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10 November 2015
Former Archer County Justice of the Peace Faces up to 10 Years in Federal Prison for Stealing County FundsRead the Press Release
WICHITA FALLS, Texas — Joseph Charles Boyle, the former Justice of the Peace for Precinct 2 in Holliday, Texas, appeared in federal court this afternoon, before U.S. Magistrate Judge Robert K. Roach, and pleaded guilty to a felony Information charging one count of theft concerning programs receiving federal funds, announced U.S. Attorney John Parker of the Northern District of Texas.
Boyle, 63, of Holliday, faces a maximum statutory penalty of 10 years in federal prison and a $250,000 fine. He could also be ordered to pay restitution. He will remain on bond pending sentencing, which is set for March 14, 2016, before U.S. District Judge Reed C. O’Connor.
Boyle resigned his position as Justice of the Peace yesterday. In late August 2015, he retired from the Texas Department of Criminal Justice, where he worked as a correctional officer at the James V. Allred Unit in Iowa Park, Texas
According to documents filed in the case, Boyle served in his elected position in Archer County, Texas, since January 2003. As Justice of the Peace, Boyle was authorized to impose fines and assess fees on individuals cited with a variety of violations, such as minor in possession of alcohol, speeding, illegal passing, driving without a valid license, and other traffic violations.
From approximately January 1, 2013, through May 5, 2015, on numerous occasions, Boyle stole, embezzled, and obtained by fraud, funds that he collected as payment of fees, fines and penalties, and failed to turn that money over to its rightful owner, Archer County.
Boyle told individuals who had been cited with a violation that the fine was a certain amount, obtained payment from the individual in that amount, and provided the individual with a receipt in that amount. Boyle, however, then kept a portion of the individual’s payment and falsely reported to Archer County that the fine assessed, and the amount received as payment of the fine, was less than the amount he had actually assessed and received.
To help facilitate his theft, Boyle often requested that individuals pay their fines in cash. Frequently, he kept a portion of the cash the individual paid, and then purchased a money order to make the payment to Archer County, all in an effort to disguise the fact that he had been paid in cash.
Boyle admitted that the total amount of money that he stole, embezzled and obtained by fraud from Archer County was more than $40,000.
The FBI investigated the case. Assistant U.S. Attorney Douglas Brasher is in charge of the prosecution.
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Former Amarillo Resident Pleads Guilty to Attempted Child Sex Trafficking OffenseRead the Press Release
AMARILLO, Texas — Xzavion Dayshaun Ragsdale, a/k/a “Yung Billy,” 19, pleaded guilty this afternoon before U.S. Magistrate Judge Clinton E. Averitte to one count of attempted sex trafficking of a child, announced U.S. Attorney John Parker of the Northern District of Texas.
Ragsdale, formerly of Amarillo, Texas, and most recently Dallas, faces a statutory penalty of not less than 10 years and up to life in federal prison and a $250,000 fine. A sentencing date was not set.
According to plea documents filed in the case, Ragsdale admitted that from approximately March 30, 2015 to April 3, 2015, he attempted to recruit a 15-year-old girl to engage in commercial sex acts.
The investigation began when a Task Force Officer (TFO) with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) learned that a particular individual, later identified as Ragsdale, was using Facebook to recruit and entice teenage females for prostitution. In March 2015, the TFO set up an undercover Facebook account representing himself as a 15-year-old female, “A.M.,” and the two exchanged messages about A.M. working as a prostitute, with Ragsdale claiming, “you can make 2500 in a week if you really put the work into it.” Ragsdale sent A.M. his phone number and the two discussed a meeting; however, the conversation ended without any arrangements being made.
On April 1, 2015, A.M. received a private message on his undercover Facebook account from “Deswan Newsome,” a defendant in a related case. Newsome and A.M. exchanged messages about A.M. engaging in prostitution, and A.M. advised Newsome that she was 15-years-old.
On April 2, 2015, an Amarillo Police Department officer, posing as A.M., made a phone call to Newsome, who answered, but turned the call over to a female who provided more details about prostitution to A.M. A.M. advised the female that she was 15-years-old.
On April 3, 2015, A.M. and Newsome exchanged messages and agreed to meet at a convenience store in Amarillo so A.M. could engage in prostitution. When Newsome arrived at the location he was identified and arrested. He admitted talking to A.M. on Facebook and said that he was going to have someone else teach her how to perform sex acts, and that he’d get 60 percent of the money she made for performing the commercial sex acts.
Newsome, 19, of Amarillo, pleaded guilty in July 2015 to one count of attempted sex trafficking of a child. He was sentenced in September to serve 135 months in federal prison.
The Amarillo Police Department and ICE HSI investigated. Assistant U.S. Attorney Joshua Frausto is in charge of the prosecution.
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Folk Nation Gang Member Sentenced to Five Consecutive Terms of Life ImprisonmentRead the Press Release
Earlier today, Jamal Laurent, a member of a set of the violent street gang Folk Nation operating primarily in the Crown Heights and East Flatbush neighborhoods of Brooklyn, was sentenced to five consecutive terms of life imprisonment at the federal courthouse in Brooklyn, New York. Last week, on November 6, 2015, one of Laurent’s co-defendants, Trevelle Merritt, was sentenced to 40 years of imprisonment. On March 18, 2015, both defendants, along with a third defendant, Yasser Ashburn, were convicted, following a jury trial, of racketeering and racketeering conspiracy, including as racketeering acts the murders of Courtney Robinson, Brent Duncan, and Dasta James, and related crimes. Ashburn is scheduled to be sentenced on January 8, 2016, and faces a mandatory term of life imprisonment.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office; and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“The defendants committed a string of shootings, robberies, and other senseless acts of violence that for years terrorized the law-abiding members of their community,” stated United States Attorney Capers. “We hope that the sentences imposed give a measure of comfort and closure to the victims and their families, and serve as a warning and deterrent to those who would continue to commit crimes in the name of this violent gang.” Mr. Capers expressed his grateful appreciation to the FBI and the NYPD, the agencies that led the government’s investigation.
From approximately 2007 until their arrests, the defendants, all members of the Folk Nation gang, were responsible for numerous acts of gang-related violence, including homicides, non-fatal shootings, and robberies in and around Crown Heights and East Flatbush, as well as elsewhere in the tri-state area.
During the course of the summer of 2010, Laurent committed seven armed robberies and three shootings. On June 19, 2010, Laurent shot and killed 18-year-old Brent Duncan while Duncan sat in his car outside a party in Brooklyn. Laurent subsequently told a friend that he shot Duncan because Duncan was a member of the rival Crips gang, but no evidence ever established that Duncan belonged to, or was even associated with, that gang.
On July 7, 2010, the same day that Laurent robbed three individuals at gunpoint, Laurent also attempted to murder Louis Ivies, who Laurent believed to be a member of the Crips. After greeting Ivies on the street, Laurent removed a gun from his waistband and fired at him eight times, hitting him five times. Ivies was seriously injured but ultimately survived.
During a three-week period in January 2011, Merritt and fellow gang members participated in a robbery spree that culminated in murder. In the first two robberies, Merritt and others robbed two residents of the Ebbets Field Houses of their cell phones. On January 28, 2011, Merritt, Laurent, and another man attempted to rob Dasta James at his residence on McKeever Place in Brooklyn. During the course of the robbery, James was shot in the back and head. He was taken to Kings County Hospital, where he died.
The government’s case is being prosecuted by the Office’s Organized Crime & Gangs Section. Assistant United States Attorneys Darren LaVerne, M. Kristin Mace, and Margaret Lee are in charge of the prosecution.
The Defendants:
JAMAL LAURENT, also known as “Tails”
Age: 25
Brooklyn, NYTREVELLE MERRITT, also known as “Tiger”
Age: 22
Brooklyn, NYE.D.N.Y. Docket No. 11-CR-303 (NGG)
Florida Man Pleads Guilty in Manhattan Federal Court to Concealing A Bank Account in Liechtenstein Worth More Than $1 MillionRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that HARRY FALTERBAUER pled guilty today to willfully failing to file a Report of Foreign Bank and Financial Accounts (“FBAR”) with the IRS regarding a secret offshore bank account he maintained and controlled. FALTERBAUER, a United States citizen and resident of Florida, maintained the undeclared account at a bank in Liechtenstein from approximately 1988 to 2008. During that time, the account reached a high balance of more than $1.5 million. FALTERBAUER, who was arrested in July 2015, entered his guilty plea before U.S. District Judge Jesse M. Furman.
Manhattan U.S. Attorney Preet Bharara said: “As he admitted, Harry Falterbauer tried to conceal his million-dollar offshore bank account from U.S. authorities. Today’s plea is a reminder that we continue to work with the IRS to investigate and prosecute taxpayers who seek to use bank-secrecy laws abroad to avoid legal obligations in the U.S.”
According to the Indictment previously filed in Manhattan federal court and statements made in court in connection with FALTERBAUER’s guilty plea:
FALTERBAUER opened an account at Liechtensteinische Landesbank AG, a bank based in Vaduz, Liechtenstein (“LLB-Vaduz”), in the late 1980s. Although FALTERBAUER opened the account in his own name, the bank referred to the account exclusively by its number in order to conceal the connection to FALTERBAUER. In an affidavit provided to the bank in 2003, FALTERBAUER declared that he was a U.S. citizen and that he was not authorizing LLB-Vaduz to disclose his name to U.S. tax authorities.
The account generated capital gains and losses from investments, reaching a high balance of more than $1.5 million in approximately 2007. It had a balance of more than $1.1 million before its closure in 2008.
For the calendar year 2008, FALTERBAUER willfully failed to disclose on his tax returns both his interest in the LLB-Vaduz account and the income that account generated. For the same year, FALTERBAUER also willfully failed to file an FBAR with the IRS, as the law required him to do.
Liechtenstein amended its laws in 2012 to permit banks to produce documents relating to certain U.S. taxpayers to the Department of Justice. LLB-Vaduz subsequently provided files from undeclared accounts, including FALTERBAUER’s, to this Office.
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FALTERBAUER, 60, faces a maximum sentence of five years in prison. As part of his plea agreement, FALTERBAUER has agreed to pay a civil penalty of $794,500, file amended tax returns, and pay back taxes of at least $15,013. He is scheduled to be sentenced by Judge Furman on February 24, 2016 at 4 p.m. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the outstanding investigative work of IRS-CI. Mr. Bharara also thanked the U.S. Department of Justice’s Tax Division for its assistance.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Sarah Paul and David Abramowicz are in charge of the prosecution.
Final Defendant from Operation "Spa City Special" Sentenced to Nine Years in Federal Prison for Drug TraffickingRead the Press Release
El Dorado, Arkansas - Kenneth Elser, Acting United States Attorney for the Western District of Arkansas, announced that Tyrong Godbold, aka “Bull”, age 43, of Hot Springs, was sentenced today on one count of Distribution of Cocaine Base to 108 months in federal prison followed by three years of supervised release. The Honorable Susan O. Hickey presided over the sentencing in the United States District Court in El Dorado.
Beginning in March of 2012, the Hot Springs Street Crimes Unit in conjunction with the ATF launched an investigation in response to the emerging gang violence and drug trafficking. Over 80 controlled buys of crack cocaine and methamphetamine were conducted during the course of this investigation. The investigation resulted in the seizure of over 500 grams of crack cocaine, seven vehicles valued at over $50,000, 17 firearms, methamphetamine, and over $15,000 in cash. 24 defendants were originally charged in state and federal court in this operation called the Spa City Special. Godbold was the final defendant to be sentenced.
This case was investigated by the Hot Springs Police Department and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant United States Attorney David Harris 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
Federal Officials Close Review into the Death of Dontre HamiltonRead the Press Release
The Justice Department announced today that there is insufficient evidence to pursue federal criminal civil rights charges against former Milwaukee Police Officer Christopher Manney for the death of Dontre Hamilton on April 30, 2014.
Officials from the U.S. Attorney’s Office of the Eastern District of Wisconsin, the Department of Justice’s Civil Rights Division and the FBI met today with Hamilton’s family and their representatives to inform them of this decision.
Federal authorities conducted a comprehensive and independent review of the evidence collected related to the death of Hamilton, who was shot during a struggle with Manney. This included reviewing all information from the state investigation, reviewing all recorded interviews, consulting with the Milwaukee County medical examiner and reviewing the transcripts from Manney’s termination hearing by the Milwaukee Fire and Police Commission.
The team of experienced federal prosecutors and FBI agents considered whether Manney violated federal law by willfully using unreasonable force against Hamilton. Under the applicable federal criminal civil rights statute, prosecutors must establish, beyond a reasonable doubt, that a law enforcement officer willfully deprived an individual of a Constitutional right. To establish willfulness, federal authorities must show that the officer acted with the deliberate and specific intent to do something the law forbids. This is the highest standard of intent imposed by law. Mistake, misperception, negligence or poor judgment are not sufficient to establish a federal criminal civil rights violation.
In this case, there were numerous civilian witnesses who saw some part of the physical confrontation between Manney and Hamilton. Based on those eyewitness accounts, the account of the former officer involved, the physical evidence and the assessments of independent use of force experts, the team of experienced federal prosecutors and FBI agents determined that the evidence was insufficient to prove, beyond a reasonable doubt, that Manney acted willfully with a bad purpose to violate the law. Accordingly, the federal review of this incident has been closed without prosecution. This decision is limited strictly to an application of the high legal standard required to prosecute the case under the federal civil rights statute; it does not reflect an assessment of any other aspect of the incident that led to Hamilton’s death.
The U.S. Attorney’s Office of the Eastern District of Wisconsin, the Civil Rights Division and the FBI are committed to investigating allegations of civil rights violations by law enforcement officers and will continue to devote the resources required to ensure that all allegations of serious civil rights violations are fully and completely investigated. The department will aggressively prosecute criminal civil rights violations whenever there is sufficient evidence to do so.
Federal Officials Close Review into the Death of Dontre HamiltonRead the Press Release
WASHINGTON – The Justice Department announced today that there is insufficient evidence to pursue federal criminal civil rights charges against former Milwaukee Police Officer Christopher Manney for the death of Dontre Hamilton on April 30, 2014.
Officials from the U.S. Attorney’s Office of the Eastern District of Wisconsin, the Department of Justice’s Civil Rights Division and the FBI met today with Hamilton’s family and their representatives to inform them of this decision.
Federal authorities conducted a comprehensive and independent review of the evidence collected related to the death of Hamilton, who was shot during a struggle with Manney. This included reviewing all information from the state investigation, reviewing all recorded interviews, consulting with the Milwaukee County medical examiner and reviewing the transcripts from Manney’s termination hearing by the Milwaukee Fire and Police Commission.
The team of experienced federal prosecutors and FBI agents considered whether Manney violated federal law by willfully using unreasonable force against Hamilton. Under the applicable federal criminal civil rights statute, prosecutors must establish, beyond a reasonable doubt, that a law enforcement officer willfully deprived an individual of a Constitutional right. To establish willfulness, federal authorities must show that the officer acted with the deliberate and specific intent to do something the law forbids. This is the highest standard of intent imposed by law. Mistake, misperception, negligence or poor judgment are not sufficient to establish a federal criminal civil rights violation.
In this case, there were numerous civilian witnesses who saw some part of the physical confrontation between Manney and Hamilton. Based on those eyewitness accounts, the account of the former officer involved, the physical evidence and the assessments of independent use of force experts, the team of experienced federal prosecutors and FBI agents determined that the evidence was insufficient to prove, beyond a reasonable doubt, that Manney acted willfully with a bad purpose to violate the law. Accordingly, the federal review of this incident has been closed without prosecution. This decision is limited strictly to an application of the high legal standard required to prosecute the case under the federal civil rights statute; it does not reflect an assessment of any other aspect of the incident that led to Hamilton’s death.
The U.S. Attorney’s Office of the Eastern District of Wisconsin, the Civil Rights Division and the FBI are committed to investigating allegations of civil rights violations by law enforcement officers and will continue to devote the resources required to ensure that all allegations of serious civil rights violations are fully and completely investigated. The department will aggressively prosecute criminal civil rights violations whenever there is sufficient evidence to do so.
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Federal Jury Finds 2 Guilty of All Counts in Sacramento-Area Builder Bailout Mortgage Fraud SchemeRead the Press Release
SACRAMENTO, Calif. — A federal jury found two defendants guilty today of mail fraud and making false statements on loan applications in a scheme that provided financial incentives to straw buyers to get them to purchase homes that developers were having difficulty selling, United States Attorney Benjamin B. Wagner announced.
Edward Khalfin, 58, of San Mateo, was found guilty of 12 counts of mail fraud and 11 counts of making false statements on loan applications. Robin Dimiceli, 53, of Brentwood, was found guilty of six counts of mail fraud and six counts of making false statements on loan applications.
According to court documents, from August 2006 through May 2008, two brothers, Volodymyr Dubinsky, 56, formerly of Folsom, and Leonid Doubinski, 50, formerly of Copperopolis, built, developed, and sold real estate in Carmichael, Sacramento, and Copperopolis. As the real estate market declined, the brothers recruited family members, employees, and associates with good credit to act as straw buyers for residential properties. The Dubinsky brothers have not been apprehended and are fugitives thought to be residing in Ukraine.
