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21 April 2015
Two Arkansas Brothers Honored Today at National Crime Victim’s Rights Service Awards Ceremony in Washington D.c.Read the Press Release
JUSTICE DEPARTMENT HONORS 12 INDIVIDUALS AND TEAMS FOR ADVANCING RIGHTS AND SERVICES FOR CRIME VICTIMS
Fayetteville, Arkansas – Conner Eldridge, United States Attorney for the Western District of Arkansas, announced today that Matthew Smith of Little Rock, and Dr. Marc Smith of Texarkana, were honored with the Ronald Wilson Reagan Public Policy Award today at the National Crime Victim’s Rights Awards Ceremony in Washington, D.C. The Smith brothers selflessly and courageously spearheaded a change in the law in the State of Arkansas to eliminate the statute of limitations on prosecution of child sex offenders. This extraordinary piece of legislation removed an obstacle to prosecution of those that abuse kids and makes the legal landscape more victim-friendly for future generations of Arkansans.
The Smith brothers had been serially abused by the same coach, Walter Richard Roberts, in their childhood. In 2012, Dr. Smith encountered the perpetrator working with youth at a local baseball field. Dr. Smith contacted law enforcement which led to an investigation in which more than ten adult men were identified as victims of the coach. The state statute of limitations at that time precluded prosecution of the coach for crimes committed when the men were minors in the 1980’s and 1990’s. According to court records and testimony in court, during that time period, Roberts made several trips across state lines with minor children, all under the age of 12 at the time, in order to engage in sexual activity. During one instance, Roberts transported two victims from Arkansas to a business in Texarkana, Texas, where he had the minors get into the back of his van and sexually abused them. Roberts transported one of these same minors again on a separate trip to Wright Patman Lake in Texas, telling the youth to get into the back of his van, where he proceeded to sexually molest the victim. Finally, during the summer of 1988 or 1989, Roberts transported a third victim on a fishing trip to Beard’s Lake in Arkansas. Roberts sexually abused the victim while driving on Highway 71 from Texarkana. During interviews with investigators, Roberts admitted to further sexual abuse of the minor victims. Specifically, Roberts stated that he continued to abuse one of the minors over a five-year period. Roberts was originally indicted on August 22, 2012. He pleaded guilty on November 1, 2012 and was sentenced in May, 2013 to ten years in prison., the statutory maximum.
U.S. Attorney Eldridge commented, "Thanks to leadership of the Smiths, a barrier to the pursuit of justice on behalf of victims of childhood sexual abuse in Arkansas has now been removed. As a result, those that abuse kids in Arkansas will be subject to prosecution for the rest of their lives, regardless of when the abuse is discovered. We should all thank the Smith brothers for their efforts, and we should also continue the fight against child sexual abuse armed with this enhanced ability to bring abusers to justice."
Attorney General Eric Holder presided over the National Crime Victims’ Rights Service Awards ceremony at 2:00 p.m. on Tuesday, April 21. The event honors 12 individuals and programs for their extraordinary actions to bring positive and lasting changes in the lives of crime victims.
"The Department of Justice is proud to recognize the tremendous contributions of dedicated colleagues, passionate advocates and extraordinary partners in the field of victim services," said Attorney General Eric Holder. "From safeguarding survivors of sexual violence to assisting victims of mass marketing fraud, the recipients of today’s awards have been instrumental in our nationwide effort to protect the most vulnerable among us, to prevent and combat crime, and to help victims find hope and seek justice."
The Department’s Office for Victims of Crime leads communities across the country in observing National Crime Victims’ Rights Week and hosts an award ceremony each year. President Reagan proclaimed the first Victims’ Rights Week in 1981, calling for greater sensitivity to the rights and needs of victims. For 2015, the week is observed from April 19 through 25, with the theme Engaging Communities - Empowering Victims.
Following is a list of the award recipients, who were nominated by their colleagues in the field and selected by the Attorney General:
The Ronald Wilson Reagan Public Policy Award honors leadership, innovation and vision that leads to noteworthy changes in public policy that benefit crime victims. Recipients: Dr. Marcus Smith and attorney Matthew Smith, of Little Rock, Arkansas, and Director of Victim Services Suzanne Breedlove of the District Attorneys Council in Oklahoma City.
The Allied Professional Award recognizes an individual or organization outside the victim assistance field for services or contributions to the victims’ field. Recipients: Mary Kay Inc. of Addison, Texas, and Assistant District Attorney Norman A. Gahnof the Milwaukee County District Attorney’s Office.
The Crime Victims Financial Restoration Award recognizes individuals, programs, organizations or teams that developed innovative ways of funding services for crime victims or instituted innovative approaches for securing financial restoration for crime victims. Recipient: A team of representatives from the U.S. Attorney’s Office of the Middle District of Pennsylvania, the department’s Asset Forfeiture Money Laundering Section and U.S. Postal Inspection Service for Harrisburg, Pennsylvania.
The National Crime Victim Service Award honors extraordinary efforts in direct service to crime victims. Recipients: Karen Kalergis, a victim advocate from Austin, Texas, and Executive Director Alecia "Lisa" Thompson-Heth of Wiconia Wawokiya Inc., of the Crow Creek Sioux Indian Reservation, Fort Thompson, South Dakota.
The Crime Victims’ Rights Award honors those whose efforts to advance or enforce crime victims’ rights have benefited crime victims at the state, tribal or national level. Recipient: Laurel Wemhoff, a survivor and advocate from Washington, D.C.
The Professional Innovation in Victim Service Award recognizes a program, organization or individual who has helped to expand the reach of victims’ rights and services. Recipient: Judge Paul M. Herbert of the Franklin County Municipal Court in Columbus, Ohio.
The Special Courage Award recognizes extraordinary bravery in the aftermath of a crime or courageous act on behalf of a victim or potential victim. Recipients: Ronald Cotton and Jennifer Thompson, of Chapel Hill, North Carolina.
The Vision 21 Crime Victims Research Award recognizes individual researchers or research teams that make a significant contribution to the nation’s understanding of crime victims’ issues. Recipient: Rebecca Campbell, of Michigan State University in East Lansing, Michigan.
The Volunteer for Victims Award honors individuals for their extraordinary and selfless efforts resulting in positive and lasting changes in the lives of crime victims. Recipient: LaWanda Hawkins, of San Pedro, California.
Descriptive narratives and videos of the contributions of recipients are available at Office for Victims of Crime’s Gallery.
