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Wednesday 4 November 2015
Two Members of Illegal International Gambling Enterprise Convicted of Racketeering ConspiracyRead the Press Release
A federal jury in Oklahoma City convicted two individuals today for their participation in a scheme involving illegal gambling, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Sanford C. Coats of the Western District of Oklahoma.
Kelly Dorn, 53, of Oklahoma City, and Kory Koralewski, 45, of Parker, Colorado, were found guilty of racketeering conspiracy. Dorn was additionally convicted of conducting an illegal gambling business. A sentencing hearing has not yet been set.
According to the trial evidence, from 2003 to 2013, Dorn and Koralewski conspired with others to operate Legendz Sports, an international criminal enterprise that ran Internet and telephone gambling services from Panama City. Legendz Sports took more than $1 billon in illegal wagers, almost exclusively from gamblers in the United States betting on American sporting events. Dorn worked as a bookie in Oklahoma who illegally solicited and accepted sports wagers as well as settled gambling debts. Koralewski facilitated the movement of illegal gambling proceeds from the United States to Panama.
The case was investigated by the FBI and Internal Revenue Service-Criminal Investigation, with the assistance of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the U.S. Marshals Service.
The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Special Assistant U.S. Attorney Robin L. Summer and Assistant U.S. Attorney Travis D. Smith of the Western District of Oklahoma.
Two Caldwell Men Sentenced to Prison for Firearms OffensesRead the Press Release
BOISE – Gustavo Collado Rodriguez, 20, and David Angel Prieto, 22, both of Caldwell, Idaho, were sentenced today for unlawful possession of a pistol and a sawed-off shotgun, U.S. Attorney Wendy J. Olson announced. Senior U.S. District Judge Edward J. Lodge sentenced Rodriguez to 60 months in prison, and sentenced Prieto to 36 months in prison followed by three years of supervised release. Both defendants pleaded guilty on August 11, 2015.
According to court documents, Prieto and Rodriguez went to a residence in Caldwell, Idaho, where Rodriguez demanded money and pointed a pistol at the occupant of the home. Prieto and Rodriguez fled before police officers arrived, but officers were able to track them by following footprints in the snow to a nearby shed. Inside the shed, officers found Rodriguez and Prieto along with a sawed-off 12 gauge shotgun and a 9 millimeter pistol with a high capacity magazine loaded with hollow point ammunition. Rodriguez is prohibited from possessing firearms because he is an alien illegally and unlawfully in the United States. Prieto is prohibited from possessing firearms because he was previously convicted of the felony crime of possession of a controlled substance. According to information presented in court, both Prieto and Rodriguez associate with a criminal gang. Judge Lodge ordered Prieto to have no contact with criminal gangs upon his release from prison. Rodriguez will likely be deported after serving his prison sentence because he was unlawfully in the United States. The firearms involved in the offense were forfeited.
The case was investigated by the Caldwell Police Department and the Treasure Valley Metro Violent Crimes Task Force. The Treasure Valley Metro Violent Crime Task Force is comprised of federal, state and local agencies, including the Federal Bureau of Investigation; Bureau of Alcohol, Tobacco, Firearms and Explosives; Boise Police Department; Ada County Sheriff’s Office; Caldwell Police Department; Nampa Police Department; Meridian Police Department; Canyon County Sheriff’s Office; and Idaho Department of Probation and Parole.
The case was prosecuted by the Special Assistant U.S. Attorney hired by the Canyon County Prosecutor’s Office, the Treasure Valley Partnership and the State of Idaho to address gang crimes. The Treasure Valley Partnership is comprised of a group of elected officials in southwest Idaho dedicated to regional coordination, cooperation, and collaboration on creating coherent regional growth. For more information, visit treasurevalleypartners.org.
Two Business Owners Charged with Filing False Federal Income Tax ReturnsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that two owners of a Metairie business were charged today with filing false federal income tax returns.
ROMMEL CORDOVA, age 35 of Luling, and SAUL RAMIREZ, age 43, of Kenner, were each charged in a single Bill of Information with willfully filing false 2011 individual income tax returns. According to the Bill of Information, CORDOVA and RAMIREZ owned and operated Skill Labor Provider, Inc. (“Skill Labor”) a Metairie, Louisiana labor services business. They were each fifty-percent owners of Skill Labor and shared equally in its net income.
During calendar years 2010 and 2011, CORDOVA and RAMIREZ cashed, and caused to be cashed, checks made payable to Skill Labor and other business checks at a check cashing business in Kenner. CORDOVA and RAMIREZ caused false corporate income tax returns for Skill Labor to be prepared which did not accurately report the gross receipts, labor expenses deductions, or net income of Skill Labor. They then filed their respective individual income tax returns, which did not accurately report the amounts of business income that CORDOVA and RAMIREZ received from Skill Labor.
Upon conviction, each defendant faces a maximum penalty of three years of imprisonment, one year of supervised release, a fine of $250,000, or twice the gross gain or loss caused by the offense, a $100 special assessment, and restitution to the Internal Revenue Service.
U. S. Attorney Polite reiterated that the Bill of Information is merely a charge and that the guilt of the defendants must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of the Internal Revenue Service – Criminal Investigations and Homeland Security Investigations for investigating this matter. Assistant U.S. Attorney Hayden Brockett and Tax Division Trial Attorney Michael Hatzimichalis are in charge of the prosecution.
Troy Brothers Indicted for Health Care FraudRead the Press Release
ALBANY, NEW YORK – Michael VonFricken and John VonFricken were indicted separately for obtaining false receipts for orthodontic services and submitting them to their union’s health care plan, announced United States Attorney Richard S. Hartunian.
The charges carry a maximum sentence of 10 years in prison, a fine of up to $250,000, and a term of supervised release of up to 3 years.
Both defendants were arraigned on November 3, 2015 in Albany, New York, before United States Magistrate Judge Christian F. Hummel, and released pending a trial scheduled for January 4, 2016 before United States District Judge Mae A. D’Agostino.
John VonFricken, age 55, of Troy, New York, is charged with health care fraud for obtaining $54,600 in reimbursements from the Health and Welfare Plan of the Plumbers and Steamfitters, Local Union Number 7.
Michael VonFricken, age 44, of Troy, is charged with health care fraud for obtaining $32,732 in reimbursements from the Health and Welfare Plan of the Plumbers and Steamfitters, Local Union Number 7.
The charges in the Indictment are merely accusations. The defendants are presumed innocent until proven guilty.
This case is being investigated by the United States Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, and the Federal Bureau of Investigation, and is being prosecuted by Assistant U.S. Attorneys Jeffrey C. Coffman and Solomon B. Shinerock.
Trafficker Sentenced for Cocaine and Money Laundering ConspiracyRead the Press Release
NEW BERN - United States Attorney Thomas G. Walker announced that in federal court today, United States District Judge Louise W. Flanagan sentenced RAUL PINEDA, 32, of Anaheim, California, to 89 months in prison and 5 years of supervised release for conspiracy to distribute and possess 5 kilograms or more of cocaine and conspiracy to launder monetary instruments. PINEDA previously pled guilty to these charges on May 13, 2014. FABIO HIROCHI INOUE, one of PINEDA’S co-conspirators, was sentenced to 51 months in prison and 5 years of supervised release for the same charges by Judge Flanagan on June 10, 2015.
The investigation revealed that between April 2013 and September 22, 2013, PINEDA sent INOUE, to Johnston County, North Carolina, to deliver cocaine and collect drug proceeds for a drug trafficking organization operating out of Mexico and California. INOUE made several trips during this time period to meet with cocaine traffickers in the Johnston County, N.C., area. During these trips INOUE delivered multiple kilograms of cocaine and collected drug proceeds. INOUE laundered some of the drug proceeds by depositing portions into a bank account in the name of a real estate business located in California. Based on the investigation, the United States Drug Enforcement Administration (DEA) discovered that INOUE would be flying to the Raleigh Durham International Airport with several kilograms of cocaine on September 22, 2013. Agents found INOUE at the airport and seized his luggage which contained 3,891 grams of cocaine. Agents arrested INOUE after seizing the cocaine.
On November 19, 2013, DEA learned that PINEDA traveled to Garner, N.C., to transport 2 kilograms of cocaine to the Johnston County traffickers. Agents located PINEDA after he exited a hotel in Garner to deliver the cocaine. Agents arrested PINEDA after locating 2 kilograms of cocaine in PINEDA’S backpack. In total, PINEDA was found to be responsible for trafficking 14.89 kilograms of cocaine and laundering drug proceeds totaling $170,985.
The investigation of this case was conducted by the United States Drug Enforcement Administration, the Johnston County Sheriff’s Office and the Internal Revenue Service-Criminal Investigation Division. The federal prosecution was handled by Special Assistant United States Attorney Glenn Perry. Mr. Perry is a prosecutor with the Pitt County District Attorney’s Office. Pitt County District Attorney Kimberly Robb has assigned Mr. Perry to the United States Attorney’s Office to prosecute federal Organized Crime Drug Enforcement Task Force criminal matters. Mr. Perry’s assignment to the United States Attorney’s Office has been made possible by grants funded by the Governor’s Crime Commission.
Three New Albany-area men sentenced in fraud schemeRead the Press Release
New Albany – Josh J. Minkler, United States Attorney, announced today that three Louisville-area men were sentenced in federal court on fraud charges. U.S. District Judge Sarah Evans Barker sentenced Travis O. Kiser, 43, Louisville (18 months), Kevin J. O’Donnell, 44 Louisville (15 months) and David Gibson, 45, Floyds Knob (one year and one day) after their convictions for wire fraud and money laundering.
“Defrauding insurance companies has an immediate impact on all of us through higher premiums,” said Minkler. “When emergencies arise and people need their insurance companies, they deserve honest and quick acting service from all who process the claim”
Between 2011 and 2014, Travis Kiser conspired with O’Donnell and Gibson to defraud Farm Bureau and Cincinnati Insurance companies in excess of $340,000.
Gibson was employed by Indiana Farm Bureau Insurance Company as a field claims adjuster in New Albany, Indiana. Kiser was employed by Belfor USA, a restoration company located in Louisville, Kentucky, as a marketing manager. The two orchestrated the scheme by creating an artificial company, Derby City Solutions LLC, to submit inflated invoices to Farm Bureau for emergency services actually performed by Belfor. Kiser would use cashier’s checks payable to Belfor to hide the existence of his sham company. The two would then split the fraudulent proceeds which totaled approximately $126,360.
In a second scheme, Kiser and O’Donnell formed a company called River City Solutions, LLC, which originally was legitimate but later was used solely to defraud the Cincinnati Insurance Company (CIC). The scheme was similar to the previous one. O’Donnell was a field claims superintendent for CIC in Louisville, Ky. He would submit false or inflated invoices for emergency restoration to CIC for payment. They used their pass- through company, River City to defraud the insurance company. Often times the pair would submit invoices that were inflated, the work was performed by another company or never performed at all. They used cashier’s checks payable to the company that legitimately performed the services to hide their fraud. The total loss to CIC was approximately $216,332.
Some of the emergency work being performed was a result of the New Pekin and Henryville tornadoes from February 2012.
This case was investigated by the Internal Revenue Service, Criminal Investigation who Judge Barker lauded for their efforts in such a complex and sophisticated scheme.
IRS Criminal Investigation Special Agent in Charge Stephen Boyd stated, “Insurance fraud impacts almost all honest American citizens because the cost of this crime comes out of all of our pockets. IRS Criminal Investigation special agents are experts in tracing the flow of money which assisted the investigative team in uncovering the three guilty individuals who will be held accountable with time in prison.”
According to Assistant United States Attorney James M. Warden, who prosecuted this case for the government, all three men must serve a period of supervised release after their sentence, some of which is on home detention. They must also make full restitution for the money they stole.
Statement Concerning Arrest of Superior Court Judge JonesRead the Press Release
RALEIGH – United States Attorney Thomas G. Walker confirms the arrest this morning of North Carolina Superior Court Judge Arnold Ogden Jones, II. A federal grand jury returned a three-count indictment yesterday charging Jones with Promising and Paying a Bribe to a Public Official, Promising and Paying a Gratuity to a Public Official, and Corruptly Attempting to Influence an Official Proceeding.
Jones is scheduled to make his initial appearance at 10:00 a.m. this morning before U.S. Magistrate Judge Robert T. Numbers in Raleigh. A copy of the indictment is attached.
Six sentenced for heroin, painkiller traffickingRead the Press Release
ELKINS, WEST VIRGINIA – Six individuals were sentenced in federal court today for heroin and prescription pill trafficking, United States Attorney William J. Ihlenfeld, II, announced.
Jonathan Paul Calain, 38, of Elkins, was sentenced today to 78 months in prison after he admitted that he conspired with multiple other individuals to possess and distribute oxycodone in Randolph County, West Virginia. He pled guilty in February 2015 to one count of “Conspiracy to Distribute Oxycodone.” The Mountain Region Drug and Violent Crime Task Force, the West Virginia State Police, the Randolph County Sheriff’s Department, the Upshur County Sheriff’s Department, the Drug Enforcement Administration, and the Internal Revenue Service investigated.
In another matter, five individuals were sentenced in federal court today for selling heroin and prescription medications throughout 2014 and 2015 in Grant County, West Virginia following an investigation by the West Virginia State Police and the Potomac Highlands Task Force.
