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29 June 2015
Acoma Pueblo Man Pleads Guilty to Federal Misdemeanor Assault ChargeRead the Press Release
ALBUQUERQUE – Kevin Bernard Joe, 41, a member and resident of Acoma Pueblo, N.M., pleaded guilty this morning in Albuquerque, N.M., to a federal misdemeanor information charging him with assaulting an Indian woman.
Joe was arrested on April 27, 2015, on a criminal complaint charging him with an assault charge. According to the complaint, on March 23, 2015, the Acoma Pueblo Tribal Police Department was notified by the victim of an assault occurring on Acoma Pueblo in Cibola County, N.M. The complaint alleged that Joe assaulted the victim, an Acoma woman, by punching her multiple times with a closed fist causing injuries to her face, head, and upper body. The victim sustained a laceration above her left eye which needed approximately seven to eight stitches. Joe was subsequently indicted on May 12, 2015, and charged with assaulting an intimate partner resulting in substantial bodily injury.
During today’s proceedings, Joe entered a guilty plea to a misdemeanor information and admitted assaulting the victim by punching her with a closed fist multiple times on her head and body. Joe also acknowledged that his assault caused the victim to suffer a laceration to the left eye that required medical attention.
At his sentencing, Joe faces a statutory maximum penalty of 12 months in federal prison and up to one year of supervised release. Joe has been in federal custody since his arrest and remains detained pending his sentencing hearing, which has yet to be scheduled.
This case was investigated by the Laguna/Acoma Agency of the BIA’s Office of Justice Services and the Acoma Pueblo Tribal Police Department. Assistant U.S. Attorney Raquel Ruiz-Velez is prosecuting the case.
The case was brought pursuant to the Tribal Special Assistant U.S. Attorney (Tribal SAUSA) Pilot Project in the District of New Mexico which is sponsored by the Justice Department’s Office on Violence Against Women under a grant administered by the Pueblo of Laguna. The Tribal SAUSA Pilot Project seeks to train tribal prosecutors in federal law, procedure and investigative techniques to increase the likelihood that every viable violent offense against Native women is prosecuted in either federal court or tribal court, or both. The Tribal SAUSA Pilot Project was largely driven by input gathered from annual tribal consultations on violence against women, and is another step in the Justice Department's on-going efforts to increase engagement, coordination and action on public safety in tribal communities.
Accountant Who Solicited Sexually Explicit Photos from Girls in the Philippines Sentenced to 20 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Simi Valley man was sentenced today to 20 years in federal prison after pleading guilty to child pornography charges and admitting he used social media to solicit girls in the Philippines and Vietnam to send him sexually explicit images of themselves.
Ronald Carey Shirley, 64, of Simi Valley, a CPA who served as the chief financial officer for the California Angels baseball team in the 1990s, was sentenced by United States District Judge John F. Walter. In addition to the 20-year sentence, Shirley will be subject to a lifetime of supervised release after he finishes his prison term.
Shirley pleaded guilty in April to two counts of attempted receipt of child pornography. He was arrested in February by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) at Los Angeles International Airport as he prepared to depart for Vietnam to visit minor girls he had communicated with on social media.
As today’s sentencing hearing, Judge Walter found that Shirley travelled to Philippines last November for the purpose of having sex with minors, that he was leaving for Vietnam for the same purpose when he was arrested, and that he had planned to return to the Philippines the coming November for the purpose of having sex with minor girls.
During today’s hearing, Judge Walter quoted from a prosecutor’s sentencing memorandum when he said Shirley is “a modern-day parent’s worst nightmare” who is “a sexual predator who indiscriminately uses the Internet to target his victims.”
The investigation into Shirley began after HSI received a lead from the National Center for Missing and Exploited Children (NCMEC) about suspected child sexual exploitation activity linked to a social media account belonging to Shirley. According to court documents, Shirley had online exchanges of a sexual nature with at least three girls over the course of at least seven months. In an exchange with a 16-year-old victim in the Philippines, Shirley told her he wanted to have sex with her and wired her money in exchange for sending him sexually explicit images of herself.
“This sentence should serve as a sobering warning to every sexual predator who thinks they can hide from the law by violating the innocence of children overseas,” said Claude Arnold, special agent in charge of HSI Los Angeles. “There can be no place for the abuse of foreign children by our citizens, and HSI will seek to vindicate the rights of those victims no matter how far they live from our shores.”
The investigation into Shirley was conducted by HSI, which received substantial assistance from HSI’s attaché offices in Manila and Vietnam, the Philippine National Police and the Vietnamese Ministry of Public Security.
CONTACT: Assistant United States Attorney Jennifer Y. Chou (213) 894-6482
26 June 2015
Wasilla Man Sentenced to 12 Years in Prison for Sexual Exploitation of ChildrenRead the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that a Wasilla man was sentenced on Thursday, June 25, 2015, in Federal Court in Anchorage before United States District Judge Timothy M. Burgess to 144 months (12 years) imprisonment and 17 years of Supervised Release for sexual exploitation of children: distributing child pornography.
Daniel Clinton Piaskowski, 33, of Wasilla, was sentenced after pleading guilty for using social media, file sharing and instant messaging, on his computer and cell phone, to connect with other like-minded users, to download, receive and distribute child pornography that depicted prepubescent children engaged in sex acts. Evidence presented at the sentencing hearing showed that during one 18-day period alone – concluding on the day of his arrest – Piaskowski distributed 221 images of child pornography to twelve other males and chatted online with them about having sex with prepubescent children. During their communications, two of the males described themselves to Piaskowski as teen-aged minors.
Judge Burgess commented on the extremely serious consequences that burdened the child sexual exploitation victims involved. Judge Burgess also noted that the Internet has greatly expanded the market for producing child pornography world-wide [which in turn harms more children].
This case was investigated by the Federal Bureau of Investigation, and prosecuted by Assistant U.S. Attorney Audrey J. Renschen.
This prosecution is part of the Department of Justice’s ongoing Project Safe Childhood (PSC) initiative which was launched to increase Federal prosecutions of sexual predators of children, and to reduce the number of Internet crimes against children, including child pornography trafficking. As a part of PSC, the United States Attorney’s Office has teamed with state and local agencies and organizations to increase law enforcement presence on the Internet, and to educate the public about safe Internet use, thereby reducing the risk that children might fall prey to online sexual predators. For additional information on the PSC initiative, please go to www.projectsafechildhood.gov or call the United States Attorney’s Office for the District of Alaska.
WIFLE Presents Top Prosecutor Award to Middle District of Florida AttorneyRead the Press Release
AUSA Rachelle DesVaux Bedke (center) accepts Top Prosecutor Award from WIFLE Foundation, Inc.
WIFLE Foundation President Catherine W. Sanz (left) and Vice President Sheree Mixell presented the award.
TAMPA, FL – Assistant United States Attorney Rachelle DesVaux Bedke was presented with the Top Prosecutor Award by the Women in Federal Law Enforcement (WIFLE) Foundation earlier this month at a ceremony in Tampa.
Ms. DesVaux Bedke received the award in recognition of her outstanding case-handling and exceptional written and oral advocacy on behalf of the United States in two related cases (United States v. Paul Robert Gunter, et al. and United States v. Roger Lee Shoss, et al.) that resulted in the conviction of six individuals who had defrauded thousands of victim-investors worldwide out of more than $137 million. Ms. DesVaux Bedke was lauded for her ability to present complex and technical information about a sophisticated investment fraud and money laundering scheme to federal jurors in a clear, concise, and understandable way, and for securing the convictions of four defendants in two separate trials. She was praised for her superior work in working with law enforcement agencies and securities regulators in multiple countries, analyzing massive amounts of evidence, drafting detailed indictments, and negotiating plea agreements.
United States Attorney A. Lee Bentley, III, who attended the ceremony, said, “Ms. DesVaux Bedke is most deserving of this honor. She is without doubt one of the top federal prosecutors in the country, and her work on these cases was nothing short of amazing.”
Ms. DesVaux Bedke serves as Chief of the Criminal Division (South) of the U.S. Attorney’s Office for the Middle District of Florida. She has been an Assistant United States Attorney with the office since February 1997 and has prosecuted a multitude of offenses involving narcotics, firearms, child exploitation, bank robbery, kidnapping and, most often, frauds involving investments, taxes, mortgages, health care, federal programs, and money laundering.
In addition to Ms. DesVaux Bedke, more than 20 other women were recognized by WIFLE for their exceptional courage, outstanding accomplishments, and significant contributions that have advanced the recruitment, retention, and promotion of women in federal law enforcement. For more information about WIFLE, visit http://www.wifle.org/.
U.S. Attorney Goodwin and IRS award over $200,000 from criminal forfeitures to Wyoming County Law EnforcementRead the Press Release
Beckley, W.Va. – U. S. Attorney Booth Goodwin and Internal Revenue Service (IRS) Special Agent in Charge Thomas Jankowski presented Wyoming County law enforcement agencies with over $200,000 in forfeited cash as a result of their participation in joint investigations with the IRS. The objective of the federal asset forfeiture program is to take the profit out of crime and give it back to communities. Forfeiture proceeds are shared with state and local law enforcement agencies as a result of their direct participation in investigations resulting in forfeiture. The forfeited money shared today resulted from investigations into The New WV Mining Company, James Trent, Brandy Horvath, et al. and Jerry H. Harvey, Jr.. The agencies receiving a share of the forfeiture for their role of the investigations were the Wyoming County Sheriff’s Department - $118,326; Pineville Police Department - $63,034; and the Wyoming County Prosecutor’s Office - $41,468.
As a result of their investigation, Brandy Horvath, President of The New WV Mining Company, Horvath’s then boyfriend James Thomas Trent of Rock View, Wyoming County, and others, were identified as having structured cash withdrawals from the company’s bank accounts. “Structuring” involves the breaking down of cash transactions in the amount of $10,000 or less for the purpose of avoiding bank reporting requirements to the IRS. Horvath was named New WV Mining’s president and sole officer of the company to conceal Trent’s interest in the company. New WV Mining began mining coal for Riverside Energy at a mine near Gary, McDowell County, West Virginia. Once operations began, Horvath routinely withdrew cash for her and Trent’s personal use from New WV Mining’s bank accounts and intentionally misrepresented the nature of the withdrawals as legitimate business expenses, knowing that the personal cash withdrawals would have been taxable to her. As President of New WV Mining, Horvath signed and caused the company’s accountant to file a corporate income tax return for the year 2008 that she knew failed to disclose the true amount of money she and Trent had taken from the company. Horvath pleaded guilty to tax evasion, and on behalf of New WV Mining, she pleaded guilty to structuring cash withdrawals from company bank accounts to avoid IRS reporting requirements. As a result, New WV Mining Company agreed to forfeit $731,581 and a 2011 Nissan 370z. Trent pleaded guilty to federal income tax fraud for reporting he had no earnings on his 2008 personal income tax return, although he had sold the lease and mining permits of a McDowell County-based mining company he owned for which he received $100,000. Horvath and Trent were sentenced to 26 months and 36 months in prison, respectively.
Wyoming County law enforcement was also awarded forfeited cash for their contributions to the investigation of Jerry H. Harvey, Jr., of Oceana, West Virginia. Harvey pleaded guilty and was sentenced to 36 months in federal prison for aiding and abetting structuring financial transactions to avoid IRS bank reporting requirements. Harvey admitted that for more than a year he intentionally made multiple bank withdrawals not exceeding $10,000 so the bank would not report the withdrawals to the IRS. He also admitted that the withdrawn funds were profits he made while engaged in the interstate transportation and receipt of stolen property, from which he gained more than $100,000. Pursuant to his plea agreement, Harvey forfeited $303,000 to the United States.
Twin Brothers Guilty of Wire Fraud, Conspiring to Hack into State Department and Private CompanyRead the Press Release
ALEXANDRIA, Va. – Twin brothers Muneeb and Sohaib Akhter, 23, of Springfield, Virginia, pleaded guilty today to charges of conspiracy to commit wire fraud, conspiracy to access a protected computer without authorization, and conspiracy to access a government computer without authorization. Muneeb Akhter also pleaded guilty to additional charges of accessing a protected computer without authorization, making a false statement, and obstructing justice.
According to the defendants’ statements of facts, which were filed with their plea agreements, beginning in or about March 2014, Muneeb Akhter hacked into the website of a cosmetics company and stole thousands of its customers’ credit card and personal information. The Akhter brothers and co-conspirators used the stolen information to purchase goods and services, including flights, hotel reservations, and attendance at professional conferences. Muneeb Akhter also provided stolen information to an individual he met on the “dark net,” who sold the information to other dark-net users and gave Akhter a share of the profits.
In a separate scheme, the Akhter brothers and co-conspirators engaged in a series of computer intrusions and attempted computer intrusions against the U.S. Department of State to obtain sensitive passport and visa information and other related and valuable information about State Department computer systems. In or around February 2015, Sohaib Akhter used his contract position at the State Department to access sensitive computer systems containing personally identifiable information belonging to dozens of co-workers, acquaintances, a former employer, and a federal law enforcement agent investigating his crimes.
Sohaib Akhter later devised a scheme to ensure that he could maintain perpetual access to desired State Department systems. Sohaib Akhter, with the help of Muneeb Akhter and co-conspirators, attempted to secretly install an electronic collection device inside a State Department building. Once installed, the device could have enabled Sohaib Akhter and co-conspirators to remotely access and collect data from State Department computer systems. Sohaib Akhter was forced to abandon the plan during its execution when he broke the device while attempting to install it behind a wall at a State Department facility in Washington, D.C.
Furthermore, beginning in or about November 2013, Muneeb Akhter was performing contract work for a private data aggregation company located in Rockville, Maryland. He hacked into the company’s database of federal contract information so that he and his brother could use the information to tailor successful bids to win contracts and clients for their own technology company. Muneeb Akhter also inserted codes onto the victim company’s servers that caused them to vote for Akhter in an online contest and send more than 10,000 mass emails to students at George Mason University, also for the purpose of garnering contest votes.
In or about October 2014, Muneeb Akhter lied about his hacking activities and employment history on a government background investigation form prior to successfully obtaining a position with a defense contractor. Furthermore, in or about March 2015, after his arrest and release pending trial, Muneeb Akhter obstructed justice by endeavoring to isolate a key co-conspirator from law enforcement officers investigating the conspirators’ crimes. Among other acts, Muneeb Akhter drove the co-conspirator to the airport and purchased a boarding pass, which the co-conspirator used to travel out of the country to the Republic of Malta. When the co-conspirator returned to the United States, Muneeb Akhter continued to encourage the co-conspirator to avoid law enforcement agents.
