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Thursday 19 March 2015
Trinidad Woman Arrested on Charges of Aggravated Identity TheftRead the Press Release
St. Croix, USVI – Ameena Ali, 39, of Trinidad, was arrested after a federal grand jury returned a two-count indictment against her on Tuesday, March 17, 2015, charging her with making a false statement in an application for a passport and aggravated identity theft, United States Attorney Ronald W. Sharpe announced today. On Wednesday March 18, 2015, Ali made her initial appearance before U.S. Magistrate Judge Cannon in district court. She was released pending trial.
If convicted of making a false statement as charged, Ali faces a maximum of 10 years in prison and a $250,000 fine. If convicted of aggravated identity theft, she faces a mandatory two years in prison and a $250,000 fine.
The two-count indictment is the result of months of investigative work by the United States Department of State Diplomatic Security Service. The case is being prosecuted by Assistant U.S. Attorney Rami S. Badawy.
An indictment is merely a formal charging document and is not evidence of guilt. Every defendant is presumed innocent until and unless proven guilty.
Three More Defendants Sentenced for Their Role in Federal Racketeering ConspiracyRead the Press Release
Defendants among 91 Charged in Operation Wax House
CHARLOTTE, N.C. – Denetria Myles, 43, of Charlotte, Frank DeSimone, 42, of Charlotte, and William Brown, 35, of Matthews, N.C., were sentenced by U.S. District Court Judge Graham C. Mullen on Wednesday, February 18, 2015, on federal racketeering charges, announced the U.S. Attorney’s Office for the Western District of North Carolina. One additional defendant was sentenced earlier this month for his role in the scheme.
The U.S. Attorney’s Office is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
These convictions are the latest in Operation Wax House, an investigation which began in 2007. Of the 91 individuals charged, eighty-nine defendants have either pleaded guilty or have been convicted following trial. The two remaining defendants are international fugitives.
Myles was sentenced to 51 months in prison followed by three years of supervised release. Myles served the conspiracy as a buyer, seller, promoter, and licensed notary. In total, the fraudulent transactions Myles participated in resulted in more than $2 million in losses to financial and lending institutions, with Myles receiving nearly a quarter million in exchange for her crimes. Myles was convicted at trial in October 2013 of racketeering conspiracy and bank fraud.
DeSimone was sentenced to 51 months in prison, followed by two years of supervised release. According to court records and Wednesday’s sentencing hearing, DeSimone operated as a promoter in the investment fraud operations and was involved with multiple fraudulent companies controlled by the Enterprise. In sentencing DeSimone, Judge Mullen noted that an active sentence was necessary to protect the public from further crimes of this defendant. DeSimone pleaded guilty for his role in the RICO conspiracy in November 2013.
Brown was sentenced to 48 months in prison followed by one year of supervised release. According to court records and Wednesday’s sentencing hearing, Brown served the racketeering Enterprise as a promoter in its mortgage fraud operations. As part of the racketeering Enterprise, Brown was involved in at least ten separate mortgage fraud transactions, resulting in losses of approximately $3 million, and he received more than $780,000 in fraudulent kickbacks. According to court records, over the course of the conspiracy Brown also engaged in identity theft. Brown pleaded guilty for his role in the RICO conspiracy in October 2013.
Earlier this month, on February 3, 2015, Judge Mullen also sentenced Sean Williams, 46, of Huntersville, N.C. to 30 months in prison followed by two years of supervised release. Williams was a licensed loan officer and a certified public accountant, who owned and operated a mortgage company, which he used to process loan applications for mortgage fraud transactions, resulting in a total loss of more than $5 million. Williams pleaded guilty to mortgage fraud charges.
Of the 26 six defendants charged in RICO Indictment, 15 await sentencing, including three of the scheme’s leaders. The fourth leader, Ramin Amini, 46, last known address Tehran, Iran, is one of two international fugitives.
Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution. The Operation Wax House prosecution is being handled for the government by Assistant United States Attorney Maria K. Vento.
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.
The names and case numbers of the all the defendants charged to date in Operation Wax House are listed below, organized by their alleged role in the scheme.
Three Indicted in Relation to Laboring Trafficking, Witness TamperingRead the Press Release
HARRISONBURG, VIRGINIA – Three individuals, including two operators of a Harrisonburg restaurant, have been indicted by a federal grand jury in the Western District of Virginia in Harrisonburg on charges related to labor trafficking and witness tampering.
Maria Rosalba Alvarado McTague, [Alvarado], 47, Felix Adriano Chujoy, 26, and Gladys Georgette Chujoy, 32, all of Harrisonburg, Va., were charged in a superseding indictment filed under seal on Thursday, March 12, 2015 and unsealed today following the arrest and initial appearances of all three defendants.
According to the superseding indictment, Alvarado and F. Chujoy, who are originally from Peru but have become naturalized United States citizens, managed Inca’s Secret, a restaurant in Harrisonburg, Va. As part of the alleged labor trafficking conspiracy, Alvarado is accused of making regular trips to Peru where she attempted to recruit victims to immigrate illegally to the United States for the purpose of working unlawfully at Inca’s Secret. According to the indictment, Alvarado promised to help smuggle the victims into the United States, told victims they would be paid for working at the restaurant, and agreed to provide the victims a place to live in the basement of her and F. Chujoy’s home. In exchange, the victims had to work for Alvarado and F. Chujoy at Inca’s Secret for six months to work off the “debt” owed for smuggling and housing the victims.
According to the indictment, when a victim in Peru refused to cross the Mexican border and enter into the United States illegally, Alvarado arranged to have a visa application submitted to the U.S. Embassy in Peru on behalf of the victim. The application contained a variety of false and fraudulent information.
Upon arriving in the United States, the indictment alleges, the victims were generally forced to work 12-hours per day, seven days per week, and provide services outside of their work at the restaurant. The victims were paid approximately $450 per month, effectively resulting in an hourly wage of less than $1.50 per hour. Other documents unsealed at a previous court hearing reflect that Alvarado and F. Chujoy controlled the victims through isolation, threats, and harassment.
In addition, to the trafficking allegations, the indictment also alleges that Alvarado and F. Chujoy employed illegal aliens at the restaurant and housed others in their home.
G. Chujoy, along with the other two defendants, are also accused of attempting to influence, delay, or prevent victims in this case from testifying at official proceedings. The indictment alleges that Alvarado, F. Chujoy, and G. Chujoy conspired to tamper with witnesses. Alvarado and F. Chujoy were previously indicted, arrested and appeared in federal court on related charges on December 12, 2014. The court released both defendants on bond at that time. The witness tampering is alleged to have occurred while the defendants were on supervised release pending trial on the previous charges in this case.
The investigation of the case was conducted by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Federal Bureau of Investigation, and the Commonwealth of Virginia Attorney General’s Office. Assistant United States Attorney Heather Carlton is prosecuting the case for the United States.
A Grand Jury Indictment is only a charge and not evidence of guilt. The defendant is entitled to a fair trial with the burden on the government to prove guilt beyond a reasonable doubt.
Tax Return Preparer Sentenced to Three Years in Federal Prison for Preparing False Tax ReturnsRead the Press Release
DALLAS — A defendant who admitted to a federal felony offense stemming from his preparation of false tax returns was sentenced yesterday, announced Acting U.S. Attorney John Parker of the Northern District of Texas.
Kenny Iroegbu was sentenced by U.S. District Judge Jorge A. Solis to 36 months in federal prison and ordered to pay $323,046 in restitution to the IRS. Iroegbu pleaded guilty in December 2014 to one count of aiding and assisting in the preparation of a false income tax return.
According to the factual resume filed, Iroegbu operated his own tax return preparation business, doing business as Homequest Vision Tax Service and Homequest Tax Service. Prior to starting his own tax preparation business in 2005, Iroegbu worked as an intern at Lynks Tax Service in Greenville, Texas.
The factual resume also states that Iroegbu prepared tax year 2005 and tax year 2006 returns out of an office located at 3030 LBJ Freeway, Suite 700, in Dallas; he prepared 2007 returns at an office located at 601 West Parker Road, Suite 103, in Plano, Texas.
The method employed by Iroegbu, according to the factual resume, included filing a client’s tax return using a false IRS Schedule F, Profit or Loss from Farming or a false IRS Schedule C, Profit or Loss from Business. Iroegbu would include the false Schedule on the client’s return and typically claim a loss if the client had Form W-2 wages or claim a net profit if the client did not have any Form W-2 wages. This gave the appearance to the IRS that the taxpayer was generating income.
In addition, according to the factual resume, Iroegbu would then put a false refundable fuel credit from taxes paid on un-dyed diesel fuel used on a farm, or for taxes paid on gasoline used for taxes paid on un-dyed diesel fuel used on a farm, or for taxes paid on gasoline used for other nontaxable use. These fuel credits were refundable regardless of whether the taxpayer had a tax liability or was due a refund before considering the fuel credit. Iroegbu claimed fuel credits on IRS Form 4136, Credit for Federal Tax Paid on Fuels.
The factual resume notes that Iroegbu prepared and electronically filed on behalf of his clients 66 tax year 2006 returns and 59 tax year 2007 returns claiming $1,294,749 in fuel credits of which $361,294 in false refunds was used by the IRS to offset any tax owed on the return. The remaining amount was paid to the taxpayers. Twenty-four fraudulent returns examined claimed refunds for Iroegbu’s clients totaling $237,996. The actual amount paid out by the government on these 24 claims totaled $126,582.49.
IRS Criminal Investigation investigated. Assistant U.S. Attorney Joseph M. Revesz prosecuted.
Tanzanian National Heads to Prison in Tax Fraud Scheme Involving Nearly 700 VictimsRead the Press Release
HOUSTON - Tanzanian national Amon Rweyemamu Mtaza, of Houston, has been ordered to prison following his conviction of conspiracy to commit wire fraud, wire fraud and two counts of aggravated identity theft, announced U.S. Attorney Kenneth Magidson. Mtaza pleaded guilty Sept. 16, 2014.
Today, U.S. District Judge Gray Miller, who accepted the guilty plea, handed Mtaza a 63-month sentence for the conspiracy and wire fraud charges to be served concurrently. He also received an additional two years for the aggravated identity theft conviction which will be served consecutively to the other sentence imposed resulting in a 87-month federal prison sentence.
As part of the sentence, the court also signed a final order of forfeiture for a 2006 Maserati and a 2007 Mercedes Benz s550 as proceeds gained from the illegal scheme and ordered Mtaza to pay $404,409 in restitution. In handing down the sentence, Judge Miller considered the numerous victim impact statements that were submitted and the extent of the scheme.
Mtaza is expected to face deportation proceedings following his release from prison.
At the time of his plea, Mtaza admitted he ran a stolen identity refund fraud (SIRF) scheme that targeted more than 600 people and involved the filing of hundreds of fraudulent tax returns. Mtaza used stolen and unlawfully obtained personal identity information, including the names and Social Security numbers, of true persons to prepare fraudulent U.S. income tax returns. The returns were electronically filed in order to generate and obtain tax refunds to which he was not entitled. Mtaza then either directed the fraudulently obtained tax refunds to be deposited onto reloadable debit cards or disbursed as U.S. Treasury checks and used the monies to obtain cash and goods for his own benefit.
The tax refund filings account for an intended loss of more than $1.8 million with an actual loss of $404,409 to the Internal Revenue Service (IRS). A total of 685 victims were identified as victims in Mtaza’s scheme.
Mtaza will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
This case was investigated and prosecuted by the U.S. Postal Inspection Service and IRS - Criminal Investigation. Assistant United States Attorney Suzanne Elmilady is prosecuting this case.
Two Jackson Men Indicted for Drug Conspiracy Resulting in MurderRead the Press Release
Jackson, Miss - Anthony Watson, 25, and Joshua Martin, 23, both of Jackson, were indicted on March 18, 2014 by a federal grand jury for killing Jackson resident Sharod Vaughn on August 13, 2013, announced U.S. Attorney Gregory K. Davis and ATF Special Agent in Charge Phillip R. Durham.
The indictment alleges that Watson and Martin conspired to possess with the intent to distribute less than 50 grams of marijuana and, in the course of carrying out that conspiracy, they shot and killed Sharod Vaughn. The indictment also alleges that, at the time of the murder, Martin was a convicted felon in possession of a firearm.
Causing the death of a person by discharging a firearm during a drug transaction is punishable by death or up to life in prison. The penalty for the conspiracy to possess marijuana is not more than five (5) years in prison and up to a $250,000 fine, and the penalty for being a felon in possession of a firearm is not more than 10 years and up to a $250,000 fine.
Martin and Watson are scheduled to appear before United States Magistrate Judge F. Keith Ball on April 22, 2015 for their initial appearance and arraignment. Both are currently in the custody of the Hinds County Jail.
The public is reminded that an indictment is a formal charge that a defendant has committed a violation of the federal criminal laws. All defendants are presumed innocent unless and until proven guilty.
Tucson Man Convicted of Murder, AssaultRead the Press Release
TUCSON, Ariz. – On March 17, 2015, Joseph Edward Camargo, 29, of Tucson, Ariz., was found guilty of second degree murder, aggravated assault, and weapons offenses, by a federal jury. The case was tried before U.S. District Chief Judge Raner C. Collins on March 10-17, 2015. Camargo is being held pending sentencing before Judge Collins on May 27, 2015.
The evidence at trial showed that on Sept. 30, 2011, Camargo drove to a residence on the Pascua Yaqui Indian Reservation, armed with a handgun. Camargo provoked a fight with the male victim in the front yard of the residence. After the victim fled into the home, Camargo pursued him, firing four shots into the house. Three bullets struck the victim, killing him a fourth bullet struck another male at the house who was treated and medically released by University Medical Center. All victims are/were members of the Pascua Yaqui Indian Tribe.
A conviction for second degree murder carries a maximum penalty of lifetime incarceration.
The investigation in this case was conducted by the Federal Bureau of Investigation and Pascua Yaqui Police Department, with assistance provided by the Arizona Department of Public Safety and Office of the Medical Examiner. The prosecution was handled by Jesse J. Figueroa and Matthew C. Cassell, Assistant U.S. Attorneys, District of Arizona, Tucson.
CASE NUMBER: CR-11-4021-TUC-RCC-DTF
RELEASE NUMBER: 2015-024_ Camargo
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.
St. Croix Man Charged with Federal and Local Crimes Related to Carjacking at the St. Croix Educational Complex High SchoolRead the Press Release
St. Croix, USVI – U.S. Magistrate Judge George W. Cannon arraigned James Cruz, 20, today on federal charges of Carjacking, Using a Firearm in a Crime of Violence and local charges of Robbery in the First Degree, Assault in the Third Degree, and Unauthorized Possession of a Firearm During a Crime of Violence, United States Attorney Ronald W. Sharpe announced. Judge Cannon ordered Cruz detained pending trial.
