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Thursday 12 March 2015
Michael Fabini of Fort Wayne Sentenced to 168 MonthsRead the Press Release
FORT WAYNE – The United States Attorney for the Northern District of Indiana, David Capp, announces that today, Michael Fabini, 35, of Fort Wayne was sentenced to 168 months imprisonment along with a term of 5 years of supervised release, and forfeiture was ordered following his plea of guilty to the felony offenses of conspiring to distribute and possession with intent to distribute 1,000 kilograms or more of marijuana and engaging in a monetary transaction in property derived from drug trafficking.
Documents filed in this case indicate that, from on or about September 21, 2007, and continuing to on or about December 6, 2012, Fabini did knowingly and intentionally conspire, combine, confederate and agree to distribute and possess with the intent to distribute 1,000 kilograms or more of marijuana and on or about August 7, 2009, did knowingly engage in a monetary transaction affecting commerce in depositing $70,154.99 derived from drug trafficking. Fabini agreed as part of his plea agreement to the forfeiture of certain assets, and also agreed to a forfeiture money judgment in the amount of $5,000,000.00.
According to Capp, the sentencing of Michael Fabini represents a culmination of a lengthy and extensive law enforcement investigation that removed 2 of the top dealers, (Fabini and Matthew McChesney) in the Fort Wayne area along with many of their underlings from the streets of Fort Wayne. Not only were significant sentences imposed, but the United States will obtain significant forfeiture of Fabini’s real estate (his home in Cherry Hills) and personal property, but also cash and various accounts which represented proceeds of criminal activity. The United States has already forfeited cash, vehicles, and residences with a total value of approximately $1.9 million dollars as a result of McChesney’s conviction.
As the United States Attorney has repeatedly indicated to the citizens of the Northern District of Indiana, “law enforcement is organized, and federal law enforcement will continue to coordinate their efforts with state and local law enforcement officers to bring comprehensive cases against drug dealers operating in our communities.” Not only will the federal prosecution result in significant sentences, but Capp indicates that his office will seek forfeiture of all assets, real and personal and well as any proceeds derived from the commission of the offense.
This joint investigation was conducted by the Allen County Police Department Vice and Narcotics Division, New Haven Police Department, and the FBI Fort Wayne Safe Streets Task Force, which is comprised of FBI agents and officers from the Indiana State Police, Allen County Police Department, and the Fort Wayne Police Department. This case was prosecuted by Assistant United States Attorney Anthony W. Geller.Miami-Based Lender Pays $3.8 Million to Resolve Liability Relating to U.S. Export-Import Bank LoansRead the Press Release
The Justice Department announced today that Hencorp Becstone Capital L.C. (Hencorp) has agreed to pay $3.8 million to resolve allegations under the False Claims Act that it made false statements and claims to the Export-Import Bank of the United States (Ex-Im Bank) in order to obtain loan guarantees. Hencorp is a Miami-based lender and financial services company that provides financing and other financial services to Latin American businesses.
“The Ex-Im Bank provides vital support for U.S. manufacturing by enabling foreign businesses to obtain financing to purchase U.S.-made goods and equipment,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “The Justice Department will continue to vigorously pursue those who attempt to take advantage of this important program.”
The Ex-Im Bank guarantees loans made by approved lenders to foreign businesses for the purchase of American-made products. The lender is responsible for performing a credit review of the transaction to ensure that it meets applicable criteria. The government alleged that Ricardo Maza, a Peruvian-based former Hencorp business agent, created false documentation to obtain Ex-Im Bank guarantees on fictitious transactions on which no products were sold or exported, and that Hencorp acted recklessly by outsourcing key credit review functions to Maza without adequate supervision or oversight. The government alleged that Maza then diverted the proceeds of the loans to himself and to his friends and business associates in Peru, and that the transactions resulted in losses to the Ex-Im Bank when the loans were not repaid. In 2012, Mario Mimbella, 64, of Miami, Florida, the purported U.S.-based exporter on three of the fraudulent transactions, pled guilty to making false records for his participation in the scheme and was later sentenced to prison.
“Lenders that use Ex-Im programs have an obligation to prevent and detect fraud,” said Acting Inspector General Michael T. McCarthy for the Ex-Im Bank. “The Office of Inspector General will pursue accountability for all participants involved in schemes that defraud the Ex-Im Bank.”
This settlement resolves allegations made in a whistleblower lawsuit filed under the False Claims Act by Genaro Benites Caballero, the former owner of one of the purported purchasers who stated that he had no part in the scheme and that his signature was forged on key documents without his knowledge, and Patricia Doris Lee Dominguez, a former attorney for the purported purchaser. Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery. The whistleblowers will receive $608,000 of the settlement.
This case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Columbia and the Office of Inspector General for the Ex-Im Bank.
The lawsuit is captioned United States ex rel. Benites Caballero, et al. v. Hencorp Becstone Capital, L.C., et al., cv-13-168 (D.D.C.). The claims resolved by the settlement are allegations only, and there has been no determination of liability with respect to Hencorp.
Mechanicsburg Man Sentenced for Impersonating A Federal AgentRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Brandon H. Schnetzka, age 41, of York, Pennsylvania was sentenced today to 18 months incarceration in a federal prison by Senior United States District Court Judge Sylvia Rambo. Schnetzka pleaded guilty to one count of impersonating an officer or employee of the United States on July 30, 2014.
According to United States Attorney Peter Smith, the charge against Schnetzka is a result of a report that he falsely represented himself as a Special Agent from the Federal Bureau of Investigation in order to fraudulently procure a Lexus loaner vehicle from a Mechanicsburg, Pennsylvania dealership. After multiple requests, Schnetzka eventually returned the vehicle after using it for 8 days.
This case was investigated by the Federal Bureau of Investigation and the Silver Spring Township Police Department. This case is being prosecuted by Assistant United States Attorney Meredith A. Taylor.
Manhattan U.S. Attorney and FBI Assistant Director-In-Charge Announce Filing of Criminal Charges Against, and Deferred Prosecution Agreement with, Commerzbank AG New York Branch in Connection with Olympus Corporation’s Billion Dollar Accounting FraudRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Diego Rodriguez, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today two major actions filed in federal court in the District of Columbia and Manhattan against COMMERZBANK AG (“COMMERZ”), and COMMERZBANK AG NEW YORK BRANCH (“COMMERZ NEW YORK”).
First, a criminal Information was filed today in federal court in the District of Columbia charging COMMERZ NEW YORK with felony violations of the Bank Secrecy Act, in connection with COMMERZ’s and COMMERZ NEW YORK’s relationship with the Olympus Corporation (“Olympus”) and COMMERZ NEW YORK’s failure to, among other things, maintain an effective anti-money laundering program, detect reportable transactions under U.S. law and prevent them from being processed by COMMERZ NEW YORK. The criminal BSA charges are contained in a four-count felony Information (the “Information”) which also charges COMMERZ with conspiring to violate the International Emergency Economic Powers Act (“IEEPA”) based on COMMERZ’s role in processing, from 2001 through at least 2008, $263 million of transactions that were prohibited under U.S. law. The case is assigned to United States District Judge Beryl Howell.
Second, the United States has entered into an agreement (the “Agreement”) with COMMERZ and COMMERZ NEW YORK (collectively, the “Company”) under which the Company agrees to accept responsibility for its conduct by stipulating to the accuracy of an extensive Statement of Facts; to pay a $300 million forfeiture amount to the victims of the Olympus fraud; to refrain from future criminal conduct and cooperate fully with the Government; and to continue reforms of its Bank Secrecy Act (“BSA”)/Anti-Money Laundering (“AML”) compliance program. Assuming the Company’s continued compliance with the Agreement, the Government has agreed to defer prosecution on the Information for a period of three years, after which time the Government will seek to dismiss the charges. The $300 million forfeiture amount to the victims of the Olympus fraud will be paid through a parallel civil forfeiture complaint filed in Manhattan federal court.
COMMERZ and COMMERZ NEW YORK will pay a total of $1.45 billion in penalties to resolve the Olympus-related AML charges, IEEPA violations, and payments to regulators.
Manhattan U.S. Attorney Preet Bharara said: “Today, Commerz New York stands charged with Bank Secrecy Act criminal offenses for its acute, institutional anti-money laundering deficiencies that made it a conduit for over a billion dollars of the Olympus fraud. These criminal charges follow a multi-year investigation and a guilty plea by a former Commerzbank Singapore employee who helped set up the structure that allowed for the Olympus fraud. Institutions, not just individuals, have an obligation to follow the law, and anti-money laundering laws in particular are critical for financial institutions to follow. With today’s resolution, the bank, as part of a deferred prosecution agreement, has accepted responsibility in a detailed statement of facts, agreed to continue reforming its anti-money laundering practices, and will pay $300 million that will go to victims of the Olympus fraud.”
FBI Assistant Director-in-Charge Diego Rodriguez said: “Today we announce more charges against yet another bank. Commerz New York violated the Bank Secrecy Act designed to prevent the movement of money, often with nefarious intent. Commerzbank enabled Olympus to evade detection for years. And worse yet, failed to create a process to prevent this criminal behavior. Management at banks and financial institutions should heed this warming: This behavior will be investigated, vigorously.”
According to the allegations in the criminal Information and other documents filed today in the United States District Court for the District of Columbia, and felony plea documents related to an Olympus executive filed previously in the District Court for the Southern District of New York:
Since 2008, and continuing until at least 2013, COMMERZ NEW YORK violated the BSA and its implementing regulations. Specifically, COMMERZ NEW YORK failed to maintain adequate policies, procedures, and practices to ensure its compliance with United States law, including its obligation to detect and report suspicious activity. As a result of the wilful failure of COMMERZ NEW YORK to comply with United States law, a multibillion-dollar securities fraud was operated through COMMERZ and COMMERZ NEW YORK.
Olympus was a Japan-based manufacturer of medical devices and cameras. Its common stock is listed on the Tokyo Stock Exchange, and its American Depository Receipts trade in the United States. From at least the late 1990s through 2011, Olympus perpetrated a massive accounting fraud designed to conceal from its auditors and investors hundreds of millions of dollars in losses. In September 2012, Olympus and three of its senior executives pled guilty in Japan to inflating the company’s net worth by approximately $1.7 billion.
Olympus used COMMERZ and COMMERZ NEW YORK to perpetrate its fraud. COMMERZ, through its branch and affiliates in Singapore, both loaned money to off-balance-sheet entities created by or for Olympus to perpetrate its fraud, and transacted more than $1.6 billion through COMMERZ NEW YORK in furtherance of the fraud.
The Suspicions at COMMERZ
COMMERZ and COMMERZ NEW YORK were used in furtherance of the Olympus fraud during two different time periods. From approximately 1999 through 2000, Olympus perpetrated its fraud primarily through COMMERZ and its Singapore branch and affiliates. Among other things, Olympus used special purpose vehicles to facilitate the fraud, some of which were created by COMMERZ – including several executives based in Singapore – at Olympus’s direction, using funding from COMMERZ. One of those Singapore-based executives, Chan Ming Fon, was involved in creating the Olympus structure in 1999 while at Commerzbank (Southeast Asia) Ltd., and later managed an Olympus-related entity in 2005-2010 on behalf of which he submitted false confirmations to Olympus’s auditors. In September 2013, Chan pled guilty in Manhattan federal court to conspiracy to commit wire fraud.
From 1999 through 2000, Olympus executives asked COMMERZ executives to provide certain false documents to Olympus’s auditors, which would have failed to disclose that certain Olympus assets were pledged as collateral for loans from a COMMERZ affiliate. COMMERZ obtained a legal opinion, which, in the words of one COMMERZ executive written to an Olympus executive, “ma[de] clear that our bank could be subject to both civil and criminal penalties if we are seen to be assisting or facilitating you in the non-disclosure.” Although COMMERZ ultimately declined to provide the false documents, its executives suggested a variety of ways Olympus could nonetheless fail to disclose the pledge.
In 2000, Olympus took its business away from COMMERZ and transferred it to another bank. In 2005, however, Olympus – and its fraud – returned to COMMERZ. From that point until at least 2010, COMMERZ executives expressed strong suspicions about the Olympus transactions and structure. One senior executive worried that Olympus would have to “write off [the] full amount” of the relevant transactions, and wondered about the effects on COMMERZ if “any negative news is splash[ed] on the front page.” A senior legal and compliance officer responsible for COMMERZ’s Singapore branch and affiliates wrote at the time that he was “concerned” about fraud, asset stripping, market manipulation, and tax offenses, and that “[i]f the [Olympus] structure and transactions can not [be] explained we must file Suspicious Transaction report as a matter of law and [COMMERZ] policy.”
The New York Wires
In March 2010, two wire transfers in the amount of approximately $455 million and $67 million, respectively, related to the Olympus scheme were processed by COMMERZ NEW YORK through the correspondent account for the Singapore branch of COMMERZ. Those wires caused COMMERZ NEW YORK’s automated AML monitoring software to “alert.”
At the time, COMMERZ NEW YORK had conducted no due diligence on the Singapore branch and affiliates of COMMERZ, consistent with COMMERZ’s policy of not conducting due diligence on its own branches. In response to the alerts, however, COMMERZ NEW YORK sent a request for information to COMMERZ in Frankfurt and COMMERZ’s Singapore branch, inquiring about the transactions. The Singapore branch responded in a brief e-mail, dated April 20, 2010, referring to the Olympus-related entities involved in the wires:
GPA Investments Ltd. ist [sic] a Caymen [sic] Islands SPV, Creative Dragons SPC-Sub Fund E is a CITS administered fund both of which are part of an SPC structure to manage securities investments for an FATF country based MNC.
According to the Relationship Manager the payment reflects the proceeds from such securities investments to be reinvested.
COMMERZ’s Singapore branch did not relay any of the concerns about the Olympus-sponsored structures and transactions.
Based on its response, COMMERZ NEW YORK closed the alert without taking any further action other than to note that in March 2010 alone, GPA Investments had been involved in six transactions through COMMERZ NEW YORK totalling more than $522 million. In fact, between 1999 and 2010, a total of more than $1.6 billion in furtherance of the Olympus fraud was cleared through COMMERZ NEW YORK. COMMERZ NEW YORK failed to file a SAR in the United States concerning Olympus or any of the Olympus-related entities until November 2013 – more than two years after the Olympus accounting fraud was revealed.
COMMERZ NEW YORK’s Compliance Deficiencies
COMMERZ NEW YORK had the same designated BSA Officer continuously from approximately 2003 until early 2014. Over those years, she raised concerns about AML compliance, both to her superiors at COMMERZ NEW YORK, and with COMMERZ Frankfurt.
Under the BSA, a financial institution is required to detect and report suspicious activity. This is accomplished, in part, through conducting due diligence, and enhanced due diligence where appropriate, of the correspondent relationship – which COMMERZ NEW YORK failed to do – and by sending requests for further information to the correspondent bank when potentially suspicious transactions are detected. COMMERZ NEW YORK frequently had difficulties getting responses to requests for information generated in connection with automated transaction monitoring “alerts.” Because requests for information went unanswered for as long as eight months without SARs being filed, alerts were often closed without any response to the pending request. As a result of these deficiencies, COMMERZ NEW YORK cleared numerous AML “alerts” based on its own perfunctory internet searches and searches of public source databases but without ever receiving responses to its requests for information.
On June 24, 2010, a COMMERZ NEW YORK-based compliance officer who had primary responsibility for automated transaction monitoring wrote in an e mail to the BSA Officer and the Head of Compliance in New York (who had previously served as the Head of Compliance in Asia) that “we currently have 90 alerts a day,” with “808 alerts outstanding,” which “could lead to a possible back log.” He continued, “I also wanted to make you aware that we have currently over 130 Frankfurt RFIs [i.e., requests for information] outstanding,” noting “a decrease in response to the RFIs” from Frankfurt. The following day, the Head of Compliance in New York forwarded the e mail to COMMERZ’s Global Head of Compliance, adding that “things are not getting better with regards to th[ose] findings. (see below). I will forward you the DRAFT memo on potential revision of staffing needs.” Although the Global Head of Compliance thereafter instituted new procedures designed to increase the speed of responses to RFIs from New York, problems persisted with the timely flow of information from business units outside the U.S. to compliance officers in New York.
COMMERZ and COMMERZ NEW YORK also failed to conduct adequate due diligence or to obtain “know your customer” information with respect to correspondent bank accounts for COMMERZ’s own foreign branches and affiliates. These systemic deficiencies reflected a failure to maintain adequate policies, procedures, and controls to ensure compliance with the BSA and regulations prescribed thereunder and to guard against money laundering.
IEEPA Violations
According to admissions contained in the deferred prosecution agreement, from 2002 to 2008, COMMERZ knowingly and willfully moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese entities subject to U.S. economic sanctions. COMMERZ engaged in this criminal conduct using numerous schemes designed to conceal the true nature of the illicit transactions from U.S. regulators.
For example, in the deferred prosecution agreement, COMMERZ acknowledged that it used non-transparent payment messages, known as cover payments, to conceal the involvement of sanctioned entities, and also removed information identifying sanctioned entities from payment messages, in transactions processed through COMMERZ NEW YORK and other financial institutions in the United States. Specifically, in 2003, COMMERZ designated a group of employees in the Frankfurt back office to review and amend Iranian payments so that the payments would not be stopped by U.S. sanctions filters. In doing so, COMMERZ ensured that Iranian payment messages did not mention the Iranian entity, as transactions may have otherwise been stopped pursuant to the U.S. sanctions.
