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20 May 2015
Former DEA Supervisor and Employee Charged with False Statements Regarding Employment at Adult Entertainment EstablishmentRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, Diego Rodriguez, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Ronald G. Gardella, Special Agent-in-Charge of the Department of Justice Office of the Inspector General (“DOJ OIG”), announced today the arrest of DAVID POLOS, until recently an Assistant Special Agent-in-Charge with the Drug Enforcement Administration (“DEA”), and GLEN GLOVER, a DEA Information Technology Specialist, for allegedly making false statements to the government regarding their employment at an adult entertainment establishment. The Complaint alleges that POLOS, who supervised the Organized Crime and Drug Enforcement Strike Force, and GLOVER failed to disclose their employment at, and ownership interests in, an adult entertainment establishment (the “Club”) in Northern New Jersey in connection with a background check to determine their suitability as employees of a federal law enforcement agency with access to classified information. The national security forms POLOS and GLOVER allegedly submitted in connection with the background check require disclosure of outside employment in part due to concerns attendant to certain types of employment, including proximity to crime and persons involved in crime and the risk of employee blackmail. POLOS and GLOVER surrendered to the FBI in Manhattan this morning, and are scheduled to appear before U.S. Magistrate Judge Kevin Nathaniel Fox in Manhattan federal court later today.
Manhattan U.S. Attorney Bharara said: “David Polos and Glen Glover had important and sensitive law enforcement jobs with the DEA. As alleged in the Complaint, they also had other secret jobs, which they concealed from DEA in order to maintain their national security clearance, betraying the oaths they had taken and creating needless risk for the agency they worked for.”
FBI Assistant Director-in-Charge Rodriguez said: “We expect those in government—and particularly those charged with enforcing the law—to tell the truth. As alleged, the defendants’ lack of candor is what finds them before a judge today in Manhattan Federal Court.”
DOJ OIG Special Agent-in-Charge Gardella said: “Federal law enforcement officers must be held to the highest standards of integrity. The alleged conduct is serious and we will do everything we can to ensure that justice is done in this case.”
According to the allegations in the Complaint unsealed today in Manhattan federal court*:
GLOVER and POLOS submitted national security forms in August and September 2011, respectively, that stated, among other things, that they did not have employment other than their DEA jobs within the previous seven years. In fact, as charged, GLOVER was the part owner of, and POLOS had a convertible ownership interest in, the Club, which featured scantily clad and sometimes topless women dancers and offered private stalls for what were supposed to be limited-contact dances between dancers and their patrons. As POLOS and GLOVER knew, many of the dancers – who at times engaged in sexual acts with club patrons and staff – were undocumented immigrants not lawfully in the United States.
GLOVER and POLOS both worked regular shifts at the Club in the months prior to and following their submission of the national security forms. They also hired, fired, and paid bartenders, dancers, and bouncers; advertised the Club in local periodicals; manned a back office available only to employees; remotely monitored video camera feed from the Club when not present; and generally tended to various Club-related matters. GLOVER and POLOS at times attended to Club matters during DEA work hours.
Had POLOS and GLOVER truthfully disclosed their employment at the Club, their ownership and involvement in the affairs of the Club would have been investigated as part of their background checks, and the security clearances that they were required to maintain as federal law enforcement employees likely would have been denied.
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POLOS, 51, of West Nyack, New York, and GLOVER, 45, of Lyndhurst, New Jersey, are each charged with one count of making false statements, which carries a maximum sentence of five years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Bharara praised the investigative work of the FBI and DOJ OIG. He also thanked the Internal Revenue Service-Criminal Investigation Division for its assistance.
This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Martin S. Bell and Andrew D. Goldstein are in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
* As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations and every fact described should be treated as an allegation.
Former Chief Financial Officer Pleads Guilty for Role in $30 Million Bank Fraud SchemeRead the Press Release
Earlier today, Thomas Torre, the former Chief Financial Officer of Metro Fuel Oil Corp., pled guilty to conspiracy to commit bank fraud. According to court filings and facts presented during the plea proceeding, Torre conspired in a scheme to overstate Metro Fuel’s accounts receivable in order to draw from a revolving line of credit issued by New York Commercial Bank. The fuel company later filed for bankruptcy after fraudulently obtaining over $30 million from the bank.
The guilty plea was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office.
“Through his deceit and trickery, Torre defrauded New York Commercial Bank in an amount exceeding $30 million,” stated Acting United States Attorney Currie. “We will remain alert to such schemes and will aggressively prosecute those who would steal from our financial institutions.” Mr. Currie extended his grateful appreciation to the Federal Bureau of Investigation, the agency which led the government’s investigation.
From approximately July 2007 to July 2012, Torre and others falsely overstated the company’s accounts receivable on certificates submitted to the bank at least once per month by not recording cash payments from customers and by creating fictitious invoice amounts. The bank relied on this misinformation in determining the amount Metro Fuel could borrow on its revolving line of credit. By September 2012, Metro Fuel could no longer pay its bills and filed a voluntary petition for bankruptcy.
Today’s guilty plea took place before United States District Judge Pamela K. Chen. When sentenced, Torre faces up to 30 years in prison, as well as forfeiture and a fine. The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney William P. Campos is in charge of the prosecution. Assistant United States Attorney Brian D. Morris is handling the forfeiture aspect of the case.
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.
The Defendant:
THOMAS TORRE
Age: 63
Albertson, New York
E.D.N.Y. Docket No. 14 - CR - 514 (PKC)
Former Chairman of Board of Trustees for South Carolina State Sentenced to 5 Years for Racketeering ConspiracyRead the Press Release
Contact Person: J.D. Rowell, (803) 929-3000
Columbia, South Carolina---- The United States Attorney’s Office announced that Jonathan Pinson, age 45, of Greenville, South Carolina was sentenced today in federal court in Columbia, South Carolina, for Conspiracy to Commit Racketeering (Count 1), Theft Concerning Programs Receiving Federal Funds (Counts 2,3) Conspiracy to Commit Wire Fraud (Counts 12, 18), Mail Fraud (Counts 25, 26), Wire Fraud (Counts 27-34), Money Laundering (Counts 35-41) and False Statements (Counts 43-46 and 48-50). United States District Judge David C. Norton of Columbia sentenced Mr. Pinson to 60 months concurrent on each count of conviction, to be followed by 5 years supervised release. Judge Norton imposed restitution in the amount of $337,843.05.
In June 2014, a jury convicted Mr. Pinson for his involvement in four different schemes. One scheme revolved around the 2011 homecoming concert at SCSU and Mr. Pinson’s efforts to steer the concert promotion contract to his close friend and former SCSU roommate in exchange for a kickback.
Other schemes included Mr. Pinson’s theft of government funds earmarked for the installation of a diaper plant in Marion County. Evidence showed that proceeds from the grant, intended to create jobs in rural Marion County, were instead pocketed by Mr. Pinson and his associates, Lance Wright, Tony Williams, and Phil Mims, each of whom has pled guilty to charges related to the fraud.
Mr. Pinson was also convicted of theft of government funds received from a 10 million dollar American Recovery and Reinvestment Act (ARRA) grant (commonly known as stimulus money) intended for the development known as the Village at Rivers Edge (VRE).
In the final scheme Mr. Pinson again used his position as Chairman of the Board of SCSU to influence officials at SCSU to purchase land known as “Sportsman’s Retreat”. The seller of the property, Richard Zahn, Pinson’s business partner, testified that he agreed to pay a kickback to Mr. Pinson in the form of a new Porsche Cayenne, an SUV valued at approximately 90 thousand dollars.
During the two and one-half week trial, the Government called twenty witnesses, introduced approximately 200 exhibits and played 118 secretly recorded telephone calls. The calls, authorized by a court ordered wiretap, covered from July 21 to November 20, 2011.
“The FBI, and its local, state, and federal law enforcement partners, remain vigilant in the fight against Public Corruption and are committed to bringing to justice those who abuse public trust,” said FBI Special Agent in Charge David A. Thomas. In thanking his law enforcement partners, SAC Thomas added, “The investigation that gave rise to this indictment and the conviction of Mr. Pinson and others is an example of the excellent work being done by the South Carolina Public Corruption Task Force which includes the FBI, the South Carolina Law Enforcement Division and IRS.”
Special Agent in Charge Thomas Holloman said, “The Internal Revenue Service, Criminal Investigations, is committed to using our agent’s expertise in ‘following the money’ to bring accountability to public officials who steal taxpayer dollars to fund their prodigal lifestyles.”
The case was investigated by agents of the Federal Bureau of Investigation (FBI), State Law Enforcement Division (SLED), Department of Housing and Urban Development, Office of Inspector General (HUD-OIG) and Internal Revenue Service, Criminal Investigations (IRS-CI). Assistant United States Attorney Nancy Wicker, Jane Taylor, Dewayne Pearson, and J.D. Rowell of the Columbia office prosecuted the case.
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Former Alabama State Employee Sentenced to Prison for Stealing Identities Used to Request over $7 Million in Tax RefundsRead the Press Release
Montgomery, Alabama – A Phenix City, Alabama, resident and former state employee was sentenced to serve more than seven years in prison for her role in a stolen identity tax refund fraud 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.
Tamika Floyd (30) was sentenced by U.S. District Court Judge W. Keith Watkins to serve 87 months in prison, three years of supervised release and ordered to pay $3,092,885 in restitution. Floyd pleaded guilty on Oct. 2, 2014, to one count of conspiracy to file false claims and one count of aggravated identity theft. Floyd’s co-conspirators, including Keisha Lanier, Tracy Mitchell, Latasha Mitchell, Talarious Paige and others, pleaded guilty on April 1 and are scheduled to be sentenced on Aug. 7.
According to court documents, between 2006 and 2014, Tamika Floyd worked at two Alabama state agencies located in Opelika, Alabama: the Department of Public Health and the Department of Human Resources. In both positions, she had access to the personal identifying information of individuals. Beginning in 2012, Floyd was approached by co-conspirator Lanier. As part of the scheme, Floyd stole names and personal information from the state agencies and provided the information to Lanier to be used to file false federal income tax returns. Most of the stolen identifying information consisted of names of teenagers. Lanier then provided the stolen information to co-conspirators Tracy Mitchell, Latasha Mitchell, Paige and others to use to file false tax returns. These co-conspirators filed more than 3,000 fraudulent federal income tax returns claiming more than $7.5 million in tax refunds using the stolen information provided by Floyd.
U.S. Attorney Beck Jr. and Acting Assistant Attorney General Ciraolo commended special agents of Internal Revenue Service (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 A. Brown of the Middle District of Alabama, who are prosecuting the case.
Forfeited Assets Seized in Internet Gambling and Money Laundering Case DistributedRead the Press Release
ALBANY, NEW YORK - United States Attorney Richard S. Hartunian announced today the distribution to numerous law enforcement agencies of over $9.6 million dollars of forfeited assets seized during a multi-agency investigation of an international internet gambling operation. Joining U.S. Attorney Hartunian were United States Marshal David McNulty, Albany County Sheriff Craig Apple, Sr., Andrew W. Vale, Special Agent in Charge of the Albany Division of the Federal Bureau of Investigation, IRS Supervisory Special Agent Thomas Fattorusso, and Saratoga County District Attorney Karen Heggen.
The assets were forfeited in connection with guilty pleas entered in U.S. District Court in the Northern District of New York by Philip Gurian, Michele Lasso, and Alan Gould, each of whom pled guilty to Conspiracy to Launder Monetary Instruments, and Jay Goldman, who pled guilty to Transmission of Wagering Information.
A total of $9,628,093.75 was distributed by the U.S. Marshal’s Service to the Albany County Sheriff’s Office, the Federal Bureau of Investigation, the Internal Revenue Service, the Albany County District Attorney’s Office, the Saratoga County District Attorney’s Office and the Broward County Sheriff’s Office as follows:
Albany County Sheriff’s Office $4,662,393.21
Albany County District Attorney’s Office $862,468.22
Saratoga County District Attorney’s Office $363,833.85
Broward County Sheriff’s Office $104,946.22
IRS $1,653,579.39
FBI $1,980,872.86
All of the above law enforcement agencies participated in an investigation which revealed that the above-named defendants operated a large-scale illegal gambling business using internet websites which allowed bettors to place thousands of wagers from New York, Florida, Indiana, California, Texas, Kansas, Nevada, and elsewhere. Over a four year period, at least $10 million in illegal gambling proceeds was deposited into accounts in the names of sham corporations and accounts in Panama, Andorra, and the Cayman Islands. Gurian admitted having said that he was making $150,000 each day. Lasso admitted helping Gurian launder the gambling proceeds to conceal the source and control of the money, depositing at least $8 million. Gould admitted involvement in $3.8 million in transactions. Jay Goldman admitted accepting nearly 9,000 bets totaling over $1.5 million using foreign websites and eighteen different routers.
U.S. Attorney Hartunian said, "Stripping criminals of illegal profits deprives them of the fuel that sustains their illegitimate enterprises. In illegal gambling, money is both the way the crime is committed and the reason for committing it. No money = no crime. Forfeiting the proceeds and instrumentalities of crime puts the money to work for good – helping the victims of crime, funding community programs, and providing resources to be used to promote public safety. Equitable sharing redirects these illegal proceeds toward the local law enforcement agencies who work with their federal counterparts and United States Attorneys to dismantle large scale criminal enterprises like this one. Such sharing can enable a local police chief, sheriff, or district attorney to commit the necessary resources to conduct a complex, long term investigation that in the end enhances public safety."
This case was prosecuted by Assistant U.S. Attorney Robert A. Sharpe.
Florida Man Indicted on Federal Charges for Flying Gyrocopter to U.S. Capitol GroundsRead the Press Release
WASHINGTON – Douglas Hughes, 61, of Ruskin, Fla., was indicted today by a federal grand jury on charges stemming from the April 15, 2015 incident in which he flew a gyrocopter into Washington, D.C., and landed on the West Lawn of the Capitol.
The indictment was announced by Acting U.S. Attorney Vincent H. Cohen, Jr., Kim C. Dine, Chief of the United States Capitol Police, and David C. Williams, Inspector General for the U.S. Postal Service.
Hughes was arrested immediately after landing the gyrocopter. The grand jury indicted him on a total of six charges. They include two felonies: one count each of operating as an airman without an airman’s certificate and violating registration requirements involving aircraft. In addition, he was indicted on four misdemeanor counts: three counts of violation of national defense airspace, and one of operating a vehicle falsely labeled as a postal carrier.
In addition, the indictment includes a forfeiture allegation seeking a judgment for the gyrocopter, which has been seized by law enforcement. Each of the felony charges carries a statutory maximum of three years in prison and potential financial penalties. Each of the misdemeanor charges of violations of national defense airspace carries a statutory maximum of one year in prison and potential fines, and the misdemeanor offense of operating a vehicle falsely labeled as postal carrier carries a statutory maximum of six months in prison and potential fines.
Hughes is to be arraigned on the charges on May 21, 2015, in the U.S. District Court for the District of Columbia.
According to the government’s evidence, Hughes flew the gyrocopter into Washington, D.C. from Gettysburg, Pa., passing through three no-fly zones. An investigation determined that he does not have a pilot’s certificate or registration for the aircraft. The gyrocopter was privately owned by Hughes, but had the logo and emblem of the United States Postal Service without authorization. Hughes was employed by the U.S. Postal Service as a postal carrier in Florida, but he was on leave at the time of the incident, and had no official duties in the Washington, D.C. area.
Hughes has been free on personal recognizance since his initial court appearance in this matter on April 16, 2015. At that time, the Court ordered that he be placed on home detention in Florida. He is barred from returning to the District of Columbia except for court appearances and meetings with his attorney. Any time that he is in the District of Columbia, Hughes must stay away from the Capitol, White House and nearby areas. He also was barred from operating any aircraft while he is on release and ordered to surrender his passport.
Charges contained in an indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The case is being investigated by the United States Capitol Police and the Office of the Inspector General for the U.S. Postal Service. Assistance has been provided by the United States Park Police. The case is being prosecuted by Assistant U.S. Attorney Tejpal S. Chawla, of the National Security Section of the U.S. Attorney’s Office for the District of Columbia.
Five Major Banks Agree to Parent-Level Guilty PleasRead the Press Release
Citicorp, JPMorgan Chase & Co., Barclays PLC, The Royal Bank of Scotland plc Agree to Plead Guilty In Connection With The Foreign Exchange Market and Agree to Pay More Than $2.5 Billion In Criminal Fines
Five major banks – Citicorp, JPMorgan Chase & Co., Barclays PLC, The Royal Bank of Scotland plc and UBS AG – have agreed to plead guilty to felony charges. Citicorp, JPMorgan Chase & Co., Barclays PLC, and The Royal Bank of Scotland plc have agreed to plead guilty to conspiring to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange (FX) spot market and the banks have agreed to pay criminal fines totaling more than $2.5 billion. A fifth bank, UBS AG, has agreed to plead guilty to manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates and pay a $203 million criminal penalty, after breaching its December 2012 non-prosecution agreement resolving the LIBOR investigation.
Attorney General Loretta E. Lynch, Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Director Aitan Goelman of the Commodity Futures Trading Commission’s Division made the announcement.
“Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes, and they serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers,” said Attorney General Lynch. “The penalty these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct. It is commensurate with the pervasive harm done. And it should deter competitors in the future from chasing profits without regard to fairness, to the law, or to the public welfare.”
“The charged conspiracy fixed the U.S. dollar – euro exchange rate, affecting currencies that are at the heart of international commerce and undermining the integrity and the competitiveness of foreign currency exchange markets which account for hundreds of billions of dollars worth of transactions every day,” said Assistant Attorney General Baer. “The seriousness of the crime warrants the parent-level guilty pleas by Citicorp, Barclays, JPMorgan and RBS.”
“The five parent-level guilty pleas that the department is announcing today communicate loud and clear that we will hold financial institutions accountable for criminal misconduct,” said Assistant Attorney General Caldwell. “And we will enforce the agreements that we enter into with corporations. If appropriate and proportional to the misconduct and the company’s track record, we will tear up an NPA or a DPA and prosecute the offending company.”
“These resolutions make clear that the U.S. Government will not tolerate criminal behavior in any sector of the financial markets,” said Assistant Director in Charge McCabe. “This investigation represents another step in the FBI’s ongoing efforts to find and stop those responsible for complex financial schemes for their own personal benefit. I commend the special agents, forensic accountants, and analysts, as well as the prosecutors for the significant time and resources they committed to investigating this case.”
According to plea agreements to be filed in the District of Connecticut, between December 2007 and January 2013, euro-dollar traders at Citicorp, JPMorgan, Barclays and RBS – self-described members of “The Cartel” – used an exclusive electronic chat room and coded language to manipulate benchmark exchange rates. Those rates are set through, among other ways, two major daily “fixes,” the 1:15 p.m. European Central Bank fix and the 4:00 p.m. World Markets/Reuters fix. Third parties collect trading data at these times to calculate and publish a daily “fix rate,” which in turn is used to price orders for many large customers. “The Cartel” traders coordinated their trading of U.S. dollars and euros to manipulate the benchmark rates set at the 1:15 p.m. and 4:00 p.m. fixes in an effort to increase their profits.
As detailed in the plea agreements, these traders also used their exclusive electronic chats to manipulate the euro-dollar exchange rate in other ways. Members of “The Cartel” manipulated the euro-dollar exchange rate by agreeing to withhold bids or offers for euros or dollars to avoid moving the exchange rate in a direction adverse to open positions held by co-conspirators. By agreeing not to buy or sell at certain times, the traders protected each other’s trading positions by withholding supply of or demand for currency and suppressing competition in the FX market.
Citicorp, Barclays, JPMorgan and RBS each have agreed to plead guilty to a one-count felony charge of conspiring to fix prices and rig bids for U.S. dollars and euros exchanged in the FX spot market in the United States and elsewhere. Each bank has agreed to pay a criminal fine proportional to its involvement in the conspiracy:
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Citicorp, which was involved from as early as December 2007 until at least January 2013,has agreed to pay a fine of $925 million;
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Barclays, which was involved from as early as December 2007 until July 2011, and then from December 2011 until August 2012, has agreed to pay a fine of $650 million;
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JPMorgan, which was involved from at least as early as July 2010 until January 2013, has agreed to pay a fine of $550 million; and
- RBS, which was involved from at least as early as December 2007 until at least April 2010, has agreed to pay a fine of $395 million.
Barclays has further agreed that its FX trading and sales practices and its FX collusive conduct constitute federal crimes that violated a principal term of its June 2012 non-prosecution agreement resolving the department’s investigation of the manipulation of LIBOR and other benchmark interests rates. Barclays has agreed to pay an additional $60 million criminal penalty based on its violation of the non-prosecution agreement.
In addition, according to court documents to be filed, the Justice Department has determined that UBS’s deceptive currency trading and sales practices in conducting certain FX market transactions, as well as its collusive conduct in certain FX markets, violated its December 2012 non-prosecution agreement resolving the LIBOR investigation. The department has declared UBS in breach of the agreement, and UBS has agreed to plead guilty to a one-count felony charge of wire fraud in connection with a scheme to manipulate LIBOR and other benchmark interest rates. UBS has also agreed to pay a criminal penalty of $203 million.
According to the factual statement of breach attached to UBS’s plea agreement, UBS engaged in deceptive FX trading and sales practices after it signed the LIBOR non-prosecution agreement, including undisclosed markups added to certain FX transactions of customers. UBS traders and sales staff misrepresented to customers on certain transactions that markups were not being added, when in fact they were. On other occasions, UBS traders and sales staff used hand signals to conceal those markups from customers. On still other occasions, certain UBS traders also tracked and executed limit orders at a level different from the customer’s specified level in order to add undisclosed markups. In addition, according to court documents, a UBS FX trader conspired with other banks acting as dealers in the FX spot market by agreeing to restrain competition in the purchase and sale of dollars and euros. UBS participated in this collusive conduct from October 2011 to at least January 2013.
In declaring UBS in breach of its non-prosecution agreement, the Justice Department considered UBS’s conduct described above in light of UBS’s obligation under the non-prosecution agreement to commit no further crimes. The department also considered UBS’s three recent prior criminal resolutions and multiple civil and regulatory resolutions. Further, the department also considered that UBS’s post-LIBOR compliance and remediation efforts failed to detect the illegal conduct until an article was published pointing to potential misconduct in the FX markets.
Citicorp, Barclays, JPMorgan, RBS and UBS have each agreed to a three-year period of corporate probation, which, if approved by the court, will be overseen by the court and require regular reporting to authorities as well as cessation of all criminal activity. All five banks will continue cooperating with the government’s ongoing criminal investigations, and no plea agreement prevents the department from prosecuting culpable individuals for related misconduct. Citicorp, Barclays, JPMorgan and RBS have agreed to send disclosure notices to all of their customers and counter-parties that may have been affected by the sales and trading practices described in the plea agreements.
Today, in connection with its FX investigation, the Federal Reserve also announced that it was imposing on the five banks fines of over $1.6 billion; and Barclays settled related claims with the New York State Department of Financial Services (DFS), the Commodity Futures Trading Commission (CFTC) and the United Kingdom’s Financial Conduct Authority (FCA) for an additional combined penalty of approximately $1.3 billion. In conjunction with previously announced settlements with regulatory agencies in the United States and abroad, including the Office of the Comptroller of the Currency (OCC) and the Swiss Financial Market Supervisory Authority (FINMA), today’s resolutions bring the total fines and penalties paid by these five banks for their conduct in the FX spot market to nearly $9 billion.
This investigation is being conducted by the FBI’s Washington Field Office.This prosecution is being handled by the Antitrust Division’s New York Office and other criminal enforcement sections and the Criminal Division’s Fraud Section.The Justice Department appreciates the substantial assistance provided by the CFTC, OCC, FINMA, FCA, DFS, Securities and Exchange Commission, Federal Reserve Board, and the U.K. Serious Fraud Office. The Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office in the District of Connecticut have also provided assistance in this matter.
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Federal Grand Jury Indicts Dallas Anesthesiologist on Health Care Fraud OffensesRead the Press Release
DALLAS — Dr. Richard Ferdinand Toussaint, Jr., a licensed anesthesiologist who allegedly ran a scheme to defraud health care benefit plans by submitting false and fraudulent claims, has been indicted by a federal grand jury in Dallas on 17 counts of health care fraud, announced John Parker, Acting U.S. Attorney for the Northern District of Texas.
According to the indictment, Toussaint, 57, provided anesthesia services personally and through a company he founded, Ascendant Anesthesia. From approximately 2009-2010, Toussaint practiced medicine at two Dallas hospitals - Forest Park Medical Center located on North Central Expressway and Doctors Hospital at White Rock Lake, located on North Buckner Boulevard.
The indictment alleges that during this time, Toussaint ran a scheme to defraud Blue Cross Blue Shield of Texas (BCBS), United Healthcare (UHC), and the Federal Employees Health Benefits Program (FEHBP) by submitting, or causing to be submitted, false and fraudulent claims for personally performing medical direction of anesthesia services for certified registered nurse anesthetists (CRNAs). Toussaint falsely represented he was “present for” these services when: 1) he was under anesthesia undergoing surgery himself; 2) he was flying on his private jet; 3) he was in another state; and 4) he was at another hospital several miles away. For example, Toussaint submitted or caused to be submitted several claims representing he was present for and medically directing six patients at two different hospitals and was medically directing two patients while under anesthesia himself.
The indictment further alleges that Toussaint also inflated the amount of time the procedures took and pre-signed patients’ medical records representing the services were provided before the procedures even took place. In addition to personally creating false medical records and inflating anesthesia procedure time, Toussaint directed others to do the same, representing he was present for procedures when he knew he was not.
As part of his approximate 18-month-long fraud scheme, Toussaint billed BCBS, UHC, and the FEHBP more than $8 million, of which at least $5 million was fraudulent.
An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty. Upon conviction, however, the maximum statutory penalty for each count of health care fraud is 10 years in federal prison and a $250,000 fine. Restitution could also be ordered.
The indictment also includes a forfeiture allegation that would require Toussaint, upon conviction, to forfeit proceeds obtained from his fraud scheme, including a 2010 and a 2012 Rolls Royce Ghost; a 2011 Mercedes ML350; a 2011 Bentley Mulsanne, a 2012 Bentley Continental GT and a 2016 Bentley Mulsanne; a 2012 McLaren MP4-12C and a 2015 McLaren 650S Spider; and any and all real property and any and all interests in aircraft.
The FBI; U.S. Department of Labor OIG; U.S. Department of Labor Employee Benefits Security Administration; U.S. Postal Service OIG; U.S. Department of Defense, OIG, Defense Criminal Investigative Service; U.S. Office of Personnel Management OIG; U.S. Department of Health and Human Services, Food and Drug Administration, Office of Criminal Investigation; and Internal Revenue Service Criminal Investigation are investigating. Assistant U.S. Attorneys Brandon McCarthy and Andrew Wirmani are prosecuting.
Federal Court Shuts Down California Tax Preparer and Convicted FelonRead the Press Release
A federal court in Sacramento, California, has permanently barred a former Ripon, California, man from preparing tax returns for others, the Justice Department announced today.
The civil injunction order, to which Sarad Chand consented, was entered by U.S. District Judge Garland E. Burrell Jr. of the Eastern District of California. According to stipulation, the defendant admitted to repeatedly preparing federal tax returns that understated his customers’ federal tax liabilities.
The complaint alleged that Chand, and others working with him under the business name S. Chand Tax & Accounting Services, prepared tax returns that falsely claimed inflated or fabricated tax credits or deductions. The suit noted that Chand most frequently prepared returns that falsely inflated unreimbursed employee business expenses. Chand also created Schedule Cs (Profit or Loss From Business) with false income, while for other clients he created false losses or inflated expenses, according to the suit. According to the complaint, these fabrications served to improperly reduce the customers’ taxable income and resulted in reduced tax liability or inappropriate tax refunds. Moreover, according to the complaint, Chand also led his customers to believe that he was a former Internal Revenue Service (IRS) employee, when he was not.
The suit also noted that on May 15, 2014, Chand pleaded guilty to aiding and assisting in the preparation and presentation of a false and fraudulent tax return. As part of his plea agreement, Chand agreed to the entry of a permanent civil injunction.
The suit alleged that the IRS had completed examinations of 919 of the approximately 8,155 tax returns Chand prepared from 2008 to 2012, and that nearly all of the examined returns resulted in a finding of deficiency or denial of a refund claim. The 886 returns found to be inaccurate had a total tax understatement of more than $2.7 million.
The injunction requires Chand to provide a list of customers for whom he has prepared federal tax returns or claims for refund since Jan. 1, 2012.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2015. The IRS has some tips on its website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on here. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Federal Correctional Officer Charged in Bribery SchemeRead the Press Release
Petersburg Prison Guard Indicted for Smuggling Heroin, Marijuana, and Cigarettes to Inmates in Exchange for Bribes
RICHMOND, Va. – Jermaine Brown, 37, of Chesterfield, Virginia, was charged by a federal grand jury on Tuesday with conspiracy to commit bribery and bribery for his alleged role in a prison bribery scheme.
According to the indictment, from the Fall of 2010 until March 25, 2013, while employed as a federal correctional officer and recreational specialist at the Federal Correctional Institution-Medium, Petersburg, Virginia, Brown engaged in a conspiracy to smuggle heroin, marijuana, and cigarettes to multiple inmates within the prison in exchange for bribes. The indictment charges that inmates would have friends or family outside of the prison wire transfer money to Brown’s co-conspirator, who would then pay Brown. From December 2010 through March 2011, the indictment alleges, Brown received at least five wire transfers from inmates totaling $3,050 in exchange for contraband.
Brown faces a maximum penalty of 15 years in prison if convicted. 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; Adam S. Lee, Special Agent-In-Charge of the FBI’s Richmond Field Office; and Michael Tompkins, Special Agent-In-Charge, Department of Justice, Office of the Inspector General, made the announcement after Brown’s initial appearance before U.S. Magistrate Judge David J. Novak.
This case was investigated by Department of Justice-Office of Inspector General and the FBI’s Richmond Field Office. Assistant U.S. Attorney Erik S. Siebert is 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. 3:15CR93.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Federal Grand Jury in Hammond Returns a 34 Count Superseding Indictment of Jack WeichmanRead the Press Release
HAMMOND- United States Attorney David Capp announced today that a federal grand jury returned a 34 count superseding indictment charging Jack Weichman with nine counts of bank fraud, fourteen counts of bankruptcy fraud, two counts of money laundering, four counts of wire fraud, and five counts of filing false federal income tax returns.
According to the superseding indictment, Weichman, a CPA, owned and operated an accounting firm and a medical billing firm in Munster, Indiana that managed medical practices and provided payroll, billing, accounting and tax services for its physician clients. Weichman is alleged to have illegally obtained over three million dollars from a local bank by obtaining money from his physician clients’ bank accounts, and obtaining lines of credit in the name of a client without the knowledge or permission of his clients. The proceeds from the lines of credit are alleged to have gone directly to Weichman who in turn used the money to, among other things, pay debts he owed to casinos. Weichman is also charged with defrauding a second bank into renewing a $355,133.68 term loan by omitting critical information he was required to provide the bank regarding his assets and liabilities. Specifically, it is alleged that Weichman failed to advise the bank that he owed the IRS approximately $2 million dollars in back taxes.
The superseding indictment also alleges that Weichman hid assets from his creditors and bankruptcy trustee during his Chapter 11 bankruptcy. As outlined in the superseding indictment, Weichman is alleged to have hidden hundreds of thousands of dollars that he paid to area casinos as well as tens of thousands of dollars in credit card payments for the purchase of items such as cigars, luxury handbags, sports memorabilia, and cruises. The bankruptcy charges identified in Counts 10 and 20 of the superseding indictment also trigger allegations of money laundering, alleging hundreds of thousands of dollars in criminally derived property.
A wire fraud scheme is also alleged in the superseding indictment. As part of the wire fraud scheme, the superseding indictment alleges that Weichman and employees at his accounting firm caused the transmission of withdrawal requests on a client’s IRA accounts to be faxed to brokerage offices in San Diego, CA and St. Louis Mo., without the client’s knowledge or permission. It is alleged in the superseding indictment that Weichman would direct his accounting firm employees to pretend to be the actual owner of the IRA accounts when contacting the brokerage firm. The money obtained from this scheme is alleged to have been used by Weichman for his own benefit, including gambling.
Finally, the superseding indictment alleges that Weichman filed five false income tax returns from approximately August 2009 through October 15, 2013.
This case was investigated by the Internal Revenue Service-Criminal Investigation Division, the Federal Deposit Insurance Corporation-Office of Inspector General, and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys Diane L. Berkowitz and David Nozick.
The United States Attorney's Office emphasized that an Indictment is merely an allegation and that all persons charged are presumed innocent until and unless proven guilty in court.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
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Essex County, New Jersey, Man Sentenced to 148 Months in Prison for Armed Carjacking and Bribing A Corrections Officer to Smuggle Contraband into Essex County JailRead the Press Release
TRENTON, N.J. – A Newark, New Jersey, man was sentenced today to 148 months in prison for his role in an armed carjacking and subsequent involvement in a scheme to bribe a corrections officer to smuggle contraband, including marijuana and cell phones, into the Essex County Correctional Facility, a federal pretrial detention facility, U.S. Attorney Paul J. Fishman announced.
Quasim Nichols, 30, previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with one count of committing an armed carjacking and one count of conspiring with others, including Essex County Corrections Officer Stephon Solomon, 27, of Irvington, New Jersey, to commit extortion under color of official right. Judge Cooper imposed the sentence today in Trenton federal court.
According to the documents filed in this case, other cases, and statements made in court:
On May 28, 2012, Nichols and three men were traveling in a gray Dodge Magnum toward Elizabeth, New Jersey. Nichols was driving the vehicle. Upon arriving in Elizabeth, the three men exited the car and approached a 2005 BMW 645. The men pointed handguns in the direction of the BMW’s passengers and ordered them out of the car. Two of the men then entered the BMW and drove it away. The third man re-entered the Dodge Magnum driven by Nichols. The third man was carrying a black Taurus Millennium semi-automatic handgun and a cell phone that had been stolen from one of the occupants of the BMW. Nichols and the third man drove away and followed the stolen BMW.
