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30 April 2015
Mississippi Man Pleads Guilty to Possession and Transportation of Stolen FirearmsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ALEX BRASINGTON, age 22, of Carriere, Mississippi, pled guilty today to conspiracy to possess and transport stolen firearms in interstate commerce and transportation of stolen firearms in interstate commerce. A five-count superseding indictment was returned on October 3, 2014, charging BRASINGTON, and co-defendants BRITTANY BAUER and BRITTEN PARSONS, with conspiracy, possession and transportation of stolen firearms in interstate commerce.
According to court documents, in January and February 2013, BRASINGTON, BAUER and PARSONS transported nine stolen firearms in interstate commerce, from Alabama to Louisiana. The investigation revealed that the firearms had been stolen during residence burglaries in Huntsville, Alabama. On February 14, 2013, agents conducted a search of BAUER’s New Orleans apartment and found five stolen firearms and approximately 1700 rounds of ammunition. Court documents reflect that agents also recovered four stolen firearms and ammunition that BRASINGTON, BAUER and PARSONS sold to individuals in New Orleans. BRASINGTON had previously been found in possession of a stolen firearm on January 31, 2013.
BRASINGTON faces a maximum of ten years imprisonment, followed by three years of supervised release. U.S. District Judge Jane Triche Milazzo set sentencing for July 20, 2015.
U.S. Attorney Polite stated, “Today’s guilty plea underscores our Office’s continued commitment to prosecuting those who illegally transport stolen firearms into our District.”
U.S. Attorney Polite praised the work of the ATF New Orleans Division Office, New Orleans Police Department, Pearl River (LA) Police Department, Pearl River County (MS) Sheriff’s Office, and Huntsville Police Department in investigating this matter. Assistant United States Attorney Nolan D. Paige is in charge of the prosecution.
Alex Brasington Factual Basis
Military Contractor in Afghanistan Sentenced to Four Years in Prison for Offering Bribes to a US Army OfficialRead the Press Release
An independent contractor for a trucking company in Afghanistan that was responsible for delivering fuel to U.S. Army installations was sentenced to four years in prison today for offering a U.S. Army serviceman $54,000 in bribes to falsify documents confirming the receipt of fuel shipments that were never actually delivered.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Special Inspector General for Afghanistan Reconstruction John F. Sopko, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office, Special Agent in Charge Raymond R. Parmer Jr. of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) New York Field Office and Director Frank Robey of the U.S. Army’s Criminal Investigation Command (CID) made the announcement.
Akbar Ahmed Sherzai, 50, of Centreville, Virginia, pleaded guilty on Feb. 14, 2014, to one count of conspiracy to commit bribery. In addition to the prison sentence, U.S. District Court Judge Margo K. Brodie of the Eastern District of New York ordered Sherzai to forfeit $54,000.
In connection with his guilty plea and in other court documents, Sherzai acknowledged that he was employed by a local Afghan trucking company contracted to transport fuel between U.S. military bases in Afghanistan. Sherzai acknowledged that, in April 2013, he approached a U.S. military serviceman to discuss instances in which his company failed to deliver the fuel—called “no-show” missions—which resulted in a $75,000 fine to his company for each no-show. Sherzai admitted that he offered the serviceman bribes to falsify documents to confirm deliveries, so that Sherzai’s company and others could recover the fines they had paid for no-shows. On several occasions, Sherzai paid cash bribes to the serviceman, who, unbeknownst to Sherzai, was working with law enforcement. In total, Sherzai acknowledged that he paid the serviceman $54,000 to falsify documents relating to nine deliveries, allowing his company and others to avoid or recover $675,000 in fines.
This matter was investigated by the Special Inspector General for Afghanistan Reconstruction, FBI, ICE-HSI and CID. The case is being prosecuted by Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Amir H. Toossi of the Eastern District of New York.
Midland Man Sentenced to 15 Years in Federal Prison for Advertising to Produce, Buy, Sell or Trade Child PornographyRead the Press Release
In Midland this morning, Senior United States District Judge Robert A. Junell sentenced 47–year-old Kyle Unterbrink to 15 years in federal prison for advertising online to produce, buy, sell or trade child pornography announced Acting United States Attorney Richard L. Durbin, Jr., and Homeland Security Investigations (HSI) Special Agent in Charge Waldemar Rodriguez, El Paso Division.
In addition to the prison term, Judge Junell ordered that the defendant pay $51,000 restitution to the identified victims of the child pornography he possessed and distributed. Judge Junell also ordered that Unterbrink be placed on supervised release for ten years following the completion of his prison term. In February, Unterbrink pleaded guilty to the advertising child pornography charge. Unterbrink, who has remained in federal custody since his arrest on December 11, 2014, has agreed to forfeit his residence to the Government to satisfy his court ordered restitution.
According to court records, over the course of several days in November 2014, HSI agents identified the defendant’s IP address as one which was making almost 2,000 images of prepubescent child pornography available to anyone in the world who was connected to the same network. On December 11, 2014, agents conducted a search warrant at the defendant’s residence and seized various electronic devices belonging to Unterbrink. A subsequent search of the seized items revealed the presence of approximately 6,700 images depicting the sexual exploitation of minors downloaded from the Internet.
This case was investigated by Homeland Security Investigations together with the Federal Bureau of Investigation and the Texas Department of Public Safety. Assistant U.S. Attorney Austin Berry prosecuted this case on behalf of the Government.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Miami-Area Physician Sentenced to 60 Months in Prison for Role in $5.5 Million Medicare Fraud SchemeRead the Press Release
A Miami-area medical doctor was sentenced today to 60 months in prison for his role in a $5.5 million Medicare fraud scheme involving fraudulent billings by a psychiatric hospital in Hollywood, Florida.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.
Barry Kaplowitz, 54, of Aventura, Florida, a licensed physician, was convicted of making false statements related to health care matters on Feb. 20, 2015, following a six-week jury trial. In addition to today’s prison sentence, U.S. District Judge Cecilia M. Altonaga of the Southern District of Florida ordered Kaplowitz to pay more than $2.9 million in restitution.
According to evidence presented at trial, Kaplowitz served as the medical director at Hollywood Pavilion (HP), a state-licensed psychiatric hospital, from approximately 2008 to 2011. During that time, Kaplowitz signed false and fraudulent medical records in order to make it appear that HP’s patients qualified for and received intensive outpatient services, even though they did not. The evidence demonstrated that Kaplowitz signed patient files for over 400 patients certifying that he had provided mental health services to each of them, even though he never saw nor provided any treatment to the patients. HP used these falsified medical records to submit over 2,800 false claims to Medicare totaling over $5.5 million. Medicare paid $2.9 million on those false claims.
Five other individuals have previously been convicted and sentenced in this case:
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Karen Kallen-Zury, of Lighthouse Point, Florida, HP’s former chief executive officer, was sentenced to 25 years in prison;
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Daisy Miller, of Hollywood, the clinical director of HP’s inpatient facility, was sentenced to 15 years in prison;
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Michele Petrie, of Fort Lauderdale, Florida, the head of HP’s intensive outpatient program, was sentenced to six years in prison;
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Christian Coloma, of Miami Beach, Florida, the director of physical therapy for an entity associated with HP, was sentenced to 12 years in prison; and
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Christopher Gabel, of Davie, Florida, HP’s former chief operating officer, was sentenced to six years in prison.
Kallen-Zury, Miller, Gabel and Petrie were ordered to pay more than $39 million in restitution, and Coloma was ordered to pay more than $20 million in restitution.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. The case is being prosecuted by Trial Attorneys Nicholas E. Surmacz, Andrew H. Warren and L. Rush Atkinson of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
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Mexican Nationals Plead Guilty to Violations of the Federal Gun Control ActRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ROBERTO HERRERA-VILLAGOMEZ, age 23, and JUAN MANUEL HERRERA-VILLAGOMEZ, age 34, both citizens of Mexico, pled guilty today to a two-count Indictment charging them with violations of the Federal Gun Control Act.
According to court records, on or about October 15, 2014, ROBERTO HERRERA-VILLAGOMEZ and JUAN MANUEL HERRERA-VILLAGOMEZ, both illegal aliens, were found in possession of firearms. Agents executed a search warrant into the harboring of illegal aliens at a mushroom farm in Tangipahoa Parish and found the defendants in possession of firearms.
ROBERTO HERRERA-VILLAGOMEZ and JUAN MANUEL HERRERA-VILLAGOMEZ each face a maximum term of imprisonment of ten years, followed by up to three years of supervised release, and a fine of $250,000. U.S. District Judge Jane Triche Milazzo set sentencing for July 30, 2015.
U.S. Attorney Polite praised the work of the Department of Homeland Security, Homeland Security Investigations (HSI) in investigating this matter. Assistant United States Attorney David Haller is in charge of the prosecution.
Herrera-Villagomez, Roberto & Juan Manual Factual Basis
McLaughlin Woman Sentenced for Assault with A Dangerous WeaponRead the Press Release
Acting United States Attorney Randolph J. Seiler announced that a McLaughlin, South Dakota, woman convicted of Assault with a Dangerous Weapon was sentenced on April 27, 2015, by U.S. District Court Judge Charles B. Kornmann.
Gwendolyn Iron Shield, a/k/a Gwendolyn Taken Alive, age 41, was sentenced to 12 months and 1 day of custody, 3 years of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
Iron Shield was indicted by a federal grand jury on June 10, 2014. She pled guilty on November 19, 2014.
On or about April 20, 2014, a Bureau of Indian Affairs (BIA) officer was dispatched to a house in McLaughlin, where an adult male victim had been stabbed. Upon arriving at the residence, the officer made contact with the victim and observed a deep laceration to the upper portion of his left arm. The victim informed the officer that following an argument, he attempted to leave the residence he shared with Iron Shield. According to the victim, Iron Shield charged him outside of the residence with a large kitchen knife, and as he was trying to protect himself, he was stabbed on the arm.
This case was investigated by the BIA, Standing Rock Agency. Assistant U.S. Attorney Troy R. Morley prosecuted the case.
Iron Shield is to self-surrender to the U.S. Marshals Service by May 26, 2015.
McLaughlin Man Sentenced for Assaulting, Resisting and Impeding A Federal OfficerRead the Press Release
Acting United States Attorney Randolph J. Seiler announced that a McLaughlin, South Dakota, man convicted of Assaulting, Resisting, and Impeding a Federal Officer was sentenced on April 27, 2015, by U.S. District Judge Charles B. Kornmann.
Kirk Flying Horse, age 41, was sentenced to 30 months in custody, 3 years of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
Flying Horse was indicted by a federal grand jury on August 19, 2014. He pled guilty on November 19, 2014.
On July 25, 2014, two Bureau of Indian Affairs (BIA) officers responded to a call at a home in McLaughlin, after receiving a report that a man was intoxicated and causing a disturbance. Upon arrival, officers made contact with the Defendant, Flying Horse, who informed the officers that he had been beaten by his ex-wife. Dispatch was called regarding the situation and the officers were informed that the Defendant was on tribal court conditions and was not to consume alcohol. Flying Horse was then placed in custody. The Defendant began kicking the patrol car’s window, and kicked one of the officers on the top of his head when the officer asked him to calm down.
This case was investigated by the BIA, Standing Rock Agency. Assistant U.S. Attorney Troy R. Morley prosecuted the case.
Flying Horse was immediately turned over to the custody of the U.S. Marshals Service.
McLaughlin Man Sentenced for Assault by Striking, Beating and WoundingRead the Press Release
Acting United States Attorney Randolph J. Seiler announced that a McLaughlin, South Dakota, man convicted of Assault by Striking, Beating, and Wounding was sentenced on April 27, 2015, by U.S. District Judge Charles B. Kornmann.
Brett Claymore, age 22, was sentenced to 6 months in custody, 1 year of supervised release, and a $25 special assessment to the Federal Crime Victims Fund.
Claymore was indicted by a federal grand jury on June 17, 2014. He pled guilty on November 3, 2014.
On June 15, 2014, a Corson County Sheriff’s Deputy was attempting to detain the driver of a four-wheeler in McLaughlin. The driver fled and ran into a private residence, where he was eventually taken into custody. At the time of the incident, three other people, including Claymore, were in the living room of the residence. The deputy instructed the group of people to sit on the floor, and two of them complied, but Claymore refused. The deputy tried to detain Claymore, who pulled his arm away and pushed his left elbow into the deputy’s chest. The two began to scuffle, but the deputy broke free and handcuffed Claymore.