COMMERZ admitted that it hid these practices from COMMERZ NEW YORK. For example, in 2003, when two state-owned Iranian banks wanted to begin routing their U.S. dollar clearing business through COMMERZ, a COMMERZ back office employee emailed other COMMERZ employees directing: “If for whatever reason CB New York inquires why our turnover has increase[d] so dramatically, under no circumstances may anyone mention that there is a connection to the clearing of Iranian banks!!!!!!!!!!!!!.”
COMMERZ admitted that this conduct continued even though its senior management was warned that the bank’s practices for Iranian clients “raised concerns.” For example, in October 2003, the head of COMMERZ’s internal audit division stated in an email to a member of COMMERZ’s senior management that Iranian bank names in payment messages going to the United States were being “neutralized” and warned: “it raises concerns if we consciously reference the suppression of the ordering party in our work procedures in order to avoid difficulties in the processing of payments with the U.S.A.”
In another scheme designed to avoid U.S. sanctions, COMMERZ admitted that, in 2004, it agreed with an Iranian bank client that, rather than sending direct wire payments to the United States, the Iranian bank would pay U.S. beneficiaries with COMMERZ-issued checks listing only the Iranian bank’s account number and address in London with no mention of the Iranian bank’s name.
Additionally, COMMERZ admitted that in 2005, it created a “safe payment solution” for an Iranian shipping company client, which allowed the client to conduct transactions using the U.S. financial system. The safe payment solution involved routing payments through special purpose entities controlled by the Iranian company, which were incorporated outside of Iran and bore no obvious connection to the Iranian client. COMMERZ and its client switched use of such special purpose entities when COMMERZ NEW YORK’s sanctions compliance filters were updated to detect the use of a particular special purpose entity. COMMERZ continued to process payments on behalf the Iranian client even after the client had been designated by OFAC as an entity subject to U.S. sanctions for its involvement in weapons of mass destruction proliferation.
In addition, COMMERZ admitted that, from 2002 to 2007, it provided Sudanese sanctioned entities with access to the U.S. financial system by engaging in similar schemes to remove reference to Sudanese companies from the transaction records.
The Deferred Prosecution Agreement
As a result of the foregoing conduct, this Office has entered into a Deferred Prosecution Agreement with the Company which has been submitted today to Judge Howel1. Pursuant to the Agreement, the Company has agreed to the following terms and conditions. First, the Company has agreed to waive indictment and to the filing of the Information, charging the Company with violations of the Bank Secrecy Act. Count Two of the Information charges that the Company failed to maintain an effective anti-money laundering program, from in 2008 through in or about 2013, as required under the BSA. Count Three of the Information alleges that the Company violated the BSA by failing to file Suspicious Activity Reports with respect to correspondent banking transactions. Count Four of the Information charges that the Company failed to obtain adequate due diligence on foreign institutions owned by or affiliated with the Company, information that if collected and maintained would have reasonably allowed for the detection and reporting of instances of money laundering and other suspicious activity.
Second, pursuant to the Agreement, the Company agrees to acknowledge responsibility for its conduct by, among other things, stipulating to the accuracy of a detailed Statement of Facts.
Third, the Company agrees to a $300 million non-tax deductible payment, in the form of a civil forfeiture, which the Government intends to distribute to the victims of the Olympus fraud, consistent with the applicable Department of Justice regulations, through the ongoing remission process. To effectuate that forfeiture, the Office has today filed a parallel civil forfeiture complaint in the Southern District of New York, which has been assigned to United States District Judge Paul Gardephe.
Fourth, the Company agrees to various cooperation obligations, including (1) an obligation to report any criminal conduct by any employee acting within the scope of his employment at the Company; (2) reporting to the Offices any BSA-related investigation or proceeding in which the Company is involved; and (3) committing no subsequent federal crimes.
Fifth, the Company agrees to continue reforming its Bank Secrecy Act/Anti-Money Laundering compliance programs and procedures, as required under the prior formal enforcement actions taken by the Federal Reserve and the additional actions taken concurrently by the Federal Reserve and the New York State Department of Financial Services (“DFS”), and to provide quarterly reports and other information to this Office about its progress.
In consideration of these obligations, the Government has agreed to defer prosecution on the Information for a period of three years, after which time – assuming that the Company does not violate the Agreement – the Government will seek to dismiss the charges.
In separate actions, the Federal Reserve Board and DFS announced that they had also reached agreements with COMMERZ and COMMERZ NEW YORK with respect to its BSA crimes.
Mr. Bharara praised the work of the FBI. He also thanked the Federal Reserve Board, the Internal Revenue Service, Criminal Investigation, and DFS.
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. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Bonnie Jonas is in charge of the prosecution.
US v. $300000000 15 Civ. 1825 (SDNY Civil Forfeiture Complaint)
U.S. v. Commerzbank AG, et al Information
Justice Department Settles Lawsuit Against Missouri National Guard to Enforce Employment Rights of Civilian National Guard TechnicianRead the Press Release
The U.S. Justice Department’s Civil Rights Division announced today that a settlement has been reached with the Missouri National Guard (MNG) to resolve allegations that MNG violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by requiring its civilian National Guard dual technician employees to be separated from their civilian positions prior to entering active military duty service with the U.S. Active Guard Reserve (AGR) Program.
According to the complaint, filed in the U.S. District Court of the Western District of Missouri, MNG violated the USERRA rights of Kinata Holt, a civilian National Guard dual technician, by requiring her to give up her civilian employment as a condition of being called to active duty with the AGR. The Justice Department alleged that MNG’s refusal to place Holt on furlough or leave of absence from her civilian job, by forcing her separation, resulted in the loss of paid military leave to which she would otherwise have been entitled. Under the terms of the settlement agreement, which is subject to approval by the district court, MNG has agreed to rescind its current policy requiring separation in order to enter the AGR and to compensate Holt by awarding her 30 days of paid military leave.
The settlement agreement also provides that MNG will compensate 137 other civilian National Guard dual technicians who were similarly denied military leave benefits. As a part of the agreed upon terms of settlement for those employees, each will receive a leave credit of 15 days of paid military leave for the 2014-2015 fiscal year. Collectively, these employees will receive more than 2,000 days of paid leave for the past year, and be awarded paid military leave in the future as they continue to serve on active duty with AGR.
“This settlement will provide much deserved relief to Kinata Holt and 137 other service members who lost their military benefits because of the actions of MNG,” said Acting Associate Attorney General Stuart Delery. “The Department of Justice is committed to protecting the rights of the men and women who serve in our Armed Forces and we will continue to devote time and resources to hold bad actors accountable.”
“The Missouri National Guard, like other state employers, has a legal obligation under USERRA to provide the full range of rights and benefits to military service members that are permitted under the statute,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Department of Justice will continue to vigorously enforce the rights of uniformed service members in retaining their civilian employment benefits while on an absence due to military service obligations.”
This case stems from a referral by the U.S. Department of Labor (DOL) following an investigation by the DOL’s Veterans’ Employment and Training Service. The case was handled by the Employment Litigation Section of the Civil Rights Division with the assistance of the U.S. Attorney’s Office of the Western District of Missouri, both of whom work collaboratively with DOL to protect the jobs and benefits of National Guard and Reserve Servicemembers.
The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Justice Department Files Motion to Expedite the Preliminary Injunction Appeal in State of Texas, et al v. United States of AmericaRead the Press Release
Attached is the motion to expedite the preliminary injunction appeal in the Fifth Circuit Court of Appeals in the case State of Texas, et al v. United States of America.
Appellants’ Motion for Expedited Appeal and for Leave to Use Appendix on Appeal
Justice Department Files Emergency Motion for Stay in the Case of State of Texas, et al v. United States of AmericaRead the Press Release
Attached is the Justice Department’s emergency motion for a stay in the Fifth Circuit Court of Appeals in the case State of Texas, et al v. United States of America.
Attachments to Appellants’ Emergency Motion for Stay Pending Appeal
Appellants’ Emergency Motion for Stay Pending Appeal
Justice Department Asks Federal Court to Shut Down Florida Tax PreparerRead the Press Release
The United States filed a complaint seeking to bar a Doral, Florida, man and his businesses from preparing federal tax returns for others, the Justice Department announced today.
The civil injunction complaint against Eleuterio Almanzar, Almanzar Tax Accounting & Consulting Corp. and Almanzar Financial Services Corp., filed in U.S. District Court in the Southern District of Florida, alleges that Almanzar prepares federal income tax returns for customers that understate the tax that is due or seek refunds larger than are appropriate.
According to the government’s complaint, the understatements are the result of improper education credits, first time homebuyer tax credits, earned income tax credits, charitable deductions and business expense deductions that Almanzar claims for his customers without performing the required due diligence and despite the absence of any supporting documentation. Because some of these credits are refundable credits, the improper claims often result in larger than appropriate refunds, according to the suit. The Internal Revenue Service (IRS) interviewed several of Almanzar’s customers, who stated that the improper deductions and credits were not based on information they provided to Almanzar, and that they did not know that the improper deductions and credits had been taken on their tax return until after their return was filed.
The complaint also seeks to enjoin Almanzar from using a false or fictitious federally issued identification number — including social security numbers, Electronic Filing Identification Numbers, Employer Identification Numbers, Taxpayer Identification Numbers and Preparer Tax Identification Numbers — to file or remit federal income tax returns. The suit also seeks to prevent Almanzar from using any federally issued identification number that belongs to another person to file or remit federal income tax returns. The government is also asking to have Almanzar provide a list of customers that identifies by name, social security number, address, e-mail address, telephone number and tax periods all persons for whom he has prepared federal tax returns or claims for refund since Jan. 1, 2009.
According to the complaint, the average tax deficiency for the returns the IRS examined since 2009 was $3,249 per return. Given the number of returns Almanzar has prepared since 2009, the harm to the United States caused by his practices could be in the millions of dollars.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2015. The IRS has some tips on their website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Announces Settlement with California Bank for Knowingly Facilitating Consumer FraudRead the Press Release
The United States filed a civil complaint in the U.S. District Court for the Central District of California today against Plaza Bank of Irvine, California, for knowingly facilitating consumer fraud by permitting a third-party payment processor to make millions of dollars of unauthorized withdrawals from consumer bank accounts on behalf of fraudulent merchants. To resolve the case, Plaza Bank has agreed to pay $1.225 million and enter into a permanent injunction that reforms the bank’s practices to prevent such fraud in the future. The proposed consent decree has been filed with the court, which will determine whether to enter the order.
“Today’s complaint alleges that, in exchange for fee income, the bank ignored its responsibilities and looked the other way while a third-party payment processor and its merchants defrauded unsuspecting victims of millions of dollars,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “A part of our responsibility at the Justice Department is to stop those who knowingly facilitate consumer fraud, and those in the financial industry are no exception.”
The complaint alleges that from July 2007 to mid-2010, Plaza Bank knowingly permitted fraudulent merchants, acting through an intermediary called a third-party payment processor, to illegally withdraw millions of dollars from consumers’ bank accounts. The complaint further alleges that these unauthorized withdrawals resulted in: abnormally high rate of rejected transactions, which hovered between 50 and 55 percent; hundreds of consumer complaints each month in which consumers stated, by sworn affidavit, that withdrawals from their accounts were unauthorized; and inquiries from other banks and law enforcement, both of which expressed their belief that the payment processor’s transactions were fraudulent.
According to the complaint, when Plaza’s chief compliance official raised concerns about these numerous warning signs of fraud, she was brushed aside by Plaza’s chief operating officer—who, unknown to the compliance officer, was one of two corporate officials who also happened to be a part-owner of the payment processor. Plaza thus continued to give fraudsters unfettered access to the bank accounts of tens of thousands of consumers.
Eventually, in June 2009, Plaza was sold to a third-party equity firm, which brought in new bank management. According to the complaint, while new management soon recognized the problematic nature of the bank’s relationship with the payment processor, it did not immediately terminate the processor’s banking capabilities. Instead, the complaint alleges that months passed while Plaza officials debated whether the revenues generated by the payment processor relationship outweighed the possible risk to the bank. Meanwhile, the payment-processor significantly increased the number of fraudulent withdrawals from consumers’ bank accounts, according to the complaint. The complaint further alleges that only after more than a thousand consumer complaints about unauthorized withdrawals reached Plaza, hundreds of thousands of transactions were returned, and tens of millions of additional dollars had been withdrawn from consumer accounts did Plaza finally terminate the relationship.
“Plaza Bank turned a blind eye while consumers lost tens of millions of dollars as unscrupulous merchants reached into accounts and stole hard-earned money,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California. “Because of its flagrant failure to protect consumers and the integrity of our banking system, Plaza Bank is now subject to a significant penalty and court oversight to ensure it behaves as a lawful corporate citizen.”
According to the terms of the proposed consent decree, Plaza Bank will be required to pay $1 million to the U.S. Treasury as a civil monetary penalty and to forfeit $225,000 to the U.S. Postal Inspection Service’s (USPIS) Consumer Fraud Fund. Plaza will also be required to implement a strict regime of underwriting and monitoring designed to prevent future consumer fraud by third-party payment processors. The bank must also implement and enforce policies regarding disclosure of conflicts of interest by its senior executives and board members. The bank also will be required to cooperate fully in other civil and criminal investigations.
The Justice Department’s case is being handled by Trial Attorney Sang Lee of the Civil Division’s Consumer Protection Branch in coordination with the U.S. Attorney’s Office for the Central District of California.
Joint Law Enforcement Task Force Announces Arrests and Continuing Efforts to Capture Child PredatorsRead the Press Release
LAS VEGAS, Nev. – Federal, state and local law enforcement joined arms today to announce the results of a six-month arrest surge of child predators in southern Nevada, and to discuss their ongoing efforts to identify and prosecute persons who are committing sex crimes against children in Nevada, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
At a news conference in the Lloyd D. George Federal Courthouse, U.S. Attorney Bogden was joined on stage by FBI Assistant Special Agent in Charge Rick Brodsky, Clark County District Attorney Steve Wolfson, Clark County Sheriff Joe Lombardo, Nevada Attorney General Adam Laxalt, HSI Assistant Special Agent in Charge Mike Harris, U.S. Marshal Christopher Hoye, and Captain Michael Johnston of the Henderson Police Department to announce arrest and prosecution results in Operation Protect the Powerless. The Operation occurred from June 1 to Dec. 31, 2014, and resulted in the prosecution and conviction of 219 persons, the execution of 100 search warrants, and the recovery of over 500,000 images and 2,700 videos of child rape and pornography. The surge also resulted in prosecutions are being handled jointly by the U.S. Attorney’s Office and Clark County District Attorney’s Office, and resulted in distinct charges in federal and state court.
Henry Genaro Macias, 33, of Las Vegas, Nev., is a defendant who was jointly prosecuted by state and federal authorities and was sentenced during Operation Protect the Powerless. Investigators determined that Macias was using the internet to share numerous files of child pornography and at the same time was molesting minor children. Macias pleaded guilty in federal court to receipt of child pornography and was sentenced on Dec. 4, 2014, to 12 years in prison and lifetime supervised release. Macias also pleaded guilty in Clark County District Court to attempt lewdness with a child and was sentenced on July 29, 2014, to six to 15 years in prison.
Operation Protect the Powerless was organized and led by the Project Safe Childhood (PSC) Task Force in southern Nevada, and targeted child traffickers, persons who were coercing and enticing minors for sex, child pornographers, child molesters and child rapists. The Task Force, comprised of federal, state and local investigators and prosecutors, was reorganized in 2013 to provide a format for weekly meetings in Las Vegas to review cases involving sex crimes against children and to determine the best venue for prosecution. Members of the Task Force have also been participating in outreach at Clark County schools in order to educate parents and children about the dangers of the internet and unsuspecting child sex predators. The reorganization promptly resulted in the successful six-month operation.
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."
Independence Man Pleads Guilty to a Federal Gun ViolationRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ERIC O’NEAL SELDERS, age 43, from Independence, pled guilty today to a federal gun charge.
SELDERS pled guilty to being a previously convicted felon in possession of a firearm. Specifically, on July 29, 2012, SELDERS, who had four prior state felony convictions, possessed a .38 caliber revolver within the Eastern District of Louisiana. Because of his four prior convictions, SELDERS may be deemed an Armed Career Criminal under federal law and sentenced to a minimum of 15 years of incarceration. If not deemed to be an Armed Career Criminal, SELDERS is facing a maximum of 10 years of incarceration, a fine of not than $250,000 and up to 3 years of supervised release. There is also a mandatory $100 special assessment for each count associated with a guilty plea. U.S. District Judge Eldon E. Fallon set sentencing on June 25, 2015.
U.S. Attorney Polite praised the work of the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Tangipahoa Parish Sheriff’s Office in investigating this matter. Assistant United States Attorney Edward Rivera is in charge of the prosecution.
Houston-Area Owner of Medical Equipment Companies Convicted in a $3.4 Million Medicare Fraud SchemeRead the Press Release
A federal jury in Houston yesterday convicted the owner of two Texas medical equipment companies for his role in a $3.4 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Mike Fields of the U.S. Department of Health & Human Services-Office of the Inspector General (HHS-OIG) Dallas Regional Office, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office and the Texas Attorney General’s Medicaid Fraud Control Unit made the announcement.
Huey P. Williams Jr., 45, who owned and operated Hermann Medical Supply of Katy, Texas, and Hermann Medical Supplies II of Houston, was convicted of one count of health care fraud, as charged in a Jan. 15, 2014, indictment. Sentencing will be scheduled at a later date, and will take place before U.S. District Judge Melinda Harmon of the Southern District of Texas.
