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3 February 2016
Buffalo Man Charged with Multiple Child Pronography ChargesRead 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 Robert Pritchett, 20, of Buffalo, NY, was arrested and charged by criminal complaint with Production, receipt and possession of child pornography and sex trafficking of minors. The charges carry a mandatory minimum penalty of 15 years in prison and a maximum of life.
Assistant U.S. Attorney Aaron J. mango, who is handling the case, stated that according to the complaint, on July 10, 2014, the defendant was arrested by the Cheektowaga Police Department and charged with sexually assaulting and raping a 15 year old girl. The charges were filed after Pritchett had a 14 year old female send him naked pictures using the Kik messaging application in June of 2014. The 14 year old asked the defendant to delete the pictures but he refused. The 14 year old contacted a 15 year old friend who contacted Pritchett in an attempt to get him to delete the pictures. The defendant agreed if the 15 year old met him in person.
The 15 year old met the defendant in South Buffalo, NY and the two boarded a bus to the Galleria Mall in Cheektowaga, NY. Pritchett forced the 15 year old to have oral sex and sexual intercourse with him. The 15 year old reported the assault and rape to the Cheektowaga Police in July 6, 2014. Subsequently, law enforcement officers, acting in an undercover capacity, contacted the defendant through the 15 year old’s telephone. Pritchett agreed to meet the “15 year old” on July 10, 2014 at which time he was arrested.
A subsequent search of the defendant’s cellular telephone revealed naked images of numerous unidentified underage females as well as images of one known underage female (victim 1). According to the complaint, during an interview with officers, victim 1 said she told Pritchett she was 15 years old. She also indicated that the defendant filmed a video chat during which she was naked. After that video session, victim 1 said she began receiving messages on social media from strangers who had seen her video.
On November 8, 2015, the town of Tonawanda Police responded to the Erie County Medical Center for a report of the sexual assault of a 17 year old female (victim 2). Victim 2 told officers she met the defendant on a social media website and eventually began communicating through telephone. Victim 2 said she told Pritchett she was having trouble at her New Jersey residence and wanted to leave. The defendant encouraged victim 2 to come to Buffalo but stated she would have to have sexual relations with his adopted brother when she arrived among other things. Pritchett also convinced victim 2 to place an ad on Backpage.com offering sexual services in exchange for money. On November 6, 2015, victim 2 traveled to Buffalo where the defendant picked her up and took her to a motel in Tonawanda where the two had sex.
On November 7, 2015, the defendant made victim 2 place ads on Backpage.com and meetme.com advertising prostitution services. Later that day, victim 2 has sexual intercourse with an individual who responded to the ad on meetme.com.
On November 8, 2015, victim 2 boarded a bus to head back to New Jersey but she got off at a stop near the airport and called a family friend who drove her to the hospital.
The defendant made an initial appearance this afternoon before U.S. Magistrate Judge Jeremiah J. McCarthy and is being detained.
The complaint is the culmination of an investigation by the Federal Bureau of Investigation, under the direction of Special Agent in Charge Adam S. Cohen, the Cheektowaga Police Department, under the direction of Chief David Zack, the Tonawanda Police Department, under the direction of Chief Jerome Ushold, the Buffalo Police Department, under the direction of Commissioner Daniel Derenda, and the Erie County Sheriff’s Department, under the direction of Timothy Howard.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Bradenton Man Sentenced to Life in Federal Prison for Child Sexual Exploitation OffensesRead the Press Release
Tampa, FL – U.S. District Judge Steven D. Merryday today sentenced Nathan Bryan (40, Bradenton) to life in federal prison for producing child pornography and attempting to entice a minor for illegal sexual activity. The Court also ordered him to forfeit items that he had used while committing the offenses. Bryan pleaded guilty on October 25, 2015.
According to court documents, in April 2014, a detective from the Bradenton Police Department conducted an undercover investigation of Bryan, who was attempting to obtain babysitting jobs by posting and responding to online ads. Bryan communicated with the detective, who Bryan believed was the stepfather of an 8-year-old boy, and made plans to meet the “child” for sex. He also discussed various sex acts that he wanted to perform on the child. On June 21, 2015, Bryan arrived at the prearranged location to meet the “dad” and to have sex with the “child.” During that meeting, he shared a video that he had produced while babysitting that contained explicit images of a young boy.
This case was investigated by the Bradenton Police Department, which is a member of the Federal Bureau of Investigation Child Exploitation Task Force in Fort Myers. It was prosecuted by Assistant United States Attorney Amanda C. Kaiser.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Beavercreek Business Owner Charged with Embezzling $95,550 from Employee Retirement Savings PlanRead the Press Release
PORTLAND, Ore. – Charles W. Buller, 63, of Beavercreek, Oregon, has been charged by federal indictment with embezzling $95,550 from an employee retirement savings plan he controlled. The indictment alleges that Buller was the President and sole owner of Park Place Wood Products, Inc., based in Oregon City, Oregon. Park Place made high-end cabinetry for homes and businesses and in a typical year employed between 10 and 20 people.
Park Place maintained a retirement savings benefit plan for its employees and from July 2011 to December 2012, Buller, as the sole trustee of the plan, allegedly drew eight checks totaling $95,550 on the retirement plan account and converted the money to his own use.
“Employees of small businesses contribute to retirement plans relying on the money being there when they retire, and business owners have a special responsibility to maintain those plans solely for the benefit of their employees” said U.S. Attorney Billy J. Williams. “This office, in partnership with the Department of Labor, will vigorously investigate and prosecute business owners who take money out of their employees’ pockets in this manner.”
This case was investigated by the U. S. Department of Labor, Employee Benefits Security Administration. The case is being handled by Assistant U. S. Attorney Seth D. Uram.
You can download the Indictment attached below.
Baltimore City Landfill Supervisor and Three Other Defendants Sentenced to Prison in Bribery and Illegal Salvaging SchemesRead the Press Release
Baltimore, Maryland – U.S. District Judge Marvin J. Garbis sentenced William Charles Nemec, Sr., age 56, of Baltimore, today to 78 months in prison followed by three years of supervised release for conspiracy and bribery in connection with two schemes: one in which Department of Public Works (DPW) employees sought and accepted cash payments from commercial haulers in return for allowing the haulers to deposit trash at the Quarantine Road Landfill without paying the required disposal fees (bribery scheme); and a second scheme in which DPW employees stole scrap metal from the landfill for personal gain (the junking scheme). Judge Garbis also entered an order that Nemec pay restitution of $6 million.
On February 1, 2016, Judge Garbis sentenced two commercial haulers for their participation in the bribery scheme: Adam Williams, Jr., age 52, of Randallstown, to one year in prison followed by two years of community confinement with work release; and Larry Lowry, age 61, of Orchard Beach, Maryland, to 30 months in prison. Judge Garbis also entered an order that Williams pay restitution of $900,000, and Lowry pay restitution of $180,000.
Yesterday, Judge Garbis sentenced Michael Theodore Bennett, age 46, of Baltimore, an employee at the Baltimore City Landfill, to 46 months in prison and entered an order that Bennett pay restitution of $400,000. Bennett had previously pleaded guilty to conspiracy to steal from a program receiving federal funds, wire fraud and failure to file a tax return in connection with the junking scheme.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office; Robert H. Pearre, Jr., Inspector General, City of Baltimore Office of Inspector General; Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Colonel William M. Pallozzi, Superintendent of the Maryland State Police.
Bribery Scheme
Individuals or companies commercially hauling trash that have registered their vehicles with Baltimore City and obtained Landfill permits, as well as Baltimore City residents with larger loads, must deposit their trash in an open area located within the Landfill. Commercial haulers of trash that meet certain vehicle weight limitations must, in addition to purchasing a Landfill permit, pay a waste disposal fee of $67.50 per ton of trash deposited at the Landfill. DPW employees assigned as scale house operators weigh each truck as it enters the Landfill, which is recorded on a computerized point-of-sale system. The scale house operators reweigh each truck as it leaves the Landfill.
According to the defendants’ plea agreements, Nemec started working in 1984 for the DPW as a scale house cashier at the Cold Spring Lane Landfill. Back then, Nemec and other cashiers would regularly accept bribes from small and large haulers in lieu of charging disposal fees and then split the bribe money among all the cashiers. That same year, Nemec was transferred to the Quarantine Road Landfill (Landfill) where he engaged in the same type of bribery scheme. Except for short periods of time over the years since 1984, and despite the comings and goings of new scale house employees and supervisors at the Landfill, Nemec and other scale house operators continued to execute the bribery scheme, even after Nemec was promoted to a supervisory position at the Landfill in 2006, and until his arrest on May 12, 2015.
Beginning around 2002, Nemec executed the bribery scheme in tandem with two scale house operators. Nemec and the scale house operators accepted $100 bribe payments from large haulers for each truckload of trash dumped at the Landfill, which saved the haulers many hundreds of dollars per trip to the Landfill. Nemec and others concealed the bribery scheme by not entering a truck’s registration number into the computerized scale system, which meant the transaction was not recorded. Consequently, the transaction would not appear on the scale house’s daily logs and the commercial hauler would not be billed for using the Landfill on that particular occasion.
To maintain the pretense that the trucks had been weighed and the disposal fee paid, Nemec and others would hand the truck drivers fake or blank receipts when they crossed the outbound scale. In return, the commercial haulers, including Larry Lowry and Adam Williams, either paid the $100 bribe through the outbound window at the scale house or met with Nemec or another scale house operator at an off-site location to pay a week’s worth of bribes or more. The commercial haulers always paid the $100 bribes in cash. Nemec and the two scale house operators split the bribes three ways until Nemec became a supervisor, after which they agreed that Nemec would collect and keep Lowry’s bribes as Nemec’s share of the scheme, and Washington and the other employee would collect and keep the bribes paid by the other haulers as their share of the scheme.
By paying the $100 bribes in lieu of the disposal fees to Nemec and other scale house operators, the commercial haulers saved their businesses thousands of dollars each month, which, in turn, cost the City of Baltimore more than $6 million in revenue. For example, from July 1, 2014 through May 1, 2015 alone, Nemec, while working as a landfill supervisor, accepted more than $15,000 in bribe payments from Larry Lowry in return for not charging Lowry approximately $55,000 in required waste disposal fees. Similarly, during the same time period, Adam Williams paid more than $42,000 in bribe payments in lieu of paying $120,000 in required waste disposal fees.
Illegal Junking Scheme
In addition to the revenue generated by the collection of disposal fees, Baltimore City’s waste management system generates revenue by collecting and selling recyclable scrap metal dumped at the City’s trash collection facilities, including household appliances, steel cables, copper wires, car parts, computer parts, door and window frames. The City awards contracts to private salvage companies to purchase and remove such scrap metal from its trash collection facilities.
DPW employees at the Landfill and other trash collection sites are required to segregate the recyclable scrap metal from general refuse and place it in separate bins provided by the salvage companies. The companies regularly pick up the scrap metal, weigh it and send a tonnage report to the City. Based on predetermined prices per ton, the City sends an invoice to the companies requesting payment for the value of the scrap metal the companies removed during a given period of time. Salvaging by employees, also referred to as “junking,” was strictly prohibited and employees were put on notice that any salvaging of metal constituted theft of City property.
From about 2005 to May 2015, Nemec and other Landfill employees falsely represented to the DPW that they were performing their jobs when in fact they unlawfully collected and sold scrap metal for personal gain during work hours.
Nemec knew that laborers at the Landfill, including Michael Bennett, used their personal cell phones during work shifts to let each other know when and where recyclable scrap metals were being dumped at the Landfill. After collecting and creating piles of the scrap metal, the laborers would transport the scrap metal using their personal pick-up trucks to a private salvage company, frequently making multiple trips during an eight-hour work shift. Bennett and other employees paid other DPW employees to help locate, collect and load the scrap metal onto their trucks.
During 2011 and 2012, Bennett paid Nemec approximately $20 every day to allow them to collect and transport the stolen scrap metal. In addition to not reporting Bennett’s daily trips to the salvage company to sell the stolen metal, which some days could take a total of 3 - 4 hours, Nemec would authorize and submit false time and attendance records to conceal the scheme, so that Bennett and other laborers were able to be paid for work they did not perform while stealing the metal.
Bennett prepared and submitted false time and attendance records, which claimed he had been working, when he was instead illegally collecting and selling the scrap metal, resulting in wages being paid to Bennett for work he did not perform.
The loss to the City of Baltimore as a result of the junking scheme was approximately $1 million.
Bennett also failed to report approximately $479,468 of income for tax years 2011 through 2013, the majority of which was obtained from the illegal junking scheme, resulting in a tax loss to the government of $126,273.
To date, five DPW employees and six commercial haulers have been convicted in the schemes.
United States Attorney Rod J. Rosenstein praised the FBI, IRS-CI, Baltimore Office of Inspector General and Maryland State Police for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Martin J. Clarke and Leo J. Wise, who prosecuted the case.
BBA Aviation to Divest Facilities at Six Airports in Landmark Aviation AcquisitionRead the Press Release
Divestitures Avoid Creating Monopolies or Duopolies for Critical Fueling and Support Services
The Department of Justice announced today that it will require BBA Aviation plc, the parent company of Signature Flight Support, to divest fixed‑base operator assets (FBOs) at six U.S. airports in order to proceed with its $2.065 billion acquisition of Landmark Aviation.
The department’s Antitrust Division filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to block the proposed acquisition, and simultaneously filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit. The department said that without the required divestitures, the transaction would have created a monopoly for FBO services at three airports and reduced the number of full-service FBO providers from three to two at three others, resulting in higher prices and lower quality of FBO services for consumers.
“The merger would have subjected general aviation customers at six airports to a monopoly or duopoly for critical fueling and support services,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Higher prices and lower quality services were the likely result. Today’s proposed settlement will ensure that customers at these airports will continue to receive the benefits of vigorous competition.”
FBOs provide fuel and related support services to general aviation customers, which include charter, private and corporate aircraft operators. Signature and Landmark own or operate full-service FBOs at airports throughout the United States. Signature and Landmark are the only two full-service FBOs at Washington Dulles International Airport (IAD) in Dulles, Virginia; Scottsdale Municipal Airport (SDL) in Scottsdale, Arizona; and Fresno Yosemite International Airport (FAT) in Fresno, California. Signature and Landmark are two of only three full-service FBOs at Jacqueline Cochran Regional Airport (TRM) in Thermal, California; Westchester County Airport (HPN) in White Plains, New York; and Ted Stevens Anchorage International Airport (ANC) in Anchorage, Alaska. At each of these three airports, the third FBO is much smaller than Signature and Landmark.
Under the terms of the proposed settlement, BBA Aviation must divest Landmark’s FBO assets at each of the six impacted airports to a buyer approved by the Antitrust Division.
BBA Aviation plc is a United Kingdom public limited company headquartered in London. Its subsidiary, Signature Flight Support, a Delaware corporation headquartered in Orlando, Florida, has the world’s largest FBO network and operates approximately 70 FBO facilities in the United States. BBA had worldwide revenues of approximately $2.3 billion in 2014, of which over $900 million were derived from Signature’s U.S. FBO business.
Landmark U.S. Corp LLC and LM U.S. Member LLC (collectively doing business as Landmark Aviation), are Delaware limited liability companies headquartered in Houston and are owned by investment funds managed by the Carlyle Group. Landmark operates approximately 60 FBO facilities in the United States. Landmark had worldwide revenues of over $700 million in 2014, of which over $500 million were derived from its U.S. FBO business.
As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to James J. Tierney, Chief, Networks & Technology Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 7100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed final judgment upon finding that it serves the public interest.