This case was investigated by the Bureau of Indian Affairs, Standing Rock Agency. Assistant U.S. Attorney Troy R. Morley prosecuted the case.
Claymore is to self-report to the U.S. Marshals Service by May 12, 2015.
Martha’s Vineyard CPA Sentenced for Tax FraudRead the Press Release
BOSTON – A Vineyard Haven CPA was sentenced on Tuesday, April 28, 2015, for filing false tax returns in which he underreported more than $800,000 in income for three years.
Roger A. Armstrong, 61, was sentenced by U.S. District Court Judge Indira Talwani to three years of probation, the first nine months of which are to be served in home confinement, and ordered to pay a fine of $3,000. At the sentencing hearing, Armstrong paid restitution of $389,365, which included his taxes owed, as well as interest and penalties. In January 2015, Armstrong pleaded guilty to three counts of filing false tax returns.
Armstrong, a certified public accountant (CPA) and tax preparer who lived and worked on Martha's Vineyard, owned rental property in Massachusetts and Florida. As a sole proprietor, Armstrong was required to accurately report his gross receipts and his business profit or loss on his individual income tax returns and also was to report any rental income he received. For tax years 2009 through 2011, Armstrong filed tax returns in which he significantly underreported both his business gross receipts and his rental income. Specifically, he did not report a total of $790,000 in gross receipts and $47,000 in rental income, and, as a result of the underreporting, did not pay $200,000 in taxes.
United States Attorney Carmen M. Ortiz and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case was prosecuted by Assistant U.S. Attorney Sandra S. Bower of Ortiz’s Economic Crimes Unit.
Maine Nursing Home Operator to Pay $300,000 to Resolve Allegations Concerning Claims for Rehabilitation TherapyRead the Press Release
BOSTON – A skilled nursing facility operator in Maine, Rousseau Management, Inc., entered into an agreement with the United States to pay $300,000 to resolve allegations concerning inflated Medicare claims.
Rousseau, which owns the Horizons Living and Rehab Center in Brunswick, Maine, and previously provided administrative management services to the Amenity Manor skilled nursing facility in Topsham, Maine, entered into an agreement concerning claims for therapy purportedly provided by its subcontractor, RehabCare Group East, Inc. (RehabCare), a part of Kindred Healthcare, Inc. This settlement resolves allegations that Rousseau submitted, or caused the submission of, claims to Medicare that sought inflated amounts of reimbursement based on the provision of unreasonable, unnecessary, unskilled rehabilitation therapy, or therapy that was not provided at all.
“This settlement is another in a series of resolutions involving inflated Medicare billing at skilled nursing facilities,” said United States Attorney Carmen M. Ortiz. “We continue our efforts to ensure that the provision of care in nursing facilities is based on patients’ clinical needs and not tied to the inflated financial interests of the companies providing care.”
“These defendants allegedly made decisions based on profitability, rather than on patient care,” said Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “These actions not only affect patients, but have a ripple effect on taxpayers who pay into the system. The FBI will continue to work with all of our law enforcement partners to make sure those who abuse the healthcare system are brought to justice.”
The United States alleges that prior to Oct. 1, 2011, Rousseau failed to take sufficient steps to prevent RehabCare from engaging in a pattern and practice of providing high levels of therapy that were not reasonable or necessary during so-called “assessment reference periods,” thereby causing Horizons and Amenity Manor to bill for their Medicare patients’ care at the highest reimbursement level, even though RehabCare was providing less therapy to those same patients during those periods when the facilities were not required to report to Medicare the amount of therapy their Medicare patients were receiving.
This settlement further resolves allegations that, even after Oct. 1, 2011, Rousseau failed to prevent other RehabCare practices designed to inflate Medicare reimbursement, including: (1) presumptively placing patients in the highest reimbursement level unless it was shown that the patients could not tolerate that amount of therapy, rather than using individualized evaluations to determine the level of care most suitable for each patient’s clinical needs; (2) planning the minimum number of minutes of therapy required to bill at the highest reimbursement level while discouraging the provision of therapy in amounts beyond that minimum threshold, despite the Medicare requirement that the amount of care provided be determined by patients’ clinical needs; (3) arbitrarily shifting the number of minutes of planned therapy between therapy disciplines to ensure targeted reimbursement levels were achieved; (4) reporting that time spent on initial evaluations was therapy time in order to avoid the Medicare prohibition on counting initial evaluation time as therapy time; and (5) reporting that time spent providing unskilled palliative care was time spent on skilled therapy.
HHS Hotline. The government encourages anyone with information about the practices described above, or similar practices involving rehabilitation therapy in nursing facilities, to contact the Department of Health and Human Services Office of Inspector General Hotline via telephone, 1-800-HHS-TIPS (1-800-447-8477), or in writing via https://forms.oig.hhs.gov/hotlineoperations/.
This matter was investigated by the Department of Health and Human Services, Office of the Inspector General, and the Federal Bureau of Investigation. The case was handled by Assistant U.S. Attorneys Gregg Shapiro and Patrick Callahan of Ortiz’s Affirmative Civil Enforcement Unit and Department of Justice Trial Attorneys Christelle Klovers and Rohith Srinivas.
Los Zetas Members Sentenced to Life Imprisonment on Federal Drug and Firearm ChargesRead the Press Release
In Del Rio this morning, U.S. District Judge Alia Moses sentenced two members of the Los Zetas Drug Trafficking Organization, to life in federal prison for smuggling thousands of kilograms of marijuana and hundreds of assault rifles announced Richard L. Durbin, Jr., Acting United States Attorney; James Spero, Homeland Security Investigations (HSI) Special Agent in Charge of the San Antonio Division; Robert Elder, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge of the Houston Division; and, Christopher Combs, Federal Bureau of Investigation (FBI) Special Agent in Charge of the San Antonio Division.
On June 20, 2014, a federal jury convicted 29–year-old Emilio Villalobos-Alcala and 27–year-old Jose Eluid Lugo-Lopez (aka “Cochi Loco”) of one count of conspiracy to import marijuana; one count of conspiracy to possess with intent to distribute marijuana; one count of conspiracy to possess firearms in furtherance of a drug trafficking crime; and, two counts of smuggling goods from the United States.
According to courtroom testimony, Villalobos-Alcala, a purported leader of the Los Zetas Cartel activities in Piedras Negras and fellow senior level member Lugo-Lopez were involved in a large-scale marijuana and firearms smuggling scheme from July 2011 until February 2013. Assault weapons, other firearms, magazines and ammunition purchased in San Antonio were transported inside hidden compartments in cars and trucks and smuggled through Eagle Pass, Texas, to Piedras Negras. Bundles of marijuana, smuggled across the river into Quemado, Texas, were transported to stash houses in Eagle Pass. From there, the marijuana was transported to stash houses in San Antonio and ultimately to distributors in Dallas and Houston.
Evidence presented during the trial included multiple threats made by Villalobos-Alcala and Lugo-Lopez that they would kill people involved in the smuggling conspiracy or their family members if they did not pay money for drugs or weapons seized by law enforcement or agree to move drugs or weapons on behalf of the cartel.
“Today’s sentencing of Emilio Villalobos-Alcala and Jose Eluid Lugo-Lopez to life imprisonment sends a clear message of the serious consequences awaiting those who engage in this type of criminal activity,” said James Spero, Special in Charge, HSI San Antonio. “HSI will continue to utilize its broad authorities, in concert with its federal, state/local and international partners, to dismantle criminal organizations.”
“Operations such as these, which rely on intimidation and violence to accomplish their goals, represent the worst types of offenders. ATF is proud to be among the agencies responsible for taking down two key players in the Los Zetas Cartel,” said Robert Elder, ATF Special Agent in Charge.
This case was investigated by special agents with HSI, ATF, FBI and the Drug Enforcement Administration together with the U.S. Border Patrol, Texas Department of Public Safety and the Zavala County Sheriff’s Office. Assistant United States Attorneys Jay Hulings and Russell Leachman prosecuted this case on behalf of the Government.
Leader of an Illegal International Gambling Enterprise Convicted of Conspiracy to Commit Money LaunderingRead the Press Release
A federal jury in Oklahoma City convicted a Texas man today of running an illegal international gambling enterprise and conspiring to commit money laundering, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Sanford C. Coats of the Western District of Oklahoma.
Bartice Alan King, aka “Luke,” 44, of Spring, Texas, was found guilty of conducting an illegal gambling business and engaging in a conspiracy to commit money laundering. A sentencing hearing has not yet been set.
According to evidence presented at trial, from 2003 to 2013, King was the owner, CEO and President of Legendz Sports, an Internet and telephone gambling enterprise based in Panama City, Panama. Over the course of a decade, the international gambling enterprise took more than $1 billon in illegal wagers, almost exclusively from gamblers in the United States on American sporting events.
The evidence demonstrated that after founding Legendz Sports, King directed and supervised a network of bookies located all over the United States, who illegally solicited and accepted sports wagers and settled gambling debts. The evidence further demonstrated that bookies and runners for Legendz Sports transported millions of dollars of gambling proceeds in cash and checks from the United States to Panama. The checks were made out to various shell companies created by Legendz Sports throughout Central America to launder gambling proceeds.
The evidence demonstrated that the illegal gambling proceeds were used to further promote the gambling business, including to pay employees, build a new multi-million dollar call center to take bets and build a “bank” of cash to pay future winning bettors. King used the profits to live a lavish lifestyle, including mansions in Florida and Texas.
The case was investigated by the FBI and Internal Revenue Service-Criminal Investigation, with the assistance of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the U.S. Marshals Service. The Criminal Division’s Office of International Affairs also assisted with this investigation. The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Susan Dickerson Cox and Travis D. Smith of the Western District of Oklahoma.
Kolon Industries Inc. Pleads Guilty for Conspiring to Steal Dupont Trade Secrets Involving Kevlar TechnologyRead the Press Release
Kolon Sentenced to Pay $360 Million in Restitution and Fines
ALEXANDRIA, Va. – Kolon Industries Inc., a South Korean industrial company, pleaded guilty this morning in federal court in Alexandria, Virginia, to conspiracy to steal trade secrets involving E.I. DuPont de Nemours & Co.’s (DuPont) Kevlar technology. The company was sentenced to pay $85 million in criminal fines and $275 million in restitution.
United States Attorney Dana J. Boente of the Eastern District of Virginia, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, and Special Agent in Charge Adam S. Lee of the FBI’s Richmond, Virginia, Division made the announcement.
Kolon Industries Inc., appearing through two successor entities—Kolon Industries Inc. and Kolon Corporation (collectively, Kolon)—pleaded guilty to one count of conspiracy to convert trade secrets before U.S. District Judge Anthony J. Trenga of the Eastern District of Virginia.
“Research and development are pillars of our economy, and we cannot allow anyone to obtain by theft what innovators develop through effort and ingenuity,” said U.S. Attorney Boente. “Today’s outcome confirms that we will aggressively investigate and prosecute intellectual property crimes, regardless of whether the perpetrators are foreign or domestic, corporations or individuals. There are no safe harbors for those who seek to steal trade secrets in the Eastern District of Virginia.”
“Protecting the trade secrets of American businesses sustains the integrity and competitiveness of the American economy, and encourages the development of new products, including advanced technologies,” said Assistant Attorney General Caldwell. “The Criminal Division is committed to ensuring that foreign companies, like Kolon Industries, cannot escape the reach of the criminal justice system when they have conspired to steal the results of American ingenuity and our companies’ intellectual property.”
“Protecting American companies from the theft of their trade secrets is a high priority for the FBI,” said Special Agent in Charge Lee. “Each year, billions of U.S. dollars are lost to foreign competitors who pursue illegal commercial short cuts by stealing valuable advanced technologies. This case demonstrates the FBI’s ability to penetrate these highly sophisticated criminal schemes and bring their perpetrators to justice. Its outcome should send a clear message to foreign commercial actors who seek to illegally exploit American companies and steal our nation’s innovation and technology.”
According to the statement of facts filed with the plea agreement, from June 2006 to February 2009, Kolon conspired with former DuPont employees and others to steal DuPont’s trade secrets for making Kevlar, a high-strength, para-aramid synthetic fiber. Kevlar, a trademarked name, is one of DuPont's most well-known products and is used is a wide range of commercial applications such as body armor, fiber optic cables, and automotive and industrial products. Kolon admitted that it was attempting to improve the quality of its own para-aramid fiber known as Heracron.
