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5 May 2015
Two Birmingham Area Men Charged with Filing False Tax Returns, Theft of Public Monies, Wire Fraud, and Aggravated Identity TheftRead the Press Release
Kenyen R. Brown, the United States Attorney for the Southern District of Alabama, announced today that Donald Centreal Smith, age 32, of Birmingham, Alabama, and Gary G. Collins, age 33, of Odenville, Alabama, have been charged in a 30-count indictment by a federal grand jury in Birmingham, Alabama, with conspiring to file false tax returns, filing false tax returns, theft of public monies, wire fraud, and aggravated identity theft. Smith and Collins are charged in each of the thirty counts.
The conspiracy and false claims counts carry a maximum penalty of 5 years imprisonment; the theft of public monies counts carry a maximum penalty of 10 years imprisonment; the wire fraud counts carry a maximum penalty of 20 years imprisonment; and the counts charging aggravated identity theft require a 2 year mandatory term of imprisonment to run consecutive to any other sentence. The Indictment also seeks the forfeiture of a money judgment equal to the proceeds derived from the above-referenced violations.
As alleged in the Indictment, Donald C. Smith is a Special Agent with the Internal Revenue Service, Criminal Investigation, Atlanta Division, and he and Collins are charged with using personal information that came into Smith’s possession by virtue of his employment as a Special Agent to prepare and electronically file false tax returns.
“The IRS will continue to aggressively pursue those who use stolen social security numbers to file false tax returns,” said Jerome McDuffie, Special Agent in Charge, IRS Criminal Investigation- New Orleans Field Office. “The indictment returned against Mr. Smith and Mr. Collins serves as a reminder that those who defraud innocent people and steal government funds will be held accountable. Mr. Smith used his position and access as an IRS employee to perpetrate this fraudulent scheme. Our agency will continue to work closely with the United States Attorney’s Office to hold individuals, particularly those in positions of public trust, responsible for their illegal activities.”
“Corrupt interference with Federal tax administration is an extremely serious matter,” said Melissa Chedotal, Special Agent in Charge for TIGTA’s Atlanta Field Division. “Allegations of aggravated identity theft committed by an IRS employee who bears the responsibility for protecting taxpayers from such crimes are particularly reprehensible. TIGTA will aggressively investigate any and all allegations of IRS employees victimizing taxpayers for their own personal gain.” Chedotal credited IRS CI for working diligently to bring the investigation to a satisfactory conclusion. “This was a joint investigation in every sense of the word,” she said. “The successful investigation of these allegations would not have been possible without IRS Criminal Investigations, whose cooperation was superb in every way.”
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent unless and until he or she is proven guilty at trial.
This case was investigated by the United States Department of Treasury Inspector General for Tax Administration and the Internal Revenue Service, Criminal Investigation, New Orleans Division. The case will be prosecuted by Donna B. Dobbins of the United States Attorney’s Office for the Southern District of Alabama, acting as Special Attorney, due to the recusal of the United States Attorney’s Office for the Northern Division of Alabama.
Tucker County woman charged with fraudulently collecting government benefitsRead the Press Release
CLARKSBURG, WEST VIRGINIA – A federal grand jury returned an indictment today charging Dorothy Lawson, 66, of Hendricks, West Virginia, with fraudulently collecting spousal death benefits from the Department of Veterans Affairs, United States Attorney William J. Ihlenfeld, II, announced.
Dorothy Lawson was previously married to a veteran who passed away in 1991. Lawson allegedly remarried in 1995 and continued to unlawfully collect spousal death benefits from the Department of Veterans Affairs until at least 2013. Lawson is further alleged to have falsely reported on at least two government forms that she had never remarried.
Lawson is charged with one count of “Theft and Conversion of Government Monies.” She faces up to 10 years in prison and a fine of up to $250,000.00. She is further charged with two counts of “False Statement in Document.” She faces up to five years in prison and a fine of up to $250,000.00 on each of the two counts. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Andrew Cogar is prosecuting the case on behalf of the government. The Department of Veterans Affairs Office of Inspector General is leading the investigation.
An indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.
Toledo man sentenced to 27 years in prison for operating chop shopRead the Press Release
Nine men from northwest Ohio were sentenced to prison for their roles in a conspiracy to transport nearly $2.3 million worth of semi-trucks, trailers and cargo stolen in Ohio, Michigan and Indiana, law enforcement officials said.
Sentenced this week were:
Michael Wymer, 56, of Toledo: 27 years in prison.
Robert W. Debolt, Jr., 50, of Toledo: 10 years in prison.
Gary J. Wymer, Sr., 61, of Rossford, Ohio: five years in prison.
John Debolt, 45: five years in prison.
Earl Beebe, 39: five years in prison.
Terrance Wymer, 30, of Toledo: five years in prison.
Gary Wymer, Jr, 29: four years in prison.
Terry Wymer, 52, of Toledo: three years, six months in prison.
Joe McKinney, 77: one year, eight months in prison.
“This was a highly organized group that stole from people throughout the Midwest,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “The scale of their predatory behavior is reflected in the sentences. The FBI, Ohio State Patrol and all the law enforcement partners involved in this investigation did a tremendous job shutting down this ring.”
“These defendants operated a truck and cargo-theft ring, stealing from Ohio, Michigan and Indiana, which resulted in a multi-million dollar losses,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Northern District of Ohio. “This case was a true collaborative effort by all participating agencies, and we are committed to holding accountable those individuals who engage in this organized criminal activity.”
U.S. District Judge James Carr also ordered the defendants to pay nearly $2.3 million in restitution.
Overall, 13 people pleaded guilty for their roles in the conspiracy.Greg Rose, Diana Vannes and Shawn Wymer are scheduled to be sentenced later this month for their roles, and Anthony Wymer is scheduled to be sentenced June 1.
From at least August 2012 through February 2013, the defendants operated a chop shop located at 642 Sterling Street in Toledo, while Gary Wymer and others operated another chop shop at 2322 Consual Street in Toledo, according to court documents.
The defendants dismantled stolen semi-trucks, trailers and cargo, transport the pieces and parts of said stolen items between the two chop shops and the ultimately destroy or scrap the stolen goods. They also received stolen motor vehicles and parts with the intent to sell or dispose of them, according to court documents.
This case was prosecuted by Assistant U.S Attorney Alissa Sterling following an investigation by the Federal Bureau of Investigation, with assistance from the Ohio State Highway Patrol and the Ohio Bureau of Motor Vehicles.
Three Men Charged with Sex TraffickingRead the Press Release
BOSTON – Three men were arrested today on charges related to the sex trafficking of several women, including a minor.
Tyrell Gorham, a/k/a Sheek, 30, of Lewiston, Maine; Chelanjei Greene, a/k/a Young, 32, of Brockton; and Lee Young, a/k/a Chop, 32, of Brockton, were charged in a federal complaint with sex trafficking of a minor across state lines and sex trafficking through force, fraud, or coercion.
According to the criminal complaint, an undercover law enforcement operation conducted in February 2013 identified three adult women and one minor woman as victims of a sex trafficking ring. The investigation revealed that Gorham allegedly used social media to identify and target vulnerable women living in the Portland, Maine area, and then either lured or transported them to the Greater Boston area where Gorham, Greene, and Young would force them to work as prostitutes, posting advertisements for their services on Backpage.com. The victims were required to have sex with 10 to 15 customers per day and turn over their earnings to Gorham, Greene, and Young.
The case was investigated by the Federal Bureau of Investigation’s Boston Child Exploitation Task Force (CETF). Significant investigative assistance was provided by the FBI; the Boston Police Department Child Abuse and Human Trafficking Units; the Arlington, Malden, Norwood, Revere, Saugus, Woburn, and Brockton Police Departments; the Massachusetts State Police; and the Massachusetts State Police Human Trafficking Unit of the Massachusetts Attorney General’s Office.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Emily Cummings and Timothy Moran of Ortiz’s Organized Crime and Gang Unit.
The details contained in the complaint are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Temple Hills Felon Convicted of Armed Robbery of a Pizza Hut in BowieRead the Press Release
Greenbelt, Maryland – A federal jury convicted Gary Warren Hancock, Jr., age 37, of Temple Hills, Maryland, today of robbery, brandishing a firearm during the robbery and being a felon in possession of a gun and ammunition.
The conviction was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William P. McMullan of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Chief John Nesky of the Bowie Police Department; Chief Mark A. Magaw of the Prince George’s County Police Department; and Colonel William M. Pallozzi, Superintendent of the Maryland State Police.
According to evidence presented during the six day trial, on May 2, 2013, Hancock entered the Pizza Hut restaurant at 1290 Crain Highway NW, Bowie, Maryland, pointed a handgun at an employee and demanded the opening of a safe. When the employee said he could not open the safe, Hancock demanded money from the cash register. The employee complied. Hancock fled on a motorcycle.
A Bowie City Police Department officer happened to be on patrol just outside the Pizza Hut at the time, and was alerted by witnesses to the robbery. The officer saw Hancock fleeing on the motorcycle and gave chase. After a pursuit, Hancock crashed the motorcycle and was arrested. Law enforcement officers recovered the stolen money and a loaded firearm.
Hancock had previously been convicted of numerous felonies, including carjacking, kidnapping and attempted robbery, and was thus prohibited from possessing a firearm and ammunition.
Hancock faces a maximum sentence of 20 years in prison for the robbery; a mandatory minimum sentence of seven years in prison and a maximum of life in prison for using a firearm during the robbery; and a mandatory minimum sentence of 15 years and a maximum sentence of life in prison for being a felon in possession of a gun and ammunition. U.S. District Judge George J. Hazel has scheduled sentencing for August 11, 2015 at 10:00 a.m.
United States Attorney Rod J. Rosenstein commended the ATF, Bowie and Prince George’s County Police Departments and the Maryland State Police for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Thomas M. Sullivan and Michael T. Packard, who are prosecuting the case.
Staunton Woman Sentenced on Wire Fraud ChargesRead the Press Release
LYNCHBURG, VIRGINIA – A Staunton, Va. woman, who worked as a financial advisor for a Staunton-based branch of a national bank chain, who previously pled guilty to wire fraud charges, was sentenced today in the United States District Court for the Western District of Virginia in Lynchburg.
Kirsten Flynn Hawkins, 45, of Staunton, Va., previously waived her right to be indicted and pled guilty to a three count Information charging her with three separate counts of wire fraud. Today in District Court, Hawkins was sentenced to 41 months of federal incarceration. In addition, she was ordered to pay her victims approximately $472,000 in restitution.
According to evidence presented at the guilty plea hearing by Assistant United States Attorney Daniel Bubar, Hawkins worked as a financial advisor for an unnamed bank. During that time, between August 2011 and August 2014, the defendant devised a scheme to defraud and obtain money though false representations and promises.
Evidence showed that it was the purpose of the scheme for Hawkins to take control of “Victim One’s” various bank and investment accounts, which were located in the bank. At various times between 2011 and 2014 and on the three separate occasions charged, Hawkins caused money to be transferred from the accounts of Victim One to her personal banking accounts. The funds were used to pay various living expenses, utilities, rent, travel, jewelry, clothing, eating out and to provide other economic benefit for herself and her family.
The investigation of the case was conducted by United States Secret Service. Assistant United States Attorney Daniel Bubar is prosecuting the case for the United States.
Statement on Execution of Federal Search Warrants in Fayette CountyRead the Press Release
PITTSBURGH - David J. Hickton, United States Attorney for the Western District of Pennsylvania, issued the following statement today in response to media inquiries regarding searches conducted on May 5, 2015:
"On Tuesday, May 5, 2015, special agents from the Federal Bureau of Investigation, troopers from the Pennsylvania State Police, and detectives from the Fayette County Drug Task Force - accompanied by Fayette County Tactical Medics from Fayette County EMS - executed federal search warrants at 11 locations in Fayette County, Pa., as part of an ongoing federal investigation.”
Skin care business convicted of selling misbranded, unauthorized medical productsRead the Press Release
MARTINSBURG, WEST VIRGINIA - Rebuilder Medical Technologies, Inc., a skin care business operating in Jefferson County, West Virginia, was convicted in federal court today of distributing medical products without the approval of the U.S. Food and Drug Administration, United States Attorney William J. Ihlenfeld, II, announced.
An FDA investigation revealed that Rebuilder was manufacturing and distributing SilverCure Ointment, a product containing colloidal silver for use in treating molluscum, psoriasis, and other skin conditions. The FDA has not approved drugs containing colloidal silver due to concerns over lack of effectiveness and side effects such discoloration of the skin resulting from an accumulation of silver or silver sulfide.
