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25 November 2015
Additional Criminal Charges Have Been Filed Against A Cazenovia ManRead the Press Release
SYRACUSE, NEW YORK - United States Attorney Richard S. Hartunian announced today that additional criminal charges have been filed against a Cazenovia man already facing allegations of fraud and money laundering.
JAMES P. GRIFFIN, 70, is the Chief Executive Officer of several companies using a variation of the name 54 Freedom. These 54 Freedom companies are headquartered at 5 Ledyard Avenue, Cazenovia, New York. In July Griffin was indicted on charges that the 54 Freedom companies, marketed a financial product called the 54 Freedom Charitable Gift Annuity. This product purportedly allowed a person to make a gift to charity and still receive income for himself or others. The 54 Freedom Charitable Gift Annuity was represented to be backed by a highly rated major insurance carrier and would provide guaranteed life time income for the investor. It is alleged, however, that the monies invested by clients were not used to purchase annuities from A rated insurance companies, but rather were used by GRIFFIN for his own use and to pay expenses of the various 54 Freedom companies. The indictment charges that over $1.6 million was invested with the defendant to purchase 54 Freedom Charitable Gift Annuities. The investors initially received monthly payments as promised, but these regular payments stopped in approximately January 2013.
GRIFFIN was arrested on July 23, 2015 and appeared for arraignment before United States Magistrate Judge Andrew T. Baxter in Syracuse. He pled not guilty to the charges.
On November 25, 2015 a federal grand jury in Syracuse returned a superseding indictment that charges Griffin with five additional counts of mail fraud. The new charges allege that Griffin fraudulently induced persons to invest in his companies by using funds withdrawn from tax sheltered retirement accounts upon the false promise that the investments would be profitable and the investment funds would be "rolled over" into another tax sheltered account or that Griffin would pay any tax or penalty due on the early distribution of the retirement account monies. The indictment alleges that the investments were not profitable and the funds were not rolled over into tax sheltered accounts, and as a result, the investors did not realize a profit but also suffered an early withdrawal tax penalty on the funds invested. It is alleged that Griffin received at least $370,000 from investors that had come from tax sheltered retirement plans.
GRIFFIN is now charged with ten counts of mail fraud, eight counts of wire fraud, and five counts of money laundering. He faces a maximum term of imprisonment of twenty years on each of the mail and wire fraud counts and ten years on the money laundering counts. Each count carries a maximum fine of $250,000.
The case was investigated by the Internal Revenue Service, Criminal Investigation, and Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Edward R. Broton.
The charges are merely accusations and the defendant is presumed innocent until and unless proven guilty.
24 November 2015
‘Pill Mill’ Operators SentencedRead the Press Release
CINCINNATI – Christopher Stegawski, 65, of Cleveland, and John Randy Callihan, 58, of Portsmouth, Ohio, were sentenced in U.S. District Court for running “pill mills.” Stegawski was sentenced yesterday to 160 months in prison and 10 years of supervised release. Callihan was sentenced today to 60 months in prison and five years of supervised release.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Ohio Attorney General Mike DeWine; Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), A.J. Groeber, Executive Director of the State Medical Board of Ohio; and Steven W. Schierholt, Executive Director, Ohio Board of Pharmacy announced the sentences handed down today by U.S. District Judge Michael R. Barrett.
According to court testimony, beginning about November 2009 until May 2012, Stegawski and Callihan owned and/or operated a business initially known as Eastside Medical Specialist in Dayton, Ohio. In February 2010, the business moved to Lucasville, Ohio and the name was changed to Lucasville Medical Specialist. Stegawski took over the ownership of Lucasville Medical Specialist and listed his partner and co-conspirator, Callihan, as an employee.
Stegawski represented himself as a chronic pain management doctor at these clinics and an unnamed clinic located in Southpoint, Ohio. The clinics operated as “pill mills” by selling prescriptions for controlled substances, primarily oxycodone, without a legitimate need for the prescriptions. There was no valid doctor-patient relationship and many of the prescriptions were openly sold and diverted.
Stegawski had a DEA registration number that allowed him to order controlled substances for the clinics. Stegawski received a medical degree in Warsaw, Poland in 1977 and was purportedly trained to specialize in anesthesiology. The Ohio Board of Pharmacy has suspended and is pursuing permanent revocation of Stegawski’s license to practice medicine.
As many as 40 patients would visit the clinics each weekday. In some cases, customers traveled in excess of 200 miles roundtrip to obtain prescriptions from the doctor. Stegawski knowingly prescribed large amounts of prescription drugs to drug abusers and addicts, who were charged $200 cash per visit and received at most a cursory examination.
During the tenure of the pain clinics, many local pharmacies refused to honor any prescriptions written by Stegawski due to the “large quantities of narcotics” and his “catering to customers with prior drug abuse and arrest histories.”
A United States District Court jury convicted Stegawski in February of one count of conspiracy to distribute and dispense prescription drugs, one count of conspiracy to launder money and two counts of maintaining a place for illegal distribution of drugs.
Stegawski and Callihan were charged in an 11-count-indictment by a grand jury on May 16, 2012. Callihan pleaded guilty to conspiracy to distribute and dispense prescription drugs and money laundering.
Stewart commended the cooperative investigation by agents and officers of the agencies named above including IRS Special Agent Robert Mullins, Ohio Board of Pharmacy Agent Jesse Wimberly, the Ohio Bureau of Criminal Investigation in Attorney General DeWine’s Office, the DEA, Lawrence County Sheriff Jeff Lawless and the Sheriff’s Drug Task Force, Scioto County Sheriff Marty Donini, and the Riverside Police Department, as well as Criminal Chief Kenneth L. Parker and Assistant U.S. Attorney Timothy D. Oakley, who prosecuted the case.
ormer Employee of New Mexico Human Services Department Pleads Guilty to Defrauding Federal Food Stamp ProgramRead the Press Release
ALBUQUERQUE – A former employee of the Income Support Division of the New Mexico Human Services Department has entered a guilty plea to defrauding the federal food stamp program. Joseph Martin Padilla, 34, of Albuquerque, N.M., pled guilty in federal court yesterday under a plea agreement that requires him to pay $181,398.76 in restitution to the U.S. Department of Agriculture. At sentencing, which has yet to be scheduled, Padilla faces a statutory maximum penalty of five years in prison.
Padilla is one of six defendants charged with defrauding the Food Stamp Program in a 32-count indictment filed in Aug. 2014. The indictment alleged that between Sept. 2009 to May 2010, Padilla conspired with Justin Quintana, 29, of Rio Rancho, N.M., Wilfredo Lopez, 46, Sergio Escobedo, 36, and Veronica Hernandez, 41, all of Albuquerque, to defraud the United States through the unauthorized use of Food Stamp benefits, which are called Supplemental Nutrition Assistance Program (SNAP) benefits. During this time, Padilla worked as a Family Assistance Analyst for the Income Support Division of the New Mexico Human Services Department where he was responsible for determining applicants’ eligibility and benefit level for SNAP benefits.
According to the indictment, SNAP is funded by the U.S. Department of Agriculture and is administered by the States. The program was created to alleviate hunger and malnutrition, and permits low income households to obtain more nutritious diet by increasing the food purchasing power for eligible households. In New Mexico, individuals qualify to participate in SNAP based on income and need by completing an application with the Income Support Division of the New Mexico Human Services Department. Once an applicant is deemed eligible for SNAP benefits by a Family Assistance Analyst, the Analyst establishes a SNAP account in the applicant’s name and electronic benefit transfers (EBT), which are determined based on income, resources and household size, are deposited into the account on a monthly basis.
The indictment charged Padilla with abusing his position as a Family Assistance Analyst by conspiring with his co-defendants to defraud the United States through the unauthorized use of SNAP benefits. It alleged that Padilla used names and personal identifiers he obtained from his co-defendants to establish fraudulent SNAP accounts, sometimes in exchange for cash or other things of value. It also alleged that Padilla established a fraudulent SNAP account and used the account to fraudulently obtain SNAP benefits for himself, and that he fraudulently established 25 separate SNAP accounts through which the United States was defrauded of SNAP benefits. The indictment further alleged that Padilla, aided and abetted by his co-defendants, fraudulently established SNAP accounts that were used to fraudulently obtain SNAP benefits.
During yesterday’s proceedings, Padilla pled guilty to Count 1 of the Indictment, and admitted that while employed by the Income Support Division of the New Mexico Human Services Department he processed numerous fraudulent applications for SNAP benefits. Padilla admitted conspiring with Moya to arrange for others to receive the fraudulent benefits in return for payment to Padilla and Moya.
On March 9, 2015, Moya pled guilty to Count 31 of the indictment and admitted that he fraudulently obtained SNAP benefits to which he was not entitled. Moya admitted that in early Dec. 2009, Padilla provided him with an application to obtain food stamps. Moya completed the application and returned it to Padilla for processing even though he knew that he was not entitled to SNAP benefits. Moya admitted unlawfully receiving $866.00 in SNAP benefits. Moya also admitted providing another application for SNAP benefits to a family member and that his relative unlawfully received $1,578.00 in SNAP benefits. On May 6, 2015, Moya was sentenced to six months in prison, or time served, followed by three years of supervised release. Moya also was ordered to pay $2,444.00 in restitution to the U.S. Department of Agriculture as the victim of his crime.
On May 18, 2015, Quintana pled guilty to Count 30 of the Indictment, and admitted meeting Padilla through Moya and knowing that Padilla had the ability to register people to receive food stamps. Quintana admitted that he agreed to pay Padilla a fee in exchange for arranging for him to receive food stamps unlawfully. Quintana obtained $486.00 in SNAP benefits through his illegal conduct. He also received a fee for collecting SNAP applications from six other people and delivering the completed applications to Padilla for the purpose of assisting them in obtaining SPA benefits unlawfully. Quintana was sentenced on Aug. 17, 2015, to three years of probation, and was ordered to pay $9,384.00 in restitution to the U.S. Department of Agriculture as the victim of his crime.
On May 19, 2015, Lopez entered a guilty plea to Count 32 of the indictment and admitted completing fraudulent applications for SNAP benefits in his name, another for himself in a pseudonym, and in the names of two other individuals. Lopez paid $100.00 to process each of the applications. He acknowledged that his criminal conduct caused a total monetary loss to the U.S. Department of Agriculture of approximately $8,382.00. Lopez’s sentencing hearing has yet to be scheduled.
Escobedo and Hernandez have entered not guilty pleas to the charges in the indictment. Charges in indictments are merely accusations and defendants are presumed innocent unless found guilty beyond a reasonable doubt.
This case was investigated by the Office of Inspector General for the U.S. Department of Agriculture and the Office of Inspector General for New Mexico Human Services, and is being prosecuted by Assistant U.S. Attorneys Sean J. Sullivan and Cynthia Weisman.
Wasilla Men Sentenced for 2014 Bank RobberyRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that Jason L. Wood and Lawrence L. Niesen, both of Wasilla, Alaska, were sentenced in federal court for their roles in a bank robbery which occurred on April 23, 2014, at a Key Bank branch in Wasilla. Wood, age 35, and Niesen, age 39, had earlier pleaded guilty to planning and then committing the unarmed robbery. Wood, who actually entered the bank and demanded money from a teller, was sentenced to 36 months in federal prison. Niesen, who acted as a “getaway” driver following the robbery, received 32 months in federal prison for his role. Both men were also ordered to make restitution to Key Bank in the amount of $1,604.00.
In imposing the sentences on the two men, Chief United States District Court Judge Ralph R. Beistline noted that both men had significant heroin addiction problems which appeared to be the impetus for the robbery. Referring to the prevalence of heroin addiction in the Anchorage and Mat-Su Valley areas as a “scourge”, Judge Beistline noted that drug addiction in general appears to be an increasing cause of these types of crimes.
Ms. Loeffler commends the Federal Bureau of Investigation and the Wasilla Police Department for the investigation of this case.
United States Attorney Stephen R. Wigginton Announces ResignationRead the Press Release
Stephen R. Wigginton, the United States Attorney for the Southern District of Illinois, has announced his resignation effective midnight on December 11, 2015. After his resignation, he plans on joining a national law firm based in the St. Louis, Missouri, area.
Mr. Wigginton was sworn into office as the United States Attorney for the Southern District of Illinois on August 27, 2010, after nomination by President Barack Obama and unanimous confirmation by the United States Senate. Mr. Wigginton served on the following subcommittees and working groups of the Attorney General’s Advisory Committee: Violent and Organized Crime, Health Care Fraud, Civil Rights and Controlled Substances/Asset Forfeiture. From December 2012 to the present he has served as Chairman of the Violent and Organized Crime subcommittee. In December 2012 he was appointed as the U.S. Attorney’s representative on the Violent Crime Resource Working Group supporting Vice-President Biden’s Violent Crime Task Force in the wake of the Newtown, Connecticut, school shootings. He is also a member of the Attorney General’s Health Care Fraud Working Group, and, served as the representative for the U.S. Attorney Community on the Nation’s Threat Mitigation Working Group.
"It has been an honor to serve as the United States Attorney for the Southern District of Illinois. Words cannot express the appreciation I have for the opportunity to serve the people of Southern Illinois, granted to me by the efforts of Senator Dick Durbin, the nomination by President Barack Obama and the unanimous support of the Senate. It is truly a privilege to work with the many men and women in law enforcement at the federal, state and local level who risk their lives daily to make our communities safer. The dedicated professionals in this United States Attorney’s office have performed outstanding work over the past five years and will continue to do so in the future. I have been fortunate to work with two great leaders- former Attorney General Eric Holder and current Attorney General Loretta Lynch. The leadership, support and advice of the past and present Attorneys General have allowed our office and the Department of Justice as a whole to perform at the highest levels and achieve extraordinary success not only in the Southern District of Illinois but across this great nation. Having served as the United States Attorney for over five years, I witnessed many challenges and my office met every challenge. We viewed challenges as opportunities to do tough work, make difficult decisions and always, always, seek justice." noted United States Attorney Wigginton.
During his tenure as United States Attorney, Mr. Wigginton directed and oversaw many important law enforcement operations targeting violent crime, public corruption, fraud on government programs, health care fraud and crimes involving the exploitation of children. He took a very aggressive stand targeting prohibited persons from possessing weapons. He worked closely with the St. Clair County and Madison County State’s Attorneys’ offices to combat violent crime and the heroin epidemic which exploded over the Metro-East area in 2011.
Over the past five years, Mr. Wigginton substantially increased the number of prosecutions of public officials and law enforcement officers caught violating the law. This included elected officials, police chiefs, police officers, probation officers, federal correctional officers, water clerks, township officials and mayors.
In March, 2011, he along with the St. Clair County and Madison County State’s Attorneys’ offices formed the Anti-Heroin Task Force and focused not just on the prosecution of heroin dealers but also engaged in a robust educational program at area high schools and middle schools to educate parents and children about the danger of heroin and other opiate based prescription drugs. He has spoken to over 10,000 high school and middle school students throughout Southern Illinois.