About the Office of Justice Programs (OJP)
OJP, headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims. OJP has six components: the Bureau of Justice Assistance, the Bureau of Justice Statistics, the National Institute of Justice, the Office of Juvenile Justice and Delinquency Prevention, the Office for Victims of Crime and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking. More information about OJP can be found at www.ojp.gov.
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Stamford Pharmacy to Pay $45,000 to Settle Allegations Under the Controlled Substances ActRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that Stamford Pharmacy, located at 1055 High Ridge Road in Stamford, has entered into a civil settlement with the government to resolve allegations that it violated civil provisions of the Controlled Substances Act. Stamford Pharmacy has agreed to pay a total of $45,000.
The allegations against Stamford Pharmacy include claims that they failed to promptly file theft and loss reports of controlled substances with the DEA in at least 17 separate instances as required by law, and that they failed to keep current, complete, and accurate controlled substance records of each controlled substance purchased and dispensed.
Congress, with the passage of the Controlled Substances Act, took steps to create “a closed system” of distribution for controlled substances in which every facet of the handling of the substances, from their manufacture to their consumption by the ultimate user, was to be subject to intense governmental regulation. This mission was taken against the backdrop of trying to prevent the diversion and abuse of legitimate controlled substances while at the same time ensuring an adequate supply of those substances needed to meet the medical and scientific needs of the United States.
This investigation was conducted by investigators from the Drug Enforcement Administration’s Office of Diversion Control in Rocky Hill, and the State of Connecticut, Department of Consumer Protection, Drug Control Division. The prosecution was led by Assistant U.S. Attorney Alan M. Soloway.
Spice Targets ArrestedRead the Press Release
NEWPORT NEWS, Va. – The local owners of a business charged with selling “Spice” were arrested yesterday based upon federal warrants issued in the Eastern District of Virginia.
According to court documents and court proceedings, Nadir Abdallah, age 54, and Sharif Abdallah, age 31, both of Newport News, Virginia, were arrested on an indictment issued by a Federal Grand Jury sitting in Newport News, Virginia. The indictment charges both individuals with Conspiracy to Possess with Intent to Distribute and Distribution of Controlled Substances and Controlled Substance Analogues (also known as Spice) and Making a False Statement.
Nadar and Sharif Abdallah each face a maximum penalty of 25 years in prison if convicted. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Terry Sult, Chief of Hampton Police, Richard W. Myers, Chief of Newport News Police, and Clark E. Settles, Special Agent in Charge of U.S. Immigration and Customs Enforcement's Homeland Security Investigations Washington, D.C., made the announcement after Nadar Abdallah’s initial appearance before U.S. Magistrate Judge Douglas E. Miller. Sharif Abdallah was arrested in the Western District of New York and will appear for a detention hearing on April 22, 2015, in Rochester, New York. Nadar Abdallah’s detention hearing is scheduled for April 22, 2015 at 2:00 p.m. in Newport News Federal Court.
This case was investigated by the Department of Homeland Security, Hampton Police Division, Newport News Police Department, the United States Postal Inspection Service, the Virginia State Police, and the Virginia Peninsula Narcotics Enforcement Task Force. Assistant U.S. Attorneys Eric M. Hurt and Kevin Hudson and Special Assistant United States Attorney Amy Cross are prosecuting the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 4:15cr18.
Salem Man Guilty of Defrauding OctogenarianRead the Press Release
Paul P. Gierten, 47, of Salem, Illinois, pled guilty to fraud, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced. On March 31, 2015, Gierten was charged with defrauding an octogenarian out of $39,000.
Gierten formerly worked as an investment advisor in Centralia, Illinois. The octogenarian victim was one of Gierten’s clients. In August of 2009, Gierten falsely told the victim that he had an investment opportunity with a business that assisted military victims. Because he is a military veteran himself, the victim agreed to invest with this business. From August 2009, through March 2011, the victim provided a total of $39,000 to Gierten for investment in this company. Gierten did not invest the victim’s funds as promised. Instead, Gierten used the victim’s funds for his own personal expenses and to pay operating expenses of his own business.
The specific crime with which Gierten was charged is Interstate Transportation of Money or Securities Obtained by Fraud. At today’s hearing, Gierten admitted that in March of 2011, he used $5,000 from the victim’s last investment to purchase a Travel Money Card. Gierten then used the Travel Money Card to pay for his expenses during a trip to Colorado.
In commenting on today’s conviction, United States Attorney Wigginton stated: "Mr. Gierten took advantage of one of our most vulnerable citizens. We will always aggressively prosecute those who prey upon and defraud elderly residents of Southern Illinois."
Gierten’s sentencing hearing has been scheduled for July 31, 2015, at 11:00 a.m., at the Federal Courthouse in East St. Louis, Illinois. Interstate Transportation of Money or Securities Obtained by Fraud is punishable by up to 10 years in prison, and/or a $250,000 fine, and up to three years of supervised release. Gierten’s actual sentence will be determined by the court and will be guided by the advisory federal Sentencing Guidelines.
The investigation is being conducted by the Securities Department of the Illinois Secretary of State’s Office. The case is being prosecuted by Assistant United States Attorney Scott A. Verseman.
Phoenix Financial Planner and Fund Manager Both Sentenced to Prison for FraudRead the Press Release
PHOENIX – Yesterday, Rolf Heartburg, 41 and Larry Heartburg, 68, of Scottsdale, Ariz., were both sentenced by U.S. District Court Judge Neil V. Wake to a year in prison and ordered to pay $257,000 in restitution. Rolf Heartburg previously pleaded guilty to one count of conspiracy to commit wire and mail fraud and Larry Heartburg previously pleaded guilty to five counts of willfully failing to file a tax return. Rolf Heartburg was immediately taken into custody following the imposition of his sentence.
"Unfortunately, the problem of investment scams targeting the elderly is rampant,” said John S. Leonardo, United States Attorney. “This case sends a strong message that the United States Attorney’s Office will make every effort to uncover frauds by investment managers against vulnerable members of our community and we will prosecute the unscrupulous perpetrators of such frauds. I commend the IRS for its fine work in interrupting this fraud before more clients were victimized."
“Rolf Heartburg exploited his position of trust as a financial advisor by directing the victim investors to a risky real estate investment controlled by his father Larry who used the money for this own personal expenses,” said IRS Criminal Investigation Special Agent in Charge Dawn Mertz. “Larry Heartburg then failed to file income tax returns and failed to pay taxes on that income. Honest and law abiding citizens are fed up with those who use deceit and fraud to line their pockets with other people’s money and then skirt their own tax obligations.”