Khalfin was a licensed mortgage broker; his company was called Bay Financial Co. Dimiceli was a licensed real estate salesperson and was self-employed at Trinity Mortgage Capital, which was affiliate with Windsor Mortgage Capital. Khalfin and Dimiceli assisted in the scheme by submitting the loan applications for the straw buyers. They allegedly prepared and submitted applications to lenders that falsely stated the straw buyers’ income, assets, and intent to occupy the homes as their primary residences. Dimiceli was a straw buyer for at least two properties involved in the scheme.
This case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant United States Attorneys Todd A. Pickles and Roger Yang are prosecuting the case.
Three other indictments were brought relating to this scheme. Four defendants have pleaded guilty and are scheduled to be sentenced: Svetlana Dubinsky, 51, of Boca Raton, Fla.; Serge Doubinski, 32, of San Francisco; Zinayda Chekayda, 52, of Antelope, (docket # 2:12-cr-327 WBS); and Kory Schmidli, 37, of Linden (docket # 2:12-cr-330 GEB). A trial is pending for Diana Woods, 58, of Citrus Heights, on March 8, 2016 (docket # 2:12-cr-329). Volodymyr Dubinsky and Leonid Doubinski are fugitives. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Sentencing is set for Khalfin and Dimiceli for February 1, 2016, by United States District Judge William B. Shubb. The defendants face a maximum statutory penalty of up to 20 years in prison and a $250,000 fine for mail fraud and 30 years in prison and a $1 million fine for false statements on a loan or credit application. The actual sentence, however, will 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.
Federal Inmate Sentenced for Assaulting a Correctional OfficerRead the Press Release
PANAMA CITY, FLORIDA –Kenneth Hobson, 33, of Memphis, Tennessee, was sentenced today to 92 months in prison for knowingly assaulting and injuring a correctional officer at the Federal Correctional Institution in Marianna. The sentence was announced by Christopher P. Canova, Acting United States Attorney for the Northern District of Florida.
The jury convicted the defendant after the government presented evidence that, in July 2014, Hobson forcibly assaulted a corrections officer when the officer attempted to search him for possession of contraband. During the assault, Hobson delivered multiple punches to the officer’s face and body, punching and kicking the officer as he was rendered unconscious. The officer fell to the ground, and Hobson continued to punch and kick him. The officer sustained contusions to his face and jaw, a fractured cheek bone, and a loose tooth.
The case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Kathryn D. Risinger.
The United States Attorney's Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. The office strives to protect and serve the citizens of the Northern District of Florida through the ethical, vigorous, and impartial enforcement of the laws of the United States, to defend the national security, to improve the safety and quality of life in our communities through the protection of civil rights, and to protect the public funds and financial assets of the United States. To access available public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
For more information, contact: Amy Alexander, Public Information Officer
(850) 216-3854, [email protected]Federal Grand Jury Returns Indictment Against Convicted Felon for Drugs and Firearms ViolationsRead the Press Release
Contact Person: Beth Drake (803) 929-3000
United States Attorney Bill Nettles stated today that a Federal Grand Jury in Greenville, South Carolina, returned Indictment(s) against the following:
Robert Samuel Hollingsworth, age 37, was charged in a multi-count indictment. The indictment alleges that Hollingsworth violated federal law on two dates. First, it alleges that on November 15, 2014, Hollingsworth possessed with the intent to distribute methamphetamine, hydrocodone, marijuana, diazepam, and carisoprodol. Also on November 15, 2014, the indictment alleges that Hollingsworth possessed a firearm, a Smith & Wesson .40 caliber pistol, in furtherance of a drug trafficking crime and did possess the firearm and ammunition associated with the firearm after having been convicted of a felony.
Second, the indictment alleges that on June 18, 2015, Hollingsworth possessed ammunition after having been convicted of a felony.
If convicted on the charges in the indictment, Hollingsworth faces up to 30 years imprisonment on the drug charge plus an additional 5 years to life imprisonment on the firearms charges. The Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Department of Homeland Security/Homeland Security Investigations, the United States Marshals Service, the Greenville County Sheriff’s Office, Greenville County Department of Public Safety, and the Greer Police Department investigated the case. Andy Moorman with the U.S. Attorney?s Office will be prosecuting.
The United States Attorney stated that all charges in these Indictments are merely accusations and that all defendants are presumed innocent until and unless proven guilty.
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Essex County, New Jersey, Man Sentenced to 30 Years in Prison for Taking Cellphone Pictures While Sexually Abusing Two ChildrenRead the Press Release
NEWARK, N.J. – A Newark, New Jersey, man was sentenced today to 360 months in prison for sexually abusing two girls and recording the conduct on his cellphone, U.S. Attorney Paul J. Fishman announced.
Justin Kinney, 26, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to an indictment charging him with two counts of producing child pornography. Judge Chesler imposed the sentence today in Newark federal court.
According to the documents filed in the case and statements made in court:
On Oct. 25, 2012, law enforcement executed a search warrant on Kinney’s laptop computer and cellphone, which revealed several files of child pornography that appeared to be taken with Kinney’s cellphone. Kinney admitted that two of the images, dated Aug. 19, 2012 and Oct. 10, 2012, were taken by him while he sexually abused two girls.
In addition to the prison term, Judge Chesler sentenced Kinney to a lifetime term of supervised release. Kinney is required to register as a sex offender.
U.S. Attorney Fishman credited special agents of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Acting Special Agent in Charge Kevin Kelly and the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorneys Danielle M. Corcione and Danielle Alfonzo Walsman of the U.S. Attorney’s Office Criminal Division in Newark.
Defense counsel: Assistant Federal Public Defender John H. Yauch Esq., Newark
El Paso Man Sentenced to Federal Prison on Child Enticement ChargeRead the Press Release
In El Paso today, 37–year-old Salvador Lopez of El Paso was sentenced to 125 months in federal prison followed by five years of supervised release for attempting to entice a minor into engaging in sexually explicit conduct announced United States Attorney Richard L. Durbin, Jr., and Homeland Security Investigations (HSI) Special Agent in Charge Waldemar Rodriguez, El Paso Division.
On August 21, 2015, Lopez pleaded guilty to the enticement charge. By pleading guilty, Lopez admitted that in April 2013, he engaged in sexually explicit communications, with whom he believed to be a 14-year-old female, in an attempt to coerce and entice her into having unlawful sexual intercourse.
Lopez has remained in federal custody since his arrest on May 1, 2013, when he arrived to a pre-arranged meeting with the minor who turned out to be an undercover agent.
This case was investigated by Homeland Security Investigations and prosecuted by Assistant U.S. Attorneys Ian Hanna and Robert White.
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 U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, 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.
Doctors and Associates Indicted in First Wave of Massive Bribery SchemeRead the Press Release
For Further Information, Contact: Assistant U.S. Attorneys Fred Sheppard (619) 546-8237, Valerie Chu (619) 546-6750, and Caroline Han (619) 546-6968
NEWS RELEASE SUMMARY – November 10, 2015
SAN DIEGO – Eight medical professionals and associates are charged in federal grand jury indictments with buying and selling patients in a bribery scheme involving $25 million in improper claims for medical services and devices which were then billed to California Workers’ Compensation insurance companies.
FBI agents along with investigators from the California Department of Insurance and the San Diego County District Attorney’s Office served five search warrants and three seizure warrants today at locations in San Diego, Chula Vista, National City, Murietta and Los Angeles. Authorities arrested five people, including a radiologist, a chiropractor, a medical equipment provider, a medical clinic administrator and a so-called medical marketer. An attorney and a medical service provider were summoned to appear in federal court on Thursday. One indicted defendant, Gonzalo Paredes, remains a fugitive and a warrant has been issued for his arrest.
These defendants, plus six corporations, are charged in three federal grand jury indictments unsealed today with conspiracy and honest services mail fraud. The indictments allege that these players either paid or received tens of thousands of dollars to buy or sell hundreds of patients, without the patients’ knowledge - therefore depriving those patients of their right to their doctors’ honest services.
“Today’s indictments are only the first wave of charges in what we believe is rampant corruption on the part of some physicians and chiropractors in their dealings with the health care system in general, and California’s Workers’ Compensation System in particular,” said U.S. Attorney Laura Duffy. “A patient puts his trust, and his very life, into the hands of his physician. A doctor’s decisions should never, under any circumstances, be influenced by anything other than the patient’s best interest.”
“Today's indictments show how the defendants in this case allowed greed and corruption to influence their patient care decisions and treated their patients as a commodity to be bought and sold,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI will continue to use our intelligence and investigative expertise to identify, disrupt and dismantle sophisticated criminal conspiracies that unlawfully enrich individuals at the expense of patient care. The FBI and our law enforcement partners are committed to rooting out corruption in our health care system.”
“This criminal network bought and sold patients like cattle,” said District Attorney Bonnie Dumanis. “They cashed in on people who trusted them with their health and they conspired to illegally game the system on a level that we’ve not seen before. But, the game is over.”
“Our detectives from the California Department of Insurance worked closely with the FBI, United States Attorney's Office and San Diego District Attorney's office to investigate and arrest these medical providers for insurance fraud, which adds crippling costs to California's workers compensation system,” said Department of Insurance Commissioner Dave Jones. “These are not victimless crimes. When medical providers defraud insurers, those costs are passed on to California businesses and consumers, who already are struggling to make ends meet.”
This is how the schemes worked:
Patients who said they were injured on the job filed a workers’ compensation claim with the state of California and sought treatment for their injury. In this round of indictments, the workers sought help from a chiropractor.
The chiropractors were the gateway to a wide-array of health care fraud. In these cases alone they prescribed medical equipment, referred the patients for MRIs and X-Rays, and ordered specialized treatments such as Shockwave therapy.
As alleged in one of the indictments, Los Angeles radiologist Ronald Grusd paid bribes to a San Diego chiropractor in exchange for patient referrals. The bribes were funneled to the chiropractor via Grusd’s corporation, Willows Consulting, a shell company. The checks were labeled “professional services,” but this was a sham.
In order to further hide the illegal kickbacks, checks were issued to intermediaries - defendants Alexander Martinez and his father, Ruben - through their front companies, “Line of Sight” and “Desert Blue Moon.” The Martinezes took their “cut” and then, in turn, paid off the chiropractor.
Grusd’s practice, California Imaging Network Medical Group, has clinics in San Diego, Los Angeles, Beverly Hills, Fresno, Rialto, Santa Ana, Studio City, Bakersfield, Calexico, East Los Angeles, Lancaster, Victorville and Visalia.
In another indictment, a second San Diego chiropractor, Dr. George Reese, with offices on El Cajon Boulevard, referred patients to a Los Angeles area medical service provider (controlled by attorney Lee Mathis and Fernando Valdes, president of Foremost Shockwave Solutions ) in return for bribes. The bribes were set by the conspirators at $100 per patient and paid through an intermediary. After taking a cut amounting to $25 per patient, the intermediary would pay the remaining $75 per patient to Reese.
Although disguised as “office rent” payments, the illegal bribes were paid in cash during clandestine exchanges in restaurants and parking lots. For example, $6,000 in cash was delivered to Reese in the parking lot of the Jolly Roger in Oceanside, hidden in a gift bag. Other times, it was passed in envelopes or stashed inside newspapers.
According to the indictment, Reese and his codefendants generated and submitted bills to insurers totaling in the tens of millions of dollars. Most of these treatments involved the providing of “Shockwave therapy,” which uses low energy sound waves to initiate tissue repair. Proceeds from the insurance claims generated through this scheme were paid to Mathis and Valdes.
In the final indictment, a San Diego chiropractor referred patients to a licensed provider of durable medical equipment, Julian Garcia. In return Garcia paid the chiropractor $50 for each patient – in cash, to disguise the kickbacks. Garcia then improperly billed Workers Comp insurers millions for hot and cold packs for patients who had been secured by bribes.
Anyone with information about healthcare fraud may call the FBI at 1-800-CALL-FBI, or 1-800-225-5324 or the California Department of Insurance’s toll-free fraud hotline, 800-927-4357.
An arrest itself is not evidence that the defendant committed crimes charged. The defendant is presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.
DEFENDANTS Case Number: 15cr2821-BAS
Ronald Grusd Age 69 Los Angeles, CA
**Gonzalo Ernesto Paredes Age 59 LaVerne, CA
Alexander Martinez Age 37 Calexico, CA
Ruben Martinez Age 59 Murietta, CA
California Imaging Network Incorporated in 2007 Beverly Hills, CA
Willows Consulting Company Incorporated in 2011 Beverly Hills, CA
Line of Sight, Inc. Incorporated in 2002 Calexico, CA
Desert Blue Moon Incorporated in 2001 Las Vegas, NV
DEFENDANTS Case Number: 15cr2822-CAB
George K. Reese Age 50 San Diego, CA
*Lee Mathis Age 70 San Clemente, CA
*Fernando Valdes Age 50 Westminster, CA
George K. Reese Chiropractic Corp. Incorporated in 2001 San Diego, CA
Foremost Shockwave Solutions Incorporated in 2005 Garden Grove, CA
DEFENDANT Case Number: 15cr2820-BAS
Julian Garcia Age 32 National City, CA
SUMMARY OF CHARGES
Conspiracy to Commit Honest Services Mail Fraud, in violation 18 U.S.C. 371
Maximum Penalty: Five years in custody; $250,000 fine and three years’ supervised release
Honest Services Mail Fraud, in violation of 18 U.S.C. Secs. 1341 and 1346
Maximum Penalty: Twenty years in custody; $250,000 fine or twice the pecuniary gain or loss, whichever is greater, and three years’ supervised release
Travel Act, in violation of U.S.C. 1952
Maximum Penalty: Five years in custody; $250,000 fine and three years’ supervised release
INVESTIGATING AGENCIES
Federal Bureau of Investigation
San Diego County District Attorney’s Office
California Department of Insurance
*Not arrested, but were summoned to appear before a judge on Thursday.
**Still at large
District Man Pleads Guilty to Federal Charge for Role in Massive Identity Theft and Tax Fraud SchemeRead the Press Release
WASHINGTON – A resident of the District of Columbia pleaded guilty today to a charge stemming from his involvement in a far-reaching stolen identity refund fraud scheme in which he and others working with him obtained over $315,000 through the filing of fraudulent federal income tax returns seeking refunds, the Justice Department announced.
Ezekiel Raspberry, 39, is the second defendant to plead guilty to federal charges in recent weeks. Approximately 14 people have pleaded guilty to charges in the U.S. District Court for the District of Columbia. According to court documents, the overall case involves the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $40 million from the U.S. Treasury.
The guilty plea was announced by Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Channing D. Phillips of the District of Columbia, Special Agent in Charge Thomas Jankowski of the Internal Revenue Service-Criminal Investigation (IRS-CI), Inspector in Charge David G. Bowers of the U.S. Postal Inspection Service, Washington Division, and Assistant Inspector General for Investigations John L. Phillips of the U.S. Department of the Treasury.
Raspberry pleaded guilty to conspiracy to defraud the United States with respect to claims. Sentencing was set for Jan. 15, 2016. Under federal sentencing guidelines, Raspberry faces an advisory guideline range of 24 to 30 months in prison and a fine of up to $50,000 at his sentencing before the Honorable U.S. District Judge Ellen S. Huvelle of the District of Columbia. In addition, as part of his plea agreement, Raspberry must pay $315,076 in restitution to the IRS.
According to the government’s evidence, Raspberry participated in a massive and sophisticated stolen identity refund fraud scheme that involved an extensive network of more than 130 people, many of whom were receiving public assistance. The refunds were sought for tax years 2005 through 2012, often in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners. In other cases, the refunds were sent to people who were willing participants in the scheme. The refunds listed more than 400 “taxpayer” addresses located in the District of Columbia, Maryland and Virginia.
According to documents filed with the court, from September 2008 through November 2010, Raspberry and others conspired to defraud the IRS of approximately $315,076 through the filing of 145 fraudulent federal income tax returns. Raspberry received refund checks from a co-conspirator and deposited them into his bank account. He would then withdraw the funds and provide them to the co-conspirator, keeping a portion of the proceeds for himself.
The refund checks were generated by filing false U.S. federal income tax returns, attaching the Schedule C or C-EZ Net Profit From Business, which falsely claimed that each “taxpayer” operated a business as a sole proprietorship, including a “barber” or “childcare.” The returns falsely stated that the “taxpayer” had gross receipts and two or more dependent children, when, in fact, the “taxpayer” was either a victim of identity theft, was misled into providing his or her identifying information, or was a willing participant in the scheme. No such business had been operated by the “taxpayer;” and the “taxpayer” had no such dependents.
In a related action, Bernard Rankin, 43, of Glenarden, Maryland, pleaded guilty on Nov. 4, 2015, to conspiracy to defraud the United States with respect to claims. Rankin admitted permitting the use of his residential address and bank account in the scheme and recruiting another individual to deposit fraudulently obtained tax refund checks into that individual’s bank account as well.