The United States Attorney’s Office for the Southern District of Illinois aggressively pursued child exploitation perpetrators and was recognized nationally for the strategic plan they formulated in 2012 showing how an office can increase the number of child exploitation prosecutions during austere times without hiring additional prosecutors.
In September 2013, United States Attorney Wigginton formed the Metro East Armed Robbery Initiative, bringing together local, state and federal law enforcement to address the increase in armed robberies of commercial establishments. This Initiative has been wildly successful in locating, arresting and convicting violent individuals who use guns to rob convenient marts, retail stores, restaurants and banks.
United States Attorney Wigginton oversaw many operations targeting individuals who defrauded federally funded programs such as Medicaid, Social Security, the Railroad Retirement Board and grant programs. He also focused on consumer fraud crimes such telemarketing scams. During his tenure the United States Attorney’s Office for the Southern District of Illinois was one of the nation’s leaders in prosecuting and convicting telemarketing and mass marketing fraudsters. Wigginton’s office obtained over 50 convictions in one telemarketing scam arising out of Florida. His Operation Home Alone program, which pursues individuals who falsely claim to be performing personal assistant services and billing a fund administered by the State of Illinois, and funded by federal tax dollars, has resulted in over 45 convictions so far. His office was also one of the nation’s leaders in prosecuting health care fraud.
United States Attorney Wigginton also aggressively pursued many affirmative civil enforcement actions against individuals and corporations involved in defrauding the government. During the past five years his office has recovered over $450,000,000.00 in monies through the aggressive enforcement of both civil and criminal actions. He, along with his Affirmative Civil Enforcement Assistants, established a Defense Procurement Fraud Task Force targeting those contractors who have defrauded the government during the wars in Afghanistan and Iraq. Last year, in a case involving defense contractors engaged in shipping, United States Attorney Wigginton’s office recovered $32 million from the contractors.
As the Chairman of the Violent and Organized Crime Subcommittee, Mr. Wigginton has been invited to speak at a number of regional as well as national conferences on the issue of gun violence. He has hosted meetings with law enforcement officials in Baltimore, Camden, Chicago, Indianapolis and Philadelphia. He received the "Olympian Award" from the Southern Illinois Police Chiefs Association for his leadership in tackling violent crime. He received the "Extra Effort Award" from the Edwardsville School District for his work in combating heroin related crimes and his participation in Project Drugsmart.
The Southern District of Illinois covers the 38 southern-most counties in Illinois, has a population of approximately 1.25 million people and encompasses a geographical area about the size of Maryland. The United States Attorney’s Office, with staffed offices in East St. Louis, Benton and Fairview Heights, Illinois, has 32 attorneys and is responsible for conducting all criminal and civil litigation in the district on behalf of the United States of America.
U.S. Attorney's Office Provides Update on Investigation into the Shooting Death of Laquan McDonaldRead the Press Release
CHICAGO — On April 13, 2015, this Office announced a joint federal and state investigation into the October 20, 2014, fatal shooting of Laquan McDonald. Both before and since that announcement, the U.S. Attorney’s Office and our law enforcement partners have been conducting a thorough investigation into the circumstances of the shooting.
The federal investigation of the shooting remains active and ongoing.
U.S. Announces Settlement with Illinois Landlord for Failing to Disclose Potentially Dangerous Lead HazardsRead the Press Release
WASHINGTON – The U.S. Department of Housing and Urban Development (HUD), the U.S. Attorney’s Office for the Northern District of Illinois, and the U.S. Environmental Protection Agency (EPA) today announced a settlement with a Rockford, Illinois landlord to resolve a claim he failed to inform tenants, some with young children, that their homes may contain potentially dangerous lead.
The agreement requires Dennis Hardesty to replace windows and clean up lead‑based paint hazards in 50 rental properties containing a total of 52 units (see attached list of properties). In addition to the $308,000 worth of lead abatement work, Hardesty agreed to pay $5,000 in penalties.
According to the federal government, Hardesty violated the Federal Residential Lead-Based Paint Hazard Reduction Act (Residential Lead Act) by failing to inform tenants that their homes may contain potentially dangerous levels of lead. Winnebago County health department officials identified at least seven children with elevated blood lead levels in the properties Hardesty leased. Investigations by the health department identified lead‑based paint and lead-based paint hazards in the units. Going forward, Hardesty will ensure that he will provide information about lead‑based paint to tenants before they are obligated to sign any lease.
The lead abatement work Hardesty will perform as a result of the settlement includes window replacement and abatement of all friction and impact surfaces, and clearance exams to make those units lead safe for families to rent and live in. HUD will provide ongoing monitoring of Hardesty’s implementation of the settlement agreement, and will share the results with its federal partners for possible further action.
“Lead poisoning is entirely preventable but it requires all of us to recognize that we share a responsibility to protect our vulnerable populations, especially young children who are still developing,” said Matt Ammon, Director of HUD’s Office of Lead Hazard Control and Healthy Homes. “Landlords of homes built before 1978 have a legal responsibility to make their tenants aware of lead-based paint and lead-based paint hazards they know about or that may be in their homes so that tenants can protect their families.”
“This settlement will protect children in Rockford from exposure to lead-based paint – and it sends a clear message to landlords and property managers across the country that the Environmental Protection Agency is prioritizing enforcement actions to eliminate elevated blood lead levels in children,” EPA Region 5 Administrator Susan Hedman said.
“This settlement requires Dennis Hardesty to institute a robust program to ensure that his properties are compliant with federal law,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “My office will continue to enforce these important laws to protect tenants from exposure to dangerous lead paint.”
The settlement announced today represents the first joint Residential Lead Act enforcement action in Rockford. It was the result of intensive coordination among local health officials and federal investigators. HUD, EPA and the Department of Justice are continuing similar enforcement efforts around the nation. As a result of enforcement actions taken thus far, landlords have agreed to conduct lead-based paint hazard reduction in more than 187,000 apartments and to pay $1.5 million in civil penalties. In resolving these cases, landlords have committed to expend more than an estimated $31 million to address lead-based paint hazards in the affected units. In addition, over $700,000 has been provided by defendants to community-based projects to reduce lead poisoning.
Background
The Residential Lead Act is one of the primary federal enforcement tools to prevent lead poisoning in young children. The Lead Disclosure Rule requires home sellers and landlords of housing built before 1978 to disclose to purchasers and potential tenants knowledge of lead-based paint or lead-based paint hazards using a disclosure form, signed by both parties, attached to the sales contract or lease containing the required lead warning statement, provide any available records or reports, and provide an EPA-approved “Protect Your Family From Lead in Your Home” information pamphlet. Sellers must also provide purchasers with an opportunity to conduct a lead-based paint inspection and/or risk assessment at the purchaser’s expense. Acceptable lead disclosure forms can be found at www.hud.gov/offices/lead/dislcosurerule and www.epa.gov/lead/pubs/leadbase.htm.
Health Effects of Lead-Based Paint
No safe blood lead level in children has been identified. Lead exposure can affect nearly every system in the body. Lead exposure causes reduced IQ, learning disabilities, developmental delays, reduced height, poorer hearing, and a host of other health problems in young children. Many of these effects are thought to be irreversible. In later years, lead-poisoned children are much more likely to drop out of school, become juvenile delinquents and engage in criminal and other anti-social behavior. Researchers have found that even at low levels, lead exposure in children can significantly impact IQ and might delay puberty in young girls.
At higher levels, lead can damage a child’s kidneys and central nervous system and cause anemia, coma, convulsions and even death. According to the Centers for Disease Control and Prevention (CDC), 4 million households have children living in them that are being exposed to high levels of lead. There are approximately half a million U.S. children ages 1-5 with blood lead levels above 5 micrograms per deciliter, the reference level at which CDC recommends public health actions be initiated.
Eliminating lead-based paint hazards in older low-income housing is essential if childhood lead poisoning is to be eradicated. According to CDC estimates, the percentage of children with elevated blood lead levels has been cut in half since the early 1990’s, although as many as 1 million children are still affected by lead poisoning today. HUD estimates that the number of houses with lead paint has declined from 64 million in 1990 to 37 million in 2006. About 23 million homes still have significant lead-based paint hazards, and about 3.6 million homes with children less than 6 years of age have one or more of these hazards.
Dennis Hardesty Subject Properties
Two Sentenced in Relation to “Butch” Ballow Fraud SchemeRead the Press Release
HOUSTON – A U.S. citizen from Georgetown and a citizen of Nigeria who was residing in Houston have been ordered to federal prison following their convictions related to a fraud scheme directed by Harris Dempsey “Butch” Ballow, announced U.S. Attorney Kenneth Magidson.
Christopher Harless, 62, of Georgetown, pleaded guilty Jan. 13, 2014, admitting he conspired to defraud victims Ballow’s scheme, while Sikiru Olubunmi, 46, entered his plea Nov. 5, 2014, to laundering the proceeds of the fraud scheme.
Today, U.S. District Judge Lee Rosenthal handed Harless a 240-month sentence. Bonojo received 63 month in federal prison. Both have been in federal custody since their arrests in 2010.
Ballow, 72, formerly of Galveston County, pleaded guilty to one count of money laundering in September 2003 and was permitted release pending sentencing. However, he fled to Mexico and remained a fugitive for more than five years. In 2005, while living in Mexico under the alias of “John Gel,” Ballow gained control of E-SOL International Corp. (E-SOL), a Nevada company with shares traded on the over-the-counter securities market under the symbol ESIT. Ballow then carried out a fraudulent scheme to sell stock in E-SOL and interests in a non-existent Mexican vacation resort supposedly developed by E-SOL to unsuspecting investors. The victims included citizens of the United States and Canada who wire transferred money to a bank account in the name of E-SOL at Wells Fargo Bank in Reno, Nevada.
Harless is Ballow’s brother-in-law. As part of his guilty plea, Harless admitted he was aware that Ballow pleaded guilty to the money laundering charges but fled to Mexico instead of appearing at his sentencing. In 2008, Harless began helping Ballow to sell stock and investments in E-SOL. Harless led investors to believe Ballow’s name was John Gel or Tom Brown so they would not learn about his past criminal convictions or the fact that he was a fugitive. In 2009, Harless moved to Puerto Aventuras, Mexico, under the name “Chris Harris” and continued working with Ballow. In July of that year, Ballow fled from Puerto Aventuras and surfaced a few months later in Puerto Vallarta, Mexico, under the name Martin Twinley. However, Harless stayed in Puerto Aventuras and continued to meet with and mislead investors. On April 27, 2010, Harless spoke to an investor over the telephone. Without revealing that Tom Brown was not a real name, that “Tom Brown” had criminal convictions and was permanently barred from promoting securities, Harless attempted to convince the investor to purchase ESIT stock for $5 million.
Bonojo and Ballow met in prison in the fall of 2003 when they were both in custody on unrelated criminal charges. In 2004, after Bonojo’s release from prison, Bonojo helped Ballow obtain fraudulent British passports so Ballow could flee to Mexico. Bonojo also obtained a cell phone under a fake name in order to communicate with Ballow in Mexico. In 2006, Ballow began causing large sums of money to be wire transferred from E-SOL’s bank account at Wells Fargo to accounts controlled by Bonojo at banks in the Houston area, including an account in the name of Guiding Angels EMS Inc. at Trustmark National Bank. Bonojo admitted as part of his guilty plea that he knew the money sent from Wells Fargo was proceeds of some kind of felony, further acknowledging that he withdrew much of the money in cash in order to conceal and disguise its source. Bonojo used a lot of the cash to make payments Ballow directed, including to his grandson who was living in or near Houston.
Three others were also charged in this case - James David Wright, 60, of Corinth; Patrick Lanier, 67, of Austin; and Clarence LaFey Hudgens Jr., 59, of Lebanon, Oregon. Hudgens and Wright each pleaded guilty to conspiracy to commit wire fraud arising from the E-SOL stock sale scheme. Lanier was convicted Feb. 27, 2014, after a lengthy trial on 16 counts to include conspiracy to commit wire fraud, wire fraud, harboring and concealing Ballow from arrest and assisting a federal offender. They are set for sentencing Jan. 26, 2016.
A second, but related, case against Ballow and five others, including Ruben Garza Perez, is pending before Judge Ewing Werlein, Jr. Garza, 55, formerly of Houston, pleaded guilty in that case on July 17, 2015, to conspiracy to commit wire fraud arising from the sale of E-SOL stock. His sentencing is set for Feb. 5, 2016.
Ballow is in custody, while the other four are located in foreign countries. All five are considered innocent unless and until convicted through due process of law.
The cases were investigated by the FBI and Internal Revenue Service – Criminal Investigation with the assistance of the U.S. Marshals Service and U.S. Postal Inspection Service. The governments of Mexico and Canada also provided extensive and valuable assistance.
Assistant U.S. Attorneys John R. Lewis and Belinda Beek are prosecuting the case.
Two Indicted by Federal Grand Jury Following Additional Marijuana Raids in Western ColoradoRead the Press Release
DENVER – A federal grand jury has indicted two individuals who, after investigation, were found tending to a large marijuana grow in western Colorado, U.S. Attorney John Walsh, and DEA Denver Division Special Agent in Charge Barbra Roach announced. The two men charged, Luis Adolfo Garcia, age 33 of Parachute, and Luis Rios-Cortes, age 23, a Mexican National in the country illegally, have made their initial appearance, where they were advised of the pending charges as well as their rights. Both were also arraigned by a U.S. Magistrate Judge. Both defendants were ordered held without bond by a U.S. Magistrate Judge. Approximately 1,720 pounds of marijuana was recovered during the November 13, 2015 raids.
According to court documents, in April of 2015, a Bureau of Land Management (BLM) Ranger noticed two trucks conspicuously but consistently appearing in an area along the Dolores River. Ultimately the BLM found two large marijuana grows on their property, one on September 15th, which resulted in the arrest of four defendants, and a second on September 30, 2015, four miles from the first location, where six people were arrested. After those raids, the DEA, along with the BLM, the Delta County Sheriff and the Seventh Judicial Drug Task Force, continued to investigate potential illegal marijuana grows in the area. The two trucks seen in the area, one a Chevy Silverado, and the other a maroon Ford F-150, were continually seen in the area. Additional investigative techniques were used which resulted in the identification of two addresses.
On Friday, November 13th, the DEA, along with the other investigative partners, executed two search warrants. The first was at a residence in Parachute, and the other was identified as the “San Juan Vista Property”. Evidence of illegal marijuana activity, including the names of some of the defendants arrested in September, was found in the residence. At the San Juan Vista Property, law enforcement found approximately 1,720 pounds of dried marijuana. The property containing the marijuana was owned by Luis Garcia’s sister, Esther Garcia. The residence searched was Esther Garcia’s as well. Luis Garcia was stopped multiple times while driving the Chevy Silverado, which is owned by Esther Garcia. The investigation continues.