BBA_Landmark CIS (86.52 KB)
BBA_Landmark PFJ (84.97 KB)
BBA_Landmark Hold Separate (105.15 KB)
BBA_Landmark Explanation (26.9 KB)
BBA_Landmark Complaint (115.75 KB)
9 Charged in Federal Court with Circumventing Smog Check Program by ‘Clean Piping’ over 1,300 Vehicles that Were Never TestedRead the Press Release
LOS ANGELES – A federal grand jury has returned a 44-count indictment that charges nine defendants with violating the Clean Air Act by conducting hundreds of fraudulent smog check inspections that falsely certified vehicles had passed emissions tests when different cars and trucks had actually been tested.
The indictment, which was filed yesterday afternoon in United States District Court, focuses on Smogz R Us, a shop that operated on West 54th Street in South Los Angeles. The defendants – who are charged with conspiracy and various counts of making false statements in a record – allegedly performed more than 1,300 fraudulent smog checks at Smogz R Us.
“Environmental protection programs, such as California’s smog check program, are designed to protect our health and safety,” said United States Attorney Eileen M. Decker. “The operator and employees of this smog check facility – one of many on the front lines of limiting air pollution – willfully circumvented testing procedures and allowed as many as 1,300 hundred cars and trucks to emit harmful levels of pollutants.”
The federal Clean Air Act gives primary responsibility for meeting “ambient air quality” standards for pollutants such as ozone, lead, sulfur dioxide and carbon monoxide to the states. As part of California’s plan to meet these air quality standards, the state’s Bureau of Automotive Repair oversees a vehicle inspection program that requires many vehicles in the state – and in the Los Angeles metropolitan area, where ozone pollution is particularly severe – to undergo an emissions test commonly called a smog check. The Clean Air Act prohibits a person from knowingly making false statements and certifications in relation to programs mandated under the Clean Air Act, which includes the California smog check program.
The indictment alleged that the nine defendants engaged in a form of fraudulent smog testing known as “clean piping.” To do this, the defendants entered vehicle identification information into the smog testing equipment, known as the Emissions Inspection System (EIS), to make it appear that a particular vehicle was being tested, but then they performed the emissions test on a second “substitute vehicle” to obtain a passing result for the vehicle that was not actually tested. This process of “clean piping” was allegedly used to conduct more than 1,300 fraudulent smog checks at Smogz R Us, and nearly all of the vehicles supposedly being tested were not even at the testing station. According to the indictment, once the bogus tests were completed, the defendants caused fraudulent Certificates of Compliance to be submitted to California’s Vehicle Information Database, falsely certifying that vehicles passed the smog checks when they were never tested.
The defendants named in the indictment are:
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Jermaine Elroy Williams, also known as “Aria,” 32, of Woodland Hills, who allegedly conducted fraudulent smog inspections at Smogz R Us after his license had been revoked and a Los Angeles Superior Court judge in a criminal case ordered Williams not to have any employment related to smog checks;
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Cheerline May Young, also known as Cheerline Williams, 52, of Athens, who is the mother of Jermaine Williams and was the owner and operator of Smogz R Us;
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Mario Mesa, 47, of Bell Gardens, a licensed smog check technician who allegedly conducted fraudulent smog check inspections at Smogz R Us;
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Jaime Patrick Alvarez, 55, of Baldwin Park, another licensed smog check technician who allegedly conducted fraudulent smog checks;
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Darnell Tyrone Usher, also known as “Who Knew,” 26, of South Los Angeles, who along with Williams was previously ordered by a Los Angeles Superior Court judge not to be employed in the smog or emissions industry;
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Lavell Fay Davenport, also known as “Precept,” 54, of South Los Angeles, who allegedly conducted fraudulent smog inspections;
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Miguel Angel Espinoza, 67, of Maywood, who allegedly facilitated and assisted in fraudulent smog checks;
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Mark Anthony Young, 23, of Woodland Hills, who is the son of Cheerline May Young and allegedly facilitated and assisted in fraudulent smog checks; and
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Cheerline Marie “Cici” Young, 26, of South Los Angeles, who is the daughter of Cheerline May Young and who also allegedly conducted fraudulent smog inspections.
The nine defendants will be summoned to appear for arraignment in United States District Court in the coming weeks.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The charge of conspiracy of conspiracy carries a statutory maximum penalty of five years in federal prison, and the charge of making false statements in a record carries a statutory maximum penalty of two years.
The indictment targeting Smogz R Us is the product of an investigation by the United States Environmental Protection Agency, Criminal Investigation Division.
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4 Arrested on Federal Drug ChargesRead the Press Release
COLUMBUS, Ohio – Four defendants were arrested yesterday morning on charges related to running a marijuana ring between Tuscon, Ariz. and Columbus, Ohio. Investigators have seized more than 2,000 pounds of marijuana and more than $1.2 million in cash in relation to the case.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Joseph P. Reagan, Special Agent in Charge, Drug Enforcement Administration (DEA), Columbus Police Chief Kim Jacobs and other members of Central Ohio HIDTA (High Intensity Drug Trafficking Area) Drug Task Force announced the arrests that took place today. The HIDTA Task Force is operated as part of the Ohio Attorney General’s Ohio Organized Crime Investigations Commission.
According to court documents, detectives with Columbus Police and the HIDTA Task Force began in investigation into a multi-kilogram marijuana drug ring in November 2015. Detectives learned large shipments were being imported into Columbus on a monthly basis by a male named “Lucky,” later identified as Damian Edwards, a Jamaican native.
While conducting surveillance, law enforcement officials saw defendants renting and driving large vehicles such as a U-Haul, Dodge Durango and Landstar Ranger semi-tractor trailer and meeting at locations near Polaris Shopping Place before following one another to a hotel nearby.
The defendants were each charged with conspiracy to possess with intent to distribute marijuana, a crime punishable by a range of 10 years up to life in prison, and a $10 million fine.
Initial court appearances for the arrestees are scheduled this afternoon before U.S. Magistrate Judge Norah McCann King. They include:
Damian Edwards, 38, of Columbus
Hopie Dawn Edwards, 34, of Columbus
Theo Lavelle Smith, 33, of Columbus
German Alfredo White, 53, of Jacksonville, Fla.
U.S. Attorney Stewart commended the cooperative investigation by the DEA and Columbus Division of Police, as well as Assistant U.S. Attorneys Michael Hunter and David Bosley, who are prosecuting the case.
Charges contained in a complaint are allegations. All defendants should be presumed innocent until and unless proven guilty in court.
20 Charged after FBI Task Force Investigation into Hartford Drug TraffickingRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, Patricia M. Ferrick, Special Agent in Charge of the Federal Bureau of Investigation, and Hartford Police Chief James C. Rovella, today announced that 20 individuals have been charged with federal narcotics offenses related to the distribution of crack cocaine in Hartford’s North End.
According to allegations made in court, this matter stems from joint law enforcement investigation headed by the FBI’s Northern Connecticut Violent Crimes Task Force that targeted a drug trafficking organization operating in Hartford’s North End that was distributing crack and powder cocaine. The investigation revealed that DAVID GIL-GRANDE of Manchester received shipments of cocaine, secreted in sealed coffee cans, from Puerto Rico. GIL-GRANDE supplied cocaine to GERARD BROWN, a.k.a. “Goldie,” ANTHONY SHELTON, a.k.a. “Pretty,” and TREVON TERRY, a.k.a. “B.J.,” who converted much of the cocaine into crack cocaine and distributed both forms of the drug to others for street sale in the area of Barbour Street in Hartford.
The investigation has included the use of court-authorized wiretaps, physical surveillance, controlled drug purchases and seizures of drugs, a firearm, body armor, more than $150,000 in cash, two vehicles and jewelry.
Charged in a 38-count indictment, which was returned by a federal grand jury in Hartford on January 28, 2016, are:
DAVID GIL-GRANDE, 28, of Manchester
ANTHONY SHELTON, a.k.a. “Pretty,” 37, of Hartford
GERARD BROWN, a.k.a. “Gerald Brown” and “Goldie,” 35, of Hartford
TREVON TERRY, a.k.a. “B.J.,” 37, of Newington
NORKA SANCHEZ, 35, of Manchester
LUIS CRUZ, a.k.a. “Gordo,” 37, of Hartford
LONNIE ARNOLD, 35, of Hartford
NATISHA BROWN, 33, of Hartford
EUGENE McCLARY, a.k.a. “Chalk,” 35, of Hartford
CHARLES MORELAND, a.k.a. “Chuck,” 49, of Hartford
JIMMIE SMITH, a.k.a. “Prime,” 43, of Hartford
WILLIAM BRASWELL, a.k.a. “Skills,” “Bubba Skillet” and “Handsome,” 44, of Hartford
DION SMITH, a.k.a. “Uncle Block, 47, of Hartford
RICHARD DURRANT, a.k.a. “Face,” 31, of Hartford
JULIUS NELSON, 31, of Meriden
ANTHONY McKENZIE, 54, of Manchester
ANDRE CARTAGENA, 28, of Hartford
HERIBERTO LEBRON, 33, of Hartford
CARLOS RIVERA, a.k.a. “Los,” 26, of Hartford
ROBERT JONES, a.k.a “Y.O.,” 30, of HartfordOn January 21, 2016, investigators arrested GIL-GRANDE, GERARD BROWN, TERRY and SANCHEZ at their respective residences. SHELTON was arrested the following day at a hotel in Branford.
The investigation culminated yesterday with the arrests of CRUZ, NATISHA BROWN, McCLARY, MORELAND, BRASWELL, DION SMITH, NELSON, McKENZIE, CARTAGENA, RIVERA and JONES.
LEBRON is currently in state custody.
(*ARNOLD, JIMMIE SMITH and DURRANT are currently being sought by law enforcement. Citizens with knowledge of their whereabouts, or with information that may be helpful the investigation of this matter, are encouraged to call the FBI at 203-777-6311.)
The indictment charges GIL-GRANDE, SHELTON, GERARD BROWN, TERRY, SANCHEZ, CRUZ, ARNOLD, NATISHA BROWN, McCLARY, MORELAND, JIMMIE SMITH, BRASWELL, DION SMITH and DURRANT with conspiracy to distribute and to possess with intent to distribute narcotics. If convicted of this charge, based on the type and quantity of narcotics charged, GIL-GRANDE, SHELTON, GERARD BROWN, TERRY and SANCHEZ face a minimum term of imprisonment of 10 years and a maximum term of imprisonment of life; CRUZ, ARNOLD, NATISHA BROWN, McCLARY, MORELAND and JIMMIE SMITH face a minimum term of imprisonment of five years and a maximum term of imprisonment of 40 years, and BRASWELL, DION SMITH and DURRANT face a maximum term of imprisonment of 20 years.
SHELTON, GERARD BROWN, TERRY are charged with one or more counts of possession with intent to distribute, and distribution of, various quantities of crack cocaine, and GERARD BROWN, McKENZIE, CARTAGENA, LEBRON, RIVERA, and JONES are charged with one or more counts of possession with intent to distribute narcotics.
NELSON, McKENZIE, CARTAGENA, LEBRON, RIVERA and JONES are charged with use of telephone to facilitate the distribution of controlled substances, a charge that carries a maximum term of imprisonment of four years.
Finally, the indictment charges SHELTON with one count of possession of a firearm by a previously convicted felon, which carries a maximum term of imprisonment of 10 years, and one count of possession of body armor by a violent felon, which carries a maximum term of imprisonment of three years.
U.S. Attorney Daly stressed that an indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Federal Bureau of Investigation’s Northern Connecticut Violent Crimes Task Force, which includes members of the Hartford Police Department, East Hartford Police Department, Connecticut State Police and Connecticut Department of Correction. The Hartford Police Department’s Vice and Narcotics Squad and the Drug Enforcement Administration are providing valuable assistance to the investigation.
The case is being prosecuted by Assistant U.S. Attorney Brian P. Leaming.
2 February 2016
Wilton Man Sentenced to Prison for Felon in Possession of a Firearm and Possession of a Stolen Firearm ChargesRead the Press Release
DAVENPORT, IA – On January 29, 2016, Brandon Lysle VanBlarcom, 29, of Wilton, Iowa, was sentenced by United States District Court Judge Stephanie M. Rose to 72 months in prison for felon in possession of a firearm and possession of a stolen firearm, announced Acting United States Attorney Kevin E. VanderSchel. VanBlarcom was ordered to serve three years of supervised release following his prison term and to pay $200 to the Crime Victims’ Fund.
VanBlarcom pleaded guilty to the offenses on October 5, 2015. According to the plea agreement, on February 17, 2015, law enforcement was notified of a burglary in Morrison, Illinois, involving stolen firearms. On March 30, 2015, police officers searched VanBlarcom’s residence and found a Yugoslavian SKS 7.62 x 39 caliber rifle hidden in a crawl space. This gun was verified as having been stolen in the Morrison burglary. VanBlarcom has a prior 2005 felony conviction for burglary in the second degree.
This matter was investigated by the Muscatine Police Department, Muscatine County Sheriff’s Department, Muscatine Drug Task Force, Wilton Police Department, Cedar County Sheriff’s Department, Iowa Division of Narcotics Enforcement, Scott County Sheriff’s Department, Whiteside County Sheriff’s Department, and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa as part of the Project Safe Neighborhood initiative.
Williamsburg Man Sentenced to 15 Years for Illegal FirearmRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Williamsburg, Mo., man was sentenced in federal court today for illegally possessing a firearm.
William Hayward Council, 58, of Williamsburg, was sentenced by U.S. District Judge Brian C. Wimes to 15 years in federal prison without parole. Council was sentenced as an armed career criminal due to his prior felony convictions.
On Sept. 1, 2015, Council pleaded guilty to being a felon in possession of a firearm. Council admitted that he was in possession of a sawed-off shotgun on Aug. 23, 2013. Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Council has two prior felony convictions for unlawful use of a weapon and three prior felony convictions for distribution of a controlled substance. Council has been convicted of driving while intoxicated on 10 different occasions.
On Aug. 23, 2013, two individuals reported to law enforcement that Council jumped out of his truck and pointed a sawed-off shotgun at them on a rural roadway in Callaway County, Mo. Callaway County sheriff’s deputies went to Council’s residence that day. Deputies knocked on the door to Council’s camper (where he resided) and he opened the door. Deputies instructed Council to step outside the trailer, and informed him they were going to arrest him; however, he stepped back into the camper. Fearing that Council could access the gun, deputies stepped into the camper and grabbed Council, who resisted the deputies’ attempts to arrest him.
After obtaining a search warrant, officers found a New England 12-gauge shotgun, with a barrel length of less than 12 inches, on a bed inside the camper.
This case was prosecuted by Assistant U.S. Attorney Jim Lynn. It was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Callaway County, Mo., Sheriff’s Department.
Victoria Man Gets 30 Years for Producing Child PornographyRead the Press Release
CORPUS CHRISTI, Texas – James Peyton Busbee Jr., 30, of Victoria, has been ordered to federal prison following his conviction of sexual exploitation of a child, otherwise known as production of child pornography, announced U.S. Attorney Kenneth Magidson.
At a hearing late yesterday, Senior U.S. District Judge John D. Rainey sentenced Busbee to 360 months in federal prison. At the hearing, the agent testified that Busbee used a pipe laced with methamphetamine in the assault. In handing down the sentence, Judge Rainey called the crime “heinous.” The prison term will be immediately followed by 10 years of supervised release during which time he will have to comply with numerous requirements designed to restrict access to children and the Internet. He must also register as a sex offender and pay $1200 in restitution.
