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24 December 2015
Texas Man Indicted for Unemployment Insurance Fraud Perpetrated Through Misused Identities and Undocumented WorkersRead the Press Release
FRESNO, Calif. — Fernando Alanis, 52, of Rio Grande City, Texas and Parlier, California, was arrested yesterday pursuant to an indictment charging him in connection with an unemployment insurance fraud scheme, United States Attorney Benjamin B. Wagner announced. On November 19, 2015, a federal grand jury returned a 20-count indictment against Alanis charging him with mail fraud.
According to court documents, Alanis was a supervisor with a farm labor contractor located in Sanger, California. Alanis would arrange for the hiring of laborers and would supervise forepersons or “crew bosses” who would oversee laborers in fruit packing houses and agricultural fields. Alanis would employ undocumented workers by having the laborers work under the identities of Alanis’ relatives and acquaintances who were authorized to work in the United States. The wages earned by the undocumented laborers would be reported to the California Employment Development Department as wages earned by the identities arranged by Alanis, and not by the actual workers who earned the wages. After the seasonal agricultural employment was over, Alanis provided documentation to the individuals whose identities were used to enable them to file unemployment insurance claims for work they never performed and wages they did not earn. The individuals whose identities were used would pay Alanis for the information to enable the unemployment insurance claims, or would otherwise share those stolen benefits with Alanis.
This case was the product of an investigation by the Department of Labor, Office of Inspector General, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the California Employment Development Department, Investigation Division. Assistant United States Attorney Henry Z. Carbajal III is prosecuting the case.
If convicted, Alanis faces a maximum statutory penalty of twenty years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Sentencings for December 18 - December 23, 2015Read the Press Release
Angela Kenney, 32, of Parker, Colorado, was sentenced by Federal District Court Judge Alan B. Johnson on December 23, 2015, for conspiracy to distribute 500 grams or more of a mixture or substance containing a detectable amount of methamphetamine and possession of a firearm in furtherance of a drug trafficking crime. Kenney was arrested in Denver, Colorado. She received 177 months imprisonment, to be followed by 5 years of supervised release, and was ordered to pay a $750.00 fine and a $200.00 special assessment. This case results from an ongoing Organized Crime Drug Enforcement Task Forces (OCDETF) joint investigation conducted by the Wyoming Division of Criminal Investigation, the U.S. Drug Enforcement Administration and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
Samuel Briseno, 34, of Lovell, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on December 22, 2015, for production of child pornography. Briseno was arrested in Lovell, Wyoming. He received 180 months imprisonment, to be followed by ten years of supervised release, and was ordered to pay a $100.00 special assessment. This case was investigated by the Wyoming Division of Criminal Investigation Internet Crimes Against Children Task Force, the Lovell Police Department, and the Big Horn County Attorney’s Office.
Allison Martin, 21, of Gillette, Wyoming, was sentenced by Federal District Court Judge Scott W. Skavdahl on December 18, 2015, for conspiracy to distribute 500 grams or more of a mixture or substance containing a detectable amount of methamphetamine. Martin appeared pursuant to a summons. She received 36 months imprisonment, to be followed by three years of supervised release, and was ordered to pay a $100.00 special assessment. This case results from an ongoing Organized Crime Drug Enforcement Task Forces (OCDETF) joint investigation conducted by the Wyoming Division of Criminal Investigation and the U.S. Drug Enforcement Administration. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
Krystle McCann, 31, of Gillette, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on December 18, 2015, for conspiracy to distribute 500 grams or more of a mixture or substance containing a detectable amount of methamphetamine. McCann was arrested in Gillette, Wyoming. She received 37 months imprisonment, to be followed by four years of supervised release, and was ordered to pay a $200.00 fine and a $100.00 special assessment. This case results from an ongoing Organized Crime Drug Enforcement Task Forces (OCDETF) joint investigation conducted by the Wyoming Division of Criminal Investigation and the U.S. Drug Enforcement Administration. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
Information: Federal Court ArraignmentsRead the Press Release
The United States Attorney’s Office announced that those persons listed below were arraigned before the U.S. Magistrate and the indictments handed down by the Grand Jury unsealed.
Appearing before U.S. Magistrate Johnston in Great Falls, on December 24, 2015 and entering pleas of Not Guilty were:
- SIOUX SUMMER NECKLACE, a 25-year-old resident of Poplar, appeared on charges of assault resulting in serious bodily injury. If convicted of the charge contained in the indictment, NECKLACE faces 10 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the Federal Bureau of Investigation. PACER Case Reference. 15-88
- EVERETT TODD WHITE, a 47-year-old resident of Poplar, appeared on charges of conspiracy to possess with intent to distribute marijuana; possession with intent to distribute marijuana within 1,000 feet of a school, and distribution of marijuana. If convicted of the most serious charges contained in the indictment, WHITE faces 10 years in prison, $500,000 in fines and 4 years supervised release. The case was investigated by the Bureau of Indian Affairs. PACER Case Reference. 15-89
Appearing before U.S. Magistrate Ostby in Billings, on December 23, 2015 and entering pleas of Not Guilty were:
- SARA MARIE CLARK, a 38-year-old resident of Laurel, appeared on charges of bank embezzlement. If convicted of the charge contained in the indictment, CLARK faces 30 years in prison, $1,000,000 in fines and 5 years supervised release. The case was investigated by the U.S. Secret Service. PACER Case Reference. 15-141
- MATTHEW LEE DUSTIN, a 35-year-old resident of Billings, appeared on charges of felon in possession of a firearm and possession of a stolen firearm. If convicted of the most serious charges contained in the indictment, DUSTIN faces 10 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives. PACER Case Reference. 15-55
- ARTHUR CHARLES KESTNER, a 36-year-old resident of Billings, appeared on charges of conspiracy to possess with intent to distribute methamphetamine, and possession with intent to distribute methamphetamine. If convicted of the most serious charges contained in the indictment, KESTNER faces 20 years in prison, $1,000,000 in fines and 3 years supervised release. The case was investigated by the FBI Drug Task Force and the Drug Enforcement Administration. PACER Case Reference. 15-144
Appearing before U.S. Magistrate Lynch in Missoula, on December 22, 2015 and entering pleas of Not Guilty were:
- COURTNEY A. COLLIER, a 33-year-old resident of Renton, Washington, appeared on charges of conspiracy to possess with intent to distribute oxycodone, possession with intent to distribute oxycodone, conspiracy to acquire or obtain possession of a controlled substance by deception and acquiring or obtaining possession of a controlled substance by deception. If convicted of the most serious charges contained in the indictment, COLLIER faces 20 years in prison, $1,000,000 in fines and 3 years supervised release. The case was investigated by the Drug Enforcement Administration. PACER Case Reference. 15-21
- RYAN DAVID HIPPENSTIEL, a 36-year-old resident of Hayden Lake, Idaho, appeared on charges of conspiracy to distribute methamphetamine, possession with intent to distribute methamphetamine, possession of a firearm in furtherance of a drug trafficking crime and felon in possession of a firearm. If convicted of the most serious charges contained in the indictment, HIPPENSTIEL faces life in prison, $10,000,000 in fines and 5 years supervised release. The case was investigated by the Federal Bureau of Investigation and the Montana Regional Violent Crime Task Force. PACER Case Reference. 15-36
Appearing before U.S. Magistrate Ostby in Billings, on December 18, 2015 and entering pleas of Not Guilty were:
- JON LEE FIGHTER, a 30-year-old resident of Pryor, appeared on charges of assault resulting in serious bodily injury and felony child abuse and neglect. If convicted of the most serious charges contained in the indictment, FIGHTER faces 10 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the Bureau of Indian Affairs. PACER Case Reference. 15-75
- KODY GORDON WINFREY, a 42-year-old resident of Billings, appeared on charges of conspiracy to distribute and to possess with intent to distribute methamphetamine and possession with intent to distribute methamphetamine. If convicted of the most serious charges contained in the indictment, WINFREY faces life in prison, $10,000,000 in fines and 5 years supervised release. The case was investigated by the FBI Task Force. PACER Case Reference. 15-104
- MICHAEL SHAWN YATES, a 41-year-old resident of Billings, appeared on charges of possession with intent to distribute methamphetamine and distribution of methamphetamine. If convicted of the most serious charges contained in the indictment, YATES faces 20 years in prison, $1,000,000 in fines and 3 years supervised release. The case was investigated by the FBI Drug Task Force. PACER Case Reference. 15-65
If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system so that you stay current and not miss any important developments in the case.
To establish a PACER account, which will allow you to review documents filed in the case, please go to, http://www.pacer.gov/register.html. To access the district court’s calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.
Des Moines Man Sentenced for Unlawful Transport and Taking of a Deer and Making False Statements to the United StatesRead the Press Release
DAVENPORT, IA – On December 22, 2015, Christopher Ryan King, 34, of Des Moines, Iowa, was sentenced by Chief United States District Court Judge John A. Jarvey to 30 days of imprisonment for the unlawful transport and taking of a whitetail buck deer in violation of the Lacey Act and 30 days of imprisonment for making a false statement to a department of the United States, announced Acting United States Attorney Kevin E. VanderSchel. The two thirty- day prison terms were ordered to be served concurrently. King was also ordered to serve three years of supervised release following his prison term. Conditions of supervised release imposed by the Court included restrictions against possessing firearms or other dangerous weapons, and King may not hunt, fish, or trap any wildlife, nor accompany others engaged in such activities. King was also ordered to pay $10,000 in restitution to the Iowa Army Ammunition Plant and $125 in special assessments to the Crime Victims’ Fund.
The Iowa Army Ammunition Plant is a United States Department of Defense facility operated by the United States Department of the Army and located in Des Moines County. It is a secure, limited access facility where medium and large-caliber munitions are loaded, assembled, and packed for the United States military. However, persons may apply to the Iowa Army Ammunition Plant for authorization to hunt certain areas of its approximately 19,300 acres.
According to King’s plea agreement, in April 2012, King prepared and submitted an application seeking authorization to hunt wildlife at the Iowa Army Ammunition Plant. As part of his application, King falsely attested he did not have a fish and wildlife conviction in any jurisdiction, and had never been ticketed for a violation involving hunting, fishing or trapping. Prior to the completion of his application, King had been convicted of multiple Iowa hunting violations. Based upon his false application, Plant officials allowed King to hunt on Iowa Army Ammunition Plant grounds.
King also admitted in his plea agreement on or about October 13, 2012, he shot a whitetail buck deer while hunting at the Iowa Army Ammunition Plant. King located the deer in a section of the Plant that was closed to hunting. King entered the restricted area, removed the trophy parts of the deer, and left the carcass. King then took the trophy parts out of the Iowa Army Ammunition Plant without reporting he had harvested a deer. King knew it was a violation of the law to hunt in a closed area, and to not report all game harvested at the Plant security gate. After exiting the Iowa Army Ammunitions Plant, King transported the trophy parts of the deer back to Central Iowa.
This matter was investigated by the United States Fish and Wildlife Service and the Iowa Department of Natural Resources. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Davenport Man Sentenced to Prison for Possession and Transfer of a Sawed-Off ShotgunRead the Press Release
DAVENPORT, IA – On December 22, 2015, Domingo Edward Monge, 19, of Davenport, Iowa, was sentenced by Chief United States District Court Judge John A. Jarvey to 58 months in prison for possession and transfer of a weapon made from a shotgun, announced Acting United States Attorney Kevin E. VanderSchel. Monge was ordered to serve three years of supervised release following his prison term and to pay $100 towards the Crime Victims’ Fund.
According to Monge’s plea agreement, on or about May 31, 2014, he possessed and sold a modified Sears, Roebuck, and Co., 12 gauge JC Higgins shotgun to another individual. Monge was aware the shotgun had been modified, and the barrel of the firearm was less than 18 inches in length. He also agreed the firearm was not registered in the National Firearms Registration and Transfer Records.
This matter was investigated by the Davenport Police 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.
Davenport Man Sentenced to Prison for Felon in Possession of a Firearm ChargeRead the Press Release
DAVENPORT, IA – On December 22, 2015, Earl Vanal Fullenwider, Jr., 24, of Davenport, Iowa, was sentenced by Chief United States District Court Judge John A. Jarvey to 60 months in prison for a felon in possession of a firearm charge, announced Acting United States Attorney Kevin E. VanderSchel. Fullenwider was ordered to serve three years of supervised release following his prison term and to pay $100 towards the Crime Victims’ Fund.
Fullenwider pleaded guilty to the felon in possession of a firearm charge on July 23, 2015. According to the criminal complaint affidavit, on March 25, 2015, Davenport Police officers responded to a gun shots fired report. Near the location of the shots fired, officers noticed Fullenwider in the passenger seat of a vehicle matching the description of a car possibly involved in the shooting. A traffic stop was conducted by police, and officers found two loaded guns during a search of the car. One of the guns was found on the floor wedged between the front passenger seat and the console, accessible to Fullenwider. Prior to March 2015, Fullenwider had been convicted of felony offenses in 2009 and 2011.
This matter was investigated by the Davenport Police 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.
23 December 2015
United States Settles with Aria Health Systems over Unnecessary Invasive Procedures and Improper Compensation ClaimsRead the Press Release
PHILADELPHIA – The United States and Aria Health Systems, Inc. ("Aria") today settled two False Claims Act matters which Aria self-disclosed, announced United States Attorney Zane David Memeger. Aria agreed to pay $564,700 to resolve claims that a cardiologist performed unnecessary invasive procedures on inpatients and outpatients at their Torresdale Campus between October 1, 2012 and April 15, 2013. Aria also agreed to pay $2.5 million to resolve alleged violations of the False Claims Act regarding compensation to physicians that were in excess of fair market value. The settlement resolves claims regarding compensation paid to a cardiac thoracic surgeon from 2012 to 2014 and claims regarding the purchase of a trademark name in the course of the acquisition of an orthopedic group by Aria in December 2012. Aria is a major health care provider in Northeast Philadelphia and lower Bucks County.
Aria became aware of certain complaints regarding the cardiologist in January 2013. They hired an independent review organization that reviewed the medical treatment for some of his patients. As a result of the review, the doctor agreed to cease performing invasive cardiac procedures at the end of February 2013 and agreed to terminate his employment with Aria as of April 15, 2013. After further review, Aria self-disclosed this matter to the United States in March 2014.
The False Claims Act and the Stark Act require that physicians be paid salaries that are no more than fair market value and may not include compensation for referrals of patients. Aria self-reported the cardiac thoracic surgeon contract to DOJ based on a concern that his $1.4 million annual compensation was outside fair market value. With respect to the trademark purchase, Aria paid $3.5 million dollars for the right to use the trademark in perpetuity. Aria’s own internal investigation, conducted in 2014, found that the trademark payment was inflated above fair market value based on an independent valuation.
“Patients have a right to medical treatment that is ethical and necessary and not influenced by a physician’s strategy to increase his compensation,” said Memeger. “In this case, Aria recognized a problem, reported it to the government, and voluntarily made internal changes to its operations.”
The settled civil claims are allegations only. There has been no determination of civil liability, and Aria denies any such liability. The case involving improper physician compensation and purchase of a trademark was handled by Assistant United States Attorney Thomas Johnson and Health Care Fraud Analyst Raymond Uhlhorn; the allegations concerning Aria’s unnecessary invasive procedures were handled by Assistant United States Attorney Susan Dein Bricklin and Health Care Fraud Analyst George Niedzwicki. The Office of the Inspector General of the Department of Health and Human Services assisted in both investigations.
United States Files Suit Against Brooklyn Cooperative Apartment Building Trump Village for Fair Housing Act ViolationsRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York, and Vanita Gupta, Principal Deputy Assistant Attorney General for Civil Rights, announced the filing today of a federal Fair Housing Act complaint against Coney Island, New York cooperative Trump Village Section IV Inc. and Igor Oberman, a former President of its Board of Directors, for violation of the Fair Housing Act, 42 U.S.C. §§ 3604(f) and 3617. Trump Village Section IV Inc. is a 1,144-unit cooperative apartment complex in Brooklyn, New York. The owners of the complex are shareholders in the cooperative, and have proprietary leases for their residential units. The complaint alleges that between May 2012 and March 2015, defendants engaged in a pattern or practice of discrimination by denying Trump Village residents with disabilities emotional support animals.