According to the evidence submitted at trial, Williams submitted claims to Medicare through his two companies for durable medical equipment, including orthotic devices, which were medically unnecessary or never provided to the patients. Many of the orthotic devices were components of an “arthritis kit,” and were purported to be for the treatment of arthritis-related conditions. The evidence demonstrated that, from December 2006 through July 2010, Williams submitted approximately $3.4 million in fraudulent claims to Medicare, and Medicare paid approximately $1.9 million on those claims.
The case was investigated by the FBI, HHS-OIG and the Medicaid Fraud Control Unit of the Texas Attorney General’s Office, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas. The case is being prosecuted by Trial Attorneys Ashlee Caligone McFarlane and Jason Knutson 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 & 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.
Holland Couple Indicted in Connection with Fraudulent Receipt of Veterans’ Benefits and Workers CompensationRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
BUFFALO, N.Y.-- U.S. Attorney William J. Hochul, Jr. announced today that a federal grand jury has returned a three-count indictment charging Richard Klaffka, 57, and his wife, Cathleen Klaffka, 61, both of Holland, NY, with fraud in connection with Richard Klaffka’s receipt of over $1,000,000 in benefits from the Veterans’ Administration and Workers’ Compensation under false pretenses. The Klaffkas are charged with conspiracy to commit mail fraud and wire fraud and wire fraud and mail fraud. The charges carry a maximum penalty of 20 years in prison, a fine of $250,000 or both.
Assistant U.S. Attorney John E. Rogowski, who is handling the case, stated that according to the indictment, in 2006, Richard Klaffka told the Veteran Administration that, due to an injury connected with his military service in 1978, he was disabled, confined to a wheelchair and unable to engage everyday activities like walking, driving and dressing himself. The indictment further alleges that to promote the fraud, Cathleen Klaffka pushed Richard Klaffka in a wheelchair when at the VA hospital in order to support Richard Klaffka’s false claim that he was confined to wheelchair when, in fact, they both knew Richard Klaffka was able to walk without assistance and engaged in physical activities such as hiking, riding a bike and pitching iron horseshoes.
The indictment also alleges that in order to get Workers’ Compensation benefits from his employment with the United States Postal Service, the defendant falsely claimed that his mobility was limited due to a work injury and that he was only able to walk with the assistance of a cane. According to the indictment, the Klaffkas received over $1,000,000 in government benefits to which they were not entitled. The investigation was triggered by an anonymous call to a fraud hotline.
The indictment is the result of an investigation on the part of Special Agents of the United States Veterans Administration, Office of Inspector General, Criminal Investigations Division, under the direction of Jeffrey Hughes, the Veterans Administration Police Department, under the direction of Chief Jeremy Novak, the United States Department of Labor, Office of Inspector General, under the direction of Special Agent in Charge Cheryl Garcia, and the United States Postal Service, Office of Inspector General, under the direction of Monica Weyler, Special Agent in Charge, Eastern Area Field Office.
The defendants will be arraigned on March 20, 2015 at 2:00 p.m. before U.S. Magistrate Judge H. Kenneth Schroeder, Jr.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Grandson of Naval Historian Pleads Guilty to Stealing Historical Records Relating to His Grandfather and Is SentencedRead the Press Release
Baltimore, Maryland - Samuel Loring Morison, age 70, of Crofton, Maryland, pleaded guilty today to theft of government property, specifically, historical records related to his grandfather, Rear Admiral Samuel Eliot Morison.
U.S. District Judge William D. Quarles, Jr. also sentenced Morison today to two years’ probation with the conditions that: he not access any library or archives without the permission of his probation officer; and he cooperate with investigators and archivists in identifying any other government property in his possession. In imposing the probationary sentence, Judge Quarles cited Morison’s failing health, his prior military service and his cooperation with investigators.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Darrell Gilliard of the Naval Criminal Investigative Service (NCIS), Washington Field Office; and Acting Inspector General James Springs of the National Archives and Records Administration (NARA) - Office of Inspector General.
“It's gratifying that NCIS could work with our law enforcement partners to identify and arrest the person responsible for these thefts , and thereby help preserve the illustrious history of the United States Navy,” said NCIS Special Agent in Charge Darrell Gilliard.
James Springs, NARA's Acting Inspector General, stated, “Thefts from our nation’s historical record are an affront to all citizens, regardless of where those records are housed. I appreciate the hard work of the U.S. Attorney’s Office, NCIS, and NARA OIG to insure that this behavior will not be tolerated.”
According to his plea agreement, on April 12, 2014, Morison allegedly offered to sell records relating to Rear Admiral (RADM) Morison’s work during World War II to the owner of a bookstore, who subsequently agreed to take possession of the records, place them on consignment through his shop, and sell them using eBay. On May 12, 2014, special agents with the National Archives and Records Administration Office of Inspector General reviewed the historical records being offered for sale through eBay. The special agents, assisted by the former curator of the Navy Archives determined that the records belonged to the Naval History and Heritage Command's Navy Archive, and were the property of the U.S. government.
On May 21, 2014, a search warrant was executed at Morison’s residence and approximately 34 boxes of government records and property stolen from the Navy Archives were seized. The investigation revealed that Morison was a part-time researcher at the Naval Historical Foundation from March 19, 2010, and had access to the records, known as the “Office Files of RADM Morison Papers.” Morison was never given authority to remove the records from the Navy Archives.
Morison faces a maximum sentence of 10 years in prison for theft of government property. As part of his plea agreement, the government will ask the court to require that Morison be prohibited from visiting libraries and archives without prior approval from his probation officer.
United States Attorney Rod J. Rosenstein praised NCIS and the NARA Office of Inspector General for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney James G. Warwick, who prosecuted the case.
Fraudsters Sent to Federal PrisonRead the Press Release
CORPUS CHRISTI, Texas - Several individuals have been ordered to federal prison for their roles in a scheme to defraud local banks, announced U.S. Attorney Kenneth Magidson.
Rosemary Guillen, 41, and Richard Villarreal, 29, both of Corpus Christi, pleaded guilty in December 2014 to aiding and assisting one another to commit bank fraud. Today, U.S. District Judge Nelva Gonzalez Ramos sentenced Guillen to 46 months imprisonment to be followed by three years of supervised release and Villarreal to a 46-month-term also to be followed by a three-year-term of supervised release. Both were further ordered to pay restitution.
In a separate, but related, indictment, Brianna Geuea, 36, of Portland, entered a guilty plea to a single count of bank fraud as well as theft of mail. She was also sentenced today to 33 and 27 months in federal prison for the bank fraud and mail theft convictions, respectively. Judge Ramos ordered her sentences to run concurrently. She must also serve three years of supervised release following her release from prison and must pay a total of $4,087.52 in restitution.
As part of the fraudulent scheme, individuals would open banking accounts at a local area credit or gain access to existing accounts. They would then deposit fraudulent or counterfeit checks into those accounts, withdraw money and make purchases before the financial institution discovered the fraudulent nature of the deposits.
The fraudulent activity involved more than 20 accounts and created a potential loss of more than $100,000.
In federal custody since their arrests, all will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be designated in the near future.
The charges stem from an investigation by U.S. Secret Service and the Corpus Christi Police Department. Assistant U.S. Attorney Lance Watt is prosecuting the case.
Fort Worth Selected as One of the First Six Pilot Sites for the National Initiative for Building Community Trust and JusticeRead the Press Release
FORT WORTH, Texas – As part of the Department of Justice’s ongoing commitment to strengthening the relationship between law enforcement and the communities they serve and protect, Attorney General Eric Holder announced Birmingham, Alabama; Fort Worth, Texas; Gary, Indiana; Minneapolis, Minnesota; Pittsburgh, Pennsylvania; and Stockton, California, are the first six cities to host pilot sites for the National Initiative for Building Community Trust and Justice. As part of a larger effort, the National Initiative team will work with each pilot site to assess the police-community relationship as well as develop a detailed site-specific plan that will enhance procedural justice, reduce bias and support reconciliation in communities where trust has been eroded.
“This National Initiative is a multi-faceted approach to enhance community trust and help strengthen the relationship between law enforcement and the communities they serve,” said John Parker, Acting U.S. Attorney for the Northern District of Texas. “I join Fort Worth Police Chief Rhonda Robertson and Mayor Betsy Price in embracing this strategy.”
“The Fort Worth Police Department is honored to be selected as one of the six pilot sites for this groundbreaking study,” said Chief of Police Rhonda Robertson. “Upon learning about the project, we immediately realized the opportunity it would present to strengthen our existing community partnerships and to develop new relationships built upon trust within the community. Fort Worth is already an excellent place to live, work, and visit; and we believe our participation in the National Initiative for Building Community Trust and Justice will make it even better.”
“We’re pleased that Fort Worth was chosen as one of the six pilot sites for this national initiative,” said Mayor Betsy Price. “Fort Worth historically has an excellent track record of encouraging diversity as a city. This study will be a valuable tool to open the discussion on equitable treatment in major cities across the nation, including Fort Worth. This study gives us a tool to strengthen our partnership with the justice system and to continue building relationships in the community.”
Attorney General Holder also announced that the Department of Justice is providing additional training and technical assistance to police departments and communities that are not pilot sites. Through the Office of Justice Program’s Diagnostic Center (www.OJPDiagnosticCenter.org), police departments and community groups can request training, peer mentoring, expert consultation and other types of assistance on implicit bias, procedural justice and racial reconciliation. Additionally, the initiative launched a new online clearinghouse that includes up-to-date information about what works to build trust between citizens and law enforcement. The clearinghouse can be found at www.trustandjustice.org.
The Justice Department established the National Initiative for Building Community Trust and Justice as part President Obama’s groundbreaking launch of the My Brother’s Keeper initiative, which seeks to create opportunities for all young people in this country—regardless of their background—to improve their lives and reach their full potential.
“The Department of Justice is committed to using innovative strategies to enhance procedural justice, reduce bias and support reconciliation in communities where trust has been eroded,” said Attorney General Holder. “By helping to develop programs that serve their own diverse experiences and environments, these selected cities will serve on the leading edge of our effort to confront pressing issues in communities around the country.”
“Restoring trust where it has eroded is one of the defining public safety challenges of our day,” said Assistant Attorney General Karol V. Mason of the Office of Justice Programs. “Trust-building is the responsibility of the police and the community, and the National Initiative’s goal is to build the bridge that will define a new era in public safety.”
The three-year grant has been awarded to a consortium of national law enforcement experts from John Jay College of Criminal Justice, Yale Law School, the Center for Policing Equity at UCLA and the Urban Institute. The initiative is guided by a board of advisors that includes national leaders from law enforcement, academia and faith-based groups, as well as community stakeholders and civil rights advocates. In a holistic approach, the initiative simultaneously addresses the tenets of procedural justice, reducing implicit bias and facilitating racial reconciliation. The initiative complements and is advised by other Justice Department components such as the Office of Justice Programs, the Office of Community Oriented Policing Services, the Office on Violence Against Women, the Civil Rights Division and the Community Relations Service.
Former University of Wisconsin-Oshkosh Student Pleads Guilty in Federal Court to Possession of RicinRead the Press Release
Assistant Attorney General for National Security John P. Carlin and U.S. Attorney James L. Santelle of the Eastern District of Wisconsin announced today that Kyle Allen Smith, 21, of Oshkosh, Wisconsin, has entered a guilty plea to possession of ricin. At sentencing, Smith faces a maximum of 10 years imprisonment and fine of $250,000.
According to the plea agreement, Smith admitted growing castor bean plants and extracting ricin from the beans. A substance found in Smith’s residence was sent to the Department of Homeland Security’s National Bioforensics Analysis Center at Fort Detrick, Maryland, and tested positive for the toxin ricin. Ricin is a toxin that infects human cells and blocks their ability to synthesize their own protein. Small doses of ricin may be lethal to human beings if ingested, inhaled or injected. Symptoms of ricin poisoning can include difficulty breathing, nausea, vomiting and diarrhea, with possible death occurring within 36 to 72 hours. According to information posted on the website of the Centers for Disease Control and Prevention (CDC), there are no known antidotes for ricin poisoning.
Smith admitted having homicidal thoughts and that his homicidal thoughts might have sparked his curiosity about the production of ricin. He stated he would not use or test the ricin on any human because too many people knew what he was doing and would turn him in.
Smith was arrested on Oct. 31, 2014, after two professors at the University of Wisconsin at Oshkosh reported to campus authorities that Smith was making unusual inquiries about chemical processes, including extracting ribosomal inhibiting proteins. Assistant Attorney General Carlin joins U.S. Attorney Santelle in praising the actions of the professors and the university administration in bringing Smith to the prompt attention of law enforcement authorities. Assistant Attorney General Carlin is also very grateful to the Wisconsin National Guard, 54th Civil Support Team, for the critical assistance they provided in the safe recovery of the ricin.
The case was investigated by the Oshkosh Police Department and the FBI. The case was prosecuted by Assistant U.S. Attorney Paul L. Kanter of the Eastern District of Wisconsin and the Justice Department’s National Security Division.
Former University of Kentucky Faculty Member SentencedRead the Press Release
A former employee of the University of Kentucky’s Veterinary Diagnostic Laboratory has been sentenced to 66 months in prison for downloading child pornography images onto his work-issued computer.
On Wednesday, U.S. District Judge Karen Caldwell sentenced 60 year-old Neil Mason Williams for receipt of child pornography. Under federal law, Williams will have to serve at least 85 percent of his sentence. Following his release from prison, Williams will be under the supervision of U.S. Probation Office for 20 years and he will have restricted access to a computer during this time period.
Williams pleaded guilty to the charge in December of last year, admitting that he used a file sharing program to download thousands of images of child pornography onto his work computer. The investigation started in February 2014, when staff members from the Information Technology Department noticed files downloaded on Williams’ computer that appeared to contain child pornography.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, FBI; Jack Conway, Kentucky Attorney General; and Ray Larson, Office of the Commonwealth’s Attorney, jointly announced the sentence today.
The investigation was conducted by the FBI, the University of Kentucky Police Department, and the Office of the Kentucky Attorney General. Assistant U.S. Attorney David Marye, prosecuted the case on behalf of the federal government.
Former UW-Oshkosh Student Pleads Guilty in Federal Court to Possession of RicinRead the Press Release
United States Attorney James L. Santelle of the Eastern District of Wisconsin announced today that Kyle Allen Smith (Age: 21) of Oshkosh has entered a guilty plea to possession of ricin in violation of Title 18, United States Code, Section 175(b). At sentencing Smith faces a maximum of 10 years’ imprisonment and fine of $250,000.
According to the plea agreement Smith admitted growing castor bean plants and extracting ricin from the beans. A substance found in Smith’s residence was sent to the Department of Homeland Security, National Bioforensics Analysis Center at Fort Detrick, Maryland, and tested positive for the toxin ricin. Ricin is a toxin that infects human cells and blocks their ability to synthesize their own protein. Small doses of ricin may be lethal to human beings if ingested, inhaled, or injected. Symptoms of ricin poisoning can include difficulty breathing, nausea, vomiting, and diarrhea, with possible death occurring within 36 to 72 hours. According to information posted on the website of the Centers for Disease Control and Prevention (“CDC”), there are no known antidotes for ricin poisoning.
Smith admitted having homicidal thoughts and that his homicidal thoughts might have sparked his curiosity about the production of ricin. He stated he would not use or test the ricin on any human because too many people knew what he was doing and would turn him in.
Smith was arrested on October 31, 2014, after two professors at the University of Wisconsin at Oshkosh reported to campus authorities that Smith was making unusual inquiries about chemical processes, including extracting ribosomal inhibiting proteins. United States Attorney Santelle praises the actions of the professors and the university administration in bringing Smith to the prompt attention of law enforcement authorities. It is a perfect example of “See something, say something,” which guides the required vigilance of our times. Mr. Santelle also thanks the Wisconsin National Guard, 54th Civil Support Team, for the critical assistance they provided in the safe recovery of the ricin.
The case was investigated by the Oshkosh Police Department and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Paul L. Kanter.
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Former U.S. Army Specialist Indicted for Taking Bribes While Deployed in AfghanistanRead the Press Release
A former specialist with the U.S. Army has been indicted for accepting bribes from Afghan truck drivers at Forward Operating Base (FOB) in Gardez, Afghanistan, in exchange for allowing the drivers to take thousands of gallons of fuel from the base for resale on the black market.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia made the announcement after the indictment was unsealed today.
Anthony Don Tran, 28, of Stockton, California, was indicted on March 10, 2015, in the Middle District of Georgia for one count of conspiracy to commit bribery of a public official and one count of bribery of a public official. Tran was arrested in Santa Clara, California, on March 11, 2015.
According to allegations in the indictment, from December 2012 to May 2013, Tran conspired with James Norris and Seneca Hampton, both sergeants in Tran’s unit, to solicit and accept cash bribes from local Afghan truck drivers in exchange for permitting the truck drivers to take thousands of gallons of fuel from the base. The indictment specifically alleges that on Jan. 26, 2013, Tran accepted $20,000 in exchange for permitting an Afghan driver to leave FOB Gardez with nearly 13,000 gallons of fuel purchased by the U.S. government.
The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
Norris and Hampton each pleaded guilty to one count of conspiracy to commit bribery of a public official and one count of money laundering on Feb. 11, 2015, and are scheduled to be sentenced on May 21, 2015.