According to court records, the charges stem from an incident that occurred on February 21, 2015, at the St. Croix Educational Complex High School when Cruz and an unnamed juvenile stole a vehicle at gun point. Both persons were apprehended after fleeing from the pursuing police officers.
Spencerport Man Pleads Guilty to Fraud ChargesRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
ROCHESTER, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Matthew Lavilla, of Spencerport, NY, pleaded guilty before U.S. District Judge Frank P. Geraci to engaging in financial transactions with proceeds from a fraud scheme. The charge carries a maximum penalty of 10 years in prison, a fine of $250,000 or both.
Assistant U.S. Attorney Bradley E. Tyler, who handled the case, stated that in June 2007, the became aware that the Xerox Corporation had been defrauded by Clarkson Auto Electric, a company that he was a part owner of, and Anthony Fretto, a co-defendant in the case, and also an owner of Clarkson Auto Electric. Despite that knowledge, Lavilla engaged in financial transactions with proceeds of the fraud.
Lavilla was indicted along with nine other defendants, all have been convicted.
“Today’s conviction concludes the Government’s investigation into a group of men who sought to defraud one of our area’s most venerated companies,” said U.S. Attorney Hochul. “The fact that the scheme was perpetrated by business associates as well as corporate insiders should serve as a warning to all businesses. The saying ‘trust, but by all means verify’ is a good rule to keep in mind when it comes to the business world. “
The plea is the culmination of a joint investigation on the part of the Internal Revenue Service, under the direction of Shantelle P. Kitchen, Special Agent in Charge, New York Field Office, and the United States Postal Inspection Service, under the direction of Shelly Binkowski, Inspector in Charge, Boston Division, United States Postal Inspection Service.
Sentencing for March 18, 2015Read the Press Release
Rodney Goich, 45, of Rock Springs, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on March 18, 2015, for conspiracy to possess with intent to distribute, and to distribute, at least 500 grams of methamphetamine. Goich was arrested in Rock Springs, Wyoming. He received 78 months imprisonment, to be followed by five years of supervised release, and was ordered to pay a $500.00 fine and a $100.00 special assessment. This case was investigated by the Wyoming Division of Criminal Investigation.
Second Cardiac Monitoring Company Pays $6.4 Million to Settle Allegations It Overbilled Government Medical ProgramRead the Press Release
A second heart monitoring company, BioTelemetry, Inc., is resolving allegations that it overbilled Medicare for outpatient services that were not medically necessary, announced Acting U.S. Attorney Annette L. Hayes. BioTelemetry has agreed to pay $6.4 million to resolve allegations that its subsidiary, CardioNet, improperly billed the Medicare Program for Mobile Cardiac Outpatient Telemetry (MCOT) services when those services were not reasonable or medically necessary. This is the second cardiac monitoring company to settle overbilling charges for these services following an investigation led in Western Washington. In March 2012, LifeWatch Services, Inc., of Rosemont, Illinois, agreed to pay the United States $18.5 million to resolve allegations that the company submitted false claims to federal health care programs. The investigation of CardioNet’s billing practices grew out of a qui tam or “whistleblower” lawsuit against LifeWatch.
“Billing for a higher-level service that is not necessary to treat a patient’s condition to receive higher reimbursement from federal health care programs will not be tolerated,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”
“Today’s settlement is another example of how we will act to stop abusive billing practices and hold companies accountable for conduct that raises everyone’s healthcare costs,” said Acting U.S. Attorney Annette L. Hayes for the Western District of Washington. “This settlement should send a message to all providers: do not misuse federal billing systems to improperly gouge the healthcare system upon which so many Americans rely.”
An MCOT monitor is a real-time, outpatient cardiac monitoring service. MCOT monitors are worn by patients for a period of time during which the device continuously records the activities of the patient’s heart, including any irregular rhythms. The MCOT monitor differs from traditional, less expensive event monitors in that it incorporates cell phone technology, which allows it to continuously transmit data to CardioNet’s diagnostic center (whereas traditional event monitors only download data periodically through a landline).
The government’s investigation revealed that CardioNet was aware that MCOT services were not eligible for Medicare reimbursement when provided to patients who had experienced only mild or moderate heart palpitations, since less expensive “event” or “Holter monitors” could effectively collect data about those patients’ conditions. Nonetheless, the government’s investigation revealed that CardioNet knowingly submitted claims to Medicare for more expensive MCOT services by using an inaccurate diagnostic code that ensured that the claims would be reimbursed by Medicare at a higher rate.
“Sticking taxpayers with a hefty bill for unneeded medical care will never be tolerated,” said Special Agent in Charge Ivan Negroni of U.S. Health and Human Services, Office of Inspector General, Regional Office including Washington. “Working in close coordination with our law enforcement partners we will tirelessly pursue and prosecute these suspected violators.”
“Federal employees deserve health care providers, including remote monitoring companies, that meet the highest standards of ethical and professional behavior,” said Patrick E. McFarland, Inspector General of the U.S. Office of Personnel Management. “Today's settlement reminds all providers that they must observe those standards, and reflects the commitment of Federal law enforcement organizations to pursue improper and illegal billings that increase the cost of medical care.”
The claims resolved by this agreement are allegations only, and there has been no determination of liability.
The settlement was negotiated by Assistant United States Attorney Kayla Stahman of the U.S. Attorney’s Office, Western District of Washington, who was assisted by investigators from the Office of Inspector General of the Department of Health and Human Services and the Office of Inspector General for the Office of Personnel Management.
San Francisco Man and Company Indicted for Smuggling Sophisticated Electrical Components to Russian FederationRead the Press Release
SAN FRANCISCO – Russian émigré Pavel Semenovich Flider was arrested yesterday on charges that he and corporate co-defendant Trident International Corporation, LLC, illegally smuggled sophisticated electrical components out of the United States, and used laundered funds to promote the scheme announced United States Attorney Melinda Haag, U.S. Department of Commerce Acting Special Agent in Charge Joseph Whitehead, U.S. Homeland Security Investigations Acting Special Agent in Charge Tatum King, Federal Bureau of Investigation Special Agent in Charge David Johnson, and U.S. Customs and Border Protection Director of Field Operations Brian Humphrey. A federal grand jury in San Francisco indicted Flider and Trident on March 5, 2015 with Smuggling Goods, Conspiracy to Commit International Money Laundering, and Money Laundering. The indictment was unsealed today in federal court.
According to the indictment, Flider, 65, of San Rafael, California, a Russian national and naturalized citizen of the United States, served as the co-owner and operator of Trident in San Francisco. He is alleged to have procured electronic components from U.S. companies and smuggled them to Russia using transshipment points in Estonia and Finland, in violation of U.S. export law. In furtherance of the crime, Flider and Trident are alleged to have knowingly submitted false and misleading export information on Shipper’s Export Declarations, an official document submitted to the Department of Homeland Security in connection with export shipments from the U.S. Funds used to purchase these electronic components came, at least in part, from transfers received from foreign banks.
Many of the components alleged to have been wrongly smuggled into Russia were controlled dual-use programmable computer chips capable of operating in austere environments making them useful in both civilian and military applications. Wire transfers that allegedly promoted the conspiracy totaled more than 60 million dollars, and were received in San Francisco from banks located in a variety of countries including the Czech Republic, Estonia, Latvia, Cyprus, and Hong Kong. Flider has been charged with fifteen counts of smuggling of goods in violation of 18 U.S.C. § § 554(a), one count of conspiracy to commit international money laundering in violation of 18 U.S.C. § 1956(h) and ten counts of substantive money laundering in violation of 18 U.S.C. § 1956(a)(2)(A). Trident has been charged with the smuggling and money laundering charges. The indictment also seeks forfeiture of Flider’s and Trident’s real and personal property connected to the alleged crimes, including proceeds traceable to the alleged laundering violations.
Flider was arrested in San Rafael, California on March 18, 2015, and made his initial appearance in federal court in San Francisco this morning before the Honorable Maria-Elena James, U.S. Magistrate Judge. Flider currently is being held in federal custody pending a formal detention hearing on Monday, March 23, 2015 before Magistrate Judge James.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Flider could face a maximum 20-year term of imprisonment for each money laundering-related count, and a maximum 10-year sentence for each count of smuggling. Additional periods of supervised release, fines, and special assessments also could be imposed. Trident faces a maximum fine of $500,000 for each money laundering count (or a fine of twice the value of the property used in the transaction) and a maximum fine of $ 250,000 for each of the smuggling counts. As with Flider, upon conviction Trident could be subject to additional fines and assessments. Any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Philip Kearney and Arvon J. Perteet are prosecuting the case with the assistance of Jacqueline Lovrin and Helen Yee. The prosecution is the result of an investigation by the U.S. Department of Commerce, Homeland Security Investigations, U.S. Customs and Border Protection, and the Federal Bureau of Investigation.
San Diego Real Estate Developer Sentenced for Wire FraudRead the Press Release
U.S. Attorney Kenneth A. Polite announced that TIMOTHY MONAHAN, age 36, a real estate developer from San Diego, California, was sentenced today after previously pleading guilty to committing wire fraud.
U.S. District Judge Jane Triche Milazzo sentenced MONAHAN to one year and one day incarceration, followed by two years of supervised release. Restitution to the Bolivar Investment Group, LLC in the amount of $140,525.19 was paid prior to sentencing.
According to court documents, in about late 2008, MONAHAN and his business partner, “M.H.,” sought investors to invest approximately $3,000,000 for the acquisition of an approximately five-acre tract of land adjacent to the Lakeview Regional Medical Center in Covington, Louisiana, and the development of two office buildings on that land. MONAHAN and M.H. convinced Bolivar Investors Group, L.L.C., an investment group organized by members of the Crescent River Port Pilots= Association, to invest the money. In February 2009, MONAHAN, his partner, and Bolivar created a new entity, ANewtrac West,@ to facilitate the purchase and development. As part of the agreement, Bolivar agreed to fund a $3,000,000 capital contribution to Newtrac West. Shortly thereafter, MONAHAN and his business partner opened a bank account in the name of Newtrac West; while representatives of Bolivar were supposed to have access to the account, in truth only MONAHAN and M.H. had access. Between January 20, 2009, and July 14, 2009, Bolivar made six deposits, including five by wire, into the Newtrac West bank account, totaling approximately $3,000,000.
Between January 20, 2009, and July 27 2009, MONAHAN used approximately $140,525.19 from the account without authorization to pay expenses and debts apart from and unrelated to the purchase or development of the land in Covington.
Subsequently, MONAHAN and M.H. devised a scheme to hide the misuse of funds. Specifically, false financial and bank statements of Newtrac West, based on the real bank statements for the Newtrac West account, were created to hide the unauthorized withdrawal of funds and to deceive representatives of Bolivar into believing that Newtrac West was in excellent financial condition. For example, while the Newtrac West account had a true balance of negative $29,292.45 on September 30, 2009, the doctored statement represented that the account had a balance of $826,512.92.
MONAHAN’S partner, M.H., was charged in the Eastern District of Louisiana in August 2013 for his role in the above-described scheme. He pleaded guilty in the Southern District of California and was sentenced to twenty-four months in jail earlier this year.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigation in investigating this matter. Assistant United States Attorney Jordan Ginsberg was in charge of the prosecution.
Sacramento Men Indicted for Methamphetamine TraffickingRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned a five-count indictment today against Lagranger Jones, 36, and Lamonte DeShannon Rush, 45, both of Sacramento, charging them with conspiracy to distribute methamphetamine and methamphetamine distribution, United States Attorney Benjamin B. Wagner announced.
According to court documents, between October 2014 and February 2015, Jones and Rush sold methamphetamine during controlled purchases conducted by DEA Special Agents in the Sacramento area. Court documents allege that Jones has a lengthy criminal history.
This case was the product of an investigation by the Drug Enforcement Administration and the Sacramento Police Department. Assistant United States Attorney Jason Hitt is prosecuting the case.
Jones was arrested by federal agents on March 9, 2015. He was ordered detained pending trial on the same day. Rush remains at large.
If convicted of the most serious charge in the indictment, both defendants face a maximum statutory penalty of life in prison, a mandatory minimum of 10 years in prison and a $10 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Rochester Man Indicted for Stealing More Than $1.2 Million from His Brother and In-LawsRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
ROCHESTER, N.Y.--U.S. Attorney William J. Hochul, Jr. announced that a federal grand jury has returned a 20 count indictment charging Mark Saile, 57, of Rochester, NY, with mail and wire fraud, aggravated identity theft, and money laundering. The mail and fraud charges carry a maximum sentence of 20 years in prison, and a fine of $250,000, the identity theft charge carries a mandatory minimum sentence of two years in prison, and the money laundering charges carry a maximum sentence of 10 years in prison and a fine of $250,000.Assistant U.S. Attorney, Richard A. Resnick, who is handling the case, stated that according to the indictment, the defendant’s brother, Robert Saile, who resides in Redmond, Washington, worked for Microsoft, Inc. for a number of years. Robert Saile set up a 401(K) retirement account with Fidelity Brokerage Services, LLC, comprised of Microsoft stock and Fidelity money market funds.
Between July 26, 2012 and June 20, 2014, Mark Saile contacted Fidelity numerous times pretending to be his brother. During those contacts, the defendant was able to trick Fidelity into transferring approximately $980,000 from Robert Saile’s 401(k) retirement account to a bank account his name. Robert Saile was unaware that his brother was stealing money from his retirement account. The defendant also changed the email and mailing addresses on file at Fidelity so that all correspondence from Fidelity would be sent to him.
The indictment further states that, prior to the fraud against his brother, the defendant pretended to be his in-laws and had more than $258,000 withdrawn from their financial accounts without their knowledge.
The indictment is the culmination of an joint investigation on the part of the United States Postal Inspection Service, under the direction of Shelly Binkowski, Inspector in Charge, Boston Division, United States Postal Inspection Service, the Internal Revenue Service, under the direction of Shantelle Kitchen, Acting Special Agent in Charge, New York Field Office, the Federal Bureau of Investigation, and the New York State Police, under the direction of Major Craig Hanesworth.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Previously Convicted Bossier Tax Preparer Pleads Guilty to Tax FraudRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced today that a Bossier City woman pleaded guilty to making and filing a false tax return.
Karen Cartagena, 54, of Bossier City, La., pleaded guilty before U.S. District Judge Elizabeth E. Foote to one count of making and subscribing a false tax return. According to evidence presented at the guilty plea, Cartagena prepared and filed a fraudulent tax return on or about January 24, 2012. In the return, she added education credits (Education and American Opportunity credits) to which she was not entitled.
