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Thursday 14 May 2015
Metairie Men Sentenced on Federal Firearm ViolationsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that JOSEPH F. GAGLIANO, age 55, and DOMINICK GULLO, age 72, both from Metairie, were each sentenced today for violating federal firearm laws.
U.S. District Judge Eldon E. Fallon sentenced GAGLIANO to 28 months imprisonment, to be followed by 3 years supervised release. GULLO was sentenced to serve 5 months imprisonment, to be followed by 3 years of supervised release.
GAGLIANO pled guilty to being a convicted felon in possession of a loaded, Ruger model, .22 caliber scope-mounted rifle. GAGLIANO and GULLO both pled guilty to being in possession of an unregistered silencer that fit the .22 caliber rifle. The rifle and silencer, along with other evidence, was recovered from an older model Ford van occupied by both GAGLIANO and GULLO. A Jefferson Parish Sheriff’s Deputy stopped the van on May 7, 2014, after learning the van had a stolen license plate affixed to it. Subsequent investigation by agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives, along with Jefferson Parish Sheriff’s detectives, revealed modifications to the van were made at GAGLIANO’s instruction.
U.S. Attorney Polite praised the work of the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Jefferson Parish Sheriff’s Office for their work investigating this matter. Assistant United States Attorneys William J. Quinlan, Jr. and Elizabeth Privitera were in charge of the prosecution.
Mattapan Man Charged with Drug Distribution and Firearms ViolationsRead the Press Release
BOSTON – A Mattapan man was indicted today on drug distribution and firearms charges in U.S. District Court in Boston.
Manuel Pereyra, 27, was indicted on distribution of heroin, possession of a firearm in furtherance of a drug crime, and receipt of a firearm by a person under indictment. Pereyra has been detained since he was arrested on a criminal complaint in April 2015.
According to the charging documents, in March 2015, a cooperating witness told officers that Pereyra was a heroin dealer, and that Pereyra had previously traded heroin to obtain a firearm. As a result, on April 2, 2015, at the direction of law enforcement officers, the cooperating witness purchased heroin from Pereyra at a location in the Old Colony Public Housing Development in South Boston. During that meeting, Pereyra sought to obtain a firearm from the cooperating witness. On April 14, 2015, the cooperating witness and an undercover federal agent met with Pereyra in a hotel room in Dorchester. There, Pereyra gave the undercover federal agent 11 grams of heroin in exchange for a .380 caliber semi-automatic pistol. Pereyra was arrested at the scene moments after the exchange took place and before he was permitted to leave the room.
The charge of distribution of heroin provides for a sentence of no greater than 20 years in prison, a lifetime of supervised release, and a fine of $1 million. The charge of possession of a firearm in furtherance of a drug trafficking crime provides for a minimum mandatory sentence of five years (consecutive to any other sentence) and up to a lifetime in prison, five years of supervised release, and a fine of $250,000. The charge of receipt of a firearm by a person under indictment provides for a sentence of no greater than five years in prison, three years of supervised release, and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Jordi de Llano of Ortiz’s Major Crimes Unit.
Maryland Woman Pleads Guilty to Federal Heroin Trafficking Charge in New MexicoRead the Press Release
ALBUQUERQUE – Rosalie Theresa Ollivierre, 31, of Baltimore, Md., pleaded guilty this morning in federal court in Albuquerque, N.M., to a heroin trafficking charge under a plea agreement with the U.S. Attorney’s Office.
Ollivierre was arrested on Jan. 12, 2015, at the Amtrak Train Station in Albuquerque after a consensual search of her baggage by DEA agents revealed that she was carrying approximately five kilograms of heroin. Ollivierre subsequently was indicted on Feb. 10, 2015, and charged with possession of heroin with intent to distribute.
During today’s proceedings, Ollivierre pled guilty to a felony information charging her with possession of heroin with intent to distribute. In entering the guilty plea, Ollivierre admitted that on Jan. 12, 2015, while traveling to Baltimore on an Amtrak train and during a stop in Albuquerque, DEA agents recovered bundles containing approximately five kilograms of heroin from her baggage.
At sentencing, Ollivierre faces a statutory maximum penalty of 20 years in federal prison. Ollivierre remains in custody pending a sentencing hearing which has yet to be scheduled.
This case was investigated by the Interdiction Unit of the DEA’s Albuquerque office which focuses on disrupting the flow of narcotics, weapons, and the proceeds of illegal activities as they are smuggled into or through New Mexico in passenger buses, passenger trains, commercial vehicles and automobiles. Assistant U.S. Attorney Shana B. Long is prosecuting the case.
This case is being prosecuted pursuant to the New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative. The HOPE Initiative is a collaborative effort between the U.S. Attorney’s Office and the University of New Mexico Health Sciences Center that is partnering with the Bernalillo County Opioid Accountability Initiative with the overriding goal of reducing the number of opioid-related deaths in the District of New Mexico. The HOPE Initiative comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. The law enforcement component of the HOPE Initiative is led by the Organized Crime Section of the U.S. Attorney’s Office and the DEA in conjunction with their federal, state, local and tribal law enforcement partners. Targeting members of major heroin trafficking organizations for investigation and prosecution is a priority of the HOPE Initiative.
Manhattan U.S. Attorney Settles Civil Fraud Claims Against Westchester Medical Center Arising from Its Violations of the Anti-Kickback Statute and the Stark LawRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s (“HHS-OIG”) New York Region, and Diego Rodriguez, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that the United States has settled civil fraud claims under the False Claims Act against WESTCHESTER COUNTY HEALTH CARE CORPORATION d/b/a WESTCHESTER MEDICAL CENTER (“WMC”) related to WMC’s alleged violations of the Anti-Kickback Statute and the Stark Law and submission of costs reports to Medicare seeking reimbursement for charges WMC did not incur. In connection with the settlement, which was approved by U.S. District Judge Lewis A. Kaplan on May 14, 2015, the defendant agreed to pay a total of $18,800,000 to resolve its liabilities, and made admissions as to its conduct.
Manhattan U.S. Attorney Preet Bharara said: “The conduct of Westchester Medical Center is the reason the Anti-Kickback Statute and the Stark Law are so important – they are laws that help to rid the healthcare industry of conflicts that can improperly influence medical judgment, potentially jeopardizing patient care and causing federal healthcare programs to pay for excessive or unnecessary treatments. Hospitals and medical practices have an obligation to patients, and taxpayers, to ensure their arrangements conform to the requirements of these laws.”
HHS-OIG Special Agent in Charge Scott J. Lampert said: “Westchester Medical Center’s aggressive, intricate kickbacks and other fraud schemes in this case threatened the impartiality of medical referrals, the financial integrity of Medicare, and the public’s trust in the health care system. Our agency will continue to investigate those who seek to cheat federal health care programs.”
FBI Assistant Director-in-Charge Diego Rodriguez said: “Westchester Medical Center participated in a coordinated shakedown of Medicare and, by extension, taxpayers. Today, they agreed to pay more than $18 million to resolve their liabilities and enable this government program to serve the seniors it was designed to help.”
According to the complaint-in-intervention filed in Manhattan federal court:
WMC operates a tertiary and quaternary care hospital in Valhalla, New York, and serves as the primary clinical affiliate of New York Medical College. From approximately 2000 through 2007, WMC maintained a financial relationship with Cardiology Consultants of Westchester, P.C. (“CCW”), a cardiology practice formerly operating on WMC’s Valhalla campus, which violated the Anti-Kickback Statute and the Stark Law. In particular, the complaint-in-intervention alleges that WMC advanced monies to CCW to open a practice for the express purpose of generating referrals to the hospital. When CCW began making payments to WMC purportedly repaying the advances, WMC entered into retroactive, no-work consulting agreements under which it paid CCW tens of thousands of dollars. Further, the complaint-in-intervention alleges that around this same time, WMC also began permitting CCW to use WMC’s fellows in CCW’s private office free of charge, contrary to WMC’s historic practice. As a result, WMC’s submission of claims to the Medicare Program for services rendered to patients referred to WMC by CCW’s shareholder physicians violated the False Claims Act. Additionally, during the same time period, through cost reports filed with the Centers for Medicare and Medicaid Services (“CMS”), WMC wrongly sought and obtained reimbursement for certain costs that WMC did not incur and that were not reimbursable under the relevant cost-reporting rules.
Under the Medicare Program, CMS makes payments to hospitals for inpatient and outpatient services after the services are rendered. Hospitals, like all healthcare providers, are required to comply with the Anti-Kickback Statute and the Stark Law, and in both cases, are prohibited from submitting claims tainted by such violations to the Medicare Program.
The Anti-Kickback Statute makes it illegal for a hospital to knowingly and willfully offer or pay remuneration to any person to induce that person to purchase, order, or recommend purchasing or ordering any good or item for which payment may be made under a federal health care program. The Anti-Kickback Statute arose out of congressional concern that remuneration given to those who can influence health care decisions would result in goods and services being provided that are medically unnecessary, of poor quality, or harmful to a vulnerable patient population.
The Stark Law provides that the government will not pay for certain designated health services prescribed by physicians who have improper financial relationships with entities to whom they refer patients because such financial relationships can compromise the physicians’ professional judgment as to whether a service is medically necessary, safe, effective, and of good quality.
As part of today’s settlement, WMC admitted the following conduct:
- Kingston Practice Arrangement. In July 2001, WMC, through its practice management affiliate, Matrix Resources, L.L.C. (“Matrix”), entered into a management agreement with CCW through which WMC agreed to assist CCW in establishing and developing a medical office located in Kingston, New York, with the objective of expanding WMC’s referral base and service area to the upper reaches of the Hudson Valley.
- Pursuant to the terms of the management agreement, which had an initial term of three years, Matrix agreed to provide certain management services for CCW’s Kingston office and to advance working capital to establish and operate the office. Between 2001 and 2002, WMC, through Matrix, advanced to CCW approximately $450,000 to pay for certain costs of the practice, including payment of the monthly management fee due under the management agreement.
- The management agreement provided that CCW would repay the advances at a rate of 8.5 percent interest by the end of the three-year term, with the proviso that the management agreement could be extended for one year if full repayment had not been made.
- In July 2002, CCW and WMC began discussions regarding the termination of the management agreement. At the outset of these discussions, WMC received a memorandum from CCW requesting that WMC, among other things, postpone or eliminate certain interest payments, reduce the applicable interest rate to the then-market rate of 6.5 percent, and extend the repayment period in recognition of CCW’s efforts in developing clinical volume at the Kingston practice and the resulting referral benefit to WMC.
- As of April 25, 2003, CCW and WMC executed a promissory note and associated letter agreement providing for immediate termination of the management agreement and repayment of the then-outstanding advances over five years at an initial interest rate of 4.75 percent (subject to periodic adjustment based upon changes in the prime rate), beginning with an initial repayment of $116,936.15 on April 28, 2003.
- In addition, on April 25, 2003, three days prior to CCW’s initial repayment of the advance, WMC and CCW entered into a two-year consulting agreement, retroactive to July 2, 2002. Pursuant to this agreement, CCW was to provide various consulting services to WMC for an annual amount of $50,000. In April 2004, the contract was amended and extended.
- Between April 2003 and July 2005, WMC paid CCW approximately $190,000 under the original and amended consulting services agreement.
- WMC was not able to locate evidence that CCW performed the contracted services under this agreement.
- During the period of approximately April 2003 through July 2005, CCW referred patients for hundreds of medical procedures at WMC.
- Fellows. For certain years during the relevant period, WMC charged various physician practices for a portion of the salaries and expenses relating to residents and fellows who trained at WMC. During the relevant period, fellows in WMC’s cardiology fellowship program performed certain services within CCW’s private offices as part of their regular clinical rotation.
- Prior to 2003, CCW paid hundreds of thousands of dollars to WMC for the salaries and expenses relating to cardiology fellows.
- Beginning in 2003, CCW ceased paying the fellowship charges for which it was invoiced by WMC; after continuing to bill CCW, but failing to compel payment, WMC wrote off these amounts as uncollectible in April 2007.
- Cost Report Reimbursement. From 2000 through 2007 (“relevant cost report timeframe”), WMC submitted annual Medicare cost reports to the Health Care Financing Administration (“HCFA”), and later CMS, reflecting certain costs, referred to as Direct Graduate Medical Education (“DGME”) and Indirect Medical Education (“IME”), associated with its residency and fellowship programs.
- Pursuant to certain HCFA/CMS regulations applicable to the DGME and IME lines of Medicare cost reports in effect during the relevant cost report timeframe, hospitals were permitted to claim reimbursement for time spent by the residents or fellows at other hospitals and non-hospital settings only if the hospital incurred all or substantially all of the salary and fringe benefit expense of the residents and fellows being rotated through other hospitals or non-hospital settings and complied with other applicable regulatory requirements.
- For the relevant cost report timeframe, WMC included certain costs in its filed cost reports that corresponded to time spent by certain residents and fellows at other hospitals or at non-hospital settings, but did not incur all or substantially all of the costs associated with these fellows and residents, or otherwise did not meet applicable HCFA/CMS regulatory requirements.
WMC also agreed to pay $18,800,000 to resolve its liabilities for this conduct.
* * *
Mr. Bharara praised the investigative work of the agents at HHS-OIG and expressed appreciation for their dedication to the case. Mr. Bharara also praised the investigative work of the FBI.
The case is being handled by the Office’s Civil Frauds Unit. Assistant United States Attorneys Rebecca C. Martin and Christine Schessler Poscablo are in charge of the case.
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Manhattan U.S. Attorney and FBI Announce Insider Trading Charges Against Managing Director of Investment Bank and His FatherRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Diego Rodriguez, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a criminal Complaint in Manhattan federal court charging SEAN STEWART, a Managing Director at an investment advisory firm headquartered in Manhattan, and his father, ROBERT STEWART, with using inside information to trade and cause another to trade in the securities of five different health care companies, the acquisitions of which were announced between 2011 and 2014. ROBERT STEWART was arrested on conspiracy and insider trading charges this morning at his home in North Merrick, Long Island. SEAN STEWART surrendered to the FBI on the same charges in Middleton, Wisconsin, and is expected to appear in Manhattan federal court on Monday.
Manhattan U.S. Attorney Preet Bharara said: “The Stewarts – father and son alike – allegedly engaged in insider trading together to the tune of more than $1 million. And, as alleged in one instance, the son’s tip to his father became a gift to himself when his father kicked back some of the proceeds of the insider trading to pay for his son’s wedding. I would like to thank our partners at the FBI for their excellent investigative work on this and so many other financial fraud cases.”
Assistant Director-in-Charge Diego Rodriguez said: “The defendants today stand charged with violations of our securities laws. The cash payments and cryptic communication, as alleged in the complaint, show the seriousness of the allegations. We will continue to police our markets to ensure they are legal, fair, and equitable.”
According to the Complaint* unsealed today in Manhattan federal court:
In early 2011, SEAN STEWART, who at the time held the position of Vice President in the Healthcare Investment Banking Group of a global bank headquartered in Manhattan (“Investment Bank A”), began tipping his father, ROBERT STEWART, with nonpublic information about upcoming mergers and acquisitions. The first of these deals involved the acquisition of Kendle International Inc. by INC Research, LLC, which was announced publicly on May 4, 2011. SEAN STEWART worked on the deal, representing Kendle. ROBERT STEWART made about $7,900 in profits on purchases of Kendle stock executed in February and March of 2011. When questioned by the Securities and Exchange Commission about his Kendle trades in May 2013, ROBERT STEWART reported that he used the proceeds of those trades to pay expenses related to SEAN STEWART’s June 2011 wedding.
The second deal about which SEAN STEWART tipped ROBERT STEWART was the acquisition of Kinetic Concepts, Inc. (“KCI”) by Apax Partners, announced on July 13, 2011. Although ROBERT STEWART purchased some stock in KCI based on SEAN STEWART’s tip, he sold that stock before the acquisition was announced, around the same time that SEAN STEWART learned the Financial Industry Regulatory Authority was conducting an inquiry into ROBERT STEWART’s Kendle trading.
Also around this time, in the spring of 2011, ROBERT STEWART expressed a concern to a co-conspirator and cooperating witness not named in the criminal Complaint (“CW-1”) that ROBERT STEWART was “too close to the source” to be trading in KCI stock his own account, and asked CW-1 to make purchases of KCI call options for ROBERT STEWART in CW-1’s brokerage account. CW-1 agreed to do so, and also mirrored for his own benefit the KCI trades that ROBERT STEWART was directing.
When the KCI/Apax Partners deal was announced, ROBERT STEWART and CW-1 reaped profits totaling approximately $107,790. At around this time, ROBERT STEWART told CW-1 that the source of the KCI tip and the earlier Kendle tip had been ROBERT’s son. Later, around the spring of 2012, ROBERT STEWART clarified for CW-1 that the son in question was SEAN STEWART, who worked on the “sell side” on Wall Street.
In October 2011, SEAN STEWART left Investment Bank A. A few months later, he joined an investment banking advisory firm headquartered in Manhattan (“Investment Bank B”) as a Managing Director.
During SEAN STEWART’s tenure with Investment Bank B, based on tips concerning nonpublic acquisition-related information supplied by SEAN STEWART, ROBERT STEWART had CW-1 conduct options trading in advance of the public announcements of three more deals: (1) the acquisition of Gen-Probe Inc. by Hologic, Inc., announced on April 30, 2012; (2) the acquisition, by tender offer, of Lincare Holdings Inc. by Linde AG, announced on July 1, 2012; and (3) the acquisition of CareFusion Corp. by Becton, Dickinson & Co. (“Becton”), announced on October 5, 2014. Investment Bank B represented Hologic in connection with its acquisition of Gen-Probe; Linde in connection with its acquisition of Lincare; and CareFusion in connection with its acquisition by Becton. The profits that ROBERT STEWART and CW-1 reaped from illegal insider trading in advance of the announcements of these three deals totaled over $1 million. In the midst of the scheme, in December 2012, ROBERT STEWART transferred at least $15,000 to SEAN STEWART.