The case is being investigated by the U.S. Army Criminal Investigation Command, the Office of the Special Inspector General for Afghanistan Reconstruction, the Defense Criminal Investigative Service and the Defense Contract Audit Agency, Investigative Support Division. The case is being prosecuted by Trial Attorney John Keller of the Criminal Division’s Public Integrity Section.
Former St. Louis City Police Officer Indicted on Weapons ChargesRead the Press Release
St. Louis, MO – An indictment was unsealed earlier today charging former St. Louis City Police Officer DON McGHEE with providing a firearm to known drug dealers to facilitate their distribution of crack cocaine and marijuana in the City of St. Louis.
According to the indictment, McGhee was a St. Louis Metropolitan Police Officer, assigned as a Patrolman in the Sixth District. The indictment alleges that Officer McGhee knew and associated with individuals who stored and distributed quantities of crack cocaine and marijuana in and from a house located in the City of St. Louis. On March 2, 2014, Officer McGhee took a Mossberg 12 gauge pistol grip shotgun to the Cottage Avenue drug house and gave it to one of the drug dealers knowing, believing or having reason to believe that the drug dealer would use the shotgun in relation to and in furtherance of the drug trafficking. During the execution of a search warrant at the Cottage Avenue house several days later, law enforcement officers recovered the Mossberg pistol grip shotgun, fully loaded, along with several other firearms, ammunition, quantities of crack cocaine and marijuana and a large amount of cash.
McGhee, St. Louis City, was indicted yesterday by a federal grand jury on one felony count of conspiracy to possess a firearm in relation to a drug trafficking crime. Officer McGhee surrendered to authorities this morning. He appeared for arraignment at 2:30 today before United States Magistrate Judge Nanette Baker.
If convicted, this charge carries a maximum penalty of 20 years in prison and/or fines up to $250,000. In determining the actual sentence, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
United States Attorney Richard Callahan noted that this investigation originated with the St. Louis City Police Department, which then partnered with additional law enforcement agencies as its investigation expanded. In addition to the St. Louis City Police Department, the case is also being investigated by the Federal Bureau of Investigation, the United States Drug Enforcement Administration and the St. Louis Circuit Attorney’s Office. Assistant United States Attorney Hal Goldsmith is handling the case for the U.S. Attorney’s Office.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.Former South Carolina Congaree Chief of Police Pleads Guilty to Lying to Federal Grand JuryRead the Press Release
Contact Person: Jay Richardson (803) 929-3000
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Columbia, South Carolina ---- United States Attorney Bill Nettles stated today that Jason Amodio (46) of Lexington, South Carolina has entered a guilty plea in federal court in Columbia, to Lying to a Federal Grand Jury, a violation of 18 U.S.C. § 1623. Senior United States District Judge Joseph F. Anderson, Jr. of Columbia accepted the guilty plea.
Evidence presented at the change of plea hearing established that during a joint federal and state investigation into illegal gambling, extortion under color of law, mail and wire fraud, and related public corruption in Lexington County, Amodio appeared before a federal grand jury. Asked about the purpose of a particular check payable to Amodio, Amodio claimed that the check was a loan. In fact, Amodio knew this was false and that the check was an improper payment from an attorney in Lexington. Amodio had assisted in convincing a family to hire that attorney to file a civil lawsuit after a car wreck had left one member of the family dead and one injured. When the attorney received a fee in return for his representation, that attorney then paid Amodio through an intermediary.
“Mr. Amodio went before the federal grand jury, swore on the Bible to tell the truth, and lied; that is a crime,” said United States Attorney Bill Nettles. “This is another joint investigation by the S.C. Attorney General’s Office and the U.S. Attorney’s Office, along with the FBI and SLED, in our ongoing coordinated partnership to prosecute public corruption on all levels.”
As part of his agreement to plead guilty and cooperate with law enforcement, Amodio agreed to be sentenced to four years of probation with eight months of home confinement with electronic monitoring. Additionally, Amodio has agreed to plead guilty in state court to misconduct in office. This case is part of a joint investigation of the FBI, SLED, the South Carolina Attorney General’s Office, and the United States Attorney’s Office into public corruption and is being prosecuted by Assistant United States Attorneys Jay N. Richardson and Jim H. May and Assistant Deputy Attorney General Creighton Waters.Former Non-Profit Executive Pleads Guilty to Stealing Funds Intended to Help the HomelessRead the Press Release
PHILADELPHIA - Nathaniel E. Robinson, 62, of Philadelphia, plead guilty today to using funds intended to help the homeless to pay for his own personal and living expenses. Robinson was the Chief Program Officer at SELF, Inc. He was charged with theft from a program receiving federal funds.
Between 2006 and 2010, Robinson used his corporate American Express credit card at SELF to charge personal expenses. The government alleges he stole approximately $154,050 and reimbursed a total of $2,594.30 before his employment was terminated. Robinson used the corporate American Express card to pay for trips to Alabama, including airfare, lodging, and restaurants; lodging in Orlando, Florida, and Philadelphia; car rentals; car repairs; admission tickets to Six Flags Great Adventure and Clementon Amusement Park; Amtrak tickets; purchases at Walmart and Filene’s Basement; and restaurant charges in Washington, D.C. and Baltimore, MD. Today, Robinson admitted that he stole at least $5,000 of SELF’s funds for personal use.
U.S. District Court Judge Berle M. Schiller scheduled a sentencing hearing for June 8, 2015. Robinson faces a maximum possible sentence of 10 years in prison, restitution, up to three years of supervised release, and a fine of up to $250,000.
The case was investigated jointly by the FBI and the Philadelphia Office of the Inspector General, and was initiated by a tip to the Inspector General’s Office. It is being prosecuted by Assistant United States Attorney Karen L. Grigsby.
Former New York City Police Officer Sentenced to 18 Years’ ImprisonmentRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, former New York City Police Officer Jose Tejada was sentenced to 18 years in prison by United States District Judge John Gleeson. Tejada was convicted after a six-week jury trial in November 2013 of two counts of obstruction of justice and after a two-week jury trial in June 2014 of conspiring to commit Hobbs Act robberies and conspiring to distribute cocaine and heroin.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division, and William J. Bratton, Commissioner of the New York City Police Department (NYPD).
Tejada was a 17-year veteran of the NYPD who, at the time of the criminal conduct, was assigned to the 28th Precinct in Harlem. This prosecution arose out of Tejada’s commission of multiple robberies and attempted robberies in Queens, Manhattan, and the Bronx in 2006 and 2007, some of which he committed while on duty, in uniform, and using an NYPD undercover vehicle.
“The defendant violated his sworn oath as a New York City police officer to protect and serve the citizens of New York by conspiring to commit armed robberies and to distribute narcotics stolen during those robberies.” stated United States Attorney Lynch. “Today’s sentence will send a message that no one – especially one sworn to uphold the law – is immune from prosecution if he engages in criminal acts.” Ms. Lynch expressed her thanks to the New York Drug Enforcement Task Force – comprising DEA special agents, NYPD officers, and New York State Police investigators – and the NYPD’s Internal Affairs Division, Police Impersonation Investigation Unit, which jointly led the investigation.
The evidence presented at the two trials showed that Tejada participated in multiple armed robberies and attempted robberies, which netted thousands of dollars in cash and multiple kilograms of cocaine.
In one such attempted robbery on Schley Avenue in the Bronx, Tejada -- while on duty and in uniform -- used his status as a police officer to demand and gain access to a private residence occupied by a husband and wife and their teenaged daughter. Tejada and two other robbers impersonating police officers mistakenly believed that the residence was a stash house for narcotics. In fact, the residents had no involvement in drug dealing. While Tejada and the other robbers unsuccessfully searched the premises for drugs, Tejada attempted to handcuff the male victim and brandished his NYPD-issued firearm in an effort to intimidate the innocent family.
In a robbery near 125th Street and Broadway in Manhattan, Tejada, fellow NYPD officer Jorge Arbaje-Diaz, and NYPD auxiliary officer Yvan Tineo pulled over an SUV, handcuffed the driver, and stole five kilograms of cocaine hidden inside the car.1 In another robbery on Seaman Avenue in Upper Manhattan, Tejada and Tineo robbed a drug supplier of three kilograms of cocaine at gunpoint.
In an incident outside an arrivals terminal at John F. Kennedy International Airport in Queens, Tejada, Arbaje-Diaz, and Tineo staged the arrest of a corrupt airline employee who was part of a scheme to smuggle narcotics into the United States on board incoming commercial flights. The staged arrest permitted the corrupt airline employee and the members of the robbery crew to steal at least five kilograms of cocaine from the drug organization to whom the corrupt airline employee was to deliver the drugs.
Tejada also supplied members of the robbery crew with NYPD gear and equipment, including an NYPD jacket, utility belt, and police radio, to enable members of the robbery crew to impersonate police officers during the drug robberies.
The evidence at the two trials also showed that Tejada searched confidential law enforcement databases to determine whether there were outstanding warrants for his own arrest, as well as for the arrest of other members of the robbery crew. Tejada then shared that information with his confederates in an effort to assist them in evading arrest.
Tejada’s conviction is one of the most recent of dozens of convictions in a set of interlocking cases brought in the Eastern District of New York against the members of violent drug robbery crews who impersonated police officers and frequently committed robberies with real police officers. Tejada is the third NYPD officer to be convicted in these cases. In addition, two NYPD auxiliary officers have been convicted as well. In total, 52 defendants who participated in this robbery crew have been convicted.
The government’s case is being prosecuted by Assistant United States Attorneys Alexander A. Solomon, Douglas M. Pravda, and Kenji M. Price.
The Defendant:
JOSE FELIX TEJADA
Age: 47
Mahopac, New York
E.D.N.Y. Docket No. 08-CR-242 (JG)
__________________________________________________________________________
1 Arbaje-Diaz was previously convicted of robbery conspiracy and narcotics distribution conspiracy, and was sentenced to 20 years’ imprisonment. Tineo was previously convicted of robbery conspiracy, narcotics distribution conspiracy, and unlawful use of a firearm, and is awaiting sentencing.
Former Mexican Governor’s Political Appointee IndictedRead the Press Release
CORPUS CHRISTI, Texas - A former Mexican political appointee from the State of Tamaulipas, Mexico, has been indicted for conspiring to launder monetary instruments, conspiracy to commit bank fraud and two counts of bank fraud, announced U.S. Attorney Kenneth Magidson.
Pablo Zarate Juarez is the former Instituto Tamaulipeco De Vivienda Y Urbanismo (ITAVU) director in the State of Tamaulipas, Mexico. The criminal indictment, returned yesterday, is a result of the efforts of a multi-agency Organized Crime Drug Enforcement Task Force (OCDETF) investigation.
ITAVU is the Tamaulipas Institute for Housing and Urban Development. Zarate Juarez was appointed to the position of director of ITAVU by former Tamaulipas Governor Tomas Yarrington Ruvalcaba. ITAVU is the department in Tamaulipas responsible for supporting lower income residents with housing programs and financing programs.
There was a previously filed Verified Civil Complaint for Forfeiture in Rem regarding a 2005 Pilatus Aircraft, bearing tail number N679PE, also listed in the forfeiture provision of the indictment against Zarate. The Pilatus aircraft is the same aircraft that is also listed in the notice of forfeiture in the pending criminal indictment charging former Tamaulipas Governor Tomas Yarrington Ruvalcaba. In the civil case, it is alleged that Yarrington is the true owner and that he purchased the aircraft through several straw purchasers in a complex money laundering scheme. The laundered proceeds is alleged to have included drug cartel money.
“HSI special agents often investigate complex financial schemes in order to disrupt and dismantle the ongoing operations of suspected transnational criminal organizations,” said Special Agent in Charge Janice Ayala of Homeland Security Investigations (HSI) San Antonio. “These investigations can deprive the organizations from enjoying the fruits of these illicit proceeds and prevent them from furthering the ongoing criminal enterprise. HSI will continue to aggressively investigate fraudulent financial schemes that jeopardize the integrity of our financial system.”
If convicted of the money laundering conspiracy, Zarate faces up to 20 years in federal prison and a possible $500,000 fine (or twice the value of the monetary instrument or funds involved in the transactions or both). Upon conviction of the bank frdu charge, Zarate also faces up to 30 years in Federal prison and a potential $1 million fine.
Zarate is not in the custody of the United States and a warrant remains outstanding for his arrest. Anyone with information about his whereabouts is asked to contact Homeland Security Investigations at 956-542-5811. Persons calling from Mexico should call 001-800-010-5237.
The OCDETF investigation leading to the indictment was conducted in McAllen, San Antonio, Brownsville, Houston, Laredo and Corpus Christi by HSI, FBI, Internal Revenue Service - Criminal Investigation and Drug Enforcement Administration.
This case is being prosecuted in the Southern District of Texas by Assistant U.S. Attorney Julie K. Hampton.
An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.Former Logan County Assessor sentenced for federal banking law violationRead the Press Release
Rick Grimmett admits to more than $366,000 in structured cash transactions
Charleston, W.va. – United States Attorney Booth Goodwin announced that Russell R. Grimmett, also known as Rick Grimmett, 51, of Man, West Virginia, was sentenced today to five years’ federal probation, including six months of home confinement, for violating federal banking laws. Grimmett is the former Logan County assessor. The sentence was handed down by United States District Judge Thomas E. Johnston.
Banks are required by federal law to report all cash transactions in excess of $10,000. Grimmett admitted that he and an associate withdrew cash from the Logan Bank and Trust in Man, West Virginia, in amounts less than $10,000 to prevent triggering the reporting requirement. This practice, known as “structuring,” is a federal crime. Grimmett further admitted that between early 2009 and December 2012, he and his associate structured more than $366,000 in cash from various banks.
As part of his plea agreement, Mr. Grimmett agreed to resign his position as assessor. He also agreed to forfeit $150,000.
Today’s charge stems from an investigation conducted by the FBI, IRS Criminal Investigation, United States Postal Inspection Service, and the West Virginia State Police. Assistant United States Attorney Meredith George Thomas is handling the prosecution.
Former Immigration Officer Charged with Conspiracy to Commit Visa FraudRead the Press Release
Jacksonville, Florida. – United States Attorney A. Lee Bentley, III announces the unsealing of an indictment charging Orange Park residents Paul Reynolds Friel, Jr. (47) and Marisol Del Carmen Rodriguez Chavarria (39) with conspiracy to commit visa fraud. Additionally, Friel has been charged with four separate counts of making a materially false statement. If convicted on all counts, Friel faces a maximum penalty of 25 years in federal prison. Rodriguez faces a maximum penalty of 5 years in prison.
According to the indictment, Friel was an officer with U.S. Citizenship and Immigration Services, which is part of the Department of Homeland Security. The indictment alleges that beginning in September 2007, he conspired with Rodriguez, a citizen of Nicaragua, for her to enter into a sham marriage with another man. That individual, Luis Aguilar, has been charged separately in another case. Friel allegedly conspired with Rodriguez and Aguilar to make false representations in applying for a visa that would enable Rodriguez to travel to the United States as Aguilar’s spouse. Friel paid for air travel for Aguilar and himself for the wedding of Aguilar to Rodriguez, which occurred in Nicaragua in January 2008. He also paid for Aguilar’s air travel to attend a visa interview in Nicaragua in November 2010, and for Rodriguez’s air travel to Florida in December 2010, after she was issued a visa. The indictment alleges that Friel assisted Rodriguez and Aguilar in filling out immigration forms, and that he loaned $3,500 to Aguilar in order to falsely portray Aguilar’s financial condition in an affidavit submitted to the State Department. Additionally, Friel coached Aguilar on what questions might be asked of him at the visa interview in order to detect relationship fraud. In December 2010, Rodriguez was issued a visa that enabled her to travel to the United States as Aguilar’s spouse. However, the indictment alleges that in or around March 2011, she moved in with Friel and that they had a romantic relationship. Subsequently, Rodriguez and Friel were married.
Friel is also charged with making materially false statements, including during a background investigation for a national security clearance. It is alleged that in December 2011, he failed to disclose his relationship with Rodriguez as his cohabitant, and failed to disclose his contact with her during the preceding seven years, as a foreign national, in connection with a background investigation done by the U.S. Department of Homeland Security and Office of Personnel Management. Rodriguez is a resident alien, not a U.S. citizen.
An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.
On March 12, 2015, Friel and Rodriguez made their initial appearance before United States Magistrate Judge Patricia D. Barksdale. They were released on bond. An arraignment for Friel and Rodriguez has been scheduled for March 16 and 17, 2015, respectively.
This case was investigated by the U.S. Department of Homeland Security, Office of Inspector General, and the Jacksonville office of the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorney Dale Campion.
Former Denton High School Teacher Sentenced to Serve A Total of 60 Years in Federal Prison for Producing Child PornographyRead the Press Release
FORT WORTH, Texas — A former teacher at Denton High School, Gregory Bogomol, 39, was sentenced today on child pornography production convictions, announced Acting U.S. Attorney John Parker of the Northern District of Texas.
Bogomol, who pleaded guilty in October 2014 to an indictment charging two counts of production of child pornography, was sentenced by U.S. District Judge Terry R. Means to 360 months in federal prison for each count, to run consecutively, for a total of 720 months in federal prison.
According to documents filed in the case, the investigation began when U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) was contacted by the parents of a 15-year-old male victim regarding an individual who solicited a nude photograph of the minor through a smartphone application.
Specifically, according to the factual resume, Bogomol used social media applications such as KIK, Grindr, and Pinger to initiate conversations with underage males. Bogomol posed as a minor female and sent nude images of females to entice the boys to produce sexually explicit pictures.