On Feb. 3, 2015, authorities responded to Busbee’s residence in reference to the possible sexual assault of a child. A minor male relative was identified and confirmed the abuse. Busbee also admitted to sexually assaulting the child.
A forensic examination of Busbee’s phone led to the discovery of an electronic video depicting Busbee involved in sexually explicit conduct with the child. Busbee was arrested on the federal charges in April 2015 and has been in custody since that time.
The charges were the result of an investigations conducted by Homeland Security Investigations with the assistance of the Victoria County Sherriff’s Office.
This case, prosecuted by Assistant U.S. Attorney Hugo R. Martinez, was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Two Orlando Men Involved in the Carjacking of A Federal Officer Plead GuiltyRead the Press Release
Orlando, Florida – United States Attorney A. Lee Bentley, III announces that Dante Askins (18) and Gregory McDonald (18) have pleaded guilty to carjacking and using a firearm while committing that offense. They each face a maximum penalty of 25 years in federal prison for the carjacking conviction and a mandatory 7-year consecutive term of imprisonment for the firearm conviction. The sentencing hearing has been scheduled for April 25, 2016.
According to court documents, on August 12, 2015, Askins and McDonald committed an armed carjacking of a U.S. Customs and Border Protection officer at a hotel in Orlando. The victim, who was on vacation with his family, had gone down to his SUV in the hotel parking lot to preload his GPS for a trip to Destin the next morning. Askins ran up to the victim and stuck a long-barreled .22 caliber revolver in his face. He, along with McDonald, and two minors, then forced the victim into the backseat of his vehicle at gunpoint. McDonald pistol whipped the victim three times in the back of the head. The carjackers held the victim for approximately two hours. When OnStar location services contacted the vehicle, the carjackers fled and the victim escaped.
This case was investigated by the Federal Bureau of Investigation, the Orange County Sheriff’s Office, and the Florida Department of Law Enforcement. It is being prosecuted by Assistant United States Attorney Tiffany L. Cummins.
Two Men Sentenced to Federal Prison for Investment FraudRead the Press Release
Jacksonville, Florida – U.S. District Judge Marcia Morales Howard has sentenced Chawalit Wongkhiao (29, Jacksonville) and Joshua Gilliland (31, Chattanooga, TN, formerly of Jacksonville) for conspiracy to commit wire fraud. Wongkhiao was sentenced to a term of four years and seven months and Gilliland was sentenced to one year and three months’ imprisonment. The Court also entered a money judgment against Wongkhiao and Gilliland in the amount of $1,120,831.00, the proceeds of the fraud.
Wongkhiao pleaded guilty on August 25, 2015, and Gilliland pleaded guilty on September 25, 2015.
According to court documents, Gilliland and Wongkhiao, doing business as Allied Markets LLC, solicited money for purported investments in foreign currency exchange (“forex”) transactions. Between March 2012 and July 2014, based on their representations, investors gave them substantial amounts of money. Contrary to their representations, Gilliland and Wongkhiao invested only a small portion the total investors’ funds in forex transactions, which resulted in a loss. A large portion of the funds were used for personal expenses, including cash withdrawals, rent, furnishings, clothing, travel, food, and entertainment. They also used some of the funds received from later investors to pay off earlier investors
This case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation, the Florida Office of Financial Regulation, and the Jacksonville Beach Police Department. It was prosecuted by Assistant United States Attorney Arnold B. Corsmeier.
Two Men Plead Guilty to Federal Charges for Role in Taco John’s Robbery; Three Additional Men ChargedRead the Press Release
FARGO - U. S. Attorney Christopher C. Myers announced that on Jan. 29, 2016, Rico Jamal Brown, 27, and Calvin Michael Frederick Brown, 25, pled guilty before U. S. District Judge Ralph R. Erickson to Interference with Commerce by Threats and Violence-Hobbs Act Robbery.
On September 3, 2015, the Taco John’s restaurant, 2601 32nd Avenue South, Fargo, was robbed at gunpoint. During the robbery, two men entered the business and an employee was shot during the course of the robbery. Rico Brown admitted during his plea hearing to aiding and abetting this robbery by participating as a lookout and Calvin Brown admitted to being a get-away driver for the robbery.
Judge Erickson has set sentencing for both men to take place on April 21, 2016, in U. S. District Court, Fargo, ND.
On January 28, 2016, Tommy Trent, 29, made an initial appearance before Magistrate Judge Alice Senechal on charges of Interference with Commerce by Threats and Violence-Hobbs Act Robbery.
Kadeem Malik Muhammed and Carl Eugene Smith, currently charged in Cass County District Court, are both scheduled for a court appearance in federal court on February 5, 2016, at 11:00 am; the case remains sealed until their first appearance.
This case is being investigated by the Fargo Police Department and Alcohol, Tobacco, Firearms, and Explosives (ATFE).
U. S. Attorney Christopher C. Myers is prosecuting the case.
Two Men Plead Guilty to Federal Charges for Role in Fargo Liquor Store RobberiesRead the Press Release
FARGO - U. S. Attorney Christopher C. Myers announced that on Jan. 29, 2016, Andrew Jerome Ford, and Carlos Henry Bethel, both 28, pled guilty before U. S. District Judge Ralph R. Erickson to Interference with the Commerce by Threats and Violence-Hobbs Act Robbery and Possession of a Firearm in Furtherance of a Crime of Violence.
On September 28, 2015, Bottle Barn Wine and Liquor, 2515 South University Dr., and The Spirit Shop Liquor Store, 1404 33rd St. S., were robbed within an hour of each other. Bethel pled guilty to robbing Bottle Barn while brandishing a firearm and threatening the cashier to hand over money. Ford has agreed to plead guilty to robbing The Spirit Shop through violence or threat of violence and did knowingly possess a firearm in furtherance of the crime of violence.
As part of the plea agreement Ford and Bethel also agreed that they participated or aided and abetted the following crimes:
(a) A home invasion on June 24, 2015, in Hillsboro, North Dakota, where currency was stolen;
(b) A burglary resulting in a stolen firearm in Hillsboro in or about July through September 2015;
(c) A burglary of a vehicle in Fargo, North Dakota, in which monetary instruments were stolen on or about August 24, 2015, and on or about September 24, 2015;
(d) A burglary of a residence in Fargo, resulting in the theft of five firearms on or about September 24, 2015;
(e) Setting fire to four dumpsters in Fargo in an effort to determine law enforcement response time on or about September 28, 2015, as well as robbery of The Spirit Shop Liquor Store in Fargo;
(f) The pistol whipping assault of a victim resulting in serious bodily injury including unconsciousness on or about September 19, 2015 in Fargo; and,
(g) Conspiracy to distribute marijuana in North Dakota.
Judge Erickson has set sentencing for Ford to be held on April 19, 2016, and Bethel’s sentencing is scheduled for April 25, 2016, in the U. S. District Court, Fargo, ND.
This case is being investigated by the Fargo Police Department and Alcohol, Tobacco, Firearms, and Explosives (ATFE).
U. S. Attorney Christopher C. Myers is prosecuting the case.
Two L.A. County Sheriff’s Deputies Involved in Use-of-Force Incident Against Shackled Inmate Found Guilty of Obstruction of JusticeRead the Press Release
LOS ANGELES – Two Los Angeles Sheriff’s deputies who were assigned to the 3000 Floor of the Men’s Central Jail were found guilty this afternoon of falsifying reports with the intent to obstruct justice. The false reports were filed after an incident in which a shackled inmate was struck, kicked, repeatedly hit by a flashlight, and pepper-sprayed by the defendants.
Concluding a two-week trial, a federal jury convicted former deputies Joey Aguiar, 28, and Mariano Ramirez, 40. Both men were found guilty of one count of falsifying records with the intent to obstruct justice, a charge that carries a statutory maximum penalty of 20 years in federal prison.
The jury in the case was unable to reach a unanimous decision on a civil rights offense that alleges the deputies unlawfully beat the victim during the incident on February 11, 2009. The jury reported in open court that it was split 10-2 in favor of guilt.
The jury acquitted Aguiar and Ramirez of conspiring to violate the inmate’s civil rights.
United States District Judge Beverly Reid O’Connell scheduled a sentencing date for April 25. Federal prosecutors have yet to decide if they will retry Aguiar and Ramirez on the unresolved civil rights charge.
Aguiar was convicted of one count of falsification of records for submitting a report that falsely stated the inmate, Bret Phillips, who is now 44, was beaten after he had attempted to headbutt deputy Aguiar’s face and that Phillips violently kicked at Aguiar. Mr. Phillips did neither, according to testimony presented at the trial.
It was undisputed that Mr. Phillips was waist-chained with handcuffs binding his hands to a chain around his stomach throughout the entire beating.
During the trial, Chaplin Paulino Juarez, who was an eyewitness to the event, testified that he repeatedly raised concerns about what he had seen with senior LASD officials, but was rebuffed. Chaplin Juarez ultimately relayed his concerns to the ACLU. The information provided to the ACLU by the chaplain later came to the attention of the FBI. By this time the FBI had begun a wide-ranging investigation into civil rights abuses by the LASD in custodial settings, particularly excessive uses of force by deputies on the 3000 Floor of the Men’s Central Jail. Another witness, who was an inmate when Mr. Phillips was beaten, testified that he hid in the shower to avoid being seen by LASD personnel as he watched the deputies beat a defenseless and unmoving inmate.
Ramirez was found guilty of one count of falsification of records for submitting a report that falsely stated the victim had “viciously kicked his legs at deputies.”
During the incident – which allegedly involved an excessive and unreasonable use of force, according to the still-pending charge in the case – Aguiar and Ramirez punched and kicked the victim before using pepper spray on him and then hitting him repeatedly with a flashlight, according to the testimony at trial.
Soon after the incident, the deputies wrote the false reports, which formed the basis of a referral to the Los Angeles County District Attorney’s Office for potential criminal prosecution of Mr. Phillips.
“These defendants failed to report accurately the circumstances surrounding the beating of an inmate who was restrained with waist chains in an attempt to obstruct a subsequent investigation,” said United States Attorney Eileen M. Decker. “This failure to tell the truth and attempt to thwart oversight tarnishes the outstanding work of law enforcement officers everywhere.”
The case against Aguiar and Ramirez is the result of an investigation by the FBI, and is one in a series of cases resulting from an investigation into corruption and civil rights abuses at county jail facilities in downtown Los Angeles. As a result of the investigation, 17 current or former members of the Los Angeles Sheriff’s Department have now been convicted of federal charges.
Topeka Woman Pleads Guilty to Sex Trafficking of 17-Year-OldRead the Press Release
TOPEKA, KAN. – A Topeka woman pleaded guilty Tuesday to the sex trafficking of a 17-year-old girl, U.S. Attorney Barry Grissom said.
Tiara Jade Newman, 22, Topeka, pleaded guilty to one count of conspiracy to commit sex trafficking. In her plea, she admitted that on March 21, 2015, she and her husband, co-defendant Reginald Newman, 29, Topeka, Kan., took a 17-year-old girl from Topeka to Junction City, Kan., for the purpose of prostitution.
The Newmans rented two rooms at a Value Place motel in Junction City. The rooms -- one room for performing commercial sex acts and the other where the three slept – were rented March 21 to March 25.
On March 21, Tiara Newman and the girl met a solder from Fort Riley at the Value Place motel. The soldier paid $250 to have sex with both of them.
On March 26, Tiara Newman took the girl along on an “out call” to the Fairfield Inn in Manhattan, Kan. Newman told the customer that the girl was new and she was showing her the business. The customer noticed that the girl was nervous and gave her a tip.
Reginald Newman kept all the money from the commercial sex acts. He pleaded guilty and is set for sentencing April 1.
Tiara Newman’s sentencing is set for May 2. Newman faces a penalty of not less than 15 years and a fine up to $250,000. Grissom thanked the following agencies for their work on the investigation: The Topeka Police Department, Homeland Security Investigations, the Riley County Police Department, the Junction City Police Department, the Kansas Department of Revenue, the Fort Riley Police Department, the Ottawa Police Department, the Shawnee County District Attorney’s Office, the Pottawatomie County Attorney, the Riley County Attorney and local human trafficking victim specialists.
Superseding Indictment Adds Charges Against Alleged Leader of Straw Purchasing SchemeRead the Press Release
PHILADELPHIA – A superseding indictment was filed today against Nakia Adams, 41, address unknown, adding four counts of possession of firearms by a convicted felon and four counts of aiding and abetting the making of a false statement in connection with the purchase of firearms from a federally licensed firearms dealer. Adams was charged by indictment, unsealed in December of 2015, with conspiracy, making false statements to a federal firearms licensee, possession of firearms by a convicted felon, and aiding and abetting.
According to the superseding indictment, Adams used several individuals as “straw purchasers” to obtain firearms from federally licensed firearms dealers. Adams, who is a convicted felon, is prohibited from purchasing firearms himself.
If convicted, the defendant faces a maximum possible statutory sentence of 135 years in prison, possible fines, a $2,000 special assessment, and three years of supervised release.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives Reading Field Office and is being prosecuted by Assistant United States Attorney Eric Boden.
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
South Florida Government Contractor Sentenced to Prison for Tax FraudRead the Press Release
A government contractor based in Fort Lauderdale, Florida, was sentenced to 12 months and one day in prison for filing a false income tax return, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced today.
According to court documents, Maxim Silinsky, 44, owned an aircraft-leasing and parts-supply company called Simplex Corporation. Simplex contracted with the federal government to lease Russian aircraft to the U.S. Air Force for training purposes and to supply parts and equipment to U.S. military forces deployed to Afghanistan.
Silinsky used a complex web of domestic and foreign corporate entities and financial accounts to facilitate his underpayment of both corporate and individual income tax for the years 2007 through 2010. Silinsky filed false corporate tax returns for these years that overstated Simplex’s expenses. For the years 2008 through 2010, Silinsky also filed false individual income tax returns on which he understated the amount of income he received from the business. To conceal his fraud from the Internal Revenue Service (IRS), Silinsky transferred approximately $1.7 million from Simplex to nominee bank accounts that he controlled and disguised the transfers as costs of goods sold, which led to overstated costs-of-goods-sold expenses on Simplex’s corporate returns. In 2012, during an audit of Simplex’s 2008 corporate return, Silinsky made false statements to the IRS about these expenses. Silinsky also purchased real estate using funds he diverted from the business and titled the property in nominee names to hide his involvement. Additionally, a family member served as a nominee shareholder of a shell corporation that Silinsky established to receive income from Simplex on his behalf, which allowed Silinsky to pay taxes on this money at a lower rate. In the plea documents, Silinsky also admitted that he was involved in making illicit payments to a government contractor and U.S. military personnel.
“All taxpayers are required to provide truthful information to the Internal Revenue Service, whether it be on a tax return, during an audit, or with respect to collections” said Acting Assistant Attorney General Ciraolo. “The Tax Division is committed to pursuing those taxpayers who seek to obstruct or evade the assessment and collection of federal income taxes by lying to the government about their income, expenses or assets.”
Silinsky cooperated with federal authorities in the prosecution of a federal government contractor, Victor Villalobos, and a retired senior non-commissioned Air Force officer, Trevor Smith, who have both pleaded guilty in separate cases to government contracting and tax fraud. Smith was sentenced last month to 18 months in prison and Villalobos is set to be sentenced on Feb. 17.
In addition to the prison term, Silinsky was also ordered to pay a $6,000 fine. Silinsky paid restitution to the IRS prior to his sentencing.