According to the government’s complaint, defendants refused to allow four residents of the cooperative to live with emotional support dogs and commenced eviction proceedings against three of them when they refused to give up their animals. As further set forth in the complaint, defendants took some of these actions even after they entered into a conciliation agreement with the United States Department of Housing and Urban Development in which they agreed that Trump Village would permit individuals to live with emotional support animals. The complaint seeks monetary damages for the victims of the discrimination as well as injunctive relief barring defendants from discriminating against individuals with disabilities.
“The law is clear that reasonable accommodations must be granted to individuals with disabilities when those accommodations are necessary to afford them the equal opportunity to use and enjoy their homes. This includes the right to live with an emotional support animal. Those responsible for refusing to grant such accommodations or retaliating against individuals with disabilities who try to enforce their rights under the Fair Housing Act will be held accountable,” stated United States Attorney Capers. Mr. Capers extended his appreciation to the United States Department of Housing and Urban Development Office of Fair Housing and Equal Opportunity for its assistance with the investigation.
“Emotional support animals provide critical care and therapeutic aid for people with disabilities,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “The department will continue to enforce fair housing laws to ensure that housing providers make reasonable accommodations for individuals who rely on assistance animals in their homes.”
The government’s case is being handled by Assistant United States Attorney Melanie D. Hendry.
E.D.N.Y. Docket No: 15-cv-7306 (NGG)(PK)
Ukrainian National Extradited from Poland to Face Charges Related to $10 Million Cyber Money Laundering OperationRead the Press Release
A Ukrainian national made his initial appearance today in federal court in Charlotte, North Carolina, after being extradited from Poland to face charges relating to a $10 million international money laundering operation, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina and Special Agent in Charge John A. Strong of the FBI’s Charlotte Division.
Viktor Chostak, 34, of Ukraine, along with three other individuals, are charged in a 25-count indictment with conspiracy to commit money laundering, eleven counts of money laundering, conspiracy to commit computer fraud, conspiracy to transport stolen property, conspiracy to commit access device fraud, four counts of transporting stolen property and six counts of aggravated identity theft.
According to a redacted version of the indictment unsealed today, beginning in September 2007, Chostak and three other conspirators were members of an international money laundering organization. The organization created and operated a sophisticated online infrastructure that allowed hackers to obtain and conceal stolen money, primarily from U.S. companies’ bank accounts, and transfer it to countries outside the United States. The organization created seemingly legitimate websites for fake companies, then sent spam emails advertising employment opportunities. When an individual responded to the spam solicitations, the organization put the applicant through what appeared to be a legitimate hiring process. The organization falsely represented that the individual’s job was to receive payments from businesses into their personal bank accounts, withdraw the money, then wire the funds to the company’s partners overseas. In reality, the individuals merely acted as money mules, processing hackers’ stolen proceeds and wiring them out of the country to other conspirators. The organization allegedly laundered at least $10 million in stolen money from the United States overseas.
According to the indictment, Chostak recruited, hired and managed others who oversaw the money mule operations. Chostak also allegedly worked with computer programmers to meet the needs of the organization’s online infrastructure.
An indictment is merely an allegation and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the FBI’s Charlotte Division. The Criminal Division’s Office of International Affairs also provided assistance. The case is being prosecuted by Trial Attorneys Jocelyn Aqua and Ryan K. Dickey of the Criminal Division’s Computer Crime and Intellectual Property Section, and Assistant U.S. Attorney Kevin Zolot of the Western District of North Carolina.
Chostak et al Indictment
Ukrainian National Extradited from Poland to Face Charges Related to $10 Million Cyber Money Laundering OperationRead the Press Release
CHARLOTTE, N.C. – A Ukrainian national made his initial appearance today in federal court in Charlotte, North Carolina, after being extradited from Poland to face charges relating to a $10 million international money laundering operation, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina and Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division.
Viktor Chostak, 34, of Ukraine, along with three other individuals, are charged in a 25-count indictment with conspiracy to commit money laundering, eleven counts of money laundering, conspiracy to commit computer fraud, conspiracy to transport stolen property, conspiracy to commit access device fraud, four counts of transporting stolen property and six counts of aggravated identity theft.
According to a redacted version of the indictment unsealed today, beginning in September 2007, Chostak and three other conspirators were members of an international money laundering organization. The organization created and operated a sophisticated online infrastructure that allowed hackers to obtain and conceal stolen money, primarily from U.S. companies’ bank accounts, and transfer it to countries outside the United States. The organization created seemingly legitimate websites for fake companies, then sent spam emails advertising employment opportunities. When an individual responded to the spam solicitations, the organization put the applicant through what appeared to be a legitimate hiring process. The organization falsely represented that the individual’s job was to receive payments from businesses into their personal bank accounts, withdraw the money, then wire the funds to the company’s partners overseas. In reality, the individuals merely acted as money mules, processing hackers’ stolen proceeds and wiring them out of the country to other conspirators. The organization allegedly laundered at least $10 million in stolen money from the United States overseas.
According to the indictment, Chostak recruited, hired and managed others who oversaw the money mule operations. Chostak also allegedly worked with computer programmers to meet the needs of the organization’s online infrastructure.
An indictment is merely an allegation and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the FBI’s Charlotte Division. The Criminal Division’s Office of International Affairs also provided assistance. The case is being prosecuted by Trial Attorneys Jocelyn Aqua and Ryan K. Dickey of the Criminal Division’s Computer Crime and Intellectual Property Section, and Assistant U.S. Attorney Kevin Zolot of the Western District of North Carolina.
Two Texas men plead guilty to transporting 28 kilograms of cocaineRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced that two Texas men pleaded guilty Monday to conspiring to sell approximately 28 kilograms of powder cocaine.
Ricardo Garcia, 28, and Jesus Christian Martinez, 34, both of Brownsville, Texas, pleaded guilty before U.S. Judge Elizabeth E. Foote to one count of conspiracy to possess with the intent to distribute powder cocaine. According to the guilty plea, Louisiana State Police conducted a traffic stop on February 3, 2015 on a vehicle traveling eastbound on I-20 in Bossier Parish. The vehicle displayed North Carolina license plates but was not registered to either the driver or the passenger. After further investigation, troopers searched the vehicle and found 28 kilogram-size packages of powder cocaine inside of a speaker box.
The defendants each face 10 years to life in prison, five years of supervised release and a $10 million fine. Sentencing is set for April 22, 2016.
The DEA-Shreveport Office and Louisiana State Police conducted the investigation. Assistant U.S. Attorney Allison D. Bushnell is prosecuting the case.
Two Individuals Indicted and Arrested for False Statements in Loan ApplicationsRead the Press Release
San Juan, Puerto Rico – Two individuals have been charged in a one-count indictment unsealed today and returned by a grand jury in San Juan, Puerto Rico on December 22, 2015, said U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico announced today. These charges stem from a scheme used by the defendants to obtain money from mortgage lending institutions. The investigation was conducted by the Department of Homeland Security (HSI), with the collaboration of the Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS) and the Housing and Urban Development-Office of Inspector General (HUD-OIG).
Defendants Edgar A. Reyes-Colón and Francisco Quintero-Peña are charged with making false statements in loan applications. The investigation revealed that as part of the scheme and artifice to defraud, the defendants, through straw buyers, purchased a property by obtaining mortgage loans from a federally insured financial institution in amounts substantially exceeding the selling price of the property. The excess amount of the loan was “kickbacked” to the defendants, and then they would default on payment of the monthly mortgage premiums. In order to ensure the approval of the loan, the participants created and submitted false supporting documentation along with the loan application, i.e.: financial statements, bank statements, employment verification letters, tax returns, among others.
The defendants, aiding and abetting each other, knowingly made or caused to be made, material false statements to Doral Bank for the purposes of obtaining mortgage loan numbers 3006810889 & 3006804465 for a total amount of $560,000.00 for the purchase of property located at 131 Fairway Street, Palmas Plantation Development, Humacao, P.R. 00791. The false statements included, but are not limited to, the following: (i) in the final Uniform Residential Loan Applications for both loans that an individual had a bank account at Santander Bank ending in 8132 with a balance of $33,892.11, when in truth and in fact, as the defendants well knew, this bank account did not exist; (ii) in the final Uniform Residential Loan Application for both loans that the individual had a monthly bas income of $18,818.00 from a business she owned called K’ricias Boutique, when in truth and fact, as the defendants well knew, these statements were false; (iii) in the HUD-1 for loan #3006810889 that the individual paid closing costs of $4,114.57 when in truth and in fact, as the defendants well knew, this statement was false; and (iv) in the HUD-1 for loan #3006804465 that the individual paid the closing costs of $22,166.48, when in truth and in fact, as the defendants well knew, this statement was false.
The defendants also supplied false and fraudulent account statements, financial statements, and a letter indicating that the individual’s then existing primary residence was producing rental income, when in truth and fact, as the defendants well knew, this was false.
This case is being prosecuted by Assistant US Attorney Nicholas Cannon. The maximum penalties for these offenses are 20 years of imprisonment, and fines up to $1 million. An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.
Twenty Charged in Manhattan Federal Court with Narcotics Conspiracy in the BronxRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, William J. Bratton, Commissioner of the of the New York City Police Department (“NYPD”), and Glenn Sorge, Acting Special Agent in Charge of the United States Department of Homeland Security, Homeland Security Investigations (“HSI”), and the United States Marshals Service today announced further arrests in a federal indictment charging 20 defendants with allegedly participating in a conspiracy to distribute crack cocaine in the Bronx, New York, and charging six of those defendants with carrying guns as part of the conspiracy. Nineteen defendants are now in federal custody – five after having initially fled apprehension. One defendant remains at large. The case is assigned to U.S. District Judge Richard M. Berman.
U.S. Attorney Preet Bharara stated: “Until these arrests, the flood of poisonous drugs that allegedly accompanied this conspiracy were a plague on the neighborhood these defendants dominated through intimidation and threats of violence. We thank the New York City Police Department and the Department of Homeland Security for their extraordinary efforts on this case, and the U.S. Marshals Service for their vital assistance in apprehending those fugitives who tried to escape justice.”
Commissioner William J. Bratton said: “The resolve of the NYPD and its law enforcement partners to stamp out illegal narcotic sales and its accompanying violence remains unfettered. I commend the work of the investigators and prosecutors involved in this case, whose dedication to protecting the residents of New York has resulted in these pivotal arrests.”
Acting Special Agent in Charge Glenn Sorge said: “The individuals arrested today wreaked havoc on the neighborhoods of the Bronx by selling crack cocaine to anyone who had the money, including young children. This operation embodies HSI’s commitment to partner with our federal and state authorities to rid our communities of these dangerous criminal organizations and the violence that comes with them.”
Michael Greco, the United States Marshal for the Southern District of New York stated: “The U.S. Marshals success in this operation was a direct result of interagency collaboration and tireless follow up with previous investigative efforts by HSI and NYPD. The swift apprehension of these dangerous fugitives is proof of the effectiveness and efficiency derived from federal and local law enforcement agencies working together.”
As alleged in the Indictment, United States v. Rayshawn Barnes, a/k/a “Twerk,” et al., S1 15 Cr. 288 (RMB)[1]:
Since at least 2013, the defendants conspired to distribute massive amounts of crack cocaine, as well as other drugs, in an area of the Bronx centered on Barnes Avenue and East 213th Street. The defendants often sold to children as young as middle school age, and controlled the area by the threat of violence. Many carried guns to make that threat real.
The NYPD and HSI used the full spectrum of law enforcement techniques to investigate this criminal conspiracy. Through covert surveillance, dozens of undercover purchases of narcotics, and court-authorized wiretaps of the conspirators’ phones, among other methods, law enforcement agents learned the structure and membership of the conspiracy, and amassed evidence of its crimes.
* * *
The defendants in United States v. Barnes, et al. face maximum terms of life in prison and mandatory minimum terms of at least 10 years in prison. The defendants charged with both narcotics conspiracy and gun possession face a mandatory minimum term of at least 15 years in prison.
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.
A chart containing the names of the defendants who were arrested, and the charges and maximum penalties they face, is attached.
Mr. Bharara praised the outstanding investigative work of the New York City Police Department’s Organized Crime Control Bureau Bronx Narcotics Major Case Unit, 47th Precinct Narcotics Module, 47th Precinct Detective Squad, and All Source Intelligence Collaboration Unit, the United States Department of Homeland Security, Homeland Security Investigations, the United States Marshals for the Southern District of New York and the New York/New Jersey Regional Fugitive Task Force.
The prosecution is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Rachel Maimin, Micah Smith, Robert Allen, and Hagan Scotten 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.
CHARGE(S)
DEFENDANTS
MAXIMUM PENALTIES
Narcotics conspiracy
(Conspiracy to distribute and possess with intent to distribute 280 grams or more of crack cocaine.)
RAYSHAWN BARNES, a/k/a “Twerk,” ALEXANDER FINLEY, a/k/a “A,” a/k/a “Abe,” EMMANUEL MCKENZIE, a/k/a “Bliz,” a/k/a “Bills,” a/k/a “Manny Fresh,” TRAVIS HENRY, a/k/a “Barker,” a/k/a “Migo,” EVERAL MCLAGGON, a/k/a “Doghouse,” a/k/a “Max,” ARSENIO MILLER, a/k/a “Mayno,” JERMAINE MITCHELL, a/k/a “Jerry,” OMAR SHARPE, a/k/a “Dummy,” a/k/a “Dumbshit,” KEMANI CAMPBELL, a/k/a “Bibby,” a/k/a “Juice,” ALEX CHRISTIE, a/k/a “Denimz,” a/k/a “A1,” SEAN JOHNSON, a/k/a “Dutty,” PETER BLAIR, a/k/a “Twin,” a/k/a “Drilla,” ENIKO WILSON, a/k/a “Bigz,” a/k/a “Akeem,” SHAWN WILLIAMS, a/k/a “Fry Eye,” a/k/a “Flyers,” ODAINE JOHNSON, a/k/a “Flocka,” VANDERMME MCDONALD, a/k/a “Van Dam,” a/k/a “Tommy Lee,” FABIAN WILLIAMS, JAVARRE BROWN, a/k/a “Choppy,” and JAMAR DAVIDSON, a/k/a “Smoove.”
Life in prison
Mandatory minimum: 10 years in prison
Possession of a firearm during and in relation to a drug-trafficking crime
RAYSHAWN BARNES, a/k/a “Twerk,” OMAR SHARPE, a/k/a “Dummy,” a/k/a “Dumbshit,” JERMAINE MITCHELL, a/k/a “Jerry,” KEMANI CAMPBELL, a/k/a “Bibby,” a/k/a “Juice,” ALEX CHRISTIE, a/k/a “Denimz,” a/k/a “A1,” and PETER BLAIR, a/k/a “Twin,” a/k/a “Drilla,”
Life in prison
Mandatory minimum: five years in prison, consecutive to any other sentence
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Texas Couple Convicted of Drug and Money Laundering Conspiracies Sentenced to Twenty Years and Life in PrisonRead the Press Release
Aldo Villarreal, 46, of McAllen, Texas, and his wife, Juana Edith Vela-Salinas, 41, also of McAllen, Texas, were sentenced on December 21, 2105, by Senior U.S. District Judge William J. Haynes, Jr., announced David Rivera, United States Attorney for the Middle District of Tennessee. In a joint federal jury trial in July 2015 the jury found Villarreal guilty of conspiring to possess and distribute cocaine and marijuana, and found both Villarreal and Vela-Salinas guilty of conspiring to commit money laundering.
The evidence at trial showed that, between 2008 and 2011, Villarreal was a manager in an extensive drug operation that distributed large quantities of cocaine in Nashville and Atlanta, and distributed large quantities of marijuana in Nashville. The evidence at trial revealed that the drugs were imported from Mexico into Texas before being transported to Atlanta and Nashville. The evidence also showed that Villarreal and Vela-Salinas conspired to launder the proceeds of that drug operation through a variety of methods, including the purchase of used vehicles in Nashville and the subsequent sale of vehicles at El Shadai, a used car lot the defendants owned and operated in Edinburg, Texas.