“My office is committed to the vigorous prosecution of corrupt individuals who prepare fraudulent tax returns,” Finley said. “The selective targeting for profit of educational and other tax credits, which are designated to help individuals in need, is reprehensible.”
“Return preparer fraud is a priority for IRS Criminal Investigation, and we have committed many resources to these cases,” said Jerome R. McDuffie, Acting Special Agent in Charge, IRS-Criminal Investigation, New Orleans Field Office. “Ms. Cartagena was previously convicted of preparing false income tax returns and willfully chose to continue her illegal activities. Taxpayers should be very selective in choosing a return preparer, and have confidence that their returns are prepared accurately and reflect only the information that they provide. We will continue to vigorously investigate and prosecute return preparers who abuse the nation’s tax system.”
Cartagena faces up to three years in prison, one year supervised release, a $250,000 fine, and restitution. A sentencing date of July 16, 2015 was set.
The IRS Criminal Investigation conducted the investigation. Assistant U.S. Attorney Earl M. Campbell is prosecuting the case.
Preston County, WV man arrested in Weirton for production of child pornographyRead the Press Release
WHEELING, WEST VIRGINIA – Robert J. Gongloff, 25, of Weirton, West Virginia, was arrested on March 13, 2015 pursuant to a criminal complaint charging him with “Production of Child Pornography,” United States Attorney William J. Ihlenfeld, II, and Homeland Security Investigations Philadelphia Special Agent in Charge John Kelleghan announced today.
Gongloff, originally from Terra Alta in Preston County, West Virginia, is alleged to have produced numerous images and videos depicting nude minors and minors engaged in sexually explicit conduct. Gongloff is further alleged to have misrepresented his name and age on a website known as MeetMe.com, claiming to be 17 years old and using the name “Johnny Williamson,” in order to transmit sexually explicit photographs to minor females.
HSI requests that anyone with knowledge of this man’s unsupervised contact with minors should contact the agency by calling the 24-hour HSI Tip line at 1-866-DHS-2ICE.
The public can also submit an online tip at www.ice.gov/tips/ or by downloading the Operation Predator smartphone app and submitting a tip via the app.
“What this man is charged with is one of the most heinous crimes in our society,” said Kelleghan. “HSI is committed to aggressively pursuing those who create or trade child pornography. It’s our job to protect the most vulnerable members of our society.”
Assistant U.S. Attorney Stephen Vogrin is prosecuting the case on behalf of the government. U.S. Immigration and Customs Enforcement's Homeland Security Investigations is leading the investigation with assistance from the West Virginia State Police.
A criminal complaint is merely an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Man Charged in Prescription Fraud SchemeRead the Press Release
PHILADELPHIA - Raymond Rysheem E. Starr, 21, of Philadelphia, PA was charged today by indictment with possession of a firearm by a convicted felon and possession of oxycodone, announced United States Attorney Zane David Memeger.
According to the indictment, Starr obtained identifying information and Keystone First account information of a Medicaid beneficiary and used that information to visit a physician and obtain prescriptions for oxycodone, cyclobenzaprine and ibuprofen. Because there was no co-pay, the pharmacies sent claims for payment to Keystone First which paid the pharmacies.
If convicted, Starr faces a maximum possible sentence of 11 years in prison, three years of supervised release and a fine of up to $500,000.
The case was investigated by the United States Postal Inspection Service, United States Secret Service and Federal Bureau of Investigation, with the assistance of the Philadelphia Police Department, Springfield Township, Montgomery County Police Department, Abington Police Department and the Bensalem Police Department. It is being prosecuted by Assistant United States Attorneys K.T. Newton and Yvonne Osirim.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Owner and Executives Convicted in Medicare Referral Kickback Conspiracy at Closed Sacred Heart HospitalRead the Press Release
CHICAGO - The former owner and chief executive officer, the chief operating officer, and the chief financial officer of the now-closed Sacred Heart Hospital were convicted by a jury after a nearly two-month trial of collectively paying hundreds of thousands of dollars in illegal kickbacks in exchange for the referral of hospital patients who were insured by Medicare and Medicaid. The jury found that EDWARD J. NOVAK, 60, of Park Ridge, Sacred Heart’s owner and chief executive officer, ROY M. PAYAWAL, 66, of Burr Ridge, executive vice president and chief financial officer, and CLARENCE NAGELVOORT, 59, of Chicago, paid physicians concealed bribes and kickbacks to induce patient referrals and to increase the patient census, which, in turn, increased hospital revenue.
Sacred Heart Hospital was a 119-bed acute care facility located at 3240 West Franklin Blvd., in Chicago. The hospital closed and filed for bankruptcy in 2013, after Medicare payments were suspended in the aftermath of criminal charges that were first filed in April 2013.
All three defendants were convicted of one count of conspiring to violate the federal healthcare anti-kickback statute by offering and paying kickbacks and bribes, directly and indirectly, to physicians to induce them to refer patients to the hospital for services that would be reimbursed by Medicare and Medicaid. The charged conspiracy spanned from no later than 2001 through April 2013. The jury also convicted defendant Novak of 26 substantive counts of paying kickbacks for patient referrals, defendant Payawal of 17 substantive counts of paying kickbacks for patient referrals, and defendant Nagelvoort of 11 substantive counts of paying kickbacks for patient referrals. The jury acquitted defendant Payawal of ten substantive kickback counts and Nagelvoort of one substantive kickback count. The jury did not reach a verdict on one substantive kickback count for defendant Novak.
Defendants remain free on bond pending their sentencings, which have been scheduled for July 2015. Each count in the indictment carries a maximum penalty of five years in prison and a $250,000 fine and restitution is mandatory. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
Four defendants previously entered guilty pleas in the case. These defendants are: Dr. SUBIR MAITRA, 73, of Chicago; Dr. JAGDISH SHAH, 70, of Oakbrook; ANTHONY J. PUORRO, 57, formerly of Chicago, who was Sacred Heart’s chief operating officer; and NOEMI VELGARA, 64, of Chicago, who was Sacred Heart’s vice president of geriatric services and was responsible for overseeing the Golden L.I.G.H.T. medical clinics, including managing employees responsible for marketing, and recruiting and transporting patients.
Four additional physicians associated with Sacred Heart Hospital are scheduled to proceed to trial later this year.
The verdict was announced by U.S. Attorney Zachary T. Fardon for the Northern District of Illinois; Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Service Office of Inspector General; and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
The government is being represented by Assistant U.S. Attorneys Joel Hammerman, Ryan Hedges, Kelly Greening, Diane MacArthur, Debra Bonamici, and Brian Wallach.
The case falls under the umbrella of the Medicare Fraud Strike Force, which expanded operations to Chicago in February 2011, and is part of the Health Care Fraud Prevention & Enforcement Action Team, a joint initiative announced in May 2009 between the Justice Department and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Dozens of defendants have been charged in health care fraud cases since the strike force began operating in Chicago.
To report health care fraud and to learn more about the Health Care Fraud Prevention & Enforcement Action Team, go to: stopmedicarefraud.gov.
Operator of Illegal Gambling Enterprise Pleads GuiltyRead the Press Release
CHARLOTTE, N.C. – A South Carolina man appeared before U.S. Magistrate Judge David C. Keesler today and admitted to operating an illegal gambling enterprise in Gaston County, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Lenny Steen, Jr. 65, of Spartanburg, S.C. pleaded guilty to one count of running an illegal gambling business and one count of money laundering.
In January 2015, Steen’s conspirator, Clarence Larry Calhoun, 71, of Gastonia, N.C. pleaded guilty to the same charges for his role in the illegal gambling scheme.
Ryan L. Spradlin, Acting Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas joins Acting U.S. Attorney Rose in making todays’ announcement.
According to filed court documents and court proceedings, from about 2012 to October 2014, Calhoun and Steen owned and operated an illegal video poker gambling business in Gaston County. According to court records, Calhoun provided management advice and capital, while Steen was responsible for the day-to-day operations of the business. According to court records, the gambling business, known as “Mr. Lenny’s Place,” operated out of a large warehouse in Gaston County and was open 24 hours a day, 7 days a week. Court records show that, at its height, the gambling establishment housed approximately 63 video poker machines, employed more than eight employees and generated, on an average, more than $10,000 per day.
According to court records and court proceedings, the two men split the profits in half. Court records show that Steen collected the cash and concealed it in retail bags, and personally delivered half of the profits to Calhoun. Calhoun hid the gambling profits in PVC piping, while Steen transported his share to South Carolina and directed others to store the cash, court records show. Court records also indicate that law enforcement seized more than $4 million in cash over the course of the investigation.
At sentencing, the defendants face a maximum prison term of five years and a $250,000 fine for the charge stemming from running the gambling operation, and a maximum of 20 years in prison and a $500,000 fine or twice the amount of criminally derived proceeds for the money laundering charge.Both men have been released on bond and currently await sentencing.
HSI investigated the case.Assistant U.S. Attorney Kevin Zolot, of the U.S. Attorney’s Office in Charlotte, is prosecuting the case.
Olean Man Indicted on Drug and Gun ChargesRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
BUFFALO, N.Y.–U.S. Attorney William J. Hochul, Jr. announced today that a federal grand jury has returned a four count indictment charging Giovanni Salmonson, 23, of Olean, NY, with possession with intent to distribute heroin, possession with intent to distribute buprenorphine (suboxone), possession of a firearm in furtherance of a drug trafficking crime, and being a felon in possession of a firearm. The charges carry a mandatory minimum of five years in prison, a maximum of life, $250,000 or both.Assistant U.S. Attorney Caleb J. Petzoldt, who is handling the case, stated that according to the indictment, on January 1, 2015, during the course of an investigation, the Olean Police Department discovered the defendant to be in possession of quantities of heroin buprenorphine. In addition, Salmonson also had a .22 caliber revolver. The defendant was previously convicted on state charges which prevent him from legally possessing a firearm.
The defendant will be arraigned on March 20, 2015 at 10:15 a.m. before U.S. Magistrate Judge H. Kenneth Schroeder.
The indictment is the culmination of an investigation on the part of the Olean Police Department, under the direction of Chief and the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Delano A. Reid.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Nigerian Woman Sentenced for Misuse of A PassportRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
BUFFALO, N.Y. – U.S. Attorney William J. Hochul, Jr. announced today that Pamela Amaka Mmakogu, 30, a citizen of Nigeria, pleaded guilty to misuse of a passport in an attempt to gain entry into the United States before U.S. District Judge Richard J. Arcara. The defendant was also sentenced to time served (six months) in prison.Assistant U.S. Attorney Marie P. Grisanti, who handled the case, stated that on September 6, 2014, Mmakogu, a passenger on a bus at the Peace Bridge Port of Entry, presented a Canadian passport that belonged to another person.
The plea and sentencing are the result of an investigation by United States Customs and Border Protection, under the direction of Rose Hilmey, Acting Director of Field Operations.
New York Pharmacist Charged with Defrauding Medicare and Medicaid of More Than $5 Million Through Fraudulent Billing of Prescription MedicationsRead the Press Release
A twenty-four-count indictment was unsealed this morning in federal court in Brooklyn, New York, charging Andrew Barrett, a licensed pharmacist, with health care fraud, filing false claims, unlawful monetary transactions, filing false personal tax returns, and the filing of and assisting in the preparation of false corporate tax returns.1 Barrett will be arraigned at 2:00 pm today before U.S. Magistrate Judge Steven M. Gold at the U. S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Scott Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), and Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York (IRS-CI).
“As alleged in the indictment, instead of using his pharmacist license to provide valid relief to those in need, Andrew Barrett used it as a license to steal from publicly-funded health care programs and then lied about it on his tax returns,” stated United States Attorney Lynch. "Today’s indictment makes clear that this Office will hold accountable corrupt pharmacists who seek to enrich themselves at the expense of tax-payer funded programs."
“Defrauding Medicare and Medicaid is a serious crime that has consequences for the entire U.S. economy. As alleged, Barrett stole more than $5 million from Medicare and Medicaid for his own personal gain. As evidenced by today’s indictment, the FBI and its partners will vigorously pursue those who seek to steal from taxpayer-funded programs,” stated FBI Assistant Director-in-Charge Rodriguez.
“The alleged actions by Andrew Barrett diverted scarce taxpayer funds from the Medicare and Medicaid prescription drug programs just for personal enrichment,” said HHS-OIG Special Agent in Charge Lampert. “The HHS Office of Inspector General, together with our law enforcement partners, will continue to vigorously pursue those who steal from government health programs in such greed-fueled schemes.”
IRS-CI Special Agent-in-Charge Kitchen stated, “Individuals who steal from government programs often take the added risk of committing tax crimes in the process, exposing themselves to further criminal sanctions. As the federal agency responsible for investigating criminal tax violations, IRS-Criminal Investigation works with our law enforcement partners on complex financial fraud investigations, with the goals of protecting the American taxpayer and seeing that everyone pays their fair share.”
As alleged in the indictment, from January 2011 to December 2012, Barrett operated pharmacies in Bronx, Rockland, and Queens counties in New York State. From his Queens pharmacy, Barrett fraudulently billed Medicare and Medicaid more than $5 million for prescription medications that he never dispensed to patients. Barrett used more than $4 million of his ill-gotten gains to buy drugs for his pharmacies in the Bronx and Rockland counties. Barrett also siphoned off for personal expenses more than $2.5 million from the Bronx and Rockland pharmacy accounts while falsely claiming those funds as business expenses on his personal and corporate tax returns.
The government’s case is being prosecuted by Assistant United States Attorneys William P. Campos and Karin Orenstein.
This prosecution was the result of efforts 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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendant:
ANDREW BARRETT
Age: 55
New City, New York
E.D.N.Y. Docket No. 15-CR-103 (KAM)
____________________________________________________________________________
1 The charges announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Modesto Man Pleads Guilty to Producing Child PornographyRead the Press Release
SACRAMENTO, Calif. — Danny M. Shatswell Jr., 44, of Modesto, pleaded guilty today to producing visual depictions of a minor engaged in sexually explicit conduct, United States Attorney Benjamin B. Wagner announced.
According to court documents, Shatswell used a webcam to produce sexually explicit images of a minor. The minor victim reported to law enforcement that Shatswell was abusing her. When they searched his electronic storage devices and equipment they recovered sexually explicit images that Shatswell produced of his victim in 2010 and 2011.
This case is the product of an investigation by the Modesto Police Department, the Federal Bureau of Investigation, and the Sacramento County Sheriff's Office’s High Tech Crimes Task Force. Assistant U.S. Attorney Michelle Rodriguez is prosecuting the case.