Kolon personnel met repeatedly with former DuPont employees, including Edward Schulz, 72, of Brownstown, Pennsylvania, and Michael Mitchell, 58, of Chesterfield, Virginia, to obtain confidential and proprietary DuPont information about Kevlar. Schulz pleaded guilty to conspiracy to steal trade secrets in September 2014 and is scheduled to be sentenced on June 26, 2015. Mitchell pleaded guilty to theft of trade secrets and obstruction of justice in December 2009 and was sentenced to 18 months in prison.
Kolon admitted that it obtained technical and business documents regarding Kevlar, including instructional materials that described DuPont’s “New Fiber Technology,” documents on polymerization, and a detailed breakdown of DuPont’s capabilities and costs for the full line of its Kevlar products and DuPont’s Kevlar customers.
According to the statement of facts and Mitchell’s admissions at his guilty plea, Mitchell exchanged numerous telephone calls and emails with Kolon personnel. On more than one occasion, Mitchell advised Kolon personnel that some of the information they sought was proprietary and that DuPont considered such information to be trade secrets. Mitchell also coordinated a meeting at a hotel in Richmond, at which Kolon personnel were introduced to a cooperating witness who pretended to be a disgruntled scientist from DuPont. During the Richmond meeting, Kolon personnel indicated that they would only be comfortable communicating with the cooperating witness in a manner that was confidential and that would not leave an evidentiary trail.
In February 2009, DuPont filed a civil lawsuit against Kolon in the Eastern District of Virginia, alleging theft of trade secrets. Thereafter, certain Kolon personnel attempted to delete files and emails related to Mitchell, Schulz and outside consultants hired to improve Kolon’s para-aramid fiber, and urged other Kolon personnel to search for such materials and mark them for deletion.
Kolon also admitted that certain employees approached a former employee of an American subsidiary of Teijin Ltd. – a Japanese company that makes the para-aramid fiber called Twaron—in an unsuccessful effort to obtain information about Twaron.
This case represents the first time that foreign corporations with no direct presence in the United States were found to be successfully served with U.S. criminal process, over their objections, based on service pursuant to an international treaty. In December 2014, the district court found that both of the successor companies were properly served, and ordered them to appear for arraignment. In February 2015, the Fourth Circuit Court of Appeals denied Kolon’s petition for extraordinary relief seeking reversal of the district court’s order.
Five former Kolon executives and employees, all of South Korea, were charged in an August 2012 indictment filed in the Eastern District of Virginia: Jong-Hyun Choi, 58, a senior executive who oversaw the Heracron Business Team; In-Sik Han, 52, who managed Kolon’s research and development related to Heracron; Kyeong-Hwan Rho, 49, the head of the Heracron Technical Team; Young-Soo Seo, 51, the general manager for the Heracron Business Team; and Ju-Wan Kim, 42, a manager on the Heracron Business Team.
None of these individuals has appeared in the United States to face the charges. The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
The case was investigated by the FBI’s Richmond Division. The case is being prosecuted by Assistant U.S. Attorneys Kosta S. Stojilkovic and Matthew Burke of the Eastern District of Virginia, Trial Attorney John W. Borchert of the Criminal Division’s Fraud Section and Senior Counsel Rodolfo Orjales of the Criminal Division’s Computer Crime and Intellectual Property Section. The Criminal Division’s Office of International Affairs has provided valuable assistance.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 3:12-cr-137.
Kolon Industries Inc. Pleads Guilty for Conspiring to Steal DuPont Trade Secrets Involving Kevlar TechnologyRead the Press Release
Kolon Sentenced To Pay $360 Million in Restitution And Fines
Kolon Industries Inc., a South Korean industrial company, pleaded guilty this morning in federal court in Alexandria, Virginia, to conspiracy to steal trade secrets involving E.I. DuPont de Nemours & Co.’s (DuPont) Kevlar technology. The company was sentenced to pay $85 million in criminal fines and $275 million in restitution.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Special Agent in Charge Adam S. Lee of the FBI’s Richmond, Virginia, Division made the announcement.
Kolon Industries Inc., appearing through two successor entities—Kolon Industries Inc. and Kolon Corporation (collectively, Kolon)—pleaded guilty to one count of conspiracy to convert trade secrets before U.S. District Judge Anthony J. Trenga of the Eastern District of Virginia.
“Protecting the trade secrets of American businesses sustains the integrity and competitiveness of the American economy, and encourages the development of new products, including advanced technologies,” said Assistant Attorney General Caldwell. “The Criminal Division is committed to ensuring that foreign companies, like Kolon Industries, cannot escape the reach of the criminal justice system when they have conspired to steal the results of American ingenuity and our companies’ intellectual property.”
“Research and development are pillars of our economy, and we cannot allow anyone to obtain by theft what innovators develop through effort and ingenuity,” said U.S. Attorney Boente. “Today’s outcome confirms that we will aggressively investigate and prosecute intellectual property crimes, regardless of whether the perpetrators are foreign or domestic, corporations or individuals. There are no safe harbors for those who seek to steal trade secrets in the Eastern District of Virginia.”
“Protecting American companies from the theft of their trade secrets is a high priority for the FBI,” said Special Agent in Charge Lee. “Each year, billions of U.S. dollars are lost to foreign competitors who pursue illegal commercial short cuts by stealing valuable advanced technologies. This case demonstrates the FBI’s ability to penetrate these highly sophisticated criminal schemes and bring their perpetrators to justice. Its outcome should send a clear message to foreign commercial actors who seek to illegally exploit American companies and steal our nation’s innovation and technology.”
According to the statement of facts filed with the plea agreement, from June 2006 to February 2009, Kolon conspired with former DuPont employees and others to steal DuPont’s trade secrets for making Kevlar, a high-strength, para-aramid synthetic fiber. Kevlar, a trademarked name, is one of DuPont's most well-known products and is used is a wide range of commercial applications such as body armor, fiber optic cables, and automotive and industrial products. Kolon admitted that it was attempting to improve the quality of its own para-aramid fiber known as Heracron.
Kolon personnel met repeatedly with former DuPont employees, including Edward Schulz, 72, of Brownstown, Pennsylvania, and Michael Mitchell, 58, of Chesterfield, Virginia, to obtain confidential and proprietary DuPont information about Kevlar. Schulz pleaded guilty to conspiracy to steal trade secrets in September 2014 and is scheduled to be sentenced on June 26, 2015. Mitchell pleaded guilty to theft of trade secrets and obstruction of justice in December 2009 and was sentenced to 18 months in prison.
Kolon admitted that it obtained technical and business documents regarding Kevlar, including instructional materials that described DuPont’s “New Fiber Technology,” documents on polymerization, and a detailed breakdown of DuPont’s capabilities and costs for the full line of its Kevlar products and DuPont’s Kevlar customers.
According to the statement of facts and Mitchell’s admissions at his guilty plea, Mitchell exchanged numerous telephone calls and emails with Kolon personnel. On more than one occasion, Mitchell advised Kolon personnel that some of the information they sought was proprietary and that DuPont considered such information to be trade secrets. Mitchell also coordinated a meeting at a hotel in Richmond, at which Kolon personnel were introduced to a cooperating witness who pretended to be a disgruntled scientist from DuPont. During the Richmond meeting, Kolon personnel indicated that they would only be comfortable communicating with the cooperating witness in a manner that was confidential and that would not leave an evidentiary trail.
In February 2009, DuPont filed a civil lawsuit against Kolon in the Eastern District of Virginia, alleging theft of trade secrets. Thereafter, certain Kolon personnel attempted to delete files and emails related to Mitchell, Schulz and outside consultants hired to improve Kolon’s para-aramid fiber, and urged other Kolon personnel to search for such materials and mark them for deletion.
Kolon also admitted that certain employees approached a former employee of an American subsidiary of Teijin Ltd. – a Japanese company that makes the para-aramid fiber called Twaron—in an unsuccessful effort to obtain information about Twaron.
This case represents the first time that foreign corporations with no direct presence in the United States were found to be successfully served with U.S. criminal process, over their objections, based on service pursuant to an international treaty. In December 2014, the district court found that both of the successor companies were properly served, and ordered them to appear for arraignment. In February 2015, the Fourth Circuit Court of Appeals denied Kolon’s petition for extraordinary relief seeking reversal of the district court’s order.
Five former Kolon executives and employees, all of South Korea, were charged in an August 2012 indictment filed in the Eastern District of Virginia: Jong-Hyun Choi, 58, a senior executive who oversaw the Heracron Business Team; In-Sik Han, 52, who managed Kolon’s research and development related to Heracron; Kyeong-Hwan Rho, 49, the head of the Heracron Technical Team; Young-Soo Seo, 51, the general manager for the Heracron Business Team; and Ju-Wan Kim, 42, a manager on the Heracron Business Team.
None of these individuals has appeared in the United States to face the charges. The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
The case was investigated by the FBI’s Richmond Division. The case is being prosecuted by Assistant U.S. Attorneys Kosta S. Stojilkovic and Matthew Burke of the Eastern District of Virginia, Trial Attorney John W. Borchert of the Criminal Division’s Fraud Section and Senior Counsel Rodolfo Orjales of the Criminal Division’s Computer Crime and Intellectual Property Section. The Criminal Division’s Office of International Affairs has provided valuable assistance.
Ketchikan Couple Indicted and Arraigned in Federal Court on Drug Conspiracy ChargesRead the Press Release
Anchorage, Alaska - United States Attorney Karen L. Loeffler announced today that Robert Duane Moriarty, 36, and Sara Skan, 34, of Ketchikan, Alaska, were indicted by a federal grand jury in Anchorage on April 21, 2015, on a single count of drug conspiracy. Moriarty and Skan were arraigned yesterday in U.S. District Court in Ketchikan before Chief Magistrate Judge Deborah M. Smith.
According to the indictment, Moriarty and Skan conspired with each other and others to distribute and to possess with the intent to distribute methamphetamine and heroin in Ketchikan, Alaska, between September 2014 and January 28, 2015. The United States is also seeking forfeiture of $1,009 in U.S. Currency in a separate forfeiture allegation.
Assistant U.S. Attorney Jack S. Schmidt, who presented the case to the grand jury, indicated that the law provides for a maximum sentence of 40 years in prison, a fine of $5,000,000, or both. Under the federal sentencing statutes, the actual sentence imposed will be based upon the seriousness of the offense(s) and the prior criminal history, if any, of the defendants. Both defendants are currently detained pending trial.
The Drug Enforcement Administration, Federal Bureau of Investigation, Port of Seattle Police Department, and the Ketchikan Police Department conducted the investigation leading to the indictment in this case.
An indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
Justice Department Wins Its Suit Seeking Religious Diets for Florida PrisonersRead the Press Release
The U.S. District Court for the Southern District of Florida today granted the Justice Department’s motion for summary judgment in United States v. Florida Department of Corrections, holding that the Department of Corrections’ failure to provide a kosher diet violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA). Consuming a kosher diet is central to the religious observance of hundreds of Florida prisoners. For years, the Department of Corrections’ policy had forced these prisoners to violate their core beliefs on a daily basis by eating non-kosher meals.
“Religious freedom is a cornerstone of our pluralistic society,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “State and local correctional facilities incarcerate individuals from a wide variety of faith groups and religious backgrounds. Accommodating these prisoners’ religious exercise is a core tenet of effective prison management. It reduces tension and disciplinary incidents, fosters learning and self-reflection and ultimately eases prisoners’ transition back into mainstream society.”
Congress enacted RLUIPA unanimously, recognizing that religion plays an indispensable role in the management of correctional facilities and the rehabilitation of prisoners. To achieve Congress’ goal of protecting prisoners’ religious liberty, RLUIPA prohibits policies that substantially burden prisoners’ religious exercise unless those policies are the least restrictive means of furthering a compelling government interest. The act allows the Justice Department to remedy violations through civil litigation. The Justice Department has previously used RLUIPA to secure prisoners’ access religious texts, wear religiously significant clothing, consume religious diets and observe their faith by maintaining beards or long hair.
The Special Litigation Section of the Justice Department’s Civil Rights Division in Washington, D.C. filed suit against the Florida Department of Corrections in 2012 after a 15-month investigation found that the failure to offer a kosher diet violated RLUIPA. The case number is 2012-cv-22958 (S.D. Fla).
Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
Justice Department Settles Housing Discrimination Lawsuit involving North Attleboro Apartment ComplexRead the Press Release
BOSTON – The U.S. Attorney’s Office and the Justice Department today announced an agreement with J & R Associates, the owner and operator of the Royal Park Apartments in North Attleboro, Mass., to resolve allegations of discrimination against families with children in violation of the Fair Housing Act.
