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10 December 2015
Three Chinese Nationals Arrested for Scheme to Steal and Illegally Export Military-Grade SemiconductorsRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that three Chinese nationals have been arrested on federal criminal complaints in connection with a scheme to obtain and illegally export sophisticated semiconductors stolen from the U.S. military. DAOFU ZHANG, 50; JIANG GUANGHOU YAN, also known as “Ben,” 33; and XIANFENG ZUO, 37, were arrested this morning in Milford.
The three defendants made initial appearances before U.S. Magistrate Judge Sarah A.L. Merriam in New Haven and were detained.
As alleged in the criminal complaints, federal law enforcement agents began investigating YAN and a Chinese company known as HK Potential in 2012 for trafficking in counterfeit semiconductors. In October 2014 and in March 2015, YAN sold a total of 45 counterfeit Intel microprocessors to an undercover agent who had advised YAN that the components would be used on a U.S. Navy contract involving submarines.
The complaints further allege that, in July 2015, YAN asked whether the undercover agent could obtain 22 Xilinx semiconductors, military grade, for which YAN would pay $37,000 each. After the undercover agent advised YAN that the Xilinx components could be stolen from a U.S. Navy base, YAN offered to provide fake Xilinx components that could be substituted for the stolen components in order to prevent detection of the theft. When asked whether the fake Xilinx components would work, YAN replied that “the fake one just look the same” but were “not ok for function.” In November 2015, YAN shipped eight of the fake Xilinx components to the undercover agent.
ZHANG, YAN, and ZUO traveled to the U.S. on December 6, and they were arrested today attempting to take delivery of the Xilinx semiconductors from the undercover agent.
“The Justice Department and our federal law enforcement partners are committed to prosecuting those who would supply our armed forces with counterfeit electronic components, as well as those who attempt to steal sophisticated U.S. military components and distribute them to places unknown,” stated U.S. Attorney Daly. “I thank the collaborative efforts of our partners in this long-term investigation, including the DCIS, HSI, FBI, U.S. Department of Commerce’s Bureau of Industry and Security, and U.S. Air Force’s Office of Special Investigations.”
The complaint charges ZHANG, YAN, and ZUO with violating the International Emergency Economic Powers Act, which carries a maximum penalty of 20 years of imprisonment and a $1 million fine; and receipt of stolen government property, which carries a maximum penalty of 10 years of imprisonment and a $250,000 fine. ZHANG and YAN are also charged with trafficking in counterfeit goods, which carries a maximum penalty of 10 years of imprisonment and a $2 million fine; and mail fraud, which carries a maximum penalty of 20 years of imprisonment and a $250,000 fine. In addition, ZHANG and ZUO are charged with conspiracy, which carries a maximum penalty of five years of imprisonment and a $250,000 fine.
U.S. Attorney Daly stressed that a complaint is only a charge and is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Defense Criminal Investigative Service, Homeland Security Investigations, the Federal Bureau of Investigation, the U.S. Department of Commerce’s Bureau of Industry and Security, and the U.S. Air Force’s Office of Special Investigations. The case is being prosecuted by Assistant U.S. Attorney Edward Chang.
Texas Man Sentenced to 21 Days in Prison on Federal Charge Stemming from Disturbance at U.S. Supreme CourtRead the Press Release
WASHINGTON – Rives M. Grogan, 50, of Mansfield, Texas, was sentenced today to 21 days of incarceration on a federal charge stemming from a disturbance that he caused on April 28, 2015, at the United States Supreme Court, U.S. Attorney Channing D. Phillips announced.
Grogan pled guilty on Sept. 25, 2015, in the U.S. District Court for the District of Columbia to a charge of picketing or parading in violation of 18 U.S.C. § 1507, which covers illegal demonstrations within federal court buildings. He was sentenced by the Honorable Randolph D. Moss. Upon completion of his prison term, Grogan will be placed on one year of supervised release. During that time, he is ordered to stay away from the Supreme Court.
Grogan has a history of convictions for disorderly conduct and similar offenses, including cases involving other disturbances over the years at the U.S. Capitol and the Supreme Court and on Capitol grounds during the 2013 Presidential inauguration. The guilty plea in this case stems from his actions on the morning of April 28, 2015, as the Supreme Court was in session, with all nine Justices present and presiding.
According to a statement of offense submitted as part of the guilty plea, on the date of the disturbance, the Justices were considering whether a state’s constitutional and statutory bans on recognition of marriages of same-sex couples validly entered in other jurisdictions violate the Due Process and Equal Protection clauses of the U.S. Constitution and whether a state’s refusal to recognize a judgment of adoption of a child issued to a same-sex couple by the courts of a sister state violates the Full Faith and Credit Clause of the U.S. Constitution.
Due to the historical significance of the issues before the Supreme Court that day, the courtroom was full with civilians, members of the Supreme Court bar, and other professional attendees.
Grogan entered the courtroom at about 10:30 a.m., as arguments were under way. A short time later, he stood and began yelling statements in a very loud, forceful voice toward the front of the courtroom, where the Justices were seated at the court bench. Among other things, he stated that “the Bible teaches if you support gay marriage, you could burn in hell for eternity.” Police officers attempted to detain him, but Grogan refused to leave his bench. Then, as officers attempted to grab him and take him out of the courtroom, he continued to shout statements. This continued as he was escorted through the building and to a holding area. He could still be heard by attendees in the courtroom.
In announcing the sentence, U.S. Attorney Phillips expressed appreciation for the work of the Police Department of the U.S. Supreme Court, which investigated the case. He also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Criminal Investigator Derek Starliper; Paralegal Specialist Carolyn Carter-McKinley, and Legal Assistant Holly Crouse. Finally, he commended the work of Assistant U.S. Attorney Angela S. George, who prosecuted the case.
Tenth Twin Cities Man Charged with Conspiracy to Provide Material Support to ISILRead the Press Release
United States Attorney for the District of Minnesota Andrew M. Luger, Special Agent in Charge for the Minneapolis Division of the FBI Richard T. Thornton and Assistant Attorney General for the National Security Division John P. Carlin today announced a criminal complaint charging ABDIRIZAK MOHAMED WARSAME, 20, with conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL) and providing material support to ISIL. The defendant made an initial appearance today before Senior District Judge Michael J. Davis in U.S. District Court in Minneapolis, Minn.
“This defendant is the tenth Twin Cities’ man charged as part of a broad conspiracy to provide material support to ISIL,” said US Attorney Luger. “The FBI and prosecutors in my office continue to work without pause to keep Minnesotans safe and bring these defendants to justice.”
“This arrest demonstrates the commitment to U.S. national security by the members of the FBI's Joint Terrorism Task Force,” said Special Agent in Charge Thornton. “The members of this task force work in concert to ensure the protection of the United States and its citizens every day. These efforts will continue as long as threats persist.”
“Abdirizak Warsame conspired with others to travel to Syria to fight with ISIL,” said Assistant Attorney General Carlin. “Counterterrorism is the National Security Division’s highest priority, and we will continue to work to stem the flow of foreign fighters abroad and to bring to justice those who seek to provide material support to designated foreign terrorist organizations.”
According to the complaint and documents filed in court, in the spring of 2014, WARSAME and his co-conspirators began meeting to watch propaganda videos that glorified religious violence and discussing their aspirations to travel to Syria to join and fight with ISIL. Members of the group, including WARSAME, discussed ways to leave the United States and travel to Syria despite the fact that law enforcement scrutiny of them was intense. At one such meeting, GULED OMAR was elected “emir,” or leader, of the group. Later in 2014 when OMAR was planning to depart for Syria, OMAR appointed WARSAME to replace him as “emir” for the remaining co-conspirators.
According to the complaint and documents filed in court, in the spring of 2014, WARSAME provided $200 to a co-conspirator, ADNAN FARAH, so that A. FARAH could obtain an expedited U.S. Passport so that A. FARAH could travel overseas to join ISIL. WARSAME also applied for an expedited passport in the spring of 2014, but his application was initially denied.
According to the complaint and documents filed in court, WARSAME repeatedly attempted to obtain a telephone number or other contact information of ISIL members, including ISIL member H.K. In June 2014, WARSAME attempted to obtain this contact information so that he could pass the contact information along to Y.J., who was then attempting to travel from Turkey to Syria to join ISIL.
According to the complaint and documents filed in court, in April 2015 WARSAME had actively encouraged OMAR and other co-conspirators to travel to Syria through Mexico, but did not plan to join the Mexico group because he was planning to travel with his family to East Africa. From East Africa, WARSAME planned to either break free from his family and travel to Syria, or wait in Somalia for a time when, he believed, al-Shabaab would pledge allegiance to ISIL, thus expanding ISIL to Somalia.
According to the criminal complaint and documents filed in court, on April 2, 2015, WARSAME recounted a conversation he had with ABDI NUR, before NUR left the United States for Syria. In that exchange, WARSAME told OMAR that he proposed to NUR that they rob people in order to finance their travel to Syria. WARSAME further explained that NUR rejected this idea, and suggested they rob the government instead.
This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force (JTTF). The JTTF includes members from the following departments: the United States Marshals Service, Bloomington Police Department, Ramsey County Sheriff’s Office, Hennepin County Sheriff’s Office, Federal Air Marshals Service, Customs and Border Patrol, Department of Homeland Security, Minneapolis Police Department, the Airport Police, and the FBI.
This case is being prosecuted by Assistant U.S. Attorneys Andrew R. Winter and John F. Docherty.
Defendant Information:
ABDIRIZAK MOHAMED WARSAME, 20
Eagan, Minn.
Charges:
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Conspiracy to provide material support to a designated foreign terrorist organization, 1 count
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Providing material support to a designated foreign terrorist organization, 1 count
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
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Tenth Minnesota Man Charged with Conspiracy to Provide Material Support to ISILRead the Press Release
Three Co-Conspirators Have Already Pleaded Guilty; Five Expected to Go to Trial in May 2016
Abdirizak Mohamed Warsame, 20, of Eagan, Minnesota, was charged by criminal complaint with conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL), announced Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Andrew M. Luger of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division.
“Abdirizak Warsame conspired with others to travel to Syria to fight with ISIL,” said Assistant Attorney General Carlin. “Counterterrorism is the National Security Division’s highest priority, and we will continue to work to stem the flow of foreign fighters abroad and to bring to justice those who seek to provide material support to designated foreign terrorist organizations.”
“This defendant is the 10th Twin Cities’ man charged as part of a broad conspiracy to provide material support to ISIL,” said U.S. Attorney Luger. “The FBI and prosecutors in my office continue to work without pause to keep Minnesotans safe and bring these defendants to justice.”
“This arrest demonstrates the commitment to U.S. national security by the members of the FBI's Joint Terrorism Task Force,” said Special Agent in Charge Thornton. “The members of this task force work in concert to ensure the protection of the United States and its citizens every day. These efforts will continue as long as threats persist.”
According to the complaint and documents filed in court, in spring 2014, Warsame and his co-conspirators began meeting to watch propaganda videos that glorified religious violence and to discuss their aspirations to travel to Syria to join ISIL. Members of the group, including Warsame, discussed ways to leave the United States and travel to Syria, despite the fact that law enforcement was intensely scrutinizing the group. At one such meeting, Guled Omar was elected “emir,” or leader, of the group. Later in 2014, when Omar was planning to depart for Syria, Omar appointed Warsame to replace him as emir for the remaining co-conspirators.
According to the complaint and documents filed in court, during the same period, Warsame provided $200 to a co-conspirator, Adnan Farah, so that Farah could obtain an expedited U.S. passport to travel overseas to join ISIL. Warsame also applied for an expedited passport during this time, but his application was initially denied.
According to the complaint and documents filed in court, Warsame repeatedly attempted to obtain a telephone number or other contact information of ISIL members, including ISIL member H.K. In June 2014, Warsame specifically attempted to obtain this contact information so that he could pass it along to Y.J., who was attempting to travel from Turkey to Syria to join ISIL.
According to the complaint and documents filed in court, in April 2015, Warsame actively encouraged Omar and other co-conspirators to travel to Syria through Mexico, but did not plan to join their group because he was planning to travel with his family to East Africa. From East Africa, Warsame planned to either break free from his family and travel to Syria, or wait in Somalia for a time when, he believed, al-Shabaab would pledge allegiance to ISIL, thus expanding ISIL to Somalia.
According to the criminal complaint and documents filed in court, on April 2, 2015, Warsame recounted a conversation he had with Abdi Nur, before Nur left the United States for Syria. In that exchange, Warsame told Omar that he proposed to Nur that they rob people in order to finance their travel to Syria, which Nur rejected and suggested instead that they rob the government.
The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
This case is the result of an investigation conducted by members of the FBI-led Joint Terrorism Task Force in Minneapolis.
This case is being prosecuted by Assistant U.S. Attorneys Andrew R. Winter and John F. Docherty of the District of Minnesota and the National Security Division’s Counterterrorism Section.
Warsame Complaint
Stilwell Man Pleads Guilty to Possession of Firearm and Counterfeit ObligationRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma, announced today that CHRISTOPHER DEAN JONES, a/k/a Snake, age 36, of Stilwell, Oklahoma, pled guilty to FELON IN POSSESSION OF FIREARM AND AMMUNITION, in violation of Title 18, United States Code, Sections 922(g)(1) and 924(a)(2), punishable by not more than 10 years imprisonment, up to a $250,000 fine or both. He also pled guilty to POSSESSION OF COUNTERFEIT OBLIGATIONS OR SECURITIES OF THE UNITED STATES, in violation of Title 18, United States Code, Section 472, punishable by not more than 20 years, up to a $250,000 fine or both.
Charges arose from an investigation by the Cherokee Nation Marshal Service, the Cherokee County Sheriff’s Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the United States Secret Service. The defendant was indicted in November, 2015.
The Indictment alleged that on or about October 1, 2015, within the Eastern District of Oklahoma, the defendant, CHRISTOPHER DEAN JONES, a/k/a Snake, having been convicted of a crime punishable by imprisonment for a term exceeding one year, did knowingly possess in and affecting commerce, a firearm and ammunition, which had been shipped and transported in interstate commerce.
The Indictment further alleged that on or about October 1, 2015, within the Eastern District of Oklahoma, the defendant, CHRISTOPHER DEAN JONES a/k/a Snake, with intent to defraud, possessed a counterfeit obligation of the United States.
The Honorable Steven P. Shreder, Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, accepted the guilty plea and ordered the completion of a presentence report. Sentencing will be scheduled following its completion. The defendant will remain in the custody of the United States Marshal Service pending sentencing.
Assistant United States Attorney Dean Burris represented the United States.
St. Louis Area Man Pleads Guilty to Interstate Transportation of Stolen VehiclesRead the Press Release
St. Louis, MO – JONATHAN CURTIS pled guilty to charges involving his sale of stolen vehicles to out of state buyers.
According to court documents, in December 2014, Curtis obtained a 2011 Nissan Maxima which had been stolen from its lawful owner in the Eastern District of Missouri. On February 21, 2015, Curtis sold the vehicle to a purchaser from Michigan for $9,000. In April 2015, Curtis obtained a stolen 2007 Cadillac Escalade that had been taken from a car dealership located in the Eastern District of Missouri. Curtis had a duplicate key made to enable the sale of that stolen vehicle to an individual in Fairview Heights, Illinois, for $13,000 on April 9, 2015.
Curtis, of St. Louis City, pled guilty to two felony counts of interstate transportation of stolen property before United States District Judge Ronnie L. White. Sentencing has been set for March 10, 2016.
Each count carries a maximum penalty of 10 years in prison and/or fines up to $250,000. In determining any actual sentence imposed, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
The case was investigated by the Federal Bureau of Investigation. Assistant United States Attorney Gwendolyn Carroll is handling the case for the U.S. Attorney’s Office.
St. Francis Man Sentenced to 262 Months for Second Degree MurderRead the Press Release
United States Attorney Randolph J. Seiler announced that a St. Francis, South Dakota, man convicted of two counts of Second Degree Murder was sentenced on December 7, 2015, by United States District Judge Roberto Lange.
Daryl Dean Fool Bull, age 33, was sentenced to 262 months in custody, followed by 3 years of supervised release, and a $200 special assessment to the Federal Crime Victims Fund.