Acting Assistant Attorney General Ciraolo commended special agents of IRS Criminal Investigation, the U.S. Air Force’s Office of Special Investigations and the U.S. Department of Defense’s Defense Criminal Investigative Service, who investigated this case, and Trial Attorneys Charles M. Edgar Jr. and Jason H. Poole of the Tax Division, who prosecuted this case. Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Florida for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Shreveport resident sentenced to 15 years in prison for producing child pornographyRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced today that a Shreveport resident was sentenced to 15 years in prison for producing child pornography.
Jason Carl Fruge, 45, of Shreveport, was sentenced by U.S. District Judge Elizabeth E. Foote on one count of production of child pornography. The defendant was also sentenced to five years of supervised release and must register as a sex offender. According to evidence presented at the October 1, 2015 guilty plea, during the course of investigating Fruge for other offenses, agents found a video on Fruge’s computer of a minor male child engaged in a sexually explicit sex act. Fruge pretended to be an attractive female in order to convince the minor to engage in the sexual act. Fruge directed the minor child to commit the sexually explicit act and recorded the minor using an online video chat service similar to Skype on June 9, 2014.
This case is part of Project Safe Childhood, a U.S. Department of Justice nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood combines federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Those concerned may leave tips with the FBI at tips.fbi.gov. Tips may be submitted anonymously. The Shreveport FBI office number is (318) 861-1890.
The U.S. Department of Homeland Security/Homeland Security Investigations/Immigration & Customs Enforcement (ICE) also encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at (866) DHS-2ICE. Investigators are available at all hours to answer hotline calls. Tips or other information can also be submitted to ICE online by visiting their website at www.ice.gov/exec/forms/hsi-tips/tips.asp or through the Operation Predator smartphone application (http://www.ice.gov/predator/smartphone-app). Tips also may be submitted anonymously.
The FBI and ICE Homeland Security Investigations conducted the investigation. Assistant U.S. Attorney Robert W. Gillespie Jr. prosecuted the case.
Seven Charged in Manhattan Federal Court with Crimes Related to ATM Skimming and Counterfeit and Stolen Credit CardsRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, Diego Rodriguez, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and William J. Bratton, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment in Manhattan federal court charging GJETO PRELAJ, a/k/a “Bibi,” ERBI KAU, a/k/a “Mafia,” BLEDAR BATSKA, a/k/a “Alex,” NIKOLIN DEDUSHI, a/k/a “Niko,” ENIS MUSTAFA, and MEHMET BOGIC, a/k/a “Bogi,” with access device fraud and aggravated identity theft for their alleged roles in schemes to steal customer bank account information and to use counterfeit/stolen debit and credit cards in New York and Nevada. PRELAJ, KAU, BATSKA, DEDUSHI, and VICTOR TOMESCU were also charged with possessing, using, and trafficking devices that used “skimming” technology to secretly record the debit card and personal identification numbers of customers who used automated teller machines (“ATMs”). Such devices can be employed to steal hundreds of card numbers of ATM users, which can be encoded on new counterfeit cards and used to make thousands of dollars of fraudulent charges or withdrawals.
All the defendants were arrested and taken into custody earlier this morning. The case has been assigned to U.S. District Judge Richard J. Sullivan. PRELAJ, KAU, BATSKA, MUSTAFA, TOMESCU, and BOGIC was presented before Judge Sullivan in Manhattan federal court this afternoon. DEDUSHI, who was arrested in Las Vegas, Nevada, was presented in the U.S. District Court for the District of Nevada in Las Vegas.
Manhattan U.S. Attorney Preet Bharara said: “Today, we arrested seven defendants who allegedly stole debit and credit card numbers using sophisticated skimming devices installed on ATMs, and then used that information to defraud victims out of thousands of dollars. I want to thank the FBI, NYPD, as well as the Joint Organized Crime Task Force and FBI-NYPD Financial Cyber Crimes Taskforce, for their excellent work in this investigation.”
FBI Assistant Director-in-Charge Diego Rodriguez said: “As alleged today, the defendants participated in a plot to steal proprietary financial information from their victims. Criminals who turn a quick profit in these types of schemes exploit and manipulate the very technology we depend on to streamline the banking process. Furthermore, this system of new-age thievery has the ability to cause considerable losses to banks and their clientele. The FBI is serious about protecting banks and bank customers from the nefarious actions of cyber criminals and transnational organized crime groups who are known to engage in this type of activity. We urge the public to visit our website at www.fbi.gov for tips on how to avoid being victimized by skimming.”
Police Commissioner William J. Bratton said: “Identity theft is a crime that often has an ongoing impact on unwitting victims who are left to piece their financial lives back together. As alleged, the individuals named in this indictment engaged in a type of criminal activity that affects not only their direct victims, but financial systems as well, through the use of skimming device technology and the counterfeiting of credit cards. I commend the well-coordinated work of the investigators assigned to this case and our many law enforcement partners in dismantling this operation.”
According to the allegations in the Indictment[1] unsealed today in Manhattan federal court:
From January 2015 through December 2015, PRELAJ, KAU, BATSKA, DEDUSHI, and MUSTAFA conspired to, among other things, place skimming devices on ATMs in Las Vegas, which can be used to surreptitiously record the numbers of cards that are used in the ATM by reading the information contained on the cards’ magnetic strips. For example, on September 2, 2015, KAU removed a skimming device that was installed on an ATM in a gas station in Las Vegas. On the morning of September 12, 2015, BATSKA installed at least one skimming device on ATMs in the business center of a hotel in Las Vegas, which was later removed by KAU on the evening of the same day.
The conspiracy also involved producing and trafficking in counterfeit debit cards created with information stolen by skimming devices, and using those cards to withdraw money fraudulently from victims’ bank accounts. For example, on August 18, 2015, PRELAJ and KAU used counterfeit debit cards at an ATM in Manhattan. Also, on September 10, 2015, MUSTAFA used at least one counterfeit debit card to withdraw almost $1,000 in cash fraudulently from an ATM at a gas station in Las Vegas. In addition, on October 24, 2015, DEDUSHI mailed a magnetic card reader and writer from Las Vegas to PRELAJ in the Bronx, New York to be used to produce counterfeit cards.
In January 2015, PRELAJ and KAU sold a skimming device in Queens, New York, in exchange for $6,000 in a transaction that was brokered by TOMESCU. Furthermore, from November 2015 through December 2015, PRELAJ and BATSKA fraudulently obtained thousands of dollars of merchandise at department stores in Manhattan by using at least one credit card that had been stolen from a victim by BOGIC.
Finally, PRELAJ, KAU, BATSKA, DEDUSHI, MUSTAFA, and BOGIC were charged with aggravated identity theft for transferring, possessing, and using other persons’ debit and credit card numbers and associated personal identification numbers in connection with the felony crimes described above.
* * *
Attached are charts containing the charges against the defendants and the maximum penalties they face, as well as the defendants’ ages and residences. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the Court.
Mr. Bharara praised the outstanding investigative work of the Joint Organized Crime Task Force and FBI-NYPD Financial Cyber Crimes Task Force. He also thanked the FBI’s Las Vegas Field Office, the Las Vegas Metropolitan Police Department, the United States Postal Inspection Service, and U.S. Customs and Border Protection for their assistance throughout the investigation.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Robert Allen and Sagar K. Ravi are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty
###
United States v. Gjeto Prelaj, et al.
COUNT
CHARGE
DEFENDANTS
MAXIMUM PENALTIES
1
Conspiracy to Commit Access Device Fraud
(18 U.S.C. § 1029(b)(2))
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
ENIS MUSTAFA
Seven-and-a-half years in prison
2
Access Device Fraud —
Producing, Using, and Trafficking in Counterfeit Access Devices
(18 U.S.C. §§ 1029(a)(1) and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
ENIS MUSTAFA
10 years in prison
3
Access Device Fraud —
Fifteen and More Counterfeit and Unauthorized Access Devices
(18 U.S.C. §§ 1029(a)(3) and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
10 years in prison
4
Access Device Fraud —
Device-Making Equipment
(18 U.S.C. §§ 1029(a)(4) and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
VICTOR TOMESCU
15 years in prison
5
Access Device Fraud —
Device-Making Equipment
(18 U.S.C. §§ 1029(a)(4) and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
15 years in prison
6
Access Device Fraud — Access Devices Issued to Another Person
(18 U.S.C. §§ 1029(a)(5) and 2)
GJETO PRELAJ, a/k/a “Bibi”
BLEDAR BATSKA, a/k/a “Alex”
MEHMET BOGIC, a/k/a “Bogi”
15 years in prison
7
Aggravated Identity Theft (18 U.S.C. §§ 1028A(a)(1) & (b), and 2)
GJETO PRELAJ, a/k/a “Bibi”
ERBI KAU, a/k/a “Mafia”
BLEDAR BATSKA, a/k/a “Alex”
NIKOLIN DEDUSHI, a/k/a “Niko”
ENIS MUSTAFA
MEHMET BOGIC, a/k/a/ “Bogi”
Mandatory minimum: two years in prison, consecutive to any other sentence
DEFENDANT
RESIDENCE
AGE
GJETO PRELAJ, a/k/a “Bibi”
Bronx, New York
39
ERBI KAU, a/k/a “Mafia”
Queens, New York
27
BLEDAR BATSKA, a/k/a “Alex”
Queens, New York
39
NIKOLIN DEDUSHI, a/k/a “Niko”
Las Vegas, Nevada
45
ENIS MUSTAFA
Queens, New York
30
VICTOR TOMESCU
Queens, New York
62
MEHMET BOGIC, a/k/a/ “Bogi”
Bronx, New York
52
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Second St. Joseph Business Owner Pleads Guilty to Solar Company's $1.4 Million Fraud SchemeRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a second owner of a solar energy installation company in St. Joseph, Mo., pleaded guilty in federal court today to his role in a fraud scheme that totaled nearly $1.4 million in rebates through state and federal programs.
Trevor Dryden, 36, of St. Joseph, waived his right to a grand jury and pleaded guilty before U.S. District Judge Beth Phillips to a four-count information that charges him with one count of participating in a conspiracy to fraudulently obtain state and federal solar rebates and with four counts of making false statements related to state and federal solar rebate programs.
Dryden was an owner of US Solar in St. Joseph, which sold and installed solar-powered panel systems to businesses and home owners in northwest Missouri. In a separate but related case, US Solar co-owner Richard Schonemann, 38, of St. Joseph, pleaded guilty on Sept. 2, 2015, to his role in the conspiracy and to one count of making false statements.
By pleading guilty today, Dryden admitted that he was involved in three separate fraud schemes: first, a fraud related to KCP&L state rebates; second, a fraud related to the federal rebate program; and third, a fraud related to annual updates for the federal program. The total loss from the fraudulent schemes, determined by the government, is $1,396,956, although the total loss acknowledged by Dryden is $993,506.
KCP&L State Rebate Program
From July 23, 2011, to Dec. 31, 2013, US Solar obtained fraudulent rebates from KCP&L by overstating the number of solar panels installed at approximately 27 homes or businesses so that a larger rebate would be paid to KCP&L customers, who signed the rebates over to US Solar.
KCP&L administered the state’s Solar Photovoltaic Rebate Program, which was created in 2008 by the state of Missouri and funded by a tax on power customers. The rebate allowed for a payment of $2 per watt, not to exceed $50,000, to customers that installed solar powered panel systems on their homes or businesses. US Solar was one of the larger solar powered panel system installation companies that utilized this rebate program through KCP&L. To utilize the state rebate program, US Solar submitted applications and schematic drawings on behalf of their customers via email to KCP&L. Once the application process was completed, funds were disbursed to US Solar by checks mailed from KCP&L.
As a result of this fraud scheme, US Solar was paid a total of $464,080 more in rebates than the company was entitled to receive.
Dryden was, at a minimum, involved in the fraudulent rebate payments related to his father’s home and his personal home. Dryden pleaded guilty today to two counts of making false statements related to these rebate payments.
One of the fraudulent rebate payments related to the St. Joseph residence of Dryden’s father. Fraudulent paperwork was submitted requesting payment for 75 extra panels not installed, resulting in a rebate overpayment of $35,250. Another fraudulent rebate payment under this program was related to Dryden’s personal home. Fraudulent paperwork was submitted to KCP&L requesting payment for 54 extra panels not installed, resulting in a rebate overpayment of $25,380.
During the investigation of the state rebate scheme, the FBI uncovered unexplained payments from the federal government to US Solar that led to the discovery of a second fraudulent scheme that was part of the conspiracy.
American Recovery and Reinvestment Act of 2009
US Solar also obtained fraudulent federal rebates authorized by the American Recovery and Reinvestment Act of 2009. Under the federal program, the government reimbursed 30 percent of the cost of the installation of a solar-powered panel system leased to the property owner. US Solar received federal funds under this program from August 2011 to September 2013, because Dryden and US Solar certified they installed systems and leased those systems to the property owners. The certification was false because the systems were owned by customers rather than leased.
US Solar submitted forged lease contracts in order to receive the federal rebates. Dryden created false paperwork and computer entries using US Solar customer information. The conspiracy involved the use of false paperwork and computer entries, including lease agreements, certification that US Solar retained ownership of the solar powered panel systems, detailed cost breakdowns on each system and usage reports.
US Solar received 34 payments from the federal government, totaling $932,876. US Solar was not eligible to receive any of the $932,876 paid under the federal program.
Annual Updates
In order to participate in the federal rebate program, US Solar was required to certify that the installed systems were still running and report the systems’ output each year after installation. Dryden provided updates showing kilowatt usage on each property to the federal government in 2012 and 2013.
During the course of the conspiracy, Dryden and Schonemann, received payments from US Solar that were described as profit distributions. A significant source for those profit distributions were funds received by US Solar from the federal rebate program.
Under the terms of today’s plea agreement, the government will recommend a maximum sentence of five years in federal prison without parole. Dryden must pay between $60,630 to $464,080 in restitution to KCP&L for the state rebate fraud, as determined by the court, and no more than $932,876 in restitution for the federal rebate fraud (less any amounts paid by Schonemann), as determined by the court. A sentencing hearing will be held at 11 a.m. on June 16, 2016.
This case is being prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the FBI.
Resident of Manchester Pleads Guilty to Bank RobberyRead the Press Release
CONCORD, N.H. – Ronald Alan Cook, a 44-year-old resident of Manchester, has pleaded guilty to robbing the Bank of New Hampshire at 705 Hooksett Road in Manchester on November 10, 2015, announced United States Attorney Emily Gray Rice.
Cook entered the federally-insured bank and handed a note to a bank teller that stated, “I have a gun!! Give me all the 100, 50, 20 and 10 now and fast.” Cook also told the bank teller, “This is serious give me all your money 50, 100, 20s.” The teller took money from her teller drawer and gave it to Cook, who then ran from the bank.
A landscaper working in the vicinity of the bank saw Cook leave the bank. The landscaper provided the police with a description of what Cook was wearing. That description was broadcast to Manchester police officers, including one police officer who saw Cook riding a bicycle near the bank and detained him because he matched the description of the bank robber. While being questioned by this police officer, Cook admitted that he robbed the bank and that the stolen money was in his pants pocket. The police were able to identify the currency in Cook’s pocket as having been stolen from the bank.
Cook is facing a maximum statutory prison sentence of 20 years and a maximum fine of $250,000. A sentencing hearing has been scheduled for May 11, 2016 before United States District Court Judge Steven McAuliffe.
The case was investigated by the Manchester Police Department and the Federal Bureau of Investigation. The case was prosecuted by AUSA Robert Kinsella.