While driving away from the scene, multiple police vehicles activated their overhead lights and turned on their sirens in an effort to stop Nichols. Nichols continued to drive the Dodge Magnum at a high rate of speed from Elizabeth into Newark, drove through a red light and struck a vehicle at the intersection of Martin Luther King Boulevard and Market Street. The driver of the other vehicle suffered serious injury. Nichols and the other man then attempted to flee the area on foot.
Subsequently, while detained at the Essex County Correctional Facility on the armed carjacking charge, Nichols conspired with others, including Solomon, Dwayne Harper, 31, of Newark, and Darsell Davis, 29, of Newark, to pay cash bribes to Solomon so that he would smuggle contraband – including cell phones, tobacco, and marijuana – into the Essex County Correctional Facility. After Davis and Harper collected the contraband, Davis delivered the items and cash bribes to Solomon, who then smuggled the contraband to Nichols. Nichols ultimately sold the marijuana and cell phones to other inmates. The inmates purchasing marijuana and cell phones had their friends and family pay for the items by sending Western Union money transfers to Nichols, who enlisted Davis and others to retrieve those payments. Davis obtained at least $4,300 in Western Union payments for Nichols.
In addition to the prison term, Judge Cooper sentenced Nichols to serve five years of supervised release.
Solomon pleaded guilty to conspiring to commit extortion under color of official right and was sentenced to 18 months in prison on March 25, 2015. Davis pleaded guilty to conspiring to commit extortion under color of official right and was sentenced to 15 months in prison on March 23, 2015. Harper pleaded guilty to conspiring to smuggle marijuana into the Essex County Correctional Facility and was sentenced to 12 months in prison on March 23, 2015.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; investigators with the Internal Affairs Division of Essex County Correctional Facility, under the leadership of Warden Roy Hendricks; the Port Authority of New York and New Jersey; the Newark Police Department, under the direction of Director Eugene Venable and Chief Anthony Campos; and the Elizabeth Police Department, under the direction of Director James Cosgrove, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorneys Jim Donnelly and Rob Frazer of the Criminal Division, Organized Crime/Gangs Unit, and Rahul Agarwal of the U.S. Attorney’s Office, Special Prosecutions Division, in Newark.
Defense counsel: Michael J. Pappa Esq., Hazlet, New Jersey
Eight Sentenced for Their Role in a Prescription Pill SchemeRead the Press Release
Montgomery, Ala. – Eight individuals have been sentenced for their participation in a scheme to unlawfully obtain prescriptions for Oxycodone from a clinic in Opelika, Alabama, announced U.S. Attorney George L. Beck Jr. of the Middle District of Alabama. Sentencing for one additional individual is still pending.
The individuals involved in the scheme are as follows: Jean Herby Thelomat (28), of Miami, Florida; Joseph M. McCann (31), of Huntsville, Alabama; Laura Amelia Robinson (46), of Ellerslie, Georgia; Quinton Michael Corbett (28), of Belle Mina, Alabama; Mauricia Adaryll Corbett (35), of Harvest, Alabama; Porcha Donielle Cawthorn (25), of Huntsville, Alabama; Zachary Cornez Lilley (26), of Huntsville, Alabama; Brittney Lashelle McCauley (27), of Toney, Alabama; and James Richard Lawlor (35), of Huntsville, Alabama.
According to the indictment and court documents, Thelomat developed a plan to create fraudulent medical paperwork that would be presented to EMeds Medical Clinic in Opelika, Alabama for Oxycodone prescriptions. The paperwork included fraudulent reports of Magnetic Resonance Imaging (MRI) testing results that were designed to appear legitimate, but contained false information with respect to medical conditions and diagnoses.
Thelomat obtained the cooperation of two other individuals to carry out this scheme. Joseph McCann was a patient of the clinic who assisted Thelomat by serving as a "sponsor" that recruited others to pose as patients at the clinic and receive prescriptions. McCann provided these patients with fraudulent medical paperwork that he created with the help of Thelomat. In exchange for the paperwork, the drug-seeking recruits would pay Thelomat and McCann a fee. These recruits would travel hundreds of miles from their known residences in north Alabama to the EMeds clinic in Opelika, Alabama.
Laura Robinson was an employee of EMeds and was responsible for various day-to-day administrative functions, including the responsibility of verifying the legitimacy of paperwork submitted to the clinic by patients. In that capacity, Robinson verified MRI paperwork prepared by McCann and Thelomat even though she knew that the paperwork was fraudulent. Robinson would also advise McCann on modifications that needed to be made to the fraudulent medical paperwork in order to make the documents appear more legitimate and to justify prescriptions for large volumes of Oxycodone. For her participation in this scheme, Robinson was paid a fee per patient, and also received portions of these payments in the form of pills.
The remaining six individuals listed were recruits who posed as patients and utilized fraudulent MRI paperwork at the EMeds clinic to obtain illegitimate and illegal prescriptions.
Of the nine who pled guilty, eight have been sentenced and one is still pending. The sentences are as follows: McCann- 60 months; Thelomat- 57 months; Robinson- 21 months; M. Corbett- 12 months; Q. Corbett- 6 months; Lilley- 6 months; McCauley- 4 years of probation; and Cawthorn- 3 years of probation. Lawlor’s sentencing is pending and he faces a maximum sentence of 4 years.
"Prescription drug abuse is the fastest growing drug problem in the country. It is particularly troubling to find medical practitioners so complicit in this epidemic,” said DEA Assistant Special Agent in Charge Clay Morris. “We trust our medical practitioners to heal our bodies, not poison our communities. We will not tolerate or accept this illegal behavior, and we will bring justice to those that condone this type of practice."
“This prescription pill scheme highlights the serious epidemic of prescription drug addiction that threatens our communities,” said FBI Mobile Special Agent in Charge Robert F. Lasky. “This addiction results in disastrous consequences affecting every sector of our society – families, employment, and our children’s futures. Those motivated by greed who unlawfully abuse our healthcare system will be tirelessly pursued by the FBI and prosecuted for their crimes.”
“Corruption at any level diminishes the hard work and dedication of the thousands of health care workers who are dedicated to providing services to the American public,” stated Special Agent in Charge, IRS Criminal Investigation Veronica F. Hyman-Pillot. “IRS-CI stands committed to weed out individuals who ignore the public's well-being and choose to take the path to financial success by using greed and corruption. We are proud to contribute our financial expertise in an effort to halt the illegal sale and distribution of prescription drugs.”
“Prescription drug abuse is a rising problem in Alabama,” said ALEA’s State Bureau of Investigations Director Gene Wiggins. “Over the past several months ALEA has teamed with our federal and local partners to combat this problem and we are committed to continuing this effort.”
“The over-prescription and excessive use of pain medications can lead to a dangerous cycle of addiction,” stated U.S. Attorney George L. Beck Jr. “Whether accomplished by the use of fraud, or by the reckless actions of medical providers, too often this cycle leads to overdose and death. My office will continue to work with our partners to prevent these unscrupulous individuals from peddling pills and endangering the public. However, the responsibility of breaking this dangerous cycle of addiction lies not only with law enforcement, but the entire medical community. From the drug manufacturers, to the clinics, to the pharmacies, we all have a duty to safeguard the public from this epidemic.”
The case was investigated by the Drug Enforcement Administration, the Federal Bureau of Investigation, IRS Criminal Investigation (CI) in Montgomery, the Opelika Police Department, and the Alabama Law Enforcement Agency. It was prosecuted by Assistant United States Attorneys Gray Borden, Brandon Essig, and Bob Anderson.
Eagle Butte Woman Sentenced for Simple AssaultRead the Press Release
Acting United States Attorney Randolph J. Seiler announced that an Eagle Butte, South Dakota, woman charged with Simple Assault pled guilty and was sentenced on May 18, 2015, by U.S. Magistrate Judge Mark A. Moreno.
Lisa Lone Eagle, age 34, was sentenced to 83 days in custody and a $10.00 special assessment to the Federal Crime Victims Fund.
The conviction stems from an incident that took place on December 9, 2014, when Lone Eagle and her brother were walking down the street in Cherry Creek, South Dakota, and the victim was walking ahead of them. Lone Eagle and her brother were angry at the victim for providing an interview with the Cheyenne River Sioux Police Department that implicated Lone Eagle’s brother in a federal crime. Lone Eagle threatened and yelled obscenities at the victim and picked up an iron bar and threw it at the victim. The iron bar missed the victim and she was not injured.
The investigation was conducted by the Cheyenne River Sioux Tribe Law Enforcement Services. This case was prosecuted by Assistant U.S. Attorney Mikal Hanson.
Lone Eagle was remanded to the custody of the U.S. Marshals Service.
Dover Teacher Sentenced to 15 Years in Child Exploitation CaseRead the Press Release
HARRISBURG - The United States Attorney's Office for the Middle District of Pennsylvania announced that Senior United States District Court Judge Sylvia H. Rambo sentenced Matthew B. Puterbaugh, age 47, of Dover, Pennsylvania today to 180 months imprisonment for production of child pornography.
According to U.S. Attorney Peter Smith, Puterbaugh was a music teacher and band director at Dover Intermediate School in York County. Between 2010 and 2014, he secretly recorded images of female students at the school that constitute child pornography. In February 2014, school officials reported a complaint to the Northern York County Regional Police Department. Police conducted searches and allegedly found thousands of images depicting minors engaged in sexually explicit conduct on computers in Puterbaugh's home.
Puterbaugh was initially charged in August 2013. He pled guilty on January 21, 2015 pursuant to a plea agreement filed December 11, 2014.
This case was brought as part of Project Safe Childhood, a U.S. Department of Justice nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorney’s 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/.
This case was investigated by the Federal Bureau of Investigation and the Northern York County Regional Police Department in cooperation with the York County District Attorney’s Office. The case was prosecuted by Assistant United States Attorney Meredith A. Taylor.
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Delaware Woman Sentenced on Fraud ChargesRead the Press Release
NORFOLK, Va. – Linda M. Avila, 50, of Frankford, DE, was sentenced today to 144 months in prison, followed by 3 years of supervised release for conspiring to obtain payment for false claims and mail fraud.
Dana J. Boente, United States Attorney for the Eastern District of Virginia; Thomas J. Kelly, Special Agent in Charge, Washington, D.C. Field Office, IRS-Criminal Investigations; and Clark E. Settles, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Washington, D.C.; made the announcement after sentencing by U.S. District Judge Raymond A. Jackson.
Avila pled guilty on November 17, 2014. According to court documents, Linda Avila and unindicted co-conspirators devised a scheme to file false income tax returns using forms obtained from illegal aliens on the Eastern Shore of Virginia and elsewhere. Avila altered the W-2 forms by using white out to cover up the names, social security numbers, and addresses and then wrote in other names and addresses and filed the fraudulent returns. According to court documents, she also created fake W-2 forms and notarized fake identity documents to facilitate her fraudulent filings. The addresses listed on the forms were for post office boxes and residential addresses to which she or a co-conspirator had access. Once the refund checks arrived, she provided fake identification documents to co-conspirators so they could cash the checks. An arrest warrant and search warrant were executed at her home in Delaware and agents seized approximately 17 boxes of fraudulent tax records. Templates for fraudulent W-2 forms and identification documents were also found on her computer. The records included copies of approximately 1,754 tax returns filed between 2008 and 2014 for tax years 2004 through 2013. The total loss to the IRS based on the fraudulent returns is approximately $7.2 million.
This case was investigated by the Internal Revenue Service and Homeland Security Investigations. Assistant United States Attorney Randy Stoker is prosecuted the case on behalf of the United States.
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. 2:14-cr-108.
###Cruz Pleads Guilty to Possession of Methamphetamine; Admits 73.8 Pounds of Meth Were Destined for Distribution in Salt Lake CityRead the Press Release
SALT LAKE CITY – Travis Javier Cruz, age 38, of the Salt Lake City area, who traveled to California in October to pick up 73.8 pounds of methamphetamine from a supplier destined for distribution in Salt Lake City, pleaded guilty to possession of methamphetamine with intent to distribute in U.S. District Court Wednesday morning.
As a part of the plea agreement reached with federal prosecutors, Cruz admitted that he traveled to the Orange County area of California on Oct. 28, 2014, to pick up a large quantity of methamphetamine for distribution in the Salt Lake City area. According to a complaint filed in the case, Cruz was already under surveillance by the FBI’s Safe Streets Task Force, in conjunction with the Salt Lake Unified Police Department, the Davis County Sheriff’s Office, and other law enforcement agencies prior to making the trip to California.
Cruz arrived at a hotel in Huntington Beach, where the narcotics transaction would take place, with approximately $300,000 in cash to pay for 70 pounds of narcotics. Cruz admitted meeting with a courier for the methamphetamine source of supply at the hotel on Oct. 28, 2014, and giving him $300,000.
The next day, according to the plea agreement, the courier returned to the hotel with five or six five-gallon buckets. He took the buckets into Cruz’s room. The buckets contained the methamphetamine Cruz planned to distribute in the Salt Lake City area. Cruz admitted that he and others packaged the methamphetamine into plastic wrap and mustard to transport it back to Salt Lake City. The narcotics were placed in a roller bag and two backpacks and loaded into the trunk of the Cruz’s car for transportation back to Salt Lake City.
Agents and officers, who had been conducting surveillance at the hotel, conducted a vehicle stop after the narcotics were loaded in the car. A dog alerted to the presence of narcotics in the trunk of the vehicle. Cruz admitted as a part of the plea agreement that the amount of narcotics recovered was approximately 73.8 pounds.
On the same day, officers executed a federal search warrant at a storage unit in Salt Lake City and recovered approximately 1.5 pounds of methamphetamine. Cruz admitted it was his intent to distribute the methamphetamine in the Salt Lake City area.
As a part of the plea agreement, Cruz agreed to forfeit vehicles and cash used to facilitate the criminal conduct.
Sentencing is set for Aug. 4, 2014, in U.S. District Judge Robert J. Shelby’s courtroom. Federal prosecutors agreed in the plea agreement to recommend that Cruz be sentenced at the mid-range level of the federal sentencing guidelines in the case, as determined by the court. He faces a 10-year minimum mandatory sentence in the case.
Cruz was charged with conspiracy to distribute methamphetamine and possession of methamphetamine with intent to distribute in an indictment returned by a federal grand jury in November.
ConAgra Subsidiary Agrees to Enter Guilty Plea in Connection with 2006 through 2007 Outbreak of Salmonella Poisoning Related to Peanut ButterRead the Press Release
ConAgra Grocery Products LLC, a subsidiary of ConAgra Foods Inc., today agreed to plead guilty and pay $11.2 million in connection with the shipment of contaminated peanut butter linked to a 2006 through 2007 nationwide outbreak of salmonellosis, or salmonella poisoning, the Department of Justice announced today. ConAgra Grocery Products LLC is based in Omaha, Nebraska, with a manufacturing facility in Sylvester, Georgia.
Acting Associate Attorney General Stuart F. Delery, Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia announced the filing of a criminal information against ConAgra Grocery Products alleging a misdemeanor violation of the federal Food, Drug and Cosmetic Act. The company signed a plea agreement admitting that it introduced Peter Pan and private label peanut butter contaminated with salmonella into interstate commerce during the 2006 through 2007 outbreak. The plea agreement provides that ConAgra Grocery Products will pay a criminal fine of $8 million and forfeit assets of $3.2 million. The criminal fine is the largest ever paid in a food safety case.
“As parents, we can make sure that our kids look both ways before they cross the street and wear a helmet when they ride their bikes,” said Acting Associate Attorney General Delery. “But we have to rely on the companies that make their food to make sure it is safe. That’s why the Department of Justice is dedicated to using all the tools we have to ensure the processors and handlers of our food live up to their legal obligations to keep the public’s safety in mind.”
“The safety of the nation’s food supply is a top concern, and every company, large and small, must take appropriate measures to ensure that their products don’t make customers sick,” said Principal Deputy Assistant Attorney General Mizer. “No company can let down its guard when it comes to these kinds of microbiological contaminants. Salmonellosis is a serious condition, and a food like peanut butter can deliver it straight to children and other vulnerable populations.”
In February 2007, the U.S. Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC) announced that an ongoing outbreak of salmonellosis cases in the United States could be traced to Peter Pan and private label peanut butter produced and shipped from the company’s Sylvester peanut butter plant. The company voluntarily terminated production at the plant on Feb. 14, 2007, and recalled all peanut butter manufactured there since January 2004. The CDC eventually identified more than 700 cases of salmonellosis linked to the outbreak with illness onset dates beginning in August 2006. The CDC estimated that thousands of additional related cases went unreported. The CDC did not identify any deaths related to the outbreak.
The criminal information, filed in the Middle District of Georgia, specifically alleges that on or about Dec. 7, 2006, the company shipped from Georgia to Texas peanut butter that was adulterated, in that it contained salmonella and had been prepared under conditions whereby it may have become contaminated with salmonella. The company admitted in the plea agreement that samples obtained after the recall showed that peanut butter made at the Sylvester plant on nine different dates between Aug. 4, 2006, and Jan. 29, 2007, was contaminated with salmonella. Environmental testing conducted after the recall identified the same strain of salmonella in at least nine locations throughout the Sylvester plant.