Fool Bull was indicted for two counts of Second Degree Murder and two counts of Assault with a Dangerous Weapon by a federal grand jury on April 14, 2015. He pled guilty to two counts of Second Degree Murder on September 14, 2015.
On the evening of March 30, 2015, and the morning of March 31, 2015, Daryl Fool Bull, Kirby Sharpfish, Russell Sharpfish, and Crystal Sharpfish were drinking together at a residence in Todd County, South Dakota. Kirby, Russell, and Crystal were siblings. Crystal and Fool Bull were in a dating relationship and had children together.
Fool Bull, Russell, Kirby and Crystal became heavily intoxicated. At approximately 10:00 a.m. on March 31, 2015, Fool Bull became upset and without provocation, he repeatedly stabbed Russell Sharpfish and Kirby Sharpfish with a kitchen knife. Two minor children were present in the home. During the altercation, one child woke up and went into the living room. Crystal was lying face down on the floor and Fool Bull was standing beside her, holding a knife in his hand. Russell was kneeling on the ground with blood “squirting” from his neck. Kirby was in an armchair and was deceased. The child then went to a bedroom and called 911.
An ambulance and law enforcement officers arrived a short time later. Fool Bull and Crystal were not found in the home. Both Russell and Kirby were pronounced dead at the scene. Russell died from 28 stab wounds to the head, neck, back, hands, and forearms. Kirby died from 14 stab wounds to the neck and head. A knife covered in blood was located behind the back door of the residence.
Responding officers with the Rosebud Sioux Tribe Law Enforcement Services searched the surrounding area for Crystal and Fool Bull, who were located in a field west of the residence. Fool Bull had dried blood on his clothing and his hands. Crystal had numerous scrapes along her body that were incurred when Fool Bull dragged her through the field.
This case was investigated by the Federal Bureau of Investigation and the Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Carrie Sanderson prosecuted the case.
Fool Bull was immediately turned over to the custody of the U.S. Marshals Service.
Sixteen Named in Racketeering Indictment Alleging Money Laundering Schemes Orchestrated by Former President of Orange County BankRead the Press Release
Two Other Money Laundering Indictments Unsealed as Part of Operation “Phantom Bank”
Federal authorities today arrested 11 defendants named in a sweeping racketeering indictment alleging a series of money laundering schemes that revolved around the former head of Saigon National Bank, based in Westminster, California, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Eileen M. Decker of the Central District of California. Four other defendants, who are named in separate indictments, were also arrested today.
The majority of the defendants arrested today are named in a racketeering indictment that was returned on Dec. 1 by a federal grand jury and unsealed today along with two other indictments returned by the grand jury over the past year. The three indictments charge a total of 20 defendants.
Six of the defendants named in the main indictment are charged with violating the federal Racketeer Influenced and Corrupt Organizations Act (RICO) by playing key roles in a series of schemes to launder drug proceeds. At the center of the schemes is Tu Chau “Bill” Lu, 71, of Fullerton, California, who from 2009 through January 2015, was president and CEO of Saigon National Bank.
The indictment alleges that Lu and the other five defendants were members of a criminal organization that was involved in narcotics trafficking and international money laundering in countries that included the United States, China, Cambodia, Liechtenstein, Mexico and Switzerland. Lu allegedly used his insider knowledge, position as an official at Saigon National Bank and network of connections to promote and facilitate money laundering transactions involving members and associates of the enterprise. Several members of the organization established or engaged in separate money laundering schemes, but all of the defendants allegedly worked with Lu, through him or at his direction.
In one scheme, an undercover informant delivered cash represented to be drug proceeds to defendants, who allegedly arranged for the cash to be converted into cashier’s checks made out to a company the informant claimed to own. Other conspiracies alleged in the indictment also involved the delivery of cash from the informant and the defendants’ alleged conversion of that money into cashier’s checks.
As part of the racketeering enterprise, Lu and others named in the RICO count allegedly floated a plan in which the informant and his boss (who was an actually an undercover law enforcement officer) would purchase a controlling interest in Saigon National Bank so they could have a financial institution that could easily facilitate money laundering operations.
In another aspect of the racketeering conspiracy, Lu and others allegedly proposed setting up a foundation in Liechtenstein that would be used to move money around the world. The informant and an undercover law enforcement officer posing as an associate told those proposing the creation of the foundation that they would be laundering the proceeds of drug sales in Europe and that the drugs had been bartered for weapons in Nigeria.
In yet another aspect of the conspiracy, Lu allegedly played a critical role in introducing the informant and other defendants to operatives from the Sinaloa drug cartel who wanted to launder millions of dollars every month. According to the indictment, Lu had also discussed purchasing Saigon National Bank with the Sinaloa operatives, and one of the operatives said the cartel had already invested $1 million in the bank.
The five other individuals charged in the RICO count are:
- Tsung Wen “Peter” Hung, 61, of Monterey Park, California;
- Edward Kim, 56, of Beverly Hills, California;
- John Edmundson, 55, a British citizen who resides in Hong Kong, who is still being sought by authorities;
- Pablo Hernandez, 75, of Tijuana, Mexico, who is still being sought by authorities; and
- Emilio Herrera, 53, a Mexican citizen who resides in Spring Valley, California, who is still being sought by authorities.
The RICO count is one of 28 counts in the indictment. The various money laundering schemes detailed in the RICO count are the subject of other charges, specifically conspiracy, money laundering and structuring transactions to avoid federal reporting requirements. Kim is additionally charged with evidence tampering for allegedly encouraging one of the undercover agents to destroy evidence.
The indictment alleges that members of the racketeering conspiracy discussed laundering hundreds of millions of dollars. The indictment details actual money transactions involving a total of $3.75 million.
The other defendants named in the indictment are:
- Mina Chau, 32, of La Mesa, California;
- Ben Ho, 41, of Santa Ana, California;
- Tom Huynh, also known as The Fat Guy, 57, of Westminster;
- Renaldo Negele, 51, of Liechtenstein, who is still being sought by authorities;
- Jack Nguyen, 38, of Manhattan Beach, California;
- Luis Krueger, 58, of Malibu, California;
- Li Jessica Wei, who is also known under various permutations of her name, including Wei Jessica Li, 58, of Arcadia, California;
- Du Truong “Andrew” Nguyen, 34, of Westminster, who is still being sought by authorities;
- Richard Cheung, also known as Richard Cheang, 58, of El Monte, California; and
- Lien Tran, 41, of Santa Ana.
The second indictment unsealed today charges Hung; Wei; Jian Sheng “Raymond” Tan, 48, of Temple City, California; and Derrick Cheung, also known as Chang Zhang Ying and Zhang Ying Chang, 39, of Rowland Heights, California, with conspiring to launder money that they believed to be the proceeds of narcotics trafficking and bank fraud. The defendants allegedly accepted money from an undercover operative and converted it to cashier’s checks and money orders, in exchange for a fee.
The third indictment unsealed today charges Tan; Ruimin Zhao, 45, of Temple City; and Vivian Tat, of Hacienda Heights, California, with conspiring to launder money that they believed to be the proceeds of narcotics trafficking. An undercover operative allegedly delivered the money to the defendants, who converted into cashier’s checks.
The 15 defendants taken into custody today will be arraigned this afternoon in U.S. District Court in Los Angeles.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The FBI, the Office of the Special Inspector General for the Troubled Asset Relief Program and Internal Revenue Service-Criminal Investigation are conducting the investigation in Operation Phantom Bank. Trial Attorney Andrew Creighton of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Kim Meyer of the Central District of California are prosecuting these cases.
Seven Sentenced for Methamphetamine Distribution in Johnston, Wilson, and Wayne CountiesRead the Press Release
WILMINGTON - United States Attorney Thomas G. Walker announces that seven individuals were sentenced for their involvement in a methamphetamine distribution organization. All 7 were part of the same drug trafficking organization operating in Johnston, Wilson, and Wayne Counties. The organization called themselves “The Hill-Top Mafia” due to the close affiliation they have with methamphetamine, guns, and violence.
The following individuals were charged in a 13-count indicted on September 16, 2014. Count 1 charged conspiracy to manufacture, distribute, dispense, and possess with intent to distribute a mixture and substance containing a detectable amount of methamphetamine between November 2011 and September 16, 2014. Counts 2 and 3 charged distribution and possession with intent to distribute a quantity of a mixture and substance containing a detectable amount of methamphetamine on March 18, 2013 and March 26, 2013 respectively. Counts 4 and 7 charged possession with intent to distribute a quantity of a mixture and substance containing a detectable amount of methamphetamine and aiding and abetting on September 13, 2013 and December 9, 2013 respectively. Counts 5, 6, and 9 charged possession of equipment, chemicals, products and material with the intent to manufacture methamphetamine and aiding and abetting on October 16, 2013 and December 9, 2013 respectively. Counts 8 and 10 charged possession of pseudoephedrine with the intent to manufacture methamphetamine and aiding and abetting on December 9, 2013, and December 12, 2013, respectively. Count 11 charged possession of a firearm by a felon on December 12, 2013. Count 12 charged possession of a stolen firearm on December 12, 2013. Count 13 charged possession of a firearm in furtherance of a drug trafficking Crime on December 12, 2013.
The count of the indictment each pleaded guilty to is annotated as well as their sentence.
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William Bryan Hill, 32, of Kenly, NC – Count 1, 121 months & a lifetime of supervised release
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Samuel Wayne Hill, 26, of Smithfield, NC – Count 1, 480 months & a lifetime of supervised release
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William Joseph Hill, 28, of Princeton, NC – Count 1, 175 months & a lifetime of supervised release
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Terry Matthew Hall, 21, of Wilson, NC – Count 1, 225 months & a lifetime of supervised release
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Michael Eugene Custer, 40, of Princeton, NC – Count 1, 123 months & a lifetime of supervised release
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Dolly Wadsworth Evans, 46, of Smithfield, NC – Count 1, 157 months & 10 years of supervised release
Samantha Leigh Ross-Varner, 24, of Goldsboro, NC was named in a two-count Criminal Information filed on May 5, 2015. Count 1 of the Criminal Information charged conspiracy to manufacture, distribute, dispense, and possess with the intent to distribute a mixture and substance containing a detectable amount of methamphetamine between November 2011, and September 16, 2014. Count 2 charged Ross-Varner with possession of a firearm by a felon on December 12, 2013. She pled guilty to the two count Criminal Information on May 11, 2015. On December 8, 2015 Ross-Varner was sentenced to 180 months imprisonment followed by a lifetime of supervised release.
“The NC State Bureau of Investigation values its partnerships with local and federal law enforcement in the continued fight against methamphetamine production in North Carolina, and appreciates the Eastern District United States Attorney’s Office for their ongoing work and continued support in this investigation,” stated Special Agent in Charge Todd Duke who is the supervisor of the NCSBI’s Clandestine Laboratory Response Unit.
As a result of an on-going investigation into methamphetamine production in the Wayne and Johnston County, areas, federal, state, and local authorities identified several individuals, including Samuel Wayne Hill, William Joseph Hill (Jody Hill), William Bryan Hill, Terry Matthew Hall (Matt Hall), Michael Eugene Custer, Samantha Leigh Ross-Varner, Dolly Wadsworth Evans, and others, were involved in the production of methamphetamine between 2010 and 2014. Manufacturing methamphetamine requires pseudoephedrine, found in over-the-counter cold medicine, as well as other commonly found ingredients including lithium (usually stripped from batteries), plastic tubing, dry ice, Coleman fuel, muriatic acid, fertilizer, and liquid drain cleaner. The majority of these items can be purchased at retail stores such as Lowe’s Home Improvement Center and Walmart.
The investigation established that the conspiracy centered in the Brogden area of Johnston County. The investigation established that residence and property owned by Evans was a hub of this conspiracy, along with the residences of Samuel Hill, Jody Hill, and related family properties. Evans, a methamphetamine user, allowed her property to be used by all of the conspirators for manufacturing and using methamphetamine. Samuel Hill, Jody Hill, Bryan Hill, Custer, and Hall were methamphetamine cooks. Evans, who had a job through the period of the conspiracy, allowed conspirators to live in her house and purchased chemicals and items used in the production of methamphetamine in return for methamphetamine. Ross-Varner was a methamphetamine user and cook and she purchased pseudoephedrine and other items for use in the production of methamphetamine. During a portion of the conspiracy, Ross-Varner lived with Evans and dated Samuel Hill.
The case was investigated by the North Carolina State Bureau of Investigation, the Johnston County Sheriff’s Office, the Wayne County Sheriff’s Office, the Wilson County Sheriff’s Office and the Drug Enforcement Administration. Assistant U.S. Attorney Jennifer Wells prosecuted the case for the government.
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Sentencing for December 9, 2015Read the Press Release
Salvador Machuca-Chavez, 51, of Mexico, was sentenced by Federal District Court Judge Alan B. Johnson on December 9, 2015, for illegal re-entry of a previously deported alien into the United States. Machuca-Chavez was arrested in Rawlins, Wyoming. He received time served, plus ten days, was ordered to pay a $100.00 special assessment, and is subject to deportation upon release from custody. This case was investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement.
Second Former HARC Employee Pleads Guilty to MakingRead the Press Release
Tampa, FL – United States Attorney A. Lee Bentley, III announces that Marsha C. Weisse (56, Tampa) today pleaded guilty to making a false statement to the Social Security Administration. If convicted, she faces a maximum penalty of 5 years in federal prison and a fine of $250,000. In her plea agreement, Weisse also agreed to make full restitution to the Social Security Administration Program (SSA) or its designee.
According to court documents, the Hillsborough Achievement and Resource Centers (HARC), formerly the Hillsborough Association for Retarded Citizens, was established in 1953 to positively impact the future for people living with developmental disabilities, such as Alzheimer’s disease and Down syndrome. HARC opened and operated group homes that served its target client population. HARC also spearheaded various community programs for its clients focused on inclusion activities for youths, adults, and seniors with disabilities.
Many of the HARC clients received SSA benefits due to various developmental disabilities. For certain HARC clients who lacked the capacity to manage their own SSA benefits, SSA approved one or more HARC officials to act as a “Representative Payee” to receive a particular client’s benefits and to use them exclusively for that client’s benefit. As a Representative Payee, the HARC official was required to complete and submit to the SSA a “Representative Payee Report” that included certain information about each HARC client’s living situation and the financial benefits received and expended on behalf of that client.
Weisse began working at HARC in 2008 as a comptroller, reporting to the CFO. While working in that capacity, she became aware that HARC clients’ SSA funds purportedly allocated solely for the HARC clients’ personal needs and use had been wrongfully diverted by HARC executives from the clients for other purposes. Weisse raised the wrongful diversion of the clients’ funds with the CEO, who acknowledged the conduct. Notwithstanding, the CEO instructed Weisse to continue transferring funds from the HARC Endowment Account to the operating account, which she did.
During the fall of 2009, in an effort to conceal that the client funds were being wrongfully diverted, Weisse was instructed by HARC executives—including the HARC CEO and CFO—to secure signatures from the HARC clients on a document backdated to 2007. Weisse did as instructed, knowing that many of the developmentally disabled clients who signed the document did not have the capacity to understand the full import of the document.
Weisse was promoted to the position of HARC CFO in March 2011. Thereafter, she supervised another HARC employee, Sandra Shepherd, who routinely assisted her in completing and submitting Representative Payee Reports, or Form SSA-6234s, to the SSA. In August 2011, Weisse signed a Form SSA-6234 that stated that $5,128 of SSA benefits had been spent solely for W.C., a developmentally disabled HARC client, during the period August 1, 2010, through July 31, 2011, for such items and services as clothing, education, medical and dental expenses, recreation, or other personal items, when Weisse knew that was not the case. Instead, only approximately $1,013.06 had been used for such items and services for W.C., and the remaining difference had been wrongfully diverted by the HARC executives for other purposes.
After reviewing and signing the false and misleading Form SSA-6234 for W.C., Weisse gave the form to Shepherd for submission to the SSA. Weisse has also acknowledged that she completed and submitted additional false and fraudulent Form SSA-6234s, relating to other clients, to the SSA.
Weisse is the second person to enter into a plea agreement with the government in the ongoing HARC investigation. In October 2015, Shepherd pleaded guilty to making a false statement to the Social Security Administration. Her sentencing hearing is scheduled for December 30, 2015.