Richard Dean Gibson, 32, of Petersburg, West Virginia, was sentenced today to 21 months in prison for selling heroin in May 2014 in Grant County, West Virginia. He pled guilty in July 2015 to one count of “Aiding and Abetting Distribution of Heroin.”
John Daniel Barnett, 39, of Petersburg, West Virginia, was sentenced today to 18 months in prison for selling heroin in May 2104 in Grant County, West Virginia. He pled guilty in July 2015 to one count of “Aiding and Abetting Distribution of Heroin.”
Kaylei Oressa Wilson, 26, of Petersburg, West Virginia, was sentenced today to 6 months in prison for selling heroin in August 2014 in Grant County, West Virginia. She pled guilty in July 2015 to one count of “Aiding and Abetting Distribution of Heroin.”
Autumn Lyn Forbeck, 24, of Frostburg, Maryland, was sentenced today to three years of probation after she was discovered in possession of heroin in June 2014 in Grant County, West Virginia. She pled guilty in July 2015 to one count of “Aiding and Abetting Possession with Intent to Distribute Controlled Substances.”
Sandra Elizabeth Gibbins, 58, of Moorefield, West Virginia, was sentenced today to two years of probation for selling heroin in May 2014 in Grant County, West Virginia. She pled guilty in July 2015 to one count of “Aiding and Abetting Distribution of Heroin.”
Assistant U.S. Attorney Stephen Warner prosecuted Calain and Assistant U.S. Attorney Michael Stein prosecuted the remaining defendants on behalf of the government.
U.S. District Judge John Preston Bailey presided.
Sharon, Pa., Tobacco Businesses, Owner and Manager Plead Guilty to Fraud, Filing False ReportsRead the Press Release
PITTSBURGH – Residents of Ohio and New York, along with two tobacco wholesale businesses in Sharon, Pennsylvania, pleaded guilty in federal court to charges of mail fraud and failure to file required reports with state revenue authorities, United States Attorney David J. Hickton announced today.
Raid Zaghari, 43, of Brooklyn, New York, USA Trading Corporation-I and USA Trading Corporation-V, both located in Sharon, Pennsylvania, pleaded guilty to mail fraud before United States District Judge Cathy Bissoon.
Tareq Alasadi, a/k/a Tareq Alasade, 41, of Youngstown, Ohio, pleaded guilty before United States District Judge Cathy Bissoon to failure to file a report setting forth the amount of tobacco product sold to a North Carolina distributor.
According to information presented to the Court at the guilty pleas by Assistant U.S. Attorney Stephen R. Kaufman, Zaghari, USA Trading Corporation-I and USA Trading Corporation-V used commercial interstate carriers for the purpose of executing a scheme to defraud. Non-cigarette tobacco, known in the industry as “other tobacco products” or “OTP,” was sold by the defendants from their warehouse in Sharon, Pennsylvania, to distributors in New York and North Carolina, states that impose an excise tax on OTP. Pennsylvania is the only state in the nation which does not tax the wholesale distribution of OTP. In the mail fraud schemes, the defendants agreed not to report the sales to the taxing authorities in those other states, as required by law, which caused significant loss of tax revenue to the those states. USATC-I and USATC-V admitted that the loss was $3 million in taxes.
Alasadi failed to file, with the North Carolina Department of Revenue, the required notifications pertaining to the interstate distribution of taxable tobacco products to a customer in North Carolina by USATC-I.
Judge Bissoon scheduled sentencing for March 2, 2016 for Alasadi, March 9, 2016 for Zaghari, and April 7, 2016 for USA Trading Corporation-I and USA Trading Corporation-V. The law provides for a maximum total sentence of three years in prison, a fine of $250,000 or both for Alasadi and Zaghari. The law provides for a maximum total sentence of a term of probation, an order of criminal forfeiture, and restitution for USA Trading Corporation-I and USA Trading Corporation-V. 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 defendants.
Assistant United States Attorney Shaun E. Sweeney is prosecuting this case on behalf of the government.
The Bureau of Alcohol, Tobacco, Firearms, and Explosives conducted the investigation leading to the charges in this case.
Second California Resident Sentenced to Prison for Helping to Transport Heroin Across the CountryRead the Press Release
SCRANTON--The United States Attorney’s Office for the Middle District of Pennsylvania announced that a 39-year-old California resident was sentenced to 41 months in prison today by Senior U.S. District Court Judge Richard P. Conaboy in Scranton, for possessing with intent to distribute more than one kilogram of heroin.
According to United States Attorney Peter Smith, the defendant, Livier Cantor-Huizar, of Fresno, California, admitted to transporting heroin from California to the Mt. Pocono area of Monroe County in July 2014.
Cantor-Huizar was indicted by a federal grand jury in July 2014, as a result of an investigation by the Drug Enforcement Administration and the Pennsylvania State Police.
Judge Conaboy ordered Cantor-Huizar to serve two years on supervised release following her prison sentence.
Last week, Judge Conaboy sentenced co-defendant Jose Rosario Huizar-Rios to 46 months in prison. Two other defendants have entered guilty pleas in the case and are awaiting sentencing.
The case was prosecuted by Assistant U.S. Attorney Francis P. Sempa.
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San Juan County Resident Arraigned on Federal Wire Fraud ChargesRead the Press Release
ALBUQUERQUE – Bobby Willis, 43, a resident of Kirtland, N.M., was arraigned this morning in federal court in Albuquerque, N.M., on an indictment charging him with wire fraud. Willis entered a not guilty plea and was released on pretrial conditions pending trial.
The two-count indictment, which was filed on Oct. 20, 2015, alleges that, from March 2010 through Aug. 2011, Willis executed an illegal scheme to defraud two victims of $1,000,000. According to the indictment, Willis allegedly offered the victims the opportunity to purchase a five-percent interest in a real estate investment company for $1,000,000 with the understanding that he and other individuals had also invested millions of dollars in the company. Willis then allegedly spent $995,000.00 of the victims’ $1,000,000 instead of investing the funds.
Count 1 of the indictment alleges that on Oct. 25, 2010, Willis caused $900,000.00 to be wire transferred from the bank account of the real estate investment company to his and his wife’s bank account. Count 2 alleges that on Nov. 12, 2010, Willis caused another $95,000.00 to be wire transferred from the real estate investment company’s bank account to his and his wife’s bank account. The indictment includes forfeiture provisions seeking a money judgment against Willis in the amount of $1,000,000.
If convicted, Willis faces a statutory maximum sentence of 20 years in prison and a maximum fine of $250,000.00. Charges in indictments are merely accusations and defendants are presumed innocent unless found guilty in a court of law.
This case was investigated by the Albuquerque office of the FBI and is being prosecuted by Assistant U.S. Attorney C. Paige Messec.
Rockford Woman Arrested on Federal Tax Fraud ChargesRead the Press Release
ROCKFORD — A Rockford, Ill. woman was arrested today on federal charges of making false claims for federal tax refunds and using other persons’ identification in connection with the fraudulent claims for tax refunds. CRYSTAL S. JACKSON, 27, of Rockford, was charged by a federal indictment on Oct. 20, 2015. The indictment charged her with 45 counts of filing fraudulent claims for federal tax refunds, and three counts of illegally possessing and using other persons’ identification in connection with making fraudulent claims for federal tax refunds.
The indictment alleges that between Aug. 1, 2011 and Feb. 5, 2013, Jackson prepared and filed, both electronically and by mail, 45 federal individual income tax returns in the names of other individuals without their permission, causing fraudulent claims for refunds to be made against the United States Treasury. The 45 false returns were filed with the IRS for tax years 2010, 2011, and 2012, and requested refunds totaling $189,237. Some of the 2010 and 2011 fraudulent tax returns listed the address of a relative of Jackson as the taxpayers’ address, and requested debit cards containing the tax refunds be mailed to that address.
Each count of filing a fraudulent claim for a federal income tax refund carries a maximum potential penalty of up to 5 years in prison. Each count of possessing another person’s identification in connection with making a fraudulent claim for a federal income tax refund carries a potential penalty of up to 5 years in prison, or up to 15 years in prison if the charge involves obtaining anything of value totaling $1,000 or more during any one year period. In addition each count charged carries a fine of up to $250,000, or twice the gross gain or gross loss resulting from that offense, whichever is greater, and full restitution. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines. Jackson will appear for a detention hearing at 3:00 p.m. today in Federal Court in Rockford, before U.S. Magistrate Iain D. Johnston.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The arrest was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Stephen Boyd, Special Agent-In-Charge of the Chicago Field Office of Internal Revenue Service - Criminal Investigation Division
The government is represented by Assistant U.S. Attorney Joseph C. Pedersen.
Indictment
Riverhead Physician Assistant Arrested for Conspiracy to Illegally Prescribe OxycodoneRead the Press Release
Michael Troyan, a physician assistant who operated two urgent care clinics on the east end of Long Island was arrested this morning pursuant to a grand jury indictment[1] with conspiring to illegally distribute oxycodone, a highly addictive prescription pain medication. Also this morning, a search warrant was executed at the East End Urgent and Primary Care in Riverhead by the DEA’s Long Island Tactical Diversion Squad which is comprised of agents and officers of the DEA, Nassau County Police Department, Rockville Centre Police Department, and Port Washington Police Department. The Long Island Tactical Diversion Squad was also assisted by agents and officers of the Department of Health & Human Services, the Southampton Town Police Department, and the Suffolk County District Attorney’s East End Drug Taskforce. The defendant is scheduled to be arraigned this afternoon before United States Magistrate Judge Gary R. Brown at the United States Courthouse in Central Islip, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent in Charge, Drug Enforcement Administration (DEA), New York.
The indictment and public filings allege that between November 2011 and October 2015, Troyan, a physician assistant with authority to prescribe controlled substances, issued prescriptions for thousands of oxycodone pills to co-conspirators for the purpose of illegally re-selling the pills for cash. Troyan was captured on video in an undercover operation writing phony prescriptions for oxycodone and receiving large quantities of cash at his Riverhead medical office for prior illegal sales. Troyan was receiving half of the profit from the sale of the oxycodone pills.
United States Attorney Capers stated, “As alleged, Troyan abused his authority to prescribe controlled substances and his position of trust as a physician assistant to illegally sell oxycodone in exchange for cash. Such abuse by health care professionalswill not be tolerated.” Mr. Capers extended his grateful appreciation to each of theparticipating law enforcement agencies for their assistance in this case.
DEA Special Agent in Charge James J. Hunt stated, “People who are addicted to opioid painkillers are forty times more likely to be addicted to heroin. Cashing in on heroin’s hold over American communities, it is alleged that Michael Troyan wrote prescriptions to oxycodone dealers on the East End in exchange for half the cash profits from the resulting drug sales. DEA and our law enforcement partners will continue to identify the diverted painkiller suppliers, be it an oxy street dealer, a rogue doctor, or a greedy physician’s assistant.”
If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment and a $1 million fine.
This case is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this jurisdiction, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Prescription Drug Initiative to mount a comprehensive response to what the United States Department of Health and Human Services Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. To date, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 18 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorney Allen Bode is in charge of the prosecution.
The Defendant:
Name: MICHAEL TROYAN
Age: 37
Residence: Riverhead, New York
[1] The charges announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Rhode Island Man Arrested for Interstate Travel to have Sex with a MinorRead the Press Release
Contact: Michael J. Conley
Assistant United States Attorney
Tel: (207) 780-3257Portland, Maine: United States Attorney Thomas E. Delahanty II announced that William McNeill, 23, of Cumberland, Rhode Island, was arrested yesterday in Massachusetts following his indictment in Maine on October 21, 2015 for travelling interstate on October 18, 2014 to have sex with a minor.
McNeill faces up to 30 years in prison and a $250,000 fine.
The joint investigation was conducted by the Naval Criminal Investigative Service and the Bridgton, Maine Police Department.
An indictment is merely an accusation and a defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Real Estate Developer, Charles P. Gahan, Sentenced to 70 Months for Eight Million Dollar Title Insurance Fraud SchemeRead the Press Release
GRAND RAPIDS, MICHIGAN — U.S. Attorney Patrick A. Miles, Jr., announced today that Charles P. Gahan, currently a resident of New Smyrna Beach, Florida, and formerly of Grand Rapids, Michigan, was sentenced today in U.S. District Court to 70 months’ imprisonment for his role in a conspiracy to commit wire fraud affecting financial institutions. Gahan was also ordered to pay restitution of $8,205,405.71. The Honorable Robert Holmes Bell noted the significant impact that his fraud scheme had upon numerous homeowners in the Western District of Michigan, as well as the victim title insurance companies, and remanded Gahan to the custody of the U.S. Marshal at the conclusion of the sentencing hearing.
"This was a very sophisticated and long-running title insurance fraud scheme that involved numerous residential developments," said U.S. Attorney Miles. "Innocent homeowners arrived home to find foreclosure notices on their doors, from banks they had never heard of, solely because Gahan fraudulently diverted closing funds from those banks to his own pocket. The Court’s sentence today reflects the seriousness of this financial crime."