The lawsuit, filed today in U.S. District Court in Boston, alleges that J & R Associates discriminated against families with children seeking to rent units at Royal Park Apartments by maintaining and enforcing policies that segregate families with children in certain buildings and restrict them to certain floors and units within the 224-unit complex. The allegations are based on evidence generated by the Department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices.
Under the terms of the agreement, which is in the form of a consent order and still must be approved by the Court, J & R Associates will establish a settlement fund in the amount of $135,000 to compensate victims of their discriminatory practices. The defendant also will pay $7,500 in civil penalties to the United States. The agreement requires J & R Associates to take steps to ensure that families with children no longer are restricted from renting units anywhere at Royal Park Apartments.
“Families should be able to rent and live where they choose, without being discriminated against because they have children,” said United States Attorney Carmen M. Ortiz. “My office remains committed to enforcing federal civil rights laws to ensure equality for the residents in this district.”
“Discrimination against families because they have children limits their ability to find suitable housing and will not be tolerated,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division. “We appreciate the defendant’s cooperation with our investigation and willingness to resolve the claims.”
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact HUD at 1-800-669-9777.
This matter was handled by Assistant U.S. Attorney Jennifer Serafyn of Ortiz’s Civil Rights Enforcement Team and Trial Attorney Beth Pepper of the Justice Department’s Civil Rights Division.
Justice Department Settles Housing Discrimination Lawsuit Involving North Attleboro, Massachusetts, Apartment ComplexRead the Press Release
The Justice Department today announced an agreement with J & R Associates, the owner and operator of the Royal Park Apartments in North Attleboro, Massachusetts, to resolve allegations of discrimination against families with children in violation of the Fair Housing Act.
The lawsuit, filed today in U.S. District Court of the District of Massachusetts, alleges that J & R Associates discriminated against families with children seeking to rent units at Royal Park Apartments by maintaining and enforcing policies that segregate families with children in certain buildings and restrict them to certain floors and units within the 224-unit complex. The allegations are based on evidence generated by the department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices.
Under the terms of the agreement, which is in the form of a consent order and still must be approved by the court, J & R Associates will establish a settlement fund in the amount of $135,000 to compensate victims of their discriminatory practices. The defendant also will pay $7,500 in civil penalties to the United States. The agreement requires J & R Associates to take steps to ensure that families with children no longer are restricted from renting units anywhere at Royal Park Apartments.
“Discrimination against families because they have children limits their ability to find suitable housing and will not be tolerated,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division. “We appreciate the defendant’s cooperation with our investigation and willingness to resolve the claims.”
“Families should be able to rent and live where they choose, without being discriminated against because they have children,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts. “My office remains committed to enforcing federal civil rights laws to ensure equality for the residents in this district.”
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact HUD at 1-800-669-9777.
Jury Convicts Hammond Resident for Gun and Drug ViolationsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that on Tuesday, April 28, 2015, a jury convicted MELVIN JACKSON, age 34, of Hammond, of violations of federal drug and firearms laws.
After a two-day trial, the jury returned a guilty verdict on all three counts charged in the Indictment: conspiracy to distribute and possess with intent to distribute over one kilogram of heroin; felon in possession of a firearm; and possession with intent to distribute a quantity of heroin.
JACKSON faces a minimum sentence of ten years’ incarceration, and a maximum of life imprisonment. U.S. District Judge Stanwood R. Duval, Jr. set sentencing for August 12, 2015.
U.S. Attorney Polite commended the work of the Drug Enforcement Administration and the Tangipahoa Parish Sheriff’s Office in investigating this matter. Assistant United States Attorneys Maurice Landrieu and Brandon Long were responsible for the prosecution.
Jasper Physician Indicted for Illegally Dispensing NarcoticsRead the Press Release
BIRMINGHAM -- A federal grand jury today indicted a physician and owner of a Jasper neurology and pain clinic on illegal drug distribution charges for dispensing narcotic painkillers for other than legitimate medical purposes. U.S. Attorney Joyce White Vance, Drug Enforcement Administration Assistant Special Agent in Charge Clay A. Morris and Internal Revenue Service Criminal Investigation Special Agent in Charge Veronica Hyman-Pillott announced the charges.
An indictment filed in U.S. District Court charges Dr. MUHAMMAD WASIM ALI, 50, of Vestavia Hills, with 10 counts of unlawfully distributing controlled substances "outside the scope of professional practice and not for a legitimate medical purpose" to three people working undercover with law enforcement. Ali owns and practices at the Walker Rural Health Care/Jasper Neurological Care clinic. DEA agents arrested Ali and searched his clinic on March 27.
The 10 distribution counts charge 10 instances that Ali illegally dispensed oxycodone, an opioid painkiller, to three undercover agents between August 2014 and November 2014. According to the indictment, Ali dispensed 1,100 oxycodone pills to the three people within those three months.
"Narcotic painkillers have an important and legitimate use in medical treatment, but Alabama leads the nation in the number of prescriptions per capita for opioid painkillers," Vance said. "Opiates are extremely addictive, and the use and abuse of opioid painkillers often lead to the abuse of and addiction to heroin, which is killing people in record numbers," she said. "Physicians who provide these dangerous narcotics without justifiable medical reasons must be stopped."
"The use and abuse of prescription opioid pain relievers for non-medical reasons is at epidemic levels across the United States, and Alabama is no exception," Morris said. "The DEA enjoys outstanding relationships with the vast majority of DEA registrants, including physicians; however, physicians who have abandoned their duties and the Hippocratic Oath cannot be tolerated. Those whose sole purpose is to profit from the addictions of others will be stopped," he said. "The abuse of opioid-based drugs is deadly. DEA remains committed to removing all drug sources of supply from our communities."
“The federal laws that regulate structuring requirements are in place to detect and stop those knowingly and willfully structuring to conceal their illegal activities,” Hyman-Pillot said. “Individuals who structure currency transactions are attempting to circumvent the law. This type of suspicious behavior will be thoroughly investigated in an effort to reveal underlying criminal activity,” she said.
The indictment against Ali also charges him with two counts of illegally possessing with intent to distribute controlled substances on March 27. One count charges illegal possession with intent to distribute hydrocodone, oxycodone and fentanyl, and a second count charges illegal possession with intent to distribute amphetamine salts and oxycodone.
The indictment's 13th count charges Ali with structuring currency transactions totaling about $151,480 at Wells Fargo Bank between July 10, 2014, and Dec. 8, 2014, in order to avoid the requirement that banks report transactions of $10,000 or more to the U.S. Treasury.
The maximum penalty for the distribution counts is 20 years in prison and a $1 million fine. The maximum penalty for financial structuring is 10 years in prison and a $500,000 fine.
The DEA and IRS-CI investigated the case, which Assistant U.S. Attorney Elizabeth A. Holt is prosecuting.
An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.
Irs Revenue Officer Indicted for Mail and Wire Fraud, Filing False Tax Returns, Identity Theft, and PerjuryRead the Press Release
A twenty-eight-count indictment was unsealed today in United States District Court for the Eastern District of New York charging James Brewer, a resident of Staten Island, New York, with seven counts of wire fraud, mail fraud, three counts of subscribing to false federal tax returns, six counts of aiding and assisting in the preparation of false federal tax returns, ten counts of aggravated identity theft, and perjury. Brewer is a Revenue Officer of the Internal Revenue Service (IRS), assigned to the Edison, New Jersey IRS office. Brewer was arrested in Las Vegas, Nevada, and is scheduled to be arraigned tomorrow afternoon before a United States Magistrate Judge at the federal courthouse in Las Vegas.
The charges were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS-CI), Newark Field Office and Rodney A. Davis, Special Agent-in-Charge, Treasury Inspector General for Tax Administration (TIGTA), Washington Field Division.
“As alleged, James Brewer abused his position of trust to enrich himself,” stated Acting United States Attorney Currie. “He willfully disregarded his responsibility to deal honestly and testify truthfully, and now stands accused of a series of crimes. We will continue to work with our law enforcement partners to enforce our laws across the board.” Mr. Currie expressed his grateful appreciation to the United States Attorney’s Office for the District of New Jersey, the United States Attorney’s Office for the District of Nevada, IRS-CI, Las Vegas Field Office and the Treasury Inspector General for TIGTA, Denver Field Division for its assistance in this case.
“The crimes alleged in this indictment are very serious. While employed by the IRS to enforce our nation’s tax laws, it is alleged that James Brewer was himself breaking these laws,” stated Special Agent-in-Charge Larsen, IRS-Criminal Investigation, Newark Field Office. “Today’s indictment underscores our commitment to work in a collaborative effort to promote honest and ethical government at all levels and to prosecute those who allegedly violate the public’s trust.”
“Mr. Brewer allegedly not only stole the identities of taxpayers for personal gain but also allegedly cheated the very tax system he was paid to uphold and support. TIGTA will aggressively investigate any allegation of an IRS employee committing a criminal act that impacts federal tax administration,” said TIGTA Special Agent-in-Charge Davis.
According to the indictment, Brewer operated two outside businesses contrary to IRS regulations: he prepared tax returns for others in exchange for fees, and he operated a business selling designer clothes, collectable toys, sports memorabilia, and other items through the Internet auction site “eBay.” As part of a scheme to fraudulently reduce his taxable income and increase his tax refunds, Brewer failed to report any income he received for his unauthorized tax preparation business, underreported the gross receipts earned from his Internet retail business, and claimed false dependents on federal tax returns he prepared and filed on his behalf for three tax years. Brewer also engaged in a multi-year scheme in which he prepared and filed false tax returns for others. Brewer listed false dependents and false deductions on these returns, among other materially false information, in order to fraudulently cause his clients to receive a refund to which they were otherwise not entitled or fraudulently inflate their refunds. In doing so, Brewer listed the names and social security numbers of various individuals on those tax returns as dependents without those individuals’ authorization. As part of this scheme, Brewer also diverted a portion of those clients’ refunds to himself, in some cases without his clients’ authorization or knowledge. Finally, in an effort to fraudulently obtain for himself a tax credit for first time homebuyers, Brewer lied under oath about his residency when he testified in a matter in the United States Tax Court in New York, New York.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Marisa Megur Seifan and Moira Kim Penza are in charge of the prosecution.
The Defendant:
JAMES C. BREWER
Age: 38
Staten Island, New York
E.D.N.Y. Docket No. 15 CR 209 (PKC)
Indiana County Man Sentenced to Prison for Heroin Trafficking ConspiracyRead the Press Release
JOHNSTOWN, Pa. – An Indiana County resident has been sentenced in federal court to 16 months in prison and four years supervised release on his conviction of conspiracy to distribute heroin, United States Attorney David J. Hickton announced today.
United States District Judge Kim R. Gibson imposed the sentence on Douglas A. Lydic, 31, of Commodore, Pa.
According to information presented to the court, from April 2012 to March 8, 2013, Lydic conspired with his co-defendants to possess and distribute 100 grams or more of heroin.
Assistant United States Attorney John J. Valkovci, Jr., prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Laurel Highlands Resident Agency of the Federal Bureau of Investigation and the Cambria County Drug Task Force for the investigation leading to the successful prosecution of Lydic.
Independent Contractor in Afghanistan Sentenced to 48 Months for His Role in Offering $54,000 in Bribes to A U.S. Government OfficialRead the Press Release
Earlier today at the federal courthouse in Brooklyn, Akbar Ahmad Sherzai, an independent contractor for a trucking company operating in Afghanistan responsible for delivering fuel to U.S. Army installations, was sentenced to 48 months’ imprisonment, three years of supervised release, and forfeiture of $54,000 for his role in offering a U.S. Army serviceman bribes to falsify documents to reflect the successful delivery of fuel shipments that Army records indicate were never delivered. The sentencing proceeding was held before U.S. District Judge Margo K. Brodie. Sherzai previously pleaded guilty to one count of conspiracy to commit bribery.
The sentence was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, Leslie R. Caldwell, Assistant Attorney General of the Justice Department’s Criminal Division, John F. Sopko, Special Inspector General for Afghanistan Reconstruction, Diego G. Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office, Raymond R. Parmer, Special Agent in Charge, Immigration and Customs Enforcement, Homeland Security Investigations (HSI), and Frank Robey, Director of the U.S. Army’s Criminal Investigation Command.
“Attempts to corrupt American officials will not be tolerated, either at home or abroad,” stated Acting United States Attorney Currie. “Our efforts to bring to justice those who would do so do not end at our nation’s borders.” Mr. Currie extended his grateful appreciation to each of the agencies who participated in the investigation and prosecution of this case.