Judge Haynes sentenced Villarreal to a term of life in prison on the drug conspiracy conviction, to run concurrently with a twenty-year sentence on the money laundering conspiracy conviction. Judge Haynes sentenced Vela-Salinas to also serve twenty years on her money laundering conspiracy conviction.
In imposing sentence, Judge Haynes stated that this case involved one of the largest drug conspiracies he had seen in terms of the amount and value of the drugs involved and took notice that both defendants had threatened potential witnesses.
Judge Haynes also found that the defendants must forfeit two pieces of property alleged in the indictment and ordered the defendants to be held responsible for a forfeiture money judgment of $6,000,000.
The case was investigated by the Federal Bureau of Investigation; the Drug Enforcement Administration; the Internal Revenue Service, the Department of Homeland Security; the Metropolitan Nashville Police Department; the Wilson County Sheriff’s Office, and the Lebanon Police Department. The case was prosecuted by Assistant U.S. Attorneys Brent A. Hannafan and Ben Schrader.
Tampa Man Sentenced to More Than Eight Years for Stealing and Cashing Rent Checks Throughout FloridaRead the Press Release
Tampa, Florida – U.S. District Judge Steven D. Merryday yesterday sentenced Juan Carlos Miranda Noda (29, Tampa) to eight years and one month in federal prison for conspiracy to commit bank fraud. The Court also entered a forfeiture money judgment in the amount of $259,257, which constituted the proceeds of the conspiracy, and a restitution order in the amount of $424,433, to be paid to the victims.
According to court documents, from in or around May 2013, through 2015, Miranda Noda was the ring leader of a group of conspirators who stole rent payments from rent collection boxes at apartment complexes across the State of Florida and in Georgia. The conspirators staked out the drop boxes, burglarized them, and kept the money orders that the victim renters had purchased to pay their rent. The conspirators then washed or altered the original money orders, replacing the original names with their own names, and deposited the stolen money orders into accounts under their control at several banks located throughout Hillsborough and Pinellas Counties. They then shared in the proceeds of the thefts.
Five other conspirators will be sentenced for their involvement over the coming weeks.
This case was investigated by the United States Secret Service, the Clearwater Police Department, the Hillsborough County Sheriff’s Office, the Tampa Police Department, the Pasco County Sheriff’s Office, the Temple Terrace Police Department, the St. Petersburg Police Department, the Largo Police Department, the Bradenton Police Department, the Sarasota Police Department, the Sarasota County Sheriff’s Office, the Manatee County Sheriff’s Office, and the Palmetto Police Department. It is being prosecuted by Assistant United States Attorneys Amanda Riedel and Megan Kistler.
Sherman Man Involved in Steroid Manufacturing and Distribution Ring is SentencedRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that MICHAEL D. MASE, 32, of Sherman, was sentenced today by U.S. District Judge Robert N. Chatigny in Hartford to three years of probation for his role in a steroid manufacturing and distribution ring. Judge Chatigny also ordered that MASE spend the first three months of his probation in home confinement, perform 120 hours of community service and pay a $2000 fine.
According to court documents and statements made in court, a long-term investigation led by the Federal Bureau of Investigation, Drug Enforcement Administration and Homeland Security Investigations revealed that Steven Santucci, a former Newtown Police sergeant, and others were receiving shipments of steroid ingredients from China and manufacturing and distributing wholesale quantities of steroids. The investigation also revealed that certain members of the conspiracy were distributing prescription pills, including oxycodone, as well as cocaine.
MASE, a registered nurse and a competitive weight lifter, purchased anabolic steroids from Santucci and distributed them to others, including athletes who competed in body-building and weight lifting competitions.
During the course of the investigation, law enforcement officers seized hundreds of vials of steroids, approximately 600 grams of raw testosterone powder, approximately 350 grams of powder cocaine, and four long guns.
MASE was arrested on April 29, 2015. On October 6, 2015, he pleaded guilty to one count of conspiracy to distribute anabolic steroids.
On December 9, 2015, Santucci pleaded guilty steroid distribution and money laundering offenses. He awaits sentencing.
This matter is being investigated by the Federal Bureau of Investigation, Drug Enforcement Administration, Homeland Security Investigations, with the assistance of the U.S. Marshals Service, U.S. Postal Inspection Service and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
This case is being prosecuted by Assistant U.S. Attorneys Rahul Kale and Robert M. Spector.
Puerto Rico’s Government to Make Major Upgrades to San Juan Water Infrastructure in Settlement with the Federal GovernmentRead the Press Release
Under two settlements with the Department of Justice and the U.S. Environmental Protection Agency (EPA), three Puerto Rico government agencies have agreed to upgrade portions of storm water systems they own within the Municipality of San Juan. These upgrades, which will be performed by the Department of Natural and Environmental Resources, the Department of Transportation and Public Works from the Commonwealth of Puerto Rico and the Puerto Rico Highways and Transportation Authority, are aimed at eliminating or minimizing future discharges of sewage and other pollutants into water bodies in and around San Juan, including the Condado Lagoon, the Martin Peña Channel and the Atlantic Ocean. The EPA estimates that over 6 million gallons of untreated sewage is being discharged into waterways in and around San Juan every day which amounts to more than 2.2 billion gallons discharged annually.
“These structural and operational improvements to the storm water infrastructure are critical and desperately needed for the public health and well-being of San Juan’s residents,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “This agreement will improve storm water collection systems that will reduce contamination from sewage that is presently escaping into water bodies around the city each day.”
“For far too long, harmful discharges of sewage and other contaminants have polluted water bodies in communities in Puerto Rico,” said Regional Administrator Judith A. Enck of the EPA. “These legal agreements will drive water quality improvements and protect the health of the people of Puerto Rico.”
The Puerto Rico agencies will invest an estimated $77 million in infrastructure upgrades and other actions over the life of the two legal agreements. The settlements are related to an agreement with the Municipality of San Juan that was announced on Oct. 26, 2015 in which San Juan agreed to take actions to upgrade its separate storm sewer system.
Stormwater runoff in San Juan is collected through municipal separate storm sewer systems and is discharged into local waterways. When rain falls on roofs, streets and parking lots, the water cannot soak into the ground and carries trash, bacteria, heavy metals and other pollutants into streams, threatening public health. In addition, property and infrastructure can be damaged by storm water runoff due to erosion. Additionally, sanitary sewer lines or industrial discharges can also be illegally connected to the storm sewer, leading to untreated sewage or other pollutants reaching water bodies.
Between 2005 and 2013, the EPA documented that the Puerto Rico agencies were discharging untreated sewage and other pollutants from their storm sewer systems into water bodies, in violation of the Clean Water Act. The waters receiving the untreated sewage include those that are classified for activities where people may come into contact with the water, such as fishing, boating, swimming, wading and/or other recreational and commercial activities. Untreated sewage can carry bacteria, viruses and other harmful pollutants that can cause a number of illnesses. Direct and indirect human exposure to or contact with untreated sewage and contaminated waters discharged on a daily basis presents an imminent and substantial endangerment to human health and welfare.
The EPA waived the collection of any monetary civil penalties due to financial challenges currently facing the Puerto Rico government; however, the agreements will include financial penalties if the agencies fail to complete the work and meet the deadlines.
In the complaint filed in 2014, the EPA alleges that the Puerto Rico Department of Natural and Environmental Resources was discharging pollutants without a permit from its Baldorioty de Castro, De Diego and Stop 18 stormwater pump stations. These three pump stations were designed to control flooding in the San Juan area by pumping large volumes of storm water into receiving waters. These three Department of Natural and Environmental Resources pump stations have been receiving flow from various sources which contain untreated sewage. The agreement with the Department of Natural and Environmental Resources requires it to invest an estimated $33 million to upgrade its system over the life of the settlement, including:
- Obtain a proper permit and implement a Storm Water Management Program.
- Install, inspect, maintain, monitor and replace warning signs at all pump station outfalls and replace booms at all pump stations.
- Upgrade the Baldorioty de Castro Pump Station and install electronic monitoring equipment and lighting fixtures at pump station wet wells.
- Routinely clean and maintain its pump stations and develop methods for sludge sampling, disposal and water level management.
- Develop a Spill Prevention Control and Countermeasures Plan.
- Pay $650,000 each year into a Court Registry Account to be used by the Municipality of San Juan, Department of Transportation and Public Works and the Highways and Transportation Authority to support the implementation of work plans for work in the collection systems that flow to DNER’s three pump stations.
The EPA also alleges that the Puerto Rico Department of Transportation and Public Works and the Puerto Rico Highway and Transportation Authority was discharging storm water containing untreated sewage through the storm water systems they own and operate to provide drainage for their roads and highways. Flow from these systems is conveyed to the Department of Natural and Environmental Resources’ pump stations. Under a legal agreement, the Puerto Rico Department of Transportation and Public Works and the Puerto Rico Highways and Transportation Authority will invest an estimated $44 million over the life of the agreement to:
- Comply with the permit and develop and implement a Storm Water Management Program.
- Eliminate all illegal connections and discharges to their storm water systems under an EPA-approved schedule.
- Address complaints from residents and government agencies by developing a registry of complaints of illegal discharges into their storm water systems and address those complaints.
- Install, inspect, maintain, monitor and/or replace warning signs at outfalls.
- Submit a vacuum truck sludge disposal plan and submit standard operating procedures for pump stations.
- HTA must investigate the Barrio Obrero Vacuum Sewer System and either enter into an agreement to transfer the system to PRASA, or repair the system.
- Develop a program, subject to EPA review, to inspect, clean and repair the storm water system.
- Develop plans to prevent and respond to spills.
- Sample water quality at all outfalls and maintain outfall information.
- Complete an inventory of all of outfalls in the city of San Juan.
- Actively identify ways to incorporate green infrastructure into plans to comply with the agreement.
The settlement, lodged today in the U.S. District Court for the District of Puerto Rico, is subject to a 30-day public comment period and approval by the federal court. The settlement will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html.
DNER Consent Decree
DTPW HTA Consent Decree
Professional Condo Association Located in Fairfax County Reaches Agreement to Settle Americans with Disabilities Act ComplaintRead the Press Release
ALEXANDRIA, Va. – The U.S. Attorney’s Office for the Eastern District of Virginia (EDVA) announced today a compliance agreement under the Americans with Disabilities Act (ADA) with the Burke Professional Center Condominium Association (BPCCA) related to an office complex that houses professional offices of health care providers located in Fairfax County. The agreement is to improve accessibility to persons with disabilities through the removal of architectural barriers.
“This settlement exemplifies our unwavering commitment to ensure that individuals with disabilities have access to health care providers,” said Dana J. Boente, U.S. Attorney for EDVA. “The corrective measures agreed to will improve the access to this office complex for individuals with mobility disabilities.”
The investigation into the office complex began with a complaint from the public alleging that BPCCA violated the ADA by failing to ensure the accessibility of an office complex that houses a health care provider due to a variety of architectural barriers. The compliance agreement requires BPCCA to, among other things, create accessible parking spaces, install curb ramps from the parking area to the sidewalk, and install ramps to certain offices suites.
This matter was handled by Assistant U.S. Attorney Steven Gordon, who is the Civil Rights Enforcement Coordinator for EDVA.
This case is a part of the Department of Justice’s Barrier-Free Health Care Initiative, which seeks to enforce the ADA’s prohibition of discrimination against disabled individuals by health care providers, including hospitals. Through the Barrier-Free Health Care Initiative, U.S. Attorneys’ offices across the nation and the Department’s Civil Rights Division target their enforcement efforts on a critical area for individuals with disabilities—access to medical services and facilities. The Barrier-Free Health Care Initiative is a multi-phase initiative that includes effective communication for people who are deaf or have hearing loss, physical access to medical care for people with mobility disabilities, and equal access to treatment for people who have HIV/AIDS.
The Department of Justice has a number of publications available to assist entities in complying with the ADA, including Access to Medical Care for Individuals with Mobility Disabilities. For more information on the ADA and to access these publications, visit ADA.gov or call the Justice Department’s toll-free ADA information Line at 800-514-0301 or 800-514-0383 (TDD). ADA complaints may be filed by email to [email protected].
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.
Peterborough Man Sentenced for Failure to Register as A Sex OffenderRead the Press Release
CONCORD, NEW HAMPSHIRE - William Townley, 56, of Peterborough, New Hampshire, was sentenced in United States District Court yesterday for failure to register as a sex offender in violation of federal law, announced Acting United States Attorney Donald Feith. Townley was arrested and detained on June 30, 2015. The court sentenced Townley to time served and five years of supervised release.
Townley is required to register for life under the Sex Offender Registration and Notification Act (SORNA). In January, 2014, Townley left New Hampshire and traveled to New Jersey and Indiana. He remained in Indiana from March, 2014 through September, 2014 and knowingly failed to register as a sex offender in Indiana or any other state and knowingly failed to update his registration in New Hampshire.
This case was investigated by the Peterborough Police Department and the United States Marshals Service. The case was prosecuted by Assistant United States Attorney Georgiana Konesky.
Owner of Kodiak "Stripper Boat" Convicted of Dumping SewageRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that after a nine-day trial, a federal jury found Darren K. Byler, 55, resident of Kodiak, Alaska, guilty of violating the Refuse Act and Making False Statements. The jury found his wife, Kimberly Riedel-Byler not guilty of the same charges.
According to the evidence at trial, Kimberly Riedel-Byler and Darren K. Byler were the owners of the Wild Alaskan, a floating strip club anchored in Kodiak Harbor between June 2014 and November 2014. On the Wild Alaskan was a customer bathroom for patrons and an employee bathroom for dancers and other staff. During its operation, more than 1,000 customers visited the Wild Alaskan. Also present on the vessel during some or all of that time were the Bylers, their six-year-old daughter, a nanny, and between three and six dancers.
Sewage from both bathrooms was piped to flow directly overboard into the waters of Kodiak Harbor. Evidence establishing this fact included the absence of any storage facilities on board the Wild Alaskan capable of containing sewage. In addition, video evidence from early November 2014, showed no systems on board the vessel capable of storing and properly disposing of sewage. Finally, during a search of the vessel on December 9, 2014, law enforcement found no storage tanks, hoses, pumps, or bladders on board the vessel to indicate the proper storage and disposal of sewage. In addition, expert testimony established that marine growth present on the customer bathroom discharge pipe could only have established itself in the spring and summer of 2014.
When asked to produce documentation about his sewage disposal from the Wild Alaskan, Darren Byler gave the United States Coast Guard Marine Safety Detachment Kodiak a false ship’s log. In the log the defendant claimed to have disposed of 1,500 gallons of raw sewage from the Wild Alaskan at the Pier 2 sewage disposal facility in Kodiak Harbor on July 29 and 30, 2014. The defendant also claimed to have disposed of five additional 800 gallon loads of sewage in September and October 2014, by transporting it in his landing craft, the Gulf Coast Responder, and dumping it at sea beyond 3 nautical miles.
Multiple witnesses testified to not seeing Darren Byler at Pier 2 off-loading sewage at any time on either July 29 or July 30, 2014. The only witness who saw Byler at the facility testified that his vessel was away from the pier, and that there was no equipment in the vessel that could be used to carry or pump sewage. When inspected by Harbor Master employees, the Pier 2 sewage pipe was dry with no evidence of having ever been used.
In addition, flight records and video evidence introduced at trial showed the defendant was not present in Kodiak, Alaska, on two of the days he claimed to have traveled off-shore to dump sewage. Rather, on those days the defendant was at his home in a remote area of Kodiak Island. On a third day, the defendant was present in Anchorage for most of the day, arriving in Kodiak in the late afternoon. Cell phone messages from that day show that the defendant did not leave the Wild Alaskan after his arrival back into Kodiak.
The case was the product of an investigation by multiple United States Coast Guard units and law enforcement agencies, to include the United States Coast Guard Investigative Service, the United States Coast Guard Marine Safety Detachment Kodiak, the FBI, and the Kodiak Police Department. Assistant U.S. Attorney Kyle Reardon and Special Assistant U.S. Attorney Lt. Cmdr. William George prosecuted the case.