Rolf Heartburg was a Phoenix based financial planner who solicited his own clients to invest in a speculative real estate fund. The fund allegedly generated profits by selling mortgage notes it had acquired at a discount. Unbeknownst to the investors, Larry Heartburg served as the manager of the fund and he did not purchase any mortgage notes. Instead, the Heartburgs used nearly two thirds of investor money for their own personal expenses. Additionally, Larry Heartburg failed to file taxes on the money received from investors and other income for tax years 2008-2012.
The investigation in this case was conducted by the Internal Revenue Service-Criminal Investigation. The prosecution was handled by Assistant U.S. Attorney Kevin M. Rapp.
CASE NUMBER: CR-13-CR-01461-NVW
RELEASE NUMBER: 2015-032_ Heartburg et al
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.
Owner of Long Island Produce Distributor Charged in Manhattan Federal Court with Embezzling Money from Company Profit-Sharing PlanRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Jonathan Kay, Phyllis C. Borzi, the Assistant Secretary of Labor for Employee Benefits Security (“DOL”), and Shantelle P. Kitchen, the Special Agent-in-Charge of the New York Office of the Internal Revenue Service’s Criminal Investigation Division (“IRS”), announced today the return of an indictment charging THOMAS HOEY JR. with embezzling assets from his company’s profit-sharing plan. As alleged in the Indictment, HOEY, the owner and president of a Long Island-based produce distributor (the “Company”), and trustee for the Company’s profit-sharing plan (the “Plan”), an employee benefit plan set up for the benefit of the Company’s employees, transferred more than $800,000 from the Plan to the Company’s corporate accounts. HOEY then allegedly unlawfully used the money to cover significant negative balances in the Company’s accounts, to purchase, among other things, hundreds of thousands of dollars of produce for the Company, and for HOEY’s personal expenses. As a result of the defendant’s conduct, he is charged with embezzlement from an employee benefit plan, interstate transportation of stolen money, wire fraud, and money laundering. The defendant, who is in custody following convictions for federal narcotics, perjury, and obstruction charges, was presented and arraigned in Manhattan federal court today before Judge Jesse Furman.
Manhattan U.S. Attorney Preet Bharara said: “Thomas Hoey Jr.’s alleged crime is the nightmare of any employee: the theft of a company-sponsored pension plan. Thanks to the dedicated investigative work of the Department of Labor and the IRS, Hoey will have to answer for his alleged behavior in the court of law.”
DOL Assistant Secretary Phyllis C. Borzi said: “Let this indictment remind fiduciaries that we will not tolerate benefit plan assets being misused to subsidize a lifestyle. They must conduct themselves with undivided loyalty to safeguarding the retirement security of the plan's participants, and we will vigorously pursue all legal remedies when our investigations uncover such betrayals of trust.”
IRS Special Agent-in-Charge Shantelle P. Kitchen said: “This indictment demonstrates the government’s commitment to investigate allegations of impropriety relating to ERISA qualified pension plans. Employees who will one day rely on their account balances expect their plan’s trustee to protect their interests and not exploit their plan for personal use. IRS Criminal Investigation will work with our law enforcement partners on all kinds of corporate fraud allegations, including embezzlement from employee benefit plans.”
According to the allegations contained in the Indictment:
The Plan was set up as an employee pension benefit plan under the Employee Retirement Income Security Act of 1974 (“ERISA”), for the benefit of certain employees of the Company. As an ERISA qualified pension plan, there were strict statutory and regulatory limitations on the use of money contributed to the Plan. In particular, Plan proceeds could only be used to pay for employee disbursement and employee loans, which, in no circumstances, could be greater than $50,000. Moreover, the Company, which was the sponsor for the Plan, was not allowed to receive any money from the Plan.
Between June 2009 and July 2012, however, HOEY transferred almost all of the assets in the Company’s Plan to corporate accounts that he controlled. Specifically, in three transactions on one day in June 2009, the defendant transferred $350,000 from the Plan to the Company’s corporate bank account. In May 2010, the defendant transferred $415,000 from the Plan to the Company’s corporate bank account. Finally, in July 2012, the defendant transferred $73,000 from the Plan to the Company’s corporate bank account. As a result of these withdrawals from the Plan as well as fees on the account, the Plan, which at one point was worth more than $900,000 in employee benefits, was almost entirely depleted.
The Plan money was transferred to corporate accounts to cover significant negative balances as well as for additional corporate expenses and HOEY’s personal expenses. For example, hundreds of thousands of dollars of Plan money was used to pay the Company’s produce suppliers. Plan money was also used to pay for automobile insurance on a policy that covered, among other vehicles, numerous luxury cars that HOEY used for his personal use. During the period of time that HOEY was using Plan money to fund the Company’s corporate accounts, the corporate accounts were also being used to pay for HOEY’s personal expenses, including international travel for HOEY and his family, limousine service, and hotels in Manhattan.
In order to cover up his embezzlement of Plan assets, HOEY caused plan statements to be created that reflected the employees’ full account balances as if no money had been taken out of the Plan. A 2012 account statement for one employee, for example, reflected an individual benefit total of approximately $140,000. At that time, however, the total amount of money left in the Plan was only approximately $15,000.
HOEY, 47, of Garden City, New York, is charged with one count of embezzlement from an employee pension plan, one count of interstate transportation of stolen money, one count of wire fraud, and one count of money laundering. The embezzlement count carries a maximum sentence of five years in prison. The interstate transportation of stolen money and money laundering counts each carry a maximum sentence of 10 years in prison. The wire fraud count carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
HOEY is scheduled to be sentenced by Judge P. Kevin Castel on unrelated charges this Thursday, April 23, 2015, at 2:00 p.m.
Mr. Bharara praised the work of the DOL and the IRS.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Daniel B. Tehrani is in charge of the prosecution.
The allegations contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Thomas Hoey Indictment - 15 Cr 229 Indictment
Operator of Detroit Adult Day Care Center and Two Home Health Care Company Owners Sentenced in $29 Million Medicare Fraud ConspiracyRead the Press Release
The former operator of a Detroit adult day care center and two former owners of Detroit-area home health care companies were sentenced to prison today for their roles in a $29 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.
Felicar Williams, 51, of Dearborn, Michigan, was sentenced to five years in prison and ordered to pay $2,431,018 in restitution, representing the amount paid by Medicare for Williams’ fraudulent claims. Abdul Malik Al-Jumail, 54, and Jamella Al-Jumail, 25, both of Brownstown, Michigan, were sentenced to 10 years in prison and four years in prison respectively. Both were also ordered to pay $8,389,541 and $589,516 in restitution, respectively, the amounts paid by Medicare for their fraudulent claims. The sentences were imposed by U.S. District Judge Denise Page Hood of the Eastern District of Michigan in Detroit.