The U.S. Army regularly contracts with local Afghan trucking companies to transport U.S. military equipment, fuel, and other supplies throughout Afghanistan. To ensure the companies fulfilled these requests, the U.S. Army used transportation movement requests (TMRs), which, when properly completed, verified that the shipments were successfully completed before approving payments to the trucking companies.
In April 2013, Sherzai approached a U.S. military serviceman to discuss fuel delivery missions that had been classified by the U.S. Army as “no-shows,” meaning that the fuel had not been delivered. Sherzai offered the serviceman a bribe to falsify the TMRs to reflect successful deliveries so that Sherzai’s company would receive payment and avoid penalties for failed fuel deliveries. The serviceman, under the supervision of law enforcement, continued to meet with Sherzai to discuss payments for the falsification of records. On two separate occasions, Sherzai paid the serviceman bribes in cash on American military bases in Afghanistan. On another occasion, Sherzai arranged for the serviceman’s bribe to be transferred to the United States through a hawala, an informal money transfer system. In total, Sherzai paid the serviceman $54,000 in cash to falsify 14 TMRs. Each “no show” delivery mission, absent the fraudulent TMRs, would have resulted in a fine of the company by the U.S. government of $75,000.
The government’s case is being prosecuted by Assistant U. S. Attorney Amir H. Toossi and Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section.
The Defendant:
AKBAR AHMAD SHERZAI
Age: 50
Centerville, Virginia
Citizenship: Dual United States and Afghanistan
E.D.N.Y. Docket No. 14-Cr-60 (MKB)
Illegal Alien Charged with Passport Fraud and Illegal Possession of FirearmRead the Press Release
HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a citizen of the Dominican Republic illegally residing in Hazleton has been charged with attempting to obtain a U.S. passport by false statements and with illegally possessing a firearm.
According to United States Attorney Peter Smith, Jhonny Melenciano Marte, age 34, of Hazleton, was charged in a Criminal Information filed today in the United States District Court in Scranton. The Criminal Information was filed pursuant to a Plea Agreement which is subject to the approval of the court.
The case was investigated by the United States Department of State, Diplomatic Security Service, Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATFE). The case is being prosecuted by Assistant U.S. Attorney Todd Hinkley.
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 guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law is 20 years of imprisonment, a term of supervised release following imprisonment, and a fine. 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.
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Huntsville, Alabama, Police Officer Charges with Excessive Use of Force and Obstruction of JusticeRead the Press Release
The Justice Department announced that Huntsville, Alabama, Police Department Officer Brett Russell, 48, has been charged with deprivation of rights under color of law for allegedly assaulting and injuring G.H., a detainee, on Dec. 23, 2011. Russell also has been charged with obstruction of justice for allegedly filing a false police report regarding this incident.
The indictment identifies the subject of the arrest by the initials, “G.H.” According to the indictment, Russell falsely stated in his incident report that G.H. kicked at officers, attempted to head-butt officers while they transported him to Russell's vehicle, that he was told to stop resisting several times but would not comply and that he was transported to the Huntsville metro jail “without incident.” Russell omitted from his report that he "had struck G.H. with his fist and kneed G.H. in the body," as the indictment says.
Russell faces a maximum sentence of 10 years in prison for the civil rights charge and 20 years for the obstruction charge. An indictment is merely an allegation, and the defendant is presumed innocent until proven guilty.
The investigation by the Florence Resident Agency of the FBI is ongoing. The case is being prosecuted by Trial Attorney Carroll McCabe of the Civil Rights Division and Assistant U.S. Attorney Xavier O. Carter Sr. of the Northern District of Alabama.
Huntsville Police Officer indicted for Excessive Force in 2011 ArrestRead the Press Release
BIRMINGHAM -- A federal grand jury today indicted a Huntsville police officer for using excessive force during a 2011 arrest, announced Acting Assistant Attorney General Vanita Gupta of the Justice Department's Civil Rights Division, U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Roger C. Stanton.
A two-count indictment filed in U.S. District Court charges that BRETT M. RUSSELL, 48, of Huntsville, assaulted a man during a Dec. 23, 2011, arrest, thereby depriving the man of his constitutional right not to be subjected to excessive force by someone acting in the official capacity of a police officer, or "under color of law." The indictment also charges that Russell obstructed justice by making false statements and concealing information in the incident report he filed on the arrest.
"We are fully committed to investigating, and prosecuting where appropriate, the use of excessive force by law enforcement officers," Vance said.
The indictment identifies the subject of the arrest by the initials, "G.H." According to the indictment, Russell falsely stated in his incident report that G.H. kicked at officers, attempted to head-butt officers while they transported him to Russell's vehicle, that he was told to stop resisting several times but would not comply, and that he was transported to the Huntsville metro jail "without incident." Russell omitted from his report that he "had struck G.H. with his fist and kneed G.H. in the body," the indictment says.
The maximum penalty for deprivation of civil rights under color of law is 10 years in prison and a $250,000 fine. The obstruction of justice count carries a maximum penalty of 20 years in prison and a $250,000 fine.
The investigation by the Florence Resident Agency of the FBI is ongoing. Assistant U.S. Attorney Xavier O. Carter Sr. and DOJ Trial Attorney Carroll McCabe are prosecuting the case.
An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.
Honduran National Pleads Guilty to Immigration OffenseRead the Press Release
United States Attorney Kenneth A. Polite announced that JOSE MARTINEZ-ROMERO, age 32, a native of Honduras, pled guilty yesterday to a one-count Indictment for illegal entry of a removed alien.
According to court documents, MARTINEZ was previously removed from the United States on April 16, 2007. MARTINEZ was later found in the Eastern District of Louisiana on March 2, 2015 and had not received permission from the Attorney General of the United States or the Secretary of the Department of Homeland Security to reenter.
MARTINEZ faces a maximum term of imprisonment of two years, as well as a fine of $250,000. United States District Court Judge Carl J. Barbier set sentencing for June 11, 2015.
U.S. Attorney Polite praised the work of Immigration and Customs Enforcement in investigating this matter. Assistant United States Attorney Jon Maestri is in charge of the prosecution.
Jose Martinez-Romero Factual Basis (630.46 KB)
Hawthorne Woman Sentenced to 6½ Years in Federal Prison for Running Wheelchair Scam That Cost Medicare Nearly $3.5 MillionRead the Press Release
LOS ANGELES – A Hawthorne woman who ran a company that submitted more than $7 million in fraudulent claims to Medicare – primarily for power wheelchairs that were not needed by patients – and caused the government health insurance program to lose nearly $3.5 million has been sentenced to 78 months in federal prison.
Adeline Ekwebelem, 51, was sentenced yesterday afternoon by United States District Court Judge Michael W. Fitzgerald, who also ordered the defendant to pay $3.45 million in restitution to the Medicare program.
Following a seven-day trial last September, a federal jury found Ekwebelem guilty of 16 counts of conspiracy to commit health care fraud, health care fraud and payment of illegal kickbacks.
The evidence presented at the trial showed that Ekwebelem’s Gardena-based durable medical equipment (DME) supply company, Adelco Medical Distributors, Inc., billed Medicare for medically unnecessary DME – primarily power wheelchairs – for beneficiaries often recruited off the street. As part of the scheme, which ran from January 2007 through December 2011, Ekwebelem illegally paid kickbacks to “marketers” who recruited those beneficiaries and then paid kickbacks to a handful of complicit doctors in exchange for fraudulent prescriptions for DME.
Those doctors included Dr. Charles Okoye, who was sentenced to two years in federal prison after he pled guilty to conspiring with Ekwebelem to commit health care fraud, and Dr. Uche Chukwudi, who fled a month before trial and remains a fugitive. Three of Adelco’s marketers – Romie Tucker, Cindy Santana and Maritza Hernandez – have also received sentences of up to two years in prison for their roles in the scheme.
During the course of the scheme, Ekwebelem submitted more than $7 million in fraudulent claims to Medicare and received nearly $3.5 million. As the evidence at trial showed, Ekwebelem did more than cause substantial losses to Medicare – she also caused harm to Medicare beneficiaries. Medicare will only pay for one wheelchair every five years. On at least one occasion, Ekwebelem submitted a fraudulent claim to Medicare for a power wheelchair that she did not even let the beneficiary keep, which later prevented the beneficiary from getting a wheelchair when it was actually needed.
As prosecutors wrote in a sentencing memorandum filed with the court: “In addition to exploiting Medicare’s honor system, defendant’s scheme also took advantage of the beneficiaries’ unfamiliarity with the English language and the Medicare system, forcing them to provide their personal Medicare information and sign forms shifting liability for the power wheelchairs to them, even though the forms were neither translated nor explained to the beneficiaries. In some cases, defendant’s conduct even prevented beneficiaries from getting medical care they later needed.”
The investigation into Ekwebelem and Adelco was conducted by the U.S. Department of Health and Human Services, Office of the Inspector General, and the Federal Bureau of Investigation.
Release No. 15-038
Grand Isle Man Sentenced to 41 Months in Prison for Submitting a Fraudulent GCCF ClaimRead the Press Release
U.S. Attorney Kenneth A. Polite announced that RONNIE P. VEDROS, 52, of Grand Isle, was sentenced today after previously pleading guilty to one count of mail fraud.
U.S. District Judge Lance M. Africk sentenced VEDROS to 41 months imprisonment, to be followed by three years of supervised release. In addition to the term of imprisonment, VEDROS was ordered to pay $30,173.56 in restitution.
According to court documents, VEDROS’s charges stem from an application he submitted to the Gulf Coast Claims Facility (GCCF) in the aftermath of the explosion and oil spill at the Deepwater Horizon oil rig. VEDROS claimed to have lost earnings as a commercial fisherman and engineer as a result of the oil spill and provided documentation to prove his loss. In reality, as set forth in the factual basis, VEDROS was neither a commercial fisherman nor employed as an engineer at the time of the disaster and the documentation submitted had been falsified. As a result of VEDROS’s false application, he received approximately $30,173.56 in funds from the GCCF in which he was not entitled.
This case was brought as part of this District’s partnership with the National Center for Disaster Fraud (NCDF), a nationwide initiative to protect available funds and assistance for those victims of both natural and man-made disasters such as hurricanes, floods, tornadoes and the recent Gulf oil spill. If you have knowledge of fraud, waste, abuse, or allegations of mismanagement involving disaster relief operations, you can contact the NCDF by either calling the hotline at (866) 720-5721, faxing (225) 334-4707, emailing at [email protected]
U.S. Attorney Polite praised the work of the U.S. Secret Service in investigating this case. Assistant U.S. Attorney Tracey Knight was in charge of the prosecution.
Germantown Man Indicted for Failing to Pay $550,000 in TaxesRead the Press Release
Memphis, TN – A 46-year-old Germantown man was indicted this week on tax evasion charges for failing to file and pay more than $500,000 in income tax returns.
According to the indictment, John Ballard, a former securities/investment broker, failed to file and pay income tax returns from 2000 to 2008. Ballard’s delinquency caused him to owe $553,627.28 in back taxes. This amount, however, doesn’t include penalty charges and accrued interest.
Ballard was able to avoid satisfying his tax obligations by falsely claiming to the Internal Revenue Service (IRS) that he was unemployed and unable to find employment.
Despite owing the government, the indictment alleges Ballard was paid approximately $522,140.79 in 2009 alone from his then employer NFP Securities.
Ballard faces up to five years in prison if convicted.
The case was investigated by IRS-Criminal Investigation. The government’s case is being prosecuted by Assistant U.S. Attorney John Fabian.
The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Fugitive Sought in Sex Trafficking of Minors CaseRead the Press Release
GALVESTON, Texas – A criminal complaint charging three Galveston residents has been unsealed alleging they engaged in a conspiracy to traffic minors for sexual purposes and financial gain, announced U.S. Attorney Kenneth Magidson.
The criminal complaint was filed under seal April 21, 2015, and charges Charles Devan Fulton Sr., 39, Charmell Potts, 32, and Dominque Warner, 23. It was unsealed in Galveston federal court today as Warner was ordered into custody pending further criminal proceedings. Potts was previously ordered into custody where she will also remain. Fulton is considered a fugitive and a warrant remains outstanding for his arrest.
Fulton is alleged to have coerced several young females into prostitution. The victims were advertised on websites commonly known for publicizing commercial sex. The complaint further alleges that Fulton would not rent rooms himself; therefore, Potts and Warner would do so at area hotels to use for prostitution involving the young girls. The complaint also alleges Warner would drive the girls to the locations, wait until they were finished, then drive them back to Fulton’s residence in Galveston. Potts also drove the girls and would keep some of the monies earned, according to the complaint. Fulton would allegedly keep the remainder of all of the monies the victims earned.