The Akhter twins were indicted by a federal grand jury on April 30, 2015. Muneeb Akhter faces a maximum penalty of 50 years in prison, while Sohaib Akhter faces a maximum penalty of 30 years in prison. Both men will be sentenced on Sept. 25, 2015. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Gregory Marshall, Chief Security Officer, Department of Homeland Security (DHS); Gregory Starr, Assistant Secretary for the U.S. Department of State’s Bureau of Diplomatic Security; and Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after the pleas were accepted by U.S. District Judge T.S. Ellis, III.
This case was investigated by the Internal Security and Investigations Division of the Office of the Chief Security Officer, DHS Headquarters; the U.S. Department of State’s Bureau of Diplomatic Security, and FBI’s Washington Field Office. Special Assistant U.S. Attorneys John Taddei and Jennifer Clarke are prosecuting the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:15-cr-124.
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Tonawanda Man Pleads Guilty to Drug Importation ChargeRead 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 Peter Viera, 22, of Tonawanda, N.Y., pleaded guilty to conspiracy to import methylone, a Schedule I controlled substance, before U.S. District Judge Richard J. Arcara. The charge carries a maximum penalty of 20 years in prison and a $1,000,000 fine.
Assistant U.S. Attorney Frank T. Pimentel, who is handling the case, stated that between December 1, 2011, and May 22, 2013, the defendant ordered approximately $60,000 worth of methylone from China as part of the conspiracy to import and sell methylone in Western New York. On May 31, 2013, Viera was parked in a car across from the LaSalle Post Office in Niagara Falls, N.Y. observing a co-conspirator pick up a package from the Post Office, which had been sent from China. Unbeknownst to Viera and his co-conspirators -- the package was intercepted two days prior by U.S. Postal inspectors and found to contain approximately one kilogram of methylone.
The plea is the result of an investigation by an investigation on the part of Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge James C. Spero and the United States Postal Inspection Service, under the direction of U.S. Postal Inspection Service, Boston Division, under the direction of Inspector in Charge, Shelly A. Binkowski.
Sentencing is scheduled for October 13, 2015 at 1:00 before Judge Arcara.
Tolar, Texas, Man Sentenced to 720 Months in Federal Prison for Production of Child PornographyRead the Press Release
FORT WORTH — A Tolar, Texas, man was sentenced yesterday by U.S. District Judge Terry R. Means to 720 months in federal prison on a child pornography conviction, announced Acting U.S. Attorney John R. Parker of the Northern District of Texas.
Jonathan Daniel Kutej, 34, was convicted in November 2014 to two counts of production of child pornography.
According to documents filed in the case, on July 17, 2013 Kutej persuaded a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of that conduct.
On August 14, 2013 Kutej took sexually explicit photos with his Apple iPhone of a separate minor child. After discovering the photos the minor child’s mother contacted Investigators. An arrest warrant was obtained August 15, 2013, Kutej was carrying a black Apple iPhone in the back pocket of his pants at the time of the arrest that contained the sexually explicit photos of the minor girl.
The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 2006 by the Department of Justice, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s 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, and identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/. For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”
Homeland Security Investigations (HSI) and the Hood County District Attorney’s Office investigated. Assistant U.S. Attorney A. Saleem prosecuted.
Tennessee Man Pleads Guilty to Hobbs Act Robbery of Former EmployerRead the Press Release
A Tennessee man pleaded guilty to Hobbs Act robbery and use of a handgun in a crime of violence, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David Rivera of the Middle District of Tennessee.
Deonte Graham, 34, of Clarksville Tennessee, pleaded guilty before Chief U.S. District Judge Kevin Sharp of the Middle District of Tennessee.
On Oct. 21, 2011, Singletary Construction in Clarksville, Tennessee, was robbed of $17,000 in cash by two masked men with a gun. Physical evidence recovered in connection with the robbery resulted in the identification of Michael Massey as one of the robbery suspects. In May 2015, Massey pleaded guilty to his role in the robbery.
In connection with today’s guilty plea, Graham admitted that, in October 2011, he had worked for Singletary for more than one year. According to Graham’s admissions, after the owner of the company accused Graham of misrepresenting the hours he worked and docked his pay, Graham and Massey devised a plan to rob Singletary. Graham also admitted that, in December 2012, he bragged to a former Singletary employee about arranging the robbery because Singletary owed him money.
This case was investigated by Clarksville, Tennessee, Police Department and the Drug Enforcement Administration. The case is being prosecuted by Trial Attorney Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Lynne T. Ingram of the Middle District of Tennessee.
Deonte Graham Plea Agreement
Telemarketer Sentenced for Roll in Multi-Million Dollar ScamRead the Press Release
Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today that James Richard Currey, 55, of Winter Park, FL, was sentenced in federal court this morning on one count of conspiracy to commit mail and wire fraud in connection with telemarketing. Currey was sentenced to one year in prison, to be followed by five years of supervised release. Currey was also ordered to pay $67,137.50 in restitution to the individual victims and a $100 special assessment.
The investigation determined that Curry was a telemarketer for National Solutions and related companies located in Orlando, Florida. National Solutions defrauded consumers across the continent using the fictitious names, Bluescape Timeshares International, Country Wide Timeshares, Countrywide Timeshares MA, Landmark Timeshares, Propertys Direct, Quicksale Propertys, Sun Property Networks, Sun Property’s, Universal Propertys, VIM Timeshares, Propertys DRK, Quick Sale Advisers, Quick Sale International, City Resorts, Resort Advisers, American Timeshares, Exit Week, and Resort Advisors International. These companies targeted owners of timeshares throughout the United States and Canada. In various court filings related to the National Solutions scam, the government has alleged that the overall scam bilked over 2,500 consumers out of at least $6 million, including eight victims within the Southern District of Illinois.
This prosecution is one of nearly 100 timeshare resale fraud prosecutions brought in the Southern District of Illinois over the past four years. The case is part of an ongoing investigation by the Midwest Region Office of the Federal Trade Commission and the St. Louis Field Office of the Chicago Division of the United States Postal Inspection Service. The prosecution of this case is being handled by Assistant United States Attorneys William E. Coonan and Michael Hallock.
Swiss Bank Reaches Resolution under Justice Department's Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Ersparniskasse Schaffhausen AG (EKS) has reached a resolution under the department’s Swiss Bank Program.
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, EKS agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute EKS for tax-related criminal offenses.
EKS was founded in 1817 and is wholly owned by a Swiss charitable foundation. It is headquartered in the city and canton of Schaffhausen, Switzerland. EKS opened, maintained and serviced accounts for U.S. persons that it knew or had reason to know were likely not declared to the Internal Revenue Service (IRS) or the U.S. Department of the Treasury as required by U.S. law.
From 2004 through 2011, EKS accepted referrals of U.S. persons as new clients from an external asset manager who, until 2009, resided in the United States and conducted some of his business through a corporation organized under the laws of the United States. The majority of the accounts that came to EKS as a result of these referrals were held in the names of non-U.S. entities that were beneficially owned by U.S. persons.
In May 2008, with the knowledge and approval of EKS management, the external asset manager and an EKS relationship manager visited five U.S. cities to meet with U.S. clients and attorneys who had the potential to refer new clients. Topics discussed during their meetings included the “crisis” involving Swiss bank UBS AG, client satisfaction with EKS, the performance of client accounts at EKS and the “asset protection” benefits of EKS.
Until 2009, EKS opened numbered accounts for U.S. persons, including code-name or pseudonym accounts, upon request. Upon opening this type of account, an EKS employee would enter the accountholder’s name in a physical register rather than in the bank’s electronic records system. This action limited the number of EKS personnel who knew the client’s identity. Holders of these accounts could also provide documents to EKS using only their code names or numbers as their authorized signatures.
EKS provided all of its clients, including U.S. persons, with the option to request that EKS retain all mail related to a client’s financial accounts in exchange for a standard service fee. EKS understood that providing such hold-mail agreements upon request could allow U.S. persons to keep evidence of their EKS accounts outside of the United States and thus assist them in concealing assets and income from the IRS.
EKS also accepted IRS Forms W-8BEN for U.S.-related accounts held in the names of non-U.S. entities, such as foreign corporations, trusts or foundations. Because Swiss law required EKS to identify the true beneficial owners of the entities on a document called a Form A, EKS knew that these accounts were beneficially owned by U.S. persons. Nonetheless, EKS accepted Forms W-8BEN that it knew falsely stated that the entities were the beneficial owners of the accounts.
EKS was aware of the 2009 IRS Offshore Voluntary Disclosure Program for U.S. persons. Despite knowing of that program and knowing or having reason to know that some of its U.S. clients had likely not declared their EKS accounts to the IRS, EKS made no effort to encourage its U.S. clients to disclose their accounts through that program.
During 2009, consultants reported to EKS, among other things, that EKS had increased risks because of its relationship with the external asset manager; that it was only a matter of time until small banks came into contact with U.S. authorities; and that there was a latent risk that previous revenues from EKS’s “U.S. strategy” could be seized or corresponding fines imposed. According to minutes of a 2009 meeting of the EKS board of directors, an EKS executive stated, among other things, that “there is practically no risk if U.S. customers travel to Switzerland and a customer account is handled locally,” and that he had been informed that Swiss bank Wegelin & Co. was going to keep its previous U.S. customers.
In October 2009, the EKS board of directors voted to continue the account relationships with clients of the external asset manager, including his U.S. clients, under certain conditions, including that his business be relocated to Switzerland. The board also voted to “have the option of entering into new cross-border business relationships.”
Since Aug. 1, 2008, EKS provided private banking services for 90 U.S.-related accounts with approximately $65 million in assets. Thirty-seven of these accounts were opened after Aug. 1, 2008. EKS will pay a penalty of $2.066 million.
In accordance with the terms of the Swiss Bank Program, EKS mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at EKS who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at EKS must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanked the IRS, and in particular, IRS-Criminal Investigation and the IRS Large Business and International Division for their substantial assistance, Gregory E. Van Hoey and Michael R. Pahl, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer and Senior Litigation Counsel Nanette L. Davis of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Statement from the United States AttorneyRead the Press Release
INDIANAPOLIS - Tim Durham was resentenced today by U.S. District Judge Jane Magnus-Stinson to 50 years in federal prison; the same sentence he originally received after his jury trial on securities and wire fraud charges. Mr. Durham’s sentence means he will effectively spend the rest of his life in prison for stealing over $220 million dollars from nearly 5000 victims, many of whom lost their life’s savings.
Mr. Durham’s actions were a result of greed, arrogance and deceit and his sentence is a just consequence for his crimes.
Stafford Doctor Sentenced to Four Years in Prison for Distribution of Oxycodone and Health Care FraudRead the Press Release
ALEXANDRIA, Va. – Nibedita Mohanty, M.D., 56, of Stafford, Virginia, was sentenced today to 48 months in prison, followed by three years of supervised release for distribution and dispensation of controlled substances and aiding and abetting health care fraud. Dr. Mohanty, who was formerly the Chief of Medicine at Stafford Hospital from June 2009 through Feb. 12, 2013, was also fined $15,000 and ordered to pay a forfeiture of cash proceeds in the amount of $43,120.
Dr. Mohanty pleaded guilty on Feb. 23, 2015. According to court documents, Dr. Mohanty admitted to issuing prescriptions for oxycodone which were not for a legitimate medical purpose and beyond the bounds of medical practice. In one such instance, on May 2, 2011, Dr. Mohanty issued a prescription for oxycodone to patient who experienced a nonfatal narcotics overdose. Dr. Mohanty subsequently treated the patient at the hospital. On May 31, 2011, Dr. Mohanty issued another oxycodone prescription to same patient. The next day, the patient was found deceased in the bathroom of a friend’s home. The cause of death was determined to be accidental acute combined oxycodone and imipramine toxicity.
In another instance, on Oct. 3, 2011, Dr. Mohanty issued a prescription for oxycodone to a patient. Nine days later the patient was found unresponsive in her home. Hospital records and testimony would have shown that the nonfatal overdose was oxycodone related.
In addition, Dr. Mohanty admitted that she aided and abetted a patient in the commission of health care fraud. Dr. Mohanty acknowledged that she did not possess a “X” DEA number, nor was she authorized for office-based narcotic buprenorphine treatment. Despite this Dr. Mohanty prescribed Subutex, which contains buprenorphine, to a patient who she was treating for drug addiction and dependence, which was billed to and paid for by the patient’s health insurance.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Adam S. Lee, Special Agent in Charge of the FBI’s Richmond Field Office; Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office; and Charles E. Jett, Stafford County Sheriff, made the announcement after sentencing by U.S. District Judge Liam O’Grady.
The case was investigated by the Stafford County Sheriff’s Office, and the FBI’s Richmond and Washington Field Offices. Assistant U.S. Attorney Gene Rossi and Special Assistant U.S. Attorneys Jennifer Ballantyne and Nicole Grosnoff are prosecuting the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:14-cr-256.
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Shiprock Man Sentenced to Prison for Federal Theft ConvictionRead the Press Release
ALBUQUERQUE – Orlando Jay Johnson, 24, an enrolled member of the Navajo Nation who resides in Shiprock, N.M., was sentenced this afternoon in federal court in Albuquerque, N.M., to 12 months in federal prison followed by three years of supervised release for his conviction on theft occurring in Indian Country.
Johnson was arrested on Oct. 31, 2014, after officers of the Navajo Nation Division of Public Safety were called to a fast food restaurant in Shiprock in response to a report that an elderly Navajo man had been robbed of his wallet and money. According to the criminal complaint, Johnson followed the victim out of the restaurant and stole the wallet from the victim’s pocket. The victim chased Johnson for approximately half a mile in his truck until he caught up to Johnson, who returned the wallet.
On March 26, 2015, Johnson pled guilty to a felony information charging him with theft occurring in Indian Country. In entering the guilty plea, Johnson admitted that on Oct. 23, 2014, in San Juan County, N.M., he stole a wallet and cash from the victim.
This case was investigated by the Farmington office of the FBI and Shiprock office of the Navajo Nation Division of Public Safety. Assistant U.S. Attorney Raquel Ruiz-Velez prosecuted this case.
