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13 November 2015
San Diego Federal Court Enjoins Man Posing as Attorney and CPA from Promoting Bogus Tax Schemes, Preparing ReturnsRead the Press Release
A federal court in San Diego, California, has permanently barred Lawrence Preston Siegel from preparing federal tax returns for others, providing tax advice for compensation or any promise of compensation and working for any business that provides tax advice or prepares tax returns, the Justice Department announced. Siegel is also a fugitive from the State of California, wanted on a 20-count criminal complaint, filed in 2014, charging him with Medi-Cal fraud, grand theft, forgery, identity theft, financial dependent adult abuse and tax evasion.
Judge Gonzalo P. Curiel of the U.S. District Court for the Southern District of California entered the permanent injunction on Nov. 9, after Siegel failed to appear to defend the civil case.
The civil complaint alleges that Siegel impersonated licensed California attorneys and used multiple aliases, including Larry Lave and Yehuda Lave, to falsely represent that he is a licensed attorney and CPA in order to recruit customers and implement his tax fraud schemes. According to the complaint, Siegel resigned from the California bar in 1994 and lost his CPA license in 1997 after he was convicted of federal crimes, including tax evasion. Siegel allegedly never regained either accreditation.
The complaint alleges that among his tax fraud schemes, Siegel falsely advised his customers, typically high earners who own profitable businesses, that they can establish companies in another state, usually Nevada, then treat their California home as an out-of-state corporate office. Siegel claimed that doing so would transform a vast array of non-deductible personal expenses into tax deductible business expenses, according to the complaint. The complaint details how Siegel boasted about this tax fraud scheme in e-mails, including one where Siegel falsely claimed that his customers are entitled to free housing as tax-free compensation from their out-of-state companies and that “[t]he housing can [b]e luxurious and cost thousands a month” because “[t]here is an assumption that corporations don’t waste money.”
In conjunction with his tax fraud schemes, Siegel allegedly prepared customer tax returns. In some instances, Siegel filed tax returns without reviewing them with his customers or obtaining their permission to file them, according to the complaint. Siegel is alleged to have fraudulently claimed customers’ personal purchases as deductible business expenses on tax returns he prepared. For example, the complaint states that Siegel deducted on one couple’s tax returns purchases at Tiffany & Company, Royal Caribbean Cruise Lines, Louis Vuitton and Princess Cruise Lines. Siegel allegedly attempted to conceal these fraudulent deductions from the Internal Revenue Service (IRS) by lumping them together and reporting them as large expenses for “supplies” or “medical records and supplies.”
According to the complaint, Siegel also attempted to delay and obstruct IRS examinations of his customers who entered into Siegel’s tax fraud schemes. Siegel allegedly provided false corporate documents to the IRS in order to deceive auditors, produced bogus contracts to IRS auditors and lied to IRS officials during U.S. Tax Court litigation when asked to confirm information on behalf of his customers.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014. The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme 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.
Roswell Man Pleads Guilty to Federal Heroin Trafficking ChargeRead the Press Release
ALBUQUERQUE – Cecil Edward Sexton, 73, of Roswell, N.M., pleaded guilty today in federal court in Las Cruces, N.M., to a heroin trafficking charge under a plea agreement with the U.S. Attorney’s Office.
Sexton and his co-defendant Cheryl Ann Gruette, 51, also of Roswell, were arrested on June 16, 2015, on a criminal complaint charging them with conspiracy and possession of heroin with intent to distribute in Chaves County, N.M., on Jan. 2, 2015. According to the complaint, Chaves County Metro Narcotics Task Force Agents executed a state search warrant on Sexton’s vehicle and residence in Roswell where they seized a total of 273.6 grams of heroin, $1,352.00 in cash, pill bottles, prescription slips in Sexton’s name, drug paraphernalia, and two rifles.
Sexton and Gruette were subsequently indicted on Sept. 16, 2015, and charged with conspiracy to distribute heroin from Sept. 25, 2014 through Jan. 2, 2015, and possession of heroin with intent to distribute on Jan. 2, 2015. Both offenses alleged took place in Chaves County.
During today’s plea hearing, Sexton pled guilty to conspiracy to possess heroin with intent to distribute. Sexton admitted that on Jan. 2, 2015, he and Gruette traveled to Albuquerque, N.M., to obtain 179.3 grams of heroin from their source of supply and then returned to Roswell. In Roswell, law enforcement agents found the 179.3 grams of heroin while executing a state search warrant, they also found an additional 94.3 grams of heroin inside Sexton’s residence. Sexton admitted that he and Gruette intended to distribute the 273.6 grams of heroin to others.
At sentencing Sexton faces a maximum of 20 years in prison followed by not less than three years of supervised release. He remains in custody pending a sentencing hearing which has yet to be scheduled.
Gruette has entered a not guilty plea to the complaint and indictment. Charges in indictments and criminal complaints are only accusations. All criminal defendants are presumed innocent unless proven guilty beyond a reasonable doubt. Gruette is currently scheduled for trial on Dec. 14, 2015.
This case was investigated by the Las Cruces office of the DEA, the Chaves County Metro Narcotics Task Force and the Roswell Police Department. Assistant U.S. Attorney Anna R. Wright of the U.S. Attorney’s Las Cruces Branch Office is prosecuting the case.
The HIDTA Chaves County Metro Narcotics Task Force is comprised of investigators from the Roswell Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, the FBI and the Chaves County Sherriff’s Office. The High Intensity Drug Trafficking Areas (HIDTA) program was created by Congress with the Anti-Drug Abuse Act of 1988. HIDTA is a program of the White House Office of National Drug Control Policy (ONDCP) which provides assistance to federal, state, local and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States and seeks to reduce drug trafficking and production by facilitating coordinated law enforcement activities and information sharing.
This case is being prosecuted pursuant to the New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative. The HOPE Initiative is a collaborative effort between the U.S. Attorney’s Office and the University of New Mexico Health Sciences Center that is partnering with the Bernalillo County Opioid Accountability Initiative with the overriding goal of reducing the number of opioid-related deaths in the District of New Mexico. The HOPE Initiative comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. The law enforcement component of the HOPE Initiative is led by the Organized Crime Section of the U.S. Attorney’s Office and the DEA in conjunction with their federal, state, local and tribal law enforcement partners. Targeting members of major heroin and opioid trafficking organizations for investigation and prosecution is a priority of the HOPE Initiative.
Providence Felon Detained on Drug Trafficking, Firearms ChargesRead the Press Release
PROVIDENCE, R.I. - Thealeah Duopu, 39, of Providence, was ordered detained in federal custody today following an initial appearance in federal court in Providence on charges of trafficking crack cocaine, and for being a felon in possession of a firearm and for using the firearm in furtherance of his alleged drug trafficking activities.
United States Attorney Peter F. Neronha and Daniel J. Kumor, Special Agent in Charge of the Boston Field Division of ATF, announced the arrest and detention of Duopu, which comes following a nearly month-long investigation of Duopu’s alleged drug trafficking and gun crime related activities. The investigation allegedly included several purchases of crack cocaine by an undercover ATF agent from Duopu and a court authorized search of Duopu’s residence.
Duopu was ordered detained by U.S. District Court Magistrate Judge Patricia A. Sullivan following an initial appearance on a criminal complaint charging Duopu with possession of 28 grams or more of cocaine base with intent to distribute, distribution of 28 grams or more of cocaine base, distribution of cocaine base, possession of firearms in furtherance of a drug trafficking crime and being a felon in possession of firearms.
A 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.
According to court documents, beginning on October 19, 2015, and continuing until yesterday, an ATF undercover agent allegedly arranged on at least four occasions for the purchase of varying amounts of crack cocaine from Duopu. In each alleged instance, the amount of crack cocaine allegedly ordered from Duopu and delivered to the agent by Duopu increased substantially from the previous transaction. The alleged purchases and deliveries ranged from approximately 8 grams on October 20, 2015, to approximately 52 grams on November 3, 2015. Each alleged transaction occurred at an agreed upon location in a parking lot in Pawtucket.
According to court documents, on Tuesday of this week, an ATF undercover agent allegedly arranged with Duopu to again purchase crack cocaine. They allegedly agreed to meet in Pawtucket on Thursday to complete the transaction. On Thursday, as Duopu left his residence allegedly to meet with the agent, he was detained by members of the ATF Task Force. A court authorized search of Duopu’s alleged stash house and of his person resulted in the seizure of crack cocaine, a loaded firearm, cash, and items used in the packaging and distribution of crack cocaine.
As a result of the alleged undercover purchases of crack cocaine from Duopu, the court authorized search of his alleged stash house and of his person, law enforcement seized 233.3 grams of crack cocaine, a loaded semi-automatic handgun and $20,538 in cash.
According to court records, Duopu was previously convicted in Rhode Island state court on firearm and drug charges.
The case is being prosecuted by Assistant U.S. Attorneys Milind M. Shah and Paul F. Daly, Jr.
Pawtucket Police and the Providence Arson Squad assisted the ATF Task Force in the investigation of this matter. The ATF Task Force consists of agents and officers from ATF; Providence, Cranston and Central Falls Police Departments; and the Special Investigations Unit at the Rhode Island Department of Corrections.
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Contact:
Jim Martin (401) 709-5357
email: [email protected]
on Twitter @USAO_RI
Photographer Charged with Manufacturing Child PornographyRead the Press Release
PHILADELPHIA - Mark Wilkens, 57, of Philadelphia, PA, was charged by indictment, unsealed today, with manufacturing child pornography and possession of child pornography, United States Attorney Zane David Memeger. According to the indictment, Wilkens was working as a volunteer photographer for WXPN radio station when, on various dates from August 2010 through July 4th, he photographed prepubescent children at public events to capture and attempt to capture sexually explicit images. Wilkens was arrested this morning.
The indictment charges five counts of manufacturing and attempting to manufacture child pornography and one count of possession of child pornography which Wilkens allegedly downloaded from the Internet. If convicted of all charges, Wilkens faces a mandatory minimum sentence of 15 years with a possible advisory sentencing guideline range 210 to 262 months in prison.
This case was investigated by the Philadelphia Police Department and the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Michelle Rotella.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
An indictment is an accusation. A defendant is presumed innocent until proven guilty.
Owner of Wheaton Financial Firm Indicted on Federal Charges of Fraud and Misappropriation of FundsRead the Press Release
CHICAGO — The owner of a Wheaton financial firm misused more than $1.2 million in client money to fund his company’s payroll and business obligations, according to a ten-count indictment returned in federal court in Chicago.
ROBERT PEARSON, the owner and chief executive of Illinois Stock Transfer Co., took the money out of a client fund account the company maintained at BMO Harris Bank, the indictment alleges. Pearson allegedly used the money to meet his company’s payroll and tax commitments from February 2012 until approximately February 2014. He tried to conceal the scheme by fraudulently representing to customers, the U.S. Securities and Exchange Commission and an outside accountant that the funds were secure, the indictment states.
The indictment, which was returned Thursday, charges Pearson, 58, of Winfield, with ten counts of wire fraud. An arraignment hearing is set for Nov. 19, 2015, at 2:30 p.m. before U.S. District Judge Edmond E. Chang in Chicago.
Pearson’s Wheaton-based company, which did business under the name IST Shareholder Services, functioned as a transfer agent to repurchase shares of securities as a result of companies merging or being acquired. IST also reinvested dividends for shareholders of certain IST customers, recorded changes of ownership in securities, and maintained records of issuers.
According to the indictment, Pearson told his clients that IST complied with the rules and guidelines of the SEC, which mandated that transfer agents safeguard their customers’ funds. In reality, Pearson knew that his company did not comply with the SEC rules because he was misappropriating certain client funds, the indictment states. As a result of the scheme, Pearson misappropriated more than $1.2 million, according to the indictment.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; and Antonio Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The SEC assisted in the investigation.
Each count of wire fraud carries a maximum penalty of 20 years in prison and restitution to be determined by the Court, plus a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant United States Attorney Jacqueline Stern.
Indictment
Orlando Man Pleads Guilty to Passing Counterfeit Federal Reserve NotesRead the Press Release
Jacksonville, Florida – United States Attorney A. Lee Bentley, III announces that Leon White (30, Orlando) has pleaded guilty to passing counterfeit Federal Reserve notes. He faces a maximum penalty of 20 years in federal prison.White has also agreed to forfeit the monetary proceeds he obtained by passing the counterfeit notes, as well as the computer media he used to manufacture them. A sentencing date has not yet been set.
According to the plea agreement, in January 2015, White and his co-defendants, Marcos Rogelio Blake (24, New York) and Ralph Darel Lipsey (28, Miramar), passed or attempted to pass counterfeit bills at multiple businesses in Nassau County. Law enforcement officers subsequently issued an alert for the three individuals’ vehicle. On January 17, 2015, a deputy from the Nassau County Sheriff’s Office stopped the vehicle with the three men inside. Blake, who was driving the vehicle, was detained due to a suspended license. During a search, the deputy found genuine and counterfeit bills on Blake. An inventory search of the vehicle yielded additional counterfeit notes and a lock box containing computer equipment used to manufacture counterfeit bills. A follow-up investigation connected White and Lipsey to more than $1,600 in counterfeit Federal Reserve notes.