To try to avoid detection for their crimes, ROBERT STEWART and CW-1 refrained from speaking explicitly about their trading over the phone or e-mail, sometimes using “golf”-related code. For example, shortly after the announcement of Lincare’s proposed acquisition by Linde, a German company, ROBERT STEWART wrote to CW-1 that he had seen a news story about the “high cost of golf reservations since a foreign company purchased all- even more expensive than imagined.” Other steps ROBERT STEWART and CW-1 took to avoid detection included trying to discuss their trading at face-to-face meetings and adopting a profit-splitting mechanism that had CW-1 paying ROBERT STEWART his portion of the illegal proceeds in small increments, over time, typically in cash.
In March and April of 2015, CW-1 recorded meetings he had with ROBERT STEWART. During one such meeting, ROBERT STEWART accepted a payment of $2,500 cash from CW-1, which was the balance of the proceeds owed to ROBERT STEWART for profitable trading executed in CW-1’s account in advance of the CareFusion acquisition announcement. Also during this meeting, ROBERT STEWART admitted that SEAN STEWART once chastised him for failing to make use of a tip, saying, “I can’t believe I handed you this on a silver platter and you didn’t invest in it.”
* * *
SEAN STEWART, 34, of New York, New York, and ROBERT STEWART, 60, of North Merrick, New York, have each been charged in the Complaint with one count of conspiracy to commit securities fraud and fraud in connection with a tender offer (Count One), one count of conspiracy to commit wire fraud (Count Two), six counts of securities fraud (Counts Three through Eight), and one count of fraud in connection with a tender offer (Count Nine). The securities fraud, tender offer fraud, and wire fraud conspiracy charges each carries a maximum prison term of 20 years. The charge of conspiracy to commit securities fraud and tender offer fraud carries a maximum prison term of five 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 a judge.
Mr. Bharara praised the investigative work of the FBI and also thanked the Securities and Exchange Commission, which has brought civil actions against the defendant.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Sarah E. McCallum and Brooke E. Cucinella are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
*As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations and every fact described should be treated as an allegation.
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Long-term Care Pharmacy to Pay $31.5 Million to Settle Lawsuit Alleging Violations of Controlled Substances Act and False Claims ActRead the Press Release
WASHINGTON – PharMerica Corporation has agreed to pay the United States $31.5 million to resolve a lawsuit alleging that they violated the Controlled Substances Act by dispensing Schedule II controlled drugs without a valid prescription and violated the False Claims Act by submitting false claims to Medicare for these improperly dispensed drugs, the Justice Department announced today.
“Pharmacies put patients at risk when they dispense Schedule II narcotics, which have the highest potential for abuse of any prescription drug, without a valid prescription from a physician,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Department of Justice’s Civil Division. “Today’s settlement demonstrates our commitment to the fight against the misuse of controlled substances.”
PharMerica is a long-term care pharmacy that dispenses medications to residents of long-term care facilities, including nursing homes and skilled nursing facilities. Many of the prescriptions filled by PharMerica are for controlled substances listed in Schedule II under the Controlled Substances Act. Schedule II drugs, such as oxycodone and fentanyl, can cause significant harm if used improperly and have a high potential for abuse.
The government’s suit alleged that PharMerica pharmacies operating across the country routinely dispensed Schedule II controlled drugs in non-emergency situations without first obtaining a written prescription from a treating physician. According to the complaint, PharMerica’s actions violated the Controlled Substances Act by enabling nursing home staff to order narcotics, and pharmacists to dispense them, without confirming that a physician had made a medical judgment as to whether the narcotics were necessary and should be administered to the resident. Under the settlement, PharMerica has agreed to pay $8 million to resolve these allegations.
The government’s complaint also alleged that PharMerica violated the False Claims Act by knowingly causing the submission of false claims to Medicare Part D for improperly dispensed Schedule II drugs. The False Claims Act imposes treble damages and penalties for the knowing submission of false claims for federal funds. PharMerica has agreed to pay $23.5 million to resolve its alleged False Claims Act violations.
“Today’s significant settlement represents a single but critical significant step toward promoting integrity in the administration of public health programs,” said U.S. Attorney James L. Santelle of the Eastern District of Wisconsin. “This civil litigation and its meaningful resolution demonstrates that our fight against health care fraud is helping to protect all Americans, including the elderly, people with disabilities and other who may be vulnerable to mistreatment and abuse.”The False Claims Act claims resolved by today’s settlement were originally brought by Jennifer Denk, a pharmacist formerly employed by PharMerica, under the whistleblower provisions of the act, which authorize private parties to sue on behalf of the United States and to receive a portion of any recovery. The act permits the United States to intervene and take over the lawsuit, as it did in this case with respect to some of Ms. Denk’s allegations. Ms. Denk will receive $4.3 million as her share of the settlement.
“DEA registrants are responsible to handle controlled substances in compliance with the Controlled Substances Act,” said Special Agent in Charge Dennis Wichern of the Drug Enforcement Administration (DEA) Chicago Field Division. “Failure to do so increases the potential for diversion and jeopardizes the public health and safety”.
“The DEA is committed to investigating organizations that are not in compliance with the Controlled Substances Act,” said Special Agent in Charge Michael J. Ferguson of the DEA New England Field Division. “Our obligation is to ensure public safety and public health and we are committed to working with our law enforcement and regulatory partners nationwide to ensure that these rules and regulations are followed.”
“The legal requirement that narcotics like oxycodone be prescribed by a physician is a crucial patient protection, which is especially important to safeguard the health of the vulnerable elderly and disabled patients in long term care facilities,” said Special Agent in Charge Lamont Pugh of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG). “Our agency is dedicated to protecting the taxpayer-funded Medicare and Medicaid programs as well as the millions of beneficiaries who rely on those programs for their health and well-being.”
As part of the settlement announced today, the settling defendant has also agreed to enter into a corporate integrity agreement with the HHS-OIG, which obligates PharMerica to undertake substantial internal compliance reforms and to submit federal health care program claims for an independent review for the next five years.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement with PharMerica was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office of the Eastern District of Wisconsin, the U.S. Attorney’s Office of the District of Rhode Island, HHS-OIG and the DEA.
The lawsuit is captioned U.S. ex rel. Denk v. PharMerica Corp., No. 09-cv-720 (E.D. Wis.). The claims resolved by the settlement are allegations only; there has been no determination of liability.
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To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/
Contact: 401-709-5357
[email protected]Long-Term Care Pharmacy to Pay $31.5 Million to Settle Lawsuit Alleging Violations of Controlled Substances Act and False Claims ActRead the Press Release
PharMerica Corporation has agreed to pay the United States $31.5 million to resolve a lawsuit alleging that they violated the Controlled Substances Act by dispensing Schedule II controlled drugs without a valid prescription and violated the False Claims Act by submitting false claims to Medicare for these improperly dispensed drugs, the Justice Department announced today.
“Pharmacies put patients at risk when they dispense Schedule II narcotics, which have the highest potential for abuse of any prescription drug, without a valid prescription from a physician,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Department of Justice’s Civil Division. “Today’s settlement demonstrates our commitment to the fight against the misuse of controlled substances.”
PharMerica is a long-term care pharmacy that dispenses medications to residents of long-term care facilities, including nursing homes and skilled nursing facilities. Many of the prescriptions filled by PharMerica are for controlled substances listed in Schedule II under the Controlled Substances Act. Schedule II drugs, such as oxycodone and fentanyl, can cause significant harm if used improperly and have a high potential for abuse.
The government’s suit alleged that PharMerica pharmacies operating across the country routinely dispensed Schedule II controlled drugs in non-emergency situations without first obtaining a written prescription from a treating physician. According to the complaint, PharMerica’s actions violated the Controlled Substances Act by enabling nursing home staff to order narcotics, and pharmacists to dispense them, without confirming that a physician had made a medical judgment as to whether the narcotics were necessary and should be administered to the resident. Under the settlement, PharMerica has agreed to pay $8 million to resolve these allegations.
The government’s complaint also alleged that PharMerica violated the False Claims Act by knowingly causing the submission of false claims to Medicare Part D for improperly dispensed Schedule II drugs. The False Claims Act imposes treble damages and penalties for the knowing submission of false claims for federal funds. PharMerica has agreed to pay $23.5 million to resolve its alleged False Claims Act violations.
“Today’s significant settlement represents a single but critical significant step toward promoting integrity in the administration of public health programs,” said U.S. Attorney James L. Santelle of the Eastern District of Wisconsin. “This civil litigation and its meaningful resolution demonstrates that our fight against health care fraud is helping to protect all Americans, including the elderly, people with disabilities and other who may be vulnerable to mistreatment and abuse.”
The False Claims Act claims resolved by today’s settlement were originally brought by Jennifer Denk, a pharmacist formerly employed by PharMerica, under the whistleblower provisions of the act, which authorize private parties to sue on behalf of the United States and to receive a portion of any recovery. The act permits the United States to intervene and take over the lawsuit, as it did in this case with respect to some of Ms. Denk’s allegations. Ms. Denk will receive $4.3 million as her share of the settlement.
“DEA registrants are responsible to handle controlled substances in compliance with the Controlled Substances Act,” said Special Agent in Charge Dennis Wichern of the Drug Enforcement Administration (DEA) Chicago Field Division. “Failure to do so increases the potential for diversion and jeopardizes the public health and safety”.
“The DEA is committed to investigating organizations that are not in compliance with the Controlled Substances Act,” said Special Agent in Charge Michael J. Ferguson of the DEA New England Field Division. “Our obligation is to ensure public safety and public health and we are committed to working with our law enforcement and regulatory partners nationwide to ensure that these rules and regulations are followed.”
“The legal requirement that narcotics like oxycodone be prescribed by a physician is a crucial patient protection, which is especially important to safeguard the health of the vulnerable elderly and disabled patients in long term care facilities,” said Special Agent in Charge Lamont Pugh of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG). “Our agency is dedicated to protecting the taxpayer-funded Medicare and Medicaid programs as well as the millions of beneficiaries who rely on those programs for their health and well-being.”
As part of the settlement announced today, the settling defendant has also agreed to enter into a corporate integrity agreement with the HHS-OIG, which obligates PharMerica to undertake substantial internal compliance reforms and to submit federal health care program claims for an independent review for the next five years.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement with PharMerica was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office of the Eastern District of Wisconsin, the U.S. Attorney’s Office of the District of Rhode Island, HHS-OIG and the DEA.
The lawsuit is captioned U.S. ex rel. Denk v. PharMerica Corp., No. 09-cv-720 (E.D. Wis.). The claims resolved by the settlement are allegations only; there has been no determination of liability.
Long-Term Care Pharmacy to Pay $31.5 Million to Settle Lawsuit Alleging Violations of Controlled Substances Act and False Claims ActRead the Press Release
James L. Santelle, United States Attorney for the Eastern District of Wisconsin announced today that PharMerica Corporation has agreed to pay the United States $31.5 million to resolve a lawsuit alleging that they violated the Controlled Substances Act by dispensing Schedule II controlled drugs without a valid prescription and violated the False Claims Act by submitting false claims to Medicare for these improperly dispensed drugs, the Justice Department announced today.
“Pharmacies put patients at risk when they dispense Schedule II narcotics, which have the highest potential for abuse of any prescription drug, without a valid prescription from a physician,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Department of Justice’s Civil Division. “Today’s settlement demonstrates our commitment to the fight against the misuse of controlled substances.”
PharMerica is a long-term care pharmacy that dispenses medications to residents of long-term care facilities, including nursing homes and skilled nursing facilities. Many of the prescriptions filled by PharMerica are for controlled substances listed in Schedule II under the Controlled Substances Act. Schedule II drugs, such as oxycodone and fentanyl, can cause significant harm if used improperly and have a high potential for abuse.
The government’s suit alleged that PharMerica pharmacies operating across the country routinely dispensed Schedule II controlled drugs in non-emergency situations without first obtaining a written prescription from a treating physician. According to the complaint, PharMerica’s actions violated the Controlled Substances Act by enabling nursing home staff to order narcotics, and pharmacists to dispense them, without confirming that a physician had made a medical judgment as to whether the narcotics were necessary and should be administered to the resident. Under the settlement, PharMerica has agreed to pay $8 million to resolve these allegations.
The government’s complaint also alleged that PharMerica violated the False Claims Act by knowingly causing the submission of false claims to Medicare Part D for improperly dispensed Schedule II drugs. The False Claims Act imposes treble damages and penalties for the knowing submission of false claims for federal funds. PharMerica has agreed to pay $23.5 million to resolve its alleged False Claims Act violations.
“Today’s significant settlement represents a single but critical significant step toward promoting integrity in the administration of public health programs,” said U.S. Attorney James L. Santelle of the Eastern District of Wisconsin. “This civil litigation and its meaningful resolution demonstrates that our fight against health care fraud is helping to protect all Americans, including the elderly, people with disabilities and other who may be vulnerable to mistreatment and abuse.”
The False Claims Act claims resolved by today’s settlement were originally brought by Jennifer Denk, a pharmacist formerly employed by PharMerica, under the whistleblower provisions of the act, which authorize private parties to sue on behalf of the United States and to receive a portion of any recovery. The act permits the United States to intervene and take over the lawsuit, as it did in this case with respect to some of Ms. Denk’s allegations. Ms. Denk will receive $4.3 million as her share of the settlement.
“DEA registrants are responsible to handle controlled substances in compliance with the Controlled Substances Act,” said Special Agent in Charge Dennis Wichern of the Drug Enforcement Administration (DEA) Chicago Field Division. “Failure to do so increases the potential for diversion and jeopardizes the public health and safety”.
“The DEA is committed to investigating organizations that are not in compliance with the Controlled Substances Act,” said Special Agent in Charge Michael J. Ferguson of the DEA New England Field Division. “Our obligation is to ensure public safety and public health and we are committed to working with our law enforcement and regulatory partners nationwide to ensure that these rules and regulations are followed.”
“The legal requirement that narcotics like oxycodone be prescribed by a physician is a crucial patient protection, which is especially important to safeguard the health of the vulnerable elderly and disabled patients in long term care facilities,” said Special Agent in Charge Lamont Pugh of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG). “Our agency is dedicated to protecting the taxpayer-funded Medicare and Medicaid programs as well as the millions of beneficiaries who rely on those programs for their health and well-being.”
As part of the settlement announced today, the settling defendant has also agreed to enter into a corporate integrity agreement with the HHS-OIG, which obligates PharMerica to undertake substantial internal compliance reforms and to submit federal health care program claims for an independent review for the next five years.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement with PharMerica was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office of the Eastern District of Wisconsin, the U.S. Attorney’s Office of the District of Rhode Island, HHS-OIG and the DEA.
The lawsuit is captioned U.S. ex rel. Denk v. PharMerica Corp., No. 09-cv-720 (E.D. Wis.). The claims resolved by the settlement are allegations only; there has been no determination of liability.
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Las Cruces Resident Pleads Guilty to Federal Narcotics Trafficking and Firearms ChargesRead the Press Release
ALBUQUERQUE – Eric G. Acosta, 28, a resident of Las Cruces, N.M., pled guilty today in federal court to methamphetamine trafficking and firearms charges.
Acosta and co-defendant Christopher J. Cleveland, 35, also of Las Cruces, were arrested in July 2014, on a criminal complaint charging them with possession of methamphetamine with intent to distribute, using a firearm in furtherance of a drug trafficking crime and possession of a firearm by a convicted felon. The complaint alleged that during a routine traffic stop on June 23, 2014, officers of the Las Cruces Police Department discovered approximately 889.2 grams of methamphetamine, a firearm and drug paraphernalia inside a vehicle driven by Acosta and in which Cleveland was a passenger. It further alleged that Cleveland and Acosta had traveled from Arizona, where they obtained the methamphetamine, to Las Cruces in Doña Ana County, N.M., where they intended to distribute the drugs.
An indictment subsequently was filed on Oct. 16, 2014, charging Acosta and Cleveland with a methamphetamine trafficking conspiracy and possession of methamphetamine with intent to distribute. The indictment also charged each of the two men with being a felon in possession of a firearm. The two men were charged with committing these crimes on June 23, 2014, in Doña Ana County. At the time, Acosta and Cleveland each was prohibited from possessing firearms or ammunition because each had previously been convicted a felony offense.
During today’s proceedings, Acosta pled guilty to the conspiracy charge, the substantive methamphetamine trafficking charge, and to being a felon in possession of a firearm. At sentencing, he faces a statutory mandatory minimum of ten years in federal prison. Acosta remains in custody pending his sentencing hearing, which has yet to be scheduled.
Cleveland has entered a not guilty plea to the indictment and remains in custody pending trial. Allegations in complaints and indictments are merely accusations and defendants are presumed innocent unless found guilty beyond a reasonable doubt.
This case was investigated by the Las Cruces office of the FBI and the HIDTA Regional Interagency Drug Task Force/Metro Narcotics Task Force and is being prosecuted by Assistant U.S. Attorneys Maria Y. Armijo and Selesia Lee Winston of the U.S. Attorney’s Las Cruces Branch Office.
The HIDTA Regional Interagency Drug Task Force/Metro Narcotics Task Force is comprised of officers from the Las Cruces Police Department, the Doña Ana County Sheriff’s Office, the FBI, HSI and the New Mexico State Police. The High Intensity Drug Trafficking Areas (HIDTA) program was created by Congress with the Anti-Drug Abuse Act of 1988. HIDTA is a program of the White House Office of National Drug Control Policy (ONDCP) which provides assistance to federal, state, local and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States and seeks to reduce drug trafficking and production by facilitating coordinated law enforcement activities and information sharing.
Luis Percina Sentenced to 120 Months for Possession with Intent to Distribute 50 Grams or More of MethamphetamineRead the Press Release
HAMMOND – United States Attorney for the Northern District of Indiana, David Capp, announced that Luis Pecina, 34, of Phoenix, AZ, was sentenced today for possession with intent to distribute 50 grams or more of methamphetamine.
Percina was sentenced to 10 years (120 months) imprisonment and 8 years of supervised release.
According to documents filed in this case, police stopped Pecina’s vehicle in the 3800 block of 179th Street, Hammond, Indiana on November 14, 2013. Officers searched the vehicle and found more than three hundred grams of methamphetamine. After waiving his rights, Percina admitted to officers that the methamphetamine was his and that his intent was to sell the methamphetamine to another individual.
This case was investigated by the Drug Enforcement Administration and prosecuted by Assistant United States Attorney Jennifer Chang-Adiga.