Darren Byler is scheduled to be sentenced by U.S. District Court Judge Sharon L. Gleason on March 28, 2016.
The maximum statutory penalty for a violation of the Refuse Act, 33 U.S.C. §§ 407 and 411, is not less than 30 days and up to one year imprisonment, fine of up to $25,000 for each day of a violation, a one-year term of supervised release, and a $25 special assessment. The maximum statutory penalty for a violation of 18 U.S.C. § 1001, False Statements, is up to five years imprisonment, a fine of up to $250,000, a two-year term of supervised release, and a $100 special assessment. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Outpatient Physical Therapy Practice, Old Towne Physical Therapy, to Pay $710,000 to Resolve False Claims Act AllegationsRead the Press Release
WILMINGTON, Del. - Old Towne Physical Therapy LP has agreed to a $710,000 settlement with the government to resolve allegations of health care fraud arising under the False Claims Act. Old Towne Physical Therapy is an outpatient physical therapy practice that owns three clinics in Delaware. The United States contends that Old Towne improperly billed Medicare for physical therapy services. The settlement was announced today by United States Attorney Charles M. Oberly, III.
Allegedly, from August 1, 2007 through November 13, 2009, Old Towne submitted claims to Medicare for physical therapy services performed at the Old Towne clinics by physical therapists and physical therapist assistants without the adequate supervision by a Medicare-enrolled physical therapist, as required by Medicare rules. As part of the resolution of this case, Old Towne and its parent company, U.S. Physical Therapy, Inc., entered into a Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General.
"The United States Attorney's Office for the District of Delaware is to committed to ensuring that Medicare beneficiaries receive the quality health care they deserve, and that the government gets what it pays for," said Oberly. "When providers cut corners by failing to ensure that procedures are adequately supervised, it cheats both the patients and the government."
This case was investigated by the United States Attorney's Office for the District of Delaware and the United States Department of Health and Human Services' Office of Inspector General. Within the United States Attorney's Office, the case was handled by Assistant United States Attorneys Jennifer Hall and Shannon Hanson, and Auditor Lawrence Kutys.
New Hampshire Man Sentenced to 63 Months on Firearm and Drug ChargesRead the Press Release
CONCORD, N.H. – Robert Pierre, 35, of Rochester, New Hampshire, was sentenced yesterday in the United States District Court for the District of New Hampshire to being a felon in possession of a firearm and possession of a controlled substance with the intent to distribute, announced Acting United States Attorney Donald Feith. The Court imposed a term of 63 months imprisonment and three years of supervised release.
On February 1, 2014, NHSP Trooper Haden Wilber conducted a vehicle stop of a gray, 2002 Volvo S60 with a NH registration in Durham, New Hampshire. The operator was Robert Pierre. While standing at the vehicle’s door, Trooper Wilber smelled the distinct odor of fresh marijuana.
A search warrant was obtained for the vehicle and law enforcement found several baggies of illegal drugs in a jacket on the front passenger seat and within the trunk. Law enforcement also found three digital scales and a Taurus .22 caliber handgun. The drugs were individually wrapped and the scales had a powder-like residue and a residue consistent with marijuana. The drugs were analyzed and tested positive for marijuana, methylone, crack cocaine, cocaine, heroin and benzylpiperazine (BZP).
On July 22, 2002, the defendant was convicted of Breaking & Entering in the Night-time with intent to Commit a Felony in Cambridge, Massachusetts District Court, Docket Number 0152CR003296, a felony punishable by a term of imprisonment exceeding one year. Based on this conviction, Pierre was a prohibited person who could not legally possess a firearm.
The case was investigated by the New Hampshire State Police and the Bureau of Alcohol, Tobacco, Firearms & Explosives and was prosecuted by Assistant U.S. Attorney Debra M. Walsh.
Justice Department Announces Four Banks Reach Resolutions Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Bank J. Safra Sarasin AG (Safra Sarasin), Coutts & Co Ltd (Coutts), Gonet & Cie (Gonet) and Banque Cantonal du Valais (BC Valais) reached resolutions under the department’s Swiss Bank Program. These banks collectively will pay penalties of more than $178 million.
“With today’s resolutions under the Swiss Bank Program, the department has reached agreements with 75 Swiss banks, imposed penalties in excess of $1 billion, and secured voluminous and detailed information regarding the illegal conduct of financial institutions, professionals and accountholders around the world,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “Building on the success of the Swiss Bank Program, the civil and criminal offshore enforcement efforts of the department and its partners in the IRS will be a top priority in 2016.”
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
- Make a complete disclosure of their cross-border activities;
- Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
- Cooperate in treaty requests for account information;
- Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
- Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
- Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.
Safra Sarasin is a Swiss bank with its head office in Basel. Safra Sarasin was formed in June of 2013 through the merger of two Swiss banks, Banque J. Safra (Suisse) SA (Safra) and Bank Sarasin & Cie AG (Sarasin). In Switzerland, Safra Sarasin has branches in Berne, Geneva, Lucerne, Lugano and Zurich. Safra Sarasin specializes in providing investment advice and asset management services to private and institutional clients, as well as to investment funds. It offers clients portfolio management, secured lending and financial analysis, among other services.
In 2001, Safra and Sarasin each entered into a Qualified Intermediary (QI) Agreement with the Internal Revenue Service (IRS). The QI regime provided a comprehensive framework for U.S. information reporting and tax withholding by a non-U.S. financial institution with respect to U.S. securities. After signing their respective QI Agreements, Safra and Sarasin continued to service certain U.S. customers without disclosing the customers’ identity to the IRS and without regard for the impact of U.S. criminal law on that decision.
Through at least 2014, Safra Sarasin knew that it was highly probable that some U.S. taxpayers who had opened and maintained accounts at Safra Sarasin were not complying with their U.S. income tax and reporting obligations. Safra and Sarasin took the position that they could service U.S. clients that they knew or had reason to believe were engaged in tax evasion so long as Safra and Sarasin prohibited their accountholders from trading in U.S.-based securities or required that the account be nominally structured in the name of a non-U.S.-based entity.
With respect to structured accounts, U.S. clients would create an entity, such as a Liechtenstein foundation, a Panama corporation or a British Virgin Islands corporation, and pay a fee to third parties to act as corporate directors. Those third parties, at the direction of the U.S. client, would then open an account at Safra or Sarasin in the name of the entity or transfer a pre-existing Swiss bank account from another Swiss bank. In certain cases that involved a non-U.S.-based entity, Safra or Sarasin was aware that a U.S. taxpayer was the true beneficial owner of an account. Despite this, the respective bank would obtain from the entity’s directors an IRS Form W-8BEN or equivalent bank document in which the directors falsely declared that the beneficial owner was not a U.S. taxpayer. Although it was highly probable that in such cases the U.S. taxpayer was avoiding U.S. taxes, some of these accounts were permitted to trade in U.S. securities without the respective bank reporting account earnings or transmitting any withholding taxes to the IRS, as required by its QI Agreement.
In some instances, relationship managers at Safra and Sarasin met with or took directions or instructions from the U.S. taxpayer beneficial owner of an offshore structure account, instead of the directors or other authorized parties on the account. Some of these relationship managers interacted with corporate service providers, including Swiss lawyers, who assisted U.S. taxpayers in setting up nominee entities for their undeclared accounts. In some instances, relationship managers referred U.S. clients who were interested in creating nominee offshore entities to these corporate service providers. After these entities were created, relationship managers assisted these clients in opening and maintaining accounts at Safra Sarasin.
For example, a Geneva-based lawyer assisted U.S. clients in opening undeclared accounts in the names of Panama corporations. These accounts had high balances totaling approximately $250 million during the period since Aug. 1, 2008. The Geneva-based lawyer had signature authority and power of attorney over these accounts and was a director of some of these entities. With respect to one of these accounts, the lawyer signed an IRS Form W-8BEN falsely certifying that a Panama entity was the taxpayer, and not the U.S. client. In December 2010, in connection with the closing of one of these accounts, the lawyer assisted a U.S. client in transferring the funds to a bank in Hong Kong. During 2011, in connection with the closing of seven of these accounts, the lawyer assisted the U.S. clients in transferring the funds to a Swiss bank under investigation by the department.
Safra Sarasin assisted some U.S. clients in other ways, in concealing assets and income from the IRS upon the closure of their accounts. Approximately 20 percent of the funds in U.S.-related accounts closed by Safra Sarasin were transferred to banks in countries other than Switzerland and the United States, including Israel, Hong Kong and Liechtenstein. In one instance, Safra Sarasin assisted a U.S. client, whose account was held in the name of a Panama company, to withdraw $2.9 million in gold at the account closing. In another instance, Safra Sarasin processed five cash withdrawals of $190,000 each for a U.S. client, comprising a total aggregate amount of $950,000 in cash over a two-day period.
A number of U.S.-related accounts held at Sarasin were managed by external asset managers. From June through August 2008, one of these external asset managers used intermediary accounts at Sarasin to assist five U.S. clients in transferring $21.1 million from a large Swiss bank into undeclared bank accounts at Sarasin. These intermediary accounts were opened in the name of the external asset manager’s company and were used when a U.S. client wanted to deposit funds into his or her account or transfer funds to a third party. This added a layer of concealment when transferring the assets of a client or third party to or from the U.S. client’s bank account at Sarasin. In 2012, this same external asset manager was charged, in a U.S. federal court, with conspiring to impede and impair the IRS in the ascertainment, computation, assessment and collection of U.S. income taxes, in connection with the external asset manager’s activities at Swiss banks other than Safra Sarasin.
In the period since Aug. 1, 2008, Sarasin maintained six accounts, with an aggregate value of $24 million, that were owned by insurance companies and held assets relating to insurance products that were issued to U.S. taxpayer clients of the respective insurance companies. Such accounts, known commonly as “insurance wrappers,” were titled in the names of insurance companies but funded with assets that were transferred to the accounts for the beneficial owners of the insurance products. Two of the six insurance wrapper accounts were held in the name of a Cayman Islands corporation, and another account was held in the name of a Singapore company.
Since Aug. 1, 2008, Safra Sarasin had 1,275 U.S.-related accounts with an aggregate maximum value of approximately $2.2 billion. Safra Sarasin will pay a penalty of $85.809 million.
Coutts is a Swiss private bank headquartered in Zurich with branches in Geneva, Hong Kong, Monaco and Singapore. Coutts also has operating subsidiaries in Geneva and on the Isle of Man. During the period since Aug. 1, 2008, Coutts was part of the international Wealth Management Division of The Royal Bank of Scotland Group plc, which is majority-owned by the United Kingdom government, and had no offices, branches or subsidiaries in the United States. Coutts closed its New York branch in 1997, and the bank closed its representative office in Florida in 2005, shortly after Coutts had acquired the Florida office as part of its acquisition of Bank von Ernst & Cie AG in 2003.
Coutts was aware that U.S. taxpayers had a legal duty to report to the IRS and pay taxes on all of their income, including income earned in accounts that these U.S. taxpayers maintained at Coutts. Coutts nonetheless opened, serviced and profited from accounts for U.S. clients who Coutts knew or had reason to know were likely not complying with these obligations. Since August 2008, Coutts has accepted over $150 million in inflows from other Swiss banks that were being investigated by the department, and Coutts opened 465 accounts for U.S. clients, some of whom did not comply with their obligations regarding U.S. tax or Reports of Foreign Bank and Financial Accounts (FBARs).
Prior to December 2008, several relationship managers from the Coutts private banking desks traveled to the United States to maintain existing relationships with U.S. clients and recruit new clients. After 2008, Coutts relationship managers continued to travel to the United States to meet with clients, including three relationship managers employed by other group entities located outside of Switzerland who made 11 trips to the United States.
Coutts relationship managers in Switzerland aided and assisted certain U.S. clients with undeclared accounts at Coutts to evade their income taxes by placing their assets in the names of structures formed, maintained and managed by various subsidiary trust companies of Coutts. Coutts has operated its own trust companies in Liechtenstein and Switzerland. These companies provided structuring services to Coutts clients, including the creation of foundations, trusts and companies incorporated or based in offshore locations such as the Bahamas, British Virgin Islands, Channel Islands, Liechtenstein and Panama. By operation of Swiss bank secrecy laws, the U.S. client’s ownership of these structures would not be disclosed to U.S. authorities. In all, more than 500 of the 1,337 U.S. client accounts held at Coutts since August of 2008, with more than $1 billion in assets under management, had some type of structure with a U.S. beneficial owner.
In addition to the relationships they had with affiliated trust companies, Coutts relationship managers coordinated with external trust companies to create and administer offshore structures for its U.S. clients that were incorporated or based in offshore locations such as the British Virgin Islands, Liechtenstein and Panama. For example, one relationship manager had three U.S. clients with undeclared accounts held in the names of British Virgin Islands companies. These three accounts totaled approximately $130 million.
Because Swiss law requires Coutts to identify the true beneficial owner of structures on a document called a Form A, it knew that these were U.S. client accounts. Nonetheless, for numerous such accounts, Coutts relationship managers and other employees knowingly accepted and included in Coutts’ account records IRS Forms W-8BEN or equivalent bank documents provided by the directors of the offshore companies that falsely represented under penalty of perjury that such companies were the beneficial owners, for U.S. income tax purposes, of the assets in the Coutts accounts. This aided and assisted the U.S. clients in concealing these assets and income from the IRS.
Coutts also assisted U.S. clients in concealing the assets and income in their undeclared accounts by processing requests from U.S. taxpayers to transfer assets from accounts being closed to non-U.S.-related Coutts accounts, or to Coutts accounts that were restructured to eliminate the U.S. connection. For example, in one instance in 2001, a joint account was opened by couple living in Singapore. The husband was a U.S. citizen, and the wife was a French citizen. After Coutts asked the accountholder to provide an IRS Form W-9, the husband instructed Coutts to close the joint account and internally transfer assets totaling $15.1 million to a Coutts account held jointly by his wife and children. The husband had signatory authority over the newly opened account based on a general power of attorney, and he continued to manage the assets and was the only contact person for Coutts with respect to this account. In another case, between July 2011 and April 2014, Coutts assisted a U.S. client in transferring $33 million from an undeclared account held in the name of a Belize corporation to 11 other accounts at Coutts held in the names of nominee entities.
Since Aug. 1, 2008, Coutts held and managed 1,337 U.S.-related accounts, which included both declared and undeclared accounts, with a peak of assets under management of approximately $2.1 billion. Coutts will pay a penalty of $78.484 million.
Gonet is a family-owned private bank headquartered in Geneva, Switzerland. Gonet operates a branch office in Lausanne, Switzerland, which was opened in 2011, and a representative office in Abu Dhabi, United Arab Emirates, which was opened in 2014. In 1982, Gonet opened a subsidiary in Nassau, Bahamas, which offers traditional private banking services. In 2008, Gonet acquired a minority interest in an entity in Monaco, and three years later Gonet established a subsidiary in Singapore. In 2014, Gonet sold the entities in Monaco and Singapore.
Gonet enabled some U.S. taxpayers to evade their U.S. tax and filing obligations, resulting in the filing of false income tax returns with the IRS and allowing U.S. taxpayers to hide offshore assets from the IRS. Gonet opened accounts for U.S. taxpayers who had left other Swiss banks that were known targets of investigations by the department, including UBS and Credit Suisse. With respect to the majority of these accounts, Gonet knew or should have known that the beneficial owners were attempting to evade U.S. taxes and foreign account reporting requirements. Gonet also opened and maintained a number of U.S.-related accounts held by non-U.S. entities with the knowledge that U.S. persons were the true beneficial owners of the assets maintained in the accounts. Two of the accounts held by non-U.S. entities were insurance wrapper accounts.
With respect to structured accounts, U.S. clients, with the assistance of their external advisors, would create an entity, such as a Liechtenstein foundation, Panamanian corporation or British Virgin Islands corporation, and pay a fee to third parties to act as corporate directors. Those third parties, at the direction of the U.S. client, would then open a bank account at Gonet in the name of the non-U.S. entity or transfer funds from a pre-existing account from another bank. Gonet employees provided prospective U.S. clients with referrals to external advisors who could assist with the creation and management of such an entity. In certain cases, Gonet was aware that a U.S. client was the true beneficial owner of the account. Despite this, Gonet would sometimes obtain from the entity’s directors an IRS Form W-8BEN or equivalent bank document that falsely declared that the beneficial owner was not a U.S. taxpayer.