In June 2013, the U.S. Attorney’s Office filed a Verified Complaint for Forfeiture In Rem in a related case (Case No. 8:13-Cv-1601-T-17TBM), seeking the forfeiture of $87,000 held in a Synovus Bank account. That complaint raised like allegations—that HARC clients’ SSA benefits had been wrongfully diverted from the clients and used by HARC for other purposes—and was supported by facts contained in the sworn affidavit of a special agent with the U.S. Department of Health and Human Services - Office of Inspector General. On September 30, 2013, the district court entered a Default Judgment of Forfeiture in which the court ordered the forfeiture of the $87,000 to the United States.
“Taking advantage of developmentally disabled Floridians to receive unwarranted Social Security payments is reprehensible, and I want to thank United States Attorney Lee Bentley and all the government agencies involved in investigating this important case. After numerous discussions between our offices, we determined the U.S. Attorney’s Office was best situated to handle this case and we are pleased with today’s announcement."
“Social Security payments are a lifeline for many Americans. The Office of the Inspector General has no higher priority than the investigation and prosecution of those who violate the public trust of vulnerable beneficiaries,” stated Special Agent-in-Charge Margaret Moore-Jackson, SSA-Office of the Inspector General. “I’m grateful that the U.S. Attorney’s Office shares our determination to ensure the integrity of SSA’s programs.”
"Stealing government checks meant to cover the personal expenses of developmentally delayed clients in your care just to enrich yourself is a serious betrayal of trust," said Special Agent in charge Shimon R. Richmond. "Our agency is dedicated to ensuring the integrity of taxpayer-funded programs and the well-being of the often vulnerable beneficiaries of those programs."
“This is an appalling example of someone who betrayed the trust of HARC’s clients, their families, and all of Florida’s taxpayers,” said Florida Chief Financial Officer Jeff Atwater. “Stealing the funds designed to help Floridians with developmental disabilities is a crime that deserves to be prosecuted to the fullest extent of the law, and I’m pleased to see the work of many agencies come together to hold her accountable.”
This case is being investigated by the Social Security Administration - Office of the Inspector General, the U.S. Department of Health and Human Services - Office of the Inspector General, and the Florida Department of Law Enforcement, along with the State of Florida’s Department of Financial Services - Office of Fiscal Integrity. It is being prosecuted by Assistant United States Attorney Jay G. Trezevant.
Schuele Boys Gang Associate Sentenced on Drug Charge; Another Defendant Pleads Guilty to Drug ChargeRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
BUFFALO, N.Y. — U.S. Attorney William J. Hochul, Jr. announced today that Tywone Smothers, 36, of Buffalo, who was convicted of conspiracy to distribute marijuana, was sentenced to two years probation and four months home detention by U.S. District Judge Richard J. Arcara.Assistant U.S. Attorney George C. Burgasser, who handled the case, stated that between June 2013 and July 2014, Smothers conspired with Damario James and others to distribute marijuana in the City of Buffalo.
In a related case, Xavier Hill, 43, of Buffalo, NY, pleaded guilty to possession of cocaine. On numerous occasions, Hill purchased cocaine from Schuele Boy member Michael Robertson.
The Schuele Boys Gang, which operated in the Schuele Street area of the East Side of Buffalo, is believed to be responsible for multiple acts of violence and the distribution of illegal narcotics including cocaine, crack cocaine and marijuana.
Smothers and Hill are two of 28 Schuele Boys Gang members, associates and other individuals arrested in this case. To date, 16 of the defendants have been convicted.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Today’s sentenced and plea are the culmination of an investigation on the part of the FBI's Safe Streets Task Force which includes representatives of the Amherst Police Department; the Buffalo Police Department; U.S. Border Patrol, the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Cheektowaga Police Department; the Erie County Sheriff’s Department; the Hamburg Police Department; the Lancaster Police Department; the Niagara Frontier Transportation Authority Police; the New York State Department of Correctional Services; the New York State Police; and U.S. Immigration and Customs Enforcement, Homeland Security Investigations. Additional assistance was provided by the Drug Enforcement Administration; U.S. Customs and Border Protection, the United States Marshal Service, the Lackawanna Police Department, and the Niagara County Sheriff’s Department.
Xavier Hill will be sentenced on March 24, 2016 at 12:30 p.m. before Judge Arcara.
Roswell Woman Pleads Guilty to Federal Heroin Trafficking ChargeRead the Press Release
ALBUQUERQUE – Cheryl Ann Gruette, 51, of Roswell, N.M., pleaded guilty today in federal court in Las Cruces, N.M., to a heroin trafficking charge under a plea agreement with the U.S. Attorney’s Office.
Gruette and her co-defendant Cecil Edward Sexton, 73, also of Roswell, were arrested on June 16, 2015, on a criminal complaint charging them with heroin trafficking offenses. According to the complaint, on Jan. 2, 2015, the Chaves County Metro Narcotics Task Force executed a state search warrant on Sexton’s vehicle and residence in Roswell and seized 273.6 grams of heroin, $1,352.00 in cash, pill bottles, prescription slips in Sexton’s name, drug paraphernalia and two rifles.
Gruette and Sexton were subsequently indicted on Sept. 16, 2015, and charged with conspiracy to distribute heroin from Sept. 25, 2014 through Jan. 2, 2015, and possession of heroin with intent to distribute on Jan. 2, 2015. The indictment alleged that the pair committed the crimes in Chaves County, N.M.
During today’s plea hearing, Gruette pled guilty to a felony information charging her with conspiracy to possess heroin with intent to distribute. Gruette admitted that on Jan. 2, 2015, she and Sexton traveled to Albuquerque, N.M., where they obtained 179.3 grams of heroin from their source of supply, and then returned to Roswell. Gruette further acknowledged that, after they returned to Roswell, officers found the heroin while executing a state search warrant in addition to another 94.3 grams of heroin that were in Sexton’s residence. Gruette and Sexton intended to distribute the heroin to others.
Sexton pled guilty to similar charges on Nov. 13, 2015. At sentencing, Gruette and Sexton each face a maximum of 20 years in federal prison followed by not less than three years of supervised release. Both remain in custody pending sentencing hearings which have yet to be scheduled.
This case was investigated by the Las Cruces office of the DEA, the Chaves County Metro Narcotics Task Force and the Roswell Police Department. Assistant U.S. Attorney Anna R. Wright of the U.S. Attorney’s Las Cruces Branch Office is prosecuting the case.
The HIDTA Chaves County Metro Narcotics Task Force is comprised of investigators from the Roswell Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, the FBI and the Chaves County Sherriff’s Office. The High Intensity Drug Trafficking Areas (HIDTA) program was created by Congress with the Anti-Drug Abuse Act of 1988. HIDTA is a program of the White House Office of National Drug Control Policy (ONDCP) which provides assistance to federal, state, local and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States and seeks to reduce drug trafficking and production by facilitating coordinated law enforcement activities and information sharing.
This case is being prosecuted pursuant to the New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative. The HOPE Initiative is a collaborative effort between the U.S. Attorney’s Office and the University of New Mexico Health Sciences Center that is partnering with the Bernalillo County Opioid Accountability Initiative with the overriding goal of reducing the number of opioid-related deaths in the District of New Mexico. The HOPE Initiative comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. The law enforcement component of the HOPE Initiative is led by the Organized Crime Section of the U.S. Attorney’s Office and the DEA in conjunction with their federal, state, local and tribal law enforcement partners. Targeting members of major heroin and opioid trafficking organizations for investigation and prosecution is a priority of the HOPE Initiative.
Rosebud Man Sentenced to 177 Months for Assaulting a Federal Officer and Using a Firearm During a Crime of ViolenceRead the Press Release
United States Attorney Randolph J. Seiler announced that a Rosebud, South Dakota, man convicted of Assaulting a Federal Officer and Using and Carrying a Firearm During and In Relation to a Crime of Violence was sentenced on November 30, 2015, by Judge Roberto A. Lange.
Arthur James Burnette, also known as Kory Young, age 25, was sentenced to 57 months in custody for Assaulting a Federal Officer, and 120 months in custody for Using and Carrying a Firearm During and In Relation to a Crime of Violence, to be served consecutively, for a total of 177 months. His prison time will be followed by 3 years of supervised release, and he was ordered to pay $4,105 in restitution, and $200 in special assessment fees to the Federal Crime Victims Fund.
On March 19, 2015, the defendant was with two women in St. Francis, on the Rosebud Sioux Indian Reservation. He was driving a stolen 1995 Honda Accord sedan and had a shotgun and ammunition with him in the vehicle. He was firing the shotgun off and harassing people. The disturbance was reported by a citizen to the Rosebud Sioux Tribe Law Enforcement Services. Officers responded and attempted to capture the defendant, who had outstanding tribal warrants. The defendant fled from the pursuing officers, fleeing into Nebraska. He obstructed and impeded the officers as he fled, with his vehicle exceeding 98 miles per hour at times. The defendant was observed hollering obscenities and extending his middle finger at the pursuing officers. He drove his vehicle in an evasive manner, which included leaving the roadway, recklessly passing other vehicles, as well as forcing other vehicles off the roadway.
At one point, the defendant turned his vehicle around, extended his shotgun out the window and fired at a pursuing officer’s squad car. That officer was not hurt and called out over the radio that he had been shot at.
At a different location, another officer stopped his patrol vehicle on a roadway, armed himself with a rifle, and exchanged gunfire with the defendant. No one was injured in the exchange.
Burnette fled towards Kilgore and Crookston, Nebraska, and then to a different location on Highway 20 in Nebraska, and encountered more officers whom he also menaced with his shotgun. At a different location, the defendant drove the stolen vehicle off the roadway and into a ditch, breaking the landowner’s fence. The defendant was arrested at the scene.
This case was investigated by the Rosebud Sioux Tribe Law Enforcement Services, the Federal Bureau of Investigation, and the Bureau of Alcohol, Tobacco, and Firearms. Assistant U.S. Attorney Tim Maher prosecuted the case.
Burnette was immediately turned over to the custody of the U.S. Marshals Service to serve his sentence.
Rapid City Man Sentenced for Production of Child PornographyRead the Press Release
United States Attorney Randolph J. Seiler announced that a Rapid City, South Dakota, man convicted of Production of Child Pornography was sentenced on November 30, 2015, by Chief Judge Jeffrey L. Viken, U.S. District Court.
Jesse Gallego, age 22, was sentenced to 15 years of imprisonment, followed by 5 years of supervised release, and ordered to pay a $100 special assessment to the Federal Crime Victims Fund.
In November 2014, at Pine Ridge, Gallego took multiple pornographic photos of a young girl with his cell phone.
The investigation was conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney Sarah Collins prosecuted the case.
Gallego was immediately turned over to the custody of the U.S. Marshals Service.
Pub Owner Charged in Fraud SchemeRead the Press Release
PHILADELPHIA - Michael Hoffner, Sr., 50, of Voorhees, New Jersey was charged today by superseding indictment with five additional counts of wire fraud, announced United States Attorney Zane David Memeger. Hoffner was first charged in June 2015 with 23 counts of wire fraud.
Hoffner owned the Brown Street Pub in Philadelphia, Pennsylvania. According to the superseding indictment, on 28 occasions between September and December 2012, Hoffner used a stolen credit number to make charges to Visa, American Express, or Mastercard cards. The cardholders were not aware of and did not authorize these transactions. The proceeds of these transactions went into accounts that Hoffner controlled.
If convicted, the defendant faces a maximum statutory sentence of 20 years in prison on each of the wire fraud counts, a $7 million fine, and three years of supervised release.
The case was investigated by United States Secret Service and the Internal Revenue Service-Criminal Investigations. It is being prosecuted by Assistant United States Attorney David J. Ignall.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Press Conference Statement by U.S. Attorney Tammy DickinsonRead the Press Release
IN THE WAKE OF COUNTLESS HIGH-PROFILE INCIDENTS ACROSS THE COUNTRY THAT HAVE THRUST US INTO A NATIONAL DIALOGUE OVER THE USE OF EXCESSIVE FORCE, OFFICER AND PUBLIC SAFETY AND A FESTERING LACK OF TRUST BETWEEN POLICE DEPARTMENTS AND THE COMMUNITIES THEY SERVE, WE ARE HERE TODAY TO ANNOUNCE AN UNPRECEDENTED MEMORANDUM OF UNDERSTANDING THAT HAS BEEN SIGNED BY EACH ONE OF US.
ALL OF US HERE TODAY ARE COMMITTED TO UPHOLDING THE HIGHEST STANDARDS OF LAW ENFORCEMENT THROUGHOUT THE COMMUNITY. EVERY MEMBER OF THE COMMUNITY EXPECTS AND DESERVES THE PROTECTION OF LAW ENFORCEMENT THAT IS EFFECTIVE, RESPONSIVE, RESPECTFUL AND MOST IMPORTANTLY, CONSTITUTIONAL. EACH DAY, THANKS TO THE TIRELESS DEDICATION OF MEN AND WOMEN WHO WEAR THE BADGE, CITIZENS OF OUR COMMUNITY RECEIVE JUST THAT. BUT WHEN COMMUNITY MEMBERS FEEL THEY ARE NOT RECEIVING THAT KIND OF POLICING, THERE ARE PROFOUND CONSEQUENCES FOR THE WELL-BEING OF OUR COMMUNITIES, FOR THE RULE OF LAW AND FOR THE COUNTLESS LAW ENFORCEMENT OFFICERS WHO STRIVE TO FULFILL THEIR DUTIES WITH PROFESSIONALISM AND INTEGRITY.
WE ARE COOPERATING TO PROACTIVELY ADDRESS ALLEGATIONS OF THE EXCESSIVE USE OF FORCE BY ANY KCPD OFFICER. THIS AGREEMENT MARKS AN EXTRAORDINARY PARTNERSHIP BETWEEN LOCAL AND FEDERAL LAW ENFORCEMENT. AS SOON AS THERE IS A NOTIFICATION OF SUCH AN ALLEGATION, WHETHER THAT COMES FROM A CITIZEN’S COMPLAINT OR FROM WITHIN ONE OF OUR DEPARTMENT’S OWN REVIEW PROCESS, THE MATTER WILL BE IMMEDIATELY REFERRED TO THE FBI TO MAKE AN UNBIASED ASSESSMENT. THIS AGREEMENT CREATES AN INDEPENDENT AND IMPARTIAL REVIEW PROCESS TO ASSESS ALLEGATIONS OF EXCESSIVE FORCE BY KCPD OFFICERS. IT IS OUR INTENTION THAT THIS PROCESS WILL GO A LONG WAY IN MAINTAINING AND STRENTHENING COMMUNITY TRUST.
IN SOME CASES, THE FBI MAY DETERMINE THAT A FEDERAL CIVIL RIGHTS INVESTIGATION IS WARRANTED AND REFER THE MATTER TO MY OFFICE. IN OTHER CASES, THE FBI MAY DETERMINE THAT A STATE CRIMINAL INVESTIGATION IS WARRANTED AND REFER THE MATTER TO THE JACKSON COUNTY PROSECUTOR’S OFFICE, OR THE FBI MAY DETERMINE THAT POLICE OFFICERS ACTED LAWFULLY AND APPROPRIATELY, AND NO FURTHER INVESTIGATION IS WARRANTED.
WHATEVER THE OUTCOME …
… THE PUBLIC CAN REST ASSURED THAT ANY AND ALL ALLEGATIONS OF EXCESSIVE USE OF FORCE BY KCPD OFFICERS ARE BEING FAIRLY INVESTIGATED AND JUSTLY RESOLVED. BY HAVING THIS PROCESS IN PLACE OUR SOLE MOTIVATION IS TO PRESERVE AND BUILD THE TRUST BETWEEN LAW ENFORCEMENT AND THE COMMUNITY.
ALTHOUGH THERE HAS BEEN AN EXCELLENT WORKING RELATIONSHIP AMONG OUR OFFICES, THERE HAS NEVER BEEN A FORMAL MECHANISM IN PLACE TO ENSURE COOPERATION AND CONSISTENCY IN ASSESSING, INVESTIGATING AND PROSECUTING (WHERE APPROPRIATE) ALLEGATIONS OF EXCESSIVE USE OF FORCE BY KCPD OFFICERS.