Shatswell is scheduled to be sentenced on June 4, 2015, by U.S. District Judge Troy L. Nunley. Shatswell faces a sentence of 15 years to life in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Midland Man Sentenced to Federal Prison for Coercion and Enticement of a MinorRead the Press Release
Midland resident Kenneth Simon Brzoznowski, age 37, will serve 29 years and 7 months in federal prison for coercion and enticement of a minor announced Acting United States Attorney Richard L. Durbin, Jr., and Homeland Security Investigations (HSI) Special Agent in Charge Waldemar Rodriguez in El Paso.
In addition to the prison term handed down today, U.S. District Judge Robert Junell ordered that Brzoznowski be placed under supervised release for a period of 10 years after completing his prison term.
On October 17, 2014, Brzoznowski pled guilty to using a cell phone to entice a minor female to engage in sexual activity. According to court records, the defendant used a phone app called “Tango” to have a sexually explicit conversation with a female minor. This app was discovered by Brzoznowski’s parole officer. Brzoznowski was previously incarcerated in 2005 for attempting to meet with a 13-year-old girl to have sex.
"Part of HSI's mandate is to protect children in our community from criminals that want to harm them," said Waldemar Rodriguez, Special Agent in Charge of HSI El Paso. "It's a part of our mission that we pursue aggressively."
This investigation was conducted by Homeland Security Investigations. Assistant United States Attorney Austin Berry prosecuted this case on behalf of the Government.
Miami Resident Sentenced for Filing False Tax Returns and Failure to File a Tax ReturnRead the Press Release
A Miami resident was sentenced to 27 months in prison, followed by one year of supervised release, and was ordered to pay restitution of $196,645 to the Internal Revenue Service.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Robert C. Erickson, Deputy Inspector General, General Services Administration Office of the Inspector General (GSA-OIG), made the announcement.
Danilo Santos, 52, previously pled guilty to three counts of filing a false federal income tax return and one count of failure to file a federal income tax return.
According to court documents, in 2009 and 2010, Santos was president and 100% shareholder of Santos Auction USA, Inc. Santos falsely represented to the public that he was associated with the General Services Administration and that he could arrange to sell government seized properties, including boats and automobiles, at bargain prices, prior to the items being offered for auction. An investigation by the General Services Administration Office of the Inspector General revealed that in 2009 and 2010, Santos defrauded a number of his clients by representing to them that he was buying government seized properties for them and then failing to deliver the properties or return the funds that Santos received from the clients. Subsequent prosecution of Santos by the State of Florida resulted in his paying court-ordered restitution to some of these clients.
Court documents state that IRS reviewed Santos’ personal and business bank accounts, interviewed individuals who paid Santos to purchase properties for them, and examined the tax returns filed by Santos. Santos filed false individual and corporate income tax returns for calendar year 2009, and filed a false individual income tax return for calendar year 2010. Santos failed to file a corporate income tax return for calendar year 2010.
Mr. Ferrer commended the outstanding investigative efforts of IRS-CI and GSA-OIG. The case was prosecuted by Assistant U.S. Attorney Robert J. Lehner.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Miami Dade College Student Convicted for Her Involvement in a Stolen Identity Tax Refund Fraud Scheme Involving Her Student Financial Services AccountRead the Press Release
After a three-day trial, a federal jury convicted Laquisha Q. Johnson, 24, of Opa Locka, Florida, for her involvement in a stolen identity tax refund fraud scheme that utilized her student Higher One financial services account. Johnson was convicted of three counts of receiving stolen government property.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and George L. Piro, Special Agent in Charge, FBI, Miami Field Office, made the announcement.
As shown at trial, Johnson was a student at Miami Dade College. During her time as a student, Johnson opened a bank account serviced by Higher One, Inc., which provides financial services to colleges and universities throughout the United States, including Miami Dade College in Florida. After opening this account, tax refunds issued to three different victim-taxpayers were direct deposited into Johnson’s account. This included a tax refund of $61,000.00, that had been issued to a victim-taxpayer with the initials E.R.L. An aggregate amount of tax refunds in the amount of $63,000.00 was deposited into Johnson’s account.
At sentencing, which is currently set for May 27, 2015 at 1:30 p.m., before U.S. District Judge Jose E. Martinez, Johnson faces a maximum term of 10 years in prison.
Mr. Ferrer commended the investigative efforts of IRS-CI and the FBI. The case is being prosecuted by Assistant U.S. Attorneys John Byrne and John Gonsoulin.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Message to Potential Tax Cheats from Federal Prosecutors: Tax Crimes Result in Criminal Prosecution, Prison Sentences and FinesRead the Press Release
CHARLOTTE, N.C. - With the deadline for filing income tax returns approaching next month, Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina, and Thomas J. Holloman, III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI), jointly announce recent tax fraud prosecutions and deliver a powerful warning to potential tax cheats.
“As tax filing season reaches its peak, would-be tax fraudsters are warned that our office will prosecute those who try to cheat the tax system,” said Acting U.S. Attorney Rose. Rose noted the importance of deterring others from committing tax crimes and stated, “Our tax system is built on voluntary compliance and tax criminals who do not pay their fair share increase the tax burden on honest taxpayers.”
“Filing a truthful, accurate tax return is a responsibility that tax preparers should take very seriously, said Thomas J. Holloman, III, Special Agent in Charge, IRS Criminal Investigation. “Let the message to unscrupulous tax return preparers be clear, that criminal activity and greed carry severe consequences. I encourage citizens to avoid being taken advantage of, by seeking out credentialed, reputable tax preparers during the current filing season, also to take the appropriate measures to safeguard their personal information, so as not to fall victim to identity theft.”
On Wednesday, March 18, 2015, Fitzroy Lawrence, a Charlotte tax return preparer, was indicted on federal charges for preparing false tax returns by making false claims for refund from the IRS. According to the indictment, for tax years 2008 through 2011, Lawrence aided and assisted in the preparation of hundreds of tax returns that were filed with the IRS, seeking fraudulent tax refunds totaling millions of dollars. Many of the fraudulent tax returns included false wages and false dependent information. Lawrence was charged with 15 counts of making false claims for refund and faces a maximum sentence of five years in prison and a $250,000 fine per count. The charges against Lawrence are allegations and he is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Prosecutions of Tax Evasion and Filing False Tax Returns
Over the last year, the U.S. Attorney’s Office has prosecuted and convicted a number of individuals for omitting income from their individual tax returns. For example, Mark Tuan Le (3:14-cr-00110), an internal medicine physician, pleaded guilty to tax evasion for hiding millions of dollars in personal income from the IRS by claiming fraudulent business expenses for funds that were used to purchase and construct a $2.4 million, 8000-square foot residence on Lake Norman in Cornelius. Plea documents indicate that Le omitted to report approximately $1.2 million of income per year for 2009 and 2010. Le, who also pleaded guilty to healthcare fraud charges, is awaiting sentencing.
During the past year, defendants have received substantial sentences for tax charges, ranging from home confinement to several years in prison. The following individuals were among the defendants sentenced for lying to the IRS about their taxable income:
- Denise Swanson (5:13-cr-00061), of Lenoir, N.C., owned and operated a tax preparation and bookkeeping business and failed to report more than $800,000 of income she received from embezzling client funds during years 2006 through 2011.
- Nghia Ly (3:13-cr-00235), of Waxhaw, N.C., and the fifty-percent owner of Kim Sen Jewelry, Inc., d.b.a. KS Nail Supply (KSJ) in Charlotte, concealed gross receipts and taxable income of over $800,000 from the IRS for 2007 through 2011.
- Kenneth Sumner (3:13-cr-00257), of Charlotte, and owner of Ken B. Sumner and Associates, a Charlotte-based sales company, failed to file timely tax returns for 2006 through 2008 with the IRS. Sumner subsequently filed a delinquent 2006 federal income tax return that omitted gross receipts from Sumner’s business totaling approx. $106,808. For tax years 2007 and 2008, Sumner failed to file timely income tax returns despite having income of approx. $318,433 and $337,090, respectively.
- Jonathan Davey (3:12-cr-00068), of Newark, Ohio, failed to report income that he received from a $21 million Ponzi scheme on his federal tax returns. Davey was also convicted of securities fraud conspiracy, wire fraud conspiracy, and money laundering conspiracy.
Prosecutions of Fraudulent Tax Return Preparers
In 2014, the U.S. Attorney’s Office also prosecuted unscrupulous tax return preparers. The following defendants are among those prosecuted federally for tax return preparer fraud:
- Nkhenge Shropshire (3:13-cr-00248), of Charlotte, and owner of Tax Connections, was sentenced to 33 months in prison following her guilty plea to conspiracy to defraud the IRS and making a false statement on a loan application. For tax years 2009 through 2011, N. Shropshire aided and assisted in the preparation of more than 600 fraudulent tax returns filed with the IRS, resulting in tax losses of more than $580,000.
- Jessica Ordonez (3:14-cr-00071), a resident of Gaston County, N.C. and owner of Tax Pros, (a/k/a Ordonez Tax Services), located in Gastonia and Morganton, pleaded guilty to preparing fraudulent tax returns falsely claiming more than $200,000 in Additional Child Tax Credits. Ordonez also pleaded guilty to filing false tax returns in her own name. Ordonez is scheduled to be sentenced on March 25, 2015.
- Malik Shropshire (3:15-cr-00025), of Charlotte, was indicted in February 2015 on multiple charges, including conspiring with others to prepare hundreds of false tax returns with the IRS that included, among other things, false Schedule C businesses, false dependents, and false refundable education credits.
Prosecutions of Stolen Identity Refund Fraud
In addition to prosecuting tax evaders and fraudulent tax return preparers, the U.S. Attorney’s Office prosecuted individuals for stealing the identities of taxpayers and filing fraudulent tax returns. Jacquline Juarez (3:13-cr-00157), was sentenced to 18 months in prison and ordered to pay restitution of more than $1 million for her role in a fraudulent tax refund scheme involving the use of fraudulent IRS Individual Taxpayer Identification Numbers (ITIN) to obtain false tax refunds.
Federal penalties for each count of conviction of tax crimes range from a maximum of one year in prison and a $100,000 fine for failure to file a tax return, false withholding exemptions, and delivering or disclosing false tax documents, to a maximum of 10 years in prison and a $250,000 fine for conspiracy to defraud with respect to false refund claims. Other penalties include a mandatory term of two years in prison and a $250,000 fine for aggravated identity theft charges, three years in prison and a $250,000 fine for obstructing or impeding an investigation and filing or preparing a false tax return, and a maximum of five years in prison and a $250,000 fine for tax evasion, failure to pay taxes, conspiracy to commit a tax offense or conspiracy to defraud.
The U.S. Attorney’s Office and the IRS remind tax payers to exercise caution during tax season to protect themselves against a wide range of tax schemes ranging from identity theft to return preparer fraud. The IRS has issued its annual “Dirty Dozen” which lists common tax scams that taxpayers may encounter, particularly during filing season. Taxpayers are urged look out for, and to avoid, the following common schemes:
- Phone Scams
- Phishing
- Identity Theft
- Return Preparer Fraud
- Offshore Tax Avoidance
- Inflated Refund Claims
- Fake Charities
- Hiding Income with Fake Documents
- Abusive Tax Shelters
- Falsifying Income to Claim Credits
- Excessive Claims for Fuel Tax Credits
- Frivolous Tax Arguments
Education is the best way to avoid these common schemes.To learn more about the Dirty Dozen scams and for help with recognizing and avoiding abusive tax schemes, the IRS offers educational material at www.irs.gov. Suspected tax fraud can be reported to the IRS using Form 3949-A found on the IRS.gov website.
Memphis Woman Pleads Guilty to Preparing Falsified Income Tax ReturnsRead the Press Release
Memphis, TN – A Memphis woman pleaded guilty this afternoon in federal court to preparing falsified federal income tax returns.
Telska Pollard, 41, of Memphis, TN pled guilty to a three-count information charging her with aiding and assisting with the preparation of false federal income tax returns.
According to the court documents, during April 2009, Pollard aided and assisted taxpayers in preparing and filing fraudulent 2008 U.S. Individual Income Tax Returns. The false returns prepared by Pollard contained certain deductions and expenses on Forms Schedule C, Profit or Loss from Business, that she knew the tax payers were not entitled to claim in order to generate a larger income tax refund.
Pollard pleaded guilty before United States District Judge S. Thomas Anderson, who is scheduled to sentence Pollard on June 25.
This case was investigated by the Internal Revenue Service – Criminal Division. The government’s case is being prosecuted by Assistant U.S. Attorney David Pritchard.
Memphis Tax Preparer Sentenced to 18 Months in Federal Prison for Filing Falsified Income Tax ReturnsRead the Press Release
Memphis, TN – The operator of Tara’s Tax Preparation Service has been sentenced to 18 months in federal prison for conspiring to defraud the Internal Revenue Service by filing false and fictitious income tax returns. There is no parole in the federal prison system.
Tara L. Mitchell, 42, of Cordova, TN was sentenced this afternoon by United States District Court Judge S. Thomas Anderson. Mitchell pled guilty on October 8, 2014 to conspiring to defraud the United States by receiving money for filing false income tax returns.
According to court documents, Mitchell owned and operated a tax return preparation business in Memphis in 2009. Mitchell prepared federal income tax returns that contained a combination of false, misleading and inaccurate statements in order to generate a larger income tax refund.
A number of the false returns prepared by Mitchell would contain two tax credits to increase the amount of income tax refund: the Earned Income Credit and the First-Time Home Buyers Tax Credit. In order to be eligible for the First-Time Home Buyers Tax Credit a tax payer had to meet certain requirements, one of them being that the home must be purchased after April 8, 2008 and before December 1, 2009. In several instances, the income tax returns prepared by Mitchell included the First-Time Home Buyers Tax Credit when the tax payer had not purchased a home during the required period.
Other false items contained in Mitchell’s prepared tax returns included Schedule C Income and Loss statements containing false information; the listing of dependents that the tax payer was not entitled to claim; false claims of Head of Household status; and false wage information.
Mitchell, who did not have an Electronic Filing Identification Number (“EFIN”) to file the income tax returns electronically, paid a fee to use the EFIN of another tax preparer.
Co-defendant Derrick M. Evans, 43, of Marion, Arkansas, who was sentenced in January 2015, would recruit tax payers for Mitchell, and on two separate occasions provided identity information that was used by Mitchell to prepare false income tax returns.
Once the tax return was completed and filed by Mitchell, a check for a Refund Anticipation Loan would be printed. Evans would then transport the tax payer to Memphis to sign the Refund Anticipation Loan check and Mitchell would pay that individual a portion of the proceeds in cash and deposit the remainder of the tax refund in a bank account she controlled.