From 2002 to 2006, Gahan operated as a real estate developer under the name GBW Development. Gahan conspired with Scott Hoeft, then the owner of Prime Title Services, to divert real estate closing proceeds to his own pocket. The essence of the fraud was that Hoeft assisted Gahan in obtaining construction loan financing by agreeing to provide the prospective lenders with fraudulent title commitments that purposefully failed to disclose the existence of prior liens against the property on which new homes would be constructed. After a home was constructed and sold, Hoeft would fail to disclose these prior liens to the buyer’s lender or, if he did disclose such liens, he did not pay off the liens with the loan proceeds deposited to his escrow account. Instead, those funds were transferred to Gahan, who used them to support his lifestyle or to build the next home in his development. The two title insurance companies that Hoeft used to issue the title insurance policies suffered over $8,000,000.00 in losses to provide clear title to the homeowners. Hoeft was previously sentenced to 63 months’ imprisonment for his role in the scheme, which was reduced to 45 months’ imprisonment for his cooperation in the prosecution of Gahan.
The case was investigated by the Grand Rapids Office of the FBI and the U.S. Postal Inspection Service. Assistant U.S. Attorney Ronald M. Stella prosecuted the case.
Real Estate Appraiser Ordered to Pay $75,297.94 for Attempted Tax EvasionRead the Press Release
ALBANY, NEW YORK – Peter Kellner, age 77, of Sunrise, Florida, was sentenced yesterday to two years of probation and ordered to pay restitution in the amount of $75,297.94, following his conviction for attempted tax evasion, announced United States Attorney Richard S. Hartunian and Shantelle P. Kitchen, Special Agent in Charge of IRS-Criminal Investigation’s New York Field Office.
Kellner was sentenced in Albany by U.S. District Judge Mae A. D’Agostino. He pleaded guilty on November 3, 2014.
Kellner, a licensed real estate appraiser formerly of Philmont, New York, incurred a personal tax liability that had grown to approximately $86,179.94 by October 2008. In an effort to reduce his owed tax, Kellner submitted a false Offer of Compromise to the Internal Revenue Service, falsely reporting assets totaling $8,612. However, at that time, Kellner had assets totaling $79,263 in the form of 81 United States Postal Money Orders that he did not disclose to the IRS. On the basis of the false information Kellner provided, the IRS approved his Offer of Compromise on May 26, 2009, allowing him to resolve his tax debt for only $8,612. After his tax debt was resolved, Kellner negotiated approximately $78,540 in Postal Money Orders between May 26, 2009 and October 2010, and the IRS thereafter discovered that Kellner had attempted to evade the payment of his taxes.
This case was investigated by IRS-Criminal Investigation’s New York Field Office and was prosecuted by Assistant United States Attorney Ransom P. Reynolds.
Project Manager Overseeing Construction Projects at Morris County, New Jersey, U.S. Army Installation Admits Accepting KickbacksRead the Press Release
NEWARK, N.J. – A regional manager for a prime contractor working at Picatinny Arsenal today admitted taking more than $20,000 in kickbacks in return for favorable treatment on construction projects at the installation, U.S. Attorney Paul J. Fishman announced.
Shawn A. Fuller, 45, of East Stroudsburg, Pennsylvania, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with one count of accepting unlawful kickbacks.
According to documents filed in this case and statements made in court:
Fuller, a project manager for a prime contractor working at Picatinny Arsenal, admitted taking kickbacks from subcontractors in return for favorable treatment on related construction projects. On June 27, 2010, Fuller solicited and accepted a Yamaha Wave Runner, valued at $4,250, from a subcontractor who owned a Warren County, New Jersey, construction company. Fuller also admitted that, between 2009 and June 2013, he accepted approximately $20,000 in cash payments from other subcontractors involved in Picatinny Arsenal construction projects.
The charge to which Fuller pleaded guilty carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Feb. 16, 2016.
U.S. Attorney Fishman credited special agents with the FBI, under the direction of Special Agent in Charge Richard M. Frankel; the U.S. Department of Defense, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Craig Rupert; and the U.S. Army Major Procurement Fraud Unit, Criminal Investigation Command, under the direction of Special Agent in Charge Larry Scott Moreland, with the investigation leading to today’s plea.
The government is represented by Assistant U.S. Attorney Barbara R. Llanes and Senior Litigation Counsel Leslie Faye Schwartz of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
Defense counsel: Assistant Federal Public Defender Candace Hom Esq., Newark
President and CEO of Wilson Capital Group Sentenced in Financial Fraud CaseRead the Press Release
NORFOLK, Va. – Ayanna N. James, 40, of Virginia Beach, was sentenced today to 84 months in prison, followed by three years of supervised release for mail fraud and unlawful monetary transactions. James was also ordered to pay $4,592,300 in restitution to her victims.
James pleaded guilty on May 15, 2015. According to a statement of facts filed with the plea agreement, James was the President and CEO of Wilson Capital Group, Inc. which was a private equity firm that she claimed controlled billions of dollars in investor participation. Claiming that she controlled a legitimate company, James, and other known conspirators, solicited funds from clients by promising to secure capital and other financing through purported “Standby Letters of Credit” and other fraudulent means. James never invested in anything and instead immediately converted the funds entrusted to her company to her own personal use to fund her extravagant lifestyle. For example, James used $34,000 of fraudulent proceeds to purchase season tickets to the Orlando Magic, and hundreds of thousands of dollars to travel overseas, to build a custom home, for living expenses, to purchase jewelry, to support her extended family, and to purchase a 2007 Bentley automobile. As a result of her fraudulent conduct, multiple victims suffered actual losses of over $4.5 million.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; John S. Adams, Special Agent in Charge of the FBI’s Norfolk Field Office; Thomas Jankowski, Special Agent in Charge, IRS-Criminal Investigations, Washington, D.C. Field Office, and David Bowers, Inspector in Charge of the Washington Division of the United States Postal Inspection Service, made the announcement after sentencing by Chief U.S. District Judge Rebecca Beach Smith.
This case was investigated by the Tidewater Complex Financial Crimes Task Force. Members of the Task Force include the FBI, IRS, and the Postal Inspection Service. Assistant U.S. Attorney Melissa E. O’Boyle prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No.2:15cr55.
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Philadelphia Man Convicted of Heroin Trafficking and Firearms Violation Following Jury TrialRead the Press Release
HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Jose Juan Albertorio-Garcia, age 47, of Philadelphia, Pennsylvania, was convicted of possession of a firearm in furtherance of drug trafficking and distributing a controlled substance after a two and a half day jury trial in Harrisburg before U.S. District Court Judge Sylvia H. Rambo.
According to United States Attorney Peter Smith, the jury returned with the verdict of guilty after approximately two hours of deliberation. The charges against Albertorio-Garcia are a result of his supplying other drug dealers with heroin for distribution in Harrisburg in March 2014. Following Albertorio-Garcia’s arrest on March 18, 2014, the Pennsylvania State Police seized additional quantities of heroin and a firearm from his home on Rorer Street in Philadelphia, Pennsylvania. No sentencing date has been set for Albertorio-Garcia.
This case was investigated by the Drug Enforcement Administration and the Pennsylvania State Police and was prosecuted by Assistant U.S. Attorney Meredith A. Taylor.
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Philadelphia Man Charged in Fraud Involving Dead Sister's AnnuityRead the Press Release
PHILADELPHIA – Charles Spencer, 81, of Philadelphia, PA, was charged today by information with mail fraud in connection with the theft of approximately $230,400 from an annuity, announced United States Attorney Zane David Memeger.
According to the information, Spencer became the guardian of his sister, V.R., and her affairs when V.R. became infirmed. V.R. was receiving monthly payments of $1,600 from an annuity. She died on January 22, 2001 but Spencer, it is alleged, did not inform Lincoln National Insurance Company (LNIC), which disbursed the annuity payments. LNIC continued to send monthly annuity checks payable to V.R. which defendant Spencer allegedly received, countersigned, and deposited into his bank account. It is alleged that Spencer received approximately 144 annuity checks, totaling approximately $230,400.
If convicted the defendant faces a statutory maximum sentence of 20 years in prison, possible restitution, a fine of up to $250,000, up to three years of supervised release, and a $100 special assessment.
The case was investigated by United States Postal Inspection Service and is being prosecuted by Assistant United States Attorney Floyd J. Miller.
An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Pembroke Woman Sentenced to Two Years Probation for Making False Statements to Obtain Social Security BenefitsRead the Press Release
Contact: Andrew McCormack
Assistant United States Attorney
Tel: (207) 945-0373
Bangor, Maine: United States Attorney Thomas E. Delahanty II announced that Rosemary Peterson, 29, of Pembroke, Maine, was sentenced today in U.S. District Court by Judge John A. Woodcock, Jr. to two years of probation for making false statements to obtain Social Security Disability Insurance ("SSDI") benefits. She was also ordered to pay $11,874 in restitution. SSDI benefits are paid by the Social Security Administration ("SSA") to people with disabilities. Peterson pleaded guilty on May 8, 2015.According to court records, from April 2011 until November 2012, the defendant was designated as the representative payee for her boyfriend’s SSDI benefits. During this period of time, her boyfriend received over $10,000 in SSDI benefits. In November 2011, the defendant's boyfriend was required to undergo a Continuing Disability Review to determine if he was still disabled. During this review, the defendant claimed that her boyfriend did not work outside the house and required someone to clean, bathe, dress and cook for him. In fact, the defendant had lived with her boyfriend for several years and was well aware that he did not have disabilities that required her to clean, bathe, dress and cook for him. She was also aware that her boyfriend did a significant amount of work outside the house including working as a scrap metal dealer, carpenter and woodcutter.
The investigation was conducted by the SSA’s Office of the Inspector General.
Owner of Sandusky company indicted for fraud related to Castalia FarmsRead the Press Release
Criminal charges were filed against the owner of a Sandusky equipment rental company for his fraudulent conduct related to Castalia Farms and other businesses, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office.
A 32-count indictment was filed charging Scott C. Wagner, 51, of Perkins Township, with several criminal conspiracies, wire fraud, mail fraud, money laundering, and destruction of records. Tom Walters, Jr., of Swanton, is also charged in the indictment with conspiracy and mail fraud.
According to court documents filed in the case:
Castalia Farms was a hospitality facility owned by Owens-Illinois, Inc. and used by the company as a recreational facility since the 1930s. O-I closed the facility in 2012 and later sold the property.
Michael K. Conrad, 48, of Castalia, Ohio, managed Castalia Farms. In this capacity, Conrad had an occasional need for industrial equipment and was a regular customer of Wagner and his company, Construction Equipment & Supply (CES), a Sandusky business that rented and sold industrial machinery and equipment for commercial use.
Wagner controlled the day-to-day operations of CES and submitted false invoices to Conrad that were then passed on to O-I for equipment rentals that never occurred, purchases of construction supplies and other goods that never occurred, purchases of construction supplies that were far in excess of what was actually delivered, and other fraudulent billings.
For example, O-I was billed more than $350,000 for 532 days of renting a piece of equipment used to grind trees and other vegetation, when in reality the grinder was not at Castalia Farms for nearly all the time it was billed to O-I as a rental, according to court documents.
In October 2010, Conrad submitted to O-I a fraudulent invoice for $47,925 worth of landscaping work, purportedly done at Castalia Farms. The work was actually done at Wagner’s personal residence. O-I paid the invoice in December 2010, according to court documents.
The indictment also charges Wagner with defrauding two other Northwest Ohio companies using a similar false-billing scheme. The first victim company, Kyklos Bearing International, LLC of Sandusky, Ohio, paid false invoices Wagner submitted with the assistance of a Kyklos Bearing International employee. The indictment alleges that the invoices were false because they sought payment for goods that were never delivered by CES.
The second victim company, Sawyer Structural Steel, Inc. of Holland, Ohio, paid false invoices Wagner submitted with the assistance of Tom Walters, Jr., a Sawyer Steel employee at the time of the fraud. Wagner and Walters conspired to defraud Sawyer Steel, where Walters worked as a general manager. To do this, Wagner submitted invoices to Sawyer Steel that were false, including invoices for supplies and other goods that were never delivered, equipment rentals that never occurred and the purchase of supplies and other goods that were far in excess of what was actually delivered, according to court documents.
Conrad has already pleaded guilty to crimes related to his role in the conspiracy and is awaiting sentencing.
If convicted, each defendant’s sentence will be determined by the Court after reviewing factors unique to his case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
This case is being prosecuted by Assistant U.S. Attorney Gene Crawford following an investigation by the Federal Bureau of Investigation, Sandusky, Ohio, with the assistance of the Ohio Bureau of Criminal Investigation and the Erie County Sheriff’s Office.
A charge is not evidence of guilt. Defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Orleans Parish Couple Sentenced for Conspiracy to Commit Wire Fraud in Aftermath of the BP Oil SpillRead the Press Release
U.S. Attorney Kenneth A. Polite announced that LATASHA N. ANDERS, age 34, and ARNOLD WILLIAMS, age 33, both of New Orleans, were sentenced today after previously pleading guilty to conspiracy to commit wire fraud relating to fraudulent applications they made or caused to be made to the Gulf Coast Claims Facility (GCCF) for financial assistance during the aftermath of the Deepwater Horizon oil spill.
U.S. District Judge Martin L.C. Feldman sentenced ANDERS to 5 years probation, with 12 months of home incarceration, and ordered restitution in the amount of $250,000. WILLIAMS was sentenced to three years probation and was ordered to pay $50,000 in restitution to the GCCF.
