihlenfeld, II, announced.
White conspired with other individuals to sell heroin, cocaine, and prescription painkillers throughout 2014 in Ohio County and Marshall County, West Virginia. White pled guilty in September 2015 to one count of “Conspiracy.”
Kari Jako, 26, and Christina Crupe, 33, both of Wheeling, also participated in the drug trafficking conspiracy. Jako pled guilty in September 2015 to one count of Conspiracy. She was sentenced to six months in prison. Crupe pled guilty in September 2015 to a criminal Information charging her with one count of “Conspiracy to Possess with Intent to Distribute and to Distribute Oxycodone.” She was sentenced to probation for a term of three years.
Assistant U.S. Attorney Randy Bernard prosecuted the case on behalf of the government. The Ohio Valley Drug and Violent Crime Task Force, a HIDTA-funded initiative, investigated.
Senior U.S. District Judge Frederick P. Stamp, Jr. presided.
Oakland-Based Government Finance Director Pleads Guilty to Embezzling Public FundsRead the Press Release
SAN FRANCISCO – Clarke J. Howatt, a former public finance director of the Association of Bay Area Governments (ABAG), pleaded guilty today to embezzling almost $3.9 million from that government authority, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The guilty plea stems from the February 13, 2015, information filed by the federal government charging Howatt with wire fraud for fraudulently inducing ABAG and its related Finance Authority for Non-Profit Corporation (FAN) to make payments to accounts he controlled.
In the plea agreement, Howatt, 56, formerly of Oakland, admits he engaged in a scheme to fraudulently obtain funds from ABAG/FAN. The plea agreement describes the transactions Howatt conducted to purloin the money.
ABAG, headquartered in Oakland, is a Joint Powers Agency formed in the 1960s. As ABAG’s Financial Services Director, Howatt oversaw all bonds issued on its behalf by FAN. In some case, Howatt also had the power to request that FAN make certain payments to, among others, entities completing work for certain public capital improvement projects. In the plea agreement, Howatt admits he used his power to convince FAN to make payments to accounts he controlled by disguising the transactions as legitimate expenditures.
One of the transactions described in the plea agreement involves Howatt’s creation of a Nevada corporation and the establishment of a related bank account to receive FAN funds. In June of 2006, FAN approved an indenture and issued a series of bonds to pursue a public capital improvement project in the South of Market neighborhood of San Francisco. The project was intended to offset the impact of a high-rise building to be built on Rincon Hill. Howatt admitted that he opened a Citibank account in the name of the Nevada corporation. Then, in August of 2014, Howatt requested that the FAN reimburse the corporation for more than a million dollars in expenditures incurred as part of the capital improvement project. The request for reimbursement was purported to be for “reimbursable costs, fees, and expenses submitted to the ABAG Finance Authority [FAN]” by the developer of the Rincon Hill project; however, the request was truly from Howatt. FAN eventually made a wire transfer of $1,296,340.66 to the Citibank account controlled by Howatt.
In another scheme, Howatt convinced FAN to issue over a million dollars to “Windemere BLC Land Company LLC,” another company associated with Howatt. This company was purported to be a developer of a housing development located in San Ramon, Calif. FAN issued several bonds and made numerous legitimate expenditures in connection with the public capital improvements associated with Windemere Ranch and its special districts. Nevertheless, several years after the improvements funded by the bonds had been completed, there remained surplus funds from bonds issued by the FAN. In 2011, Howatt convinced the FAN to issue a wire transfer moving over a million dollars of the surplus funds to an account created for the company he controlled.
In total, Howatt admitted he illegally obtained $3,876,135.21 as a result of his scheme to defraud. He pleaded guilty to the single count of wire fraud in the information, a violation of 18 U.S.C. § 1343.
Howatt currently is released from custody pending sentencing. He is scheduled to appear for sentencing on March 23, 2016, before the Honorable Charles R. Breyer, District Judge. The maximum penalty for a violation of 18 U.S.C. § 1343 is 20 years’ imprisonment; a fine of $250,000 or twice the gross gain or loss, whichever is greater; and 3 years of supervised release. However, any sentence following conviction for this offense would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Kyle Waldinger and David Countryman are prosecuting the case with the assistance of Jessica Meegan and Carolyn Jusay. The prosecution is the result of an investigation by the FBI.
North Carolina Man Charged with Tax Fraud and Other CrimesRead the Press Release
A federal grand jury sitting in Greensboro, North Carolina, returned a superseding indictment against a Thomasville, North Carolina, man charging him with one count of evading the payment of income taxes, three counts of filing false tax returns, one count of making false statements on aircraft maintenance records, one count of aggravated identity theft and four counts of serving as an airman without an airman’s certificate, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand for the Middle District of North Carolina announced today.
According to the superseding indictment, from 2011 through 2014, Paul Douglas Tharp aka Doug Tharp, attempted to evade payment of income taxes he owed for the tax years 2004 through 2007 by filing false documents, including false tax returns, with the Internal Revenue Service (IRS). The superseding indictment also alleges that Tharp forged the signature of a licensed mechanic on aircraft maintenance records and served as an airman without the required certification.
If convicted, Tharp faces a statutory maximum sentence of five years in prison for the tax evasion charge, three years in prison for each count of filing a false tax return, three years in prison for each count of serving as an airman without an airman’s certificate, five years in prison for making false statements and a two year mandatory prison sentence for aggravated identity theft. He also faces substantial monetary penalties, supervised release and restitution.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Anand Ramaswamy and Trial Attorney Nathan Brooks of the Tax Division, who are prosecuting this case.
An indictment merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.