Since Aug. 1, 2008, Gonet held 150 U.S.-related accounts with an aggregate maximum balance of approximately $254.5 million. Gonet will pay a penalty of $11.454 million.
BC Valais, founded in 1917, is headquartered in the Canton of Valais, Switzerland. BC Valais was founded by the government of the Canton of Valais to provide banking services to assist in the development of the regional economy and to provide credit services to residents of the Canton of Valais. As a cantonal bank, the Canton of Valais is BC Valais’ majority shareholder, and pursuant to cantonal law, the Canton of Valais guarantees all of the bank’s liabilities.
In 2001, BC Valais entered into a QI Agreement with the IRS. If an accountholder wanted to trade in U.S. securities without being subjected to mandatory U.S. tax withholding, the agreement required BC Valais to obtain the consent of the accountholder to disclose the client’s identity to the IRS. In the years following the signing of its QI Agreement, BC Valais’ position was that it could service U.S. clients that it knew or had reason to believe were non-compliant with their U.S. tax obligations as long as the account did not trade or hold U.S. securities. For example, an internal memorandum written to BC Valais’ board of directors in October 2009 stated that BC Valais had 63 American clients whose accounts traded securities, but only seven of those 63 clients submitted Forms W-9 to BC Valais that authorized income generated from those securities to be reported to the IRS. The other 56 American clients had not authorized their names to be disclosed to the IRS and, because of the QI Agreement, “[t]he other clients [did] not hold any American securities.”
Prior to the time that BC Valais signed its QI Agreement in 2001, BC Valais requested that its accountholders sign an IRS Form W-9 if they wished to continue to trade in U.S. securities. One accountholder, who lived in New York and had an open BC Valais account for more than 25 years, signed a form declaring that “I am an American taxpayer … [and I] prohibit the Bank from divulging my name and authorize it to sell in the course of the year 2000 all of my American securities held by the Bank. I take note of the fact that the Bank will not invest in American securities for me anymore.”
Since Aug. 1, 2008, BC Valais maintained 185 U.S.-related accounts with a maximum aggregate value of approximately $72 million. BC Valais will pay a penalty of $2.311 million.
In accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of these non-prosecution agreements, noncompliant U.S. accountholders at these banks must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
“Today’s resolutions reflect the continued, strong progress of the Department of Justice’s Swiss Bank Program,” said acting Deputy Commissioner International David Horton of the IRS Large Business & International Division (LB&I). “Financial institutions that aided non-compliance and evasion are putting this conduct behind them and cooperating, leading us to those U.S. taxpayers who have failed to report their foreign accounts and pay their income taxes.”
“The end of the year does not signal the end to our enforcement efforts to bring to justice those who would circumvent our nation’s tax laws by hiding their money overseas,” said Chief Richard Weber of IRS Criminal Investigation (CI). “In fact, with the wealth of information gathered from the Swiss Bank Program, we have already begun to track those individuals who think they are above the law and continue to hide their money offshore. The decision to evade taxes will certainly be one they regret when they face criminal sanctions.”
Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-CI and the IRS LB&I Division for their substantial assistance. Acting Assistant Attorney General Ciraolo also thanked the counsel on these matters, John E. Sullivan, Mark W. Kotila, Thomas G. Voracek and Thomas J. Sawyer, who serves as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program, as well as Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Justice Department Announces Banque Cantonale Vaudoise Reaches Resolution Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Banque Cantonale Vaudoise (BC Vaudoise) reached a resolution under the department’s Swiss Bank Program. BC Vaudoise will pay a penalty of more than $41 million.
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
- Make a complete disclosure of their cross-border activities;
- Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
- Cooperate in treaty requests for account information;
- Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
- Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
- Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, BC Vaudoise agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.
Founded in 1845 and headquartered in Lausanne, Switzerland, BC Vaudoise was established by an Act of the Vaud Cantonal Parliament as a corporation organized under public law. The Canton of Vaud must hold a majority share of BC Vaudoise, and the Canton currently holds more than two third of the shares of BC Vaudoise.
BC Vaudoise is a retail bank whose legal mission has always been to provide banking services to the local community. Because BC Vaudoise is a cantonal bank serving the residents of the Canton of Vaud, most of its business relates to three core areas: retail banking, including home mortgages and savings accounts; small and medium enterprises; and onshore private banking. BC Vaudoise also provides private banking services to clients residing outside of Switzerland through its International Private Banking Department.
BC Vaudoise was aware that U.S. persons had a legal duty to report to the Internal Revenue Service (IRS) and pay taxes on the basis of all their income, including income earned in accounts that the U.S. persons maintained at BC Vaudoise. BC Vaudoise knew or had reason to know that it was likely that some U.S. taxpayers who maintained accounts at BC Vaudoise were not complying with their U.S. reporting obligations.
In 2008, BC Vaudoise opened approximately 10,000 more new client accounts bank-wide than in the previous years. A large portion of these accounts were for ex-UBS clients who left UBS during the financial crisis. Out of this overall influx of clients, between August 2008 and February 2009, BC Vaudoise opened 265 new U.S. taxpayer accounts, comprising an aggregate of $171 million in new assets under management, without determining whether the relevant U.S. taxpayer clients were tax compliant in the United States.
BC Vaudoise had several relationships with independent asset managers who brought 93 U.S. taxpayer-clients to BC Vaudoise between August 2008 and February 2009. BC Vaudoise did not require evidence of tax compliance with respect to these accounts, which resulted in the opening of many undeclared accounts for U.S. taxpayer-clients. One of these asset managers received a finders’ fee of 300,000 Swiss francs for introducing accounts to BC Vaudoise.
BC Vaudoise offered a variety of traditional Swiss banking services – including hold mail service, numbered accounts and code named accounts – that it knew could assist, and that did assist, U.S. taxpayers in concealing assets and income from the IRS. BC Vaudoise permitted U.S. taxpayer-clients to close undeclared U.S.-related accounts by transferring account funds to non-U.S.-related accounts, while continuing to exercise control or retain entitlement to the funds. Close to or while closing accounts, BC Vaudoise also allowed U.S. taxpayer-clients to make large cash withdrawals totaling millions of dollars and to cash millions of dollars in checks drawn on the accounts.
BC Vaudoise opened and maintained potentially undeclared accounts beneficially owned by U.S. taxpayers and held in the name of structures, which were formed in the British Virgin Islands, Cayman Islands, Panama, Switzerland and the United Kingdom. U.S. taxpayers were beneficial owners of those nominee entities, which enabled U.S. taxpayer clients to conceal their identities from the IRS. In some instances, BC Vaudoise provided U.S. taxpayers with the names of outside service providers who could create these types of structures. BC Vaudoise also permitted relationship managers in some cases to have direct contact with and accept instructions from U.S. beneficial owners who did not have powers of attorney over the entity accounts, including accounts that were held by entities incorporated in the British Virgin Islands and Panama.
Since Aug. 1, 2008, BC Vaudoise held approximately 2,088 U.S.-related accounts, which included both undeclared and not undeclared accounts, with total assets of approximately $1.3 billion. BC Vaudoise will pay a penalty of $41.677 million.
In accordance with the terms of the Swiss Bank Program, BC Vaudoise mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at BC Vaudoise who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at BC Vaudoise must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
Acting Deputy Assistant Attorney General Larry J. Wszalek of the Justice Department’s Tax Division thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance. Acting Deputy Assistant Attorney General Wszalek also thanked W. Damon Dennis, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Government Settles Alleged False Claims Act Violations with Memorial Health, Inc.Read the Press Release
SAVANNAH, GA: Memorial Health, Inc., Memorial Health University Medical Center, Inc., Provident Health Services, Inc., and MPPG, Inc. d/b/a Memorial Health University Physicians have agreed to pay $9,895,043.04 to resolve allegations that they violated the False Claims Act by submitting claims to the Government in violation of the Stark Law. The settlement is the largest civil health care fraud recovery in the history of the United States Attorney’s Office for the Southern District of Georgia.
United States Attorney Edward J. Tarver said, “This settlement demonstrates the U.S. Attorney’s Office’s continued commitment to ensure that health care providers do not violate the Stark Law and all medical decisions are based strictly on the best interests of patients, not the financial interests of providers.”
“Let this settlement act as a reminder to health care providers, large and small, that the Office of Inspector General is committed to pursuing allegations of Stark Law violations,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “Financial incentives for referrals should never come into play for health care providers when they are determining the best course of care for our nation’s citizens.”
The settlement resolves allegations that were originally part of a federal lawsuit filed under the whistleblower provisions of the False Claims Act, which allow private citizens with knowledge of false claims to file suit on behalf of the Government and to share in the recovery. As part of this settlement, Memorial entered into a five-year corporate integrity agreement with the Office of Inspector General, Department of Health and Human Services.
The case was investigated by Kimberly Reinken Creamer from the United States Attorney’s Office and Special Agent David Graupner, Department of Health and Human Services, Office of Inspector General. The United States was represented by Assistant United States Attorneys Edgar D. Bueno and J. Thomas Clarkson. For additional information, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.
Former State Representative’s Safety Deposit Boxes Reveal a Trove of Bundled CashRead the Press Release
BOSTON – This week U.S. Marshals discovered and seized over one million dollars in small bundles of cash concealed in several safe deposit boxes controlled by John George, a former Dartmouth Selectman and State Representative. George was convicted and sentenced earlier this year on federal charges related to his embezzlement from a taxpayer-subsidized bus company which he controlled.
In July 2015, George, 68, was sentenced to 70 months in prison for embezzling hundreds of thousands of dollars from the Southeastern Regional Transit Authority (SRTA). As part of his sentence, U.S. District Court Judge Denise J. Casper ordered George to pay $688,772 in restitution and forfeit an additional $1.38 million to the United States. Pursuant to the money judgment and sentence, the U.S. Attorney’s Office and U.S. Marshals sought search and seizure warrants from the Court to obtain assets which they believed were being concealed by George. Over the last two days, U.S. Marshals gained access to George’s safe deposit boxes at banks in New Bedford and Fairhaven. They discovered over-sized safe deposit boxes filled to the brim with cash tied up in rolls of $100s, $50s, and other denominations.
George owned Union Street Bus Company (USBC), a New Bedford-based company that operated public buses. During the same period, George operated John George Farms (JG Farm), a large produce farm based in Dartmouth. From approximately 1991 to 2011, USBC was awarded the Southeastern Regional Transit Authority (SRTA) contract to operate the SRTA public bus system that served a region that included New Bedford, Fall River, and several other neighboring towns.
While USBC had the SRTA contract, George conspired to have USBC employees work at JG Farm during their assigned USBC work hours. Such farm work included plowing, loading produce, and operating a produce stand at JG Farm, all during USBC business hours. As part of the conspiracy, George deployed USBC workers to JG Farm to repair farm equipment and used USBC equipment and labor to provide personal out-of-state roadside assistance. George also inflated his final yearly salary from $75,000 to $275,000 in an attempt to fraudulently boost his SRTA pension.
From 2007 to 2011, George deposited only $5,000 in cash into his JG Farm business checking account despite the fact that JG Farm was the largest retail produce farm in Southeastern Massachusetts and did most of its business in cash.
Prior to his July 2015 sentencing, George was required to disclose his financial status to the Court. At that time, he stated that his liquid assets only consisted of about $160,000 in bank accounts and approximately $28,000 in cash.United States Attorney Carmen M. Ortiz and John Gibbons, U.S. Marshal for the District of Massachusetts, made the announcement today. The criminal forfeiture was handled by Assistant United States Attorney Doreen Rachal of Ortiz’s Asset Forfeiture Unit and the U.S. Marshal’s Asset Forfeiture Unit in the District of Massachusetts.
The criminal case was investigated by the U.S. Department of Transportation, Office of the Inspector General, and was prosecuted by Assistant U.S. Attorneys Dustin Chao and Ryan M. DiSantis of Ortiz’s Public Corruption Unit.
Former Lansing Resident, Tsiidzoyedu Callista Chiwocha, Pleads Guilty on Federal Tax ChargeRead the Press Release
Defendant illegally received over $24,000 in tax refunds.
GRAND RAPIDS, MICHIGAN — On December 23, 2015, Tsiidzoyedu Callista Chiwocha, 43, a former resident of Lansing Michigan, pled guilty in federal court to having obtained more than $24,000 from the United States Treasury in 2011 by causing false federal tax returns to be filed with the Internal Revenue Service, U.S. Attorney Patrick Miles announced today. Her scheme involved deceiving citizens into providing their personal identification information by promising them "free stimulus money." The tax returns typically contained false reporting of undocumented income and abusive use of the Earned Income credit.
U.S. Attorney Miles affirmed his commitment to pursing stolen identity fraud cases as a high priority for his office. "When someone cheats on a federal tax return, they are hurting all honest taxpayers in the Western District of Michigan and elsewhere."
Complaints by local citizens prompted the Federal Bureau of Investigation to open a criminal investigation, including obtaining multiple search warrants to seize evidence of a tax fraud scheme. During the multi-year investigation, more than fifty subpoenas were issued to track down the tax refunds which had been paid into numerous bank accounts. In some instances, the personal identification information was used to file a tax return in a successive year. In an earlier prosecution, Taka Chiwocha-Crowell, the sister of Tsiidzoyedu Chiwocha, pled guilty to filing false tax returns and was sentenced to 42 months’ incarceration. Tsiidzoyedu Chiwocha’s sentencing has been scheduled for May 16, 2016 before Chief U.S. District Judge Robert J. Jonker.
"We take these types of fraud very seriously," said David P. Gelios, Special Agent in Charge, FBI Detroit Division. "These schemes were multi-layered in that they involved countless stolen identities, various amounts of money taken from numerous individuals, as well as large sums of money diverted from the American people as a whole. This conviction should serve as a reminder of the FBI’s commitment to the investigation of all types of financial fraud schemes."
The investigation was conducted by the Lansing Office of the FBI and the Lansing Office of IRS Criminal Investigations. The case is being prosecuted by Assistant U.S. Attorney Michael A. MacDonald.
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Former Beaumont ISD Employee Pleads Guilty to Conspiracy to Make False StatementsRead the Press Release
BEAUMONT, Texas – A former Beaumont Independent School District (BISD) teacher has pleaded guilty to federal charges in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Victoria Gauthier Steward, 31, of Lake Charles, LA, pleaded guilty in federal court today to a charge of conspiracy to make false statements. Steward was indicted in February, 2015, along with her co-defendant, Patricia Lambert.
According to information presented in Court, Steward was employed by BISD starting in 2007 as a math teacher, and was assigned to the Central Medical Magnet High School (CMMHS) under Principal Patricia Lambert. Soon after beginning at CMMHS, Lambert created the position of “numeracy coach,” for Steward, where Steward provided instructional support for the teachers, although she was still designated as a teacher by BISD. During that time, Steward was assigned various roles related to the administration of standardized tests. Specifically, Steward was assigned to oversee testing of students in large groups. Between 2007 and 2012, Steward signed multiple Oaths of Test Security, in which she affirmed that she “complied with all the requirements governing the State Assessment Program and that [she] reported any suspected violations of test security or confidentiality to the campus testing coordinator. However, as Steward was well aware, teachers routinely manipulated standardized test scores by various methods. For example, witnesses would testify that teachers would aggregate large numbers of tests and then erase and change incorrect answers to correct answers after students turned in their tests; teachers would give students answers while they were taking the tests; and that test manipulation occurred on a regular basis from 2007-2012. Steward was aware of the fact that teachers were changing answers on a state mandated TAKS test in April of 2011. Steward was aware that Patricia Lambert also knew that teachers were improperly changing students’ answers. Nonetheless, at Lambert’s direction, Steward was provided with an Oath of Test Security in April and May of 2011, which Steward knew to be false.