"In 1999, the FDA notified the public that colloidal silver is not generally recognized as safe or effective and is an unapproved new drug. This form of silver in drugs that are readily available presents a clear threat to the public health," said Antoinette V. Henry, Special Agent in Charge, FDA Office of Criminal Investigations' Metro Washington Field Office. "The FDA will continue to work to remove such potentially dangerous products from the U.S. marketplace and to bring to justice those who attempt to evade regulatory scrutiny."
The company’s owners represented to the FDA that the businesses would discontinue the production and sale of products containing colloidal silver. However, the company continued to sell the unauthorized products.
Rebuilder Medical Technologies, Inc. pled guilty today to one count of "Introduction into Interstate Commerce of an Unapproved New Drug." David B. Phillips, a Rebuilder executive, executed the plea agreement on behalf of the company. The corporation faces a fine of up to $250,000.00 and a period of probation between one and five years. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.Assistant U.S. Attorney Paul Camilletti prosecuted the case on behalf of the government.
U.S. Magistrate Judge Robert W. Trumble presided.
Sex Offender Sentenced to 33 months for Failing to RegisterRead the Press Release
United States Attorney Deborah R. Gilg announced that Timothy Kirsch, 31, was sentenced in federal court in Omaha for failing to register as a sex offender. The Honorable Joseph F. Bataillon, Senior Judge, sentenced Kirsch to a 33 month term of imprisonment. There is no parole in the federal system. After his release from prison Kirsch will begin a 10 year term of supervised release.
Kirsch was convicted in Page County, Iowa in 2002 of Lascivious Acts with a Child. He was later convicted in Louisiana for failing to register as a sex offender.
Kirsch reported to Iowa authorities that he would be living in Nebraska. He resided at two separate residences in Omaha and failed to register either residence with the Nebraska Sex Offender Registry.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Scranton Man Sentenced to More Than 12 Years in Prison for Role in Sex Trafficking ConspiracyRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that a 28-year-old Scranton resident was sentenced today to 151 months in prison by Senior U.S. District Court Judge James M. Munley in Scranton, for his role in a sex trafficking conspiracy involving a minor.
According to United States Attorney Peter Smith, the defendant, Sean Cantelmo, previously pleaded guilty to conspiring with others to have a 17-year-old female engage in prostitution and illegal sexual activity during February through May 2014. Cantelmo admitted that he and others used a cell phone to post advertisements for “escort services” involving the minor female on a website, rented motel rooms in Lackawanna and Luzerne Counties to facilitate the prostitution activities, and purchased condoms for the minor to use when engaging in commercial sex acts.
Cantelmo was indicted by a federal grand jury in August 2014, as a result of an investigation by Homeland Security Investigations, the Pennsylvania State Police, and the Lackawanna District Attorney’s Office.
Judge Munley also ordered Cantelmo to serve 10 years on supervised release following his prison sentence. Cantelmo must also undergo sex offender treatment and must comply with the registration and notification requirements of the Sex Offender Registration and Notification Act.
This case was brought as part of Project Safe Childhood, a
nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Assistant U.S. Attorney Francis P. Sempa prosecuted the case.
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Salvadoran National Pleads Guilty to Illegally ReentryRead the Press Release
U.S. Attorney Kenneth A. Polite announced that LUIS ADALBERTO MORADIAGA, age 44, a citizen of El Salvador, pled guilty on today to a one-count Indictment for illegal reentry of removed alien.
According to court records, on or about March 5, 2015, MORADIAGA was found in the United States after having been officially deported and removed on or about August 25, 2000.
MORADIAGA faces a maximum term of imprisonment of two years, followed by one year of supervised release, a fine of $250,000, and a $100 special assessment. U.S. District Judge Jay C. Zainey set sentencing for July 28, 2015.
U.S. Attorney Polite praised the work of the United States Department of Homeland Security, Homeland Security Investigations in investigating this matter. Assistant United States Attorney Spiro G. Latsis is in charge of the prosecution.
Luis Adalberto Moradiaga Factual Basis
Rochester Man Sentenced for Making Counterfeit CurrencyRead 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 Adrian Clemons, 34, of Rochester, NY, who was convicted of counterfeiting United States currency, was sentenced to one year in prison by U.S. District Court Judge Charles J. Siragusa.
Assistant U.S. Attorney John J. Field, who handled the case, stated that between January 2013 and March 2013, Clemons created more than $10,000 in counterfeit $50 and $20 bills using a scanner and a printer. The defendant then sold the counterfeit bills to others to pass at local stores in Rochester as genuine currency. Victims of the scam also included individuals who had advertised personal items for sale.
The plea is the culmination of an investigation by Special Agents of the Secret Service, under the direction of Special Agent in Charge C. Todd Laster.
Ripple Labs Inc. Resolves Criminal InvestigationRead the Press Release
SAN FRANCISCO – Ripple Labs Inc., and its wholly-owned subsidiary, XRP II, LLC (formerly XRP Fund II, LLC), have agreed to resolve a criminal investigation in exchange for a Settlement Agreement calling for a series of substantial remedial measures, including a migration of a portion of Ripple’s virtual currency business to a separate entity; the company’s ongoing cooperation in other investigations; an extensive remedial framework to ensure future compliance with federal laws; and forfeiture and penalties totaling $700,000, announced United States Attorney Melinda Haag, U.S. Treasury Department Financial Crimes Enforcement Network (“FinCEN”) Director Jennifer Shasky Calvery, and Internal Revenue Service Criminal Investigation Division Chief Richard Weber. The agreement will resolve allegations that Ripple and its subsidiary failed to follow the law while engaging in the exchange of virtual currency and that the entities failed to establish and maintain an appropriate anti-money laundering program.
Ripple Labs Inc. is headquartered in San Francisco and developed and sold virtual currency known as “XRP.” As of 2015, the currency of the Ripple network, XRP, is the second-largest digital currency by market capitalization.
The agreement formalizes the steps Ripple and its subsidiary must take to bring its virtual currency operation within the existing regulatory framework for money services businesses. The agreement consists of a Settlement Agreement, an agreed Statement of Facts, and a Remedial Framework for the company going forward. Aside from monetary penalties in the form of forfeiture, the Remedial Framework requires the migration of any component of Ripple’s business that is engaged in the exchange of virtual currency into an entity registered with FinCEN. In addition, the agreement calls for continued enhancements to the company’s anti-money laundering (AML) controls and training program. Further, the Remedial Framework calls for external audits through the year 2020, enhancements to the Ripple Protocol, increased transaction monitoring, and an extensive review of historical activity.
“By these agreements, we demonstrate again that we will remain vigilant to ensure the security of, and prevent the misuse of, the financial markets,” said U.S. Attorney Melinda Haag. “Ripple Labs Inc. and its wholly-owned subsidiary both have acknowledged that digital currency providers have an obligation not only to refrain from illegal activity, but also to ensure they are not profiting by creating products that allow would-be criminals to avoid detection. We hope that this sets an industry standard in the important new space of digital currency.”
The agreement is the culmination of a criminal investigation conducted by U.S. Attorney’s office and the Internal Revenue Service’s Criminal Investigation Division. FinCEN joined the investigation with a parallel civil enforcement action. In that action, Ripple Labs and XRP II have agreed to pay a $700,000 civil penalty, $450,000 of which will be designated a forfeiture to settle issues raised in the U.S. Attorney’s investigation. “Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws," said FinCEN Director Jennifer Shasky Calvery. "Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”
“Federal laws that regulate the reporting of financial transactions are in place to detect and stop illegal activities, including those in the virtual currency arena,” said Richard Weber, Chief, IRS Criminal Investigation, “Unregulated, virtual currency opens the door for criminals to anonymously conduct illegal activities online, eroding our financial systems and creating a Wild West environment where following the law is a choice rather than a requirement.”
Ripple described itself as an exchanger of virtual currency in a December 2013, filing made in San Francisco federal court in an unrelated case. As an exchanger, Ripple was required to register with FinCEN and to comply with applicable federal laws and regulations. Yet Ripple sold XRP even though it had not registered with FinCEN, effectuating sales of over approximately $1.3 million U.S. dollars in April 2013 alone. Ripple also failed to establish and maintain an appropriate AML program, and failed to have policies, procedures, and internal controls to ensure compliance with the Bank Secrecy Act and anti-money laundering laws. In July 2013, Ripple incorporated a subsidiary, now known as XRP II, that replaced Ripple as the seller of XRP. Although XRP II registered with FinCEN, it failed to have an effective AML program or to file appropriate suspicious activity reports. In late 2013, for example, it negotiated a $250,000 transaction with an individual who had prior felony convictions for dealing in explosive devices and had been sentenced to prison, failing to follow its own internal “know your customer” requirements.
Assistant U.S. Attorneys Kathryn R. Haun and Arvon J. Perteet handled the matter on behalf of the U.S. Attorney’s Office with the assistance of Daniel Charlier-Smith and Leslie Cook. The Settlement Agreement with Ripple Labs was the result of a coordinated effort by the United States Attorney’s Office and IRS Criminal Investigation, working in tandem with FinCEN.
Ripple Labs Inc. Resolves Criminal InvestigationRead the Press Release
Ripple Labs Inc. and its wholly-owned subsidiary, XRP II LLC, formerly XRP Fund II LLC, have agreed to resolve a criminal investigation in exchange for a settlement agreement calling for a series of substantial remedial measures, including a migration of a portion of Ripple’s virtual currency business to a separate entity, the company’s ongoing cooperation in other investigations, an extensive remedial framework to ensure future compliance with federal laws and forfeiture and penalties totaling $700,000, announced U.S. Attorney Melinda Haag of the Northern District of California, Director Jennifer Shasky Calvery of the U.S. Treasury Department Financial Crimes Enforcement Network (FinCEN) and Chief Richard Weber of the Internal Revenue Service (IRS) Criminal Investigation Division. The agreement will resolve allegations that Ripple and its subsidiary failed to follow the law while engaging in the exchange of virtual currency and that the entities failed to establish and maintain an appropriate anti-money laundering program.
Ripple Labs Inc. is headquartered in San Francisco, California, and developed and sold virtual currency known as “XRP.” As of 2015, the currency of the Ripple network, XRP, is the second-largest digital currency by market capitalization.
The agreement formalizes the steps Ripple and its subsidiary must take to bring its virtual currency operation within the existing regulatory framework for money services businesses. The agreement consists of a settlement agreement, an agreed statement of facts, and a remedial framework for the company going forward. Aside from monetary penalties in the form of forfeiture, the remedial framework requires the migration of any component of Ripple’s business that is engaged in the exchange of virtual currency into an entity registered with FinCEN. In addition, the agreement calls for continued enhancements to the company’s anti-money laundering (AML) controls and training program. Further, the remedial framework calls for external audits through the year 2020, enhancements to the ripple protocol, increased transaction monitoring and an extensive review of historical activity.
“By these agreements, we demonstrate again that we will remain vigilant to ensure the security of and prevent the misuse of the financial markets,” said U.S. Attorney Haag. “Ripple Labs Inc. and its wholly-owned subsidiary both have acknowledged that digital currency providers have an obligation not only to refrain from illegal activity, but also to ensure they are not profiting by creating products that allow would-be criminals to avoid detection. We hope that this sets an industry standard in the important new space of digital currency.”
The agreement is the culmination of a criminal investigation conducted by U.S. Attorney’s Office and the Internal Revenue Service’s Criminal Investigation Division. FinCEN joined the investigation with a parallel civil enforcement action. In that action, Ripple Labs and XRP II have agreed to pay a $700,000 civil penalty, $450,000 of which will be designated a forfeiture to settle issues raised in the U.S. Attorney’s investigation.
“Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws,” said Director Calvery for FinCEN. “Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”
“Federal laws that regulate the reporting of financial transactions are in place to detect and stop illegal activities, including those in the virtual currency arena,” said Chief Weber of the IRS Criminal Investigation Division. “Unregulated, virtual currency opens the door for criminals to anonymously conduct illegal activities online, eroding our financial systems and creating a Wild West environment where following the law is a choice rather than a requirement.”