THE VAST MAJORITY OF POLICE OFFICERS ARE HONEST AND HONORABLE. THEY PUT THEIR LIVES AT RISK ON A DAILY BASIS TO SERVE AND PROTECT THEIR FELLOW CITIZENS. AND THEY ARE OFFENDED, AS WE ALL ARE, BY THE VERY FEW OFFICERS WHO TARNISH THEIR BADGE BY MISCONDUCT.
WE SIGNED THIS AGREEMENT SEVERAL MONTHS AGO BECAUSE WE SHARE A COMMITMENT TO UPHOLDING THE RULE OF LAW AND PROTECTING THE CIVIL RIGHTS OF ALL CITIZENS. WE’RE MAKING THE ANNOUNCEMENT TODAY AT THE PRODDING OF OUR FRIENDS AT THE AD HOC GROUP AGAINST CRIME. DAMON DANIEL, THE EXECUTIVE DIRECTOR OF AD HOC, AND HIS PREDECESSOR ALVIN BROOKS – WHO ARE BOTH HERE TODAY -- WERE AMONG THE COMMUNITY LEADERS WHO GATHERED LAST FRIDAY FOR A DIALOGUE WITH THE FBI AND MYSELF. WHEN WE MENTIONED TO THE GROUP THAT WE HAD THIS MEMORANDUM IN PLACE, DAMON ASKED WHY WE HADN’T PUBLICIZED IT AND SUGGESTED WE SHOULD MAKE A MORE PUBLIC ANNOUNCEMENT.
THANK YOU, DAMON, YOU WERE RIGHT, OF COURSE. SO HERE WE ARE TODAY.
IT SPEAKS VOLUMES ABOUT THE INTEGRITY BOTH OF THE KANSAS CITY MO POLICE DEPARTMENT AND JACKSON COUNTY PROSECUTORS OFFICE THAT CHIEF DARRYL FORTE AND JEAN PETERS BAKER HAVE THE COURAGE TO VOLUNTARILY EMBRACE THIS PROCESS. AND FBI SPECIAL AGENT IN CHARGE ERIC JACKSON FOR SHOULDERING THE ADDITIONAL INVESTIGATIVE WORKLOAD DESPITE RESOURCE CONSTRAINTS. EACH ONE OF THESE OFFICIALS HAS MY RESPECT AND GRATITUDE FOR STEPPING UP TO DEAL FORTHRIGHTLY WITH A PRESSING ISSUE OF PUBLIC CONCERN.
Postal Employee Sentenced to 12 Months in Federal Prison for Use of Mail to Distribute DrugsRead the Press Release
HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced that Edward Larry Kline II, age 50, of Selinsgrove, Pennsylvania was sentenced today to 12 months in federal prison by U.S. District Court Judge Yvette Kane in Harrisburg for attempted possession with intent to distribute marijuana.
According to U.S. Attorney Peter Smith, Kline was charged in January 2015 and pleaded guilty to attempted possession with intent to distribute marijuana in June 2015.
Kline was employed by the United States Postal Service at the Lewisburg, Pennsylvania post office. Between May and September 2014, Kline began receiving parcels which contained marijuana sent from California to his rented Post Office box at the Lewisburg post office. Three of the parcels were opened pursuant to federal search warrants and contained almost 20 kilograms of marijuana. Evidence established that Kline had received at least four additional parcels containing marijuana weighing over 22 kilograms. One kilogram weighs approximately 2.2 pounds. Kline resigned from his position at the post office.
The investigation was conducted by the United States Postal Inspection Service, the United States Postal Service, Office of Inspector General and the Pennsylvania State Police and was prosecuted by Assistant United States Attorney Daryl F. Bloom.
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Physician and His Patient Indicted in Scheme to Fraudulently Prescribe and Dispense Oxycodone and AdderallRead the Press Release
CHICAGO — A southwest suburban doctor and his patient are facing federal drug charges for allegedly scheming to fraudulently prescribe and dispense thousands of Oxycodone and Adderall pills, authorities announced today.
From approximately January 2010 to July 2013, DR. WILLIAM MIKAITIS issued over 500 prescriptions for Oxycodone and Adderall tablets to his patient, DAVID STELMACHOWSKI, without ordering medical tests or performing a thorough physical examination, according to a 25-count federal indictment. Stelmachowski filled the prescriptions at 80 different Chicago-area pharmacy locations so as to avoid attracting attention to such a high number of prescriptions and pills, the indictment alleges. In all, Stelmachowski used these prescriptions to obtain approximately 37,000 pills or tablets of Oxycodone and Adderall, according to the indictment.
The indictment was returned last week in U.S. District Court in Chicago and unsealed today. The indictment charges Mikaitis and Stelmachowski with conspiring to distribute misbranded prescription drugs and conspiring to acquire controlled substances by fraud and deception. The two counts carry a combined maximum sentence of nine years in prison.
Mikaitis, 72, of Burr Ridge, is also individually charged with 15 counts of distributing a controlled substance outside the scope of professional practice. Each count is punishable by up to 20 years in prison. Stelmachowski, 38, of River Forest, faces eight individual counts of possessing Oxycodone with the intent to distribute. These counts each carry a maximum sentence of 20 years.
Mikaitis pleaded not guilty during an arraignment yesterday before U.S. Magistrate Judge Young B. Kim. Stelmachowski will be arraigned at a later date to be set by the Court.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Dennis A. Wichern, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration; Mark S. McCormack, Acting Special Agent-in- Charge of the U.S. Food and Drug Administration’s Office in Chicago; and Stephen Boyd, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is represented by Assistant U.S. Attorney Matthew Schneider.
Indictment
Pharmacy Robber Sentenced to 141 Months for Conviction on Federal Hobbs Act, Drug Trafficking and Firearms ChargesRead the Press Release
ALBUQUERQUE – Victor Hurtado, 21, of Albuquerque, N.M., was sentenced today in federal court to 141 months in federal prison for his conviction on Hobbs Act, drug trafficking and firearms charges arising out of a pharmacy robbery in Jan. 2015, and a traffic stop in March 2015. Hurtado will be on supervised release for five years after completing his prison sentence.
The sentence was announced by U.S. Attorney Damon P. Martinez, 2nd Judicial District Attorney Kari E. Brandenburg, Acting Special Agent in Charge Bryan Finnegan of the FBI’s Albuquerque Division, Special Agent in Charge Will R. Glaspy of the DEA’s El Paso Division, Chief Gorden Eden, Jr., of the Albuquerque Police Department, Chief Pete N. Kassetas of the New Mexico State Police.
U.S. Attorney Damon P. Martinez noted that pharmacy robberies are where New Mexico’s high violent crime rates and prescription drug crisis intersect. “Pharmacy robbers put innocent people at risk when they rob pharmacies at gunpoint to obtain opioids that they then sell on the street at astronomical prices to addicts. Law enforcement investigations reveal that pharmacy robbers often engage in serial robberies, compounding the negative impacts of their criminal behavior. This is why targeting these criminals for federal investigation and prosecution is a priority for the entire law enforcement community.”
“Another conviction and sentencing under the Worst of the Worst Initiative equals another big step for our community in the fight against the criminal element. We are so pleased to have worked with the U.S. Attorney's Office to ensure this case would receive fair, swift, and just prosecution,” said 2nd Judicial District Attorney Kari E. Brandenburg.
“One way to stop violent criminals who endanger our communities is for law enforcement and prosecutors to work together,” said Acting Special Agent in Charge Bryan Finnegan. “This case is a good example of how this kind of partnership makes a difference: the individual sentenced today was among six Albuquerque residents indicted earlier this year for a string of drug store robberies, thanks to a multi-agency investigation. FBI Special Agents and staff worked closely on this case with the U.S. Attorney's Office, Drug Enforcement Administration, Albuquerque Police Department and New Mexico State Police.”
Hurtado and his co-defendant, Joseph Montano, 23, also of Albuquerque, were two of six defendants charged in four indictments with robbing retail pharmacies in Albuquerque. The indictment against Hurtado and Montano alleged that the two men (1) violated the Hobbs Act by interfering with interstate commerce by robbery and violence; (2) brandished a firearm during a crime of violence; (3) violated the Controlled Substance Registrant Act by robbery involving controlled substance; (4) violated the Safe Doses Act by theft of medical products; and (5) possessed Oxycodone with intent to distribute. The charges against Hurtado and Montano arose from the Jan. 6, 2015, armed robbery of the Smith’s Pharmacy located at 4016 Louisiana Blvd. NE in Albuquerque.
On July 1, 2015, Hurtado pled guilty to robbing a commercial business engaged in interstate commerce; brandishing a firearm during a crime of violence, and possession of Oxycodone with intent to distribute. In entering the guilty plea, Hurtado admitted that on Jan. 6, 2015, he entered the Smith’s Pharmacy, jumped over the counter while brandishing a firearm, and ordered the pharmacist to open the safe where controlled substances were kept. He also admitted pointing the firearm at the pharmacy employees to gain their compliance, and stealing bottles of Oxycodone and other drugs from the pharmacy’s inventory.
Hurtado also pled guilty on July 1, 2015, to possession of methamphetamine with intent to distribute, and admitted that he was arrested on state charges on March 5, 2015, after the New Mexico State Police found 54 grams of heroin and 133 grams of methamphetamine in the vehicle Hurtado was driving.
Montano has entered a not guilty plea to the indictment. He remains in federal custody pending trial which is currently scheduled for Jan. 29, 2016. Charges in indictments are merely accusations and defendants are presumed innocent unless found guilty in a court of law.
“DEA and our partners are committed to thoroughly investigating, arresting and punishing anyone responsible for the diversion of opioids, whether it be individuals who are prescribed these medications and divert them for personal profit, or drug organizations who think they can violently rob pharmacies to sell these drugs in our communities,” said DEA Special Agent in Charge Will R. Glaspy. “Opioid addiction is an epidemic and we will continue to lock up anyone trying to profit from the sale of these dangerous and highly addictive drugs.”
“We are all committed to curbing crime, especially violent crime, in our city,” said Albuquerque Police Chief Gorden Eden, Jr. “Our partnerships and collaborative efforts continue to ensure we rid our streets of the Worst of the Worst offenders. We truly appreciate the work of our local and federal partners and know our community is safer following this sentencing and the corresponding indictments.”
“This is another great example of agencies working together to make our communities safer,” said New Mexico State Police Chief Pete Kassetas. “We are committed to bringing these violent criminals to justice. We will continue to dedicate our resources to track down, and apprehend individuals involved in the drug trade. I cannot express my gratitude enough to all the agencies involved.”
This case was investigated by the Albuquerque office of the FBI, the Tactical Diversion Squad of the DEA in Albuquerque, the Albuquerque Police Department and the New Mexico State Police, with assistance from the 2nd Judicial District Attorney’s Office in Bernalillo County. The case is being prosecuted by Assistant U.S. Attorneys Joel R. Meyers and Shaheen P. Torgoley.
DEA’s Tactical Diversion Squads combine DEA resources with those of federal, state and local law enforcement agencies in an innovative effort to investigate, disrupt and dismantle those suspected of violating the Controlled Substances Act or other appropriate federal, state or local statutes pertaining to the diversion of licit pharmaceutical controlled substances or listed chemicals.
These cases are being prosecuted as part of a federal anti-violence initiative that targets “the worst of the worst” offenders for federal prosecution. Under this initiative, the U.S. Attorney’s Office and federal law enforcement agencies work with New Mexico’s District Attorneys and state, local and tribal law enforcement agencies to target violent or repeat offenders for federal prosecution with the goal of removing repeat offenders from communities in New Mexico for as long as possible. Because New Mexico’s violent crime rates, on a per capita basis, are amongst the highest in the nation, New Mexico’s law enforcement community is collaborating to target repeat offenders from counties with the highest violent crime rates, including Bernalillo County, under this initiative.
This case is being prosecuted pursuant to the New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative. The HOPE Initiative is a collaborative effort between the U.S. Attorney’s Office and the University of New Mexico Health Sciences Center that is partnering with the Bernalillo County Opioid Accountability Initiative with the overriding goal of reducing the number of opioid-related deaths in the District of New Mexico. The HOPE Initiative comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. The law enforcement component of the HOPE Initiative is led by the Organized Crime Section of the U.S. Attorney’s Office and the DEA in conjunction with their federal, state, local and tribal law enforcement partners. Targeting members of major heroin and opioid trafficking organizations for investigation and prosecution is a priority of the HOPE Initiative.
Osceola Man Sentenced to 94 Months in Prison for Possession of HandgunRead the Press Release
LITTLE ROCK—Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas and David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation (FBI) announced that on December 9, 2015, Steven Cuble, age 38, of Osceola, was sentenced to 94 months imprisonment followed by three years of supervised release by U.S. District Judge James M. Moody, Jr. The 94 months are to be served consecutive to the five-year state sentence he is currently serving.
Cuble was indicted in June 2014 for a single count of being a felon in possession of a firearm. He pled guilty on April 2, 2015, at which time he admitted that on March 20, 2014, he possessed a loaded 9mm handgun. According to facts read at Cuble’s change of plea hearing, on March 20, 2014, officers with the Osceola Police Department attempted to serve two felony warrants on Cuble when he fled a short distance in a vehicle. When Cuble was stopped, he was arrested on those warrants. The officers then searched his car and found the loaded handgun between the driver’s seat and center console. Some plastic baggies, scales, and other drug paraphernalia were also found in Cuble’s car, which led to a sentencing enhancement. At the time of offense, Cuble was serving a five-year suspended imposition of sentence on a state drug case.
The offense of felon in possession of a firearm, 18 U.S.C. § 922(g)(1), carries a possible sentence of up to 10 years’ imprisonment, not more than three years supervised release, and up to a $250,000 fine.
The investigation was conducted by the United States Attorney’s Office, FBI, and the Osceloa Police Department. It was prosecuted by Assistant United States Attorney Michael Gordon.
Oregon Resident Sentenced to Prison for Role in One Million Dollar Tax Fraud SchemeRead the Press Release
A Portland, Oregon, resident was sentenced today to more than two years in prison for her role in a fraudulent income tax refund scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Jasmine Mason, 33, was sentenced to 32 months in prison followed by three years of supervised release. According to the indictment and information disclosed in related court proceedings, Mason conspired with Tataneisha White, Shawntina Ware, Brandon Leath and another individual to file more than 227 false income tax returns falsely claiming more than $1 million in refunds. The indictment charged all five individuals with conspiracy to file false claims and multiple counts of filing false claims, wire fraud and theft of government funds.
Mason pleaded guilty in June, to one count of conspiracy to file false claims, one count of filing a false claim and one count of theft of government funds. In her plea agreement, Mason admitted that she and her co-conspirators prepared and filed false income tax returns that included fictitious W-2 wages and inflated amounts of income tax withheld to generate refunds ranging from $1,000 to $12,000. Mason also admitted that she and her co-conspirators shared personal identifying information with each other to file the false tax returns and used multiple bank accounts controlled by the co-conspirators or their family and friends to split the fraudulent refunds.
In addition to the prison term, U.S. District Judge Robert E. Jones for the District of Oregon ordered Mason to pay $336,937.61 in restitution to the Internal Revenue Service (IRS). On Nov. 3, co-conspirator Leath was sentenced to 24 months in prison and ordered to pay $55,635.61 in restitution to the IRS. White and Ware are awaiting sentencing on their guilty pleas to similar charges.
Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Lori A. Hendrickson and Ryan R. Raybould of the Tax Division, who are prosecuting the case with valuable assistance from the U.S. Attorney’s Office in Portland.
Omaha Man Sentenced to 6 Years for Possessing Child PornographyRead the Press Release
Randy D. Van Beek, 59, was sentenced Monday in federal court in Omaha, Nebraska, for receiving and possessing child pornography. The Honorable Laurie Smith Camp sentenced Van Beek to seventy-two (72) months of imprisonment. There is no parole in the federal prison system. After his release from prison, Van Beek will serve a ten (10) year term of supervised release and will be required to register as a sex offender.