According to court documents, the GCCF made disaster assistance money available to individuals and businesses affected by the oil spill resulting from the Deepwater Horizon explosion. The GCCF required individuals to verify loss of income. ANDERS worked as a claims adjuster for the GCCF. Beginning in or about October 2010, ANDERS submitted or caused to be submitted, via the internet, claim forms on behalf of her co-conspirators containing false representations and fraudulent documentation that they were employed in the commercial fishing industry at the time of the oil spill, when in fact they were not. ANDERS shared in the claim proceeds in exchange for her assistance. Based upon the fraudulent documentation, ANDERS obtained $250,000 in claim proceeds to which she and her co-conspirators were not entitled.
Additionally, ANDERS conspired with WILLIAMS to file a false claim for loss earnings on his behalf, when in fact he did not work in the commercial fishing industry. Based upon the fraudulent claim, WILLIAMS received $50,000 to which he was not entitled. Both ANDERS and WILLIAMS admitted to purchasing a home for $110,000 with the illegal proceeds they received from the fraudulent claims.
This case was brought as part of this District’s partnership with the National Center for Disaster Fraud (“NCDF”), a nationwide initiative to protect available funds and assistance for those victims of both natural and man-made disasters such as hurricanes, floods, tornadoes and the recent Gulf oil spill. If you have knowledge of fraud, waste, abuse or allegations of mismanagement involving disaster relief operations, you can contact the NCDF by either calling the hotline at (866) 720-5721, faxing (225) 334-4707, emailing at [email protected], or in writing to National Center for Disaster Fraud, Baton Rouge, LA 70821-4909.
U.S. Attorney Polite praised the work of the U.S. Postal Inspection Service and the U.S. Secret Service in investigating this matter. Assistant U. S. Attorney Julia K. Evans was in charge of this prosecution.
Oakland Man Sentenced to Life in Prison Plus 10 Years for Murder in Christmas Marijuana Robbery Near Oakland AirportRead the Press Release
OAKLAND – Damion Sleugh was sentenced today to life in prison plus 35 years for murder and related drug trafficking charges, announced Acting U.S. Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The charges stemmed from the murder of Vincent Muzac in a parking lot near the Oakland Airport three days before Christmas in 2013.
Evidence at trial showed that Sleugh, 28, of Oakland, helped arrange a meeting to purchase five pounds of marijuana. In the early afternoon of December 22, 2013, Sleugh met with Mr. Muzac, of Alameda, in the parking lot of a Walmart store near Hegenberger Road and interstate 880 in Oakland. Surveillance video showed Mr. Muzac enter a car where he remained for four minutes before he was robbed and shot. His body was seen lying on the ground as the car sped away. A joint investigation by the FBI and the Oakland Police Department revealed that Sleugh was the driver. The evidence submitted at trial included incriminating text messages, FBI crime scene recreations, and images of Sleugh with the stolen marijuana. The photographs of Sleugh included a “selfie” taken from Sleugh’s phone two hours after the shooting; in the photograph, Sleugh is pictured in the same passenger seat where Mr. Muzac had just been shot.
On March 27, 2014, Sleugh was indicted in a six-count indictment charging him with conspiracy and attempt to possess with the intent to distribute marijuana, in violation of 21 U.S.C. § 841; robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a); the use of a firearm during a drug trafficking crime or a crime of violence, in violation of 18 U.S.C. § 924(c); the use of a firearm during a drug trafficking crime or a crime of violence resulting in murder, in violation of 18 U.S.C. § 924 (j); and being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g).
According to the government’s filings, all but one of the charges against Sleugh arose from his participation in a conspiracy to distribute marijuana. The government asserted the drug deal with Mr. Muzac was just a ploy to rob him of marijuana. Moreover, once apprehended, Sleugh attempted to escape responsibility for the murder by blaming the person who drove Sleugh to and from the place where the marijuana deal was so have taken place. The government argued in papers filed with the court:
Defendant Sleugh pulled a loaded gun on an unarmed man in a closed vehicle. When Muzac refused to give up the marijuana, Sleugh formed the requisite premeditation—pressing the muzzle of the gun an inch from Muzac’s flesh and then firing, even as Muzac begged him not to. After he fired the shot, the defendant pushed the dying Muzac out of the car and sped away. As if this were not sufficiently callous, the defendant felt compelled to memorialize the moment with that notorious selfie from Vincent Muzac’s seat.
On July 17, 2015, a jury convicted Sleugh of all six counts in the indictment. The verdict also included a special finding that Sleugh committed first degree murder. The guilty verdict followed a two-week jury trial before the Honorable Yvonne Gonzalez-Rogers, U.S. District Judge. The sentence was handed down by the Judge Gonzalez-Rogers.
Assistant United States Attorneys Damali Taylor and Joseph Alioto Jr. prosecuted the case, along with paralegals Patty Lau and Christine Tian. The prosecution is the result of an investigation led by the FBI and of the Oakland Police Department.
Northshore Man Sentenced to Serve 30 Years in Prison for Drug Conspiracy and Firearms ViolationsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that MELVIN JACKSON, age 35, of Ponchatoula was sentenced today for his participation in a drug conspiracy and his participation in a May 11, 2012, shooting and robbery that took place outside of Roy’s Lounge.
U.S. District Judge Stanwood R. Duval sentenced JACKSON to 360 months imprisonment for the drug conspiracy, 120 months on the firearms violation, and 240 months on a separate drug charge. All sentences were ordered to run concurrently with each other.
At trial, which was held on April 11, 2015, the Government presented evidence that JACKSON, who had a prior conviction for attempted murder, was caught on video in 2012 exiting Roy’s Lounge with several associates after a night of gambling. Once outside, JACKSON removed a firearm from his shirt and gave the firearm to his friend, MELVIN DOKES. DOKES then shot the victim, a fellow gambler, four times. As the victim lay bleeding on the ground, JACKSON stood over him and took several hundred dollars out of the victim’s pockets. JACKSON and DOKES then fled. Both were initially arrested on state charges by the Tangipahoa Parish Sheriff’s Office, but made bond. While JACKSON was out on bond he continued to sell heroin on the North Shore. His drug dealing activity was brought to the attention of federal agents. An undercover operation was done which led to a search warrant being executed at JACKSON’S home. Agents recovered drugs and drug proceeds. JACKSON then confessed to his role in the conspiracy to distribute more than a kilogram of heroin and over five kilograms of cocaine hydrochloride.
U.S. Attorney Polite praised the work of the United States Drug Enforcement Administration in leading this investigation along with members of the Tangipahoa Parish Sheriff’s Office. Assistant United States Attorneys Maurice E. Landrieu, Jr. and Brandon Long were in charge of the prosecution.
North Texas Man Sentenced in Foreign Currency Trading SchemeRead the Press Release
SHERMAN, Texas – A 47-year-old former resident of Bonham, Texas, was sentenced to federal prison for operating a currency trading scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Frank Edwin Pate was found guilty by a jury on May 26, 2015, of two counts of wire fraud and one count of mail fraud following a five-day trial before U.S. District Judge Amos Mazzant. Pate was sentenced to 210 months in federal prison today by Judge Mazzant. Pate was also ordered to pay restitution in the amount of $2,829,589.84.
According to information presented in court, Pate perpetrated a fraud scheme on seven individuals who invested money with Pate for the purpose of trading foreign currency on their behalf. Pate’s scheme caused investors to invest over $3.4 million over a several year period for the purpose of currency trading. Instead of using the money for foreign currency trading, Pate spent a large portion of the money for his own personal expenses. Pate was indicted by a federal grand jury on Aug. 13, 2014.
This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorneys J. Andrew Williams and Christopher Eason.
Norfolk Man Sentenced on Drug Conspiracy and Gun ChargesRead the Press Release
NORFOLK, Va. – Isaac Deleon Nevares, 51, of Norfolk, was sentenced today to 216 months in prison for conspiracy to manufacture, distribute, and possess with intent to distribute methamphetamine, cocaine, and crack cocaine, and for possession and carrying firearms in furtherance of a drug trafficking crime.
Nevares pleaded guilty on June 5, 2015. According to court documents, ATF agents conducted a series of controlled purchases of cocaine, “crack” cocaine, and handguns from Nevares’s co-defendant Anthony Tillman Quinones, whom Nevares supplied with drugs. After executing search warrants on multiple residences involved in the drug-trafficking conspiracy, agents were led to an apartment Nevares used to store drugs. At the apartment, agents recovered over one kilogram of high-purity methamphetamine, 400 grams of cocaine, 270 grams of crack cocaine, two handguns, and a semiautomatic rifle. Nevares was arrested later that day in possession of another handgun.
Tillman Quinones, who was indicted with Nevares, pleaded guilty to drug trafficking conspiracy and firearms charges on May 19, 2015, and was sentenced to 156 months in prison on Oct. 16, 2015.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Charles E. Smith, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) Washington Field Division, made the announcement after sentencing by Chief U.S. District Judge Rebecca Beach Smith. Assistant U.S. Attorney Andrew C. Bosse prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:15-cr-38.
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New York Attorney and Two Registered Brokers Arrested for Engaging in A $300 Million Market Manipulation SchemeRead the Press Release
BROOKLYN, NY -- Darren Ofsink, a Manhattan attorney and founder of Ofsink LLC; Michael Morris, a registered broker and managing director of Halcyon Cabot Partners, Ltd. (Halcyon); and Darren Goodrich, a registered broker; were arrested earlier today on charges of securities fraud, wire fraud, and conspiracy to commit securities fraud, mail fraud, and wire fraud in connection with a $300 million market manipulation scheme. In addition to the three defendants arrested today, the eleven-count superseding indictment unsealed this morning charges four additional defendants who were arrested in July 2014: Abraxas J. Discala, also known as “AJ Discala,” the Chief Executive Officer of OmniView Capital Advisors LLC; Ira Shapiro, the Chief Executive Officer of CodeSmart Holdings, Inc., a publicly traded company; Craig Josephberg, a registered broker; and Kyleen Cane, a Las Vegas attorney and managing partner of Cane Clark LLP.[1] Three defendants, Marc Wexler, Matthew Bell, and Victor Azrak, who were charged in the underlying indictment, have pleaded guilty and are awaiting sentencing.
Ofsink and Morris will be arraigned later today before Magistrate Judge Viktor V. Pohorelsky, at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York. Goodrich’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 312 North Spring Street, Los Angeles, California. Discala, Shapiro, Josephberg, and Cane will be arraigned on the superseding indictment at a later date.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“As alleged, licensed professionals such as Ofsink, Morris, and Goodrich abused their positions of trust and became part of an elaborate scheme designed to defraud the securities markets and the investing public through false and misleading press releases and manipulated trading activity. The three were entrusted to be gatekeepers to the securities markets but instead perpetrated one of the largest market manipulation schemes ever, and by doing so, preyed upon unsuspecting and elderly investors,” stated United States Attorney Capers. “Today’s three arrests and the seven arrests last year, reflect the scope of this fraud and our commitment to bring to justice those who abuse our financial markets in order to fraudulently enrich themselves.” Mr. Capers expressed his appreciation to the FBI for its tireless efforts in leading the investigation and thanked the United States Securities and Exchange Commission, New York Regional Office, for their significant cooperation and assistance.
“Using investment schemes like ‘pump and dump,’ ‘wash trades,’ and ‘match trades,’ the defendants were able to manipulate stock prices to profit themselves while defrauding unsuspecting investors. The FBI is committed to investigating and bringing to justice those who prey upon trusting individuals for their own personal gain.” stated FBI Assistant Director-in-Charge Rodriguez.
As alleged in the indictment and other court filings, between October 2012 and July 2014, the defendants agreed to defraud investors and potential investors in four public companies: CodeSmart Holdings, Inc. (CodeSmart), trading under the ticker symbol ITEN; Cubed, Inc. (Cubed), trading under the ticker symbol CRPT; StarStream Entertainment Inc. (StarStream), trading under the ticker symbol SSET; and The Staffing Group, Ltd. (Staffing Group), trading under the ticker symbol TSGL (collectively, the Manipulated Public Companies) by artificially controlling the price and volume of traded shares in the Manipulated Public Companies through false and misleading press releases, false and misleading SEC filings, fraudulent concealment of the defendants’ and their co-conspirators’ ownership interests, engineering price movements and trading volume in the stocks, and unauthorized purchases of stock in accounts of unwitting investors.
The CodeSmart Manipulation Scheme
In early May 2013, the defendants engineered a reverse merger of CodeSmart, a private company, with a shell public company. After gaining control of CodeSmart’s three million purportedly unrestricted shares, the defendants, including Ofsink and Morris, on two occasions fraudulently inflated CodeSmart’s share price and trading volume and then sold their shares at a profit when the price reached desirable levels -- a scheme commonly referred to as a “pump and dump.” The first pump and dump occurred between approximately May 13, 2013 and August 21, 2013. During this period, the defendants manipulated CodeSmart’s stock price by raising it from $1.77 to a high of $6.94, before causing it to drop to $2.19. The second pump and dump occurred between approximately August 21, 2013 and September 20, 2013. During this period, the defendants manipulated CodeSmart’s stock price by raising it from $2.19 to a high of $4.60, before causing it drop to $2.13.