After Bogomol received an image from the minor male, Bogomol would make additional explicit demands. If the minor male did not comply with his demands, Bogomol would threaten to send sexually explicit pictures of the boy to the boy’s friends via social media applications.
On approximately April 20, 2014, Bogomol coerced one minor victim to send a sexually explicit image of himself. A few days later, Bogomol coerced another minor victim to send a sexually explicit image of himself.
The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 2006 by the Department of Justice, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/. For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”
ICE HSI investigated. Assistant U.S. Attorney A. Saleem prosecuted.
Felon Sentenced to Eight Years in Prison for Illegally Possessing HandgunRead the Press Release
Spack previously convicted of eight felonies in MinnesotaUnited States Attorney Andrew M. Luger today announced the sentencing of TOMMY MICHAEL SPACK, 32, to eight years in prison for illegally possessing a firearm after having been previously convicted of multiple felonies in both Ramsey and Washington Counties. SPACK was indicted on February 3, 2014. The defendant pleaded guilty on May 8, 2014, and was sentenced today before Judge Ann D. Montgomery in U.S. District Court in Minneapolis, Minn.
“Reducing violent crime in Minnesota means keeping guns out of the hands of felons,” said U.S. Attorney Luger. “This defendant had eight felony convictions and knew he was forbidden from possessing firearms. He is now paying the price for repeatedly flaunting the law.”
According to the defendant’s guilty plea and documents filed in court, on December 14, 2013, SPACK was driving a car when St. Paul Police Officers pulled him over at the intersection of Van Dyke Street and Stillwater Avenue East, in St. Paul, Minn. Officers searched the vehicle and recovered a Charter Arms Police Undercover .38 special revolver and a small bag containing methamphetamine.
According to his guilty plea and documents filed in court, SPACK later admitted that both the gun and drugs were his. Based on his criminal history, including convictions for eight felonies prior to December 14, 2013, it was illegal for SPACK to possess a firearm. SPACK’S criminal history includes convictions in Ramsey County for terroristic threats, receiving stolen property, attempted burglary, theft, and possession of illegal drugs. SPACK was previously convicted in Washington County for burglary and receiving stolen property.
This case is the result of an investigation conducted by the St. Paul Police Department and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
Assistant U.S. Attorney Surya Saxena prosecuted the case.
Defendant Information:
TOMMY MICHAEL SPACK, 32
St. Paul, Minn.
Convicted:
• Felon in Possession of a Firearm, 1 count
Sentenced:
• Eight years in prison
• Three years supervised releaseFelon Facing Federal Gun ChargesRead the Press Release
PITTSBURGH - A resident of Allegheny County, Pennsylvania, has been indicted by a federal grand jury in Pittsburgh on charges of possession of a firearm and ammunition by a convicted felon, and possession of a stolen firearm, United States Attorney David J. Hickton announced today.
The two-count Superseding Indictment, returned on March 11, named Jason T. Korey, 32, as the sole defendant.
According to the Superseding Indictment, on or about April 17, 2014, Korey possessed a firearm and ammunition as a convicted felon, and possessed a stolen firearm. Federal law prohibits an individual who has been convicted of a felony from possessing a firearm.
The law provides for a maximum total sentence of 20 years in prison, a fine of $500,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history of the defendant.
Assistant United States Attorneys Barbara Doolittle and Cindy K. Chung are prosecuting this case on behalf of the government.
The Bureau of Alcohol, Tobacco, Firearms and Explosives conducted the investigation leading to the Superseding Indictment in this case.
A Superseding Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Federal Jury Convicts Michael O. Brown on Drug Conspiracy and Distribution ChargesRead the Press Release
CHATTANOOGA, Tenn. - Following a four day trial in U.S. District Court, Chattanooga, Tenn., a jury convicted Michael O. Brown, of Fayetteville, Tenn., of conspiracy to distribute and distribution of cocaine and cocaine base (crack).
Sentencing is set for 9:00 a.m., Jun. 15, 2015, in U.S. District Court in Chattanooga. Brown faces a sentence of life in prison for the conspiracy charge and up to 30 years in prison for the distribution charge.
Evidence presented at trial showed that a group of 15 men and women conspired to distribute and possess with intent to distribute five kilograms or more of cocaine and 280 grams or more of cocaine base (crack). The jury saw a video of Brown selling crack cocaine to a confidential source and heard recorded telephone calls in which Brown is heard ordering cocaine from a codefendant. All of the 14 other individuals charged in the case pleaded guilty and have been sentenced. Brown was the only one to go to trial.
Law enforcement agencies participating in the joint investigation which led to indictment and subsequent conviction of Brown and his codefendants included the Drug Enforcement Administration, Tennessee Bureau of Investigation, Franklin County Sheriff’s Office, Lincoln County Sheriff’s Office and Winchester Police Department. Assistant U.S. Attorney Terra L. Bay represented the United States at trial.
Federal Jury Convicts Guatemalan for Cocaine and Methamphetamine ConspiracyRead the Press Release
LAKE CHARLES, La. – United States Attorney Stephanie A. Finley announced that, after a two-day trial, a federal jury found a Guatemalan guilty of conspiracy and possession with intent to distribute more than $1.5 million worth of cocaine and $75,000 worth of methamphetamine.
Jose Gabriel Mendez, 35, a Guatemalan living in Texas, was found guilty of one count of conspiracy to possess with intent to distribute cocaine and methamphetamine, one count of possession with intent to distribute cocaine, and one count of possession with intent to distribute methamphetamine. United States District Judge Donald E. Walter presided over the trial. The defendant’s trial started Tuesday and ended Wednesday afternoon with the jury returning the guilty verdict after deliberating for approximately two hours. Evidence admitted at trial showed that law enforcement agents conducted a traffic stop on October 15, 2014, of a 1996 Dodge Dakota pickup truck driven by Mendez. Further investigation by Corporal Kevin Hoover of the Calcasieu Parish Combined Anti-Drug Task Force (CAT) revealed 516 grams of methamphetamine and 15 kilograms of cocaine hidden in the four door panels and tire jack compartment of the truck.
Mendez faces 10 years to life in prison, five years of supervised release and a $10 million fine. Sentencing is set for June 29, 2015. Mendez’s co-conspirator in the indictment, Jack Edward Lane, 67, of Brownsville, Texas, previously pleaded guilty to the drug conspiracy on January 20, 2015. Sentencing is set for April 15, 2015.
The DEA and Calcasieu Parish Combined Anti-Drug Task Force conducted the investigation. Assistant U.S. Attorneys David C. Joseph and Howard C. Parker prosecuted the case.
Exide Technologies Admits Role in Major Hazardous Waste Case and Agrees to Permanently Close Battery Recycling Facility in VernonRead the Press Release
Facility that has Polluted East L.A. for over 90 Years will be Cleaned Up Pursuant to Agreement Designed to Allow Exide to Emerge from Bankruptcy
LOS ANGELES – The United States and Exide Technologies have reached an agreement that calls for the battery manufacturing company to immediately and forever close a battery recycling facility in Vernon and to pay $50 million to clean-up the site and surrounding neighborhoods, which have been affected by environmental toxins for close to a century.
The agreement approved late yesterday calls for Exide to permanently close the plant which, the company admits, produces a host of hazardous wastes, including lead, cadmium, arsenic and volatile organic compounds.
“The reign of toxic lead ends today,” said Acting United States Attorney Stephanie Yonekura. “After more than nine decades of ongoing lead contamination in the City of Vernon, neighborhoods can now start to breathe easier.”
Exide had planned to resume operations at the recycling facility as early as next month, but the agreement calls for the facility to be shuttered, demolished and cleaned up. Exide is also required to make expedited payments that will complete funding of a $9 million trust fund that will be used to clean up 216 nearby residences in the Boyle Heights neighborhood and the City of Maywood.
The deal to close the recycling facility is contained in a Non-Prosecution Agreement (NPA) that was finalized late last night. The agreement calls for the immediate closure of the battery recycling facility and estimates that Exide’s direct costs of compliance are well in excess of $100 million, costs that include the company walking away from recent improvements to the facility and incurring new costs for lead and plastic that must now be purchased to manufacture new batteries.
The United States Attorney’s Office entered into the NPA because negotiations with the bankrupt company revealed that even the threat of a criminal prosecution would almost certainly force the liquidation of the company. The NPA opens the door to new funding for the company, which employs thousands of workers in the United States and around the world, and ensures that money will be available to pay for the clean-up of the Vernon site and several other toxic sites around the United States. Without the NPA, prosecutors believe, Exide would cease to exist as a viable company and responsibility to clean up toxic sites like the recycling plant in Vernon would revert to governmental agencies.
“The agreement with Exide ensures that the Vernon site will be permanently closed, while guaranteeing that the company will survive to adequately finance the clean-up of this long-suffering community,” Yonekura said.
Jared Blumenfeld, EPA’s Regional Administrator for the Pacific Southwest, stated: “The closure of this facility is a victory for the residents of Vernon who have suffered from decades of toxic pollution. This historic action was made possible because of the tireless efforts of local community members, including parents, environmental groups and religious leaders. Today’s announcement shows that companies who fail to meet federal environmental laws will face serious consequences.”
In addition to the commitments to close the Vernon facility and pay for associated clean-up costs, Exide has acknowledged criminal conduct, including the illegal storage, illegal disposal, illegal shipment and illegal transportation of hazardous waste. For example, in the NPA “Exide admits that it knowingly and willfully caused the shipment of hazardous waste contaminated with lead and corrosive acid in leaking van trailers owned by Wiley Sanders Truck Line, Inc. and operated by Lutrel Trucking, Inc. and KW Plastics of California, Inc., from the [Vernon] facility to Bakersfield, California, a significant number of times over the past two decades, in violation of federal law. Each incident could be charged as a felony violation of the federal Hazardous Materials Transportation Act.”
The admissions of criminal violations is important because Exide agreed that it could be prosecuted for the felony environmental offenses it previously committed at any time over the next 10 years if it fails to abide by the terms of the NPA. A violation would include failing to adequate finance clean-up efforts at the recycling facility, a program that will be overseen by the California Department of Toxic Substances Control (DTSC).
The NPA with Exide is the result of an investigation by the United States Environmental Protection Agency – Criminal Investigations Division and the United States Department of Transportation – Office of the Inspector General.
Release No. 15-027
East Alton Man Sentenced to Federal Prison for Illegally Possessing A FirearmRead the Press Release
Jerry D. Roof, 31 of East Alton, Illinois, was sentenced today by United States District Court Judge David R. Herndon to 30 months in federal prison for being a felon in possession of a firearm, announced Stephen R. Wigginton, United States Attorney for the Southern District of Illinois.
According to court documents, in January 2014, Roof’s probation officer found him in possession of a firearm at his residence in violation of his probation and federal law. As a convicted felon, Roof could not lawfully possess a firearm. Roof was charged in federal court in East St. Louis, Illinois and pled guilty.
United States Attorney Wigginton noted that: "My office remains committed to prosecuting felons who illegally arm themselves with firearms. A sentence like this one sends a strong, clear message: If you’re a convicted felon, you simply cannot have a gun. Period."
There is no parole in the federal prison system. In addition to the prison sentence, Judge Herndon also sentenced Roof to serve 3-years of supervised release and to pay a $300 fine as well as $100 in court fees.
The Madison County Sheriff’s Department and the Madison County Probation Department investigated this case with the assistance of the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant United States Attorney Monica A. Stump prosecuted the offense.
Duke Energy Subsidiaries Plea to Criminal Information and Sentencing Set for April 16, 2015Read the Press Release
RALEIGH – A Plea and Sentencing Hearing has been set for Duke Energy Business Services, LLC, Duke Energy Progress, Inc., and Duke Energy Carolinas, LLC for April 16, 2015 at 10:00 a.m. in the federal courthouse in Greenville, North Carolina. The companies were charged with multiple violations of the Clean Water Act.
Persons directly and proximately harmed as a result of the conduct charged in this matter may have rights under the Crime Victims’ Rights Act. See 18 U.S.C. § 3771. If you believe that you are a crime victim in this matter, please contact the United States Attorney’s Office for the Eastern District of North Carolina at [email protected] no later than March 26, 2015.
The U.S. Attorney’s Offices will have no further comment on this matter until after court proceedings.
Drug Dealer Found Guilty at TrialRead the Press Release
BATON ROUGE, LA –United States Attorney Walt Green announced that a federal jury unanimously convicted KENDRICK D. ALEXANDER, age 41, of Baton Rouge, Louisiana, today following a four-day jury trial before U.S. District Judge John W. deGravelles based on an Indictment charging him with possession with the intent to distribute oxycodone, a Schedule II controlled substance, in violation of Title 21, United States Code, Sections 846 and 841(a)(1). ALEXANDER faces a significant term of imprisonment, followed by supervised release, along with a fine and forfeiture of assets. A sentencing date has not yet been set.
The evidence at trial demonstrated that ALEXANDER engaged in illegal drug dealing involving oxycodone, which is a controlled pain medication that has increasingly become a drug of choice for illegal users and dealers. Oxycodone may only be dispensed and used legally when prescribed by a DEA-registered medical doctor for medical necessity reasons. This is because oxycodone is potentially very addictive and has resulted in significant abuse by some users, risking serious injury and death.
U.S. Attorney Green stated: “Drug traffickers will continue to face the multi-pronged attack being waged by my office and all of law enforcement in this district. Today’s verdict is another successful result of that ongoing effort. I greatly appreciate the hard work of the DEA, the Baton Rouge Police Department, and my staff in bringing the defendant to justice.”
Joseph W. Shepherd, Assistant Special Agent-in-Charge of the U.S. Drug Enforcement Administration’s New Orleans Field Office, stated: “Kendrick Alexander is yet another drug dealer who learned today the strength, partnership, and solidarity of the federal, state, and local law enforcement community. The message is simple: the Drug Enforcement Administration and the U.S. Attorney’s Office will stop at nothing to ensure that drug trafficking ventures perpetrated by the likes of Mr. Alexander will not be tolerated.”
The investigation was conducted by the U.S. Drug Enforcement Administration and the Baton Rouge Police Department. The case was prosecuted by Assistant United States Attorneys Cam Le and Ryan Crosswell.
District Man Sentenced to 80 Years in Prison for 2013 Murders of Siblings in Northeast Washington -Sister Died While Trying to Shield Her Younger Brother from Gunfire-Read the Press Release
WASHINGTON – Kevin Walker, 39, of Washington, D.C., was sentenced today to 80 years in prison for killing two people – a sister and her brother - in Northeast Washington, U.S. Attorney Ronald C. Machen Jr. announced.
Walker was found guilty by a jury in December 2014 of two counts of first-degree murder while armed and two related firearms offenses. The verdicts followed a trial in the Superior Court of the District of Columbia. He was sentenced by the Honorable Russell F. Canan.
According to the government’s evidence, on July 20, 2013, at about 4:30 a.m., Walker killed Jamie Jenkins, 28, and her brother, Jamahl Jenkins, 21, in the 5300 block of East Capitol Street NE. Before the shootings, Jamie Jenkins had been involved in a fight with Walker’s girlfriend. Jamahl Jenkins was present, but not involved. After the fight broke up, the siblings left the area, but they came back a few minutes later to look for Jamie Jenkins’s lost cell phone.
Walker then came outside with a gun and approached the pair. Eyewitnesses screamed at Walker that the fight was over, and that it wasn’t serious. However, words were exchanged, and Walker then fired his gun. According to the government’s evidence, Jamie Jenkins was fatally shot when she jumped in front of the first bullet intended for her brother. Walker then followed Jamahl Jenkins and shot him six times in the back as he tried to run away.
After the shooting, Walker fled to North Carolina, where he was apprehended by the U.S. Marshals Service in September 2013.
In announcing the sentence, U.S. Attorney Machen commended the work of the Metropolitan Police Department, which investigated the case. He also expressed appreciation for the assistance provided by the District of Columbia’s Office of the Chief Medical Examiner, the District of Columbia Department of Forensic Services, and the U.S. Marshals Service. He acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Litigation Technology Specialists Anisha Bhatia and Leif Hickling; Victim/Witness Advocate Marcia Rinker; Investigative Analyst Zachary McMenamin; and Paralegal Specialists Kwasi Fields and Kendra Johnson. Finally, he commended the work of Assistant U.S. Attorneys Magdalena Acevedo and Demian S. Ahn, who investigated and prosecuted the case.
15-043
Dallas-Area Residents Charged with Conspiracy, Drug Trafficking and Firearms OffensesRead the Press Release
DALLAS — Ten Dallas-area residents have been charged with various federal offenses to include conspiracy, drug trafficking, and firearms offenses, including assault on federal agents, announced John Parker, Acting U.S. Attorney for the Northern District of Texas.
Several of the defendants, charged in an indictment and in complaints, were arrested following a law enforcement operation on February 10, 2015. During that operation, at a residence in Grand Prairie, Texas, one of the defendants fired an AK-47 at two special agents with the FBI.
The charges are the result of the continuing investigation of the violent drug trafficking organization (DTO) known as the “Goon Squad,” which operated in Dallas. The Goon Squad consisted of numerous individuals, including defendant Jose Pedro Maya. In June 2014, the FBI arrested 10 members/associates of the Goon Squad and those cases are pending in this district. Shortly after those arrests, Maya fled to Mexico, but returned to the U.S. in September 2014. At some point in 2014, Maya split from the Goon Squad and began leading his own drug trafficking organization, the Maya DTO.