In announcing the pleas, Acting Assistant Attorney General Ciraolo, U.S. Attorney Phillips, Special Agent in Charge Jankowski, Inspector in Charge Bowers and Assistant Inspector General Phillips commended those who investigated the case. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office of the District of Columbia, including former Assistant U.S. Attorney Sherri L. Schornstein and Paralegal Specialist Donna Galindo. Finally, they expressed appreciation for the work of Assistant U.S. Attorney Ellen Chubin Epstein of the District of Columbia’s Fraud and Public Corruption Section and Trial Attorneys Jeffrey B. Bender and Thomas F. Koelbl and former Trial Attorney Jessica Moran of the Tax Division, who prosecuted the case.
Delano Man Sentenced to 6.5 Years in Prison for Receiving and Distributing Child PornographyRead the Press Release
FRESNO, Calif. — Michael David Wilson, 32, of Delano, was sentenced late Monday afternoon by Senior United States District Judge Anthony W. Ishii to six and a half years in prison for receiving and distributing child pornography, United States Attorney Benjamin B. Wagner announced.
According to court documents, between September 2012 and April 2013, Wilson received and distributed more than 1,400 images and video files depicting minors engaged in sexually explicit conduct. The illicit files also involved the portrayal of sadistic, masochistic, and other depictions of violence, and included depictions of prepubescent minors. On July 25, 2013, Wilson was charged with receiving and distributing child pornography, and he pleaded guilty to the charge on August 27, 2014.
“The actions of child predators cause irreparable harm to children across our nation,” said Ryan L. Spradlin, special agent in charge for HSI San Francisco. “The victims of these criminals deserve outcomes like today. With the tireless efforts made by HSI and our law enforcement partners, we will continue to hunt down predators and hold them accountable for their disturbing actions.”
This case was the product of an investigation by the Bakersfield office of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorney Brian W. Enos prosecuted the case.
DC Man Pleads Guilty to Federal Charges for Role in Massive Identity Theft and Tax Fraud SchemeRead the Press Release
A District of Columbia resident pleaded guilty today to a charge stemming from his involvement in a far-reaching stolen identity refund fraud scheme in which he and others working with him obtained more than $315,000 through the filing of fraudulent federal income tax returns seeking refunds, the Justice Department announced.
Ezekiel Raspberry, 39, is the second defendant to plead guilty to federal charges in recent weeks. Approximately 14 people have pleaded guilty to charges in the U.S. District Court for the District of Columbia. According to court documents, the overall case involves the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $40 million from the U.S. Treasury.
The guilty plea was announced by Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Channing D. Phillips of the District of Columbia, Special Agent in Charge Thomas Jankowski of the Internal Revenue Service-Criminal Investigation (IRS-CI), Inspector in Charge David G. Bowers, U.S. Postal Inspection Service, Washington Division and Assistant Inspector General for Investigations John L. Phillips of the U.S. Department of the Treasury.
Raspberry pleaded guilty to conspiracy to defraud the United States with respect to claims. Under federal sentencing guidelines, Raspberry faces at his Jan. 15, 2016 sentencing, an advisory guideline range of 24 to 30 months in prison and a fine of up to $50,000 at his sentencing before the Honorable U.S. District Judge Ellen S. Huvelle of the District of Columbia. In addition, as part of his plea agreement, Raspberry must pay $315,076 in restitution to the IRS.
According to the government’s evidence, Raspberry participated in a massive and sophisticated stolen identity refund fraud scheme that involved an extensive network of more than 130 people, many of whom were receiving public assistance. The refunds were sought for tax years 2005 through 2012, often in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners. In other cases, the refunds were sent to people who were willing participants in the scheme. The refunds listed more than 400 “taxpayer” addresses located in the District of Columbia, Maryland and Virginia.
According to documents filed with the court, from September 2008 through November 2010, Raspberry and others conspired to defraud the IRS of approximately $315,076 through the filing of 145 fraudulent federal income tax returns. Raspberry received refund checks from a co-conspirator and deposited them into his bank account. He would then withdraw the funds and provide them to the co-conspirator, keeping a portion of the proceeds for himself.
The refund checks were generated by filing false U.S. federal income tax returns, attaching the Schedule C or C-EZ Net Profit From Business, which falsely claimed that each “taxpayer” operated a business as a sole proprietorship, including a “barber” or “childcare.” The returns falsely stated that the “taxpayer” had gross receipts and two or more dependent children, when, in fact, the “taxpayer” was either a victim of identity theft, was misled into providing his or her identifying information, or was a willing participant in the scheme. No such business had been operated by the “taxpayer” and the “taxpayer” had no such dependents.
In a related action, Bernard Rankin, 43, of Glenarden, Maryland, pleaded guilty on Nov. 4, to conspiracy to defraud the United States with respect to claims. Rankin admitted permitting the use of his residential address and bank account in the scheme and recruiting another individual to deposit fraudulently obtained tax refund checks into that individual’s bank account as well.
In announcing the pleas, Acting Assistant Attorney General Ciraolo, U.S. Attorney Phillips, Special Agent in Charge Jankowski, Inspector in Charge Bowers and Assistant Inspector General Phillips commended those who investigated the case. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office of the District of Columbia, including former Assistant U.S. Attorney Sherri L. Schornstein and Paralegal Specialist Donna Galindo. Finally, they expressed appreciation for the work of Assistant U.S. Attorney Ellen Chubin Epstein of the District of Columbia’s Fraud and Public Corruption Section and Trial Attorneys Jeffrey B. Bender and Thomas F. Koelbl and former Trial Attorney Jessica Moran of the Tax Division, who prosecuted the case.
Construction Contractor Indicted for Making Fradulent Bonding Applications to Win Government ContractsRead the Press Release
United States Attorney Andrew M. Luger today announced the indictment of GERARD LEAONRD ROY for fraud, money laundering and concealing assets in anticipation of filing for bankruptcy in connection with a series of construction companies he owned and operated. ROY is charged with using the various companies to fraudulently obtain and attempt to obtain government contracts.
“Competitive bidding for government contracts requires all companies to play by the rules,” said U.S. Attorney Luger. “This defendant is charged with gaining an unfair advantage by breaking those rules, failing to meet his obligations and then trying to reap a windfall by declaring bankruptcy. The white collar section in the U.S. Attorney’s Office and our partners in law enforcement will continue to investigate and disrupt fraudulent business practices.”
“The role of IRS Criminal Investigation becomes even more important in bankruptcy and fraud cases due to the complex financial transactions that can take time to unravel,” said Shea Jones, Special Agent in Charge, St. Paul Field Office. “IRS Criminal Investigation is committed to investigating financial fraud and money laundering schemes where individuals attempt to conceal the true source of their money.”
“According to the indictment, committing insurance fraud was just part of business as usual for Gerard Roy and his construction companies,” said Minnesota Commerce Commissioner Mike Rothman. “Roy created fraudulent insurance documents to win bids on multiple construction projects. He took business away from honest contractors, while victimizing his clients and subcontractors with unfinished projects and unpaid bills, all without the financial protection that legitimate insurance bonds would have provided.”
According to the indictment and documents filed in court, between 2010 and February 2015, ROY owned and operated at least seven construction companies, including RSI Associates, Inc., Restoration Specialists, Inc., Road Spec Corporation, Omni Construction Services, Inc., Omni Construction Company, Omni-Midwest, Inc., and Olympic Construction Services, Inc. Through these companies ROY bid on construction contracts offered by public and quasi-governmental organizations, including the City of Minneapolis, City of Hastings, Washington County, Metropolitan Council, Minnesota State Colleges and Universities and others.
According to the indictment and documents filed in court, in order to commission construction projects, public and quasi-governmental entities generally solicit bids from multiple contractors. Among other things, contractors submitting bids are required to obtain surety bonds issued by a third-party insurer, guaranteeing satisfactory completion of the construction project and the payment of all labor and material costs. Such bonds generally cost the contractor between .5 and two percent of the amount of the construction contract.
According to the indictment and documents filed in court, between 2010 and February 2015 ROY used the aforementioned construction companies that he controlled to fraudulently obtain construction contracts from public and private entities through the submission of fraudulent construction bonds asserting that the projects were insured if ROY could not complete the contract or failed to pay subcontractors. In fact, ROY had no such insurance and was ineligible to bid on the projects. ROY fraudulently obtained at least $3 million in construction contracts, at least $1.8 million in payments on those contracts, and caused losses to clients, subcontractors and others of at least $700,000.
According to the indictment and documents filed in court, between 2010 and 2012, ROY controlled and operated Omni Construction Services, through which he bid on construction projects. In order to secure projects commissioned by public or quasi-governmental entities, ROY falsely claimed on bid documents that he had purchased surety bonds. ROY created phony bond documents, including bid bonds, performance bonds and payment bonds, purportedly issued by a surety on behalf of ROY or his company. In order to create these phony documents, ROY forged the signatures of the relevant sureties, witnesses and public notaries. Between 2010 and 2012, ROY obtained at least five construction contracts using fraudulent bid and bond documents, with a total value of at least $850,000.
According to the indictment and documents filed in court, between June 2011 and July 2012, ROY withdrew at least $400,000 from Omni Construction Services’ bank accounts and used that money for his own purposes. In 2012, ROY deposited at least $300,000 in receivables belonging to Omni Construction Services into accounts he opened in the names of other companies. He used a significant portion of those funds for his own purposes, including making house payments and transferring money into a personal bank account. On July 13, 2012, Omni Construction Services filed for Chapter 7 bankruptcy in an attempt to avoid paying approximately $600,000 in liabilities.
According to the indictment and documents filed in court, after serving roughly one year in jail on an unrelated matter, ROY continued operating a construction business, now under the names of RSI Associates and Restoration Specialists. Between 2013 and early 2015, ROY obtained or attempted to obtain at least six construction contracts using fraudulent bid and bond documents, with a total value of at least $2.6 million.
According to the indictment and documents filed in court, between January 2014 and February 2015, ROY used at least $400,000 from RSI’s bank accounts to buy jet skis, snowmobiles, gold coins and luxury automobiles such as a Corvette and Jaguar. ROY also opened a bank account in the name of Road Spec Corporation, into which he deposited at least $100,000 from RSI’s bank accounts. He used those funds for his own purposes. On February 19, 2015, RSI Associates, Inc., filed for Chapter 11 bankruptcy in an attempt to avoid paying approximately $500,000 of RSI’s liabilities.
This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS, Minnesota Department of Commerce Fraud Bureau, and United States Postal Inspection Service.
This case is being prosecuted by Assistant United States Attorney Benjamin Langner.
Defendant Information:
GERARD LEONARD ROY, 53
Prior Lake, Minn.
Charges:
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Mail fraud, 2 counts
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Wire fraud, 5 counts
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Transactional money laundering, 4 counts
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Concealment of bankruptcy assets, 2 counts
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
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College Park Man Convicted in Scheme to Obtain More Than $7 Million of Fraudulent Tax RefundsRead the Press Release
Greenbelt, Maryland – A federal jury convicted Charles W. Parker, Jr., age 49, of College Park, Maryland, today of conspiring to file false federal income tax returns and six counts of filing false tax returns.
The conviction was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Principal Deputy Assistant Attorney General Caroline D. Ciraolo, of the Justice Department’s Tax Division; and Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation (IRS-CI), Washington, D.C. Field Office.
“Criminal conspiracies involving fraudulent refund schemes victimize our nation’s honest taxpayers,” said Thomas Jankowski, Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office. “Today’s guilty verdict is a reminder that IRS-CI will remain vigilant in our investigation of these schemes and work with prosecutors to combat this type of criminal conduct.”
According to evidence presented during the trial, from March to June 2009, Parker recruited clients for co-conspirator Penny Jones. Jones, a resident of Idaho, was a tax return preparer who prepared tax returns falsely reporting the amount of taxes withheld and purportedly paid to the IRS. Parker collected financial information from the client and provided the information to Jones for the preparation of the false tax returns. Parker paid Jones to prepare false tax returns for Parker and others. For example, Parker paid Jones $3,000 on March 19, $750 on March 31, and $2,450 on April 13, 2009 to prepare false returns for himself and others. Parker mailed the false tax returns to the IRS for tax years 2005 to 2008, claiming large tax refunds to which the taxpayers were not entitled.
On May 26, 2009, after Parker paid Jones to prepare a false tax return for two co-conspirators who were residents of Atlanta, Parker and Jones caused the IRS to issue a tax refund to the co-conspirators of $1,723,693. On June 3, 2009, Parker emailed the co-conspirators directing them to wire funds to Parker’s bank account. The next day, the co-conspirators transferred $182,370 into Parker’s account.
Parker and his co-conspirators caused the IRS to issue two fraudulent tax refunds totaling $2,007,568. In 2013, Jones was sentenced to 120 months in prison for her role in a scheme to help individuals obtain fraudulent tax refunds from the IRS.
Parker faces a maximum sentence of 10 years in prison for the conspiracy, and a maximum sentence of five years in prison for each of the six counts of filing a false tax return. U.S. District Judge Roger W. Titus has scheduled sentencing for March 28, 2016 at 11:00 a.m.
United States Attorney Rod J. Rosenstein praised the Tax Division and IRS-Criminal Investigation for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Leah Jo Bressack and Trial Attorney Erin Pulice of the Department of Justice Tax Division, who are prosecuting the case.
Cleveland man charged with robbing three banks and attempting to rob a fourthRead the Press Release
A federal grand jury returned a four-count indictment charging a Cleveland man with robbing three banks and attempting to rob a fourth during a one-week period, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.
Kevin Lamar Anderson, 46, is charged with robbing the Key Bank located at 5703 Broadway Avenue, twice robbing the U.S. Bank located at 6509 Harvard Avenue in Cleveland, Ohio, and attempting to rob the Ohio Saving Bank at 1866 W. 25th Street in August.
Assistant United States Attorney Matthew J. Cronin is prosecuting the case following an investigation by the Federal Bureau of Investigation, the Cleveland Division of Police, and other local law enforcement agencies.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial where it is the government's burden to prove guilt beyond a reasonable doubt.
Chester County Man Charged with Theft of Government FundsRead the Press Release
PHILADELPHIA - Wayne Tiffany, 57, of Downingtown, Pennsylvania, was charged by Information with one count of theft of government funds, announced United States Attorney Zane David Memeger. According to the information, the defendant received Social Security benefits intended for his deceased paramour, after her death in April 2010 until his fraud was discovered in February 2015. The defendant’s alleged actions resulted in a loss to the government of approximately $39,028.
If convicted, the defendant faces a substantial period of incarceration, a 3‑year period of supervised release, restitution to the government of $39,028, a fine of up to $250,000, and a $100 special assessment.
The case was investigated by the Social Security Administration, Office of Inspector General, and is being prosecuted by Special Assistant United States Attorney Amanda R. Reinitz.
An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Buffalo Woman Sentenced for Oxycodone SalesRead the Press Release
BUFFALO, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Michelle S. Kidd, 39, of Buffalo, New York, who was convicted of oxycodone distribution, was sentenced to one year and one day imprisonment by U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Frank T. Pimentel, who handled the case, stated that on four dates between August 2014 and January 2015, Kidd sold a total of $6,000 worth of oxycodone pills to an individual at Kidd’s Buffalo residence. Oxycodone, along with other opiod and opiate-type drugs, has been responsible for an alarming increase in overdose deaths in this area. United States Attorney Hochul, along with public health officials, have described these fatalities as an epidemic.
The sentencing is the culmination of an investigation by the Drug Enforcement Administration, under the direction of James J. Hunt, Special Agent in Charge, New York Field Division.
Bowie Loan Originator Pleads Guilty in Fraudulent Mortgage SchemeRead the Press Release
Baltimore, Maryland – David B. Pick, age 47, of Bowie, Maryland, pleaded guilty today to making false statements arising from a real estate closing.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Deputy Inspector General for Investigations Rene Febles of the Federal Housing Finance Agency Office of Inspector General; and Special Agent in Charge Fran Mace, of the Federal Deposit Insurance Corporation Office of Inspector General.
Pick was a loan originator responsible for preparing loan applications, obtaining documentation to support the representations in loan applications, presenting loan applications to financial institutions for funding and working with financial institutions to close loans.
In 2005, Pick sought a $900,000 construction loan from a mortgage lender to purchase and construct a residence at 1206 Tilghmans Landing Way in Annapolis. The residence was to be constructed by Richland Homes, Inc., owned and operated by Timothy Ritchie.
According to his plea agreement, on March 10, 2005, Pick falsely represented on the loan application that he received $1,250 in monthly rent from “Georgia Brown” to rent property on Clam Cove Court in Rock Hall, Maryland. In fact, no individual named Georgia Brown occupied the property or paid rent to Pick.
Relying on the false loan application, the lender agreed to fund the construction loan on the condition that Pick personally pay the required down payments, closing costs and prepaid expenses, and that Pick did not have any agreement with Ritchie or Richland Homes, as the seller, that was not disclosed to the lender.
On March 21, 2005, Pick and Ritchie signed a settlement statement, and Pick also signed a borrower’s affidavit, falsely stating the Pick paid $63,901.63 at the closing, when in fact, Pick contributed no cash to the closing. The funds owed by Pick were instead deducted from Richland Homes’ proceeds from the sale. The lender, which would not have approved the loan without Pick paying the full $63,901.63, suffered a loss of $383,178.