Seven Indicted for $3 Million Mortgage Fraud ConspiracyRead the Press Release
FRESNO, Calif. — A federal grand jury returned a 15-count indictment on Thursday against seven individuals, charging them with conspiracy to commit mail fraud and bank fraud, mail fraud and aiding and abetting, and making false statements to a bank in a mortgage fraud scheme, United States Attorney Benjamin B. Wagner announced.
Jyoteshna Karan, 43, and Praveen Singh, 36, were arrested this morning at their home in Modesto. Mahendra Prasad, 53, was arrested this morning at his home in Fremont. The remaining defendants each received a summons to appear for arraignment: Phul Singh, 79; and Sunita Singh, 60, both of Modesto, Nani Isaac, 69, of Ceres, and Martin Bahrami, 42, of Turlock.
According to court documents, the defendants conspired to defraud mortgage lending companies and financial institutions by making false statements on loan applications and short-sale applications in order to obtain properties under their names and the names of others. The false statements included statements relating to the defendants’ employment, their familial relationship, income, and their intent to occupy the home as their primary residence.
According to the indictment, the conspiracy encompassed at least 25 properties from Sacramento to Modesto. As a result of the scheme, lenders lost in excess of $3 million.
“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to join the United States Attorney for the Eastern District of California and our law enforcement colleagues in announcing these indictments” said Wade Walters, Special Agent in Charge for the FDIC’s Office of Inspector General. “We are committed to our partnerships with others in federal, state, and local law enforcement organizations as we address mortgage fraud cases throughout the country. The American people need to be assured that their government is working to ensure integrity in the financial services and housing industries and that those involved in criminal misconduct that undermines that integrity will be held accountable.”
“The partnership between the Stanislaus County District Attorney’s Office, federal agencies and the U.S. Attorney’s Office allows us to investigate the most complex real estate fraud cases at the local level and yet prosecute at the federal level to ensure full accountability. This is a true benefit to the community,” said Stanislaus County District Attorney Birgit Fladager.
“The short sale process is intended to assist legitimately distressed homeowners,” said Leslie DeMarco, Special Agent in Charge, Federal Housing Finance Agency Office of Inspector General. “Our investigation disclosed that Karan and others allegedly manipulated the process for their personal gain. FHFA-OIG is committed to ensuring that real estate professionals maintain the highest ethical standards, which in turn will protect taxpayers.”
“Early this morning, SIGTARP agents and our law enforcement partners arrested or served summons on seven individuals who stand charged with operating a fraud scheme that cost financial institutions, including multiple TARP banks, millions of dollars in losses,” said Christy Romero, Special Inspector General for TARP. “The seven allegedly conspired to falsify information on mortgage loan and short-sale applications submitted to multiple financial institutions in order to obtain properties across Eastern California. SIGTARP and our law enforcement partners will aggressively investigate allegations of fraud perpetrated at the expense of taxpayers’ TARP bank investments and bring accountability to those who engage in these schemes.”
This case is the product of an investigation by the Stanislaus County District Attorney’s Office, the Federal Bureau of Investigation, the Federal Housing Finance Agency Office of Inspector General, the Federal Deposit Insurance Corporation Office of Inspector General, and the Office of the Special Inspector General for the Troubled Asset Relief Program. Assistant United States Attorneys Mark E. Cullers and Patrick Delahunty are prosecuting the case.
Jyoteshna Karan and Praveen Singh are scheduled to appear for arraignment in U.S. District Court in Fresno, on Friday, June 26, 2015, at 1:30 p.m. before U.S. Magistrate Judge Gary Austin. Phul Singh, Sunita Singh, Nani Isaac and Martin Bahrami are scheduled to appear for arraignment in U.S. District Court in Fresno, on Wednesday, July 1, 2015, at 1:30 p.m. before U.S. Magistrate Judge Gary Austin. Mahendra Prasad is scheduled to appear in U.S. District Court in San Jose on June 26, 2015, for arraignment.
If convicted, each defendant faces a maximum statutory penalty of 30 years in prison and a $1 million fine per count. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Sean Meadows Sentenced to 25 Years for Defrauding Investors of More Than $13 MillionRead the Press Release
United States Attorney Andrew M. Luger today announced the sentence of SEAN MEADOWS, 42, to 25 years in federal prison for using his financial planning and asset management firm, Meadows Financial Group (MFG), to operate a long-term Ponzi scheme in which he stole more than $13 million from at least 100 individual victims. MEADOWS was indicted on August 5, 2014, and pleaded guilty on December 11, 2014. He was sentenced today before United States District Court Judge Susan Richard Nelson.
“Sean Meadows systematically destroyed the financial security of more than one hundred working and middle class people, leaving them with no possibility of recovery,” said U.S. Attorney Luger. “Over the past year we have charged more than a dozen individuals for conducting investment fraud schemes that resulted in the loss of tens of millions of dollars from hundreds of victims. Like Meadows, many of these criminals preyed on the most vulnerable victims – working-class retirees seeking to make a little more out of their golden years. It is a priority of my office to put a stop to this kind of malicious financial exploitation. Working together with excellent investigators at the Minnesota Department of Commerce Fraud Bureau, IRS-CID, United States Postal Inspection Service, SEC and FBI, we are focused on catching these types of cases at the earliest stages to prevent the kind of financial catastrophe that Sean Meadows caused to the victims in this case.”
“Sean Meadows pretended to be a trusted investment adviser, but he abused that trust by lying to and stealing from his clients,” said Minnesota Commerce Commissioner Mike Rothman. “Instead of investing his clients’ hard-earned retirement savings, he used their money to bankroll his own extravagant lifestyle. Meadows not only robbed his victims of their lifetime savings. He also robbed them of their peace of mind and their dreams of a secure retirement. The Commerce Department Fraud Bureau put a stop to his crimes and worked closely with federal authorities to bring Meadows to justice.”
"Illegal activity involving the investment industry has brought financial ruin to many Americans” said Special Agent in Charge Shea Jones of the IRS Criminal Investigation St. Paul Field Office. “Today's sentencing of Mr. Meadows reinforces our commitment to identify and prosecute those who prey upon honest, hard-working taxpayers that have taken what has belonged to others for their own personal financial gain.”
According to the defendant’s guilty plea and documents filed in court, MEADOWS operated MFG, through which he sold insurance and investment products to clients in Minnesota, Indiana, Arizona, and elsewhere. From 2007 until April 2014, MEADOWS successfully solicited a total of at least $13 million from more than 100 clients for a purported investment managed by MFG. The defendant falsely told victims that he would use their funds to purchase bonds, real estate, or other legitimate third-party investments.
According to the defendant’s guilty plea and documents filed in court, MEADOWS lured victims into removing funds from their retirement and other savings accounts by promising high rates of returns – up to 10 percent annually – when, in fact, he did not invest their funds and did not have a legitimate means by which to make interest payments. Instead, MEADOWS used funds from new investors to make interest and/or principal repayments to existing investors. For example, as charged in the indictment, on September 26, 2013, MEADOWS made a payment of more than $500,000 to one victim, purportedly paying off a successful investment with MFG. In fact, the payment was actually comprised of newly invested funds from other victims.
According to the defendant’s guilty plea and documents filed in court, MEADOWS used the illicit proceeds of the Ponzi scheme to pay personal expenses, including: making “salary” payments to himself; making payments to his spouse; paying expenses on personal investment properties; paying personal credit card bills; purchasing a vehicle for himself; traveling to Las Vegas; gambling at various casinos and online; and spending more than $135,000 at adult entertainment establishments in Minnesota and Las Vegas.
Among the victims MEADOWS defrauded are senior citizens and the disabled, poor or terminally ill. Victims were left in financial ruin because they lost their financial security, retirement funds, their ability to support their families, and in some cases, their ability to pay for cancer treatments.
According to documents filed in court, as just one example, one 66-year-old victim identified in court papers as “Victim 1,” had approximately $200,000 saved in a MetLife annuity when she met the defendant. MEADOWS convinced her to entrust him with the annuity to invest. In November 2013, Victim 1 was diagnosed with lung cancer and was told she only had 18 months to live. When she asked the defendant to surrender her investment so she could travel, enjoy her remaining time and divide her money amongst her family, Meadows convinced her to instead move most of the money to a high interest bond that was “very liquid.” She wrote a check to MFG for $215,000. An Allianz internal investigator soon called her and asked if she was aware of the surrender penalties she would have to pay. The victim called MEADOWS, who told her to “relax” and avoided her questions by first saying he was recovering from knee surgery and later that he was on vacation in Arizona. Victim 1 asked the defendant for $20,000 to cover her credit card debt, which he claimed he would provide, but the money never arrived. MEADOWS left Victim 1 without the funds to travel, without the funds to seek advanced treatment for cancer and with no money to leave to her family.
This case is the result of an investigation conducted by the Minnesota Department of Commerce, Securities and Exchange Commission, the United States Postal Inspection Service, the Internal Revenue Service – Criminal Investigation, and the FBI.
This case was prosecuted by Assistant U.S. Attorneys Benjamin F. Langner and Melinda A. Williams.
Defendant Information:
SEAN MEADOWS, 42
Eden Prairie, Minn.
Convicted:
- Wire Fraud, 7 counts
- Mail Fraud, 3 counts
- Transaction Involving Fraud Proceeds, 1 count
Sentenced
- 25 years in prison
- 3 years supervised release
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United States Attorney’s Office, District of Minnesota: (612) 664-5600
Puyallup Man Sentenced to Two Years in Prison for Hash Oil BlastRead the Press Release
A Puyallup man making hash oil for an illegal marijuana edible operation was sentenced today in U.S. District Court in Tacoma to 24 months in prison and three years’ supervised release, announced U.S. Attorney Annette L. Hayes. SETH M. CLEEK, 22, was using highly flammable butane gas to make hash oil on May 20, 2014 when the operation exploded and caught fire. Butane canisters were hurled in every direction – putting those living near the scene, and first responders at risk. One canister was driven through a plastic planter – demonstrating the force of the explosion. Fortunately CLEEK’s family, including his 18-month-old child, was not injured in the blast. U.S. District Judge Ronald B. Leighton imposed the sentence.
According to records filed in the case, CLEEK was being paid $10 for each “tube” of marijuana he sought to turn into butane honey oil (BHO). The process, which involves forcing butane gas through marijuana clippings packed in a tube, and then boiling off the solvent can prove highly explosive. CLEEK was using some 20 cases of butane supplied to him by co-defendant Kevin Weeks, when the operation exploded. The resulting fire melted the siding on the Puyallup home and destroyed a plastic basketball backboard.
The investigation revealed that CLEEK was working for Weeks – the operator of a marijuana “medible” company called ‘Cap’n Cosmics. The company had no state licensure to make marijuana products, and used marketing that mimics the look of a children’s cereal, “Cap’n Crunch.” Search warrants served several weeks after the Puyallup explosion revealed that Weeks had moved the BHO manufacturing operation to an industrial area, but was using a method that could have resulted in a much greater and even more damaging explosion. In all some 1800 pounds of marijuana and marijuana laced food products were seized in the investigation.
The case was investigated by the Puyallup Police Department, Pierce County Sheriff’s Department, the Drug Enforcement Administration (DEA) and the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF). The Pierce County Prosecutors Office assisted with the case. The case is being prosecuted by Assistant United States Attorneys Vince Lombardi and Todd Greenberg.
Project Safe Childhood Newmarket Man Sentenced for Child Pornography PossessionRead the Press Release
CONCORD, NEW HAMPSHIRE: Brian Sorrentino, 36, of Newmarket, was sentenced on Thursday, June 25, 2015 in the United States District Court for the District of New Hampshire on one count of possessing child pornography, announced Acting United States Attorney Donald Feith. The Court imposed a term of 30 month’s imprisonment and five years of supervised release.
The investigation into Sorrentino began in 2008, when the Portsmouth Police Department and the Department of Homeland Security traced internet activity involving child pornography back to Sorrentino’s residence. When Portsmouth detectives approached Sorrentino at his home, he admitted to possessing images of child pornography, hundreds of which were subsequently found during a forensic analysis of Sorrentino’s computer.
The case was investigated by the Portsmouth, New Hampshire Police Department in conjunction with the the New Hampshire Crimes Against Children Task Force (NH ICAC), and the Department of Homeland Security, Homeland Security Investigations. This case was prosecuted by Assistant United States Attorney Nick Abramson.
In February 2006, the Department of Justice introduced Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Philadelphia Pub Owner Charged in Fraud SchemeRead the Press Release
PHILADELPHIA - Michael Hoffner, Sr., 50, of Voorhees, New Jersey was charged by indictment, unsealed today, with 23 counts of wire fraud in connection with a scheme to defraud Navy Federal Credit Union and American Express, announced United States Attorney Zane David Memeger.
According to the indictment, Hoffner owned the Brown Street Pub in Philadelphia, Pennsylvania. The indictment alleges that on 23 occasions, between September and November 2012, Hoffner used a stolen credit number to make charges to either Visa or American Express. The cardholders were not aware of and did not authorize these transactions. The proceeds of these transactions went into accounts that Hoffner controlled.
If convicted the defendant faces a potential advisory sentencing guideline range of at least 18 to 24 months in prison, a $5.75 million fine, and three years of supervised release. The indictment also seeks forfeiture in the amount of $47,209.
The case was investigated by United States Secret Service and is being prosecuted by Assistant United States Attorney David J. Ignall.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Phenix City Woman Sentenced to More Than 12 Years in Prison for Leading $4 Million Dollar Stolen Identity Refund Fraud RingRead the Press Release
Montgomery, Alabama – A Phenix City, Alabama, resident was sentenced to serve more than 12 years in prison for leading a multi-million dollar stolen identity theft ring, announced U.S. Attorney George L. Beck Jr. of the Middle District of Alabama, and acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Tamaica Hoskins, 34, of Phenix City, was sentenced to serve 145 months in prison, three years of supervised release and ordered to forfeit $1,082,842 in proceeds from the scheme by U.S. District Judge Callie V.S. Granade of the Southern District of Alabama.
According to court documents, between September 2011 and June 2014, ringleader Tamaica Hoskins, who was sentenced today, Roberta Pyatt, Lashelia Alexander and others used stolen identities to file more than 1,000 false federal income tax returns that fraudulently claimed more than $4 million in tax refunds. Hoskins obtained stolen identities from various sources, including the identities of employees from a Columbus, Georgia, company. In order to file the false tax returns, Hoskins and Pyatt obtained two Electronic Filing Identification Numbers using sham tax businesses. On behalf of those sham tax businesses, they also applied to various financial institutions for bank products, such as blank check stock. The conspirators directed the Internal Revenue Service (IRS) to mail U.S. Treasury checks to addresses under their control and to send the tax refunds to prepaid debit cards and financial institutions where the conspirators maintained and controlled bank accounts using the sham tax businesses. When the tax refunds were deposited into the conspirators’ accounts at the financial institutions, the conspirators printed the refund checks using the blank check stock. Hoskins and Pyatt each cashed the refund checks at several businesses’ locations in Alabama and Georgia.