On September 30, 2015, Blake pleaded guilty to manufacturing and passing counterfeit Federal Reserve notes, and possessing counterfeit business checks. Lipsey pleaded guilty to manufacturing and passing counterfeit Federal Reserve notes on October 26, 2015.
This case was investigated by the Nassau County Sheriff’s Office and the United States Secret Service, Jacksonville Field Office. It is being prosecuted by Assistant United States Attorney Kevin C. Frein.
Oregon Man Sentenced for Traveling to Missouri to Engage in Illicit SexRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a LaGrande, Ore., man has been sentenced in federal court for traveling across states lines to Missouri to engage in illicit sexual activity with two minors, whom he believed were the daughters of an undercover law enforcement officer.
Abdul Lamont Gamble, 41, of LaGrande, Ore., was sentenced by U.S. Chief District Judge Greg Kays on Thursday, Nov. 12, 2015, to five years in prison without parole.
Gamble, who pleaded guilty on May 18, 2015, admitted that he traveled from Oregon to Missouri between March 25 and April 9, 2014, to engage in illicit sexual conduct with a minor.
Gamble contacted an undercover law enforcement officer through an online social media site in October 2013 and offered to have sex with her fictitious 12-year-old and 15-year-old daughters. Gamble engaged in numerous conversations with the undercover detective through late 2013 and early 2014 via this social media site, email and text messages. Gamble described the specific sexual acts he intended on performing with and on the two minor females, for which he agreed to pay $250.
Gamble traveled to Kansas City, Mo., on a Greyhound bus and arrived on April 9, 2014. The undercover officer met him at the bus station. Gamble reconfirmed the sexual acts he intended on performing on and with the two minor girls.
Gamble and the undercover officer stopped at a CVS on Independence Avenue. Police officers arrested Gamble when he exited the car and began to approach the CVS.
This case was prosecuted by Assistant U.S. Attorney Patrick D. Daly. It was investigated by the Kansas City, Mo., Police Department and the FBI.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Miami-Area Pharmacy Owner Sentenced to 42 Months in Prison for Role in $1.5 Million Medicare Part D Fraud SchemeRead the Press Release
A Miami-area pharmacy owner was sentenced today to 42 months in prison for her role in the submission of more than $1.5 million in fraudulent claims to Medicare Part D.
U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.
Tamara Esponda, 48, of Miami, pleaded guilty to one count of health care fraud on Aug. 7, 2015. In addition to imposing the prison sentence, U.S. District Judge James I. Cohn of the Southern District of Florida ordered Esponda to pay $1,583,976 in restitution.
Esponda owned Biomax Pharmacy Inc. According to admissions made in connection with Esponda’s guilty plea, between October 2012 and September 2013, Biomax Pharmacy submitted fraudulent claims to Medicare for prescription drugs that were not prescribed by physicians, not medically necessary and not provided to Medicare beneficiaries. Esponda further admitted that in perpetrating this fraud she and her accomplices used the beneficiaries’ and doctors’ Medicare identification numbers without their consent. During the course of the scheme, Biomax received more than $1.5 million in payments from Medicare Part D, the prescription drug benefit, based on those false claims.
The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida. The case was prosecuted by Trial Attorney Timothy P. Loper of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
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.
Miami-Area Pharmacy Owner Sentenced to 42 Months in Prison for Role in $1.5 Million Medicare Part D Fraud SchemeRead the Press Release
A Miami-area pharmacy owner was sentenced today to 42 months in prison for her role in the submission of more than $1.5 million in fraudulent claims to Medicare Part D.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.
Tamara Esponda, 48, of Miami, pleaded guilty to one count of health care fraud on Aug. 7, 2015. In addition to imposing the prison sentence, U.S. District Judge James I. Cohn of the Southern District of Florida ordered Esponda to pay $1,583,976 in restitution.
Esponda owned Biomax Pharmacy Inc. According to admissions made in connection with Esponda’s guilty plea, between October 2012 and September 2013, Biomax Pharmacy submitted fraudulent claims to Medicare for prescription drugs that were not prescribed by physicians, not medically necessary and not provided to Medicare beneficiaries. Esponda further admitted that in perpetrating this fraud she and her accomplices used the beneficiaries’ and doctors’ Medicare identification numbers without their consent. During the course of the scheme, Biomax received more than $1.5 million in payments from Medicare Part D, the prescription drug benefit, based on those false claims.
The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida. The case was prosecuted by Trial Attorney Timothy P. Loper of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Maryland Man Sentenced to 45 Years in Prison for 2012 Killing of Taxicab Driver in Northeast WashingtonRead the Press Release
WASHINGTON – Joshua Mebane, 20, of Waldorf, Md., was sentenced today to 45 years in prison for the November 2012 killing of a taxicab driver in Northeast Washington, U.S. Attorney Channing D. Phillips announced.
Mebane was found guilty by a jury in September 2015, following a trial in the Superior Court of the District of Columbia, of first-degree murder while armed and nine other charges, including conspiracy, assault with intent to commit robbery while armed, and firearms offenses. He was sentenced by the Honorable Jennifer Anderson.
A co-defendant, Linda Bury, also 20, earlier pled guilty to charges of second-degree murder while armed and conspiracy to commit armed robbery. She is awaiting sentencing.
According to the government’s evidence, Mebane and Bury, both 17 years old at the time, met online in October of 2012. Dissatisfied with their respective home environments, they made a plan to run away together. On Nov. 1, 2012, Mebane took a taxi from his family home in Waldorf, Md., to Bury’s family home in Parkton, Md. They then took a cab into the District of Columbia, and they stayed at a motel in Northeast Washington from Nov. 2 to Nov. 7, 2012.
In light of a dwindling money supply, Mebane and Bury devised a plan to commit a robbery of a taxicab driver on the evening of Nov. 7, 2012. A few minutes before 9 p.m., they randomly hailed a taxicab and instructed the driver, Muhammad Quadeer, to drive them to the rear of Hamilton Junior High School in the 1400 block of Brentwood Parkway NE. Once in the rear of the building, Mebane put on a black latex glove, pulled a 9mm pistol from a nylon bag, and fatally shot Mr. Quadeer, 44, once to the back of his head.
In announcing the sentence, U.S. Attorney Phillips commended the work of those who investigated the case from the Metropolitan Police Department (MPD). He also expressed appreciation for the assistance provided by the District of Columbia Department of Forensic Sciences; Bode Technologies; the Charles County, Md. Sheriff’s Department; the Baltimore County, Md. Police Department, and the Gallaudet University Department of Public Safety. In addition, he acknowledged the efforts of those who handled the case for the U.S. Attorney’s Office, including Assistant U.S. Attorney Sharon Donovan; Litigation Technology Specialist Leif Hickling; Paralegal Specialists Kwasi Fields and Benjamin Kagan-Guthrie; Investigative Analyst Zachary McMenamin; Victim/Witness Advocate Marcia Rinker, and Victim/Witness Security Specialist David Foster. Finally, he commended the work of Assistant U.S. Attorney George A. Pace, who investigated and prosecuted the case.
Manhattan U.S. Attorney Announces Charges Against Former Sec Compliance Examiner for Making False Statements Related to Prohibited Financial HoldingsRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, and Carl W. Hoecker, Inspector General of the United States Securities and Exchange Commission, Office of the Inspector General (“SEC-OIG”), announced charges against former SEC Compliance Examiner EUGENIA CANTIELLO for making false statements to the SEC regarding her and her husband’s ownership of various stocks they were prohibited from holding under SEC ethical rules. It is alleged that CANTIELLO, while a Compliance Examiner in the SEC’s New York Regional Office, made false statements to the SEC in order to conceal her ownership of stocks that she, as an SEC employee, was prohibited from holding. The Government and defendant have entered into a deferred prosecution agreement, which was approved in Manhattan Federal Court by U.S. Magistrate Judge James L. Cott today.
According to the allegations in the Criminal Complaint[1] unsealed today:
CANTIELLO was, until 2014, a Compliance Examiner in the SEC’s New York Regional Office. Among other duties, she was responsible for overseeing broker-dealers, investment advisers, investment companies, clearing agencies, and others in their compliance with the nation’s securities laws. As an SEC employee, CANTIELLO was subject to rules issued by the SEC (“SEC Ethics Rules”) designed to prevent conflicts of interest that could arise when SEC employees hold stock in entities subject to routine SEC examinations.
The SEC Ethics Rules prohibit SEC employees from owning stock in entities directly regulated by the SEC, and require employees to submit any proposed personal transactions in such securities to the SEC prior to executing them. The prohibited securities include those of several banks and broker-dealers, including banks with broker-dealer subsidiaries. Individuals who owned stock at the time the changes were implemented were directed to divest their holdings, and provided with instructions on how to do so. The SEC Ethics Rules apply, with equal force, to securities holdings in the names of spouses and immediate family members of SEC employees.
CANTIELLO and her husband held approximately $50,000 in stock in one such prohibited company. Despite warnings and reminders provided by the SEC, CANTIELLO did not divest her and her husband’s holdings as required. Instead, she held on to much of the stock past deadlines imposed by the SEC and later, when the SEC-OIG investigated her holdings, she lied about her conduct in an investigation under oath, falsely claiming – among other things – that she had not been aware that her holdings were prohibited under the SEC Rules.
CANTIELLO, 46, of New Rochelle, New York, is charged with one count of making false statements, which carries a maximum sentence of five years in prison. The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
CANTIELLO has entered into a deferred prosecution agreement which provides that the charges against her will be dismissed in three months if CANTIELLO complies with certain conditions and commits no further offenses.
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Mr. Bharara praised the investigative work of the Securities and Exchange Commission, Office of the Inspector General, and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York.
The case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorney Martin S. Bell is in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Man Sentenced to Time Served for Illegally Re-Entering the United States from MexicoRead the Press Release
A man who illegally re-entered the country was sentenced on November 9, 2015, to time served.
Isaias Zavala-Aguilar, age 27, from Mexico, received the prison term after an August 24, 2015, guilty plea to one count of illegal re-entry of a removed alien.
At the guilty plea, Zavala-Aguilar admitted he illegally re-entered the United States after being deported on April 26, 2008. Zavala-Aguilar came to the attention of Immigration and Customs Enforcement (ICE) officials on July 16, 2015, after his arrest for soliciting prostitution in Sioux City.
Zavala-Aguilar was sentenced in Sioux City by United States District Court Judge Mark W. Bennett. Zavala-Aguilar was sentenced to time served. He must serve a 1-year term of supervised release.
The case was prosecuted by Assistant United States Attorney Kevin C. Fletcher and investigated by Immigration and Customs Enforcement (ICE) and the Enforcement and Removal Office of the Immigration and Customs Enforcement Bureau.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 15-CR-4049.
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Los Angeles Area Woman Charged with Methamphetamine Trafficking and Firearm OffenseRead the Press Release
BAKERSFIELD, Calif. — A federal grand jury returned a two-count indictment today against Manuela Guadalupe Lizarraga-Hernandez, 32, of Downey, charging her with possession with intent to distribute methamphetamine and possessing a firearm in furtherance of that crime, United States Attorney Benjamin B. Wagner announced.
According to court documents, on February 15, 2015, Lizarraga-Hernandez possessed 440.9 grams of 97 percent pure methamphetamine along with a pink 9 millimeter handgun in the car that she was driving northbound through Kern County on the SR-99 highway.
This case is the product of an investigation by the Drug Enforcement Administration and the California Highway Patrol. Assistant United States Attorney Angela Scott is prosecuting the case.
If convicted, Lizarraga-Hernandez faces a maximum statutory penalty of life in prison and a $5 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Lewis County, WV man convicted of synthetic drug traffickingRead the Press Release
CLARKSBURG, WEST VIRGINIA – John R. Burrows, 54, of Weston, West Virginia, was convicted of synthetic drug trafficking today in federal court, United States Attorney William J. Ihlenfeld, II, announced.
In April 2014, Burrows sold a synthetic cannabinoid known as AM-2201 in a package labeled “Crown Worthy.” When depositing proceeds from the sale of these drugs into his bank accounts, he structured those deposits so as to avoid the reporting requirements of the Internal Revenue Service.
Burrows pled guilty today to a criminal Information charging him with one count of “Distribution of a Schedule I Drug – Controlled Substance” for which he faces up to 20 years in prison and a fine of up to $1,000,000, and one count of “Structuring Transactions to Evade Reporting Requirement” for which he faces up to 10 years in prison and a fine of up to $500,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Robert McWilliams prosecuted the case on behalf of the government. The West Virginia State Police and the Internal Revenue Service Criminal Investigations led the inquiry.
U.S. Magistrate Judge Michael John Aloi presided.
Leader of “Scheme Team” Gang Sentenced to 20 Years for Sex TraffickingRead the Press Release
ALEXANDRIA, Va. – Alexis Rahkeem Carter, aka Bishop, 25, of Fairfax, was sentenced today to 20 years in prison for sex trafficking of a child.