A computer in Van Beek’s home was observed on three separate occasions in March, 2014 with child pornography available for sharing. A search warrant was served on the home on May 22, 2014. Van Beek admitted to viewing and deleting child pornography. Forensic analysis of his computers revealed more than 500 videos and 400 images of child pornography many of which involved prepubescent children engaged in sexual acts with other prepubescent children and adults.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was investigated by the Omaha FBI's Cyber Crime Task Force (CCTF).
North Dakota Man Sentenced for AssaultRead the Press Release
United States Attorney Randolph J. Seiler announced that a Fort Yates, North Dakota, man convicted of Assault Resulting in Serious Bodily Injury was sentenced on November 30, 2015, by U.S. District Judge Charles B. Kornmann.
Victor Twinn, age 18, was sentenced to 33 months in custody, followed by 3 years of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
Twinn was indicted by a federal grand jury on February 11, 2015. He pled guilty on August 31, 2015.
The conviction stemmed from an incident on January 1, 2015, when Standing Rock Law Enforcement was notified that a male was in front of a house in McLaughlin, South Dakota, unconscious and bleeding from his ears and head. Bureau of Indian Affairs (BIA) law enforcement arrived on scene and located the victim, lying unconscious in front of a residence. An ambulance was summoned and the victim was transported to the Saint Alexius ICU in Bismarck, North Dakota. The victim had severe swelling to his head and face from the assault, and was hospitalized for a period of time due to the injuries he sustained.
Several witnesses at the house identified Victor Twinn as the one who caused the injuries and assaulted the victim. Twinn and the victim went outside and began to fight, and witnesses attempted several times to break it up. After a brief scuffle, Twinn knocked the victim to the ground and began kicking him upon the head, rendering the victim unconscious. While the victim was laying on the ground unconscious, Twinn continued the assault by repeatedly stomping on the victim’s head.
Twinn was arrested a short time later and brought to the Standing Rock Sioux Tribal jail where he admitted to fighting with the victim and knowing that he took it too far by kicking the victim approximately three times on the head, knocking him unconscious. Twinn also recalled some people pulling him away, but that he was extremely upset and went back to where the victim was laying and stomped on his head multiple times.
This case was investigated by the BIA, Standing Rock Agency and the Federal Bureau of Investigation. Assistant U.S. Attorney Troy R. Morley prosecuted the case.
Twinn was immediately turned over to the custody of the U.S. Marshals Service.
New York Man Who Supplied Falsely Remarked Computer Chips Used in U.S. Military Helicopters is SentencedRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that JEFFREY KRANTZ, 50, of New York, N.Y., was sentenced today by U.S. District Judge Michael P. Shea in Hartford to three years of probation and ordered to pay a $100,000 fine for supplying customers with falsely remarked microprocessor chips, many of which were used in U.S. Military and commercial helicopters.
“We are committed to prosecuting individuals who distribute unapproved microprocessor chips and other electronic components for use by the U.S. Military,” said U.S. Attorney Daly. “This crime poses a potential threat to the safety of the men and women of our armed services. We thank the Defense Criminal Investigative Service and the U.S. Department of Transportation, Office of Inspector General, for their diligent work on this complex investigation.”
“Today's sentence is another necessary step along the path to protect the integrity of the Department of Defense's supply chain,” said Craig W. Rupert, Special Agent in Charge, Defense Criminal Investigative Service (DCIS), Northeast Field Office. “Distributors who opt for financial gain by introducing inferior products into mission critical equipment create an environment ripe for product failures. Such disregard puts the warfighter at an unnecessary risk, ultimately impacting the mission readiness of our military that the nation depends on. DCIS shields America’s investment in national defense by continuing to engage with our partner law enforcement agencies and prosecutors to bring to justice all who disrupt the reliability of our military's critical infrastructure.”
“The sentencing today of Jeffrey Krantz for supplying customers with falsely remarked microprocessor chips sends a clear signal that strong penalties await those that would seek to perpetrate fraud in the aerospace manufacturing industry,” said Todd Damiani, regional Special Agent-in-Charge of the U.S. Department of Transportation Office of Inspector General. “The DOT-OIG will work with our law enforcement and prosecutorial colleagues, to continue our dedicated efforts to uncover schemes involving suspect unapproved parts (“SUPs”), prevent SUPs’ use, and punish those who seek to compromise the integrity of DOT’s safety programs.”
According to court documents and statements made in court, KRANTZ was the CEO and an owner of Harry Krantz, LLC, a New York-based company that bought and sold, among other things, obsolete electronic parts for use by the U.S. Military and commercial buyers. In 2005, KRANTZ entered into a business relationship with Jeffrey Warga, the president and owner of Rhode Island-based Bay Components, LLC, to sell military microprocessor chips to Bay Components, which would in turn sell them to a Connecticut company. KRANTZ knew that the Connecticut company wanted new and original chips, not falsely remarked chips.
Between 2005 and 2008, KRANTZ purchased and sold, and caused to be purchased and sold, over a thousand chips to Bay Components, which, in turn sold them to the Connecticut company. The chips were marked with certain information, including a certain manufacturer’s name and trademark, a date code, and a military part number. In approximately December 2005, the first shipments of about 330 chips that KRANTZ had sold to Bay Components were rejected by the Connecticut company for being the wrong part because the chip contained the wrong die inside. In 2006, KRANTZ replaced those chips with at least some of the replacement chips bearing the date code 9832. Between 2006 and 2008, KRANTZ sold and caused to be sold at least 900 chips with date code 9832 to Bay Components, the majority of which were sold to the Connecticut company. KRANTZ knew that the chips had originated from a parts supplier in China, and there was a high probability that the chips were falsely remarked not the original chips of the certain manufacturer as represented by the markings on the chip. He also avoided engaging in common practices in the industry, including those which Harry Krantz LLC routinely engaged in for other military parts, to avoid confirming that the chips were likely remarked.
The investigation revealed that many of the chips were used in the assembly of U.S. Military and commercial helicopters. The chips have been examined and determined not to be the root cause of any mechanical problems experienced by the helicopters to date.
On July 28, 2015, KRANTZ waived his right to indictment and pleaded guilty to one count of wire fraud. In pleading guilty, KRANTZ also agreed to pay restitution in the amount of $402,650. Judge Shea will issue a restitution order after further court proceedings.
As part of his guilty plea, KRANTZ also agreed not to be directly or indirectly involved in the buying or selling of electronic parts, for a period of two years. He also has given up all control either directly or indirectly over Harry Krantz LLC, and all beneficial and/or financial interest, including ownership interest, in Harry Krantz, LLC, and will not reacquire such an interest.
On December 12, 2014, Warga pleaded guilty to one count of conspiracy to commit wire fraud. He awaits sentencing.
This ongoing investigation is being conducted by the Defense Criminal Investigative Service and the U.S. Department of Transportation, Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorney Douglas P. Morabito.
New York Man Found Guilty of Interstate Transportation for Prostitution and Violation of A Protective OrderRead the Press Release
Jacksonville, Florida – United States Attorney A. Lee Bentley, III announces that a federal jury has found Edik Asadorian (43, Queens, NY) guilty of interstate transportation for prostitution and interstate violation of a protective order against domestic violence. He faces a maximum penalty of 20 years in federal prison. His sentencing hearing is scheduled for February 29, 2016.
Asadorian, an Iraninan national, was indicted on May 15, 2015.
According to testimony and evidence presented at trial, on November 13, 2014, Asadorian engaged in domestic violence against a woman in Queens. Evidence showed that he punched and choked the woman, threw her against a wall and onto the floor of an apartment the two shared, causing visible injuries. A New York court issued an order of protection directing Asadorian to stay away from the woman and to have no contact with her whatsoever.
Rather than complying with that order, Asadorian transported the woman to Florida, with the intent that she engage in prostitution. Less than 24 hours after arriving in Jacksonville, an ad for the woman was placed on the Internet site Backpage.com. Asadorian also obtained multiple hotel rooms in the Jacksonville area to be used for the illegal activities. Within hours of placing the ad, the woman began prostituting and scheduling appointments for the following day. Asadorian later transported the woman to a person he and the woman believed was a customer, but turned out to be an undercover detective with the Orange Park Police Department. The detective was participating in a prostitution and anti-human-trafficking sting coordinated by the Clay County Sheriff’s office. When the woman arrived, she had gel, lingerie, and other items Asadorian had provided to her for prostitution.
This case was investigated by the Orange Park Police Department, the New York City Police Department, the Clay County Sheriff’s Office, the Florida Department of Law Enforcement, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Mac D. Heavener, III.
Neiman Groce Pleads Not Guilty to Retirement Plan EmbezzlementRead the Press Release
The United States Attorney for the District of Vermont announced that Neiman Groce, 30, of Poultney, pleaded not guilty today in United States District Court in Burlington to federal fraud and forgery charges. U.S. Magistrate Judge John M. Conroy released Groce on conditions pending trial, which has not been scheduled.
On December 2, 2015, a federal grand jury in Rutland returned a three-count indictment charging Groce with embezzlement, wire fraud and forgery. According to the indictment, between approximately 2008 and late 2012, Groce was employed by Rutland Plywood Corporation. In 2012, Groce was promoted to Human Resources Director and assumed responsibility for administering the company's section 401(k) employee retirement plan. According to the indictment, between June and November 2012, Groce embezzled approximately $88,000 from the retirement accounts of five former Rutland Plywood employees. Groce allegedly accomplished the embezzlement by forging employees' signatures on benefit plan withdrawal forms and faxing the forms to the company which managed the retirement plan. The forged forms contained directions that the money withdrawn from the employees' accounts be electronically transferred to one of two bank accounts that Groce controlled. During that time, more than $75,000 in retirement plan funds was actually transferred into Groce's accounts.
The indictment charges Groce with stealing an additional $3000 from Rutland Plywood by forging and altering a series of company checks to third parties to make them payable to himself, then cashing those checks.
The United States Attorney emphasizes that the charges in the indictment are merely accusations and that the defendant is presumed innocent unless and until he is proven guilty.
If convicted, Groce faces up to 20 years of imprisonment and a fine of up to $250,000. The actual sentence would be determined with reference to federal sentencing guidelines.
This case was investigated by the Federal Bureau of Investigation and the Vermont State Police.
Groce is represented by the office of the Federal Public Defender. The prosecutor is Assistant U.S. Attorney Gregory Waples.
Morris County, New Jersey, Man Sentenced to Five Years in Prison for Distributing Sexually Explicit Images of ChildrenRead the Press Release
TRENTON, N.J. – A Madison, New Jersey, man was sentenced today to 60 months in prison for distributing images of child sexual abuse from his home computer, U.S. Attorney Paul J. Fishman announced.
Michael Hodukavich, 25, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with one count of distributing child pornography over the Internet. Judge Wolfson imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
Hodukavich admitted that, on Nov. 20 and 21, 2014, he distributed videos and images depicting child sexual abuse on the Internet via peer-to-peer file sharing software, which allowed others access to the material in shared directories. An undercover agent discovered and downloaded the images and videos, and the username and IP address of the sharer was traced back to Hodukavich’s residence. Hodukavich also admitted to having more than 600 images of child sexual abuse saved on his computer.
In addition to the prison term, Judge Wolfson sentenced Hodukavich to five years of supervised release.
U.S. Attorney Fishman credited special agents of FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and the Madison Police Department, under the direction of Chief of Police Darren P. Dachisen Sr., with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Melissa M. Wangenheim of the U.S. Attorney’s Office General Crimes Unit in Newark.
Defense counsel: James S. Friedman Esq., Newark
Monroe County Man Sentenced to 30 Months in Prison for Federal Methamphetamine Trafficking ChargeRead the Press Release
SCRANTON - The United States Attorney’s Office for the Middle District of Pennsylvania announced that a Monroe County man was sentenced today to 30 months’ imprisonment by Senior United States District Judge Edwin M. Kosik, for his role in a methamphetamine-trafficking ring.
According to United States Attorney Peter Smith, Fred Baumgartner, age 34, of Kresgeville, Monroe County, pleaded guilty in May 2015 to the charge of conspiracy to distribute methamphetamine.
Baumgartner was one of seven individuals indicted by a federal grand jury in April 2014, after an investigation conducted jointly by the Drug Enforcement Administration, the Pennsylvania State Police, the Pocono Mountain and the Stroud Regional Police Departments regarding methamphetamine trafficking in the Monroe County area.
Previously, Emmanuel Tucker, age 39, of Stroudsburg, was sentenced to 41 months in prison for participating in the same methamphetamine trafficking conspiracy. In addition, Scott Borushak, age 51, of Stroudsburg, previously entered a guilty plea and is awaiting sentencing. The charges against the remaining defendants are currently pending.
In addition to the prison term, Senior Judge Kosik also ordered that Baumgartner be supervised by a probation officer for three years following his release from prison.
The cases are being prosecuted by Assistant United States Attorney Robert J. O’Hara.
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Minnesota Man Sentenced for Assault with a Dangerous Weapon and Mobridge Woman Sentenced for Misprision of a FelonyRead the Press Release
United States Attorney Randolph J. Seiler announced that a Minneapolis, Minnesota, man convicted of Assault with a Dangerous Weapon, and a Mobridge, South Dakota, woman convicted of Misprision of a Felony were sentenced on November 30, 2015, by U.S. District Judge Charles B. Kornmann.
Clayton Montreal, age 29, was sentenced to 20 months in custody, followed by 3 years of supervised release, and a special assessment of $100 to the Federal Crime Victims Fund.
Wyndee Sitting Dog, age 32, was sentenced to time served and a special assessment of $100 to the Federal Crime Victims Fund.
Montreal and Sitting Dog, along with a third Defendant were indicted by a federal grand jury on April 15, 2014. They pled guilty on August 24, 2015.
Montreal’s conviction stemmed from an incident on March 26, 2014, when Bureau of Indian Affairs (BIA) police were dispatched to a private residence in McLaughlin, South Dakota. Upon arrival, the BIA officer made contact with the victim, who reported she had been assaulted. Through an investigation, it was discovered that Montreal came to a residence the victim was at the night before. She got into a van with Montreal and they eventually got into a verbal argument, which escalated to a physical altercation. During the fight, Montreal punched and also kicked the victim. As a result of the assault, the victim sustained bruising to various parts of her body.
Sitting Dog’s conviction stemmed from the same incident. Montreal, along with Sitting Dog, stopped by the victim’s house and told her to get into a vehicle outside the residence. The victim got in the van and Montreal got into an argument with her over a missing sum of money. Sitting Dog was present and observed Montreal commit the assault on the victim. Sitting Dog knew the actions being committed by Montreal were a violation of law and that she should report these actions immediately to law enforcement. She was later interviewed and told the special agent she did not intervene in the argument, nor did she seek help for the victim. At no time did Sitting Dog report the felonious assault to law enforcement, or another person in civil authority under the United States.
This case was investigated by the Federal Bureau of Investigation. Assistant U.S. Attorney Troy R. Morley prosecuted the case.
Montreal was immediately turned over to the custody of the U.S. Marshals Service.
Miami Resident Sentenced to 108 Months in Prison for Defrauding Medicare Part DRead the Press Release
A Miami resident was sentenced by U.S. District Judge Donald M. Middlebrooks to 108 months in prison, to be followed by three years of supervised release and was ordered to pay $20,988,632 in restitution.
Wifredo Ferrer, United States Attorney for the Southern District of Florida, Shimon Richmond, Special Agent in Charge, Health and Human Services, Office of Inspector General (HHS-OIG), and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.
Daniel Suarez, 24, of Miami, previously pled guilty to one count of conspiracy to commit health care fraud and wire fraud, in violation of Title 18, United States Code, Section 1349.
According to the court record, Suarez and his co-conspirators were the owners of eight separate pharmacies that submitted and caused the submission of false and fraudulent claims to Medicare that they provided pharmaceutical drugs pursuant to properly written prescriptions when, in fact, such items were not properly prescribed or actually provided to Medicare beneficiaries. This fraud was accomplished in part by the use of a number of patient recruiters who received kickbacks in return for referring Medicare Part D beneficiaries to the eight separate pharmacies that Suarez controlled. These patient recruiters then purchased the prescriptions for the medically unnecessary pharmaceutical items that the pharmacies billed to Medicare. Suarez placed the pharmacies he controlled in the names of co-conspirator family members. In total, Suarez and his co-conspirators submitted and caused the submission of more than $20 million in false claims to the Medicare Part D program. Suarez used the fraudulently obtained proceeds to benefit himself and his family, including the purchase of luxury automobiles (ie: a Rolls Royce Ghost, Bentley, Range Rover and Mercedes Benz S63 AMG).