Mitchell prepared approximately 13 false tax returns for the 2009 tax year. The IRS has determined that the tax loss attributable to the 2009 tax returns totals nearly $113,227, which Mitchell was ordered to repay as restitution to the IRS.
In addition to the prison sentence, U.S. District Judge S. Thomas Anderson order Mitchell to serve three years of supervised release and barred her from participating in the business of preparing tax returns while she is serving her sentence.
This case was investigated by the Internal Revenue Service – Criminal Division. The government’s case was prosecuted by Assistant U.S. Attorney Joseph Murphy, Jr.
Member of Las Cruces-Based Prescription Drug Trafficking Ring Sentenced to Federal PrisonRead the Press Release
ALBUQUERQUE – Kyle Mendenhall, 21, of Las Cruces, N.M., was sentenced today in Las Cruces federal court to 18 months in prison followed by three years of supervised release for his prescription drug trafficking conviction.
Michael Garret Schavier, 31, Juan Rubalcava, 41, Michael Frye, 26, Shane Smolik, 27, Carlos Teran, 31, and Kristopher Hollingshead, 25, all of Las Cruces, N.M., were charged in a 14-count indictment that was filed by a federal grand jury in Las Cruces on Dec. 13, 2012. The indictment alleged that between Dec. 2011 and May 2012, the defendants conspired illegally to distribute Oxycodone and Adderall Doña Ana County, N.M. The indictment also charged members of the conspiracy with possession of Oxycodone and Adderall with intent to distribute.
According to the indictment, the defendants used fraudulent prescriptions to obtain Oxycodone, a painkiller, and Adderall, a stimulant, from pharmacies in Las Cruces and Alamogordo, N.M. The indictment alleged that, during a six-month period, the defendants fraudulently obtained an aggregate of 2,691 pills of Oxycodone (30 mg), 120 pills of Oxycodone (15 mg), and 390 pills of Adderall (30 mg), with the intention of unlawfully distributing the pills.
Mendenhall pled guilty on Dec. 27, 2013, to one count of conspiracy, one count of distributing Oxycodone and three counts of distributing Oxycodone and Adderall. He admitted that between May 3 and May 17, 2012, he obtained a total of 1,131 tablets of Oxycodone and 210 tablets of Adderall by passing fraudulent prescriptions at various pharmacies, often with the assistance of his codefendants Schavier and Rubalcava.
All eight defendants have entered guilty pleas:
- Rubalcava pled guilty on April 18, 2013, and was sentenced on Feb. 11, 2014, to 120 months in prison.
- Frye pled guilty on Jan. 22, 2014, and was sentenced on Aug. 25, 2014, to 12 months in prison.
- Smolik pled guilty on April 11, 2013, and was sentenced on Oct. 9, 2013, to 15 months in prison.
- Hollingshead pled guilty on April 18, 2013, and was sentenced on Sept. 23, 2013, to eight months in prison.
- Schavier pled guilty on Feb. 11, 2014, and Teran pled guilty on Feb. 3, 2014. Both are awaiting sentencing hearings, which have yet to be scheduled.
This case was investigated by the Tactical Diversion Squad of the El Paso Division of the DEA, the U.S. Marshals Service, U.S. Border Patrol, the Doña Ana County Sheriff’s Office and the Alamogordo Department of Public Safety. Assistant U.S. Attorney Amanda Gould of the U.S. Attorney’s Las Cruces Branch Office is prosecuting the case.
DEA’s Tactical Diversion Squads combine DEA resources with those of federal, state and local law enforcement agencies in an innovative effort to investigate, disrupt and dismantle those suspected of violating the Controlled Substances Act or other appropriate federal, state or local statutes pertaining to the diversion of licit pharmaceutical controlled substances or listed chemicals.
This case is being prosecuted pursuant to the New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative. The HOPE Initiative is a collaboration between the U.S. Attorney’s Office and the University of New Mexico Health Sciences Center that is partnering with the Bernalillo County Opioid Accountability Initiative with the overriding goal of reducing the number of opioid-related deaths in the District of New Mexico. The HOPE Initiative comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. The law enforcement component of the HOPE Initiative is led by the Organized Crime Section of the U.S. Attorney’s Office and the DEA in conjunction with their federal, state, local and tribal law enforcement partners. Targeting members of major heroin trafficking organizations for investigation and prosecution is a priority of the HOPE Initiative.
Marrero Woman Pleads Guilty to Theft of Hurricane Gustav Recovery FundsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that CAROLYN TREAUDO, age 54, of Marrero, pled guilty yesterday to theft of government funds. TREAUDO admitted to stealing approximately $94,840 from the Federal Emergency Management Agency during 2009 and 2010. The funds were administered by the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness under a program to return disaster-affected locations, including schools, to pre-disaster conditions by reimbursing expenses and paying replacement costs.
According to court documents, TREAUDO obtained the funds by making false representations in connection with a property associated with her non-profit organization, Conquering Word Christian Academy. TREAUDO represented that the location was a school prior to Hurricane Gustav, when, as she well knew, the location had not been registered as a school with the state prior to this disaster. TREAUDO also intentionally and repeatedly submitted claims for reimbursement of fictitious expenditures and for replacement of fictitious supplies. TREAUDO bolstered these claims with false invoices to make it appear as if she had spent funds on repairs and supplies when, as she well knew, these expenditures had not occurred.
TREAUDO faces up to ten years’ incarceration and a fine of up to $250,000. U.S. District Judge Kurt D. Engelhardt set sentencing for June 24, 2015.
U.S. Attorney Polite praised the work of the Department of Homeland Security - Office of Inspector General in investigating this matter and thanked the Louisiana Legislative Auditor for its assistance. Assistant U.S. Attorney Chandra Menon is in charge of this prosecution.
Manhattan U.S. Attorney and New York State Attorney General Announce $714 Million Proposed Settlement with the Bank of New York Mellon over Fraudulent Foreign Exchange Trading PracticesRead the Press Release
Bank Agrees to Terminate Employment Relationship with Responsible Executives
Preet Bharara, the United States Attorney for the Southern District of New York, Eric T. Schneiderman, the Attorney General for the State of New York, Thomas E. Perez, the U.S. Secretary of Labor (“DOL”), and Andrew J. Ceresney, Director of the Division of Enforcement for the Securities and Exchange Commission (“SEC”), announced today proposed settlements of civil lawsuits against and investigations of THE BANK OF NEW YORK MELLON (“BNYM” or the “Bank”) alleging that BNYM engaged in fraud and other misconduct when providing foreign exchange (“FX”) services to its customers. Specifically, BNYM agreed to pay a total of $714 million to settle lawsuits brought by the United States and New York State, private class action lawsuits brought by BNYM customers, and investigations by the SEC and DOL, all of which concern BNYM’s misconduct in connection with its standing instruction (“SI”) FX product. As part of the proposed settlement with the United States and the settlement with New York State, BNYM admits to and accepts responsibility for conduct alleged in the civil fraud lawsuits, including that contrary to representations to clients that it provided “best rates” and “best execution,” the Bank actually gave clients the worst reported interbank rates of the trading day. BNYM must terminate its employment relationship with certain executives with responsibilities related to the SI product, including DAVID NICHOLS (“NICHOLS”), who is a defendant in the United States’ lawsuit, and must reform its practices further to improve and increase the information provided to customers. NICHOLS also admits and accepts responsibility for conduct alleged in the United States’ complaint. The proposed settlement of the United States’ civil fraud lawsuit and proposed settlements of the customer class action lawsuits are subject to court approval. The United States submitted its proposed settlement to United States District Judge Lewis A. Kaplan today for review and approval.
Manhattan U.S. Attorney Preet Bharara said: “The Bank of New York Mellon’s custody clients, many of whom are public pension funds and non-profit organizations, trusted the Bank to be honest about the financial services it was providing and to deal with them fairly. BNYM and its executives, motivated by outsized profits and bonuses, breached this trust and repeatedly misled clients to believe that the pricing they were getting on foreign exchange was far better than it actually was. The Bank, after three years of litigation, has finally admitted what was always clear from the evidence – contrary to its various representations, including a claim of ‘best rates,’ the bank in fact gave clients prices at or near the worst interbank rates reported during the trading day. The bank repeatedly deceived its customers and is paying a heavy penalty for it. We will not hesitate to pursue and punish financial institutions and their executives who exploit their customer base to improve their bottom lines.”
Attorney General Schneiderman said: “Investors count on financial institutions to tell them the truth about how their investments are being managed. The Bank of New York Mellon misled customers and traded at their expense. Today’s settlement shows that institutions and individuals responsible for defrauding investors will be held accountable and will face serious consequences for their wrongdoing. This excellent outcome also shows what can be achieved when law enforcement agencies collaborate on an important matter such as this one.”
U.S. Secretary of Labor Thomas E. Perez said: “This case is a reminder that financial institutions charged with safeguarding retirement plan assets sometimes put the institution’s interests ahead of those of the investors they represent. Today’s settlement offers more proof that when they do so, we at the department along with our colleagues at federal and state agencies will hold them accountable.”
SEC Division of Enforcement Director Andrew J. Ceresney said: “BNYM misled registered investment company clients regarding its pricing of their foreign currency transactions. The bank said that it priced transactions according to ‘best execution standards’ and at market rates at the times of the trades, but in fact priced these transactions near the end of the day at or near the worst rates reported during the entire trading day.”
On October 4, 2011, the United States and New York State each filed civil fraud lawsuits against BNYM, one of the world’s largest custody banks, alleging that BNYM engaged in a scheme to defraud custodial clients who used BNYM’s FX services since at least 2001. The United States amended its complaint in 2012 to add as a defendant NICHOLS, a Managing Director at BNYM who had responsibilities with respect to BNYM’s representations to clients about the SI product.
The United States’ lawsuit was brought under the Financial Institutional Reform, Recovery and Enforcement Act of 1989 ("FIRREA”), which authorizes the United States to recover civil penalties for frauds involving or affecting financial institutions. This Office has pioneered the use of FIRREA to civilly prosecute financial institutions and their executives for engaging in fraud. Judge Kaplan issued a landmark decision in April 2013 endorsing the Government’s use of FIRREA in this case to pursue a financial institution for engaging in fraudulent conduct affecting its own federally insured deposits by putting them at risk. Two other Southern District of New York judges have followed Judge Kaplan’s decision in other financial fraud cases brought by this Office.
New York State’s lawsuit was brought pursuant to the Martin Act, which permits the State to seek damages and other relief for fraud.
As outlined in the lawsuits, BNYM offers FX services to its custodial clients, for whom it holds domestic and international financial assets, including currency. In particular, BNYM offers the SI product, pursuant to which BNYM automatically provides currency exchange on an as-needed basis when, for example, the client buys or sells foreign assets.
The complaints allege that BNYM provided its clients with very limited information about how it determined what currency exchange rates or prices would be used for standing instruction FX, and that what little information BNYM did provide to clients about pricing was false, incomplete, and/or misleading. For example, the complaints allege that BNYM’s FX executives, including NICHOLS, misled clients by representing that the product offered “best execution,” which is commonly understood to mean that the client receives the best available market price at the time that the currency trade is executed. As explained in the complaints, instead of providing clients with the most favorable prices available at the time the trades were executed, BNYM actually gave its SI clients the worst prices -- ones at the outer margins of the interbank daily range. According to the complaints, BNYM generated enormous profits based on the difference or “spread” between the actual interbank rate at the time of execution and the less favorable rates it gave to SI clients.
In January 2012, the United States entered into a partial settlement with BNYM resolving the Government’s injunctive claims and requiring the Bank to reform its business practices. In particular, BNYM was required, among other things, to disclose how SI transactions were priced, to make certain pricing data available to custodial clients, and to stop describing the SI product as “free” or claiming that it offered “best execution.”
Pursuant to the proposed settlements and other agreements, BNYM will pay a total of $714 million, of which $335 million will collectively be paid to the United States and New York State. Pursuant to the proposed settlement with the United States, BNYM will pay a civil penalty of $167.5 million. BNYM will similarly pay $167.5 million to the State of New York, nearly all of which will be directed to a fund that will compensate BNYM’s customers who were victims of BNYM’s misconduct. Two New York State agencies – the New York State Deferred Compensation Plan and the State University of New York (“SUNY”) – were among the victims and will be compensated for their losses.
BNYM will also pay $335 million to resolve private class action lawsuits filed by the Bank's customers.
To resolve DOL’s claims under the Employee Retirement Income Security Act (“ERISA”), BNYM will pay $14 million to the Bank’s ERISA plan customers (in addition to approximately $70 million that will be distributed to ERISA plan customers through the other settlements).
The SEC’s Division of Enforcement has reached a preliminary agreement with BNYM to recommend to the Commission a settlement of the SEC’s investigation concerning BNYM’s SI product. The settlement will include an administrative order finding that, in violation of Sections 31(a) and 34(b) of the Investment Company Act, BNYM prepared and provided its registered investment company clients with trade confirmations and monthly transaction reports that were misleading in light of the representations made because they did not specify the time the standing instruction transactions were executed or provide information about how specific rates were assigned. The proposed settlement is subject to finalization, review and approval by the Commission. Under the terms of the proposed settlement, BNYM will pay $30 million to the SEC.
In connection with the proposed settlements of the United States’ lawsuit and the settlement of New York State’s lawsuit, BNYM admits, acknowledges, and accepts responsibility for committing conduct alleged in the federal and state complaints, including the following:
How BNYM Priced Standing Instruction Foreign Exchange Transactions
1) If the client was purchasing foreign currency, the client received a price at or close to the highest reported interbank rate for that day or session (at or near the least favorable interbank price for the client reported during the trading day or session), and if the client was selling foreign currency, the client received a price at or close to the lowest reported interbank rate of the day or session (also at or near the least favorable interbank price for the client reported during the trading day or session).
2) Because SI clients received pricing at or near the high end of the reported interbank range for their currency purchases and at or near the low end of the reported interbank range for their sales, the Bank was generally buying low from, and selling high to, its own clients. The Bank recorded the difference or “spread” between the rates it gave clients and the interbank market price at the time the SI transactions were priced as “sales margin.”
BNYM’s Representations to Its Clients
1) The Bank made numerous representations to existing and potential clients concerning the SI product, including:
(i) The service provided “benefits” to its clients, including “FX execution according to best execution standards.”
(ii) The Bank “ensures best execution on foreign exchange transactions through the following mechanisms: As a major market participant, the Bank is actively engaged in making markets and taking position in numerous currencies so that we can provide the best rates for our clients.”