Recently-Terminated NYPD Officer Arrested for Interstate Transportation of ProstitutesRead the Press Release
Earlier today, a complaint was unsealed in Brooklyn federal court charging Eduardo Cornejo, a former officer with the New York City Police Department (NYPD) with transporting women in interstate commerce to engage in prostitution.[1] Until his termination from the NYPD on January 15, 2016, Cornejo was an 11-year veteran of the NYPD who, at the time of the charged conduct, was on modified assignment and was, prior to that, assigned to the 79th Precinct in Brooklyn. Cornejo is scheduled to be arraigned at 2 p.m. today before United States Magistrate Judge Steven M. Gold at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation (FBI), and William J. Bratton, Commissioner, NYPD.
“As alleged, the defendant betrayed the trust of the residents of the city he swore to protect,” stated United States Attorney Capers. “Rather than seeking to eradicate crime from the streets of the city, the defendant promoted prostitution and profited from his exploitation of women.” Mr. Capers praised the joint investigative efforts of the FBI and the Internal Affairs Bureau of the NYPD.
“Throughout his alleged criminal actions, Cornejo not only abused the public trust given to him as an NYPD officer, but he showed no human decency when he facilitated the exploitation of women for profit. Police officers, like all public servants, are held to a higher standard, and should not violate the very same laws they are supposed to enforce,” said FBI Assistant Director-in-Charge Rodriguez.
“I commend our Internal Affairs Bureau which takes a proactive role in investigating serious misconduct among the ranks of the NYPD and works closely with prosecutors in building cases against those who violate the very laws that they have sworn to enforce,” said NYPD Commissioner Bratton.
As detailed in the complaint, members of law enforcement observed Cornejo transporting at least ten different prostitutes he employed to motels throughout the New York metropolitan area, including parts of Long Island and New Jersey. Cornejo often engaged in this conduct directly after leaving his work with the NYPD.
As further detailed in the complaint, pursuant to a lawfully authorized wiretap, law enforcement intercepted statements by Cornejo that showed his commission of the crime. For example, in one such statement Cornejo discussed the way he divides monetary proceeds with the prostitutes he employs and also stated that, if he were to stand outside a motel door with “a bunch of girls,” law enforcement would “know what’s up real quick.”
If convicted, Cornejo faces up to ten years of incarceration.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Alexander A. Solomon and Kevin Trowel are in charge of the prosecution.
The Defendant:
EDUARDO CORNEJO
Age: 33
E.D.N.Y. Docket No. 16-M-69 (MDG)
[1] The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Parkersburg man pleads guilty to possessing child pornographyRead the Press Release
CHARLESTON, W.Va. – A Parkersburg man faces up to 20 years in prison after pleading guilty to possession of over 600 images and videos of child pornography, Acting United States Attorney Carol Casto announced. Kevin Wayne Davis, 49, entered his guilty plea today in federal court.
Davis admitted that on November 5, 2014, he possessed images and videos of prepubescent minors engaged in sexual acts. The images and videos were contained on his personal computer, and multiple media devices found at his residence in Parkersburg. The investigation revealed that Davis was using peer-to-peer file sharing programs to download, receive and distribute child pornography. The court scheduled sentencing for May 10, 2016.
The West Virginia Internet Crimes Against Children Task Force, West Virginia State Police and the Parkersburg Police Department conducted the investigation. Assistant United States Attorney Lisa G. Johnston is in charge of the prosecution. The hearing was held before United States District Judge John T. Copenhaver, Jr.
This case is being prosecuted as part of the U.S. Attorney's ongoing initiative to combat child sexual exploitation and abuse in the Southern District of West Virginia.
North Carolina Man Pleads Guilty to Tax Evasion and Serving as Pilot Without LicenseRead the Press Release
A North Carolina man pleaded guilty today to tax evasion and four counts of serving as a pilot without an airman’s certificate, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
According to court documents, from 2011 through 2014, Paul Douglas Tharp attempted to evade payment of an outstanding federal income tax debt by filing false documents, including false tax returns, with the Internal Revenue Service (IRS). After Tharp failed to file tax returns for the years 2003 through 2006, the IRS assessed federal income taxes for those years. Tharp also late-filed his 2007 income tax return. According to court documents, Tharp owed more than $300,000 in taxes for the years 2003 through 2007. In 2011, Tharp provided a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to an IRS revenue officer who was assigned to collect his unpaid taxes, on which he failed to report that he owned an airport and an investment firm, and concealed his business bank accounts and rental income he had received under penalty of perjury. In 2012 and 2014, Tharp also filed tax returns for the 2011 through 2013 tax years on which he omitted significant income that he received from his airport and rental properties.
“Collection Information Statements are an important tool that the IRS uses to determine an individual’s ability to pay his outstanding tax liability,” said Acting Assistant Attorney General Ciraolo. “When taxpayers submit false information, or willfully omit income or assets, impeding the IRS’s efforts to collect taxes due, the Tax Division stands ready to prosecute. Taxpayers who are engaged in this criminal conduct will pay a heavy price, including incarceration and monetary penalties.”
As part of his plea, Tharp also admitted that he served as a pilot without the required certification on four different occasions in 2012. Tharp surrendered his pilot certificate on Aug. 2, 2012 and after that date, he flew four flights in and out of Davidson County Airport in Lexington, North Carolina, without valid registration and while his pilot certificate was suspended in 2012.
Pursuant to the plea agreement, Tharp faces a potential statutory maximum sentence of five years in prison for the tax evasion charge and three years in prison for each count of serving as a pilot without an airman’s certificate, as well as a maximum fine of $250,000 for each count of conviction. He must also pay restitution in the amount of $281,366.62 to the IRS. The sentencing hearing is set for April 22, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Nathan Brooks of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
North Carolina Man Guilty in East Texas Fraud SchemeRead the Press Release
SHERMAN, Texas – A 27-year-old Morganton, NC man has pleaded guilty in connection with an oil and gas scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales.
Justin Spearman pleaded guilty to wire fraud today before U.S. Magistrate Judge Christine A. Nowak.
According to information presented in court, in June 2015, Spearman devised and executed a scheme to defraud another individual by filing fraudulent Assignments of Overriding Royalty Interest (ORI)s in Greeley Colorado, and attempting to do so in Cheyenne, Wyoming, that actually belonged to other persons, one of which was the owner of a royalties company located in Collin County, Texas. Spearman was indicted by a federal grand jury on July 15, 2015.
Spearman faces up to 20 years in federal prison at sentencing. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing date has not been set.
This case is being investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Chris Eason.
New Jersey Pipe Supply Company Owner Sentenced to 32 Months in Prison for Role in Fraud and Bribery Conspiracy in Power Generation IndustryRead the Press Release
Company Sentenced to Pay a Total of Over $1.7 Million in Fines and Restitution
A New Jersey industrial pipe supply company and its owner were sentenced today for conspiring to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York in return for the manager’s efforts to steer contracts to the company, the Department of Justice announced.
Andrew Martingano, of Staten Island, New York, was sentenced by U.S. District Judge Deborah A. Batts of the Southern District of New York to 32 months and a day in prison. American Pipe Bending and Fabrication Co. Inc. of Edison, New Jersey, was sentenced to pay a $150,000 criminal fine. Martingano and American Pipe were also sentenced to pay over $1.6 million in restitution, jointly and severally with their co-conspirators, to the victim, Con Ed. The company and its owner pleaded guilty to committing wire fraud and conspiring to defraud Con Ed on Aug. 15, 2012.
According to court documents, Martingano and others agreed to pay approximately $510,000 in cash bribes to James M. Woodason, a department manager of the purchasing department at Con Ed. In exchange for the bribes, Woodason steered Con Ed industrial pipe supply contracts to American Pipe by secretly providing Martingano with confidential competitor bid information, thereby causing Con Ed to pay higher, non-competitive prices for materials. At the time of Woodason’s arrest in August 2010, Woodason had already received approximately $45,000 in cash bribes from Martingano and American Pipe.
The department said the conspiracy took place from approximately January 2009 to August 2010. In addition, Martingano and American Pipe defrauded Con Ed by requesting a 14 percent price increase and basing that request on a fake email purporting to document a “Steel Mill” price increase that American Pipe was passing on to Con Ed. These false and fraudulent price increase requests caused actual losses to Con Ed in the amount of approximately $1.4 million and intended losses of approximately $9.4 million.
Con Ed is a regulated utility headquartered in Manhattan. It provides electric service to approximately 3.2 million customers, and gas service to approximately 1.1 million customers in New York City and Westchester County, New York. Con Ed received more than $10,000 in federal funding each year between 2003 through 2010, and cooperated with the department’s investigation.
Including Martingano and American Pipe, a total of five individuals and two companies have been charged as part of this investigation and have been ordered to serve a total of more than 16 years in prison and to pay criminal fines and restitution of more than $3 million.
The charges arose from an ongoing federal antitrust investigation of bid rigging, bribery, fraud and tax-related offenses in the power generation industry. The investigation is being conducted by the Antitrust Division’s New York Office, with assistance from the FBI and the Internal Revenue Service-Criminal Investigation. Anyone with information concerning bid rigging, bribery, tax offenses or fraud in the power generation industry should contact the FBI’s New York Division at 212-384-3720 or the Antitrust Division’s New York Office at 212-335-8000, or visit www.justice.gov/atr/contact/newcase.htm.
Naples Man Sentenced for Conspiracy to Commit StructuringRead the Press Release
Fort Myers, Florida – U.S. District Judge John E. Steele has sentenced Sydney Jackson Williams, Jr. to one year and a day in federal prison for structuring financial transactions. As part of his sentence, the Court also entered a money judgment in the amount of $332,500.00, the proceeds traceable to the offense. Williams will be jointly and severally liable for the amount of the money judgment, along with his wife and co-defendant, Lorie Ann Williams, who was sentenced last week.
According to court documents, subsequent to two civil lawsuits being brought against him, Williams transferred more than $3 million in joint marital assets into an account in his wife’s name. Soon thereafter, Williams and his wife began withdrawing funds from the account in structured cash withdrawals. Between March 3, 2010, and April 22, 2010, $332,500 was withdrawn from the account in 35 separate withdrawals of $9,500 each.
Ultimately, on September 30, 2010, Sydney Jackson Williams, Jr. filed a Chapter 11 bankruptcy petition with the United States Bankruptcy Court in the Middle District of Florida.
Pursuant to the Bank Secrecy Act, financial institutions are required to file a "Currency Transaction Report" with the United States Treasury Department for each financial transaction that involves United States currency in excess of $10,000. These transactions include deposits, withdrawals, check cashing, or other transactions involving the physical transfer of currency from one person to another.
This case was investigated by the Internal Revenue Service and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys Yolande G. Viacava and Charles D. Schmitz.
North Carolina Man Pleads Guilty to Tax Evasion and Serving as Pilot Without LicenseRead the Press Release
WASHINGTON – A North Carolina man pleaded guilty today to tax evasion and four counts of serving as a pilot without an airman’s certificate, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
According to court documents, from 2011 through 2014, Paul Douglas Tharp attempted to evade payment of an outstanding federal income tax debt by filing false documents, including false tax returns, with the Internal Revenue Service (IRS). After Tharp failed to file tax returns for the years 2003 through 2006, the IRS assessed federal income taxes for those years. Tharp also late-filed his 2007 income tax return. According to court documents, Tharp owed more than $300,000 in taxes for the years 2003 through 2007. In 2011, Tharp provided a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to an IRS revenue officer who was assigned to collect his unpaid taxes, on which he failed to report that he owned an airport and an investment firm, and concealed his business bank accounts and rental income he had received under penalty of perjury. In 2012 and 2014, Tharp also filed tax returns for the 2011 through 2013 tax years on which he omitted significant income that he received from his airport and rental properties.
“Collection Information Statements are an important tool that the IRS uses to determine an individual’s ability to pay his outstanding tax liability,” said Acting Assistant Attorney General Ciraolo. “When taxpayers submit false information, or willfully omit income or assets, impeding the IRS’s efforts to collect taxes due, the Tax Division stands ready to prosecute. Taxpayers who are engaged in this criminal conduct will pay a heavy price, including incarceration and monetary penalties.”
As part of his plea, Tharp also admitted that he served as a pilot without the required certification on four different occasions in 2012. Tharp surrendered his pilot certificate on Aug. 2, 2012 and after that date, he flew four flights in and out of Davidson County Airport in Lexington, North Carolina, without valid registration and while his pilot certificate was suspended in 2012.
Pursuant to the plea agreement, Tharp faces a potential statutory maximum sentence of five years in prison for the tax evasion charge and three years in prison for each count of serving as a pilot without an airman’s certificate, as well as a maximum fine of $250,000 for each count of conviction. He must also pay restitution in the amount of $281,366.62 to the IRS. The sentencing hearing is set for April 22, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Nathan Brooks of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.
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Mother Pleads Guilty to ID Theft When She Fled the Country with DaughtersRead the Press Release
KANSAS CITY, KAN. – A Lawrence woman pleaded guilty Tuesday to forging her ex-husband’s signature on official documents when she fled to Europe with her daughters, U.S. Attorney Barry Grissom said Tuesday.
Samantha C. Elmer, 33, Lawrence, Kan., pleaded guilty to one count of aggravated identity theft. In her plea she admitted she forged her husband’s signature on a document giving her consent to take their two daughters to Europe. She filed the document as part of the process of getting passports for the girls.
Elmer was charged in December after she returned from Europe with the girls, 9 and 11 years old.
Sentencing will be set for a later date. She faces a maximum penalty of two years in federal prison and a fine up to $250,000.
Grissom commended the following agencies that worked on the investigation: the Lawrence Police Department, the FBI, Homeland Security Investigations, the Douglas County District Attorney’s Office, the Eudora Police Department, the Overland Park Police Department and the Johnson County District Attorney’s Office, as well as the prosecutor, Assistant U.S. Attorney Chris Oakley.
Monroe County, Kentucky, Tobacco Farmer Sentenced to Prison Term for Crop Insurance FraudRead the Press Release
Ordered to pay restitution in the amount of $711,958.00
BOWLING GREEN, Ky. - A Monroe County, Kentucky tobacco farmer was sentenced by United States District Judge Greg N. Stivers, to serve eight months in prison followed by a three year term of supervised release and ordered to pay restitution in the amount of $711,958.00 for committing crop insurance fraud, announced United States Attorney John E. Kuhn, Jr.
Tracy E. Dillard, 45, of Fountain Run, Kentucky, aided and abetted by others, previously admitted in court of knowingly making false statements and reports on insurance claims submitted to Producers Agriculture Insurance Company, a company insured by the Federal Crop Insurance Corporation (FCIC).
“The federal crop insurance program ultimately exists to provide a safety net for our farming community,” stated Acting U.S. Attorney John Kuhn. “Fraud undermines the entire program. This U.S. Attorney’s Office is committed to working with our partner federal agencies to ensure that every penny of taxpayer money is fully restored.”
The violations occurred between 2009 and March 10, 2011, in the Western District of Kentucky, including Allen, Barren, Hart and Monroe Counties in Kentucky, and Macon County in Tennessee.
Specifically, in 2009 Dillard had four separate crop insurance policies on four different crops, two in Barren County, and two in Monroe County. Aided and abetted by others, Dillard intentionally overstated crop damage for each crop by forty percent (40%) on a crop insurance claim form, resulting in a loss of $125,339.20.
Additionally, in 2010 Dillard had twelve separate tobacco crop insurance policies on twelve different crops. Dillard, aided and abetted by others, intentionally overstated crop damage by forty percent (40%) for each crop on a crop insurance claim form, resulting in a loss of $504,454.80.