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Keshena Man Sentenced to 44 Months in Prison for Robbery on the Menominee ReservationRead the Press Release
United States Attorney James L. Santelle announced that Richard A. James Jr., (age: 23), was sentenced on May 8, 2015, to 44 months of imprisonment, followed by a three year term of supervised release. The sentence was the result of a guilty plea by James on January 26, 2015, to Count One of a federal indictment charging him with one count of robbery of a convenience store and three counts of assault with a dangerous weapon with intent to do bodily harm.
The investigation revealed that on July 29, 2014, James entered Martin’s Hillstop convenience store on the Menominee Reservation, held a store clerk and others at knife point, and demanded liquor and cigarettes. After getting the demanded items, James ran from the store and was confronted by officers. James threatened the officers with the knife and led the officers on a chase down the roadway, halting traffic. Menominee Tribal police officers and Menominee County deputies eventually took James into custody.
This case was investigated by the Menominee Tribal Police and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Benjamin L. Whittemore.
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Jury Finds Hillsboro Man Guilty on Federal Firearm ChargesRead the Press Release
WICHITA, KAN. – A federal jury Thursday convicted a Hillsboro man on federal firearms charges, U.S. Attorney Barry Grissom said.
David G. Nicholas, Jr., 44, Hillsboro, Kan., was convicted on three counts of unlawful possession of a firearm following a felony conviction.
During trial, prosecutors presented evidence that Nicholas was a parole absconder in October 2013 when the U.S. Marshals Service arrested him in Marion County, Kan. At the time, he possessed a .22-caliber handgun and a .30-06 caliber rifle and ammunition.
Sentencing is set for Aug. 6. He faces a maximum penalty of not less than 15 years in federal prison a fine up to $250,000 on each count. Grissom commended the U.S. Marshals Service, the Bureau of Alcohol, Tobacco, Firearms and Explosives and Assistant U.S. Attorney Jason Hart for their work on the case.
Judge Orders Injunction to Stop Sale of Dangerous MagnetsRead the Press Release
A federal judge today ordered a Colorado company to stop selling hazardous high-powered magnets that had been the subject of a product recall by their manufacturer as part of an agreement with the Consumer Product Safety Commission (CPSC), the Justice Department announced. U.S. District Court Judge Christine M. Arguello of the District of Colorado found that Zen Magnets LLC and its owner, Shihan Qu, were violating the Consumer Product Safety Act by selling magnets that were purchased from a New Jersey company shortly before the magnets were recalled.
Last week, the department filed a complaint seeking injunctive relief and civil penalties against Zen Magnets and Qu.
The complaint alleged that Zen Magnets purchased 917,000 tiny, high-powered magnets from a New Jersey firm one week before that firm signed an agreement with the CPSC to recall the magnets. Once the magnets were recalled, their sale by any party was prohibited. Nonetheless, despite repeated warnings by the CPSC, Qu’s Denver-based company continued to sell the magnets.
The magnets are sold in sets and generally marketed as desk toys. When swallowed by children or teens, the magnets clamp together and can cause serious internal injuries.
“The Department of Justice will continue to work with the Consumer Product Safety Commission to enforce our consumer protection laws and protect consumers from dangerous products,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Efforts to evade the law and sell products that have already been recalled will not be tolerated.”
In issuing the preliminary injunction, Judge Arguello found a substantial likelihood that the defendants had violated the Consumer Product Safety Act and a cognizable danger of recurring violations in the future. The ruling said that Zen Magnets “has essentially turned its pledge to continue to defy the CPSC into a marketing campaign” and has “openly vowed” not to stop selling the recalled magnets absent an injunction. Thursday’s ruling followed a three-hour evidentiary hearing on Monday in Denver.
“Zen Magnets insisted on selling a dangerous product to the public, even after repeatedly being warned to stop by the Consumer Product Safety Commission,” said U.S. Attorney John Walsh of the District of Colorado. “The magnets in this case can cause serious harm to people – particularly to children – if swallowed, by causing rips in the digestive system leading to grave infection. Given the company’s refusal to stop selling the product, this office, working with the Consumer Product Safety Commission, did not hesitate to seek a court order to protect the public. Today’s order is a victory for public safety, and for the safety of young children.”
Zen Magnets is separately challenging a rule issued by the CPSC that went into effect April 1, but was temporarily stayed until April 20. The rule requires magnets or magnet sets to be large enough so that they cannot be swallowed or weak enough so they are unlikely to clamp together if ingested.
In issuing that rule, the CPSC noted the risk of injury that the rule addresses. When a person ingests more than one magnet from a magnet set, there is potential for damage to intestinal tissue. The magnets are attracted to each other in the digestive system, damaging the tissue that becomes trapped between the magnets. In several incidents, surgery was required to remove magnets that children had swallowed.
The rule, which Zen Magnets is challenging before the 10th Circuit Court of Appeals, applies only prospectively. The preliminary injunction issued by Judge Arguello applies to the 917,000 tiny magnets that Zen Magnets acquired in July 2014, shortly before the manufacturer agreed to recall the magnets, and all other magnets that were commingled with the recalled magnets.
The case is being handled by Trial Attorney Patrick Jasperse of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Jamie Mendelson of the District of Colorado.
Judge Orders Injunction to Stop Sale of Dangerous MagnetsRead the Press Release
DENVER – A federal judge today ordered a Colorado company to stop selling hazardous high-powered magnets that had been the subject of a product recall by their manufacturer as part of an agreement with the Consumer Product Safety Commission (CPSC), the Justice Department announced. U.S. District Court Judge Christine M. Arguello of the District of Colorado found that Zen Magnets LLC and its owner, Shihan Qu, were likely violating the Consumer Product Safety Act by selling magnets that were purchased from a New Jersey company shortly before the magnets were recalled.
Last week, the department filed a complaint seeking injunctive relief and civil penalties against Zen Magnets and Qu.
The complaint alleged that Zen Magnets purchased 917,000 tiny, high-powered magnets from a New Jersey firm one week before that firm signed an agreement with the CPSC to recall the magnets. Once the magnets were recalled, their sale by any party was prohibited. Nonetheless, despite repeated warnings by the CPSC, Qu’s Denver-based company continued to sell the magnets.
The magnets are sold in sets and generally marketed as desk toys. When swallowed by children or teens, the magnets clamp together and can cause serious internal injuries.
“Zen Magnets insisted on selling a dangerous product to the public, even after repeatedly being warned to stop by the Consumer Product Safety Commission,” said U.S. Attorney John Walsh of the District of Colorado. “The magnets in this case can cause serious harm to people – particularly to children – if swallowed, by causing rips in the digestive system leading to grave infection. Given the company’s refusal to stop selling the product, this office, working with the Consumer Product Safety Commission, did not hesitate to seek a court order to protect the public. Today’s order is a victory for public safety, and for the safety of young children.”
In issuing the preliminary injunction, Judge Arguello found a substantial likelihood that the defendants had violated the Consumer Product Safety Act and a cognizable danger of recurring violations in the future. The ruling said that Zen Magnets “has essentially turned its pledge to continue to defy the CPSC into a marketing campaign” and has “openly vowed” not to stop selling the recalled magnets absent an injunction. Thursday’s ruling followed a three-hour evidentiary hearing on Monday in Denver.
“The Department of Justice will continue to work with the Consumer Product Safety Commission to enforce our consumer protection laws and protect consumers from dangerous products,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Efforts to evade the law and sell products that have already been recalled will not be tolerated.”
Zen Magnets is separately challenging a rule issued by the CPSC that went into effect April 1, but was temporarily stayed until April 20. The rule requires magnets or magnet sets to be large enough so that they cannot be swallowed or weak enough so they are unlikely to clamp together if ingested.
In issuing that rule, the CPSC noted the risk of injury that the rule addresses. When a person ingests more than one magnet from a magnet set, there is potential for damage to intestinal tissue. The magnets are attracted to each other in the digestive system, damaging the tissue that becomes trapped between the magnets. In several incidents, surgery was required to remove magnets that children had swallowed.
The rule, which Zen Magnets is challenging before the 10th Circuit Court of Appeals, applies only prospectively. The preliminary injunction issued by Judge Arguello applies to the 917,000 tiny magnets that Zen Magnets acquired in July 2014, shortly before the manufacturer agreed to recall the magnets, and all other magnets that were commingled with the recalled magnets.
The case is being handled by Assistant U.S. Attorney Jamie Mendelson of the District of Colorado and Trial Attorney Patrick Jasperse of the Civil Division’s Consumer Protection Branch.
Joplin, Springfield Men Indicted for Child PornRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Joplin, Mo., man and a Springfield, Mo., man have been indicted by a federal grand jury, in separate and unrelated cases, for receiving and distributing child pornography over the Internet.
USA v. Childers
Jason L. Childers, 38, of Joplin, was charged in a five-count indictment returned by a federal grand jury in Springfield, Mo., on Wednesday, May 13, 2015.
The federal indictment alleges that Childers received and distributed child pornography over the Internet on four separate occasions in October and December 2014. Childers is also charged with possessing child pornography on April 7, 2015.
The indictment also contains a forfeiture allegation, which would require Childers to forfeit to the government any property used to commit the alleged offenses, including a computer tower, two laptop computers, two cell phones and various digital storage media.
This case is being prosecuted by Assistant U.S. Attorney Abram McGull II. It was investigated by the Southwest Missouri Cyber Crime Task Force, the FBI and the Joplin, Mo., Police Department.
USA v. Greinke
Michael Greinke, 27, of Springfield, was charged in an indictment returned by a federal grand jury in Springfield on Wednesday, May 13, 2015.
The federal indictment alleges that Greinke received and distributed child pornography over the Internet between Jan. 1, 2014, and April 6, 2015.
This case is being prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the Southwest Missouri Cyber Crime Task Force and the York Regional Police Service in Ontario, Canada.
Dickinson cautioned that the charges contained in these indictments are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Iraqi-born U.S. Citizen Arrested for Making False Statement to the FBIRead the Press Release
DALLAS – A Mesquite, Texas, man was arrested earlier today by the FBI on a criminal complaint charging him with making a false statement to the FBI, announced Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney John Parker of the Northern District of Texas and Special Agent in Charge Thomas M. Class Sr. of the FBI’s Dallas Field Office.
Bilal Abood, 37, an Iraqi-born naturalized U.S. citizen who migrated to the United States in 2009, made his initial appearance in federal court in Dallas this afternoon. Abood will remain in custody pending a probable cause and detention hearing set for May 15, 2015.
According to the complaint, on March 29, 2013, Abood attempted to depart the United States from Dallas Fort Worth International Airport, but was not allowed to board the flight. While at the airport, FBI agents asked Abood about his planned travel, and he initially advised agents that he was merely planning to travel to Iraq to visit family. During a subsequent interview, agents asked Abood again about his attempted travel — specifically asking if he intended to go to Syria to fight, and Abood stated that was not his intent. Later in that interview, however, Abood admitted that his intent on March 29, 2013, was to go to Syria to fight against the Assad regime, claiming he wanted to fight with the Free Syrian Army (FSA).
On approximately April 29, 2013, Abood left the United States through Mexico and traveled through various countries in order to get to Turkey. Upon Abood’s return to the United States on Sept. 16, 2013, the FBI interviewed him again. In that interview, Abood admitted traveling to Syria through Turkey, and claimed that he went there to fight with the FSA and that he had stayed in an FSA camp. Abood stated that he became frustrated with a lack of action and wanted to return to the United States. He denied ever providing financial support to al-Nusrah Front (ANF), the Islamic State of Iraq and the Levant (ISIL) or any other terrorist organization.
A review of Abood’s computer on July 9, 2014, pursuant to a federal search warrant, revealed Abood pledged an oath to Abu Bakr al-Baghdadi, the leader of ISIL, on June 19, 2014. The search warrant also revealed that Abood had been on the internet viewing ISIL atrocities such as beheadings, and had used his twitter account to tweet and retweet information on al-Baghdadi.
On April 14, 2015, FBI agents went to Abood’s residence to return his computer that was seized in the 2014 search warrant. Abood admitted that he knew it was a crime to lie to an FBI agent, and Abood denied to the agents that he had ever pledged allegiance to al-Baghdadi.
The maximum statutory penalty for the offense charged in the complaint is eight years in federal prison and a $250,000 fine.
A complaint is merely a formal charging document and is not evidence of guilt. Every defendant is presumed innocent until and unless proven guilty.
The matter is being investigated by FBI’s Dallas Division. The prosecution is being handled by the U.S. Attorney’s Office for the Northern District of Texas, with assistance from the National Security Division’s Counterterrorism Section.
Iraqi-Born U.S. Citizen Arrested for Making False Statement to the FBIRead the Press Release
Defendant Allegedly Lied About Pledging Allegiance to Self-Proclaimed Leader of ISIL
A Mesquite, Texas, man was arrested earlier today by the FBI on a criminal complaint charging him with making a false statement to the FBI, announced Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney John Parker of the Northern District of Texas and Special Agent in Charge Thomas M. Class Sr. of the FBI’s Dallas Field Office.
Bilal Abood, 37, an Iraqi-born naturalized U.S. citizen who migrated to the United States in 2009, made his initial appearance in federal court the Northern District of Texas this afternoon. Abood will remain in custody pending a probable cause and detention hearing set for May 15, 2015.
According to the complaint, on March 29, 2013, Abood attempted to depart the United States from Dallas Fort Worth International Airport, but was not allowed to board the flight. While at the airport, FBI agents asked Abood about his planned travel, and he initially advised agents that he was merely planning to travel to Iraq to visit family. During a subsequent interview, agents asked Abood again about his attempted travel – specifically asking if he intended to go to Syria to fight, and Abood stated that was not his intent. Later in that interview, however, Abood admitted that his intent on March 29, 2013, was to go to Syria to fight against the Assad regime, claiming he wanted to fight with the Free Syrian Army (FSA).
On approximately April 29, 2013, Abood left the United States through Mexico and traveled through various countries in order to get to Turkey. Upon Abood’s return to the United States on Sept. 16, 2013, the FBI interviewed him again. In that interview, Abood admitted traveling to Syria through Turkey, and claimed that he went there to fight with the FSA and that he had stayed in an FSA camp. Abood stated that he became frustrated with a lack of action and wanted to return to the United States. He denied ever providing financial support to al-Nusrah Front (ANF), the Islamic State of Iraq and the Levant (ISIL) or any other terrorist organization.
A review of Abood’s computer on July 9, 2014, pursuant to a federal search warrant, revealed Abood pledged an oath to Abu Bakr al-Baghdadi, the leader of ISIL, on June 19, 2014. The search warrant also revealed that Abood had been on the internet viewing ISIL atrocities such as beheadings, and had used his twitter account to tweet and retweet information on al-Baghdadi.
On April 14, 2015, FBI agents went to Abood’s residence to return his computer that was seized in the 2014 search warrant. Abood admitted that he knew it was a crime to lie to an FBI agent, and Abood denied to the agents that he had ever pledged allegiance to al-Baghdadi.
The maximum statutory penalty for the offense charged in the complaint is eight years in federal prison and a $250,000 fine.
A complaint is merely a formal charging document and is not evidence of guilt. Every defendant is presumed innocent until and unless proven guilty.
The matter is being investigated by FBI’s Dallas Division. The prosecution is being handled by the U.S. Attorney’s Office of the Northern District of Texas, with assistance from the National Security Division’s Counterterrorism Section.
Bilal Abood Complaint
Indictment: Lawrence Man’s Simple Fraud Scheme Racked up $143,000 in Credit Card RewardsRead the Press Release
TOPEKA, KAN. – A Lawrence man has been charged with devising a simple – and illegal – scheme that allowed him to collect more than $143,000 in credit card rewards, U.S. Attorney Barry Grissom said today.
Jawad Obaid, 31, Lawrence, Kan., was indicted Wednesday on ten counts of wire fraud. The indictment alleges he obtained credit cards with Capital One, Chase and U.S. Bank and accessed their rewards program Web sites for the purpose of making Internet purchases from businesses selling goods and services on the sites. In that manner, he generated tens of thousands of reward points from the credit card companies. He cancelled the purchases within 24 hours and used the reward points from the cancelled purchases to redeem cash awards in the form of checks and direct deposits to his accounts.
If convicted, he faces a maximum penalty 30 years in federal prison and a fine up to $250,000 on each count. Homeland Security Investigations investigated. Assistant U.S. Attorney Scott Rask is prosecuting.
OTHER FEDERAL GRAND JURY INDICTMENTS
John Michael Devosha, 25, who is in federal custody, was charged in a superseding indictment with two counts of carjacking, one count of unlawful possession of a firearm and two counts of using a firearm during a carjacking. The crimes are alleged to have occurred Oct. 22 in Kansas City, Kan., and Oct. 25, 2013, on the Prairie Band Potawatomi Reservation.
If convicted, he faces a maximum penalty of 15 years in federal prison and a fine up to $250,000 on each carjacking count, a maximum penalty of 10 years and a fine up to $250,000 on the possession charge, and a penalty of not less than five years on each of the other two counts. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Special Assistant U.S. Attorney Erin Tomasic is prosecuting.
Tegan C. Gulley, 35, Wichita, Kan., is charged with one count of unlawful possession of a firearm following a felony conviction. The crime is alleged to have occurred May 7, 2015, in Sedgwick County, Kan.
If convicted, he faces a maximum penalty of ten years in federal prison and a fine up to $250,000. The Wichita Police Department investigated. Assistant U.S. Attorney Matt Treaster is prosecuting.
Domingo Uriarte, Jr., 38, Kansas City, Kan., is charged with one count of possession with intent to distribute methamphetamine. The crime is alleged to have occurred April 28, 2015, in Kansas City, Kan.
If convicted, he faces a penalty of not less than 10 years and a fine up to $10 million. The Drug Enforcement Administration investigated. Special Assistant U.S. Attorney Trent Krug is prosecuting.
Ivan Joseph Soto, 27, Topeka, Kan., and Mauricio Aguilera, 24, San Bernadino, Calif, are charged with one count of conspiracy to possess with intent to distribute methamphetamine and one count of possession with intent to distribute methamphetamine. The crimes are alleged to have occurred April 20, 2015, in Topeka, Kan.