Carter pleaded guilty on Aug. 31, 2015. According to court documents, Carter was a leader of a gang known as “Scheme Team.” In addition to robbery, narcotics, and weapons trafficking, Carter and Scheme Team generated revenue by sex trafficking teenage girls and adults. One of the girls sex trafficked by Carter was 15 years old. Carter instructed victims to lie to customers by telling them that they were over 18 years old, unless a customer requested an underage girl. Despite their youth, Carter instructed the victims to submit to any sex acts that customers demanded. In addition to exploiting these minors for profit, Carter also used these victims for his own sexual gratification.
Carter sex trafficked women and girls in 2014 and 2015 in Maryland, West Virginia, Pennsylvania, and Virginia. Carter set a monetary quota of $1,000 per day, which victims were required to earn, and the victims generally met this quota. Carter received nearly all of the commercial sex proceeds earned by the girls he sex trafficked, and he sometimes required victims to submit to searches to ensure they were not keeping any of the prostitution proceeds from Carter.
To keep victims compliant, Carter frequently provided them with alcoholic beverages and controlled substances, including OxyContin, Percocet, molly, spice (also known as “K2”), Xanax, Roxicodone, and marijuana. Carter also told victims that he had guns, threatened victims with violence, and used physical force on victims, including pulling their hair and shoving them.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Clark E. Settles, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Washington; and Charles E. Jett, Stafford County Sheriff, made the announcement after sentencing by U.S. District Judge Claude M. Hilton. Assistant U.S. Attorney Michael J. Frank is prosecuting the case and was assisted by the Stafford County Commonwealth’s Attorney’s Office.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:15-cr-256.
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Kern County Man Indicted for Illegal Possession of a Destructive Device and FirearmsRead the Press Release
FRESNO, Calif. — A federal grand jury returned a four-count indictment today against Kenneth William Kirkland, 47, of California City, charging him with being a felon in possession of firearms, a destructive device and explosives, and failing to register a destructive device in the National Firearms Registry, United States Attorney Benjamin B. Wagner announced.
According to court documents, Kirkland possessed a bomb, various explosives, and three firearms at his residence in California City.
This case is the product of an investigation by the Federal Bureau of Investigation, the California City Police Department, the Kern County Sheriff’s Office and the California Highway Patrol. Assistant United States Attorney Angela Scott is prosecuting the case.
If convicted, Kirkland faces a maximum statutory penalty of 20 years in prison and a $260,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Justice Department Requires Springleaf to Divest 127 Branches in 11 States in Order to Complete Acquisition of OneMain FinancialRead the Press Release
The Department of Justice announced today that it will require Springleaf Holdings, Inc. (Springleaf) to divest 127 branches with over $600 million in loan receivables in order for Springleaf to proceed with its proposed $4.25 billion acquisition of OneMain Financial Holdings, LLC (OneMain) from CitiFinancial Credit Company, a wholly owned subsidiary of Citigroup, Inc.
The Antitrust Division, along with the offices of seven state attorneys general, filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit. The participating state attorneys general offices represent Colorado, Idaho, Pennsylvania, Texas, Virginia, Washington and West Virginia.
“Personal installment loans are often a critical lifeline for borrowers with limited credit options, allowing them to pay for unexpected expenses or to consolidate debts,” said Assistant Attorney General Bill Baer, of the Justice Department’s Antitrust Division. “Today’s proposed settlement will ensure that subprime borrowers in over 100 local markets across the United States continue to enjoy the benefits of competition when they seek these important loan products.”
Without the divestiture, subprime borrowers seeking personal installment loans would face fewer choices for these important loan products in local markets located in Arizona, California, Colorado, Idaho, North Carolina, Ohio, Pennsylvania, Texas, Virginia, Washington and West Virginia.
Personal installment loans to subprime borrowers are fixed-rate, fixed-term and fully amortized loan products that are marketed to consumers who have limited access to credit from traditional banking institutions. According to the complaint, Springleaf and OneMain are the two largest providers of personal installment loans to subprime borrowers in the United States. Springleaf and OneMain specialize in the same products (large installment loans typically ranging from $3,000 to $6,000), target the same customer base, and have a large degree of geographic overlap between their branch networks.
Specifically, the complaint alleges that in local markets within and around 126 towns and municipalities in eleven states, Springleaf and OneMain operate branches in close proximity to one another – often within five miles – and face few, if any, other competitors. According to the complaint, the loss of head-to-head competition between Springleaf and OneMain would result in a reduction of consumer choice that likely would drive subprime borrowers to much more expensive forms of credit or leave them with no reasonable alternative.
Under the terms of the proposed consent decree, Springleaf must divest 127 branches in eleven states to Lendmark Financial Services or to an alternative buyer approved by the United States. The divestiture includes all active loans originated or serviced at the divested branches and other assets associated with the branches. Divestiture of the branches to Lendmark will create a new competitor in the provision of personal installment loans to subprime borrowers in Arizona, California, Colorado, Idaho, Ohio, Texas, and Washington. In North Carolina, Pennsylvania, Virginia, and West Virginia, the divestiture will establish Lendmark as a new competitor in some local areas and enhance its competitive presence in others. Taken together, the divestitures will remedy the loss of competition alleged in the department’s complaint.
Springleaf is a Delaware corporation with its headquarters in Evansville, Indiana. Springleaf operates approximately 830 branches in 27 states. Springleaf has a consumer loan portfolio that totals $4 billion.
OneMain is a Delaware limited liability company with its headquarters in Baltimore. OneMain operates approximately 1,139 branches in 43 states. OneMain is a subsidiary of CitiFinancial Credit Company, a holding company that is a wholly-owned subsidiary of Citigroup. OneMain has a consumer loan portfolio that totals $8.4 billion.
As required by the Tunney Act, the proposed consent decree, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
Springleaf Complaint (596.89 KB)
Springleaf APSO (352.74 KB)
Springleaf CIS (634.75 KB)
Springleaf PFJ (735.57 KB)
Justice Department Announces Standard Chartered Bank (Switzerland) SA Reaches Resolution Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Standard Chartered Bank (Switzerland) SA, en liquidation (SCB Switzerland), reached a resolution under the department’s Swiss Bank Program.
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, SCB Switzerland 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 penalties in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.
SCB Switzerland is a private bank with a single office located in Geneva, Switzerland. It is a wholly owned subsidiary of Standard Chartered PLC, a British multinational banking and financial services company headquartered in London. SCB Switzerland joined the Standard Chartered group of entities (the Standard Chartered Group) in May 2008 when Standard Chartered PLC acquired American Express Bank Ltd. As part of that acquisition, Standard Chartered Group acquired American Express Bank (Switzerland) SA, a private bank incorporated in Switzerland in 1987, which thereafter operated under the name SCB (Switzerland) SA.
In early 2014, the Standard Chartered Group decided to cease its Swiss private banking operations for commercial reasons. SCB Switzerland is now in voluntary formal liquidation. Subject to Swiss regulatory approval, SCB Switzerland expects to return its banking license at the end of 2015, and then the entity will continue to exist as a corporation in liquidation until at least the end of 2018, without banking status or supervision by Swiss Financial Market Supervisory Authority FINMA and with no operations other than completing the wind down.
Through its employees and others, SCB Switzerland knew or should have known that some of the U.S. persons who opened or maintained accounts at SCB Switzerland may not have complied with their U.S. income tax and reporting obligations. By establishing and maintaining such accounts, SCB Switzerland provided assistance to certain U.S. persons in evading their U.S. tax obligations. Among other things, SCB Switzerland:
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Agreed to hold account statements and other mail relating to some U.S.-related accounts;
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Provided account statements and other documentation to the accountholder which contained only the account number in order to further insure the secrecy of the identity of the accountholder; and
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Accepted and included in its account records Internal Revenue Service (IRS) Forms W-8BEN (or equivalent documents) provided by the directors of the offshore companies that falsely represented that such companies were the beneficial owners of the assets in those accounts for U.S. federal income tax purposes.
SCB Switzerland opened and maintained accounts for certain U.S. persons in the name of structures, including trusts created by American Express and inherited and maintained by affiliates of SCB Switzerland, which served as the nominal accountholders of bank accounts that held assets that, in reality, belonged to U.S. persons. SCB Switzerland adopted the Advisory Center/Booking Center Model from American Express Bank. This method allowed clients to book and hold accounts in any of Standard Chartered Group’s booking centers, including Geneva, while working with relationship managers at other locations throughout the world. The Group also acquired a trust center from American Express Bank. Trust services were available to eligible clients who wished to set up trusts or private investment companies. The trust centers were located in Guernsey, Singapore and the Cayman Islands. A client could create a trust structure in any one of the trust centers while opening an account in another booking center and working with a relationship manager in another advisory center.
SCB Switzerland maintained one account held by a British Virgin Islands private investment company, of which the beneficial owner was a U.S. citizen. The beneficial owner had provided SCB Switzerland with a false W-8BEN, and SCB Switzerland was unaware of the U.S. citizenship of the beneficial owner until 2010. In 2010, a compliance officer discovered the beneficial owner’s U.S. citizenship through a periodic review of the account that included an Internet search. Nevertheless, SCB Switzerland maintained the account for approximately two years after discovering that the beneficial owner was a U.S. citizen.
Since Aug. 1, 2008, SCB Switzerland held 22 U.S.-related accounts, comprising a peak of aggregated assets under management of $33.1 million. SCB Switzerland will pay a penalty of $6.337 million.
In accordance with the terms of the Swiss Bank Program, SCB Switzerland 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 SCB Switzerland 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 SCB Switzerland must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance. Ciraolo also thanked Lisa L. Bellamy, 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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Judge Sentences Two for Pretending to Be FBI AgentsRead the Press Release
St. Thomas, USVI - District Court Judge Curtis V. Gomez today sentenced Yamini Potter, 29, of St. Thomas and Alana Liburd, 34, of St. John for impersonating FBI agents, United States Attorney Ronald W. Sharpe announced. Judge Gomez sentenced Potter to 12 months in prison, one year of supervised release, and 200 hours of community service. He sentenced Liburd to 30 days of intermittent confinement to be served on weekends, five years of probation, and 200 hours of community service.
Judge Gomez also ordered Potter and Liburd to pay $6,010 in restitution, joint and several, and a special assessment of $100 each. Potter and Liburd were remanded to the custody of the U.S. Marshals Service to begin serving their sentences.
In July 2015, both Liburd and Potter pleaded guilty to impersonation of a federal officer. According to court records, Potter and Liburd devised a scheme wherein they pretended to be FBI agents, and then persuaded 11 individuals to pay them a total of $6,010 in fees to become FBI agents.
This case was investigated by the FBI and prosecuted by Assistant U.S Attorney Everard E. Potter.
Judge Sentences Former V.I. Army National Guard Major to PrisonRead the Press Release
St. Croix, USVI - District Court Judge Curtis V. Gomez on November 12, 2015 sentenced Sherrymae Morales, 54, of St. Croix, to 12 months and one day in prison, and three years of supervised release, United States Attorney Ronald W. Sharpe announced. Judge Gomez also ordered Morales to serve 200 hours of community service, repay $45,426 in restitution to the Virgin Islands National Guard, and pay a special assessment of $2,100.
On July 1, 2015, after a three-day trial in District Court on St. Croix, the jury found Morales guilty of 21 counts of wire fraud. According to evidence presented at trial, from 2010 until 2011, Morales was employed as a full-time employee with the Virgin Islands National Guard (VING) on St. Croix. At the same time she was employed as a full-time VING employee, Morales also held a full-time contract position with the Military Personnel Services Corporation (MPSC), which provides employee support services to members of the VING. Evidence presented at trial demonstrated that Morales submitted time sheets to both the MPSC and VING for the same 40-hour work weeks over 14 months.
This case was investigated by the United States Army Criminal Investigation Command-Major Procurement Fraud Unit, Defense Criminal Investigative Service, and the Department of Homeland Security Immigration and Customs Enforcement, Homeland Security Investigations. It was prosecuted by Assistant United States Attorney Everard E. Potter.
Jamestownman Pleads Guilty to Making False StatementsRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
ROCHESTER, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Tyrell Fuqua-Hayes, 38, of Jamestown, NY, pleaded guilty to making false statements and representations to the FBI before Chief U.S. District Judge Frank P. Geraci, Jr. The charge carries a maximum penalty of five years in prison and a $250,000 fine.Assistant U.S. Attorney Tiffany H. Lee, who is handling the case, stated that in January 2015, Hayes alleged that he met a man who was arrested in another federal case while they were in custody together at the same jail. The defendant claimed that the man provided him with contact information and advised Hayes that he would be reaching out to him.
In May 2015, Hayes advised the Federal Bureau of Investigation that he was receiving text messages from the man he met in jail indicating that the man wanted to pay the defendant $5000 to kill witnesses in that man’s case. The defendant later admitted he created the text messages himself and that lied about the recent conversations between the man and himself.