Ripple described itself as an exchanger of virtual currency in a December 2013 filing made in San Francisco, California, federal court in an unrelated case. As an exchanger, Ripple was required to register with FinCEN and to comply with applicable federal laws and regulations. Yet Ripple sold XRP even though it had not registered with FinCEN, effectuating sales of over approximately $1.3 million in April 2013 alone. Ripple also failed to establish and maintain an appropriate AML program and failed to have policies, procedures and internal controls to ensure compliance with the Bank Secrecy Act and anti-money laundering laws. In July 2013, Ripple incorporated a subsidiary, now known as XRP II, that replaced Ripple as the seller of XRP. Although XRP II registered with FinCEN, it failed to have an effective AML program or to file appropriate suspicious activity reports. In late 2013, for example, it negotiated a $250,000 transaction with an individual who had prior felony convictions for dealing in explosive devices and had been sentenced to prison, failing to follow its own internal “know your customer” requirements.
Assistant U.S. Attorneys Kathryn R. Haun and Arvon J. Perteet handled the matter on behalf of the U.S. Attorney’s Office with the assistance of Daniel Charlier-Smith and Leslie Cook. The settlement agreement with Ripple Labs was the result of a coordinated effort by the U.S. Attorney’s Office and IRS Criminal Investigation, working in tandem with FinCEN.
Readout of Attorney General Lynch's Visit to Baltimore, MarylandRead the Press Release
Attorney General Loretta E. Lynch traveled to Baltimore, Maryland, today for meetings with Mayor Stephanie Rawlings-Blake, Commissioner Anthony Batts and line officers for the Baltimore Police Department, members of Congress, faith, youth and community leaders and the family of Freddie Gray. This was Attorney General Lynch's first trip since being sworn in. She was joined on the trip by staff including Acting Assistant Attorney General Vanita Gupta, head of the Civil Rights Division, Director Ronald Davis of the Office of Community Oriented Policing Services and Director Grande Lum of the Community Relations Service.
During the Attorney General's meeting with faith leaders and members of the Maryland congressional delegation, she emphasized that she came to Baltimore to listen to concerns expressed by all groups and reinforced her commitment to have the Justice Department remain in Baltimore after the cameras leave in order to help the city rebuild and move forward. The Attorney General noted that watching people come together following the unrest last Monday has been personally inspiring.
The Attorney General then met with Baltimore Police Commissioner Batts and line police officers. In her meeting with rank and file officers, the Attorney General thanked them for their work telling them: “You have picked a noble profession, you have picked a hard profession, but you have picked one of the best professions out there today, because you have picked the one that lets you go out there every day and say I’m going to help somebody.” She also discussed the spotlight on Baltimore saying, "We don't always choose moments, sometimes they choose us."
During the Attorney General's meeting with Baltimore United Leaders, she heard from youth leaders who have focused on police reform issues. The Attorney General and her staff heard about the efforts by the young people as well as their concerns. The Attorney General assured youth leaders and community leaders that the independent civil rights investigation was ongoing and would be done as expeditiously as possible.
Following her meetings, the Attorney General spoke to pool reporters and shared that her meetings with city leaders, community leaders and police were positive. The Attorney General said she took away a sense that everyone - community leaders, city officials and police officers - cares about the city and is working hard to overcome the loss of trust between the police and community.
“What I heard was both instructive and constructive,” said Attorney General Lynch
The Attorney General noted that the department has been engaged in a Collaborative Reform Initiative with Baltimore Police Department since October and that the Community Relations Service was on the ground meeting with community leaders. She emphasized that the aim of her trip was to hear firsthand ideas for how the Justice Department could assist the city in addition to the work already being done. Asked specifically to respond to city leaders asking for a “pattern or practice” investigation, she said she would consider the request.
Penn Hills Man Charged with Firearms Violations, Making False StatementsRead the Press Release
PITTSBURGH - A Pittsburgh-area resident has been indicted by a federal grand jury in Pittsburgh on charges of firearms violations and making a false statement to the government, United States Attorney David J. Hickton announced today.
The three-count indictment, returned on April 28 and unsealed today, named Michael David Woodson, 27, of Penn Hills, Pa.
According to indictment, Michael David Woodson purchased a gun giving false statements to the gun dealer, knowingly sold the gun to a convicted felon and gave false statements to the government when he was questioned regarding the firearm.
The law provides for a maximum total sentence of 25 years in prison, a fine of $750,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Soo C. Song is prosecuting this case on behalf of the government.
The Bureau of Alcohol, Tobacco, Firearms and Explosives conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Ohio man convicted of heroin, crack cocaine traffickingRead the Press Release
WHEELING, WEST VIRGINIA – Devon J. Ball, 29, of Columbus, Ohio, was convicted in federal court today of heroin and crack cocaine trafficking, United States Attorney William J. Ihlenfeld, II, announced.
An investigation by the West Virginia State Police revealed that throughout October and November 2014, Ball repeatedly conspired with others to possess and distribute heroin and crack cocaine in Marshall County, West Virginia.
Ball pled guilty today to one count of “Conspiracy to Possess with Intent to Distribute and to Distribute Heroin and Cocaine Base.” He faces up to 20 years in prison and a fine of up to $1,000,000.00. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Sarah Montoro prosecuted the case on behalf of the government.
U.S. Magistrate Judge James E. Seibert presided.
North Side Man Pleads Guilty to Heroin Trafficking, Gun CrimesRead the Press Release
PITTSBURGH – Gerard Porter has been convicted of committing heroin trafficking and firearms crimes, United States Attorney David J. Hickton announced today.
Porter, 39, pled guilty today to possessing heroin with intent to distribute and to possessing a firearm in furtherance of a drug trafficking crime on Oct. 11, 2013. He is scheduled to be sentenced by Senior United States District Judge Gustave Diamond on Sept. 8, 2015, at 10 a.m.
In support of the guilty plea, Judge Diamond was informed that, on Oct. 11, 2013, Porter possessed more than 50 bricks of heroin, three loaded pistols, and $17,000 in cash that were found inside a house in Pittsburgh. The items were found inside the house after members of the Western Pennsylvania Fugitive Task Force went to that location to serve five outstanding arrest warrants for Porter. Porter was not found inside the Shelton house on that date. He was apprehended in December 2013 inside a different house in the Pittsburgh area in possession of two cell phones and $1,900 in cash.
The law provides for a maximum total sentence of up to life in prison, a fine of up to $2,250,000, or both.
Assistant United States Attorney Craig W. Haller is prosecuting this case on behalf of the United States.
The Federal Bureau of Investigation, the Allegheny County Sheriff’s Office, the United States Marshals Service, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives conducted the investigation leading to the conviction in this case.
North Attleboro Woman Pleads Guilty to Stealing from Disabled ManRead the Press Release
BOSTON – A North Attleboro woman pleaded guilty today to stealing $32,439 in government benefits from a disabled man whose financial affairs she was managing.
Wendy Mairle, 49, pleaded guilty to converting Social Security payments. In April 2015, Mairle was charged in a felony information. U.S. District Court Senior Judge Mark L. Wolf scheduled sentencing for Aug. 18, 2015.
In 2012, Mairle became the representative payee for the monthly Social Security disability payments of a man who was in full-time residential treatment at a local hospital. As a representative payee, Mairle was required to spend the Social Security payments on the man’s behalf. From May 2012 to May 2014, Mairle received $45,255 from the Social Security Administration (SSA), but she only spent $12,816 on the disabled man’s behalf and spent the remaining $32,439 on herself, including a vacation to Myrtle Beach, South Carolina.
This case was brought as part of an ongoing effort by the U.S. Attorney’s Office in partnership with the SSA to investigate and prosecute fraud pertaining to Social Security disability benefits.
In March 2015, Emily Lardiero, of Revere was sentenced to three years of probation, including six months of home confinement, and was ordered to pay $47,671 in restitution to SSA and $40,391 in restitution to the U.S. Department of Housing and Urban Development (HUD). Lardiero worked and earned income for several years, despite telling SSA that she was still disabled and not earning income in order to continue receiving disability benefits. She also illegally received HUD rental subsidies for several years.
In July 2014, Charles Flynn and Steven Grondell, of Georgetown, were each sentenced to three years of probation, including six months of home confinement, and were ordered to serve 105 hours of community service and to pay $105,158 in restitution to SSA. Flynn received SSA disability benefits while working under Grondell’s identity, and with his permission, to conceal the work from SSA.
Also in July 2014, Carl Lynch, of Ware, was sentenced to three years of probation, including six months of home confinement, and was ordered to pay $50,264 in restitution to SSA. Lynch received SSA disability benefits while working under another man’s identity to conceal the work from SSA.
In January 2014, Antonio Pulinario Brea, of the Dominican Republic, was sentenced to ten months in prison and was ordered to pay $60,455 in restitution to SSA. Pulinario Brea used the identity of an American citizen to obtain SSA disability benefits that he was not entitled to receive under his true identity.
United States Attorney Carmen M. Ortiz and Scott Antolik, Special Agent in Charge of the Office of Inspector General, Social Security Administration, Office of Investigations, Boston Field Division, made the announcement today. The Mairle case is being prosecuted by Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.
Niagara Falls Man Pleads Guilty to Drug ChargesRead 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 Ronald Carter, 59, of Niagara Falls, NY, pleaded guilty to conspiracy to distribute over 500 grams of cocaine before U.S. District Judge Richard J. Arcara. The charge carries a mandatory minimum penalty of five years, a maximum of 40 years and a $5,000,000 fine.
Assistant U.S. Attorney George C. Burgasser, who is handling the case, stated that between December 2010 and April 4, 2011, distributed multiple quantities of cocaine in the Niagara Falls, NY area. On April 4, 2011, officers executed a search warrant at the defendant’s 10th Street residence and seized 1.3 kilograms of cocaine, three kilograms of marijuana and $51,913 in United States currency.
The defendant was arrested along with four others. Carter is the fourth defendant to be convicted.
The plea is the culmination of an investigation by Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Acting Special Agent in Charge J. Michael Kennedy and the Niagara Falls Police Department, under the direction of Chief Bryan DalPorto.
Sentencing is scheduled for August 26, 2015 at 12:30 p.m. before Judge Arcara.
New York Man Sentenced to 35 Months in Prison for Role in Extortion SchemeRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that EDWARD MEMOLI, 66, of Unadilla, N.Y., was sentenced yesterday by U.S. District Judge Vanessa L. Bryant in Hartford to 35 months of imprisonment, followed by two years of supervised release, for his role in an extortion scheme. Judge Bryant also ordered MEMOLI to pay $26,000 in restitution to the victim of his scheme.
On October 30, 2014, a jury found MEMOLI guilty of one count of conspiracy to obstruct interstate commerce by extortion and one count of aiding and abetting the obstruction of interstate commerce by extortion.
According to the evidence at trial, between approximately September 2010 and December 2011, MEMOLI conspired with Joseph Casolo of Norwalk to extort money from a small business owner in Fairfield County by impersonating organized crime figures. Casolo threatened the victim in person, in phone conversations and in text messages using multiple personas, repeatedly stating or implying that if the victim failed to make the extortion payments, the victim, the victim’s spouse, and the victim’s daughter would be harmed with violence. Casolo enlisted the assistance of MEMOLI, who identified himself as “Lorenzo,” the organized crime family’s “enforcer,” and made at least 20 threatening calls from a restricted telephone number to the victim at Casolo’s direction. At the time, MEMOLI was living in Greenville, South Carolina.
MEMOLI specifically threatened to cause the business owner’s daughter, who was pregnant, to have a miscarriage if the extortion payments were not made.
The investigation revealed that the victim made more than $200,000 in cash payments to Casolo as a result of these threats. Casolo shared a portion of these funds with MEMOLI by sending them to him via Western Union money transfer.
Casolo and MEMOLI also targeted another Fairfield County resident for extortion. Posing as “Lorenzo,” MEMOLI made calls to the victim’s cellular telephone and the victim’s place of work in which MEMOLI made veiled threats to the victim’s wife and two children.
Law enforcement learned of Casolo and MEMOLI only after information regarding their extortion scheme came to light on a court-authorized wiretap investigating genuine organized crime activity in Fairfield County.
Casolo pleaded guilty to one count of extortion and, on October 24, 2013, he was sentenced to 57 months of imprisonment.
MEMOLI was ordered to report to prison on July 10, 2015.
This matter was investigated by the FBI Fairfield County Organized Crime Task Force and the Stamford Police Department, with the assistance of the FBI’s Binghamton Field Office. The case was prosecuted by Assistant U.S. Attorneys Hal Chen and Charles Rombeau.
New Orleans Man Pleads Guilty to Maliciously Conveying False InformationRead the Press Release
U.S. Attorney Kenneth A. Polite announced that JAHVAR HOOKS, age 31, of New Orleans, pled guilty today to a one-count Superseding Indictment charging him with maliciously conveying false information in violation of Title 18, United States Code, Section 844(e).