CodeSmart’s market capitalization at its highest closing price of $6.94 per share on July 12, 2013 was $86,347,800. However, that same day, CodeSmart filed with the SEC an amended Form 10-K, in which it listed only $6,000 in total assets, $7,600 in revenue, and a net loss of $103,141. By December 30, 2013, CodeSmart’s stock was trading at $0.66 per share, and on July 9, 2014, its stock closed at $0.01 per share.
The defendants profited by selling CodeSmart stock, issued to them at pennies, to unsuspecting investors, often without the investors’ knowledge and consent. Additionally, the defendants, including investment advisers and brokers, were selling CodeSmart shares in their personal trading accounts at the same time that they were purchasing that stock in their clients’ and customers’ accounts. During the first pump and dump, the defendants and their co-conspirators sold approximately 800,000 shares of CodeSmart in their personal accounts while they purchased virtually the identical amount in unsuspecting investors’ accounts.
The Cubed Manipulation Scheme
In March 2014, the defendants took Cubed public through an asset purchase agreement. Between April 22, 2014 and April 30, 2014, they concocted trading volume in this stock by purchasing more than 50% of the total number of Cubed shares purchased during this period.
A judicially-authorized wiretap of Discala’s cellular telephone revealed that the defendants and their co-conspirators fraudulently manipulated Cubed’s stock by artificially controlling the price and volume of that stock through, among other things, wash trades and matched trades.[2] Rather than generating significant market interest and causing a quick pump and dump that would elicit regulators’ scrutiny this time, the defendants gradually increased the price of Cubed’s stock to give it the appearance of a legitimate company with genuine and steady market demand for the security. The defendants used an escrow account maintained by Cane to successfully control the price and volume of Cubed’s stock. For example, on May 20, 2014, during a telephone call between Discala and Azrak, Discala emphasized his control over Cubed’s share price through the use of the escrow account, stating, “I’m the [expletive] brake and the gas, [expletive]. If I take my foot off the brake it’s 55 [dollars] tomorrow (laughter).”
On June 23, 2014, Cubed reached its highest closing price of $6.75 per share, resulting in a market capitalization of approximately $200 million. Previously, Cubed filed with the SEC a Form 10-Q and reported less than $1,500 in cash, zero revenue, negative stockholders’ equity, a net loss of $15,000, and accrued professional fees of $131,824.
This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Walter M. Norkin, Shannon C. Jones, Winston M. Paes and Patrick Hein are in charge of the prosecution, with assistance provided by Assistant United States Attorney Claire Kedeshian of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendants:
ABRAXAS J. DISCALA, also known as “AJ Discala”
Age: 44
Residence: Norwalk, ConnecticutIRA SHAPIRO
Age: 54
Residence: Congers, New YorkCRAIG JOSEPHBERG
Age: 42
Residence: New York, New YorkKYLEEN CANE
Age: 60
Residence: Las Vegas, NevadaDARREN GOODRICH
Age: 37
Residence: Manhattan Beach, CaliforniaDARREN OFSINK
Age: 46
Residence: Merrick, New YorkMICHAEL MORRIS
Age: 63
Residence: Merrick, New YorkE.D.N.Y. Docket No. 14-CR-399 (S-1) (ENV)
[1] The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[2] Wash trades are purchases and sales of securities that match each other in price, volume, and time of execution, and involve no change in beneficial ownership. For example, a wash trade occurs when Investor A buys 100 shares at $5.00 of Company A through Broker A while simultaneously selling 100 shares at $5.00 of Company A through Broker B. Matched trades are similar to wash trades but involve a related third person or party who places one side of the trade. For example, a matched trade occurs when Investor A buys 100 shares at $5.00 of Company A through a broker, while Investor B, who coordinates with Investor A, simultaneously sells 100 shares at $5.00 of Company A through a broker. Both wash trades and matched trades are used to create the appearance that the stock price rose as a result of genuine market demand for the securities.
New Orleans Businessman Sentenced for Participating in Kickback SchemeRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ANTHONY PENN, SR., age 53, of New Orleans, was sentenced today after previously pleading guilty to Count One of an Indictment charging him with conspiring to receive kickbacks in a federal debris removal contract.
U.S. District Judge Stanwood R. Duval sentenced PENN to three years of probation and one year of home confinement. Additionally, PENN was ordered to pay restitution in the amount of $215,111.55 to Company A.
According to court documents, the U.S. Army Corps of Engineers hired Phillips and Jordan, a national construction firm, to manage the removal of storm debris from the City of New Orleans after Hurricane Katrina devastated the metro area. After they were awarded the contract, Phillips and Jordan hired Company A, a local solid waste management company to assist with the debris removal project. Shortly after securing the contract, Company A hired ANTHONY PENN, a local businessman, to manage the debris removal project for them. After some time on the job, PENN approached the owners of Company A and asked if they would consider hiring his brother-in-law, KENNETH JOHNSON, as a sub-tier subcontractor to work on the project. The owners of Company A accepted the recommendation and hired JOHNSON’s company, KCJ Enterprises, as a sub-tier subcontractor. Sometime thereafter, PENN asked JOHNSON to provide him with a cut of the revenue that KCJ Enterprises was receiving from Company A as a reward for steering the contract to him. JOHNSON agreed to the scheme and wired a total of $236,461.55 in kickback payments to PENN from July 12, 2006, to February 8, 2008.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigations, the United States Department of Defense, and the Internal Revenue Service in investigating this matter. The case was prosecuted Assistant U.S. Attorneys Spiro G. Latsis and Theodore R. Carter, III.
New Haven Man Sentenced to More Than 6 Years in Federal Prison for Role in Drug Robbery SchemeRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that LOUIS TOLER, also known as “A.B.,” 46, of New Haven, was sentenced today by U.S. District Judge Alvin W. Thompson in Hartford to 77 months of imprisonment, followed by three years of supervised release, for participating in a drug robbery scheme.
This matter stems from “Operation Samson,” a multi-layered initiative headed by the ATF and the Bridgeport and New Haven Police Departments that targeted violent criminals, illegal firearm possession and firearm trafficking. In the spring of 2014, approximately 40 ATF special agents and personnel from Connecticut and across the country were deployed with New Haven and Bridgeport Police to conduct numerous covert operations.
According to court documents and statements made in court, during the operation, an undercover agent and a confidential informant made several controlled purchases of suspected crack cocaine from Donald Gaines, also known as “Stretch” and “Shorty,” of New Haven. During their contact, the informant asked Gaines if he and anyone he knew would be interested in committing a drug robbery. Gaines stated that he did not want to participate in the robbery itself, but introduced the informant and the undercover agent to Harold Harrington, also known as “Chopper” and “Chapo.” The undercover agent told Harrington that he wanted to hire someone to commit a home invasion robbery of a drug organization’s “stash house” in order to steal six to eight kilograms of cocaine. Harrington agreed to participate and helped plan the robbery, which would include the use of firearms. Harrington also stated that he would bring members of his crew to help commit the robbery.
The undercover agent and Harrington agreed to split the cocaine taken during the robbery, and they agreed to give Gaines one kilogram of the drug for putting the two individuals together.
On March 21, 2014, the day of the proposed robbery, Harrington arrived at the meeting location with TOLER. After TOLER, Harrington, and the undercover agent had a detailed discussion about how the robbery was going to be carried out, TOLER and Harrington were arrested. A subsequent search of TOLER’s car revealed a loaded firearm.
The informant then called Gaines, told him the robbery had gone smoothly and arranged to meet him to deliver the cocaine. When Gaines arrived at the designated location, he identified the law enforcement surveillance and drove off at a high rate of speed. After a short chase, Gaines crashed his car on an off ramp in West Haven, attempted to flee on foot and was apprehended.
TOLER has been detained since his arrest. On May 1, 2015, he pleaded guilty to one count of possession of a firearm by a convicted felon.
TOLER’s criminal history includes approximately 29 misdemeanor and felony convictions, including convictions for assault, threatening, burglary, sale of narcotics and unlawful possession of a weapon.
Gaines and Harrington each previously pleaded guilty to one count of conspiracy to interfere with commerce by robbery. On November 3, 2015, Harrington was sentenced to 72 months of imprisonment. Gaines awaits sentencing.
This case is being prosecuted by Assistant U.S. Attorneys Tracy Dayton and Robert Spector.
Metairie Man Sentenced After Pleading Guilty to Recording Movies in a Local Theater and Criminal Infringement of a CopyrightRead the Press Release
U.S. Attorney Kenneth A. Polite announced that DERRICK HOLLOWAY, age 32, of Marrero, was sentenced today after previously pleading guilty to two-count Bill of Information charging him with unauthorized recording of a motion picture and criminal infringement of a copyright.
U.S. District Judge Kurt D. Engelhardt sentenced HOLLOWAY to served four years probation with the first eight months in home confinement. Additionally, HOLLOWAY was fined $1,000 and ordered to pay restitution in the amount of $12,539.66 to the Motion Picture Association of America and the Recording Industry Association of America.
According to court documents, in 2014, HOLLOWAY used a digital camcorder to record approximately ten first-run motion pictures at the AMC Westbank Palace, located in Harvey, including When the Game Stands Tall and The Equalizer. HOLLOWAY subsequently duplicated and sold copies of some or all of the motion pictures. Additionally, HOLLOWAY manufactured and sold CDs and DVDs containing copyrighted musical works and motion pictures out from his business, Gold Teeth Kingz, located in Harvey. Specifically, during the execution of a search warrant at Gold Teeth Kingz in early January 2015, law enforcement authorities found and seized approximately 2,932 pirated DVDs containing copyrighted motion pictures, including When the Game Stands Tall and American Sniper, and 749 pirated CDs containing copyrighted musical works, including “Kingdom Come,” by Jay-Z and “Dangerously in Love,” by Beyoncé.
“Criminal counterfeiters are economic parasites who harm legitimate businesses that pay taxes, create jobs and support our national economy,” said Special Agent in Charge of HSI New Orleans Raymond R. Parmer Jr. “Anyone who thinks counterfeiting is a victimless crime should realize the proceeds of black-market sales are routinely funneled up the chain to criminal organizations that use these ill-gotten proceeds to support a multitude of large-scale criminal activity.”
U.S. Attorney Polite praised the work of the Immigration and Customs Enforcement, Homeland Security Investigations in investigating this matter. Assistant United States Attorney Jordan Ginsberg is in charge of the prosecution.
Man Sentenced for Wilson PNC Bank RobberyRead the Press Release
WILMINGTON – United States Attorney Thomas G. Walker announced today in federal court, Senior United States District Judge James C. Fox sentenced PARIS CORDAVA WILLIAMS, 42, from the District of Columbia, to 108 months imprisonment followed by 3 years of supervised release. Additionally, he was fined $3,500 and ordered to pay $1,579 in restitution. On July 6, 2015 a federal jury convicted WILLIAMS and ROBERT EARL MAYS of bank robbery and aiding and abetting. WILLIAMS also was found guilty of possession of a firearm by a felon. Prior to trial, on June 29, 2015, a third defendant RICKY FRANKS pled guilty to bank robbery, aiding and abetting and felon in possession of a firearm. MAYS was sentenced to 125 months on September 29, 2015 and FRANKS is scheduled for sentencing for the November 30, 2015, term of court.
According to the investigation, WILLIAMS, MAYS and FRANKS were traveling in a car rented by FRANKS from the District of Columbia. On November 13, 2014, close to closing time, WILLIAMS and FRANKS entered the PNC Bank located at 3401 Raleigh Road Parkway in Wilson, North Carolina and robbed it. FRANKS vaulted the teller counter and took approximately $1,579.00 in United States currency from a teller’s drawer. When FRANKS grabbed the money, he also grabbed the GPS tracking device. FRANKS and WILLIAMS hid with the money and tracking device in the trunk of the rental car. MAYS drove the car a short distance away. The Wilson Police Department was alerted of the robbery and also notified that the moving tracking device became stationary on Raleigh Road. After a systematic search of cars in a stopped line of traffic near the bank, by Wilson Police Department officers, officers located WILLIAMS and FRANKS in the car’s trunk with the bag of money, GPS tracker and a firearm.
Investigation of this case was conducted by the Federal Bureau of Investigation, and the Wilson Police Department. The Bureau of Alcohol, Tobacco, Firearms, and Explosives also assisted. Assistant United States Attorneys S. Katherine Burnette and Carrie D. Randa represented the government.
Man Sentenced for Aiming Laser Pointer at an AircraftRead the Press Release
WILMINGTON - United States Attorney Thomas G. Walker announced that today in federal court, Senior United States District Judge James C. Fox sentenced CHRISTOPHER LEE FUNK, 35, of Concord, North Carolina to 5 years probation and 200 hours of community service.
FUNK was named in an indictment charging him with knowingly aiming the beam of a laser pointer at an aircraft in flight (a helicopter), in violation of the provisions of Title 18, United States Code, Section 39A. On May 11, 2015, FUNK pleaded guilty to this charge.
According to the investigation, on May 6, 2014, at the Cape Fear Regional Jetport in Oak Island, North Carolina, a student pilot and flight instructor was completing a nighttime cross country training flight in a helicopter. At approximately 12:10AM, as the student was attempting a practice landing as part of his training, the helicopter cockpit was struck with a green laser.