The plea is the result of an investigation by the Federal Bureau of Investigation Child Exploitation Task Force which includes the Rochester Police Department, the Monroe County Sheriff’s office and Immigration and Customs Enforcement, Homeland Security Investigations.
Sentencing is scheduled for February 16, at 9:30 a.m. before Judge Geraci.
Jacksonville Man Convicted of Illegal Possession of A Dozen Firearms and Crack CocaineRead the Press Release
Jacksonville, Florida – United States District Judge Timothy J. Corrigan has found Michael Holmes (51, Jacksonville) guilty of possessing multiple firearms as a convicted felon and possessing with the intent to distribute cocaine and crack cocaine. He faces a mandatory minimum penalty of 15 years, up to life, in federal prison for the firearms offense, and up to 20 years’ imprisonment for each of the two drug counts. Holmes elected to waive his right to a jury trial and the case proceeded directly before Judge Corrigan. A sentencing date has not yet been set.
According to court documents, on December 29, 2013, detectives from the Jacksonville Sheriff’s Office questioned Holmes, on the front porch of his home, about complaints related to drug sales occurring at the property. After detecting the smell of marijuana wafting from the front door and Holmes admitting to smoking marijuana, the detectives obtained a warrant to search the home. The detectives recovered 12 firearms, more than 1,100 rounds of ammunition, 20 grams of crack cocaine, 29 grams of powder cocaine, more than 49 grams of marijuana, three digital scales, a bulletproof vest, and approximately $3,600 in cash. Prior to this incident, Holmes had three prior drug felony convictions and was therefore prohibited from possessing a firearm or ammunition under federal law.
This case was investigated by the Jacksonville Sheriff’s Office and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. It is being prosecuted by Assistant United States Attorneys Cherie Krigsman and Michael J. Coolican.
This is another case prosecuted as part of the Department of Justice’s “Project Safe Neighborhoods” Program - a nationwide, gun-violence reduction strategy. United States Attorney A. Lee Bentley, III, along with Regina Lombardo, Special Agent in Charge, ATF, are coordinating the Project Safe Neighborhoods effort here in the Middle District of Florida in cooperation with federal, state, and local law enforcement officials. It is also a part of ATF’s Frontline Strategy on reducing violent crime in communities.
Hobbs Man Pleads Guilty to Unlawful Possession of Firearm and AmmunitionRead the Press Release
ALBUQUERQUE – Carlos Chavez, 37, of Hobbs, N.M., pleaded guilty today in federal court in Las Cruces, N.M., to being a felon in possession of a firearm under a plea agreement with the U.S. Attorney’s Office.
During today’s proceedings, Chavez pled guilty to a felony information charging him with being a felon in possession of a firearm and ammunition. In entering his guilty plea, Chavez admitted that on June 28, 2015, he unlawfully possessed a firearm and ammunition. At the time, Chavez was prohibited from possessing firearms and ammunition because he had previously been convicted of at least one felony.
At sentencing, Chavez faces a statutory maximum penalty of 10 years in federal prison followed by up to three years of supervised release. Chavez remains in custody pending a sentencing hearing which has yet to be scheduled.
Court records reflect that Chavez was arrested in Aug. 2015, on related state charges filed in the 5th Judicial District Court for the State of New Mexico (Lea County, N.M.).
This case was investigated by the Las Cruces office of the DEA, the Lea County Drug Task Force and the Hobbs Police Department with assistance from the 5th Judicial District Attorney’s Office. Assistant U.S. Attorney Terri J. Abernathy of the U.S. Attorney’s Las Cruces Branch Office is prosecuting this case.
The Lea County Drug Task Force is comprised of officers from the Lea County Sheriff’s Office, Hobbs Police Department, Lovington Police Department, Eunice Police Department the Tatum Police Department and the Jal Police Department, and is part of the NM HIDTA Region VI Drug Task Force. The High Intensity Drug Trafficking Areas (HIDTA) program was created by Congress with the Anti-Drug Abuse Act of 1988. HIDTA is a program of the White House Office of National Drug Control Policy (ONDCP) which provides assistance to federal, state, local and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States and seeks to reduce drug trafficking and production by facilitating coordinated law enforcement activities and information sharing.
Hilton Head Man and Walterboro Woman Charged with Wire Fraud and Misprision of a FelonyRead the Press Release
Contact Person: Beth Drake (803) 929-3000
Donald Christy, age 72, of Hilton Head, and Lisa Arnold, age 48, of Walterboro, were charged in a 6-count Information with Wire Fraud and Misprision of a Felony, a violation of Title 18, United States Code, Sections 1343 and 4. The maximum penalty that Christy and Arnold could receive is 20 years imprisonment. The case was investigated by agents of the FBI and is assigned to Assistant United States Attorney Rhett DeHart of the Charleston office for prosecution.
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Head of Stock Trading Operation Indicted in Cross-Country Scheme to Trade on Inside InformationRead the Press Release
Traded on Information in Violation of Confidentiality Agreements, Netting More Than $3.9 Million During Three-Year Scheme
NEWARK, N.J. – A federal grand jury today indicted the owner and operator of a stock trading operation for his alleged participation in a multi-year insider trading scheme that netted more than $3.9 million in illicit profits, U.S. Attorney Paul J. Fishman announced.
Steven Fishoff, 58, of Westlake Village, California, is charged by indictment with one count of conspiracy to commit securities fraud and four counts of securities fraud.
According to documents filed in this case and statements made in court:
On numerous occasions, Fishoff and his conspirators obtained material nonpublic information related to publicly traded companies and traded on that information before it became public. Between June 2010 and July 2013, Fishoff or one of his traders – conspirators Ronald Chernin, 66, of Oak Park, California; Steven Costantin, 54, of Farmingdale, New Jersey, or a business associate referred to in the indictment as “Trader A”– expressed interest in participating in numerous stock offerings by publicly traded companies. Before providing confidential information to these individuals concerning the companies or the terms of the proposed sales, however, the investment bankers first required that Fishoff, Chernin, Costantin, Trader A, and their associated trading entities, agree to be “brought over the wall,” or “wall-crossed,” standard industry terms that meant they were required to keep the information confidential and could not buy or sell the stock based on the information.
Fishoff, Chernin, Costantin, or Trader A agreed to these disclosure and trading restrictions, then flagrantly breached the agreements. In many instances where Fishoff was not personally wall-crossed in an offering, Chernin, Costantin, and Trader A tipped Fishoff by telephone or by email about the offering prior to the public announcement. Even where Fishoff ostensibly was a party to the confidentiality agreement, through his affiliation with the wall-crossed trading entity, Fishoff breached the agreement by trading on the confidential information and by providing the information to his friends, Paul Petrello, 53, of Boca Raton, Florida, and a conspirator referred to in the indictment as “CC-1,” so that Petrello and CC-1 could engage in parallel trading through their own respective trading entities. There were also instances where Fishoff’s traders, Chernin or Costantin, violated the terms of the confidentiality agreements by using Fishoff trading entities to execute trades themselves before the offering. Fishoff and his conspirators shared the illicit profits from their insider trading scheme.
The conspiracy count with which Fishoff is charged carries a maximum potential penalty of five years in prison and a fine of $250,000. The securities fraud counts each carry a maximum potential penalty of 20 years in prison and a fine of $5 million.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to today’s indictment. He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Robert Cohen and Joseph Sansone.
The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the Special Prosecutions Division and Assistant U.S. Attorney Nicholas P. Grippo of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark, as well as Unit Chief Barbara Ward and Assistant U.S. Attorney Sarah Devlin of the Office’s Asset Forfeiture and Money Laundering Unit.
These charges are 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. attorney’s 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.
The charges and allegations contained in the indictment are merely accusations, and defendant is presumed innocent unless and until proven guilty.
Defense counsel: Steven D. Feldman Esq., New York
Harrisburg Ambulance Company Fined $250,000; Owner Sentenced to 2 Years Prison and $300,000 Fine for Medicare FraudRead the Press Release
HARRISBURG-The United States Attorney’s Office for the Middle District of Pennsylvania announced today that the owner of a Harrisburg-based ambulance company has been sentenced to 24 months in prison and ordered to pay $494,378 in restitution and fines.
Serge Sivchuk, age 30, the owner of Advantage Medical Transport, Inc, formerly headquartered at 733 Fire House Lane, Harrisburg, was sentenced by US District Court Chief Judge Christopher C. Connor yesterday to the two year term and ordered to pay $194,378 restitution to Medicare. Judge Connor also fined Sivchuk $300,000.
Judge Connor also ordered Advantage to pay $194,378 restitution to Medicare (jointly and severally with Sivchuk), and further ordered the company to pay an additional $250,000 fine.
According to US Attorney Peter Smith, Sivchuk and Advantage were indicted in January 2012 by a Middle District of Pennsylvania grand jury and charged with multiple counts of false statements in health care matters and health care fraud. The charges stemmed from Advantage’s non-emergency, ambulance transport of Harrisburg area dialysis patients between 2009 and 2011. The Indictment alleged Sivchuk defrauded Medicare by submitting hundreds of claims for the nonemergency transport of Medicare beneficiaries because the patients were ambulatory and their ambulance transports were not medically necessary.
Sivchuk pleaded guilty to one count of false statements in health care matters on February 22, 2013; Advantage pleaded guilty to 14 counts of False Statements in Health Care Matters less than 3 months later on May 1, 2013. The Indictment focused on an August 2010 audit and a June 2, 2011 search of Advantage’s business premises by federal law enforcement officers. In response to the audit Sivchuk provided Medicare dozens of ambulance Trip Sheets, which are prepared by Emergency Medical Technicians (EMTs) at the time of each ambulance transport. The Trip Sheets contain a narrative section that describes the patient’s physical condition and ability to ambulate,. The Trips Sheets serve as the primary support document for each Medicare billed, ambulance transport claim. The June 2, 2011, search by the FBI revealed Sivchuk did not submit the original trip sheets to the auditors but instead submitted copies of other trip sheets that had been re-written and forged to conceal the fact the beneficiaries were ambulatory.
Medicare paid Advantage approximately $166 for each leg of a transport to and from a dialysis treatment center, plus $5.49 per mile. Many dialysis patients underwent 3 treatments per week. Thus, one week’s transport of just one dialysis patient yielded Advantage more than $1,000.
At the time the investigators executed the June 2, 2011, search warrant, the U.S. Attorney’s Office filed a civil action in federal court that froze more than $875,000 in Sivchuk controlled bank accounts. The government intends to recoup the restitution and fines imposed by Judge Connor today from these frozen bank accounts.
The case is part of a priority program within the U.S. Department of Justice and the U.S. Attorney’s Office for the Middle District of Pennsylvania focusing on health care fraud. The case was prosecuted by Assistant U.S. Attorneys Kim Douglas Daniel and Anthony Scicchitano, and was investigated by the Harrisburg Offices of the HHS Inspector General’s Office and the FBI.
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Gore Woman Sentenced to 21 Months, $146,000 Restitution for Wire FraudRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma, announced that TAMMY JEAN McDANIELS, age 56, of Gore, Oklahoma, was sentenced to 21 months imprisonment and three years of supervised release for WIRE FRAUD, in violation of Title 18, United States Code, Section 1343. McDANIELS was also ordered to pay $146,004.80 in restitution.
The defendant entered a guilty plea in June 2015 a criminal Information alleging that from on or about October 1, 2012 to on or about December 19, 2014, within the Eastern District of Oklahoma and elsewhere, the defendant, TAMMY JEAN McDANIELS, devised and intended to devise a scheme to defraud Bacone College, and to obtain money and property by means of materially false and fraudulent pretenses, representations and promises.
The charges arose from an investigation by the Muskogee Police Department and the Federal Bureau of Investigation. The investigation revealed that the defendant, while employed as the Human Resources Director at Bacone College, fraudulently reactivated the employment status of former adjunct professors and had the fraudulent salary paid directly into her bank account.
The Honorable James H. Payne presided over the sentencing hearing. The defendant was ordered to self-report to the United States Bureau of Prisons on February 15, 2016 to begin serving her non-paroleable sentence.
Assistant United States Attorney Chris Wilson represented the United States.
Glen Burnie Woman Admits to Stealing Prescription Slips from Her Employer-Doctor and Writing Fraudulent Prescriptions for OxycodoneRead the Press Release
Baltimore, Maryland – Robin McClosky Andrews, age 51, of Glen Burnie, Maryland pleaded guilty today to conspiring to distribute and possess with intent to distribute oxycodone.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Nicholas DiGiulio, Office of Investigations, Office of Inspector General of the Department of Health and Human Services; Assistant Special Agent in Charge Don A. Hibbert of the Drug Enforcement Administration, Baltimore District Office; and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation.
According to her plea agreement, from 2009 until 2012, Andrews stole prescription slips from a doctor she worked for, and wrote fraudulent prescriptions for oxycodone in a number of different names. Her husband had individuals fill the prescriptions at pharmacies and provide him with the pills. The individuals were generally paid $100 for each prescription they filled. The oxycodone pills were then sold to co-defendant Michael Cudnik and others.