(iii) “Understanding the fiduciary role of the fund manager, it is our goal to provide best execution for all foreign exchange executed in support of our clients’ transactions.”
(iv) “We price foreign exchange at levels generally reflecting the interbank market at the time the trade is executed by the foreign exchange desk.”
(v) The Bank’s “primary focus is on securing the best possible rates for our clients rather than on trading for the bank’s own account.”
BNYM Did Not Provide Its SI Clients with the Best Price
1) Contrary to the representations set forth above, including that BNYM offered “best rates,” the Bank gave SI clients prices that were at or near the worst interbank rates reported during the trading day or session.
2) The Bank generally did not disclose its SI FX pricing methodology discussed above to its custodial clients or their investment managers.
3) The Bank was aware that many clients did not fully understand the Bank’s pricing methodology for SI transactions.
4) The Bank was aware that many market participants equated “best execution” with best price, or considered best price to be one of the most important factors in determining best execution.
As part of the proposed settlement with the United States, NICHOLS also admits, acknowledges and accepts responsibility for conduct alleged in the United States’ complaint, including the following:
1) From 2002 through 2011, NICHOLS was a Managing Director at the Bank who, among other duties, participated in the drafting and dissemination of the Bank’s description of “best execution” and the SI product. The description was disseminated to certain existing and prospective custody clients through responses to requests for proposals (“RFP”) and in other communications, and included the following statements:
(i) “Understanding the fiduciary role of the fund manager, it is our goal to provide best execution for all foreign exchange executed in support of our clients’ transactions.”
(ii) “Since The Bank of New York Mellon is one of the largest global custodians, our clients gain the ongoing benefit of aggregation of transactions across our broad customer base; accordingly, we price foreign exchange at levels generally reflecting the interbank market at the time the trade is executed by the foreign exchange desk.”
(iii) “Best execution encompasses a variety of services designed to maximize the proceeds of each trade, while containing inherent risks and the total cost of processing.”
2) NICHOLS had oversight of the Global Markets website and approved the content, which included the following statement: the Bank’s SI clients “benefit from . . . FX execution according to best execution standards.”
3) NICHOLS understood how the Bank priced SI transactions and also knew:
(i) The Bank generally did not disclose its SI FX pricing methodology discussed above to its custodial clients or their investment managers.
(ii) Many clients did not fully understand the Bank’s pricing methodology for SI transactions.
(iii) Many market participants equated “best execution” with best price, or considered best price to be one of the most important factors in determining best execution.
As part of the proposed U.S. and State settlement, BNYM must terminate its employment relationship with executives involved in the conduct alleged in the lawsuit, including NICHOLS. BNYM must also make further reforms to its business practices by providing clients additional pricing information about new standing instruction services BNYM currently offers to clients.
Mr. Bharara thanked the New York Attorney General's Office as well as counsel for the private litigants with whom this Office cooperated to litigate the multiple FX cases against the Bank and bring them to a successful conclusion.
The United States' FIRREA lawsuit arose in part from a whistleblower who filed a declaration pursuant to FIRREA.
The United States’ case has been handled by the Office's Civil Frauds Unit. Mr. Bharara established the Civil Frauds Unit in March 2010 to bring renewed focus and additional resources to combating financial fraud.
Assistant U.S. Attorneys Pierre G. Armand, Lawrence H. Fogelman, Jeffrey K. Powell, and Arastu Chaudhury are in charge of the case.
U.S. v. Bank of New York Mellon et al. Stipulation & Settlement
Man Sentenced to Serve A Total of Five Years in Federal Prison for Theft of Public Funds and Aggravated ID TheftRead the Press Release
DALLAS — A man who admitted to federal felony offenses stemming from his conspiracy to obtain tax refunds by filing fraudulent tax returns using stolen names and Social Security information was sentenced yesterday, announced John Parker, Acting U.S. Attorney for the Northern District of Texas.
Roberto Boris Fernandez was sentenced by U.S. District Judge Ed Kinkeade to a total of 60 months in federal prison and ordered to pay $466,405 in restitution to the IRS. Fernandez pleaded guilty in November 2014 to one count of conspiracy to commit theft of public funds and one count of aggravated identity theft. Specifically, Judge Kinkeade sentenced him to 36 months on the conspiracy conviction and 24 months on the identity theft conviction, to run consecutively.
According to the factual resume filed, during January 2012, Fernandez conspired with others to engage in a scheme to obtain tax refunds by electronically filing fraudulent income tax returns using stolen names and social security information. The returns falsely represented that the taxpayers were entitled to a refund because of a falsely created Earned Income Credit. The returns were filed through Turbo Tax, an online tax preparation service, and directed the IRS to deposit the refunds onto Turbo Tax debit cards that were mailed to coconspirators’ addresses. Fernandez and the coconspirators used the debit cards at automatic teller machines (ATMs) to withdraw cash.
In fact, according to the factual resume filed, for several hours during the evening and early morning hours of January 30-31, 2012, Fernandez and another co-conspirator traveled in a limousine Fernandez had rented to conduct multiple withdrawals from the Turbo Tax debit cards at various ATMs. However, the Little Elm Police Department stopped the limousine for a traffic violation. At the time, Fernandez was the sole passenger. While searching the limousine, officers seized Fernandez’s backpack, a cell phone, an air card, several Turbo Tax envelopes and debit cards, $8,295 in cash, and ATM receipts. Inside the backpack, officers found handwritten personal identifying information (PII) for approximately 200 individuals, together with notations as to refund amounts, personal identification numbers (PINs), and dates on which refunds were expected. Eight additional unopened Turbo Tax envelopes containing Turbo Tax debit cards issued in third party names were also found in the backpack.
IRS Criminal Investigation, according to the factual resume, identified 84 fraudulent income tax returns for the 2011 tax year with refund claims totaling $435,219 that were associated with the debit cards and identifying information located in the backpack.
IRS Criminal Investigation investigated. Assistant U.S. Attorney Christopher Stokes prosecuted the case.
Man Convicted in Holiday Shooting of Dorchester Postal CarrierRead the Press Release
BOSTON – Following a two-week trial, a federal jury convicted a Dorchester man yesterday in connection with the shooting, robbing, and kidnapping of a U.S. Postal letter carrier days before Christmas in 2013.
Keyon Taylor, 22, was found guilty of assault on a federal employee, robbery of a U.S. Postal worker, kidnapping, attempted kidnapping, and use of a firearm in a crime of violence. Taylor and a co-defendant Maurice Williams Miner-Gittens, 24, also of Dorchester, were charged in January 2014. Gittens pleaded guilty to robbery and conspiracy, and possession of a firearm in February 2015.
On Dec. 20, 2013, Taylor and Gittens rented a U-Haul van and followed a U.S. Postal delivery truck as a letter carrier was delivering holiday packages. When the letter carrier returned to his truck after making a delivery, Taylor confronted him with a gun pointed inches away from his head and demanded his wallet. While handing Taylor his wallet, the victim tried to move the gun away from his temple and was shot. The bullet entered his wrist, shattering a bone, and lodging in his forearm.
Taylor then repeatedly demanded the “drawer,” presumably in reference to a cash drawer. When the letter carrier told Taylor that the truck had no cash drawer, Taylor repeatedly pistol-whipped him. Taylor struck the victim so hard that a piece of the pistol grip broke off. Taylor then ordered the letter carrier into the back of the truck, and continued to beat him. He demanded the keys to the postal truck and the letter carrier’s postal uniform which Taylor then used to try to wipe up some of the victim’s blood.
Taylor, who was partially disguised, told the letter carrier not to look at him and threatened to kill him if the carrier did so. Moments later, frightened for his life, the letter carrier jumped out of the moving postal truck through the back cargo door. At the time, Taylor had carjacked the postal truck with the bleeding carrier inside. The victim ran for his life, in long johns and stocking feet. Civilians in the area provided assistance and called the police.
While the assault took place, Gittens was in the U-Haul van right behind the postal truck. In fact, Gittens got out and was directing traffic around the van and postal truck while Taylor was assaulting the letter carrier and then followed closely in the U-Haul van when Taylor drove off in the postal truck.
When the letter carrier jumped out of the postal truck, Taylor lost control of the truck, drove up onto the sidewalk and crashed the truck into a snowbank. Taylor then fled through four backyards, carrying the victim’s pants and vest, as well as the revolver. His flight path, which led to two chair link fences, was marked by a trail of boot prints in the snow. While jumping over one of the fences, Taylor punctured his hand leaving blood and a piece of a purple nitrile glove on the top of the fence. He also left more blood on a second fence and on the handle of a recycling bin. The blood was matched to Taylor by DNA analysis. Taylor dumped the victim’s pants and vest in the bin; further DNA analysis showed that both the letter carrier and Taylor had bled on the uniform. The victim’s blood was also found on a black jacket which Taylor wore. The jacket was recovered days later from a coat closet outside Taylor’s mother’s house in Attleboro, some 34 miles away from where the shooting took place.
Around 10:00 p.m. on the night of the robbery, Gittens was stopped in the U-Haul van. Inside were two pairs of purple nitrile gloves that matched the one found on the fence along Taylor’s escape path. On the outside of the van was a smear of the victim’s blood.
The charge of assault on a federal employee provides for a sentence of no greater than 25 years in prison and five years of supervised release.The charge of robbery of a U.S. Postal Worker provides for a sentence of no greater than 25 years in prison and three years of supervised release.The charge of kidnapping and attempted kidnapping provides for a sentence of no greater than life in prison and five years of supervised release.The charge of conspiracy provides for a sentence of no greater than five years in prison and three years of supervised release.For Taylor, the charge of use of a firearm in a violent crime provides for a mandatory minimum sentence of 10 years and three years of supervised release.Each charge also provides for a fine of no greater than $250,000.
U.S. Attorney Carmen M. Ortiz; Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service; and Boston Police Commissioner William Evans, made the announcement today. The U.S. Attorney’s Office wishes to thank the Boston Police Department’s Forensic Crime Laboratory for their exceptional assistance in analyzing forensic evidence. The case was prosecuted by William F. Bloomer and Thomas E. Kanwit of Ortiz’s Major Crimes Unit.
Mississippi Man Pleads Guilty to Assault with Intent to MurderRead the Press Release
Jackson, Miss –Ruben Cruz, 24, from Philadelphia, Mississippi, pled guilty today before Senior U.S. District Judge David C. Bramlette III to assault with the intent to commit murder and use of a firearm during a crime of violence, U.S. Attorney Gregory K. Davis announced.
Cruz admitted to his participation in the shooting of an individual in the Pearl River Community of the Choctaw Indian Reservation. The shooting occurred on June 1, 2014. Cruz will be sentenced by Senior U.S. District Judge David C. Bramlette III on July 14, 2015 and faces a maximum penalty of thirty years in federal prison and a $500,000 fine.
Luzerne County Man Pleads Guilty to Drug Trafficking and Illegal Gun PossessionRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that a 32-year-old Kingston man pleaded guilty today before U.S. District Court Judge Malachy E. Mannion in Scranton, to distributing Oxycontin (oxycodone) and unlawfully possessing a firearm as an illegal drug user.
According to United States Attorney Peter Smith, the defendant, Shawn Jenks, age 32, admitted to unlawfully possessing the firearm during September through November 2014, while he was also using heroin, and illegally distributing Oxycontin pills on November 22, 2014, in Luzerne County.
Jenks was charged in a criminal Information filed by the United States Attorney on March 17, 2015. The charges stem from an investigation by special agents of the Federal Bureau of Investigation and Kingston Police.
Judge Mannion ordered a pre-sentence investigation by the U.S. Probation office. Sentencing will be scheduled after the completion of that investigation.
Assistant U.S. Attorney Francis P. Sempa is prosecuting the case.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is 20 years imprisonment and a $1 million fine for the drug charge, and 10 years imprisonment and a $250,000 fine for the gun charge. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
Leader of Large Drug Conspiracy in Northern Kentucky ConvictedRead the Press Release
COVINGTON — The leader of a massive drug conspiracy that distributed large quantities of heroin and marijuana in northern Kentucky and southern Ohio has been convicted by a jury of multiple drug charges and other related offenses.
On Thursday, March 12, a federal jury convicted Alberto Lara-Chavez, 45, of Planada, Calif., of conspiracy to distribute 100 grams or more of heroin and 100 kilograms or more of marijuana, distribution of heroin and marijuana, possession of a firearm in furtherance of drug trafficking, possession of a firearm by an illegal alien, conspiracy to launder money, and engaging in a continuing criminal enterprise.
Felix Agundiz-Montes, 30, of Walton, Ky., was also convicted, of conspiracy to distribute 100 grams or more of heroin and 100 kilograms or more of marijuana, attempted distribution of marijuana, and conspiracy to launder money; and Jose Alberto-Lara, 23, of Planada, Calif., was convicted of conspiracy to distribute 100 kilograms or more of marijuana.
The jury returned the verdict after nine days of trial. The evidence established that from October 2012 through May 16, 2014, the defendants were members of a larger group that conspired to distribute heroin and marijuana in Kenton, Boone, Campbell, Gallatin, and Grant Counties in Kentucky as well as Hamilton, Brown, and Clermont counties in Ohio.
Evidence at trial established that the group shipped marijuana to this area from Texas and California and operated a large marijuana field in Sardinia, Ohio. The group brought heroin to this area from Columbus, Ohio for distribution. Evidence and court records showed that many of the members of the group were not legally present in the United States and had been brought here by other conspiracy members to sell narcotics. Many of them possessed firearms to protect the drugs and drug proceeds. The leaders of the group conspired to launder funds from the drug operation through bank deposits, wire transfers, and casino activity.
Lara-Chavez was the leader of the group and directed its local activities. Group members identified themselves as associates of a Mexican drug cartel.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Joseph Reagan, Special Agent in Charge, Detroit Field Division, Drug Enforcement Administration, jointly made the announcement.
The investigation was conducted by the Drug Enforcement Administration, the United States Postal Investigation Service, and the Internal Revenue Service. The United States was represented in the trial by Assistant United States Attorneys Tony Bracke and Jason Denney.
The defendants are scheduled to appear for sentencing before Judge Amul Thapar, in Covington, on July 1, 2015. Lara-Chavez faces a potential sentence of life imprisonment. Agundiz-Montes and Alberto-Lara face a maximum sentence of 40 years in prison. However, the sentences will be imposed by the court after consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of sentences.