According to court records, from August 12, 2013 through August 19, 2013, HOOKS made in excess of forty telephonic bomb threats. Victims of these threatening phone calls include the Orleans Parish Criminal District Court and the New Orleans Municipal/Traffic Court along with schools, hotels, casinos, and other government buildings. In an interview with Officers of the New Orleans Police Department, HOOKS admitted to making the telephone calls.
If convicted, the maximum penalty as to each charge is ten years imprisonment, a $250,000 fine, and a three year term of supervised release following imprisonment. U.S. District Judge Lance M. Africk set sentencing for August 6, 2015.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigation in investigating this matter. Assistant United States Attorney Gregory M. Kennedy is in charge of the prosecution.
Jahvar Hooks Factual Basis
Milwaukee Man Indicted on Robbery, Firearms, and Ammunition ChargesRead the Press Release
James L. Santelle, United States Attorney for the Eastern District of Wisconsin, announced that on May 5, 2015, a federal grand jury returned a four-count indictment against Justin K. Nalls (age: 27) of Milwaukee, Wisconsin, charging him with robbery, brandishing a firearm during a crime of violence, possession of ammunition by a felon, and possession of a firearm by a felon contrary to Title 18 United States Code, sections 1951(a), 924(c)(1)(A)(ii), and 922(g)(1). If convicted of the robbery offense the defendant faces 20 years imprisonment. The defendant is an armed career criminal under federal law based on three prior violent felony convictions. An armed career criminal convicted of possession of ammunition or possession of a firearm faces a mandatory minimum sentence of 15 years to life on each count. If he is found to have brandished a firearm during the robbery offense, the defendant must receive an additional 7 years imprisonment consecutive to any other sentence.
According to the indictment and other documents filed with the court, the defendant and an accomplice travelled from Milwaukee to northeast Wisconsin under the guise of offering prostitution services to the owner of a Kewaunee business. Upon arrival, the defendant and accomplice proceeded to rob the business owner at gunpoint. A search of the defendant’s residence and vehicle yielded a loaded .44 revolver in the vehicle and 15 rounds of .357 magnum ammunition in a children’s bedroom.
The case was investigated by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, the Wisconsin Department of Justice - Division of Criminal Investigation, the Kewaunee County Sheriff’s Department, the Kewaunee Police Department, and the Kewaunee County District Attorney’s Office. The case is being prosecuted by Assistant United States Attorney Daniel R. Humble.
An indictment is only a charge and not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
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Michael Junior Castro Sentenced to 174 Months ImprisonmentRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that MICHEL JUNIOR CASTRO, age 36, of Tamuning, was sentenced on April 29, 2015, before Senior Judge Alex R. Munson, in the District Court of Guam, to 174 months imprisonment and to three years supervised release.
Between October 1, 2013 and November 12, 2013, CASTRO agreed with others to distribute methamphetamine hydrochloride. Defendant CASTRO picked up a package at a Post Box which law enforcement discovered contained suspected methamphetamine. A forensic chemist later determined the substance was 98% d-methamphetamine hydrochloride and weighed 1331.4 grams. Defendant CASTRO informed law enforcement that he was supposed to receive $5,000.00 in exchange for picking up the box. Law enforcement also discovered a black, “Hi-Point” Model C9 9mm Luger Handgun firearm with an obliterated serial number, which was found during a search of his residence.
U.S. Attorney Alicia A.G. Limtiaco stated, “Our community is not immune from the poison of methamphetamine. This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.”
This case was investigated by U.S. Postal Inspectors and Drug Enforcement Administration special agents. Credit is also given to the Bureau of Alcohol, Tobacco, Firearms and Explosives for their assistance. The case was prosecuted by Assistant U.S. Attorney Stephen F. Leon Guerrero.
Mastermind of Real Estate Flipping and Equity Skimming Conspiracy SentencedRead the Press Release
Tampa, FL – U.S. District Judge Susan C. Bucklew today sentenced Stephen Mayer (51, Miami) to 11 years and 3 months in federal prison for his role in a real estate flipping and equity skimming conspiracy. The Court also ordered him to pay more than $3.1 million in restitution to the affected lenders, and more than $4 million in forfeiture, which were proceeds traceable to the scheme.
On January 29, 2015, a federal jury found Mayer of guilty of conspiracy to commit wire fraud and nine counts of wire fraud affecting a financial institution. Mayer was originally indicted on May 13, 2014.
According to evidence presented during the nine-day trial, Mayer used a variety of shell companies that he controlled to purchase distressed properties. He then flipped the properties the same day or within days to “credit partners” for an increased price and kept the proceeds. These “credit partners” were recruited by Mayer because they had good credit and were willing to sign documents. The partners never intended to live in the properties or make any mortgage payments. In exchange for helping him get the mortgages, Mayer would pay the down payment and the mortgage, and pay the “credit partners” a commission from his proceeds.
Mayer also facilitated the securing of mortgages, many from FDIC-insured lenders, based on false information about the borrowers’ income, employment, and assets. Mayer instructed the “credit partners” to deed the properties back to him and/or companies under his control so that he could flip them again to other “credit partners” at increased prices, thereby skimming the equity. Mayer failed to make mortgage payments as promised, and each of the properties ultimately went into foreclosure. He used the proceeds from his real estate flipping scheme to fund a lavish personal lifestyle. Agents identified more than 20 homes used by Mayer in this flipping conspiracy that took place between 2003 and 2007. The estimated loss to the lenders is more than $3.1 million.
This case was investigated by the Florida Department of Law Enforcement and the United States Secret Service. It was prosecuted by Assistant United States Attorneys Mandy Riedel and Kelley Howard-Allen.
Manhattan U.S. Attorney Announces Conviction of Doctor and Owner of Bronx Clinic Involved in Illegal Distribution of More Than Five Million Oxycodone PillsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced the conviction of KEVIN LOWE, the owner of “Astramed,” a purported medical clinic with multiple locations in the Bronx, New York, and from which more than five million tablets of the prescription painkiller oxycodone were unlawfully distributed over a three-year period. LOWE was convicted yesterday following a two-week jury trial presided over by U.S. District Judge Lorna G. Schofield.
Manhattan U.S. Attorney Preet Bharara said: “As a jury unanimously found, Kevin Lowe operated a series of purported medical clinics that functioned as prescription pill drug trafficking dens where doctors wrote almost 35,000 medically unnecessary prescriptions for oxycodone, comprising oxycodone tablets with a street value of nearly $165 million. With this guilty verdict and the 24 other convictions in this case, we have made an important step toward combatting the prescription pill trafficking problems plaguing the Southern District. I would like to thank the Drug Enforcement Administration and the New York City Police Department for being our partners in this case.”
According to the allegations contained in the Indictment and the Government’s evidence during LOWE’s trial:
From approximately January 2011 until February 2014, a drug distribution ring operated out of “Astramed,” a purported medical clinic with multiple locations in the Bronx that LOWE owned and operated. At these clinics, doctors working under LOWE’s direction wrote tens of thousands of medically unnecessary prescriptions for oxycodone, a highly addictive, prescription narcotic-strength opioid used to treat severe and chronic pain conditions. Oxycodone prescriptions, once written, have enormous cash value to street-level drug dealers, who can fill prescriptions at most pharmacies and resell the resulting pills at vastly inflated rates. Indeed, a single prescription for 180 30-milligram oxycodone pills has an average resale value in New York City of more than $6,000, and far more in nearby states.
LOWE capitalized on that black market for oxycodone by employing Board-certified, state-licensed doctors who were willing to write medically unnecessary prescriptions for large quantities of oxycodone in return for cash. LOWE’s clinics, which accepted no insurance from patients seeking oxycodone prescriptions, typically charged $300 in cash for “doctor visits” that usually lasted just a minute or two, involved no actual physical examination, and consistently resulted in the issuance of a prescription for large doses of oxycodone, typically 180 30-milligram tablets, or a daily dosage of six 30-milligram tablets.
LOWE’s clinics bore little resemblance to a standard medical office. For example, on a daily basis, crowds of up to 100 people gathered outside the Astramed office on Southern Boulevard (the “Clinic”) clamoring to see one of the doctors at the clinic in order to obtain a prescription for oxycodone. Virtually none of these individuals had any medical need for oxycodone, or any legitimate medical record documenting an ailment for which oxycodone would be prescribed. Instead, most of these individuals were members of “crews” – that is, they were recruited and paid by high-level drug traffickers, oxycodone distributors (the “Crew Chiefs”), to pose as “patients” in order to receive medically unnecessary prescriptions from the Doctors. The Crew Chiefs then arranged for and oversaw the filling of the resulting prescription at various pharmacies and took possession of the oxycodone pills to be resold on the street. Crew Chiefs also paid the Clinic’s employees hundreds of dollars in cash at a time to get their Crew Members into the Clinic to see one of the Doctors.
In total, between approximately January 2011 and February 2014, Astramed Doctors issued 34,925 medically unnecessary prescriptions for oxycodone, comprising nearly 5.5 million oxycodone tablets with a street value of more than $165 million. LOWE alone collected more than $7 million in cash for these sham “doctor visits” during this time period.
LOWE, 55, of Melville, New York, was convicted of one count of conspiracy to distribute and possess with intent to distribute oxycodone, which carries a maximum sentence of 20 years in prison. LOWE is scheduled to be sentenced on August 10, 2015 at 4:30 p.m. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Twenty-four additional participants in the drug distribution ring – including doctors, clinic employees, and drug traffickers who oversaw crews of “patients” whom they sent into the clinics in order to obtain medically unnecessary prescriptions – have previously pled guilty to their participation in the unlawful scheme.
Mr. Bharara thanked the Drug Enforcement Administration and the New York City Police Department for their work in the 15-month investigation, which he noted is ongoing. Mr. Bharara also thanked the Town of Orangetown Police Department, the Westchester County Police Department, the United States Department of Health and Human Services, the New York State Health Department’s Bureau of Narcotic Enforcement, the Office of the Medicaid Inspector General, New York City's Human Resource Administration, the New York State Attorney General’s Office Medicaid Fraud Control Unit, the Internal Revenue Service-Criminal Investigation and the El Dorado Task Force for their assistance.
The case is being prosecuted by the Office’s Narcotics Unit. Assistant U.S. Attorneys Edward B. Diskant and Tatiana R. Martins are in charge of the prosecution.
Manager of Deep River Gun Manufacturer Sentenced for Violating Federal Firearms LawsRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that RICHARD CUMMINGS, 43, of East Haddam, was sentenced yesterday by U.S. District Judge Stefan R. Underhill in Bridgeport to one year of probation and a $1,500 fine for violating federal firearms laws. CUMMINGS worked as a manager at Tri-Town Plastics (“Tri-Town”), a former federally-licensed firearms manufacturer located in Deep River.
“It is critically important for those who are responsible for manufacturing firearms to diligently comply with federal firearms laws throughout the production and distribution process,” stated U.S. Attorney Daly. “These laws exist to ensure that all legal firearms are properly accounted for and don’t wind up in the wrong hands. I commend the ATF and Plainfield Police Department for thoroughly investigating this matter.”
According to court documents and statements made in court, in 2011 and 2012, Tri-Town had a contract with Smith and Wesson to manufacturer firearm frames at its Deep River facility. In February 2012, after the Plainfield Police Department seized a Smith and Wesson 9 millimeter handgun from a residence, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) learned that Smith and Wesson had no record of the handgun ever having been manufactured. According to Tri-Town’s records, the handgun had been scrapped in March 2011. At that time, ATF was preparing to conduct a routine inspection of Tri-Town to determine whether to renew their federal license to manufacture firearms. Tri-Town had also been inspected in 2009 and been directed by ATF to address some record-keeping issues discovered during that inspection. When CUMMINGS and a Tri-Town employee who was his subordinate discovered that there were approximately 23 firearms missing from their inventory, rather than report them as missing, CUMMINGS directed the employee to falsely list them as “scrapped” in Tri-Town’s acquisition and disposition records so that ATF would not learn that they were missing and would renew Tri-Town’s license.
CUMMINGS admitted that it was his decision to list the firearms as scrapped, at no point prior to the February 2012 Plainfield seizure did he report these firearms as missing or lost and, in February 2012, he failed to correct Tri-Town’s acquisition and disposition records to show the missing firearms.
Later, it was learned that five of the 23 firearms were not, in fact, missing, so that the total number of unaccounted firearms remains 17 (not including the one seized in Plainfield).
On January 21, 2015, CUMMINGS pleaded guilty to one count of making a false entry in a firearms manufacturer’s acquisition and disposition records in March 2011, one count of failing to file a theft/loss report between March 2011 and February 2012, and one count of failing to maintain a firearms manufacturer’s acquisition and disposition records in February 2012.