The investigation identified more than 350 fraudulent prescriptions were written. Most of the prescriptions were for 90 Percocet 10 milligram pills, totaling 300,000 milligrams of oxycodone. Accordingly, Robin Andrews was found to be responsible for the distribution of at least 300,000 milligrams of oxycodone.
Robin Andrews faces a maximum sentence of 20 years in prison. U.S. District Judge J. Frederick Motz has scheduled sentencing for February 2, 2016 at 9:30 a.m.
Michael Joseph Cudnik, age 57, of Baltimore, has pleaded guilty to his role in the conspiracy and is scheduled to be sentenced. Robin Andrews’ husband passed away on October 21, 2015.
United States Attorney Rod J. Rosenstein commended the HHS Office of Inspector General, DEA and FBI for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Kenneth S. Clark, who is prosecuting the case.
Gahanna Woman Pleads Guilty to Illegally Receiving VA BenefitsRead the Press Release
COLUMBUS, Ohio – Rita Green, 55, of Gahanna, Ohio, pleaded guilty in U.S. District Court to theft of public money by illegally receiving Department of Veterans Affairs Dependency Indemnity Compensation benefits.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Gavin McClaren, Resident Agent in Charge, Department of Veterans Affairs Office of Inspector General (VA-OIG), Cleveland, Ohio, and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the plea entered into today before U.S. District Judge Algenon L. Marbley.
According to court documents, Green kept $89,646.22 of Department of Veterans Affairs Dependency Indemnity Compensation benefits to which she knew she was not entitled. Green’s mother was a recipient of the benefits, which are paid to surviving spouses of veterans who died in the line of duty or died from a disease or injury incurred or aggravated while on active duty. Those benefits were paid monthly to a bank account in the mother’s name.
Green’s mother died in 2009 but the VA, unaware of her death, continued depositing money into her account. Green kept the account open and converted this money to her own use by withdrawing funds and making purchases using a debit card in her mother’s name. Green also failed to disclose these VA payments on a Free Application for Federal Student Aid (FAFSA) submitted in 2012.
Theft of public money is a crime punishable by up to 10 years in prison and a $250,000 fine.
U.S. Attorney Stewart commended the investigation of this case by the VA-OIG and the FBI, and Assistant U.S. Attorney Peter Glenn-Applegate, who is prosecuting the case.
Franklinville, New Jersey, Man Sentenced to 57 Months in Prison for Using Fraudulent Invoices to Steal More Than $600,000 from Elementary Schools Across the U.S.Read the Press Release
CAMDEN, N.J. – A Franklinville, New Jersey, man was sentenced today to 57 months in prison for mailing fraudulent invoices for non-existent workbooks to more than 73,000 schools throughout the United States, U.S. Attorney Paul J. Fishman announced.
Robert S. Armstrong, 45, previously pleaded guilty before U.S. District Judge Noel L. Hillman to Count Two of a superseding indictment charging him with mail fraud. Judge Hillman imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Armstrong admitted that from July 2014 through September 2014, he sent more than 73,000 fraudulent invoices to schools throughout the United States seeking payment for non-existent workbooks. Armstrong opened mail boxes in Sewell, New Jersey, and Las Vegas, Nevada, under the name of his business, Scholastic School Supply LLC. Armstrong then drafted fraudulent invoices typically seeking payments of $647.50 for batches of math or language workbooks that the schools never ordered or received. In order to make the invoices appear legitimate, Armstrong included phony International Standard Book Numbers (ISBN), which are unique identifying numbers assigned to each book published in the United States.
Armstrong used a bulk mailing company to mail the phony invoices to more than 73,000 schools. Each invoice included a payment envelope preaddressed to Scholastic School Supply’s Sewell or Las Vegas address.
In response to the phony invoices, hundreds of schools throughout the United States sent payments to Scholastic School Supply. Armstrong deposited the checks from the victim schools into at least seven accounts that he had opened at various banks in the name of Scholastic School Supply. As of March 12, 2015, 938 schools sent a total of $612,774 in checks to Scholastic School Supply.
Armstrong originally pleaded guilty to Count One of the superseding indictment on June 12, 2015 and agreed to serve a stipulated sentence of 44 months in prison. According to the Federal Rules of Criminal Procedure, when the parties agree to a stipulated sentence, the judge has the opportunity to accept or reject the plea agreement. Judge Hillman rejected the agreement, and Armstrong entered a new plea agreement on Sept. 15, 2015 in which he pleaded guilty to Count Two of the superseding indictment and agreed to a stipulated sentence of 51 to 63 months in prison.
In addition to prison term, Judge Hillman sentenced Armstrong to serve three years of supervised release. A restitution hearing will be held on Dec. 22, 2015.
U.S. Attorney Fishman credited law enforcement officers of the U.S. Postal Inspection Service, under the direction of Inspector in Charge David W. Bosch in Philadelphia; the Gloucester County Prosecutor’s Office, under the direction of Prosecutor Sean F. Dalton; the Gloucester County Office of Consumer Protection, under the direction of Harold H. Spence Jr., Director of Consumer Affairs; the Washington Township Police Department, under the direction of Raphael Muniz, Chief of Police; and the Franklin Township Police Department, under the direction of Lawrence W. Roberts, Chief of Police.
The government is represented by Assistant U.S. Attorney Diana Carrig of the U.S. Attorney’s Office Criminal Division in Camden and Assistant U.S. Attorney Meredith Williams of the U.S. Attorney’s Office Criminal Division in Newark.
Defense counsel: Rocco C. Cipparone Jr. Esq., Haddon Heights, New Jersey.
Former TSA Officer Sentenced for Stealing Items from Passengers’ LuggageRead the Press Release
ALEXANDRIA, Va. – Douglas Wayne DeWeese, 55, of Damascus, Maryland, was sentenced today to 10 months in prison for theft of property in interstate commerce, along with two years of supervised release and restitution.
DeWeese pleaded guilty on Aug. 20, 2015. According to court documents, from 2008 through 2012, DeWeese was employed by the Transportation Security Administration (TSA) as a Transportation Security Officer responsible for inspecting checked bags at Washington-Dulles International Airport. While on duty, DeWeese stole items and valuables from passengers’ luggage, including electronics, jewelry and currency. The defendant transported the stolen items from the airport to his home in Maryland. DeWeese is no longer a TSA employee.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Peter Neffenger, Administrator of the Transportation Security Administration; and Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by U.S. District Judge Anthony J. Trenga. The case was investigated by the Internal Affairs Division of TSA’s Office of Inspection, FBI’s Washington Field Office, and the Metropolitan Washington Airports Authority. Assistant U.S. Attorney Kimberly R. Pedersen and Special Assistant U.S. Attorney William Glaser are prosecuting the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:15-cr-145.
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Former Executive with Screen Actors Guild Pension Plan Pleads Guilty to Tax Charge Stemming for Failing to Report IncomeRead the Press Release
LOS ANGELES – The former chief information officer for the Screen Actors Guild’s Producers Pension and Health Plan (PPHP) has pleaded guilty to filing a false tax return in which he failed to report income he received from contractors hired to upgrade the PPHP computer system.
Nader Karimi, 51, of Los Angeles, pleaded guilty Thursday afternoon to one felony count of subscribing to a false tax return.
When he pleaded guilty before United States District Judge Fernando M. Olguin, Karimi admitted lying on his 2008 federal tax return that failed to report $454,666 in income. Over the course of the years 2005 through 2008, Karimi failed to report a total of approximately $711,000 in taxable income, according to his plea agreement.
Karimi was responsible for modernizing PPHP’s computer systems, and in that capacity he had the authority to enter into contracts on behalf of PPHP. Over a four-year period, Karimi entered into agreements with vendors that agreed to pay a portion of the money they received from PPHP to a company affiliated with Karimi, Enterprise Technology and Management Services. The payments to ETMS totaled $711,000, and Karimi used the sums for personal expenses while not declaring them as income on his tax returns.
“Individuals entrusted with the pension and health care funds of others must be held to the highest standard of conduct,” said United States Attorney Eileen M. Decker. “The Department of Justice will do everything within its power to bring to justice those who abuse a position of trust for personal gain.”
Judge Olguin is scheduled to sentence Karimi on March 11, 2016, at which time he faces a statutory maximum of three years in federal prison.
Karimi has agreed to file amended tax returns, pay back taxes, and make an additional restitution payment of at least $100,000 to PPHP.
This case is the result of an investigation by the United States Department of Labor – Office of Inspector General, the Labor Department’s Employee Benefits Security Administration, IRS Criminal Investigation, and the FBI.
Former East Carolina University Pharmacy Adminstrator Pleads Guilty to Filing Fraudulent Documents to Stock Pharmacy InventoryRead the Press Release
NEW BERN - United States Attorney Thomas G. Walker announced that Tuesday in federal court, LEIGH LANGLEY COBB, 43, of Winterville, North Carolina, pleaded guilty to Making Materially False, Fictitious, and Fraudulent Statements and Entries Concerning Health Care Matters.
According to the Criminal Information to which COBB pleaded guilty, between the years 2000 and 2012, COBB worked for one of several clinics and pharmacies operated by the Brody School of Medicine, within East Carolina University (ECU) in Greenville, North Carolina. COBB had responsibilities pertaining to the receipt and dissemination of drugs to ECU patients. COBB also assisted patients at one of the Brody School of Medicine’s various clinics to apply to participating drug companies to receive medicine at a reduced rate, through what are known as Patient Assistance Programs (PAPs).
Between January of 2010 and October of 2012, COBB falsified numerous PAP applications and transmitted them to various victim drug companies. The applications were false because many of the prescriptions contained within them were fraudulent and forged. While in many instances patients at ECU’s clinics genuinely sought medicine from the drug companies pursuant to the PAP programs, COBB added numerous additional drugs to the applications for which the patient did not have a prescription, and which were not medically necessary for the patient. In many instances, the patient at issue had not been prescribed any of the medications listed on the application, and the physicians identified were not the physicians of record for the patients listed on the application. To cause the drug companies to supply these drugs, COBB forged signatures of both physicians and patients. One such false application occurred on March 27, 2012.
After receiving the false applications transmitted by COBB on behalf of ECU patients, the drug companies relied upon them and shipped medicines to The Bernstein Center Pharmacy, within the ECU system, that were not covered by a doctor’s prescription. COBB received the Unauthorized Drugs and placed them into The Bernstein Center Pharmacy’s drug inventory for later dissemination and sale to other patients.
The total losses from the offense are unknown, but the parties are in agreement that the losses are between $550,000 and $1.5 Million.
At sentencing, COBB faces up to 5 years in prison and 3 years of supervise release. The defendant also faces a fine of up to $250,000 and restitution if ordered by the court.
The investigation of this case was conducted by the East Carolina University Police Department and the United States Food and Drug Administration – Office of Criminal Investigations. Assistant United States Attorney William M. Gilmore of the Economic Crimes Division represents the United States.
Former CEO of Baltimore Behavioral Health Sentenced to 30 MonthsRead the Press Release
Baltimore, Maryland – U.S. District Judge Richard D. Bennett sentenced the former chief executive officer (CEO) of Baltimore Behavioral Health (BBH), William Kristen Hathaway, age 52, of Ellicott City, Maryland, today to 24 months in prison and six months of home detention, followed by three years of supervised release, for failing to pay to the IRS more than $2.4 million in payroll taxes deducted from the paychecks of BBH employees, and for stealing more than $53,000 from the BBH employee benefit plan. Judge Bennett also entered an order requiring Hathaway to pay restitution of $2,495,799 to the IRS and $915,576 to the Comptroller of the State of Maryland.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Special Agent in Charge Steven Anderson, of the Washington Regional Office, U.S. Department of Labor - Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.
“As chief executive officer of a primary ‘charitable’ organization funded by the government to treat Baltimore drug addicts, William Kristen Hathaway paid lucrative salaries to his family members while cheating the IRS and the employee pension plan,” said U.S. Attorney Rod J. Rosenstein. “This case highlights the need for close oversight of organizations that receive public funds.”
“Hathaway abused his position of trust at Baltimore Behavioral Health,” said Thomas Jankowski, Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office. “Through manipulation and theft, Hathaway’s scheme left the American taxpayers and the employees of Baltimore Behavioral Health with the tab for his greed.”
“Hathaway’s fraudulent actions hurt the livelihood of BBH employees. Today’s sentencing sends a clear message that this type of fraudulent activity is reprehensible and individuals committing these types of acts will be held accountable.” 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.
According to Hathaway’s plea agreement, he was the CEO for BBH, a tax-exempt organization that provided treatment to people with drug addictions and mental disorders. Hathaway exercised significant control over many aspects of BBH’s business affairs, including managing the company’s financial accounts and overseeing the employee payroll process, which included calculating the withholding of taxes and contributing to and maintaining employee benefit plans. The Board of Directors for BBH was primarily comprised of Hathaway’s relatives, including his wife, his sister, and his mother. Board members were paid a salary.