Lansing Man Sentenced to 12 Months in Prison for Defrauding the Government of More Than $46,000Read the Press Release
Ahmad Elbast Lied that He Was Caring for His Father to Receive Benefits
for Over Six Years after His Father Had Returned to his Native LebanonGRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick A. Miles, Jr. announced today that Ahmad Jamil Elbast of Lansing, Michigan was sentenced to 12 months in prison for Supplemental Security Income (“SSI”) representative payee fraud. Elbast was also ordered to pay restitution of $46,625. Following Elbast’s release from prison, he will serve a 36-month term of supervision by the Court. Elbast pleaded guilty to the charge before U.S. District Judge Robert J. Jonker on October 1, 2014.
Ahmad Elbast’s father qualified for Supplemental Security Income benefits and Ahmad Elbast served as his father’s representative payee starting in April 2006, promising to accept the payments on his father’s behalf. In fact, Elbast’s father left the country in March 2006, but Ahmad Elbast continued to certify that his father lived with him and that the SSI payments were being used to care for his father. Elbast’s fraud cost the taxpayers approximately $46,625.
The case was investigated by the Social Security Administration’s Office of Inspector General. Assistant U.S. Attorney Clay M. West prosecuted the case.
Land bank defendants found guilty in fraud schemeRead the Press Release
City employees received kickback payments for assisting in fraudulent land deals
PRESS RELEASE
INDIANAPOLIS – United States Attorney Josh J. Minkler, announced this morning the conviction of two defendants who were involved in a fraud scheme at the Indianapolis Land Bank. Reginald T. Walton 31, and David Johnson 48, both of Indianapolis were found guilty of multiple fraud and bribery charges after a two-week jury trial before U. S. District Judge William T. Lawrence.
“Public servants must understand that they serve the public and not themselves,” said Minkler. “Mr. Walton tried to sell our local government in Indianapolis through a scheme involving power, secrecy and greed. Our local government is not for sale and this verdict sends that message.”
The purpose of the Indianapolis Land Bank is to acquire abandoned and tax delinquent properties in Indianapolis and return them to productive and economically viable use. Properties are made available for sale to non-profit and for-profit real estate developers. For-profit investors interested in purchasing real estate from the Land Bank must pay at least the appraised value of the property. Non-profit purchasers, however, may bypass the auction process, purchasing real estate for a price between $1,000 and $2,500 per parcel, regardless of the appraised value of the property.
Walton and Johnson accepted bribes and “kick-backs” to facilitate fraudulent property sales to non-profit entities that would then sell the property to for-profit businesses. After these “pass-through” transactions had taken place, Walton and Johnson would receive kickback payments from the non-profit organizations from the proceeds of the property sales. The investigation into the pair also included the use of an undercover agent, and Walton accepted $500 from that agent in return for his agreement to fraudulently transfer at least ten parcels of land to the agent for $1,000 each.
“This type of fraud poses a fundamental threat to our way of life,” said FBI Special Agent in Charge W. Jay Abbott. “It takes a significant toll on resources, wasting billions in tax dollars every year. Citizens are owed integrity at all levels of government. The FBI is committed to pursuing those individuals who violate the public’s trust.”
“When a public official violates the trust of the citizens they are charged to serve, as was the case with Reggie Walton, it disparages the service and sacrifice of all government employees,” said Indiana State Police Superintendent Doug Carter. “The four years of investigative work put forth by state police Det. Shank helps restore lost faith and clearly conveys that criminal acts by public servants will be vigorously investigated, vigorously prosecuted and the guilty will be appropriately punished.”
Three other defendants have pleaded guilty in this case and are awaiting sentencing. They include Aaron Reed, John Hawkins and Randall Sargent.
Today’s indictment comes as the U.S. Attorney’s Office has prioritized the investigation and prosecution of fraud, waste and abuse on the part of public officials and those in positions of trust. As part of this effort, in 2012 the Office created a Public Integrity Working Group to assist in the investigation and prosecution of cases involving public corruption and white collar crimes. This case is the result of an investigation by the Federal Bureau of Investigation and the Indiana State Police, both active members of the Working Group.
According to Special Litigation Counsel Bradley A. Blackington and Cynthia Ridgeway, who prosecuted this case for the government, wire fraud charges carry a maximum penalty of twenty years in prison, and the bribery-related charges carry a maximum penalty of ten years in prison.
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Kirkland Resident Sentenced for Interstate Threats to KillRead the Press Release
A Kirkland, Washington resident was sentenced today in U.S. District Court in Seattle to two months in prison, announced Acting U.S. Attorney Annette L. Hayes. JALEEL TARIQ ABDUL-JABBAAR, 46, was arrested December 2, 2014, after he made threats on Facebook against a former Ferguson, Missouri Police Officer. ABDUL-JABBAAR pleaded guilty on February 2, 2015 and was released from custody. At sentencing U.S. District Judge Robert S. Lasnik recognized that everyone involved in the case has worked hard to obtain a just outcome that ensures public safety. Judge Lasnik noted that the U.S. Supreme court is considering a case concerning Facebook threats. “It is an area of the law that is in a state of flux,” Judge Lasnik said. Judge Lasnik emphasized that ABDUL-JABBAAR had to comply with a series of conditions as part of his court supervision and specifically ordered that ABDUL-JABBAAR’s internet use be monitored by probation and law enforcement during his three year term of supervised release.
According to records in the case, ABDUL-JABBAAR started posting threats on his Facebook page shortly after the August 9, 2014 shooting of Michael Brown. The threats continued through late November. ABDUL-JABBAAR posted various statements about killing police officers and traveling to Ferguson, Missouri. Among others, ABDUL-JABBAAR stated: “We need to kill (the officer) and anything that has a badge on.” ABDUL-JABBAAR also used Facebook communications to discuss acquiring a firearm.
The case was investigated by the FBI and was prosecuted by Assistant United States Attorney Todd Greenberg.
Justice Department Highlights Ongoing Efforts to Protect the Public and the Fisc from Fraudulent Tax Return Preparers and Tax Scheme PromotersRead the Press Release
During this tax-filing season, the Justice Department announced today the results of its ongoing efforts to combat fraudulent tax return preparers and promoters of tax fraud schemes. The department’s Tax Division has an active program to stop fraudulent return preparers and promoters from violating federal tax laws, particularly where the fraudulent activity can harm individual customers or drain the U.S. Treasury.
According to available Internal Revenue Service (IRS) statistics, taxpayers filed approximately 145 million individual income tax returns in 2014, with more than 84 million individuals using a paid tax return preparer. The division’s civil enforcement efforts have been directed against both large-scale return preparation franchises and smaller, independent return preparers and promoters. Last year, the Tax Division obtained permanent injunctions against more than 40 preparers, promoters and businesses operating all over the United States.
“In 2014, the Tax Division continued its pursuit of tax return preparers and promoters who violate the tax laws through abusive schemes and scams, and take advantage of their customers,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Tax Division. “The division’s attorneys and staff, along with our colleagues in the IRS, are committed to identifying, enjoining, and where appropriate, prosecuting those individuals who engage in such conduct.”
Preparers
As in past years, the IRS has again designated return preparer fraud as one of the “Dirty Dozen” tax scams to avoid during return filing season. The Tax Division took action in 2014 against preparers to curb some of the most common types of return preparation fraud:
Your refund should never be deposited directly into a preparer’s bank account.
In United States v. Nevers (E.D. La), the court barred a return preparer from preparing returns after she deposited refunds into her own account and took a cut before remitting the balance to customers, among other things.
Do not use a preparer who is willing to electronically file your return using your last pay stub instead of your W-2.
In United States v. Instant Tax Service, et al. (S.D. Ohio) the Court of Appeals for the Sixth Circuit affirmed the favorable district court judgment that shut down ITS Financial LLC, because of its pay stub filing and other predatory and fraudulent practices. Before being shut down, the Instant Tax Service franchise claimed it was the fourth largest tax-return-preparer franchisor in the United States. In affirming the district court’s relief, the Sixth Circuit noted “that Congress provided a broad grant of authority” to stop predatory and other harmful tax preparation practices.
Do not use a preparer who fabricates business expenses or deductions, or who claims bogus credits you may not be entitled to claim (i.e. Earned Income Tax Credit (EITC), child care, education credits).
The Tax Division secured injunctions in many cases, including United States v. Almanza (E.D. Pa.) in which the preparer claimed bogus additional child tax credit on returns and United States v. Branson (S.D. Miss.) in which the preparer claimed false EITCs and education credits. In Branson, more than 99 percent of the 2,400 returns prepared sought a refund, and 97 percent of the returns audited understated the customer’s tax liability by an average of $5,000.
Some other fraudulent schemes and practices that have been stopped through injunction orders entered by federal courts throughout the country include:
• preparing phony tax-return forms with fabricated businesses and income;
• claiming false education and homebuyer credits;
• claiming false and inflated deductions;
• claiming false filing status and false dependents;
• filing tax returns without customer consent or authorization;
• preparing bogus W-2 Forms based on information from employee paystubs;
• falsifying return information to claim inflated EITCs;
• preparing tax returns but failing to sign them as required; and
• defrauding customers by charging exorbitant fees.
Federal courts across the country — in Florida; Pittsburgh; Philadelphia; Memphis, Tennessee; Fresno, California; Waco and San Antonio, Texas; Montgomery, Alabama; New Orleans; Mississippi, and Georgia — have similarly stopped abusive tax return preparers from continuing their harmful conduct.
In September 2014, the division filed eight injunction suits in Florida to bar Walner G. Gachette, the founder of Orlando-based tax preparation company LBS Tax Services, seven LBS Tax Services franchisees and three LBS Tax Services managers from owning, operating or franchising a tax return preparation business and preparing tax returns for others. These cases also seek disgorgement from the defendants of the tax-preparation fees they charged their customers. According to the complaints, in 2013, LBS Tax Services operated at least 239 stores (192 owned by the named defendants) in Alabama, Georgia, Florida, Mississippi, North Carolina, South Carolina, Tennessee and Texas. In February 2015, a federal court in Orlando permanently barred two managers from preparing tax returns for others and from owning or operating a tax return preparation business.
Promoters
In addition to combating fraudulent return preparation, the division also filed suits in 2014 to enjoin promoters of fraudulent tax schemes, including Kenneth Elliott and Sea Nine Associates Inc., who promoted a purportedly legal welfare benefit plan. According to the division’s complaint, Elliott promoted plans that illegally permitted customers to claim substantial tax deductions for their plan contributions, then later access the full cash value of their plan contributions by taking out loans against the life insurance policies purchased with plan contributions, costing the U.S. Treasury in the process. The division obtained injunctions against Elliott and Sea Nine from promoting and selling the welfare benefit scheme.
In July 2014, the division filed suit in Chicago against Victor Crown and his various business entities to enjoin them from promoting false withholding and net-operating-loss tax schemes. According to the complaint, Crown prepares federal income tax returns and other documents that claim false amounts of income tax withheld from his customers’ earnings, and that they are entitled to claim bogus net-operating-losses because his customers sought, but did not receive, full award amounts for a separate class-action suit. Crown’s claims lack merit, according to the suit, because an employee is not entitled to claim an income tax withholding credit for more than the amount of income taxes actually withheld from their wages, and because nothing in the Internal Revenue Code permits a taxpayer to deduct the amount of a denied claim as a net operating loss.
In the past decade, the Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the division’s website.
As noted, in addition to the civil enforcement through injunctions that stop their illegal actions, many return preparers and promoters also face prosecution. Examples of those investigations can be found for fiscal years 2014 and 2015.
The IRS advises taxpayers who may select a tax professional to prepare their return to be careful in their selection. The IRS offers some basic tips and guidelines to assist taxpayers in choosing a reputable tax professional and is also offering taxpayers a number of instructional YouTube videos to help them prepare their own taxes for the upcoming filing season. Several options, including free assistance with preparation and electronic filing for the elderly and individuals making $50,000 or less, are available to help taxpayers prepare for the current tax season and receive their refunds as easily as possible.
Jury Convicts Cahokia Man of Possessing Cocaine with Intent to DistributeRead the Press Release
Antwon Jenkins, 27, of Cahokia, Illinois, was convicted of possession of cocaine with intent to distribute following a two day trial held in federal district court, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
Evidence showed that in late 2011 through early 2012, Jenkins had been in contact with another cocaine distributor and met with that cocaine distributor on January 28, 2012. Surveillance teams observed Jenkins leave the meeting, and an Illinois State Police trooper subsequently stopped Jenkins’ vehicle. A resulting search revealed Jenkins to be in possession of 81.5 grams of cocaine.
Jenkins faces up to twenty years in prison for this offense. Sentencing is scheduled for July 17, 2015. Jenkins had previously been convicted in 2014 by a federal jury for kidnapping and using or carrying a firearm during or in relation to the kidnapping. Jenkins was sentenced to a total of 308 months on that offense.
This case was investigated by the Drug Enforcement Administration. The case was prosecuted by Assistant United States Attorney Laura Reppert and Special Assistant United States Attorney Jonathan Drucker.
Illinois Woman Appears in Court on Charges of Providing Material Support to TerroristsRead the Press Release
St. Louis, MO – JASMINKA RAMIC of Rockford, Illinois, was arrested in Germany and extradited to the United States to face charges. She appeared in federal court earlier today in St. Louis for an initial appearance. She is set for an arraignment/detention hearing Monday, March 23, 2015.
The United States Attorney’s Office for the Eastern District of Missouri announced the indictment February 6 upon the arrests of the other five defendants on terrorist related crimes. Charged in the indictment are: Ramic, Ramiz Zijad Hodzic, his wife Sedina Unkic Hodzic, and Armin Harcevic, all of St. Louis County, Missouri; Nihad Rosic of Utica, New York; and Mediha Medy Salkicevic of Schiller Park, Illinois. All defendants are charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists. Ramiz Zijad Hodzic and Nihad Rosic are also charged with conspiring to kill and maim persons in a foreign country.
If convicted, the crimes of conspiring to provide material support carry penalties ranging up to 15 years imprisonment for each count and/or fines up to $250,000. The crime of conspiring to kill and maim persons in a foreign country carries a penalty of up to life in prison. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the St. Louis FBI’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), U.S. Postal Inspection Service, St. Louis Metropolitan and St. Louis County Police Departments, with assistance from multiple law enforcement agencies. The case is being prosecuted by Assistant U.S. Attorneys Matthew Drake, Howard Marcus and Kenneth Tihen of the Eastern District of Missouri and Mara Kohn, a Trial Attorney in the Counterterrorism Section of the Department of Justice.As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Illinois Woman Appears in Court on Charges of Providing Material Support to TerroristsRead the Press Release
St. Louis, MO – JASMINKA RAMIC of Rockford, Illinois, was arrested in Germany and extradited to the United States to face charges. She appeared in federal court earlier today in St. Louis for an initial appearance. She is set for an arraignment/detention hearing Monday, March 23, 2015.