Smith and Wesson purchased Tri-Town in May 2014 and now owns the facility.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, with the assistance of the Plainfield Police Department. The case was prosecuted by Assistant U.S. Attorneys Robert M. Spector and Vanessa Richards.
Las Vegas Urologist Sentenced to Four Years in Prison for Re-Using Needle Guides During Prostate ProceduresRead the Press Release
LAS VEGAS, Nev. – Las Vegas urologist, Michael Stanley Kaplan, 60, was sentenced today to four years in prison and one year of supervised release for re-using single use needle guides during prostate procedures, announced U.S. Attorney Daniel G. Bogden for the District of Nevada.
“Dr. Kaplan re-used the needle guides for the purpose of personal enrichment and with an intent to defraud or mislead,” said U.S. Attorney Bogden. “We will hold accountable those medical professionals who endanger patients for their own personal profit.”
Kaplan was convicted by a jury last September of one count of conspiracy to commit adulteration. The jury acquitted him of making false representations to Food and Drug Administration (FDA) investigators regarding the duration of his re-use of the needle guides.
“FDA’s requirements for safe use of medical devices are in place to protect the health of the public; when these requirements are flouted, serious consequences can ensue,” said Lisa L. Malinowski, Special Agent in Charge of the Los Angeles Field Office for FDA’s Office of Criminal Investigations. “We will continue our vigilance in protecting the U.S. consumers’ and patients’ right to safe medical products.”
At the time of the offense, Dr. Kaplan operated Green Valley Urology. According to the evidence presented at trial, Kaplan re-used single-use plastic needle guides during prostate procedures, causing a significant health risk to his patients. The packaging on each needle guide clearly warned that they should not be used more than once, but Dr. Kaplan instructed his staff and permitted his staff to re-use them three to five times prior to disposal. Between about Dec. 15, 2010, and March 11, 2011, Dr. Kaplan performed approximately 120 procedures requiring a needle guide but used less than 10 guides during that period.
The case was investigated by the FDA Office of Criminal Investigations and prosecuted by Assistant U.S. Attorney Crane M. Pomerantz and Special Assistant U.S. Attorney Peter J. Leininger.
Kenmore Man Pleads Guilty to ExtortionRead 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 Brian Morath, 34, of Kenmore, NY, who was convicted of extortion, was sentenced to 37 months in prison by U.S. District Court Judge Richard J. Arcara. The defendant was also ordered to pay $130,000 in restitution.
“This defendant preyed upon one of the more vulnerable members in our community,” said U.S. Attorney Hochul. “Thankfully, this elderly victim alerted law enforcement and we were able to arrest and convict the defendant and prevent him from victimizing this or other individual.”
Assistant U.S. Attorney Joel L. Violanti, who handled the case, stated that between December 2012 and October 2013, Morath extorted $130,000 from an elderly victim. During this time, the defendant threatened the victim on multiple occasions claiming that if the victim did not give him money, individuals would be sent to collect the money from him. The victim made several cash withdrawals from a savings account but eventually he advised Morath that he could not pay any more money.
Subsequently, the victim started receiving voice mails and text messages from the defendant threatening physical harm if he did not give the defendant any more money. On October 7, 2013, law enforcement officers monitored the defendant’s phone and confirmed that Morath made several threatening communications to the victim over the phone and through text messages. Investigators were able to determine that the the messages were being sent by the defendant.
The sentencing is the culmination of an investigation on the part of the Federal Bureau of Investigation.Justice Department Settles Lawsuit Against Bullhead City Fire District in Arizona to Enforce Employment Rights of United States Army Reserves MemberRead the Press Release
The Justice Department’s Civil Rights Division announced today that a settlement has been reached with the Bullhead City Fire District (BCFD) in Arizona, resolving claims that BCFD violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), by discriminating against U.S. Army Reserves Member Brett Guinan and by failing to reemploy him following his military deployment. USERRA protects the rights of uniformed service members to retain their civilian employment following absences due to military service obligations, and provides that service members shall not be discriminated against because of their military obligations.
According to the complaint, filed yesterday in the United States District Court of the District of Arizona, BCFD discriminated against Guinan by terminating his employment on the basis of his military service. The complaint alleges that, between 2008 and 2013, Guinan was deployed three times in the Army Reserves. During his second military deployment, Guinan’s supervisor began making negative statements about Guinan’s military service obligations. In June 2013, while Guinan was serving his third deployment, BCFD eliminated Guinan’s Fire Inspector position and terminated his employment, claiming to have undergone a “reduction in workforce.” Guinan’s Fire Inspector position, however, was the only job position eliminated in 2013. After Guinan’s position was eliminated, BCFD also continued to pay other people to perform Guinan’s Fire Inspector duties and continued to post new job openings on its website. The complaint further alleges that after Guinan returned from his third deployment, he notified BCFD that he was seeking reemployment. Despite Guinan’s efforts to be reemployed, BCFD refused to reemploy him as required by USERRA.
Under the terms of the settlement agreement, filed along with the complaint, BCFD has agreed to pay $75,000 as back pay and front pay damages to Guinan. BCFD also has agreed to adopt a new personnel policy that informs employees of their rights and obligations under USERRA and to provide USERRA training to all supervisory staff in its five fire stations.
“This settlement will provide much needed relief to U.S. Army Reserve Member Brett Guinan, who lost his job simply for serving our country,” said Acting Associate Attorney General Stuart F. Delery. “I want to thank the Department of Labor for referring this case to the Department of Justice. I’m hopeful that through the department’s newly created Servicemembers and Veterans Initiative, we will continue to build on our strong ties with federal partners and continue using every tool at our disposal to protect the rights of the men and women who serve in our Armed Forces.”
“The men and women who wear our nation’s uniform need to know that they will be protected from the types of injustice experienced by Mr. Guinan,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Department of Justice, through its enforcement of USERRA, strongly supports the right of service members to retain their rightful positions in the workforce both while they serve and after they complete their military service to our country.”
This case stems from a referral by the U.S. Department of Labor (DOL), pursuant to an investigation by the DOL’s Veterans’ Employment and Training Service. The case is being handled by the Employment Litigation Section of the Department of Justice’s Civil Rights Division, which works collaboratively with the DOL to protect the jobs and benefits of Army Reserves service members upon their return to civilian life.
The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Justice Department Seeks to Shut Down Florida Tax Return Preparer and Owner of Tax Preparation BusinessRead the Press Release
The United States filed a civil injunction suit seeking to bar a Tampa, Florida, man from owning, operating or franchising a tax return preparation business and from preparing tax returns for others, the Justice Department announced today. The complaint also requests that the court order the defendant to disgorge the fees that he obtained through alleged fraudulent tax return preparation.
The suit, which was filed in the U.S. District Court for the Middle District of Florida, alleges that Milot Odne owns and operates Rapid Tax 1, a tax return preparation business in the Tampa area. According to the complaint, Odne was previously a franchisee of LBS Tax Services.
The suit alleges that Odne targets primarily low-income customers with deceptive and misleading advertisements, prepares and files fraudulent tax returns to fraudulently increase his customers’ refunds, and profits through unconscionable and exorbitant fees — all at the expense of his customers and the U.S. Treasury.
According to the suit, there is a “culture of greed” at Odne’s tax return preparation stores “that expressly promotes and encourages the preparation of false and fraudulent federal tax returns in order to maximize corporate and individual profits.” The complaint alleges that Odne’s stores engage in fraudulent activity, including:
• Falsely claiming the Earned Income Tax Credit;
• Claiming improper filing status (i.e., head of household);
• Fabricating businesses and related business income and expenses;
• Fabricating itemized deductions on a Schedule A, including for unreimbursed employee business expenses, automobile expenses and charitable contributions;
• Falsely claiming education credits to which customers are not entitled;
• Improperly preparing returns based on paystubs rather than Forms W-2; and
• Failing to provide customers with a copy of a competed tax return, as required.
According to the complaint, the Internal Revenue Service (IRS) estimates that the tax loss resulting from these activities for the 2012, 2013 and 2014 tax years could be up to $35.5 million or more.
This lawsuit is one of several filed against former LBS Tax Services-related individuals, including Walner Gachette, Douglas Mesadieu, Jean Demesmin, Kerny Pierre-Louis, Demetrius Scott, Jason Stinson, Wilfrid Antoine, Tonya Chambers, Jehoakim Victor and Lauri Rodriguez. In February 2015, a court barred Victor and Rodriquez from preparing tax returns for others and from owning or operating a tax return preparation business.
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 this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Reaches Settlements with Three Public Entities to Remove Barriers to Employment for People with DisabilitiesRead the Press Release
The Justice Department announced today that it reached settlement agreements with the city of Parowan, Utah; the city of Española, New Mexico; and the village of Ruidoso, New Mexico. The agreements resolve investigations of each public entity under Title I of the Americans with Disabilities Act (ADA). The investigations found that each jurisdiction’s online employment application asked questions about disabilities in violation of the ADA. The ADA does not permit employers to inquire as to whether an applicant is an individual with a disability or as to the nature of such disability before making a conditional offer of employment. Under Section 503 of the Rehabilitation Act of 1973, however, federal contractors subject to affirmative action requirements must invite an applicant voluntarily to self-identify as an individual with a disability, consistent with certain requirements.
Two investigations also found that the public entity’s online employment opportunities website or job applications were not fully accessible to people with disabilities, such as those who are blind or have low vision, are deaf or hard of hearing, or have physical disabilities affecting manual dexterity (such as limited ability to use a mouse). In recent months, the department reached similar settlement agreements with the cities of DeKalb, Illinois; Vero Beach, Florida; Fallon, Nevada; Isle of Palms, South Carolina; Hubbard, Oregon; and Florida State University.
“These agreements ensure that job applicants with disabilities will have an equal chance to compete for jobs in the public sector and won’t face illegal questions,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We commend each public entity for its cooperation in making the job application process more accessible.”
Under the settlement agreements, each public entity agrees to ensure that its hiring policies and procedures do not discriminate against any applicant on the basis of disability, including by:
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not conducting a medical examination or making a disability-related inquiry of a job applicant before a conditional offer of employment is made;
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not requiring a medical examination or making inquiries of an employee as to whether such employee is an individual with a disability or as to the nature or severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity;
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maintaining the medical or disability-related information of applicants and employees in separate, confidential medical files; and
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training employees who make hiring or personnel decisions on the requirements of the ADA, designating an individual to address ADA compliance matters, and reporting on compliance.
Parowan and Ruidoso must also ensure that their online employment opportunities website and job applications conform with the Web Content Accessibility Guidelines 2.0, which are industry guidelines for making web content accessible.
Those interested in finding out more about the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov.
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Joplin Man Indicted for Drugs, Firearm After Ramming into Police VehicleRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Joplin, Mo., man was indicted by a federal grand jury today following a pursuit in which he rammed into a police vehicle.
Michael L. Watson, 37, of Joplin, was charged in a three-count indictment returned by a federal grand jury in Springfield, Mo. Today’s indictment replaces a federal criminal complaint that was filed against Watson on April 13, 2015, and includes additional charges.
Today’s indictment alleges that Watson was in possession of methamphetamine with the intent to distribute on April 10, 2015. Watson is also charged with one count of possessing a firearm in furtherance of a drug-trafficking crime and one count of being a felon in possession of a firearm and ammunition.
Watson allegedly possessed a Ruger 9mm semi-automatic pistol on April 10, 2015. Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Watson has prior felony convictions for assaulting a law enforcement officer, possession of a controlled substance, operating a motor vehicle with a suspended license, possession of drug paraphernalia and resisting a lawful stop.
Watson was arrested on April 10, 2015, when a Joplin police officer contacted a vehicle that Watson was driving. The officer initially stopped a man walking out of the Sunrise Inn motel at 3600 Rangline, and the man indicated that he was with the four occupants of a Nissan Sentra that was parked nearby. One of the passengers started to get out of the car, and the officer told him to stay in the vehicle. The man closed the passenger door and Watson, the driver, allegedly fled in the vehicle at a high rate of speed.