Co-conspirator Alexander worked for a Walmart check cashing center in Columbus. In January 2014, Alexander was approached by several co-conspirators about cashing fraudulent tax refund checks issued in the names of third parties and in return, Alexander would receive a portion of the refunds. Hoskins and Pyatt electronically filed fraudulent federal income tax returns for 2013 using the personal identifying information of numerous identity theft victims. Alexander cashed more than $100,000 in fraudulently obtained third-party refund checks containing forged endorsements.
At sentencing, prosecutors read impact statements from several victims whose identities were stolen and false tax returns were filed in their names. One victim described the consequences of the fraud on her and her family, stating:
What your intentional theft did to me was so much more than just stealing money. As a law student, a part-time employee and a full time mom, you stole time from me, time I will never get back, time spent crying because of the avalanche effect of not receiving my income tax check back which I depended on and budgeted for, time checking my mailbox daily, time worrying about whether it was ever going to come, time explaining to my children how there are horrible people in the world who steal because they feel like the world owes them something. Time spent explaining to our youngest that she won’t be getting her braces this year to fix her extremely crooked teeth. Time explaining that Christmas may have to be put on hold this year. Luckily, we are fortunate to have family and friends who love and care enough about us that in our time of need, they stepped up to the plate without batting an eye. We had to borrow money to buy law school books because the tax return was not coming. Financially it was a serious hardship because when you do not have money for necessities, it puts an emotional strain on every part of your life.
Roberta Pyatt pleaded guilty to conspiracy to commit wire fraud and is scheduled to be sentenced in the Middle District of Alabama for her role in the conspiracy on July 16.
“Stolen identity refund fraud is a nationwide epidemic that causes substantial harm to the individuals whose identities are stolen, and a significant loss to the U.S. Treasury,” stated Acting Assistant Attorney General Ciraolo. “Prosecuting those who engage in this criminal conduct is among our highest priorities, and as today’s sentence demonstrates, those who orchestrate these schemes will face lengthy periods of incarceration and steep monetary penalties.”
U.S. Attorney Beck Jr. and Acting Assistant Attorney General Ciraolo commended special agents of IRS–Criminal Investigation, who investigated the case, and Trial Attorneys Michael C. Boteler and Gregory P. Bailey of the Tax Division and Assistant U.S. Attorney Todd Brown of the Middle District of Alabama, who are prosecuting the case.
Peabody Tax Preparer Convicted of FraudRead the Press Release
BOSTON – A Peabody tax preparer pleaded guilty today to defrauding small-business clients out of nearly $900,000 that his clients had given him to pay their federal payroll taxes.
Barry Ginsberg, 63, pleaded guilty to multiple counts of mail and wire fraud, preparing false tax returns, and obstructing the IRS, after being indicted in May 2013. U.S. District Court Judge Leo T. Sorokin scheduled sentencing for Sept. 28, 2015.
Ginsberg owned and operated a payroll tax business that had a number of so-called “escrow” clients. Ginsberg not only prepared their payroll tax returns, but these clients also sent him money on a regular basis for the purpose of paying their payroll taxes to the IRS. Instead of doing so, however, Ginsberg took the money and used it for other business or personal reasons. As a result, the defendant’s clients—some of whom had trusted him years—racked up significant arrearages with the IRS over time.
To cover up his scheme, Ginsberg falsified his clients’ tax returns, which he was hired to prepare, indicating that the clients’ payroll taxes had been paid in full, when they had not. When asked by clients about their mysterious IRS debts, Ginsberg gave them a litany of false excuses, including blaming the IRS and his own staff.
The mail and wire fraud charges provide for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the total gain or loss, whichever is greater. The maximum penalties for the tax-related crimes are three years in prison, one year of supervised release, and a fine of $100,000. 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 William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Eric P. Christofferson and Vassili Thomadakis of Ortiz’s Economic Crimes Unit.
Oyster-Adams Bilingual School Teacher Pled Guilty to Sexually Abusing 4th Grade Student in ClassroomRead the Press Release
WASHINGTON – Giovanni Pena, 31, of Washington, D.C., pled guilty today to one count of Second-Degree Child Sexual Abuse and to one count of Obscenity, Acting U.S. Attorney Vincent H. Cohen, Jr. announced. The charges stem from Pena’s sexual abuse of a 4th grade student at Oyster-Adams Bilingual School, a D.C. Public School, during the 2013 – 2014 school year. Pena remains held without bond pending sentencing on September 4, 2015 before the Honorable Michael Ryan of the D.C. Superior Court.
According to the government’s evidence, Pena was the child’s 4th grade teacher during 2013 – 2014. Pena sexually abused the child by touching the child’s clothed penis and buttocks. Pena told detectives with the Metropolitan Police Department’s Youth Investigations Division that he was curious whether a 4th grade child could have an erection. Pena also had the child touch Pena’s clothed penis. These incidents took place in the classroom during the school day.
Additionally, Pena sent nude photos of his erect penis to the child, as well as a photo of Pena’s sperm. Pena used the mobile application Snapchat to transmit these images. Pena also taught the child about masturbation.
In announcing the plea, Acting U.S. Attorney Cohen commended the work of the detectives of the Metropolitan Police Department’s Youth Investigations Division. He also commended the efforts of staff from the U.S. Attorney’s Office, including Child Forensic Interview Specialists Tracy Owusu and Karen Giannakoulias, Victim Advocate Elsa Maltese, Criminal Investigator John Marsh, Paralegal Specialists Joyce Arthur and D’Yvonne Key, Legal Intern Allison Denton, and Assistant U.S. Attorney John L. Hill, who prosecuted the case.
Northern California Real Estate Investor Indicted for Bid-Rigging and Fraud Conspiracies at Public Foreclosure AuctionsRead the Press Release
A federal grand jury in San Francisco returned an indictment against a Northern California real estate investor for his role in bid-rigging and fraud conspiracies at public foreclosure auctions in Northern California, the Department of Justice announced today.
A two-count indictment has been filed in the U.S. District Court of the Northern District of California in Oakland, charging Ramin Rad “Ray” Yeganeh of San Mateo, California, with participating in conspiracies to rig bids and defraud mortgage holders and others in Alameda County.
“This defendant conspired to rig bids at home mortgage foreclosure auctions in Alameda County,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Lenders and those who lost their homes to foreclosure are entitled to the proceeds of a competitive auction, and they did not get that here. Whether a conspiracy is local, national or international in scope, the division will investigate and prosecute those who conspire rather than compete.”
To date, 54 individuals have pleaded guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California. In addition, 21 real estate investors have been charged in six multi-count indictments for their roles in bid-rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Mateo and San Francisco counties in California.
The indictment alleges, among other things, that as early as September 2008 and continuing until about January 2011, Yeganeh conspired with others not to bid against one another and instead designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County. Yeganeh was also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries by holding second, private auctions open only to members of the conspiracy. Selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
“This is another example of justice being served in preserving the fairness of public real estate foreclosure auctions as well as the FBI’s commitment in investigating those who take advantage of a competitive marketplace,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI will continue to aggressively investigate real estate-related frauds and other violations of federal law which victimize distressed homeowners and financial institutions through the exploitation of the housing crisis.”
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from the scheme.
Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300 or call the FBI tip line at 415-553-7400.
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.
New York City Private Investigator Who Hacked into E-Mail Accounts Sentenced in Manhattan Federal Court to Three Months in PrisonRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that ERIC SALDARRIAGA, a private investigator in New York City, was sentenced today in Manhattan federal court to three months in prison. The sentence was imposed by U.S. District Judge Richard J. Sullivan. SALDARRIAGA pled guilty to conspiracy to commit computer hacking before Judge Sullivan on March 6, 2015.
According to the allegations in documents filed in Manhattan federal court, and statements made at today’s sentencing and other court proceedings:
The defendant, a private investigator, owned a company that provided private investigation services to members of the public for a fee. Beginning in 2009, SALDARRIAGA, through services advertised on the Internet (the “Hacking Services”), hired individuals to hack into the e-mail accounts of almost 50 different victims. For certain victims, SALDARRIAGA attempted to gain unlawful access to more than one email account. SALDARRIAGA used the Hacking Services to access, unlawfully and secretly, the e-mail accounts of individuals he investigated on behalf of his clients, as well as individuals in whom SALDARRIAGA was interested for personal reasons.
SALDARRIAGA paid the Hacking Services to provide him with login credentials, including usernames and passwords, for victims’ e-mail accounts. SALDARRIAGA then unlawfully accessed and reviewed victims’ e-mail communications. In total, SALDARRIAGA hired the Hacking Services to hack into, and provide unauthorized access to, at least 60 different e-mail accounts.
* * *
In addition to the prison term, SALDARRIAGA, 41, of Queens, New York, was also sentenced to three years of supervised release and ordered to forfeit $5,000 and pay a $1,000 fine.
Mr. Bharara praised the FBI for their outstanding work in the investigation.
This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Daniel Noble is in charge of the case.
New Orleans Man Charged with Possession of Child PornographyRead the Press Release
U.S. Attorney Kenneth A. Polite announced that DAVID MOREL, age 31, of New Orleans, was charged yesterday in a Bill of Information for crimes involving the sexual exploitation of children.
According to court records, on June 25, 2015, MOREL was charged as a result of a child exploitation investigation conducted by the U.S. Department of Homeland Security-Homeland Security Investigations (“HSI”) and the Louisiana Attorney General’s Office High Tech Crime Unit (“LAGO”). According to court records, HSI and LAGO agents executed a search warrant at MOREL’s residence after determining MOREL was downloading images depicting the sexual victimization of children.
In 2010, MOREL was convicted in Orleans Parish Criminal Court of 536 counts of possession of pornography involving juveniles. He received 10 years suspended and was sentenced to 5 years home incarceration. MOREL was prohibited from using computers and the Internet. MOREL was arrested by the LAGO on December 18, 2014, and is currently in state custody for a violation of his state probation.
Because of his prior state conviction for similar criminal conduct, MOREL faces a mandatory minimum penalty of ten years and a maximum penalty of twenty years, followed by up to a lifetime term of supervised release, and a $250,000 fine.
U. S. Attorney Polite reiterated that the Bill of Information is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
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."
U.S. Attorney Polite praised the work of the U.S. Department of Homeland Security-HSI and the Louisiana Attorney General’s Office High Tech Crime Unit in investigating this matter. The prosecution of this case is being handled by Project Safe Childhood Coordinator and Fraud Unit Chief, Assistant U.S. Attorney Brian M. Klebba.
David Morel Bill of Information.pdf (240.58 KB)
Mississippi Women Sentenced to Prison on Drug ChargesRead the Press Release
Jackson, Miss - Princess Grace, a/k/a Princess Rutley, 36 of Meridian, was sentenced on June 25, 2015 by U.S. District Judge Daniel P. Jordan III to 36 months in federal prison followed by three years of supervised release for conspiracy to possess with intent to distribute actual methamphetamine, announced U.S. Attorney Gregory K. Davis and DEA Special Agent in Charge Keith Brown.
Stacy Shelwood, 36, of Newton, was sentenced on June 26, 2015 by U.S. District Judge Daniel P. Jordan III to 63 months in federal prison followed by three years of supervised release for conspiracy to possess with intent to distribute actual methamphetamine.
Both defendandants were indicted and convicted as a result of DEA’s "Operation Yeti Ice", an extensive Organized Crime Drug Enforcement Task Force (OCDETF) investigation, which began as an operation targeting illegal narcotics distribution in central Mississippi. The drug network involved the distribution of over 100 Kilograms of Methamphetamine and encompassed the states of California and Mississippi.
This OCDETF operation was led by the Drug Enforcement Administration and the Mississippi Bureau of Narcotics with assistance from the U.S. Marshal Service, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Postal Service, Internal Revenue Service Criminal Investigation, Scott County Sheriff’s Office, Leake County Sherriff’s Office, Madison County Sherriff’s Office, Carthage Police Department, Forest Police Department, Newton County Sherriff’s Office, Lauderdale County Sherriff’s Office, Decatur Police Department, Richland Police Department, Pearl Police Department, Ridgeland Police Department, and the Jackson Police Department. The case was prosecuted by Assistant U.S. Attorney Erin Chalk.
The OCDETF program is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations, and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.
Miami Gardens Residents Charged with Selling Crack Cocaine and Firearms OffensesRead the Press Release
Three Miami Gardens residents, Talvet Johnson, 45, Demetrius Brown, 25, and Eric McKenzie, 25, were indicted on charges of selling crack cocaine. Brown is also charged with possessing a firearm in furtherance of drug trafficking and with possession of a firearm by a convicted felon. A fourth Miami Gardens resident, Reuben Oliver, 22, was indicted on charges of selling firearms to a convicted felon. As part of a joint federal-state operation, five other defendants who have been charged by the Miami-Dade State Attorney’s Office with related narcotics offenses remain at large.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Katherine Fernandez Rundle, State Attorney for Miami-Dade County, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Hugo J. Barrera, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and Antonio G. Brooklen, Interim Chief, Miami Gardens Police Department (MGPD), made the announcement.
According to court documents and statements made in court, Johnson, Brown, and McKenzie are each charged in separate indictments with selling crack cocaine on multiple occasions in or near a housing complex located in Miami Gardens. If convicted, Brown faces a mandatory minimum sentence of five years’ imprisonment and a maximum term of life imprisonment. Johnson and McKenzie each face a maximum term of 20 years’ imprisonment. Oliver faces a maximum term of 10 years’ imprisonment.
Mr. Ferrer commended the investigative efforts of members of the United States Attorney’s Office Violence Reduction Partnership, which includes the FBI, ATF, and MGPD. The federal cases are being prosecuted by Assistant U.S. Attorneys Olivia S. Choe and Vanessa Snyder. The state cases are being prosecuted by Assistant State Attorney Sarah Lobel.
Through its Violence Reduction Partnership, the U.S. Attorney’s Office and its federal and local law enforcement allies have sought to dismantle the most violent criminal networks in various neighborhoods in the Southern District of Florida, while simultaneously working with community leaders and concerned citizens to mentor at-risk youth, provide job training, coordinate social services and support the reintegration of ex-offenders (returning citizens) to the community.