“We, as consumers, take for granted that the food we feed our families is safe,” said U.S. Attorney Moore. “We count on the companies who prepare and package the things we eat to be just as concerned with the product we put in our mouths as they are with the profit they put in their pockets. The proposed criminal fine and sentence in this case should sound the alarm to food companies across the country – we are watching, and we are expecting you to hold yourselves to a standard reflective of the trust that your consumers have placed in you. No more excuses. A lot of people got very sick because of the conduct in this case and we are committed to doing all we can to make sure that does not happen again.”
As part of the plea agreement, the company admitted that it had previously been aware of some risk of salmonella contamination in peanut butter. On two dates in October 2004, routine testing at the Sylvester plant revealed what later was confirmed to be salmonella in samples of finished peanut butter. Company employees attempting to locate the cause of the contamination identified several potential contributing factors, including an old peanut roaster that was not uniformly heating raw peanuts, a storm-damaged sugar silo, and a leaky roof that allowed moisture into the plant and airflow that could allow potential contaminants to move around the plant. As stated in the plea agreement, while efforts to address some of these issues had occurred or were underway, the company did not fully correct these conditions until after the 2006 through 2007 outbreak. In public statements after the 2007 recall, company officials hypothesized that moisture entered the production process and enabled the growth of salmonella present in the raw peanuts or peanut dust.
The company also admitted in the plea agreement that between October 2004 and February 2007, employees charged with analyzing finished product tests at the Sylvester plant failed to detect salmonella in the peanut butter, and that the company was unaware some of the employees did not know how to properly interpret the results of the tests.
“U.S. consumers expect and deserve the highest standards of food safety and integrity,” said Acting Commissioner Dr. Stephen Ostroff of the FDA. “Today’s plea agreement reflects the FDA’s commitment to ensuring the safety of the nation’s food supply and demonstrates that those who risk the health of Americans will be held accountable.”
Following the outbreak and shutdown, the company made significant upgrades to the Sylvester plant to address conditions the company identified after the 2004 incident as potential factors that could contribute to salmonella contamination. The company also instituted new and enhanced safety protocols and procedures regarding manufacturing, testing and sanitation, which it affirmed in the plea agreement it would continue to follow.
Information about the case and any upcoming court hearings can be found on the Justice Department’s website in the “Food and Dietary Supplements” section. The case is being prosecuted by the U.S. Attorney’s Office of the Middle District of Georgia and the Civil Division’s Consumer Protection Branch. This matter was investigated by the FDA’s Office of Criminal Investigations.
The proposed plea agreement and recommended sentence is not final until accepted by the U.S. District Court.
Columbia Women Sentenced in Oxycodone ConspiracyRead the Press Release
Contact Person: Winston David Holliday, Jr. (803) 929-3000
Columbia, South Carolina ---- United States Attorney Bill Nettles stated today that Shawnetta Belton, age 32, and Althea Mack, age 35, both of Columbia, South Carolina, were sentenced yesterday for Conspiracy to Possess with Intent to Distribute Oxycodone, a violation of Title 21, U. S. C., § 846. Chief United States District Judge Terry L. Wooten sentenced Belton to ten years imprisonment and Mack to two years imprisonment. Both were immediately taken into custody.
Evidence presented during their change of plea hearings established that Belton worked for a doctor and had access to his prescription pad. She wrote prescriptions for oxycodone and distributed them to others to be filled. Some of these unlawful prescriptions were filled in Columbia, others were filled in Beaufort. Althea Mack was the go-between for the Beaufort prescriptions, receiving them from Belton and distributing them to co-conspirators in Beaufort. Over ninety prescriptions were passed during the course of the conspiracy.
Previously, Desmond Washington, age 39, of Charlotte, North Carolina, was sentenced to 41 months imprisonment for his involvement in the conspiracy, and Latrincy Carter, age 30, of Columbia, was sentenced to 37 months imprisonment.
United States Attorney Bill Nettles stated, “Those who traffic in prescription drugs prey on the addictions of some of our most vulnerable citizens. Our office has dedicated itself to pursuing these drug dealers to punish their conduct and to provide a disincentive to those who would profit from selling pills illegally.”
Fifth Circuit Solicitor Dan Johnson stated, “It’s always a good day when the US Attorney and I can work together to make the community better and to create the positive outcomes that the public expects.” Adds Johnson, “I look forward to working with the United States Attorney and all law enforcement agencies in Richland and Kershaw Counties to further rid our communities of drugs and drug offenders.”
The case was investigated by investigators with the Drug Enforcement Administration, the Richland County Sheriff’s Office, and the S.C. DHEC Bureau of Drug Control. Assistant United States Attorney Winston Holliday of the Columbia office and Assistant Solicitor Joseph Shenkar of Richland County prosecuted the case.
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Civilian Living on Fort Carson Sentenced to 45 Years in Federal Prison for Heinous Domestic Violence AssaultsRead the Press Release
Defendant choked victim until she blacked out, then poured boiling hot water on her groin to bring her back to consciousness
DENVER – Mitchell Lee Gibson, age 30, who resided on-base on Fort Carson near Colorado Springs, Colorado, was sentenced today by U.S. District Court Judge Robert E. Blackburn to serve 540 months (45 years) in federal prison for assault resulting in serious bodily injury, assault with a dangerous weapon and assault of a spouse by strangling and suffocation, U.S. Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Following his prison sentence, Judge Blackburn ordered Gibson to serve 3 years on supervised release. Gibson, who attended the sentencing hearing in custody, was remanded at the hearing’s conclusion.
Gibson was first arrested based on a Criminal Complaint filed on March 26, 2014. He pled guilty before Judge Blackburn on February 5, 2015, and was sentenced today, May 20, 2015.
According to the stipulated facts contained in the plea agreement, on March 25, 2014 at about 9:45 p.m., Fort Carson Police officers responded to a 911 call from a victim who explained that Gibson had assaulted her. Responding officers immediately saw significant injuries and called for medical assistance. She told officers that Gibson was under the influence of alcohol and prescription medication, and that he threatened to hurt her and a child.
While at the hospital, doctors determined that the female victim had two black eyes, scratches and extensive bruising on her face, arms, chest, shoulders, torso, hips and legs. She had red marks on her arms and throat, and injuries from whipping on her back, torso and legs. She had a bite mark on the back of her neck and blood from a laceration on her ear. She had second degree burns covering her stomach, groin, right arm and right leg. She also had two open blisters from the burns. All of this while she was 9 weeks pregnant.
The investigation determined that Gibson had whipped the victim with a coaxial cable, which he regularly made her retrieve for him prior to the beatings. He would choke her with the cable until she blacked out, and then pour boiling hot water on her stomach, groin and leg to revive her. He had threatened to kill her, a child and then himself.
“Defendant Gibson assaulted his victim in a series of senseless, sadistic attacks that earned him every minute of the stern sentence imposed,” said U.S. Attorney John Walsh. “We hope that his victim – and the larger community -- can now rest easy, knowing that her tormentor will spend decades isolated from society.”
“The level of Mitchell Gibson’s violence and his cruelty toward family members during these assaults are shocking,” said Special Agent in Charge Thomas P. Ravenelle. “We view today’s sentence as a just punishment and deterrent that will help to protect others from his abhorrent conduct.”
This case was investigated by the Fort Carson Police Department and the FBI.
Gibson was prosecuted by Assistant U.S. Attorney Gregory Holloway.
Christian County Sheriff Pleads Guilty to Stealing Public Money, Money LaunderingRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the elected sheriff of Christian County, Mo., pleaded guilty in federal court today to embezzling county funds and to his role in laundering the proceeds of a political supporter’s investment fraud scheme.
“This elected sheriff stole taxpayers’ money and treated the county coffers as his own personal piggy bank,” Dickinson said. “Sheriff Kyle took money that was supposed to be for firearms and other supplies needed by his deputies. But his greed wasn’t limited to public dollars or to the taxpayers whose trust he betrayed. He also abused his position to promote a political supporter’s investment fraud scheme, and even used the criminal profits from the scheme to help bankroll his reelection.
“The shameful actions of this defendant shouldn’t cast a shadow on the integrity and dedication of the vast majority of honest law enforcement officers,” Dickinson said. “No one is above the law. This disgraced law enforcement officer will be held accountable for his actions.”
Joseph “Joey” Edward Kyle, 53, of Ozark, Mo., waived his right to a grand jury and pleaded guilty before U.S. Magistrate Judge David P. Rush to a federal information that charges him with one count of embezzling from Christian County and one count of participating in a money-laundering conspiracy.
Under the terms of today’s plea agreement, Kyle must immediately resign his office as sheriff of Christian County. Kyle was elected to the sheriff’s office in 2008 and reelected in 2012.
Christian County Embezzlement
By pleading guilty today, Kyle admitted that he embezzled $50,290 from Christian County. Kyle submitted 22 fraudulent invoices and purchase orders to the county for goods and services that were never provided between Jan. 1, 2011, and Oct. 14, 2014.
Kyle submitted those requisitions on behalf of EDI Plus, LLC, in Nixa, Mo. EDI was awarded a contract by the county to provide equipment – including firearms and ammunition – for the sheriff’s department from 2011 to 2014. Kyle received cash from EDI for his personal use then submitted fraudulent requisitions for goods and services purportedly supplied by EDI. In reality, no goods or services were provided; instead, these requisitions repaid EDI for the money Kyle personally received.
Money Laundering Conspiracy
Kyle also admitted today that he received $21,350 from another person, identified as “Subject #2” in court documents, for his role in promoting an investment fraud scheme.
According to the plea agreement, Subject #2 owned and operated various companies and, from January 2008 to October 2014, engaged in an investment fraud scheme. Subject #2 solicited Kyle to assist him as a promoter of the scheme, to take advantage of the authority and prestige of Kyle’s position as county sheriff. Kyle referred potential investors, distributed promotional materials, served as a personal reference and recommended that victims invest money in Subject #2’s companies.
In order to persuade potential investors, Subject #2 falsely informed them that Kyle had personally invested funds and that Kyle had assembled an investment group, comprised of deputy sheriffs and others, to invest in Subject #2’s companies. In reality, Kyle did not invest his personal funds in Subject #2’s companies. Instead, Subject #2 gave Kyle 50,000 shares in one of his companies, which Subject #2 normally sold to investors at the rate of one dollar per share.
Kyle founded Five Rivers Management, LLC, purportedly as a law enforcement training company in 2011. He deposited the money he received from Subject #2 into the company’s bank account in order to conceal the source and nature of the payments, and to make them appear to be receipts from Kyle’s law enforcement training company. Subject #2 also made a $3,000 contribution, using victim investor funds, to Kyle’s political campaign on July 1, 2012.
Between June 2012 and January 2014, Subject #2 received investment funds totaling approximately $952,670. At the time he promoted the investment fraud scheme, Kyle states that he believed Subject #2’s companies were legitimately engaged in efforts to bring their products to market. However, Kyle admitted the United States could prove he knew checks written to Five Rivers were the proceeds of some form of unlawful activity. Further, Kyle acknowledged that, at the very least, he deliberately closed his eyes to the fraud, which should have been obvious to him.
Sentencing
Under the terms of today’s plea agreement, Kyle will be sentenced to one year and one day in federal prison without parole. Kyle must pay $50,290 in restitution to Christian County and must forfeit to the government a money judgment of $71,640, representing the proceeds he received from his criminal conduct. Kyle must disclose and surrender any and all property that was purchased with county funds, including firearms, ammunition, vehicles, equipment, preserved food (meals-ready-to-eat) and other supplies. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorneys James J. Kelleher and Steven M. Mohlhenrich. It was investigated by the FBI, IRS-Criminal Investigation and the Missouri State Highway Patrol.
Chillicothe Man Sentenced for Possessing Pornographic Pictures of Young ChildrenRead the Press Release
COLUMBUS, Ohio – Daniel J. Akehurst, 46, of Chillicothe, Ohio, was sentenced in U.S. District Court to 84 months’ imprisonment for possessing child pornography.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and members of the Franklin County Internet Crimes Against Children (ICAC) Task Force, announced the sentence handed down today by U.S. District Senior Judge George C. Smith.
According to court documents, in September 2013, investigators connected 59 images of child pornography to Akehurst’s IP address. The files depicted nude or partially nude pre-pubescent females, approximately one to seven years old, being sexually abused.
When a search warrant was executed at the defendant’s residence, ICAC Task Force officers discovered more than 16,000 images and videos of child pornography on a computer and thumb drive.
Akehurst pleaded guilty on December 22, 2014, to knowingly possessing visual depictions of child pornography.
The Franklin County ICAC Task Force is a multi-agency effort dedicated to the fight against computer facilitated crimes against children. The following agencies are members:
Franklin County Sheriff’s OfficeUpper Arlington Police Department Grove City Police DepartmentColumbus Police Department Grandview Heights Police DepartmentWhitehall Police Department Hilliard Police DepartmentWesterville Police Department Homeland Security InvestigationsU.S. Secret Service Ohio ICACFranklin County Prosecutor's Office
This case is being brought as part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorney's Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children as well as to identify and rescue victims.
U.S. Attorney Stewart commended the cooperative investigation by the Franklin County ICAC Task Force, as well as Assistant United States Attorneys Jessica H. Kim and Heather A. Hill, who are representing the United States in this case.
Certified Public Accountant Charged with Using Her Tax Preparation Business to Fraudulently File Income Tax Returns and Unlawfully Receive Unauthorized RefundsRead the Press Release
A Certified Public Account (CPA) was arrested and charged with using her tax preparation business to facilitate an income tax refund fraud scheme.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.
Pamella B. Watson, 60, of Davie, was charged by criminal complaint with various violations of Title 18 of the United States Code (U.S.C.), including: submitting false, factitious, or fraudulent claims (18 U.S.C. §287) punishable by up to ten years in prison; aggravated identity theft (18 U.S.C. §1028A) punishable by a mandatory consecutive term of two years in prison; mail fraud (18 U.S.C. §1341) punishable by up to twenty years in prison; wire fraud (18 U.S.C. §1343) punishable by up to twenty years in prison; money laundering concealment (18 U.S.C. §1956) punishable by up to twenty years in prison; and money laundering (18 U.S.C. §1957) punishable by up to ten years in prison.
According to the complaint, Watson operated Watson & Associates Business Services, Inc., a tax preparation business in Miami. Watson allegedly used various methods to fraudulently file federal income tax returns and receive unauthorized tax refunds on behalf of her clients. She allegedly prepared the tax returns and provided the respective client with a copy of the filing which showed a refund amount and/or an amount payable to the IRS. The complaint alleges that without the client’s knowledge or authorization, the figures on the prepared return were changed and a tax return showing a higher refund amount was in fact filed with the IRS. It is further alleged that the client’s bank account received the refund amount reflected on the copy of the filing shown by Watson and the remainder of the inflated tax refund was deposited into an account controlled by the defendant. The complaint alleges that the client did not have any knowledge of the refund falsification and splitting.
The complaint further alleges that Watson prepared approximately 557 federal income tax returns for her clients, for tax years 2010 through 2013. Allegedly, 395 (71%) of the filings received refunds which were split into an account controlled by Watson or the entirety of the refund was diverted into the defendant’s bank account. It is further alleged that 5 of the 557 tax return filings showed an amount due to the IRS and 11 of the tax return filings did not claim a refund. Allegedly, the remaining 541 (97%) tax returns claimed a refund.
The complaint further alleges that an IRS analysis of Watson’s bank accounts, for the period from approximately January 2011 through September 2014, showed more than $3,405,479.20 in tax refund deposits related to 183 client taxpayers. Allegedly, the analysis further showed that 10 checks (totaling $222,676) that had been written by the defendant’s clients to the IRS were in fact posted as credits to Watson’s personal tax account history.
Watson was ordered held in custody following her initial appearance on the complaint. A pre-trial detention hearing before United States Magistrate Judge Lurana S. Snow is scheduled for May 22, 2015 in Fort Lauderdale.
Mr. Ferrer commended the investigative efforts of the IRS-CI. The case is being prosecuted by Senior Litigation Counsel Neil Karadbil.
A complaint contains mere allegations. A defendant is presumed innocent unless and until proven guilty in a court of law.
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.
Centralia Man Pleads Guilty to Methamphetamine ChargesRead the Press Release
Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today that Destry Wood, 50, of Centralia, Illinois, pled guilty on May 19, 2015, to Conspiracy to Manufacture and Distribute Methamphetamine and Possession of Pseudoephedrine with the Intent to Manufacture Methamphetamine as charged against him in an indictment returned by a Federal Grand Jury in November 2014. The offenses took place in Marion, Clinton and St. Clair Counties.
The Conspiracy carries a penalty of not less than 5 years, and not more than 40 years in federal prison, up to a $5 million fine, and at least 4 years of supervised release. The charge of Possession of Pseudoephedrine with the Intent to Manufacture Methamphetamine carries a penalty of up to 20 years in prison, up to a $250,000 fine, and up to 3 years of supervised release. Each charge carries a special assessment of $100. Sentencing is scheduled for September 2, 2015.