Mr. Ferrer commended the investigative efforts of the HHS-OIG and FBI. This case was prosecuted by Assistant United States Attorneys Roger Cruz.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Mexican Nationals Charged with Federal Marijuana Trafficking OffensesRead the Press Release
ALBUQUERQUE – Jose Luis Castillo-Marchado, 31, and Luis Lopez-Felix, 33, both Mexican nationals illegally in the United States, made their initial appearances this morning in federal court in Las Cruces, N.M., on a criminal complaint charging them with violating the federal narcotics trafficking laws. Both men were detained pending a preliminary hearing and detention hearing which have not yet been scheduled.
The criminal complaint charges Castillo-Marchado and Lopez-Felix with possession of marijuana with intent to distribute and alleges that they committed the offense on Dec. 8, 2015, in Hidalgo County, N.M. According to the complaint, Castillo-Marchado and Lopez-Felix were arrested on Dec. 8, 2015, by U.S. Border Patrol agents near New Mexico Highway 338, after agents allegedly discovered approximately 2,774.45 pounds of marijuana concealed in Castillo-Marchado and Lopez-Felix’s vehicle.
If convicted of the marijuana trafficking charge, Castillo-Marchado and Lopez-Felix each face a statutory penalty of a mandatory minimum of ten years and a maximum of life in federal prison. Charges in criminal complaints are merely accusations. All criminal defendants are presumed innocent unless proven guilty beyond a reasonable doubt.
This case was investigated by the El Paso office of the DEA and the Lordsburg station of the U.S. Border Patrol. Assistant U.S. Attorney Marisa A. Lizarraga of the U.S. Attorney’s Las Cruces Branch Office is prosecuting the case.
Mexican Citizen Sentenced for Use of a Fraudulent Identification DocumentRead the Press Release
United States Attorney Randolph J. Seiler announced that a Mexican citizen living in Huron, South Dakota, convicted of Use of a Fraudulent Identification Document, was sentenced on December 1, 2015, by United States District Judge Roberto Lange.
Milton Oropeza-Chavarria, aka Alfredo De Jesus De Leon, age 21, was sentenced to 18 months of probation, including two months of home confinement, and a special assessment to the Federal Crime Victims Fund.
Oropeza-Chavarria was indicted for Use of a Fraudulent Identification Document by a federal grand jury on February 4, 2015. He pled guilty on September 28, 2015.
On November 30, 2011, Oropeza-Chavarria, a citizen of Mexico, knowingly used an identification document bearing the name Alfredo De Leon for the purpose of obtaining employment. Oropeza-Chavarria signed the Department of Homeland Security Form I-9 to obtain employment with a Jerauld County employer. For verification of authorization to work in the United States, he knowingly provided documentation that was not issued lawfully for his use.
This case was investigated by U.S. Immigration and Customs Enforcement. Assistant U.S. Attorney Carrie Sanderson prosecuted the case.
Oropeza-Chavarria was released to begin his period of home confinement.
Mescalero Apache Man Sentenced to Five Years of Probation for Federal Burglary ConvictionRead the Press Release
ALBUQUERQUE – Anthony Shendo, 17, an enrolled member of the Mescalero Apache Nation who resides in Mescalero, N.M., was sentenced this afternoon in federal court in Las Cruces, N.M., to five years of probation for his burglary conviction.
Shendo pled guilty on July 15, 2015, to an information charging him with burglary. In entering the guilty plea, Shendo admitted that on Feb. 16, 2014, he entered a residence on the Mescalero Apache Reservation in Otero County, N.M., without authorization and with intent to commit a theft. In his plea agreement, Shendo voluntarily waived his right to be prosecuted as a juvenile and agreed to be prosecuted as an adult.
This case was investigated by the Mescalero Agency of the BIA’s Office of Justice Services and the New Mexico State Police. Assistant U.S. Attorney Aaron O. Jordan of the U.S. Attorney’s Las Cruces Branch Office prosecuted the case.
Meridian Man Sentenced to Prison for Preparing False Income Tax ReturnsRead the Press Release
Jackson, Miss - Kendrick Williams, 36, of Meridian, was sentenced today by U.S. District Judge Tom Lee to serve 21 months in federal prison followed by one year of supervised release for aiding and assisting in the preparation of false and fraudulent federal income tax returns, announced U.S. Attorney Gregory K. Davis and Jerome R. McDuffie, Special Agent in Charge of Internal Revenue Service - Criminal Investigation. The Court will hold a restitution hearing on March 3, 2016 to determine the amount of restitution that Williams will have to pay back to the Internal Revenue Service.
Williams prepared fraudulent tax returns for clients for the 2007 and 2008 tax years using the business name, TaxPro415. Without his clients’ knowledge, Williams prepared tax returns with falsely inflated federal withholding amounts, overstated wages, understated wages, false filing statuses, false Education Credits, false Tuition and Fees Deductions, and false Itemized Deductions. The false tax returns claimed $99,329.51 in refunds.
"The U.S. Attorney’s Office will continue to aggressively prosecute those individuals who steal money from the U.S. Treasury," said U.S. Attorney Gregory K. Davis.
Special Agent in Charge, Jerome R. McDuffie, stated: "Kendrick Williams filed false returns to obtain inflated refunds on behalf of his clients. While most of the individuals had no knowledge of his illegal actions, they are still charged with repaying the monies, to their own detriment. IRS - Criminal Investigation is committed to holding unscrupulous return preparers accountable for the victimization of taxpaying citizens, and would caution taxpayers out there to seek out reputable return preparers and review the documents being filed with the IRS on their behalf."
This case was investigated by IRS- Criminal Investigation and prosecuted by Assistant U.S. Attorney Glenda Haynes.
McLaughlin Man Sentenced for IncestRead the Press Release
United States Attorney Randolph J. Seiler announced that a McLaughlin, South Dakota, man convicted of Incest was sentenced on November 30, 2015, by U.S. District Judge Charles B. Kornmann.
Joseph Milo Follows The Road, age 62, was sentenced to custody until December 15, 2015, and a special assessment of $100 to the Federal Crime Victims Fund.
Follows The Road was indicted by a federal grand jury on July 14, 2015. He pled guilty on August 31, 2015.
The conviction stemmed from an incident on June 18, 2015, when Bureau of Indian Affairs (BIA) law enforcement was dispatched to the residence of Joseph Follows The Road, in McLaughlin. Law enforcement officers were informed that witnesses had seen Follows The Road and his biological daughter engaging in inappropriate behavior. Follows The Road admitted to having engaged in consensual sexual intercourse with his daughter on June 17, 2015.
This case was investigated by the BIA, Standing Rock Agency. Assistant U.S. Attorney Troy R. Morley prosecuted the case.
Follows The Road was immediately turned over to the custody of the U.S. Marshals Service.
McAllen Man Sentenced to 17 Years for Receiving Child PornographyRead the Press Release
McALLEN, Texas – A 58-year-old resident of McAllen has been ordered to federal prison following his conviction of receipt of child pornography, announced U.S. Attorney Kenneth Magidson. Maximiliano Cantu pleaded guilty Oct. 28, 2014.
Today, U.S. District Judge Randy Crane took into consideration the fact that the offense involved more than 400 movies and 3,000 images depicting child pornography for a period in excess of 10 years and handed Cantu a sentence of 204 months. The sentence will be immediately followed by a lifetime term of supervised release Cantu was further ordered to pay $52,000 in restitution to known victims. Additional information presented today included descriptions of the types of images received as material portraying sadistic conduct and prepubescent minors and the fact that the defendant was involved in the distribution of images in return for the receipt of additional images of child pornography.
Cantu came to the attention of law enforcement following an investigation which began Aug. 7, 2014, into persons using the Internet to traffic in child pornography. A special agent with Homeland Security Investigations (HSI) was able to locate and identify a computer as offering to participate in the receipt of child pornography movies through the peer-to-peer network on the Internet. Through the investigation, it was determined that the computer was located in a residence in McAllen.
On Aug. 28, 2014, authorities executed a search warrant at that residence and obtained Cantu’s computer and various external media devices. A forensic examination on Cantu’s computer and storage media revealed more than 400 movies of child pornography involving clearly young children engaged in sexually explicit conduct. These movies included children under the age of 12 engaged in sadistic conduct and acts of violence. Some of the movies are of known victims as identified through the National Center for Missing and Exploited Children.
Cantu admitted he downloaded child pornography from the Internet thereby receiving the child pornography found on his computer and external storage media devices.
Cantu will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The charges are the result of an investigation conducted by HSI.
This case, prosecuted by Assistant United States Attorneys Kimberly Ann Leo and Alex Benavides, was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Maryland man sentenced for unlawful possession of stolen firearmsRead the Press Release
CLARKSBURG, WEST VIRGINIA – Adesola Vanzant, 21, of Tacoma Park, Maryland, was sentenced today to 30 months in prison for unlawful possession of stolen firearms, United States Attorney William J. Ihlenfeld, II, announced.
Vanzant was discovered in April 2014 in Doddridge County, West Virginia in possession of two stolen firearms: a .22 caliber pistol and a 20 gauge shotgun. He pled guilty in August 2015 to one count of “Possession of Stolen Firearms – Aiding and Abetting.”
Assistant U.S. Attorneys Zelda Wesley and Stephen Warner prosecuted the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated.
U.S. District Judge Irene M. Keeley presided.
Manatee County Man Pleads Guilty to Stolen Identity Refund FraudRead the Press Release
Tampa, Florida – United States Attorney A. Lee Bentley, III announces that Ledale Johnson (51, Bradenton) has pleaded guilty to knowingly filing a false income tax return on behalf of another and aggravated identity theft. He faces a maximum penalty of five years in federal prison on the tax return count, to be followed by a consecutive two-year term for the aggravated identity theft count.
According to the plea agreement, Johnson participated in a scheme involving the filing of false tax returns claiming tax refunds from the IRS totaling more than $250,000. Nearly $60,000 was downloaded to prepaid debit cards, in other people’s names, as a result of those filings. On several dates between October 2011 and March 2012, Johnson was found to be in possession of unauthorized and counterfeit debit cards that had been loaded with fraudulently obtained tax refunds filed using stolen identities. Johnson also had filed a fraudulent tax return in his name and the name of another individual.
In November 2011, when law enforcement officers searched Johnson’s residence, officers seized personal identifying information belonging to others, multiple computers, and more than 100 user identification numbers associated with electronically filing tax returns.
This case was investigated by the Manatee County Sheriff’s Office, the Bradenton Police Department, and the Internal Revenue Service - Criminal Investigation. It is being prosecuted by Assistant United States Attorney Kelley C. Howard-Allen.
Long Island Man Admits Role in International $200 Million Credit Card Fraud ConspiracyRead the Press Release
TRENTON, N.J. - A Hicksville, New York, man today admitted his role in one of the largest credit card fraud schemes ever charged by the Justice Department, U.S. Attorney Paul J. Fishman announced.
Ijaz Butt, 56, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to Count One of an indictment charging him with conspiracy to commit bank fraud.
According to documents filed in this case and statements made in court:
Butt was originally charged in February 2013 as part of a conspiracy to fabricate more than 7,000 false identities to obtain tens of thousands of credit cards. Since then, 19 people, including Butt, have pleaded guilty in connection with the scheme.
Members of the conspiracy doctored credit reports to pump up the spending and borrowing power associated with the cards. They then borrowed or spent as much as they could, based on the phony credit history, but did not repay the debts – causing more than $200 million in confirmed losses to businesses and financial institutions.
The scheme involved a three-step process in which the defendants would make up a false identity by creating fraudulent identification documents and a fraudulent credit profile with the major credit bureaus; pump up the credit of the false identity by providing false information about that identity’s creditworthiness to those credit bureaus; and finally, run up large loans.
The scope of the criminal fraud enterprise required Butt and other conspirators to construct an elaborate network of false identities. Across the country, the conspirators maintained more than 1,800 “drop addresses,” including houses, apartments and post office boxes, which they used as the mailing addresses of the false identities.
Butt admitted that he helped obtain credit cards in the name of third parties – many of which were fictional – then directed the credit cards to be mailed to addresses controlled by members of the conspiracy. He also admitted they knew the cards would be used fraudulently at businesses.
The conspiracy charge to which Butt pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine. Sentencing is scheduled for March 21, 2016.
U.S. Attorney Fishman praised special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Richard M. Frankel in Newark; postal inspectors, under the direction of Inspector in Charge Maria L. Kelokates; and special agents of the U.S. Secret Service, under the direction of Special Agent in Charge Carl Agnelli, for the investigation leading to today’s sentencing. He also thanked the U.S. Social Security Administration for its role in the investigation.
The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit and Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’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. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
Defense counsel: Kenneth W. Kayser Esq., East Hanover, New Jersey
Justice Department Obtains $100,000 Settlement in Lawsuit Against Wisconsin Mobile Home Park for Discriminating Against Families with ChildrenRead the Press Release
The Justice Department announced today that the owners and operators of Twin Oaks Mobile Home Park in Whitewater, Wisconsin, have agreed to pay $100,000 to settle a Justice Department lawsuit alleging that they unlawfully excluded families with children from significant portions of their 230-lot mobile home park. The settlement must still be approved by the U.S. District Court for the Western District of Wisconsin.
“Families with children should be free to choose housing that meets their needs and their budget,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “They should not face discrimination when they are looking for a home for their families.”
“The U.S. Department of Justice is committed to fighting illegal discrimination and ensuring the fair housing rights of families wherever they are challenged,” said U.S. Attorney John W. Vaudreuil of the Western District of Wisconsin.
The lawsuit, filed in October 2014, arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by a single mother and a former resident who had tried to complete the sale of a mobile home in the park. The defendants refused to approve the application for residency of the single mother who planned to purchase the mobile home and live there with her then-two-year-old child because the home was located in an area of the park where they did not allow children. After conducting an investigation, HUD found that the defendants had violated the Fair Housing Act and referred the matter to the Department of Justice. The defendants in the case include Twin Oaks Mobile Home Park Inc.; Merrill Eugene Gutzmer, the owner of the park; and Dennis Hansen, the resident manager. After the lawsuit was filed, the defendants approved the residency of the single mother who had filed the HUD complaint and she was able to purchase the mobile home.
“Unless a mobile home park meets the very specific requirements to be designated housing for older persons, the owner cannot refuse to sell or rent a home to a family because they have a child,” said Gustavo Velasquez, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “Today’s settlement reaffirms HUD’s determination to work with the Justice Department to ensure that occupancy standards established by housing providers do not violate the Fair Housing Act.”
Under the terms of the proposed settlement, the defendants will pay $45,000 in damages and rent credits to the two persons who filed HUD complaints, $45,000 to other persons who are identified later through a claims process established in the decree and $10,000 in a civil penalty. The settlement also requires the defendants to change their policies to allow families with children throughout the park. Anyone who believes that they have been discriminated against by Twin Oaks because they have children should call the Justice Department at 1-800-896-7743, mailbox number 9997 or email the department at [email protected].
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, familial status and disability. Among other things, the Fair Housing Act makes it illegal to refuse to rent housing and to discriminate in the terms or conditions of housing rentals because of familial status, except in specified categories of housing that are reserved for older persons. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, email the Justice Department at [email protected], or contact HUD at 1-800-669-9777 or through www.hud.gov.
Twin Oaks Consent Decree
Twin Oaks Joint Motion for Entry of Consent Decree
Justice Department Announces Two Banks Reach Resolutions Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Cornèr Banca SA (Cornèr) and Bank Coop AG (Bank Coop) reached resolutions under the department’s Swiss Bank Program.
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.
Cornèr is headquartered in Lugano, Switzerland, with branch offices in Chiasso, Geneva, Locarno and Zurich, Switzerland. Cornèr has two wholly owned affiliates: Cornèr Banque (Luxembourg) SA, based in Luxembourg, and Cornèr Bank (Overseas) Ltd., based in the Bahamas. Cornèr offers a full range of traditional banking services, but it specializes in private banking, payment cards and securities trading.