Defendants charged include:
Jose Pedro Maya, a/k/a “Little Maya,” 21, of Grand Prairie
Santiago Reynozo, a/k/a “Santiago Reynosa” and “Pelon,” 21, of Dallas
Baltazar Moreno, a/k/a “Chalan,” 39, of Dallas
Adrian Reynozo, a/k/a “Adrian Reynoso,” 22, of Dallas
Rogelio Lira, a/k/a “Primo,” 25, of Dallas
Guillermo Perez, 18, of Grand Prairie
Emmitt Herrera, Jr., 46, of Grand Prairie
Diego Moreno, 21, of Dallas
Jessie Amaya, 19, of Grand Prairie
Oracio Ferrer Reza, 34 of Mesquite, Texas
Maya is related to Santiago Reynoza and Adrian Reynozo, who are brothers.
The original indictment alleged the Maya DTO distributed methamphetamine and cocaine in the Dallas area; it also possessed and trafficked in firearms. Like the Goon Squad, it targeted individuals believed to be drug dealers for burglary, robbery, or other acts of violence as those individuals were likely to possess large quantities of illegal narcotics, cash or firearms and would not likely report any offenses by the Maya DTO because of their own unlawful activities.
Defendants Maya, Santiago Reynozo, Baltazar Moreno, Adrian Reynozo and Lira are each charged with one count of conspiracy to possess with intent to distribute a controlled substance — methamphetamine and cocaine. As part of the conspiracy, Moreno cooked methamphetamine and provided it to Maya and the other conspirators. Santiago Reynoza, Moreno, Adrian Reynozo and Lira sold the illegal narcotics outside of the Los Campadres Billiards in Dallas. Maya provided the methamphetamine for these individuals to sell, and he received a portion of the sales proceeds. Maya also sold firearms in furtherance of his drug trafficking activities, and all five defendants possessed firearms in furtherance of their drug trafficking activities.
Each of these five defendants is also charged with one count of using, carrying, or brandishing a firearm during or in relation to a drug trafficking crime; Adrian Reynozo is also charged with being an illegal alien in possession of a firearm.
In another indictment, Perez and Herrera are each charged with one count of assault on a federal officer, one count of conspiracy to possess with intent to distribute methamphetamine, and one count of conspiracy to possess with the intent to distribute heroin. In addition, Perez is charged with two counts and Herrera with one count of using carrying, brandishing and discharging a firearm during and in relation to a crime of violence. Herrera is also charged with one count of being a felon in possession of a firearm.
Defendants Diego Moreno and Reza each pleaded guilty this week to Informations charging one count of possession of methamphetamine with intent to distribute. Defendant Lira pleaded guilty to a superseding Information charging the same offense. Defendant Amaya pleaded guilty to an Information charging possession with intent to distribute cocaine. Each faces a maximum statutory penalty of 20 years in federal prison and a $1 million fine.
A trial date of April 20, 2015, is set for the remaining defendants.
According to documents filed in the cases, as law enforcement officers were executing an arrest warrant for Maya at his residence in Grand Prairie, Perez, who was a guest at the residence, grabbed an assault rifle and fired two rounds in the direction of the front door where law enforcement personnel were located. Law enforcement personnel had clearly identified themselves as law enforcement, both visually and orally.
Herrera was also in the residence at the time. He was in the kitchen where law enforcement observed a large quantity of methamphetamine and the water faucet turned on in what appeared to be an attempt to wash the methamphetamine down the sink.
A federal indictment is an accusation by a grand jury. If convicted, however, the statutory maximum penalty for the drug trafficking conspiracy is life in federal prison and millions of dollars in fines. Each firearm conviction carries a statutory penalty of not less than five years in federal prison and up to a $250,000 fine, and the alien in possession conviction carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine. The assault on a federal officer offense carries a maximum statutory penalty of 20 years in federal prison and a $250,000 fine.
The FBI and Dallas Police Department are investigating. Assistant U.S. Attorney P.J. Meitl is prosecuting.
Cottage Grove Woman Convicted by Jury of Producing Pornographic Images of A ChildRead the Press Release
Roxanne Merrell promised $100,000 to send obscene photos of young girlUnited States Attorney Andrew M. Luger today announced the conviction of ROXANNE MERRELL, 35, for making pornographic images of a pre-pubescent girl. MERRELL was convicted by a jury of the entire indictment against her after a three-day trial before Senior Judge David S. Doty in U.S. District Court in Minneapolis, Minn. A sentencing date has not yet been set.
As proven at trial, Travis Guenthner of Washburn, North Dakota, who was convicted in May 2014 in the District of North Dakota of multiple counts of production of child pornography and other child exploitation offenses, knew ROXANNE MERRELL. Guenthner offered MERRELL $100,000 to take pornographic photos of a young girl, which MERRELL took while the child was sleeping. Other pictures of the child’s naked buttocks and clothed pubic area were also discovered on Guenthner’s computer. The photographs, some of which included an image of an adult hand, were later discovered on Guenthner’s computer. The adult hand appearing in the photos belonged to MERRELL.
“HSI is committed to aggressively pursuing those individuals who trade in child pornography,” said HSI St. Paul Special Agent in Charge J. Michael Netherland. "It is our job to do everything that we can to protect the most vulnerable members of our society.”
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.projectsafechildhood.gov
This case is the result of an investigation conducted by Homeland Security Investigations (HSI) and the Cottage Grove Police Department.
Assistant U.S. Attorneys Katharine T. Buzicky and Sarah E. Hudleston are prosecuting the case.
Defendant Information:
ROXANNE MERRELL, 35
Cottage Grove, Minn.
Convicted:
• Production of Child Pornography, 2 countsCortland Man Charged with ThreatsRead the Press Release
PLATTSBURGH, NEW YORK – On March 11, 2015, a federal grand jury indicted Roy S. Redeye, age 38, with threatening to kill three Saint Regis Mohawk Police Officers, announced United States Attorney Richard S. Hartunian, Homeland Security Investigations Special Agent in Charge James Spero, and Saint Regis Mohawk Police Chief Matthew Rourke. According to the two-count indictment, on February 6, 2015, Redeye threatened to kill the police officers in posts on his Facebook page.
Redeye was arrested in Cortland, New York, on February 10, 2015, where he was living at that time. On February 26, 2015, he had his initial appearance before United States Magistrate Judge Gary L. Favro
; the defendant has been detained since then. The trial date will be set in the coming days.
If convicted of these charges, the maximum penalties the defendant faces include: a term of imprisonment of 5 years; a fine of $250,000; a term of three years of supervised release; and payment of restitution to the victims.
The case is being investigated by agents of Homeland Security Investigations based in Massena, New York. Assistant United States Attorney Elizabeth Horsman is prosecuting the case.
The charges are merely accusations and the defendant is presumed innocent unless and until proven guilty in a court of law.
Corpus Christi Man Pleads Guilty to Distributing Child PornographyRead the Press Release
CORPUS CHRISTI, Texas – Kevin Justin Esquivel, 24, of Corpus Christi, has pleaded guilty to distribution of child pornography, announced U.S. Attorney Kenneth Magidson.
The court heard today that agents with the FBI Dallas Child Exploitation Task Force, while using peer-to-peer software, were able to successfully download of various files containing child pornography from an IP address that was associated with Esquivel. As a result of this information, the FBI office in Corpus Christi was contacted to assist in the investigation.
In August 2014, agents executed a search warrant at Esquivel’s residence, at which time they seized various electronic devices. Forensic analysis on those devices revealed more than 4,000 images and more than 900 videos of child pornography. Esquivel admitted having an sexual interest in children between the ages of 10 and 13 years of age and having downloaded child pornography.
U.S. Magistrate Judge Jason B. Libby accepted the guilty plea today and set sentencing for June 30, 2015, before U.S. District Judge Nelva Gonzales Ramos. At that time, Esquivel faces a minimum of five and up to 20 years in federal prison and a possible $250,000 maximum fine. Upon completion of any prison term imposed, Esquivel also faces a maximum of life on supervised release during which time the court can impose a number of special conditions designed to protect children and prohibit the use of the Internet.
Esquivel was arrested on the federal charges in August 2014 and has been in custody since that time where he will remain pending his sentencing.
The FBI investigated with the assistance of the Corpus Christi Police Department.
This case, prosecuted by Assistant U.S. Attorney Hugo R. Martinez, 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."
Contract Worker Pleads Guilty to Using Fraudulent TWIC Card to Attempt to Gain Access to Sulphur FacilityRead the Press Release
LAKE CHARLES, La. – United States Attorney Stephanie A. Finley announced today that a contract worker pleaded guilty to using a fraudulent facility access pass to attempt to gain entrance into a Sulphur, La., petrochemical facility.
Cristobal Vargas Zambrano, 32, a contract worker at a Sulphur facility, entered a conditional guilty plea before U.S. Magistrate Judge Kathleen Kay for one count of fraudulent use or possession of an official pass. The plea will become final when accepted by U.S. District Judge Donald E. Walter. According to the guilty plea, Zambrano used a fraudulent transportation worker identification credential (TWIC) on August 14, 2014, to attempt to gain access to Westlake Petrochemicals in Sulphur. Westlake Petrochemicals is a Transportation Security Act regulated facility and workers must present a TWIC card to gain access.
Zambrano faces up to five years in prison, three years supervised release and a $250,000 fine. A sentencing date of June 29, 2015 was set.
The U.S. Coast Guard Investigative Service investigated the case. Assistant U.S. Attorney Robert C. Abendroth is prosecuting the case.
Commerzbank AG Admits to Sanctions and Bank Secrecy Violations, Agrees to Forfeit $563 Million and Pay $79 Million FineRead the Press Release
Commerzbank AG, a global financial institution headquartered in Frankfurt, Germany, and its U.S. branch, Commerzbank AG New York Branch (Commerz New York), have agreed to forfeit $563 million, pay a $79 million fine and enter into a deferred prosecution agreement with the Justice Department for violations of the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA). The bank has also entered into settlement agreements with the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Board of Governors of the Federal Reserve System.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. of the District of Columbia, U.S. Attorney Preet Bharara of the Southern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) and District Attorney Cyrus R. Vance Jr. of New York County made the announcement.
In entering the deferred prosecution agreement, Commerzbank admitted and accepted responsibility for its criminal conduct in violation of IEEPA, and Commerz New York admitted its criminal conduct in violation of the BSA. Commerzbank further agreed to pay $263 million in forfeiture and a fine of $79 million for the IEEPA violations, and to pay $300 million in forfeiture in connection with the BSA violations, which will be remitted to the victims of a multi-billion dollar securities fraud scheme that was permitted to operate through Commerzbank. Commerzbank also agreed to implement rigorous internal controls and to cooperate fully with the Justice Department, including by reporting any criminal conduct by an employee.
A four-count felony criminal information was filed today in the District of Columbia charging Commerzbank with knowingly and willfully conspiring to commit violations of IEEPA and Commerz New York with three violations of the BSA for willfully failing to have an effective anti-money laundering (AML) program, willfully failing to conduct due diligence on its foreign correspondent accounts, and willfully failing to file suspicious activity reports. Assuming the bank’s continued compliance with the deferred prosecution agreement, the government has agreed to defer prosecution for a period of three years, after which time, the government would seek to dismiss the charges.
The New York County District Attorney’s Office is also announcing today that Commerzbank has entered into a deferred prosecution agreement, and in the corresponding factual statement, Commerzbank admitted that it violated New York State law by falsifying the records of New York financial institutions. In addition, the Board of Governors of the Federal Reserve System is announcing that Commerzbank has agreed to a cease and desist order, to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations and to pay a civil monetary penalty of $200 million. The New York State Department of Financial Services (DFS) is announcing Commerzbank has agreed to, among other things, pay a monetary penalty to DFS of $610 million. The OFAC has also levied a fine of $258.6 million, which will be satisfied by payments made to the Justice Department. In total, Commerzbank will pay $1.45 billion in penalties.
“Commerzbank concealed hundreds of millions of dollars in transactions prohibited by U.S. sanctions laws on behalf of Iranian and Sudanese businesses,” said Assistant Attorney General Caldwell. “Commerzbank committed these crimes even though managers inside the bank raised red flags about its sanctions-violating practices. Financial institutions must heed this message: banks that operate in the United States must comply with our laws, and banks that ignore the warnings of those charged with compliance will pay a very steep price.”
“Sanctions laws are designed to protect the national security of the United States and promote our foreign policy interests,” said U.S. Attorney Machen. “Commerzbank undermined the integrity of our financial system and threatened our national security by hiding the business they were doing with entities in Iran and Sudan. The bank tried to skirt our laws by hiding its illegal business with Iranian banks from its own employees in the United States. Today’s resolution demonstrates that there will be consequences when global banks try to profit from the benefits of the U.S. financial system without respecting our laws.”
“Today, Commerz New York stands charged with Bank Secrecy Act criminal offenses for its acute, institutional anti-money laundering deficiencies that made it a conduit for over a billion dollars of the Olympus fraud,” said U.S. Attorney Bharara. “These criminal charges follow a multi-year investigation and a guilty plea by a former Commerzbank Singapore employee who helped set up the structure that allowed for the Olympus fraud. Institutions, not just individuals, have an obligation to follow the law, and anti-money laundering laws in particular are critical for financial institutions to follow. With today’s resolution, the bank, as part of a deferred prosecution agreement, has accepted responsibility in a detailed statement of facts, agreed to continue reforming its anti-money laundering practices, and will pay $300 million that will go to victims of the Olympus fraud.”
“Today’s deferred prosecution agreement is a significant milestone – on an international stage – that reaffirms our clear message to other global financial institutions,” said Chief Weber. “IRS-CI’s work in this investigation – as well as the prior sanction cases – has resulted in fundamental changes in the way banks operate worldwide. IRS-CI and our partners will continue to hold financial institutions accountable for international criminal violations.”
“Today, we announce more charges against yet another bank,” said Assistant Director in Charge Rodriguez. “Commerzbank violated the Bank Secrecy Act designed to prevent the movement of money, often with nefarious intent. Commerzbank enabled Olympus to evade detection for years. And worse yet, failed to create a process to prevent this criminal behavior. Management at banks and financial institutions should heed this warming: This behavior will be investigated, vigorously.”
“We have sanctions in place to prevent rogue nations and terrorists from accessing the U.S. financial system,” said District Attorney Vance. “In order to have teeth, sanctions need to be enforced and Manhattan financial institutions need to be protected from being unwittingly used by bad actors. Over the course of eight settlements, my office and our partners have sent a strong message of enforcement that has led to the transformation of compliance in this area.”
IEEPA Violations
According to admissions contained in the deferred prosecution agreement, from 2002 to 2008, Commerzbank knowingly and willfully moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese entities subject to U.S. economic sanctions. Commerzbank engaged in this criminal conduct using numerous schemes designed to conceal the true nature of the illicit transactions from U.S. regulators.
For example, in the deferred prosecution agreement, Commerzbank acknowledged that it used non-transparent payment messages, known as cover payments, to conceal the involvement of sanctioned entities, and also removed information identifying sanctioned entities from payment messages, in transactions processed through Commerz New York and other financial institutions in the United States. Specifically, in 2003, Commerzbank designated a group of employees in the Frankfurt back office to review and amend Iranian payments so that the payments would not be stopped by U.S. sanctions filters. In doing so, Commerzbank ensured that Iranian payment messages did not mention the Iranian entity, as transactions may have otherwise been stopped pursuant to the U.S. sanctions.
Commerzbank admitted that it hid these practices from Commerz New York. For example, in 2003, when two state-owned Iranian banks wanted to begin routing their U.S. dollar clearing business through Commerzbank, a Commerzbank back office employee emailed other Commerzbank employees directing: “If for whatever reason CB New York inquires why our turnover has increase[d] so dramatically, under no circumstances may anyone mention that there is a connection to the clearing of Iranian banks!!!!!!!!!!!!!.”
Commerzbank admitted that this conduct continued even though its senior management was warned that the bank’s practices for Iranian clients “raised concerns.” For example, in October 2003, the head of Commerzbank’s internal audit division stated in an email to a member of Commerzbank’s senior management that Iranian bank names in payment messages going to the United States were being “neutralized” and warned: “it raises concerns if we consciously reference the suppression of the ordering party in our work procedures in order to avoid difficulties in the processing of payments with the U.S.A.”
In another scheme designed to avoid U.S. sanctions, Commerzbank admitted that, in 2004, it agreed with an Iranian bank client that, rather than sending direct wire payments to the United States, the Iranian bank would pay U.S. beneficiaries with Commerzbank-issued checks listing only the Iranian bank’s account number and address in London with no mention of the Iranian bank’s name.
Additionally, Commerzbank admitted that in 2005, it created a “safe payment solution” for an Iranian shipping company client, which allowed the client to conduct transactions using the U.S. financial system. The safe payment solution involved routing payments through special purpose entities controlled by the Iranian company, which were incorporated outside of Iran and bore no obvious connection to the Iranian client. Commerzbank and its client switched use of such special purpose entities when Commerz New York’s sanctions compliance filters were updated to detect the use of a particular special purpose entity. Commerzbank continued to process payments on behalf the Iranian client even after the client had been designated by OFAC as an entity subject to U.S. sanctions for its involvement in weapons of mass destruction proliferation.
In addition, Commerzbank admitted that, from 2002 to 2007, it provided Sudanese sanctioned entities with access to the U.S. financial system by engaging in similar schemes to remove reference to Sudanese companies from the transaction records.