If convicted, they face a penalty of not less than 10 years and a fine up to $10 million on each count. The Drug Enforcement Administration investigated. Assistant U.S. Attorney Greg Hough is prosecuting.
Jerome Birdsong, 33, Kansas City, Kan., is charged with one count of conspiracy to possess with intent to distribute methamphetamine, one count of maintaining a residence at 2942 N. 47th Terrance in Kansas City, Kan., in furtherance of drug trafficking, and one count of unlawful possession of ammunition following a felony conviction. The crimes are alleged to have occurred in 2013 in Kansas City, Kan.
If convicted, he faces a penalty of not less than 10 years in federal prison and a fine up to $10 million on the conspiracy charge, a maximum penalty of 20 years and a fine up to $500,000 on the charge of maintaining a residence for drug trafficking and a maximum penalty of 10 years and a fine up to $250,000 on the ammunition charge. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Special Assistant U.S. Attorney Erin Tomasic is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Indictment Charges Fake Cops, Real Robbers in Robbery ConspiracyRead the Press Release
PHILADELPHIA – An indictment was unsealed today, charging a Philadelphia-based group with conspiracy to commit violent robberies, including an attempted robbery of a Center City jewelry store in which the defendants impersonated police officers. Additionally, the indictment alleges that the robbers tracked their target victims with GPS devices to rob them in their homes. The indictment charges 16 defendants with conspiring to commit Hobbs Act Robbery and various other charges. Various defendants are charged in violent home invasion robberies or attempted robberies that included shooting one victim, water boarding and pouring boiling water on another, and, in one incident, assisting the scheme by playing the role of a robbery victim.
The charges were announced today by First Assistant United States Attorney Louis Lappen and Acting Special Agent-in-Charge Kelly D. Brady with the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Charged are: Khalil Smith, Mark Woods, Marcus Bowens, Michael Queen, Terrace Munden, Robert Hartley, Hasan Chaney, Levern Jackson, Braheim Ballard, William Jefferson, Daniel Hayes, Jeffrey Bellamy, Romel Anthony, Eric Scott, Brandon Segers, all of Philadelphia, PA, and Jamal Doggett, of Willingboro, NJ.
According to the indictment, between September 2012 and April 29, 2014, in Philadelphia, Ambler, Hatfield, and elsewhere, the defendants conspired to commit robbery to obtain drugs, the proceeds from drug sales, jewelry and money from their victims by means of actual and threatened force, violence, and fear of injury. On July 15, 2013, the indictment alleges that Daniel Hayes and Brandon Segers entered the Platinum Jewelers, at 1136 Market Street, Philadelphia, wearing disguises and posing as customers. Smith and Marcus Bowens, it is alleged, entered the store posing as police officers. Smith allegedly pointed a gun at the store clerk and yelled “police,” while defendants Mark Woods, Michael Queen and Jeffrey Bellamy kept watch outside and/or monitored a police scanner. The defendants fled the scene after police were notified by a store clerk who pushed an alarm button.
In a previous alleged incident, on September 3, 2012, Eric Scott was among the guests in the victim’s Ambler home when he notified Smith and William Jefferson that they could rob the home. The indictment alleges that Smith and Jefferson entered the home wearing masks and armed with guns, which they pointed at the homeowner and guests, including Scott who pretended to be a victim. They tied up the victims, stole jewelry, cash, and a small amount of cocaine.
The indictment charges that between November 2013 and April 2014, Smith, Bowens, and a combination of other defendants committed four other home invasion robberies or robbery attempts. In November of 2013, Smith and Queen allegedly placed a GPS tracking device on vehicles driven by their target victim to find his home in Hatfield, PA. When the victim arrived home, he was met by the defendants who forced him inside at gunpoint where he was restrained, threatened, and assaulted. It is further alleged that Smith, Bowens, Queen, Doggett, and Ballard stole guns, electronics, and the victim’s BMW.
In January 2014, Smith, Bowens, Woods, Jackson, and Bellamy robbed a residence in Philadelphia of half a kilogram of cocaine, $10,000, and other items, while restraining, threatening, and assaulting the occupant.
In April 2014, defendants Smith, Bowens, Woods, Jackson, Bellamy, Munden, Hartley, and Chaney allegedly forced two victims to strip naked while robbing their Philadelphia home, and threatened to sodomize and kill them. They water boarded one victim and poured boiling water on him before stealing jewelry, an iPad and a 2009 Toyota Camry.
Later that month, defendants Smith, Bowens, Woods, Munden, Bellamy and Hartley tracked a Philadelphia resident they believed to be a drug dealer. They burglarized the home, stealing jewelry and electronics. Believing they missed the drugs and drug money, they returned a few days later and held two victims at gunpoint, shooting one of them before fleeing empty handed.
“These defendants are charged with engaging in a brazen crime spree of robbery and violence,” said Lappen. “They terrorized their victims, stole their money and property, and had the audacity to impersonate police officers in an effort to perpetrate their crimes. If convicted, the defendants face mandatory prison terms and lengthy guideline sentences which will ensure that they are off the street for a very long time.”
“These 16 defendants allegedly committed serious acts of violence that included armed home invasions, a shooting, and brutal physical torture,” said Brady. “They were well-organized, well-planned and well-armed. Now, this violent pattern of robberies has ended and these defendants face serious prison terms if convicted. ATF is committed to working with our law enforcement partners to reduce violent crime and increase public safety.”
The investigation was led by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, with assistance from the Philadelphia Police Department, the Hatfield Township Police Department and the Whitpain Township Police Department. It is being prosecuted by Assistant United States Attorneys Salvatore Astolfi and Jeanine Linehan.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Illinois Man Sentenced to Prison for Shooting at a HomeRead the Press Release
A man who fired several rounds from a handgun at a house after a dispute with its occupants was sentenced yesterday to two and a half years in federal prison.
Marcus Wilson, age 24, from Carbondale, Illinois, received the prison term after a January 15, 2015, guilty plea to possession of a firearm as an unlawful drug user.
In a plea agreement, Wilson admitted that on May 8, 2014, he purchased a .40 caliber handgun and ammunition from a Cedar Rapids gun shop. In purchasing the firearm, Wilson lied on the background check paperwork, falsely claiming that he was not an unlawful user of controlled substances. In fact, Wilson had been unlawfully using cocaine, marijuana, and PCP for at least three years prior to the purchase. The day after Wilson purchased the handgun, he visited a girlfriend at her friend’s home in Cedar Rapids, where Wilson got into a verbal altercation with the occupants of the home. When forced to leave the home, Wilson pulled out his handgun and wildly fired several rounds at the home, hitting it and a neighboring house. Both homes were occupied, including by children, and at least one round penetrated the exterior wall of a home. When police arrived moments later in response to the gunfire and found Wilson outside the home, he falsely claimed he had been shot at by occupants of the home. This compelled the police to remove the occupants at gunpoint only to discover that Wilson had lied to them.
Wilson was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Wilson was sentenced to thirty months’ imprisonment. A special assessment of $100 was imposed. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system. Wilson is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney C.J. Williams and investigated by the Federal Bureau of Investigation and the Cedar Rapids Police Department as part of the FBI Safe Streets Taskforce, a unit focused on ending gun violence in the Northern District of Iowa.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 14-CR-0083.
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IRS Employee Charged with Theft of Government FundsRead the Press Release
PHILADELPHIA - Robin Wood, 45 of Philadelphia, Pennsylvania was charged today by Indictment with wire fraud and theft of approximately $45,312 in government funds, announced United States Attorney Zane David Memeger.
According to the indictment, for approximately 100 weeks between November 10, 2007, and July 3, 2010, the defendant received unemployment compensation, for which she fraudulently claimed each week she was eligible when, in fact, she was employed by the Internal Revenue Service and receiving a salary.
If convicted the defendant faces a maximum possible statutory sentence of 20 years in prison, restitution, up to three years of supervised release, and a $300 special assessment.
The case was investigated by the Treasury Inspector General for Tax Administration and is being prosecuted by Assistant United States Attorney Andrea G. Foulkes.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Imperial Gangster Jason Medina Sentenced to 325 Months ImprisonmentRead the Press Release
HAMMOND – United States Attorney for the Northern District of Indiana, David Capp, announced that Jason Medina, 31, of East Chicago, Indiana, was sentenced today to 325 months imprisonment and 3 years supervised release for conspiracy to participate in racketeering and attempted murder in furtherance of racketeering.
Jason Medina aka “Burns” a member of the Imperial Gangsters Street Gang was part of a 24-defendant indictment alleging that members of the gang committed 13 homicides in East Chicago, Hammond and Gary, Indiana. The indictment charged a decade-long racketeering conspiracy that involved 19 additional attempted murders and large scale distribution of cocaine and marijuana.
On January 14, 2015, Medina plead guilty to a conspiracy to participate in racketeering activity. Medina’s involvement in this RICO conspiracy included committing the first degree murder of Guadalupe Trevino. This murder occurred on July 24, 2005 in Gary, Indiana. In addition to pleading guilty to the Trevino murder, Medina also pled guilty to an attempted murder in furtherance of racketeering activity that occurred on June 6, 2011.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the FBI and the East Chicago Police Department, with assistance from the Gary Police Department, the Hammond Police Department and the Lake County High Intensity Drug Trafficking Area Program. This case is being prosecuted by Assistant U.S. Attorney David J. Nozick of the Northern District of Indiana and Trial Attorney Bruce R. Hegyi of the Criminal Division’s Capital Case Section.
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Honduran National Sentenced for Illegally ReentryRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ANGEL CORNEJO-MORENO, age 44, a Honduran citizen, was sentenced today after having previously pled guilty to a one-count Indictment for illegal reentry of a removed alien.
U.S. District Judge Mary Ann Vial Lemmon sentenced CORNEJO-MORENO to five months imprisonment followed by one year of supervised release, and a $100 special assessment. Following his incarceration, CORNEJO-MORENO will be surrendered to the custody of the U.S. Immigration & Customs Enforcement for removal proceedings.
According to court documents, on or about December 8, 2014, Jefferson Parish Sheriff deputies arrested CORNEJO-MORENO for driving while intoxicated and driving without a license. The deputies then contacted agents of United States Immigration & Customs Enforcement (ICE), who discovered that CORNEJO-MORENO was a Honduran national who had been previously deported from the United States in 2003 and 2009. ICE agents confirmed that CORNEJO-MORENO had again illegally reentered the United States without inspection by a United States Immigration official. Agents placed an ICE detainer on CORNEJO-MORENO in order to hold him for criminal prosecution.
U.S. Attorney Polite praised the work of the Immigration and Customs Enforcement Agency in investigating this matter. Assistant United States Attorney Rick Veters is in charge of the prosecution.
Honduran Man Guilty of Illegally Reentering the United StatesRead the Press Release
Concord, NH – Florentino Vasquez-Rodriguez of Honduras, pleaded guilty today in United States District Court for the District of New Hampshire to illegally reentering the United States after having been previously deported, announced Acting United States Attorney Donald Feith.
Vasquez-Rodriguez was arrested in Texas in 2004 by border patrol authorities and deported to Honduras. In March 2015, agents of the U.S. Department of Homeland Security, Bureau of Immigration and Customs Enforcement received information that Vasquez-Rodriguez was residing in Nashua, New Hampshire. After a brief investigation, Vasquez-Rodriguez was traced to a residence on Bridge Street in Nashua. When approached by immigration officials, Vasquez-Rodriguez initially claimed to be from Puerto Rico. Shortly thereafter he admitted he was from Honduras and did not possess documents that would have permitted him to legally reside in the United States. Fingerprint analysis confirmed that Vasquez-Rodriguez was the same individual who had been previously deported in 2004.
A sentencing hearing is scheduled on August 20, 2015. Vasquez-Rodriguez will be deported after serving his sentence.
The U.S. Department of Homeland Security, Bureau of Immigration and Customs Enforcement investigated this case. Assistant U.S. Attorney Alfred Rubega is prosecuting this case.
Hollister, Republic Men Indicted for Producing Child PornRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Hollister, Mo., man and a Republic, Mo., man have been indicted by a federal grand jury, in separate and unrelated cases, for producing child pornography.
USA v. Tyson
Michael Shane Tyson, 30, of Hollister, was charged in an indictment returned by a federal grand jury in Springfield, Mo., on Wednesday, May 13, 2015. The indictment replaces a federal criminal complaint that was filed against Tyson on April 24, 2015.
The federal indictment alleges that Tyson used a minor, identified as Jane Doe, to produce child pornography from Jan. 30 to April 7, 2015.
The indictment also contains a forfeiture allegation, which would require Tyson to forfeit to the government any property used to commit the alleged offense, including an Acer laptop computer and a Droid Razr Maxx cell phone.
This case is being prosecuted by Assistant U.S. Attorney Ami Harshad Miller. It was investigated by the FBI.
USA v. Hopper
Benjamin Michael Hopper, 22, of Republic, was charged in an indictment returned by a federal grand jury in Springfield, Mo., on Wednesday, May 13, 2015.
The federal indictment alleges that Hopper used a minor, identified as “Jane Doe #1,” to produce child pornography between Jan. 21 and 25, 2015.
This case is being prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the FBI and the Republic, Mo., Police Department.
Dickinson cautioned that the charge contained in these indictments are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Hollister, Republic Men Indicted for Producing Child PornRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Hollister, Mo., man and a Republic, Mo., man have been indicted by a federal grand jury, in separate and unrelated cases, for producing child pornography.
USA v. Tyson
Michael Shane Tyson, 30, of Hollister, was charged in an indictment returned by a federal grand jury in Springfield, Mo., on Wednesday, May 13, 2015. The indictment replaces a federal criminal complaint that was filed against Tyson on April 24, 2015.
The federal indictment alleges that Tyson used a minor, identified as Jane Doe, to produce child pornography from Jan. 30 to April 7, 2015.
The indictment also contains a forfeiture allegation, which would require Tyson to forfeit to the government any property used to commit the alleged offense, including an Acer laptop computer and a Droid Razr Maxx cell phone.
This case is being prosecuted by Assistant U.S. Attorney Ami Harshad Miller. It was investigated by the FBI.
USA v. Hopper
Benjamin Michael Hopper, 22, of Republic, was charged in an indictment returned by a federal grand jury in Springfield, Mo., on Wednesday, May 13, 2015.
The federal indictment alleges that Hopper used a minor, identified as “Jane Doe #1,” to produce child pornography between Jan. 21 and 25, 2015.
This case is being prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the FBI and the Republic, Mo., Police Department.
Dickinson cautioned that the charge contained in these indictments are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Grand Forks Man Convicted After Trial in Meth ConspiracyRead the Press Release
FARGO - Acting United States Attorney Christopher C. Myers announced that on May 13, 2015, José Luis Delacruz, 37, aka Joe Delacruz, from Grand Forks, North Dakota, was found guilty following a 2 ½ day trial for Conspiracy to Possess with Intent to Distribute and Distribution of Methamphetamine, as well as Brandishing a Firearm During the Commission of Drug Trafficking.
During the course of the conspiracy, co-conspirators received methamphetamine from Delacruz, which was sold primarily in the Grand Forks area; the conspiracy moved in excess of 500 grams of a mixture containing methamphetamine.
Delacruz was also convicted for his role of pistol-whipping a co-conspirator in Grand Forks whom he believed was cooperating. Delacruz faces up to life imprisonment for the drug charge and a mandatory seven-year consecutive sentence for brandishing the firearm in connection with the conspiracy.
This case was investigated by the Grand Forks Police Department, the Grand Forks Narcotics Task Force, and the Department of Homeland Security - Homeland Security Investigations.
The case was prosecuted by Acting U.S. Attorney Chris Myers, AUSA Megan Healy, and SAUSA Jeremy Ensrud.
Sentencing for Delacruz is set for August 3, 2015, in Fargo.
Golden Valley Man Indicted for Leading Multi-Million Dollar Cell Phone Trafficking ConspiracyRead the Press Release
United States Attorney Andrew M. Luger and Special Agent in Charge of the United States Secret Service Minneapolis Division Louis Stephens today announced the indictment of ZIBO LI, 30, and eight co-conspirators for conspiring to traffic in stolen and fraudulently obtained cellular telephones and related charges. LI led the conspiracy, during which he trafficked at least $3.8 million in stolen cellular devices throughout the United States and between the United States and Hong Kong. LI made an initial appearance today before United States Magistrate Judge Mayeron in U.S. District Court in Minneapolis, Minn.
“According to this indictment, the criminal conspiracy dismantled today was adept at victimizing Minnesota businesses and citizens,” said Special Agent in Charge of the United States Secret Service Minneapolis Division Louis Stephens. “Today’s success is the result of close and collaborative working relationships between local, state and federal law enforcement agencies, as well as federal prosecutors and several organizations in the retail sector. The Minnesota Financial Crimes Task Force is a force multiplier that facilitates numerous law enforcement agencies in combining our resources, leveraging our various areas of expertise, and working as one. Working together, we are able to stop significant crime in its tracks.”
“As charged, these defendants stole the identifying information of nearly 60 known individuals and 20 known businesses,” said Assistant United States Attorney Manda M. Sertich. “They exploited vulnerable members of our society, including people residing in homeless shelters, to steal cell phones and turn a profit. I am proud to work with my law enforcement colleagues to put an end to this alleged conspiracy.”
According to the indictment and documents filed in court, between 2011 and 2014, ZIBO LI and eight co-defendants engaged in a conspiracy to fraudulently obtain mobile cellular devices for reduced rates by fraudulently entering into service contacts, often using identity theft. ZIBO LI ultimately sold the stolen merchandise to contacts in Hong Kong, where a new Apple iPhone could, at the time of the conspiracy, retail for as much as $2,000.
According to the indictment and documents filed in court, OMID NGANGE AKALE, DEREK KREZ MCCORMACK, and JOSEPH FRANCIS WERB, each served as middlemen in LI’s organization. They purchased stolen or fraudulently obtained phones from buyers, and subsequently sold them to ZIBO LI. LI paid the middlemen by depositing cash directly into their bank accounts.