Pick faces a maximum sentence of 30 years in prison. U.S. District Judge Richard D. Bennett scheduled his sentencing for February 10, 2016.
In related cases arising from their participation in similar transactions, John L. Davis, age 53, of Chestertown, Maryland, a settlement agent, previously pleaded guilty to conspiracy to commit mail fraud and wire fraud, and is scheduled to be sentenced on January 19, 2016 at 3:00 p.m. Timothy L. Ritchie, age 44, of Annapolis, Maryland has pleaded guilty to making false statements involving his purchase of three lots in St. Michaels, Maryland. Ritchie is scheduled to be sentenced on January 14, 2016, at 10:00 a.m.
The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available http://www.justice.gov/usao-md/financial-fraud-and-identity-theft.
United States Attorney Rod J. Rosenstein commended the FHFA - OIG and FDIC – OIG for their work in the investigation. Mr. Rosenstein thanked Special Assistant U.S. Attorney Kevin V. Di Gregory and Assistant U.S. Attorney Kathleen O. Gavin, who are prosecuting the case.
Benton attorney pleads guilty to bankruptcy fraudRead the Press Release
MONROE, La. – United States Attorney Stephanie A. Finley announced today that a Benton attorney pleaded guilty to collecting filing fees from clients without informing the bankruptcy court.
Glay H. Collier II, 53, of Benton, La., entered a conditional guilty plea to one count of bankruptcy fraud before U.S. Magistrate Judge Karen L. Hayes. The plea will become final when accepted by U.S. District Judge Robert G. James. According to evidence presented at the guilty plea, Collier filed records into the bankruptcy court stating that he would accept “No Look” fees as payment for his services. The “No Look” fee caps attorney’s fees in bankruptcy proceedings to $2,800. In excess of that limit, Collier charged up to $281 in filing fees to some clients, which he did not disclose to the court. Between March 2010 and November 2013, Collier filed 983 Chapter 13 bankruptcy cases in Monroe, and during the same time period, he filed 2,160 Chapter 13 bankruptcy cases in Shreveport. In approximately 479 of these cases, Collier fraudulently collected and attempted to collect filing fees.
Collier faces up to five years in prison, three years supervised release and a $250,000 fine. A sentencing date of March 1, 2016 was set.
The FBI and the U.S. Trustee’s Office, Region 5, conducted the investigation. Assistant U.S. Attorney Cytheria D. Jernigan is prosecuting the case.
Attorney General and Manhattan U.S. Attorney Announce Charges Stemming from Massive Network Intrusions at U.S. Financial Institutions, U.S. Brokerage Firms, Major News Publications and Other CompaniesRead the Press Release
Breaches Included the Largest Theft of Customer Data from a U.S. Financial Institution in History
Defendants Hacked in Furtherance of Securities Market Manipulation Schemes, and Vast Gambling and Payment Processing Schemes
Attorney General Loretta E. Lynch, U.S. Attorney Preet Bharara of the Southern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office and Special Agent in Charge Robert J. Sica of the U.S. Secret Service (USSS) New York Field Office announced today the unsealing of a superseding indictment charging Gery Shalon, aka “Garri Shalelashvili,” “Gabriel,” “Gabi,” “Phillipe Mousset” and “Christopher Engeham,” with orchestrating massive computer hacking crimes against U.S. financial institutions, brokerage firms and financial news publishers, including the largest theft of customer data from a U.S. financial institution in history (the U.S. Financial Sector Hacks). Shalon is charged with committing these crimes with Joshua Samuel Aaron, aka “Mike Shields,” in furtherance of securities market manipulation schemes that Shalon and Aaron perpetrated with defendant Ziv Orenstein, aka “Aviv Stein” and “John Avery” in the United States.
As alleged, Shalon also orchestrated computer network hacks and cyberattacks in furtherance of other major criminal schemes, including unlawful internet casinos and illicit payment processors which Shalon operated with Orenstein. Shalon also owned and controlled an illegal U.S.-based Bitcoin exchange known as Coin.mx. Shalon and Orenstein were arrested in July 2015 by the Israel Police on an indictment that charged the underlying securities fraud, and they remain in custody in Israel pending extradition on those charges. The U.S. Attorney’s Office will seek their extradition to stand trial in the United States on the additional charges announced today. Aaron remains at large. Also announced today is the unsealing of a separate indictment charging Anthony R. Murgio with operating Coin.mx in the United States, and related crimes. Murgio, who was arrested on a complaint in July 2015, will be arraigned before the Honorable Alison J. Nathan.
“As set forth in the indictment, these three defendants perpetrated one of the largest thefts of financial-related data in history – making off with the sensitive information of literally thousands of hard-working Americans,” said Attorney General Lynch. “These charges were made possible in large part because those victims came forward and worked with the Department of Justice to hold the perpetrators accountable. In an age when enormous quantities of vital information are stored in digital format on potentially vulnerable Internet-connected devices, public-private partnerships and information-sharing are more critical than ever. The Department of Justice is committed to protecting the financial data of all our citizens and the financial integrity of our institutions. I’d like to thank the prosecutors and law enforcement professionals who worked tirelessly on this case, and the victims who offered their full cooperation with law enforcement to make these criminal charges possible.”
“Today, we have exposed a cybercriminal enterprise that for years successfully and secretly hacked into the networks of a dozen companies, allegedly stealing personal information of over 100 million people, including over 80 million customers from one financial institution alone,” said U.S. Attorney Bharara. “The charged crimes showcase a brave new world of hacking for profit. It is no longer hacking merely for a quick payout, but hacking to support a diversified criminal conglomerate. This was hacking as a business model. The alleged conduct also signals the next frontier in securities fraud – sophisticated hacking to steal nonpublic information, something the defendants discussed for the next stage of their sprawling enterprise. Fueled by their hacking, the defendants’ criminal schemes allegedly generated hundreds of millions of dollars in illicit proceeds. Even the most sophisticated companies – like those victimized by the hacks in this case – have to appreciate the limits of their ability to uncover the full scope of any cyber-intrusion and to stop the perpetrators before they strike again. If they have been hacked, most likely others have been as well, and even more will be. The best bet to identify, stop and punish cybercriminals is to work closely, and early, with law enforcement. That happened here, and today’s charges are proof of that.”
“Shalon, Aaron and their co-conspirators allegedly robbed victim companies, often for months at a time, stealing the contact information of tens of millions of customers,” said Assistant Director in Charge Rodriguez. “They cloaked themselves in secrecy, but their methods rivaled those of the traditional masked robber. Today’s indictment sheds light on an increasingly complex threat. But just as criminals continue to develop relationships with one another in order to advance their objectives, the law enforcement community has developed a collaborative approach to fighting these types of crimes.”
“This investigation is indicative of the sophistication and complexity of cybercrime and the transnational criminal organizations that are responsible for it,” said Special Agent in Charge Sica. “Transnational cybercriminal organizations operate with impunity regardless of national borders as these criminal organizations seek to profit from information stolen through the unauthorized access to victims’ networks. Through the U.S. Secret Service global network of Electronic Crimes Task Forces, our field offices located overseas and the close cooperation of our foreign law enforcement partners, no cybercriminal is beyond our reach. We will remain relentless in pursuing these criminals wherever they may reside.”
According to the allegations contained in the superseding indictment[1]:
From approximately 2012 to mid-2015, Shalon, working with Aaron and others, orchestrated the U.S. Financial Sector Hacks, stealing personal information of over 100 million customers of the victim companies. Among these, their network intrusion at one bank (Victim-1) resulted in the theft of personal information of over 80 million Victim-1 customers, making it the largest theft of customer data from a U.S. financial institution in history. Shalon, Aaron and their co-conspirators engaged in these crimes in furtherance of other criminal schemes. In particular, in an effort to artificially manipulate the price of certain stocks publicly traded in the United States, Shalon and his co-conspirators sought to market the stocks, in a deceptive and misleading manner, to customers of the victim companies whose contact information they had stolen in the intrusions.
In addition to directing the U.S. Financial Sector Hacks, Shalon directed computer network hacks and cyberattacks against numerous companies outside of the financial sector. Shalon and his co-conspirators engaged in these crimes in furtherance of large-scale criminal businesses that Shalon and Orenstein operated in the United States and other countries. In particular, between approximately 2007 and July 2015, Shalon owned and operated unlawful internet gambling businesses in the United States and abroad; owned and operated multinational payment processors for illegal pharmaceutical suppliers, counterfeit and malicious software (malware) distributors, and unlawful internet casinos; and owned and controlled Coin.mx, an illegal U.S.-based Bitcoin exchange that operated in violation of federal anti-money laundering laws. Nearly all of these schemes, like Shalon’s securities market manipulation schemes, relied for their success on computer hacking and other cybercrimes committed by Shalon and his co-conspirators.
Through their criminal schemes, between in or about 2007 and in or about July 2015, Shalon and his co-conspirators earned hundreds of millions of dollars in illicit proceeds, of which Shalon concealed at least $100 million in Swiss and other bank accounts.
Shalon, Aaron, Orenstein and their co-conspirators operated their criminal schemes, and laundered their criminal proceeds, through at least 75 shell companies and bank and brokerage accounts around the world. The defendants controlled these companies and accounts using aliases, and by fraudulently using approximately 200 purported identification documents, including over 30 false passports that purported to be issued by the United States and at least 16 other countries.
The U.S. Financial Sector Hacks
Between approximately 2012 and August 2014, Shalon and a co-conspirator (CC-1), working at times with Aaron, executed the hacks of the computer networks of Victims 1 through 9. Among other things, in foreign-language electronic communications, during these hacks, Shalon bragged about the size and scope of his securities market manipulation schemes and described to CC-1 his use of the stolen data in furtherance of those schemes. Shalon and CC-1 also discussed expanding their network intrusions to encompass thefts of material non-public information from the financial institutions and other firms they were hacking.
The Securities Market Manipulation Schemes
Since 2011, Shalon, Aaron, Orenstein and their co-conspirators orchestrated multimillion-dollar stock manipulation – or “pump and dump” – schemes to manipulate the price and trading volume of dozens of publicly traded microcap stocks (penny stocks) in order to enable members of the conspiracy to sell their holdings in those stocks at artificially inflated prices. In some instances, Shalon and Aaron caused the companies to become publicly traded in furtherance of the scheme. To do so, Shalon caused privately held companies to engage in “reverse mergers” with publicly traded shell corporations Shalon controlled. Orenstein managed bank and brokerage accounts used in furtherance of the schemes under aliases that he supported with false passports and other false personal identification information.
To artificially manipulate the trading volume and prices of dozens of stocks, among other things, at pre-arranged times, Shalon and Aaron disseminated materially misleading, unsolicited messages by various means – including by email (spam) to up to millions of recipients per day – that falsely touted the stock in order to trick others into buying it. Shalon and Aaron engaged in the U.S. Financial Sector Hacks in part to acquire email and mailing addresses, phone numbers and other contact information for potential victims to whom they could send such deceptive communications. Shalon and his co-conspirators generated tens of millions of dollars in unlawful proceeds from the securities market manipulation schemes.
The Unlawful Internet Gambling Schemes, Hacks and Cyberattacks
From at least in or about 2007 up to and including in or about July 2015, Shalon, Orenstein and their co-conspirators operated unlawful internet casinos in the United States and elsewhere through hundreds of employees in multiple countries. In the United States, the defendants knowingly operated at least 12 unlawful internet casinos (the Casino Companies) which, through their websites, offered real-money casino gambling in violation of federal law and the laws of numerous states, including New York state. Through the Casino Companies, Shalon, Orenstein and their co-conspirators generated hundreds of millions of dollars in unlawful income.
In furtherance of his unlawful internet gambling schemes, Shalon and his co-conspirators engaged in massive hacks and cyberattacks against other internet gambling businesses to steal customer information, secretly review executives’ emails and cripple rival businesses. For example, Shalon orchestrated network intrusions of Victims-10 and -11, companies that provided operating software to Shalon’s internet casinos. In doing so, Shalon sought to, and did, secretly obtain access to the email accounts of senior executives at both companies to ensure that the companies’ work with Shalon’s competitors did not compromise the success of Shalon’s unlawful internet gambling businesses.
The Illicit Payment Processing Scheme and Hack
From at least in or about 2011 until in or about July 2015, Shalon, Orenstein and their co-conspirators operated IDPay and Todur, multinational payment processors for criminals who sought to receive payments by credit and debit card in furtherance of their unlawful schemes. Through these payment processors, Shalon, Orenstein and their co-conspirators knowingly processed credit and debit card payments for, at a minimum, unlawful pharmaceutical distributors, purveyors of counterfeit and malicious purported “anti-virus” computer software, their own unlawful internet casinos and Coin.mx, an illegal U.S.-based Bitcoin exchange owned by Shalon. In doing so, Shalon, Orenstein, and their co-conspirators knowingly processed hundreds of millions of dollars in transactions for criminal schemes, for which they earned a percentage of every transaction.
Beginning in or about 2012, Shalon and his co-conspirators hacked into the computer networks of Victim-12, a U.S. company which assessed merchant risk and compliance for credit card issuers and others, including by detecting merchants that accepted credit card payments for unlawful goods or services. Thereafter, on an ongoing basis, Shalon and his co-conspirators monitored Victim-12’s detection efforts, including by reading emails of Victim-12 employees, so they could take steps to evade detection by Victim-12 of their unlawful payment processing scheme.
The Unlawful Bitcoin Exchange
From in or about 2013 to in or about July 2015, Shalon knowingly owned Coin.mx, which was operated by Murgio in the United States at Shalon’s direction in violation of federal anti-money laundering (AML) registration and reporting laws and regulations. Through Coin.mx, Shalon, Murgio and their co-conspirators enabled their customers to exchange cash for Bitcoins, charging a fee for their service. In total, between approximately October 2013 and July 2015, Coin.mx exchanged millions of dollars for Bitcoins on behalf of its customers.
* * *
Shalon, 31, of Savyon, Israel; Aaron, 31, a U.S. citizen who resides in Moscow; and Tel Aviv; and Orenstein, 40, of Bat Hefer, Israel, are charged with the following offenses, which carry the maximum prison terms listed below:
Count
Defendants
Charge
Maximum Prison Term
One
Shalon and Aaron
Conspiracy to Commit Computer Hacking
five years
Two
Shalon and Aaron
Computer Hacking
five years
Three
Shalon and Aaron
Computer Hacking
five years
Four
Shalon, Aaron and Orenstein
Conspiracy to Commit Securities Fraud
20 years
Five
Shalon, Aaron and Orenstein
Conspiracy to Commit Wire Fraud: Securities Market Manipulation Scheme
20 years
Six to 12
Shalon, Aaron and Orenstein
Securities Fraud
20 years
13
Shalon, Aaron and Orenstein
Wire Fraud
20 years
14
Shalon, Aaron and Orenstein
Identification Document Fraud Conspiracy
20 years
15
Shalon, Aaron and Orenstein
Aggravated Identity Theft
Mandatory two years
16
Shalon and Orenstein
Unlawful Internet Gambling Enforcement Act Conspiracy
five years
17
Shalon and Orenstein
Unlawful Internet Gambling Enforcement Act
five years
18
Shalon and Orenstein
Operation of Illegal Gambling Business
five years
19
Shalon and Orenstein
Conspiracy to Commit Wire Fraud: Unlawful Payment Processing
20 years
20
Shalon
Conspiracy to Operate an Unlicensed Money Transmitting Business
five years
21
Shalon
Operation of an Unlicensed Money Transmitting Business
five years
22
Shalon, Aaron and Orenstein
Money Laundering Conspiracy: Securities Market Manipulation Scheme
20 years
23
Shalon, Aaron and Orenstein
Money Laundering Conspiracy: Internet Gambling and Payment Processing Schemes
20 years
For his alleged conduct, Murgio, 31, of Tampa, Florida, is charged with the following offenses: conspiracy to operate an unlicensed money transmitting business, which carries a maximum prison term of five years; operation of an unlicensed money transmitting business, which carries a maximum prison term of five years; conspiracy to make corrupt payments with intent to influence an officer of a financial institution, which carries a maximum prison term of five years; making corrupt payments with intent to influence an officer of a financial institution, which carries a maximum prison term of 30 years; conspiracy to commit wire fraud, which carries a maximum prison term of 20 years; wire fraud, which carries a maximum prison term of 20 years; and money laundering, which carries a maximum prison term of 20 years.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
U.S. Attorney Bharara praised the investigative work of the FBI and the USSS, and expressed his sincere gratitude to the Office of the State Attorney of the Israel Ministry of Justice’s Department of International Affairs and the Israel National Police, Cyber Unit - Lahav 433, for their support and assistance with the investigation and the ongoing extradition proceedings. He also thanked the U.S. Securities and Exchange Commission, U.S. Immigration and Customs Enforcement-Homeland Security Investigations, the Financial Industry Regulatory Authority, the National Credit Union Administration, the Justice Department’s Office of International Affairs and the Financial Services Information Sharing and Analysis Center, which significantly aided the investigation by facilitating information-sharing among the victim institutions.