A reward of up to $5000 is being offered by the FBI and Crime Stoppers for information that leads to the arrest of Fulton.
Anyone with information about his whereabouts is asked to call the Houston office of the FBI at 713-693-5000 or call Crime Stoppers of Houston at 713-222-TIPS (8477). Text TIP610 plus your tip to CRIMES (274637) or visit www.crime-stoppers.org. All tipsters remain anonymous.
Beginning today, Clear Channel Outdoor will post messages on digital billboards across the Greater Houston and Galveston County area to publish the reward and a picture of the fugitive. Clear Channel Outdoor is donating space and time on its digital billboards as a public service to the community.
The charges are the result of an investigation conducted jointly by the FBI and Galveston Police Department. Assistant U.S. Attorney Sherri Zack is prosecuting the case.
The prosecution was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
A criminal complaint is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.Fountain Inn Man Pleads Guilty to Hydrocodone ConspiracyRead the Press Release
Contact Person: Bill Watkins (864) 282-2100
Columbia, South Carolina ---- United States Attorney Bill Nettles stated that Houston G. Leake, age 70, of Fountain Inn, pled guilty today in federal court in Greenville, to conspiracy to distribute hydrocodone and other controlled substances, a violation of Title 18, United States Code, Section 846. Senior United States District Judge G. Ross Anderson, Jr., of Anderson accepted the plea and will impose sentence after he has reviewed the presentence report which will be prepared by the U.S. Probation Office.
Evidence presented at the change of plea hearing established that the federal Drug Enforcement Administration along with the Fountain Inn Police Department had undertaken a long-term investigation of Leake. Agents used a confidential informant and an undercover police office to make 7 buys of hydrocodone and Percocet pills from Leake. Based on the undercover buys, law enforcement executed a search warrant at Leake’s home. Inside they found various controlled substances including morphine, methadone, oxycodone and hydrocodone. Law enforcement also found various firearms.
Mr. Nettles stated the maximum penalty Leake can receive is a fine of $250,000 and/or imprisonment for 20 years, plus a special assessment of $100.
The case was investigated by agents of the Fountain Inn Police Department and the federal Drug Enforcement Administration. Assistant United States Attorney Bill Watkins of the Greenville office handled the case.
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Former aid worker from Summit County charged with sexually abusing minors in HondurasRead the Press Release
A Summit County man who worked at a homeless shelter for youths in Honduras was arrested and charged in federal court with engaging in sex with minor victims.
Corey Bryant, 25, of Norton, was arrested Wednesday afternoon following a search of his residence. Bryant charged in U.S. District Court with travelling to a foreign country to engage in illicit sexual conduct with minors.
Bryant, while working at a Honduran homeless agency as far back as 2011, engaged in sexual conduct with three minor victims -- including one as young as 9 years old, according to the criminal complaint.
Bryant was initially ordered held without bond and was ordered to appear at a subsequent bond hearing on May 4, 2015.
During the search of his residence, HSI special agents seized two thumb drives, two cell phones and a laptop computer. The devices will undergo computer forensic examination.
The federal charges are the product of an ongoing probe initiated after an anonymous tip was received December 2014 by U.S. Immigration and Customs Enforcement's (ICE) Tip Line website.
The investigation is being handled by ICE Homeland Security Investigations (HSI). HSI Transnational Criminal Investigative Unit, HSI Tegucigalpa, and the Norton Police Department assisted in the investigation.
The federal prosecution is being handled by Assistant U.S. Attorney Michael A. Sullivan.
A charges is only charge an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
This investigation was conducted under HSI's Operation Predator, an international initiative to protect children from sexual predators. Since the launch of Operation Predator in 2003, HSI has arrested more than 10,000 individuals for crimes against children, including the production and distribution of online child pornography, traveling overseas for sex with minors, and sex trafficking of children. In fiscal year 2014, more than 2,300 individuals were arrested by HSI special agents under this initiative and more than 1000 victims identified or rescued.
HSI encourages the public to report suspected child predators and any suspicious activity through its toll-free Tip Line at 1-866-DHS-2-ICE or by completing its online tip form. Both are staffed around the clock by investigators. From outside the U.S. and Canada, callers should dial 802-872-6199. Hearing impaired users can call TTY 802-872-6196.Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.
Former Youngstown resident indicted for fraudulent purchase of a dozen homes in Mahoning CountyRead the Press Release
A 12-count federal indictment was filed charging a former Youngstown man with fraud related to the purchase of a dozen homes in Mahoning County, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, and Steven D. Anthony, Special Agent in Charge of the FBI’s Cleveland office.
R. Allen Sinclair, 51, of Suwanee, Georgia, was indicted on 12 counts of financial institution fraud.
Sinclair was the owner and operator of Newport Investments, LLC and Newport Development, Inc. in Youngstown. He advertised that the company was in the business of buying, renovating and selling residential real estate properties, according to the indictment.
Sinclair, through his companies, solicited money from investors, promising them annual returns of about 10 percent and telling them their funds would be used for the acquisition and renovation of properties in Youngstown. Five investors invested a total of approximately $147,000, according to the indictment.
Sinclair knew that the properties needed little or no renovation. Instead, he converted the money for his personal use, according to the indictment.
Beginning in 2005, Sinclair acquired the 12 properties – in Youngstown, Canfield, Struthers and Austintown -- through land trusts he created for each property. Sinclair fraudulently misled the sellers into believing the land trusts had assumed the mortgage payments. After making minimal monthly payments, Sinclair then stopped paying the mortgages and did not notify the sellers, who were unaware they were still obligated to the loans, according to the indictment.
As a result, the properties went into foreclosure, causing substantial losses to the lenders and the federal agencies that insured them, according to the indictment.
This case is being prosecuted by Assistant U.S. Attorneys Robert J. Patton and Derek Kleinmann following an investigation by the Federal Bureau of Investigation, with assistance from the U.S. Department of Housing and Urban Development -- Office of Inspector General and the Ohio Attorney General's Office.
If convicted, the defendants’ sentences will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendant’s prior criminal record (if any), the defendant’s role in the offense and the characteristics of the violation.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Former U.S. Marine Corps Reservist Indicted for Stealing, Selling Ammunition, Body Armor, and Training RiflesRead the Press Release
Memphis, TN – A 21-year-old former U.S. Marine Corps (USMC) reservist was indicted by a federal grand jury this week on theft of government property charges for stealing and selling assault-style training rifles, ammunition, and body armor. The indictment also alleges that the defendant used two government vehicles in an unauthorized manner.
According to the indictment, in January 2014, Armando Jaime Vazquez, Jr., of Memphis, removed an $89,000 Military-issued Hummer and $150,000 Tractor, Rubber Tired, Articulated Steering, Multipurpose Vehicle (also known as a "TRAM") from the USMC Reserve Center in Memphis.
The following month, Vazquez sold more than $4,000 worth of stolen USMC equipment to an individual. The items he unlawfully sold in February include: a Marine Corps issued Improved Load Bearing Equipment (ILBE) pack; desert tan body armor; ammunition magazines for M-16 style rifles; a Quiet Pro communications headset; and a ballistic helmet with camouflage cover.
Vazquez sold additional stolen equipment to an individual in early March, which valued at over $20,000. The stolen items included: body armor; 2 Beretta M9 inert training aids; ammunition magazines for M-16 style rifles; a Bushmaster Blue Fire M4; and a Bushmaster Blue Fire M-16 A4 with an accompanying magazine.
Vazquez faces a maximum sentence of 10 years in federal prison if convicted. He also faces up to a $250,000 fine.
The case was investigated by Naval Criminal Investigative Services and the FBI Safe Streets Task Force. The government’s case is being prosecuted by Assistant U.S. Attorney Kasey Weiland.
The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Former Springfield Police Officer Sentenced for Child PornRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a retired Springfield, Mo., police officer was sentenced in federal court today for possessing child pornography.
Steven Robert Magruder, 60, of Springfield, was sentenced by U.S. District Judge M. Douglas Harpool to four years in federal prison without parole. The court will issue a separate order for Magruder to pay restitution to one of his victims.
Magruder retired as a corporal from the Springfield Police Department in 2005. He worked part-time from 2006 to 2014 as a security officer for Ozarks Technical Community College in Springfield and as a bailiff for the Greene County Circuit Court in 2013.
On Oct. 7, 2014, Magruder pleaded guilty to possessing child pornography.
A detective with the Jasper County Sheriff’s Department identified Magruder’s computer on Jan. 7, 2013, as sharing child pornography over the Internet. The detective downloaded 12 videos of child pornography that Magruder was sharing via a peer-to-peer file-sharing program during a 42-day period in January and February 2013. Law enforcement officers executed a search warrant at Magruder’s residence and seized his computer, which contained child pornography. A detailed forensic analysis was conducted on Magruder’s computer and indicated that Magruder had been collecting child porn for the past year.
This case was prosecuted by Assistant U.S. Attorney Abram McGull, II. It was investigated by the FBI, the Southwest Missouri Cyber Crime Task Force, the Jasper County, Mo., Sheriff’s Department and the Springfield, Mo., Police Department.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Former Shell Employee Ordered to Pay over $19 Million in RestitutionRead the Press Release
United States Attorney James L. Santelle announced today that Randy Jones (age: 44) of Houma, Louisiana, a former corrosion coordinator for Shell Pipeline Company L.P. (Shell) was sentenced in federal court to five years of probation and ordered to pay $19,377,785 in restitution.
Previously, Jones pleaded guilty to knowingly failing to conduct required safety test between January and December 2011 and submitting the false data to the Pipeline and Hazardous Material Safety Administration (PHMSA). Jones’ violations were connected to a pipeline owned by Shell that delivered commercial aviation jet fuel to General Mitchell International Airport in Milwaukee, WI. In January 2012, a hole was discovered in the pipeline at Mitchell Airport after jet fuel began showing up in the soil surrounding the airport and Wilson Creek. Approximately 9,000 gallons of jet fuel was released from the pipeline.
This case was investigated by the U.S. Environmental Protection Agency Criminal Investigation Division, U.S. Coast Guard Investigative Service, U.S. Department of Transportation office of Inspector General, and the Federal Bureau of Investigation with assistance from PHMSA. The case was prosecuted by Jennifer A. Whitfield of the Environmental Crimes Section of the Department of Justice and Tracy M. Johnson of the U.S. Attorney’s Office for the Eastern District of Wisconsin.
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Former Officer of Rockford Group Pleads Guilty for Role in Multi-Million Dollar Fraud SchemeRead the Press Release
Earlier today, Genadi Yagodayev, a former officer of the Rockford Group, pleaded guilty to conspiracy to commit mail and wire fraud in connection with a scheme to defraud investors of more than $10 million. Today’s plea is the fourth conviction in connection with the investigation into Rockford Group.
The guilty plea was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Philip R. Bartlett, Postal Inspector in Charge, New York Division, U.S. Postal Inspection Service (USPIS); Raymond R. Parmer Jr., Special Agent-in-Charge, Homeland Security Investigations, New York Field Office (HSI); and Robert J. Sica, Special Agent in Charge, United States Secret Service, New York Field Office (USSS).
“Yagodayev and his cohorts scammed unsuspecting investors through a web of lies and deceit. When the money was stolen and sent overseas, Yagodayev fled the country and thought he had escaped the reach of U.S. law enforcement,” stated Acting United States Attorney Currie. “His extradition and prosecution show that we and our law enforcement partners will leave no stone unturned in bringing to justice those who seek to defraud the investing public.” Mr. Currie expressed his appreciation to the USPIS, HSI, and USSS for their hard work and dedication over the course of this investigation and prosecution. Mr. Currie also thanked the government of Cyprus and the Department of Justice, Office of International Affairs (OIA), for their substantial assistance in the extradition of Yagodayev.
From approximately December 2008 to November 2009, Yagodayev and his co-conspirators participated in a fraudulent investment scheme through a company called the Rockford Group. The Rockford Group marketed itself as a “leading private equity firm,” claimed to invest in plaintiffs’ rights to future recoveries in personal injury and other lawsuits, and promised a 15% return on their investments. The Rockford Group, however, never invested in any lawsuits. Instead, nearly all of the investors’ funds were wired to bank accounts overseas. Approximately 200 investors in the U.S. and Canada lost approximately $11 million as a result of this scheme.
After the scheme collapsed, Yagodayev fled to Israel. In 2014, he was apprehended while traveling to Cyprus and extradited to the United States later that year.