According to the indictment and documents filed in court, buyers for the organization were responsible for obtaining low-cost phones from retailers. Among the methods employed to obtain phones was “credit muling,” a scheme through which buyers, or those acting at their direction, signed up for cellular telephone service contracts to obtain reduced cost phones in other people’s names, but never intended to or did honor those contracts. Some of the buyers also recruited people residing in homeless shelters to sign up for cell phone contracts and obtain reduced cost phones, for which those recruited received nominal payments or goods.
According to the indictment and documents filed in court, buyers often used stolen identities to enter into contracts to obtain low-cost phones. They obtained stolen identities of real victims from co-conspirators TEMETRIUS LATONYA NICKERSON and REGINALD DEMARIUS WASHINGTON. The buyers provided stolen identities to ELIJAH WAYNE JACKSON to use in the opening of cell phone service contracts from his employer, a major Twin Cities-area retailer. JACKSON ran credit checks on the stolen identities to confirm that the stolen identities could be used to enter into cell phone service contracts and obtain cellular devices using the names of the identity theft victims.
According to the indictment and documents filed in court, IFRAH ISAAK NOR and RANDOLPH KENDRICK WILLIAMS also used stolen information to fraudulently obtain cellular telephones. Rather than using stolen identity information of individuals, NOR and WILLIAMS stole the identifying information of a Twin Cities-area business, which they exploited to open business accounts with cellular telephone contract providers. Applying for business contracts allowed WILLIAMS and NOR to obtain far more low-cost phones than an individual account.
This case is the result of an investigation conducted by the United States Secret Service, Saint Paul Police Department, Minnesota Bureau of Criminal Apprehension, Minnesota Financial Crimes Task Force, University of Minnesota Police Department, and Plymouth Police Department.
This case is being prosecuted by Assistant United States Attorneys Manda M. Sertich, Steven L. Schleicher, and John R. Marti.
Defendant Information:
ZIBO LI, 30
Golden Valley, Minn.
Charges:
• Conspiracy to traffic unauthorized access devices, 1 count
• Fraud and related activity in connection with access devices, 1 count
DEREK KREZ MCCORMACK, 33
St. Louis Park, Minn.
Charges:
• Conspiracy to traffic unauthorized access devices, 1 count
• Fraud and related activity in connection with access devices, 1 count
ELIJAH WAYNE JACKSON, 21
St. Paul, Minn.
Charges:
• Conspiracy to traffic unauthorized access devices, 1 count
• Aggravated identity theft, 2 counts
TEMETRIUS LATONYA NICKERSON, 42
St. Paul, Minn.
Charges:
• Conspiracy to traffic unauthorized access devices, 1 count
• Aggravated identity theft, 1 count
REGINALD DEMARIUS WASHINGTON, 23
Brooklyn Park, Minn.
Charges:
• Conspiracy to traffic unauthorized access devices, 1 count
• Aggravated identity theft, 1 count
OMID NGANGE AKALE, 35
Minneapolis, Minn.
Charges:
• Conspiracy to traffic unauthorized access devices, 1 count
JOSEPH FRANCIS WERB, 37
Minneapolis, Minn.
Charges:
• Conspiracy to traffic unauthorized access devices, 1 count
RANDOLPH KENDRICK WILLIAMS, 27
Bloomington, MN
Charges:
• Conspiracy to traffic unauthorized access devices, 1 count
IFRAH ISAAK NOR, 23
St. Louis Park, Minn.
Charges:
• Conspiracy to traffic unauthorized access devices, 1 count
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The charges are merely accusations, and the defendants are presumed innocent unless and until proven guilty.Fresno Men Indicted on Methamphetamine Trafficking ChargesRead the Press Release
FRESNO, Calif. — A federal grand jury returned a four-count indictment today against Fresno residents Armando Perez, 50, and Christian Sandoval, 22, charging them with conspiracy to distribute and possess with intent to distribute methamphetamine and possession with intent to distribute methamphetamine, United States Attorney Benjamin B. Wagner announced.
According to court documents, on April 9, 2015, Perez provided an undercover officer with approximately one ounce of methamphetamine. On April 21, 2015, Perez provided the undercover officer with approximately one pound of methamphetamine. On May 7, 2015, Sandoval drove Perez to a meeting with an undercover officer, and Perez provided the officer with approximately 10 pounds of methamphetamine.
This case is the product of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation involving the Drug Enforcement Administration and Fresno County Sheriff’s Office. OCDETF is a program that facilitates joint investigative work by federal, state, and local law enforcement agencies. Assistant United States Attorney Kimberly A. Sanchez is prosecuting the case.
If convicted, Perez faces a maximum statutory penalty of life in prison and a $35 million fine. Sandoval is facing a maximum penalty of 20 years in prison and a $1 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; each defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Four Plead Guilty in San Antonio to Unlawfully Selling Migratory BirdsRead the Press Release
In San Antonio, four individuals await sentencing after pleading guilty to federal charges related to illegally selling migratory birds announced Acting United States Attorney Richard L. Durbin, Jr. and Special Agent in Charge Nicholas Chavez, U.S. Fish and Wildlife Southwest Region.
Appearing before Chief United States District Court Judge Fred Biery this morning, 50-year-old Jorge Rocha of Natalia, TX, pleaded guilty to one count of unlawfully offering to sell and selling migratory birds.
Previously, three other defendants—67-year-old Juan Luis Guerra of San Antonio; 56-year-old Francisco Guerrero of Cuero, TX; and, 60–year-old Tomas G. Perez of Devine, TX—pleaded guilty to the same federal charge. By pleading guilty, the defendants admitted to knowingly and unlawfully selling a migratory bird(s) to an undercover agent on various occasions in 2011 and 2012. Those birds included a Red-tailed Hawk and Great Horned Owls which are protected species under the Migratory Bird Treaty Act.
“One of the U.S. Fish and Wildlife Service's highest priorities is to investigate individuals that are involved in the unlawful commercial trafficking of our Nation's fish and wildlife,” said U.S. Fish and Wildlife Special Agent in Charge Nicholas Chavez. “The successful outcome of this investigation is also the result of working jointly with the Texas Parks and Wildlife Department to ensure the protection of our migratory birds. With our law enforcement partnership, information sharing, and investigative technology, we can disrupt wildlife trafficking on the web, smuggling through our airports, or our land borders.”
All four defendants remain on bond pending sentencing scheduled later this year. Each defendant faces up to two years imprisonment and a maximum fine of $2,000.
This indictment resulted from an investigation conducted by agents with the Southwest Region of the U.S. Fish and Wildlife Service and the Texas Parks and Wildlife Department. Assistant United States Attorney Bud Paulissen is prosecuting this case on behalf of the Government.
Four Defendants Plead Guilty to Operating a “Pill Mill” in Lilburn, GeorgiaRead the Press Release
ATLANTA - George Borbas, Randy Webman, Larry Webman, and Dara Webman have all pleaded guilty to illegally selling and distributing prescriptions for opiate-based narcotics and other controlled substances to addicts and drug dealers under the guise of a pain clinic in Lilburn, Georgia.
“These defendants came to Georgia for the sole purpose of profiting personally from the sale of prescription narcotics to addicts and drug dealers, without regard to the safety and well-being of our community,” said Acting U.S. Attorney John Horn. “Trafficking in prescription pain killers and other pharmaceuticals continues to be a top public safety issue in Georgia, leading to record levels of overdoses and addiction as well as a disturbing resurgence in heroin use by addicts who transition from abusing prescription pain killers.”
“The arrest of these defendants led to the dismantlement of an organization responsible for the illegal distribution opiate-based analgesics and other controlled substances,” said Daniel R. Salter, the Special Agent in Charge of the DEA Atlanta Field Division. “This case is a perfect example of the success that can be achieved when federal, state and local resources are combined to present a united front.”
“The integrity of the medical profession must be protected from criminal enterprises and those who seek to illegally profit by pretending to provide legitimate medical services,” stated Veronica F. Hyman-Pillot, Special Agent in Charge, Internal Revenue Service Criminal Investigation. “Our communities need assurance that medical professionals who lack integrity and engage in illegal activities will be held accountable for their actions. The guilty pleas today are just one example of how IRS Criminal Investigation and the law enforcement community work together to reassure the public.
“I would like to thank all of our law enforcement partners who helped dismantle and prosecute those responsible for operating this illegal enterprise. While the pill mill was operating in our town, it unlawfully dispensed thousands of powerful pain killers into the streets, poisoning our community. After the removal of this pill mill, our business corridor returned to a legal boulevard of opportunity, devoid of the proliferation of illegal dispensing of prescription drugs,” said Bruce Hedley, Chief of Police, City of Lilburn, Georgia.
“We always stand ready to partner with our federal agencies to combat the growing problem of prescription drug diversion. These close working relationships are imperative in this type of multi-jurisdictional and complex drug investigations,” said Director B.W. Collier, North Carolina State Bureau of Investigation.
According to Acting U.S. Attorney Horn, the charges and other information presented in court: From approximately February 2012 through January 2013, Larry Webman and Randy Webman operated an illegal enterprise, variously known as Premier Medical Management, Inc.; Premier Pain Management, Inc.; Premier Pain Management; and Premier Pain Management and Physical Therapy, located in Lilburn, Georgia. Dara Webman worked at the clinic as an office manager handing out prescriptions for narcotic opiates to customers in exchange for cash payments ostensibly collected for office visits.
Larry Webman and Randy Webman managed and controlled the clinic. Though neither had any medical training, they often directed the decisions of the clinic’s physician with respect to prescribing controlled substances. The clinic saw as many as 60 customers a day, each paying between $250 and $350 a visit. These customers almost always left with a prescription for controlled substances, which often included Oxycodone, a highly addictive painkiller. The clinic’s customers regularly traveled long distances to obtain prescriptions for controlled substances. Most hailed from outside the state, including North Carolina, Kentucky, Tennessee, Ohio, South Carolina, and Florida. The clinic’s physician allegedly saw a customer only at the initial visit, at which time he conducted a brief examination.
On return visits, a customer rarely saw the clinic’s physicians, but instead was able to obtain additional prescriptions for controlled substances allegedly based solely upon an exam by another clinic employee. On at least one occasion, Dara Webman mailed opiate prescriptions to undercover officers posing as customers. George Borbas sponsored the visits of numerous customers to the clinic in exchange for receiving a portion of the prescription pills the customers were ultimately prescribed. Almost all customers paid cash, and Larry Webman and Randy Webman personally used that money to promote the clinic’s ongoing illegal activity by, for example, purchasing an MRI machine.
The defendants in this case are as follows:
- George Borbas, 46, of Raleigh, North Carolina, pleaded guilty to drug trafficking conspiracy.
- Randy Webman, 62, of Hollywood, Florida, pleaded guilty to drug trafficking conspiracy and engaging in a money laundering conspiracy.
- Larry Webman, 66, of Hollywood, Florida, pleaded guilty to drug trafficking conspiracy and engaging in a money laundering conspiracy.
- Dara Webman, 31, of Hollywood, Florida, pleaded guilty to using the mail to illegally distribute drugs.
George Borbas will be sentenced on September 23, 2015, at 11:00 a.m. Randy, Larry, and Dara Webman will also be sentenced on the same day at 2:00 p.m. All defendants will be sentenced by United States District Judge Steve C. Jones. Dr. George Williams and Liz Troncoso are presently awaiting trial.
Criminal charges remain pending against the clinic physician, Dr. George Williams, for prescribing controlled substances outside the course of professional medical practice, and without a legitimate medical purpose. Charges are also pending against another clinic employee, Liz Troncoso, who is alleged to have conducted exams of patients seeking pills instead of Dr. Williams. Dr. George Williams and Liz Troncoso are presently awaiting trial.
This case is being investigated by the Drug Enforcement Administration, Internal Revenue Service Criminal Investigation, the Lilburn Police Department, and the North Carolina State Bureau of Investigation.
Assistant United States Attorney Laurel Boatright prosecuted the case.
The U.S. Attorney’s Office in Atlanta recommends parents and children learn about the dangers of drugs at the following web site: www.justthinktwice.com.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao-ndga.
Fort Worth Woman and Daughter-in-Law Tax Return Preparers Sentenced on Conspiracy and Tax ConvictionsRead the Press Release
FORT WORTH, Texas — Two Fort Worth, Texas, tax preparers who were convicted at trial in November 2014 on 34 counts of a superseding indictment charging conspiracy and other tax offenses, were sentenced yesterday, announced John Parker, Acting U.S. Attorney for the Northern District of Texas.
Ramona C. Johnson was sentenced to 170 months in federal prison by U.S. District Judge John McBryde and Nekia N. Everson was sentenced to 95 months in federal prison. Both must surrender to the Bureau of Prisons by June 5, 2015.
According to evidence presented at trial, Ramona C. Johnson managed/operated a tax preparation business in Fort Worth that was known, among other names, as Tax Office One. Johnson’s daughter-in-law, Nekia N. Everson, was a return preparer for the business, according to evidence presented at trial.
Johnson and Everson were each convicted on one count of conspiracy to aid and assist in the preparation and presentation of a false tax return. Johnson was also convicted on 26 counts of aiding and assisting in the preparation of a false tax return and two counts of filing false tax returns. Everson was also convicted on five counts of aiding and assisting in the preparation and presentation of a false tax return.
The government presented evidence at trial that Johnson and Everson, and those working with them, prepared and filed false and fraudulent tax returns that included various false and fraudulent schedules, deductions, exemptions, and credits with the goal of reducing the amount of taxes owed by the taxpayers and obtaining larger refunds for the taxpayers than they were entitled to receive. As a result of the larger refunds, Johnson and Everson were able to charge higher fees for preparing returns, build client loyalty, and increase business through client referrals.
In some instances, Johnson and Everson, and those working with them, created false and fraudulent Schedule C (reporting business losses/profits) and Schedule A (reporting itemized deductions) forms to accompany the taxpayer’s Form 1040. The taxpayers would often be asked about their personal expenses, such as those incurred commuting to and from work, cell phone, automobile, clothes, etc., and then the information would be fraudulently listed on the Schedule C as business expenses or unreimbursed employee expenses on Schedule A. On some returns, Johnson and Everson would completely fabricate a Schedule C business, including income and expense items. For some taxpayers, Johnson would create a false and fraudulent Schedule C reflecting the taxpayers had a profit from a nonexistent business. This false profit, together with claimed dependents (both fraudulent and actual), would be used to claim the taxpayer was entitled to an earned income tax credit.
In other instances, according to evidence presented at trial, Johnson and Everson would include false dependent exemptions on tax returns for some clients. Johnson, or someone working with her, would acquire various personal identities, the names and social security numbers of individuals with no connection to the taxpayer to use as false dependents on tax returns prepared for clients. When included on the tax return, the false dependents would increase the number of exemptions, increase the deduction for exemptions, and often, entitle the taxpayer to an earned income tax credit.
In addition, the government presented evidence that for calendar years 2009 and 2010, Johnson filed tax returns in which she reported total income of $2,850 and $16,906, respectively, when she well knew that the income amount was understated in that it did not include income she received for her work preparing tax returns.
Between January 2008 and October 2011, according to evidence presented at trial, Johnson’s tax preparation business collected more than $1.9 million in tax preparation fees from clients.
IRS Criminal Investigation investigated. Assistant U.S. Attorneys Mark Nichols and Chris Wolfe prosecuted.
Fort Myers Man Indicted for Check-Kiting Scheme and Obstruction of JusticeRead the Press Release
Fort Myers, Florida – United States Attorney A. Lee Bentley, III announces the return of an indictment charging Roger Eugene Hagood (43, Fort Myers) with 13 counts of bank fraud and two counts of obstruction of justice. If convicted, he faces a maximum penalty of 30 years in federal prison for each bank fraud count and up to 20 years’ imprisonment for each obstruction of justice count. The indictment also notifies Hagood that the United States is seeking a forfeiture money judgment in the amount of $1,592,121.00, the proceeds of the bank fraud offenses.
According to the indictment, Hagood operated Coral Palm Auto Sales, a used car dealership. Coral Palm Autos Sales received financing through a third-party lender to purchase automobiles. Vehicle titles were provided as security to procure the loans, and loan payments were made using proceeds from the vehicle sales. Once each loan was paid in full, the third-party lender would release the vehicle titles used to secure the loan back to Coral Palm Auto Sales.
In November and December 2011, Hagood allegedly engaged in a check-kiting scheme by writing 13 checks on his business checking account, made payable to the third-party lender, knowing that the account lacked sufficient funds to cover the checks.
As a result, the third-party lender wrote new loan checks on its account, made payable to Coral Palm Auto Sales, based on Hagood’s worthless checks. According to the indictment, Hagood’s scheme caused federally insured financial institutions to suffer significant financial losses.
The indictment also alleges that on March 29, 2015, Hagood concealed and attempted to destroy documents and records in an effort to obstruct an official proceeding and federal investigation.
An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by Federal Bureau of Investigation and the Florida Department of Law Enforcement. It will be prosecuted by Assistant United States Attorney Jeffrey F. Michelland.
Former Number Two of Los Angeles Sheriff’s Department Charged with Obstructing Federal Investigation into Misconduct at County JailsRead the Press Release
Paul Tanaka, 56, who was the second in command of the Los Angeles Sheriff’s Department (LASD) and William Thomas Carey, 56, who oversaw internal criminal investigations at the LASD, have been indicted on obstruction of justice charges for allegedly directing efforts to quash a federal investigation into corruption and civil rights violations by sheriff’s deputies at two downtown jail complexes.
A federal grand jury yesterday returned a five-count indictment against Tanaka and Carey, who allegedly participated in a broad conspiracy to obstruct the investigation, a scheme that started when the sheriff’s department learned that an inmate at the Men’s Central Jail (MCJ) was an informant for the Federal Bureau of Investigations (FBI). Tanaka and Carey allegedly directed, oversaw and participated in a conspiracy that last year resulted in the conviction of seven other former LASD deputies.
The obstruction of justice case was announced at a news conference this morning by Acting U.S. Attorney Stephanie Yonekura for the Central District of California and Assistant Director in Charge David Bowdich for the FBI’s Los Angeles Field Office.
Tanaka and Carey are charged with conspiracy to obstruct justice and each is named in one count of obstruction of justice. Carey is charged with two counts of making false declarations for perjuring himself last year during the trials of co-conspirators.