The prosecution of this case is being overseen by the U.S. Attorney’s Office of the Southern District of New York’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Nicole Friedlander, Eun Young Choi and Sarah Lai of the Southern District of New York are in charge of the prosecution. Assistant U.S. Attorney Edward Diskant of the Southern District of New York’s Money Laundering and Asset Forfeiture Unit is in charge of the forfeiture aspects of the case.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the superseding indictment and the description of the indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Attorney General and Manhattan U.S. Attorney Announce Charges Stemming from Massive Network Intrusions at U.S. Financial Institutions, U.S. Brokerage Firms, A Major News Publication, and Other CompaniesRead the Press Release
Loretta E. Lynch, the Attorney General of the United States, Preet Bharara, the United States Attorney for the Southern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Robert J. Sica, Special Agent in Charge of the US Secret Service New York Field Office (“USSS”) announced today the unsealing of a superseding indictment charging GERY SHALON, a/k/a “Garri Shalelashvili,” a/k/a “Gabriel,” a/k/a “Gabi,” a/k/a “Phillipe Mousset,” a/k/a “Christopher Engeham,” with orchestrating massive computer hacking crimes against U.S. financial institutions, brokerage firms, and financial news publishers, including the largest theft of customer data from a U.S. financial institution in history (the “U.S. Financial Sector Hacks”). SHALON is charged with committing these crimes with JOSHUA SAMUEL AARON, a/k/a “Mike Shields,” in furtherance of securities market manipulation schemes that SHALON and AARON perpetrated with defendant ZIV ORENSTEIN, a/k/a “Aviv Stein,” a/k/a “John Avery” in the United States. As alleged, SHALON also orchestrated computer network hacks and cyberattacks in furtherance of other major criminal schemes, including unlawful internet casinos and illicit payment processors which SHALON operated with ORENSTEIN. SHALON also owned and controlled an illegal U.S.-based Bitcoin exchange known as Coin.mx. SHALON and ORENSTEIN were arrested in July 2015 by the Israel Police on an indictment that charged the underlying securities fraud, and they remain in custody in Israel pending extradition on those charges. The United States Attorney’s Office will seek their extradition to stand trial in the United States on the additional charges announced today. AARON remains at large. Also announced today is the unsealing of a separate indictment charging ANTHONY R. MURGIO with operating Coin.mx in the United States, and related crimes. MURGIO, who was arrested on a Complaint in July 2015, will be arraigned before the Honorable Alison J. Nathan.
Attorney General Loretta E. Lynch said: “As set forth in the indictment, these three defendants perpetrated one of the largest thefts of financial-related data in history – making off with the sensitive information of literally thousands of hard-working Americans. These charges were made possible in large part because those victims came forward and worked with the Department of Justice to hold the perpetrators accountable. In an age when enormous quantities of vital information are stored in digital format on potentially vulnerable Internet-connected devices, public-private partnerships and information-sharing are more critical than ever. The Department of Justice is committed to protecting the financial data of all our citizens and the financial integrity of our institutions. I’d like to thank the prosecutors and law enforcement professionals who worked tirelessly on this case, and the victims who offered their full cooperation with law enforcement to make these criminal charges possible.”
Manhattan U.S. Attorney Preet Bharara said: “Today, we have exposed a cybercriminal enterprise that for years successfully and secretly hacked into the networks of a dozen companies, allegedly stealing personal information of over 100 million people, including over 80 million customers from one financial institution alone. The charged crimes showcase a brave new world of hacking for profit. It is no longer hacking merely for a quick payout, but hacking to support a diversified criminal conglomerate. This was hacking as a business model. The alleged conduct also signals the next frontier in securities fraud – sophisticated hacking to steal nonpublic information, something the defendants discussed for the next stage of their sprawling enterprise. Fueled by their hacking, the defendants’ criminal schemes allegedly generated hundreds of millions of dollars in illicit proceeds. Even the most sophisticated companies – like those victimized by the hacks in this case – have to appreciate the limits of their ability to uncover the full scope of any cyber-intrusion and to stop the perpetrators before they strike again. If they have been hacked, most likely others have been as well, and even more will be. The best bet to identify, stop and punish cybercriminals is to work closely, and early, with law enforcement. That happened here, and today’s charges are proof of that.”
FBI Assistant Director-in-Charge Diego Rodriguez said: “Shalon, Aaron, and their co-conspirators allegedly robbed victim companies, often for months at a time, stealing the contact information of tens of millions of customers. They cloaked themselves in secrecy, but their methods rivaled those of the traditional masked robber. Today’s indictment sheds light on an increasingly complex threat. But just as criminals continue to develop relationships with one another in order to advance their objectives, the law enforcement community has developed a collaborative approach to fighting these types of crimes.”
USSS Special Agent in Charge Robert J. Sica said: “This investigation is indicative of the sophistication and complexity of cybercrime and the transnational criminal organizations that are responsible for it. Transnational cybercriminal organizations operate with impunity regardless of national borders as these criminal organizations seek to profit from information stolen through the unauthorized access to victims’ networks. Through the U.S. Secret Service global network of Electronic Crimes Task Forces, our field offices located overseas, and the close cooperation of our foreign law enforcement partners, no cybercriminal is beyond our reach. We will remain relentless in pursuing these criminals wherever they may reside.”
According to the allegations contained in the superseding indictment[1]:
From approximately 2012 to mid-2015, SHALON, working with AARON and others, orchestrated the U.S. Financial Sector Hacks, stealing personal information of over 100 million customers of the victim companies. Among these, their network intrusion at one bank (“Victim-1”) resulted in the theft of personal information of over 80 million Victim-1 customers, making it the largest theft of customer data from a U.S. financial institution in history. SHALON, AARON, and their co-conspirators engaged in these crimes in furtherance of other criminal schemes. In particular, in an effort to artificially manipulate the price of certain stocks publicly traded in the United States, SHALON and his co-conspirators sought to market the stocks, in a deceptive and misleading manner, to customers of the victim companies whose contact information they had stolen in the intrusions.
In addition to directing the U.S. Financial Sector Hacks, SHALON directed computer network hacks and cyberattacks against numerous companies outside of the financial sector. SHALON and his co-conspirators engaged in these crimes in furtherance of large-scale criminal businesses that SHALON and ORENSTEIN operated in the United States and other countries. In particular, between approximately 2007 and July 2015, SHALON owned and operated unlawful internet gambling businesses in the United States and abroad; owned and operated multinational payment processors for illegal pharmaceutical suppliers, counterfeit and malicious software (“malware”) distributors, and unlawful internet casinos; and owned and controlled Coin.mx, an illegal United States-based Bitcoin exchange that operated in violation of federal anti-money laundering laws. Nearly all of these schemes, like SHALON’s securities market manipulation schemes, relied for their success on computer hacking and other cybercrimes committed by SHALON and his co-conspirators.
Through their criminal schemes, between in or about 2007 and in or about July 2015, SHALON and his co-conspirators earned hundreds of millions of dollars in illicit proceeds, of which SHALON concealed at least $100 million in Swiss and other bank accounts.
SHALON, AARON, ORENSTEIN, and their co-conspirators operated their criminal schemes, and laundered their criminal proceeds, through at least 75 shell companies and bank and brokerage accounts around the world. The defendants controlled these companies and accounts using aliases, and by fraudulently using approximately 200 purported identification documents, including over 30 false passports that purported to be issued by the United States and at least 16 other countries.
The U.S. Financial Sector Hacks
Between approximately 2012 and August 2014, SHALON and a co-conspirator (“CC-1”), working at times with AARON, executed the hacks of the computer networks of Victims 1-9. Among other things, in foreign-language electronic communications, during these hacks, SHALON bragged about the size and scope of his securities market manipulation schemes, and described to CC-1 his use of the stolen data in furtherance of those schemes. SHALON and CC-1 also discussed expanding their network intrusions to encompass thefts of material non-public information from the financial institutions and other firms they were hacking.
The Securities Market Manipulation Schemes
Since 2011, SHALON, AARON, ORENSTEIN, and their co-conspirators orchestrated multimillion-dollar stock manipulation – or “pump and dump” – schemes to manipulate the price and trading volume of dozens of publicly traded microcap stocks (“penny stocks”) in order to enable members of the conspiracy to sell their holdings in those stocks at artificially inflated prices. In some instances, SHALON and AARON caused the companies to become publicly traded in furtherance of the scheme. To do so, SHALON caused privately held companies to engage in “reverse mergers” with publicly traded shell corporations SHALON controlled. ORENSTEIN managed bank and brokerage accounts used in furtherance of the schemes under aliases that ORENSTEIN supported with false passports and other false personal identification information.
To artificially manipulate the trading volume and prices of dozens of stocks, among other things, at pre-arranged times, SHALON and AARON disseminated materially misleading, unsolicited messages by various means – including by email (“spam”) to up to millions of recipients per day – that falsely touted the stock in order to trick others into buying it. SHALON and AARON engaged in the U.S. Financial Sector Hacks in part to acquire email and mailing addresses, phone numbers, and other contact information for potential victims to whom they could send such deceptive communications. SHALON and his co-conspirators generated tens of millions of dollars in unlawful proceeds from the securities market manipulation schemes.
The Unlawful Internet Gambling Schemes, Hacks and Cyberattacks
From at least in or about 2007 up to and including in or about July 2015, SHALON, ORENSTEIN and their co-conspirators operated unlawful internet casinos in the United States and elsewhere through hundreds of employees in multiple countries. In the United States, the defendants knowingly operated at least 12 unlawful internet casinos (the “Casino Companies”) which, through their websites, offered real-money casino gambling in violation of federal law and the laws of numerous states, including New York State. Through the Casino Companies, SHALON, ORENSTEIN, and their co-conspirators generated hundreds of millions of dollars in unlawful income.
In furtherance of his unlawful internet gambling schemes, SHALON and his co-conspirators engaged in massive hacks and cyberattacks against other internet gambling businesses to steal customer information, secretly review executives’ emails, and cripple rival businesses. For example, SHALON orchestrated network intrusions of Victims-10 and -11, companies that provided operating software to SHALON’s internet casinos. In doing so, SHALON sought to, and did, secretly obtain access to the email accounts of senior executives at both companies to ensure that the companies’ work with SHALON’s competitors did not compromise the success of SHALON’s unlawful internet gambling businesses.
The Illicit Payment Processing Scheme and Hack
From at least in or about 2011 until in or about July 2015, SHALON, ORENSTEIN, and their co-conspirators operated IDPay and Todur, multinational payment processors for criminals who sought to receive payments by credit and debit card in furtherance of their unlawful schemes. Through these payment processors, SHALON, ORENSTEIN, and their co-conspirators knowingly processed credit and debit card payments for, at a minimum, unlawful pharmaceutical distributors, purveyors of counterfeit and malicious purported “anti-virus” computer software, their own unlawful internet casinos, and Coin.mx, an illegal United States-based Bitcoin exchange owned by SHALON. In doing so, SHALON, ORENSTEIN, and their co-conspirators knowingly processed hundreds of millions of dollars in transactions for criminal schemes, for which they earned a percentage of every transaction.
Beginning in or about 2012, SHALON and his co-conspirators hacked into the computer networks of Victim-12, a U.S. company which assessed merchant risk and compliance for credit card issuers and others, including by detecting merchants that accepted credit card payments for unlawful goods or services. Thereafter, on an ongoing basis, SHALON and his co-conspirators monitored Victim-12’s detection efforts, including by reading emails of Victim-12 employees, so they could take steps to evade detection by Victim-12 of their unlawful payment processing scheme.
The Unlawful Bitcoin Exchange
From in or about 2013 to in or about July 2015, SHALON knowingly owned Coin.mx, a Bitcoin exchange service, which was operated by MURGIO in the United States at SHALON’s direction in violation of federal anti-money laundering (“AML”) registration and reporting laws and regulations. Through Coin.mx, SHALON, MURGIO, and their co-conspirators enabled their customers to exchange cash for Bitcoins, charging a fee for their service. In total, between approximately October 2013 and July 2015, Coin.mx exchanged millions of dollars for Bitcoins on behalf of its customers.
* * *
SHALON, 31, of Savyon, Israel, AARON, 31, a U.S. citizen who resides in Moscow, Russia, and Tel Aviv, Israel, and ORENSTEIN, 40, of Bat Hefer, Israel, are charged with the following offenses, which carry the maximum prison terms listed below:
Count
Defendants
Charge
Maximum Prison Term
One
SHALON and AARON
Conspiracy to Commit Computer Hacking
5 years
Two
SHALON and AARON
Computer Hacking
5 years
Three
SHALON and AARON
Computer Hacking
5 years
Four
SHALON, AARON, and ORENSTEIN
Conspiracy to Commit Securities Fraud
20 years
Five
SHALON, AARON, and ORENSTEIN
Conspiracy to Commit Wire Fraud: Securities Market Manipulation Scheme
20 years
Six to Twelve
SHALON, AARON, and ORENSTEIN
Securities Fraud
20 years
Thirteen
SHALON, AARON, and ORENSTEIN
Wire Fraud
20 years
Fourteen
SHALON, AARON, and ORENSTEIN
Identification Document Fraud Conspiracy
20 years
Fifteen
SHALON, AARON, and ORENSTEIN
Aggravated Identity Theft
Mandatory 2 years
Sixteen
SHALON and ORENSTEIN
Unlawful Internet Gambling Enforcement Act Conspiracy
5 years
Seventeen
SHALON and ORENSTEIN
Unlawful Internet Gambling Enforcement Act
5 years
Eighteen
SHALON and ORENSTEIN
Operation of Illegal Gambling Business
5 years
Nineteen
SHALON and ORENSTEIN
Conspiracy to Commit Wire Fraud: Unlawful Payment Processing
20 years
Twenty
SHALON
Conspiracy to Operate an Unlicensed Money Transmitting Business
5 years
Twenty One
SHALON
Operation of an Unlicensed Money Transmitting Business
5 years
Twenty Two
SHALON, AARON, and ORENSTEIN
Money Laundering Conspiracy: Securities Market Manipulation Scheme
20 years
Twenty-Three
SHALON, AARON, and ORENSTEIN
Money Laundering Conspiracy: Internet Gambling and Payment Processing Schemes
20 years
For his alleged conduct, MURGIO, 31, of Tampa, Florida, is charged with the following offenses: (1) conspiracy to operate an unlicensed money transmitting business, which carries a maximum prison term of 5 years; (2) operation of an unlicensed money transmitting business, which carries a maximum prison term of 5 years; (3) conspiracy to make corrupt payments with intent to influence an officer of a financial institution, which carries a maximum prison term of 5 years; (4) making corrupt payments with intent to influence an officer of a financial institution, which carries a maximum prison term of 30 years; (5) conspiracy to commit wire fraud, which carries a maximum prison term of 20 years; (6) wire fraud, which carries a maximum prison term of 20 years; and (7) money laundering, which carries a maximum prison term of 20 years.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the investigative work of the FBI and the United States Secret Service, and expressed his sincere gratitude to the Office of the State Attorney of the Israel Ministry of Justice’s Department of International Affairs and the Israel National Police, Cyber Unit - Lahav 433, for their support and assistance with the investigation and the ongoing extradition proceedings. He also thanked the SEC, Immigration and Customs Enforcement - Homeland Security Investigations, the Financial Industry Regulatory Authority, the National Credit Union Administration, the Office of International Affairs of the U.S. Department of Justice, and the Financial Services Information Sharing and Analysis Center, which significantly aided the investigation by facilitating information-sharing among the victim institutions.
The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.Assistant U.S. Attorneys Nicole Friedlander, Eun Young Choi, and Sarah Lai are in charge of the prosecution.Assistant U.S. Attorney Edward Diskant of the Office’s Money Laundering and Asset Forfeiture Unit is in charge of the forfeiture aspects of the case.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the superseding indictment and the description of the indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Asset Manager Sentenced to Two Years in Prison for $5 Million Fraud SchemeRead the Press Release
Greenbelt, Maryland – U.S. District Judge Theodore D. Chuang sentenced Max Wagenblast, age 35, of Arlington, Virginia, late on November 9, 2015, to two years in prison, followed by three years of supervised release, for wire fraud in connection with a scheme to steal over $5 million from his company. Judge Chuang also ordered Wagenblast to pay a fine of $25,000.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation.
According to the his plea, Wagenblast was employed as an asset manager for a Bethesda company (the company) that was the second largest Special Servicer of commercial real estate mortgages in the United States. As a Special Servicer, the company was responsible for administering defaulted commercial mortgage loans and the real estate securing foreclosed loans. The company performed this service on behalf of the Real Estate Mortgage Investment Conduit (“REMIC”) trust that held the mortgage loans on behalf of the certificate holders of the trust. In its capacity as a Special Servicer, the company collected borrower payments and property cash flow and remitted them to the REMIC trust, which was responsible for distributing those funds to the certificate holders. Wagenblast oversaw both the loans and properties that acted as security for the loans serviced by the company, including the application and utilization of funds generated by the properties he managed.
Wagenblast admitted that he redirected a portion of the funds collected from the properties he managed into the bank accounts of three limited liability companies he controlled. Those redirected funds should have been sent to the company and then forwarded to the REMIC trust bank accounts. Wagenblast obtained these funds in three ways: by sending fake invoices to the property managers and directing them to wire the funds for payment into one of the bank accounts Wagenblast controlled; by creating fake service contracts and again directing the property managers to wire the funds for payment into one of the bank accounts Wagenblast controlled; and by sending the property managers an email requesting that all wires in excess of $10,000 be sent to a bank account Wagenblast controlled.