FUNK, who at the time was outside a residence near the airport, aimed the beam of a hand-held laser at the helicopter and maintained the beam on the cockpit as it descended from about 600 feet. When the laser hit the acrylic bubble windscreen, the beam refracted and lit up the cockpit with bright green light, making it very difficult to see both inside and outside the cockpit. The student was able to maintain control of the helicopter and land safely land on the runway.
The student needed to make another landing for his training, so to avoid the area where the laser appeared to originate, the instructor and student attempted to land further away, at the southern end of the runway. However, Funk again aimed the laser at the helicopter, striking the cockpit and blinding the student and instructor. The student was able to land safely, and the instructor immediately reported the incident to local law enforcement.
With the instructor’s assistance, officers with the Oak Island Police Department were able to determine the area within a residential neighborhood next to the airport where the laser originated. Officers approached the residence and encountered FUNK, and he admitted that he may have shined the laser at the helicopter. The laser device was seized by officers after it was turned over by another individual at the residence.
The case was investigated by the Oak Island Police Department and the Federal Bureau of Investigation. Assistant United States Attorney Eric D. Goulian prosecuted the case for the government.
Mahoning Valley man face federal firearms chargesRead the Press Release
Two men from the Mahoning Valley face federal firearms charges, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio
Indicted are Chance D. Wells, 25, of Warren, and Arian O’Connor, 38, of Youngstown. Both are charged with being a felon in possession of firearms in unrelated cases.
Wells possessed a Ruger, Model P85 MKII, 9mm pistol, and a Mossberg, Model 146B, .22 caliber rifle, and ammunition, on September 4, 2015, despite prior convictions for conspiracy to distribute heroin and failure to comply, according to the indictment.
O'Connor, also known as Noble Bullhorn Sirius O’Connor Bay, possessed a Maddi Company, Model Arm, 7.62 rifle on or about August 12, 2015, O’Connor, despite prior convictions for felonoius assault and two convictions for being a felon in possession of a firearm, according to the indictment.
If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violations. In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.
These cases are being prosecuted by Assistant U.S. Attorney David M. Toepfer following investigations by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Youngstown Police Department and the U.S. Probation Office.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Leader of Massive Heroin Trafficking Group Sentenced to 30 Years in PrisonRead the Press Release
NORFOLK, Va. – Alonzo Outten, 35, of Portsmouth, was sentenced today to 360 months in prison for his leadership and involvement in a heroin trafficking operation that was responsible for the distribution of between 30 and 90 kilograms of heroin with an estimated street value between $1.5 and $4.5 million dollars.
Outten, along with six of his co-conspirators, were indicted by a grand jury on July 8, 2015. In the early morning hours of July 14, 2015, search warrants were executed simultaneously on 14 properties in Portsmouth, Chesapeake, and Suffolk by more than 250 law enforcement officials from three states and the District of Columbia. On July 30, 2015, Outten, along with several of his co-conspirators, pleaded guilty for conspiracy to manufacture, distribute, and possess with intent to distribute in excess of one kilogram of heroin.
According to the statement of facts, Outten was the leader of an organization from November 2013 to July 2015 that managed the manufacturing and distribution of between 30 and 90 kilograms of heroin with an estimated street value between $1.5 and $4.5 million dollars. Outten managed six mid-level drug operatives who in turn managed approximately a dozen other individuals that either directly assisted or facilitated the trafficking and distribution of heroin.
Outten supplied kilogram amounts of heroin to at least two Bloods gang sets: the Imperial Gangsta Bloods led by “Godfather” Chris Smith, aka Killa, who pleaded guilty on July 28, 2015; and the Gorilla Mafia Piru gang led by Theodore Vann, aka Flatline, who pleaded guilty on June 25, 2015.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Mark R. Herring, Attorney General of Virginia; and John S. Adams, Special Agent in Charge of the FBI’s Norfolk Field Office, made the announcement after sentencing by U.S. District Judge Mark S. Davis.
This case was investigated by the FBI’s Norfolk Field Office and the Chesapeake Police Department with the assistance of the Portsmouth Police Department, the Virginia State Police, and the Naval Criminal Investigative Service. Virginia Assistant Attorney General and Special Assistant U.S. Attorney John F. Butler, and Assistant U.S. Attorneys Joseph E. DePadilla and Andrew C. Bosse prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:15-cr-80 (Outten, et. al.); 2:15-cr-93 (Jackson); 2:15cr7 (Smith); and 2:15cr60 (Vann).
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Lawrenceville Man Charged with Attempting to Have Sex with 9-Year-Old ChildRead the Press Release
ATLANTA - Leonard Nathaniel Peragine, Jr., has been arraigned on federal charges of using the internet to entice a child for sexual activity, and distributing and possessing child pornography. Peragine was indicted by a federal grand jury on October 27, 2015.
“Peragine is accused of shopping online for sex with children,” said U.S. Attorney John Horn. “Such conduct is as dehumanizing as it is dangerous. Predators may feel safe in the anonymity of the internet, but this case shows that we will find these predators and bring them to justice.”
“The FBI Violent Crimes Against Children program continues to target and present for prosecution individuals such as Mr. Peragine who, as alleged in the federal indictment, would sexually exploit our nation's children. The FBI asks that anyone with information regarding child exploitation matters to contact their nearest FBI field office,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office.
According to U.S. Attorney Horn, the charges, and other information presented in court: The defendant, Leonard Nathaniel Peragine, Jr., responded to a classified advertisement that was posted online that purported to offer sexual access to a child. The ad was posted by an undercover agent as part of an FBI investigation. While communicating with the undercover agent to arrange to have sex with the child, said to be a 9-year-old girl, Peragine sent child pornography videos to the undercover agent that depicted adult men committing sex acts on prepubescent children. Peragine sent the videos via messenger application in order to have the agent show the videos to the child to persuade her to have sex with the defendant.
Peragine later spoke with who he thought was the child and asked the child whether she had seen the videos, and whether she wanted to try those activities with him. After the child said she might be interested, Peragine arranged to meet the undercover agent and the child on September 29, 2015, at a location in Suwanee, Georgia. When Peragine showed up for the meeting, he was arrested and searched. Condoms were found in his car, and additional child pornography was located on his cell phone.
Leonard Nathaniel Peragine, Jr., 32, of Lawrenceville, Georgia, was arraigned before United States Magistrate Judge Russell G. Vineyard.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the Federal Bureau of Investigation.
Assistant United States Attorney John S. Ghose is prosecuting the case.
This case is being brought as part of Project Safe Childhood. In February 2006, the Attorney General launched Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorney’s Offices around the country, Project Safe Childhood marshals federal, state and local resources to apprehend and prosecute individuals who exploit children. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
Kent County Tax Return Preparer, Yashica Toshian Tucker, Sent to Prison for Filing A False Claim Against the U.S. GovernmentRead the Press Release
Yashica Tucker also ordered to pay $196,784 in restitution to the IRS
GRAND RAPIDS, MICHIGAN — Grand Rapids resident Yashica Toshian Tucker, 40, was sentenced to one year and one day in federal prison for making a false claim against the U.S. Government, U.S. Attorney Patrick A. Miles, Jr. announced today. Chief U.S. District Judge Robert J. Jonker, who imposed the sentence, also ordered Tucker to pay restitution to the IRS in the amount of $196,784. U.S. Attorney Miles was joined in the announcement by Jarod J. Koopman, Special Agent in Charge of the Internal Revenue Service - Criminal Investigation.
Tucker was charged in April 2015 by a federal grand jury in a 10-count indictment that alleged she prepared and filed false federal tax refund claims between January 2011 and February 2013. Tucker pled guilty to one of those counts in August 2015. At the sentencing hearing today, Chief Judge Jonker held Tucker responsible for knowingly filing numerous false federal tax returns that fraudulently claimed refunds totaling $196,784. Tucker has agreed to be permanently barred from preparing or filing federal tax returns for anyone other than herself, and was ordered not to file returns on behalf of others during the three years she will be supervised by the U.S. Probation Office following release from prison.
This case was investigated by Special Agents of Internal Revenue Service Criminal Investigation and the U.S. Postal Inspection Service. Assistant U.S. Attorney Christopher O’Connor prosecuted the case on behalf of the United States.
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Justice Department Settles with Augusta County, Virginia, Regarding Polling Place Accessibility Under the Americans with Disabilities ActRead the Press Release
Today the Justice Department filed a proposed consent decree with Augusta County, Virginia, resolving claims that the county violated the Americans with Disabilities Act (ADA). The complaint, which was filed along with the consent decree, alleges that the county discriminated against voters with disabilities by failing to provide accessible polling places. Many polling places in Augusta County have architectural barriers that make them inaccessible to voters who use wheelchairs or have mobility impairments, or voters who are blind or have vision impairments.
“Voting is the cornerstone of our democracy,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Through the ADA, the promise of equal voting rights for people with disabilities is fulfilled. Under this agreement, voters with disabilities in Augusta County can vote at the polling place near their home alongside their neighbors and friends, like other voters.”
“The ability of the people to participate in our elected system of government requires access for all to voting places,” said U.S. Attorney Anthony P. Giorno of the Western District of Virginia. “The agreement in this case represents a substantial step toward guaranteeing voting access to all of our citizens.”
Under the consent decree, which must be approved by the court, the county will make temporary changes for election day at many of its polling places and permanent changes to the Augusta County Government Center, to make these polling places accessible, before the March 2016 elections. Going forward, the county will select only polling place locations that are accessible on election day. The county will also provide training to poll workers and file reports with the Justice Department on its compliance. The county, which cooperated with the department in this matter, began to increase the accessibility of its polling places for yesterday’s election.
Title II of the ADA prohibits public entities, such as Augusta County, from discriminating against people with disabilities in their programs, services and activities. With respect to polling places, public entities are required to select and use polling places that are accessible. To learn more about ADA requirements for polling place accessibility or about the ADA and other laws protecting the rights of voters with disabilities, visit www.ada.gov/ta-pubs-pg2.htm.
Those interested in finding out more about the ADA can call the Justice Department's toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), or access the ADA website at www.ada.gov.
Augusta County Complaint
Augusta County Consent Decree
Jury Finds Warehouse Manager and Truck Driver Guilty in Drug ConspiracyRead the Press Release
LAREDO, Texas – A federal jury sitting in Laredo convicted two Laredoans guilty of being involved in a conspiracy to possess with intent to distribute in excess of 1,000 kilograms of marijuana, announced U.S. Attorney Kenneth Magidson. The verdicts against Rafael Ortega aka Tio, 57, and Baltazar Ibarra Cardona aka Balta, 55, were returned last night following a three-day trial.
Both were found guilty of the conspiracy. Cardona and Ortega were also convicted of one and four counts, respectively, of possession with intent to distribute marijuana.
During trial, the government presented testimony from 13 witnesses and admitted more than 300 exhibits to prove their guilt in the drug conspiracy which occurred from June 2011 through June 2013. Ortega was a warehouse manager who allowed the Erasmo Trejo Nava drug trafficking organization to use the facility, while Cardona was one of several truck drivers used by the organization to transport marijuana from Laredo to Dallas.
Ortega was a warehouse manager in Laredo who, unbeknownst to his employer, made the building available for the loading and unloading of marijuana before and after business hours and on weekends. He received $3,000 on each occasion. Ortega allowed members of the drug organization to prepare the drug shipments using the warehouse and warehouse yard. A trailer would bring large wooden crates to the warehouse which were unloaded and readied for marijuana bundles to arrive from stash houses. As many as 138 bundles each weighing 20-40 pounds were unloaded at the warehouse and placed into the crates.
Surveillance showed Ortega meeting the co-conspirators at the warehouse and unlocking the gates to allow them access and entry. Testimony further revealed that Ortega used the warehouse forklift to assist the organization with unloading and loading of the crates into the trailers.
Evidence established that Ortega used his employer’s warehouse unload, load and transport approximately 6,394 kilograms of marijuana. 2,801 kilograms were eventually seized by law enforcement at the checkpoint, while 1,858 kilograms were seized from Cardona as he attempted to transport the drugs to Dallas.
Cardona was a commercial truck driver willing to transport marijuana loads for $15,000. He would pick up trailers loaded with the marijuana left at the warehouse for transportation to Dallas. loads. On a weekend in October 2011, the organization loaded four large crates with marijuana and placed them onto a trailer at the warehouse provided by Ortega. On Oct. 2011, Cardona drove a tractor to the warehouse and picked up the marijuana-loaded trailer to transport to Dallas, taking a longer route via Highway 83 to circumvent the IH-35 checkpoint in the hopes of evading law enforcement. However, he was stopped by a Zavala County deputy between Carrizo Springs and Uvalde with an expired driver’s license as well as expired insurance on the tractor. He also had a false bill of Lading showing that his cargo was destined to a hardware store in Abeline. A search of the tractor trailer revealed he was transporting 1,858 kilograms of marijuana. Evidence established that this had been Cardona’s third trip for the organization.