Olympus Accounting Fraud
Since 2008, and continuing until at least 2013, Commerz New York violated the BSA and its implementing regulations. Specifically, Commerz New York failed to maintain adequate policies, procedures and practices to ensure its compliance with U.S. law, including its obligation to detect and report suspicious activity. As a result of the wilful failure of Commerz New York to comply with U.S. law, a multibillion-dollar securities fraud was operated through Commerzbank and Commerz New York.
Olympus was a Japanese-based manufacturer of medical devices and cameras. Its common stock is listed on the Tokyo Stock Exchange, and its American Depository Receipts trade in the United States. From at least the late 1990s through 2011, Olympus perpetrated a massive accounting fraud designed to conceal from its auditors and investors hundreds of millions of dollars in losses. In September 2012, Olympus and three of its senior executives pleaded guilty in Japan to inflating the company’s net worth by approximately $1.7 billion.
Olympus used Commerzbank and Commerz New York to perpetrate its fraud. Commerzbank, through its branch and affiliates in Singapore, both loaned money to off-balance-sheet entities created by or for Olympus to perpetrate its fraud, and transacted more than $1.6 billion through Commerz New York in furtherance of the fraud.
Commerzbank and Commerz New York were used in furtherance of the Olympus fraud during two different time periods. From approximately 1999 through 2000, Olympus perpetrated its fraud primarily through Commerzbank and its Singapore branch and affiliates. Among other things, Olympus used special purpose vehicles to facilitate the fraud, some of which were created by Commerzbank – including several executives based in Singapore – at Olympus’s direction, using funding from Commerzbank. One of those Singapore-based executives, Chan Ming Fon, was involved in creating the Olympus structure in 1999 while at Commerzbank (Southeast Asia) Ltd., and later managed an Olympus-related entity in 2005-2010 on behalf of which he submitted false confirmations to Olympus’s auditors. In September 2013, Chan pleaded guilty in Manhattan federal court to conspiracy to commit wire fraud.
From 1999 through 2000, Olympus executives asked Commerzbank executives to provide certain false documents to Olympus’s auditors, which would have failed to disclose that certain Olympus assets were pledged as collateral for loans from a Commerzbank affiliate. Commerzbank obtained a legal opinion, which, in the words of one Commerzbank executive written to an Olympus executive, “ma[de] clear that our bank could be subject to both civil and criminal penalties if we are seen to be assisting or facilitating you in the non-disclosure.” Although Commerzbank ultimately declined to provide the false documents, its executives suggested a variety of ways Olympus could nonetheless fail to disclose the pledge.
In 2000, Olympus took its business away from Commerzbank and transferred it to another bank. In 2005, however, Olympus – and its fraud – returned to Commerzbank. From that point until at least 2010, Commerzbank executives expressed strong suspicions about the Olympus transactions and structure. One senior executive worried that Olympus would have to “write off [the] full amount” of the relevant transactions, and wondered about the effects on Commerzbank if “any negative news is splash[ed] on the front page.” A senior legal and compliance officer responsible for Commerzbank’s Singapore branch and affiliates wrote at the time that he was “concerned” about fraud, asset stripping, market manipulation and tax offenses, and that “[i]f the [Olympus] structure and transactions can not [be] explained we must file Suspicious Transaction report as a matter of law and [Commerzbank] policy.”
In March 2010, two wire transfers in the amounts of approximately $455 million and $67 million, respectively, related to the Olympus scheme were processed by Commerz New York through the correspondent account for the Singapore branch of Commerzbank. Those wires caused Commerz New York’s automated AML monitoring software to “alert.”
At the time, Commerz New York had conducted no due diligence on the Singapore branch and affiliates of Commerz, consistent with Commerz's policy of not conducting due diligence on its own branches. In response to the alerts, however, Commerz New York sent a request for information to Commerz in Frankfurt and Commerz's Singapore branch, inquiring about the transactions. The Singapore branch responded in a brief e-mail, dated April 20, 2010, referring to the Olympus-related entities involved in the wires:
GPA Investments Ltd. ist [sic] a Caymen Islands SPV, Creative Dragons SPC-Sub Fund E is a CITS administered fund both of which are part of an SPC structure to manage securities investments for an FATF country based MNC.
According to the Relationship Manager the payment reflects the proceeds from such securities investments to be reinvested.
Commerzbank’s Singapore branch did not relay any of the concerns about the Olympus-sponsored structures and transactions.
Based on its response, Commerz New York closed the alert without taking any further action other than to note that in March 2010 alone, GPA Investments had been involved in six transactions through Commerz New York totalling more than $522 million. In fact, between 1999 and 2010, a total of more than $1.6 billion in furtherance of the Olympus fraud was cleared through Commerz New York. Commerz New York failed to file a SAR in the United States concerning Olympus or any of the Olympus-related entities until November 2013 – more than two years after the Olympus accounting fraud was revealed.
Commerz New York had the same designated BSA Officer continuously from approximately 2003 until early 2014. Over those years, she raised concerns about AML compliance, both to her superiors at Commerz New York and with Commerz Frankfurt.
Under the BSA, a financial institution is required to detect and report suspicious activity. This is accomplished, in part, through conducting due diligence, and enhanced due diligence where appropriate, of the correspondent relationship – which Commerz New York failed to do – and by sending requests for further information to the correspondent bank when potentially suspicious transactions are detected. Commerz New York frequently had difficulties getting responses to requests for information generated in connection with automated transaction monitoring “alerts.” Because requests for information went unanswered for as much as eight months without SARs being filed, alerts were often closed without any response to the pending request. As a result of these deficiencies, Commerz New York cleared numerous AML “alerts” based on its own perfunctory Internet searches and searches of public source databases but without ever receiving responses to its requests for information.
On June 24, 2010, a Commerz New York-based compliance officer who had primary responsibility for automated transaction monitoring wrote in an e‑mail to the BSA Officer and the Head of Compliance in New York (who had previously served as the Head of Compliance in Asia) that “we currently have 90 alerts a day,” with “808 alerts outstanding,” which “could lead to a possible back log.” He continued, “I also wanted to make you aware that we have currently over 130 Frankfurt RFIs [i.e., requests for information] outstanding,” noting “a decrease in response to the RFIs” from Frankfurt. The following day, the Head of Compliance in New York forwarded the e‑mail to Commerz’s Global Head of Compliance, adding that “things are not getting better with regards to th[ose] findings. (see below). I will forward you the DRAFT memo on potential revision of staffing needs.” Although the Global Head of Compliance thereafter instituted new procedures designed to increase the speed of responses to RFIs from New York, problems persisted with the timely flow of information from business units outside the United States to compliance officers in New York.
Commerzbank and Commerz New York also failed to conduct adequate due diligence or to obtain “know your customer” information with respect to correspondent bank accounts for Commerzbank’s own foreign branches and affiliates. These systemic deficiencies reflected a failure to maintain adequate policies, procedures and controls to ensure compliance with the BSA and regulations prescribed thereunder and to guard against money laundering.
This case was investigated by the IRS-Criminal Investigation’s Washington D.C. Field Division and FBI’s New York Field Office. This case is being prosecuted by Trial Attorney Sarah Devlin of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Assistant U.S. Attorneys Matt Graves, Maia Miller, Crystal Boodoo and Zia Faruqui of the District of Columbia, and Assistant U.S. Attorney Bonnie Jonas of the Southern District of New York.
The New York County District Attorney’s Office also conducted its own investigation in conjunction with the Justice Department. The Federal Reserve Bank of New York, DFS and OFAC provided substantial assistance with this investigation.
Commerzbank Deferred Prosecution Agreement
Commerzbank Information
Columbus Grove Bank VP Charged with Making False Financial StatementsRead the Press Release
DAYTON – A federal grand jury returned a three-count indictment against Barry J. Von Der Embse, 53 of Kalida, Ohio, alleging three separate counts of making false financial statements in an indictment returned in Dayton. Von Der Embse is charged with making three separate false statements to the Union Bank Company of Columbus Grove, Ohio in the form of personal financial statements in 2004, 2006 and 2007 while employed as a commercial loan officer with the bank.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Office and Joseph Moriarty, Special Agent in Charge, Federal Deposit Insurance Corporation (FDIC) Office of Inspector General, Chicago Field Office, announced the indictment returned today.
The indictment alleges that while employed as a commercial loan officer with Union Bank Company of Columbus Grove, Ohio, Von Der Embse filed materially false personal financial statements. Specifically, Von Der Embse allegedly failed to reveal his ownership of an 85-acre parcel of farmland in Shelby County, Ohio, including 456 head of cattle valued at approximately $421,800. It is also alleged that the defendant did not reveal liabilities in the form of a $12,600 farm loan and a $344,362 line of credit.
Each count of making false financial statements is a crime punishable by up to 30 years in prison and a $1 million fine.
U.S. Attorney Stewart commended the investigation of this case by the FBI and FDIC Office of Inspector General, and Assistant U.S. Attorney Dwight Keller, who is prosecuting the case.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Child Exploitation Charges Filed Against Morgantown ManRead the Press Release
PHILADELPHIA - Robert Wendell Landis, 30, of Morgantown, PA, was charged today by indictment with possession, receipt and production of child pornography and online enticement, announced United States Attorney Zane David Memeger.
If convicted the defendant faces a maximum possible sentence of life imprisonment, with a mandatory minimum of 15 years imprisonment, lifetime supervised release, a $1,250,000 fine and a $500 special assessment.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Roberta Benjamin.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Captain of Genovese Crime Family Pleads Guilty in Manhattan Federal Court to RacketeeringRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today the guilty plea of DANIEL PAGANO, a Captain of the Genovese Organized Crime Family of La Cosa Nostra (the “Genovese Crime Family”). PAGANO pled guilty before U.S. District Judge Ronnie Abrams to participating in a racketeering conspiracy. As part of his plea, PAGANO admitted to being a leader of the criminal enterprise. PAGANO is scheduled to be sentenced by Judge Abrams on July 10, 2015.
Manhattan U.S. Attorney Preet Bharara said: “Danny Pagano, a capo in the Genovese Crime family, has now admitted to being a leader in a racketeering conspiracy that spanned nearly five years. Today’s plea demonstrates that La Cosa Nostra is not a thing of the past or a relic of movie myth. Our efforts with our law enforcement partners are aimed at making it so.”
According to the Indictment, the plea agreement, and statements made during the plea proceeding:
The Genovese Crime Family is part of a nationwide criminal organization known by various names, including the “Mafia” and “La Cosa Nostra” (“LCN”), which operates through entities known as “Families.” The Genovese Crime Family operates through groups of individuals known as “crews” and “regimes,” most of which are based in New York City. Each “crew” has as its leader a person known as a “Caporegime,” “Capo,” “Captain,” or “Skipper,” who is responsible for supervising the criminal activities of his crew and providing “Soldiers” and associates with support and protection. In return, the Capo typically receives a share of the illegal earnings of each of his crew’s Soldiers and associates, which is sometimes referred to as Atribute.@ DANIEL PAGANO is a Caporegime or Captain in the Genovese Crime Family.
Each crew consists of “made” members, sometimes known as “Soldiers,” “wiseguys,” “friends of ours,” and “good fellows.” Soldiers are aided in their criminal endeavors by other trusted individuals, known as “associates,” who sometimes are referred to as “connected” or identified as “with” a Soldier or other member of the Family. Associates participate in the various activities of the crew and its members. In order for an associate to become a made member of the Family, the associate must first be of Italian descent and typically needed to demonstrate the ability to generate income for the Family and/or the willingness to commit acts of violence.
From 2009 through August 2014, PAGANO, along with other members and associates of the Genovese Crime Family, committed a wide array of crimes including operating an illegal gambling business. PAGANO, a Captain, exercised a leadership role within the Family by, among other things, settling disputes between and among associates of the Family.
PAGANO, 61, of Rockland County, faces a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara thanked the Federal Bureau of Investigation (“FBI”), the Rockland County District Attorney’s Office, the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the New York City Police Department (“NYPD”), and the New York State Police.
This investigation was a result of the Department of Justice's Organized Crime and Drug Enforcement Task Force Program, and it combined the resources and expertise of its member federal agencies in cooperation with local law enforcement. The investigation was conducted by the FBI-NYPD Joint Organized Crime Task Force.
The prosecution is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jennifer Burns, Abigail Kurland, and Rahul Mukhi are in charge of the prosecution.
COMMERZBANK AG ADMITS TO SANCTIONS AND BANK SECRECY VIOLATIONS, AGREES TO FORFEIT $563 MILLION AND PAY $79 MILLION FINE Combined with Payments to Regulators, Commerzbank to Pay $1.45 BillionRead the Press Release
WASHINGTON – Commerzbank AG, a global financial institution headquartered in Frankfurt, and its U.S. branch, Commerzbank AG New York Branch (Commerz New York), have agreed to forfeit $563 million, pay a $79 million fine and enter into a deferred prosecution agreement with the Justice Department for violations of the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA). The bank has also entered into settlement agreements with the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Board of Governors of the Federal Reserve System.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. of the District of Columbia, U.S. Attorney Preet Bharara of the Southern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) and District Attorney Cyrus R. Vance Jr. of New York County made the announcement.
In entering the deferred prosecution agreement, Commerzbank admitted and accepted responsibility for its criminal conduct in violation of IEEPA and the BSA, and Commerz New York admitted its criminal conduct in violation of the BSA. Commerzbank further agreed to pay $263 million in forfeiture and a fine of $79 million for the IEEPA violations, and to pay $300 million in forfeiture in connection with the BSA violations, which will be remitted to the victims of a multi-billion dollar securities fraud scheme that was permitted to operate through Commerzbank. Commerzbank also agreed to implement rigorous internal controls and to cooperate fully with the Justice Department, including by reporting any criminal conduct by an employee.
A four-count felony criminal information was filed today in the District of Columbia charging Commerzbank and Commerz New York with knowingly and willfully conspiring to commit violations of IEEPA and three violations of the BSA for willfully failing to have an effective anti-money laundering (AML) program, willfully failing to conduct due diligence on its foreign correspondent accounts, and willfully failing to file suspicious activity reports. Assuming the bank’s continued compliance with the deferred prosecution agreement, the government has agreed to defer prosecution for a period of three years, after which time, the government would seek to dismiss the charges.
The New York County District Attorney’s Office is also announcing today that Commerzbank has entered into a deferred prosecution agreement, and in the corresponding factual statement, Commerzbank admitted that it violated New York State law by falsifying the records of New York financial institutions. In addition, the Board of Governors of the Federal Reserve System is announcing that Commerzbank has agreed to a cease and desist order, to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations and to pay a civil monetary penalty of $200 million. The New York State Department of Financial Services (DFS) is announcing Commerzbank has agreed to, among other things, pay a monetary penalty to DFS of $610 million. The OFAC has also levied a fine of $258.6 million, which will be satisfied by payments made to the Justice Department. In total, Commerzbank will pay a total of $1.45 billion in penalties.
“Commerzbank concealed hundreds of millions of dollars in transactions prohibited by U.S. sanctions laws on behalf of Iranian and Sudanese businesses,” said Assistant Attorney General Caldwell. “Commerzbank committed these crimes even though managers inside the bank raised red flags about its sanctions-violating practices. Financial institutions must heed this message: banks that operate in the United States must comply with our laws, and banks that ignore the warnings of those charged with compliance will pay a very steep price.”
“Sanctions laws are designed to protect the national security of the United States and promote our foreign policy interests,” said U.S. Attorney Machen. “Commerzbank undermined the integrity of our financial system and threatened our national security by hiding the business they were doing with entities in Iran and Sudan. The bank tried to skirt our laws by hiding its illegal business with Iranian banks from its own employees in the United States. Today’s resolution demonstrates that there will be consequences when global banks try to profit from the benefits of the U.S. financial system without respecting our laws.”
Manhattan U.S. Attorney Preet Bharara said: “Today, Commerzbank stands charged with Bank Secrecy Act criminal offenses for its acute, institutional anti-money laundering deficiencies that allowed over a billion dollars of the Olympus fraud to flow through its New York office. These criminal charges follow a multi-year investigation and a guilty plea by a former Commerzbank Singapore employee who helped set up the structure that allowed for the Olympus fraud. Institutions, not just individuals, have an obligation to follow the law, and anti-money laundering laws in particular are critical for financial institutions to follow. With today’s resolution, the bank, as part of a deferred prosecution agreement, has accepted responsibility in a detailed statement of facts, agreed to continue reforming its anti-money laundering practices, and will pay $300 million that will go to victims of the Olympus fraud.”
“Today’s deferred prosecution agreement is a significant milestone – on an international stage – that reaffirms our clear message to other global financial institutions,” said IRS-CI Chief Weber. “IRS-CI’s work in this investigation – as well as the prior sanction cases – has resulted in fundamental changes in the way banks operate worldwide. IRS-CI and our partners will continue to hold financial institutions accountable for international criminal violations.”
“We have sanctions in place to prevent rogue nations and terrorists from accessing the U.S. financial system. In order to have teeth, sanctions need to be enforced and Manhattan financial institutions need to be protected from being unwittingly used by bad actors,” said Manhattan District Attorney Vance. “Over the course of eight settlements, my Office and our partners have sent a strong message of enforcement that has led to the transformation of compliance in this area.”
IEEPA Violations
According to admissions contained in the deferred prosecution agreement, from 2002 to 2008, Commerzbank knowingly and willfully moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese entities subject to U.S. economic sanctions. Commerzbank engaged in this criminal conduct using numerous schemes designed to conceal the true nature of the illicit transactions from U.S. regulators.