The Texas Education Agency (TEA) is mandated by the US Department of Education to administer and regulate standardized testing, including maintaining test security. As part of its test security measures, TEA requires that teachers abide by all test security regulations and sign Oaths of Test Security. These test scores are then communicated to the US Department of Education, who relies on the scores, among other metrics, in determining the appropriate disbursement of federal education funds. The falsified oaths were capable of misleading TEA or the US Department of Education.
Steward faces a sentence of not more than five years in prison, a fine not to exceed $250,000, and a term of supervised release of not more than three years. She could also be ordered to pay restitution in an amount determined by the Court. A sentencing date has not been determined.
This case was prosecuted as part of the Joint Task Force established in March 2014 between the U.S. Attorney’s Office for the Eastern District of Texas and the Jefferson County District Attorney’s Office to investigate and prosecute major crimes – more specifically, violent crime and crimes related to the abuse of public trust in Jefferson County, Texas.
If you have any information related to this matter, please call the Federal Bureau of Investigation at 409-832-8571.
This investigation was conducted by the Federal Bureau of Investigation, the Department of Education Office of Inspector General, the Texas Education Agency, the Jefferson County District Attorney’s Office and the Beaumont Police Department. This case is being prosecuted by Assistant U.S. Attorneys Christopher T. Tortorice and Joseph R. Batte.
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Former Army Pharmacy Specialist Sentenced to 18 Months in Prison for Stealing Prescription Drugs from Walter Reed HospitalRead the Press Release
Greenbelt, Maryland – U.S. District Judge Paul W. Grimm sentenced Lamelle Marquez Malone, age 35, formerly of Columbia, Maryland, today to 18 months in prison, followed by three years of supervised release, for conspiring to steal prescription drugs from a military hospital and for interstate transportation of stolen property. Judge Grimm also entered an order requiring Malone to pay a money judgment of $500,000 and restitution of $2,113,483.51.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service - Mid‑Atlantic Field Office; and Acting Special Agent in Charge Glen A. McElravy of the U.S. Food & Drug Administration, Office of Criminal Investigations’ Metro Washington Field Office.
“Lamelle Malone ran a business selling prescription drugs, but he obtained his products for free by stealing them from Walter Reed Medical Center,” said U.S. Attorney Rod J. Rosenstein. “Over a period of sixteen months, Mr. Malone and his co-conspirators stole more than $2 million worth of Somatropin. a human growh hormone available only by prescription.”
Malone admitted that from April 8, 2011 through August 2012, he conspired with Roger Gurdon, and others to steal Somatropin, a form of human growth hormone, from the pharmacy located at the former Walter Reed Medical Center in Washington, D.C. Malone and his co-conspirators re-sold the stolen pharmaceuticals for profit.
Gurdon was a pharmacy technician at Walter Reed. Between January 2008 and the fall of 2011, Gurdon stole Somatropin from Walter Reed and sold it to a co-conspirator. When Gurdon traveled out of the country in April 2011, he arranged for the co-conspirator to obtain Somatropin from Malone, who was an enlisted member of the Army and worked as a pharmacy specialist at Walter Reed. Malone distributed stolen Somatropin to the co-conspirator from April until August 2011, when Walter Reed was closed. Malone paid a pharmacy technician at Walter Reed to order the Somatropin which Malone stole, and paid the non-commissioned officer who was in charge of the pharmacy to ignore the fact that Malone was stealing Somatropin. Malone transported the stolen Somatropin from Walter Reed to his home in Columbia, and to College Park, Maryland to distribute the Somatropin to the co-conspirator.
During the period that Malone was involved in the conspiracy, the government contends that he and his co-conspirators stole over $2 million worth of Somatropin from the Walter Reed pharmacy. Gurdon admitted that the total loss to the United States over the course of the entire conspiracy was at least $4,467,000.
Roger Gurdon, age 43, of Waldorf, Maryland, pleaded guilty to his role in the conspiracy and was sentenced to 78 months in prison, and was ordered to pay restitution of $4,467,000. Another conspirator, Issa Wasco Koroma, age 63, of Springdale, Maryland was sentenced to five years in prison for conspiring to steal prescription drugs from two federal military hospitals.
United States Attorney Rod J. Rosenstein praised the DCIS and FDA-OCI for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Mara Zusman Greenberg, who is prosecuting the case.
First Charges Brought in Investigation of Collusion Among Heir Location Services FirmsRead the Press Release
President and Company to Plead Guilty for Agreeing Not to Compete
The president and CEO of a California-based heir location services provider and his firm have agreed to plead guilty to allocating customers with another heir location firm, announced Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.
Bradley N. Davis, president of Brandenburger & Davis, and his firm will plead guilty to conspiring between 2003 and 2012 to eliminate competition in the heir location services industry. Heir location services firms identify people who may be entitled to an inheritance from the estate of a relative who died without a will. The heir location services firms then help heirs secure their inheritances in exchange for a contingency fee paid out of the inheritances they are due to receive.
“The defendants conspired for nearly a decade to enrich themselves at the expense of beneficiaries,” said Assistant Attorney General Baer. “Heirs of relatives who died without a will deserve better. Working with the FBI and our other law enforcement partners, the Antitrust Division will continue to hold the leaders of companies that corrupt the competitive process accountable for their crimes.”
Brandenburger & Davis has agreed to pay an $890,000 criminal fine for its role in the conspiracy. In a separate plea agreement, Davis and the Antitrust Division have jointly agreed to allow the court to determine an appropriate criminal sentence. In addition, both the company and Davis have agreed to assist the government in its investigation. The charge was filed today in the U.S. District Court of the Northern District of Illinois. The terms of the plea agreements are subject to approval of the court.
Today’s charge is the first to result from an ongoing federal antitrust investigation into customer allocation, price fixing, bid rigging and other anticompetitive conduct in the heir location services industry, being conducted by the Antitrust Division’s Chicago Office and the FBI’s Salt Lake City Division, with assistance from the U.S. Attorney’s Office of the Northern District of Illinois.
Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Chicago Office at 312-984-7200, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Salt Lake City office at 801-579-1400.
BD and Bradley Davis Information (596.08 KB)
El Salvadoran Man with Serious Criminal History Sentenced for Illegally Re-Entering the United States and for Violating the Terms of Supervised ReleaseRead the Press Release
A man charged with illegal re-entry following an aggravated felony conviction, and with violating the terms of his federal supervised release was sentenced December 21, 2015, to 120 months (10 years), and 24 months imprisonment, respectively.
Inmar Hernandez-Pineda, age 25, from El Salvador, received the prison terms after a guilty plea to one count of illegally re-entering the United States following a conviction as an aggravated felon. At the guilty plea, Hernandez-Pineda admitted he had illegally re-entered the United States from El Salvador after prior aggravated felony convictions of criminal mischief 2nd degree, and theft 2nd degree in Woodbury County in 2009.
Hernandez-Pineda came to the attention of Immigration and Customs Enforcement (ICE) after he was arrested on June 5, 2015, by the Sioux City police for robbery, and going armed with intent when he and another individual committed an armed robbery at Natalia’s Bakery in Sioux City. During the robbery, defendant was armed with an eight-inch knife and his accomplice was armed with a shotgun. During the robbery, the bakery owner’s son fought with the accomplice, who pulled a knife and stabbed the owner’s son in the shoulder and scalp. Defendant committed the armed robbery of Natalia’s Bakery on June 5, 2015, after his last deportation on September 29, 2014.
Hernandez-Pineda was sentenced in Sioux City, Iowa by United States District Court Judge Mark W. Bennett. Hernandez-Pineda was sentenced to 120 months imprisonment for illegal re-entry, and 24 months imprisonment for violation of his federal supervised release. A special assessment of $100 was also imposed. He must serve a 3-year term of supervised release after the prison term. There is no parole in the federal system. Hernandez-Pineda is being held in the United States Marshal’s custody until he can be transported to the Iowa Department of Corrections to begin to serve his state sentence prior to serving his federal sentence.
The case was prosecuted by Assistant United States Attorney Kevin C. Fletcher and investigated by the Enforcement and Removal Office of the Immigration and Customs Enforcement Bureau and the Sioux City, Iowa, Police Department.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 15-CR-4039.
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District of South Carolina Settles Long Term Care Pharmacy Whistle Blower Case Completing Final Leg of Anemia Drug LitigationRead the Press Release
Contact Person: Bill Nettles (803) 929-3000
Columbia, South Carolina ------ A $2.5 million settlement with Pharmerica, a long term care pharmacy servicing hundreds of nursing homes across the nation, completes the final leg of litigation involving the illegal promotion of Aranesp, an anemia drug manufactured by Amgen, Inc.
In 2013, the US Attorney’s Office for the District of South Carolina, The Department of Justice Civil Frauds and a number of states executed a $24.9 million settlement with Amgen in this case. In 2014, Omnicare followed with a $4.19 million settlement. The recent settlement brings the government’s recovery in United States ex rel. Kurnik v. Amgen et al. to just over $31.5 million.
The Kurnik litigation was brought under federal and state false claims act statutes that allow private citizens to bring suit on behalf of the government to recover money expended as a result of fraud or other wrongful conduct. The government intervened in the Amgen and Omnicare portions of the case and the Relator pursued the case against Pharmerica on behalf of the government.
“Public health insurance programs shouldn’t foot the bill for drug company schemes that manipulate doctors and patients to maximize profits,” said South Carolina US Attorney Bill Nettles. “This case is an excellent example of how the government can work together with private whistleblowers to recover money for taxpayers.”
The United States was represented by Assistant US Attorneys Fran Trapp and James Leventis from the District of South Carolina Office.
Kurnik was represented by Dick Harpootlian and Chris Kenney of Richard A. Harpootlian, P.A. in Columbia, South Carolina and Reuben Guttman, Traci Buschner, Justin Brooks and Caroline M. Poplin, J.D., M.D. of Guttman, Buschner & Brooks PLLC in Washington, D.C.
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Denver Meth Dealer Sentenced to 20 Years in Federal Prison for Conspiracy and Possession with Intent to Distribute ChargesRead the Press Release
DENVER – Carol Hawley of Denver, Colorado, was sentenced on Monday, December 21st, 2015 by U.S. District Court Judge Raymond P. Moore to serve 240 months (20 years) in federal prison, followed by 10 years on supervised release for Conspiracy to possess methamphetamine with the intent to distribute 50 grams or more of actual meth and Possession of methamphetamine with the intent to distribute 50 grams or more of actual meth, U.S. Attorney John Walsh, Federal Bureau of Investigation (FBI) Denver Division Special Agent in Charge Thomas Ravenelle and Drug Enforcement Administration (DEA) Denver Division Special Agent in Charge Barbra Roach announced. The case was investigated by the Metro Gang Task Force (MGTF). Hawley, who appeared at the sentencing hearing in custody, was remanded at its conclusion.
Hawley, along with six others, were indicted by a federal grand jury in Denver on May 19, 2014. The grand jury returned a superseding indictment on September 23, 2014. She was convicted of the counts outlined above on October 9, 2015 following a 5-day jury trial.
According to the facts presented to the jury during trial, and as outlined in the Government’s Sentencing Statement, in March 2013, agents and officers of the MGTF were conducting a long-term drug trafficking investigation, focusing on an organization run by Debbi Martinez, a/k/a “Payasa.” The investigation revealed that Martinez purchased distribution-sized quantities of methamphetamine for re-sale to various individuals within the Denver metropolitan area. One of her sources of supply included a large-scale drug trafficker whose Mexican-based drug trafficking organization.
During the investigation, it was determined that after a series of phone calls between Martinez called Hawley, Defendant Hawley obtained money and purchased methamphetamine to be sold in Fort Collins. While Hawley was on her way to Fort Collins with the methamphetamine, MGTF officers requested assistance from the Denver Police Department (DPD) in performing a traffic stop of Hawley. Early morning of March 13, 2013, Denver officers observed a traffic violation, and thus pulled Hawley’s vehicle over. The only identification Hawley had was able to produce to law enforcement was her Colorado Department of Correction identification card. DPD called for a drug K-9, and the Aurora Police Department responded with the K-9. After the dog alerted to the vehicle, investigators searched the vehicle.
During the search officers recovered a zippered purse which contained 223 grams of 100 percent pure methamphetamine. Officers also recovered an additional 3.17 grams of methamphetamine, 18.3 grams of MSM (a common cutting agent for methamphetamine), an empty bottle of prescription pills, a sheet of apparent pseudoephedrine, a marijuana pipe, and drug paraphernalia. Hawley was subsequently arrested. The passenger, who was the registered owner of the vehicle Hawley was driving, was released.
"Methamphetamine is a highly addictive, harmful drug, and destroys users, their families and harms the community in which they live," said U.S. Attorney John Walsh. "This severe sentence, handed down to a repeat drug trafficking offender, reflects our efforts to keep the community safe from this scourge."
“Trafficking in methamphetamines is a very serious crime which erodes the basic fabric of our society,” said FBI Denver Division Special Agent in Charge Thomas Ravenelle. "We are fortunate to be able to investigate and prosecute these individuals in partnership with the US Attorney’s Office and the DEA's Strike Force.”
This case was investigated by the Aurora Police Department, and the Metro Gang Task Force with the FBI. The DEA participated in some parts of the larger drug trafficking investigations.
The defendant was prosecuted by Assistant U.S. Attorneys Bradley Giles and Barbara Skalla.
Dallas-Based Home Heath Company Owners and Nurses Charged for Roles in $13.4 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – The co-owners of a home health company in Dallas and two nurse employees were charged in an indictment unsealed yesterday for their alleged participation in a $13.4 million health care fraud scheme involving fraudulent claims for home health services.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John Parker of the Northern District of Texas, Special Agent in Charge CJ Porter of the Health and Human Services-Office of Inspector General’s (HHS-OIG) Dallas Region, Special Agent in Charge Thomas M. Class Sr. of the FBI’s Dallas Field Office and Director of Law Enforcement David Maxwell of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.
Patience Okoroji, 57, Usani Ewah, 58, Kingsley Nwanguma, 45, all of Dallas County, Texas, and Joy Ogwuegbu, 39, of Collin County, Texas, were each charged with one count of conspiracy to commit health care fraud. In addition, Okoroji and Ewah are each charged with five counts of health care fraud; Nwanguma is charged with three counts of health care fraud and Ogwuegbu is charged with four counts of health care fraud.
Ewah, Nwanguma and Ogwuegbu were arrested yesterday and made their initial appearances before U.S. Magistrate Judge Renee H. Toliver of the Northern District of Texas. Okoroji was also arrested yesterday and will have her initial appearance today.
Okoroji and Ewah co-owned Timely Home Health Services Inc. (Timely), where Okoroji was also an administrator and licensed vocational nurse and Ewah was the director of nursing and a registered nurse. Nwanguma was a licensed vocational nurse working for Timely and Ogwuegbu was a registered nurse working for Timely.
The indictment alleges that from approximately January 2007 to September 2015, the defendants conspired to defraud Medicare by causing the submission and concealment of false and fraudulent claims to Medicare. According to the allegations, Okoroji and Ewah would in some cases pay recruiters, including Nwanguma, to recruit beneficiaries for home health services, regardless of whether the beneficiaries needed home health care. Okoroji, Ewah and Ogwuegbu allegedly prepared or caused to be prepared fraudulent Medicare documents that made it appear that the beneficiaries qualified for home health services. These documents were used by doctors to certify Medicare beneficiaries for home health care.
The indictment alleges that during the scheme, Okoroji and Ewah billed Medicare approximately $13,434,550 based on false and fraudulent claims for home health services.
An indictment is merely an allegation and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
HHS-OIG, FBI and the Texas Attorney General’s MFCU investigated the case, which was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Northern District of Texas. Trial Attorney Jason Knutson of the Criminal Division’s Fraud Section is prosecuting the case.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,300 defendants who have collectively billed the Medicare program for more than $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
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Coloplast Corp. and Liberator Medical Agree to Pay over $3.6 Million to Resolve False Claims Act AllegationsRead the Press Release
The Justice Department announced today that Coloplast Corp., a manufacturer of ostomy and continence care products, and Liberator Medical Supply, Inc., a supplier of medical products, have agreed to pay $3.16 million and $500,000, respectively, to resolve allegations that Coloplast paid kickbacks to several medical suppliers, including Liberator, to induce them to conduct promotional campaigns designed to refer individual users to Coloplast products.