The United States Attorney’s Office for the Eastern District of Missouri announced the indictment February 6 upon the arrests of the other five defendants on terrorist related crimes. Charged in the indictment are: Ramic, Ramiz Zijad Hodzic, his wife Sedina Unkic Hodzic, and Armin Harcevic, all of St. Louis County, Missouri; Nihad Rosic of Utica, New York; and Mediha Medy Salkicevic of Schiller Park, Illinois. All defendants are charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists. Ramiz Zijad Hodzic and Nihad Rosic are also charged with conspiring to kill and maim persons in a foreign country.If convicted, the crimes of conspiring to provide material support carry penalties ranging up to 15 years imprisonment for each count and/or fines up to $250,000. The crime of conspiring to kill and maim persons in a foreign country carries a penalty of up to life in prison. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the St. Louis FBI’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), U. S. Postal Inspection Service, St. Louis Metropolitan and St. Louis County Police Departments, with assistance from multiple law enforcement agencies. The case is being prosecuted by Assistant U.S. Attorneys Matthew Drake, Howard Marcus and Kenneth Tihen of the Eastern District of Missouri and Mara Kohn, a Trial Attorney in the Counterterrorism Section of the Department of Justice.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Houston Man Convicted in Brownsville of Importing MethamphetamineRead the Press Release
BROWNSVILLE, Texas – A federal jury has found Derrick Hargrove, 34, guilty on all four counts as charged related to the trafficking of 4.99 kilograms of methamphetamine, announced U.S. Attorney Kenneth Magidson. The verdict was returned today following three days of trial.
Hargrove, of Houston, was convicted of conspiracy to possess with intent to distribute, possession with intent to distribute, conspiracy to import and importation of methamphetamine.
The jury heard that Hargrove crossed from Mexico into the U.S. on Oct. 9, 2014, at the Gateway Port of Entry pedestrian lane with a suitcase. Upon inspection, a Customs and Border Protection (CBP) officer felt something in the suitcase, x-rayed it and observed two packages inside. A search revealed 4.99 kilograms of pure crystal methamphetamine.
Hargrove initially claimed ownership of the suitcase, but later claimed a stranger in Mexico gave it to him on the streets of Mexico. He claimed the stranger asked him to deliver the suitcase to a person he knew who was helping Hargrove get a liquor license for a nightclub he was allegedly opening in Matamoros.Hargrove is from Houston but had been living in Matamoros after losing his job.
U.S. District Judge Andrew S. Hanen, who presided over trial, set sentencing for June 22, 2015. At that time, Hargrove faces a minimum of 10 years and up to life in federal prison as well as a possible $10 million fine. He will remain in custody pending sentencing.
The case was investigated by Homeland Security Investigations and CBP. Assistant U.S. Attorneys Karen Betancourt and Justin Dinsdale prosecuted the case.
Guatemalan National Sentenced for Illegal ReentryRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ESWIN ESTUARDO MARTINEZ-REYES, age 42, a citizen of Guatemala, was sentenced today after previously pleading guilty to a one-count Bill of Information for illegal reentry of a removed alien.
U.S. District Judge Sarah S. Vance sentenced MARTINEZ-REYES to time served and a $100 special assessment. MARTINEZ-REYES will be surrendered to the custody of the U.S. Immigration and Customs Enforcement for removal proceedings.
According to court documents, MARTINEZ-REYES was found in the United States on December 2, 2014, after having been officially deported and removed on or about June 7, 2013.
U.S. Attorney Polite praised the work of the United States Department of Homeland Security, U.S. Border Patrol in investigating this matter. Assistant United States Attorney Spiro G. Latsis is in charge of the prosecution.
Garland County Jail Escapee Sentenced to 32 Years in Prison on Firearms Charges in Connection with Robbery and CarjackingRead the Press Release
Texarkana, Arkansas – Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that Derrick Estell, age 35, of Hot Springs, was sentenced today on two counts of Use of a Firearm in Furtherance of a Crime of Violence. Estell pleaded guilty on December 1, 2014 to charges in connection with a Bank Robbery that occurred in Hot Springs on March 1, 2013 and a Carjacking that occurred on March 7, 2013. Estell was sentenced on one count to 84 months in prison and on the other count to 300 months in prison; the sentences are to run consecutive for a total of 384 months. He was also sentenced to five years of supervised release on each count to run concurrent and was ordered to pay restitution in the amount of $12,478.00. The Honorable Susan O. Hickey presided over the sentencing hearing in The United States District Court in Texarkana.
U.S. Attorney Eldridge commented, “Armed and dangerous, this defendant terrorized multiple innocent victims during his reckless crime spree. Thanks to the dedicated work of several law enforcement agencies, he was apprehended and has now been held accountable for this criminal activity that threatened the Hot Springs community. Our office remains committed to ensuring that justice is served on behalf of all of the residents of the Western District of Arkansas by prosecuting violent crimes to the fullest extent of the law.”
"Estell is a criminal who terrorized and victimized people and businesses," stated Special Agent in Charge David T. Resch with the Little Rock Federal Bureau of Investigation, "He will now go to federal prison. This demonstrates the commitment between the United States Attorney, Garland County Sheriff’s Office, the Hot Springs Police Department, the ATF, and the FBI to work together and should send a strong message to anyone who would use intimidation and violence against the people of Arkansas.”
“We should all applaud the hard work of the investigators and deputies of the Garland County Sheriff’s Office in coordination with federal and state law enforcement agencies that Derrick Estell will spend a great deal of his life behind bars,” said Garland County Sheriff Mike McCormick. “The people of Garland County have spoken by saying that lawlessness will no longer be tolerated in their communities. His sentencing should send a message to other criminals that they will receive the same punishment if they plan to prey on the people of Garland County.”
According to court records, on March 1, 2013, Estell, wearing a dark colored hooded sweatshirt, a black ski mask, brown gloves and brandishing a small dark revolver, entered the Hot Springs Bank & Trust in Hot Springs, Arkansas and pointed the firearm at a customer, ordering the customer to the floor. Estell then announced the hold up, demanded money, pointed his weapon at the branch manager, and produced a paper bag demanding the money to be placed in it. Once money had been placed in the bag, Estell retrieved it and fled the bank. As 911 was called, employees of the bank observed Estell drive away in a vehicle that had been reported stolen from the surrounding area the previous day. The loss to the bank was over $11,000.
On March 7, 2013, officers with the Garland County Sheriff’s Office established surveillance on the Super 8 Motel in Hot Springs where they believed Estell to be staying. Officers were able to confirm the room Estell was staying in, the car he was driving, and that he was armed with at least three firearms. While investigators were attempting to isolate Estell in the motel, he emerged from a back door and fled on foot with officers in pursuit. Estell then carjacked a motor vehicle at gunpoint and took possession of the victim’s truck to continue his flight. According to the victim, Estell brandished a pistol, put it next to his side and demanded the keys. While fleeing from the officers at a high rate of speed, Estell struck at least three other vehicles before wrecking the stolen truck and running into nearby woods.
While officers were attempting to establish a perimeter around the woods, Estell was spotted running into an adjacent apartment complex where he broke into an apartment by kicking open the back door. The Garland County SWAT team and the Hot Springs Police Department officers isolated Estell in the apartment and after he refused commands to surrender, deployed gas to drive him out and ultimately took him into custody.
At the scene, officers recovered a loaded .38 revolver which was used by Estell during the carjacking and that matched the description of the firearm used in the bank robbery. In addition, officers obtained a search warrant for Estell’s motel room, in which they recovered a black hooded shirt, black neoprene ski mask, dark colored gloves that matched the clothing worn during the robbery, three other loaded pistols, and an assortment of ammunition.
This case was investigated by the Garland County Sheriff’s Office, the Hot Springs Police Department, the Federal Bureau of Investigation, and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant U.S. Attorney David Harris prosecuted the case for the United States.
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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
Four sentenced for drug traffickingRead the Press Release
CLARKSBURG, WEST VIRGINIA – Four individuals were sentenced today for drug trafficking, United States Attorney William J. Ihlenfeld, II, announced.
Arthur Sean Warner, 43, of Morgantown, West Virginia, was sentenced today to 151 months in prison for crack cocaine trafficking in Monongalia County, West Virginia in October 2014. He pled guilty in December 2014 to one count of “Possession with Intent to Distribute Cocaine Base” following an investigation by the Mon Valley Drug and Violent Crime Task Force.
John Howard Goff, Jr., 43, and Brian Michael Barnes, 33, both of Clarksburg, each pled guilty in November 2014 to one count of “Distribution of Methamphetamine – Aiding and Abetting.” Goff was sentenced today to 30 months in prison. Barnes was sentenced today to two years of probation.
Rodney Wayne Swiger, 46, of Clarksburg, pled guilty in November 2014 to one count of “Distribution of Controlled Substance Analogue – Aiding and Abetting.” They sold bath salts known as “Power X Energy Soak.” The bath salts contained a controlled substance known as “α-Pyrrolidinovalerophenone” or “α-PVP.” Swiger was sentenced today to two years of probation.
The Bureau of Alcohol, Tobacco, Firearms and Explosives and the Greater Harrison County Drug and Violent Crime Task Force, a HIDTA-funded initiative, investigated Goff, Barnes, and Swiger.
Assistant U.S. Attorney Zelda Wesley prosecuted Warner and Assistant U.S. Attorney Shawn Morgan prosecuted the remaining defendants on behalf of the government.
U.S. District Judge Irene M. Keeley presided.
Former University of Rochester Employee Sentenced on Fraud ChargesRead 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 Debra Bulter, 54, of Penfield, NY, who was convicted of conspiracy to commit mail fraud and to money laundering, was sentenced to 36 months in prison and three years supervised release by Chief U.S. District Judge Frank P. Geraci, Jr. The defendant was also ordered to pay restitution totaling $4,285,637.33; $1,875,622.33 to the University of Rochester and $2,410.015 to CGF Anesthesia Associates, P.C.
Assistant U.S. Attorney Richard A. Resnick, who handled the case, stated that the defendant worked as the Program Administrator for the Department of Anesthesiology at the University of Rochester in Rochester. The Department of Anesthesiology provides anesthesia services to patients undergoing surgery or other procedures at Strong Memorial Hospital, Highland Hospital and other medical facilities in Rochester. A physician, known as the Chair, oversees the Anesthesiology Department's management and operations. The Program Administrator oversees administrative duties and reports to the Chair.
From 2001 through 2012, an anesthesia medical group, CGF Anesthesia Associates, P.C., contracted with the Department of Anesthesiology to provide anesthesiologists at medical facilities served by the Department of Anesthesiology. Between 2003 to 2008, two doctors from CGF Anesthesia Associates, P.C. individually contracted with the Department of Anesthesiology purportedly to provide additional administrative services to the Department of Anesthesiology.
From 2007 through 2012, the defendant participated in several schemes to defraud the Department of Anesthesiology and the CGF Anesthesia Associates, P.C. One scheme involved deceiving the Department of Anesthesiology from 2007 to 2009 into making fraudulent payments to the two doctors and the CGF Anesthesia Associates, P.C. Misusing her position of trust, the defendant provided the Department of Anesthesiology with fraudulent documents, including fraudulent requisition forms and invoices, which made it appear that the two doctors and the CGF Anesthesia Associates, P.C. had provided adequate services to the Department of Anesthesiology for such payments. As a result of an unsuspecting U of R official signing the fraudulent documents, the Department of Anesthesiology was deceived into paying the two doctors $930,000 and CGF Anesthesia Associates, P.C. $530,000 to which they were not entitled. To compensate the defendant for her participation in the scheme, CGF Anesthesia Associates, P.C. was deceived into paying the fraudulent money it received from the Department of Anesthesiology to a business started by the defendant, DJA Solutions, Inc.
From January 2010 to September 2012, the Department of Anesthesiology and CGF Anesthesia Associates, P.C. were deceived into causing a large portion of the compensation earned by CGF Anesthesia Associates, P.C. from the Department of Anesthesiology to be diverted to the two doctors. As a part of the scheme, the two doctors each executed fraudulent contracts with the Department of Anesthesiology for the fiscal years 2010 through 2013 which stated that they intended to provide additional administrative services to the Department of Anesthesiology worth more than $3,000,000. These contracts were improperly signed by the defendant on behalf of the Department of Anesthesiology and concealed from the Chair of the Department of Anesthesiology and the other anesthesiologists at CGF Anesthesia Associates, P.C. The two doctors also caused invoices in their own names to be submitted to the Department of Anesthesiology which falsely represented that they had provided the services listed on such invoices. The scheme caused the Department of Anesthesiology to divert compensation actually earned by CGF Anesthesia Associates, P.C. to the two doctors in the total amount of $2,410,015. To compensate the defendant for her role in this scheme, CGF Anesthesia Associates, P.C. was deceived into to paying the defendant’s business, DJA Solutions, LLC, more than it was entitled. For the years 2010 through 2012, DJA Solutions, LLC received $1,169,606 from CGF Anesthesia Associates, P.C.
Another of the defendant's schemes involved causing the Department of Anesthesiology to make a fraudulent and unauthorized loan to a doctor working for the Department of Anesthesiology. The defendant disguised various payments to the doctor as extra compensation earned by the doctor. The defendant did this by preparing fraudulent payroll documents, which were submitted to the Chair of the Department of Anesthesiology for authorization to pay the extra compensation to the doctor. The Chair signed such forms believing that the doctor was entitled to such extra compensation and was unaware that such payments were actually an improper loan to the doctor. The total amount of the fraudulent payments to the doctor was $510,726.
From October 2012 to May 2012, the defendant also caused the Department of Anesthesiology to pay a former employee of the Department of Anesthesiology $7,168 by disguising the payments as compensation earned by the former employee, when in fact, the former employee was no longer working for the Department of Anesthesiology.
Finally, from March 2009 to June 2012, the defendant submitted expense reimbursement forms totaling $4,809.37 to the Department of Anesthesiology for expenses which she either had already been reimbursed for or were not actual business expenses.
Doron Feldman, 54, of Williamsville, NY, one of the two doctors with CGF Anesthesia Associates, P.C., was also convicted in this case and sentenced to 24 months in prison. The defendant was also ordered to pay restitution to the University of Rochester totaling $1,460,000. In addition, Feldman must pay $157,000 in restitution to the Internal Revenue Service.
The sentencing is the culmination of a joint investigation on the part of the Internal Revenue Service, under the direction of Shantelle P. Kitchen, Special Agent in Charge, New York Field Office, and the United States Postal Inspection Service, under the direction of Shelly Binkowski, Inspector in Charge, Boston Division, United States Postal Inspection Service.