All three defendants were convicted on Sept. 30, 2014, after a 12-week jury trial in the Eastern District of Michigan. Williams was convicted of conspiracy to commit health care fraud and conspiracy to receive health care kickbacks. Abdul Malik Al-Jumail and Jamella Al-Jumail were each found guilty of conspiracy to commit health care fraud. Abdul Malik Al-Jumail was also found guilty of conspiracy to pay and receive health care kickbacks. Jamella Al-Jumail was also found guilty of destroying documents in connection with a federal investigation.
According to the evidence at trial, Williams billed Medicare, through her company, Haven Adult Day Care Center LLC, for psychotherapy services that were not actually provided. The evidence demonstrated that, in some instances, Williams billed Medicare for services purportedly provided to patients who were already deceased. Williams also sold the private medical information of her patients to Abdul Malik Al-Jumail so that he could use it to submit fraudulent claims to Medicare.
The evidence further showed that Abdul Malik Al-Jumail obtained patients by paying unlawful kickbacks to Williams and others, and caused claims to be submitted to Medicare for home health services, including physical therapy, that were never delivered. Like her father, the evidence demonstrated that Jamella Al-Jumail billed Medicare for home health services and physical therapy that were not actually provided. The evidence at trial also showed that, the day her father was arrested, Jamella Al-Jumail told an employee to retrieve falsified patient medical records from their company, which she and others later burned.
The case was investigated by the FBI, HHS-OIG and the IRS, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. The case was prosecuted by Trial Attorneys Christopher Cestaro, Brooke Harper and William Kanellis of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Patrick Hurford of the Eastern District of Michigan.
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.
Operator of Detroit Adult Day Care Center and Two Home Health Care Company Owners Sentenced in $29 Million Medicare Fraud ConspiracyRead the Press Release
WASHINGTON – The former operator of a Detroit adult day care center and two former owners of Detroit-area home health care companies were sentenced to prison today for their roles in a $29 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.
Felicar Williams, 51, of Dearborn, Michigan, was sentenced to five years in prison and ordered to pay $2,431,018 in restitution, representing the amount paid by Medicare for Williams’ fraudulent claims. Abdul Malik Al-Jumail, 54, and Jamella Al-Jumail, 25, both of Brownstown, Michigan, were sentenced to 10 years in prison and four years in prison respectively. Both were also ordered to pay $8,389,541 and $589,516 in restitution, respectively, the amounts paid by Medicare for their fraudulent claims. The sentences were imposed by U.S. District Judge Denise Page Hood of the Eastern District of Michigan in Detroit.
All three defendants were convicted on Sept. 30, 2014, after a 12-week jury trial in the Eastern District of Michigan. Williams was convicted of conspiracy to commit health care fraud and conspiracy to receive health care kickbacks. Abdul Malik Al-Jumail and Jamella Al-Jumail were each found guilty of conspiracy to commit health care fraud. Abdul Malik Al-Jumail was also found guilty of conspiracy to pay and receive health care kickbacks. Jamella Al-Jumail was also found guilty of destroying documents in connection with a federal investigation.
According to the evidence at trial, Williams billed Medicare, through her company, Haven Adult Day Care Center LLC, for psychotherapy services that were not actually provided. The evidence demonstrated that, in some instances, Williams billed Medicare for services purportedly provided to patients who were already deceased. Williams also sold the private medical information of her patients to Abdul Malik Al-Jumail so that he could use it to submit fraudulent claims to Medicare.
The evidence further showed that Abdul Malik Al-Jumail obtained patients by paying unlawful kickbacks to Williams and others, and caused claims to be submitted to Medicare for home health services, including physical therapy, that were never delivered. Like her father, the evidence demonstrated that Jamella Al-Jumail billed Medicare for home health services and physical therapy that were not actually provided. The evidence at trial also showed that, the day her father was arrested, Jamella Al-Jumail told an employee to retrieve falsified patient medical records from their company, which she and others later burned.
The case was investigated by the FBI, HHS-OIG and the IRS, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. The case was prosecuted by Trial Attorneys Christopher Cestaro, Brooke Harper and William Kanellis of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Patrick Hurford of the Eastern District of Michigan.
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.
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15-483
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Okmulgee Man Pleads Guilty to Marijuana DistributionRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma, announced today that STANLEY DEMARGO THOMAS, age 48, of Okmulgee, Oklahoma, pled guilty to POSSESSION WITH INTENT TO DISTRIBUTE MARIJUANA, in violation of Title 21, United States Code, Sections 841(a)(1) and (b)(1)(D).
Charges arose from an investigation by the United States Marshal Service. The defendant was indicted in March, 2015.
The Indictment alleged that on or about October 11, 2014, in the Eastern District of Oklahoma, the defendant, STANLEY DEMARGO THOMAS, did knowingly and intentionally possess with the intent to distribute marijuana, a Schedule I controlled substance.
The Honorable Steven P. Shreder, Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, accepted the guilty plea and ordered a presentence report to be completed.
Assistant United States Attorney Dean Burris represented the United States.
Oklahoma Couple Sentenced for Ponzi Scheme Related to Fictitious Hedge FundRead the Press Release
LAS VEGAS, Nev. – An Oklahoma husband and wife received prison sentences today for stealing over $6.5 million from six victims who thought they were investing in a hedge fund, announced U.S. Attorney Daniel G. Bogden for the District of Nevada, Laura A. Bucheit, Special Agent in Charge of the FBI for Nevada, and John Collins, Special Agent in Charge of IRS Criminal Investigation for Nevada.
“The defendants used convincing tactics and tempting monetary returns to persuade their victims to part with their money,” said U.S. Attorney Bogden. “If someone offers unusually high returns on an investment, it is likely too good to be true.”
Linda Livolsi, aka Linda G. Findley, aka Linda Grogg, 46, of Cleveland, Oklahoma, was sentenced to 45 months in prison, three years of supervised release, and ordered to pay approximately $6.1 million in restitution. She pleaded guilty on Oct. 15, 2014, to one count of wire fraud and one count of making and filing a false and fraudulent tax return. Her husband, William Livolsi, Jr., 55, was sentenced to two years in prison, three years of supervised release, and ordered to pay approximately $5 million in restitution. He pleaded guilty on Oct. 15, 2014, to one count of wire fraud. Linda Livolsi was allowed to self-report to prison by July 24, 2015, and William Livolsi was permitted to report to prison 30 days after Linda is released from prison.
“These sentences are a reminder of the FBI’s dedication to identify, investigate and prosecute those who are committing financial crimes against innocent consumers,” said FBI Special Agent in Charge Bucheit.