The company conducted a search of Wagenblast’s work computer and found documents detailing the fraudulent activity, including a spreadsheet detailing each diverted funds transaction that listed the amount taken, the property from where the funds originated, the date of the transaction and the bank account into which the funds were directed. From September 2012 through September 2013, Wagenblast caused over $5 million to be wire transferred into bank accounts he controlled
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
United States Attorney Rod J. Rosenstein commended the FBI for its work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Bryan E. Foreman, who prosecuted the case.
36 charged in fraud scheme involving staged automobile crashes in the tri-state areaRead the Press Release
Evansville - United States Attorney Josh J. Minkler, today announced federal charges against 36 individuals in an elaborate scheme to defraud insurance companies by staging automobile crashes and filing false police reports. Three SWAT teams and over 70 federal, state and local law enforcement officials served warrants this morning in the tri-state area, apprehending those involved.
“The Burris family is the face of organized crime in the Evansville area,” said Minkler. “My office has a zero-tolerance policy when it comes to those who conspire to steal money and put countless lives at risk through their dangerous scheme.”
The indictment alleges that between 2008 and 2014, Michael W. Burris, Sr. 56, his wife Lisa K. Burris, 53, their sons Justin A. Burris, 26, and David B. Smitha, 38, and others, planned a series of automobile crashes in and around Evansville. They recruited persons to participate in the staged crashes, made false police reports about the crashes, and then filed claims with insurance providers for “injuries” suffered in the crash which were self-inflicted or fabricated.
In several scenarios, members of the Burris family conspiracy acquired an automobile to use in the staged crash and made certain the vehicle was insured or obtained insurance just weeks before the staged crash. They would then recruit someone to crash the vehicle in a remote area, into a tree or other fixed object causing significant damage. After the crash, the driver would leave the scene and other recruited participants waiting nearby would enter the vehicle and wait for emergency personnel to respond. They would then make a false police report and be taken to the hospital for their purported injuries. Vehicles were often loaded with three or four people after the staged crash to maximize insurance claims.
The indictment further alleges Burris Sr. and his conspirators purposely injured the “victims” to create an appearance that they sustained the injuries in the crash. They did this by punching them in the face, cutting their face with a razor blade and using a wire brush on their forehead.
Lisa Burris and other conspirators instructed the crash participants on how to appear injured by not exiting the vehicle under their own power, using emergency medical resources, and running up medical expenses through hospital stays. She had the “victims” submit false insurance claims and would coach them on how to answer questions from the insurance representatives. When the crash participants received their injury claim checks from the insurance companies, it is alleged in the Indictment that Michael Burris, Sr. and the participants would go directly to the bank on which the check was written, get cash, and divide it among the conspirators.
This case was investigated by the United States Secret Service, United States Postal Inspection Service, Evansville Police Department, Indiana State Police, and the Federal Bureau of Investigation. The Vanderburgh County Sheriff’s Office, the United States Marshal Service, and the Bureau of Alcohol Tobacco Firearms and Explosives assisted in the arrest of the 36 persons charged in the indictment today.
"Over the last year and half, the Secret Service has tirelessly pursued justice with the assistance of many other federal, state and local agencies,” said Assistant Special Agent in Charge Paul Dvorak. “Insurance fraud is not a victimless crime. This type of fraud can have a significant detrimental effect on the economy of our community. We are proud that the significant and numerous arrests made here today will have a positive impact on the city of Evansville and hopefully deter similar crimes in the future.”
“The U.S. Postal Inspection Service will continue to strongly pursue its mission of investigating mail fraud crimes and protecting the US Postal Service and its customers,” stated Inspector in Charge, Tommy Coke, Pittsburgh Division, U.S. Postal Inspection Service.
“When I started my career in retail loss prevention over twenty years ago, the Burris family and their associates were one of the first criminal groups I dealt with,” said Evansville Police Chief Billy Bolin. “It would be nice if they learned from their past mistakes, but it appears they’ve just become more sophisticated in their schemes.”
“I’m pleased the state police were able to play a role in advancing this investigation” said Indiana State Police Superintendent Doug Carter. “Financial crimes like this impact insurance premiums for honest people and this particular criminal enterprise also resulted in public safety resources responding to staged crash scenes,” Carter concluded.
According to Assistant U.S. Attorneys Todd S. Shellenbarger and Kyle Sawa who are prosecuting this case for the government, each charge carries a maximum sentence of 20 years in prison, a $250,000 fine and 3 years of supervised release.
An indictment is only a charge and not an indication of guilt. Each defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
The following individuals were indicted
Michael W. Burris, Sr. Age 56 Evansville, Indiana
Lisa K. Burris Age 53 Evansville, Indiana
David B. Smitha Age 38 Evansville, Indiana
Justin A. Burris Age 26 Evansville, Indiana
Amanda J. Carreno Age 35 Evansville, Indiana
Timothy S. Ivy Age 44 Evansville, Indiana
Michael W. Burris, Jr. Age 30 Evansville, Indiana
Timothy P. Rice Age 38 Evansville, Indiana
Shawn M. Wright Age 21 Henderson, Kentucky
Jordan T. Lawrence Age 21 Evansville, Indiana
Joshua J. Norman Age 25 Evansville, Indiana
Shaun T. Gibson Age 36 Evansville, Indiana
Kyle Blake Lee Smitha Age 20 Evansville, Indiana
Thomas J. Thomas Age 21 Evansville, Indiana
Alyssa R. Vailes Age 22 Evansville, Indiana
Latisha L. Smith Age 36 Evansville, Indiana
Dillon A. Williams Age 22 Evansville, Indiana
Brooke N. Cox Age 32 Evansville, Indiana
Brooke N. Ewers Age 27 Evansville, Indiana
Toni J. Wilson Age 41 Evansville, Indiana
Jerry A. McGill Age 55 Evansville, Indiana
Benjamin W. Widick Age 42 Evansville, Indiana
Lynn M. Smitha Age 34 Evansville, Indiana
Phillip J. Gibson Age 37 Chandler, Indiana
Michelle L. Stuard Age 30 Evansville, Indiana
Ariel R. Pace Age 24 Evansville, Indiana
Ashley N. Hines Age 29 Evansville, Indiana
Crystal D. Uziekalla Age 41 Evansville, Indiana
David W. Uziekalla Age 38 Wadesville, Indiana
Tiffany L. Bowen Age 26 Evansville, Indiana
Shawna M. Morell Age 35 Chandler, Indiana
Jamey L. Grant Age 27 Evansville, Indiana
Ryan Maun Age 28 Evansville, Indiana
Mary E. Houchin Age 36 Evansville, Indiana
Theresa A. Frank Age 31 Boonville, Indiana
Sherry W. Greenwalt Age 41 Evansville, Indiana
9 November 2015
Woman Who Used Checks Stolen from Elderly Victim while under Supervision in another Fraud Case Gets 58-Month Prison TermRead the Press Release
LOS ANGELES – A woman with a 40-year history of fraudulent conduct who used checks stolen from a woman in a West Hills nursing home to purchase hundreds of dollars in merchandise – a crime she committed while on supervised released in another federal fraud case – was sentenced today to 58 months in federal prison.
Carol Ejdowski, 66, a transient who had recently been residing in Beverly Hills, was sentenced by United States District Judge Dolly M Gee, who imposed a 37-month term for the current bank fraud case and a consecutive 21-month sentence because the offense was committed while Ejdowski was on supervised release.
When she defrauded the elderly victim, Ejdowski was serving a three-year period of supervised released after pleading guilty to passport fraud related to a credit card scam, serving a 63-month federal prison term and being released in late 2012.
In sentencing Ejdowski, Judge Gee said “the facts of this case are particularly despicable.” Pointing to the defendant’s multiple prior convictions for fraud, grand theft and perjury, Judge Gee called Ejdowski “a recidivist of the highest order” who had “shown her disrespect for the law repeatedly.”
Ejdowski pleaded guilty in September 2014 to one count of bank fraud, admitting that she stole checks from the victim that she used to purchase merchandise at Costco and Walmart. Ejdowski was originally scheduled to be sentenced on April 29, but she failed to appear for that hearing and was a fugitive until she was arrested and incarcerated in August.
While Ejdowski admitted in court that she used stolen checks, prosecutors argued that she also used the victim’s credit cards in a scheme that cause $1,925 in losses.
“This case demonstrates the Department of Justice’s commitment to prosecuting those who prey upon the most vulnerable in our community,” said United States Attorney Eileen M. Decker. “Standing alone, the monetary loss in this case did not adequately reflect the gravity of defendant’s crime, but today’s significant sentence should send a message to all those who would seek to victimize the vulnerable.”
Although the low loss amount was low, prosecutors wrote in a sentencing memo that Ejdowski’s “criminal conduct was particularly deplorable because it targeted a defenseless, 70-year-old, half-paralyzed woman who was living by herself in a nursing home/rehab facility.”
In a sentencing memorandum, prosecutors detailed Ejdowski’s history of fraud offenses, with convictions going back to the 1970s.
The latest fraud case against Ejdowski was the result of an investigation by the Federal Bureau of Investigation.
Washington, Pa., Man Pleads Guilty to Selling Prescription DrugsRead the Press Release
PITTSBURGH - A resident of Washington, Pennsylvania pleaded guilty in federal court to charges of possession with intent to distribute and distribution of Oxycodone, Opana and Morphine, all Schedule II controlled substances, and obtaining prescriptions by fraud, United States Attorney David J. Hickton announced today.
Dennis DeVenney, Sr. pleaded guilty to the two felony counts before United States District Judge Cathy Bissoon.
According to information presented to the Court at the guilty plea, Devenney sold controlled substances, Oxycodone, Opana and Morphine, for cash.
Judge Bissoon scheduled sentencing for March 21, 2016. The law provides for a maximum total sentence of 24 years in prison, a fine of $1,250,000 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, if any, of the defendant.
Pending sentence, the court released DeVenney, Sr. on bond.
Assistant United States Attorney Robert S. Cessar is prosecuting this case on behalf of the government.
The Drug Enforcement Adminstration conducted the investigation leading to the charges in this case.
Wallis Man Convicted of Producing Child PornographyRead the Press Release
VICTORIA, Texas – David Ray McGee, 47, of Wallis, has entered a guilty plea to sexual exploitation of a child, otherwise known as production of child pornography, announced U.S. Attorney Kenneth Magidson. Co-defendant Saralyn Ann Proschko, 46, of Victoria, pleaded guilty earlier this year.
In July 2015, authorities with the Victoria Police Department (VPD) responded to the Texas Department of Criminal Justice (TDCJ) - District Parole Office in Victoria in reference to allegations of possession of child pornography. Officers met with Proschko and discovered an electronic video on her cellular telephone of a juvenile female engaged in a sexual act. Further investigation led to the discovery and charging of Proschko’s boyfriend - McGee - in relation to the allegations.
Today, McGee admitted to sexually assaulting the young girl, who was only five years old at the time.
During the hearing, the court heard that McGee had met Proshko on a dating website. During their conversations, he had indicated he had a sexually fantasy. Soon after, Proshko began texting him photos of herself penetrating the young girl with various sexual objects. Eventually, that led to him sexually assaulting the young girl, during which time she had begged him to stop. In at least one instance, Proshko had actually held the toddler down while McGee assaulted her.
Senior U.S. District Judge John D. Rainey accepted the guilty plea and set sentencing for Feb. 2, 2016, at which time McGee faces a minimum of 15 and up to 30 years in federal prison. Upon completion of any prison term imposed, McGee also faces a maximum of life on supervised release during which time the court can impose a number of special conditions designed to protect children and prohibit the use of the Internet.
McGee and Proschko were arrested on the federal charges in July 2015 and have been in custody since that time where both will remain pending their sentencing hearing.
The charges are the result of the investigative efforts of Homeland Security Investigations, Texas Attorney General’s Office - ICAC (Internet Crimes Against Children), Houston-Metro ICAC Task Force and the Victoria Police Department.
This case, prosecuted by Assistant U.S. Attorney Hugo R. Martinez, 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."
U.S. Attorney Message to Service Members and VeteransRead the Press Release
The following appeared in the November 2015 issue of Connecticut Guardian:
As a service member or veteran, you have undoubtedly faced obstacles and challenges both during and after your military service to our Country. The U.S. Attorney’s Office for the District of Connecticut and the U.S. Department of Justice recognize these challenges and our obligation to protect your rights and interests as service members and veterans. For over five years, through our Active Duty and Veterans Committee, we have coordinated with federal, state and local agencies and advocates to help ensure that legal protections of your rights are a reality in Connecticut. We have obtained settlements for veterans and done extensive outreach to military bases, veterans groups, and professional organizations to educate the public about the protections available for service members and veterans.
As we approach Veterans Day, we reiterate our commitment to serve you as you have served our country by outlining our major accomplishments ensuring that service members returning from active duty are not penalized by their civilian employers; that service members and their families overseas do not forfeit their right to vote; and that active duty service members and their families receive the full benefit of the consumer and financial protections provided under law.
Employment Rights and the Uniform Services Employment and Reemployment Rights Act (USERRA)
While you are deployed and working to protect our country, you should be confident that your civilian job will be there when you return home. We enforce the provisions of USERRA to ensure that employment and employment benefits will be reinstated when you return from military service. The provisions of USERRA protect active duty service members and veterans. USERRA regulations apply to virtually all civilian employers: federal and state governments, as well as private employers. Even if you are employed in a temporary job, you may be entitled to USERRA’s protections.
Where employers violate USERRA’s provisions, the Justice Department and the U.S. Attorney's Office can bring an action in federal court on your behalf to obtain injunctive relief, lost wages and benefits, double liquidated damages, as well as attorney fees and costs. Last year, the Justice Department brought actions on behalf of over 10 service members and collected over $300,000 for violations of USERRA. Additionally, several years ago in Connecticut, a federal judge ordered a bank that violated USERRA’s provisions to pay $779,000 in back pay, damages, and attorney’s fees to its employee.
Financial and Consumer Protections -- Servicemembers Civil Relief Act (“SCRA”)
When you are preparing for active duty or are returning from active duty, you should not have to worry about your car being repossessed or your home being subjected to an illegal foreclosure without your knowledge. The provisions of the SCRA protect you by postponing or suspending certain obligations associated with rental agreements, automobile leases, mortgage foreclosures, evictions, security deposits, installment contracts, student loan payments and more. The SCRA also eases financial burdens and provides some relief from credit obligations and court proceedings while you are on active duty.
Where lenders violate SCRA’s provisions, we can bring an action in federal court to obtain injunctive relief and monetary damages. For example, the Justice Department recently settled with five of the nation’s largest mortgage service providers for unlawful foreclosures. Under the settlements, a total of 2,413 service members are eligible to receive over $311 million dollars. Earlier this year, the Justice Department settled a case with a motor vehicle lender which required the lender to pay $9.35 million to service members whose motor vehicles were illegally repossessed. Last year, the Department signed a settlement with a student loan servicer, requiring it to pay $60 million to 77,795 service members for overcharging on student loans.
Voting Rights -- Uniformed and Overseas Citizens Absentee Voting Act (“UOCAVA”)
As citizens of the United States, you have a right to vote in elections for federal offices even when you are deployed. UOCAVA guarantees Americans serving in our uniformed services, their families and U.S. citizens living overseas the right to register and vote absentee in elections for federal office. Its protections are designed to ensure military and overseas voters a meaningful opportunity to request and receive their absentee ballots in time to vote and have their votes counted. Protecting the voting rights of our service members and overseas citizens is one of the highest priorities of the Department of Justice.
The Justice Department vigorously enforces UOCAVA, which requires, among other things, that states and territories transmit requested absentee ballots to military and overseas voters at least 45 days prior to federal elections. Over the years, the Department has gone to court or reached settlement agreements with many states to remedy violations of UOCAVA’s requirements. Since Congress enacted the Military and Overseas Voter Empowerment (MOVE) Act to expand UOCAVA’s protections in 2009, the Department has filed 15 cases and entered numerous out of court agreements to remedy UOCAVA violations and ensure future compliance with its requirements.
For example, prior to the 2014 federal general election in West Virginia, the Department brought a UOCAVA suit and obtained a consent decree to extend the ballot receipt deadline as well as a subsequent court order to count the votes for federal office on ballots submitted by military and overseas voters after the state failed to transmit the final ballots to these voters in a timely fashion.
Americans with Disabilities Act (“ADA”)
The challenges you face on reentry to civilian life may be compounded by issues related to physical injuries, post-traumatic stress disorder, traumatic brain injuries, and/or substance abuse. The Justice Department and U.S. Attorney's Office enforce the ADA, which protects you and your family members from discrimination on the basis of disability. The ADA prohibits discrimination and ensures equal opportunity for persons with disabilities in employment (based on complaints referred from the EEOC), state and local government services, public accommodations, commercial facilities, and transportation. Injunctive relief, compensatory damages, and, attorney’s fees are available. The Justice Department and U.S. Attorney's Office may also assess civil penalties.