Luis Adolfo Garcia and Luis Rios-Cortes each face one count of Conspiracy to manufacture and possess with intent to distribute 100 kilograms or more of marijuana, which carries a penalty of not less than 5 years, and not more than 40 years, and up to a $5,000,000 fine. They also each face one count of Manufacture and possession with intent to distribute 100 kilograms or more of marijuana, which carries the same penalty. In addition, Rios-Cortes faces one count of being an illegal alien in possession of a firearm. That count carries a penalty of not more than 10 years, and up to a $250,000 fine.
“We have seen a notable increase this year in illegal marijuana grows in Western Colorado,” said U.S. Attorney John Walsh. “As we work with the DEA, BLM, and our local law enforcement partners, we are seizing large amounts of marijuana. In addition, we have charged a total of 12 individuals, many here illegally from Mexico, for tending to these marijuana grows.”
“The Drug Enforcement Administration will continue to investigate illegal marijuana cultivation,” stated Barbra Roach, Special Agent in Charge of the DEA’s Denver Field Division. “Criminal Organizations outside the state continue to attempt to use both public and private lands in Colorado to further their illegal activities at the expense of the citizens of our community. These individuals and organizations will be held accountable for their actions.”
“The teamwork between the DEA, BLM and the Delta County Sheriff’s Department and the Seventh Judicial Drug Task Force was outstanding.” stated Delta County Sheriff Fred McKee. “All the agencies worked together to apprehend these felons engaged in the illegal cultivation and distribution of marijuana.”
This investigation is being conducted by the DEA, BLM, the Delta County Sheriff, and the Seventh Judicial Drug Task Force.
The defendants are being prosecuted by Assistant U.S. Attorney Rebecca Weber.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
Three Individuals Sentenced for Distributing Synthetic CannabinoidsRead the Press Release
CONCORD, N.H. – Acting United States Attorney Donald Feith announced today that three men who were involved in a scheme that distributed in excess of 1,000 kilograms of illegal synthetic cannabinoid products have been sentenced in federal court.
On November 24, 2015, Chief United States District Judge Joseph Laplante sentenced Robert Costello (71) of Lawrence, Massachusetts to 60 months in prison. Costello had pleaded guilty on February 12, 2015, to guilty to conspiracy to travel in interstate commerce with the intent to commit a drug trafficking crime and to traveling in interstate commerce with the intent to commit a drug trafficking crime.
On November 23, 2015, Judge Laplante sentenced Kyle Hurley (33) of Seabrook, New Hampshire to 114 months in prison. Hurley had pleaded guilty on February 12, 2015, to participation in a conspiracy to distribute, and possess with intent to distribute, controlled substances.
Earlier this month, on November 9, 2015, Judge Laplante sentenced Sean Nolan (33) of Concord, New Hampshire to 21 months in prison. Nolan had pleaded guilty on April 23, 2015, to distributing a controlled substance.
Court documents show that Hurley and Costello were arrested on March 28, 2014, after they arranged to deliver approximately 74 15-kilogram bags of synthetic cannabinoid products to undercover law enforcement officers. The synthetic cannabinoid products contained AB-FUBINACA, an illegal controlled substance.
As described in court documents, Hurley and Costello worked together to manufacture and distribute synthetic cannabinoids that were sold in packages bearing a variety of brand names, including “Scooby Snax,” “Bizarro,” “Toxic Blue Magic,” and “Caution Platinum.” These products, which were then sold in convenience stores and at other locations, contained chemicals that are unlawful controlled substances, including XLR-11 and AB-FUBINACA.
Court documents show that Sean Nolan had assisted Hurley in the distribution of these products. After the arrest of Hurley and Costello, Nolan sold a quantity of AB-FUBINACA to an undercover law enforcement officer.
Two other individuals also have been charged as a result of this investigation.
The resident of the Epping location, Ryan Johnson (32), pleaded guilty on May 26, 2015, to conspiracy to introduce misbranded drugs into interstate commerce. A sentencing date for Johnson has not yet been set.
Tony Aoude (44) of Derry, New Hampshire has been indicted on charges related the distribution of synthetic cannabinoids. The indictment charges Aoude with Distributing a Controlled Substance (AB-FUBINACA), Conspiracy to Violate the Travel Act, and Conspiracy to Receive Misbranded Products, as well as separate violations the federal Travel Act and the federal misbranding statute. According to the Indictment, Aoude sold synthetic cannabinoid products at stores in Londonderry and Hooksett, New Hampshire in 2013 and 2014. Aoude has pleaded not guilty and is scheduled for trial on February 2, 2016.
The charges and allegations contained in an indictment are merely accusations. A defendant is presumed innocent until and unless proven guilty.
Synthetic cannabinoids are green leafy materials that have been sprayed with chemicals. These products (commonly referred to as “spice” or “K2”) are often marketed as incense or potpourri. As in this case, the packaging materials often contain attractive logos that are designed to appeal to young people. Although the products are often identified as “not for human consumption,” the products are smoked in order to obtain a high. The chemicals that are sprayed on the products to produce the high are often illegal controlled substances or analogues of illegal controlled substances. The ingestion of these types of illegal products has caused some users to experience a variety of medical side effects and has led to numerous hospitalizations.
The investigation is continuing.
This case was supported by the Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations. The Drug Enforcement Administration’s Tactical Diversion Squad led the investigation in collaboration with the US Postal Inspection Service and Homeland Security Investigations. The investigators also received the invaluable assistance of DEA-NH/HIDTA and DEA’s Air Wing, the New Hampshire and Massachusetts State Police, the U.S. Marshal Service, Portsmouth Police Department, Somersworth Police Department, Kingston Police Department, Dover Police Department, and the York and Kittery, Maine Police Departments. It is being prosecuted by Assistant United States Attorney John J. Farley.
Thirteen Defendants Indicted in State-Wide Drug Trafficking ConspiracyRead the Press Release
OAKLAND – A federal grand jury indicted thirteen defendants for conducting a state-wide conspiracy to possess with the intent to distribute and the distribution of controlled substances, announced Acting United States Attorney Brian J. Stretch, Drug Enforcement Administration (DEA) Special Agent in Charge John J. Martin, and Department of Treasury, Internal Revenue Service (IRS) Acting Special Agent in Charge Thomas P. McMahon. All thirteen defendants are charged with trafficking numerous controlled substances, including cocaine, methamphetamine, and heroin, several defendants are charged with possession of a firearm in furtherance of a drug trafficking crime, and one defendant is changed with money laundering.
The indictment, filed on November 19, 2015, alleges that between December of 2013, and October of 2015, the following individuals were involved in a large-scale drug trafficking organization whose network extended throughout California and into Mexico:
Carlos Olivares Hernandez, 49, of Turlock
Manuel Gonzalez Chavez, 39, of Stockton
Daniel Jimenez, 45, of Ballico
Manuel Lara Andrade, 61, of Delhi
Gabriel Estrada, 39, of Los Angeles
Vanessa Valdez, 29, of Chula Vista
Ruben Franco Lopez, 45, of Turlock; Carlos Martinez, Jr; 23, of Hayward
Michael Anthony Sherman Sr., 45, of Lathrop
Ismael Mendoza Rodriguez, 35, of Turlock
Elias Dominguez, 43, of Patterson
Jesus Guadalupe Rojas, 29, of Delhi
Jose Armando Mendoza Linares, 39, of TurlockAccording to the indictment, underlying criminal complaints, and public records, a federal investigation revealed that Olivares Hernandez and his co-defendants regularly received large shipments of drugs from couriers transporting the contraband from San Diego area to the Central Valley of California. The defendants are further alleged to have distributed the drugs in the Central Valley and Bay Area of California. The thirteen defendants were charged with conspiracy to possess with intent to distribute and distribution of controlled substances, in violation of 21 U.S.C. §§ 846 and 841. The grand jury also indicted three of the defendants, Andrade, Chavez Gonzalez, and Mendoza Rodriguez, for possession of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c). The grand jury further charged Olivares Hernandez with fifty-six counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i).
"This investigation demonstrates the size and scope of the drug trafficking organizations that we can effectively target through the combined efforts of federal and local law enforcement,” said Acting U.S. Attorney Brian J. Stretch. “These long-term wiretap investigations and resulting charges strike at the heart of sophisticated drug trafficking and will take hundreds of thousands of doses of drugs off our streets."
DEA Special Agent in Charge John J. Martin stated, “No stone was left unturned in this investigation and its success can be attributed to the excellent collaborative effort between federal and local law enforcement. These arrests and seizures have disabled an organization with tentacles operating throughout California. DEA will diligently work with our law enforcement partners to identify and dismantle drug distribution networks at the highest levels.”
IRS Criminal Investigations Acting Special Agent in Charge Thomas McMahon said, “The combined efforts of law enforcement agencies in an investigation of this magnitude produce a formidable force against narcotics trafficking and money laundering. It’s critical to determine where the money comes from and where it goes. Finding and connecting those ‘dots’ is what IRS-CI brings to this cooperative effort.”
According to documents filed in connection with the indictment and public records, the investigation also revealed the defendants used sophisticated means to attempt transporting the drugs without detection from Southern California to the Central Valley. For example, law enforcement stopped Valdez while he was driving a vehicle containing 33 pounds of methamphetamine on September 5, 2015. The drugs were secreted inside an electronically-operated compartment built beneath the front seats and operated via buttons concealed in the center console. The defendants are also alleged to have routinely sent bulk cash payments to Mexico via couriers based in Southern California. For example, law enforcement discovered approximately $399,000 in U.S. currency hidden behind the truck-bed liner of a vehicle driven by Estrada while headed southbound on Highway-99 on October 12, 2015. In sum, searches executed at the conclusion of the investigation resulted in the cumulative seizure of more than $1.3 million in U.S. currency; numerous firearms, including an AK-47 with an extended magazine; pieces of body armor; vehicles containing aftermarket traps; and additional items. Agents also seized suspected drugs in the following quantities: 38 kilograms of cocaine, 58.1 pounds of methamphetamine, and 11.4 pounds of heroin. The drugs are alleged to have an estimated street value of over $4 million.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the drug conspiracy charge, all of the defendants, with the exception of Carlos Olivares Hernandez, face a mandatory 10-year term of imprisonment and maximum sentence of life, and a maximum fine of $10 million for the alleged violations of 21 U.S.C. §§ 846 and 841 (a)(1),(b)(1)(A)(viii). Carlos Olivares Hernandez faces a mandatory 20-year term of imprisonment and maximum of life and a maximum fine of $20 million for the alleged violations of 21 U.S.C. §§ 846 and 841 (a)(1),(b)(1)(A)(viii) based on the Information for Increased Punishment.
If convicted of possession of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c), defendants Daniel Jimenez, Manuel Lara Andrade, Manuel Gonzalez Chavez, and Ismael Mendoza Rodriguez face a consecutive mandatory minimum term of imprisonment of 5 years, 7 years if the firearm was brandished, or 10 years if the firearms was discharged. In addition, if, for any of the three defendants, it is his second conviction under § 924(c), the defendant faces a minimum 25 years’ imprisonment and a maximum lifetime of imprisonment.
If convicted, Carlos Olivares Hernandez also faces a maximum 20 years of imprisonment and maximum fine of $500,000 or twice the value of the property involved in the transactions for the alleged money laundering charges, in violation of 18 U.S.C. § 1956(a)(1)(B)(i).
Any sentences following the defendants’ convictions would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The defendants are scheduled for an initial appearance on the indictment before the Honorable Judge James Donato, U.S. District Court Judge, on December 17, 2015. All of the defendants, with the exception of Carlos Martinez Jr., are in custody.
Assistant U.S. Attorneys Katie Burroughs Medearis, Aaron D. Wegner, and Gregg Lowder are prosecuting the case with the assistance of Michelle Alter and Vanessa Vargas. The prosecution is the result of a multi-year investigation by the DEA, the Concord Police Department, and the IRS Criminal Investigations. The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force (OCDETF), a multi-agency task force that coordinates long-term narcotics trafficking investigations.
Texas Woman Sentenced for Lying on A Passport ApplicationRead 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 Valerie Christine Hedd-Johnson, 46, of Garland, Texas, who was convicted of making a false statement in an application for a U.S. passport, was sentenced to time served (13 months) by Senior U.S. District Judge William M. Skretny.Assistant U.S. Attorney Elizabeth R. Moellering, who handled the case, stated that the defendant applied for a passport in Buffalo, NY in November 2013. On the application, Johnson indicated that she had never before applied for a U.S. passport. However, in August 2000, the defendant had applied for a passport in Texas. That application was rejected due to indications of fraud.
The sentencing is the result of an investigation by Special Agents from the Department of State, Diplomatic Security Services, under the direction of Special Agent in Charge and the Social Security Administration, Office of the Inspector General, under the direction of Edward J. Ryan, Special Agent in Charge.
Tampa Man Sentenced to Nearly Six Years in Federal Prison for Stolen Identity Refund FraudRead the Press Release
Tampa, Florida – U.S. District Judge Susan C. Bucklew today sentenced Demetrius Wright to 5 years and 10 months in federal prison for conspiracy to commit theft of government funds, aggravated identify theft, wire fraud, filing false claims, and theft of government funds. As part of his sentence, the Court also entered a money judgment in the amount of $165,317, the proceeds of the charged criminal conduct. Wright pleaded guilty on August 6, 2015.
According to court documents, from as early as February 1, 2012, through on or about December 19, 2014, Wright participated in a scheme to defraud the Internal Revenue Service. During a search his home, law enforcement found notebooks containing the personally identifying information (PII) of others, none of who had provided that information to Wright. Also found in Wright’s home were documents from the Tampa Veterans Affairs hospital, which contained additional PII. As part of the scheme, over 500 tax returns were filed from laptops associated with Wright, requesting more than $3.6 million in fraudulent tax refunds.
Donald Bethell was also prosecuted for his role in this scheme. On August 31, 2015, he was sentenced to four months in federal prison for theft of government funds.
This case was investigated by Internal Revenue Service - Criminal Investigation, the Tampa Police Department, and the Department of Veterans Affairs, Office of Inspector General. It was prosecuted by Assistant United States Attorney Adam M. Saltzman.
St. Croix Man Arrested for Unauthorized Possession of Firearm and AmmunitionRead the Press Release
St. Croix, USVI – Dwayne Wesselhoft, 29, of St. Croix, was arrested today on an indictment charging him with possession of a firearm and ammunition by an unlawful user of acontrolled substance, unauthorized possession of a firearm, and unauthorized possession of ammunition, United States Attorney Ronald W. Sharpe announced today. Wesselhoft made his initial appearance before U.S. Magistrate Judge George W. Cannon in District Court and was released to a third-party custodian.
According to the indictment, Wesselhoft possessed a Taurus, model PT 24-77 Pro DS, 9mm Luger pistol, 50 Blazer, 9 mm bullets, and 40 Remington, 9 mm bullets.