“Individuals should be careful in choosing their investment advisers as they would in choosing a doctor or a lawyer,” said IRS CI Special Agent in Charge Collins. “IRS criminal investigators will use all permissible tools to pursue these criminals and hold them accountable.”
According to the plea agreements, since about 2003, under the artifice of RGM Enterprises, LLC, Linda Livolsi had been soliciting and inducing persons to give her money for the purpose of investing it in a purported hedge fund that offered large monetary returns. In reality, the hedge fund never existed and the Livolsi’s spent most the money for their personal benefit. Linda and William Livolsi, Jr. were married in 2004, and according to the plea agreements, William Livolsi participated in the fraud scheme by vouching to victims about the scheme, by creating a trust and bank accounts into which he received and withdrew monies deposited by victims, and by using the fraud monies for his own personal benefit. The victims were fooled into thinking their investments were good because the Livolsi’s provided them with false and fraudulent financial statements and account statements. The Livolsi’s fraudulently obtained about $6.5 million in funds from six investors from 2003 to 2007, including approximately $5 million that came from one victim. Linda Livolsi also filed false federal tax returns for the years 2003 to 2006, and failed to file tax returns for 2007 and 2008. Her total tax liability for those years, not including interest and penalties, is approximately $1.1 million.
The case was investigated by the FBI and IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney J. Gregory Damm.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.com.
Newport News Man Sentenced for Using Internet to Prostitute a MinorRead the Press Release
Conducted his criminal activities out of several local motels
NORFOLK, Va. – Antuane Keyone Armstrong, 35, of Newport News, was sentenced yesterday to 125 months in prison, followed by 3 years of supervised release for three counts of use of an interstate facility for unlawful activity.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and John S. Adams, Special Agent in Charge of the Federal Bureau of Investigation’s Norfolk Field Office, made the announcement after sentencing by Senior U.S. District Judge Robert G. Doumar.
Armstrong pled guilty on November 13, 2014. According to court documents, from April 2014 to about June 25, 2014, Armstrong posted advertisements on-line for his business enterprise involving the illegal prostitution of several women, including a sixteen-year-old minor. Armstrong conducted his criminal activities out of several local motels and was arrested in Norfolk on June 25, 2014, as a result of a surveillance operation.
This case arose out of prostitution investigations conducted by the Newport News, Norfolk, and Virginia Beach Police Departments. The FBI’s Norfolk Field Office handled the investigation subsequent to its initiation by the respective police departments. Assistant United States Attorney Randy Stoker prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:14cr124.
Newport News Man Sentenced for Using Internet to Prostitute a MinorRead the Press Release
Conducted his criminal activities out of several local motels
NORFOLK, Va. – Antuane Keyone Armstrong, 35, of Newport News, was sentenced yesterday to 125 months in prison, followed by 3 years of supervised release for three counts of use of an interstate facility for unlawful activity.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and John S. Adams, Special Agent in Charge of the Federal Bureau of Investigation’s Norfolk Field Office, made the announcement after sentencing by Senior U.S. District Judge Robert G. Doumar.
Armstrong pled guilty on November 13, 2014. According to court documents, from April 2014 to about June 25, 2014, Armstrong posted advertisements on-line for his business enterprise involving the illegal prostitution of several women, including a sixteen-year-old minor. Armstrong conducted his criminal activities out of several local motels and was arrested in Norfolk on June 25, 2014, as a result of a surveillance operation.
This case arose out of prostitution investigations conducted by the Newport News, Norfolk, and Virginia Beach Police Departments. The FBI’s Norfolk Field Office handled the investigation subsequent to its initiation by the respective police departments. Assistant United States Attorney Randy Stoker prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:14cr124.
New York Man Pleads Guilty to Conspiracy Involving Sales of Illegally Diverted Prescription DrugsRead the Press Release
CINCINNATI – Albert D. Nassar, 59, of New York City, pleaded guilty in U.S. District Court to conspiracy to commit mail and wire fraud in connection with the illegal sale of prescription drugs bearing false pedigrees that misrepresented the sources and origins of the drugs.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Antoinette Henry, Special Agent in Charge, U.S. Food and Drug Administration Office of Criminal Investigations, and Christopher White, Assistant Inspector in Charge, U.S. Postal Inspection Service, announced the plea entered into yesterday before U.S. District Judge Sandra S. Beckwith.
According to court documents, Nassar, the owner of Worldwide Management Consultants, Inc., participated with others in a scheme between 2007 and 2009 to obtain prescription drugs from various illicit or unknown sources - known as diverted drugs - and then resell the drugs to unwitting wholesale drug companies using false pedigrees. The false pedigrees showed legitimate authorized distributors as the source of the drugs, when, the drugs were obtained outside lawful channels.
Other conspirators included Michael Schoenwald, 71, a Hollywood, Florida-based urologist, and Gregory Pfizenmayer, 46, the owner of G & D Enterprises in Foley, Alabama.
As part of the conspiracy, Schoenwald obtained Lupron, an injectable drug used to treat prostate cancer, from the manufacturer at discounted rates due to his status as a health care provider. Federal law prohibits the resale of such drugs by health care providers.
Nassar directed Schoenwald to ship the Lupron to Pfizenmayer, who in turn sold the drugs to wholesale drug companies, providing false pedigrees that concealed the illicit source of the drugs.
Other prescription drugs allegedly involved in the conspiracy included Procrit, used to treat anemia in patients with kidney failure, and Neulasta, used to prevent infections in patients undergoing chemotherapy. The drugs were shipped with the false pedigrees by mail to drug wholesalers in New Jersey, Mississippi and Ohio, and each conspirator received payments including by wire transfer.
Pfizenmayer pleaded guilty on February 2, 2011 and Schoenwald pleaded guilty on February 16, 2012. Both pleaded guilty to one count of conspiracy.
The parties involved in Nassar’s case have agreed to a sentence of 12 months and one day incarceration.
U.S. Attorney Stewart commended the cooperative investigation by the FDA and Postal Inspectors, as well as Assistant United States Attorneys Anne Porter and Christy Muncy, who are representing the United States in this case.
New Orleans Woman Charged with Theft of Government FundsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that SYLVIA CHESTNUT, age 37, of New Orleans, was charged yesterday in one-count Bill of Information for stealing property from a Navy Exchange Store.
According to the Bill of Information, between November 12, 2011, and December 18, 2011, CHESTNUT wrote 43 worthless checks, totaling $20,549.36, to two Naval Exchange Stores in Florida. CHESTNUT used the worthless checks to purchase clothing, household items, pre-paid Visa cards, and other personal items.