For 40 years, Cornèr has offered both credit cards and prepaid debit cards under its CornèrCard brand name to its clients and clients of other financial institutions. Since Aug. 1, 2008, U.S. persons held 1,312 CornèrCard accounts at Cornèr. Use of CornèrCards by U.S. persons facilitated their access to and use of any undeclared funds on deposit at Cornèr and at other Swiss banks.
Cornèr assisted certain of its U.S. clients to evade their U.S. tax obligations, file false federal tax returns with the Internal Revenue Service (IRS) and hide overseas assets from the IRS. Cornèr opened, maintained and serviced accounts for U.S. persons that it knew were likely not declared to the IRS or the U.S. Department of the Treasury as required by U.S. law. Cornèr also maintained correspondent accounts at a U.S. bank to facilitate certain transactions for its clients – namely, conducting wire transfers in U.S. dollars and collecting checks issued in U.S. dollars. Such transfers included transactions involving U.S.-related accounts.
Between 2001 and 2008, Cornèr relationship managers traveled to the United States on at least 10 occasions to visit existing Cornèr clients. All of the U.S. client visits were approved by Cornèr management. Cornèr executives accompanied relationship managers on several of the trips to the United States and also visited with U.S. clients. Matters discussed during these client visits included account performance, account fees, account investment positions, alternative investments, increasing client deposits at Cornèr, client satisfaction with Cornèr, how to send account funds to the United States to purchase assets and referrals of new clients to Cornèr by existing clients. Cornèr relationship managers also met with holders of U.S.-related accounts in countries other than the United States and Switzerland, such as Italy.
In August 2008, Cornèr’s executive board decided that:
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There would be no changes to Cornèr’s existing U.S.-related accounts at that time, based on the board’s assessment that Cornèr had not engaged in the same type of conduct as had UBS;
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Cornèr would continue accepting new U.S. clients, but only after review by Cornèr’s compliance department and approval by an executive board member; and
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Cornèr would not accept any new U.S. clients coming from UBS.
However, after August 2008, Cornèr accepted new U.S.-related accounts from UBS, and Cornèr had reason to know that some of these accounts were undeclared. Also, after August 2008, Cornèr accepted new U.S.-related accounts, including one of the above-mentioned UBS accounts, without approval by an executive board member.
Cornèr provided its U.S. clients with the option to enter into hold-mail agreements, which allowed U.S. persons to keep evidence of their accounts outside of the United States in order to conceal assets and income from the IRS. Cornèr also provided its U.S. clients with the option to request numbered accounts, including code-name accounts. Holders of these accounts were permitted to use code names in all of their correspondence addressed to Cornèr and agreed that correspondence from Cornèr addressed to the code names would be considered as addressed to the clients. Examples of code names used by U.S. persons for their numbered accounts at Cornèr include “Dumbledor,” “Windstopper,” “Rocking” and “Anticipation.” Cornèr understood that providing numbered accounts and permitting code-name correspondence allowed U.S. persons to keep their identities secret from U.S. authorities in order to conceal assets and income from the IRS.
Cornèr had U.S.-related accounts that were beneficially owned by U.S. persons but held in the names of structures, including entities such as corporations, foundations or trusts. Cornèr knew, or had reason to know, that many of these structures were used by U.S. clients to help conceal their identities from the IRS. The structures were organized under the laws of various jurisdictions, including the Bahamas, Belize, the British Virgin Islands, Jersey, Liberia, Liechtenstein, the Marshall Islands, the Netherlands Antilles, Panama, St. Kitts and Nevis, St. Vincent and the Grenadines and Uruguay. Cornèr Bank (Overseas), Cornèr’s Bahamian affiliate, created international business corporations organized under the laws of the Bahamas, and several such corporations opened accounts at Cornèr that were beneficially owned by U.S. persons.
Since Aug. 1, 2008, Cornèr held 383 U.S.-related accounts with over $351 million in assets. Cornèr will pay a penalty of $5.068 million.
Bank Coop is a Swiss retail bank headquartered in Basel, Switzerland. Bank Coop was founded in 1927, when the Swiss Confederation of Trade Unions and the Federation of Swiss Consumer Associations established it as a cooperative society under the name Cooperative Central Bank. Today, Bank Coop is a publicly traded company listed on the SIX Swiss Exchange. Basler Kantonalbank has been Bank Coop’s majority shareholder since December 1999. Bank Coop has 32 branches throughout Switzerland. It has never had offices, branches or subsidiaries outside the country.
Bank Coop offered a variety of traditional Swiss banking services that it knew could assist, and did assist, U.S. clients in concealing their undeclared assets and income. These services included hold mail, numbered accounts and travel cash cards. Bank Coop accepted regular instructions from one client who is a U.S. citizen and resident to transfer approximately $9,500 to his account in the United States each month. After Aug. 1, 2008, Bank Coop opened accounts for U.S. residents who transferred assets from other Swiss financial institutions, including UBS and Credit Suisse AG, knowing that it was likely that the assets were undeclared.
Bank Coop also processed substantial cash withdrawals in connection with the closure of some U.S.-related accounts. For example, in February 2012, a client visited Bank Coop three times and withdrew $30,000, 30,000 in euros and 25,000 in euros, respectively, on those visits. At that time, the client informed Bank Coop that he decided to close the account, expressing concern about recent developments regarding Swiss bank secrecy and disclosure requests by U.S. and EU authorities. In March 2012, the client withdrew approximately 30,000 in Swiss francs and, upon closing the account in June 2012, withdrew the remaining balance of approximately 5,000 euros.
In April 2010, one client visited Bank Coop and requested that the bank purchase one kilogram of gold, which the client stored in his safety deposit box at Bank Coop. In August 2010, the client instructed Bank Coop to purchase another kilogram of gold, which was collected by the client’s daughter. In March 2011, the client instructed Bank Coop to purchase another kilogram of gold, which the client stored in his safety deposit box. In September 2012, after being advised by Bank Coop that his account would be closed on account of his U.S. residence, the client instructed Bank Coop to sell the gold in his safety deposit box and credit the proceeds to his account at Bank Coop. In October 2012, the client instructed Bank Coop to close the account and send a “crossed” check of approximately $335,000 to a Swiss law firm.
Bank Coop opened and maintained accounts held in the name of non-U.S. entities, including a Panama corporation and a Hong Kong corporation, while knowing that U.S. taxpayers were the true beneficial owners of the accounts held by these non-U.S. entities. In at least one instance, Bank Coop was aware that a U.S. person was the true beneficial owner of an account held by a Panama entity but accepted a false IRS Form W-8BEN from the entities’ directors. The false Form W-8BEN falsely declared that the beneficial owner was not a U.S. taxpayer and was signed by a director of the entity, who also was the director of the external asset manager that introduced the client to Bank Coop.
In 2001, Bank Coop entered into a Qualified Intermediary (QI) Agreement with the IRS. The QI regime provided a comprehensive framework for U.S. securities-related information reporting and tax withholding by a non-U.S. financial institution. In general, if an accountholder wanted to trade in U.S. securities and avoid mandatory U.S. tax withholding, the QI Agreement required Bank Coop to obtain the consent of the accountholder to disclose the client’s identity to the IRS. Bank Coop continued to service certain U.S. customers without disclosing their identity to the IRS and without considering the impact of U.S. criminal law on that decision. In 2001, a relationship manager, after winning a contest sponsored by Bank Coop, visited the United States. During the visit he secured from an accountholder a “Declaration of U.S. Taxable Persons,” in which the accountholder declared that she did not authorize Bank Coop to disclose her name to the U.S. tax authorities and instructed Bank Coop to sell her U.S. securities.
Since Aug. 1, 2008, Bank Coop maintained 385 U.S.-related accounts, with an aggregate maximum balance of approximately $71.4 million. Bank Coop will pay a penalty of $3.223 million.
In accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of these non-prosecution agreements, noncompliant U.S. accountholders at these banks must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance. Acting Assistant Attorney General Ciraolo also thanked Gregory E. Van Hoey, Michael R. Pahl and Michael N. Wilcove, who served as counsel on these matters, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Jury Convicts Liberty County Man in Kidnapping TrialRead the Press Release
BEAUMONT, Texas – A 29-year-old Dayton, Texas man has been convicted of two counts of kidnapping in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Wayne Ross Maitland was found guilty by a jury of two counts of kidnapping today following a three-day trial before U.S. District Judge Marcia A. Crone.
According to information presented in court, on Oct. 31, 2014, Maitland contacted his recently estranged wife to set up a meeting with her to discuss issues related to their potential divorce, including taking her to a bank to remove her name from their joint account. His estranged wife and her 11-month-old son, Maitland’s stepson, got in the car with Maitland and went to the bank. On the way back from the bank, Maitland drove to a county road, pulled over to the roadside, wrapped his estranged wife’s hands in duct tape and would not allow her to exit the vehicle. Maitland told her that he intended to commit suicide and force her to watch. She attempted to exit the moving vehicle, but the defendant grabbed her by the hair, choked her and punched her in the head several times. During the struggle, Maitland pulled a large segment of hair from her scalp and caused bruises to her head and face. Eventually she was able to jump from the vehicle while it was traveling approximately 40 miles per hour, which caused her to sustain further injuries, including “road rash” on her arms, back, and feet. Maitland then stopped the vehicle, got out and told his estranged wife, “I’ve got your son now” and then drove off. Maitland drove around for approximately eight hours before dropping the child off at a hospital in New Iberia, Louisiana. On Nov. 11, 2014 deputies with the Liberty County Sheriff’s Office received a tip regarding Maitland’s whereabouts. Acting on that tip, deputies executed an arrest warrant on a home in rural Liberty County, where Maitland was found hiding in an air conditioning duct. Maitland was charged by a federal grand jury on Dec. 3, 2014.
Maitland faces a minimum of 20 years and up to life in federal prison at sentencing. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors. A sentencing date has not been set.
The case was investigated by the Federal Bureau of Investigation, Texas Rangers, Liberty County Sheriff’s Office and the Dayton Police Department and prosecuted by Assistant U.S. Attorneys Christopher T. Tortorice and Lesley Bartow.
Jury Convicts Gang Member of Trafficking Crystal Methamphetamine in San JoseRead the Press Release
SAN JOSE – Eduardo Arriaga was convicted today of trafficking crystal methamphetamine and using a firearm as part of his narcotics trafficking, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigations Special Agent in Charge David J. Johnson. The guilty verdict followed a jury trial before the Honorable Edward J. Davila, U.S. District Judge, and represents the ninth conviction resulting from a proactive operation by the FBI’s Santa Clara County Violent Gang Task Force.
According to the evidence presented at trial, Arriaga, 40, of San Jose, has been a Sureño gang member for over 20 years. On April 29, 2012, Arriaga possessed a pound of crystal methamphetamine, and sold a half-ounce of it to a confidential informant working for the FBI. Arriaga, believing the confidential informant was a Sureño gang member from Southern California, conducted the drug deal out of his garage in San Jose while armed with a handgun. Approximately two months later, in the same garage, the confidential informant witnessed Arriaga with approximately a half-pound of additional crystal methamphetamine, a portion of which Arriaga sold to a fellow Sureño gang member. During that drug deal, Arriaga had two different handguns in his garage. In reaching its verdict, the jury found that Arriaga possessed 50 grams and more of crystal methamphetamine with the intent to distribute it and that he possessed a firearm in furtherance of his narcotics trafficking.
Arriaga was indicted on July 31, 2013, as part of the FBI’s crackdown on Sureño gangs in Santa Clara County. The FBI’s investigation into these gangs culminated in eight separate indictments alleging the distribution and conspiracy to distribute methamphetamine throughout Santa Clara County. The defendants charged in the crackdown include the following: (1) the reputed “matriarch,” of 8th Street Gilroy (Maria Salinas); (2) the co-conspirator mother and daughter combination associated with the Sureño gang “Varrio Sur Town” (Laura Garcia and Vanessa Pulido), and (3) known members of the Sureño gangs “Colonias,” “Varrio Mexicanos Locos,” “Poco Way,” and “Varrio Paisanos Locos.” The status of the matters against these additional defendants is as follows:
Defendant
Charges
Docket Number
Sentence
LAURA GARCIA
a/k/a “Blinky” and
VANESSA PULIDO
a/k/a “Bunny”
Distribution of Methamphetamine and Conspiracy to Distribute Methamphetamine
CR 13-00508 LHK
9/24/14
65 months
12/9/14
24 months home detention
RAFAEL MEDINA
a/k/a “Conejo”
Distribution and Conspiracy to Distribute Methamphetamine
CR 13-00507 LHK
10/22/14
75 months
RAUL VALLE MORFIN a/k/a “Green Eyes”
Distribution of Methamphetamine
CR 13-00509 DLJ
6/19/14
78 months
JESUS QUINONES
a/k/a “Canas”
Distribution of Methamphetamine
CR 13-00503 DLJ
10/9/14
60 months
JAIRO QUINTANA
a/k/a “Hido”
Distribution of Methamphetamine and Conspiracy to Distribute Methamphetamine
CR 13-00506 LHK
7/23/14
70 months
MARIA SALINAS
a/k/a “Grumpy”
Distribution of Methamphetamine
CR 13-00504 LHK
6/4/14
26 months
ULYSSES VASQUEZ a/k/a “Dreamer”
Distribution and Conspiracy to Distribute Methamphetamine
CR 13-00502 RMW
Pleaded guilty to conspiracy; sentencing is pending
Arriaga is currently being held in custody and is scheduled to be sentenced on February 29, 2016, before Judge Davila in San Jose. Arriaga faces a maximum penalty of two life sentences, and a minimum term of imprisonment of 15 years. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant United States Attorneys Marissa Harris and Stephen Meyer are prosecuting the case with the assistance of Yolanda Singletary, Nina Burney, and Ryka Barghi. The case is the result of an investigation by the FBI.
Jeffrey Cohen Sentenced to 37 Years in Prison in Massive Insurance Fraud SchemeRead the Press Release
Baltimore, Maryland – U.S. District Judge William D. Quarles, Jr. sentenced Jeffrey Brian Cohen, age 40, of Reisterstown, Maryland, today to 37 years in prison followed by three years of supervised release for wire fraud, aggravated identity theft, making false statements to an insurance regulator and obstruction of justice. Judge Quarles also entered an order requiring Cohen to pay restitution of $137 million, and will order forfeiture.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation; Special Agent in Charge Andre Watson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Postal Inspector in Charge David G. Bowers of the U.S. Postal Inspection Service - Washington Division.
U.S. Attorney Rod Rosenstein stated, “The evidence demonstrated that Jeffrey Cohen was a chronic con artist who was planning to commit murder to prevent his fraud schemes from coming to light.”
“Cohen’s substantial criminal conduct may have benefited him short-term, but now Cohen is being held accountable for his criminal actions,” said Thomas Jankowski, Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office. “Today's sentencing stands as an example that IRS-CI, along with the U.S. Attorney’s Office and our law enforcement partners, will continue to investigate and prosecute crimes involving financial fraud.”
“Postal Inspectors are proud to have worked with our federal law enforcement partners to end a widespread insurance fraud affecting businesses all over the U.S.,” stated Inspector In Charge David Bowers of the U.S. Postal Inspection Service. “But we are just as proud that the investigation may have prevented more dangerous activities from occurring.”
After four days of trial, Cohen pleaded guilty to the offenses on June 5, 2015. According to his plea agreement, Cohen acted as the president and chairman of the board of a Delaware corporation Indemnity Insurance Corporation RRG (Indemnity). Cohen previously controlled a District of Columbia corporation called Indemnity Insurance Corporation of DC, Risk Retention Group (Indemnity-DC), which was a predecessor entity to Indemnity. Both companies were located in Sparks, Maryland, and provided general liability insurance, liquor liability insurance, and excess liability insurance coverage to their customers, which were individuals and companies involved in the entertainment industry, such as nightclubs, concert tours, and special events. Both companies operated in several states, including Maryland.
The Delaware Insurance Commissioner and the DC Insurance Commissioner were charged by law with the responsibility of protecting insurance policyholders and the general public by regulating insurance companies and risk retention groups and their products to ensure among other things, that insurance companies and risk retention groups had the ability to pay claims.