Tanaka was the undersheriff, the number two in the LASD, until 2013 and he ran an unsuccessful campaign for sheriff last year. Carey left LASD after reaching the rank of captain and heading the Internal Criminal Investigations Bureau.
Tanaka and Carey surrendered themselves to the FBI early this morning and the two men are expected to be arraigned on the indictment this afternoon in U.S. District Court.
According to the indictment, the two defendants were well aware of “problem deputies” at the jails, “allegations of rampant abuse of inmates” and “insufficient internal investigations” into deputy misconduct. But against this backdrop, Tanaka allegedly told deputies assigned to the jails to work in a “gray area” and that he thought that the LASD Internal Affairs Bureau should be reduced from 45 investigators to just one.
The scheme to thwart the federal investigation allegedly started when deputies in August 2011 recovered a mobile phone from an inmate in MCJ, linked the phone to the FBI and determined that the inmate was an informant for the FBI who was cooperating in a federal corruption civil rights investigation. The phone was given to the inmate by a corrupt deputy, who subsequently pleaded guilty to federal bribery charges.
Alarmed by the federal investigation, members of the conspiracy, guided by Tanaka and Carey, took affirmative steps to hide the cooperator from the FBI and the U.S. Marshals Service, which was attempting to bring the inmate to testify before a federal grand jury in response to an order issued by a federal judge. The indictment alleges that as part of the conspiracy, the deputies altered records to make it appear that the cooperator had been released. They then re-booked the inmate under a different name, moved him to secure locations, prohibited FBI access to the informant and then told the cooperator that he had been abandoned by the FBI.
Over the course of several weeks, members of the conspiracy allegedly attempted to obtain an order from a Los Angeles Superior Court judge that would have compelled the FBI to turn over information about its investigation to LASD. After the judge refused to issue such an order because he had no jurisdiction over the federal law enforcement agency and even though it was clear that the FBI was properly acting in the course of a lawful investigation, Tanaka and Carey met to discuss having two sergeants approach the lead FBI case agent. Soon thereafter, the sergeants confronted the agent at her residence in an attempt to intimidate her. The sergeants threatened the agent with arrest and later reiterated this threat to her supervisor, stating that the agent’s arrest was imminent.
“As the allegations demonstrate, Tanaka had a large role in institutionalizing certain illegal behavior within the sheriff’s department,” said Acting U.S. Attorney Yonekura. “This case also illustrates how leaders who foster and then try to hide a corrupt culture, will be held accountable, just like their subordinates.”
The indictment also alleges that Tanaka and Carey oversaw co-conspirators who told fellow deputies not to cooperate in the federal investigation. Members of the conspiracy allegedly engaged in witness tampering by telling fellow deputies that the FBI would lie, threaten, manipulate and blackmail them to obtain information about the sheriff’s department.
“The allegations in the indictment include cover-ups, diversionary tactics, retribution and a culture generally reserved for Hollywood scripts,” said Assistant Director in Charge Bowdich. “The public held the defendants to the highest standard, but, instead, they spent their time and energy setting a tone which minimized the value of their oath and dishonored the badge they wore.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The conspiracy count carries a statutory maximum sentence of five years in federal prison and the obstruction of justice charges carry a maximum penalty of ten years. The two false declaration counts against Carey each carry a potential penalty of five years.
As a result of this investigation, a total of 21 defendants who held various ranks in the LASD have been charged, including the deputy who took the bribe to smuggle the phone and seven co-conspirators in the scheme to obstruct justice (see, for example: http://www.justice.gov/usao/cac/Pressroom/2014/161.html).
The investigation into corruption, civil rights abuses and obstruction of justice related to the Los Angeles County jails is being conducted by the FBI.
Former No. 2 of Los Angeles Sheriff’s Department Charged with Obstructing Federal Investigation into Misconduct at County JailsRead the Press Release
Former Head of LASD Criminal Investigation Unit also Accused of Obstructing Justice and Perjuring Himself during Trial Testimony of Co-Conspirators
LOS ANGELES – Paul Tanaka, who was the second in command of the Los Angeles Sheriff’s Department, and William Thomas Carey, who oversaw internal criminal investigations at the LASD, have been indicted on obstruction of justice charges for allegedly directing efforts to quash a federal investigation into corruption and civil rights violations by sheriff’s deputies at two downtown jail complexes.
A federal grand jury yesterday returned a five-count indictment against Tanaka and Carey, who allegedly participated in a broad conspiracy to obstruct the investigation, a scheme that started when the Sheriff’s Department learned that an inmate at the Men’s Central Jail (MCJ) was an FBI informant. Tanaka and Carey allegedly directed, oversaw and participated in a conspiracy that last year resulted in the conviction of seven other former LASD deputies.
The obstruction of justice case was announced at a news conference this morning by Acting United States Attorney Stephanie Yonekura and FBI Assistant Director in Charge David Bowdich.
Tanaka and Carey, both 56, are charged with conspiracy to obstruct justice, and each is named in one count of obstruction of justice. Carey is charged with two counts of making false declarations for perjuring himself last year during the trials of co-conspirators.
Tanaka was the undersheriff – the number 2 in the LASD – until 2013, and he ran an unsuccessful campaign for sheriff last year. Carey left the LASD after reaching the rank of captain and heading the Internal Criminal Investigations Bureau.
Tanaka and Carey surrendered themselves to the FBI early this morning, and the two men are expected to be arraigned on the indictment this afternoon in United States District Court.
According to the indictment that was unsealed this morning, the two defendants were well aware of “problem deputies” at the jails, “allegations of rampant abuse of inmates,” and “insufficient internal investigations” into deputy misconduct. But against this backdrop, Tanaka allegedly told deputies assigned to the jails to work in a “gray area” and that he thought that the LASD Internal Affairs Bureau should be reduced from 45 investigators to just one.
The scheme to thwart the federal investigation allegedly started when deputies in August 2011 recovered a mobile phone from an inmate in MCJ, linked the phone to the FBI, and determined that the inmate was an informant for the FBI and was cooperating in a federal corruption civil rights investigation. The phone was given to the inmate by a corrupt deputy, who subsequently pleaded guilty to federal bribery charges.
Alarmed by the federal investigation, members of the conspiracy, guided by Tanaka and Carey, took affirmative steps to hide the cooperator from the FBI and the United States Marshals Service, which was attempting to bring the inmate to testify before a federal grand jury in response to an order issued by a federal judge. The indictment alleges that as part of the conspiracy, the deputies altered records to make it appear that the cooperator had been released. They then re-booked the inmate under a different name, moved him to secure locations, prohibited FBI access to the informant, and then told the cooperator that he had been abandoned by the FBI.
Over the course of several weeks, members of the conspiracy allegedly sought an order from a Los Angeles Superior Court judge that would have compelled the FBI to turn over information about its investigation to the LASD. After the judge refused to issue the order because he had no jurisdiction over the federal law enforcement agency, and even though it was clear that the FBI was properly acting in the course of a lawful investigation, Tanaka and Carey met to discuss having two sergeants approach the lead FBI case agent. Soon thereafter, the sergeants confronted the agent at her residence in an attempt to intimidate her. The sergeants threatened the agent with arrest and later reiterated this threat to her supervisor, stating that the agent’s arrest was imminent.
“As the allegations demonstrate, Tanaka had a large role in institutionalizing certain illegal behavior within the Sheriff’s Department,” said Acting United States Attorney Stephanie Yonekura. “This case also illustrates how leaders who foster and then try to hide a corrupt culture, will be held accountable, just like their subordinates.”
The indictment also alleges that Tanaka and Carey oversaw co-conspirators who told fellow deputies not to cooperate in the federal investigation. Members of the conspiracy allegedly engaged in witness tampering by telling fellow deputies that the FBI would lie, threaten, manipulate and blackmail them to obtain information about the Sheriff’s Department.
“The allegations in the indictment include cover-ups, diversionary tactics, retribution and a culture generally reserved for Hollywood scripts,” said David Bowdich, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The public held the defendants to the highest standard, but, instead, they spent their time and energy setting a tone which minimized the value of their oath and dishonored the badge they wore.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The conspiracy count carries a statutory maximum sentence of five years in federal prison, and the obstruction of justice charges carry a maximum penalty of 10 years. The two false declaration counts against Carey each carry a potential penalty of five years.
As a result of this investigation, a total of 21 defendants who held various ranks in the LASD have been charged, including the deputy who took the bribe to smuggle the phone and seven co-conspirators in the scheme to obstruct justice (see, for example: http://www.justice.gov/usao/cac/Pressroom/2014/161.html).
The investigation into corruption, civil rights abuses and obstruction of justice related to the Los Angeles County jails is being conducted by the Federal Bureau of Investigation.
Release No. 15-044
Former Executive Director of the Virgin Islands Legislature Sentenced to Five Years in Prison for Bribery and ExtortionRead the Press Release
The former Executive Director of the Virgin Islands Legislature was sentenced to five years in prison today, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Ronald W. Sharpe of the District of the Virgin Islands.
Louis “Lolo” Willis, 57, a resident of St. Thomas, was sentenced by U.S. District Court Judge Curtis V. Gomez of the District of the Virgin Islands. On Nov. 19, 2014, a jury in the Virgin Islands convicted Willis of four counts of federal programs bribery and extortion under color of official right.
According to evidence presented at trial, Willis was the executive director of the Legislature between 2009 and 2012. His responsibilities included oversight of the major renovation of the Legislature building and awarding and entering into government contracts in connection with the project. Willis was also responsible for authorizing payments to the contractors for their work. Evidence presented at trial demonstrated that Willis accepted bribes, including $13,000 in cash and checks, from contractors in exchange for using his official position to secure more than $350,000 in work for the contractors and to ensure they received payment upon completion.
This case was investigated by the FBI’s San Juan Field Office’s St. Thomas Resident Agency, the Internal Revenue Service-Criminal Investigation and the Office of the Virgin Islands Inspector General. The case is being prosecuted by Trial Attorney Justin Weitz of the Criminal Division’s Public Integrity Section, Trial Attorney Traccee Plowell of the Criminal Division’s Office of Enforcement Operations, Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division’s Environmental Crimes Section and Assistant U.S. Attorney Delia Smith of the District of the Virgin Islands.
Former Executive Director of the Virgin Islands Legislature Sentenced to Five Years in Prison for Bribery and ExtortionRead the Press Release
WASHINGTON – The former Executive Director of the Virgin Islands Legislature was sentenced to five years in prison today, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Ronald W. Sharpe of the District of the Virgin Islands.
Louis “Lolo” Willis, 57, a resident of St. Thomas, was sentenced by U.S. District Court Judge Curtis V. Gomez of the District of the Virgin Islands. On Nov. 19, 2014, a jury in the Virgin Islands convicted Willis of four counts of federal programs bribery and extortion under color of official right.
According to evidence presented at trial, Willis was the executive director of the Legislature between 2009 and 2012. His responsibilities included oversight of the major renovation of the Legislature building and awarding and entering into government contracts in connection with the project. Willis was also responsible for authorizing payments to the contractors for their work. Evidence presented at trial demonstrated that Willis accepted bribes, including $13,000 in cash and checks, from contractors in exchange for using his official position to secure more than $350,000 in work for the contractors and to ensure they received payment upon completion.
This case was investigated by the FBI’s San Juan Field Office’s St. Thomas Resident Agency, the Internal Revenue Service-Criminal Investigation and the Office of the Virgin Islands Inspector General. The case is being prosecuted by Trial Attorney Justin Weitz of the Criminal Division’s Public Integrity Section, Trial Attorney Traccee Plowell of the Criminal Division’s Office of Enforcement Operations, Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division’s Environmental Crimes Section and Assistant U.S. Attorney Delia Smith of the District of the Virgin Islands.
Former Doctor Pleads Guilty to Illegally Prescribing Pain MedicationRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051BUFFALO, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Pravin Mehta, 77, of Amherst, NY, pleaded guilty to conspiring to illegally dispense controlled substances from his medical office by issuing prescriptions other than for a legitimate medical purpose and not in the usual course of professional practice, before Senior U.S. District Judge William M. Skretny. This conviction represents the 14th defendant charged and convicted as part of this investigation, including Office staff and other conspirators.
“This case demonstrates that those who would harm the community through illegal narcotics trafficking consist of far more than street corner drug dealers,” said U.S. Attorney Hochul. “In this case, a medical doctor, in his 70’s, stands convicted of turning his medical practice into a drug trafficking organization, complete with other conspirators and employees. This case – like others before it – also demonstrates that regardless of title or position, this Office will simply not allow anyone to contribute to the current public health crisis involving dangerous opiate substances.”
Drug Enforcement Administration Special Agent in Charge James J. Hunt stated, “Prescribing medication for no medical purpose opens the door to drug addiction. Nearly 80 percent of people who recently started using heroin had previously used prescription pain relievers illegally. To combat opioid addiction, DEA and our law enforcement partners are committed to identifying and investigating those responsible for diverting pain medication while using resources to educate the public about the perils of opioid abuse.”
Assistant U.S. Attorney John E. Rogowski, who is handling the case, stated that Mehta is a former physician who practiced medicine in the City of Niagara Falls. The defendant surrendered his medical license immediately after being first charged in this case in January 2011.
Mehta wrote prescriptions for narcotic pain medications, such as fentanyl, hydrocodone, oxycodone, and oxymorphone, for individuals without conducting legitimate medical examinations. In 2010, the Government sent four individuals who were part of the investigation to see the defendant at his office on 10 different occasions. On all but the last visit, Mehta issued prescriptions for controlled substance pain medication at the request of the individuals without conducting a thorough medical exam.
In addition, on four separate occasions between December 2007 and January 2010, prior to leaving the country for multiple weeks, the defendant signed blank prescriptions and directed his office manager, who was not a trained medical provider, to complete the prescription by writing in a patient’s name, type, amount, and dosage of controlled substances whenever a patient came to the office in his absence seeking pain medication. In fact, Mehta’s medical staff did not include any licensed medical professionals, such as other doctors, physician assistants, registered nurses, or licensed practical nurses.
U.S. Attorney Hochul further stated: “Such medications, when prescribed properly, can be very beneficial to a patients. But when they are abused can be dangerous and highly addictive. Let me be clear, a vast majority of physicians faithfully uphold their oath. For those who do not, be warned, we will prosecute to the fullest extent of the law.”
The defendant was arrested in January 2011 along with 13 others. All 14 individuals have now been convicted. All but two have been sentenced.
The charge carries a maximum penalty of 20 years in prison and a $250,000 fine. Mehta also forfeited the building that housed his medical practice, 550-552 Main Street in Niagara Falls, and $125,000 in United State currency.
The plea is the result of an investigation by Special Agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge James J. Hunt, New York Field Division, the Niagara Falls Police Department, under the direction of Superintendent Bryan DalPorto, the Niagara County Sheriff's Drug Task Force under the direction of Sheriff James Voutour, the New York State Medicaid Fraud Control Unit, the New York State Bureau of Narcotic Enforcement, and the Internal Revenue Service, Criminal Investigation Division, New York Field Division under the direction of Special Agent in Charge Shantelle P. Kitchen.
Sentencing is scheduled for September 9, 2015 at 9:00 a.m. before Judge Skretny.
Former Credit Union Official Pleads Guilty to Mail FraudRead the Press Release
ATLANTA - Ardonus “Donna” Perkins, the former Assistant Vice President of Risk Management of the Credit Union of Georgia, has pleaded guilty to a charge of mail fraud for causing the credit union to disburse over $300,000 in fraudulent loans.
“This now former credit union executive used her institutional knowledge of the financial system to concoct a multi-faceted fraud scheme to steal money from the credit union,” said Acting U.S. Attorney John Horn. “The Department of Justice and our law enforcement partners will vigorously investigate and prosecute those engaged in fraud that threatens the integrity of the banking system.”
“The United States Secret Service will continue to take an aggressive approach to arrest individuals who violate the trust of businesses to further their personal financial gain,” said Reginald G. Moore, Special Agent in Charge of the United States Secret Service, Atlanta Field Office.
According to Acting U.S. Attorney Horn, the charges and other information presented in court: From January 2008 through August 2010, Perkins, who was the Assistant Vice President of Risk Management for the Credit Union of Georgia, used the names of unknowing family members and friends to open signature loans and true lines of credit at the credit union, which are open-ended personal lines of credit. Perkins took the funds obtained from these fraudulent loans for her own personal use. She also secretly refinanced automobile loans without the auto owner’s knowledge, consent, or authorization, and took those proceeds. Additionally, Perkins established fraudulent VISA accounts in the names of family members and friends and received cash advances on those accounts without their knowledge.
Perkins’ fraud scheme went undetected at the Credit Union of Georgia until she was fired in 2010 for policy violations. She continually increased the loan limits and available credit limits on the fraudulent loans to obtain more funds. In an effort to conceal and continue her scheme, Perkins used some of the money she fraudulently received to make payments on some of the loans, lines of credit, and credit card accounts that she had fraudulently established in the names of others. To further conceal her scheme, Perkins directed the monthly statements of the fraudulently established accounts to her personal post office box. As a result of Perkins’ scheme, the Credit Union of Georgia lost more than $300,000.
Sentencing for Ardonus “Donna” Perkins, 40, of Atlanta, Georgia, is scheduled for July 30, 2015, at 10:00 a.m. before United States District Judge Mark H. Cohen.
This case is being investigated by the United States Secret Service.
Assistant United States Attorneys Loranzo M. Fleming and Jeff A. Brown are prosecuting the case.
This 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 fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.”
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao-ndga.
Former Automotive Parts Manufacturer Executive Indicted for Role in Conspiracy to Fix PricesRead the Press Release
A Detroit federal grand jury returned a one-count indictment against the former Executive Managing Director of a Japanese automotive parts manufacturer for his participation in a conspiracy to fix prices and rig bids of automotive parts, the Department of Justice announced today.
The indictment, filed today in the U.S. District Court of the Eastern District of Michigan, charges Michitaka Sakuma, a former director and member of the board of directors of T.RAD Co. Ltd., with conspiring to fix the prices of radiators sold to Honda Motor Co. Ltd., Toyota Motor Corp., and certain of their subsidiaries in the United States and elsewhere.