If convicted, CHESTNUT faces a maximum prison term of 10 years, to be followed by 3 years of supervised release, and $250,000 fine.
U.S. Attorney Polite reiterated that the Bill of Information is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of the Naval Criminal Investigative Service (NCIS) in investigating this matter. Assistant U. S. Attorney Spiro G. Latsis and Assistant U.S. Attorney Kevin Frein of the United States Attorney’s Office for the Middle District of Florida are in charge of the prosecution.
Sylvia Chestnut Bill of Information
Nevada Man Sentenced to 12 Years in Prison for Receiving Child PornRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that Nevada, Mo., man was sentenced in federal court today for receiving child pornography after he assumed a false online identity as a woman and persuaded a teenage girl in Georgia to send him pornographic images of herself.
Curtis Bowman, 43, of Nevada, was sentenced by U.S. District Judge M. Douglas Harpool to 12 years in federal prison without parole. The court also ordered Bowman to serve a life term of supervised release following his incarceration, and to pay $12,140 in restitution to his victim.
Bowman pleaded guilty on Oct. 15, 2014, to receiving child pornography over the Internet.
Law enforcement officers in Cobb County, Ga., were contacted by the victim’s mother. She told officers that her 16-year-old daughter, identified as ”Jane Doe,” had been engaged in sexually explicit e-mail communications with an individual identifying herself as “Amanda Toben.” Jane Doe confirmed that she met “Amanda Toben,” whom she believed was a female resident of Missouri, in an online chat room sometime in January 2014. They began exchanging e-mails and within a matter of days, the e-mail exchanges became sexual in nature. Jane Doe ultimately sent a number of images depicting herself engaged in sexually explicit conduct to “Toben.”
Georgia law enforcement officers identified Bowman and on March 7, 2014, local law enforcement officers executed a search warrant at Bowman’s residence, where he was arrested. Investigators discovered a number of sexually explicit images of Jane Doe on Bowman’s computer.
Although the age of consent in the state of Georgia is 16 years of age, the federal government deems the age of consent to be 18 years of age. Therefore, receiving sexually explicit images of a 16-year-old minor over the Internet is a violation of federal law.
This case was prosecuted by Assistant U.S. Attorney James Kelleher. It was investigated by the Vernon County, Mo., Sheriff’s Department, the Southwest Missouri Cyber Crimes Task Force, the FBI and the Cobb County, Ga., Police Department.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
National Crime Victims' Rights Week, April 19-25Read the Press Release
Contact Person: Beth Drake (803) 929-3000
COLUMBIA, SOUTH CAROLINA – Every April, the Office of Victims of Crime (OVC) helps lead communities throughout the country in their annual observances of National Crime Victims’ Rights Week (NCVRW) by promoting victims’ rights and honoring crime victims and those who advocate on their behalf. This year’s NCVRW will be held April 19-25 and the theme Engaging Communities, Empowering Victims, presents the opportunity to highlight the diversity in our communities, expand partnerships to serve victims of crime, enhance efforts to meet victims where they are, and empower crime victims as they pursue justice and recovery.
The U.S. Department of Justice will kick off the week with OVC’s annual National Crime Victims’ Service Awards Ceremony in Washington, DC to honor outstanding individual and programs that serve victims of crime. The US Attorney’s Office will join with state and local partners in observing NCVRW in special events throughout the state, including the South Carolina Victims Assistance Network and State Office of Victim Assistance’s Annual Victims’ Rights Week Conference, April 20 – 22. For more information, visit SCVAN’s website, www.scvan.org.
United States Attorney Nettles will lead the US Attorney’s Office in commemorating the advancement of victims’ rights by honoring several service providers, non-governmental organizations and prosecutors, all champions in advocating and providing support for crime victims in our state. The recognitions will take place on April 30. Information regarding each of the honorees will be forthcoming.
For more information about the 2015 National Crime Victims’ Rights Week and how your community may assist victims, please contact www.ovc.gov.
United States Attorney’s Office Victims’ Rights Recognitions
WHEN: Thursday, April 30, 10:00 am – 11:00 am
WHERE: USAO – 1441 Main Street, Suite 500, Columbia, SC
6th Floor Conference Room
* Paid parking is available behind 1441 Main Street and at meters on the street.
* Please ensure to bring a photo ID in order to gain entrance to the suite.
* Kindly be in place 10 minutes prior to the start of the ceremony.
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Nampa Man Sentenced to 75 Months in Prison for Drug and Gun ChargesRead the Press Release
BOISE – Guadalupe Serrano, 36, of Nampa, Idaho, was sentenced today to 15 months for possession of methamphetamine with intent to distribute and was sentenced to an additional 60 months consecutive for possessing a firearm in furtherance of a drug trafficking crime, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge also ordered Serrano to serve three years of supervised release following his 75 month prison term. Serrano pleaded guilty to the charges on February 11, 2015.
According to information presented in court, Nampa police officers stopped a black BMW Serrano was driving on June 19, 2014. A police drug-detection dog sniffed the BMW and alerted to the odor of illegal drugs. During a later search of the BMW, officers located two baggies containing methamphetamine, a digital scale, $10,200, two loaded firearms, and ammunition. The firearms were identified as a Bersa, .380 ACP pistol, and a Glock, 9 millimeter pistol. Serrano admitted that the firearms were stolen.
Serrano’s case is part of a larger long-term investigation by the Treasure Valley Metro Violent Crimes Task Force. The investigation focused on the “Norteno” Northside gang, which is active in Nampa and other parts of the Treasure Valley. Fourteen individuals were indicted on drug and gun charges as a result of the investigation. Serrano was the first to be sentenced. Four others have pleaded guilty and are awaiting sentencing including Jose Manuel Menchaca, 35, Nicole Danelle Nieto, 31, Brandi Marie Larrea, 31, and Tara Noelle Rivera, 30, all from Nampa. Guillermo Farias Jr., 29, also from Nampa has signed a plea agreement and is awaiting a court hearing to enter his guilty plea. Five others are scheduled for trial including Johhny Lee Martinez, 33, Michael David Bradshaw, 31, Richard Lobato, 51, all from Nampa, Isaac Bright, 21, from Caldwell, and Kenny P. Breedlove, 35, from California. Three other defendants have outstanding warrants, including Jose Enrique Olvera Jr., 51, Ruben Rodriguez, 36, and Veronica Cantu, 26, all from Nampa.