An indictment is a formal accusation of criminal conduct, not evidence of guilt. A defendant is presumed innocent unless proven guilty.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Member of Haitian Hostage - Taking Crew Sentenced to 16 Years in PrisonRead the Press Release
ALEXANDRIA, Va. – Samson Jolibois, 47, of Port-au-Prince, Haiti, was sentenced today to 192 months in prison, followed by three of supervised release for conspiring to commit hostage taking. Jolibois was also ordered to pay over $32,000 in restitution.
Jolibois plead guilty on Feb. 27, 2015. According to court documents, Jolibois was part of a criminal group that kidnapped and held hostage two U.S. citizens in the area of Carrefour, Haiti. The group targeted U.S citizens of Haitian descent who had returned to visit Haiti, because they believed these individuals to be from wealthy families. During two separate events, members of the criminal group took victims at gunpoint from outside their residences and held the victims hostage for several days while seeking ransom money from their families in exchange for the victims’ release. One victim was rescued by Haitian law enforcement, and the other victim escaped captivity.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and George L. Piro, Special Agent in Charge of the FBI’s Miami Field Office, made the announcement after sentencing by U.S. District Judge Liam O’Grady.
This case was investigated by the FBI’s Miami Field Office. Assistant U.S. Attorney Michael P. Ben’Ary prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:13-cr-303.
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Massachusetts Dentist Sentenced to Prison for Tax EvasionRead the Press Release
A Douglas, Massachusetts, dentist was sentenced today to serve 16 months in prison for tax evasion in the U.S. District Court for the District of Massachusetts, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
George Fenzell was indicted in February 2014 by a federal grand jury sitting in Boston on multiple counts of tax evasion and one count of corruptly endeavoring to obstruct the Internal Revenue Service (IRS). In November 2014, he pleaded guilty to one count of tax evasion.
U.S. District Court Judge Timothy S. Hillman also sentenced Fenzell to one year of supervised release and ordered him to pay $157,407 in restitution to the IRS. In sentencing Fenzell, Judge Hillman departed downward from the recommended U.S. Sentencing Guidelines range due, in part, to Fenzell’s cooperation with the government on other matters.
According to court documents, from 1999 through 2012, Fenzell engaged in conduct intended to obstruct the IRS. For the years 1999 through 2007, he failed to file timely federal income tax returns and concealed income that he earned from his dental practice from the IRS. Fenzell operated a dental office located in Shrewsbury, Massachusetts. He concealed his dental business receipts by diverting the funds through nominee entities, including River Valley Dental. He used multiple nominee bank accounts to conceal his ownership of his income and assets. Fenzell also titled and registered a Lincoln Navigator and Ducati motorcycle with another nominee entity, Smiling Trust, and made extensive use of cash in order to conceal his fraud from the IRS.
In response to a Massachusetts Department of Revenue investigation and collection action in 2007, Fenzell filed his delinquent federal tax returns for 2000 through 2005. In filing those returns, Fenzell admitted that he owed federal income taxes totaling $129,841. Fenzell had not made any tax payments to the IRS for those years. Rather than pay the federal income taxes and additional interest and penalties that were due and owing, between 2007 and 2012, Fenzell evaded IRS collection efforts by diverting his business receipts to nominee entities and using nominee bank accounts in Florida and Rhode Island to hide his income and assets. During the same period, he falsified his 2006 and 2007 tax returns that he filed late in 2009, and also failed to file his tax returns for 2008 through 2011.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Assistant Chief John N. Kane Jr. and Trial Attorney Thomas Koelbl of the Tax Division, who are prosecuting the case. Ciraolo also thanked the U.S. Attorney’s Office of the District of Massachusetts for their substantial assistance.
- Man Sentenced for False Statements in Relation to Blowout Preventer Testing on Oil Platform in Gulf of Mexico
Man Arrested, Charged with Illegal Possession of Body ArmorRead the Press Release
St. Thomas, USVI- Fabian Towers, 50, made his initial appearance in District Court today before U.S. Magistrate Ruth Miller after his arrest for Illegal Possession of Body Armor, United States Attorney Ronald W. Sharpe announced. Towers was remanded to the custody of the U.S. Marshals Service pending a detention hearing scheduled for July 1, 2015.
On April 9, 2015, a federal grand jury returned a two-count indictment charging Towers with Possession of Body Armor by a Violent Felon, in violation of federal and territorial law. According to the indictment, Towers possessed a bullet proof vest and had previously been convicted of First Degree Robbery in 1982 and 1983. As a person convicted of a crime of violence, Towers is prohibited from possessing body armor. If convicted, Towers, faces up to three years in prison on both the federal count and the territorial count.
United States Attorney Sharpe reminds the public that an indictment is merely a formal charging document and is not evidence of guilt. Every defendant is presumed innocent until and unless proven guilty.
The case is the result of a joint investigation by the Federal Bureau of Investigation and the Virgin Islands Police Department. It is being prosecuted by Assistant United States Attorney Sigrid M. Tejo-Sprotte.
Local Physician Sentenced on Health Care Fraud ChargesRead the Press Release
St. Louis, MO – DR. DEVON GOLDING was sentenced yesterday to four months imprisonment and eight months home detention on multiple health care fraud related charges for billing for services not rendered and false statements involving a health care benefit plan. Dr. Golding will also have to pay over $145,000 in restitution.
According to testimony presented at trial, Dr. Golding billed for services on multiple occasions when he was actually out of town. Dr. Golding employed a registered nurse, who at various times during her employment from September 2009 to November 2011, took the examination to become certified as a nurse practitioner. Each time, she failed the examination and advised Dr. Golding that she had failed the examination. She worked five days a week and saw patients on these days. Dr. Golding typically came to the office 2-3 days a week. In Dr. Golding’s absence, the registered nurse examined and diagnosed patients, prescribed narcotic medications and ordered lab tests for the patients. The registered nurse also completed progress notes for the patients, which Dr. Golding signed upon his return to the office, and thereby falsely indicated that he had seen the patients. Dr. Golding directed the registered nurse to provide these services, although he knew these services were beyond the scope of her license as a registered nurse.
Golding, St. Louis, MO, was convicted in February of three felony counts of health care fraud and two felony counts of making false statements related to health services. He appeared Thursday before United States District Judge John A. Ross.
This case was investigated by the United States Department of Health and Human Services-Office of the Inspector General, the Federal Bureau of Investigation and the Medicaid Fraud Control Unit of the Missouri Attorney General’s Office. Assistant United States Attorneys Dorothy McMurtry and Gwen Carroll handled the case for the U.S. Attorney’s Office.
Kenton County Man Admits Making Child Pornography Available for Download on the InternetRead the Press Release
COVINGTON — A Kenton County man has admitted to making child pornography images and videos available for download over the internet.
On Thursday, Alan K. Newberry, 43, of Park Hills, Ky., pleaded guilty to distribution of child pornography. Based on his conviction, Newberry will be required to register as a sex offender for the remainder of his life.
According to Newberry’s plea agreement, authorities with the Kentucky Attorney General’s Office identified child pornography files that had been made available for download on the internet. They traced the source of the images and videos to Newberry’s computer, which was located at his home in Park Hills. Authorities executed a search warrant at Newberry’s residence, searched his computer, and found 4,000 images and 700 videos of children engaged in sexually explicit conduct. Many of the images depicted prepubescent children and sadistic conduct.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Jack Conway, Kentucky Attorney General, jointly announced the guilty plea.
The investigation was conducted by the Office of the Kentucky Attorney General.
Newberry is scheduled for sentencing on September 24, 2015. He faces a maximum of 20 years in prison. The Court must consider the U.S. Sentencing Guidelines and the federal statutes before imposing a sentence.
Judge Imposes Death Sentence for Boston Marathon BomberRead the Press Release
A federal judge in Boston formally sentenced Dzhokhar A. Tsarnaev on June 24, for his role in using weapons of mass destruction at the 2013 Boston Marathon. U.S. District Judge George A. O’Toole of the District of Massachusetts imposed a sentence of death and multiple consecutive life sentences.
U.S. Attorney Carmen M. Ortiz of the District of Massachusetts, Assistant Attorney General for National Security John P. Carlin, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Vincent B. Lisi of the FBI’s Boston Division, Commissioner William B. Evans of the Boston Police Department, Colonel Timothy P. Alben of the Massachusetts State Police, Special Agent in Charge Daniel J. Kumor of the Bureau of Alcohol, Tobacco, Firearms and Explosives’s Boston Field Division and Deputy Special Agent in Charge Michael Shea of Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in Boston made the announcement.
In May 2014, a federal jury in Boston recommended that Tsarnaev be sentenced to death. The counts on which the jury recommended a death sentence all related to the pressure cooker bomb Tsarnaev planted and detonated in front of the Forum restaurant, killing Lingzi Lu and Martin Richard. The same jury convicted Tsarnaev on all 30 counts of the indictment on April 8, 2015.
Tsarnaev, 21, a U.S. citizen formerly residing in Cambridge, Massachusetts, was convicted of use of a weapon of mass destruction resulting in death and conspiracy; bombing of a place of public use resulting in death and conspiracy; malicious destruction of property resulting in death and conspiracy; use of a firearm during and in relation to a crime of violence; use of a firearm during and in relation to a crime of violence causing death; carjacking resulting in serious bodily injury; interference with commerce by threats or violence; and aiding and abetting.
Beginning no later than February 2013, Tsarnaev and his brother, Tamerlan Tsarnaev, conspired to detonate improvised explosive devices (IEDs), bomb places of public use and destroy property. On April 15, 2013, during the 117th running of the Boston Marathon, the brothers placed two pressure cooker bombs filled with shrapnel among the crowds of spectators on Boylston Street and then detonated the bombs seconds apart, killing three people, maiming 17 and injuring hundreds more. The brothers fled the scene in the chaos of the destruction. Three days later, on April 18, Tsarnaev and his brother, armed with five IEDs and a Ruger semiautomatic pistol that Tsarnaev had borrowed from a friend, drove to the Massachusetts Institute of Technology (MIT) campus where they shot and killed MIT Police Officer Sean Collier and attempted to steal his service weapon. Approximately 20 minutes later, they carjacked a Mercedes SUV, kidnapped the driver and forced him to drive to a gas station, and robbed him of $800 along the way. After the driver managed to escape, the brothers drove to Laurel Street and Dexter Avenue in Watertown, Massachusetts, where they exploded additional IEDs and engaged in a firefight with Watertown police officers. During the stand-off, Tsarnaev drove the carjacked vehicle at three officers, attempting to kill them and ran over his brother as he escaped. Tsarnaev hid in a winterized boat in a backyard in Watertown until his apprehension and arrest the following night. His brother died from injuries sustained at the scene.
This investigation was conducted by the FBI’s Boston Division, Boston Police Department, Massachusetts State Police, Department of Justice’s National Security Division and member agencies of the Boston Joint Terrorism Task Force, including the ATF, HSI, U.S. Marshals Service, Massachusetts Bay Transit Authority and others. In addition, the Watertown Police Department; the Cambridge, Massachusetts, Police Department; the MIT Police Department; the Boston Fire Department; the National Guard and police, fire and emergency responders from across Massachusetts and New England played critical roles in the investigation and response.
This case was prosecuted by Assistant U.S. Attorneys William Weinreb, Aloke Chakravarty and Nadine Pellegrini of the District of Massachusetts's Anti-Terrorism and National Security Unit, and Trial Attorney Steve Mellin of the Justice Department’s Capital Case Section. Vital assistance was also provided by attorneys from the National Security Division’s Counterterrorism Section and the Criminal Division’s Capital Case Section.
Information: Federal Court ArraignmentsRead the Press Release
The United States Attorney’s Office announced that those persons listed below were arraigned before the U.S. Magistrate and the indictments handed down by the Grand Jury unsealed.
Appearing before U.S. Magistrate Johnston in Great Falls on June 25, 2015, and entering pleas of Not Guilty were:
- JOHNNY LEE HAMILTON, a 22-year-old resident of Poplar, appeared on charges of burglary. If convicted of the charge contained in the indictment, HAMILTON faces 20 years in prison, $50,000 in fines and 3 years supervised release. The case was investigated by the Fort Peck Tribes Department of Law and Justice. PACER Case Reference. 14-84
Appearing before U.S. Magistrate Lynch in Missoula on June 24, 2015 and entering pleas of Not Guilty were:
- SPENCER JAMES BRUSELL, a 38-year-old resident of Kalispell, appeared on charges of counterfeiting obligations or securities of the United States and uttering counterfeit obligations or securities. If convicted of the most serious charges contained in the indictment, BRUSELL faces 20 years in prison, $250,000,000 in fines and 3 years supervised release. The case was investigated by the United States Secret Service. PACER Case Reference. 15-04
- ERNEST KHALID CALVERT, JR., a 20-year-old resident of Dania Beach, Florida, appeared on charges of conspiracy to commit wire fraud, wire fraud, and aggravated identity theft. If convicted of the most serious charges contained in the indictment, CALVERT faces 20 years in prison, $250,000,000 in fines and 3 years supervised release. The case was investigated by the Federal Bureau of Investigation. PACER Case Reference. 15-22
- ROBERT ELLIS NORRIS, a 23-year-old resident of Boynton Beach, Florida, appeared on charges of conspiracy to commit wire fraud, wire fraud, and aggravated identity theft. If convicted of the most serious charges contained in the indictment, NORRIS faces 20 years in prison, $250,000,000 in fines and 3 years supervised release. The case was investigated by the Federal Bureau of Investigation. PACER Case Reference. 15-22
Appearing before U.S. Magistrate Ostby in Billings on June 23, 2015, and entering pleas of Not Guilty were:
- LEON SEMINOLE, a 57-year-old resident of Lame Deer, appeared on charges of strangulation and assault resulting in substantial bodily injury. If convicted of the most serious charge contained in the indictment, SEMINOLE faces 10 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the Bureau of Indian Affairs. PACER Case Reference. 15-62
Appearing before U.S. Magistrate Johnston in Great Falls on June 23, 2015, and entering pleas of Not Guilty were:
- SHAD JAMES HUSTON, a 39-year-old resident of Havre, appeared on charges of false claims act conspiracy, scheme to defraud the Chippewa Cree Tribe/wire, bribery – offering an official of an Indian tribal government receiving federal funding payments for personal benefit and false and fraudulent claims against a federal funded project. If convicted of the most serious charges contained in the indictment, HUSTON faces 20 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the U.S. Department of Interior Office of Inspector General, Internal Revenue Service Criminal Investigation Division, the U.S. Department of Health and Human Services Office of Inspector General, Environmental Protection Agency and the Federal Bureau of Investigation. PACER Case Reference. 15-35
Appearing before U.S. Magistrate Ostby in Billings on June 18, 2015, and entering pleas of Not Guilty were:
- JETSEE ALBERTO NUNEZ-GUZMAN, a 34-year-old resident of Mexico, appeared on charges of possession with intent to distribute methamphetamine. If convicted of the charge contained in the indictment, NUNEZ-GUZMAN faces life in prison, $10,000,000 in fines and 5 years supervised release. The case was investigated by the Drug Enforcement Administration. PACER Case Reference. 15-68
- CAROL LYNETTE PEARSON, a 43-year-old resident of Billings, appeared on charges of conspiracy to possess with intent to distribute methamphetamine, possession with intent to distribute methamphetamine and distribution of methamphetamine. If convicted of the most serious charges contained in the indictment, PEARSON faces life in prison, $8,000,000 in fines and 8 years supervised release. The case was investigated by the Federal Bureau of Investigation. PACER Case Reference. 15-46
Appearing before U.S. Magistrate Lynch in Missoula on June 17, 2015, and entering pleas of Not Guilty were:
- JOSEPH DAVID ROBERTSON, a 76-year-old resident of Basin, appeared on charges of unauthorized discharge of pollutants into waters of the United States and malicious mischief – injury/depredation of property of the United States. If convicted of the most serious charges contained in the indictment, ROBERTSON faces 10 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the Environmental Protection Agency and the United States Forest Service. PACER Case Reference. 15-07
- SEIBERT SMITH/DRUMLUMMON GOLD CORPORATION, a 76-year-old resident of Helena, appeared on charges of false statement sin records and false statements within jurisdiction of United States. If convicted of the most serious charge contained in the indictment, SMITH faces 5 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the US Department of Labor Mine Safety and Health Administration. PACER Case Reference. 15-06
If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system so that you stay current and not miss any important developments in the case.