If convicted of possession of a firearm and/or ammunition by an unlawful user of a controlled substance, Wesselhoft faces a maximum sentence of 10 years’ imprisonment and a $250,000 fine for each count. If convicted of unauthorized possession of a firearm, Wesselhoft faces a mandatory minimum sentence of one year imprisonment and a maximum sentence of five years’ imprisonment. If convicted of unauthorized possession of ammunition, Wesselhoft faces a maximum sentence of seven years’ imprisonment.
United States Attorney Sharpe reminds the public that a complaint is merely a formal charging document and is not evidence of guilt. Every defendant is presumed innocent until and unless found guilty.
The indictment is the result of investigative work by the U.S. Drug Enforcement Administration and the Virgin Islands Police Department. The case is being prosecuted by Assistant U.S. Attorney Rami. S. Badawy.
Southampton Town Councilman Pleads Guilty to Conspiring to Illegally Distribute OxycodoneRead the Press Release
Bradley Bender, Southampton Town Councilman, pleaded guilty today to conspiring to illegally distribute oxycodone. The plea was entered before U.S. Magistrate Judge Anne Y. Shields at the federal courthouse in Central Islip.
Today’s guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent in Charge, Drug Enforcement Administration (DEA), New York.
According to court filings and statements made in court at the time he entered the guilty plea, between July 2012 and June 2015, Bender received phony prescriptions for oxycodone from a Riverhead physician assistant, Michael Troyan, filled those prescriptions, and illegally exchanged the oxycodone pills for cash and steroids with another co-conspirator. The oxycodone pills were then re-sold to drug abusers. Troyan was arrested on November 4, 2015, pursuant to an indictment which is currently pending before United States District Judge Denis R. Hurley.
The goverenment’s investigation was led by the DEA’s Long Island Tactical Diversion Squad which is comprised of agents and officers of the DEA, Nassau County Police Department, Rockville Centre Police Department, and Port Washington Police Department. The Diversion Squad was also assisted by agents and officers of the Department of Health & Human Services, the Southampton Town Police Department, and the Suffolk County District Attorney’s East End Drug Taskforce.
“Abuse of oxycodone on Long Island has reached epidemic proportions,” stated United States Attorney Capers. “Councilman Bender’s actions in this oxycodone distribution conspiracy victimized the very community he was entrusted to represent. Today’s guilty plea should serve as a reminder that no one is above the law, including those entrusted with passing our laws.” Mr. Capers extended his grateful appreciation to each of the participating law enforcement agencies for their assistance in this case.
DEA Special Agent in Charge Hunt stated, “Diverted prescription pill distributors are a new breed of drug dealer because many hide in plain view. In this case, Southampton Town Councilman Bradley Bender allegedly distributed diverted pain medication behind the backs of his constituents. By allegedly filling fraudulent oxycodone prescriptions for street sales, he was adding fuel to the fire for the opioid problem that is running rampant throughout American cities, unlike other community representatives who are looking for ways to contain it.”
At sentencing, Bender faces a maximum sentence of 20 years of imprisonment and a $1 million fine.
This case is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this district, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Initiative to mount a comprehensive response to what the United States Department of Health and Human Services Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. To date, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 19 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorney Allen Bode is in charge of the prosecution.
The Defendant:
Name: BRADLEY BENDER
Age: 52
Residence: Northampton, New YorkE.D.N.Y. Docket No. 15-CR-593(ADS)
South Florida-Based Government Contractor Pleads Guilty to Tax FraudRead the Press Release
A Fort Lauderdale, Florida based government contractor pleaded guilty today in the U.S. District Court for the Southern District of Florida to filing a false income tax return, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.
According to court documents, Maxim Silinsky, 44, owned an aircraft-leasing and parts-supply company called Simplex Corporation. Simplex contracted with the federal government to lease Russian aircraft to the U.S. Air Force for training purposes and to supply parts and equipment to U.S. military forces deployed to Afghanistan.
Silinsky used a complex web of domestic and foreign corporate entities and financial accounts to facilitate his underpayment of both corporate and individual income tax for the years 2007 through 2010. Silinsky filed false corporate tax returns for these years that overstated Simplex’s expenses. For the years 2008 through 2010, Silinsky also filed false individual income tax returns on which he understated the amount of income he received from the business. To conceal his fraud from the Internal Revenue Service (IRS), Silinsky transferred approximately $1.7 million from Simplex to nominee bank accounts he controlled and disguised the transfers as costs of goods sold, which led to overstated costs-of-goods-sold expenses on Simplex’s corporate returns. In 2012, during an audit of Simplex’s 2008 corporate return, Silinksy made false statements to the IRS about these expenses. Silinksy also purchased real estate using funds he diverted from the business and titled the property in nominee names to hide his involvement with these purchases. Additionally, a family member served as a nominee shareholder of a shell corporation that Silinsky established to receive income from Simplex on his behalf. While taxes were paid on the funds diverted to the shell corporation, the arrangement allowed Silinsky to pay taxes on this money at a lower rate. In the plea documents, Silinsky also admitted that he was involved in making illicit payments to a government contractor and U.S. military personnel.
At his Feb. 2, 2016 sentencing, Silinsky faces a statutory maximum sentence of three years in prison, a fine of up to $250,000, or twice the loss caused by the offense and restitution to the IRS.
Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, the U.S. Air Force’s Office of Special Investigations and the U.S. Department of Defense’s Office of the Inspector General, who investigated this case and Trial Attorneys Charles M. Edgar Jr. and Jason H. Poole of the Tax Division, who are prosecuting this case. Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Florida for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts against stolen identity tax refund fraud may be found on the division’s website.
Savannah Man Sentenced to Life in Prison for Role in Forcing Children to Engage in ProstitutionRead the Press Release
Savannah, GA – Jeremy Grant, 26, from Savannah, was sentenced last Friday by Chief United States District Court Judge Lisa Godbey Wood to life in prison for his role in a conspiracy to engage in the sex trafficking of minors. Grant’s life sentence means that he will spend the remainder of his life in prison; there is no parole in the federal system.
During the guilty plea and sentencing hearings, the evidence showed that between at least June of 2014 and January of 2015, Grant recruited vulnerable and financially destitute minors by offering them food and shelter. Grant then forced the minors to engage in sex acts for money, which he kept. Grant took pictures of the minors, used on-line social media sites to advertise the minors, and transported the minors to various hotels to engage in commercial sex acts. The evidence further showed that Grant physically abused some of the minors, raped them, and threatened to kill their families if they did not engage in prostitution. While sentencing Grant to life in prison, Judge Wood remarked that Grant’s conduct was “soul sapping” and that Grant committed “almost unfathomable actions towards human beings.”
United States Attorney Edward J. Tarver said, “This defendant stole the childhood and innocence from his victims and made their lives a living hell. He turned our most vulnerable and precious citizens into sex slaves and sold them for money, over and over again. Let me be absolutely clear: anyone who abuses children for their depraved sexual and financial enjoyment will be brought to justice and can expect to spend the rest of their life in prison.”
The investigation of this case was conducted by the FBI, the Pooler Police Department and Savannah-Chatham Metropolitan Police Department (SCMPD). Anyone who suspects instances of child sexual exploitation is encouraged to call 1-800-843-5678, which is operated by the National Center for Missing and Exploited Children in partnership with the FBI and other law enforcement agencies.
Assistant United States Attorneys Tania D. Groover and Carlton R. Bourne prosecuted the case on behalf of the United States. For additional questions, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.
Romanian Citizens Charged in Skimming SchemeRead the Press Release
PHILADELPHIA - Aura Voicu, 24, and Silviu Serban, 30, both of Bucharest, Romania, were charged today by Indictment with conspiracy to commit bank fraud, attempted bank fraud, and aiding and abetting, announced United States Attorney Zane David Memeger.
According to the indictment, between at least May 25, 2015 and mid-June 2015, the defendants engaged in a skimming scheme involving Automated Teller Machines (ATMs) belonging to various banks that the defendants targeted. The defendants allegedly installed devices on various Philadelphia bank ATMs to capture Personal Identification Numbers (PINs) used by bank customers.
If convicted, the defendants face a maximum possible sentence of 35 years in prison, a five year term of supervised release, a possible fine and a $200 special assessment.
The case was investigated by Federal Bureau of Investigation and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney Linwood C. Wright, Jr.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
President of North Carolina Board of Funeral Service and Business Partner Plead Guilty to Conspiracy to Defraud the United StatesRead the Press Release
Two North Carolina businessmen pleaded guilty in the U.S. District Court in the Middle District of North Carolina to conspiracy to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
Kenneth Dale Stainback, 61, of Burlington, North Carolina, pleaded guilty on Nov. 24 and Stephen Ray Smith, 60, of Mebane, North Carolina pleaded guilty on November 23. According to court documents and statements in court, Stainback and Smith conspired to defraud the United States by filing false corporate tax returns for McClure Funeral Service (McClure). Stainback, Smith and another co-conspirator bought McClure in 2004 and began diverting gross receipts from the business and omitting that income from the corporation’s tax returns. The co-conspirators opened a checking account at Mid-Carolina Bank for the purpose of diverting funds from McClure, including commission checks from insurance providers and checks from clients for payment of services. The co-conspirators wrote checks to themselves from this account, with Stainback and Smith receiving the vast majority of the diverted funds. Stainback also opened another bank account at SunTrust Bank, which he used to divert additional funds from McClure without the knowledge of his co-conspirators. Finally, the co-conspirators also pocketed cash payments from clients of McClure. In order to conceal discovery of their scheme, the co-conspirators deleted and altered invoices in the business’s accounting system. Stainback and Smith also closed their bank account at Mid-Carolina bank after being contacted by the Internal Revenue Service (IRS) regarding the corporate tax returns.
During the 2009 through 2012 fiscal years, Stainback, Smith and the other co-conspirator diverted more than $419,000 from McClure. These diverted funds were not reported on McClure’s corporate tax returns, which resulted in a corporate tax loss of $158,530.11. Stainback and Smith also failed to report the diverted funds on their individual income tax returns.
In addition to owning McClure, Stainback also serves as the President of the North Carolina Board of Funeral Service.
Stainback and Smith each face a statutory maximum sentence of five years in prison, a $250,000 fine and restitution to the IRS. The court set sentencing for Smith and Stainback on March 24, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS – Criminal Investigation who investigated the case and Assistant U.S. Attorney Clifton T. Barrett of the Middle District of North Carolina and Trial Attorney Kathryn A. Kimball of the Justice Department’s Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
President of North Carolina Board of Funeral Service and Business Partner Plead Guilty to Cospiracy to Defraud the United StatesRead the Press Release
WASHINGTON — Two North Carolina businessmen pleaded guilty in the U.S. District Court in the Middle District of North Carolina to conspiracy to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
Kenneth Dale Stainback, 61, of Burlington, North Carolina, pleaded guilty on Nov. 24 and Stephen Ray Smith, 60, of Mebane, North Carolina pleaded guilty on November 23. According to court documents and statements in court, Stainback and Smith conspired to defraud the United States by filing false corporate tax returns for McClure Funeral Service (McClure). Stainback, Smith and another co-conspirator bought McClure in 2004 and began diverting gross receipts from the business and omitting that income from the corporation’s tax returns. The co-conspirators opened a checking account at Mid-Carolina Bank for the purpose of diverting funds from McClure, including commission checks from insurance providers and checks from clients for payment of services. The co-conspirators wrote checks to themselves from this account, with Stainback and Smith receiving the vast majority of the diverted funds. Stainback also opened another bank account at SunTrust Bank, which he used to divert additional funds from McClure without the knowledge of his co-conspirators. Finally, the co-conspirators also pocketed cash payments from clients of McClure. In order to conceal discovery of their scheme, the co-conspirators deleted and altered invoices in the business’s accounting system. Stainback and Smith also closed their bank account at Mid-Carolina bank after being contacted by the Internal Revenue Service (IRS) regarding the corporate tax returns.
During the 2009 through 2012 fiscal years, Stainback, Smith and the other co-conspirator diverted more than $419,000 from McClure. These diverted funds were not reported on McClure’s corporate tax returns, which resulted in a corporate tax loss of $158,530.11. Stainback and Smith also failed to report the diverted funds on their individual income tax returns.
In addition to owning McClure, Stainback also serves as the President of the North Carolina Board of Funeral Service.
Stainback and Smith each face a statutory maximum sentence of five years in prison, a $250,000 fine and restitution to the IRS. The court set sentencing for Smith and Stainback on March 24, 2016.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS – Criminal Investigation who investigated the case and Assistant U.S. Attorney Clifton T. Barrett of the Middle District of North Carolina and Trial Attorney Kathryn A. Kimball of the Justice Department’s Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Philadelphia Man Charged in Fraud Scheme Involving Counterfeit Credit CardsRead the Press Release
PHILADELPHIA - Christopher Castillo, 22, of Philadelphia, was charged in an Indictment with producing and selling counterfeit credit cards, possessing credit card making equipment, and aggravated identity theft of a Scotiabank credit card account holder, announced United States Attorney Zane David Memeger. According to the indictment, among the items found in Castillo’s possession were over 150 white plastic credit card templates, multiple partially manufactured credit cards, multiple sheets of holographic stickers resembling the holograms found on Visa and MasterCard cards, documents containing personally identifiable information, and a desktop credit card printer.
If convicted the defendant faces a mandatory minimum sentence of two years in prison with a maximum possible sentence of 35 years in prison, three years supervised release, a fine, and a $400 special assessment.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Anita Eve.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Parker County Man Sentenced to 20 Years in Federal Prison for Role in Methamphetamine Distribution ConspiracyRead the Press Release
FORT WORTH, Texas — Gary Howard, 35, most recently of Weatherford, Texas, was sentenced by U.S. District Judge Reed C. O’Connor to 240 months in federal prison, announced U.S. Attorney John Parker of the Northern District of Texas.
Howard pleaded guilty in July 2015 to one count of conspiracy to possess with intent to distribute at least 50 grams of methamphetamine.
According to documents filed in the case, since 2014, Howard and other co-defendants received multi-ounce and pound quantities of methamphetamine on consignment. In turn, Howard distributed the methamphetamine to various customers in the Dallas, Fort Worth and North Richland Hills, Texas areas, returning to his supplier for additional methamphetamine to distribute.
The Drug Enforcement Administration, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Texas Department of Public Safety and the Fort Worth Police Department investigated the case. Assistant U.S. Attorney Shawn Smith was in charge of the prosecution.
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Palmer Man Sentenced for Being A felon in Possession of Loaded GunRead the Press Release
Anchorage, Alaska-U.S. Attorney Karen L. Loeffler announced today that a Palmer man has been sentenced by United States District Court Judge Timothy M. Burgess to serve 16 months in prison for possessing a gun as a convicted felon.
Jason Scott Freeland, 37, of Palmer, Alaska, previously pled guilty to possessing a loaded .45 caliber/.410 gauge Derringer pistol. At the time that he possessed the firearm, Freeland had already amassed a felony record, including four convictions in 2001 for assault and misconduct involving a weapon. He was therefore prohibited from possessing firearms at the time he was stopped by police. Upon being released from prison, Freeland will be on supervised release for three years.