This case and the other related cases are the result of a joint investigation by the Treasure Valley Metro Violent Crime Task Force and the Organized Crime and Drug Enforcement Task Force (OCDETF). The Treasure Valley Metro Violent Crime Task Force is comprised of federal, state and local agencies, including the Federal Bureau of Investigation; Bureau of Alcohol, Tobacco, Firearms and Explosives; Boise Police Department; Ada County Sheriff’s Office; Caldwell Police Department; Nampa Police Department; Meridian Police Department; Canyon County Sheriff’s Office; and Idaho Department of Probation and Parole.
The Organized Crime and Drug Enforcement Task Force (OCDETF), includes the cooperative law enforcement efforts of the Federal Bureau of Investigation; Drug Enforcement Administration; Bureau of Alcohol, Tobacco, Firearms and Explosives; U. S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Internal Revenue Service-Criminal Investigation; and U.S. Marshals Service. The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
The case was prosecuted by the Special Assistant U.S. Attorney hired by the Treasure Valley Partnership and the State of Idaho to address gang crimes. The Treasure Valley Partnership is comprised of a group of elected officials in southwest Idaho dedicated to regional coordination, cooperation, and collaboration on creating coherent regional growth. For more information, visit treasurevalleypartners.org.
Monroe County Man Charged with Heroin and Cocaine Trafficking OffensesRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that a Monroe County man has been indicted by a federal grand jury in Scranton for conspiracy to distribute cocaine and for aiding in the distribution of heroin.
According to United States Attorney Peter Smith, Sal DiPalma, Jr., age 45, of East Stroudsburg, Monroe County, is charged with allegedly participating in the criminal activity in Monroe, Wayne and Lackawanna Counties between January and October of 2013.
The investigation was conducted by the Lackawanna County Drug Task Force, the Drug Enforcement Administration and the Wayne County District Attorney’s Office. The case is being prosecuted by Assistant United States Attorney Robert J. O’Hara.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is imprisonment for twenty years, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public, and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
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Michagan Man Sentenced for Role in Access Device FraudRead 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 Deantuan Wiley, 26, of Southfield, MI., who was convicted of possessing more than 15 counterfeit access devices with intent to defraud, was sentenced to 30 months in prison by U.S. District Judge Richard J. Arcara. In addition, Judge Arcara ordered the defendant to make restitution to several victim banks totaling $6,406.Assistant U.S. Attorney John E. Rogowski, who handled the case, stated that Wiley and three companions were found to be in possession of 110 counterfeit access devices when the defendants were subjected to a customs inspection at the Lewiston Bridge on July 3, 2013. The fraudulent devices included Visa and MasterCard credit cards and gift cards that were purchased with counterfeit credit cards. The defendant, along with co-defendants George Brown, Rodney Gilliam, and Raina Johnson, used several counterfeit access devices to make, and attempt to make, purchases of gift cards and merchandise in several stores in Connecticut, Rhode Island, Pennsylvania and New York. After finding the counterfeit access devices in the car driven by Wiley, Department of Homeland Security agents obtained store security films which captured all four defendants making numerous purchases with counterfeit access devices.
Brown and Gilliam have also been convicted. Charges are pending against Johnson. 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.
The sentencing is the culmination of an investigation by of Special Agents of Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Acting Special Agent in Charge J. Michael Kennedy.Miami-Dade Resident Charged for Threatening to Destroy a Local IRS BuildingRead the Press Release
A Miami-Dade County resident was charged for threatening to destroy the Internal Revenue Service (IRS) building by fire or a bomb.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Melissa Chedotal, Special Agent in Charge, Treasury Inspector General for Tax Administration (TIGTA), Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and members of the South Florida Joint Terrorism Task Force (JTTF), made the announcement.
Morris R. Whitehead, 53, of Miami, was charged by complaint, with willfully making a threat through the use of a telephone concerning an attempt to be made to unlawfully damage or destroy a building by means of fire or an explosive, in violation of Title 18, United States Code, Section 844(e). The charge is punishable by a maximum sentence of ten years in prison.
According to allegations contained in the affidavit in support of a criminal complaint, Whitehead called the FBI’s Miami Field Office on April 20, 2015, and indicated that the IRS Building in Miami, Florida should be evacuated within two hours because it was going to go up in smoke. Whitehead was arrested later that same day and allegedly admitted to law enforcement officers that he had placed the threatening call.
“Threats to federal buildings are taken extremely seriously and we will continue to prosecute to the fullest extent of the law any attempts to disrupt the proper functioning of government and endanger the community,” stated United States Attorney Wifredo A. Ferrer.
Whitehead is scheduled to be arraigned on May 5, 2015.
Mr. Ferrer commends the outstanding investigative efforts of the South Florida Joint Terrorism Task Force, including the FBI, TIGTA, IRS-CI, U.S. Secret Service, Bureau of Alcohol, Tobacco, Firearms and Explosives, Federal Protective Services, and City of Miami Police Department. The case is being prosecuted by Assistant United States Attorney Adam Fels.
A complaint is only an accusation and a defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Miami-Dade County Resident Pleads Guilty in Identity Theft Fraud Scheme Involving $322,000 in Cashed Tax Refund ChecksRead the Press Release
A Miami-Dade County resident pled guilty for his participation in an identity theft fraud scheme involving $322,000 in cashed tax refund checks.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Paula A. Reid, Special Agent in Charge, U.S. Secret Service (USSS), Miami Field Office, made the announcement.
Eldridge Nichols, 41, of Miami, pled guilty to one count of theft of government money. As part of his plea agreement, Nichols agreed to pay restitution in the amount of approximately $322,000.
According to court documents, from February 2011 to January 2012, Nichols had access to and control over a bank account in the name of Eldridge Nichols LLC in Miami, Florida. Nichols caused fraudulent tax refund checks to be deposited into this account. Approximately forty-three U.S. Treasury tax refund checks, totaling approximately $322,000, were cashed through this bank account. Nichols used the proceeds from the fraudulent tax refund checks for travel, clothing, entertainment, and other personal purposes.
Law enforcement contacted a sample of individuals who had a tax refund check in their name cashed in this account. All of the individuals advised that they did not know of the defendant, that they did not authorize Nichols to have possession of a tax refund check in their name, and that they did not personally receive any of the proceeds from this unauthorized tax refund.
Nichols is scheduled to be sentenced before U.S. District Court Judge Cecilia M. Altonaga on June 29, 2015 at 9:30 a.m. At sentencing, Nichols faces a maximum of ten years in prison.