For example, in the deferred prosecution agreement, Commerzbank acknowledged that it used non-transparent payment messages, known as cover payments, to conceal the involvement of sanctioned entities, and also removed information identifying sanctioned entities from payment messages, in transactions processed through Commerz New York and other financial institutions in the United States. Specifically, in 2003, Commerzbank designated a group of employees in the Frankfurt back office to review and amend Iranian payments so that the payments would not be stopped by U.S. sanctions filters. In doing so, Commerzbank ensured that Iranian payment messages did not mention the Iranian entity, as transactions may have otherwise been stopped pursuant to the U.S. sanctions.
Commerzbank admitted that it hid these practices from Commerz New York. For example, in 2003, when two state-owned Iranian banks wanted to begin routing their U.S. dollar clearing business through Commerzbank, a Commerzbank back office employee emailed other Commerzbank employees directing: “If for whatever reason CB New York inquires why our turnover has increase[d] so dramatically, under no circumstances may anyone mention that there is a connection to the clearing of Iranian banks!!!!!!!!!!!!!.”
Commerzbank admitted that this conduct continued even though its senior management was warned that the bank’s practices for Iranian clients “raised concerns.” For example, in October 2003, the head of Commerzbank’s internal audit division stated in an email to a member of Commerzbank’s senior management that Iranian bank names in payment messages going to the United States were being “neutralized” and warned: “it raises concerns if we consciously reference the suppression of the ordering party in our work procedures in order to avoid difficulties in the processing of payments with the U.S.A.”
In another scheme designed to avoid U.S. sanctions, Commerzbank admitted that, in 2004, it agreed with an Iranian bank client that, rather than sending direct wire payments to the United States, the Iranian bank would pay U.S. beneficiaries with Commerzbank-issued checks listing only the Iranian bank’s account number and address in London with no mention of the Iranian bank’s name.
Additionally, Commerzbank admitted that in 2005, it created a “safe payment solution” for an Iranian shipping company client, which allowed the client to conduct transactions using the U.S. financial system. The safe payment solution involved routing payments through special purpose entities controlled by the Iranian company, which were incorporated outside of Iran and bore no obvious connection to the Iranian client. Commerzbank and its client switched use of such special purpose entities when Commerz New York’s sanctions compliance filters were updated to detect the use of a particular special purpose entity. Commerzbank continued to process payments on behalf the Iranian client even after the client had been designated by OFAC as an entity subject to U.S. sanctions for its involvement in weapons of mass destruction proliferation.
In addition, Commerzbank admitted that, from 2002 to 2007, it provided Sudanese sanctioned entities with access to the U.S. financial system by engaging in similar schemes to remove reference to Sudanese companies from the transaction records.
Olympus Accounting Fraud
Since 2008, and continuing until at least in or about 2013, Commerz New York violated the BSA and its implementing regulations. Specifically, Commerz New York failed to maintain adequate policies, procedures, and practices to ensure its compliance with United States law, including its obligation to detect and report suspicious activity. As a result of the willful failure of Commerz New York to comply with United States law, a multi-billion dollar securities fraud was operated through Commerzbank and Commerz New York.
Olympus was a Japanese-based manufacturer of medical devices and cameras. Its common stock is listed on the Tokyo Stock Exchange, and its American Depository Receipts trade in the United States. From at least the late 1990s through 2011, Olympus perpetrated a massive accounting fraud designed to conceal from its auditors and investors hundreds of millions of dollars in losses. In September 2012, Olympus and three of its senior executives pleaded guilty in Japan to inflating the company’s net worth by approximately $1.7 billion.
Olympus used Commerzbank and Commerz New York to perpetrate its fraud. Commerzbank, through its branch and affiliates in Singapore, both loaned money to off-balance-sheet entities created by or for Olympus to perpetrate its fraud, and transacted more than $1.6 billion through Commerz New York in furtherance of the fraud.
Commerzbank and Commerz New York were used in furtherance of the Olympus fraud during two different time periods. From approximately 1999 through 2000, Olympus perpetrated its fraud primarily through Commerzbank and its Singapore branch and affiliates. Among other things, Olympus used special purpose vehicles to facilitate the fraud, some of which were created by Commerzbank – including several executives based in Singapore – at Olympus’s direction, using funding from Commerzbank. One of those Singapore-based executives, Chan Ming Fon, was involved in creating the Olympus structure in 1999 while at Commerzbank (Southeast Asia) Ltd., and later managed an Olympus-related entity in 2005-2010 on behalf of which he submitted false confirmations to Olympus’s auditors. In September 2013, Chan pleaded guilty in Manhattan federal court to conspiracy to commit wire fraud.
From 1999 through 2000, Olympus executives asked Commerzbank executives to provide certain false documents to Olympus’s auditors, which would have failed to disclose that certain Olympus assets were pledged as collateral for loans from a Commerzbank affiliate. Commerzbank obtained a legal opinion, which, in the words of one Commerzbank executive written to an Olympus executive, “ma[de] clear that our bank could be subject to both civil and criminal penalties if we are seen to be assisting or facilitating you in the non-disclosure.” Although Commerzbank ultimately declined to provide the false documents, its executives suggested a variety of ways in which Olympus could nonetheless fail to disclose the pledge.
In 2000, Olympus took its business away from Commerzbank to another bank. In 2005, however, Olympus – and its fraud – returned to Commerzbank. From that point until at least 2010, Commerzbank executives expressed strong suspicions about the Olympus transactions and structure. One senior executive worried that Olympus would have to “write off [the] full amount” of the relevant transactions, and wondered about the effects on Commerzbank if “any negative news is splash[ed] on the front page.” A senior legal and compliance officer responsible for Commerzbank’s Singapore branch and affiliates wrote at the time that he was “concerned” about fraud, asset stripping, market manipulation and tax offenses, and that “[i]f the [Olympus] structure and transactions can not [be] explained we must file Suspicious Transaction report as a matter of law and [Commerzbank] policy.” Another senior compliance officer – who would later become head of compliance at Commerz New York – internally reported that a senior Singapore-based executive at Commerzbank had stated that “he did not typically ask questions of clients as he felt he was at less risk by not knowing.” The compliance officer responded by “repeat[ing] that it is unacceptable for senior managers to turn blind eyes or otherwise remain ignorant.”
In March 2010, two wire transfers in the amounts of approximately $455 million and $67 million, respectively, related to the Olympus scheme were processed by Commerz New York through the correspondent account for the Singapore branch of Commerzbank. Those wires caused Commerz New York’s automated AML monitoring software to “alert.”
At the time, Commerz New York had conducted no due diligence on the Singapore branch and affiliates of Commerzbank, consistent with Commerzbank’s policy of not conducting due diligence on its own branches and affiliates. In response to the alerts, however, Commerz New York sent a request for information to Commerz Frankfurt and Commerzbank’s Singapore branch, inquiring about the transactions. The Singapore branch responded in a brief e-mail, dated April 20, 2010, referring to the Olympus-related entities involved in the wires:
GPA Investments Ltd. ist [sic] a Caymen Islands SPV, Creative Dragons SPC-Sub Fund E is a CITS administered fund both of which are part of an SPC structure to manage securities investments for an FATF country based MNC.
According to the Relationship Manager the payment reflects the proceeds from such securities investments to be reinvested.
Commerzbank’s Singapore branch did not relay any of the concerns about the Olympus-sponsored structures and transactions.
Based on its response, Commerz New York closed the alert without taking any further action other than to note that in March 2010 alone, GPA Investments had been involved in six transactions through Commerz New York totalling more than $522 million. In fact, between 1999 and 2010, a total of more than $1.6 billion in furtherance of the Olympus fraud was cleared through Commerz New York. Commerz New York failed to file a SAR in the United States concerning Olympus or any of the Olympus-related entities until November 2013 – more than two years after the Olympus accounting fraud was revealed.
The same individual served as Commerz New York’s designated BSA Officer continuously from approximately 1996 or 1997 until early 2014. Over those years, she raised concerns about AML compliance, both to her superiors at Commerz New York, and with Commerz Frankfurt.
Under the BSA, a financial institution is required to detect and report suspicious activity. This is accomplished, in part, through conducting due diligence, and enhanced due diligence where appropriate, of the correspondent relationship – which Commerz New York failed to do – and by sending requests for further information to the correspondent bank when potentially suspicious transactions are detected. Commerz New York frequently had difficulties getting responses to requests for information generated in connection with automated transaction monitoring “alerts.” Because requests for information went unanswered for as much as eight months without SARs being filed, alerts were often closed without any response to the pending request. As a result of these deficiencies, Commerz New York cleared numerous AML “alerts” based on its own perfunctory internet searches and searches of public source databases but without ever receiving responses to its requests for information.
On June 24, 2010, a Commerz New York -based compliance officer who had primary responsibility for automated transaction monitoring wrote in an e‑mail to the BSA Officer and the Head of Compliance in New York (who had previously served as the Head of Compliance in Asia) that “we currently have 90 alerts a day,” with “808 alerts outstanding,” which “could lead to a possible back log.” He continued, “I also wanted to make you aware that we have currently over 130 Frankfurt RFIs [i.e., requests for information] outstanding,” noting “a decrease in response to the RFIs” from Frankfurt. The following day, the Head of Compliance in New York forwarded the e‑mail to Commerz’s Global Head of Compliance, adding that “things are not getting better with regards to th[ose] findings. (see below). I will forward you the DRAFT memo on potential revision of staffing needs.” Although the Global Head of Compliance thereafter instituted new procedures designed to increase the speed of responses to RFIs from New York, problems persisted with the timely flow of information from business units outside the U.S. to compliance officers in New York.
Commerzbank and Commerz New York also failed to conduct adequate due diligence or to obtain “know your customer” information with respect to correspondent bank accounts for Commerzbank’s own foreign branches and affiliates. These systemic deficiencies reflected a failure to maintain adequate policies, procedures, and controls to ensure compliance with the BSA and regulations prescribed thereunder and to guard against money laundering.
This case was investigated by the IRS-Criminal Investigation’s Washington D.C. Field Division and FBI’s New York Field Office. This case is being prosecuted by Trial Attorney Sarah Devlin of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Assistant U.S. Attorneys Matt Graves, Maia Miller and Zia Faruqui of the District of Columbia, and Assistant U.S. Attorney Bonnie Jonas of the Southern District of New York.
The New York County District Attorney’s Office also conducted its own investigation in conjunction with the Justice Department. The Federal Reserve Bank of New York, DFS and OFAC provided substantial assistance with this investigation.
15-042
Brighton Man Arrested for Production, Transportation and Possession of Child PornographyRead the Press Release
Defendant accused of taking a picture of the sexual abuse of an infant
DENVER – Jamie Sailas, age 29, of Brighton, Colorado, was arrested this morning without incident by federal agents with U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the U.S Attorney’s Office and HSI announced. The defendant was arrested based on a Criminal Complaint charging one count of production of child pornography, one count of transportation of child pornography, and one count of possession of child pornography. Sailas appeared before a U.S. Magistrate Judge where he was advised of his rights, and the charges pending against him. He is being held in custody pending a detention and preliminary hearing, scheduled for March 17, 2015 at 10:00 a.m.
According to an HSI special agent’s affidavit, in October of 2013 an HSI agent in Washington, DC was conducting proactive undercover investigative activity on the internet. During his investigative work, he encountered a link to a video of a minor child with black marker on her torso with obscene words and an arrow pointing down to her genitalia. It was determined that this image was located in a Dropbox account. The agent learned that Dropbox had independently contacted the National Center for Missing and Exploited Children (NCMEC). Further investigation by HSI revealed that the subscriber to the Dropbox account was Jaime Sailas, who was determined to reside at an address in Brighton, Colorado.
As the investigation progressed it was determined that in addition to Dropbox, Sailas also allegedly used two Google email addresses to transport child pornography. He transported thousands of child pornographic images and videos. He used an email account to send a nude picture of his genitalia to someone he met online. Sailas also worked at a Brighton business named Game Trader. It was determined that child pornography activity was connected to both his home and the business. No business computers were compromised.
In connection to the investigation, agents and officers executed a search warrant at Sailas’ residence. It was discovered that in addition to Sailas, there were five additional adults and one minor child residing in the home. Sailas did have his own bedroom, which was locked. In that room multiple devices containing child pornography were discovered. Also, an image of what appeared to be an adult male’s genitalia inserted into the mouth of an infant was located on one of his devices. The genitalia in this image of child pornography appears to be consistent with the physical characteristics of the images Sailas sent via one of his email accounts. This photo was allegedly produced by Sailas.
“Those who sexually abuse our children, especially those who use infants to produce child pornography, deserve the full weight of federal law enforcement to stop them,” said U.S. Attorney John Walsh. “Thanks to the work of HSI and prosecutors from the U.S. Attorney’s Office, an individual responsible for such child pornography has been arrested and charged with a crime.”
“Since the crimes associated with sexually victimizing children are so heinous, Homeland Security Investigations aggressively investigates these crimes with our law enforcement partners at the local, state, federal and international levels to identify and pursue prosecution against these child predators worldwide,” said David A. Thompson, special agent in charge of HSI Denver. “Our investigations help bring justice to these innocent victimized children.”
If convicted of production of child pornography, the defendant faces not less than 15 years, and not more than 30 years in federal prison, and up to a $250,000 fine. If convicted of transportation of child pornography, the defendant faces not less than 5 years, and not more than 20 years imprisonment, and up to a $250,000 fine. If convicted of possession of child pornography, the defendant faces not more than 10 years in federal prison, and up to a $250,000 fine.
This case was investigated by HSI with support from the Brighton Police Department.
This case is being prosecuted by Assistant U.S. Attorney Alecia L. Riewerts.
A Criminal Complaint is a probable cause charging document. Anyone accused of committing a felony violation of federal law has a Constitutional right to be indicted by a federal grand jury.
The charges contained in the Criminal Complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
Berkeley County couple convicted of tax evasionRead the Press Release
MARTINSBURG, WEST VIRGINIA – Frank J. Picone, 49, and Toni A. Picone, 44, both of Falling Waters, West Virginia, were convicted in federal court today after they admitted to tax evasion, United States Attorney William J. Ihlenfeld, II, announced.
The defendants, who own Rocky’s New York Pizza in Hagerstown, Maryland, each admitted that they failed to file personal tax returns for tax years 2010 and 2011. They each pled guilty today to two counts of “Failure to File a Personal Income Tax Return.” They each face up to one year in prison and a fine of up to $100,000.00 on each count. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendants.
Assistant U.S. Attorney Robert McWilliams, Jr. is prosecuting the case on behalf of the government. The Internal Revenue Service - Criminal Investigation is leading the investigation.
U.S. Magistrate Judge Robert W. Trumble presided.
Baltimore County Felon Exiled to 20 Years in Prison for Illegally Obtaining Firearms Through Straw PurchasesRead the Press Release
Baltimore, Maryland – U.S. District Judge J. Frederick Motz sentenced Jeffrey Gregory, age 48, of Sparks, Maryland, today to 20 years in prison, followed by three years of supervised release, in connection with a scheme in which another individual engaged in “straw purchases” to obtain guns for Gregory, a previously convicted felon who was prohibited from possessing firearms.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William P. McMullan of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Chief James W. Johnson of the Baltimore County Police Department; and Baltimore County State’s Attorney Scott Shellenberger.
According to the facts presented at Gregory’s plea hearing, on three occasions from January 2008 through March 2009, Gregory went with his co-conspirator to have the co-conspirator engage in a “straw purchase” of a firearm on Gregory’s behalf. Gregory was unable to purchase firearms himself because he had a prohibiting criminal conviction. During each visit to the gun stores, the co-conspirator filled out federal and state paperwork, which federal firearms licensed dealers (FFLs) are required by federal law to prepare and maintain as part of each firearm sale.
One of those forms, ATF Form 4473, notifies the buyer that purchasing a firearm on behalf of another person – a straw purchase - is unlawful. In each form, the buyer is asked “[a]re you the actual transferee/buyer of the firearm ....?” The question is followed by a warning in bold print that states: “Warning: You are not the actual buyer if you are acquiring the firearm(s) on behalf of another person.” Finally, the buyer’s certification explicitly states that falsely answering “yes” to the actual buyer question is a crime punishable as a felony.
On each occasion that Gregory and the co-conspirator went to gun stores, Gregory provided the co-conspirator with money, told the co-conspirator what firearm she should obtain, and instructed the co-conspirator to represent herself as the true buyer, which the co-conspirator did. For example, Gregory admitted that on July 8, 2008, the co-conspirator made false statements on a Form 4473 in order to purchase a Ruger .45 caliber firearm for Jeffrey Gregory from an FFL in Baltimore County, Maryland. On July 17, 2008, the co-conspirator picked up the firearm from the dealer and gave the gun to Gregory.
On January 4, 2008, the co-conspirator made false statements on a Form 4473 in order to acquire a Springfield .40 caliber firearm, for Jeffrey Gregory. On January 11, 2008, the co-conspirator picked up the firearm and gave it to Gregory. According to court documents, that .40 caliber gun was used to commit a murder in Baltimore County.
Gregory was previously sentenced to 93 months in federal prison for unrelated charges: possession of a firearm by a convicted felon; and possession of a firearm in furtherance of drug trafficking. In that case, Gregory brandished a handgun during a fight at a York Road restaurant. The resulting investigation recovered the gun used during the fight, as well as another gun and drugs from Gregory’s home.
United States Attorney Rod J. Rosenstein commended the ATF, Baltimore County Police Department and Baltimore County State’s Attorney’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Michael C. Hanlon and Special Assistant U.S. Attorney Piper F. McKeithen, a cross-designated Baltimore City Assistant State’s Attorney, who prosecuted the case.