The settlement with Coloplast resolves allegations that it paid kickbacks to Byram Healthcare Centers, Inc.; CCS Medical, Inc.; Liberator; Liberty Medical, Inc. and Handi Medical, Inc., in return for marketing promotions and conversion campaigns. In the case of Byram, Liberty and Handi, Coloplast’s promotional campaigns allegedly included kickbacks in the form of funding for cash incentives – sometimes known as “spiffs” – paid to the suppliers’ sales personnel to induce them to refer patients to Coloplast products. In other instances, Coloplast allegedly gave rebates or price concessions as inducements for the promotional campaigns. The settlement with Liberator resolves Liberator’s alleged receipt of kickbacks from Coloplast in the form of price concessions, in return for Liberator’s agreement to conduct two campaigns promoting Coloplast ostomy products to Liberator’s customers.
“This settlement displays the commitment of the Justice Department to protect vulnerable patients in federal health care programs from corporate marketing practices that are not in those patients’ best interests,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.
“The payment of kickbacks to induce purchases of medical supplies undermines our federal health care programs, ultimately distorting consumer purchasing decisions, and increasing health care costs,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts.
“Both of these companies acted with their own self-interests in mind, putting profits over patient care,” said Special Agent in Charge Harold H. Shaw of the FBI Boston Field Office. “The decision on which medical products to refer should be based on what is best for the patient, not on cash incentives or rebates.”
The False Claims Act settlements resolve allegations brought in a whistleblower lawsuit filed by two former employees of Coloplast under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. Under the False Claims Act, a whistleblower is entitled to receive a share of the federal recovery. The whistleblowers’ share of the Coloplast and Liberator settlements has not been determined. Claims against other defendants in the case remain outstanding.
The investigation was conducted by the FBI and the Department of Health and Human Services Office of Inspector General. The case is being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the District of Massachusetts.
The case is captioned United States ex rel. Herman, et al. v. Coloplast Corp., et al. Case No. 11-cv-12131-RWZ (D. Mass.). The claims resolved by the settlements are allegations only, and there has been no determination of liability.
Collin County Businessman Sentenced for Identity Theft-Related Federal Tax ViolationsRead the Press Release
Plano, Texas – A Princeton, Texas man has been sentenced for identity theft and mail fraud violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Johnny Lee Allie, 44, had pleaded guilty in federal court on June 18, 2015 to one count of aggravated identity theft and one count of mail fraud. Allie was sentenced last month to a 61- month federal prison term by United States District Judge Marcia Crone.
According to information presented in Court, Allie owned, operated and controlled AMO-PS Limited, located in Allen, Texas, and prepared income tax returns as part of his business. In 2012, Allie devised a scheme to defraud the Internal Revenue Service by filing a false income tax return for the year 2010 in the name of his clients without their knowledge. The tax return, which generated a refund of $26, 523.36, contained fraudulent items such as false business income and expenses, and credits for child care expenses. Allie created fake information indicating that the clients had gross receipts of $493,100.00 and net profit of $51,362.00.
Allie also forged his clients’ signatures and used his own business address rather than the clients’ home address on the tax return, so the IRS would mail any refund checks to Allie’s office at AMO-PS Limited. He used his clients’ names, dates of birth, and Social Security numbers to open an account at Bank of Texas, into which he deposited the fraudulent refund check. Allie then wrote several checks, made payable to himself, forging the clients’ signatures in order to withdraw the refund money.
As part of his plea agreement with the Government, Allie agreed to pay restitution in the amounts of $19,081.01 to his victims, and $4125.00 to the IRS. He began his prison sentence immediately after the sentencing hearing.
This case was investigated by the Internal Revenue Service – Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Christopher A. Eason.
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Business Owner Admits Using False Income Amounts to Understate Personal Tax LiabilitiesRead the Press Release
PITTSBURGH - A resident of New Kensington, Pa., pleaded guilty in federal court to a charge of income tax evasion, United States Attorney David J. Hickton announced today.
William H. Julius pleaded guilty to one count before Senior United States District Judge Donetta W. Ambrose.
In connection with the guilty plea, the court was advised that, as the owner of Materials Design Evaluation, Inc., Julius falsified company records by understating receipts and inflating business expenses, and then conveyed these false numbers to the person who prepared his corporate tax returns. Julius then used the false business income amounts in preparing his own fraudulent personal tax return Forms 1040, for 2008-2010, wherein he understated his tax liability by a total of $121,046.
Judge Ambrose scheduled sentencing for April 14, 2016 at 10 a.m. The law provides for a total sentence of 5 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Pending sentencing, the court released the defendant on an unsecured $25,000 bond.
Assistant United States Attorney Leo M. Dillon is prosecuting this case on behalf of the government.
The Internal Revenue Service, Criminal Investigation, conducted the investigation that led to the prosecution of Julius.
Arlington Nursing Home Agrees Pay $600,000 to Settle False Claim Act ViolationsRead the Press Release
ALEXANDRIA, Va. – Genesis HealthCare LLC, whose headquarters is located in Kennett Square, Pennsylvania, has agreed to pay $600,000 to resolve allegations that it submitted false claims to the federal government in connection with its operation of a skilled nursing facility known as the Potomac Center, located Arlington.
“Nursing home residents rely upon Medicare and Medicaid programs to receive life sustaining, and other essential medical services,” said Dana J. Boente, U.S. Attorney for the Eastern District of Virginia. “It is my hope that nursing homes residents will receive improved care as a result of this settlement.”
The settlement announced today resolves allegations that from Aug. 21, 2008, to Sept. 24, 2008, employees of Potomac/Genesis failed to provide patient care activities as recorded in the resident medical record of a patient and failed to provide certain care activities consistent with standing physician orders. In addition to the monetary settlement, Genesis has agreed to pay for a one-year transition consultant who has been assisting the new operator of the skilled nursing facility to identify risks and opportunities for improvement in providing skilled nursing services to residents at the facility.
The resolutions obtained in this matter were the result of a coordinated effort between the U.S. Attorney's Office for the Eastern District of Virginia, the Office of Inspector General for the U.S. Department of Health and Human Services, the FBI, and the Medicaid Fraud Control Unit of the Virginia Office of Attorney General.
This matter was handled by Assistant U.S. Attorney Steven Gordon. The civil claims settled by this False Claims Act agreement are allegations only; there has been no determination of civil liability.
If you know someone who is the victim of elder abuse, neglect, or exploitation in a nursing home, you can report it to the Virginia Long-Term-Care Ombudsman, (800) 552-3402, the Virginia Office of Licensure and Certification, (800) 955-1819, your local adult protective services office, and/or your local police department.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.
22 December 2015
West Burlington Man Sentenced for Tax ViolationsRead the Press Release
DAVENPORT, IA – On December 21, 2015, William Peugh, 63, of West Burlington, Iowa, was sentenced by United States Magistrate Judge Stephen A. Jackson, Jr. to three years of probation, a $9,000 fine, and more than $164,000 in restitution to the Internal Revenue Service for willfully failing to file his income tax returns for tax years 2008, 2009, and 2010, announced Acting United States Attorney Kevin E. VanderSchel. Peugh also was ordered to pay $75 to the Crime Victims’ Fund.
Peugh owns and operates WWPeugh Sales, which generates income through the sale of machinery. The majority of Peugh’s income is from commissions paid by companies that manufacture industrial machines. Peugh also obtains income from his ownership interest in a business that owns and operates casinos. In 2008, 2009, and 2010, Peugh received income from manufacturers resulting in a tax due and owing to the Internal Revenue Service. Prior to the initiation of this prosecution, Peugh did not file income tax returns for those years.
On August 3, 2015, Peugh plead guilty to a three-count United States Attorney’s Information charging him with willfully failing to file tax returns.
This matter was investigated by the Internal Revenue Service – Criminal Investigation, and the case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Waterford Resident Pleads Guilty to Participating in Two Drug Trafficking RingsRead the Press Release
ERIE, Pa. – A former resident of Waterford, Pennsylvania, pleaded guilty in federal court to charges of violating federal narcotics laws, United States Attorney David J. Hickton announced today.
Dana Scott Ball, 38, pleaded guilty to two counts before United States District Judge David S. Cercone.
In connection with the guilty plea, the court was advised that from in and around September 2013 to in and around January 2015, Ball conspired with three co-defendants to possess with intent to distribute and distribute approximately 700 kilograms or more of a mixture and substance containing a detectable amount of marijuana. In a separate case, from June 2013 through February 2015, Ball engaged in a conspiracy with eighteen co-defendants to distribute and possess with intent to distribute in excess of 150 kilograms of cocaine.
Judge Cercone scheduled sentencing for May 16, 2016 at 12:45 p.m. The law provides for a maximum total sentence of life in prison, a fine of $15,000,000, or both. Ball faces a mandatory minimum sentence of ten years on the cocaine case and five years on the marijuana case. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Marshall J. Piccinini is prosecuting this case on behalf of the government.
The Homeland Security Investigations, the Drug Enforcement Administration, the Pennsylvania State Police, U.S. Border Patrol, the Internal Revenue Service, Criminal Investigation; the Pennsylvania Office of Attorney General Organized Crime Section, the U.S. Postal Inspection Service, the U.S. Marshals Service, and the Bureau of Alcohol Tobacco Firearms and Explosives conducted the investigation that led to the prosecution of Ball.
United States Attorney Thomas G. Walker Announces ResignationRead the Press Release
RALEIGH – Thomas G. Walker, the U.S. Attorney for the Eastern District of North Carolina has submitted his resignation to President Barack Obama effective January 7, 2016. Mr. Walker will be returning to private practice.
Mr. Walker was sworn into office on July 8, 2011, after nomination by President Barack Obama and confirmation by the United States Senate. He took the oath of office from Chief United States District Judge James C. Dever III. As United States Attorney, Mr. Walker oversaw all federal criminal and civil matters in the 44 eastern counties of North Carolina.
“Throughout his tenure as United States Attorney for the Eastern District of North Carolina, Thomas Walker has proved himself to be a consummate public servant and an exemplary law enforcement officer,” said Attorney General Loretta Lynch. “In every case and every instance, Thomas has embodied the Justice Department’s highest standards of integrity and professionalism. Thanks to his outstanding leadership, his office is well positioned for years of continued success. And because of his tireless efforts in a range of areas – from national security to environmental protection, and from veterans’ rights to the fight against human trafficking – the communities in his district are stronger, safer, and more just. I thank him for his dedication, and I wish him well as he begins the next chapter of his already distinguished career.”
“Words cannot express the appreciation that I have for the opportunity to serve the Eastern District of North Carolina. I will forever be grateful to President Barack Obama, and to Senator Richard Burr and former Senator Kay Hagan for their nomination and approval,” said U.S. Attorney Thomas Walker.
Union County Man Sentenced for Methamphetamine OffensesRead the Press Release
On December 21, 2015, Nathan G. Stokes, 34, of Anna, was sentenced in U.S. District Court for methamphetamine related offenses, the Acting United States Attorney for the Southern District of Illinois, James L. Porter, announced today.
Stokes, who had previously pled guilty to a two-count indictment charging conspiracy to manufacture methamphetamine and possessing pseudoephedrine knowing that it would be used to manufacture methamphetamine, was sentenced to 87 months in federal prison, to be followed by 3 years of supervised release, and fined $800. Evidence at the plea and sentencing hearings established that, between April 2014 and March 2015, Stokes was involved with others in obtaining pseudoephedrine and manufacturing methamphetamine in Jackson and Union Counties. At sentencing, the district judge found that Stokes was responsible for the unlawful possession of approximately 222 grams of pseudoephedrine.
The investigation was conducted by the Union County Sheriff’s Office, Jackson County Sheriff’s Office, and Carbondale Police Department. The case was assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
Two Randolph County Residents Charged with Methamphetamine OffenseRead the Press Release
Two Randolph County residents were indicted on December 8, 2015, for a methamphetamine offense, the Acting United States Attorney for the Southern District of Illinois, James L. Porter, announced today.
Joseph S. Hatley, 37, of Sparta, and Dyllan V. Wayland, 25, of Coulterville, are charged in a one-count indictment charging conspiracy to manufacture methamphetamine. The indictment alleges that the offense occurred between March 2015 and August 2015 in Perry, Randolph, and Monroe Counties. Hatley and Wayland are scheduled to make their initial appearances in federal court in Benton on January 5, 2016.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge until proved guilty beyond a reasonable doubt to the satisfaction of a jury.
The methamphetamine offense carries a maximum penalty of up to 20 years’ imprisonment, to be followed by 3 years’ supervised release, and a $1,000,000 fine.
The ongoing investigation is being conducted by the Randolph County Sheriff’s Office, Jackson County Sheriff’s Office, Perry County Sheriff’s Office, Monroe County Sheriff’s Office, Percy Police Department, Steeleville Police Department, Sparta Police Department, and Illinois Department of Corrections. The Randolph County States Attorney’s Office also assisted in the investigation.
The case is assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
Two Monmouth County, New Jersey, Members of Drug Trafficking Organization Each Sentenced to More Than 20 Months in PrisonRead the Press Release
TRENTON, N.J. – Two Monmouth County men were sentenced to prison today for their roles in a large-scale drug trafficking organization that distributed heroin in Ocean and Monmouth counties, U.S. Attorney Paul J. Fishman announced.
Tyshon Young, a/k/a “Young Money,” a/k/a “Young Boy,” 30, of Asbury Park, New Jersey, and Matthew Miller, a/k/a “Star,” 41, of Neptune, New Jersey, were sentenced to 21 and 36 months in prison, respectively. Young and Miller previously pleaded guilty before U.S. District Judge Peter G. Sheridan to separate informations charging them with one count of conspiracy to distribute heroin. Judge Sheridan imposed both sentences today in Trenton federal court.
To date, 20 alleged members or affiliates of the “Britt-Young Drug Trafficking Organization” – so named after its leaders, Robert Britt and Rufus Young, in the criminal complaint – have pleaded guilty to narcotics offenses.
According to documents filed in this case and statements made in court:
Between February 2013 and March 2014, Tyshon Young conspired with Rufus Young and others to distribute heroin in Ocean and Monmouth counties. Tyshon Young admitted distributing between 40 and 60 grams of heroin in furtherance of the conspiracy. Miller admitted that, between February 2013 and March 2014, he agreed to store between 40 and 60 grams of heroin at his residence for use in the distribution conspiracy.
In addition to the prison terms, Judge Sheridan sentenced Young and Miller to each serve three years of supervised release.
U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Nicholas Grippo of the U.S. Attorney’s Office Criminal Division in Newark.
The allegations in the complaint against the remaining defendants are merely accusations, and they are presumed innocent unless and until proven guilty.
Defense Counsel:
Young: James R. Murphy Esq., Princeton, New Jersey
Miller: Charles Edward Waldron Esq., Lawrenceville, New Jersey
Twin Falls Man Sentenced for Meth DistributionRead the Press Release
POCATELLO – Uriel Jose Ortega, 26, of Twin Falls, Idaho, was sentenced today by Chief U.S. District Judge B. Lynn Winmill to 22 years in prison followed by five years of supervised release for possession with intent to distribute methamphetamine, U.S. Attorney Wendy J. Olson announced. Ortega pleaded guilty to the charge on June 1, 2015, but later tried unsuccessfully to withdraw his guilty plea.
According to the plea agreement and sentencing hearing, on July 10, 2014, Ortega was a passenger in a vehicle stopped by the Idaho State Police in Bonneville County, Idaho. The two were traveling from Idaho to Montana. In the vehicle, officers subsequently found in excess of 1.3 kilograms of actual methamphetamine as well as numerous firearms. Further investigation determined that Ortega had been distributing large amounts of methamphetamine to Montana from Idaho for an extended period of time. The court also found that Ortega had threatened witnesses and a law enforcement officer during the investigation.
The case was the result of an investigation by the Idaho State Police and the Bureau of Indian Affairs in Montana. The case was prosecuted jointly by the attorneys from the United States Attorney’s Office in Idaho and the Bonneville County Prosecutor’s Office, with assistance from the United States Attorney’s Office in Montana.