According to Assistant U.S. Attorney Stephanie C. Courter, who prosecuted the case along with Special Assistant United States Attorney Erin Bennett, Freeland was first encountered by police officers in the early morning hours of April 24, 2015. At the time, Freeland was slumped over inside an SUV and appeared noticeably incoherent. He had trouble locating the door handle of his vehicle, had difficulty producing his driver’s license, had slurred speech, and found it difficult to walk.
When officers searched Freeland, they found a loaded pistol in his pants pocket along with a small amount of methamphetamine. They also found a set of brass knuckles in another pants pocket. Later blood tests revealed that Freeland was high on marijuana and methamphetamine.
During the sentencing hearing, Judge Burgess raised concerns about Freeland’s past, calling the defendant dangerous and noting that he had to craft a sentence that protected the public from Freeland’s potentially violent behavior. He also noted the seriousness of the offense and need for deterrence. Freeland’s previous felony convictions stem from a 2001 incident in which Freeland fired a .45 caliber semi-automatic pistol at both a house and a vehicle that he knew had people inside.
In announcing the sentence, Ms. Loeffler commended the work of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and the Anchorage Police Department (APD), who investigated the case.
Pain doctor indicted on Federal drug chargesRead the Press Release
BECKLEY, W.Va. – United States Attorney Booth Goodwin announced today that Dr. Jose Jorge Abbud Gordinho, M.D., was indicted on multiple federal drug charges by a Grand Jury sitting in Beckley, West Virginia. Gordinho was arrested on November 12, 2015, at which time the West Virginia State Police and the Federal Bureau of Investigation executed a search warrant at his medical office on George Street in Beckley. Gordinho has been held in custody in the Southern Regional Jail since the date of his arrest.
The 21 count indictment includes allegations that Gordinho conspired to distribute pain medications such as oxycodone and morphine, not for legitimate medical purposes in the usual course of medical practice and beyond the bounds of medical practice. The indictment further alleges multiple counts of distribution of oxycodone, oxymorphone, hydrocodone, and morphine not for legitimate medical purposes in the usual course of medical practice and beyond the bounds of medical practice, as well as two counts of distributing controlled substances not within Gordinho’s capacity as a medical doctor.
Each of the 21 counts carries a maximum sentence of up to 20 years in federal prison and a $1 million fine. Gordinho is scheduled to be arraigned on the indictment on November 30, 2015, in federal court in Beckley. At that time, the court will also consider a motion filed by the United States to detain Gordinho pending his trial.
The charges are merely accusations. The defendant is presumed innocent until and unless proven guilty.
The case against Gordinho was investigated by the West Virginia State Police and the Federal Bureau of Investigation.
This case is being prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs and heroin. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin in communities across the Southern District.
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Oregon Man Sentenced for Possession and Distribution of Meth and for Unlawful Possession of a FirearmRead the Press Release
BOISE – Robert Iracheta, 27, of Vale, Oregon, was sentenced today to180 months in prison for possession and distribution of methamphetamine, and for unlawful possession of a firearm, U.S. Attorney Wendy J. Olson announced. Senior U.S. District Judge Edward J. Lodge also ordered Iracheta to serve five years of supervised release following his release from prison. Iracheta pleaded guilty on August 27, 2015.
According to court proceedings, Iracheta was arrested in Payette, Idaho, on March 18, 2015. When the officers searched the home he shared with his girlfriend and infant child they found a locked safe containing seven plastic baggies with 148.58 grams of actual methamphetamine, a Lorcin .22 caliber pistol, and $2,760 in cash, as well as paraphernalia. Iracheta admitted he possessed the methamphetamine with intent to distribute it. These items were forfeited by Iracheta as part of his sentence.
“Severe federal prison sentences are reserved for those who traffic in addictive illegal drugs and use firearms to further their unlawful conduct,” said Olson. “With our state and federal law enforcement partners, we will vigilantly pursue those who pose this specific danger to our communities.”
The case was investigated by the High Desert Task Force and the Bureau of Alcohol, Tobacco and Firearms.
Omaha Man Sentenced for Commercial RobberyRead the Press Release
United States Attorney Deborah R. Gilg announced that Liban Hassan, age 23 of Omaha, Nebraska, was sentenced to two years, nine months imprisonment by the Honorable Laurie Smith Camp, for Interference With Commerce By Threats or Violence. On August 13, 2015, a federal jury found him guilty of robbing the Kum & Go at 13149 Fort Street, Omaha. He was also ordered to serve a three-year term of supervised release and pay $455.53 in restitution.
On May 18, 2014, at approximately 4:15 a.m., four men entered the store and demanded money. One of the four acted as if he had a gun under his shirt. Two other suspects came behind the counter, grabbed the clerk asking where the cigarettes were. Hassan acted as a lookout both inside the store and then outside while the robbery was continuing inside. The four men left with $158.50 and approximately 5-6 cartons of cigarettes.
Yusuf Xasan was previously convicted in connection with the robbery and received 13 months in prison. The two other suspects remain at large.
The case was investigated by the Omaha Police Department and Federal Bureau of Investigation.
Nurse Practitioner Pleads Guilty to Illegally Prescribing OxycodoneRead the Press Release
ABINGDON, VIRGINIA – A Richlands, Va., nurse practitioner, who illegally prescribed over three thousand oxycodone pills, pled guilty today in the United States District Court for the Western District of Virginia in Abingdon.
Gloria W. “Faye” Kennedy, 51, waived her right to be indicted and pled guilty this afternoon to a two count felony Information charging her with one count of conspiring to illegally distribute controlled substances and one count of making false statements to federal law enforcement agents.
Kennedy, a licensed family nurse practitioner, illegally prescribed 3,780 (three thousand seven hundred eighty) pills of 15 mg oxycodone to her husband and others for them to redistribute and illegally use. Her husband, Darrell Lynn Wells, pled guilty, on November 12, 2015 to conspiring to illegally distribute controlled substances.
United States District Judge James P. Jones scheduled Ms. Kennedy’s sentencing hearing for March 22, 2016. Wells’ sentencing hearing is scheduled for February 8, 2016. At sentencing, Kennedy faces up to 25 years in prison. Wells faces up to 20 years in prison.
The investigation of the case was conducted by the United States Drug Enforcement Agency Tactical Diversion Squad, with the assistance of the Virginia Medicaid Fraud Control Unit, Virginia State Police, and Tazewell Regional Drug Task Force. Special Assistant United States Attorney Brian Patton and Assistant United States Attorney Randy Ramseyer are prosecuting the case for the United States.
Newnan Man Charged with Assaulting Customs Officer at Hartsfield-Jackson AirportRead the Press Release
ATLANTA - Jemel Broussard Harris has been indicted by a federal grand jury on charges of assaulting and injuring a Customs and Border Protection officer while at Hartsfield-Jackson International Airport.
“Tragic events across the world remind us that security at airport inspection areas is critical, and customs officers need to fulfill this mission without attacks and assaults as alleged in this case,” said U.S. Attorney John Horn. “These kinds of disruptions create safety issues for both the officers and other travelers.”
“This assault illustrates the inherent danger that law enforcement officers face every day while helping to keep our communities safe,” said Stephen Kremer, CBP Port Director for the Port of Atlanta. “The safety and security of our officers and of our travelers remains of paramount concern for Customs and Border Protection.”
According to United States Attorney Horn, the charges, and other information presented in court: Harris returned to the United States from the Dominican Republic on November 15, 2015. He allegedly became verbally abusive as he passed through the Customs inspection area of Hartsfield-Jackson International Airport. When Customs and Border Protection officers (CBP) told Harris that he could collect his belongings and go home, he continued his profane tirade, and threw a can of deodorant at a CBP officer. When an officer approached Harris and asked him to collect his belongings and go home, Harris surprised the officer by striking him. In the struggle that ensued, Harris allegedly pulled the officer across an inspection platform before he was subdued and arrested. The officer who Harris struck suffered a cut on his head and suffered other bodily injuries.
The grand jury issued the single-count indictment charging Jemel Broussard Harris, 38, of Newnan, Ga., on Monday, November 23, 2015.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Assistant United States Attorney William Traynor is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
Neenah Woman Sentenced to 12 Years in Federal Prison for Role in Fatal Heroin OverdoseRead the Press Release
Acting United States Attorney Gregory J. Haanstad for the Eastern District of Wisconsin, announced that today, Brandi Kniebes-Larsen (age: 37) of Neenah, Wisconsin, was sentenced to 12 years in federal prison followed by 10 years of supervised release by Chief United States District Judge William C. Griesbach. Kniebes-Larsen previously entered a guilty plea for her role in a conspiracy to deliver 100 grams or more of heroin in violation of Title 21, United States Code, Sections 841(a)(1), (b)(1)(B), and 851. According to the plea agreement and other documents filed with the court, Kniebes-Larsen procured and dealt the heroin which ultimately led to the overdose death of Frederick J. Schnettler (age: 24) also of Neenah.
In pronouncing the sentence, Chief Judge Griesbach noted the extreme nature of the offense which resulted in the death of Mr. Schnettler, as well as the lengthy criminal history of Ms. Kniebes-Larsen involving numerous drug convictions. The sentence also included the forfeiture of the defendant’s residence, from which she had distributed controlled substances in the past.
The case was investigated by the Winnebago County Sheriff’s Department, the Lake Winnebago Area MEG Unit, and the City and Town of Menasha Police Departments. The case was prosecuted by Assistant United States Attorney Daniel R. Humble.
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Navajo Man Pleads Guilty to Federal Voluntary Manslaughter and Assault ChargesRead the Press Release
ALBUQUERQUE – Roderick Talk, 43, an enrolled member of the Navajo Nation who resides in Sanostee, N.M., pleaded guilty this morning in federal court in Albuquerque, N.M., to voluntary manslaughter and assault charges under a plea agreement with the U.S. Attorney’s Office.
Talk was arrested in June 2015, and charged in a criminal complaint with killing a man in Indian Country in San Juan County, N.M., on May 30, 2015. The crime occurred during an argument between Talk, the victim and the victim’s nephew, while Talk and the victim were drinking alcoholic beverages. Talk was subsequently indicted on June 24, 2015.
During today’s proceedings, Talk pled guilty to a felony information charging him with voluntary manslaughter and assault with a dangerous weapon. In entering his guilty plea, Talk admitted that on May 30, 2015, while in the heat of passion or a sudden quarrel, he killed a man and assaulted another man with a dangerous weapon, a pickup truck, with intent to do bodily harm. Talk admitted that the crimes took place on the Navajo Indian Reservation.
At sentencing, Talk faces a statutory maximum penalty of 15 years in federal prison. Maximum potential sentences are prescribed by Congress and are provided for information purposes only. The sentence on Talk will be determined by the court. A sentencing hearing has yet to be scheduled.
This case was investigated by the Farmington office of the FBI, the New Mexico State Police and the Shiprock office of the Navajo Nation Department of Public Safety. Assistant U.S. Attorney Kyle T. Nayback is prosecuting the case.
Nanny Pleads Guilty to Forging Dozens of Checks from Employers’ Bank AccountRead the Press Release
BOSTON – A Randolph woman who was employed as a nanny pleaded guilty today in U.S. District Court in Boston in connection with forging 65 checks totaling over $280,000 from her employers’ bank account.
Stephanie L. Fox, 30, pleaded guilty to three counts of bank fraud after being arrested and charged in October 2015. U.S. District Court Judge Richard G. Stearns scheduled sentencing for Feb. 18, 2016, at 2:30 p.m.
Fox was employed as a nanny from about February 2013 until August 2015 when her employers discovered that for more than a year, Fox had been writing checks on one of their bank accounts and forging one of their signatures on the checks. Fox avoided detection by destroying the bank account statements when they arrived at her employers’ home. In total, Fox forged 65 checks totaling $281,917. She used the money to purchase jewelry, including a diamond pendant necklace and three Movado watches, as well as for travel to places such as the Bahamas, Aruba, Hawaii, Newport, Disney, and Cape Cod.
The charging statute provides for a sentence of no greater than 30 years in prison, five years of supervised release, a fine of $1 million, restitution and forfeiture. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Commissioner William Evans of the Boston Police Department, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Mark J. Balthazard of Ortiz’s Economic Crimes Unit.
Multiple Defendants Plead Guilty in Heroin Ring Based Near Former Thunderguards ClubhouseRead the Press Release
WILMINGTON, Del. – Charles M. Oberly III, United States Attorney for the District of Delaware, today announced multiple guilty pleas to conspiracy to distribute heroin from within B&D Detailing, an auto detailing shop adjacent to the now-shuttered Thunderguards Clubhouse on Northeast Boulevard in Wilmington.
Daywine Hunter, 32, of Wilmington, pled guilty on November 18, 2015 to participating in the aforementioned conspiracy, in violation of Title 21 United States Code Section 841(a)(1), (b)(1)(B) and 846. The investigation focused on Hunter, a member of the Thunderguards Motorcycle Club and the owner of B&D Detailing. Hunter and his father, Victor Williams, both sold heroin from B&D Detailing during the investigation.
Victor Williams, 54, Brian Teat, 53, Prince Seward, 51, Jaquanda Lewis-Davis, 22, all of Wilmington, and Yanthonic Herrera, 23, of Philadelphia, were also arrested as part of the heroin conspiracy. Williams, Teat, and Seward have also pled guilty to their participation in the heroin distribution ring, headed by Hunter.
Pursuant to federal wiretap orders, Drug Enforcement Administration agents intercepted Hunter’s telephone calls. Agents also covertly installed and monitored video and audio surveillance equipment, commonly referred to as “bugs”, from inside B&D Detailing. This electronic surveillance continued until the defendants’ arrests on April 22, 2015.
According to statements made by the government during court hearings in this case, Hunter used Williams and his co-defendants Teat, Seward, and Lewis-Davis as drug couriers. Hunter ordered the couriers to travel to Philadelphia in vehicles equipped with hidden compartments to pick up in excess of 100 grams of heroin per trip from Hunter’s heroin source of supply. These trips occurred weekly.
On April 22, 2015, the day after the couriers made a trip to Philadelphia, video surveillance caught a Lincoln Aviator with a hidden compartment as it backed into B&D Detailing. Hunter was then seen removing a shopping bag from the Navigator. Officers executed a search warrant at B&D Detailing and recovered the bag, which was found to contain in excess of 100 grams of heroin packaged for distribution.
United States Attorney Charles M. Oberly, III, said, “This case is the result of a tremendous partnership fostered by the New Castle County High Intensity Drug Trafficking Area (“HIDTA”). Virtually every law enforcement agency in the region contributed to the takedown of a significant heroin drug trafficking group. We will continue to use every resource available to fight heroin trafficking here in Delaware.”