According to an affidavit filed in support of the original criminal complaint, the officer returned to his vehicle and began to back up in order to follow the Sentra. Watson drove the Sentra straight into the patrol car at a high rate of speed. The collision with the passenger side of the vehicle caused significant damage. The officer felt his body leave the driver’s seat and fly upward, striking his head on the roof of his patrol vehicle. Watson got out of his car, fell to the ground, then fled on foot. Three passengers also fled on foot, in the opposite direction. The officer pursued Watson, who stumbled and fell to the ground after he jumped over a fence. The officer caught up with him and, while Watson was on the ground, saw the loaded firearm in a holster on Watson’s right side. The officer also found a hard case in Watson’s left front pocket that contained methamphetamine, marijuana and drug paraphernalia.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Special Assistant U.S. Attorney Nhan D. Nguyen. It was investigated by the Joplin, Mo., Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Houma Man Pleads Guilty to Gun and Drug ChargesRead the Press Release
U.S. Attorney Kenneth A. Polite announced that CHAD LANDRY, age 43, of Houma, pled guilty today to charges that he conspired to distribute over 500 grams of methamphetamine and unlawfully possessed a firearm in furtherance of his methamphetamine conspiracy.
The drug offense carries a sentence of ten years to life imprisonment, a fine of up to $10,000,000, and a minimum of five years of supervised release following any term of imprisonment. The gun offense carries a minimum term of imprisonment of five years imprisonment, a fine of up to $250,000, and up to five years of supervised release following any term of imprisonment.
U.S. Attorney Polite praised the work of the Drug Enforcement Administration, with assistance from the Terrebonne Parish Sheriff’s Office and Louisiana State Police in investigating this matter. Assistant U.S. Attorney Brandon S. Long is in charge of the prosecution.
Chad Landry Factual Basis
Highlands County Resident Pleads Guilty to Possessing Firearms and Ammunition While an Alien Unlawfully in the U.S.Read the Press Release
A Highlands County resident pled guilty yesterday to possessing firearms and ammunition while being an alien unlawfully present in the United States.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, Alysa D. Erichs, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), Miami Field Office, Matthew Madore, Chief Immigration Officer, U.S. Citizenship and Naturalization Service – Fraud Detection National Security (USCIS-FDNS), Tampa District Office, and Hugo J. Barrera, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), Miami Field Office made the announcement.
Juan Gregorio Perez-Treviño, 26, of Lake Placid, FL, pled guilty before Chief U.S. Magistrate Judge Frank J. Lynch Jr., in Fort Pierce, Florida to the charge of possession of one or more firearms and ammunition by an alien who is illegally and unlawfully present in the United States, in violation of Title 18, United States Code, Section 922(g)(5)(A). The offense is punishable by up to ten years in prison.
According to court records, on October 27, 2014, Perez-Treviño was interviewed by HSI agents and FDNS Officers with U.S. Citizenship and Immigration Services (USCIS) in Royal Palm Beach, Florida regarding pending immigration benefits. During the interview Perez-Treviño admitted that he was born in Reynosa, Mexico and originally entered the United States, through El Paso, Texas on a B2 ‘Visitor for Pleasure’ (i.e. Tourist) visa, which permitted a maximum stay of six months. Because he failed to exit the country, Perez-Treviño became an “overstay” and was considered an alien unlawfully present in the United States. Perez-Treviño further admitted that he owned two firearms, a .22 caliber rifle and a 12 gauge single barrel shotgun.
On March 25, 2015, HSI agents visited Perez-Treviño at his residence. During the visit, Perez-Treviño admitted to acquiring two additional firearms from when he was interviewed on October 27, 2014; a .308 caliber rifle and a 9mm pistol. Perez-Treviño voluntarily retrieved the four firearms and turned them over to law enforcement. Perez-Treviño also turned over numerous rounds of ammunition, including ammunition for each of the recovered firearms, which he had in his possession.
Mr. Ferrer commended the investigative efforts of HSI, USCIS-FDNS and ATF. This case is being prosecuted by Assistant U.S. Attorney Carmen Lineberger.
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.
Hartford Man Sentenced to Prison for Manufacturing and Distributing PCPRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that KEVIN BETTS, also known as “KK,” 28, of Hartford, was sentenced today by U.S. District Judge Michael P. Shea in Hartford to 30 months of imprisonment, followed by two years of supervised release, for manufacturing and distributing PCP.
According to court documents and statements made in court, BETTS manufactured Phencyclidine (“PCP”) in his apartment at 57 Sumner Street in Hartford and, on five occasions in July and August 2014, sold the drug out of his apartment to an individual working with law enforcement.
On August 1, 2014, investigators searched the apartment and recovered more than 60 grams of PCP, scales, packaging material, six firearms, approximately 215 rounds of ammunition and a bullet proof vest.
The investigation revealed that BETTS also supplied bullets to several violent gang members who, because of their criminal histories, could not lawfully purchase ammunition on their own.
BETTS was ordered to forfeit the firearms, ammunition and bullet proof vest that were seized on August 1, 2014.
On February 10, 2015, BETTS pleaded guilty to one count of maintaining a drug-involved premises.
This prosecution stems from Project Longevity, a comprehensive initiative to reduce gun violence in Connecticut’s major cities. Through Project Longevity, community members and law enforcement directly engage with members of groups that are prone to commit violence. A critical component of the Project Longevity strategy is the “call-in,” a face-to-face meeting where Project Longevity partners engage group members and deliver a community message against violence, a law enforcement message about the consequences of further violence and an offer of help for those who want it. Close associates of BETTS attended a call-in on April 1, 2014, in Hartford, but members of their group were charged with being involved in several shooting incidents since that date.
This ongoing investigation is being conducted by the Hartford Police Department and the FBI’s Northern Connecticut Violent Crimes Task Force. The FBI task force includes members of the Hartford Police Department, East Hartford Police Department, Connecticut State Police and Connecticut Department of Correction. The case is being prosecuted by Assistant U.S. Attorney Michael J. Gustafson.
Hartford Man Sentenced to 7 Years in Prison for Possessing Sawed-Off Firearm, Bullet Proof VestRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that KIEJUAN HAUGABOOK, 35, of Hartford, was sentenced today by U.S. District Judge Janet Bond Arterton in New Haven to 84 months of imprisonment, followed by three years of supervised release, for illegally possessing a sawed-off firearm and a bullet proof vest. HAUGABOOK also was ordered to perform 75 hours of community service during his term of supervised release.
According to court documents and statements made in court, in July 2012, HAUGABOOK escaped from a halfway house in Hartford where he had been serving out the end of a nine-year prison term for armed robbery. On February 3, 2014, a parole officer found HAUGABOOK in an apartment in Hartford. Upon entering the apartment, the parole officer noticed a firearm in plain view and contacted the Hartford Police Department. Hartford Police arrived at the apartment and seized a Harrington & Richardson, Model Topper 158, firearm with a sawed-off barrel, as well as ammunition, a Point Blank ballistic vest and a stun gun.
HAUGABOOK’s criminal history includes state convictions for first and third degree robbery, possession of narcotics and carrying a pistol without permit. It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce. It is also a violation of federal law for a person previously convicted of a violent felony offense to possess body armor that has moved in interstate commerce.
On February 3, 2015, HAUGABOOK pleaded guilty to one count of possession of a sawed-off firearm by a convicted felon.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Hartford Police Department. The case was prosecuted by Assistant U.S. Attorneys Ndidi Moses and Anastasia King.
Hanover Business Owner Admits to Mortgage and Tax Fraud SchemesRead the Press Release
Baltimore, Maryland – Luis R. Valladares, age 52, of Hanover, Maryland, pleaded guilty today to mail fraud, admitting that his fraud schemes resulted in total losses of approximately $779,277.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
Valladares owned and operated two businesses, Amazing Cleaning and Amazing Contractors, which provided janitorial services and drywall repair to vacated commercial and residential apartments.
According to his plea, in late 2006, Valladares applied for a loan to purchase a house in Miramar, Florida. Valladares provided fake lease documents with forged signatures of one of his employees and the employee’s relatives, and three fake money orders to make it appear that he was collecting rent. After obtaining a mortgage loan for $484,900, Valladares only made a few payments on the loan. The home was foreclosed upon, resulting in a loss of approximately $250,000.
In late 2007, Valladares applied for two separate loans totaling $767,000 to buy a house in Hanover, Maryland. At the closing, Valladares omitted the Florida house as a property he owned; and reported owning a rental property in Burtonsville, Maryland, which he didn’t own or receive rental income from. In October 2014, the Maryland house was sold in a short sale for approximately $530,000, causing a loss of approximately $237,000.
As a result of the mortgage fraud scheme, Valladares has agreed to pay restitution of $487,000, the total amount of the victims’ losses.
Beginning in approximately 2003, Vallardares also engaged in tax fraud by substantially understating income on business and personal tax returns. He diverted about $346,951 in third-party checks payable to the businesses to his personal accounts, and did not provide tax return preparers with information pertaining to these transactions. As a result, income deposited into his personal account was not reported either on business or personal tax returns.
In 2005 and 2006, Vallardares also engaged in tax fraud by writing a series of company checks to his brother and his brother’s business, ostensibly for business expenses. For nine of these checks totaling $152,000, his brother then endorsed the checks back over to Valladares or his then-wife, who deposited the checks into their personal bank account. They claimed these checks as business expenses on their tax returns.
Vallardes wired approximately $618,500 from a personal account to an account he controlled in Ecuador, and falsely claimed to IRS investigators that he was building apartment buildings in Ecuador as an investment.
The tax loss resulting from the tax fraud schemes totaled $292,277.
After the IRS investigation had begun, Valladares left the United States for Ecuador in September 2011. Charges against him were filed in federal court in Maryland in October 2011. Valladares was arrested in September 2014 when he arrived in Aruba for his honeymoon, and he was returned to the United States for prosecution.
Valladares faces a maximum sentence of 20 years in prison. U.S. District Judge William D. Quarles, Jr. scheduled his sentencing for July 29, 2015, at 1:00 p.m.
The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available http://www.justice.gov/usao/md/priorities_financialfraud.html.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
United States Attorney Rod J. Rosenstein commended the IRS – Criminal Investigation for its work in the investigation and thanked Assistant U.S. Attorney Gregory R. Bockin, who is prosecuting the case.
Getaway Driver Sentenced for Armed Robbery at Excelsior Springs BankRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Kan., man who drove the getaway car was sentenced in federal court today for the armed robbery of an Excelsior Springs, Mo., bank, which was followed by a high-speed chase until the robbers’ vehicle crashed.
Steven Dale Robinson, 23, of Kansas City, Kan., was sentenced by U.S. Chief District Judge Greg Kays to six years and eight months in federal prison without parole.
On Nov. 13, 2014, Robinson pleaded guilty to aiding and abetting an armed bank robbery. Co-defendants Virginia Lynn Spencer, 29, and her brother, Charles Ralph Spencer, 25, both of Kansas City, Kan., each pleaded guilty on Feb. 2, 2015, to one count of aiding and abetting an armed bank robbery and one count of aiding and abetting the possession of a firearm in furtherance of a crime of violence. Sentencing hearings for Virginia and Charles Spencer have not yet been scheduled.
By pleading guilty, all three defendants admitted to stealing $11,883 at gunpoint from Bank Midwest, 201 N. Jesse James Rd., Excelsior Springs, on May 23, 2014.
Before robbing the bank, in order to help disguise themselves for the robbery, the defendants went to a K-Mart store in Independence, Mo., where they purchased black University of Missouri t-shirts, a package of gardening gloves, head coverings, sunglasses, black spray dye for Charles Spencer’s facial hair and electrical tape for Virginia Spencer’s shoes. They cased banks in Polo, Braymer and Richmond, Mo., before deciding to rob the Bank Midwest in Excelsior Springs.
Prior to entering the bank, Virginia Spencer provided Charles Spencer with a loaded Rossi .32-caliber revolver. Robinson, the driver, backed the vehicle up near the bank’s entrance in order to facilitate the getaway.
Virginia and Charles Spencer entered the bank at about 5:30 p.m. Charles Spencer stood in the lobby and pointed a Rossi .32-caliber revolver in the air with his finger on the trigger. Charles Spencer displayed the revolver during the entire course of the robbery. They yelled at bank employees to sit on the floor. Virginia Spencer then jumped over the middle teller counter and began going through the teller drawers, while Charles Spencer stood near the teller station, revolver displayed. Virginia Spencer took money out of the teller drawers, placed it in a clear trash bag, and jumped back over the counter.
Both robbers ran from the bank, with Virginia Spencer saying, “Have a nice day” on her way out. They got into the vehicle being driven by Robinson and sped out of the parking lot.
A bank customer, who had just conducted a transaction at the ATM with her three children in the vehicle, drove around toward the front of the bank to leave the parking lot. As the bank robbers’ vehicle left the Bank Midwest parking lot it narrowly missed the customer’s vehicle. She immediately called 911 on her cell phone and reported the vehicle’s direction of travel.