Finally, in 2011 Dillard had a crop insurance policy on a crop located in Allen County. Aided and abetted by others, Dillard intentionally falsified the crop plant date on a crop insurance claim form, resulting in a loss of $82,164.
The FCIC indemnifies insurance companies for crop insurance claims.
For the 2009, 2010, and 2011 policies listed above, Dillard caused fraudulent claims to be submitted to the United States government, through claims made to ProAg and paid by the FCIC, resulting in a $711,958 loss to the United States. Dillard agreed to pay full restitution under the terms of his plea agreement.
This case was prosecuted by Assistant United States Attorney David Weiser and was investigated by the United States Department of Agriculture (USDA) Office of Inspector General (OIG) and the Risk Management Agency, Special Investigation Branch.
Michael Schmidt Sentenced to Serve 33 Months in Prison for Wire FraudRead the Press Release
GREENEVILLE, Tenn. – Michael Frank Schmidt, 60, of Jonesborough, Tenn., was sentenced on Feb. 2, 2016, by the Honorable R. Leon Jordan, U.S. District Court Judge, to serve 33 months in federal prison. Judge Jordan also imposed a three-year term of supervised release and ordered Schmidt to pay full restitution to his victims and a $100 special assessment.
Schmidt pleaded guilty in September 2015 to wire fraud. According to information included in documents on file with U.S. District Court, Schmidt devised and executed a Ponzi type investor scheme which defrauded 30 individuals of approximately $744,000, over a six-year period of time. He falsely convinced his victims that they were investing in Toner Depot, a business which had contracts with Tennessee Eastman Company.
Agencies involved in this investigation included the Tennessee Bureau of Investigation, Morristown, Tennessee Police Department, and Jonesborough, Tennessee Police Department. Suzanne Kerney-Quillen and Helen Smith, Assistant U.S. Attorneys represented the United States.
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Mexican Clinic Doctor Detained in Scheme to Commit Wire FraudRead the Press Release
McALLEN, Texas ‐ Two physicians from a family medicine clinic in Mexico have been charged in a federal indictment for their role in a scheme to submit false and fraudulent insurance claims, announced U.S. Attorney Kenneth Magidson.
According to the indictment, Dr. Mayolo Melchor, 58, and Dr. Bertha Hernandez-Melchor, 60, both of Reynosa, Tamaulipas, Mexico, conspired with policy holders of the American Family Life Insurance Company (AFLAC) to fax more than 50,000 fraudulent claim forms and accident reports to AFLAC for accidents and injuries that never occurred. The indictment charges the defendants with one count of conspiracy to commit wire fraud and eight counts of wire fraud.
The indictment was returned on June 14, 2011 and later arrested in Mexico. They were subsequently extradited to Houston and made an initial appearance on Jan. 22, 2015. Today, Hernandez-Melchor appeared before U.S. Magistrate Dorina Ramos in McAllen, at which time she was ordered into custody pending further criminal proceedings. Melchor will appear for his detention hearing Thursday, Feb. 4, 2016.
According to the indictment, policyholders for AFLAC paid the defendants to prepare and sign false reports for accidents and injuries that never occurred. The AFLAC policy holders would allegedly fill out false claims forms in the McAllen area and deliver them to the defendants’ family medicine clinic in Mexico where the defendants would prepare and sign corresponding accident reports for each fake accident and injury, according to the charges.
The indictment alleges that from September 2001 to August 2010, the defendants and the policyholders caused more than 50,000 fraudulent claim forms and accident reports to be faxed to AFLAC, resulting in the disbursement of approximately $5 million in benefit checks to the policyholders.
Conspiracy to commit wire fraud and each of the eight counts of wire fraud carry a maximum punishment of 20 years in federal prison without parole and a $250,000 fine upon conviction.
The investigation leading to the charges was conducted by the FBI. Assistant U.S. Attorneys Tina Ansari and Michael Day are prosecuting the case.
An indictment is an accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.Meth Traffickers Receive Lengthy Federal Prison SentencesRead the Press Release
FORT WORTH, Texas — Two Texas men and a woman from Florida have been sentenced to lengthy federal prison terms for their roles in a methamphetamine distribution conspiracy that operated in North Texas for approximately two years, announced U.S. Attorney John Parker of the Northern District of Texas.
James Gatlin, 40, of Garland, Texas, was sentenced on Friday afternoon by U.S. District Judge John McBryde to 320 months in federal prison. Matthew Ryan Thompson, 44, of Mineral Wells, Texas, was sentenced to 420 months. Celeste Monette Blair, 45, of Jacksonville, Florida, was sentenced to 360 months. Each pleaded guilty to one count of conspiracy to possess with intent to distribute methamphetamine.
Five other defendants convicted in the case were recently sentenced to prison terms ranging from 250 to 480 months. The last defendant, Ismael Rico, 32, of Dallas, Texas, is scheduled to be sentenced later this month.
Each pleaded guilty in August 2015 to one count of conspiracy to possess with intent to distribute methamphetamine. According to documents filed in the case, Gatlin, Thompson and Blair admitted receiving multi-ounce quantities of methamphetamine from others in the conspiracy that they distributed to others.
The Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration and the Texas Department of Public Safety investigated. Assistant U.S. Attorney Shawn Smith prosecuted.
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Mendocino National Forest Marijuana Cultivator Sentenced to More than Five Years in PrisonRead the Press Release
SACRAMENTO, Calif. — Pablo Barreto-Cruz, 39, of Mexico, was sentenced today by United States District Judge John A. Mendez to five years and three months in prison and ordered to pay $22,800 in restitution for cultivating marijuana on public land and depredation of public lands and resources, United States Attorney Benjamin B. Wagner announced.
According to court documents, between March 2015 and May 2015, Barreto-Cruz grew 2,998 marijuana plants in the Mendocino National Forest. The marijuana cultivation operation caused significant harm to the habitat and water quality of the National Forest.. Following Barreto-Cruz’s arrest on May 12, 2015, authorities searched the marijuana cultivation site and discovered approximately 1,000 pounds of irrigation pipe, approximately 1,000 pounds of camp debris, and several fertilizers and pesticides, including the highly toxic pesticide Carbofuran, which is dangerous to both humans and animals. The U.S. Forest Service estimates that the marijuana cultivation site diverted approximately 18,000 gallons of water per day.
This case was the product of an investigation by the United States Forest Service, the Glenn County Sheriff’s Office and the California Department of Fish and Wildlife. Assistant United States Attorney Christiaan Highsmith prosecuted the case.
Marijuana Grower Pleads GuiltyRead the Press Release
BOISE - Carlos Avalos-Cervantes, 31, of Walla Walla, WA, and originally from Mexico, pleaded guilty today to one count of conspiracy to manufacture a controlled substance with intent to distribute it, the substance being more than 1,000 marijuana plants; and one count of possession of a firearm in furtherance of drug trafficking, U.S. Attorney Wendy J. Olson announced. Avalos-Cervantes was charged by superseding indictment on December 8, 2015.
According to court documents, Avalos-Cervantes was arrested on September 23, 2015, along with a co-conspirator Martin Diaz-Lara, in a remote, timbered canyon north of Banks, in Boise County, Idaho. Agents were able to document a total of 6,870 live and harvested marijuana plants on state lands in the canyon. According to court proceedings, Avalos-Cervantes and his co-conspirator each possessed a 9mm handgun in furtherance of the drug trafficking crime. The court documents also state that the marijuana operation was supported and supplied by other co-defendants. Avalos-Cervantes and his co-conspirator are Mexican nationals who entered the United States illegally.
Diaz-Lara, along with co-defendants Javier Avila-Contreras, Rogelio Arevalo-Villasenor, and David Becerra-Saucedo are scheduled for trial on April 19, 2016, before Chief U.S. District Judge B. Lynn Winmill.
The maximum penalty for manufacturing more than 1,000 marijuana plants with intent to distribute the drug is not less than 10 years and may extend up to life in prison, as well as a $10,000,000 fine. The maximum penalty for possessing a firearm in furtherance of drug trafficking crimes is not less than five years imprisonment consecutive to any other penalty, and a $250,000 fine.
The arrests and complaints are the result of a joint investigation and cooperative law enforcement efforts of the Organized Crime and Drug Enforcement Task Force (OCDETF), led by the Drug Enforcement Administration, Bureau of Land Management (BLM), and Nampa Police Department Special Investigations Unit (SIU). Other agencies include Ada County Sheriff’s Office, United States Forest Service (USFS), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), U. S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Boise County Sheriff’s Office, Boise Police Department, Gooding County Sheriff’s Office, Idaho Department of Fish and Game, Idaho National Guard—Counterdrug Support Office, Meridian Police Department, Milton-Freewater Police Department, Oregon State Police, Power County Sheriff’s Office, Spokane Police Department, Valley County Sheriff’s Office, Walla Walla Police Department, and Washington State Patrol.
The OCDETF program is a federal multi agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Man Sentenced to over 3 Years in Prison for Post Office RobberyRead the Press Release
Acting United States Attorney Kenneth Elser
Western District of Arkansas_______________________________________________________
FOR IMMEDIATE RELEASE CONTACT: Joyce Snow
February 2, 2016 PHONE: (479) 494-4066TWITTER: @WDARnews
MAN SENTENCED TO OVER 3 YEARS IN PRISON FOR POST OFFICE ROBBERY
Hot Springs, Arkansas - Kenneth Elser, Acting United States Attorney for the Western District of Arkansas, announced that James Calk, age 38, of Norphlet, Arkansas, was sentenced to 46 months in prison and three years supervised release for Robbery of a Post Office. The Honorable Susan O. Hickey presided over the sentencing hearings in the United States District Court in Hot Springs.
According to court records, on or about October 2, 2014, officers responded to a robbery at a Hot Springs post office. During the robbery, a man later identified as Calk approached the clerk as a customer and then demanded all of the cash in the drawer. The clerk initially refused, but then complied after Calk indicated that he had a gun. Calk pleaded guilty to the charge on June 26, 2015.
This case was investigated by the Hot Springs Police Department and United States Postal Inspectors. Assistant United States Attorney Sydney Butler prosecuted the case for the United States.
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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
MEDIA ADVISORY: Acting US Attorney and IRS announce criminal forfeiture awards to law enforcementRead the Press Release
CHARLESTON, W.Va. – Acting United States Attorney Carol Casto and Internal Revenue Service (IRS) Special Agent in Charge Thomas Jankowski will present several local law enforcement agencies with over $1 million in forfeited assets from an investigation of a Barboursville pharmacy owner. The presentation of the forfeiture awards will take place at a press conference in the U.S. Attorney's Office in the Robert C. Byrd United States Courthouse in Charleston at 10:00 A.M.
The agencies receiving a share of the forfeiture for their role in the investigation are the Charleston Police Department, the Huntington Police Department, and the Boone County Sheriff's Department. Their successful investigation helped stop the illegal pain pill distribution at A+ Care Pharmacy in Barboursville and resulted in federal prison time for the pharmacy owner, as well as the forfeiture of significant cash derived from the criminal activity.
Forfeiture proceeds are shared with law enforcement agencies as a result of their direct participation in investigations resulting in forfeiture. This event will recognize the work of these local law enforcement agencies that keeps drugs out of our communities and puts the forfeited assets to good use.
WHO: Acting United States Attorney Carol Casto
Assistant United States Attorney Monica Coleman
IRS Special Agent in Charge Thomas Jankowski
Supervisory Special Agent Jason GandeeWHAT: Press conference to announce significant forfeiture awards to local law enforcement agencies
WHERE: U.S. Attorney's Office – large conference room
Robert C. Byrd United States Courthouse
300 Virginia Street, East, Room 4000
Charleston, WV 25301WHEN: Wednesday, February 3, 2015, at 10 A.M.
MCC Construction Company Agrees to Pay Nearly $1.8 Million for Conspiring to Illegally Obtain Federal Contracts Meant for Small, Disadvantaged BusinessesRead the Press Release
The Justice Department announced today that MCC Construction Company (MCC) has agreed to pay $1,769,294 in criminal penalties and forfeiture for conspiring to commit fraud on the United States by illegally obtaining government contracts that were intended for small, disadvantaged businesses.
The court agreement was announced today by Assistant Attorney General William J. Baer of the Justice Department’s Antitrust Division, U.S. Attorney Channing D. Phillips of the District of Columbia, Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office, Inspector General Peggy E. Gustafson of the Small Business Administration (SBA), Inspector General Carol Fortine Ochoa of the U.S. General Services Administration (GSA), Special Agent in Charge Brian J. Reihms of the Defense Criminal Investigative Service’s (DCIS) Central Field Office and Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).
“This conspiracy defrauded the government and denied small, disadvantaged businesses the opportunity to compete to do business with the United States,” said Assistant Attorney General Baer. “We will continue to work with U.S. Attorney Phillips and his talented colleagues to protect the integrity of the government contracting process.”
“This prosecution shows that there will be consequences for companies that violate federal contracting rules meant to assist small, disadvantaged businesses,” said U.S. Attorney Phillips. “MCC Construction Company secured millions of dollars in contracts by hiding behind two small businesses that did not perform labor on the projects. Its conduct took away opportunities that could have gone to companies that truly are socially and economically disadvantaged and deserving of the work.”
“An uneven marketplace is created when businesses engage in illegal backroom deals to fraudulently obtain government contracts, placing competitors at an unfair disadvantage,” said Assistant Director in Charge Abbate. “In this case, the FBI and our partners moved to protect the American taxpayer and ensure the integrity of the process. Together, we will continue to work to protect federal contract opportunities for socially and economically disadvantaged businesses within our communities from unlawful conduct.”
“Fraudulently passing work through eligible small businesses to a large business does not provide taxpayers the best value and certainly does not support the role of small businesses as engines of economic development and job creation,” said Inspector General Gustafson. “In fact, it subverts the purpose of SBA’s preferential contracting programs and harms the small businesses the programs are designed to assist. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their leadership and dedication to serving justice.”
“We will continue our work on behalf of taxpayers and legitimate small business owners to expose and punish nationwide small business fraud schemes such as this,” said Inspector General Ochoa.
“The Defense Criminal Investigative Service is committed to working with our partner agencies to combat fraud impacting the Department of Defense’s vital programs and operations and maintain the integrity of the procurement system,” said Special Agent in Charge Reihms.“This settlement is a testament to our steadfast and continued commitment to working closely with our law enforcement partners in rooting out this type of activity,” said Director Robey.
MCC was a construction management company and general contractor headquartered in Colorado.
A criminal information was filed last month in the U.S. District Court for the District of Columbia charging MCC with one count of knowingly and willfully conspiring to commit major fraud on the United States. MCC waived the requirement of being charged by way of federal indictment, agreed to the filing of the information and accepted responsibility for its criminal conduct and that of its employees. U.S. District Judge Ketanji B. Jackson accepted the company’s guilty plea today. The plea agreement is subject to the court’s approval at a sentencing hearing scheduled for March 15, 2016.
According to court documents, MCC conspired with two companies that were eligible to receive federal government contracts set aside for small, disadvantaged businesses with the understanding that MCC would, illegally, perform all of the work. In so doing, MCC was able to win 27 government contracts worth over $70 million from 2008 to 2011. The scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate small and disadvantaged businesses.
Under the illegal agreement, the companies awarded these government contracts were allowed to keep 3 percent of the value of the contracts for allowing MCC to use the companies small business status to win the contracts.