"Investigations where the DEA works with its partners from other law enforcement agencies to dismantle a heroin drug trafficking organization like this are a top priority for my office and the DEA across the country," said Gary Tuggle, the Special Agent in Charge of the DEA's Philadelphia Field Division, which encompasses Delaware. "Heroin abuse is destroying numerous lives and families across our region. The DEA will remain vigilant in using all of its technological resources to aggressively target heroin traffickers as was done here."
This case is the result of an investigation conducted by the Wilmington Resident Office of the Drug Enforcement Administration, HIDTA Group 41, the Delaware State Police, the Wilmington Police Department, the Newark Police Department, New Castle County Police Department, Delaware Probation and Parole, and the Department of Homeland Security, Homeland Security Investigations. The prosecution is being handled by Assistant United States Attorney Jennifer K. Welsh.
Monroe County Man Pleads Guilty to Heroin and Sex Trafficking Conspiracies; Six Others ChargedRead the Press Release
SCRANTON - The United States Attorney’s Office for the Middle District of Pennsylvania announced that a Monroe County man pleaded guilty today before U.S. District Court Judge Malachy E. Mannion in Scranton, to participating in a heroin trafficking conspiracy that stretched from Stroudsburg to New York to the state of Maine, and a sex trafficking conspiracy in which young women were forced or coerced into engaging in prostitution in northeastern Pennsylvania.
According to United States Attorney Peter Smith, the defendant, Sirvonn Taylor, age 33, of Pocono Summit, admitted to conspiring with others to commit drug trafficking and sex trafficking crimes between 2012 and 2014.
Taylor was indicted along with six other people by a federal grand jury sitting in Scranton in September 2015, as a result of an investigation by agents of the Federal Bureau of Investigation, investigators from the Pennsylvania State Police, Maine State Police, the Monroe County District Attorney’s Office, and local police in Monroe County.
The indictment alleges that Taylor and his co-defendants formed, joined and participated in a street gang known as the Black P-Stones; that male gang members were “beaten-in” to the gang and female members were “sexed-in” to the gang. The indictment further alleges that Taylor and his co-conspirators obtained heroin in New York and distributed the heroin in Stroudsburg and locations in the state of Maine. According to the indictment, couriers were used to transport heroin from New York to Maine.
The indictment alleges that females were “sexed-in” to the gang by being forced to engage in sex with male gang members; recruited and coerced to engage in prostitution; advertised as adult escorts on a website; provided with heroin and other drugs; and placed in various area hotels/motels to work as prostitutes. It is alleged that the sex trafficking defendants used threats, force, and intimidation to coerce females to engage in prostitution.
In today’s proceeding, Taylor pleaded guilty to conspiracy to distribute in excess of one kilogram of heroin, and conspiracy to commit sex trafficking by force or coercion. He faces a mandatory minimum 10-year prison sentence for the drug conspiracy charge, and a mandatory minimum 15-year prison sentence for the sex trafficking charge. He faces a potential maximum sentence of life in prison for each charge.
Others charged in the indictment are:
Jose Velazquez, age 25, of Tobyhanna: conspiracy to distribute more than one kilogram of heroin and conspiracy to commit sex trafficking by force and coercion;
Selena Bayer-Davis, age 21, of St. Matthews, South Carolina: conspiracy to commit sex trafficking by force and coercion;
Ricquell Lindo, age 21, of Augusta, Maine: conspiracy to distribute more than one kilogram of heroin;
Stephon Davis, age 19, of Augusta, Maine: conspiracy to distribute more than one kilogram of heroin;
Sean Griffin, age 21, of East Stroudsburg: conspiracy to distribute more than one kilogram of heroin;
Brianni Gomez, age 19, of Paterson, NJ: conspiracy to distribute more than one kilogram of heroin.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Assistant U.S. Attorney Francis P. Sempa is prosecuting the case.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court. A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law is life imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Monitor Finds Seattle Police Department’s Force Review Board in Initial Compliance with Consent Decree RequirementsRead the Press Release
SEATTLE – The formal assessment of Seattle Police Department’s (SPD) Force Review Board (FRB), the high-level internal accountability body established during the reform process to review and analyze significant uses of force, has found SPD to be in initial compliance with specific provisions of the court-ordered agreement with the Department of Justice. Federal Monitor Merrick Bobb filed the fifth of 15 systemic assessments with the U.S. District Court today and concluded that the FRB is “functioning well and, in a great majority of instances, as the Department’s hub of internal accountability, analysis, and continual improvement with respect to force.”
“Critical to lasting reform is having internal systems and structures in place that provide consistent oversight and accountability, and real-time feedback to help a police department continually improve. That is what SPD now has with the Force Review Board,” said Annette L. Hayes, U.S. Attorney for the Western District of Washington. “This assessment shows SPD has made commendable progress in critically analyzing the most significant uses of force and providing ongoing supervision. This is a major step forward.”
As part of the court-ordered reform process, SPD established a tiered force reporting system that requires increased supervision and review of more significant uses of force, including for intermediate (Type II) and the most serious (Type III) uses of force. FRB has two distinct roles in SPD’s enhanced internal accountability and supervisory structure.
The first is to review the investigation of significant force events to determine whether the force used was contrary to SPD policy, such that an internal, administrative investigation by the civilian-led Office of Professional Accountability (OPA) should be initiated. Its secondary role is to review the force incident as a whole for “best practices” to further systemic learning, including analyzing tactics, training, policies, and procedures, to improve officers’ performance in future encounters. Some of the leading police departments in the nation successfully have used this type of accountability system for many years.
The Monitor concluded that FRB serves as the “key forum for ‘internal innovation and critical analysis’ of force.” Specifically, the assessment found that of cases reviewed by FRB between June 2 and August 25, 2015:
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Eighty-five percent of the cases were handled by the FRB in a manner that was consistent with, or above the expectations, of the consent decree.
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In nearly every instance (96 percent of cases), the FRB appropriately evaluated the legal basis for the searches, detentions, and arrests involved in or implicated by the force incident.
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In 87 percent of FRB deliberations, the group’s discussion was based solely on facts in evidence, without speculation.
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In 93 percent of cases, the FRB sufficiently evaluated the objective reasonableness of the force used, the proportionality of force used, and the necessity of force used.
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In instances where equipment issues were implicated, FRB’s discussion adequately addressed those issues in nearly 91 percent of cases.
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Where there were issues involving the adequacy of SPD’s training, policy, or adherence to best practices, the FRB adequately discussed them in 92 percent of cases.
The assessment also found that, in nearly 13 percent of cases, FRB determined that an officer may have violated SPD’s use of force policy and referred the matter to OPA. This is noteworthy given that, between 2009 and 2011, only 0.04 percent of cases received any significant chain of command scrutiny whatsoever. The Department of Justice’s investigation of SPD in 2011 found that during the multi-year time period that the DOJ reviewed, only 5 of 1,230 use of force files reviewed “were referred at any level for further review” up the chain of command. DOJ concluded that the “chain of command does not properly investigate, analyze, or demand accountability from its subordinate officers for their uses of force.” Specifically, SPD’s “secondary review process” for force was “little more than a formality that provides no substantive oversight or accountability”—typically serving as nothing more than “a rubber stamp of the first-line supervisor’s conclusion” that officer force was consistent with policy.
The consent decree requires that the FRB conduct timely, comprehensive, and reliable reviews of Type II and Type III force incidents. It specifies that the Board consist of an Assistant Chief or designee to chair the Board; representatives of the Training Section; a representative of each involved precinct, selected by a precinct captain; and a representative from the Department’s Professional Standards Section that is responsible for drafting SPD policy. A representative of the civilian-led OPA attends each FRB meeting and is permitted to “self-refer” matters he deems concerning.
Board members receive a minimum of eight hours of training on an annual basis on force review. Its mission is to review each use of force packet to determine whether the findings from the chain of command and FIT regarding whether the force used is consistent with law and policy, whether the investigation is thorough and complete, and whether there are tactical, equipment, or policy considerations that need to be addressed.
In September, the Monitor filed the first four assessments relating to the reporting and review of force up to, but not including, the FRB. Those assessments concluded that SPD was in initial compliance in three of the first four areas, including Type I force reporting, Type II and III force reporting and Force Investigation Team investigations for Type III uses of force. Chain of command investigations of Type II uses of force were not found to be in initial compliance. Information about the first round of assessments can be found here: http://www.justice.gov/usao-wdwa/pr/monitor-finds-seattle-police-initial-compliance-requirements-relating-reporting.
Additional assessments, including the quality of Office of Professional Accountability investigations, SPD supervision, stops and detentions, crisis intervention and officer use of force generally will be filed over the next four months. Collectively, these assessments cover every area of the consent decree and will evaluate “whether [SPD] has the systems, policies, structures and culture in place” that the consent decree requires.
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Mitchell Lee Chambers Sentenced to Serve 87 Months in Prison for Conspiracy to Distribute Synthetic DrugsRead the Press Release
GREENEVILLE, Tenn. – Mitchell Lee Chambers, 36, of Magnolia, Tex., formerly of Clearwater, Fla., was sentenced on Nov. 23, 2015, by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve 87 months in federal prison. He was also ordered to forfeit approximately $500,000 in assets and serve three years of supervised release following his term in prison.
Chambers pleaded guilty in August 2015 to charges in a December 2014 indictment including conspiracy to distribute controlled substance analogues intended for human consumption and conspiracy to commit money laundering. He, along with Clearwater area residents Michael Sheaffer and Matthew Sheaffer, and their wives Gretchen Sheaffer and Niki Maxwell, conspired to distribute controlled substance analogues intended for human consumption as well as conduct financial transactions in the proceeds of the drug trafficking to promote the distribution of the synthetic drugs.
Chambers became involved in the sale of smokable synthetic cannabinoid products while residing in Atlanta in 2010. He formed a business called “Satchel Services” to market “incense” and “fake weed” products. The products consisted of a smokable plant material, often the plant damiana, on which synthetic cannabinoids had been sprayed. Chambers sold the products to the Sheaffers, who in turn re-sold the products to retail distributors in upper east Tennessee and elsewhere. The products contained cannabimimetic agents commonly referred to as bath salts. These chemicals were classified as Schedule I controlled substances in March 2011. Chambers ordered the raw chemicals in bulk from sources in China, Europe, and elsewhere.
In approximately August 2011, Chambers moved from Atlanta to the Clearwater area to join the Sheaffers in their activities. Michael Sheaffer, Matthew Sheaffer and Chambers agreed to form a business called “Zombie International.” Zombie International continued to use the Internet, phone calls and text messages to receive orders for controlled substance analogues intended for human consumption. In addition to products which were labeled “Zombie” and “Zombie Killa,” Zombie International also sold a product in early 2012 labeled “Zombie Dust” which contained the controlled substance analogue ά-PVP (also known as “gravel” or “flakka”). Chambers and the Sheaffers agreed to use funds obtained from the sale of controlled substance analogues intended for human consumption to purchase additional analogues from sources in China and Europe.
While many believed that synthetic marijuana products were less harmful than other drugs, such products have been shown to result in extreme paranoia and psychoses; agitated and violent behavior; and elevated heart rates, blood pressure, and body temperatures. Other adverse effects include excited delirium, acute kidney injury, seizures, psychosis, hallucinations, cardiotoxic effects, coma, and death. Medical treatment for the users of such drugs is complicated because there are no available antidotes, such as for opioid overdoses, and physicians often do not know what substance is involved. Synthetic marijuana products are often targeted at teenagers and young adults with colorful packaging with cartoon characters. A study by the Center for Substance Abuse Research identified synthetic marijuana as the third most reported substance used by U.S. high school students after alcohol and marijuana.
Agencies involved in this investigation included the Drug Enforcement Administration, Internal Revenue Service-Criminal Investigation, Sullivan County Sheriff’s Office, Bristol Tennessee and Virginia Police Departments, Kingsport Police Department, Washington County Sheriff’s Office, Johnson City Police Department, the First and Second Judicial District Drug Task Forces, and the Clearwater, Florida Police Department. Assistant U.S. Attorney Neil Smith represented the United States.
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Miami-Dade County Resident Sentenced in Connection with Aircraft Parts Ponzi SchemeRead the Press Release
A Miami-Dade County resident was sentenced by United States District Judge Marcia G. Cooke in Miami to 38 months imprisonment, to be followed by 3 years of supervised release, for organizing and engaging in a fraudulent investment scheme in South Florida.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Robert C. Hutchinson, Acting Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), and J.D. Patterson, Director, Miami-Dade Police Department (MDPD), made the announcement.
On August 7, 2015, Anthony Lazaro Saumell, 45, of Doral, was convicted by a jury of seven counts of wire fraud.
According to documents and statements made in court, Saumell organized and engaged in a complex fraudulent investment scheme to defraud investors in South Florida. Saumell deceived victims into investing approximately $3.9 million dollars into his company, Gear Management Corporation. Victims were told their investment would be used to purchase aircraft parts which would then be sold for a profit. Saumell guaranteed victims a ten percent profit within thirty days but subsequently used the incoming investments to pay other investors or on his personal expenses, such as jewelry, dining, alimony, private school and art galleries. By October 2013, Saumell had spent all of the investors' funds and Gear Management Corporation became insolvent. Investors suffered approximately $1 million dollars in losses.
Mr. Ferrer commended the investigative efforts of ICE-HSI and MDPD. The case was prosecuted by Assistant U.S. Attorneys Gera Peoples and AUSA Daya Nathan.
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.
Mesquite Woman Sentenced to 132 Months in Federal Prison and Ordered to Pay $2,294,442 in Restitution in Stolen-Identity Tax Refund CaseRead the Press Release
DALLAS — Yolanda Lavell Kaiser was sentenced today by U.S. District Judge Barbara M. G. Lynn to 132 months in federal prison and ordered to pay $2,294,442 in restitution to the Internal Revenue Service (IRS) following her guilty plea in April 2015 to one count of wire fraud stemming from a stolen-identity tax refund scheme she ran. At sentencing today, Judge Lynn noted Kaiser’s lengthy criminal history as one of the reasons for the sentencing, pointing specifically to Kaiser’s 2004 federal conviction in the Northern District of Texas for aiding or assisting in the preparation of false tax returns. Judge Lynn also found Kaiser’s offense caused substantial financial hardship to many of the more than 1,300 identity-theft victims in the case. U.S. Attorney John Parker of the Northern District of Texas made the announcement today.
According to factual resume filed in the case, from approximately September 2013 through August 2014, Kaiser prepared and electronically filed, over interstate wires, fraudulent tax returns using the name, Social Security Number, and other means of identification of actual persons, without lawful authority, to fraudulently obtain U.S. federal tax refunds. She prepared and filed tax returns through a tax preparation business known as Right 1 Tax Services, which was located on North Galloway in Mesquite and later on Estate Lane in Dallas.
Kaiser obtained and possessed, according to the factual resume, means of identification of other individuals, without their knowledge or consent, and obtained prepaid debit cards issued in the names of those other individuals. Using others’ identification, she filed and caused to be filed false federal income tax returns to requesting tax refund and directing those refunds be deposited on prepaid debit cards associated with unique account numbers. Kaiser made cash withdrawals of refunds deposited into accounts, including making withdrawals with prepaid debit cards.