To establish a PACER account, which will allow you to review documents filed in the case, please go to, http://www.pacer.gov/register.html. To access the district court’s calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.
Indictment in UPMC Stolen Identity SchemeRead the Press Release
PITTSBURGH - On Wednesday, a federal grand jury in Pittsburgh returned a multi-count indictment against Yoandy Perez Llanes, a foreign national residing outside of the United States. Llanes was charged in a 21-count indictment with a scheme to defraud the Internal Revenue Service, United States Treasury, using the stolen identities of employees of UPMC (University of Pittsburgh Medical Center) to file false federal income tax returns in order to obtain unlawful tax refunds. Llanes and unnamed conspirators converted the unlawful tax refunds to Amazon.com gift cards, which were used to buy merchandise which was shipped internationally. All of these acts occurred generally between January and April, 2014. Llanes is charged with conspiracy to defraud the United States, wire fraud, money laundering and aggravated identity theft.
Early in 2014, thousands of employees of UPMC had their personal information compromised by hackers, who intruded into a UPMC computerized database stealing names, social security numbers, dates of birth and other personal identifying information. This data was then used to file false 2013 federal tax returns. Investigators learned that names and other identifiers were used by Llanes and other conspirators to file 935 false tax returns in which unlawful refunds were requested in the form of Amazon.com gift cards. Quick action by the IRS, UPMC, and Amazon.com frustrated the efforts of the fraudsters to file additional false returns and obtain further fraudulent proceeds. While the perpetrators sought approximately $2.2 million in fraudulent refunds, only $1.4 million was actually disbursed as refunds. Stolen Identity Refund Fraud, such as that alleged to have been perpetrated by Llanes, costs United States taxpayers billions of dollars.
This criminal scheme was complex and crossed national borders. Llanes and the conspirators used anonymous and encrypted email to disguise their identities and proxy computers to file returns. Using the fraudulently obtained Amazon.com gift cards, Llanes purchased hundreds of thousands of dollars in electronic merchandise for shipment through reshipping services in Miami, Florida, with instructions for delivery to “drop” locations outside the United States. Llanes and others then retrieved the merchandise and advertised it for sale on online auction websites overseas.
Though Llanes and the conspirators attempted to conceal their whereabouts and their identities through the use of encrypted email and proxy services, investigators were able to uncover the sophisticated plot and identify Llanes.
The law provides for a sentence of imprisonment, a fine of $5,500,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Gregory C. Melucci is prosecuting this case on behalf of the government.
The Internal Revenue Service-Criminal Investigation, the United States Secret Service and the United States Postal Inspection Service, conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Indictment in UPMC Stolen Identity SchemeRead the Press Release
On Wednesday, a federal grand jury in Pittsburgh returned a multi-count indictment against Yoandy Perez Llanes, a foreign national residing outside of the United States. Llanes was charged in a 21-count indictment with a scheme to defraud the Internal Revenue Service (IRS), and the U.S. Treasury, using the stolen identities of employees of the University of Pittsburgh Medical Center (UPMC) to file false federal income tax returns in order to obtain unlawful tax refunds. Llanes and unnamed conspirators converted the unlawful tax refunds to Amazon.com gift cards, which were used to buy merchandise which was shipped internationally. All of these acts occurred generally between January and April 2014. Llanes is charged with conspiracy to defraud the United States, wire fraud, money laundering and aggravated identity theft.
Early in 2014, thousands of employees of UPMC had their personal information compromised by hackers, who intruded into a UPMC computerized database stealing names, social security numbers, dates of birth and other personal identifying information. This data was then used to file false 2013 federal tax returns. Investigators learned that names and other identifiers were used by Llanes and other conspirators to file 935 false tax returns in which unlawful refunds were requested in the form of Amazon.com gift cards. Quick action by the IRS, UPMC and Amazon.com frustrated the efforts of the fraudsters to file additional false returns and obtain further fraudulent proceeds. While the perpetrators sought approximately $2.2 million in fraudulent refunds, only $1.4 million was actually disbursed as refunds. Stolen Identity Refund Fraud, such as that alleged to have been perpetrated by Llanes, costs United States taxpayers billions of dollars.
This criminal scheme was complex and crossed national borders. Llanes and the conspirators used anonymous and encrypted email to disguise their identities and proxy computers to file returns. Using the fraudulently obtained Amazon.com gift cards, Llanes purchased hundreds of thousands of dollars in electronic merchandise for shipment through reshipping services in Miami, Florida, with instructions for delivery to “drop” locations outside the United States. Llanes and others then retrieved the merchandise and advertised it for sale on online auction websites overseas.
Though Llanes and the conspirators attempted to conceal their whereabouts and their identities through the use of encrypted email and proxy services, investigators were able to uncover the sophisticated plot and identify Llanes.
The law provides for a sentence of imprisonment, a fine of $5.5 million or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Gregory C. Melucci is prosecuting this case on behalf of the government.
The IRS-CI, the U.S. Secret Service and the U.S. Postal Inspection Service, conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Indiana Manufacturer Sentenced in Connection with Clean Air Act False Statement ViolationsRead the Press Release
Calumite Company LLC, a manufacturer of an additive used in the production of glass, was sentenced today in U.S. District Court in Hammond, Indiana, in connection with its September 2014 plea of guilty to two Clean Air Act false statement violations. The company was sentenced to pay a $325,000 fine, serve a two year term of probation and implement an environmental compliance plan that includes an annual environmental compliance training program.
Calumite, located near the shores of Lake Michigan in Portage, Indiana, manufactures and sells a powdery substance of the same name to various glass manufacturers. The company collects slag, a waste product of the steel industry, dries it in a hot gas oven, crushes it into a fine powder and then ships it off-site to glass manufacturers, who use it as an additive to lower the temperature at which glass can be produced.
Calumite's Portage facility was subject to a Title V Clean Air Act Operating Permit issued by the Indiana Department of Environmental Management (IDEM). Among other things, the permit required that Calumite operate, maintain and monitor several “baghouses” on site that are used to control and minimize emissions of a fine particulates. One of the baghouses, known as the loadout baghouse, was used to collect emissions of particulate that occurred during the loading of product onto tractor trailers and rail cars for shipment to customers.
A differential pressure gauge (DP gauge) attached to each baghouse continuously monitored and measured the efficiency and effectiveness of the baghouses, to determine whether they were operating properly. Calumite's Clean Air Act permit required that DP gauges on the baghouses be read daily, while the baghouses were operating and that the results be recorded on daily maintenance log sheets. The company also was required to submit quarterly reports to IDEM that stated whether the company was in compliance with permit requirements.
From Dec. 5, 2008, through late July 2009, Calumite did not maintain the loadout baghouse in operating condition and the DP gauge was broken. Nevertheless, during this same time period, employees continued to load tractor trailers and rail cars with product for shipment off-site. Calumite employees also knowingly continued to routinely fill out daily logs that falsely reflected DP gauge monitoring readings that were within the range allowed by the permit and caused false information to be submitted to IDEM in the company’s quarterly reports.
The Clean Air Act makes it a crime to knowing make a material false statement or omit material information from a document that is required to be filed or maintained under the statute. Both the daily maintenance logs and the quarterly reports were required by Calumite’s permit and the Clean Air Act.
The case was investigated by the Northern District of Indiana Environmental Crimes Task Force, including agents from the U.S. Environmental Protection Agency’s Criminal Investigation Division and the Indiana Department of Environmental Management’s Office of Criminal Investigations. The case was prosecuted by the U.S. Attorney’s Office for the Northern District of Indiana and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
Indiana Manufacturer Sentenced in Connection with Clean Air Act False Statement ViolationsRead the Press Release
WASHINGTON – Calumite Company LLC, a manufacturer of an additive used in the production of glass, was sentenced today in U.S. District Court in Hammond, Indiana, in connection with its September 2014 plea of guilty to two Clean Air Act false statement violations. The company was sentenced to pay a $325,000 fine, serve a two year term of probation and implement an environmental compliance plan that includes an annual environmental compliance training program.
Calumite, located near the shores of Lake Michigan in Portage, Indiana, manufactures and sells a powdery substance of the same name to various glass manufacturers. The company collects slag, a waste product of the steel industry, dries it in a hot gas oven, crushes it into a fine powder and then ships it off-site to glass manufacturers, who use it as an additive to lower the temperature at which glass can be produced.
Calumite's Portage facility was subject to a Title V Clean Air Act Operating Permit issued by the Indiana Department of Environmental Management (IDEM). Among other things, the permit required that Calumite operate, maintain and monitor several “baghouses” on site that are used to control and minimize emissions of a fine particulates. One of the baghouses, known as the loadout baghouse, was used to collect emissions of particulate that occurred during the loading of product onto tractor trailers and rail cars for shipment to customers.
A differential pressure gauge (DP gauge) attached to each baghouse continuously monitored and measured the efficiency and effectiveness of the baghouses, to determine whether they were operating properly. Calumite's Clean Air Act permit required that DP gauges on the baghouses be read daily, while the baghouses were operating and that the results be recorded on daily maintenance log sheets. The company also was required to submit quarterly reports to IDEM that stated whether the company was in compliance with permit requirements.
From Dec. 5, 2008, through late July 2009, Calumite did not maintain the loadout baghouse in operating condition and the DP gauge was broken. Nevertheless, during this same time period, employees continued to load tractor trailers and rail cars with product for shipment off-site. Calumite employees also knowingly continued to routinely fill out daily logs that falsely reflected DP gauge monitoring readings that were within the range allowed by the permit and caused false information to be submitted to IDEM in the company’s quarterly reports.
The Clean Air Act makes it a crime to knowing make a material false statement or omit material information from a document that is required to be filed or maintained under the statute. Both the daily maintenance logs and the quarterly reports were required by Calumite’s permit and the Clean Air Act.
The case was investigated by the Northern District of Indiana Environmental Crimes Task Force, including agents from the U.S. Environmental Protection Agency’s Criminal Investigation Division and the Indiana Department of Environmental Management’s Office of Criminal Investigations. The case was prosecuted by the U.S. Attorney’s Office for the Northern District of Indiana and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
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Heroin Traffickers Sentenced to Federal PrisonRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051ROCHESTER, N.Y.- U.S. Attorney William J. Hochul Jr. announced today that Jonathan Rodriguez Melendez a/k/a ‘Bori”, 25, and C.J. Cortes Rodriguez, 28, both of Rochester, New York, have been sentenced by the Hon. Frank P. Geraci, United States District Court, for their roles in an armed heroin trafficking operation which operated in the northeast section of the city of Rochester.
Assistant U.S. Attorney Douglas E. Gregory, who handled the case, stated that Jonathan Rodriguez Melendez received a sentence of 10 years in federal prison, as well as a $500 fine and 5 years of post-release supervision. C.J. Cortes Rodriguez received a sentence of 9 years and 4 years of post-release supervision. Earlier this year, both men pled guilty to conspiring to distribute quantities of heroin and possession of firearms in connection with the drug offenses. The investigation, which included court ordered wire taps and numerous undercover purchases of heroin from both men, revealed that they were obtaining quantities of heroin from a Philadelphia source of supply and distributing it here in Monroe County.
“Like many areas of our country, the Rochester community has experienced an alarming increase in overdoses associated with heroin and other opiates,” said U. S. Attorney Hochul. “Certainly the most effective way to combat this crisis would be for users to stop taking these illegal substances or even better, never start. Until that day comes, however, we in law enforcement will continue to use all of our resources to bring to justice those who would poison our community with these deadly substances.”
The investigation was led by the Federal Bureau of Investigation, with the assistance of the Rochester Police Department, under the direction of Chief Michael Ciminelli, and the Greater Rochester Area Narcotics Enforcement Team (GRANET).
Hammond Woman Charged in Tax Fraud Scheme with Mail Fraud and Aggravated Identity TheftRead the Press Release
U.S. Attorney Kenneth A. Polite announced that RAVEN HUGHES, age 27, of Hammond, was charged today in an eight-count Indictment with mail fraud and aggravated identity theft for engaging in a multi-year tax fraud scheme.