The Justice Department and U.S. Attorney's Office have an active ADA docket, composed of a wide variety of cases against state and local governments as well as private entities for failing to make reasonable modifications to assist people with disabilities. Entities that have violated the ADA have been required to pay monetary damages to compensate those impacted. Recently, the U.S. Attorney's Office settled a case with a local business that refused to allow a veteran to enter with her service dog. The U.S. Attorney's Office required the local business to make sweeping changes to its policies, train its staff, and post signs on its property notifying the public of their rights. The Justice Department also recently settled a case against a hotel chain requiring it to pay monetary damages to compensate a veteran and his family who were denied the right to stay in the hotel because of his service animal. Complaints may be filed in a number of ways including by using our complaint form located on www.ada.gov.
Fair Housing Act (“FHA”)
After serving our Country, some of you may have difficulty securing housing because of discrimination. The FHA prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. The FHA authorizes the court to award injunctive relief, monetary damages and, in some cases, civil penalties.
In one case, the Justice Department sued a landlord for violating the FHA because he refused to allow a veteran to keep an assistance animal in his apartment. The landlord settled with the Department and agreed to pay the tenant $20,000 in compensation. In another case, the Department entered into a $300,000 settlement with a mobile home park owner who was alleged to have sexually harassed female tenants of the park, including several women whose husbands were stationed at the nearby army base.
As current or former members of the military, you have sacrificed to protect our nation. It is our privilege to do everything in our power to enforce the federal laws designed to protect you and your families. We encourage you to come forward and notify us of any issues or problems you or your families are facing. We welcome and look forward to hearing from you on how the U.S. Attorney's Office and Justice Department can better help you and your families live securely in this Country that you have helped protect and defend.
Please feel free to call my office with questions, suggestions, and complaints at 203 821 3700 or write to us at Active Duty and Veterans Committee, U.S. Attorney’s Office for the District of Connecticut, Attn: John Fitzgerald, 157 Church Street, 25th Floor, New Haven, CT 06510. You may also visit http://www.justice.gov/crt-military.
On behalf of the U.S. Attorney’s Office of the District of Connecticut: Thank you for your service to our Country. We could not be more proud of your dedication and sacrifice. Please know that we are here to serve you and protect your rights.
Deirdre M. Daly was nominated by President Barack Obama to serve as the 51st U. S. Attorney for the District of Connecticut. Ndidi N. Moses is an Assistant U.S. Attorney and the Civil Rights Coordinator for the Civil Division.
U.S. Attorney Alicia Limtiaco Attends 2015 Ninth Circuit Corrections SummitRead the Press Release
ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), was invited to attend the 2015 Ninth Circuit Corrections Summit, which was held on November 4-6, 2015, in Sacramento, California.
The U.S. District Court Judges from Guam and the Northern Mariana Islands, together with other Federal judges and court staff, U.S. Attorneys, members of the bar, state and federal corrections officials, and deputy state attorneys general participated in the summit. The summit was held in an effort to more effectively manage prisoner litigation within states in the Ninth Circuit, including Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington, Guam and the Northern Mariana Islands.
Some of the topics covered at the summit were segregated housing, health care delivery, prison grievance procedures, strategies for prisoner cases filed in federal court, and class action litigation.
In a press release announcing the summit, Chief Judge Sidney R. Thomas of the Ninth Circuit Court of Appeals stated that "[t]he challenges of prisoner litigation have never been greater, and we need fresh perspectives and initiatives to address these critical issues.” He further stated that “[t]he summit allows all of the stakeholders to share perspectives, gain understanding and discuss how to more effectively manage inmate litigation, from the initial grievance to trial and beyond.”
Two sentenced for heroin, oxycodone traffickingRead the Press Release
CLARKSBURG, WEST VIRGINIA – Two individuals were sentenced in federal court today for heroin and oxycodone trafficking, United States Attorney William J. Ihlenfeld, II, announced.
Marvin Pierre Ledbetter, Jr., 30, of Detroit, Michigan, was sentenced today to 120 months in prison after he pled guilty to one count of “Possession with Intent to Distribute Oxycodone – Aiding and Abetting.” He was discovered in possession of oxycodone pills in Harrison County, West Virginia following an investigation by the Greater Harrison County Drug and Violent Crime Task Force, a HIDTA-funded initiative, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Gregory Morris, Jr., 33, of Duquesne, Pennsylvania, was sentenced today to 96 months and 20 days months in prison for selling heroin near a playground in Monongalia County, West Virginia. He pled guilty in May 2014 to one count of “Distribution of Heroin in within 1,000 feet of a Protected Location” following an investigation by the West Virginia State Police Bureau of Criminal Investigations.
Assistant U.S. Attorney Zelda Wesley prosecuted Morris and Wesley, along with former Assistant U.S. Attorney Shawn Morgan, prosecuted Ledbetter on behalf of the government.
U.S. District Judge Irene M. Keeley presided.
Two Traffickers Sentenced to PrisonRead the Press Release
McALLEN, Texas – Two men have been ordered to federal prison following their convictions for conspiring to possess with the intent to distribute cocaine, marijuana and conspiring to launder drug proceeds, announced U.S. Attorney Kenneth Magidson. Francisco Javier Gonzalez, 39, of San Juan, and Osmar Alexander Gonzalez, 35, of Houston, entered guilty pleas Jan. 31, 2013, and March 27, 2013, respectively.
Today, U.S. District Judge Randy Crane ordered Francisco Gonzalez to serve 120 months in federal prison, while Osmar Gonzalez received a 144-month term. The prison terms will be immediately followed by a five-year-term of supervised release.
The investigation revealed that during 2010 and 2011, Francisco Gonzalez and others conspired to transport large amounts of marijuana from the Rio Grande Valley to various destinations via tractor-trailers. During the investigation, law enforcement was able to seize several loads of marijuana, including 1,512 kilograms, 980 kilograms and 890 kilograms on May 10, 2010, Oct. 9, 2010, and Jan. 27, 2011, respectively.
The defendants and others also conspired to distribute multi-kilogram quantities of cocaine from the Rio Grande Valley to Houston and elsewhere. Agents seized more than $96,000 on Aug. 25, 2011 - the proceeds of the narcotics distribution.
Both will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The investigation leading to the charges was conducted by the Drug Enforcement Administration. Assistant U.S. Attorney James Sturgis prosecuted the case.
Two New Jersey Men Admit Roles in Scheme to Extort Thousands of Dollars from Hudson County ProjectRead the Press Release
NEWARK, N.J. – Two men today admitted extorting thousands of dollars in corrupt payments in connection with arranging approvals to provide landfill materials for a Hudson County Improvement Authority (“HCIA”) project, U.S. Attorney Paul J. Fishman announced.
Gerard Pica, 65, of Middletown, New Jersey, pleaded guilty before U.S. District Judge Jose L. Linares to Count Four of an indictment charging him with conspiracy to commit extortion under color of official right. James Castaldo, 60, of Beachwood, New Jersey, pleaded guilty before Judge Linares to Count One of the indictment charging him with conspiracy to commit extortion under color of official right.
According to the documents filed in this case and statements made in court:
The HCIA was overseeing the construction of a nine-hole public golf course located at Lincoln Park West in Jersey City, New Jersey (the “LPW project”). As part of its construction, the LPW project required several hundred thousand cubic yards of soil, fill material and crushed stone to be incorporated into the site, as well as to serve as road bedding during the construction of the golf course. As the overseer of the LPW project, one of the functions of the HCIA – either directly or through a designated contractor – was to serve as a gatekeeper for any material to be delivered to the LPW site. It was the HCIA’s responsibility to solicit, evaluate and decide which contractors’ proposals to accept for the provision of soil and fill material for the LPW project.
Castaldo ran Renda Enterprises LLC, which provided interstate transportation and broker services that moved or received recycled waste and other materials. Pica had been employed by the HCIA as an environmental scientist and had the ability to influence the HCIA’s decisions regarding the selection of contractors to provide soil and fill material to the LPW project. An individual referred to in the indictment as “Employee 1” also had authority over the selection of contractors seeking to provide materials for the project site.
From August 2010 through November 2011, Pica, Castaldo and others schemed to obtain payments from certain contractors in exchange for Pica and Employee 1’s assistance in getting approval for certain companies to provide materials for the LPW project.
Pica admitted that he arranged to obtain corrupt payments from “Individual 3,” the owner of a recycling business in Bayonne, New Jersey. Pica admitted using his authority at the HCIA to ensure that Individual 3 and Individual 3’s company received approval to provide Class B materials, including crushed stone, for the LPW project. As part of the agreement, Individual 3 would pay Castaldo a fee – $2 per cubic yard of fill and soil material delivered to the site – for the benefit of Pica, Castaldo and Employee 1. Pica admitted receiving approximately $6,600 in December 2010 as a partial payment of his share. In addition, Pica admitted to creating a fraudulent invoice from a separate company which he owned for monies purportedly owed to him by Renda Enterprises. Pica admitted that he accepted a check for $6,000 from Renda Enterprises in April 2011, knowing that this amount was further payment of his share which he extorted from Individual 3.
Castaldo admitted that in early 2011, he met with Pica and a person referred to in the indictment as “Individual 1,” who was the owner of a full service environmental consulting firm seeking authorization to dump soil and fill material at the LPW site. Castaldo admitted that he, Pica and Individual 1 agreed upon the amount per cubic yard that Individual 1 would have to pay in return for Pica’s assistance in ensuring Individual 1 would receive authorization to dump the material at the LPW site. Castaldo acknowledged that in July 2011, Renda Enterprises received two payments totaling more than $8,600 as corrupt payments for allowing Individual 1 to dump more than 2,600 cubic yards of fill materials at the LPW site.
The counts to which Pica and Castaldo pleaded guilty both carry a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Pica and Castaldo are also jointly responsible for forfeiture of $53,861. Sentencing for both defendants is scheduled for Feb. 23, 2016.
U.S. Attorney Fishman credited special agents from the FBI, under direction of Special Agent in Charge Richard M. Frankel in Newark and special agents with the N.J. State Commission of Investigation, under the direction of Acting Executive Director Lee C. Seglem, for the investigation.
The government is represented by Assistant U.S. Attorneys David L. Foster and Mark McCarren of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
Defense counsel:
Pica: Edward Plaza, Esq., Newark
Castaldo: Matthew J. Heagen, Toms River
Two KC Men Sentenced for Drug Trafficking, Illegal FirearmsRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that two Kansas City, Mo., men were sentenced in federal court today on charges related to drug trafficking and illegally possessing firearms.
Donald Morgan, also known as “Rone,” 43, and Derrick K. Vaughn, 47, both of Kansas City, were sentenced in separate appearances before U.S. District Judge Gary A. Fenner. Morgan was sentenced to 11 years and eight months in federal prison without parole. Vaughn was sentenced to six years in federal prison without parole.
On April 30, 2015, Morgan and Vaughn each pleaded guilty to possessing firearms in furtherance of a drug-trafficking crime. Morgan also pleaded guilty to participating in a conspiracy to distribute cocaine and marijuana and to money laundering. Vaughn also pleaded guilty to possessing crack cocaine with the intent to distribute.
From April 25, 2007, to April 25, 2012, Morgan and Vaughn participated in a conspiracy that distributed one kilogram of cocaine and nine kilograms of marijuana.
Morgan admitted that he was in possession of a Roman Arms rifle and a DPMS 7.62 x 39 rifle in furtherance of the conspiracy. Vaughn admitted that he was in possession of a Pietro Beretta handgun in furtherance of his possession of crack cocaine to distribute.
Morgan also admitted that he purchased a residence in Kansas City, Mo., with the proceeds of drug trafficking. He provided a co-defendant with two checks in order to close on the property, in an effort to conceal the true origin of the funds. Vaughn admitted that he occupied a bedroom in this house, where he possessed eight bags of crack cocaine totaling 2.35 grams, which he intended to distribute, as well as the handgun.
Morgan used this residence and another residence as storage and distribution hubs for his cocaine and marijuana supplies. Morgan specifically admitted that on Feb. 21, 2012, he stored distribution amounts of marijuana and $79,980 in drug proceeds at one of the residences. He admitted that he possessed the rifles within the residence in order to protect the marijuana and the money.
Co-defendant Rudolfo Villareal, also known as “Gordo” and “Rudy,” 41, of Kansas City, Mo., and others supplied Morgan with distribution amounts of cocaine and marijuana. Villareal pleaded guilty to his role in the conspiracy to distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana, and to money laundering, and awaits sentencing.
Four co-defendants in addition to Morgan, Vaughn and Villareal, have pleaded guilty in this case. Paul Tinoco, Sr., 67, of Kansas City, Mo., was sentenced to 15 years in federal prison without parole. Edward M. Sola, 41, of Kansas City, Mo., was sentenced to 10 years in federal prison without parole. James Comer, 37, of Kansas City, Mo., was sentenced to four years in federal prison without parole. Andrea Mabe, 39, of Kansas City, Mo., pleaded guilty and awaits sentencing.
This case is being prosecuted by Assistant U.S. Attorney Catherine Connelly. It was investigated by the FBI, the Kansas City, Mo., Police Department, the Drug Enforcement Administration and IRS-Criminal Investigation.
Two Individuals Sentenced for Endorsing and Cashing Stolen and Fraudulently Obtained United States Treasury ChecksRead the Press Release
Two individuals from the Southern District of Florida were sentenced for endorsing and cashing stolen and fraudulently obtained United States Treasury checks.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.
Pete Hoggins, 32, was sentenced to 61 months in prison, followed by three years of supervised release. Hani Sobhi Alshaikh, a/k/a “Danny”, 35, was sentenced to 11 months in prison, followed by three years of supervised release. The defendants were also ordered to pay joint and several restitution in the amount of $150,008.05. Hoggins and Alshaikh previously pled guilty to one count of conspiracy to commit forgery and theft of public money, in violation of Title 18, United States Code, Section 371. Hoggins also pled guilty to one count of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A.
According to court documents, Alshaikh worked at a gas station in Pompano Beach, Florida. On multiple occasions from December 2011 to January 2014, Hoggins brought Alshaikh stolen and fraudulently obtained Treasury checks to cash at this gas station. Hoggins and Alshaikh forged the payees’ endorsements on the Treasury checks. Alshaikh then deposited those checks into several different business checking accounts that he had opened at various banks in the name of his company, HSA Investment Group.
The total number of victims in the scheme was more than 50, but less than 250. The total amount of intended loss was more than $200,000 but less than $250,000.
Mr. Ferrer commended the investigative efforts of IRS-CI. This case is being prosecuted by Assistant U.S. Attorney Alicia E. Shick.
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.
Two Brooklyn New York Narcotics Dealers Sentenced for Distributing Heroin and Crack Cocaine in RutlandRead the Press Release
The Office of the United States Attorney for the District of Vermont stated that Alvin Kinard (a.k.a. “Baby”), 25, and Stephen Morrison (a.k.a. “MJ”), 25, both from Brooklyn, New York, were sentenced by Chief Judge Christina Reiss in U.S. District Court in Burlington. Judge Reiss sentenced Kinard to 48 months imprisonment and sentenced Morrison to 46 months imprisonment. She also sentenced both to three years of supervised release, which will follow their prison sentences. Kinard and Morrison had previously pled guilty to conspiracy to distribute heroin and crack cocaine in the Rutland area.
According to court papers, on September 9, 2013, defendants Kinard and Morrison obtained heroin and crack cocaine in Brooklyn, New York, and began traveling by car from Brooklyn north to Rutland, Vermont with two women from Vermont, one of whom was driving. At Kinard’s and Morrison’s direction, the two Vermont women were carrying over 100 grams of crack cocaine and about 40 grams of heroin, in total. Early that morning, the New York State Police stopped the car for a motor vehicle violation near Albany and seized the drugs. Kinard and Morrison were later charged in Vermont with a longer term drug conspiracy that included many other trips from Brooklyn to Rutland, Vermont.
At the sentencing hearings, Judge Reiss stated that a “common theme” of this conspiracy was “using young women” for “body packing” and having young women addicts “take most of the risk” as “human mules.” Judge Reiss also described the adverse impact of heroin on various Vermont communities.
This case was investigated by the Vermont State Police Drug Task Force, the Federal Bureau of Investigation, and the Drug Enforcement Administration. The United States is represented by Assistant U.S. Attorney Joseph Perella. Kinard is represented by Mary Kehoe, Esq. of Burlington and Morrison is represented by Michael Shklar, Esq. of Newport, New Hampshire.
Twelve Latin Kings Indicted for Drug and Firearms OffensesRead the Press Release
BOSTON – Twelve Springfield-area men, nine of whom were arrested this morning, were charged in U.S. District Court in Springfield with drug distribution and firearms offenses.
“The defendants are alleged leaders and members of the Latin Kings, a criminal organization whose tactics include intimidation, violence and even murder,” said United States Attorney Carmen M. Ortiz. “The charges, and today’s arrests, strike at the core of this organization and seek to bring peace to the neighborhoods they have damaged through drug dealing and violence.”
“Today’s arrests have significantly disrupted one of the most powerful and brutal gangs in western Massachusetts,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “Not only did the FBI’s Western Massachusetts Gang Task Force seize numerous narcotics and firearms, but we prevented specific acts of violence from taking place. The FBI will continue to work with our law enforcement partners to take back our communities from these violent offenders and make our streets safer.”