“Today’s charge demonstrates that the Antitrust Division will continue to hold senior executives accountable for directing and authorizing subordinate employees to engage in criminal conduct,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program. “Senior executives should expect that they will be pursued and prosecuted when they knowingly permit and direct collusive conduct to occur under their management.”
Sakuma participated in the conspiracy first as a general manager in charge of Toyota sales and then as the executive managing director in charge of all sales at T.RAD. Sakuma was also a member of the board of directors at T.RAD.
The indictment alleges, among other things, that beginning at least as early as October 2003 and continuing until at least February 2010, Sakuma and his co-conspirators participated in meetings with co-conspirators and reached collusive agreements to rig bids, allocate supply and fix the price of radiators sold to Honda and Toyota.
T.RAD is a corporation organized and existing under the laws of Japan with its principal place of business in Tokyo, Japan. On Nov. 12, 2013, T.RAD pleaded guilty and agreed to pay a $13.75 million criminal fine for its role in the conspiracy. On Dec. 9, 2014, Kosei Tamura, the general manager in charge of Honda sales at T.RAD, pleaded guilty of participating in the same conspiracy and was sentenced to serve one year and one day in a U.S. prison.
Including Sakuma, 53 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing and bid rigging in the automotive parts industry. Additionally, 35 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.5 billion in criminal fines.
Sakuma is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323
Florida Businessman Found Guilty of Conspiring to Defraud InvestorsRead the Press Release
ORLANDO, FLA. – Donovan G. Davis, Jr., 33, of Palm Bay, Fla., was found guilty by a jury today of federal charges stemming from an investment fraud scheme in which more than 100 investors lost over $13 million, announced Vincent H. Cohen, Jr., Acting U.S. Attorney for the District of Columbia, and James D. Robnett, Special Agent in Charge of the Tampa Field Office of IRS-Criminal Investigation.
Davis was found guilty of one count of conspiracy to commit mail/wire fraud; one count of mail fraud; six counts of wire fraud, and eight counts of money laundering. The jury trial began May 4, 2015, before the Honorable Carlos E. Mendoza of the U.S. District Court for the Middle District of Florida. After the verdicts were returned the judge ordered Davis to be detained pending his sentencing on Aug. 5, 2015.
Two co-defendants earlier pled guilty. Blayne S. Davis, 33, formerly of Naples, Fla., pled guilty in July 2014, to conspiracy to commit mail and wire fraud; he was later sentenced to a nine-year prison term and ordered to pay $13,215,874.75 in restitution. (The Davises are not related). Damien L. Bromfield, 38, of Ocoee, Fla., pled guilty in November 2013, to conspiracy to commit wire fraud and is awaiting sentencing.
“These families lost more than $13 million when they entrusted their hard-earned savings to an investment firm that lied about its performance,” said Acting U.S. Attorney Cohen. “With today’s guilty verdict, all three men responsible for this fraud are seeing the consequences of their crimes. Financial crimes don’t just create losses on paper; they cause lasting harm to real people. I commend the prosecutors from here in D.C. who held these criminals accountable for their deception in a Florida courthouse.”
“Today’s verdict holds this man accountable for his misuse of a position of trust within his investment corporation,” said Special Agent in Charge Robnett. “The Special Agents of IRS-Criminal Investigation, along with our law enforcement partners, are committed to unraveling complex financial transactions and money laundering schemes and bringing justice for the investors.”
According to the government’s evidence, Donovan Davis, Jr. was the managing member of Capital Blu Management, LLC, a Florida-based corporation that purported to offer investment and managed account services for investors in the off-exchange foreign currency, or “forex,” marketplace. Blayne S. Davis was the director of trading, and Bromfield was the director of operations.
Blayne S. Davis and Bromfield formed Capital Blu in January 2007. In 2007 and 2008, according to the government’s evidence, Donovan Davis, Jr. solicited relatives, friends, and associates to invest in Capital Blu, resulting in substantial amounts being placed under the company’s management. Donovan Davis, Jr., became a managing member of Capital Blu in August 2007, working out of an office in Melbourne, Fla.
In or about September 2007, according to the government’s evidence, the three men formed the CBM FX Fund, LP, which pooled investors’ money into a common fund to be traded by Capital Blu Management. Many of Capital Blu’s managed-account investors transferred their investments into the CBM FX Fund.
By January 2008, according to the government’s evidence, the three partners knew that the CBM FX Fund had sustained significant trading losses, resulting in large losses for its investors. At or about that time, the men began defrauding investors by means of materially false and fraudulent pretenses, representations, and promises. These included, according to the government’s evidence, a series of misrepresentations about Capital Blu’s trading performance, the value of the fund, and the risks of the fund.
According to the government’s evidence, the men conspired to post positive monthly returns to the CBM FX Fund’s investors from January through August of 2008, even though the fund and its investors had sustained net losses. In addition, the men diverted investors’ money from the fund to pay for Capital Blu’s operational expenses and personal expenses, including their salaries and payments for the use of a private airplane and luxury cars.
In or about September 2008, the National Futures Association, an independent self-regulatory organization that oversees commodities and futures trading in the United States, conducted a surprise audit of Capital Blu and suspended its operations. As of September 2008, investors had invested over $16.9 million into the CBM FX Fund; the investors lost over $13 million.
This case was transferred from the Middle District of Florida to the U.S. Attorney’s Office for the District of Columbia and the Department of Justice, Criminal Division.
The case was investigated by a task force consisting of agents from the IRS- Criminal Investigation, the U.S. Secret Service, the Florida Department of Law Enforcement, and the Brevard County, Fla., Sherriff’s Office. Related civil litigation was pursued by the Commodity Futures Trading Commission, which resulted in a civil judgment against the defendants after a trial in 2011.
Assistance on the criminal case was provided by Paralegal Specialists Donna Galindo, Corinne Kleinman, and Heather Sales; former Paralegal Specialist Diane Hayes; Legal Assistant Angela Lawrence; Forensic Accountant Crystal Boodoo; Information Technology Specialist Thomas (Ron) Royal; and Victim Witness Advocates Yvonne Bryant and Tasheeka Hawkins, all of the U.S. Attorney’s Office for the District of Columbia. Paralegal Specialists Zayden Tethong and Elias Brockman of the U.S. Department of Justice, Criminal Division, also assisted at trial. Assistant U.S. Attorneys Catherine K. Connelly and Anthony Saler, of the Asset Forfeiture and Money Laundering Section of the U.S. Attorney’s Office for the District of Columbia, have assisted with guidance on asset forfeiture matters.
The case was prosecuted by Assistant U.S. Attorney Jonathan P. Hooks of the U.S. Attorney’s Office for the District of Columbia, who was designated as a Special Attorney in the Middle District of Florida, and Trial Attorneys David M. Fuhr and Ephraim (Fry) Wernick, of the U.S. Department of Justice, Criminal Division.
Felon Arrested for Possessing A Firearm at Area Shooting RangeRead the Press Release
CHICAGO — A Chicago man was arrested this morning and is facing federal gun charges for being a felon in possession of a firearm. The defendant, LABAR SPANN, was arrested following an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Chicago Police Department.
SPANN, 36, of the 800 block of North Francisco Street, was arrested at his residence and charged by criminal complaint that was unsealed following his initial appearance today. He appeared today before U.S. Magistrate Judge Michael T. Mason and was ordered to remain in custody pending a detention hearing at 2:00 p.m. on Monday in U.S. District Court.
According to the complaint, on September 14, 2014, Spann, a convicted felon, knowingly possessed a firearm, namely a Glock 19, model 19C, .9 mm caliber handgun while with two individuals, L.H. and K.C., at Midwest Sporting Goods, a firearms store and shooting range, located in Lyons, Illinois. Allegedly, one of the individuals, L.H., rented a Glock 19C pistol and proceeded to the firing line with Spann and K.C. while Spann allegedly loaded a magazine with 9 mm ammunition into the firearm and then shot at the target, emptying the magazine. Spann then allegedly loaded additional magazines into the firearm twice and handed it to L.H., then K.C., who each shot at targets and emptied the magazines.
If convicted of being a felon-in-possession of a firearm, the defendant could be sentenced to a maximum 10 years imprisonment and a $250,000 maximum fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Federal Bureau of Investigation Chicago Office; Carl Vasilko, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives; and Chicago Police Superintendent Garry McCarthy.
The government is being represented by Assistant U.S. Attorneys Peter S. Salib, Timothy J. Storino and Tobara Richardson.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Complaint
Federal Jury Finds New Jersey Man Guilty of Supplying Heroin to Pittsburgh-based Drug RingRead the Press Release
PITTSBURGH - After deliberating for approximately 90 minutes, on May 13, 2015, a federal jury found Santino Drew guilty of two felony narcotics counts: conspiracy to distribute one kilogram or more of heroin and possession with the intent to distribute 100 grams or more of heroin, United States Attorney David J. Hickton announced today.
Santino Drew, 36, of New Brunswick, New Jersey, was tried before United States District Judge Cathy Bissoon in Pittsburgh, Pa.
According to Assistant United States Attorneys Eric Rosen and Conor Lamb, who prosecuted the case, Drew was originally scheduled to proceed to trial with Brandon Thompson and Aldwin Vega as co- defendants. All three defendants were alleged to have supplied Jay Germany, a resident of Homestead, Pa. with heroin for distribution. On May 4, 2015, Vega pled guilty to heroin trafficking charges, and that same day, Thompson pled guilty to heroin and cocaine trafficking charges, as well as discharge of a firearm in furtherance of a drug trafficking offense. Vega’s guilty plea called for a stipulated sentence of 16 years in prison, while Thompson’s guilty plea called for a stipulated sentence of 15 years in prison.
On May 4, 2015, with Thompson and Vega having pled guilty, Drew proceeded to trial alone. Over a period of four and a half days, the jury heard evidence establishing that over an approximately five-month period in 2012 and 2013, Drew conspired together with two other New Jersey-based heroin suppliers – Thomas Martinez and Hector Guadalupe – to transport heroin from New Jersey to Pittsburgh, where it was resold. One of the persons Drew sold heroin to was Jay Germany, who, in the fall of 2012, became the focal-point of an FBI-led investigation into violent gang activity in Homestead. Germany has pled guilty to the heroin trafficking charges against him, and he was sentenced to 15 years in prison. On Jan. 30, 2013, the FBI, who was monitoring a telephone utilized by Santino Drew, anticipated that a load of heroin was being brought to Pittsburgh by Thomas Martinez. That evening, a search warrant was executed at the Comfort Inn in Robinson Township, and 519 bricks of heroin, totaling 707 grams, were found under Drew’s bed.
Judge Bissoon scheduled sentencing for Sept. 2, 2015 at 10 a.m. The law provides for a total sentence of not less than 20 years in prison and not more than life, a fine of not more than $10,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based on the seriousness of the offense and the prior criminal history, if any, of the defendant. Pending sentencing, the court continued the detention of Mr. Drew.
The Federal Bureau of Investigation, Bureau of Alcohol, Tobacco, Firearms, and Explosives, Pennsylvania Office of the Attorney General, City of Pittsburgh Bureau of Police, Pennsylvania State Police, Allegheny County Sheriff's Office, McKeesport Police Department, Munhall Police Department, and the West Homestead Police Department conducted the investigation that led to the prosecution of Santino Drew.
Federal Grand Jury IndictmentsRead the Press Release
Contact Person: Beth Drake (803) 929-3000
Columbia, South Carolina----United States Attorney Bill Nettles stated today that a Federal Grand Jury in Charleston, South Carolina, returned Indictment(s) against the following:
Summerville Man Indicted for Attempted Possession and Attempted Receipt of Child Pornography
Ernest Christopher Limehouse, age 31, of Summerville, South Carolina, was charged in a 4-count Indictment with Attempted Possession and Attempted Receipt of Child Pornography, a violation of 18 U.S.C. § 2252A. The maximum penalty that Limehouse could receive is 20 years imprisonment and a maximum fine of $250,000. The case was investigated by agents of the FBI and is assigned to Assistant United States Attorney Rhett DeHart of the Charleston office for prosecution.Summerville Woman Indicted for Theft of Government Property
Ophelia Williams, age 60, of Summerville, South Carolina, was charged in a 1-count Indictment with Theft of Government Property, a violation of 18 U. S. C. § 641. The maximum penalty that Williams could receive is 10 years imprisonment and a maximum fine of $250,000. The case was investigated by agents of the Social Security Administration and is assigned to Assistant United States Attorney Rhett DeHart of the Charleston office for prosecution.Hanahan Man Indicted for Illegal Reentry of an Alien after Removal
Ivan Edgardo Soto Naranjo, a/k/a Juan Chavez Avalos, age 37, of Hanahan, South Carolina, was charged in a one-count Indictment with Illegal Reentry of an Alien after Removal, in violation of Title 8, United States Code, Section 1326(a). The maximum penalty Soto Naranjo could receive is 2 years imprisonment and a $250,000 fine. The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (ICE-ERO) and is assigned to Assistant United States Attorney Dean H. Secor of the Charleston office for prosecution.Man Charged with False Statement to a Federal Agency
Divett Lydrell Mays, age 43, of Hurghada, Egypt, was charged in a one-count Indictment with False Statement to a Federal Agency, a violation of Title 18, United States Code, Section 1001(a)(2). The maximum penalty Mays could receive is 5 years imprisonment and a $250,000 fine. The case was investigated by agents of the Department of State, Diplomatic Security Service and is assigned to Assistant United States Attorney Dean H. Secor of the Charleston office for prosecution.Hollywood Man Indicted for Failure to Register as a Sex Offender
Andre Youngblood, a/k/a Michael S. Long, a/k/a Michael Johnson, age 40, of Hollywood, South Carolina, was charged in a one-count Indictment with Failing to Register as a Sex Offender, a violation of Title 18, United States Code, Section 2250(a). The maximum penalty Youngblood could receive is 10 years imprisonment. The case was investigated by agents of the United States Marshals Service and is assigned to Assistant United States Attorney Dean H. Secor of the Charleston office for prosecution. This case is being 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 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 better locate, apprehend, and prosecute individuals who sexually exploit children, as well as to identify and rescue victims. For more information, please visit www.usdoj.gov/psc.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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Evansville, Indiana Man Charged with Transportation of an Owensboro, Kentucky Minor to Engage in Criminal Sexual ActivityRead the Press Release
Bowling Green, Ky. – An Evansville, Indiana man was detained and remanded to the custody of the U.S. Marshals following a detention hearing yesterday, before Magistrate Judge H. Brent Brennenstuhl, on charges of the transportation of a minor to engage in criminal sexual activity, announced Acting United States Attorney John E. Kuhn, Jr.
Zachery Andrew Coleman, age 27, was arrested on May 5, 2015, on federal charges, following an investigation by members of the Daviess County, Kentucky Sheriff’s Office (DCSO), the Evansville, Indiana Police Department and the FBI. According to an Affidavit in support of the Criminal Complaint, on or about February 6, 2015, a minor female of twelve years of age, left her residence in Owensboro, Kentucky with Coleman, was taken to the defendant’s home in Evansville, Indiana, and was returned to the minor’s residence the next day. Coleman is alleged to have engaged in criminal sexual activity with the minor during that time. According to the Affidavit, Coleman communicated with the minor on a social networking site called Mylol and allegedly sent sexually explicit messages to the minor using the screen name Swisher812. Conversations obtained via a search of the minor’s computer show Coleman arranged to pick up the minor at the minor’s home for the purposes of transporting the minor to engage the child in illegal sexual activities.
If convicted at trial, Coleman faces a statutory mandatory minimum of 10 years and a maximum of life imprisonment, a fine of $250,000, and supervised release of not less than 5 years and not more than life.
This case is being prosecuted by Assistant United States Attorney A. Spencer McKiness, and is being investigated by the Federal Bureau of Investigation (FBI) with assistance from the Daviess County, Kentucky Sheriff’s Office, and the Evansville, Indiana Police Department.
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The indictment of a person by a Grand Jury is an accusation only and that person is presumed innocent until and unless proven guilty.
Enviro-Safe Refrigerants Agrees to Halt Sales of Unapproved Flammable Hydrocarbon Refrigerants as Direct Replacements for Ozone Depleting SubstancesRead the Press Release
Enviro-Safe Refrigerants Inc. of Pekin, Illinois, has agreed to pay a $300,000 civil penalty and cease marketing and sale of unapproved flammable hydrocarbon refrigerants as substitutes for ozone depleting substances (ODS). ODS are being phased out of production and importation because they deplete the Earth’s stratospheric ozone layer. As part of the United States’ transition away from ODS, the Environmental Protection Agency’s (EPA) Significant New Alternatives Policy (SNAP) Program evaluates and approves substitute refrigerants so that they can safely and legally replace ODS. EPA evaluates these potential substitute refrigerants according to health, safety and environmental criteria. The Clean Air Act addresses ODS and establishes standards and requirements where a substitute for an ODS is sought to be introduced to the marketplace.
According to the two-count complaint, filed simultaneously with the settlement today in the Central District of Illinois, Enviro-Safe allegedly violated Clean Air Act requirements through the marketing and sale of two flammable hydrocarbon refrigerant products, ES 22a and ES 502a, as substitutes for ODS without providing the requisite information to EPA for review and approval. EPA has not approved any flammable hydrocarbon as a replacement for ODS in systems not specifically designed for flammable refrigerants and has warned that use of flammable refrigerants in those systems presents a risk of fire or explosion.
“With this settlement, Enviro-Safe will pay a penalty, stop its nationwide sales of unapproved flammable refrigerants and ozone depleting substances, and notify consumers of potential safety hazards from these products,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division. “This civil action illustrates how the requirements of the Clean Air Act guard consumer safety and the health of our environment each and every day.”
“The actions Enviro-Safe will be required to take under this consent decree will protect consumers and the environment from a potentially dangerous product,” said Regional Administrator Susan Hedman of EPA.
In addition to paying a penalty and halting non-compliant sales, the company will also state on the label of any flammable refrigerant, its website and other marketing materials that the refrigerant is “flammable to an open flame or spark” and to “proceed with caution if used in systems designed for non-flammable refrigerants.” Labels must also include any use restrictions for approved substitutes. The company will notify by mail all known past customers that purchased products labeled “ES 12a,” “ES 22a” and “ES 502a” of potential safety hazards associated with such products.