Today’s guilty plea took place before United States District Judge I. Leo Glasser. When sentenced, Yagodayev faces up to 20 years in prison. The government’s case is being prosecuted by the Office’s Business and Security Fraud Section. Assistant United States Attorney Daniel Spector is in charge of the prosecution.
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 is 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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The Defendant:
GENADI YAGODAYEV
Age: 37
E.D.N.Y. Docket No. 14-CR-258
Former Merrill Lynch and Smith Barney Investment Adviser Receives Second Conviction for Defrauding ClientsRead the Press Release
BOSTON – A former Merrill Lynch and Smith Barney investment adviser already serving a federal prison term for investment fraud pleaded guilty on Tuesday, April 28, 2015 to additional fraud charges in connection with a nearly two-decade-long scheme to defraud clients of hundreds of thousands of dollars.
Jane E. O’Brien, 62, of Needham, pleaded guilty to three counts of mail fraud, two counts of wire fraud, and two counts of investment adviser fraud. U.S. District Court Judge Nathaniel M. Gorton scheduled sentencing for Aug.6, 2015.
As alleged in the indictment, between 1995 and 2013, O’Brien defrauded several clients for whom she provided investment advisory services. As part of the scheme, O’Brien misappropriated funds entrusted to her through a variety of means, including persuading clients to withdraw money from their bank and brokerage accounts and give the money to her to invest on their behalf. After gaining control of her clients’ money, however, O’Brien made no such investments. Instead, she used the misappropriated client funds for a variety of improper purposes, including paying personal expenses, paying purported investment returns, or repaying personal loans to other clients. Finally, in order to perpetuate her fraud and conceal it from her clients, O’Brien made false statements and misrepresentations to clients, including by making lulling payments to clients and otherwise providing them with false assurances of their financial security.
Specifically, O’Brien caused one client to empty her Smith Barney brokerage account, then to borrow an additional $1 million on her home and give much of that money to O’Brien to invest. With respect to a second client, O’Brien caused the client to empty her Merrill Lynch brokerage account and give the proceeds to O’Brien, purportedly to invest in a Hollywood movie called “Crooked Arrows.” With respect to a third client, O’Brien caused the client to withdraw $190,000 from her bank account and give the proceeds to O’Brien to invest. O’Brien made none of the investments she promised.
O’Brien was previously convicted of securities fraud after pleading guilty in December 2012 to a scheme to defraud yet another client of $240,000 by selling her a security that did not exist. She is currently serving a sentence of 33 months in prison.
The charges of mail and wire fraud provide for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charge of investment adviser fraud provides for a sentence of no greater than five years in prison, three years of supervised release, and a $10,000 fine. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Stephen E. Frank, Deputy Chief of Ortiz’s Economic Crimes Unit.
Former Financial Manager and Church Treasurer Pleads Guilty to Mail FraudRead the Press Release
Bruce L. Johnson, 50, of Wayne City, Illinois, the former Manager of Finance and Office Services for Wayne-White Counties Electric Cooperative and Treasurer of the Wayne City First Christian Church, pled guilty today in United States District Court in Benton to a four-count information charging him with defrauding both organizations, announced Stephen R. Wigginton, United States Attorney for the Southern District of Illinois. The information to which Johnson pled guilty alleged that between 2007 and 2013, Johnson used his trusted positions with both organizations to steal over $350,000 in Cooperative and Church funds. Throughout that time period Johnson regularly used the United States mail to send unauthorized, and in many cases forged, checks drawn on the organizations’ respective bank accounts to his personal creditors and others.
Sentencing is set for August 27, 2015, at 10:00 a.m., at the United States District Courthouse in Benton. At that time, on each count, Johnson faces up to 20 years in federal prison, a $250,000 fine, and 3 years of supervised release to follow any term of incarceration imposed. Johnson will also be required to make full restitution to his victims. Johnson will remain on bond pending sentencing.
The investigation leading to the charges and guilty plea was a cooperative effort by the Federal Bureau of Investigation, the Fairfield Police Department, and the Wayne County Sheriff’s Department.
The case is being prosecuted by Assistant United States Attorney James M. Cutchin.
Former FBI Assistant Special Agent in Charge in Boston Charged with Perjury and Obstruction of JusticeRead the Press Release
BOSTON – Robert Fitzpatrick, former Assistant Special Agent in Charge (ASAC) of the FBI’s Boston Field Office, has been indicted by a federal grand jury on six counts of perjury and six counts of obstruction of justice in connection with his testimony at the 2013 trial of James “Whitey” Bulger. Fitzpatrick was an ASAC in Boston between 1981 and 1986 and supervised the FBI’s organized crime squad in Massachusetts, Rhode Island, New Hampshire and Maine.
Fitzpatrick, 75, of Charlestown, R.I., who is the author of “Betrayal, Whitey Bulger and the FBI Agent Who Fought To Bring Him Down," testified under oath at the Bulger trial on July 29 and July 30, 2013. During that testimony, it is alleged that Fitzpatrick made false material declarations to aid Bulger’s defense and designed, in part, to enhance his own credibility as a former FBI official testifying for the defense.
It is alleged that Fitzpatrick falsely testified that: he was specifically sent to Boston by the Assistant Director of the FBI because there were major problems in the office, when, in fact, it was a routine reassignment and Fitzpatrick received no special instructions from the Assistant Director; that Bulger told Fitzpatrick that Bulger was not an FBI informant when, in fact, Bulger never denied to Fitzpatrick that Bulger was an informant; that Fitzpatrick tried to close Bulger as an FBI informant but was overruled by, among others, FBI headquarters when, in fact, Fitzpatrick never advocated that Bulger be closed as an informant; that he was not demoted and reduced in grade because of charges related to a shooting incident, when, in fact, Fitzpatrick was demoted due to his falsification of reports related to his investigation of a shooting incident; and that he personally arrested mob boss Jerry Angiulo when, in fact, Fitzpatrick did not arrest Jerry Angiulo. Finally, it is alleged that Fitzpatrick falsely testified that he personally found the rifle that was used to assassinate Dr. Martin Luther King, Jr. in Memphis in 1968, “having just missed James Earl Ray, the shooter.” According to the indictment, Fitzpatrick was not the first officer at the scene who recovered the weapon used to assassinate Martin Luther King.
The charging statute provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 on each of the six perjury counts and a sentence of no greater than 10 years in prison on the obstruction of justice counts. The sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
Fitzpatrick is scheduled to have his initial appearance before U.S. Magistrate Judge Donald L. Cabell later today.
United States Attorney Carmen M. Ortiz and Michael E. Horowitz, Inspector General for the Department of Justice made the announcement today. This matter is being investigated by the Department of Justice Office of the Inspector General and is being prosecuted by Assistant U.S. Attorney Zachary R. Hafer of Ortiz’s Public Corruption and Special Prosecutions Unit.
The details contained in the Indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Former El Paso Couple Sentenced to Federal Prison for their Roles in an Identity Theft and Fraudulent Tax Refund SchemeRead the Press Release
In El Paso, 34–year-old Curtis Joshua Cooper (aka “Kelvin Afanador-Rodriguez”) and 30-year-old Brandie Malfavon were sentenced to 29 months and eight months in federal prison, respectively, for their roles in an identity theft and fraudulent tax refund scheme announced Acting United States Attorney Richard L. Durbin, Jr., and Internal Revenue Service-Criminal Investigation Special Agent in Charge William Cotter.
In addition to the prison terms, U.S. District Judge Frank Montalvo ordered that the defendants pay $22,749.55 restitution to the Internal Revenue Service and that they be placed on supervised release for a period of two years after completing their prison terms.
On January 13, 2015, Cooper and Malfavon pleaded guilty to one count of conspiracy to commit wire fraud. Cooper also pleaded guilty to one count of aggravated identity theft. According to court records, from January 2010 until March 2011, the defendants conspired to obtain refunds derived from fraudulently prepared income tax returns. Cooper, admittedly, used names, dates of birth and social security numbers he purchased to electronically submit fraudulent income tax returns to the Internal Revenue Service. The refunds, which were claimed and received by Cooper based on those fraudulent income tax returns, were transferred by wire from the Federal Reserve Branch in New York to bank accounts in El Paso that were opened by Malfavon.
“The actions of these criminals to steal the identities of innocent, hardworking Americans in order to use the ill-gotten funds for personal gain are disgraceful,” said IRS-Criminal Investigation Special Agent in Charge William Cotter, San Antonio Field Office. “Identity theft is a serious crime that hurts innocent taxpayers and IRS Criminal Investigation is determined to stop these criminals and bring them to justice.”
This case was investigated by the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorney Adrian Gallegos prosecuted this case on behalf of the Government.
Former Dubberly postmaster sentenced to two years' probation for money order fraudRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced today that a Ruston woman was sentenced to two years of probation and a $1,000 fine for cashing money orders without posting payments to the U.S. Treasury.
Amanda Murphy, 36, of Ruston, La., was sentenced by U.S. District Judge Donald E. Walter on one count of misappropriation of postal funds. According to evidence presented at the January 22, 2015, guilty plea, Murphy intentionally delayed reporting 37 money orders, which totaled $10,318.76 from December 13, 2013 to February 10, 2014, while serving as Postmaster for the Dubberly Post Office. When questioned by agents, Murphy admitted to cashing the money orders to herself and delaying payments. She also falsified U.S. Postal Service daily reports on money order transactions in order to accomplish the scheme. Agents also audited her cash drawer and found a $1,077.17 shortage. Murphy has paid all restitution in full.
The U.S. Postal Service-Office of Inspector General conducted the investigation. Assistant U.S. Attorney Brandon B. Brown prosecuted the case.
Former Controller of Non-Profit Organization That Funds Medical Research Pleads Guilty in Manhattan Federal Court to Embezzling over $1.8 Million and Tax EvasionRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that KAREN ALAMEDDINE, a/k/a “Karen Dean,” the former controller of a New York-based non-profit organization whose core mission is to cure genetic illnesses by supporting biomedical research (the “Non-Profit”), pled guilty in Manhattan federal court to embezzling more than $1.8 million from the Non-Profit, and to tax evasion for deliberately failing to report to the IRS as income the money she embezzled. ALAMEDDINE was initially charged in November 2014, and entered her guilty plea today before United States District Judge Gregory H. Woods.
Manhattan U.S. Attorney Preet Bharara said: “As she admitted in Court today, over the course of five years Karen Alameddine stole almost $2 million that she, as controller of an organization, was responsible for overseeing and safeguarding. To make matters worse, her victim was a non-profit organization dedicated to finding cures for serious diseases, and she compounded her embezzlement with tax crimes.”
According to the Complaint, the Indictment, and proceedings in Manhattan federal court:
From approximately late 2008 through early 2014, while working as the controller for the Non-Profit, ALAMEDDINE diverted over $1.85 million of the Non-Profit’s funds to her own bank accounts and for her own personal use. ALAMEDDINE executed the scheme principally by disguising QuickBooks entries to make transfers to her personal bank account appear as if they were transfers made to pay grant recipients of the Non-Profit. ALAMEDDINE further sought to disguise the fraud by inventing a fictitious accounting firm named “Davis & Greene,” purportedly based in Washington, D.C., which was, according to ALAMEDDINE, retained to prepare certain tax returns for the Non-Profit for the 2012 and 2013 tax years.
After ALAMEDDINE fraudulently transferred the funds from an account belonging to the Non-Profit to a personal bank account, she further transferred the funds to other accounts she controlled, and thereafter used those funds for various personal expenses, including to pay personal bills. Among the personal items ALAMEDDINE paid for with the embezzled money were utility bills, car payments, jewelry, the purchase of a recreational vehicle, her personal mortgages, and leisure travel.
In addition, for each of the calendar years 2009 through 2013, ALAMEDDINE filed tax returns with the Internal Revenue Service (“IRS”) in which she deliberately omitted reporting the income she received from the fraud. Those deliberate omissions resulted in ALAMEDDINE’s evasion of substantial amounts of income tax for each of the years between 2009 and 2013.
ALAMEDDINE, 57, of Perris, CA, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of tax evasion, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. ALAMEDDINE will be sentenced by Judge Woods on August 14, 2015, at 2:30 p.m.
Mr. Bharara praised the outstanding investigative work of the IRS and the U.S. Postal Inspection Service.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Stanley J. Okula is in charge of the prosecution.