Hathaway admitted that from March 2009 through December 2011, he regularly deducted payroll taxes from all employees’ wages without forwarding the money to the IRS. For example in the second quarter of 2009, Hathaway caused $344,112.26 in federal payroll taxes to be withheld from employees’ wages, but he elected not to pay that amount over to the IRS. Hathaway admitted withholding a total of $2,495,779 in payroll taxes from March 2009 through December 2011, but instead of forwarding those funds to the IRS, he spent the money on company expenses. For example, during the same period, Hathaway authorized a total of $2,730,752 in salaries to BBH officers, including himself, and contractual payments to an entity owned and operated by his mother and stepfather.
Hathaway also served as a fiduciary for the employee pension plan and was responsible for transferring employee contributions to the retirement plan, as well as any matching company contributions to the custodian of assets for the BBH employee pension plan. Hathaway admitted that from September 2009 through April 2010, Hathaway diverted $53,530.07 in employee contributions to the BBH employee pension plan to pay company expenses, instead of transferring those funds to the custodian of assets.
United States Attorney Rod J. Rosenstein commended the IRS – CI and the Washington Regional Office, U.S. Department of Labor - Office of Inspector General, Office of Labor Racketeering and Fraud Investigations for their work in the investigation and the Employee Benefits Security Administration for its assistance in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Martin J. Clarke, who prosecuted the case.
Former Assistant Manager of the Wilkes-Barre City Employees Federal Credit Union Receives A Sentence of Two Years Supervised Release for Bank FraudRead the Press Release
WILKES-BARRE - The United States Attorney’s Office for the Middle District of Pennsylvania announced that a former Assistant Manager of the Wilkes-Barre City Employees Federal Credit Union was sentenced yesterday by United States District Judge A. Richard Caputo to a sentence of time served followed by two years of supervised release.
According to United States Attorney Peter Smith, Amanda Magda, age 29, of Wilkes-Barre, pleaded guilty to aiding and abetting bank fraud in January 2015. Magda was charged in a superseding indictment with codefendant, Leo Glodzik. The charges stem from a scheme involving a former Wilkes-Barre police officer, Tino Ninotti, and Glodzik, a contractor for the city, involving Ninotti allegedly conspired with Glodzik to secure a loan from the credit union by using false and fraudulent collateral. Magda falsely witnessed the signature of another person to the loan agreement which was actually forged by Ninotti. Magda no longer is employed at the credit union, which is under new management and has instituted new policies and procedures to address the problems and eliminate the abuses that led to the fraud prosecutions.
The charges against Leo Glodzik are still pending. Tino Ninotti pleaded guilty to conspiracy to commit bank fraud in April 2015 and sentencing is scheduled for December 1, 2015.
The investigation was conducted jointly by the Federal Bureau of Investigation and the Pennsylvania State Police.
Prosecution is assigned to Assistant United States Attorney Michelle L. Olshefski.
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Former Amtrak Police Department Officer Sentenced in Manhattan Federal Court for Embezzling Union FundsRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, announced that ERIC GIVENS, a former police officer with the National Railroad Passenger Corporation (“Amtrak”), and the former treasurer of the national union for Amtrak police officers, was sentenced in Manhattan federal court late yesterday to 16 months in prison for embezzling union funds. GIVENS previously pled guilty before U.S. District Judge Analisa Torres, who imposed yesterday’s sentence.
According to the Complaint, Indictment, public filings, and statements made during the sentencing proceeding:
GIVENS was employed as a police officer with Amtrak since May 1997, and was most recently assigned to Penn Station, in New York, New York. GIVENS served as the elected treasurer of the Amtrak Police Lodge 189 Labor Committee (the “Labor Committee”), the national union for Amtrak police officers, from 2003 through January 2010. During the same period, and continuing until November 2013, GIVENS also served as the elected treasurer of Amtrak Police Lodge 189 Inc. (the “Lodge”), a fraternal organization affiliated with the Labor Committee.
Starting in 2008, GIVENS stole more than $120,000 in total from the Labor Committee and Lodge by fraudulently charging personal expenses to the Labor Committee and Lodge and by withdrawing cash for his own purposes, and took steps to hide what he had done. During this period, GIVENS used the debit card of the Labor Committee to pay for, among other things, gasoline and food, and used the debit card of the Lodge to pay for, among other things, travel, hotels in multiple cities, and entertainment in New York and New Jersey. GIVENS also withdrew thousands of dollars in cash from Labor Committee and Lodge bank accounts.
* * *
GIVENS, 53, of East Stroudsburg, Pennsylvania, pled guilty to one count of embezzlement of union funds. In addition to the prison term, GIVENS was sentenced to three years of supervised release, and was ordered to pay approximately $127,000 in restitution, and to forfeit approximately $12,000.
Mr. Bharara praised the outstanding work of the U.S. Department of Labor’s Office of Labor-Management Standards and its Office of Inspector General’s Office of Labor Racketeering and Fraud Investigations. Mr. Bharara also thanked the Amtrak Police Department’s Office of Internal Affairs for its assistance.
The case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorney Daniel C. Richenthal is in charge of the prosecution.
Former Accounting Manager Pleads Guilty to Embezzling Nearly $400,000 from Huntersville-Area EmployerRead the Press Release
CHARLOTTE, N.C. – Amy Hilty, 38, formerly of Stanley, N.C. and now residing in Dalton, Ohio, appeared before U.S. Magistrate Judge David C. Keesler today and pleaded guilty to stealing nearly $400,000 from her former employer, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Hilty pleaded to one count of wire fraud and one count of tax evasion.
U.S. Attorney Rose is joined in making today’s announcement by Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
According to filed documents and today’s court proceedings, from 2008 to 2012, Hilty was employed as accounting manager for a company located in Huntersville, N.C. As the company’s accounting manager, Hilty’s responsibilities included preparing the company’s financial statements, maintaining QuickBooks, preparing payroll and making bank deposits. According to court records, Hitly used her access to the company’s accounting system to divert company funds to bank accounts she controlled. According to court records, Hilty covered her fraud by falsely recording the stolen funds in the company’s books and records as supplies, owner withdrawals and travel expenses, among others. In this manner, court records show that Hilty embezzled $390,156.73 from the company during the relevant time period and used the money to purchase a new home and a BMW vehicle. Court records also show that for tax years 2008 through 2011, Hilty did not file federal income tax returns, and failed to report the diverted income and her salary from the victim company, totaling $520,976.17.
Hilty was released on bond after her plea hearing. The wire fraud charge carries a maximum prison term of 20 years and a $250,000 fine. The tax fraud charge carries a maximum prison term of five years and a $250,000 fine. As part of her plea agreement, Hilty has agreed to pay restitution, the amount of which will be determined by the Court at sentencing. A sentencing date for the defendant has not been set yet.
The investigation was handled by the IRS-CI. The prosecution for the government is being handled by Assistant U.S. Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte.
Financial Customer Service Specialist Sentenced for Bilking Deceased Sisters’ Estate of $1.2 Million DollarsRead the Press Release
PROVIDENCE, R.I. – Ronald Hunt, 45, of Collinsville, Ill., a former financial customer service specialist for Columbia Management Investment Services (CMIS), a subsidiary of Ameriprise Financial, was sentenced today to 18 months in federal prison for defrauding the estate of two deceased sisters from Galway, Ireland, of more than $1.2 million dollars, announced United States Attorney Peter F. Neronha and Ted A. Arruda, Resident Agent in Charge of the Providence Office of the United States Secret Service.
At sentencing, U.S. District Court Chief Judge William E. Smith also ordered Hunt, formerly of Bristol, R.I., to serve two years supervised release and 100 hours of community service upon completion of his prison sentence. Hunt pleaded guilty on July 16, 2015, to wire fraud.
According to court documents, in March 2013, while working at a CMIS call center in Providence, Hunt used his position to research deceased clients who had unredeemed Ameriprise Financial accounts and no listed beneficiaries. Hunt identified two such accounts belonging to deceased sisters in Galway, Ireland.
According to court documents, in May 2013, Hunt submitted redemption paperwork for the two sisters’ accounts, using the alias “Sean Kane,” as the executor for the accounts. On May 20, 2013, using the alias, Hunt transferred $769,242.24 from one sister’s account and $459,531.91 from the second sister’s account into a CMIS account he created. Two days later he transferred the entire amount, $1,228,774.15, to a fictitious business bank account he created. On May 23, 2013, and again on August 29, 2013, Hunt withdrew funds totaling $750,000 from the business account.
Amerprise Financial recovered nearly all of the stolen funds. At sentencing, U.S. District Court Chief Judge Smith ordered Hunt to pay restitution in the amount of nearly $21,000, which represents the balance of the amount of money stolen from the sisters’ estates which was not previously recovered.
The case was prosecuted by Assistant U.S. Attorney Terrence P. Donnelly, with the assistance of Assistant U.S Attorney John P. McAdams.
The matter was investigated by the United States Secret Service, with the assistance of the Securities and Exchange Commission, Division of Enforcement.
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Contact:
Jim Martin (401) 709-5357
email: [email protected]
on Twitter @USAO_RI
Felon Sentenced to Eight Months Prison for Illegally Re-Entering the United States from MexicoRead the Press Release
A man who illegally re-entered the country was sentenced on November 9, 2015, to eight months in federal prison.
Baudilio Perez-Ramirez, age 34, from Guatemala, received the prison term after a September 14, 2015, guilty plea to one count of felon found after illegal re-entry.
At the guilty plea, Perez-Ramirez admitted he illegally re-entered the United States after being deported on December 15, 2011. Perez-Ramirez came to the attention of Immigration and Customs Enforcement (ICE) officials on August 19, 2015, when he was arrested in Sioux City after fleeing from officers attempting to establish his identity. Perez-Ramirez had previously been deported after being convicted of fraud and misuse of documents to obtain employment and re-entry of a removed alien in the United States District Court for the Northern District of Iowa on November 10, 2011.
Perez-Ramirez was sentenced in Sioux City by United States District Court Judge Mark W. Bennett. Perez-Ramirez was sentenced to eight months imprisonment. He must serve a 1-year term of supervised release. There is no parole in the federal system.
The case was prosecuted by Assistant United States Attorney Kevin C. Fletcher and investigated by Immigration and Customs Enforcement (ICE) and the Enforcement and Removal Office of the Immigration and Customs Enforcement Bureau.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 15-CR-4056.
Follow us on Twitter @USAO_NDIA.
Felon Pleads Guilty to Drug and Gun ChargesRead the Press Release
PITTSBURGH - A Pittsburgh resident pleaded guilty in federal court to charges of violating federal narcotics and firearms laws, United States Attorney David J. Hickton announced today.
Jeremiah Pashuta, 36, pled guilty to two counts before United States District Judge Mark R. Hornak.
In connection with the guilty plea, the court was advised that on Aug. 6, 2013, Pashuta possessed a sawed-off shotgun and two semi-automatic pistols on the day Pittsburgh Police Officers executed a search warrant at his residence. Police also located approximately 649 stamp bags containing a total of approximately 13 grams of heroin, thousands of dollars in cash, a drug scale and records of drug debts.
Pashuta has had multiple state court convictions for drug dealing, illegal gun possession and threats in the past. Federal law makes it illegal for a person to possess a firearm or ammunition after a state court conviction for an offense carrying a maximum penalty of more than 2 years in prison.
Judge Hornak scheduled sentencing for June 15, 2016, at 9:30 a.m. The law provides for a maximum total sentence of not less than 15 years and up to life in prison, a fine of $2,250,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history of the defendant.
Assistant United States Attorneys Cindy K. Chung and Ross E. Lenhardt are prosecuting this case on behalf of the government.
The Bureau of Alcohol, Tobacco, Firearms and Explosives and the Pittsburgh Bureau of Police conducted the investigation leading to the prosecution of Pashuta. This case is being prosecuted under Project Safe Neighborhoods, a collaborative effort by federal, state and local law enforcement agencies, prosecutors and communities to prevent, deter and prosecute gun crime.
Federal Murder Charges Unveiled in 73-Count Indictment Against Gang MembersRead the Press Release
SAN JOSE – A 73-count superseding indictment was unsealed today charging nine defendants with racketeering, murder, attempted murder, armed bank robbery, robbery affecting interstate commerce, and the use of firearms, announced Acting United States Attorney Brian J. Stretch. The arrests followed an investigation referred to as “Operation Daybreak,” so named for the early morning attacks that characterized the alleged criminal activity in this case.
Eight of the defendants- Daniel Chavez, AKA Youngster (age 33); Victor Skates, AKA Demon (age 26); Eduardo Lebron, AKA Warlord (age 36); Eder Torres, AKA Flaco (age 29); Julian Ruiz, AKA JJ (age 26); Antonio Cruz (age 28); Terrell Golden, AKA G (age 24); and Anthony Lek (age 28) are alleged to be Salinas-based Norteño gang members, while the ninth defendant, Robert Loera (age 35), is alleged to be an associate of the gang. According to the superseding indictment, all nine defendants conspired to commit murder and other violent crimes as part of a criminal RICO enterprise tied to their Norteño gang activity. The superseding indictment alleges that, over a two year time period, the defendants committed 12 murders, seven attempted murders, and seven bank robberies.