As an example, in February 2014, Kaiser electronically filed a false federal tax return in the name of W.F. and obtained a $5,098 refund, according to the factual resume. The return was false and fraudulent because Kaiser did not have authorization to file a return on behalf of W.F. and because the information contained on the return was materially false, including false information about W.F.’s W-2 wages. Because of the fraudulent return, the IRS deposited a $5,098 refund onto an Advent Financial Instant Issue Debit Card that Kaiser then used to make cash withdrawals from ATMs.
IRS Criminal Investigation, with assistance from the Mesquite Police Department and the Dallas County District Attorney’s Office, investigated. Assistant U.S. Attorney J. Nicholas Bunch prosecuted.
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Massachusetts Man Convicted of Heroin and Crack Cocaine TraffickingRead the Press Release
Contact: David B. Joyce
Assistant United States Attorney
Tel: (207) 780-3257Portland, Maine: United States Attorney Thomas E. Delahanty II announced that Jean Valbrun, 27, of Mattapan, Massachusetts, was found guilty by a jury today in U.S. District Court of possession with intent to distribute heroin and cocaine base, commonly known as, crack cocaine.
According to court records, on March 16, 2014, law enforcement officers seized 225 grams of heroin and 106 grams of crack cocaine from a vehicle driven by Valbrun. The seizure occurred at a gas station in Auburn, Maine.
Valbrun faces up to 20 years in prison and a $1,000,000 fine. He will be sentenced after the preparation of a presentence investigation report by the U.S. Probation Office.
This case was investigated by the U.S. Drug Enforcement Administration and the Auburn and Lewiston Police Departments. This investigation is part of the ongoing effort of the Organized Crime Drug Enforcement Task Forces (OCDETF), a partnership between federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
Mass. Resident Detained in R.I. on Stolen Firearms, Bank Fraud ChargesRead the Press Release
PROVIDENCE, R.I. – Edwin William Rosa, 45, of Peabody, Mass., was ordered detained in federal custody today by U.S. District Court Magistrate Judge Lincoln D. Almond following an initial appearance in federal court in Providence on charges that he allegedly purchased eight guns from firearms dealers in Massachusetts using bogus bank checks, and that he allegedly sold the stolen guns to firearms dealers in Rhode Island.
Rosa is charged by way of a federal criminal complaint with possession of stolen firearms and bank fraud. The charges are announced by United States Attorney Peter F. Neronha and Daniel J. Kumor, Special Agent in Charge of the Boston Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
It is alleged in court documents that between September 8 and September 30, 2015, Rosa used personal checks from closed bank accounts to purchase eight firearms from registered firearms dealers in Massachusetts, and that he then sold the firearms to registered firearms dealers in Rhode Island for immediate payment in cash or by check.
According to an affidavit in support of an arrest warrant and criminal complaint in this matter, Rosa’s alleged possession of stolen firearms arises from his theft of the firearms as well as his possession of those stolen firearms up to the point of sale to other firearms dealers. Rosa’s alleged bank fraud arises from his alleged scheme to defraud banks through the issuance of “bad” checks designed to draw funds from financial institutions.
A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S. Attorney Milind M. Shah.
The matter was investigated by ATF, with the assistance of the Smithfield, R.I., and Seekonk, Fall River and Somerset, Mass., Police Departments.
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Contact:
Jim Martin (401) 709-5357
email: [email protected]
on Twitter @USAO_RI
Maryland Owner of Loan Brokerage Firms Sentenced to Four Years in Prison for Fraud and Obstruction of JusticeRead the Press Release
Baltimore, Maryland – U.S. District Judge William D. Quarles, Jr. sentenced Jeong Joon Moon, a/k/a Patrick Moon, age 47, of Germantown, Maryland, today to four years in prison followed by five years of supervised release for conspiring to commit bank fraud, bank fraud and destroying records in a federal investigation, arising from a scheme to defraud financial institutions who loaned money to small businesses. Judge Quarles also entered an order that Moon forfeit $2,270,590.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; U.S. Small Business Administration (SBA) Inspector General Peggy E. Gustafson; Postal Inspector in Charge David G. Bowers of the U.S. Postal Inspection Service - Washington Division; Assistant Director in Charge Paul M. Abbate of the Federal Bureau of Investigation - Washington Field Office; and Matthew Alessandrino, Assistant Inspector General for Investigations, Federal Deposit Insurance Corporation.
Moon owned and operated JM Capital Solutions, Inc. and RNB Consulting, Inc., which were loan brokerage firms with offices located in Annandale and Springfield, Virginia. These firms specialized in securing loans for individuals to purchase or refinance small businesses in Maryland, Virginia, the District of Columbia and elsewhere.
Moon encouraged prospective borrowers to apply for business loans through the SBA’s Section 7(a) program, which authorizes SBA to help small businesses obtain financing by guaranteeing 75 to 90 percent of qualified loans made by commercial lenders. Small business owners are required to invest a certain amount of their own money into the business before they can qualify for the loan. Moon compiled and submitted to lenders the documentation necessary to substantiate the borrowers’ equity injection and ability to repay loans guaranteed by SBA, as well as documentation needed for other commercial loans.
From 2006 to April 2014, Moon and others defrauded financial institutions by submitting false copies of the borrowers’ monthly bank statements to reflect more money than was actually in the borrowers’ bank accounts. Moon and others also prepared and submitted false tax returns for the borrowers which inflated the borrowers’ income. The financial institutions relied on the false information to lend funds to the borrowers, which resulted in loan broker commissions being paid to JM Capital and RNB Consulting.
On July 12 and 15, 2013, Moon altered, destroyed or concealed documents relating to six loans guaranteed by SBA for six small businesses, intending to impede the federal investigation of such loans.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
United States Attorney Rod J. Rosenstein praised the SBA - OIG, U.S. Postal Inspection Service, FBI and FDIC - OIG for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Leo J. Wise and Marty Clarke, who prosecuted the case.
Manhattan U.S. Attorney Announces Agreement with Westchester County Jail to Establish Corrective Measures and Appoint an Independent MonitorRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced an agreement with Westchester County that resolves the United States’ long-running investigation into Westchester County Jail (the “Jail”) under the Civil Rights of Institutionalized Persons Act (“CRIPA”). This agreement, approved today by the Westchester County Board of Acquisition and Contract, implements a resolution of the Government’s findings regarding the Jail’s use of force against inmates, its use of isolation as a method of discipline for minors incarcerated at the jail, and its provision of inadequate medical and mental health care to inmates. The agreement requires the appointment of an independent monitor to ensure that the Jail complies with the agreement. The agreement will last for three years, or until the time that the Jail has achieved substantial compliance with its terms.
The Jail, located in Valhalla, New York, houses pretrial detainees and sentenced inmates. The Jail also houses minors awaiting transfer to a juvenile detention facility and minors adjudicated as adults.
Manhattan U.S. Attorney Preet Bharara said: “As I have emphasized many times before, within the walls of a correctional facility does not mean outside the protection of the Constitution. Jails have a constitutional obligation to take reasonable steps to protect the safety of inmates and to provide humane conditions of confinement. This agreement, and the commitment on the part of the County to comply with its terms, are important steps toward ensuring that inmates at Westchester County Jail are treated in a manner consistent with the Constitution.”
The agreement between the United States and the Jail resolves a long-running investigation into the Jail. In 2009, the United States issued a letter setting forth the Government’s findings regarding constitutional violations at the Jail. Key findings included that the Jail had failed to adequately protect inmates from physical harm caused by inappropriate and excessive force used by staff and failed to provide adequate medical and mental health care, particularly with respect to minors housed in isolation in the punitive segregation unit of the Jail, all resulting in unconstitutional living conditions.
Since the Government issued its findings letter and during the ongoing investigation, the Jail has made progress in addressing various problematic conditions and has now agreed to implement all the corrective measures set forth in the parties’ agreement to ensure the Jail’s compliance with constitutional requirements.
With respect to minors, the agreement requires that the Jail cease its practice of placing minors under 18 years old in isolation or punitive segregation, and that it develop systems to address disciplinary issues in a manner that is consistent with minors’ needs and that does not deprive them of access to certain programs and services. The agreement also requires the development and implementation of alternative approaches to discipline for 18-year-old inmates. The Jail has agreed to measures designed to ensure that its use of force is not excessive and is consistent with the law, and has agreed to implement appropriate policies and practices concerning review of all uses of force, training of staff, and supervision of inmates. The agreement also puts in place requirements concerning the provision of medical and mental health care for both minors and adults.
Finally, the agreement mandates the appointment of an independent monitor to assist the County in achieving compliance with the provisions of the agreement, to make reports concerning the status and progress of compliance, and to provide the County with technical assistance to comply with the provisions of the agreement. The United States and the monitor will have full access to the Jail and its records, staff, and inmates for the life of the agreement. The agreement will terminate in three years if the United States agrees that the County is in substantial compliance with all provisions and has maintained substantial compliance with all provisions for 24 months.
The case is being handled by the Office’s Civil Rights Unit. Assistant U.S. Attorneys Rebecca C. Martin and Tara M. La Morte are in charge of the case.
Man from Alexandria sentenced to 54 months in prison for selling methamphetamineRead the Press Release
ALEXANDRIA, La. – United States Attorney Stephanie A. Finley announced that an Alexandria man was sentenced Monday to 54 months in prison for selling methamphetamine.
Franklin Drake Smith, 25, of Alexandria, La., was sentenced by U.S. District Judge Dee D. Drell on one count of distribution of methamphetamine. He was also sentenced to three years of supervised release. According to the August 19, 2015 guilty plea, agents conducted controlled buys of methamphetamine from Smith on February 2, 2015 and February 11, 2015 at different locations in Alexandria. The total weight of the methamphetamine sold exceeded 50 grams. Smith was held accountable for the distribution of approximately 680 grams of methamphetamine based on further investigation.
The FBI Central Louisiana Safe Streets Task Force with assistance from the Louisiana State Police conducted the investigation. Assistant U.S. Attorney Allison D. Bushnell prosecuted the case.
Man Sentenced to 84 Months in Prison for Carjacking at St. Croix Educational ComplexRead the Press Release
St. Croix, USVI –District Court Chief Judge Wilma A. Lewis today sentenced James Cruz, 20, to 84 months in prison for using a firearm during a crime of violence, United States Attorney Ronald W. Sharpe announced. Cruz also was ordered to serve three years of supervised release and pay a $500 fine.
On July 28, 2015, Cruz pleaded guilty to using a firearm during a crime of violence. As part of his plea, Cruz admitted that on February 21, 2015 at St. Croix Educational Complex, he and an accomplice ordered two people to the ground at gun point and then drove off with their pick-up truck. According to court records, Virgin Islands Police Department (VIPD) officers located and pursued the accomplices, who abandoned the truck and fled on foot in the Longpoint area. VIPD officers were able to capture the accomplices.
The accomplice is a juvenile, and his case has been adjudicated through the Office of the Attorney General of the Virgin Islands.
This case was investigated by the VIPD and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney Christian H. Stringer.
Man Sentenced for Fraudulent Employment Visa SchemeRead the Press Release
CONCORD, N.H. – Jae Won Lee, 38, of Rockville, Maryland, was sentenced to three years’ probation for a visa fraud scheme in which he caused others to make false statements on visa applications filed with the National Visa Center in Portsmouth, New Hampshire, reports Acting United States Attorney Donald Feith.
Under the employment-based visa program, U.S. employers who cannot fill jobs with U.S. based workers are able to fill those positions with qualified immigrants. The U.S. employers who sponsor immigrants seeking employment-based visas must have jobs available when the immigrants arrive in the United States.
Lee worked with an emigration company in Seoul, South Korea, that charged South Koreans as much as $35,000 to obtain employment-based visas to immigrate to the United States. From in and around March 2008, through in and around December 2014, Lee recruited various U.S. employers, including Wallace Enterprises, Inc. d/b/a The Cleaning Authority, a company in Falls Church, Virginia, to file various documents falsely representing to the United States government that they would hire certain visa applicants if the applicants received employment-based visas, when, in actuality, no positions were available for the applicants. Lee told some employers they were not required to hire the applicants and he paid or offered to pay some employers for filing false documents.
Lee also falsely informed visa applicants that Wallace or other employers would hire them if they were granted visas. That caused the applicants to unwittingly file Applications for Immigrant Visa and Alien Registration with the National Visa Center that contained materially false information identifying Wallace and other companies as the U.S. employers who would hire them if they were issued visas. Lee’s actions resulted in applicants receiving employment-based visas when there was no job waiting for them in the United States.
U.S. Department of State, Assistant Inspector General for Investigations, Geoffrey Cherrington, said, “When an immigrant is issued a fraudulent employment-based visa and does not work for the employer who submits the petition, it deprives another immigrant of the ability to legitimately immigrate, deprives other U.S. employers of opportunities to fill vacant positions, and takes away employment opportunities that could have been afforded to U.S. citizens.”
“Jae Won Lee’s criminal actions deprived law abiding immigrants and U.S. citizens from filling positions available within the United States,” stated Special Agent in Charge Steven D. Anderson, of the Washington Regional Office, U.S. Department of Labor - Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.
The United States Attorney’s Office sought a sentence of 15 months incarceration in the case.
This case was the result of an investigation conducted by the U.S. Department of State, Office of Inspector General; the U.S. Department of Labor, Office of Inspector General; and the U.S. Department of Homeland Security, Homeland Security Investigations, in coordination with the United States Citizenship and Immigration Services. It was prosecuted by Assistant United States Attorney Mark S. Zuckerman.
Lockport Man Arrested on 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 Joseph Thompson, 58, of Lockport, NY, was arrested and charged by criminal complaint with possession with intent to distribute heroin, crack cocaine and fentanyl. The charge carries a maximum penalty of 20 years in prison and a $1,000,000 fine.Assistant U.S. Attorney Meghan A. Tokash, who is handling the case, stated that according to the complaint, the defendant is accused of selling heroin and fentanyl at his residence on Elmwood Avenue in Lockport. A search warrant executed at the residence recovered two digital scales, cash, baggies, as well as heroin, crack cocaine and fentanyl.
The defendant was ordered detained following a detention hearing today before U.S. Magistrate Judge Leslie G. Foschio.
The complaint is the result of an investigation by the Drug Enforcement Administration, under the direction of Special Agent in Charge James J. Hunt, New York Field Division, the Lockport Police Department, under the direction of Chief Lawrence Eggert and the Niagara County Drug Task Force, under the direction of Sheriff James Voutour.
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.
Las Cruces Man Sentenced to Twenty Years in Prison for Conviction on Federal Conspiracy and Firearms ChargesRead the Press Release
ALBUQUERQUE – Conrad Vasquez Salazar 43, of Las Cruces, N.M., was sentenced today in federal court to 20 years in prison followed by three years of supervised release for his conviction on conspiracy and firearms charges. Salazar also was ordered to pay $111,018.05 in restitution to the victim of his criminal conduct.