Former CEO and President of Gateway Bank Pleads Guilty to Bank Fraud ConspiracyRead the Press Release
Earlier today, Poppi Metaxas, the former President and Chief Executive Officer (CEO) of Gateway Bank, FSB (Gateway) pleaded guilty to conspiracy to commit bank fraud for her role in defrauding the bank of more than $1.8 million in the aftermath of the financial crisis.
The guilty plea was announced by Kelly T. Currie, Acting 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); Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and Christina Scaringi, Special Agent-in-Charge, Northeast Region, U.S. Department of Housing and Urban Development, Office of Inspector General (HUD-OIG).
“As Gateway Bank struggled to survive under the burden of its accumulated toxic assets, its CEO Poppi Metaxas turned to sham transactions to deceive regulators and convince them that the bank had rid itself of its bad loans and underwater real estate holdings. Today’s guilty plea puts bank officers on notice that they will be brought to justice if they resort to lies and deceit to fix mistakes of the past,” stated Acting United States Attorney Currie. Mr. Currie thanked the FBI, SIGTARP, and HUD-OIG for their hard work and dedication through the course of this five-year investigation and prosecution.
According to court filings and the facts presented at the plea hearing, between 2009 and 2010, Metaxas engaged in a scheme to defraud Gateway in connection with Gateway’s sale of non-performing assets and mortgage loans to three entities in exchange for $15 million. Specifically, Metaxas caused Gateway to enter into a sham loan agreement with Ideal Mortgage Bankers Ltd. d/b/a Lend America, a Long Island mortgage lender and Gateway’s largest mortgage lending client. Metaxas and her co-conspirators, through a series of wire transfers, then used the proceeds of that sham loan to satisfy the 25 percent down payment that the three entities owed to Gateway in connection with the sale of the non-performing assets and loans. To conceal the fraudulent “round trip” nature of the loan funds, Metaxas deceived the board of directors of Gateway and, in October 2009, she provided false testimony to bank regulators when asked about the source of the down payment.
Today’s guilty plea took place before United States District Judge Joseph F. Bianco at the United States Courthouse in Central Islip, New York. When sentenced, Metaxas faces up to five years in prison.
The government’s case is being prosecuted by the Office’s Business and Security Fraud Section. Assistant United States Attorneys Walter M. Norkin and Christopher L. Nasson are in charge of the prosecution.
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 is 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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The Defendant:
POPPI METAXAS
Age: 62
Hillsborough, California
E.D.N.Y. Docket No. 14-CR-190 (JFB)
Former Boston Police Officer Sentenced for Making False StatementsRead the Press Release
BOSTON – A former Boston Police Officer was sentenced today in U.S. District Court in Boston for making false statements to the FBI relating to an investigation of the Academy Homes Street Gang (AHSG), a violent narcotics trafficking gang that operated out of the Academy Homes housing development in Roxbury.
Mel Steele, 36, of Boston, was sentenced to one year of probation and a fine of $2,000. In December 2014, Steele pleaded guilty to one count of making false statements to the FBI during the course of a federal investigation.
Steele, who was assigned to the Boston Police Department’s (BPD) Youth Violence Task Force (YVTF), was a long-time friend of an associate of the AHSG. During the course of joint FBI-BPD investigation of the AHSG from 2009 to 2011, Steele provided assistance to the AHSG associate. On one occasion, Steele allegedly used his BPD computer to run a license plate check on a vehicle which was later determined to be an unmarked BPD vehicle operated by a detective who was conducting surveillance on the AHSG. On another occasion Steele contacted a Massachusetts State Trooper to glean information about a gang member’s pending charges on another criminal case. In May 2011, Steele made false statements about these matters when confronted by FBI agents.
United States Attorney Carmen M. Ortiz; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Boston Police Commissioner William Evans, made the announcement today. The investigation was conducted jointly by the FBI Public Corruption Unit and the Boston Police Department Anti-Corruption Division. The case was prosecuted by Assistant U.S. Attorney Dustin Chao of Ortiz’s Public Corruption and Special Prosecutions Unit.
Florida Men Sentenced for Poisoning Wildlife and Hunting Dogs in Bullock CountyRead the Press Release
Montgomery, Alabama - Daryl Fischer of Seminole, Florida and Russell Taylor of Loxahatchee, Florida were sentenced on Tuesday, April 28, 2015, to terms of probation for improper use of the pesticide Aldicarb, which is marketed as Temik, announced the United States Attorney for the Middle District of Alabama, George L. Beck, Jr.
The two men were members of a hunting club leasing Bucksnort Plantation near Fitzpatrick, Alabama, and on January 31, 2014 sprinkled granules of Temik on portions of a deer carcass that they spread around the property in an effort to kill coyotes. Temik is toxic to fish, birds and other wildlife, and is not approved for use as a poison for animals. The poisoning resulted in significant loss of animal life, including three fox-hunting dogs, two red-tailed hawks, and a black vulture. In addition to their terms of probation, Fischer and Taylor are prohibited from hunting all game animals for one year, including deer and migratory birds; are ordered to pay restitution and fines in the amount of $14,249.79; and will be responsible for publishing a public notice in the Union Springs Herald regarding the misuse of toxic pesticides.
“Using pesticides for purposes other than their registered use is illegal and puts people, animals and the environment at risk of exposure,” said Maureen O’Mara, Special Agent in Charge of the Environmental Protection Agency’s criminal enforcement program in Alabama. “Pesticide labels and usage instructions must be followed carefully to ensure safe application. Today’s sentence sends a strong signal that individuals who knowingly misuse these products and kill protected wildlife will be prosecuted.”
“This investigation was highly successful because of the collaborative efforts from everyone who worked on this important investigation,” said Luis Santiago, Special Agent in Charge of the Fish and Wildlife Service Office of Law Enforcement program in the southeast. “Our agents will continue to work with federal, state, and local agencies to vigorously pursue those who misuse registered use pesticides.”
“I want to commend the EPA Criminal Investigation Division and the U.S. Fish and Wildlife Service for their outstanding work in this case,” stated U.S. Attorney Beck. “We must protect our wildlife and environment for generations to come.”
This case was investigated by the United States Environmental Protection Agency Criminal Investigation Division and the United States Fish and Wildlife Service Office of Law Enforcement. This case was prosecuted by Assistant United States Attorney Gray M. Borden.
Federal Judge Hands Down 10-Year Sentence to Former Chief Accounting Officer for Beazer Homes USA, Inc.Read the Press Release
CHARLOTTE, N.C. – Today, U.S. District Judge Robert J. Conrad, Jr. sentenced Michael T. Rand, 52, of Sandy Springs, Ga., to 120 months in prison and to three years of supervised release on conspiracy and obstruction of justice charges in connection with federal investigation into a seven-year accounting fraud conspiracy at Beazer Homes USA, Inc. (“Beazer”), announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. In July 2014, a federal jury convicted Rand of the charges following a two-week retrial. Rand, who was the former Chief Accounting Officer for Beazer, was previously found guilty in October 2011, however that verdict was later vacated due to juror misconduct, which prompted the presiding judge to order Rand’s retrial.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division joins Acting U.S. Attorney Rose in making today’s announcement.
The charges against Rand arise from a government investigation involving Beazer and its employees that began in March 2007. In July 2009, Beazer was charged with, among other things, participation in the conspiracy and securities fraud with Rand. Beazer accepted responsibility for those charges and, in a deferred prosecution agreement, agreed to pay restitution of $50 million. Rand was indicted by a federal grand jury in August 2010.
“As the Chief Accounting Officer of a publicly-traded company, Rand had an obligation to Beazer’s investors and the public to abide by accounting rules and maintain proper books and records that accurately reflected the company’s financial status. Corporate corruption erodes the public’s trust in our financial system which can have an adverse effect on our economy. Rand’s sentence reflects the seriousness of his offense and underscores my office’s commitment to protecting Americans from executives that engage in corporate fraud,” said Acting U.S. Attorney Rose.
“As evidenced by the significant efforts of the investigative and prosecutive team, the FBI remains committed to holding corporate executives responsible for any and all malfeasance which affects America’s financial markets. The ordinary investor should have confidence in the accuracy of corporate accounting requirements and rest assured that executives who place their personal interests above all others will be held responsible. The two juries who heard the complicated testimony in this matter clearly agreed with this position,” stated John A. Strong, Special Agent in Charge for the Charlotte Division of the FBI.
A federal jury found that, while serving as Beazer’s Chief Account Officer, Rand directed an accounting fraud conspiracy to falsify reported profits at Beazer by lying to Beazer’s auditors, fraudulently achieving earnings targets, falsifying Beazer’s books and records, and deceiving the public by boosting and lowering company earnings. Rand was convicted of conspiracy to commit securities fraud, to make false and misleading statements to auditors and accountants, to circumvent Beazer’s internal accounting controls, and to falsify the books, records, and accounts of Beazer. He was also convicted of engaging in wire fraud conspiracy.
According to court documents and evidence presented at Rand’s second trial, Rand executed the conspiracy in two main ways: Between 2005 and 2006, Rand entered into a hidden oral side agreement with another company through one of its employees, which was designed to allow Beazer to obtain cash and to improperly report revenue from purported “sales” of model homes. This activity was in direct contravention of the accounting rules and hidden from Beazer’s auditors. Between 2000 and 2007, Rand directed a scheme to commit securities fraud and create false books and records at Beazer by practicing “cookie jar accounting,” which allowed Rand and others to falsely report profits in Beazer’s publicly reported financial statements.
The jury also convicted Rand of obstruction of justice in relation to a federal grand jury investigation. Trial evidence showed that after being notified of the federal grand jury’s investigation of Beazer in March 2007, Rand deleted nearly 6,000 emails, obstructing the grand jury investigation then focused on the separate investigation into mortgage fraud at Beazer.
Finally, the jury convicted Rand of lying to hinder an investigation by making numerous false statements to investigators on behalf of the Audit Committee of Beazer’s Board of Directors, after learning that such false statements would be reported to the FBI and the U.S. Attorney’s Office.
In announcing today’s sentence, Judge Conrad described the defendant’s conduct as Chief Accounting Officer at Beazer as “criminal, dishonest and corrupt,” with “repeated acts to cook the books,” and as a result, “illegality became a norm” at Beazer. The Court emphasized that its sentence was intended to deter others because our “markets depend on the integrity of accounting officers.”
Following the sentencing hearing Rand was released on bond. He will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
Acting U.S. Attorney Rose credited FBI special agents for the investigation leading to today’s sentence. She also thanked the U.S. Securities & Exchange Commission for their invaluable assistance throughout the investigation.
Assistant U.S. Attorneys Kurt W. Meyers and Maria K. Vento of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Federal Inmate at Talladega Indicted for Assaulting Correctional OfficerRead the Press Release
BIRMINGHAM -- A federal grand jury today indicted an inmate at the Federal Correctional Institution in Talladega for assaulting a correctional officer at the prison in May 2014, announced U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Roger C. Stanton.
The one-count indictment filed in U.S. District Court charges that CORNELIUS MOORE, 39, assaulted a correctional officer engaged in official duties, and that the assault involved physical contact.
The charge carries a maximum sentence of eight years in prison and a $250,000 fine.
The FBI investigated the case, which Assistant U.S. Attorney Frank M. Salter is prosecuting.
Federal Inmate Pleads Guilty to EscapeRead the Press Release
Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today that on April 30, 2015, Kim T. Collins, 38, formerly an inmate at the Federal Correctional Center in Forrest City, Arkansas (FCC-Forrest City), pled guilty to an Indictment charging him with Escape. Collins faces a new term in federal prison of not more than five years, a fine up to $250,000, or both, and a term of supervised release of not more than three years. Collins’ sentencing is scheduled for August 7, 2015, in East St. Louis, Illinois. Collins has been detained (held without bond) since his arraignment on the Indictment in March 2015.
Facts revealed in Court showed that on March 8, 2013, Collins was sentenced to a total of 135 months in prison for drug offenses. On September 4, 2014, Collins was furloughed from FCC-Forrest City to the United States Penitentiary in Marion, Illinois ("USP-Marion"). With a furlough, the Bureau of Prisons allows low-risk inmates to travel from one facility to another without a law enforcement escort. In this case, Collins was to travel to Marion via Greyhound Bus and then take a taxi to the prison. Collins never showed up at USP-Marion, and never contacted either USP-Marion or FCC-Forrest City to explain why he did not do so. In fact, Collins had been picked up by an individual at the bus stop on September 4, 2014, and went to Alton rather than USP-Marion.
The case was investigated by the Bureau of Prisons and the United States Marshals Service. The case is assigned to Assistant United States Attorney Angela Scott.