A total of 18 others previously pleaded guilty. Erasmo Abdon Trejo Nava, 43, Jose Angel Trejo, 42, Ovidio Rodriguez, 41, Victor Hugo Trejo Nava, 41, Francisco Colin, 41, and Salvador Saldaña-Medrano, 36, all of Laredo; Jaime Enrique Montalvo-Ruiz, 44, of Nuevo Laredo, Mexico; and Leocadio Ruiz, 47, of Dallas, entered pleas of guilty to conspiring to possess with intent to distribute more than 1,000 kilograms of marijuana and conspiracy to launder drug proceeds. Five others - Juan Manuel Vargas Aguilar, 45, Mario Albert Rodriguez, 29, and Ricardo Ramirez, 33, all of Laredo; Arturo Lozano, 47, of Dallas; and Joshua Sanchez, 32, of Nuevo Laredo – pleaded guilty to the conspiracy. Gerardo Moreno Recio, 48, of Nuevo Laredo, was convicted of two separate counts of possession with intent to distribute more than 100 kilograms of marijuana, while Laura Heredia Garcia, 50, of Nuevo Laredo; and Erika Alvarez, 38, Raquel Margarita Ramos Jimenez, 44, and Leslie Bernice Trejo, 22, all of Laredo, entered pleas of guilty to one count of conspiracy to launder drug proceeds.
The case against two others remains pending.
The charges were the result of a long term Organized Crime Drug Enforcement Task Force Investigation dubbed Operation Trena Sin Trono spearheaded by the Drug Enforcement Administration and IRS - Criminal Investigation with the assistance of Homeland Security Investigations, Laredo Police Department, Zavala County Sheriff’s Office. Assistant U.S. Attorney Mary Lou Castillo is prosecuting the case.
Jury Convicts Three of Marriage FraudRead the Press Release
ALBANY, NEW YORK – A jury voted yesterday to convict three people of entering into fraudulent marriages for the purpose of allowing two of them to unlawfully remain in the United States, announced United States Attorney Richard S. Hartunian and James C. Spero, Special Agent in Charge of the Buffalo Field Office of Homeland Security Investigations.
Gaurav Mehta, age 35, a citizen of India, was convicted of one count of marriage fraud and two counts of immigration fraud. Isha Mehta, age 32, a citizen of India, also known as Isha Kamboj and Isha Johnson, was convicted of one count of marriage fraud and one count of immigration fraud. Mary Opoka, age 55, of Troy, New York, was convicted of one count of marriage fraud.
The Mehtas each face up to 10 years in prison on each of the immigration fraud convictions. Each defendant faces a maximum of 5 years in prison on their marriage fraud conviction. Senior United States District Court Judge Thomas J. McAvoy is scheduled to sentence the three defendants on March 14, 2016 in Albany.
The jury reached a verdict on November 3, after a 6-day trial.
The evidence at trial established: Gaurav and Isha Mehta were married in India in February 2006. They divorced in India in 2009, but then flew together, along with their child, to the United States, eventually settling in Menands, New York, and working together at a Menands gas station. The Mehtas came to the United States on 6-month tourist visas that expired in 2010; neither had authorization to stay in the United States.
In October 2011, Opoka, a U.S. citizen, and Gaurav Mehta, an alien unlawfully present in the United States as of January 2010, were married in Troy. The marriage was designed to enable Gaurav Mehta to stay in the United States. Because of the fraudulent marriage to a U.S. citizen, Gaurav Mehta was issued an employment authorization document and a conditional permanent resident card that he was not eligible to receive.
Isha Mehta, an alien unlawfully present as of January 2010, married Brandon Johnson, a U.S. citizen, in Troy in January 2013. Gaurav Mehta paid Johnson $2,000 to marry Isha. The marriage was designed to enable Isha Mehta to stay in the United States. Because of the fraudulent marriage to a U.S. citizen, Isha Mehta was issued an employment authorization document that she was not eligible to receive.
On March 12, 2014, Brandon Johnson pled guilty to marriage fraud; he is scheduled to be sentenced on February 17, 2016.
The case was investigated by Homeland Security Investigations with assistance from the Menands Police Department, and is being prosecuted by Assistant U.S. Attorney Edward P. Grogan.
Jefferson City Man Sentenced for Distributing HeroinRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Jefferson City, Mo., man was sentenced in federal court today for distributing heroin.
Xavier Deprey Johnson, 32, of Jefferson City, was sentenced by U.S. District Judge Brian C. Wimes to 12 years and seven months in federal prison without parole.
On April 27, 2015, Johnson pleaded guilty to distributing heroin and to possessing heroin with the intent to distribute.
On July 30, 2013, Johnson distributed $100 of heroin to another person, who distributed it to an informant working with law enforcement. On Aug. 27, 2013, Johnson possessed heroin with the intent to distribute it to another person. This heroin was discovered during the execution of a search warrant at his girlfriend’s apartment.
According to court documents, Johnson admitted to law enforcement officers that he distributed hundreds of grams of heroin per month between June 2013 and August 2013. Johnson estimated that he distributed between 540 to 810 grams during that time.
This case was prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. It was investigated by the Drug Enforcement Administration and the Jefferson City, Mo., Police Department.
Honolulu Man Indicted for Murder of WifeRead the Press Release
HONOLULU – A federal grand jury today indicted Michael Walker, age 36, of Honolulu for murder in the first degree for the killing of his wife and a second charge of conspiring to do so. This superseding indictment joined Walker with Ailsa Jackson, age 25, who had previously been indicted for the same murder occurring between November 14 and 15, 2014, on Aliamanu Military Reservation on Oahu. Walker was arrested without incident by the Federal Bureau of Investigation (FBI), assisted by the Army Criminal Investigation Command (CID), after the indictment, and his initial appearance is set in U.S. District Court on November 5 at 11:00am.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said the superseding indictment alleges that:
- In September 2014, Walker expressed to Jackson his desire to have his wife "gone," after which Jackson said that one way to stage a killing was to make it look like a burglary.
- During a meeting on November 14, 2014, Jackson informed Walker that she was going to execute the killing that night, and Walker confirmed that he was working that night and gave Jackson instructions as to how she would know which method of entry into Walker’s home would work.
- Around midnight between November 14 and 15, Jackson entered Walker’s home on Aliamanu Military Reservation with the assistance of a key left near the rear entry of the house, grabbed a knife from the kitchen, and stabbed Walker’s wife multiple times, resulting in her death.
The maximum penalty if convicted of murder in the first degree is death, while the maximum penalty for conspiring to commit murder is life imprisonment. Charges and allegations contained in the superseding indictment are merely accusations, and each defendant is considered innocent unless and until proven guilty. The investigation of this case was conducted by the FBI, which has acknowledged the critical assistance of the Army CID. The prosecution is being handled by Assistant U.S. Attorneys Thomas Brady and Jill Otake and Special Assistant U.S. Attorney Sean Mahoney.
Harvey Homeowner Pleads Guilty to Theft of Home Elevation Grant FundsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that QUANG SMITH, age 65, of Harvey, pled guilty today to a one count Bill of Information charging her with theft of government funds.
According to documents filed in federal court, QUANG SMITH owned a home in Harvey. In August 2010, SMITH executed application documents with the HMGP program to receive federal grant funds to elevate her house in Harvey, Louisiana. The application was completed with the understanding that the grant monies would be used to elevate her house in Harvey, Louisiana.
In early 2011, SMITH received federal Home Mitigation Grant Program (“HMGP”) monies totaling $80,000 to elevate her house in Harvey. The monies were electronically transferred into her personal bank account for the elevation project. However, SMITH failed to use the grant monies to elevate her residence. Instead, she converted the federal funds for her own personal use and never elevated her home.
The maximum penalty for theft of government funds is ten years imprisonment and/or a fine of $250,000 or the greater of twice the gross gain to the defendant or twice the gross loss to the victim. U.S. District Judge Susie Morgan set sentencing for February 24, 2016.
U.S. Attorney Kenneth Polite praised the work of the Department of Homeland Security, Office of Inspector General in investigating this matter. Assistant United States Attorney, Richard R. Pickens, II is in charge of the prosecution.
Quang Smith - Factual Basis.pdf (108.59 KB)
Guatemalan Man Sentenced for Possession and Importation of Liquid Meth in Gas TankRead the Press Release
BROWNSVILLE, Texas – A 52-year-old man from Guatemala who was residing in Ciudad Hidalgo Chiapas, Mexico, has been ordered to federal prison for his two convictions of possessing with intent to distribute and importing methamphetamine, announced U.S. Attorney Kenneth Magidson. A jury convicted Hector Feliciano Lopez-Monzon following a three-day trial and less than two hours of deliberation on March 13, 2015,
Today, U.S. District Judge Hilda G. Tagle, who presided over the trial, ordered Lopez-Monzon serve a total of 292 months in federal prison. Not a U.S. citizen, he is expected to face deportation proceedings following his release from prison.
The case arose from a seizure at the international bridge in Los Indios on Dec. 26, 2014. On that date, a tractor trailer pulling an empty car hauler was found to have 378.5 kilograms of liquid methamphetamine in one of the diesel tanks. Testimony at trial revealed that a “cruzador” (crosser) had been hired at the Mexican border to cross the car hauler into the United States for delivery to a transmigrant forwarding company.
Transmigrants from Central America travel to the U.S. to buy vehicles, tractors and other items to export to their country for resale. The cruzador and another witness testified that cruzadors are routinely hired by transmigrants from Central America to drive the vehicles from the Mexican border to an importation/forwarding company in Los Indios.
Lopez-Monzon crossed into the United States the day after the tractor trailer seizure. He identified himself as the owner of the conveyance saying he had traveled in it with a companion from Guatemala through Mexico and then hired a cruzador to cross it into the U.S. He denied knowledge of the drugs. However, testimony at trial revealed he had false documentation regarding the tractor and car hauler. In addition, he gave an inconsistent version of how the traveled from Guatemala through Mexico.
The jury ultimately convicted him on the two charges.
Lopez-Monzon will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
This charges were the result of an investigation conducted by Homeland Security Investigations with the assistance of Customs and Border Protection. Assistant U.S. Attorneys Oscar Ponce and David Coronado are prosecuted the case.
Former Orleans Parish School Board Employee Sentenced for Conspiracy to Commit Federal Bribery and Honest Services Wire FraudRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ARMER BRIGHT, age 51, of Baton Rouge, a former employee of the Orleans Parish School Board (“OPSB”), was sentenced today after previously pleading guilty to the charge of conspiracy to commit bribery and honest services wire fraud.
U.S. District Judge Susie Morgan sentenced BRIGHT to one year plus one day incarceration, followed by one year of supervised release, and a $100 special assessment.
According to court documents, BRIGHT admitted that beginning in September 2013 and continuing until January 2015, he and others participated in a conspiracy to commit bribery and honest services wire fraud. BRIGHT further admitted that he initiated a scheme to defraud Orleans Parish and its citizens of honest services through bribery and a kickback scheme, whereby IRA THOMAS, an Orleans Parish School Board member, used his public office and official capacity to provide favorable treatment, including attempting to facilitate the awarding of a contract, that was designed to benefit the business and financial interest of an individual who provided him with a bribe and kickback in the form of cash payment disguised as a campaign contribution.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigation in investigating this matter. Assistant U.S. Attorney Sean Toomey was in charge of the prosecution.
Former Husband, Wife Business Owners Sentenced for K2 DistributionRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the owners of a head shop and liquor store in Queen City, Mo., were sentenced in federal court today for their roles in a mail fraud conspiracy related to the distribution of synthetic marijuana, commonly referred to as K2.
Jimmy Dean Moore, 50, and his ex-wife Tina Irene Moore, 45, both of Queen City, were sentenced in separate appearances before U.S. District Judge Brian C. Wimes. Jimmy Moore was sentenced to three years in federal prison without parole. Tina Moore was sentenced to two years and three months in federal prison without parole.
Jimmy and Tina Moore each pleaded guilty to participating in a conspiracy to commit mail fraud. The Moores and their co-conspirators devised a scheme to defraud the Food and Drug Administration and to defraud the public by claiming that synthetic cannabinoid products were “incense” and “not for human consumption,” when in fact these substances were synthetic cannabinoids that were intended for human consumption as a drug.
Between April 20, 2012, and Jan. 17, 2013, the Moores (who were married at the time) purchased synthetic marijuana from co-conspirators, which was delivered through FedEx. The Moores distributed the synthetic marijuana from Moore-4-You Variety Store, their head-shop and liquor store at 1108 Cedar Street in Queen City.
Based upon the invoices, bank records, and products seized by law enforcement, the Moores purchased approximately $145,999 of synthetic cannabinoid products from their co-conspirators, which they then sold through their business for approximately $291,999. In total, they sold multiple kilogram quantities of synthetic cannabinoid products.
The distribution of synthetic drugs from Moore-4-You was the dominant economic activity taking place at the business. Over a five-week period in July and August 2012, for example, they obtained $28,165 of synthetic drug inventory, compared to $6,568 of beer inventory and $2,324 of liquor inventory.
Co-defendant Charles Sterling Austin, Jr., 63, of St. Charles, Mo., pleaded guilty on Oct. 28, 2015, to participating in a money-laundering conspiracy. As the owner of Puff N Snuff, LLC, with two locations in Camdenton and Eldon, Mo., Austin also pleaded guilty to the same charge on behalf of the company. Austin admitted that he purchased synthetic marijuana from several sources and sold it in his smoke shop.