With respect to the murders and attempted murders, the superseding indictment alleges that the defendants hunted for rival gang members and other enemies, and shot and killed them and others suspected of being rival gang members. One of the homicides charged in the superseding indictment occurred on the campus of Alisal High School in Salinas, California.
“We greatly appreciate the tireless efforts of the Salinas Police Department in reducing violent crime in the Salinas Valley,” said U.S. Attorney Brian J. Stretch. “Operation Daybreak has been a critical part of exposing crime in the area. While there remains more work to be done, today’s indictment is the result of collective leadership of the Salinas Police Department, and the FBI.”
"This years-long investigation involved thousands of investigative hours by Salinas police detectives with the assistance of the Federal Bureau of Investigation,” said Chief Kelly J. McMillin of the Salinas Police Department. “This case demonstrates what we have known for many years; that very few individuals drive the majority of violence in Salinas. It should also serve to remind us all that the role of prevention and intervention efforts cannot be overlooked and in fact must be strengthened further to ensure other young men never think it's okay to shoot another. The Salinas Police Department would like to thank the people of the Office of the United States Attorney, Northern District of California, for their incredible dedication to bringing these individuals to justice."
As alleged in the superseding indictment, the armed bank robberies occurred in the cities of Salinas, Watsonville, and San Jose. In addition, there was an armed robbery of a Zales jewelry store in Gilroy.
All nine defendants have been charged with the crimes set forth in the first four counts of the superseding indictment:
- racketeering conspiracy, in violation of 18 U.S.C. § 1962(d);
- conspiracy to commit murder and assault with a dangerous weapon in aid of racketeering, in violation of 18 U.S.C. § 1959;
- use of firearms in furtherance of crimes of violence, in violation of 18 U.S.C. § 924(c); and
- robbery and conspiracy to commit robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a).
In addition, the following defendants have been charged with the following counts and additional crimes under the indictment:
Defendant
Charges
Counts in the Indictment
Daniel Chavez a/k/a Youngster
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1) and 2
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3) and 2
Attempted Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(5) and 2
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. §§ 1951(a) and 2
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-14, 21- 33,
46-48, 65-67,
71-73
Victor Skates a/k/a Demon
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1) and 2
Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3), (5) and 2
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a) and 2
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 2
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-17, 21-25, 29-34, 38-44, 46-55, 59-64, 68-70
Eduardo Lebron a/k/a Warlord
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1)
Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3), (5) and 2
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
35-37, 49-58
Eder Torres a/k/a Flaco
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1)
Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3), (5) and 2
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3) and 2
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a) and 2
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-7, 29-31,
65-67, 71-73
Julian Ruiz a/k/a JJ
Only charges in counts 1-4
Only counts 1-4
Antonio Cruz
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1)
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a) and 2
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-7, 18-20,
24-28, 59-64,
68-70
Terrell Golden a/k/a G
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1)
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
15-17
Anthony Lek
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a)
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-7, 24, 25
Robert Loera
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a)
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
Accessory After the Fact to Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(5) and 3
5-7, 45
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The maximum penalty each defendant faces upon conviction is life imprisonment. Chavez, Skates, Golden, Cruz, Torres, and Lebron are charged with death-eligible offenses. The decision whether to seek the death penalty against any or all of these defendants is pending. Additionally, periods of supervised release, fines, forfeitures, and special assessments also could be imposed. However, any sentence following conviction 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 all currently in law enforcement custody in various jurisdictions, including in the custody of the United States Marshals Service. Defendants are scheduled to appear before the Honorable Lucy Koh, United States District Judge, on Wednesday, November 18, 2015, at 9:30 a.m.
Assistant U.S. Attorney Stephen Meyer is prosecuting the case with the assistance of Nina Burney and Susan Kreider. The prosecution is the result of an investigation by the Salinas Police Department.
Federal Jury Convicts Brothers in Visa Fraud CaseRead the Press Release
DALLAS — Following a six-day trial before U.S. District Judge Barbara M. G. Lynn, a federal jury has convicted two brothers on felony offenses stemming from a conspiracy they ran, from approximately March 2005 to February 2011, to commit visa fraud to secure a low-cost workforce at their information technology consulting company headquartered in Carrollton, Texas, announced U.S. Attorney John Parker of the Northern District of Texas.
Atul Nanda, 46, and his brother, Jiten “Jay” Nanda, 44, were each convicted on one count of conspiracy to commit visa fraud, one count of conspiracy to harbor illegal aliens, and four counts of wire fraud. The conspiracy to commit visa fraud count carries a maximum statutory penalty of five years in federal prison and a $250,000 fine. The conspiracy to harbor illegal aliens count carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine. Each wire fraud count carries a maximum statutory penalty of 20 years in federal prison and a $250,000 fine. Both men were allowed to remain on bond, pending a detention hearing on Friday, November 13, 2015. A sentencing date was not set.
Dibon Solutions is an information technology consulting company located on Chenault Drive in Carrollton; it is a family operation created by the Nanda family. Atul and Jiten Nanda created, established and ran the corporation that they used to commit fraud through the H1-B visa program.
The H-1B visa program allows businesses in the U.S., such as Dibon, to temporarily employ foreign workers with specialized or technical expertise in a particular field such as accounting, engineering or computer science.
The government presented evidence at trial that as part of their scheme, the Nanda brothers recruited foreign workers with expertise who wanted to work in the U.S. They sponsored the workers’ H-1B visa with the stated purpose of working at Dibon headquarters in Carrolton, but, in fact, did not have an actual position at the time they were recruited and knew the workers would ultimately provide consulting services to third-party companies located throughout the U.S. Contrary to representations made by the conspirators to the workers (and the government), Jay and Atul Nanda directed that the workers only be paid for time spent working at a third-party company and only if the third-party company actually first paid Dibon for the workers’ services. Additionally, in Dibon’s visa paperwork, the conspirators falsely represented that the workers had full-time positions and were paid an annual salary, as required by regulation to secure the visas.
This scheme, according to evidence presented at trial, provided the conspirators with a labor pool of inexpensive, skilled foreign workers who could be used on an “as needed” basis. The scheme was profitable because it required minimal overhead and Dibon could charge significant hourly rates for a computer consultant’s services. Thus, the Nandas, as Dibon’s owners, earned a substantial profit margin when a consultant was assigned to a project and incurred few costs when a worker was without billable work. This scheme is known as “benching.” Dibon actively recruited H-1B workers for the “bench.”
The government presented further evidence that the Nandas required the H-1B visa candidates to pay the processing fees that the law requires to be paid by the company. The evidence at trial showed that the Nandas attempted to hide this by having the H-1B candidates pay the fees directly to Dibon either with cash or a check written to “Dibon Training Center.”
The case was investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement, Homeland Security Investigations and the U.S. Department of State.
Special Assistant U.S. Attorney Danial Gividen and Assistant U.S. Attorney Paul Yanowitch prosecuted.
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El Salvadorian Man Sentenced to Ten Years in Prison for Possession of Methamphetamine with Intent to DistributeRead the Press Release
Fayetteville, Arkansas – Kenneth Elser, Acting United States Attorney for the Western District of Arkansas, announced that Timothy Colhour, age 24, of Otis, Oregon, was sentenced today to a total of 170 months in federal prison followed by three years of supervised release and ordered to pay a $4,800.00 fine on one count of Distribution of Methamphetamine and one count of Use of a Firearm During and in Relation to a Drug Trafficking Offense. The Honorable Timothy L. Brooks presided over the sentencing in the United States District Court in Fayetteville.
According to court records, in December, 2014, as part of an investigation into the trafficking of methamphetamine in the region, a confidential source indicated to officers that he or she could purchase methamphetamine from the defendant, Timothy Colhour. On December 21, 2014, Colhour distributed methamphetamine, and later arranged to conduct a second transaction on December 23, 2014. When investigating officers arrived at the location where Colhour was to distribute the methamphetamine, they made contact with Colhour, and found him to be in possession of approximately 26.16 grams of pure methamphetamine hydrochloride and a loaded 9 mm handgun.
This case was investigated by the Rogers Police Department, the 4th Judicial Drug Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and the Drug Enforcement Administration (DEA). Assistant United States Attorney Kimberly Davis prosecuted the case for the United States.
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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
District Man Sentenced to over 11 Years in Prison for Sexually Abusing Child RelativeRead the Press Release
WASHINGTON – A 30-year-old man from Washington, D.C. was sentenced today to a prison term of 11 years and three months on a felony charge stemming from the sexual abuse of a child who is a relative, U.S. Attorney Channing D. Phillips announced
The defendant, who is not identified here to protect the privacy of the victim, pled guilty in September 2015, in the Superior Court of the District of Columbia, to one count of first-degree child sexual abuse. The plea, which was contingent upon the Court’s approval, called for a prison sentence of 11 years and three months. It also called for him to register for life as a sex offender. The Honorable Michael Ryan accepted the plea today and sentenced the defendant accordingly. Following the prison term, the defendant will be placed on five years of supervised release.
The charge stems from the man’s sexual abuse of a female relative when she was 10 to 11 years old. According to the government’s evidence, the defendant, on multiple occasions, went to the child’s home in Northwest Washington, where he engaged in various sexual acts with her. In May of this year, the girl disclosed vaginal discomfort to her mother, and was taken to Children’s National Medical Center. There, doctors diagnosed the child with Trichomonas, a sexually transmitted disease (STD). Afterwards, the child disclosed that the defendant had been sexually abusing her for the past one and a half to two years.
After the defendant’s arrest in July, the government obtained a urine sample from him, which was sent to the Johns Hopkins University’s STD Laboratory. The lab results showed that he possessed Trichomonas, the same STD he transferred to the child. The defendant has been in custody since his arrest.
In announcing the sentence, U.S. Attorney Phillips commended the work of the detectives of the Metropolitan Police Department’s Youth Investigations Division. He acknowledged the critical services provided to the complainant at the District of Columbia Children’s Advocacy Center, and the specialized medical treatment provided at the Children’s National Medical Center. He further commended the vital assistance provided by Dr. Jonathan Zenilman, Dr. Charlotte Gaydos, and Laboratory Manager Laura Dize from the Infectious Diseases Department at Johns Hopkins University. Finally, he commended the efforts of staff from the U.S. Attorney’s Office, including Child Forensic Interview Specialists Tracy Owusu and Karen Giannakoulias; Victim/Witness Advocate Veronica Vaughn; Paralegal Specialist Joyce Arthur; Legal Intern Allison Denton, and Assistant U.S. Attorney John L. Hill, who prosecuted the case.
District Man Pleads Guilty to Sexual Abuse of 13-Year-Old DaughterRead the Press Release
WASHINGTON – A 34-year-old man from Washington, D.C. pled guilty today to a charge of first-degree child sexual abuse with aggravating circumstances for sexually abusing his 13-year-old daughter, U.S. Attorney Channing D. Phillips announced.
The defendant, who is not identified here to protect the privacy of the victim, pled guilty in the Superior Court of the District of Columbia. The plea, which is contingent upon the Court’s approval, calls for a prison sentence between 9 ½ and 23 years. It also requires the defendant to register as a sex offender for 10 years upon his release. The Honorable Jennifer Anderson scheduled sentencing for Jan. 29, 2016.
According to the government’s evidence, the abuse occurred between July 19 and July 27, 2014 in Southeast Washington. The defendant, who is the victim’s father, was watching television with her in the defendant’s room. The defendant removed the victim’s pants and underwear, and sexually assaulted her. Afterwards, he apologized to the victim, promising that he wouldn’t sexually abuse her again.
The defendant, who left the Washington, D.C. area, was arrested by the U.S. Marshals Service in New York City on Sept. 10, 2015. He admitted having had sex with the victim. He also wrote the victim an apology letter, asking her to forgive him.
In announcing the plea, U.S. Attorney Phillips commended the work of the detectives of the Metropolitan Police Department’s Youth Investigations Division and of the Deputy U.S. Marshals based in New York. He also commended the efforts of staff from the U.S. Attorney’s Office, including Child Forensic Interview Specialists Tracy Owusu and Karen Giannakoulias; Victim/Witness Advocate Lezlie Richardson; Paralegal Specialist Joyce Arthur, and Assistant U.S. Attorney John L. Hill, who is prosecuting the case.
Delta Crossroads Leader Sentenced to 20 Years in PrisonRead the Press Release
LITTLE ROCK—Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; along with David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation (FBI); Colonel William J. Bryant, of the Arkansas State Police; and Donald Oakes, Chief of the West Memphis Police Department; announced today that Rafael McDaniel, age 33, of West Memphis, Arkansas, was sentenced to 20 years imprisonment following his convictions before Chief U.S. District Judge Brian S. Miller.