Clay County Sheriff’s deputies saw the vehicle near 69 Highway and Lightburn Road. Attempting to escape from pursuing law enforcement officers, Robinson drove approximately 85 miles per hour while going southbound (the wrong way) in the northbound lane of traffic. Robinson ran traffic stops, struck a concrete barrier, and continued evading police officers, driving over 50 miles per hour through residential neighborhoods. After turning into oncoming traffic on Missouri Highway 291, Robinson continued to speed at 65 miles per hour, eventually reaching approximately 90 miles per hour. During this chase, Charles Spencer threw the firearm out the car window. Eventually, Robinson was traveling at such a high rate of speed that while attempting to round a corner, he lost control of the vehicle and struck a tree head-on near Kings Highway and Dam Road in Liberty, Mo. Virginia and Charles Spencer were both injured in the crash and were transported to a nearby hospital.
Law enforcement officers found a bag containing $11,883 on the front floorboard of the vehicle. Police recovered the firearm near the crash site.
Under federal statutes, Virginia and Charles Spencer are each subject to a mandatory minimum sentence of five years in federal prison without parole, up to a sentence of life in federal prison without parole, plus a fine up to $500,000. Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Justin G. Davids. It was investigated by the FBI, the Clay County, Mo., Sheriff’s Department and the Excelsior Springs, Mo., Police Department.
Four Remaining Defendants Plead Guilty in Manhattan Federal Court for Their Roles in Multimillion-Dollar Corporate Accounting FraudRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that LATCHMEE MAHATO, a/k/a “Robbie,” and JONATHAN WHEELER, two of the owners and principals of G3K Displays, Inc., and related entities (“G3K”) – a New Jersey-based company that provided in-store displays for retailers – ZACHARY KAITZ, an executive at G3K, and KATHLEEN SMITH, a former employee of Foot Locker, Inc., a major customer of G3K, pled guilty in Manhattan federal court for their roles in an elaborate scheme to defraud G3K’s lenders and customers out of millions of dollars. Among other things, MAHATO, WHEELER, and ZACHARY KAITZ admitted that they and others fraudulently inflated G3K’s sales and accounts receivable to secure millions of dollars in loans, and verified to G3K’s lenders and outside auditors false financial information about G3K. SMITH admitted to inflating purchase orders from Foot Locker to G3K and receiving kickbacks from MAHATO, SMITH, and co-defendant Steven Kaitz, the third owner and principal of G3K. MAHATO, WHEELER, SMITH, ZACHARY KAITZ, and Steven Kaitz were charged in January 2015. MAHATO and SMITH pled guilty yesterday, ZACHARY KAITZ pled guilty today, and WHEELER pled guilty on April 28, 2015, each before United States District Judge Jed S. Rakoff. Steven Kaitz pled guilty on April 22, 2015, before Judge Rakoff.
Manhattan U.S. Attorney Preet Bharara said: “With the guilty pleas of Latchmee Mahato, Jonathan Wheeler, Kathleen Smith, and Zachary Kaitz, all five of the defendants have now pled guilty in connection with this multimillion-dollar scheme that misled G3K’s customers, lenders, and auditors. I would like to thank our partners at the FBI for working with us on this case.”
According to the Indictment and statements made during the proceedings in this case:
Steven Kaitz, MAHATO, and WHEELER were the three owners and principals of G3K, a company that manufactured and designed displays for retailers around the world, including major retailers of sports apparel and footwear. ZACHARY KAITZ served as G3K’s Vice President of Creative Services.
From approximately 2012 to May 2014, in order to trick various lenders, including Veritas Financial Partners, LLC, and MVC Capital, into lending at least $18.6 million to G3K, Steven Kaitz, MAHATO, WHEELER and others engaged in a scheme to falsely inflate G3K’s revenue and accounts receivable, and as part of the scheme, made and caused to be made materially false and misleading statements about G3K’s financial condition. To create the false impression of sales, the defendants created phony documents, including fake and falsely inflated purchase orders purporting to reflect sales to G3K’s customers. Steven Kaitz, MAHATO, WHEELER, and SMITH also tricked certain of the company’s customers, including Foot Locker into paying falsely inflated invoices from G3K.
The defendants took elaborate steps to keep the scheme afloat and prevent G3K’s lenders and outside auditors from discovering the fraud. For example, Steven Kaitz, MAHATO, and WHEELER were involved in the creation of fake email accounts purporting to belong to fictitious employees of Foot Locker and Adidas, G3K’s two largest customers. Steven Kaitz, MAHATO, and WHEELER operated these fake email accounts themselves, pretending to be employees of those customers, and then used those fake email accounts to “verify” false information about G3K’s financial condition, including its sales and accounts receivable, to G3K’s lenders and outside auditors. To keep their scheme afloat, Steven Kaitz, MAHATO, and WHEELER also utilized shell companies to engage in “round-trip” transactions to create the false appearance that customers were paying G3K’s phony outstanding receivables. ZACHARY KAITZ, who was skilled in graphic design, helped carry out the fraud by creating fraudulent documentation, such as fake invoices, purchase orders, and bills of lading, to support the false representations to the lenders about G3K’s business.
Steven Kaitz, MAHATO, and WHEELER further misappropriated approximately $2.8 million of the loan proceeds for their own personal use, to pay for homes and luxury cars, private school tuition, and personal credit card bills, as well as kickbacks to SMITH.
As of May 2014, when G3K’s lenders terminated their lending relationships with the company after discovering the fraud, G3K had approximately $18.6 million in loans outstanding.
LATCHMEE MAHATO, a/k/a “Robbie,” 49, of Jamaica, Queens, JONATHAN WHEELER, 46, of Southport, Connecticut, and ZACHARY KAITZ, 31, of Brooklyn, New York, each pled guilty to one count of conspiracy to commit bank fraud and wire fraud, which carries a maximum sentence of 30 years in prison. As part of their respective plea agreements, MAHATO and WHEELER each agreed to pay restitution in the amount of $18,600,000, MAHATO agreed to forfeit $2,215,147, WHEELER agreed to forfeit $957,435, and ZACHARY KAITZ agreed to forfeit $100,000. KATHLEEN SMITH, 49, of South Plainfield, New Jersey, pled guilty to one count of conspiracy to commit honest services wire fraud, which carries a maximum sentence of 20 years. As part of her plea agreement, SMITH agreed to pay restitution in the amount of $348,500 and to forfeit $244,407. MAHATO, WHEELER, SMITH, and ZACHARY KAITZ are each scheduled to be sentenced by Judge Rakoff on September 9, 2015.
Steven Kaitz pled guilty on April 22, 2015, before Judge Rakoff, and he is scheduled to be sentenced on September 8, 2015.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation.
The case is being prosecuted by the Office’s Complex Frauds & Cybercrime Unit. Assistant U.S. Attorneys Joshua A. Naftalis and Rosemary Nidiry are in charge of the prosecution. Assistant U.S. Attorney Edward B. Diskant of the Money Laundering & Asset Forfeiture Unit is responsible for the forfeiture aspects of the prosecution.
Former Stockton College Police Officer Sentenced to 31 Months in Prison for Distributing OxycodoneRead the Press Release
CAMDEN, N.J. - A former Richard Stockton College of New Jersey police officer was sentenced today to 31 months in prison for selling oxycodone-based pills to an undercover officer and a witness who was cooperating with law enforcement officers, U.S. Attorney Paul J. Fishman announced.
Marcus Taylor, 41, of Sicklerville, New Jersey, previously pleaded guilty before U.S. District Judge Renee Marie Bumb to an information charging him with distributing and possessing with intent to distribute oxycodone. Judge Bumb imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Between November 2012 and January 2013, Taylor sold 537 oxycodone-based prescription pills to either an undercover Drug Enforcement Administration task force officer or the cooperating witness over five meetings, each of which occurred in Clementon, New Jersey. Taylor arranged the meetings with the undercover officer through a series of text messages. Taylor discussed the price of the pills and his hope of fostering a long-term drug distribution relationship. At the Nov. 28, 2012, meeting, Taylor told the undercover officer that the 30-milligram oxycodone pills he sold the officer were obtained through a prescription issued by a doctor, and “if you gonna be a good customer for me and buy these every 28 days for 15 bucks, I won’t give these to nobody.”
None of the transactions involved students or took place at the Stockton College campus, nor was Taylor ever in uniform when the drug sales were made. He resigned in April 2014.
In addition to the prison term, Judge Bumb sentenced Taylor to serve three years of supervised release and ordered him to forfeit $8,775.
U.S. Attorney Fishman credited special agents and officers assigned to the Camden High Intensity Drug Trafficking Area team, under the direction of the DEA Special Agent in Charge Carl J. Kotowski, for the investigation. He also thanked U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI); the Camden County Prosecutor’s Office; the Westampton Township, Camden, Burlington City and Richard Stockton College police departments; the Delaware River Port Authority; and the N.J. Division of Criminal Justice for their work on the case.
The government is represented by Assistant U.S. Attorney Matthew J. Skahill of the Special Prosecutions Division in Camden.
Former Somerville and Cambridge Teacher Convicted by Jury of Child Pornography ChargesRead the Press Release
BOSTON – Following a five-day trial, a former Somerville and Cambridge elementary school teacher was convicted today of child pornography charges.
Josh Wairi, 28, of Somerville, was convicted by a federal jury of possession of child pornography and transportation of child pornography. Wairi was acquitted of three counts of production and attempted production of child pornography. U.S. District Court Judge William G. Young scheduled sentencing for July 29, 2015.
Wairi, a former fifth and sixth grade teacher in the Somerville and the Cambridge Public Schools, used his email account to trade and receive images and videos of child pornography, and also uploaded images and videos of children being sexually exploited.Furthermore, Wairi transferred the images and videos of child pornography to other users.Wairi possessed more than 27,000 images and over 530 videos of children engaged in sexually explicit conduct.Wairi admitted to viewing videos and images of minor children for sexual self-gratification.
The charge of transportation of child pornography provides for a mandatory minimum sentence of five years and no greater than 20 years in prison, a mandatory minimum of five years and a maximum of lifetime of supervised release, and a fine of $250,000. The charge of possession of child pornography provides for a sentence of no greater than 20 years in prison, a mandatory minimum of five years and a maximum of lifetime of supervised release, and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service; Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police; Somerville Police Chief David Fallon; and Cambridge Police Commissioner Robert Hass, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Suzanne Sullivan Jacobus and Seth B. Orkand of Ortiz’s Major Crimes Unit.
The case is brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
Members of the public who have questions, concerns or information regarding this case should call (617) 748-3274.
Former Muscogee (Creek) Nation Second Chief Sentenced to Nearly Three Years in Prison for Embezzling from NationRead the Press Release
TULSA, Okla.—Roger Dana Barnett, 53, of Bristow, the former Muscogee (Creek) Nation Second Chief, was sentenced to serve 33 months in prison and ordered to pay $211,880.76 in restitution for embezzling from the Muscogee (Creek) Nation, announced United States Attorney Danny C. Williams Sr. for the Northern District of Oklahoma. In addition to the prison incarceration and restitution, Barnett was sentenced to three years of supervised release. During the time of release, Barnett will be banned from gambling facilities and is required to attend gambling addiction counseling.
“The defendant abused his position of trust,” said U.S. Attorney Williams. “Muscogee (Creek) Nation officials reported the misuse of tribal funds after an internal audit. We will continue to work with tribal government and law enforcement partners to bring those who abuse the system to justice.”
On August 6, 2014, a grand jury charged Barnett with embezzling tribal funds in excess of $1,000 from April 3, 2013 to April 29, 2014. Barnett pleaded guilty to the charge on October 9, 2014.
The FBI conducted the investigation; Assistant United States Attorney Shannon Cozzoni prosecuted the case.
Former Head of San Fernando Valley Brokerage Firm Pleads Guilty to Wire Fraud and Tax Charges in Real Estate Investment ScamRead the Press Release
LOS ANGELES – The former president and CEO of the Sherman Oaks-based Morgan Peabody, Inc. brokerage and investment firm has pleaded guilty to federal wire fraud charges stemming from a real estate investment scam that resulted in about five dozen investors losing nearly $4 million.
David Williams, 54, of Studio City, a licensed securities dealer and investment adviser, pleaded guilty yesterday before United States District Judge Dale S. Fischer. Williams pleaded guilty in the midst of a jury trial to three counts of wire fraud and two counts of tax evasion.