“So much of the street violence we deal with in this state, and in this country, is the result of the confluence of guns and drugs,” said Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police. “The inclination of gang members to use firearms to protect their drug profits and settle scores requires constant vigilance and aggressive interdiction, such as this investigation, to dismantle these organizations.”
Eric Lopez, 33, of Chicopee, and Francisco Figueroa, 30, of Holyoke, were charged with being felons in possession of firearms; Joseph Ortiz, 22, Jose Cartagena, 37, and Juan Velazquez, 29, of Springfield; Xavier Nazario, 24, Miguel Morales, 23, and Derek Richard, 31, of Holyoke; and Francisco Bermudez, 26, and Norman Andino, 35, of Chicopee, were all charged with distribution of heroin; and Bienvenido Nuñez, 37, of Springfield, and Andrew Cruz, 24, of Springfield, were charged with distribution of cocaine.
According to court documents, the investigation was initiated in October 2014 in an effort to disrupt and dismantle the Latin Kings’ criminal activity in the Springfield and Holyoke areas. The investigation revealed that the twelve defendants are allegedly members of the Latin Kings, a nation-wide gang organization headquartered in Chicago, Ill. It is also alleged that Nuñez is the “enforzador” or enforcer, in charge of security, and Cartagena is the “inca,” or chief, of the Springfield Chapter of the Latin Kings.
The Latin Kings consider fellow gang members to be brothers and sisters, and an act against the interest of one member is an act against the interest of all members. Members and associates of the Latin Kings regularly utilize violence, including homicide and armed assault, in support of drug trafficking activities.
According to court documents, members and associates of the Latin Kings are engaged in the distribution of narcotics, particularly heroin. Furthermore, disputes with rival gangs over criminal activity and drug turf are on the rise and have resulted in serious crimes of violence, including armed assaults with firearms and murder.
The charge of being a felon in possession of a firearm provides a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. The charges of distribution of heroin and cocaine each provide a sentence of no greater than 20 years in prison, five years of supervised release and a fine of $1 million on each count. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Ortiz, FBI SAC Shaw, Massachusetts State Police Colonel McKeon, Springfield Police Commissioner John Barbieri and Holyoke Police Chief James M. Neiswanger, made the announcement today. The cases were investigated by the Federal Bureau of Investigation=s Western Massachusetts Gang Task Force, the Massachusetts State Police and the Springfield and Holyoke Police Departments. They are being prosecuted by Assistant U.S. Attorneys Todd E. Newhouse and Katharine A. Wagner of Ortiz=s Springfield Office.
The details contained in the charging documents are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Tulare Man Pleads Guilty to Stealing Social Security BenefitsRead the Press Release
FRESNO, Calif. — Larry Ramirez, 52, of Tulare, pleaded guilty today to stealing benefits paid by the United States Social Security Administration (SSA), United States Attorney Benjamin B. Wagner announced.
According to court documents, Ramirez failed to disclose income he had made from owning and operating an auto body repair business in numerous applications to the SSA for benefits. During the process of determining his benefits, he made a false statement to the SSA that he had not worked in over 15 years, which he knew to be false at the time. As a result, and over the course of approximately 15 years, Ramirez stole approximately $90,000 in SSA benefits.
This case is the product of an investigation by the U.S. Social Security Administration, Office of Inspector General. Assistant United States Attorneys Patrick R. Delahunty and Henry Z. Carbajal III are prosecuting the case.
Ramirez is scheduled to be sentenced by United States District Judge Anthony W. Ishii on March 28, 2016. Ramirez faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. The actual sentence, however, will 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.
Tax Preparer to Plead Guilty to Tax and Wire FraudRead the Press Release
PROVIDENCE, R.I. – According to an information and plea agreement filed today in U.S. District Court in Providence, Leon F. Tejada, 50, of Providence, operator of El Centro Multiservicios, LLC, a tax preparation service in Providence, has agreed to plead guilty to federal tax and wire fraud charges, announced United States Attorney Peter F. Neronha and William P. Offord, Special Agent in Charge of IRS Criminal Investigation.
According to the court documents, it is alleged that during tax years 2009 through 2012, Tejada, without the knowledge of his clients, created and falsified clients’ dependents, exemptions, tax credits, deductions and expenses in order to increase the amount of tax refund due to the clients. It is alleged that the scheme resulted in a loss to the United States of $54,440.
It is also alleged that Tejada devised a scheme to divert his clients’ tax refunds through a bank clearing house, at which time, without the knowledge of his clients, a portion of the funds were diverted into his own bank account for his own personal use. It is alleged that Tejada diverted $24,987 into his own bank account.
An information is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The matter was investigated by Internal Revenue Service Criminal Investigation.
The case is being prosecuted by Assistant U.S. Attorney Richard W. Rose.
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St. Croix Man Sentenced to 21 Months in Prison for Possession of Prison Contraband and Possession of Firearm While under IndictmentRead the Press Release
St. Croix, USVI – District Court Chief Judge Wilma A. Lewis on November 5, 2015, sentenced Jahseen Simmonds, 23, to 21 months in prison for possession of prison contraband and possession of a firearm while under indictment, United States Attorney Ronald W. Sharpe and Federal Bureau of Investigation Special Agent-in-Charge Carlos Cases announced today.
Judge Lewis also sentenced the St. Croix resident to serve three years of supervised release, and pay a $300 special assessment and $600 fine. Judge Lewis also ordered Simmonds to obtain his GED and vocational or educational training to obtain a license or certification at least six months before the expiration of his supervised release.
On May 11, 2015, Simmonds pleaded guilty to two counts of possession of prison contraband, and one count of possession of a firearm while under indictment. According to court documents, on or about August 30, 2013, Virgin Islands Bureau of Corrections officers conducted a search of a cell occupied solely by Simmonds. The officers seized two shanks on the top bunk. On April 7, 2014, federal officers conducted a search of a cell occupied by Simmonds and seized a shank that was under his mattress. On January 2, 2015, Virgin Islands Police Department officers observed Simmonds in the Ruby Rouss Housing Complex on St. Croix with a clear plastic bag that contained a green leafy substance. Simmonds admitted to the police that the bag contained marijuana, and he gave the bag to the police. When asked if he had any other contraband, Simmonds ran from the police. The police officers chased and caught Simmonds. Upon searching him, the officers found a loaded .40 caliber semiautomatic handgun, a loaded magazine and a switchblade knife.
The case was investigated by the Virgin Islands Police Department and the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Rhonda Williams-Henry.
Springfield Sex Offender Pleads Guilty to Child Porn, Faces at Least 15 Years in PrisonRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a prior sex offender in Springfield, Mo., pleaded guilty in federal court today to receiving and distributing child pornography.
Gary Thomas Sheldon, 52, of Springfield, pleaded guilty before U.S. Magistrate Judge David P. Rush to the charge contained in a July 21, 2015, federal indictment.
By pleading guilty today, Sheldon admitted that he received and distributed child pornography over the Internet from Oct. 5, 2014, to July 15, 2015. Sheldon, a registered sex offender, was convicted in federal court of possessing child pornography in January 2001. As a result, Sheldon will be subject to a mandatory minimum sentence of 15 years in federal prison without parole.
According to court documents, law enforcement officers received a cybertip from the National Center for Missing and Exploited Children, which had received the tip from an adult pornography Web site where Sheldon had uploaded an image of child pornography. Law enforcement officers executed a search warrant at Sheldon’s residence on July 15, 2015. Sheldon’s desktop computer and cell phone were seized, and investigators discovered images of child pornography on both devices.
Under federal statutes, Sheldon is subject to a mandatory minimum sentence of 15 years in federal prison without parole, up to a sentence of 40 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Ami Harshad Miller. It was investigated by the FBI, the Missouri State Highway Patrol and the Southwest Missouri Cybercrime Task Force.
Registered Sex Offender in Kearny County Gets 20 Years on Child Porn ChargeRead the Press Release
WICHITA, KAN. – A registered sex offender living in Kearny County was sentenced Monday to 20 years in federal prison for distributing child pornography, U.S. Attorney Barry Grissom said.
Mark A. Wireman, 44, Lakin, Kan., pleaded guilty in July 2015 to five federal counts of distributing child pornography.
Wireman was indicted in Kansas in February 2015. Prosecutors alleged he used his Gmail account to send a photograph of a toddler being sexually assaulted by an adult to another man in Michigan. Google identified the photo as child pornography and filed a CyberTipline report. Investigators followed an electronic trail to Wireman, who made unauthorized use of his neighbor’s wireless Internet service to send the photograph. On Wireman’s phone, investigators found more child pornography he had distributed. Investigators learned Wiremen and the man to whom Wireman sent child pornography became friends in prison while Wireman was serving time for a sex offense.
Wireman has prior convictions in 2007 and 1994 in Michigan for sex offenses.
Grissom commended the National Center for Missing & Exploited Children, the Wichita Police Department, the Internet Crimes Against Children Task Force, Homeland Security Investigations and Assistant U.S. Attorney Jason Hart for their work on the case.
Ralston Man Sentenced for Manufacturing Explosives Without A LicenseRead the Press Release
United States Attorney Deborah R. Gilg announced that on November 6, 2015, Jeffrey Belmont, 50, of Ralston, Nebraska was sentenced for his conviction for manufacturing explosives without a license. Senior United States District Judge Joseph F. Bataillon sentenced Belmont to six months of imprisonment to be followed by two years of supervised release.
A search of Belmont’s home was conducted on June 24, 2014. Immediately prior to the execution of the search warrant, the defendant told investigators that he had made some fireworks the previous day in a shed behind his house. A search of the shed yielded numerous items associated with the clandestine manufacturing of what are commonly referred to as M-80 style IEDs. Thirty-six fully completed IEDs were located along with an additional twenty-eight partially completed IEDs which just needed fuses. Large quantities of potassium perchlorate and aluminum powder, chemicals used to make flash powder, were also recovered along with spools of fuse and large quantities of cardboard tubes and endcaps used in making the M-80 style IEDs.
This case was investigated by the Bureau of Alcohol, Tobacco and Firearms.
Pittsburgh Man Admits Role in Detroit to Pittsburgh Oxycodone Distribution SchemeRead the Press Release
PITTSBURGH - A Pittsburgh resident pleaded guilty in federal court to a charge of violating the federal narcotics laws, United States Attorney David J. Hickton announced today.
Max Matthew Guardalabene, 31, pleaded guilty to one count of conspiracy to distribute oxycodone before United States District Judge Nora Barry Fischer.
In connection with the guilty plea, the court was advised that Guardalabene was a lower-level distributor for a Detroit-to-Pittsburgh oxycodone ring operated by Telano White and Brandy Bara.
Judge Fischer scheduled sentencing for 9 a.m. on March 23, 2016. The law provides for a maximum total sentence of 20 years in prison, a fine of $1,000,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Stephen R. Kaufman is prosecuting this case on behalf of the government.
The Drug Enforcement Administration, Federal Bureau of Investigation, Pennsylvania Attorney General’s Office, Pennsylvania State Police, and the Pittsburgh Bureau of Police conducted the investigation that led to the prosecution of Guardalabene.
Oxnard, California Man Pleads Guilty to Possession of Counterfeit Access DevicesRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma, announced that MALIK AIULU ANDREWS, age 19, of Oxnard, California, pled guilty to POSSESSION OF FIFTEEN OR MORE COUNTERFEIT ACCESS DEVICES, in violation of Title 18, United States Code, Sections 1029(a)(3) and 2, punishable by up to 10 years imprisonment, up to a $250,000.00 fine or both.
The Indictment alleged that on or about April 24, 2015, within the Eastern District of Oklahoma, the defendant knowingly possessed fifteen (15) or more access devices, which were counterfeit or unauthorized access devices, with said activity affecting interstate commerce.
The charges arose from an investigation by the Oklahoma Highway Patrol and the United States Secret Service.
The Honorable Steven P. Shreder, Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, accepted the guilty plea and ordered the completion of a presentence report. Sentencing will be scheduled following its completion. The defendant will remain in the custody of the United States Marshal Service pending sentencing.
Assistant United States Attorney Melody Nelson represented the United States.
Ohio-Based Tax Return Preparation Business Executive Pleads Guilty to Obstructing the IRSRead the Press Release
A Liberty Township, Ohio, resident pleaded guilty to one count of obstructing and impeding the Internal Revenue Code, announced Acting Deputy Assistant Attorney General Bruce M. Salad of the Justice Department’s Tax Division.
According to court documents, Kyle Wade, 44, was the former vice-president of franchising for Instant Tax Service (ITS), a tax preparation business that claimed to have over 1,100 franchise locations throughout the United States in 2009. Wade formerly owned multiple ITS franchises.
From Jan. 1, 2004 through Nov. 1, 2012, Wade and another individual executed a scheme to obstruct the Internal Revenue Service (IRS), wherein numerous ITS franchises filed false federal income tax returns without the permission of their taxpayer clients and without receiving a valid W-2 form from each client. The false returns included false and inflated sole proprietorship Schedule C income in an attempt to increase the Earned Income Tax Credit refund. Wade and another individual also created and presented false documents with the IRS, such as phony W-2 forms that were created by ITS employees using tax preparation software and various other false IRS forms containing forged signatures.
At his sentencing on a date to be determined later, Wade faces a statutory maximum sentence of three years in prison and a fine of $250,000.
The Tax Division commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case and Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Tax Division, and Assistant U.S. Attorney Jessica Knight of the Southern District of Ohio, who are prosecuting the case.
Norwegian Shipping Company and Engineering Officers Convicted with Environmental Crimes and Obstruction of JusticeRead the Press Release
United States Attorney Kenyen R. Brown of the Southern District of Alabama announced federal jury in Mobile, Alabama, after a two week jury trial convicted Det Stavangerske Dampskibsselskab AS (DSD) and three employees with violating the Act to Prevent Pollution from Ships (APPS), conspiracy, obstruction of justice, and witness tampering,. DSD is a Norwegian-based shipping company that operates the oil tanker M/T Stavanger Blossom, a vessel engaged in the international transportation of crude oil. Also convicted at trial were three engineering officers, Bo Gao, Xiaobing Chen, and Xin Zhong, employed by DSD to work aboard the vessel. Daniel Paul Dancu a fourth engineer pled guilty in October.
In 2014 DSD and its employees conspired to bypass pollution prevention equipment aboard the M/T Stavanger Blossom and to conceal the direct discharge of approximately 20,000 gallons waste oil and oil-contaminated waste water from the vessel into the sea over a two month period. The operation of marine vessels, like the M/T Stavanger Blossom, generates large quantities of waste oil and oil-contaminated waste water. International and U.S. law requires that these vessels use pollution prevention equipment to preclude the discharge of these materials. Should any overboard discharges occur, they must be documented in an oil record book, a log that is regularly inspected by the U.S. Coast Guard. DSD and the engineering officers were convicted of violating the APPS for failing to record overboard discharges in the vessel’s oil record book and garbage record book, and with obstruction of justice and witness tampering for presenting false documents and deceiving the Coast Guard during an inspection.
DSD could be fined up to $500,000 per count, in addition to other possible penalties. Gao, Chen, and Zhong face a maximum penalty of 20 years in prison for the obstruction of justice charges
Resident Agent in Charge John Allen with the United States Coast Guard Investigative Service stated, "CGIS is dedicated to holding those individuals and Corporations accountable who violate United States and International law. CGIS will vigorously prosecute anyone who presents false documents to the U.S. Coast Guard or obstructs vessel examinations performed by the U.S. Coast Guard."
United States Attorney, Kenyen R. Brown was pleased with the outcome of the trial. Brown went on to say, "I am pleased with the record of this office in pursuing environmental crimes. We will continue to prosecute corporations and individuals to protect our resources here along the Gulf Coast as well as around the World. We need to ensure that all foreign vessels and corporations comply with U.S. Coast Guard Examinations to ensure these resources are protected."
This case was investigated by the U.S. Coast Guard Sector Mobile, U.S. Coast Guard District Eight, U.S. Coast Guard Investigative Services and the Environmental Protection Agency, Criminal Investigations Division. Assistant U.S. Attorney Michael D. Anderson, with the U.S. Attorney's Office for the Southern District of Alabama, and ECS Trial Attorney Shane N. Waller prosecuted the case.
Norton man sentenced to 7 1/2 years in prison for sexually assaulting minors in HondurasRead the Press Release
A Norton man was sentenced to 7 ½ years in prison for sexually assaulting minors while in Honduras, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio
Corey L. Bryant, 25, pleaded guilty earlier this year to traveling in foreign commerce and engaging in illicit sexual conduct.
Bryant traveled from the United States to Honduras, and engaged and attempted to engage in illicit sexual conduct with three minors at various times between August 2011 and November 2014, according to court documents.
This case is being prosecuted by Assistant United States Attorney Michael A. Sullivan and Trial Attorney Amy Larson of the Criminal Division’s Child Exploitation and Obscenity Section. The case was investigated by the Cleveland Office of Department of Homeland Security, Homeland Security Investigations (HSI), with assistance from HSI Tegucigalpa and the HSI Transnational Criminal Investigative Unit.