Cohen admitted that from January 2008 to the fall of 2013, Cohen obtained insurance premiums by falsely representing the financial status of Indemnity and other Cohen controlled entities to some policyholders, a rating agency, independent financial auditors, the DC Insurance Commissioner and the Delaware Insurance Commissioner.
Specifically, Cohen created false financial documents, including bank statements, letters of credit, and confirmations of bank account balances. Cohen transmitted some of these false documents to A.M. Best in order to obtain financial ratings for Indemnity and Indemnity-DC that were not based on the companies’ true financial condition. Cohen then touted the A.M. Best ratings to potential policyholders, policyholders, and regulatory agencies. Cohen also transmitted false emails, management representation letters, financial statements, and other documents to the auditing firms Marcum and BDO, so the auditors would provide an unqualified audit opinion on Indemnity-DC and Indemnity financial statements that Cohen knew were false. Cohen used the name and identity of a bank official to create a false bank confirmation.
According to court documents, as of 2013, Cohen paid himself more than $96,000 a month. He lived in a multi-million dollar house in Florida, and maintained homes at different points in Phoenix, Reisterstown and Baltimore Maryland. He purchased luxury cars including a Bentley and Aston Martin.
To conceal the true financial condition of the companies, Cohen transmitted fraudulent audited and unaudited financial statements for Indemnity-DC and Indemnity to the DC Insurance Commissioner and the Delaware Insurance Commissioner. Cohen also made false statements to representatives of the Delaware Insurance Commissioner in June 2012.
According to court documents, more than 5,000 policyholders paid more than $100 million in premiums for coverage that was illusory because Cohen’s companies never had sufficient capacity to cover its loss exposure. Many of these policyholders suffered additional harm when the fraud scheme collapsed in 2013. These policyholders had to purchase new policies to protect themselves, or were left without new policies, risking self-insurance or potential bankruptcy. The government also presented evidence to the Court regarding individuals who suffered substantial injuries and/or death due to the actions of Indemnity’s insured. Multiple victims, and/or their estates’ representatives, failed to receive appropriate compensation because Indemnity could not perform under its insurance policies. The Court made a factual finding that the actual losses caused by the fraud scheme exceeded $100 million.
The Delaware Insurance Commissioner began civil proceedings against the Cohen companies in June 2013. In October 2013, two attorneys referred Cohen’s criminal offenses to federal authorities. On February 20, 2014, after a hearing in the Delaware insurance litigation and in an effort to prevent one of the attorneys from communicating with federal law enforcement, Cohen turned to the attorney and stated: “Now I’m coming after you. You’re next.” According to court documents, during a deposition in connection with the Delaware insurance litigation, Cohen made a motion to a witness as if he was pointing a gun and shooting it.
According to the Court’s findings, it was probable that Cohen meant to harm a judge in the Delaware insurance litigation, two attorneys who brought Cohen’s criminal conduct to the attention of the U.S. Department of Justice, and a Delaware government official. From May to June 2014, Cohen searched online terms involving the victims’ home addresses, ammonium nitrate bombs, other bombings and explosions, and how to assemble bombs. In June 2014, he purchased 50 pounds of ammonium nitrate. He also purchased a sophisticated $25,000 rifle with 200 rounds of ammunition from a specialty firearms manufacturer, and $550 worth of fuses and incendiary ammunition. He practiced with his newly purchased rifle at a firing range. Cohen bought night vision binoculars for more than $3,500.
The government presented evidence that on June 17, 2014 he activated a prepaid bank card in the name of “Bill Ward.” On June 19th, he sought to obtain the cash value of a life insurance policy that was less than a year old (he later received a check in the mail for $250,000). In mid-June, he purchased personal information about the individuals he was targeting, including their personal residences, family members and phone numbers. On June 20, Cohen created, printed, and used directions to travel from Baltimore to the homes of a Delaware government official and the Delaware judge. While at one of the public official’s home, Cohen took notes, including “get real estate listing for scouting,” “not much cover must be night,” and “do it late – after dusk.” During this trip, he made audio recordings in which he stated that he “was driving to Delaware to scout out how [he could] attack” these two individuals; he had “methodically planned” his “recon” trip; there are individuals who “kill because of the necessity” and “look at the killing as for the greater good.” He noted that killing should not be viewed as wrong because “killing culls the weak.”
The government also presented evidence that on June 23, Cohen created a last will and testament and transferred all his personal property. Shortly before his arrest, Cohen searched the internet for additional information about bombs, the public officials’ homes, estate sales and depression.
When agents executed arrest and search warrants on June 25, 2014 on Cohen and his residence, they found the $25,000 rifle in his garage and, in addition to the other items described above, a backpack containing wigs, masks, a false moustache, gas masks, several knives, wire garrotes, strike spikes and camouflage pants. They also found a military style vest, rifle scopes and accessories, ammunition for guns, bolt cutters and a GPS device. A notebook contained the following writings: “Always carry a loaded 45 for the end. Have to carry at all times.”
United States Attorney Rod J. Rosenstein praised the FBI, HSI Baltimore, IRS – Criminal Investigation and U.S. Postal Inspection Service - Washington Division for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Harry M. Gruber and Joyce K. McDonald, who prosecuted the case.
Jefferson County Man Sentenced in Carjacking DeathRead the Press Release
BEAUMONT, Texas – A 25-year-old Beaumont, Texas man has been sentenced to federal prison for a fatal carjacking in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Jonathan Demond Patton pleaded guilty on Aug. 11, 2015 to carjacking resulting in death and was sentenced to 40 years in federal prison today by U.S. District Judge Thad Heartfield. This sentence will run consecutive to a state prison sentence he is already serving.
According to information presented in court, early on the morning of June 23, 2013, Patton and River Shynette Gobert entered a self-service laundry on Florida Avenue in Beaumont intending to rob the sole occupant. When the victim refused to hand over his car keys, Gobert shot him in the leg at Patton’s direction. Patton and Gobert fled the laundry in their vehicle without the victim’s keys. They drove by an apartment complex on Woodrow Avenue where they encountered Daryl Dwayne Fontenot asleep in his vehicle. A struggle ensued when Patton and Gobert attempted to steal the vehicle and Fontenot was shot twice in the chest killing him. Patton and Gobert fled in their vehicle after they were unable to locate Fontenot’s keys. A short time later, law enforcement officers stopped Patton and Gobert because their vehicle matched the vehicle reported in the self-service laundry shooting. Patton and Gobert fled the vehicle but left the weapon used to shoot the two men behind. Patton and Gobert were arrested and each gave statements indicating the other was responsible for the shootings. On Sep. 23, 2013, a Jefferson County grand jury indicted Patton and Gobert for the self-service laundry shooting. Gobert pleaded guilty and was sentenced to seven years in state prison. Patton pleaded guilty and was sentenced to 10 years in state prison. On Mar. 5, 2015, a federal grand jury indicted Patton and Gobert charging them for the carjacking murder of Fontenot.
Gobert is set for sentencing in federal court on Feb. 2, 2016.
This case was prosecuted as part of the Project Safe Neighborhoods Initiative. Project Safe Neighborhoods is aimed at reducing gun and gang violence, deterring illegal possession of guns, ammunition and body armor, and improving the safety of residents in the Eastern District of Texas. Participants in the initiative include community members and organizations as well as federal, state and local law enforcement agencies.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Beaumont Police Department and prosecuted by Assistant U.S. Attorney John B. Ross.
Jared Fogle co-defendant sentenced in federal court on child exploitation and distribution of child pornography chargesRead the Press Release
Indianapolis – United States Attorney Josh J. Minkler today announced the sentencing of Russell Taylor, 44, Indianapolis. Taylor was sentenced to 27 years in federal prison by U.S. District Judge Tanya Walton Pratt after his conviction on 12 counts of sexual exploitation of a child and one count of distribution of child pornography.
“Mr. Taylor victimized children as young as nine years old and protecting those who cannot protect themselves will always be a priority of this office,” said Minkler. “Adults who sexually exploit children by producing child pornography knowingly cause vast harm to their victims and should expect appropriately strong punishment. While no sentence can undo the damage that Mr. Taylor has done, this office remains committed to working with law enforcement to identify, investigate and prosecute these defendants.”
Indiana State Police detectives received information that Taylor was in possession of illegal pornographic images and served a search warrant at his home on April 29, 2015, along with law enforcement officers from the Indianapolis Metropolitan Police Department and the FBI. The investigator used a mobile forensic laboratory to conduct the search of Taylor’s home. The investigators found a cache of sexually explicit photos and videos Taylor produced by secretly filming minor children at this home. Investigators obtained a second search warrant for child pornography and found over 400 videos of child pornography in computers, cellular phones, and storage media recovered from a home office. Taylor is charged with producing these videos inside his current and former Indianapolis residences using hidden cameras, during the period between March 2011 and January 30, 2015.
As stated in court today, Taylor on multiple occasions between March 2011 and April 2015, used several hidden cameras in his residences to produce child pornography involving 12 minors. He knew that the victims in these images or videos were under the age of 18 years. He also knew their identities.
Taylor and co-conspirator Jared Fogle (sentenced to over 15 years in federal prison November 2015) discussed among themselves the fact that Taylor was secretly producing sexually explicit videos of minors in Taylor’s current and former residence. Fogle chose to benefit from such production by obtaining access to a significant amount of such material over the time period. However, Fogle did not produce any of this material himself.
None of the minors in the videos were aware that they were being filmed. Rather, Taylor produced the videos using multiple hidden cameras set up in his residences and oriented to show them nude, changing clothes, or engaged in other activities.
According to Senior Litigation Counsel Steven D. DeBrota, who prosecuted this case for the government, Taylor must also serve a lifetime of supervised release and register as a sex offender. Taylor remains in the custody of the US Marshal’s Service until he is assigned to the Bureau of Prisons.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006, by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorney’s Office and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals, who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resource.”
Jamaican Ecstasy Trafficker Sentenced on Drug ChargesRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
ROCHESTER, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Carlos McKenzie, a/k/a Charles Williams, a/k/a General, 37, of Jamaica, who was convicted by a federal jury of conspiracy to possess with intent to distribute and to distribute 500 grams or more of methamphetamine, was sentenced to 132 months in prison by U.S. District Judge David G. Larimer.Assistant U.S. Attorneys Robert A. Marangola and Everardo A. Rodriguez, who handled the case, stated that McKenzie and others obtained ecstasy tablets smuggled from Canada, which were then sold by multiple distributors in Rochester and other locations.
McKenzie was charged in 2009 along with 28 other defendants. The defendant was not arrested until 2013, when he was taken into custody in Phoenix, Arizona under an assumed name. All other defendants have been convicted and sentenced. The investigation resulted in the seizure of approximately $230,000 in U.S. currency from drug proceeds, 290 pounds of marijuana, 3,000 ecstasy tablets, 11 firearms and two automobiles.
The conviction was supported by the Department of Justice Organized Crime Drug Enforcement Task Force (OCDETF) program. It is the culmination of a federal wiretap investigation led by Special Agents of Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge James C. Spero and the New York State Police, under the direction of Major Craig Hanesworth. The investigation was part of the then-recently created Border Enforcement Security Task Force (BEST), which is comprised of local, state, and federal law enforcement organizations from Canada and the United States. Other assisting agencies the U.S. Drug Enforcement Administration, under the direction of Special Agent in Charge James J. Hunt, New York Field Office, the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Delano A. Reid, U.S. Customs and Border Protection, under the direction of Acting Director of Field Operations Rose Hilmey, the Rochester Police Department, Chief Michael Ciminelli, and the Canadian BEST task force members which include the Ontario Provincial Police, Toronto Police Services, Canada Border Services Agency, Niagara Regional Police Services, and the Royal Canadian Mounted Police.
Illegal Alien Arrested for Unlawful Possession of AmmunitionRead the Press Release
Orlando, Florida– United States Attorney A. Lee Bentley, III announces the arrest and filing of a criminal complaint charging Hamid Mohamed Ahmed Ali Rehaif (25, Melbourne, and a citizen of the United Arab Emirates) with possession of ammunition by an unlawful or illegal alien. If convicted, he faces a maximum penalty of 10 years in federal prison.
According to the complaint, Rehaif was admitted into the United States in 2013 under a student visa. He had been enrolled at the Florida Institute of Technology in Melbourne, Florida, but was terminated as a student in the fall of 2014. When Rehaif failed to leave the country within 30 days of his termination as a student, he became an unlawful alien. Yesterday, law enforcement agents made contact with Rehaif at a hotel in Melbourne, where he had been living for the last two months, paying more than $11,000 in cash for room fees. Rehaif admitted to possessing several firearms, but said that he had recently sold or disposed of them. He also admitted to firing those weapons at two local gun ranges. Agents located rounds of handgun and rifle ammunition in his hotel room and in a storage unit that he had rented, but they did not locate any firearms.
A complaint is merely a formal charge that a defendant has committed a violation of one or more federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorney Bruce S. Ambrose.
UPDATE: Hamid Mohamed Ahmed Ali Rehaif is currently in federal custody. He has waived his detention hearing, and will have his preliminary hearing in U.S. District Court in Orlando at 10 AM on Monday, December 14, 2015, before United States Magistrate Judge David Baker.
Halfmoon Town Supervisor Sentenced to 12 Months in PrisonRead the Press Release
ALBANY, NEW YORK – Former Halfmoon Town Supervisor Melinda Wormuth was sentenced today to one year and one day in prison as a result of her convictions for extortion and making a false statement, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent in Charge of the Albany Division of the Federal Bureau of Investigation.
United States District Judge Gary L. Sharpe also sentenced Wormuth to serve a 1-year term of supervised release, to begin after her release from prison, forfeit $3,000, and pay a fine of $7,500.
The sentence follows Wormuth’s August 10, 2015 guilty plea, during which she admitted that she accepted money in return for her official actions. She admitted that she received $7,500 in cash, which was characterized as “consulting fees,” in return for using her official positions as Town Supervisor and member of the Saratoga County Board of Supervisors to lobby for the legalization of professional Mixed Martial Arts (“MMA”).
“Public service is about dedication to community and country, not the use of official position for profit,” stated U.S. Attorney Richard S. Hartunian. “Taking money to lobby for legislation is illegal corruption that betrays the public trust. We will continue to work with the FBI, the Attorney General of New York, and the New York State Comptroller to identify and hold accountable officials who commit such crimes.”
“Ms. Wormuth exploited her position and the faith of those she swore to serve,” said Special Agent in Charge Andrew W. Vale. “This kind of criminality drains the public’s confidence in our leaders. The FBI stands determined with our law enforcement partners to investigate those who would further erode the public’s trust.”
The charges were the result of an investigation by the Federal-State Anti-Corruption Task Force that includes the Federal Bureau of Investigation, the New York Attorney General’s Office, the Internal Revenue Service, and the New York Comptroller’s Office.
“When elected officials misuse their office for personal gain it betrays the public’s trust,” said Attorney General Schneiderman. “This case shows that when elected officials break the law, they will be held accountable. I’m proud to have worked with my partners in state and federal government to bring this defendant to justice.”
“Ms. Wormuth abused her office and betrayed the taxpayers she was elected to serve,” State Comptroller Thomas P. DiNapoli said. “I hope this sentence sends a clear message that this misconduct by an elected official will not be tolerated. I thank United States Attorney Hartunian, Attorney General Schneiderman, the FBI and the IRS for their continued partnership to fight corruption.”
Between April 10, 2013 and August 10, 2013, Wormuth sent letters on her official letterhead to state legislators in New York, requesting legislative action in favor of professional MMA. Wormuth performed no legitimate consulting work for the $7,500 payment, and she accepted this money understanding that she was expected to use her official position to promote legislative action in favor of professional MMA.
Wormuth also admitted that she lied to FBI agents during an interview on August 7, 2013. Wormuth stated that she had consulted with “K.T.,” a former Town Justice in Saratoga County, to obtain approval for her actions before taking the $7,500 payment. This statement was false because she had not consulted with “K.T.”
This case was prosecuted by Assistant U.S. Attorneys Ransom Reynolds and Jeffrey Coffman, and by former Executive Assistant U.S. Attorney John Duncan.