According to the Indictment, HUGHES obtained the name and social security number of unsuspecting individuals and used that information without their knowledge or authorization to prepare false tax returns that claimed large tax refunds. The refund checks were mailed to numerous Post Office Boxes opened by HUGHES throughout Louisiana, as well as her residence. Once the tax refund checks were received, HUGHES falsely endorsed the checks and cashed them. HUGHES also arranged for some of the refunds to be transmitted electronically into bank accounts under her control. In total, HUGHES caused not fewer than 148 federal income tax returns to be submitted in the names of at least 103 different individuals without their knowledge or authorization. As a result of the conduct described above, between 2009 and 2012 HUGHES sought over $646,000 in fraudulent tax refunds from the Department of the Treasury, and she received at least $199,050.
“Our agency will vigorously pursue fraudulent refund claims and those individuals who engage in identity theft,” stated Jerome R. McDuffie, Special Agent in Charge, IRS Criminal Investigation. “The message to be taken from today’s court action against Ms. Hughes is simple. We will continue to work with the United States Attorney's Office to aggressively protect innocent taxpayers and preserve the integrity of our tax system. Participation in refund fraud schemes does not pay and those who do so will be prosecuted and held accountable for their illegal activities."
If convicted, HUGHES faces a maximum term of imprisonment for each count of mail fraud of not more than twenty years, followed by up to three years of supervised release, and a $250,000 fine. HUGHES also faces a mandatory consecutive two-year sentence for the commission of aggravated identity theft.
U.S. Attorney Polite reiterated that the Indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of the Internal Revenue Service – Criminal Investigation in investigating this matter. Assistant U.S. Attorney Jordan Ginsberg is in charge of the prosecution.
Raven Hugh Indictment.pdf (1.91 MB)
Gwinnett County Man goes to Prison for Child PornographyRead the Press Release
ATLANTA - Samuel London has been sentenced to eight years and four months in federal prison for downloading child pornography. London’s computer contained thousands of files containing child pornography including images depicting the sexual abuse of infants and toddlers.
“It is beyond belief that anyone could enjoy watching the sexual abuse of infants and toddlers,” said Acting U.S. Attorney John Horn. “This defendant’s conduct fueled the production and trade of this disgusting material.”
“This sentencing of Mr. London removes from our community an individual who has consistently demonstrated his willingness to exploit vulnerable children through child pornography. This case not only reflects the commitment of law enforcement to aggressively pursue these types of cases but also illustrates why we need to,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office.
According to Acting U.S. Attorney Horn, the charges and other information presented in court: In August 2013, law enforcement officers in Maryland seized a website that was used by individuals to advertise and distribute child pornography and to discuss the sexual abuse of children. That investigation led to a target in Michigan, who admitted to FBI agents that he had sexually abused his three-year-old daughter while using Skype so that a couple in Georgia could watch the abuse.
FBI agents determined that the couple—Samuel London and Heather Dalton—lived in Sugar Hill, Georgia. FBI agents executed a search warrant at their home on January 24, 2014. Agents found thousands of files containing child pornography on a computer belonging to London, with many of the images depicting the sexual abuse of infants and toddlers.
Samuel London, 30, of Sugar Hill, Georgia, has been sentenced to eight years and four months in prison to be followed by ten years of supervised release. London was convicted on these charges on April 2, 2015, after he pleaded guilty.
Heather Dalton is being prosecuted by the Gwinnett County District Attorney’s Office on charges of child molestation.
This case was investigated by the Federal Bureau of Investigation.
Assistant United States Attorney Paul R. Jones prosecuted the case.
This case is being brought as part of Project Safe Childhood. In February 2006, the Attorney General launched Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorney’s Offices around the country, Project Safe Childhood marshals federal, state and local resources to apprehend and prosecute individuals who exploit children. For more information about Project Safe Childhood, please visit www.projectsafechildhood.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 UW-Oshkosh Student Sentenced to 40 Months in Prison for Possession of RicinRead the Press Release
Kyle Allen Smith, 21, of Oshkosh, Wisconsin, was sentenced today to 40 months in federal prison for possession of ricin by the Chief District Judge William C. Griesbach of the Eastern District of Wisconsin, announced Assistant Attorney General for National Security John P. Carlin and U.S. Attorney James L. Santelle of the Eastern District of Wisconsin.
Smith was arrested on October 31, 2014, after two professors at the University of Wisconsin at Oshkosh reported to campus authorities that Smith was making unusual inquiries about chemical processes, including extracting of ribosomal inhibiting protein. According to the plea agreement, Smith admitted growing castor bean plants and extracting ricin from the beans. A substance found in Smith’s residence was sent to the Department of Homeland Security’s National Bioforensics Analysis Center at Fort Detrick, Maryland, and tested positive for the toxin ricin. Ricin is a toxin that infects human cells and blocks their ability to synthesize their own protein. Small doses of ricin may be lethal to human beings if ingested, inhaled or injected. Symptoms of ricin poisoning can include difficulty breathing, nausea, vomiting and diarrhea, with possible death occurring within 36 to 72 hours. According to information posted on the website of the Centers for Disease Control and Prevention (CDC), there are no known antidotes for ricin poisoning.
Smith admitted having homicidal thoughts and that these thoughts might have sparked his curiosity about the production of ricin. He stated he would not use or test the ricin on any human because too many people knew what he was doing and would turn him in.
Assistant Attorney General Carlin joined U.S. Attorney Santelle in praising the actions of the professors and the University administration in bringing Smith to the prompt attention of law enforcement authorities. It is a perfect example of “see something, say something,” which guides the required vigilance of our times. Assistant Attorney General Carlin and U.S. Attorney Santelle also thanked the Wisconsin National Guard, 54th Civil Support Team, for the critical assistance they provided in the safe recovery of the ricin.
The case was investigated by the Oshkosh Police Department, the FBI and the University of Wisconsin – Oshkosh Police Department. The case was prosecuted by Assistant U.S. Attorney Paul L. Kanter of the Eastern District of Wisconsin and the Justice Department’s National Security Division.
Former State Representative Convicted on Bribery ChargeRead the Press Release
A former state representative and Pikeville, Kentucky, coal operator, Wendell Keith Hall, has been convicted by a jury of bribing a federal mine official.
The jury deliberated for one hour and 30 minutes following five days of trial. According to evidence presented at trial, Hall, who represented House District 93 in the Kentucky General Assembly, paid mine reclamation officer Kelly Shortridge for favorable treatment in connection with his official duties.
Shortridge worked as an environmental inspector for the Office of Surface Mine Reclamation and Enforcement, where he was responsible for enforcing federal mine reclamation laws and regulations. From 2006 through 2011, Shortridge inspected mines owned by Hall. Shortridge ignored violations that occurred on Hall’s property in exchange for a series of payments totaling over $46,000.
The evidence also established that the two men disguised the payments as consulting fees. In 2010, they set up a shell company, DKJ Consulting, in the name of Shortridge’s wife and opened a bank account with her as the sole authorized signatory on the account. Hall then used a company he owned, S&K Properties, to funnel money to Shortridge through DKJ to make the payments appear as legitimate business expenses.
“Mr. Hall’s brazen scheme to corrupt an important governmental function for his personal benefit is made all the more egregious by his former status as a member of the Kentucky General Assembly,” said U.S. Attorney Kerry B. Harvey for the Eastern District of Kentucky. “The United States will seek a sentence which properly reflects the serious nature of Mr. Hall’s criminal conduct.”
Shortridge pleaded guilty in February of this year. Shortridge is scheduled to be sentenced on Aug. 6, 2015. U.S. Attorney Harvey, Special Agent in Charge, Howard S. Marshall for the FBI and Scott Oliver of the Office of Inspector General for the Department of Interior jointly made the announcement.
Hall faces a maximum of 10 years in prison. However, any sentence imposed will come after the court considers the U.S. Sentencing Guidelines and the federal statutes governing the imposition of sentences.
Former State Representative Convicted on Bribery ChargeRead the Press Release
PIKEVILLE – A former state representative and Pikeville coal operator, Wendell Keith Hall, has been convicted by a jury of bribing a federal mine official.
The jury deliberated for one hour and 30 minutes following five days of trial. According to evidence presented at trial, Hall, who represented House District 93 in the Kentucky General Assembly, paid mine reclamation officer Kelly Shortridge for favorable treatment in connection with his official duties.
Shortridge worked at the Kentucky Division of Mine Reclamation and Enforcement, where he was responsible for enforcing mine reclamation laws and regulations. From 2006 through 2011, Shortridge inspected mines owned by Hall. Shortridge ignored violations that occurred on Hall’s property in exchange for a series of payments totaling over $46,000.
The evidence also established that the two men disguised the payments as consulting fees. In 2010, they set up a shell company, DKJ Consulting, in the name of Shortridge’s wife and opened a bank account with her as the sole authorized signatory on the account. Hall then used a company he owned, S&K Properties, to funnel money to Shortridge through DKJ to make the payments appear as legitimate business expenses.
“Mr. Hall’s brazen scheme to corrupt an important governmental function for his personal benefit is made all the more egregious by his former status as a member of the Kentucky General Assembly,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “The United States will seek a sentence which properly reflects the serious nature of Mr. Hall’s criminal conduct.”
Shortridge pleaded guilty in February of this year. Shortridge is scheduled to be sentenced on August 6, 2015.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, FBI; and Scott Oliver, Department of Interior, Office of Inspector General, jointly made the announcement.
Hall faces a maximum of 10 years in prison. However, any sentence imposed will come after the Court considers the U.S. Sentencing Guidelines and the federal statutes governing the imposition of sentences.
Former Senior Executive of Qualcomm Sentenced to 18 Months and Fined $500,000 for Insider Trading and Money LaunderingRead the Press Release
The former Executive Vice President and President of Global Business Operations for Qualcomm Inc., was sentenced today to 18 months in prison and fined $500,000 for his role in a three-year insider trading scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Laura E. Duffy of the Southern District of California made the announcement.
“Through his position as a high-ranking executive at Qualcomm, Jing Wang gained unique access to information about the company’s earnings and intended acquisitions and illegally exploited that inside information for personal gain,” said Assistant Attorney General Caldwell. “He then enlisted the services of others – his stock broker and his brother – to cover up the scheme. This prosecution demonstrates the Criminal Division’s commitment to holding accountable corporate executives who would undermine the integrity of the financial marketplace.”
“Jing Wang was a powerful insider at one of the world’s top corporations – but he threw it all away to make a few hundred thousand dollars,” said U.S. Attorney Duffy. “While Wang has lost his power, his position and his freedom, the real losers here are investors who play by the rules, and our nation’s financial system, which is diminished with every one of these schemes.”
Jing Wang, 52, of Del Mar, California, pleaded guilty in July 2014 to insider trading, money laundering and obstruction of justice for orchestrating a multi-year scheme to trade on the confidential information of Qualcomm and cover up his criminal conduct. The sentence was imposed by U.S. District Judge William Q. Hayes of the Southern District of California.
In connection with his plea, Wang admitted that he made three, separate insider trades using a brokerage account in the name of his British Virgin Island (BVI) shell company, Unicorn Global Enterprises. First, in early 2010, prior to Qualcomm’s announcement of a dividend increase and stock repurchase, Wang bought company stock valued at approximately $277,000. He also admitted that, in December 2010, while attending Qualcomm’s Board of Directors meeting in Hong Kong, and hours after the Board approved a non-public offer to purchase Atheros, a developer of semiconductors for wireless communications, Wang purchased stock in Atheros. Wang further admitted that, just a few weeks later, he directed his stockbroker, Gary Yin, to sell the Atheros stock, for approximately $481,000, and purchase Qualcomm stock one day before the company announced record earnings.
Wang also pleaded guilty to money laundering for transferring the illegal proceeds from Unicorn’s account to an account of a new BVI shell company he controlled. He further admitted to obstructing justice by creating a false cover story in which he and co-conspirator Yin would blame Wang’s brother Bing Wang, who resides in rural China, for the insider trading and ownership of the Unicorn Account. Among other acts, Wang collected incriminating evidence and provided it to Yin to take to China, and arranged meetings between Yin and Bing Wang during which the two rehearsed the false account.
Yin pleaded guilty to conspiring to obstruct justice and launder money, and currently is scheduled to be sentenced on July 17, 2015. Bing Wang has been charged in connection with the scheme, and is wanted on an international arrest warrant.
This case was investigated by the FBI’s San Diego Field Office and the Internal Revenue Service-Criminal Investigation’s San Diego Field Division. The SEC’s Los Angeles Regional Office provided substantial assistance. The case is being prosecuted by Trial Attorney James P. McDonald of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Eric J. Beste of the Southern District of California.
Former Senior Executive of Qualcomm Sentenced to 18 Months and Fined $500,000 for Insider Trading and Money LaunderingRead the Press Release
SAN DIEGO – Jing Wang, former Executive Vice President and President of Global Business Operations for Qualcomm Inc., was sentenced today to 18 months in prison and fined $500,000 for his role in a three-year insider trading scheme.
Wang, 52, who pleaded guilty in July 2014 to insider trading, money laundering and obstruction of justice charges, was sentenced by U.S. District Judge William Q. Hayes for orchestrating a scheme to trade on the confidential information of Qualcomm and covering up his criminal conduct.
“Jing Wang was a powerful insider at one of the world’s top corporations – but he threw it all away to make a few hundred thousand dollars,” said U.S. Attorney Laura Duffy. “While Wang has lost his power, his position and his freedom, the real losers here are investors who play by the rules, and our nation’s financial system, which is diminished with every one of these schemes.”
“Through his position as a high-ranking executive at Qualcomm, Jing Wang gained unique access to information about the company’s earnings and intended acquisitions and illegally exploited that inside information for personal gain,” said Assistant Attorney General Leslie R. Caldwell. “He then enlisted the services of others – his stock broker and his brother – to cover up the scheme. This prosecution demonstrates the Criminal Division’s commitment to holding accountable corporate executives who would undermine the integrity of the financial marketplace.”
In connection with his plea, Wang admitted that he made three, separate insider trades using a brokerage account in the name of his British Virgin Island (BVI) shell company, Unicorn Global Enterprises. First, in early 2010, prior to Qualcomm’s announcement of a dividend increase and stock repurchase, Wang bought company stock valued at approximately $277,000. He also admitted that, in December 2010, while attending Qualcomm’s Board of Directors meeting in Hong Kong, and hours after the Board approved a non-public offer to purchase Atheros, a developer of semiconductors for wireless communications, Wang purchased stock in Atheros. Wang further admitted that, just a few weeks later, he directed his stockbroker, Gary Yin, to sell the Atheros stock, for approximately $481,000, and purchase Qualcomm stock one day before the company announced record earnings.