Information leading to the charges against Wood was obtained in an investigation conducted by the FBI, the Marion County Sheriff’s Office, and the Clinton County Sheriff’s Department, assisted by the Illinois State Police Methamphetamine Response Team, the Centralia Police Department, Jefferson County Sheriff’s Department and the Mt. Vernon Police Department. The case is being handled by Assistant United States Attorney Kit Morrissey.
California Woman Pleads Guilty to Federal Heroin Trafficking Charge in New MexicoRead the Press Release
ALBUQUERQUE – Hunter Dwayne Fitzgerald, Jr., 22, of Los Angeles, Calif., pleaded guilty today in federal court in Albuquerque, N.M., to a heroin trafficking charge.
Fitzgerald was arrested on April 11, 2014, at the Amtrak Train Station in Albuquerque after DEA agents found almost a pound and a half of heroin concealed in her baggage during an interdiction investigation. Fitzgerald was subsequently indicted on May 7, 2014, and charged with possession of heroin with intent to distribute on April 11, 2014, in Bernalillo County, N.M.
During today’s proceedings, Fitzgerald pled guilty to the indictment without the benefit of a plea agreement.
At sentencing, Fitzgerald faces a statutory maximum penalty of 20 years in federal prison. A sentencing hearing has yet to be scheduled.
This case was investigated by the Interdiction Unit of the DEA’s Albuquerque office which focuses on disrupting the flow of narcotics, weapons, and the proceeds of illegal activities as they are smuggled into or through New Mexico in passenger buses, passenger trains, commercial vehicles and automobiles. Assistant U.S. Attorney Rumaldo R. Armijo is prosecuting the case.
This case is being prosecuted pursuant to the New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative. The HOPE Initiative is a collaborative effort between the U.S. Attorney’s Office and the University of New Mexico Health Sciences Center that is partnering with the Bernalillo County Opioid Accountability Initiative with the overriding goal of reducing the number of opioid-related deaths in the District of New Mexico. The HOPE Initiative comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. The law enforcement component of the HOPE Initiative is led by the Organized Crime Section of the U.S. Attorney’s Office and the DEA in conjunction with their federal, state, local and tribal law enforcement partners. Targeting members of major heroin trafficking organizations for investigation and prosecution is a priority of the HOPE Initiative.
Charles R. Seals of Fort Wayne SentencedRead the Press Release
FORT WAYNE – The United States Attorney for the Northern District of Indiana, David Capp, announces that today, Charles R. Seals, 25, of Fort Wayne, Indiana, was sentenced to a total of 228 months (19 years) of imprisonment along with a term of 2 years of supervised release following his plea of guilty to the felony offenses of armed bank robbery, brandishing a firearm during and in relation to a federal crime of violence, and assaulting and impeding a postal employee.
On December 5, 2013, Mr. Seals and his two codefendants committed the armed robbery of Wells Fargo Bank in Hoagland, Indiana. Prior to entering the bank, Mr. Seals confronted a postal employee at gunpoint and forced them into the bank. Mr. Seals and codefendant Calvin Miller then proceeded to conduct the armed robbery, with Mr. Seals threatening employees with a gun. After taking money from the bank, the two escaped in a getaway vehicle being driven by the third codefendant, Brandon Sizemore. Officers with the Fort Wayne Police Department, Allen County Police Department, and Indiana State Police were successful in apprehending all three suspects after a high speed pursuit.
This investigation was conducted by the FBI’s Northeast Indiana Federal Bank Robbery Task Force (NEIFBRTF) and the United States Postal Inspection Service. The NEIFBRTF is comprised of FBI agents, and personnel from the Indiana State Police, Allen County Police Department, Fort Wayne Police Department, and the Bureau of Alcohol, Tobacco, Firearms and Explosives. This case was prosecuted by Assistant United States Attorney Anthony W. Geller.
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Buffalo Man Pleads Guilty to Tax Fraud SchemeRead 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 James Chatmon, 36, of Buffalo, NY, pleaded guilty today to conspiracy to defraud the Internal Revenue Service by making false claims for income tax refunds before U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that Chatmon gathered biographical information from more than a dozen individuals which he then used to generate false W-2 forms. The individuals then used the forms to file false Federal and New York State income tax returns. Claims for refunds and credits were made on 17 tax returns, even though the persons filing the returns were not entitled to any refunds.
Proceeds totaling $105,088 were divided between Chatmon and the tax-return filers during the scheme, which took place between January 2010 and April 2013. The defendant will be required to pay restitution of $102,149 to the IRS, and $2,939 to the New York State Department of Finance. The total attempted loss figure exceeds $120,000, as some of the false returns did not result in refunds.
The plea is the culmination of an investigation by Special Agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of Special Agent-In-Charge Shantelle P. Kitchen.
Sentencing is scheduled for September 3, 2015 before Judge Arcara.
Bellingham Man Sentenced in Drug and Money Laundering ConspiracyRead the Press Release
Fairbanks, Alaska - U.S. Attorney Karen L. Loeffler announced Friday, May 15, 2015 that Peter M. Thornton was sentenced to 104 months’ imprisonment, followed by five years of supervised release, following his pleas of guilty to conspiracy to distribute heroin and conspiracy to commit money laundering. In addition to his prison sentence, Thornton was ordered to forfeit $24,300 representing property involved in the drug trafficking and money laundering conspiracies.
According to court documents, as early as 2008, Thornton was distributing heroin in Fairbanks to make money and support his own habit. By 2011, Thornton, operating from his residence in Bellingham, WA, conducted the conspiracy to transport and distribute heroin by means of couriers from Washington State to Fairbanks for distribution. Couriers would either fly the drugs carried on their person to Alaska, or Thornton would send drugs through the mails. Thornton purchased airline tickets for some of the conspirators to transport heroin to Alaska. Once in Alaska, the heroin would be redistributed by the co-conspirators.
Thornton instructed couriers and/or redistributors in Alaska to deposit the proceeds of the heroin sales into bank accounts controlled by him at various bank branches in Alaska. From September 2010 through December 2013, approximately $300,000 in cash was deposited into accounts controlled by Thornton.
The drugs were sometimes held at Thornton’s residence at Bellingham. A search conducted by law enforcement of Thornton’s Bellingham home found heroin and cash. As part of Thornton’s sentence the court ordered Thornton to forfeit the cash and a payment in substitution for his Bellingham home.
The case was prosecuted by Assistant U.S. Attorney Stephen Cooper of the U. S. Attorney’s Office for the District of Alaska. The case was investigated by the Organized Crime Drug Enforcement Task Force which includes the Internal Revenue Service Criminal Investigation (IRS-CI), the Drug Enforcement Administration (DEA), and the North Pole Police Department. Additional assistance was provided by the U.S. Attorney’s Office for the Western District Washington.
Ashland man faces additional bank robbery chargesRead the Press Release
A grand jury returned a four-count superseding indictment charging Jordon Louis Dongarra, 33, of Ashland, Ohio, with two counts of bank robbery and two counts of brandishing a firearm during and in relation to a crime of violence, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
The superseding indictment filed today alleges that Dongarra robbed the First Merit Bank, located at 1277 Ashland Road, in Mansfield, Ohio, on December 18, 2014; and the Fifth Third Bank, located at 28880 Lorain Road, in North Olmsted, Ohio, on December 30, 2014. Both banks are federally insured financial institutions. An indictment alleging Dongarra robbed the North Olmsted Fifth Third Bank was originally returned on February 25, 2015.
If convicted, the defendant’s sentence will be determined by the court after consideration of the federal sentencing guidelines which depend upon a number of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense, and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The case is being prosecuted by Assistant U.S. Attorneys Justin Seabury Gould and Miranda E. Dugi, and was investigated by the Federal Bureau of Investigation, the Richland County Sheriff’s Office, and the North Olmsted Police Department.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Anchorage Man Sentenced to 10 Years in Prison for Drug TraffickingRead the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that an Anchorage man was sentenced in federal court in Anchorage for 1 count of trafficking narcotics. Max Jewett, 38, of Anchorage had previously pled guilty on December 22, 2014 to 1 count of conspiring to distribute over 50 grams of methamphetamine.
Jewett was sentenced today by United States District Court Judge Sharon L. Gleason, to 120 months in prison.
According to Assistant U.S. Attorney Bryan Schroder, Jewett admitted to distributing illegal drugs in Alaska from October 2011 until his arrest in September 2013. In addition to distributing drugs, Jewett admitted to using his co-conspirators to steal merchandise, especially from home improvement stores, then having them return the items to the store in exchange for gift cards. The co-conspirators would then give the gift cards to Jewett in exchange for drugs. Overall, Jewett admitted distributing over 500 grams of methamphetamine, as well as heroin.
Ms. Loeffler commends the Drug Enforcement Administration and the Anchorage Police Department for the investigation of this case.
AK Steel to Pay $1.3 Million Civil Penalty as Part of Settlement with United States and Michigan for Air Violations at Dearborn Steel PlantRead the Press Release
Under a settlement agreement with the United States and the state of Michigan, AK Steel Corporation will pay a civil penalty of $1.35 million for past violations of the Clean Air Act at its Dearborn, Michigan facility, implement a variety of procedures to reduce future violations and install dynamic air filtration systems at the Salina Elementary and Salina Intermediate Schools across Ferney Street from the plant, announced the Department of Justice, the Environmental Protection Agency (EPA) and the Michigan Department of Environmental Quality (MDEQ).
The settlement will resolve 42 violation notices issued by MDEQ and two notices of violation issued by EPA alleging violations resulting from a wide variety of air emission sources issued against Severstal, the previous owner of the Dearborn facility. AK Steel purchased the facility in September 2014 and has taken responsibility for past violations and improving its compliance with environmental regulations.
“This settlement will result in better management and monitoring practices at the AK Steel facility and measures that will help prevent and reduce dust and hazardous air pollution in neighboring communities,” said Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division. “In agreeing to this judicially enforceable settlement, AK Steel is committed to prevent the violations of its predecessor from recurring, inform the public about its future environmental compliance and provide cleaner air for local school children.”
“People living in Dearborn and southwest Detroit have long been concerned about air pollution from this steel mill,” said Regional Administrator Susan Hedman for EPA. “The consent decree will result in improved air quality in these communities and help prevent future violations of the Clean Air Act.”
The consent decree will require AK Steel to develop an environmental management system for the facility with third-party auditing every six months, annually inspect and continuously monitor the performance of the pollution control equipment at the facility’s basic oxygen furnace and implement a fugitive dust control policy to prevent large particulate emissions into the adjacent neighborhoods. Upon full implementation of the consent decree requirements, particulate matter emissions, including metal hazardous air pollutants, from AK Steel should be reduced by approximately 100 tons per year.
“Manufacturing facilities that are located near neighborhoods and schools have a responsibility to protect the clean air that residents breathe,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan. “This settlement will directly improve air quality for our community in Dearborn and Southwest Detroit.”
“This is welcome news for residents who live near the steel mill,” said Director Dan Wyant of MDEQ. “We are pleased to finally have the past environmental violations addressed and resolved and we look forward to a strong working relationship with new plant owners AK Steel.”
“We have an obligation to protect our air, lands and waterways across the state of Michigan,” said Attorney General Bill Schuette for the state of Michigan. “This is a step forward for cleaner air for the residents of Dearborn.”
The settlement was lodged with the U.S. District Court for the Eastern District of Michigan and is subject to a 30-day public comment period and final court approval. It can be viewed at www.justice.gov/enrd/Consent_Decrees.html
140 Charged in Arkansas as Part of National Prescription Drug InitiativeRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and David Downing, Assistant Special Agent in Charge of the Little Rock District Office of the Drug Enforcement Administration (DEA), were joined today by DEA New Orleans Division Special Agent in Charge Keith Brown in announcing the charging and arrests of multiple individuals in several federal indictments presented as part of a DEA national initiative.
In January 2014, as part of the national effort, the DEA New Orleans Field Division—which includes the DEA Little Rock office—launched an aggressive campaign that targeted the largest sources of illegally diverted pharmaceuticals in Arkansas, Louisiana, Mississippi, and Alabama. This effort, dubbed Operation Pilluted, involved the extensive investigation of rogue medical practitioners, pharmacists, and other DEA Registrants, as well as the aggressive pursuit of more traditional criminal organizations involved in the distribution of pharmaceuticals. Under the auspices of Operation Pilluted, concerted efforts were initiated to heighten community awareness concerning the perils of prescription drug diversion and the strategic implementation/strengthening of pharmaceutical drug laws. Nearly 1,000 law enforcement officers across four states took part in the operation.
In 2014, investigations by DEA and state and local law enforcement agencies resulted in several indictments for the illicit distribution of pharmaceutical narcotics. The most recent Eastern District of Arkansas indictments focus on the illicit distribution of pharmaceuticals in the central Arkansas area, including Pulaski, Faulkner, Perry, Lonoke and Saline Counties. The organization at the center of each investigation is alleged to have been responsible for the diversion and distribution of hundreds of thousands of Schedule II, III, and IV narcotic drugs, including hydrocodone, oxycodone, and alprazolam (Xanax) during the time period of July 2014 through April 2015.
In total, throughout Operation Pilluted Arkansas state and federal authorities have charged 140 individuals with prescription drug crimes, including 94 federal defendants in five separate indictments, and 46 state defendants. Included in that total are 4 doctors, 4 nurses, and 5 pharmacists.
“The abuse of prescription pills is perhaps the greatest drug problem Arkansas currently faces,” Thyer said. “Today’s arrests, and arrests over the course of this operation, include doctors, nurses, and pharmacists, as well as street-level dealers. It is extremely disheartening when trusted professionals such as your local pharmacist or family doctor are engaged in the illegal sale and distribution of controlled substances. My office is committed to stopping the abuse of prescription pills at every level, from the prescribing doctor to individuals trying to sell these drugs on the street. Today’s announcement should signal to those in the medical community and elsewhere that we will aggressively seek to prosecute anyone who violates our prescription drug laws.”
Seven arrests were made today at the KJ Medical Clinic, including Dr. Jerry Reifeiss, prescribing physician, Kristen Holland, pharmacist at Bowman Curve Pharmacy, and Aaron Borengasser, physician’s assistant, formerly with Artex Medical Clinic. In July 2014, DEA received information from local Walgreens and Wal-Mart pharmacies that they were seeing numerous controlled substance prescriptions being written from a clinic in west Little Rock called Artex Medical Clinic. The prescriptions were suspicious, in that they contained typographical errors and were written by the same physician’s assistant for identical pharmaceuticals, namely hydrocodone and alprazolam. Evidence obtained in the investigation revealed that Artex, which later changed its name to KJ Medical Clinic, was operating as a “pill mill,” where individuals obtained prescriptions for narcotic drugs without having legitimate medical need. Beginning in November 2014, individuals were directed by clinic staff to fill the prescriptions at a local pharmacy, Bowman Curve Pharmacy, rather than with a large chain store, such as Walgreens or Wal-Mart. As part of the operation, the homeless and other individuals were recruited to obtain prescriptions at the clinic, after which they would fill the prescriptions, hand over the pills to the recruiter, and receive a small fee.
During the investigation undercover officers and confidential informants working for law enforcement posed as clinic patients, paying $200 and obtaining prescriptions for narcotic drugs without receiving an examination from a physician, or after receiving an inadequate examination. The indictment includes 16 counts against 18 individuals who participated in the clinic’s illicit distribution of pharmaceutical narcotics, including the clinic owners, doctors, nurses, recruiters, and staff, as well as the pharmacists at Bowman Curve Pharmacy. Several individuals known to frequent the clinic have been charged with selling hydrocodone to undercover officers. The operation of KJ Medical Clinic was found to be related to several “pill mills” in the Dallas, Texas area, operators of which are under federal indictment in Texas.
This case was investigated by the DEA—Little Rock Tactical Diversion Squad composed of officers from the Conway Police Department, Beebe Police Department, Little Rock Police Department, Pine Bluff Police Department, Jefferson County Sheriff’s Office, and the Benton Police. Also involved in the investigation were the United States Marshals Service, Little Rock Police Department, and the Saline County Sheriff’s Office.
The case against KJ Medical Clinic is the latest in a series of cases in Operation Pilluted. On Monday, May 18, 2015, the Lonoke County Sheriff’s Office took Dr. Richard Johns of Little Rock into custody charging him with 187 counts of Fraudulent Practices, a class C felony. This investigation first began November 2014 when detectives responded to an overdose death outside of Cabot. The Sheriff’s Office solicited the assistance of the DEA and began a joint investigation into the doctor and the suspected criminal enterprise headed by Dr. Johns. The investigation determined that 187 fraudulent prescriptions have been filled and distributed within the illicit market in Lonoke County alone. That is approximately 16,830 oxycodone pills with a street value of $505,000 since July 2014. Dr. Johns is currently released on bond and a trial is scheduled for July 20, 2015.
On May 6, 2015, the Grand Jury for the Eastern District of Arkansas returned a superseding federal indictment against Perryville pharmacist Christopher Watson and 27 others. In July 2014, the DEA and the Arkansas State Police (ASP) initiated an investigation into Christopher Watson, a licensed pharmacist, who was engaging in the unauthorized distribution of Schedule II, III and IV pharmaceutical narcotics from his family owned and operated store in Perryville, Arkansas. Watson and his father, Tommy Watson, own and operate the Perry County Food and Drug store, and Christopher Watson was the managing pharmacist at that location. Evidence obtained in the investigation showed that Christopher Watson sold tens of thousands of hydrocodone pills and other pharmaceuticals from the pharmacy shelves after hours and forged prescriptions to account for the missing pills, as well as filled fraudulent prescriptions presented by pharmacy customers.