Salazar’s sentence was announced by U.S. Attorney Damon P. Martinez, Special Agent in Charge Carol K.O. Lee of the Albuquerque Division of the FBI, and Las Cruces Police Chief Jaime Montoya.
Conrad Vazquez Salazar (Salazar) and co-defendants Clifford Raymond Salas, 38, and Andres Linares-Baca, 32, both of Las Cruces, and Thomas Vazquez Salazar (Vazquez Salazar), 39, of Odessa, Tex., were charged in a series of complaints and indictments, the first of which was filed in Sept. 2012, with violating the federal conspiracy, explosives and narcotics laws. Salas, Salazar and Vazquez Salazar were charged with conspiracy and explosives charges that arose out of the firebombing of a tattoo parlor in Las Cruces on Aug. 31, 2012.
On Aug. 17, 2015, Salazar pled guilty to conspiracy and being a felon in possession of a firearm and ammunition. In entering the guilty plea, Salazar admitted that on Aug. 31, 2012, he conspired with other individuals to firebomb a tattoo parlor in Las Cruces. Salazar also admitted producing two Molotov cocktails at his residence and instructing two co-conspirators on how to use them to set fire to the tattoo parlor. Salazar also admitted that on Sept. 22, 2012, he possessed a handgun and ammunition even though he previously had been convicted of residential burglary, conspiracy to commit first degree murder and aggravated battery on a peace officer and was thus prohibited from possessing firearms or ammunition.
In Sept. 2013, Linares-Baca pled guilty to conspiracy to distribute heroin and a heroin distribution charge and was sentenced on Jan. 22, 2014, to 15 months in federal prison followed by three years of supervised release. Although Vazquez Salazar entered a guilty plea to the conspiracy and an explosives charge in Sept. 2013, further proceedings against him were delayed by competency proceedings. In Oct. 2014, the court found Vazquez Salazar to be incompetent to stand trial and committed him to hospitalization to determine whether he can be restored to competency.
On March 9, 2015, Salas proceeded to trial on a superseding indictment charging him with participating in a conspiracy between July 15, 2012 and Aug. 31, 2012, to commit arson by maliciously damaging and destroying a tattoo parlor located at 2245 South Main Street in Las Cruces. The indictment also charged Salas with maliciously damaging and destroying the tattoo parlor on Aug. 31, 2012, by throwing at least one Molotov cocktail into the building, using a destructive device in furtherance of an act of violence; and being a felon in possession of an explosive. Trial against Salas concluded on March 11, 2015, when the jury returned a verdict of guilty on all four counts of the superseding indictment. He remains in custody pending a sentencing hearing which has yet to be scheduled.
This case was investigated by the Las Cruces office of the FBI and the Las Cruces Police Department. Assistant U.S. Attorneys Aaron O. Jordan and Marisa A. Lizarraga of the U.S. Attorney’s Las Cruces Branch Office are prosecuting the case.
L.A. Man Pleads Guilty in $2.6 Million Federal Tax Refund SchemeRead the Press Release
LOS ANGELES – A Los Angeles man pleaded guilty late yesterday afternoon to conspiring to use stolen identities to file fraudulent tax returns with the Internal Revenue Service that sought more than $2.6 million in false tax refunds.
Heber Cotton, 39, of Los Angeles, pleaded guilty to one count of conspiracy to defraud the United States by obtaining the payment of false claims, namely tax refunds.
According to a plea agreement filed in the case, beginning in December 2008 and continuing through March 2010, Heber Cotton and his co-defendant caused at least 275 fraudulent income tax returns to be filed with the IRS, which sought income tax refunds of over $2.6 million.
The co-defendant – Adel Cotton, 63, a Hacienda Heights resident who is currently in federal prison after pleading guilty in another case involving fraudulent tax refunds – is pending trial.
In relation to the tax fraud scheme, the indictment in the case alleges that Adel Cotton obtained the names and Social Security numbers of individuals without their knowledge and consent. Adel Cotton and others not named in the indictment allegedly prepared false Forms W-2 (IRS Wage and Tax Statements) in the names of the identity theft victims that reported false employment and income information, as well as false tax withholding amounts. Using the falsified information reported on the Forms W-2, Adel Cotton and others allegedly prepared fraudulent individual income tax returns claiming false tax refunds that were filed without the knowledge or consent of the identity theft victims.
In his plea agreement, Heber Cotton admitted that he and Adel Cotton directed the Internal Revenue Service to mail the fraudulent refunds to addresses that he and Adel Cotton controlled. Heber Cotton also admitted that he gave personal information associated with identity theft victims to a co-conspirator who managed a bank, which the co-conspirator used to open bank accounts and cash the fraudulent refunds. Heber Cotton further admitted that, toward the end of the conspiracy, he paid the co-conspirator bank manager approximately 20 percent of each tax refund check that he bank manager cashed.
Heber Cotton pleaded guilty before United States District Court Judge Michael W. Fitzgerald, who is scheduled to sentence the defendant on March 7, 2016. At that time, Heber Cotton will face a statutory maximum sentence of 10 years in federal prison and a fine of $250,000.
Adel Cotton was indicted along with Heber Cotton in September 2015 and is charged with one count of conspiracy to defraud the United States with respect to claims. Adel Cotton is scheduled to go on trial before Judge Fitzgerald on March 8, 2016.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The investigation into Heber Cotton and Adel Cotton was conducted by IRS Criminal Investigation and the Federal Bureau of Investigation.
KC Woman Pleads Guilty to Tax Fraud SchemeRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., woman pleaded guilty in federal court today to her role in a fraudulent tax return scheme that claimed $433,365 in fraudulent income tax refunds.
Marquita R. Murray, 37, of Kansas City, pleaded guilty before U.S. District Judge Beth Phillips to her role in a conspiracy to defraud the government and to making false claims.
By pleading guilty today, Murray admitted that she participated in a conspiracy to defraud the United States by submitting false claims for income tax refunds from January 2009 to February 2012. The tax refund scheme involved the creation of false and fraudulent W-2 forms that reported fictitious employer information, fictitious income, and fictitious income tax withholdings. Conspirators solicited friends and acquaintances to file their tax returns using false W-2 information. These “taxpayers” had little to no legitimate income and would not otherwise have to file tax returns.
The tax refund scheme involved claims against the United States in the approximate amount of $433,365, and resulted in an actual loss of at least $329,000.
Murray provided tax filers with the false W-2 forms, transported tax filers to legitimate tax preparers to electronically file the fraudulent tax returns and transported tax filers to banks and check cashing businesses to obtain cash from the tax returns. Murray also assisted co-conspirators in electronically filing others’ false returns from their home computers.
Murray is the fourth defendant to plead guilty to charges related to the fraud scheme. Demichael A. Johnson, 37, of Kansas City, Mo., was sentenced to two years in federal prison without parole, to be served consecutively to the seven-year sentence Johnson is currently serving in federal prison for drug trafficking. The court also ordered Johnson to pay $67,281 in restitution to the government. Mika Francis, 40, of Lee’s Summit, Mo., and Lashan Brown, 41, of Kansas City, Mo., have pleaded guilty and await sentencing.
Under federal statutes, Murray is subject to a sentence of up to 15 years in federal prison without parole, plus a fine up to $500,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Senior Litigation Counsel Gregg Coonrod. It was investigated by IRS-Criminal Investigation.
Justice Department Sues to Shut Down Abusive Tax Scheme Involving Improper Deductions for Donating TimesharesRead the Press Release
The United States filed a civil injunction suit seeking to bar James Tarpey, a Montana-based attorney, Project Philanthropy, Inc. (a District of Columbia corporation which does business as Donate for a Cause) and Timeshare Closings, Inc. (a Colorado corporation which does business as Resort Closings, Inc.) from promoting an allegedly abusive timeshare donation scheme, the Justice Department announced today. The United States also filed suit against three of Tarpey’s associates – Ron Broyles of California, Curt Thor of Washington and Suzanne Crowson of Montana – all of whom, according to the complaint, assisted Tarpey in facilitating the timeshare donation scheme.
According to the complaint, which was filed in the U.S. District Court for the District of Montana, the timeshare donation scheme encourages timeshare owners to donate their unwanted timeshares to Donate for a Cause, a tax-exempt entity organized and operated by Tarpey. The complaint states that customers are falsely promised “generous” tax savings and that the defendants purportedly determine the “fair market value” of the timeshare by selecting an independent, third-party appraiser. The United States further alleged that Tarpey’s customers (the timeshare owners) pay significant processing fees to Resort Closings, Inc. to transfer the timeshares to Donate for a Cause. According to the complaint, Tarpey, Broyles, Thor and Crowson appraise the customers’ timeshares in a manner which does not comply with the law and which significantly overvalues the timeshares. According to the complaint, the appraisals fail to comply with regulations governing appraisals submitted with federal tax returns, contain substantive errors and omissions, fail to comply with generally accepted appraisal standards and grossly overvalue the timeshares. In addition, Tarpey, Broyles, Thor and Crowson are legally prohibited from appraising the timeshares for which their customers claimed federal tax deductions because they are too closely affiliated with Donate for a Cause, the complaint alleges.
Finally, as stated in the complaint, Tarpey’s customers then claim improper and grossly inflated charitable contribution deductions on their tax returns for both the overvalued timeshares and the processing fees paid to Resort Closings, Inc. The complaint alleges that Donate for a Cause is simply used as a conduit to briefly hold title to timeshares before they are sold for a fraction of the appraised amount. For example, the complaint alleges that one customer transferred a timeshare to Donate for a Cause that had originally been purchased for $10,597.50. Donate for a Cause used eBay’s charity platform to sell that timeshare to a third party for only $81, yet Tarpey appraised that timeshare for $8,740, the complaint states.
According to the complaint, the timeshare donation scheme was aggressively marketed via the Internet and through national and local media outlets, including ABC 7 News in Los Angeles, California; Fox 10 News in Phoenix, Arizona; the TODAY Show and Fox 4 News in Kansas City, Missouri. Clips of these news-based promotions are posted on the front page of the Donate for a Cause website.
In the past decade, the Tax Division has obtained injunctions against hundreds of tax return preparer and tax fraud promoters. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Announces Privatbank IHAG Zürich AG Reaches Resolution Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Privatbank IHAG Zürich AG (IHAG) reached a resolution under the department’s Swiss Bank Program. IHAG will pay a penalty of more than $7 million.
“Through the information provided by IHAG and other Swiss banks in the Program, the department has unraveled the various schemes and identified the foreign jurisdictions used by U.S. taxpayers to conceal their foreign accounts,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “Foreign financial institutions and other entities that facilitated U.S. tax evasion should come forward and cooperate now, before time runs out.”
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;
- Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
- Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, IHAG agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.
IHAG, a private bank established in 1949 and based in Zurich, Switzerland, is part of a privately-owned and diversified group of companies of which the top holding company is IHAG Holding AG (IHAG Holding). IHAG formerly maintained a branch office in Lugano, Switzerland, which closed in 2009.
Despite understanding that U.S. taxpayers had a legal duty to report to the Internal Revenue Service (IRS) and pay taxes on the basis of all their income, including income earned in accounts maintained at IHAG, IHAG intentionally opened and maintained accounts that were undeclared with the knowledge that, by doing so, IHAG was helping these U.S. taxpayers violate their legal duties.
In a few instances, IHAG assisted certain recalcitrant U.S. persons in further concealing undisclosed accounts by moving the funds to another jurisdiction and returning the funds to IHAG in a different name in order to conceal the U.S. persons’ ownership of the assets and enable the recalcitrant accountholders to continue to maintain undeclared accounts at IHAG. For example, a family of U.S. persons held assets at IHAG in the name of a Liechtenstein foundation, and another unrelated U.S. person held funds in the name of a Panama foundation. These foundation structures were designed to conceal the true beneficial ownership of the assets. In the case of the Panama foundation, IHAG assisted the U.S. person in creating the foundation. The value of the assets in the two accounts together totaled approximately $63 million.
To assist these U.S. clients in further concealing their assets and evading U.S. taxes, in order to maintain these recalcitrant individuals as IHAG clients, IHAG personnel – with the assistance of an unaffiliated fiduciary services firm in Zurich and with the knowledge and approval of bank management – moved assets from the two foundation accounts to an unaffiliated bank in Hong Kong. The funds then returned to IHAG under the name of a Singapore entity wholly owned by IHAG’s parent company, IHAG Holding, so that the accounts would bear no trace of the U.S. persons’ beneficial interest in the assets held in the accounts. The multi-step scheme also involved an entity in Hong Kong in which IHAG Holding owned a minority interest.
This scheme enabled the assets to be stripped of any indicia of U.S. ownership. In effectuating this scheme, IHAG took advantage of Swiss law, which allowed IHAG in these circumstances to treat the accounts as if know-your-customer review of the accounts had occurred in Singapore. Accordingly, IHAG did not apply Swiss know-your-customer requirements when the accounts returned to IHAG under a different name. IHAG’s files for the accounts deliberately did not contain any documentation of the U.S. persons’ interest in the assets in the accounts. IHAG knowingly and willfully committed tax fraud with respect to those accounts.
In a few other instances, IHAG assisted clients in establishing foundations used to hold their assets at IHAG. The U.S. persons who were the beneficial owners of the foundation accounts were properly identified as beneficial owners of the foundations on certain forms pursuant to Swiss know-your-customer rules. However, the foundations were identified as the beneficial owner on IRS Forms W-8BEN, thereby masking the true beneficial ownership of the accounts by U.S. persons.
For example, in 2006, an account held in the name of a Panama company was opened. In connection with the opening of the account, bank documents identified a U.S. person as the beneficial owner of the assets. However, a Form W-8BEN signed by two Swiss citizens and a citizen of Liechtenstein falsely declared that the Panama company was the beneficial owner. The U.S. person instructed IHAG not to communicate with him by phone and insisted on using code names when communicating with IHAG.
IHAG also offered a variety of traditional Swiss banking services that it knew could assist, and that did assist, U.S. taxpayers in concealing assets and income from the IRS. These services included hold mail, as well as accounts opened in the name of pseudonyms.
Since Aug. 1, 2008, IHAG held a total of 182 U.S.-related accounts with a high value of approximately $791 million. IHAG will pay a penalty of $7.453 million.
In accordance with the terms of the Swiss Bank Program, IHAG 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 IHAG who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at IHAG must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
“The signing of these agreements is not only significant for the banks and for IRS-Criminal Investigation, but also for the thousands of accountholders who used these banks to hide their money offshore to criminally defraud the United States tax system,” said Chief Richard Weber of IRS-Criminal Investigation. “As we delve into the details provided by these agreements, we learn more about who they are and how they hid their money from the government. Those who circumvent offshore disclosure laws no longer have room to hide.”
Acting Assistant Attorney General Ciraolo 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 Kathleen E. Lyon, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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