In a plea agreement filed with the court yesterday, Williams admitted that he directed Morgan Peabody representatives to sell securities in a fund that Williams personally had created, purportedly to invest in real estate. The Sherwood Secured Investment Fund, LLC, a Studio City business that Williams owned, offered a 9 percent annual return on investments.
However, as he admitted in the plea agreement, Williams used the majority of investor money from the Sherwood Fund to pay for personal expenses, including a lease on a $6 million residence in Toluca Lake.
Between June 2007 and April 2008, Williams fraudulently obtained more than $3.75 million from approximately 60 investors as a result of the Sherwood Fund offering.
In his plea agreement, Williams admitted that he used investor money for personal purposes and committed tax evasion by failing to file returns with the IRS for tax years 2007 and 2008, and failing to report the more than $2.3 million in income he received. Williams has agreed to pay additional taxes of $777,881 for those tax years, as well as the civil fraud penalty and interest.
Williams is scheduled to be sentenced by Judge Fisher on September 28. At sentencing, Williams faces a statutory maximum sentence of 70 years in federal prison.
The investigation into Williams’ scheme was conducted by special agents with the Federal Bureau of Investigation and IRS - Criminal Investigation.
Release No. 15-042
Former District of Columbia Technology Executive Sentenced to Prison for Failing to Pay over Nearly $1 Million in Payroll TaxesRead the Press Release
A Washington, D.C., resident and businessman was sentenced to prison for failing to pay over nearly $1 million in employment taxes, announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division.
Kevin Bertram, former CEO of the wireless technology firm Distributive Networks LLC, was sentenced to serve 30 months in prison to be followed by three years of supervised release, and ordered to pay $897,921 in restitution to the Internal Revenue Service (IRS). On Feb. 10, Bertram pleaded guilty in the U.S. District Court for the District of Columbia to willfully failing to pay over more than $900,000 in employment taxes, including federal income taxes, as well as the social security and Medicare taxes of Distributive Networks’ employees.
According to court documents, Bertram operated Distributive Networks from 2004 through 2010. Bertram’s company, which was named one of Washington, D.C.’s “Great Places to Work” by Washingtonian magazine in 2007, created technology that allowed cell phone users to participate in contests, download ringtones and receive content such as trivia and horoscopes.
According to court documents, Distributive Networks provided employee perks, such as free Starbucks coffee and gym memberships, and a 100 percent matching contribution to its employees’ 401(k) plans. However, Bertram willfully failed to comply with Distributive Networks’ employment tax obligations. For the quarterly tax periods in late 2007 through mid-2009, Bertram failed to file Distributive Networks’ required quarterly IRS Forms 941 (Employer’s Quarterly Federal Tax Returns) and failed to pay over $927,921.78 in employment taxes due to the IRS. At the same time that Bertram was failing to pay the IRS income and other taxes withheld from employees’ paychecks, he spent hundreds of thousands of dollars of company funds on sporting event tickets and personal luxury goods.
Acting Deputy Assistant Attorney General Wszalek commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Melissa S. Siskind and Jeffrey A. McLellan of the Tax Division, who are prosecuting the case. Wszalek also thanked the U.S. Attorney’s Office of the District of Columbia for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Florida Man Pleads Guilty to Concealing FraudRead 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 Ignacio Huergo, 44, of Miami, Florida, pleaded guilty before U.S. District Judge Richard J. Arcara to concealing financial institution fraud. The charge carries a maximum penalty of three years in prison, and a $250,000 fine.
Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that Huergo worked for Frank Garcia who owned Federal Guaranty Mortgage Company (FGMC) and Guaranty Reality and Investment (GRI) as a bookkeeper and tax preparer between 2006 and 2008. During that time, the defendant became aware of Garcia’s business practices. Garcia used Huergo and another person as straw buyers as part of a vast mortgage fraud scheme. The defendant also knew that Garcia manipulated financial statements drafted by Huergo indicating that FGMC had a minimum net worth of over $1,000,000. These statements were sent to financial institutions. The defendant failed to notify anyone about Garcia’s fraud which resulted in a $24,000,000 loss to financial institutions, including M&T Bank which was defrauded out of $4,400,000.
Garcia has been convicted and is awaiting sentencing.
The plea is the result of an investigation by Special Agents of the Federal Bureau of Investigation.
Sentencing is scheduled for August 20, 2015 at 1:00 p.m. before Judge Arcara.
Florida Gun Trafficker Sentenced for Shipping Guns to Aaron Hernandez and Lying to Cover UpRead the Press Release
BOSTON – A Florida man was sentenced today in U.S. District Court in Boston today for trafficking firearms to former New England Patriots football player, Aaron Hernandez, and lying to a federal Grand Jury to conceal his role.
Oscar Hernandez, Jr., 24 of Belle Glade, Fla. was sentenced by U.S. District Court Judge William G. Young to two years in prison and three years of supervised release. In January 2015, Hernandez pleaded guilty to three counts of making false declarations before the Grand Jury, one count of obstruction of justice, one count of witness tampering, and one count of conspiracy to transfer a firearm from an unlicensed person whose residence is in a different state.
“The illegal trafficking of firearms in our country threatens the safety of each and every community as well as the laws that ensure safe gun ownership,” said United States Attorney Carmen M. Ortiz. “This case demonstrates that no one is immune from the scrutiny of the law, and, that in the end, justice will prevail.”
“Firearms trafficking continues to be a top priority for ATF and our law enforcement partners and we are committed to identifying and disrupting the sources of illegal firearms which jeopardize the safety of our communities,” said Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division.
Hernandez, Jr. was engaged in a conspiracy with former New England Patriots football player Aaron Hernandez (no relation) and others to purchase firearms in Florida and deliver the firearms to Aaron Hernandez in Massachusetts. Three of the guns provided by Hernandez, Jr. to Aaron Hernandez were recovered during the course of the homicide investigation of victim Odin Lloyd.
Aaron Hernandez funded the conspiracy by providing Hernandez, Jr. with $15,000 to buy the guns. Hernandez, Jr. bought an older model Toyota Camry to ship the guns from Florida to Massachusetts, and arranged and paid for the transportation of the car from Florida to Aaron Hernandez’s residence in North Attleboro. Aaron Hernandez’s girlfriend, Shayanna Jenkins, paid for the delivery of the car which contained the guns, and which was then stored in Aaron Hernandez’s garage. Aaron Hernandez’s palm print was recovered from one of the guns recovered from the Toyota Camry.
In December 2013, Hernandez, Jr. lied to the Grand Jury concerning his and others’ involvement in the gun trafficking scheme and obstructed justice by delaying the Grand Jury’s investigation. Furthermore, Hernandez, Jr. attempted to influence a Grand Jury witness’ testimony by repeatedly asking the witness to lie to protect him and others from criminal responsibility.
During today’s sentencing hearing, Judge Young noted the need to protect the public from those, like Hernandez, Jr., who ship guns illegally into Massachusetts, and described the conspiracy as an extraordinarily dangerous and serious crime. Young also said that witness tampering and coaching another witness to lie, were crimes that go to the heart of the justice system.
U.S. Attorney Ortiz , SAC Kumor, and Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police, made the announcement today. The case was prosecuted by Assistant U.S. Attorney Glenn A. MacKinlay of Ortiz’s Organized Crime & Gang Unit.
Fairfield County Hedge Fund Executive Sentenced to 33 Months in Federal Prison for Fraud SchemeRead the Press Release
DAVID BRYSON, 46, a former managing partner and principal of New Stream Capital, LLC, a Ridgefield-based hedge fund, was sentenced today by Chief U.S. District Judge Janet C. Hall in New Haven to 33 months of imprisonment, followed by three years of supervised release, for engaging in a scheme to deceive investors in order to obtain and maintain investments.
“In an effort to protect their own invested money and to collect more than $5.8 million in additional fees, New Stream executives devised and promoted a series of misrepresentations carefully calculated and designed to keep existing-investors in the dark about the true risk of the fund and to deceptively raise millions of dollars in new investments in an effort to keep their fund viable,” stated First Assistant U.S. Attorney Michael J. Gustafson. “A prison term is an appropriate result for such criminal conduct. I thank the FBI, Department of Labor OIG and SEC for their work in unraveling this scheme.”
“The defendants devised a fraudulent scheme to protect the assets of their largest client at the expense of their other investors,” stated Cheryl Garcia, Special Agent in Charge of the New York Office of Labor Racketeering and Fraud Investigations, Office of Inspector General, U.S. Department of Labor. “One of the investors deceived and victimized by the conspirators was an employer retirement trust covered by the Employee Retirement Income Security Act (ERISA). Employees participating in the trust lost millions of dollars in retirement savings. The Office of Inspector General will continue to work with its law enforcement partners to identify schemes that jeopardize the retirement savings of American workers.”
According to court documents and statements made in court, in November 2007, New Stream Capital, LLC (“New Stream”) launched new feeder funds, one based in the United States (“U.S. Fund”) and a series of funds based in the Cayman Islands (“Cayman Fund”). New Stream also announced that its existing Bermuda Fund would be closing, and all foreign investors would have to move their investments into the Cayman Fund. Rather than transfer into the new structure, New Stream’s largest investor placed a redemption on its whole investment in the Bermuda Fund in March 2008. At risk of losing their largest investor, BRYSON, co-managing partner Bart Gutekunst and chief financial officer Richard Pereira set in motion a scheme to secretly keep the Bermuda Fund open and give priority to Bermuda Fund investors in an effort to reverse the redemption.
As part of the scheme, BRYSON, Gutekunst and Pereira had New Stream staff secretly execute documents to effectuate the Bermuda Fund’s special priority. New Stream failed to inform investors who had transferred from the Bermuda Fund into the Cayman Fund that the Bermuda Fund was remaining open or that it was being given priority over the Cayman Fund. Moreover, New Stream continued to market to investors by concealing from them the magnitude of the actual pending redemptions and by using deceptive marketing materials that failed to disclose the existence of New Stream’s Bermuda Fund.
Through this scheme, New Stream investors were defrauded out of more than $46 million.
From April 2008 to December 2010, BRYSON collected more than $5 million in management fees and profit sharing while participating in this fraud scheme.
On May 21, 2014, BRYSON, Gutekunst and Pereira each pleaded guilty to one count of conspiracy to commit wire fraud.
Gutekunst and Pereira are scheduled to be sentenced on May 6 and May 7, respectively.
This matter was investigated by the Federal Bureau of Investigation and the U.S. Department of Labor, Office of Inspector General, with the assistance of the Securities and Exchange Commission. The case is being prosecuted by Assistant U.S. Attorneys Liam Brennan and Michael S. McGarry, and Special Assistant U.S. Attorney Sheldon L. Pollock.
Deported Alien Sentenced to Time Served for Illegally Reentering United StatesRead the Press Release
PITTSBURGH - A resident of Michocan, Mexico, pleaded guilty in federal court to a charge of reentry of removed alien and was sentenced to time served, United States Attorney David J. Hickton announced today.
Hector Cardenas-Orozco, 37, of Michocan, Mexico, pleaded guilty and was sentenced on one count before Senior United States District Judge Gustave Diamond.
In connection with the guilty plea and sentence, the court was advised that Cardenas-Orozco, an alien who had been deported and removed from the United States on August 18, 2000, was found in the United States on March 25, 2014 without having received permission to reenter from either the Attorney General of the United States or the Secretary of the Department of Homeland Security.
Assistant United States Attorney Leo M. Dillon is prosecuting this case on behalf of the government.
The Department of Homeland Security conducted the investigation that led to the prosecution of Cardenas-Orozco.
Corning Man Pleads Guilty to Theft from Health Care FundRead 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 Brandon Wilson, 26, of Corning, NY, pleaded guilty to theft from a health care benefit program, before U.S. Magistrate Judge Marian W. Payson. The charge carries a maximum penalty of one year in prison and a $5,000 fine.
Assistant U.S. Attorney John J. Field, who is handling the case, stated that Wilson, a member of the Plumbers & Steamfitters Local 267, participated in a scheme devised by Paul Harnas, Jr. to submit fraudulent dental claims for reimbursement from the Local 267 health fund. The defendant sought fraudulent payments totaling $6,358. In aggregate, Harnas, Wilson and others involved in the scheme submitted false claims to the Local 267 health fund totaling more than $65,000.
Harnas has been convicted and is awaiting sentencing.
The plea is the culmination of an investigation by Special Agents of the United States Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Cheryl Garcia of the New York Regional Office, and the New York State Department of Financial Services, Frauds Bureau, under the direction of Superintendent Benjamin Lawsky.
Sentencing is scheduled for July 24, 2015 at 10:00 a.m. before Judge Payson.