This case is being prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. It was investigated by the Drug Enforcement Administration, IRS-Criminal Investigation, Homeland Security Investigations, the Columbia, Mo., Police Department, the MUSTANG Task Force, the LANEG Drug Task Force, the Cole County, Mo., Sheriff’s Department, the Morgan County, Mo., Sheriff’s Department, the Camden County, Mo., Sheriff’s Department, the Camdenton, Mo., Police Department, the Missouri State Highway Patrol, the Kirksville, Mo., Police Department, the North Missouri Drug Task Force, the Schuyler County, Mo., Sheriff’s Department, the Edina, Mo., Police Department, the Linn County, Mo., Sheriff’s Department and the Brookfield, Mo., Police Department.
Former Home Depot Employees Sentenced to Prison for Identity Theft in Credit Card Fraud SchemeRead the Press Release
ATLANTA – Paulette Shorter and Lakisha Grimes have been sentenced to federal prison for stealing personal identifying information from fellow employees of The Home Depot, Inc. in order to submit fraudulent applications for credit cards.
“The defendants stole the very personal information they were entrusted to protect,” said U.S. Attorney John Horn. “They applied for fraudulent credit cards with personal identifying information taken from The Home Depot’s human resources database. Grimes and Shorter violated the trust of their employer and their fellow employees, and they did so to enrich themselves at the expenses of others.”
“The U.S. Secret Service and our law enforcement partners work tirelessly to protect consumers against identity theft fraud,” said Reginald G. Moore, Special Agent in Charge of the United States Secret Service, Atlanta Field Office. “These sentences should serve as a reminder that criminals will not get away with maliciously using their entrusted positions for personal gain.”
According to United States Attorney Horn, the charges, and other information presented in court: Paulette Shorter and Lakisha Grimes worked as Human Resources employees in the Atlanta, Georgia headquarters of the Home Depot, Inc., where they had access to employee databases containing employee names, Social Security numbers, and birth dates. The defendants used personal identifying information stolen from the Home Depot employee database and other sources to apply online for Capital One credit cards in the names of different individuals, including Home Depot employees and job applicants. Home Depot Corporate Security discovered the fraudulent scheme based on a tip from a Home Depot employee and reported the identity theft to federal investigators.
In total, thirty-two fraudulent Capital One credit card applications were submitted as part of the scheme using stolen personal identifying information, and two of the approved credit cards were mailed to Shorter’s and Grimes’s residences. Two of Shorter’s relatives used a credit card issued in the fraudulent scheme to purchase merchandise at several outlet stores.
Paulette Shorter, 32, of Orlando, Florida was sentenced on November 4, 2015, by United States District Court Judge Steve C. Jones to two years and one day in prison to be followed by three years of supervised release, and she was ordered to pay $166.90 in restitution to Capital One. Shorter was convicted on this charge on July 30, 2015, after she pleaded guilty.
Lakisha Grimes, 38, of Conyers, Georgia was sentenced on January 16, 2015, by United States District Court Judge Steve C. Jones to two years in prison to be followed by one year of supervised release. Shorter was convicted on this charge on November 3, 2014, after she pleaded guilty.
This case is being investigated by the United States Secret Service.
Assistant United States Attorney Nathan P. Kitchens is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao/gan/.
Former Fugitive Convicted for Failure to AppearRead the Press Release
DAYTON – Lance Ealy, 29, of Dayton, was convicted of three counts of failure to appear. U.S. District Court Judge Thomas M. Rose issued his verdict today after a bench trial that took place on October 22, 2015.
A jury in the Southern District of Ohio convicted Ealy in November 2014 of buying stolen identities online and using the identities to file more than 150 fraudulent federal income tax returns seeking refunds to which he was not entitled.
Ealy failed to appear for his jury trial on November 17, 18 and 19, 2014. He became a fugitive on November 15, 2014, after he removed his electronic monitoring device and fled while under bond conditions. He was recaptured in late March 2015 in Georgia.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, United States Marshal Peter Tobin, Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), and Mark Porter, Special Agent in Charge, U.S. Secret Service, announced the verdict reached today.
According to court testimony in the jury trial, between approximately January 2013 and October 2013, Ealy electronically filed at least 150 fraudulent federal income tax returns, including returns filed using the personal information of others that he had unlawfully acquired from an illicit online source. Ealy opened dozens of bank accounts at multiple financial institutions using the names and social security numbers of other individuals – without their knowledge or permission – in order to electronically deposit the fraudulent tax refunds.
The jury convicted Ealy of 46 charges, including one count of illegally possessing 15 or more unauthorized access devices, 11 counts of filing false claims for income tax refunds with the IRS, 14 counts of wire fraud, 14 counts of aggravated identity theft, one count of mail fraud, and one count of using unauthorized access devices to obtain $1,000 or more in a one-year period. An access device includes things such as payment cards and bank account numbers used to access financial accounts.
Ealy faces up to 10 years in prison on each count of possessing 15 or more unauthorized access devices with intent to defraud and using unauthorized access devices to obtain items of $1,000 or more in value; up to five years in prison on each count of filing false claims for income tax refunds with the IRS; up to 20 years in prison on each count of wire fraud and each count of mail fraud; and mandatory two-year sentences on each count of aggravated identity theft that must run consecutive to whatever sentence may ultimately be handed down. Each count of conviction also carries a fine of up to $250,000. Ealy is scheduled to be sentenced before Judge Michael R. Barrett on November 20, 2015 for his convictions in the underlying case.
He faces a sentence of up to 10 years in prison for his failure to appear convictions, which must run consecutive to the sentence of imprisonment for any other offense. Judge Rose has scheduled sentencing in Ealy’s failure to appear case for February 6, 2016.
Ealy was initially charged in a federal complaint filed on October 28, 2013 following an investigation by Secret Service agents that revealed that Ealy had purchased stolen identities from an illicit online source. A federal grand jury initially indicted Ealy in November 2013, charging him with one count of knowingly possessing 15 or more access devices with intent to defraud.
U.S. Attorney Stewart commended the investigation of this case by the United States Marshals Service, Secret Service and IRS-Criminal Investigation agents, and Assistant U.S. Attorneys Alex R. Sistla and Andrew J. Hunt, who are prosecuting the case.
Former Executive Director of Zanesville's Center for Child and Family Development Pleads Guilty to Stealing Program FundsRead the Press Release
COLUMBUS, Ohio – Melissa Daley, 45, of Nashport, Ohio, pleaded guilty in U.S. District Court to one count each of filing a false income tax return with the Internal Revenue Service (IRS), wire fraud and money laundering.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the plea entered into today before U.S. District Judge Gregory L. Frost.
According to court documents, since 1992 Daley acted as the Executive Director for the Center for Child and Family Development (CCFD), which was located in Zanesville, Ohio. CCFD, a non-profit organization, provided foster care and residential case services to children as well as adult care services.
In June 2009, on behalf of CCFD, Daley applied to the Ohio Department of Developmental Disabilities (DODD) to allow for CCFD to be a part of the Individual Options Waiver Program (I/O Waiver Program). This program allowed for continued care of adult individuals with mental or developmental disabilities and permitted qualified individuals to remain in their homes and obtain support for their disabilities rather than requiring them to live in an Intermediate Care Facility for the Mentally Retarded. The application was approved by DODD.
Between March 2011 and November 2012 Daley devised a scheme to defraud CCFD. Daley faxed a change of direct deposit form to the agency responsible for processing payments for the I/O Waiver Program, which was Ohio Shared Services (OSS). Included in the fax to the OSS was a request to change the direct deposit of I/O Waiver Program funds from the CCFD operating account into a different account. Daley included in her request a copy of a bank check and a bank letter purportedly signed by a bank representative confirming that the new account was a business account in the name of CCFD. However, the letter Daley submitted was fictitious, the bank representative was an individual who never worked for the bank and the bank account was not a business account in the name of CCFD, but rather, a personal checking account for Daley. In addition, Daley altered the bank check she submitted to OSS to make it appear as though the bank account belonged to CCFD and not to her. As a result of this fraudulent scheme, Daley received $71,977.31 of CCFD’s I/O Waiver funds that were deposited into her personal checking.
In addition, in August 2011, after having resigned from CCFD, Daley opened a new bank account in the name of CCFD and claimed she was the President of the organization. After opening the account, Daley again faxed a change of direct deposit form to OSS to have CCFD I/O Waiver Program funds deposited into her bank account. Once Daley received CCFD’s I/O Waiver funds she would immediately transfer the funds into another bank account in the name of Community Base Services, which was a newly formed entity created by Daley. As a result of this fraudulent scheme, Daley received an additional $296,115.00 of CCFD’s I/O Waiver funds into her personal bank account
Daley did not report any of CCFD’s I/O Waiver funds she fraudulently obtained on her 2011 or 2012 income tax returns. The total unreported income on Daley’s 2011 and 2012 income tax returns was $360,182.37 resulting in additional taxes due and owing to the IRS in the amount of $103,043.07.
“Operating a non-profit program does not give you a license to steal,” said Troy N. Stemen, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “The conduct detailed in this case was egregious. This program was designed to help children and adults with their much needed continued care, and this defendant defrauded them for her own personal gain.”
Filing a false income tax return with the IRS is punishable by up to five years in prison and a $250,000 fine. Wire fraud is a crime punishable by up to 20 years in prison and $250,000 fine. Money laundering carries a maximum sentence of 10 years in prison and a $250,000 fine.
U.S. Attorney Stewart commended the cooperative investigation by the FBI and IRS, as well as Assistant United States Attorney Kenneth F. Affeldt, who is representing the United States in this case.
Former Employee of Federal Reserve Bank of New York Pleads Guilty in Manhattan Federal Court to Theft of Confidential Information from the Federal ReserveRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Diego Rodriguez, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the guilty plea of JASON GROSS to the theft of confidential information from the Federal Reserve Bank of New York (“FRBNY”). Between July and September of 2014, without authorization, GROSS took confidential information from the FRBNY, which related to the FRBNY’s supervision of banks, and that GROSS obtained during the course of his employment with the FRBNY, and sent that information to a former supervisor at the FRBNY (“Individual-1”) who was then employed at an investment bank headquartered in New York, New York. GROSS entered his guilty plea today before U.S. Magistrate Judge Gabriel W. Gorenstein.
According to the Information filed today and other statements made in Manhattan federal court:
The Federal Reserve System (“Federal Reserve”) fulfills several roles in the nation’s economy, including managing the nation’s money supply through monetary policy, supervising and regulating banking institutions, and generally overseeing the stability of the financial system. The Board of Governors of the Federal Reserve (the “Board”) is the Federal Reserve’s main governing body, and the FRBNY is one of the banks that is part of the Federal Reserve. Among other things, the FRBNY supervises and conducts examinations of banks that are members of the Federal Reserve and bank holding companies. Federal regulations protect the disclosure of certain “confidential supervisory information” (“CSI”) related to the Board’s and the FRBNY’s supervision of banks, including reports of examination of banks and information derived from, related to, or contained in such reports.
During the relevant time period, GROSS was employed by the FRBNY. GROSS’s responsibilities at the FRBNY included assisting with the supervision of certain banks. Prior to April of 2014, GROSS and Individual-1 had worked together at the FRBNY. From at least July 2014, up to September 2014, at the direction of Individual-1, who had left the FRBNY and begun to work at an investment bank headquartered in New York, New York (the “Investment Bank”), GROSS emailed documents containing CSI (the “Confidential Documents”) to Individual-1. GROSS sent the Confidential Documents, which he obtained during and through his employment at the FRBNY, to Individual-1 without authorization from the Board or the FRBNY. Upon receiving the Confidential Documents from GROSS, Individual-1 utilized certain of the Confidential Documents in an effort to further Individual-1’s employment at the Investment Bank. In particular, Individual-1 disseminated certain of the Confidential Documents to other Investment Bank employees for the purpose of assisting with the Investment Bank’s work for its client banks.
For example, on August 10, 2014, Individual-1 sent GROSS a text message asking GROSS to send to Individual-1 particular Confidential Documents regarding two banks (“Bank-1” and “Bank-2”). Individual-1 further asked GROSS to send the documents to Individual-1’s personal email account. Thereafter, on August 19, 2014, GROSS sent one of the Confidential Documents (“Confidential Document-1”) from his personal email account to the personal email account of Individual-1. GROSS knowingly sent Confidential Document-1, which was labeled as confidential, to Individual-1 without authorization from the Board or the FRBNY. Confidential Document-1 related to the supervision of Bank-2, a bank that Individual-1 had previously been responsible for supervising when Individual-1 worked at the FRBNY. Notwithstanding that Individual-1 knew that Individual-1 was not entitled to receive or disseminate any Confidential Documents, Individual-1 sent Confidential Document-1 from Individual-1’s email account at the Investment Bank to the email accounts of other individuals employed by the Investment Bank. In a cover email attaching Confidential Document-1, Individual-1 told these employees that, with respect to certain supervisory issues, Confidential Document-1 “gives you [an] idea of what [the] Board was looking at . . . Please don’t distribute.”
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GROSS, 37, of Bellmore, New York, pled guilty to one count of theft of government property the value of which property did not exceed $1,000 and faces a maximum sentence of one year in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. GROSS is scheduled to be sentenced by U.S. Magistrate Judge Gabrielle W. Gorentstein on March 2, 2016.
Mr. Bharara praised the investigative work of the FBI and thanked the FRBNY and the Board for their support and assistance with the investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.Assistant U.S. Attorneys Drew Johnson-Skinner and Sarah E. Paul are in charge of the prosecution.