Christopher Watson was federally arrested and indicted in a two-count indictment in February 2015. The present superseding indictment includes 44 counts against 28 individuals who participated in the conspiracy to illicitly distribute pharmaceutical drugs, or who obtained pharmaceuticals by fraud, several firearms charges and forfeiture allegations, as well as a scheme to commit insurance fraud by Christopher Watson wherein Watson falsely billed Medicare Part D for patients’ claims.
The operation resulted in the issuance of an Immediate Suspension Order to the Perry County Food and Drug store, the first Order of its kind issued in Arkansas. This Order was issued by the Administrator of DEA on the grounds that the pharmacy constitutes an imminent danger to public health and safety, and it immediately suspends the DEA Registration of the Perry County Food and Drug store required to dispense controlled substances. As a result of this Order, the Perry County Food and Drug store is prohibited from possessing and/or dispensing controlled substances pending the results of a federal administrative hearing. Trial is currently scheduled in the case for September 21, 2015.
This case was investigated by the DEA—Little Rock Tactical Diversion Squad composed of officers from the Conway Police Department, Beebe Police Department, Little Rock Police Department, Pine Bluff Police Department, Jefferson County Sheriff’s Office, and the Benton Police Department. Also involved in the investigation were the Federal Bureau of Investigation (FBI), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), United States Secret Service, United States Marshals Service, Arkansas State Police, and the Perry County Sheriff’s Office.
On October 8, 2014, the Grand Jury for the Eastern District of Arkansas returned an indictment against Charolda Walton and 32 others involved in an oxycodone distribution ring in Little Rock. In early 2014, DEA received information about large scale oxycodone distribution from a residence at 1723 S. Grant Street in Little Rock. Investigation of this residence identified Charolda Walton, Felicia Holmes, Tim McCain, and others selling bulk amounts of oxycodone tablets for $23-27 per tablet to numerous individuals. Through undercover work, wiretaps, and other operations, the DEA identified mid-level and street-level distributors of oxycodone who received their supplies from the individuals associated with 1723 S. Grant Street. The investigation resulted in the indictment of 33 distributors, including former NFL and Arkansas Razorback running back Cedric Cobbs, the seizure of approximately $22,000, 6 vehicles, a handgun, and 2,210 oxycodone, 189 hydromorphone, and 259 hydrocodone tablets. Distribution of the controlled substances took place at various public locations in Little Rock, Benton, and Sheridan, including restaurant and retail store parking lots. Trial is currently scheduled in the case for June 29, 2015.
A joint investigation into a Dilaudid (hydromorphone) distribution network in the Little Rock area conducted in the fall of 2013 through August 2014 by the DEA and Little Rock Police Department led to a federal indictment against Stephen Otey and his distribution network. Otey was identified as the source of supply for Dilaudid and other pharmaceutical drugs, distributing approximately 2,500 pills per month. It is estimated that the distribution organization profited approximately $25,000 per month from the sale of these pills. The Grand Jury for the Eastern District of Arkansas returned a second superseding indictment on February 4, 2015, charging Otey and seven others co-defendants. Execution of a search warrant at Otey’s residence resulted in the seizure of cash and two firearms, along with various prescription narcotics. Trial is currently scheduled in the case for December 7, 2015.
The final Arkansas case under the Operation Pilluted umbrella stems from an oxycodone distribution ring in central Arkansas that involved Josh Oliver and six other individuals. The DEA, working with local law enforcement agencies in Pulaski, Faulkner, and Saline County, initially discovered people obtaining valid prescriptions for oxycodone and then illegally selling the pills. Ultimately, members of the conspiracy forged prescriptions using computer templates and fraudulently obtained oxycodone. The Grand Jury for the Eastern District of Arkansas returned an indictment on April 2, 2014, and currently all seven defendants have entered guilty pleas and are awaiting sentencing.
“Although prescription medication in the right hands, at the right time and in the right place is safe, the reality is they are deadly to those who abuse the drug,” DEA Assistant Special Agent in Charge David Downing said. “These enforcement activities are the results of our continued commitment to investigating those responsible for turning a blind eye on the fraudulent prescriptions for profit. DEA works side by side with our state and local law enforcement partners in order to keep our neighborhoods free from drug abuse and the dangers that stem from drug trafficking.”
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
(Recently Announced Indictments)
19 May 2015
‘Dirty Block’ Atlantic City, New Jersey, Gang Member Sentenced to 13 Years in Prison on Drug Conspiracy and Weapons ChargesRead the Press Release
CAMDEN, N.J. – An Atlantic City, New Jersey, man was sentenced today to 156 months in prison for distributing heroin on behalf of a criminal street gang that used threats, intimidation and violence to maintain control of the illegal drug trade in Atlantic City, U.S. Attorney Paul J. Fishman announced.
Saeed Zaffa, a/k/a “Seed,” 25, previously pleaded guilty before U.S. District Judge Joseph E. Irenas to a superseding information charging him with one count of conspiracy to distribute one kilogram or more of heroin and one count of possessing a firearm as a previously convicted felon. Judge Irenas imposed the sentence today in Camden federal court.
According to documents filed in this and other cases and statements made in court:
Zaffa was a member of a gang known as “Dirty Block,” a/k/a “Crime Fam,” “3.6.6.12,” or “3.6,” which operated in a geographic area of Atlantic City that includes the public housing apartment complexes of Stanley Holmes Village Public Housing Complex, Renaissance Plaza and Schoolhouse Apartments.
From October 2010 through February 2013, Zaffa received heroin from Mykal Derry, 34, of Atlantic City, one of the gang’s leaders, and distributed the drugs to other conspirators throughout Atlantic City. Zaffa, a previously convicted felon, was also found in possession of a .40 caliber handgun when he was stopped by Atlantic County police officers on March 11, 2013.
In addition to the prison term, Judge Irenas sentenced Zaffa to serve 10 years of supervised release.
U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; the Atlantic City Police Department, under the direction of Chief Henry White; and the South Jersey Safe Streets Violent Incident and Gang (Safe Streets) Task Force, with the investigation leading to today’s sentencing.
He also thanked the N.J. State Police; the Atlantic County Sheriff’s Office; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Northfield Police Department; the Vineland Police Department; the Brigantine Police Department; the Millville Police Department; the Mullica Township Police Department; the South Jersey Transportation Authority; and the U.S. Secret Service for their contributions.
The government is represented by Assistant U.S. Attorneys Patrick Askin and Justin Danilewitz of the U.S. Attorney’s Office in Camden and Special Assistant U.S. Attorney Edmund Burgos of the Atlantic County Prosecutor’s Office.
Defense Counsel: Edward F. Borden Esq., Cherry Hill, New Jersey
Woman Sentenced for Aggravated Identity Theft Connected to Fraudulent Tax Refund SchemeRead the Press Release
Tampa, FL – U.S. District Judge Steven D. Merryday today sentenced Makaeia Demps to two years in federal prison for aggravated identity theft. The Court also ordered her to make restitution to the IRS in the amount of $13,441. Demps pleaded guilty on March 4, 2015.
According to court documents, in December 2011, Demps was arrested by officers from the Clearwater Police Department. In her possession, they found two debit cards in the names of other individuals. An investigation revealed that the debit cards contained funds that had been obtained as the result of fraudulently filed income tax returns. Further investigation linked Demps to the receipt of refunds generated by the filing of additional fraudulent income tax returns.
This case was investigated by Internal Revenue Service Criminal Investigation, with assistance from the Clearwater Police Department. It was prosecuted by Assistant United States Attorney Jay L. Hoffer.
Webster Man Pleads Guilty to Downloading Child PornographyRead 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 Preston Field, 23, of Webster, NY, pleaded guilty to possession of child pornography before Chief U.S. District Judge Frank P. Geraci. The charge carries a maximum penalty of 20 years in prison and a $250,000 fine.
Assistant U.S. Attorney John J. Field, who is handling the case, stated that from November 2012 to March 2014, the defendant downloaded and stored more than 600 images child pornography, including images portraying sadistic conduct and violence. Field also made his collection available for others to view and download.
The plea is the result of an investigation by Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Acting Special Agent in Charge J. Michael Kennedy.
Sentencing is scheduled for August 5, 2015, at 9:30, before Judge Geraci.
Vancouver, Washington Man Pleads Guilty to ‘Pump and Dump’ Stock Fraud SchemeRead the Press Release
A Vancouver, Washington resident who was a minor participant in an earlier ‘pump and dump’ stock scheme, pleaded guilty today to running his own stock fraud scheme in the months following the earlier investigation, announced U.S. Attorney Annette L. Hayes. TOVY PUSTOVIT, 20, faces up to 20 years in prison when sentenced by U.S. District Judge Ronald B. Leighton on September 14, 2015. Under the terms of the plea agreement, prosecutors have agreed to recommend a sentence no greater than 63 months in prison.
According to the facts admitted in the plea agreement, PUSTOVIT participated in a 2012 scheme with Alexander Hawatmeh, Mikhail Galas and Christopher Mrowca to manipulate the stock of ISM International, Inc. PUSTOVIT was not originally charged criminally in that stock manipulation scheme, but following the arrest of the other defendants, investigators uncovered additional information about PUSTOVIT’s participation and about his continuing to scheme to manipulate penny stocks.
In August 2014, Judge Leighton entered a preliminary injunction barring PUSTOVIT and the other defendants from engaging in stock fraud in a civil enforcement action brought by the U.S. Securities and Exchange Commission. In November 2014 PUSTOVIT conspired with another individual in a ‘pump and dump’ scheme involving three companies in the over-the-counter market. PUSTOVIT and his co-conspirator sought to manipulate the value of Brightech, Inc. (ticker symbol BRTE), General Environmental Management, Inc. (ticker symbol GEVI), and Green Street Capital Corp. (ticker symbol JAGR). The co-conspirator lined up various apparently unrelated accounts and funded them to purchase the penny stocks. After substantial amounts of stock had been purchased, the two sent out email blasts from various stock promotion websites they controlled: Infinity Stock Picks, Zeus Alerts and Hulk Alerts urging others to buy the stocks. When the price rose further, the two dumped their shares making significant profit.
Specifically, they manipulated GEVI in early 2015, accumulating some 2.7 million shares. On February 5, 2015 they sent out email blasts from the three different companies touting the stock as being “ready to soar” in value. The stock price rose sharply on the promotion, and the men sold their stock reaping $83,096 in net profits. In the days that followed the price of the shares collapsed harming numerous investors who had been defrauded.
PUSTOVIT has agreed to forfeit to the U.S. $266,373 as criminal proceeds from the scheme.
The original coconspirators in the trading of ISM International, Inc., Alexander Hawatmeh and Christopher Mrowca, are being sentenced on June 5, 2015.
The case is being investigated by the FBI. The Securities and Exchange Commission (SEC) is conducting a parallel civil investigation. The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Katheryn Kim Frierson.
United Parcel Service Agrees to Settle Alleged Civil False Claims Act ViolationsRead the Press Release
United Parcel Service Inc. (UPS) has agreed to pay $25 million to resolve allegations that it submitted false claims to the federal government in connection with its delivery of Next Day Air overnight packages, the Justice Department announced today. UPS is a package delivery company based in Atlanta.
“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will continue to ensure that when federal monies are used to purchase commercial services the government receives the prices and services to which it is entitled.”
“This conduct affected numerous federal agencies,” said U.S. Attorney Dana J. Boente of the Eastern District of Virginia. “We place high importance on the integrity of companies that provide services to the government. Combating all manners of fraud on the government is a high priority in the Eastern District of Virginia.”
UPS provides delivery services to hundreds of federal agencies through contracts with the U.S. General Services Administration (GSA) and U.S. Transportation Command, which provides support to Department of Defense agencies. Under these contracts, UPS guaranteed delivery of packages by certain specified times the following day. The settlement announced today resolves allegations that from 2004 to 2014, UPS engaged in practices that concealed its failure to comply with its delivery guarantees, thereby depriving federal customers of the ability to request refunds for the late delivery of packages. In particular, the government alleged that UPS knowingly recorded inaccurate delivery times on packages to make it appear that the packages were delivered on time, applied inapplicable “exception codes” to excuse late delivery (such as “security delay,” “customer not in,” or “business closed”), and provided inaccurate “on-time” performance data under the federal contracts.
“The United States should get what it pays for, nothing less,” said Acting Inspector General Robert C. Erickson of the GSA.
The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. The civil lawsuit was filed in the Eastern District of Virginia by Robert K. Fulk, a former employee of UPS, who will receive $3.75 million.
The resolution in this matter was the result of a coordinated effort between the U.S. Attorney’s Office of the Eastern District of Virginia, the GSA Office of Inspector General (OIG), the Federal Deposit Insurance Corporation OIG, the Defense Criminal Investigative Service, and the Treasury Inspector General for Tax Administration and the Department of Treasury OIG, with assistance from the Department of Veterans Affairs OIG.
The lawsuit is captioned United States ex rel. Fulk v. United Parcel Service, Inc., et al., No. 1:11cv890 (E.D. Va.). The claims resolved by this settlement are allegations only, and there has been no determination of liability.
Union City, New Jersey, Man Sentenced to 27 Months in Prison for Operating Supposed Charity as Illegal Bank, Falsifying TaxesRead the Press Release
NEWARK, N.J. - A Union City, New Jersey, man was sentenced today to 27 months in prison for operating a supposed charitable organization, or “gemach,” as an unchartered bank, accepting millions of dollars in deposits – including nearly $1 million of his own money – which he shielded from state or federal regulation, U.S. Attorney Paul J. Fishman announced.
Moshe Schwartz, 34, a/k/a “David Schwartz” or “Gedalya David Schwartz,” previously pleaded guilty before U.S. District Judge Jose L. Linares to two counts of an information: operating an unchartered bank and aiding and assisting in the filing of a false 2007 tax return. Judge Linares imposed the sentence today in Newark federal court.
According to the information and statements made in court:
Schwartz operated Gemach Shefa Chaim (GSC), purportedly to provide interest-free loans to needy members of the Sanz community in Union City. During his guilty plea proceeding, Schwartz admitted he operated GSC as a bank, with millions of dollars in deposits and more than 350 client accounts by July 2009.
To operate a bank in the United States, a bank is required to obtain a charter from the United States or the state in which the bank operates. Chartered banks are subject to oversight, regulation, and periodic review by federal and state authorities. Neither Schwartz nor GSC had such a charter.
Schwartz admitted that, in operating GSC as a bank, he accepted deposits and credited clients’ accounts, wrote checks from GSC as directed by clients, made transfers between accounts, disbursed client funds upon request, negotiated GSC checks presented by persons other than the named payees, conducted wire transfers, provided clients with receipts of transactions, charged clients a fee for bounced checks and provided overdraft notices to clients. Schwartz also admitted that he opened and maintained various bank accounts at financial institutions in or around North Jersey in the name of GSC and used those institutions to deposit client funds, negotiate checks, provide clients with GSC checks and conduct wire transfers. Because client funds were deposited into and commingled within GSC’s bank accounts at financial institutions, the funds could only be traced back to GSC, thereby concealing the true ownership, nature and source of the funds. Many clients were thus able to use their GSC accounts to engage in suspicious and, at times, illegal activities, including evading federal taxes and money laundering.
Schwartz also admitted that he provided false and fraudulent information to his tax preparer in Union City concerning his income for tax year 2007, falsely representing that his income was $24,475 when it was approximately $208,845. Schwartz admitted that he used his own GSC account and a false identity to conceal his income and assets from the IRS, causing a $74,889 tax loss.
In addition to the prison term, Judge Linares sentenced Schwartz to serve two years supervised release and ordered him to pay restitution of $74,889 and a $60,000 fine.
GSC bank accounts were seized in July 2009 and approximately $500,000 was ultimately forfeited. The accounts had been used by Moshe Altman, 45, Itzak Friedlander, 47, and Shimon Haber, 39, to launder proceeds that cooperating witness Solomon Dwek, 42, had purported to be the proceeds of illegal activities. Altman pleaded guilty in December 2010, to, among other things, conspiring to launder monetary instruments and was sentenced in March 2011 to 41 months in prison. Friedlander pleaded guilty in April 2010 to conspiracy to launder monetary instruments and was sentenced in April 2011 to 24 months in prison. Haber pleaded guilty to the same charge in January 2010 and was sentenced in May 2010 to five months in prison.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing; as well as the FBI, under the direction of Special Agent in Charge Richard M. Frankel; the Federal Deposit Insurance Corporation-Office of Inspector General, under the direction of Special Agent in Charge Francis L. Mace; and the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Edward J. Ryan, for their assistance.
The government is represented by Assistant U.S. Attorneys Mark J. McCarren of the Special Prosecutions Division and Frances C. Bajada of the Criminal Division in Newark.