Three Individuals Charged in Manhattan Federal Court with Multimillion-Dollar Scheme to Deceive Homeowners into Selling Their HomesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), and Shirin Emami, Acting Superintendent of Financial Services for the New York State Department of Financial Services (“DFS”), announced that SAMANTHA BOUBERT, CHRISTINE MAHARAJ, and OWEN REID were taken into custody this week for participating in a scheme to fraudulently induce distressed homeowners to sell their homes to a company associated with the defendants. BOUBERT was presented this afternoon in Manhattan federal court before U.S. Magistrate Judge Henry Pitman. MAHARAJ and REID were presented yesterday afternoon in Manhattan federal court, also before U.S. Magistrate Judge Henry Pitman.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, these defendants preyed upon distressed homeowners and, through lies and front companies, tricked people into giving up their homes. The damage allegedly caused by these defendants went far beyond financial harm; as charged, their schemes often resulted in victims being evicted from their homes.”
FBI Assistant Director Diego Rodriguez said: “All too often, desperate homeowners fall prey to elaborate homeowner relief schemes. As alleged, the defendants knowingly exploited the vulnerabilities of their victims, making it their goal to capitalize on the misfortune of others. This behavior caused serious damage to a number of struggling families who were forced out of their homes. The FBI continues to support partnerships within the mortgage industry and law enforcement as we work together to combat this serious crime.”
SIGTARP Inspector General Christy Goldsmith Romero said: “As part of TARP, the government implemented the Making Home Affordable (MHA) program which contains many free mortgage assistance programs for distressed homeowners. For homeowners seeking mortgage modifications, the Home Affordable Modification Program (HAMP) is available and, like the other government programs, it is free to apply. Homeowners need to avoid anyone asking to take the title to their home, or selling their home as part of a loan modification or assistance program.”
DFS Acting Superintendent of Financial Services Shirin Emami said: “As alleged in these charges, these arrests shut down an elaborate scheme that preyed on innocent people seeking to save their homes from foreclosure. Victimizing financially distressed homeowners is a despicable crime and the Department of Financial Services will continue to aggressively investigate cases such as this. We thank the U.S. Attorney's office for their cooperation and diligent work pursuing this matter.”
According to the allegations in the Complaint[1] unsealed yesterday in Manhattan federal court:
From January 2013 through May 2015, SAMANTHA BOUBERT, CHRISTINE MAHARAJ, OWEN REID, and others, (collectively, the “Hillside Fraud Team”) targeted distressed homeowners in the New York City area, including the Bronx, Brooklyn, and Queens. The Hillside Fraud Team, which primarily operated from a Hillside Avenue address, tricked and coerced homeowners into selling or deeding their properties to a Hillside business they controlled.
The Hillside Fraud Team sent mailings to the owners of distressed properties on the letterhead of the Homeowners Assistance Services of New York (“HASNY”), inviting the homeowners to seek assistance from HASNY to avoid foreclosure and save their homes. The Hillside Fraud Team also hired telemarketers to contact homeowners and to invite them to meet with HASNY representatives to learn more about avoiding foreclosure.
REID and others trained and directed the telemarketers to appeal to the emotions of the owners of distressed properties. They developed a script for telemarketers to use in their calls, which included, in substance, a statement that a short sale would be a means for homeowners to lower their monthly payments and still remain in their homes.
Many of the homeowners who sought assistance from HASNY met with a member of the Hillside Fraud team, who typically advised the homeowner that HASNY could assist him or her with a loan modification. In other cases, homeowners were advised that a loan modification could not be completed, but a particular type of short sale could be arranged in which the homeowner would sell the property to a third party, Launch Development, and then a relative of the homeowner could repurchase the property from Launch Development within 90 days. Homeowners typically were told they could remain in their homes throughout the entire process. REID and MAHARAJ both participated in these meetings.
After an initial meeting with homeowners, a closing typically was scheduled during which the homeowner would meet with another co-conspirator who was described as the homeowner’s attorney for the transaction. The homeowners, who had been led to believe that they were about to receive a loan modification or would be able to transfer their property to a trusted relative, were encouraged to sign documents, which in some cases were blank. Unbeknownst to the homeowners, by signing some of those documents, they were agreeing to sell their homes to a Hillside Business – often Launch Development – and would be forced to vacate their homes soon thereafter.
As part of the fraud, the Hillside Fraud Team often used Uniform Commercial Code liens to coerce victims into participating in these deals. BOUBERT filed liens on homeowner properties, even when those homeowners owed no debt to a Hillside Business.
After purchasing a property from a homeowner, members of the Hillside Fraud Team typically appeared at the homeowner’s residence and demanded that the homeowner vacate the premises, or commenced eviction proceedings against the homeowner, or both.
The Hillside Fraud Team generated millions of dollars as a result of their fraudulent scheme.
BOUBERT, MAHARAJ, and REID are each charged with one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum term of 30 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.
Amir Meiri, Mario Alvarenga, and Rajesh Maddiwar have previously been charged in connection with the Hillside Fraud, in the case United States v. Alvarenga, et al., 15 Cr. 627 (ER).
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Mr. Bharara praised the outstanding work of the FBI, SIGTARP, and the New York State Department of Financial Services for their investigative efforts and ongoing support and assistance with the case.
The prosecution of this case is being overseen by the Office’s General Crimes Unit. Assistant U.S. Attorneys Jaimie L. Nawaday and Andrew M. Thomas are in charge of the case.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Third Arrest Made in Worcester Armory TheftRead the Press Release
BOSTON – A Dorchester man was arraigned in U.S. District Court in Worcester yesterday in connection with selling weapons that were stolen from the U.S. Army Reserve Center in Worcester (Worcester Armory) and for making false statements to federal agents.
Tyrone James, 28, was charged with one count of being a felon in possession of a firearm and one count of making false statements. James was returned to state custody following his initial appearance. U.S. District Court Magistrate Judge David H. Hennessy scheduled a detention and probable cause hearing for Jan. 4, 2016.
According to court documents, On Nov. 19, 2015, James Morales was arrested and charged in connection with the theft of 16 weapons from the Worcester Amory. On Nov. 20, 2015, federal agents searched the residence of Ashlee Bigsbee and Tyrone James who had met with Morales the day after the robbery. According to Morales, Bigsbee introduced Morales to James who then arranged the sale of five handguns in two separate transactions. During an interview with federal agents, it is alleged that James falsely denied having knowledge of the stolen weapons or having been involved in their sale. However, forensic examiners recovered numerous previously-deleted text messages in which James allegedly offered to arrange for the sale of weapons stolen from the Worcester Armory. For example, on Nov. 15, 2015 Tyrone texted one contact, “Bro hit me if u know anyone lookin for any blicks.” In a separate conversation, James allegedly negotiated the sale of three M-11 handguns for $900.
On Nov. 19, 2015, James Morales was arrested and charged with one count of unlawful possession of a machine gun, one count of unlawful possession of stolen firearms and one count of theft of government property. Ashley Bigsbee has been charged with one count of unlawful possession of stolen firearms and one count of false statements.
The FBI is offering up to a $15,000 reward for information which leads to the recovery of the remaining missing firearms. Anyone with information should call the FBI at 617-742-5533 or visit https://www.fbi.gov/boston/press-releases/2015/fbi-offers-15-000-reward-to-recover-stolen-firearms.
The charge of being a felon in possession of firearms provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. The charge of making a false statement provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police; Boston Police Commissioner William Evans; Chief Gary Gemme of the Worcester Police Department; and Commissioner Haas of the Cambridge Police Department, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Mark Grady and Corey Flashner of Ortiz’s Worcester Branch Office.
The details contained in the charging document are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Southeast Iowa Man Sentenced for Unlawful Transport and Receipt of BearRead the Press Release
DES MOINES, IA - On December 21, 2015, Brenton J. Clark, 35, of Fairfield, Iowa, was sentenced by Chief United States District Court Judge John A. Jarvey to three years of probation for the unlawful transport and receipt of a bear in violation of the Lacey Act announced Acting United States Attorney Kevin E. VanderSchel. Conditions of probation imposed by the Court included restrictions against possessing firearms or engaging in guiding, hunting or fishing activities; as well as requirements to complete 120 days of home confinement and 80 hours of community service. Clark was also ordered to pay a $2,000 fine and a $25 special assessment to the Crime Victims Fund.
On June 16, 2015, Clark pled guilty to a Lacey Act violation for his receipt, in September 2010, of a grizzly bear Clark displayed in his hunting lodge in Jefferson County, Iowa. Clark killed the grizzly bear in Alaska without a proper license and without tagging and sealing the bear as required by Alaska law. Clark also admitted after he became aware he was under investigation, he engaged in multiple conversations with potential witnesses and encouraged them to not disclose information to law enforcement.
This investigation was conducted by the United States Fish and Wildlife Service and the Iowa Department of Natural Resources. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Seven Defendants Face Federal Gun Charges after Agents Arrest Out-Of-State Gun Dealer and Conduct Undercover Investigation of CustomersRead the Press Release
Baltimore, Maryland – Seven men, including three previously convicted felons, were arrested and face federal gun charges as a result of an alliance between local and federal law enforcement to reduce the number of illegal guns in Baltimore City.
The charges were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William P. McMullan of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Special Agent in Charge Andre R. Watson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation; Baltimore Police Commissioner Kevin Davis; Anne Arundel County Police Chief Tim Altomare; Anne Arundel County State’s Attorney Wes Adams; and Baltimore City State’s Attorney Marilyn J. Mosby.
“A supply chain that brought illegal guns to Baltimore City from Tennessee has been put out of business, and suspects who tried to smuggle weapons into Baltimore are now in federal custody,” said U.S. Attorney Rod J. Rosenstein.
The following defendants have been charged with gun crimes in the U.S. District Court in Maryland. Five have been ordered to be detained pending trial, and the remaining two were placed on house arrest:
Rodney Donell Henson, a/k/a “Mook,” age 28, of Odenton, Maryland; Antonio Darnell Ennis, a/k/a “Hawk” and “Peanut,” age 32, of Glen Burnie, Maryland; Alvin Gabriel Arciaga, age 28, of Brooklyn, Maryland; Delray Jamare Randall, a/k/a “Black,” age 34, of Odenton; Ernest McCutcheon, a/k/a “Ernie,” age 32, of Baltimore; Leopold Fosso Kengni, a/k/a “Kenny C” and “Kenny G,” age 24, of Odenton; and
Leonard Eugene Goliday, a/k/a “Lenny,” age 43, of Laurel, Maryland.The investigation began in May 2015, after authorities arrested an undocumented alien who was attempting to sell eight firearms in Baltimore City. That investigation led to the identification of a second suspect who brought the firearms from Tennessee and sold them in Baltimore. ATF, HSI and Baltimore Police investigators developed information that the second suspect was bringing many firearms from Tennessee to Baltimore to sell them illegally. The gun seller was arrested while bringing 21 guns from Tennessee to Baltimore in July 2015. Law enforcement agents identified customers of the seller and organized an undercover operation in which the customers were offered an opportunity to purchase firearms in December 2015.
On December 12, 2015, several suspects arrived at the operation location to buy handguns, firearms with silencers, a fully-automatic Glock handgun and other firearms. The weapons were inoperable, and police maintained a covert presence around the area of the operation to prevent any suspect from leaving with weapons. After each transaction was completed, the purchasers were arrested.
According to court documents and information presented at their detention hearings, Henson, Ennis and Arciaga allegedly conspired to illegally purchase a fully-automatic machine gun that was not registered to them, as required by law. Henson made the arrangements to purchase the gun, then brought in Ennis and Arciaga. Ennis exchanged cash for the gun and Arciaga took physical possession of the machine gun.
Kengni allegedly purchased a machine gun that was not legally registered to him.
Randall allegedly bought four firearms although he was a previously convicted felon.
McCutcheon allegedly bought seven firearms although he was a previously convicted felon.
Also on December 12, 2015, a federal search warrant was executed at Goliday’s residence in Laurel, Maryland. According to the court documents and information presented at his detention hearing, law enforcement recovered five firearms from Goliday’s home. Goliday was previously convicted of a felony and is prohibited from possessing firearms or ammunition. Goliday was arrested by Anne Arundel County Police on December 14, 2015 after a traffic stop.
As part of the coordinated state effort to reduce violent crime in Baltimore, the Baltimore City Police Department, ATF, FBI, DEA, HSI, U.S. Marshals Service, the Baltimore City State’s Attorney’s Office, and the United States Attorney’s Office, review cases of defendants arrested for firearms violations, drug offenses and other violent crimes, and evaluate whether the case should be considered for federal prosecution. Prosecutors evaluate each defendant’s criminal record, the circumstances of the arrest and other relevant information.
Henson, Ennis, Arciaga and Kengni face a maximum penalty of 10 years in prison for possession of an unregistered machine gun. Henson, Ennis and Arciaga also face a maximum penalty of five years in prison for the conspiracy. As previously convicted felons, Randall, McCutcheon and Goliday each face up to 10 years in prison for illegal possession of a firearm. There is no probation or parole in the federal criminal justice system
An individual charged by indictment or criminal complaint is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Rod J. Rosenstein commended the ATF, HSI Baltimore, FBI, Baltimore and Anne Arundel Police Departments, and the Anne Arundel County and Baltimore City State’s Attorney’s Offices for their work in the investigation and prosecution. Mr. Rosenstein thanked Assistant United States Attorney Michael C. Hanlon, who is prosecuting the cases.
Selim Zherka, Westchester Businessman, Sentenced in White Plains Federal Court to 37 Months for Conspiring to Make False Statements to A Bank and to File Materially False Federal Tax ReturnsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Westchester businessman SELIM ZHERKA was sentenced today to 37 months in prison on charges that he conspired to make false statements to a bank in order to receive millions of dollars in loans and to file materially false tax returns with the IRS. ZHERKA pled guilty to the conspiracy on August 27, 2015, before U.S. District Judge Cathy Seibel, who imposed today’s sentence. In addition to the prison sentence, ZHERKA was ordered to forfeit $5.23 million in ill-gotten gains and to pay a $1.5 million fine.
U.S. Attorney Preet Bharara said: “Selim Zherka waged a years-long campaign of lies to banks and the IRS to obtain millions of dollars in loans and fraudulently reduce his tax liabilities. Now he faces prison and the forfeiture of over $5 million. I want to thank the IRS, the FBI, and the TARP Special Inspector General for their excellent work on this case.”
According to the Superseding Information to which ZHERKA pled guilty, and other court documents filed in this case:
From December 2005 through the present, ZHERKA conspired with others to obtain $63.5 million in loans from Sovereign Bank (now Santander) for the purchase of apartment house complexes in Tennessee by lying about the purchase price of the real estate he was acquiring and the amount of the down payments he was making toward the purchases in question. In addition, ZHERKA repeatedly submitted fraudulent tax returns to the IRS that overstated depreciation expenses and understated his capital gains for the real estate holding companies in which he was a partner, thereby reducing their tax liabilities.
Four other individuals have previously pled guilty in White Plains federal court to conspiring with ZHERKA to commit offenses related to the conduct to which ZHERKA pled guilty, and are awaiting sentencing.
In addition to the prison sentence and forfeiture, ZHERKA was ordered to make restitution as follows: $878,871 (plus interest and civil fraud penalties thereon) in federal taxes; $179,634 (plus interest and civil fraud penalties thereon) in New York State Taxes; $207,508 in Connecticut taxes; and $10,373 (plus interest and civil fraud penalties thereon) in Massachusetts taxes; and to pay a fine of $1.5 million.
SELIM ZHERKA, 48, of Somers, New York, has been detained at the Metropolitan Correctional Center in lower Manhattan since his arrest on August 27, 2014.
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Mr. Bharara praised the outstanding efforts of the IRS, the FBI, the Special Inspector General for the Troubled Asset Relief Program, and the Department of Justice’s Tax Division for their significant assistance in this investigation and prosecution.
This case is being handled out of the White Plains Division. Assistant United States Attorneys Elliott B. Jacobson and Perry A. Carbone and Special Assistant United States Attorney Andrew J. Kameros are in charge of the case.