Court documents state that MCC violated the provisions of the SBA 8(a) program. The SBA 8(a) development program is designed to award contracts to businesses that are owned by “one or more socially and economically disadvantaged individuals.” To qualify for the 8(a) program, a business must be at least 51 percent owned and controlled by a U.S. citizen (or citizens) of good character who meet the SBA’s definition of socially and economically disadvantaged. The firm must also be a small business (as defined by the SBA) and show a reasonable potential for success. Participants in the 8(a) program are subject to regulatory and contractual limits. Also, under the program, the disadvantaged business is required to perform a certain percentage of the work. For the types of contracts under investigation here, the SBA 8(a)-certified companies were required to perform 15 percent or more of the work with its own employees.
MCC, along with the two 8(a) companies used to illegally obtain the contracts, engaged in and executed a scheme to defraud the SBA by, among other things:
- Allowing the two 8(a) companies to retain a guaranteed percentage of each contract for simply obtaining the contracts for MCC;
- Allowing the two 8(a) companies to perform no labor on these projects;
- Performing the accounting and government reporting for the two 8(a) companies on certain projects;
- Falsely representing to the government that MCC employees were in fact employees of the 8(a) companies;
- Obtaining certain contracts on behalf of the 8(a) companies without first informing those 8(a) companies prior to bidding; and
- Conspiring with the 8(a) companies to hire straw employees for the 8(a) companies whose labor and salaries were paid for by MCC.
For the contracts obtained through this scheme on which MCC made a profit, MCC’s profit was at least $1,269,294. The criminal penalty in this case includes a $500,000 fine and a forfeiture money judgment of $1,269,294.
The investigation is being conducted by the FBI’s Washington Field Office, the Inspector General for the SBA, the Inspector General of the U.S. GSA, the DCIS’ Central Field Office, and the MPFU.
MCC Construction Company Agrees to Pay Nearly $1.8 Million for Conspiring to Illegally Obtain Federal Contracts Meant for Small, Disadvantaged BusinessesRead the Press Release
WASHINGTON – The Justice Department announced today that MCC Construction Company (MCC) has agreed to pay $1,769,294 in criminal penalties and forfeiture for conspiring to commit fraud on the United States by illegally obtaining government contracts that were intended for small, disadvantaged businesses.
The court agreement was announced by U.S. Attorney Channing D. Phillips of the U.S. Attorney’s Office for the District of Columbia; Assistant Attorney General William J. Baer of the Justice Department’s Antitrust Division; Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office; Peggy E. Gustafson, Inspector General for the Small Business Administration (SBA); Carol Fortine Ochoa, Inspector General of the U.S. General Services Administration (GSA); Brian J. Reihms, Special Agent in Charge of the Central Field Office of the Defense Criminal Investigative Service (DCIS), and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).
“This prosecution shows that there will be consequences for companies that violate federal contracting rules meant to assist small, disadvantaged businesses,” said U.S. Attorney Phillips. “MCC Construction Company secured millions of dollars in contracts by hiding behind two small businesses that did not perform labor on the projects. Its conduct took away opportunities that could have gone to companies that truly are socially and economically disadvantaged and deserving of the work.”
“This conspiracy defrauded the government and denied small, disadvantaged businesses the opportunity to compete to do business with the United States,” said Assistant Attorney General Baer of the Antitrust Division. “We will continue to work with U.S. Attorney Phillips and his talented colleagues to protect the integrity of the government contracting process.”
“An uneven marketplace is created when businesses engage in illegal backroom deals to fraudulently obtain government contracts, placing competitors at an unfair disadvantage,” said Assistant Director in Charge Abbate. “In this case, the FBI and our partners moved to protect the American taxpayer and ensure the integrity of the process. Together, we will continue to work to protect federal contract opportunities for socially and economically disadvantaged businesses within our communities from unlawful conduct.”
“Fraudulently passing work through eligible small businesses to a large business does not provide taxpayers the best value and certainly does not support the role of small businesses as engines of economic development and job creation. In fact, it subverts the purpose of SBA’s preferential contracting programs and harms the small businesses the programs are designed to assist,” said SBA Inspector General Gustafson. “I want to thank the U.S. Attorney’s Office and our law enforcement partners for their leadership and dedication to serving justice.”
“We will continue our work on behalf of taxpayers and legitimate small business owners to expose and punish nationwide small business fraud schemes such as this,” said GSA Inspector General Ochoa.
“The Defense Criminal Investigative Service is committed to working with our partner agencies to combat fraud impacting the Department of Defense's vital programs and operations and maintain the integrity of the procurement system," said Special Agent in Charge Reihms.“This settlement is a testament to our steadfast and continued commitment to working closely with our law enforcement partners in rooting out this type of activity, " said Director Robey.
MCC was a construction management company and general contractor headquartered in Colorado.
A criminal Information was filed last month in the U.S. District Court for the District of Columbia charging MCC with one count of knowingly and willfully conspiring to commit major fraud on the United States. MCC waived the requirement of being charged by way of federal indictment, agreed to the filing of the Information, and accepted responsibility for its criminal conduct and that of its employees. U.S. District Judge Ketanji B. Jackson accepted the company’s guilty plea today. The plea agreement is subject to the Court’s approval at a sentencing hearing scheduled for March 15, 2016.
According to court documents, MCC conspired with two companies that were eligible to receive federal government contracts set aside for small, disadvantaged businesses with the understanding that MCC would, illegally, perform all of the work. In so doing, MCC was able to win 27 government contracts worth over $70 million from 2008 to 2011. The scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate small and disadvantaged businesses.
Under the illegal agreement, the companies awarded these government contracts were allowed to keep 3 percent of the value of the contracts for allowing MCC to use the companies small business status to win the contracts.
Court documents state that MCC violated the provisions of the SBA 8(a) program. The SBA 8(a) development program is designed to award contracts to businesses that are owned by “one or more socially and economically disadvantaged individuals.” To qualify for the 8(a) program, a business must be at least 51% owned and controlled by a U.S. citizen (or citizens) of good character who meet the SBA’s definition of socially and economically disadvantaged. The firm must also be a small business (as defined by the SBA) and show a reasonable potential for success. Participants in the 8(a) program are subject to regulatory and contractual limits. Also, under the program, the disadvantaged business is required to perform a certain percentage of the work. For the types of contracts under investigation here, the SBA 8(a)-certified companies were required to perform 15 percent or more of the work with its own employees.
MCC, along with the two 8(a) companies used to illegally obtain the contracts, engaged in and executed a scheme to defraud the SBA by, among other things:
- Allowing the two 8(a) companies to retain a guaranteed percentage of each contract for simply obtaining the contracts for MCC;
- Allowing the two 8(a) companies to perform no labor on these projects;
- Performing the accounting and government reporting for the two 8(a) companies on certain projects;
- Falsely representing to the government that MCC employees were in fact employees of the 8(a) companies;
- Obtaining certain contracts on behalf of the 8(a) companies without first informing those 8(a) companies prior to bidding; and
- Conspiring with the 8(a) companies to hire straw employees for the 8(a) companies whose labor and salaries were paid for by MCC.
For the contracts obtained through this scheme on which MCC made a profit, MCC’s profit was at least $1,269,294. The criminal penalty in this case includes a $500,000 fine and a forfeiture money judgment of $1,269,294.
The investigation is being conducted by the FBI’s Washington Field Office, the Inspector General for the Small Business Administration (SBA), the Inspector General of the U.S. General Services Administration (GSA), the Central Field Office of the Defense Criminal Investigative Service (DCIS), and the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).
The prosecution is being handled by Assistant U.S. Attorneys Matt Graves and John Marston of the U.S. Attorney’s Office for the District of Columbia and Assistant Chief Craig Y. Lee and Trial Attorneys Kevin B. Hart and Justin P. Murphy of the Antitrust Division.
Liverpool, New York Man Pleads Guilty to Receipt and Possession of Child PornographyRead the Press Release
SYRACUSE, NEW YORK – Christopher Filippi, 48, of Liverpool, New York, pled guilty today to the entirety of a four-count indictment charging him with the receipt and possession of child pornography, announced United States Attorney Richard S. Hartunian. In entering his guilty pleas before United States District Judge Brenda K. Sannes, Filippi admitted he received and possessed thousands of photographs and videos containing child pornography. A jury trial in the case was to begin on February 9, 2016.
At sentencing on May 27, 2016, Filippi faces a mandatory minimum term of five years in prison and a maximum term of up to twenty years in prison on each count. Sentences are imposed by a judge based upon the particular statute the defendant is charged with violating, the United States Sentencing Guidelines and other factors. In addition to a term of incarceration, Filippi will be required to register as a sex offender and to pay restitution to the victims depicted in the child pornography images he possessed. He will also forfeit the computer equipment used in his crimes and be required to serve a term of supervised release for a minimum of five years and up to life.
The case was investigated by the Federal Bureau of Investigation ("FBI") with assistance from the Syracuse Police Department, and is being prosecuted by Assistant U.S. Attorney Nicolas Commandeur.
Las Vegas Airport Employee Sentenced to 36 Months in Prison for Role in Large-Scale Drug Trafficking ConspiracyRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that a Las Vegas man has been sentenced by U.S. District Judge Sharon Gleason to serve 36 months in prison for using his employment at McCarran International Airport to aid drug traffickers in sneaking large quantities of cocaine past security and onto Alaska-bound flights.
Bryan M. Bledsoe, of Las Vegas, previously pled guilty to conspiring with others to distribute cocaine. As part of his guilty plea, Bledsoe, an airline employee, admitted that he personally took bags full of cocaine through the secure area of McCarran International Airport and then delivered the drugs to co-conspirators who then transported the drugs to Anchorage for distribution. Overall, Bledsoe admitted being involved in the shipment of between five and fifteen kilograms of cocaine during the pendency of the conspiracy.
According to Assistant U.S. Attorney Stephanie C. Courter, who handled the sentencing hearing, the conspiracy began as early as 2012 and continued until June 2014. During that time, conspirators worked to import multiple kilograms of cocaine into Alaska from Las Vegas for distribution. After the drugs were sold, the conspirators then secreted more than one million dollars in cash proceeds out of Alaska and back to the Lower 48.
Bledsoe, an airline employee working at the airport, was recruited by conspirators to help them bypass security with the cocaine. On a regular basis, co-conspirators provided Bledsoe with bags containing multiple kilograms of cocaine. Bledsoe then used his airport employee credentials to bring the drugs into the airport without having to pass through security screening. Once in the secure area of the airport, Bledsoe then returned the un-scanned bags of cocaine to his co-conspirators who then boarded Alaska-bound flights to deliver the drugs.
On June 1, 2014, investigators actually observed Bledsoe and his co-conspirators in action. On that day, co-defendant Dewane Blue gave Bledsoe a bag containing ten kilograms of cocaine. Bledsoe then carried the drugs past security checkpoints and returned them to Blue. Blue then gave the drugs to a third co-conspirator, Daren Cole, who was scheduled to travel to Anchorage that afternoon. Before Cole boarded his flight, however, his carry-on was seized and agents recovered approximately ten kilograms of cocaine from inside.
During the sentencing hearing, Judge Gleason focused on the fact that Bledsoe had used his job as an airline employee to help perpetrate the drug trafficking scheme. She noted the seriousness of the offense and the need for the public to be protected, particularly when flying. She also focused on the need to deter others in the future from using their security clearances at airports to help commit crimes.
Bledsoe is the latest in a string of sentencing hearings related to this drug trafficking scheme. To date, the following individuals have been sentenced as part of this case:
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Daren Cole:previously sentenced to 64 months in prison;
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Michael Langdon: previously sentenced to 60 months in prison; and
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Antonio Beckwith:previously sentenced to 24 months in prison
Two other defendants, including the leader of the conspiracy, are set to be sentenced in the coming months.
This case was investigated as part of the Organized Crime Drug Enforcement Task Force (OCDETF). In announcing the sentence, U.S. Attorney Loeffler praised the work of the law enforcement agencies involved, including the Drug Enforcement Administration (DEA), the Internal Revenue Service Criminal Investigation (IRS-CI), and the U.S. Postal Inspection Service (USPIS). These agencies were assisted by the FBI Anchorage Safe Streets Task Force, the Anchorage Police Department, the Las Vegas Metropolitan Police Department, the Henderson Police Department, the North Las Vegas Police Department and the Clark County Department of Aviation.
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KC Man Sentenced to 15 Years for Child PornRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was sentenced in federal court today for possessing child pornography while he was under court-ordered supervision for a prior conviction for receiving child pornography.
John T. Beyers, 46, of Kansas City, was sentenced by U.S. District Judge Beth Phillips to 15 years in federal prison without parole. Today’s sentence includes 10 years for possessing child pornography and a consecutive five years for the revocation of his supervised release, which he was serving at the time of the offense for a prior child pornography conviction.
On Feb. 27, 2007, Beyers pleaded guilty in the U.S. District Court for the Southern District of Florida to receiving child pornography and was sentenced to seven years and four months in federal prison. He was released to a halfway house in Kansas City in May 2012. One of the conditions of Beyers’ supervised release was that Beyers could obtain only one computer, and that computer had to have monitoring software installed for supervision of his Internet activity by the probation officer. Other conditions included that Beyers could not obtain any type of pornography, including adult pornography, and Beyers could not violate any state or federal laws.
The U.S. Probation Office conducted a search of Beyers’s apartment on May 17, 2013, and found three unauthorized and unmonitored computers, a thumb drive and an external hard drive. A probation officer also found a receipt for a $1,000 wire transfer. When asked about it, Beyers said a Russian national was extorting $5,000 from him to keep Beyers’s illicit Internet activities from being reported to U.S. authorities.
Investigators found more than 100 images of child pornography and several movies of child pornography on the computers, the thumb drive and the external hard drive. Internet history indicates that Beyers did the bulk of his viewing of child pornography in the cloud, which minimized the available record of his child pornography activity.
This case was prosecuted by Assistant U.S. Attorney Catherine Connelly. It was investigated by U.S. Probation Office and the FBI.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Justice Department and Consumer Financial Protection Bureau Reach Settlement to Resolve Allegations of Auto Lending Discrimination by ToyotaRead the Press Release
WASHINGTON – The Department of Justice and the Consumer Financial Protection Bureau (CFPB) announced today a settlement to resolve allegations that Toyota Motor Credit Corporation (Toyota) engaged in a pattern or practice of discrimination against African-American and Asian/Pacific Islander borrowers in auto lending. Toyota, based in Torrance, California, is the nation’s largest captive auto lender, and the fifth largest auto lender overall.
Through the settlement, Toyota agrees to limit significantly the discretion of car dealers to charge interest rate markups on Toyota loans. Notably, Toyota has also committed that it will not increase the interest rates it quotes to car dealers in order to fund additional nondiscretionary dealer compensation implemented as part of the settlement. The settlement also provides $19.9 million in compensation for borrowers who took out loans between January 2011 and January 2016 and paid higher markup based on the alleged discrimination. Additionally, Toyota will pay up to $2 million to African-American and Asian/Pacific Islander borrowers with markup disparities while Toyota is preparing to implement the new policies. The new policies must be in place by August 2016.
“Toyota’s reforms will level the playing field to ensure that all eligible borrowers – regardless of their race or national origin – can sign auto loans with fair terms and reasonable interest rates,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “While dealerships deserve fair compensation for the valuable customer service they provide, federal law protects consumers against higher price markups simply because of what they look like or where they come from. We commend Toyota for crafting a new compensation system that strikes an appropriate balance for dealers and consumers.”