UPS Agrees to Pay $25 Million to Settle Civil False Claims Act ViolationsRead the Press Release
ALEXANDRIA, Va. – United Parcel Service Inc. (UPS) has agreed to pay $25 million to resolve allegations that it submitted false claims to the federal government in connection with its delivery of Next Day Air overnight packages, the Justice Department announced today. UPS is a package delivery company based in Atlanta.
UPS provides delivery services to hundreds of federal agencies through contracts with the U.S. General Services Administration (GSA) and U.S. Transportation Command, which provides support to Department of Defense agencies. Under these contracts, UPS guaranteed delivery of packages by certain specified times the following day. The settlement announced today resolves allegations that from 2004 to 2014, UPS engaged in practices that concealed its failure to comply with its delivery guarantees, thereby depriving federal customers of the ability to request refunds for the late delivery of packages. In particular, the government alleged that UPS knowingly recorded inaccurate delivery times on packages to make it appear that the packages were delivered on time, applied inapplicable “exception codes” to excuse late delivery (such as “security delay,” “customer not in,” or “business closed”), and provided inaccurate “on-time” performance data under the federal contracts.
“This conduct affected numerous federal agencies,” said Dana J. Boente, U.S. Attorney for the Eastern District of Virginia. “We place high importance on the integrity of companies that provide services to the government. Combating all manner of fraud on the government is a high priority here in the Eastern District of Virginia.”
“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will continue to ensure that when federal monies are used to purchase commercial services the government receives the prices and services to which it is entitled.”
“The United States should get what it pays for, nothing less,” said Acting Inspector General Robert C. Erickson of the GSA.
The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. The civil lawsuit was filed in the Eastern District of Virginia by Robert K. Fulk, a former employee of UPS, who will receive $3.75 million.
This resolution in this matter was the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Virginia, the GSA Office of Inspector General (OIG), the Federal Deposit Insurance Corporation OIG, the Defense Criminal Investigative Service, the Treasury Inspector General for Tax Administration, the Department of Treasury OIG, and with assistance from the Department of Veterans Affairs OIG.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Benjamin C. Mizer, Principal Deputy Assistant Attorney General of the Justice Department’s Civil Division; Robert C. Erickson, Jr., Acting Inspector General, General Services Administration (GSA); and Fred W. Gibson, Acting Inspector General of the Federal Deposit Insurance Corporation (FDIC), Robert E. Craig, Special Agent in Charge, Defense Criminal Investigative Service, made the announcement after the case was unsealed by the U.S. District Court for the Eastern District of Virginia.
The matter was investigated by Assistant U.S. Attorneys Peter S. Hyun and Kevin Mikolashek of the Eastern District of Virginia.
The lawsuit is captioned United States ex rel. Fulk v. United Parcel Service, Inc., et al., No. 1:11cv890 (E.D. Va.). The claims resolved by this settlement are allegations only, and there has been no determination of liability.
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. 1:11cv890.
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U.S. settles with Marathon Petroleum Corp. to cut harmful air emissions at facilities in Ohio, Kentucky and IndianaRead the Press Release
The Department of Justice and the Environmental Protection Agency (EPA) announced a settlement with Marathon Petroleum Corporation today that resolves various alleged Clean Air Act violations at ten Marathon facilities and requires Marathon to take steps to reduce harmful air pollution emissions at facilities in three states. The Department of Justice and EPA allege that Marathon failed to comply with certain Clean Air Act fuel quality emissions standards and recordkeeping, sampling and testing requirements. These violations may have resulted in excess emissions of air pollutants from motor vehicles, which can pose threats to public health and the environment. Marathon self-reported many of these issues to EPA.
Under a consent decree lodged in U.S. District Court for the Northern District of Ohio, Marathon will spend over $2.8 million on pollution controls to reduce emissions of volatile organic compounds on 14 fuel storage tanks at its distribution terminals in Indiana, Kentucky and Ohio.
Marathon will also pay a $2.9 million civil penalty and retire 5.5 billion sulfur credits, which have a current market value of $200,000. Sulfur credits are generated when a refiner produces gasoline that contains less sulfur than the federal sulfur standard. These credits can be sold to other refiners that may be unable to meet the standard.
“The changes required by this settlement will positively impact air quality in communities across the Midwest,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “All Americans deserve to enjoy the benefits of clean air, land, and water. These benefits spring from our nation’s bedrock environmental laws and we will use them vigorously in the pursuit of environmental justice.”
“Fuel standards established under the Clean Air Act play a major role in controlling harmful air pollution from vehicles and engines,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “If unchecked, these pollutants can seriously impair the air we breathe, especially during summer months when they can reach higher levels. This settlement incorporates innovative pollution control solutions to reduce air pollution in overburdened communities.
“This agreement will help reduce air pollution emissions in Ohio and elsewhere,” said U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio. “We’re pleased this settlement will protect the air we breathe while promoting the use of next-generation technology.”
In their complaint, The Justice Department and EPA allege that Marathon:
- Produced about 356 million gallons of reformulated gasoline at its Texas City, Texas, refinery during 2007 that did not meet Clean Air Act standards for reducing volatile organic compounds. Volatile organic compounds are one of the primary constituents of smog and react in sunlight to form ground-level ozone. Breathing ozone can trigger a variety of health problems including chest pain, coughing, throat irritation and congestion and can worsen bronchitis, emphysema and asthma. Children, the elderly and people who have lung diseases such as asthma are particularly prone to these problems.
- Produced more than 40 million gallons of gasoline at the Texas City, Texas, refinery in 2009 that exceeded standards for sulfur levels. The goal of the Clean Air Act program that regulates sulfur in gasoline is to minimize emissions from vehicles and to ensure emissions control systems function effectively.
- Sold about 12 million gallons of gasoline that contained elevated levels of ethanol. Excess ethanol in gasoline can harm emission control components on some vehicles and engines.
- Sold about 1 million gallons of gasoline at its Tampa, Florida, terminal in 2013 that exceeded standards for volatility, known as the Reid Vapor Pressure, that help control ground level ozone during summer months. Gasoline with higher volatility results in increased emissions of volatile organic compounds, which contribute to the formation of ground level ozone.
- Failed to comply with numerous sampling, testing, recordkeeping and reporting requirements for fuel production. EPA discovered these violations during inspections of Marathon refineries and laboratories in 2008 and 2009. The sampling, testing, recordkeeping and reporting requirements of the fuels program provide the foundation for EPA’s compliance program.
Marathon will also install geodesic domes, fixed roofs, or secondary rim seals and deck fittings on 14 fuel storage tanks at several of its fuel distribution terminals in order to reduce emissions of volatile organic compounds. Marathon is also required to use innovative pollutant detection technology during the implementation of the environmental mitigation projects. Marathon will use an infrared gas-imaging camera to inspect the fuel storage tanks in order to identify potential defects that may cause excessive emissions. If defects are found, Marathon will conduct up-close inspections and perform repairs where necessary.
EPA’s Next Generation Compliance Strategy promotes advanced emissions and pollutant detection technology so that regulated entities, the government and the public can more easily see pollutant discharges, environmental conditions and noncompliance. Many of the facilities where the pollution controls will be installed are located in areas that may present environmental justice concerns.
More information about EPA’s Next Generation Compliance Strategy is available at: http://www2.epa.gov/compliance/next-generation-compliance.
The proposed consent decree is subject to a 30 day public comment period and is available on EPA’s website at http://www.justice.gov/enrd/consent-decrees.
U.S. Settles with Marathon Petroleum Corporation to Cut Harmful Air Emissions at Facilities in Indiana, Kentucky and OhioRead the Press Release
The Department of Justice and the Environmental Protection Agency (EPA) announced a settlement with Marathon Petroleum Corporation today that resolves various alleged Clean Air Act violations at ten Marathon facilities and requires Marathon to take steps to reduce harmful air pollution emissions at facilities in three states. The Department of Justice and EPA allege that Marathon failed to comply with certain Clean Air Act fuel quality emissions standards and recordkeeping, sampling and testing requirements. These violations may have resulted in excess emissions of air pollutants from motor vehicles, which can pose threats to public health and the environment. Marathon self-reported many of these issues to EPA.
Under a consent decree lodged in U.S. District Court for the Northern District of Ohio, Marathon will spend over $2.8 million on pollution controls to reduce emissions of volatile organic compounds on 14 fuel storage tanks at its distribution terminals in Indiana, Kentucky and Ohio.
Marathon will also pay a $2.9 million civil penalty and retire 5.5 billion sulfur credits, which have a current market value of $200,000. Sulfur credits are generated when a refiner produces gasoline that contains less sulfur than the federal sulfur standard. These credits can be sold to other refiners that may be unable to meet the standard.
“The changes required by this settlement will positively impact air quality in communities across the Midwest,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “All Americans deserve to enjoy the benefits of clean air, land, and water. These benefits spring from our nation’s bedrock environmental laws and we will use them vigorously in the pursuit of environmental justice.”
“Fuel standards established under the Clean Air Act play a major role in controlling harmful air pollution from vehicles and engines,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “If unchecked, these pollutants can seriously impair the air we breathe, especially during summer months when they can reach higher levels. This settlement incorporates innovative pollution control solutions to reduce air pollution in overburdened communities.
“This agreement will help reduce air pollution emissions in Ohio and elsewhere,” said U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio. “We’re pleased this settlement will protect the air we breathe while promoting the use of next-generation technology.”
In their complaint, The Justice Department and EPA allege that Marathon:
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Produced about 356 million gallons of reformulated gasoline at its Texas City, Texas, refinery during 2007 that did not meet Clean Air Act standards for reducing volatile organic compounds. Volatile organic compounds are one of the primary constituents of smog and react in sunlight to form ground-level ozone. Breathing ozone can trigger a variety of health problems including chest pain, coughing, throat irritation and congestion and can worsen bronchitis, emphysema and asthma. Children, the elderly and people who have lung diseases such as asthma are particularly prone to these problems.
-
Produced more than 40 million gallons of gasoline at the Texas City, Texas, refinery in 2009 that exceeded standards for sulfur levels. The goal of the Clean Air Act program that regulates sulfur in gasoline is to minimize emissions from vehicles and to ensure emissions control systems function effectively.
-
Sold about 12 million gallons of gasoline that contained elevated levels of ethanol.
-
Sold about 1 million gallons of gasoline at its Tampa, Florida, terminal in 2013 that exceeded standards for volatility, known as the Reid Vapor Pressure, that help control ground level ozone during summer months. Gasoline with higher volatility results in increased emissions of volatile organic compounds, which contribute to the formation of ground level ozone.
-
Failed to comply with numerous sampling, testing, recordkeeping and reporting requirements for fuel production. EPA discovered these violations during inspections of Marathon refineries and laboratories in 2008 and 2009. The sampling, testing, recordkeeping and reporting requirements of the fuels program provide the foundation for EPA’s compliance program.
Marathon will also install geodesic domes, fixed roofs, or secondary rim seals and deck fittings on 14 fuel storage tanks at several of its fuel distribution terminals in order to reduce emissions of volatile organic compounds. Marathon is also required to use innovative pollutant detection technology during the implementation of the environmental mitigation projects. Marathon will use an infrared gas-imaging camera to inspect the fuel storage tanks in order to identify potential defects that may cause excessive emissions. If defects are found, Marathon will conduct up-close inspections and perform repairs where necessary.
EPA’s Next Generation Compliance Strategy promotes advanced emissions and pollutant detection technology so that regulated entities, the government and the public can more easily see pollutant discharges, environmental conditions and noncompliance. Many of the facilities where the pollution controls will be installed are located in areas that may present environmental justice concerns.
More information about EPA’s Next Generation Compliance Strategy is available at: http://www2.epa.gov/compliance/next-generation-compliance.
The proposed consent decree is subject to a 30 day public comment period and is available on EPA’s website at http://www.justice.gov/enrd/consent-decrees.
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U.S. Attorney Barry Grissom to Take Part in FBI Youth Forum WednesdayRead the Press Release
KANSAS CITY, KAN. – U.S. Attorney Barry Grissom will take part in a Youth and Law Enforcement Forum Wednesday in Kansas City.
“Every young person in America should have the opportunity to grow, succeed and contribute to their community,” Grissom said. “Building trust between law enforcement and the community is one way to help ensure that all our young people can reach their full potential.”
Grissom’s office is helping to sponsor the event, which was organized by the FBI, with support from the U.S. Attorney’s Office for the Western District of Missouri, the Kansas City, Mo., and Kansas City, Kan., police departments and the FBI Citizens Academy Alumni Association. The forum is open to high school and college age youth from Kansas and Missouri. It will provide an opportunity for teens to talk openly about challenges and obstacles facing law enforcement and the teen community and how they can work together.
The forum will be kicked off by the Kansas City Chiefs General Manager John Dorsey at 5:30 p.m., (check-in begins at 5:00 p.m.) Wednesday, May 20. Following a period of questions and answers with leaders of area law enforcement, attendees will have the opportunity to interact with law enforcement and learn first-hand about law enforcement capabilities, tools and potential career opportunities.
The first portion of the program from 5 p.m. to 7 p.m. is closed to the media to encourage an open exchange of dialogue between the attendees and law enforcement. Media outlets are invited to attend the program at 7 p.m. until the program’s conclusion at 8 p.m. at the Robert Mohart Center located at 3200 Wayne Ave., Kansas City, MO.
For more information on the event, contact FBI Public Affairs Officer Bridget Patton at 816-512-8833.
Two Postal Employees Among Four Charged in Alleged Mail Theft ConspiracyRead the Press Release
PROVIDENCE, R.I. – Four individuals, including two mail sorters employed at the Providence Processing and Distribution Center, have been charged in U.S. District Court in Providence by way of federal criminal complaints for their alleged roles in a conspiracy to steal U.S. Treasury checks from the mail and either sell them on the street or deposit them in bank accounts opened with stolen or fraudulent personal information. The funds were withdrawn from ATM machines or used to make retail purchases with the use of debit cards.
The investigation by the Providence Police Intelligence and Organized Crime Unit and United States Postal Service (USPS) Office of Inspector General (OIG) included the execution of court authorized search warrants resulting in the seizure of approximately $1.6 million dollars worth of allegedly stolen U.S. Treasury checks and the seizure of more than $165,000 in proceeds allegedly gained as a result of the sale of stolen U.S. Treasury checks and other items allegedly stolen from the U.S. mail.
United States Attorney Peter F. Neronha, Providence Police Chief Colonel Hugh T. Clements, Jr. and Rafael Medina, Special Agent in Charge of the United States Postal Service, Office of Inspector General, Northeast Area Field Office today announced the arrest and initial appearance in U.S. District Court in Providence of:
Joan Manuel Mustafa, 36, of Providence, on charges of conspiracy, embezzlement, theft of public money (U.S. Treasury checks) and theft of mail;
Erick Vera Garzon, 35, of Providence, on charges of conspiracy, embezzlement, theft of public money (U.S. Treasury checks) and theft of mail;
Brenda Canuelas, 39, of Providence, on charges of conspiracy, theft of mail, theft of government money in excess of $1,000, forging endorsements on Treasury checks in excess of $1,000, bank fraud and aggravated identity theft; and
Secundino Velazquez Tirado, a/k/a Jesus Rivera, 45, of Providence, on charges of conspiracy, theft of mail, theft of government money in excess of $1,000, forging endorsements on Treasury checks in excess of $1,000, bank fraud and aggravated identity theft.
Major David A. Lapatin, Commanding Officer Investigative Division Providence Police Department said, “I commend the Intelligence and Organized Crime Unit of the Providence Police Department. The investigation led by Sgt. Nicholas Ludovici along with Detectives Andres Perez and Andrew Lawton, who did a fine job developing information and worked that information along with federal agencies, brought down the alleged major organized crime pattern that inconvenienced and hurt so many people of the State of Rhode Island.”
“Mail theft is always a crime, but when it is perpetrated by Postal Service employees and it impacts our veterans and our most vulnerable customers who depend on these checks, it is beyond disgraceful,” stated USPS-OIG Special Agent-in-Charge Rafael Medina. “The Special Agents of the USPS-OIG will continue to work closely with our local law enforcement partners to vigorously investigate those Postal Service employees who compromise their integrity for personal gain.”
According to court documents and information presented to the court, in September 2014, USPS-OIG agents began investigating the circumstances surrounding a significant number of missing Treasury checks addressed to individuals in Rhode Island and nearby Massachusetts. The checks were handled by employees at the U.S. Mail Providence Processing and Distribution Center. The investigation determined that many individual bank accounts were being opened in the name on missing checks, usually in a slightly altered form, by individuals other than the true owner of the check. The stolen checks were deposited in the accounts in amounts ranging from a few thousand dollars to more than $10,000. The accounts were then drawn down by cash withdrawals from ATMs, the purchase of goods and services, or by the purchase of money orders. Most of the bank accounts were opened in Rhode Island. Some were opened in Massachusetts, New York, and in the southeast United States.
According to court documents, independent of the ongoing investigation by USPS-OIG, a Providence Police Intelligence and Organized Crime Unit detective developed information that two postal employees at the Processing and Distribution Center, Joan Manuel Mustafa and Erick Vera Garzon, co-workers on the night shift, were allegedly stealing U.S. Treasury checks from the mail while the mail was being sorted. The detective developed information that Garzon was allegedly selling many of the stolen checks on the street at 20% of face value to local buyers and buyers in New York.