On March 20, 2015, McDaniel was convicted of drug trafficking and firearms offenses following a jury trial in Case No. 13CR329-1 BSM before Chief Judge Miller. At today’s sentencing hearing Chief Judge Miller determined that McDaniel was responsible for the distribution of between 840 grams and 2.8 kilograms of crack cocaine in West Memphis between January 2012 through November 2013. Chief Judge Miller further enhanced McDaniel’s sentence because McDaniel obstructed justice by lying about his drug and gun activities during his testimony at trial. Chief Judge Miller sentenced McDaniel to 15 years imprisonment on the drug trafficking offenses (Counts One, Two, and Twenty-Five), and a consecutive five years on the firearm offense (Count Twenty-Six), for a total of 20 years. There is no parole in the federal system. McDaniel will serve a term of four years of supervised release following his release from imprisonment, and must pay a $400 special assessment.
"We are committed to working together in this district to dismantle drug trafficking organizations operating in our communities," stated Thyer. "When local law enforcement asks for assistance from federal partners as the West Memphis Police Department did in this case, everyone benefits. Law enforcement, at all levels, is able to take advantage of increased manpower and resources to bring a case to a successful close.
"Our commitment to eradicating drug trafficking and violent crime has never been stronger. With this conviction, another violent drug dealer has been removed from the streets for a very long time."
"Today’s sentencing is a reflection of our continued commitment to addressing crime in Northeast Arkansas," SAC Resch said. "We appreciate the efforts of our partners, the United States Attorney’s Office, Arkansas State Police, and the West Memphis Police Department."
At trial, Rafael McDaniel was convicted of the following offenses:
• Count One: conspiracy to distribute and to possess with intent to distribute more than 28 grams of crack cocaine, in violation of 21 U.S.C. 846. This count carries a potential punishment of not less than five years and up to 40 years imprisonment, a fine of up to $5 million, and not less than four years and up to life supervised release.
• Count Two and Count Twenty-Five: Possession with intent to distribute cocaine base, commonly known as crack cocaine, in violation of 21 U.S.C. 841(a)(1). Each count carries a punishment of up to 20 years imprisonment, a fine of up to $1 million, and not less than three years and up to life supervised release.
• Count Twenty-Six: Possession of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. 924(c). This count carries a punishment of not less than five years and up to life imprisonment, which must be served consecutive to Counts One, Two, and Twenty-Five, up to a $250,000 fine, and up to five years supervised release.
McDaniel was acquitted of Count Eighteen (use of a telephone in furtherance of a drug trafficking crime, in violation of 21 U.S.C. § 843), and Count Three (possession of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. 924(c)).
Count Two stemmed from a search warrant executed by the West Memphis Police Department at McDaniel’s residence in West Memphis on February 19, 2012. Officers recovered crack cocaine, a kilogram press with cocaine residue, more than $12,000 in cash, and 14 firearms, many of which were loaded, among other items. Counts Twenty-Five and Twenty-Six stemmed from a search warrant executed by the FBI at McDaniel’s residence in West Memphis on November 18, 2013. Agents recovered cocaine, crack cocaine, scales with cocaine residue, more than $7,000 in cash, and five firearms, among other items.
The charges are the result of a state and federal Organized Crime and Drug Enforcement Task Force (OCDETF) investigation dubbed "Delta Crossroads." The investigation, which primarily focused on drug trafficking in West Memphis, was initiated by the FBI at the request of the West Memphis Police Department, which tasked several narcotics detectives to assist with the investigation. During the course of the investigation, law enforcement utilized three court-authorized wiretaps, during which hundreds of calls pertaining to cocaine and crack cocaine trafficking and firearms offenses were intercepted. On July 2, 2014, a federal grand jury returned a 26-count Superseding Indictment charging 18 individuals in Crittenden County with participating in the drug conspiracy and with firearms offenses. Rafael McDaniel was the sole defendant to go to trial. Sixteen defendants pleaded guilty in the Eastern District of Arkansas to drug trafficking offenses; one defendant resolved his charges as part of a related indictment in the Western District of Tennessee. Two defendants charged in the original indictment on November 6, 2013 were not included in the Superseding Indictment: one defendant resolved his charges as part of a related indictment in the Western District of Tennessee, and one defendant is deceased.
McDaniel’s co-defendants were previously sentenced before Chief Judge Miller, and received the following terms of incarceration:
- Demetrius Barrett, age 32, of West Memphis, 72 months imprisonment.
- Brandon Bohannon, age 31, of Marion, 168 months imprisonment.
- Brent Bohannon, age 23, of Jonesboro, 48 months imprisonment.
- Willie Brown, age 37, of West Memphis, 48 months imprisonment.
- Willie Cooper, age 52, of West Memphis, 60 months imprisonment.
- David Edwards, age 30, of Olive Branch, MS, 60 months imprisonment.
- Wendell Glenn, age 29, of West Memphis, 84 months imprisonment.
- David Green, age 27, of West Memphis, 120 months imprisonment.
- Delvin Green, age 25, of West Memphis, 121 months imprisonment.
- Courtney Hamilton, age 25, of West Memphis, 60 months imprisonment.
- John Hayes, age 50, of Houston, Texas, 96 months imprisonment.
- Michael McDonald, age 29, of West Memphis, 188 months imprisonment.
- Deloricko Prewitt, age 34, of West Memphis, 120 months imprisonment.
- Jessie Robinson, age 25, of West Memphis, 81 months imprisonment.
- Detarious Robinson, age 23, of West Memphis, 63 months imprisonment.
- Ronnie Sanes, age 35, of West Memphis, 96 months imprisonment.
"Operation Delta Crossroads made a tremendous impact on our community," West Memphis Police Chief Oakes said. "Many of the subjects arrested in Operation Delta Crossroads were extremely violent while they funneled drugs into our neighborhoods. This case is an example of the positive influence that we can have on a community when local, state, and federal agencies cooperate with each other."
The investigation was conducted by the United States Attorney’s Office, FBI, ASP, and West Memphis Police Department. It was prosecuted by Assistant United States Attorneys Julie Peters and Benecia Moore.
Criminal Defense Attorney Ramón Negrón-Colón Sentenced to 71 Months in Prison for Money LaunderingRead the Press Release
SAN JUAN, Puerto Rico – Today, Ramón M. Negrón-Colón, aka “Monchito,” was sentenced to 71 months (five years and eleven months) in prison for conspiracy to commit money laundering, announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the District of Puerto Rico. On April 4, 2014, the defendant pled guilty before United States District Court Senior Judge Juan Pérez-Giménez.
Ramón M. Negrón-Colón is an attorney licensed to practice law in Puerto Rico. Negrón-Colón represented José D. Figueroa-Agosto, aka “Junior Cápsula,” in judicial proceedings in Commonwealth courts. During the Fall of 1995, Figueroa-Agosto was convicted and sentenced to a prison term of 208 years in the Court of First Instance, San Juan, Puerto Rico. On November of 1999, Figueroa-Agosto utilized false documents to escape from a Commonwealth of Puerto Rico correctional facility. He remained a fugitive for over a decade until he was arrested on federal drug trafficking charges on July 18, 2010.
The indictment alleged that the object of the conspiracy was to nullify Figueroa-Agosto’s 208-year Commonwealth of Puerto Rico imprisonment term through illegal payments made with the proceeds of Figueroa-Agosto’s narcotics trafficking.
The indictment further alleged that beginning on a date unknown, but not later than 2007, until August 2013, Negrón-Colón and co-defendant Barreto-Ortiz, knowingly conducted and attempted to conduct financial transactions affecting interstate commerce, which transactions involved the proceeds of drug trafficking.
In late 2007, defendant Negrón-Colón indicated that the total cost of obtaining the nullification of Figueroa Agosto’s conviction and sentence would be between $2,500,000.00 and $3,000,000.00 in order to funnel illegal payments to public officials of the Commonwealth of Puerto Rico. Negrón-Colón received a few payments from individuals on different occasions in order to further the goals of the conspiracy.
The case was investigated by the Federal Bureau of Investigations (FBI) and Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI). The case was prosecuted by First Assistant U.S. Attorney Timothy Henwood.
Couple Sentenced in Mortgage Fraud SchemeRead 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 Timothy McCabe, 50, and Theresa Morales, 51, of Boynton, Florida (formerly of Buffalo), who were convicted of bank fraud, were sentenced by U.S. District Judge Richard J. Arcara. McCabe was sentenced to 27 months in prison and Morales was sentenced to two years of supervised release. The husband and wife were also ordered to pay over $1,000,000 in restitution to various banks and mortgage lenders.Assistant U.S. Attorney Kathleen A. Lynch, who handled the case, stated that the defendants executed a scheme to obtain mortgages, re-financing, and home equity credit lines, totaling $2,580,000, from various financial institutions. In furtherance of the scheme, McCabe and Morales put together loan applications, which contained materially false information as to defendant Morales’ employment and income, and as to the couple’s intent to reside at the properties as owner/occupants. The loan applications were then submitted to the financial institutions, either directly by the defendants, or through Nickel City Funding, a Western New York mortgage broker.
Relying on the representations in the loan applications, as well as false verifications provided by defendant McCabe, the financial institutions granted the loans, which totaled $2,580,000. The defendants made only minimal payments on the loans, causing the properties to go into foreclosure, and resulting in a loss to the financial institutions in excess of $1,000,000.
The sentencing is the culmination of an investigation on the part of Special Agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Adam S. Cohen and Special Agents of the United States Secret Service , under the direction of Special Agent in Charge C. Todd Laster.
Clay County man pleads guilty in Federal court to illegally possessing handgunRead the Press Release
CHARLESTON, W.Va. – United States Attorney Booth Goodwin announced today that Lloyd Ellis Rapp, 44, of Ivydale, West Virginia, entered a guilty plea in federal court in Charleston to being a felon in possession of a firearm. On June 15, 2015, Rapp was fleeing from the West Virginia State Police on his motorcycle. The pursuit ended with Rapp wrecking his motorcycle and being arrested. After the wreck, the West Virginia State Police found that Rapp was in possession of a Hi-Point Model C-9, 9mm semiautomatic handgun. Rapp was prohibited from possessing any firearm under federal law because of a 2008 felony conviction in United States District Court, Southern District of West Virginia, for distribution of methamphetamine.
Rapp faces up to ten years in federal prison and a fine of up to $250,000 when he is sentenced on February 16, 2016.
This case was investigated by the West Virginia State Police and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant United States Attorney Timothy D. Boggess is in charge of the prosecution.
The prosecution is part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide commitment to reduce gun crime in the United States by working with existing local programs that target gun crime.
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Chief Judge Diane P. Wood Receives the Justice Department's 2015 John S. Sherman AwardRead the Press Release
Judge Wood Recognized for Her Lifetime Contributions to the Development of Antitrust Law and Policy
Assistant Attorney General Bill Baer presented the 2015 John S. Sherman Award – the department’s highest antitrust honor – to Chief Judge Diane P. Wood of the U.S. Court of Appeals for the Seventh Circuit. Judge Wood is a leading antitrust scholar and served as a Deputy Assistant Attorney General in the department’s Antitrust Division between 1993 and 1995.
The John Sherman Award is named after Senator John Sherman, who authored our nation’s first antitrust law – the Sherman Act – in 1890. Established in 1994, the Sherman Award recognizes individuals whose commitment to sound antitrust enforcement and policy have made “substantial contributions to the protection of American consumers and the preservation of economic liberty.”
The award was presented to Judge Wood during a ceremony in the Great Hall of the Robert F. Kennedy Department of Justice building. “I cannot think of a more deserving recipient of the department’s highest antitrust honor,” said Deputy Attorney General Sally Quillian Yates. “Chief Judge Wood has consistently demonstrated her commitment to the legal profession and she has been a trailblazer throughout her career for those who aspire to protect economic freedom and opportunity by promoting free and fair competition in the marketplace.”
In presenting the award, Assistant Attorney General Baer said: “Judge Wood has deepened our understanding of antitrust law and competition policy – from the bench, from the halls of academia and here, as part of the Antitrust Division.” He also said that Judge Wood “is the author of a number of influential antitrust opinions,” a “noted scholar” who co-authors “one of the seminal casebooks in antitrust,” and, while at the Antitrust Division, “was the predominate force” behind the revised Enforcement Guidelines for International Operations that to this day “serve as a central tool for [the Division’s] international enforcement efforts.”
Judge Wood is the eleventh person to receive the Sherman Award and the first female recipient. Judge Wood was also one of the first women to clerk on the U.S. Supreme Court when she clerked for Justice Harry Blackman in 1976, and in 1990 she was the first woman to be honored with an endowed chair at the University of Chicago Law School.
This year’s ceremony marked the 125th anniversary of the passage of the Sherman Act, which, as the Supreme Court has observed, is the “Magna Carta of free enterprise” and “as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedom.”
Previous recipients of the Sherman Award include James F. Rill (2012), Robert Pitofsky (2010), Herbert Hovenkamp (2008), Robert H. Bork (2005), Richard A. Posner (2003), Milton Handler (1998), Thomas Kauper and William Baxter (1996), Phillip Areeda (1995), and Howard Metzenbaum (1994).