Toyota is known as an indirect auto lender because, rather than taking applications directly from consumers, the company makes most of its loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Toyota. It is also a captive auto lender because it is owned by an auto manufacturer and provides consumers with financing for the primary purpose of facilitating sales by the manufacturer and its associated franchised dealers. Toyota’s business practice, like most other major auto lenders, allows car dealers discretion to vary a loan’s interest rate from the price Toyota initially sets based on the borrower’s objective credit-related factors. Dealers receive greater payments from Toyota on loans that include a higher interest rate markup. The coordinated investigations by the department and the CFPB that preceded today’s settlement determined this system of subjective and unguided pricing discretion directly results in Toyota’s qualified African-American and Asian/Pacific Islander borrowers paying more than qualified non-Hispanic white borrowers.
To address this system, Toyota has agreed in today’s settlement to change the way it prices its loans by limiting dealer markup to 125 basis points (or 1.25 percentage points) for loans of 60 months or less, and to 100 basis points (or 1 percentage point) for loans greater than 60 months. The department and CFPB anticipate that Toyota’s new caps on discretionary markups will substantially reduce or eliminate disparities in markups based on race or national origin.
The settlement resolves claims by the department and the CFPB that Toyota discriminated by charging thousands of African-American and Asian/Pacific Islander borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Toyota charged borrowers higher interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination, and the average Asian/Pacific Islander victim was obligated to pay over $100 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Toyota’s settlement with the Justice Department, which is subject to court approval, was filed today in the U.S. District Court of the Central District of California in conjunction with the Justice Department’s complaint. Toyota resolved the CFPB’s claims by entering into a public administrative settlement.
“We are dedicated to promoting fair and equal access to credit in the auto finance marketplace,” said Director Richard Cordray of CFPB. “Toyota Motor Credit is among the largest indirect auto lenders, and we commend its industry leadership in shifting to reduced discretion to address the significant fair lending risks.”
“No consumer should be forced to pay more money for a loan because of their race or national origin,” said U.S. Attorney Eileen M. Decker of the Central District of California. “This settlement resolves our claims by providing compensation for affected consumers and seeking to ensure that future loans funded by Toyota reflect equal terms.”
In addition to the payments of at least $19.9 million to African-American and Asian/Pacific Islander borrowers, the settlement also requires Toyota to improve its monitoring and compliance systems. The settlement allows Toyota to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results. The department commends Toyota for working cooperatively to reach an appropriate resolution of this case.
The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the CFPB identify as victims of Toyota’s discrimination. The department and the CFPB will make a public announcement and post information on their websites once more details about the compensation process become available. Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the CFPB at this time.
The Civil Rights Division, the U.S. Attorney’s Office of the Central District of California and the CFPB are members of the Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information about the task force, please visit www.StopFraud.gov.
The Justice Department’s enforcement of fair lending laws and the Servicemembers Civil Relief Act (SCRA) is conducted by the Housing and Civil Enforcement Section in the Civil Rights Division. Since 2010, the Civil Rights Division has provided approximately $1.4 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the SCRA. The Attorney General’s annual reports to Congress regarding ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications.
Justice Department and Consumer Financial Protection Bureau Reach Settlement to Resolve Allegations of Auto Lending Discrimination by ToyotaRead the Press Release
The Department of Justice and the Consumer Financial Protection Bureau (CFPB) announced today a settlement to resolve allegations that Toyota Motor Credit Corporation (Toyota) engaged in a pattern or practice of discrimination against African-American and Asian/Pacific Islander borrowers in auto lending. Toyota, based in Torrance, California, is the nation’s largest captive auto lender, and the fifth largest auto lender overall.
Through the settlement, Toyota agrees to limit significantly the discretion of car dealers to charge interest rate markups on Toyota loans. Notably, Toyota has also committed that it will not increase the interest rates it quotes to car dealers in order to fund additional nondiscretionary dealer compensation implemented as part of the settlement. The settlement also provides $19.9 million in compensation for borrowers who took out loans between January 2011 and January 2016 and paid higher markup based on the alleged discrimination. Additionally, Toyota will pay up to $2 million to African-American and Asian/Pacific Islander borrowers with markup disparities while Toyota is preparing to implement the new policies. The new policies must be in place by August 2016.
“Toyota’s reforms will level the playing field to ensure that all eligible borrowers – regardless of their race or national origin – can sign auto loans with fair terms and reasonable interest rates,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “While dealerships deserve fair compensation for the valuable customer service they provide, federal law protects consumers against higher price markups simply because of what they look like or where they come from. We commend Toyota for crafting a new compensation system that strikes an appropriate balance for dealers and consumers.”
Toyota is known as an indirect auto lender because, rather than taking applications directly from consumers, the company makes most of its loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Toyota. It is also a captive auto lender because it is owned by an auto manufacturer and provides consumers with financing for the primary purpose of facilitating sales by the manufacturer and its associated franchised dealers. Toyota’s business practice, like most other major auto lenders, allows car dealers discretion to vary a loan’s interest rate from the price Toyota initially sets based on the borrower’s objective credit-related factors. Dealers receive greater payments from Toyota on loans that include a higher interest rate markup. The coordinated investigations by the department and the CFPB that preceded today’s settlement determined this system of subjective and unguided pricing discretion directly results in Toyota’s qualified African-American and Asian/Pacific Islander borrowers paying more than qualified non-Hispanic white borrowers.
To address this system, Toyota has agreed in today’s settlement to change the way it prices its loans by limiting dealer markup to 125 basis points (or 1.25 percentage points) for loans of 60 months or less, and to 100 basis points (or 1 percentage point) for loans greater than 60 months. The department and CFPB anticipate that Toyota’s new caps on discretionary markups will substantially reduce or eliminate disparities in markups based on race or national origin.
The settlement resolves claims by the department and the CFPB that Toyota discriminated by charging thousands of African-American and Asian/Pacific Islander borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Toyota charged borrowers higher interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination, and the average Asian/Pacific Islander victim was obligated to pay over $100 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Toyota’s settlement with the Justice Department, which is subject to court approval, was filed today in the U.S. District Court of the Central District of California in conjunction with the Justice Department’s complaint. Toyota resolved the CFPB’s claims by entering into a public administrative settlement.
“We are dedicated to promoting fair and equal access to credit in the auto finance marketplace,” said Director Richard Cordray of CFPB. “Toyota Motor Credit is among the largest indirect auto lenders, and we commend its industry leadership in shifting to reduced discretion to address the significant fair lending risks.”
“No consumer should be forced to pay more money for a loan because of their race or national origin,” said U.S. Attorney Eileen M. Decker of the Central District of California. “This settlement resolves our claims by providing compensation for affected consumers and seeking to ensure that future loans funded by Toyota reflect equal terms.”
In addition to the payments of at least $19.9 million to African-American and Asian/Pacific Islander borrowers, the settlement also requires Toyota to improve its monitoring and compliance systems. The settlement allows Toyota to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results. The department commends Toyota for working cooperatively to reach an appropriate resolution of this case.
The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the CFPB identify as victims of Toyota’s discrimination. The department and the CFPB will make a public announcement and post information on their websites once more details about the compensation process become available. Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the CFPB at this time.
The Civil Rights Division, the U.S. Attorney’s Office of the Central District of California and the CFPB are members of the Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information about the task force, please visit www.StopFraud.gov.
The Justice Department’s enforcement of fair lending laws and the Servicemembers Civil Relief Act (SCRA) is conducted by the Housing and Civil Enforcement Section in the Civil Rights Division. Since 2010, the Civil Rights Division has provided approximately $1.4 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the SCRA. The Attorney General’s annual reports to Congress regarding ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications.
Toyota ComplaintToyota Consent Order
Jury Convicts Traverse City Man, Jerry M. Stauffer, of Fraud and Money Laundering in Connection with Foreign Currency Trading OperationsRead the Press Release
GRAND RAPIDS, MICHIGAN — Jerry M. Stauffer, 66, of Traverse City, Michigan, was convicted of wire fraud and money laundering at the conclusion of a jury trial, U.S. Attorney Patrick Miles announced today.
U.S. Attorney Miles commented that "Stauffer used his position as a respected financial expert in Traverse City to defraud his friends and neighbors, as well as people living around the world. As a result, some people lost their life savings. This kind of crime causes long-lasting harm and will be punished whenever we find it."
During a four-day trial that began on January 26, 2016, the jury heard that Stauffer engaged in a fraudulent investment scheme between 2009 and 2015, using interstate communications to take a total of approximately $1.9 million from more than a dozen victims. He advised his "investors" that he could earn substantial profits for them with invested funds by trading in fluctuations in foreign currencies. In fact, Stauffer never invested the money as promised, but used it to pay his own expenses and make the payments necessary to keep the fraudulent scheme afloat. Two families lost $400,000 each in the scheme. Stauffer continued to persuade his investors that his actions were legitimate even after he was indicted, as a group of investors were persuaded to put up the funds he wanted to hire an attorney. The jury also heard that Stauffer laundered some of the proceeds of his crime through a bank to purchase a boat.
Stauffer now faces up to 20 years in prison for the wire fraud conviction and up to ten years in prison for the money laundering conviction. Sentencing has been scheduled for June 14, 2016 before Chief Judge Robert J. Jonker. Stauffer was permitted to remain on bond pending his sentencing.
"Mr. Stauffer’s appearance of success was masked by a tangled financial web of lies," said Jarod J. Koopman, Special Agent in Charge of IRS-Criminal Investigation. "Ponzi schemes can thrive for a short period of time based on the fraudulent claims that money is being invested and legitimate returns provided. However, that time has come to an end, and as this verdict shows, Mr. Stauffer will now face his judgment."
The Traverse City office of the FBI and the IRS-Criminal Investigation office investigated the case. Assistant U.S. Attorneys Tim VerHey and Nicole Mazzocco prosecuted it.
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Jordanian Weapons Smuggler Sentenced to PrisonRead the Press Release
Tampa, Florida – U.S. District Judge Elizabeth A. Kovachevich has sentenced Mahmoud Abdel-Ghani Mohammad Assaf (47, Amman, Jordan) to 33 months in federal prison for conspiring to export firearms and attempting to export firearms without a license, in violation of federal export control and firearms laws. The Court also ordered Assaf to forfeit the firearms and vehicles that had been involved in the offenses. He pleaded guilty on March 24, 2015.
According to court documents, Assaf was part of a network of individuals involved in smuggling firearms from the United States to the Middle East. The firearms were concealed in vehicles that had been purchased at used car auctions in Central Florida. The vehicles were then scheduled for export to Jordan.
Two of Assaf’s co-conspirators, Eyad Farah (Barrington, TX) and Yasser Ahmad Obeid (St. Petersburg, FL and Lebanon), previously pleaded guilty to their roles in the conspiracy. Farah was sentenced to 37 months and Obeid was sentenced to 51 months in federal prison.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Defense Criminal Investigative Service, with assistance from the Department of Justice’s Office of International Affairs. It was prosecuted by Assistant United States Attorneys Josephine W. Thomas and Adam M. Saltzman.
"HSI, with our domestic and international law enforcement partners, is dedicated to making communities safer by bringing criminals to justice and seizing firearms before they fall into the hands of transnational criminal organizations who pose a threat to public safety both here and abroad,” said Susan L. McCormick, special agent in charge of HSI Tampa.
Jefferson County Man Sentenced in Carjacking DeathRead the Press Release
BEAUMONT, Texas – A 22-year-old Beaumont, Texas man has been sentenced to federal prison for a fatal carjacking in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
River Shynette Gobert pleaded guilty on Aug. 26, 2015 to carjacking resulting in death and was sentenced to 30 years in federal prison today by U.S. District Judge Thad Heartfield. This sentence will run consecutive to a state prison sentence he is already serving.
According to information presented in court, early on the morning of June 23, 2013, Gobert and Jonathan Demond Patton entered a self-service laundry on Florida Avenue in Beaumont intending to rob the sole occupant. When the victim refused to hand over his car keys, Gobert shot him in the leg at Patton’s direction. Patton and Gobert fled the laundry in their vehicle without the victim’s keys. They drove by an apartment complex on Woodrow Avenue where they encountered Daryl Dwayne Fontenot asleep in his vehicle. A struggle ensued when Patton and Gobert attempted to steal the vehicle and Fontenot was shot twice in the chest killing him. Patton and Gobert fled in their vehicle after they were unable to locate Fontenot’s keys. A short time later, law enforcement officers stopped Patton and Gobert because their vehicle matched the vehicle reported in the self-service laundry shooting. Patton and Gobert fled the vehicle but left the weapon used to shoot the two men behind. Patton and Gobert were arrested and each gave statements indicating the other was responsible for the shootings. On Sep. 23, 2013, a Jefferson County grand jury indicted Patton and Gobert for the self-service laundry shooting. Gobert pleaded guilty and was sentenced to seven years in state prison. Patton pleaded guilty and was sentenced to 10 years in state prison. On Mar. 5, 2015, a federal grand jury indicted Patton and Gobert charging them for the carjacking murder of Fontenot. Patton was sentenced to 40 years in federal prison for this charge on Dec. 10, 2015.
This case was prosecuted as part of the Project Safe Neighborhoods Initiative. Project Safe Neighborhoods is aimed at reducing gun and gang violence, deterring illegal possession of guns, ammunition and body armor, and improving the safety of residents in the Eastern District of Texas. Participants in the initiative include community members and organizations as well as federal, state and local law enforcement agencies.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Beaumont Police Department and prosecuted by Assistant U.S. Attorney John B. Ross.
Jefferson City Man Sentenced for MethRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Jefferson City, Mo., man was sentenced in federal court today for possessing methamphetamine with the intent to distribute.
Cody Dean Williams, 49, of Jefferson City, was sentenced by U.S. District Judge Brian C. Wimes to 13 years and four months in federal prison without parole.
On Sept. 17, 2015, Williams pleaded guilty to possessing methamphetamine with the intent to distribute. Williams was sentenced as a career offender due to his prior felony convictions.
Williams was charged after having sold approximately 12.4 grams of methamphetamine to informants and undercover officers. Williams was arrested on March 5, 2013, when he was found to be driving on an expired license. An inventory search of his car revealed that he was carrying four bags of methamphetamine, a bag of marijuana, a bag with 11 hydrocodone pills and a bag with methamphetamine residue, which weighed approximately 8.5 grams. Williams was charged in Cole County, Mo., with felony possession of a controlled substance, among other felonies. He was released on bond.
An Eldon, Mo., police officer – acting on information that a suspected drug dealer was traveling towards Eldon – saw Williams’s truck stopped on the side of the road near the intersection of Hwy. Y and Hwy 52 on June 26, 2014. An officer searched the truck and found six syringes and a set of digital scales that field-tested positive for methamphetamine. Williams also had a small plastic bag containing marijuana in his pocket. During another search of the truck, law enforcement officers found seven grams of methamphetamine inside a hidden compartment in the dash.
Williams admitted that he had been distributing methamphetamine throughout mid-Missouri for several months. Williams stated that he sold approximately a pound each week, and purchased each pound for around $13,000. He made around $300 profit for each ounce sold. According to court documents, Williams is responsible for the distribution of approximately 8.32 kilograms of methamphetamine.
On July 18, 2014, officers were informed that there was an active arrest warrant for Williams. When officers attempted to stop him, Williams attempted to elude them by speeding, running stop signs and driving in the grass. During their pursuit, officers observed Williams throw items out of the car which the officers thought were controlled substances. The interior of Williams’s car was found to have methamphetamine residue and some residue of smoked marijuana. A later search of the chase route did not produce the baggies that officers believed were thrown from the car.
This case was prosecuted by Assistant U.S. Attorney Anthony P. Gonzalez. It was investigated by the Drug Enforcement Administration, MUSTANG (the Mid-Missouri Unified Strike Team And Narcotics Group), the Mid-Missouri Multi-Jurisdictional Drug Task Force and the Eldon, Mo., Police Department.