Based on the information developed by the detective, court authorized search warrants were obtained for both Mustafa and Garzon’s residences and were executed on April 16, 2015, with the assistance of agents from USPS-OIG. A search of Garzon’s residence and his vehicle resulted in the seizure of more than 900 U.S. Treasury checks valued at approximately $1.6 million dollars, dozens of gift cards and $33,250 in cash. From Mustafa’s residence detectives and other officers and agents seized $19,650 in cash and assorted Visa gift cards. The next day detectives and agents seized $113,100 from a safe deposit box opened by Garzon.
According to court documents, while detectives from the Providence Police Intelligence and Organized Crime Unit were gathering information on Mustafa and Garzon, USPS-OIG agents were reviewing surveillance photographs and videos from area banks and retail stores in an effort to determine who was responsible for depositing the stolen Treasury checks and withdrawing and spending the pilfered funds. Two individuals were identified as allegedly repeatedly making deposits of stolen Treasury checks, making cash withdrawals and making purchases using funds from the stolen checks. Agents and detectives worked together to identify the individuals as being Brenda Canuelas and Secundino Velazquez Tirado.
Canuelas and Tirado were arrested earlier today on federal criminal complaints and released on unsecured bond following initial appearances before U.S. District Court Magistrate Judge Patricia A. Sullivan.
Joan Manuel Mustafa and Erick Vera Garzon were arrested on April 16, 2015, on federal criminal complaints and released on unsecured bond following initial appearances before U.S. District Court Magistrate Judge Patricia A. Sullivan. Court documents pertaining to their arrest remained sealed per an order of the court until the arrest today of Canuelas and Tirado.
A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S. Attorney Gerard B. Sullivan.
Federal agents from the Veterans Administration Office of Inspector General and the U.S. Treasury Office of Inspector General assisted agents from the United States Postal Service (USPS) Office of Inspector General (OIG) and detectives from the Providence Police Intelligence and Organized Crime Unit in the investigation of this matter.
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To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/
Contact: 401-709-5357
[email protected]Two More Plead Guilty to Defrauding the Federal Food Stamp ProgramRead the Press Release
ALBUQUERQUE – Two defendants in a six-defendant case have entered guilty pleas to defrauding the federal food stamp program. Justin Quintana, 29, of Rio Rancho, N.M., plead guilty yesterday and Wilfredo Lopez, 46, of Albuquerque, N.M., entered his guilty plea earlier today. A third defendant, Joshua Moya, 33, also of Albuquerque, entered a guilty plea and was sentenced earlier this year.
Quintana and Lopez were among six defendants charged with defrauding the Food Stamp Program in a 32-count indictment that was filed in Aug. 2014. The indictment alleged that between Sept. 2009 to May 2010, Joseph Martin Padilla, 33, conspired with Quintana, Lopez, Sergio Escobedo, 36, and Veronica Hernandez, 41, to defraud the United States through the unauthorized use of Food Stamp benefits, which are currently called Supplemental Nutrition Assistance Program (SNAP) benefits. During this time, Padilla worked as a Family Assistance Analyst for the Income Support Division of the New Mexico Human Services Department where he allegedly was responsible for determining applicants’ eligibility and benefit level for SNAP benefits.
According to the indictment, SNAP is funded by the U.S. Department of Agriculture and is administered by the States. The program was created to alleviate hunger and malnutrition, and permits low income households to obtain more nutritious diet by increasing the food purchasing power for eligible households. In New Mexico, individuals qualify to participate in SNAP based on income and need by completing an application with the Income Support Division of the New Mexico Human Services Department. Once an applicant is deemed eligible for SNAP benefits by a Family Assistance Analyst, the Analyst establishes a SNAP account in the applicant’s name and electronic benefit transfers (EBT), which are determined based on income, resources and household size, are deposited into the account on a monthly basis.
Count 1 of the indictment alleges that Padilla abused his position as a Family Assistance Analyst to conspire with his co-defendants to defraud the United States through the unauthorized use of SNAP benefits. It alleges that Padilla used names and personal identifiers he obtained from his co-defendants to establish fraudulent SNAP accounts, sometimes in exchange for cash or other things of value. Count 2 alleges that Padilla established a fraudulent SNAP account and used the account to fraudulently obtain approximately $1,468.00 in SNAP benefits for himself. Counts 3 through 27 of the indictment allege that Padilla fraudulently established 25 separate SNAP accounts through which the United States was defrauded of approximately $45,263.00 in SNAP benefits. Counts 28 through 32 allege that Padilla, aided and abetted by his co-defendants, fraudulently established SNAP accounts that were used to fraudulently obtain an aggregate of $12,705.00 in SNAP benefits.
Yesterday Quintana pled guilty to Count 30 of the Indictment, and admitted meeting Padilla through co-defendant Moya and knowing that Padilla had the ability to register people to receive food stamps. Quintana admitted that he agreed to pay Padilla a fee in exchange for arranging for him to receive food stamps unlawfully. Quintana obtained $486.00 in SNAP benefits through his illegal conduct. He also received a fee for collecting SNAP applications from six other people and delivering the completed applications to Padilla for the purpose of assisting them in obtaining SPA benefits unlawfully. Quintana acknowledged that his criminal conduct caused a monetary loss to the U.S. Department of Agriculture of approximately $9,384.00.
Today Lopez entered a guilty plea to Count 32 of the indictment and admitted completing fraudulent applications for SNAP benefits in his name, another for himself in a pseudonym, and in the names of two other individuals. Lopez paid $100.00 to process each of the applications. He acknowledged that his criminal conduct caused a total monetary loss to the U.S. Department of Agriculture of approximately $8,382.00. Under the terms of the plea agreements, Quintana and Lopez each face up to six months in prison when they are sentenced. Each will be required to pay restitution. Their sentencing hearings have yet to be scheduled.
On March 9, 2015, Moya pled guilty to Count 31 of the indictment and admitted that he fraudulently obtained SNAP benefits to which he was not entitled. Moya admitted that in early Dec. 2009, Padilla provided him with an application to obtain food stamps. Moya completed the application and returned it to Padilla for processing even though he knew that he was not entitled to SNAP benefits. Moya admitted unlawfully receiving $866.00 in SNAP benefits. Moya also admitted providing another application for SNAP benefits to a family member and that his relative unlawfully received $1,578.00 in SNAP benefits. On May 6, 2015, Moya was sentenced to six months in prison, or time served, followed by three years of supervised release. Moya also was ordered to pay $2,444.00 in restitution.
Padilla, Escobedo and Hernandez have entered not guilty pleas to the charges in the indictment. Charges in indictments are merely accusations and defendants are presumed innocent unless found guilty beyond a reasonable doubt.
This case was investigated by the Office of Inspector General for the U.S. Department of Agriculture, and was prosecuted by Assistant U.S. Attorney Sean J. Sullivan.
Two Letcher Men Found Guilty of Tax CrimesRead the Press Release
Acting United States Attorney Randolph J. Seiler announced that Theodore “Ted” J. Nelson, Jr., age 67, and his son, Steven A. Nelson, age 45, both of Letcher, South Dakota, were found guilty of tax crimes as a result of a federal jury trial in Sioux Falls, South Dakota. The trial commenced on May 5, 2015, and ended on May 12, 2015.
The Nelsons were indicted by a federal grand jury on April 8, 2015. Ted Nelson was charged with one count of conspiracy to defraud the United States, six counts of failure to file income tax returns, and one count of impeding the Internal Revenue Service. Steven Nelson was charged with one count of conspiracy to defraud the United States, seven counts of failure to file income tax returns, and one count of impeding the Internal Revenue Service.
The conspiracy charge carries a maximum penalty of 5 years in custody and/or a $250,000 fine, 3 years of supervised release, and a $100 special assessment to the Federal Crime Victims Fund. For failure to file income tax returns, each count carries a maximum penalty of 1 year in custody and/or a $1,000 fine, no supervised release, a $25 special assessment to the Federal Crime Victims Fund, costs of prosecution, and restitution. The impeding count carries a maximum penalty of 3 years in custody and/or a $5,000 fine, 1 year of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
The Nelsons inherited a family farm and business from Ted Nelson’s parents. They planted and sold grain, raised cattle, performed custom work for neighbors, ran hunting/lodging businesses, leased out their land, and sold some of the land.
The Internal Revenue Service placed a lien against Ted Nelson’s real estate in January 2004. After that time, the Nelsons created over 30 trusts, corporations, LLCs, and other entities, in an effort to hide their ownership of the farm and its income. Also in 2004, the Nelsons opened a series of bank accounts with themselves or another person as signors, using false tax identification numbers and Social Security numbers. Steve Nelson filed income tax returns through 1996 and Ted Nelson filed them through 1998, and then both stopped filing.
This case was investigated by the Internal Revenue Service – Criminal Investigation. Assistant U.S. Attorneys John E. Haak and Ann M. Hoffman prosecuted the case.
A presentence investigation was ordered and a sentencing date was set for August 17, 2015. Ted Nelson was remanded to the custody of the U.S. Marshals Service, and Steve Nelson was released pending sentencing.
Two Letcher Men Found Guilty of Tax CrimesRead the Press Release
Acting United States Attorney Randolph J. Seiler announced that Theodore “Ted” J. Nelson, Jr., age 67, and his son, Steven A. Nelson, age 45, both of Letcher, South Dakota, were found guilty of tax crimes as a result of a federal jury trial in Sioux Falls, South Dakota. The trial commenced on May 5, 2015, and ended on May 12, 2015.
The Nelsons were indicted by a federal grand jury on April 8, 2015. Ted Nelson was charged with one count of conspiracy to defraud the United States, six counts of failure to file income tax returns, and one count of impeding the Internal Revenue Service. Steven Nelson was charged with one count of conspiracy to defraud the United States, seven counts of failure to file income tax returns, and one count of impeding the Internal Revenue Service.
The conspiracy charge carries a maximum penalty of 5 years in custody and/or a $250,000 fine, 3 years of supervised release, and a $100 special assessment to the Federal Crime Victims Fund. For failure to file income tax returns, each count carries a maximum penalty of 1 year in custody and/or a $1,000 fine, no supervised release, a $25 special assessment to the Federal Crime Victims Fund, costs of prosecution, and restitution. The impeding count carries a maximum penalty of 3 years in custody and/or a $5,000 fine, 1 year of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
The Nelsons inherited a family farm and business from Ted Nelson’s parents. They planted and sold grain, raised cattle, performed custom work for neighbors, ran hunting/lodging businesses, leased out their land, and sold some of the land.
The Internal Revenue Service placed a lien against Ted Nelson’s real estate in January 2004. After that time, the Nelsons created over 30 trusts, corporations, LLCs, and other entities, in an effort to hide their ownership of the farm and its income. Also in 2004, the Nelsons opened a series of bank accounts with themselves or another person as signors, using false tax identification numbers and Social Security numbers. Steve Nelson filed income tax returns through 1996 and Ted Nelson filed them through 1998, and then both stopped filing.
This case was investigated by the Internal Revenue Service – Criminal Investigation. Assistant U.S. Attorneys John E. Haak and Ann M. Hoffman prosecuted the case.
A presentence investigation was ordered and a sentencing date was set for August 17, 2015. Ted Nelson was remanded to the custody of the U.S. Marshals Service, and Steve Nelson was released pending sentencing.
Two from Centralia Plead Guilty to Drug ConspiracyRead the Press Release
Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today that Daniel L. Gazdik, 51, and Sara Rose Davis, 34, of Centralia, Illinois, pled guilty in federal district court yesterday to Conspiracy to Manufacture and Distribute Methamphetamine as charged against them in an indictment returned by a Federal Grand Jury in December 2014. Gazdik also pled guilty to two counts of Distribution of Methamphetamine and another count of Possession of Pseudoephedrine with the Intent to Manufacture Methamphetamine. The offenses took place in Marion and Clinton Counties.
The Conspiracy carries a penalty of not less than 5 years, up to 40 years in federal prison, up to a $5 million fine, and at least 4 years of supervised release. Each charge of Distribution of Methamphetamine carries a penalty of up to 20 years in prison, up to a $1 million fine, and not less than 3 years of supervised release. The charge of Possession of Pseudoephedrine with the Intent to Manufacture Methamphetamine carries a penalty of up to 20 years in prison, up to a $250,000 fine, and up to 3 years of supervised release. Each charge carries a special assessment of $100. Sentencing is scheduled for September 4, 2015, for Gazdik and August 28, 2015, for Davis.
Information leading to the charges against Gazdik and Davis was obtained in an investigation conducted by the FBI, the Marion County Sheriff’s Office, and the Clinton County Sheriff’s Department, assisted by the Illinois State Police Methamphetamine Response Team, the Centralia Police Department, Jefferson County Sheriff’s Department and the Mt. Vernon Police Department. The case is being handled by Assistant United States Attorney Kit Morrissey.
Two Columbia Area Residents Arraigned for Conspiracy to Commit Bank FraudRead the Press Release
Contact Person: John Potterfield (803) 929-3000
Columbia, South Carolina---- John Wayne Martin, III, age 49, of Lexington, South Carolina; and Brodie Kale Sexton, age 37, of Columbia, South Carolina were both arraigned on a 4-count indictment in reference to a mail theft and forgery ring operating in the Midlands of South Carolina from July 2014 through November 2014. They were charged in an indictment with two other individuals; Sandra Kay Cheeks, age 47, of Lexington, South Carolina; and Brandy Michelle Mitchell, age 35, of Lexington, South Carolina; on these charges. The indictment alleges the individuals would illegally remove checks from mail boxes and other mail receptacles. The defendants would change the amount and the name of the payee on the check to one of the defendants or the name of an innocent victim whose identification had been illegally obtained by the defendants.
Martin and Sexton are charged with Criminal Conspiracy, a violation of 18 U. S. C. §1349; and Aggravated Identity Theft, a violation of 18 U. S. C. §1028A. The maximum sentence each could receive under 18 USC, Section 1349 is a fine of $1,000,000 and/or imprisonment for not more than 30 years. The defendants face a mandatory sentence of 2 years if convicted under 18 USC, Section 1028A.
The investigation, led by the US Postal Inspection Service Columbia, SC field office, was conducted with the cooperation of federal, state, and local law enforcement agencies, along with private industry security personnel. These agencies and groups make up the Midlands Economic Crime Group, or MECG, a working group led by the US Postal Inspection Service and the Lexington County Sheriff’s Office that meets once a month to discuss ongoing criminal incidents involving forgery, theft, fraud, identity theft, and other similar white collar crimes in the Midlands of South Carolina. The case is assigned to Assistant United States Attorney John Potterfield of the Columbia office for prosecution.
The United States Attorney further stated that all charges in the Indictment are merely accusations and that all defendants are presumed innocent until and unless proven guilty in a court of law.
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Twin Falls Former Pharmacy Technician Sentenced for Diverting Controlled SubstancesRead the Press Release
BOISE – Krista Federer, 46, of Twin Falls, Idaho, was sentenced today to 12 months and one day in prison for distributing a controlled substance, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge also ordered Federer to serve three years of supervised release, and to pay a $1,000 fine.
According to the plea agreement, Federer worked as a pharmacy technician in a pharmacy in Twin Falls, Idaho. She stole and sold bottles of controlled substance prescriptions from the pharmacy stock to another individual without a prescription and outside the normal course of standard pharmacy practice. Generally, Federer arranged for the sales by text message and then put pill bottles in her car glove box in the pharmacy parking lot, where another individual retrieved the controlled substances and left payments. Specifically, on October 6, 2014, Federer illegally sold two bottles, each containing 100 pills of 20 mg oxycodone, and two bottles, each containing 100 pills of Dilaudid 4 mg (hydromorphone) for a total of $1,200. On October 14, 2014, Federer committed a similar diversion of controlled substances from her employer pharmacy by placing in her glove box three bottles, each containing 100 pills of oxycodone 30 mg, in exchange for $1,500. All of these are Schedule II controlled substances.
The case was initiated and investigated by the Twin Falls Police Department, and the Drug Enforcement Administration (DEA) led Tactical Diversion Squad which is comprised of law enforcement personnel from the DEA, Ada County Sheriff’s Office, Boise Police Department, Idaho State Police, Meridian Police Department, Nampa Police Department and U.S. Department of Health and Human Services Office of Inspector General.
Tennessee Man Pleads Guilty to Federal Fraud ChargesRead the Press Release
St. Louis, MO – COLEMAN CARPENTER of Troy, Tennessee, admitted to defrauding his former employer in a scheme involving the purchase of millions of bushels of agricultural commodities between 2009 and 2013.
In the plea, Carpenter admitted to paying $900,000 more than he was authorized to pay for various agricultural commodities while the manager of a grain elevator owned by Bunge North America, which is headquartered in St. Louis.
Carpenter appeared in St. Louis Monday before Judge Rodney W. Sippel, who accepted his guilty plea and set sentencing for August 28, 2015.
Carpenter faces up to 20 years imprisonment and/or a fine of $250,000. In determining the actual sentence, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
The case was investigated by the U.S. Postal Inspection Service and the St. Louis Division of the FBI. Assistant United States Attorney Tom Albus is handling the case for the U.S. Attorney’s Office.