Wang also pleaded guilty to money laundering for transferring the illegal proceeds from Unicorn’s account to an account of a new BVI shell company he controlled. He further admitted to obstructing justice by creating a false cover story in which he and co-conspirator Yin would blame Wang’s brother Bing Wang, who resides in rural China, for the insider trading and ownership of the Unicorn Account. Among other acts, Wang collected incriminating evidence and provided it to Yin to take to China, and arranged meetings between Yin and Bing Wang during which the two rehearsed the false account.
Yin pleaded guilty to conspiring to obstruct justice and launder money, and currently is scheduled to be sentenced on July 17, 2015. Bing Wang has been charged in connection with the scheme, and is wanted on an international arrest warrant.
This case was investigated by the FBI’s San Diego Field Office and the Internal Revenue Service-Criminal Investigation’s San Diego Field Division. The SEC’s Los Angeles Regional Office provided substantial assistance. The case is being prosecuted by Assistant U.S. Attorney Eric J. Beste of the Southern District of California and Trial Attorney James P. McDonald of the Criminal Division’s Fraud Section.
DEFENDANT Case Number: 13CR3487-WQH Jing Wang Age: 51 Del Mar, California CHARGESCount 1: Title 15, United States Code, Sections 78j(b), 78ff and 17 C.F.R. § 240.10b-5—Securities Fraud (Insider Trading). Maximum Penalty: 20 years’ custody, a $5 million fine, 3 years’ supervised release, and a $100 special assessment.
Count 2: Title 18, United States Code, Section 1956 – Money Laundering. Maximum Penalty: 20 years’ custody, a fine of $500,000 or twice the value of the property involved in the transaction, 3 years’ supervised release, and a $100 special assessment.
INVESTIGATING AGENCIESFederal Bureau of Investigation
Internal Revenue Service-Criminal InvestigationFormer Otismed CEO Sentenced to Two Years in Prison for Selling Unapproved Surgical DevicesRead the Press Release
Corporation Previously Paid More Than $80 million to Resolve Criminal and Civil Investigations
NEWARK, N.J. – The former president and CEO of OtisMed Corp. was sentenced today to serve 24 months in prison for intentionally distributing a medical device used in knee replacement surgery after its application for marketing clearance had been rejected by the Food and Drug Administration (FDA), the Justice Department announced.
Charlie Chi, 46, of San Francisco, pleaded guilty before U.S. District Judge Claire C. Cecchi in December 2014 to three counts of distributing adulterated medical devices in interstate commerce in violation of the federal Food, Drug, and Cosmetic Act (FDCA) after having been told by the FDA, legal counsel and his own board of directors not to do so. Judge Cecchi imposed the sentence today in Newark federal court. In September 2014, Judge Cecchi sentenced OtisMed Corporation, now a subsidiary of Stryker Corporation, to a criminal fine of $34.4 million and ordered the company to pay $5.16 million in criminal forfeiture. Stryker acquired the company after the criminal conduct for which Chi was sentenced. In a related civil settlement, OtisMed agreed to pay approximately $41.2 million, including interest, to resolve its civil liability for submitting false claims to the Medicare, TRICARE, Federal Employees Health Benefits and Medicaid programs.
“The defendant betrayed the trust of patients whose doctors were using his unapproved surgical device for a serious medical procedure,” U.S. Attorney Fishman said. “With everything else people have to deal with when they are facing surgery, they shouldn’t have to worry whether their doctor is using equipment that has been approved for use. The punishment meted out to Chi and his company is appropriate.”
“Today’s sentencing of OtisMed’s CEO ought to send a clear message to others in positions of authority within the medical device and pharmaceutical industries: the Department of Justice will vigorously prosecute not only corporations, but also the individuals at their helm who are responsible for endangering public health and safety in pursuit of profit,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said.
According to documents filed in this case and statements made in court:
In August 2005, Chi was among the founders of OtisMed, and conceived of the OtisKnee orthopedic cutting guide, its primary product. Chi acted as OtisMed’s president, CEO and chairman of its board of directors until OtisMed was acquired by Stryker in November 2009. The OtisKnee was used by surgeons during total knee arthroplasty (TKA), commonly known as knee replacement surgery. The surgical procedure requires a surgeon to remove the ends of the leg bones and to reshape the remaining bone to accommodate the implantation of an artificial knee prosthesis. The cuts to the bone must be made at precise angles because they are critical to the clinical result; failure to achieve the correct angle in TKA procedures can result in failure of the bones and/or the implanted prosthetic joint.
OtisMed marketed the OtisKnee cutting guide as a tool to assist surgeons in making bone cuts specific to individual patients’ anatomy based on MRIs performed prior to surgery. None of OtisMed’s claims regarding the OtisKnee device were evaluated by the FDA before the company used them in advertisements and promotional material.
Between May 2006 and September 2009, OtisMed sold more than 18,000 OtisKnee devices, generating revenue of approximately $27.1 million.
On Oct. 2, 2008, OtisMed submitted a pre-market notification to the FDA seeking clearance to market the OtisKnee. The company had not previously sought the FDA’s clearance or approval and had been falsely representing to physicians and other potential purchasers that the product was exempt from such pre-market requirements.
On Sept. 2, 2009, the FDA sent OtisMed a notice that its submission had been denied, noting that the company had failed to demonstrate that the OtisKnee was as safe and effective as other legally marketed devices. The letter warned OtisMed that distribution of the OtisKnee prior to approval would be an FDCA violation, and indicated the FDA viewed the product as a “significant risk device system,” which is defined as presenting a potential for serious risk to the health, safety or welfare of a subject. Chi and others at OtisMed received advice from legal and regulatory counsel confirming it would be unlawful for OtisMed to continue distributing the OtisKnee.
Though the board of directors unanimously decided to stop further shipments of the devices, Chi was concerned that inconveniencing surgeons planning to use the OtisKnee in scheduled surgeries would exacerbate the negative impact of the FDA letter on the reputation of OtisMed and the device. Chi directed OtisMed employees to organize a mass shipment of all OtisKnee devices that had been manufactured but had not yet been shipped and suggested ways for the employees to hide the shipments from FDA regulators.
At Chi’s direction, OtisMed shipped approximately 218 OtisKnee guides from California to surgeons throughout the United States, including 16 to surgeons in New Jersey, a week after the FDA expressly denied OtisMed’s request for clearance.
“With more than 600,000 knee replacements performed each year, patients rely on FDA to help ensure that the devices are safe and work as intended,” Director George M. Karavetsos of the FDA’s Office of Criminal Investigations said. “When manufacturers ignore FDA requirements, they risk endangering patients’ health and quality of life. We will continue to protect the public health by bringing to justice those who disregard FDA regulations.”
Chi’s sentence marks the culmination of a long-term investigation conducted jointly by the FDA’s Office of Criminal Investigations, under the direction of Special Agent in Charge Antoinette V. Henry, and the Department of Health and Human Services’ Office of Inspector General (HHS-OIG), under the direction of Special Agent in Charge Scott J. Lampert. Counsel to the HHS-OIG and FDA’s Office of Chief Counsel to the FDA also assisted. The National Association of Medicaid Fraud Control Units, along with the Medicaid Fraud Control Unit of the Massachusetts Attorney General’s Office, assisted in coordinating the settlements with the various states.
In addition to the prison term, Judge Cecchi sentenced Chi to one year of supervised release and fined him $75,000.
The government is represented by Chief Jacob T. Elberg of the U.S. Attorney’s Office of the District of New Jersey Health Care and Government Fraud Unit and Trial Attorney Ross S. Goldstein of the Civil Division’s Consumer Protection Branch.
U.S. Attorney Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
Charlie Chi: Peter Harvey Esq., New York
OtisMed: Brien O’Connor Esq.; Joshua Levy Esq., Boston
Counsel for Relator Richard Adrian: Joseph Callow Esq., Cincinnati, Ohio; Joel Hesch Esq., Lynchburg, Virginia
Former OtisMed CEO Sentenced for Selling Unapproved Surgical DevicesRead the Press Release
Corporation Previously Paid More Than $80 million to Resolve Criminal and Civil Investigations
The former president and CEO of OtisMed Corporation was sentenced today to serve two years in prison for intentionally distributing a medical device used in knee replacement surgery after its application for marketing clearance had been rejected by the Food and Drug Administration (FDA), the Department of Justice announced.
Charlie Chi, 46, of San Francisco, pleaded guilty in December 2014 to three counts of distributing adulterated medical devices in interstate commerce in violation of the federal Food, Drug, and Cosmetic Act (FDCA) after having been told by the FDA, legal counsel and his own board of directors not to do so. U.S. District Judge Claire C. Cecchi in Newark, New Jersey, delivered Chi’s 24-month sentence today and also ordered him to serve one year of supervised release and to pay a $75,000 fine. In September 2014, Judge Cecchi sentenced OtisMed Corporation, now a subsidiary of Stryker Corporation, to a criminal fine of $34.4 million and ordered the company to pay $5.16 million in criminal forfeiture. Stryker acquired the company after the criminal conduct for which he was sentenced today. In a related civil settlement, OtisMed agreed to pay approximately $41.2 million, including interest, to resolve its civil liability for submitting false claims to the Medicare, TRICARE, Federal Employees Health Benefits and Medicaid programs.
“Today’s sentencing of OtisMed’s CEO ought to send a clear message to others in positions of authority within the medical device and pharmaceutical industries: the Department of Justice will vigorously prosecute not only corporations, but also the individuals at their helm who are responsible for endangering public health and safety in pursuit of profit,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.
“The defendant betrayed the trust of patients whose doctors were using his unapproved surgical device for a serious medical procedure,” said U.S. Attorney Paul J. Fishman of the U.S. Attorney’s Office of the District of New Jersey. “With everything else people have to deal with when they are facing surgery, they shouldn’t have to worry whether their doctor is using equipment that has been approved for use. The punishment meted out to Chi and his company is appropriate.”
According to documents filed in this case and statements made in court:
In August 2005, Chi was among the founders of OtisMed and conceived of the OtisKnee orthopedic cutting guide, its primary product. Chi acted as OtisMed’s president, CEO and chairman of its board of directors until OtisMed was acquired by Stryker in November 2009. The OtisKnee was used by surgeons during total knee arthroplasty (TKA), commonly known as knee replacement surgery. The surgical procedure requires a surgeon to remove the ends of the leg bones and to reshape the remaining bone to accommodate the implantation of an artificial knee prosthesis. The cuts to the bone must be made at precise angles because they are critical to the clinical result; failure to achieve the correct angle in TKA procedures can result in failure of the bones and/or the implanted prosthetic joint.
OtisMed marketed the OtisKnee cutting guide as a tool to assist surgeons in making bone cuts specific to individual patients’ anatomy based on MRIs performed prior to surgery. None of OtisMed’s claims regarding the OtisKnee device were evaluated by the FDA before the company used them in advertisements and promotional material.
Between May 2006 and September 2009, OtisMed sold more than 18,000 OtisKnee devices, generating revenue of approximately $27.1 million.
On Oct. 2, 2008, OtisMed submitted a pre-market notification to the FDA seeking clearance to market the OtisKnee. The company had not previously sought the FDA’s clearance or approval and had been falsely representing to physicians and other potential purchasers that the product was exempt from such pre-market requirements.
On Sept. 2, 2009, the FDA sent OtisMed a notice that its submission had been denied, noting that the company had failed to demonstrate that the OtisKnee was as safe and effective as other legally marketed devices. The letter warned OtisMed that distribution of the OtisKnee prior to approval would be an FDCA violation, and indicated the FDA viewed the product as part of a “significant risk device system,” which is defined as presenting a potential for serious risk to the health, safety or welfare of a subject. Chi and others at OtisMed received advice from legal and regulatory counsel confirming it would be unlawful for OtisMed to continue distributing the OtisKnee.
Though the board of directors unanimously decided to stop further shipments of the devices, Chi was concerned that inconveniencing surgeons planning to use the OtisKnee in scheduled surgeries would exacerbate the negative impact of the FDA letter on the reputation of OtisMed and the device. Chi directed OtisMed employees to organize a mass shipment of all OtisKnee devices that had been manufactured but had not yet been shipped and suggested ways for the employees to hide the shipments from FDA regulators.
At Chi’s direction, OtisMed shipped approximately 218 OtisKnee guides from California to surgeons throughout the United States, including 16 to surgeons in New Jersey, a week after the FDA expressly denied OtisMed’s request for clearance.
“With more than 600,000 knee replacements performed each year, patients rely on FDA to help ensure that the devices are safe and work as intended,” said Director George M. Karavetsos of the FDA’s Office of Criminal Investigations. “When manufacturers ignore FDA requirements, they risk endangering patients’ health and quality of life. We will continue to protect the public health by bringing to justice those who disregard FDA regulations.”
Chi’s sentence marks the culmination of a long-term investigation conducted jointly by the FDA’s Office of Criminal Investigations, under the direction of Special Agent in Charge Antoinette V. Henry, and the Department of Health and Human Services’ Office of Inspector General (HHS-OIG), under the direction of Special Agent in Charge Scott J. Lampert. Counsel to the HHS-OIG and FDA’s Office of Chief Counsel to the FDA also assisted. The National Association of Medicaid Fraud Control Units, along with the Medicaid Fraud Control Unit of the Massachusetts Attorney General’s Office, assisted in coordinating the settlements with the various states.
The government is represented by Chief Jacob T. Elberg of the U.S. Attorney’s Office of the District of New Jersey Health Care and Government Fraud Unit and Trial Attorney Ross S. Goldstein of the Civil Division’s Consumer Protection Branch.
U.S. Attorney Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
Former Northampton Man Pleads Guilty to Failing to RegisterRead the Press Release
BOSTON – Wade Branch, 63, pleaded guilty today to one count of failing to register as a sex offender in U.S. District Court in Springfield. Branch was indicted in March 2015. Sentencing is scheduled for September 24, 2015.
In 1990, Branch was convicted of indecent assault and in 2000, he was convicted of rape in Hampden County Superior Court. On multiple occasions, he was given written notice of his obligations to register as a sex offender in the state in which he resides due to his convictions. Branch moved from Massachusetts to California, where he failed to register as a sex offender from 2008 to 2015, as he was required to do.
The charging statute provides for a sentence of no greater than 10 years in prison, a lifetime 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.
U.S. Attorney Carmen M. Ortiz and U.S. Marshal John Gibbons for the District of Massachusetts made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Alex J. Grant of Ortiz’s Springfield Branch Office.
The case is brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.