The consent decree is subject to a 30-day comment period and final approval by the court. A copy of the consent decree is available on the Department of Justice website at www.usdoj.gov/enrd/Consent_Decrees.html.
El Paso Man Sentenced to Federal Prison for the Distribution of over 700 Kilograms of Cocaine and Laundering Almost $8 Million in Drug ProceedsRead the Press Release
In El Paso today, 44-year-old Juan Manuel Flores (aka “Cholo”), the leader of an El Paso-based cocaine trafficking and money laundering organization, was sentenced to 15 years in federal prison, announced Acting United States Attorney Richard L. Durbin, Jr., Drug Enforcement Administration Special Agent in Charge Will R. Glaspy, El Paso Division, and Internal Revenue Service-Criminal Investigation Special Agent in Charge William Cotter.
In addition to the prison term, United States District Judge David C. Guaderrama ordered that Flores be placed on supervised release for five years after completing his prison term. Furthermore, the court ordered forfeiture of the defendant’s interest in five real properties in El Paso County, Texas, as proceeds of the drug conspiracy.
On February 3, 2015, Flores pleaded guilty to one count of conspiracy to possess with intent to deliver cocaine, and one count of conspiracy to launder monetary instruments. By pleading guilty, the defendant admitted to trafficking cocaine in the Western District of Texas between 2005 and July 2013. According to court records, Flores conspired to distribute over 700 kilograms of cocaine in the El Paso area and conspired to launder over $7.9 Million in drug proceeds.
“Juan Manuel Flores was a significant drug trafficker living and working in El Paso. With Flores’ crimes extending back at least a decade, supported by his ties to the Vicente Carrillo Fuentes cartel, today’s sentencing is the culmination of a long and complex investigation that has made the city of El Paso safer,” stated DEA Special Agent in Charge Will R. Glaspy.
This joint investigation was conducted by the Drug Enforcement Administration (DEA) and the Internal Revenue Service-Criminal Investigation (IRS-CI), together with the United States Department of Homeland Security, Customs and Border Protection Internal Affairs (DHS-CBP), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), El Paso Police Department, and the El Paso County Sheriff’s Office.
El Departamento de Justicia y el Tribunal Superior del Condado de Mohave, Arizona Trabajan en Asegurar el Acceso Igualitario para Personas Que No Hablen InglésRead the Press Release
WASHINGTON – El Departamento de Justicia anunció hoy que ha cerrado su revisión del Programa de Acceso Idiomático del Tribunal Superior del Condado de Mohave, Arizona. El cierre se produce después de la conclusión exitosa por el tribunal de sus obligaciones bajo un acuerdo para brindar servicios de asistencia idiomática a todos los usuarios del tribunal con conocimientos limitados del idioma inglés [Limited English Proficient (LEP)]. La División de Derechos Civiles comenzó a trabajar con el Tribunal Superior del Condado de Mohave en 2013 después de haber recibido una queja de un usuario del tribunal en la que alegaba que el tribunal discriminaba con base en el origen nacional en violación del Título VI de la Ley de Derechos Civiles de 1964 al negarse a brindarle un intérprete sin cargo en un asunto de derecho de familia. El Título VI exige que los destinatarios de asistencia financiera federal, tal como los tribunales, brinden servicios idiomáticos competentes sin cargo a personas LEP en todos los procesos y trámites judiciales.
Con la asistencia del departamento, el Tribunal Superior del Condado de Mohave ha realizado una serie de mejoras a su Programa de Acceso Idiomático, entre las que se incluyen:
- Actualización del Plan de Acceso Idiomático del Tribunal de modo que indique claramente que todas las partes LEP, los testigos, las víctimas y cualquier persona con interés en un caso recibirán servicios de intérprete en todos los procesos judiciales sin cargo, independientemente del tipo de caso, de los ingresos del usuario del tribunal o del idioma que hable.
- Creación e implementación de un sistema de quejas acerca de servicios idiomáticos.
- Mejora del acceso a servicios fuera de la sala del tribunal para todos los usuarios del tribunal a través de empleados bilingües, tarjetas “Yo hablo” disponibles en la oficina del secretario del juzgado, carteles multilingües, formularios traducidos en el portal en Internet del tribunal y servicios de intérprete telefónicos o por video disponibles para el uso de todos los empleados.
- Capacitación de todo el personal del tribunal sobre la importancia de proveer servicios idiomáticos adecuados.
- Optimización de la comunicación con partes implicadas de la comunidad.
- Trabajar con el sistema judicial estatal en mejorar la eficiencia y la calidad de los servicios de interpretación y traducción.
“Felicito al liderazgo y al personal del Tribunal Superior de Mohave por su labor para brindarles a todas las comunidades acceso igualitario a la justicia, independientemente del idioma que hablen”, señaló la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta de la División de Derechos Civiles. “A medida que Mohave y otros tribunales de Arizona siguen mejorando los servicios idiomáticos, les brindaremos con gusto la asistencia que requieran”.
El departamento viene trabajando con tribunales de todo el país en mejorar el suministro de servicios idiomáticos a personas LEP. Se puede encontrar una serie de recursos de acceso idiomático de tribunales estatales en la siguiente dirección: http://www.lep.gov/resources/resources.html#SC. En 2014, el departamento lanzó una “Herramienta de planificación de acceso idiomático y asistencia técnica para tribunales” que les brinda a los sistemas judiciales una serie de preguntas que considerar al desarrollar e implementar planes para brindar asistencia idiomática.
Haga clic aquí para más información sobre la FCS. Para más recursos relacionados con las personas LEP, diríjase al portal Interagencias Federal sobre personas LEP.
Duke Energy Subsidiaries Plead Guilty and Sentenced to Pay $102 Million for Clean Water Act CrimesRead the Press Release
Three subsidiaries of North Carolina-based Duke Energy Corporation, the largest utility in the United States, pleaded guilty today to nine criminal violations of the Clean Water Act at several of its North Carolina facilities and agreed to pay a $68 million criminal fine and spend $34 million on environmental projects and land conservation to benefit rivers and wetlands in North Carolina and Virginia. Four of the charges are the direct result of the massive coal ash spill from the Dan River steam station into the Dan River near Eden, North Carolina, in February 2014. The remaining violations were discovered as the scope of the investigation broadened based on allegations of historical violations at the companies’ other facilities.
Under the plea agreement, both Duke Energy Carolinas and Duke Energy Progress, must certify that they have reserved sufficient assets to meet legal obligations with respect to its coal ash impoundments within North Carolina, obligations estimated to be approximately $3.4 billion.
Officials from the Justice Department’s Environment and Natural Resources Division and the three U.S. Attorney’s Offices in North Carolina, the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance, EPA’s Office of Inspector General, the Internal Revenue Service (IRS) Criminal Investigations and the North Carolina State Bureau of Investigation (SBI) made the announcement following a plea hearing at the federal courthouse in Greenville, North Carolina today.
“The massive coal ash spill into North Carolina’s Dan River last year was a crime and it was the result of repeated failures by Duke Energy’s subsidiaries to exercise controls over coal ash facilities,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division. “The terms of these three plea agreements will help prevent this kind of environmental disaster from reoccurring in North Carolina and throughout the United States by requiring Duke subsidiaries to follow a rigorous and independently verifiable program to ensure they comply with the law.”
“Duke Energy's crimes reflect a breach of the public trust and a lack of stewardship for the natural resources belonging to all of the citizens of North Carolina,” said U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina. “The massive release at the Dan River coal ash basin revealed criminal misconduct throughout the state – conduct that will no longer be tolerated under the judgment imposed by the court today.”
“Duke’s subsidiaries discharged potentially toxic pollutants that put at risk North Carolina’s water quality and wildlife and today’s outcome ensures they will be held responsible for violating federal environmental requirements,” said Acting U.S. Attorney Jill W. Rose for the Western District of North Carolina. “The defendants will now have to comply with the terms imposed by the court, including paying hefty financial penalties and making significant financial contributions toward improving the quality of impacted waterways, wetlands and our water supply system.”
“Duke’s actions adversely impacted the Dan River ecosystem and caused residents who live near and rely on the water supply much apprehension about the safety of the river,” said Criminal Chief Cliff Barrett for the U.S. Attorney’s Office in the Middle District of North Carolina. “Today’s plea holds Duke accountable for this result and charts a course to remediate the impact of these spills.”
“Over two hundred sixteen million Americans rely on surface water as their source of drinking water,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “Duke Energy put that precious resource at risk in North Carolina as the result of their negligence. Companies that cut corners and contaminate waters on which communities depend, as Duke did here, will be held accountable.”
On Feb. 20, 2015, the three U.S. Attorney’s Offices in North Carolina filed separate criminal bills of information in their respective federal courts, alleging violations of the Clean Water Act at the following Duke facilities: the Dan River steam station (Rockingham County), the Cape Fear steam electric plant (Chatham County), the Asheville steam electric generating plant (Buncombe County), the H.F. Lee steam electric plant (Wayne County) and the Riverbend steam station (Gaston County). The alleged violations included unlawfully failing to maintain equipment at the Dan River and Cape Fear facilities and unlawfully discharging coal ash and/or coal ash wastewater from impoundments at the Dan River, Asheville, Lee and Riverbend facilities.
As part of their plea agreements, Duke Energy Business Services LLC, Duke Energy Carolinas LLC and Duke Energy Progress Inc. will pay a $68 million criminal fine and a total $24 million community service payment to the National Fish and Wildlife Foundation for the benefit of the riparian environment and ecosystems of North Carolina and Virginia. The companies will also provide $10 million to an authorized wetlands mitigation bank for the purchase of wetlands or riparian lands to offset the long-term environmental impacts of its coal ash basins. In addition, they will pay restitution to the federal, state and local governments that responded to the Dan River spill and be placed on a period of supervised probation for five years.
Duke’s subsidiaries operating 18 facilities in five states, including 14 in North Carolina, will also be required to develop and implement nationwide and statewide environmental compliance programs to be monitored by an independent court appointed monitor and be regularly and independently audited. Results of these audits will be made available to the public to ensure compliance with environmental laws and programs. The companies’ compliance will be overseen by a court-appointed monitor who will report findings to the court and the U.S. Probation Office as well as ensuring public access to the information.
Approximately 108 million tons of coal ash are currently held in coal ash basins owned and operated by the defendants in North Carolina. Duke Energy Corporation subsidiaries also operate facilities with coal ash basins in South Carolina, approximately 5.99 million tons of coal ash, Kentucky, approximately 1.5 million tons of coal ash, Indiana, approximately 35.6 million tons of coal ash and Ohio, approximately 5.9 million tons of coal ash.
The companies must also meet the obligations imposed under federal and state law to excavate and close coal ash impoundments at the Asheville, Dan River, Riverbend and Sutton facilities.
Additionally, at the insistence of the United States, the holding company Duke Energy Corporation has guaranteed the payment of the monetary penalties and the performance of the nationwide and statewide environmental compliance plans.
“Duke’s environmental crimes required a special financial review of their actions to which we were proud to join our partners in investigating,” said Special Agent in Charge Thomas J. Holloman, III of the IRS Criminal Investigation. “The considerable fines, formal apologies and massive cleanup initiatives will impact the Duke image and brand, assuring the public that corporations will be held accountable for their gross actions involving the environment, wildlife and the communities of this great state.”
“The SBI worked closely with the Environmental Protection Agency Criminal Investigation Division and the Internal Revenue Service in this matter,” said Acting Director B.W. Collier of the North Carolina SBI. “This type of collaboration is critical to ensuring a thorough and intensive review on cases such as this. The SBI remains committed to the public interest and is prepared to continue assisting the U.S. Attorney’s office.”
The criminal investigation was conducted by the Criminal Investigation Division, Region Four and the Office of Inspector General of EPA, Criminal Investigations of the IRS and North Carolina State Bureau of Investigation with assistance from the Federal Bureau of Investigation and the Department of Defense Criminal Investigative Service.
Duke Energy Subsidiaries Plead Guilty and Sentenced to Pay $102 Million for Clean Water Act CrimesRead the Press Release
WASHINGTON – Three subsidiaries of North Carolina-based Duke Energy Corporation, the largest utility in the United States, pleaded guilty today to nine criminal violations of the Clean Water Act at several of its North Carolina facilities and agreed to pay a $68 million criminal fine and spend $34 million on environmental projects and land conservation to benefit rivers and wetlands in North Carolina and Virginia. Four of the charges are the direct result of the massive coal ash spill from the Dan River steam station into the Dan River near Eden, North Carolina, in February 2014. The remaining violations were discovered as the scope of the investigation broadened based on allegations of historical violations at the companies’ other facilities.
Under the plea agreement, both Duke Energy Carolinas and Duke Energy Progress, must certify that they have reserved sufficient assets to meet legal obligations with respect to its coal ash impoundments within North Carolina, obligations estimated to be approximately $3.4 billion.
Officials from the Justice Department’s Environment and Natural Resources Division and the three U.S. Attorney’s Offices in North Carolina, the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance, EPA’s Office of Inspector General, the Internal Revenue Service (IRS) Criminal Investigations and the North Carolina State Bureau of Investigation (SBI) made the announcement following a plea hearing at the federal courthouse in Greenville, North Carolina today.
“The massive coal ash spill into North Carolina’s Dan River last year was a crime and it was the result of repeated failures by Duke Energy’s subsidiaries to exercise controls over coal ash facilities,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division. “The terms of these three plea agreements will help prevent this kind of environmental disaster from reoccurring in North Carolina and throughout the United States by requiring Duke subsidiaries to follow a rigorous and independently verifiable program to ensure they comply with the law.”
“Duke Energy's crimes reflect a breach of the public trust and a lack of stewardship for the natural resources belonging to all of the citizens of North Carolina,” said U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina. “The massive release at the Dan River coal ash basin revealed criminal misconduct throughout the state – conduct that will no longer be tolerated under the judgment imposed by the court today.”
“Duke’s subsidiaries discharged potentially toxic pollutants that put at risk North Carolina’s water quality and wildlife and today’s outcome ensures they will be held responsible for violating federal environmental requirements,” said Acting U.S. Attorney Jill W. Rose for the Western District of North Carolina. “The defendants will now have to comply with the terms imposed by the court, including paying hefty financial penalties and making significant financial contributions toward improving the quality of impacted waterways, wetlands and our water supply system.”
“Duke’s actions adversely impacted the Dan River ecosystem and caused residents who live near and rely on the water supply much apprehension about the safety of the river,” said Criminal Chief Cliff Barrett for the U.S. Attorney’s Office in the Middle District of North Carolina. “Today’s plea holds Duke accountable for this result and charts a course to remediate the impact of these spills.”
“Over two hundred sixteen million Americans rely on surface water as their source of drinking water,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “Duke Energy put that precious resource at risk in North Carolina as the result of their negligence. Companies that cut corners and contaminate waters on which communities depend, as Duke did here, will be held accountable.”
On Feb. 20, 2015, the three U.S. Attorney’s Offices in North Carolina filed separate criminal bills of information in their respective federal courts, alleging violations of the Clean Water Act at the following Duke facilities: the Dan River steam station (Rockingham County), the Cape Fear steam electric plant (Chatham County), the Asheville steam electric generating plant (Buncombe County), the H.F. Lee steam electric plant (Wayne County) and the Riverbend steam station (Gaston County). The alleged violations included unlawfully failing to maintain equipment at the Dan River and Cape Fear facilities and unlawfully discharging coal ash and/or coal ash wastewater from impoundments at the Dan River, Asheville, Lee and Riverbend facilities.
As part of their plea agreements, Duke Energy Business Services LLC, Duke Energy Carolinas LLC and Duke Energy Progress Inc. will pay a $68 million criminal fine and a total $24 million community service payment to the National Fish and Wildlife Foundation for the benefit of the riparian environment and ecosystems of North Carolina and Virginia. The companies will also provide $10 million to an authorized wetlands mitigation bank for the purchase of wetlands or riparian lands to offset the long-term environmental impacts of its coal ash basins. In addition, they will pay restitution to the federal, state and local governments that responded to the Dan River spill and be placed on a period of supervised probation for five years.
Duke’s subsidiaries operating 18 facilities in five states, including 14 in North Carolina, will also be required to develop and implement nationwide and statewide environmental compliance programs to be monitored by an independent court appointed monitor and be regularly and independently audited. Results of these audits will be made available to the public to ensure compliance with environmental laws and programs. The companies’ compliance will be overseen by a court-appointed monitor who will report findings to the court and the U.S. Probation Office as well as ensuring public access to the information.
Approximately 108 million tons of coal ash are currently held in coal ash basins owned and operated by the defendants in North Carolina. Duke Energy Corporation subsidiaries also operate facilities with coal ash basins in South Carolina, approximately 5.99 million tons of coal ash, Kentucky, approximately 1.5 million tons of coal ash, Indiana, approximately 35.6 million tons of coal ash and Ohio, approximately 5.9 million tons of coal ash.
The companies must also meet the obligations imposed under federal and state law to excavate and close coal ash impoundments at the Asheville, Dan River, Riverbend and Sutton facilities.
Additionally, at the insistence of the United States, the holding company Duke Energy Corporation has guaranteed the payment of the monetary penalties and the performance of the nationwide and statewide environmental compliance plans.“Duke’s environmental crimes required a special financial review of their actions to which we were proud to join our partners in investigating,” said Special Agent in Charge Thomas J. Holloman, III of the IRS Criminal Investigation. “The considerable fines, formal apologies and massive cleanup initiatives will impact the Duke image and brand, assuring the public that corporations will be held accountable for their gross actions involving the environment, wildlife and the communities of this great state.”
“The SBI worked closely with the Environmental Protection Agency Criminal Investigation Division and the Internal Revenue Service in this matter,” said Acting Director B.W. Collier of the North Carolina SBI. “This type of collaboration is critical to ensuring a thorough and intensive review on cases such as this. The SBI remains committed to the public interest and is prepared to continue assisting the U.S. Attorney’s office.”The criminal investigation was conducted by the Criminal Investigation Division, Region Four and the Office of Inspector General of EPA, Criminal Investigations of the IRS and North Carolina State Bureau of Investigation with assistance from the Federal Bureau of Investigation and the Department of Defense Criminal Investigative Service.
Link to Duke Joint Factual Statement