Mr. Ferrer commended the investigative efforts of IRS-CI and the USSS. This case is being prosecuted by Assistant U.S. Attorney Michael N. Berger.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Miami-Dade County Man Sentenced for Identity Theft Tax Fraud Scheme Involving the Unauthorized Use of Debit CardsRead the Press Release
A Miami-Dade County man was sentenced to 24 months in prison, followed by 3 years of supervised release, and was ordered to pay $5,855 in restitution, for his participation in a stolen identity tax fraud scheme.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Paula A. Reid, Special Agent in Charge, U.S. Secret Service (USSS), Miami Field Office, made the announcement.
Duniel Gongora, 28, previously pled guilty to one count of using unauthorized access devices and one count of aggravated identity theft.
According to court documents, from February 24, 2014 through March 4, 2014, Gongora knowingly used two debit cards that belonged to other people with the intent to defraud. Gongora knew that both debit cards were funded with fraudulent tax refunds. Gongora used the debit cards at various ATMs in Miami-Dade County and withdrew funds totaling over $1,000. Gongora knew that the debit card numbers belonged to real people and that the victims did not authorize him to possess their personal information or to use debit cards in their names.
Mr. Ferrer commended the investigative efforts of FBI, IRS-CI, and USSS. This case was prosecuted by Assistant U.S. Attorney Vanessa Snyder.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Meraux Man Pleads Guilty to Conspiracy Related to Falsifying Records for Gun PurchaseRead the Press Release
U.S. Attorney Kenneth A. Polite announced that RICKEY COLEMAN, age 26, of Meraux, pled guilty yesterday to one count of conspiring to falsify ATF records related to the purchase of a firearm.
According to the factual basis filed in open court, COLEMAN enlisted the help of two other individuals to aid in the purchase of a firearm from Academy Sports in Elmwood on June 9, 2013. COLEMAN was a previously convicted felon and prohibited from buying a firearm. The female who purchased the firearm falsified an ATF form regarding the true ownership of the firearm.
COLEMAN faces a sentence of up to five years in prison, followed by up to three years of supervised release, and up to $250,000 in fines. U.S. District Judge Sarah S. Vance set sentencing for August 5, 2015.
U.S. Attorney Polite praised the work of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) in investigating this matter along with the assistance of the St. Bernard Sheriff’s Office. Assistant United States Attorney Edward J. Rivera is in charge of the prosecution.
Rickey Coleman Factual Basis
Member of Drug Trafficking Organization Admits Conspiring to Sell Heroin in New JerseyRead the Press Release
TRENTON, N.J. – A South Jersey woman who was a member of a large-scale drug trafficking organization today admitted distributing more than 100 grams of heroin, U.S. Attorney Paul J. Fishman announced.
Dawn Rosser, 34, of Lakewood, New Jersey, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging her with one count of conspiring to distribute heroin.
In March 2014, 20 other alleged members of the drug trafficking organization of which Rosser was a member were charged by criminal complaint with conspiring to distribute heroin. The complaint referred to the drug trafficking organization as the “Britt-Young DTO,” after its leaders, Robert Britt, a/k/a “True,” and Rufus Young, a/k/a “Equan,” a/k/a “E-Money,” a/k/a “Kintock.” Of those individuals, nine have pleaded guilty.
According to documents filed in this case and statements made in court:
Between February 2013 and March 2014, Rosser conspired with others to distribute heroin in Ocean and Monmouth counties. Rosser admitted distributing between 100 and 400 grams of heroin.
The narcotics conspiracy charge to which Rosser pleaded guilty carries a maximum penalty of 20 years in prison and $1 million fine. Sentencing is scheduled for June 5, 2015.
U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Office, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Nicholas Grippo of the U.S. Attorney’s Office Criminal Division in Newark.
Defense counsel: Joseph Accardi Esq., Elizabeth, New Jersey
rosser_dawn_information.pdf
Member of Drug Trafficking Organization Admits Conspiring to Sell HeroinRead the Press Release
TRENTON, N.J. – A Toms River, New Jersey, man today admitted distributing heroin and cocaine as part of a large-scale drug trafficking organization that operated in Monmouth, Ocean, and Middlesex counties, U.S. Attorney Paul J. Fishman announced.
Delovi R. Canales, a/k/a “Butter,” 48, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with one count of conspiring to distribute heroin.
In October 2014, 20 other alleged members of the drug trafficking organization of which Canales was a member were charged by criminal complaint with conspiring to distribute heroin. The complaint referred to the drug trafficking organization as the “Cadet DTO,” after one of its leaders, Herve Cadet, a/k/a “Gotti,” a/k/a “Bro,” 29, of Neptune and Sayreville, New Jersey.
According to documents filed in this case and statements made in court:
From November 2013 through October 2014, Cadet, Eric Smith, a/k/a “EV,” a/k/a “E,” 42, of Manchester, New Jersey, and the other members of Cadet DTO, including Canales, conspired to sell illegal drugs – chiefly heroin – in Monmouth, Ocean and Middlesex counties. Through the use of confidential informants, authorized interception of cell phone calls and other means, law enforcement learned Cadet and Smith were responsible for identifying sources of heroin supply and oversaw distributors and other conspirators who sold, packaged and stored the drugs. Members used stash houses, spoke in code and used Haitian Creole to avoid detection by law enforcement.
The narcotics conspiracy charge to which Canales pleaded guilty carries a maximum penalty of 20 years in prison and $1 million fine. Sentencing is scheduled for June 27, 2015.
U.S. Attorney Fishman credited special agents of the DEA, Newark Division, under the direction of Special Agent in Charge Carl J. Kotowski and officers of the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher J. Gramiccioni with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Fabiana Pierre-Louis of the U.S. Attorney’s Office Criminal Division in Trenton.
Defense Counsel: David R. Oakley Esq., Princeton, New Jersey
Major Cocaine and Heroin Trafficker Pleads Guilty, Agrees to Forfeit Love and Hip Hop Income and Other AssetsRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051
ROCHESTER, N.Y.- U.S. Attorney William J. Hochul, Jr. announced today that Mendeecees Harris, 36, of the Bronx, NY, pleaded guilty before U.S. District Judge Frank P. Geraci, Jr. to conspiracy to distribute and possess with intent to distribute 100 grams or more of heroin and 500 grams or more of cocaine. The charges carry a mandatory minimum penalty of five years in prison, a maximum 40 years, a fine of $5,000,000.00, or both. The defendant also agreed to the forfeiture of assets totaling at least $100,000 which represents proceeds from the drug trafficking conspiracy.Assistant U.S. Attorney Frank H. Sherman, who is handling the case, stated that the defendant participated in a conspiracy to distribute heroin and cocaine from 2005 until August 2012. Harris admitted that, from at least 2006 through 2008, in New York City, he participated in the distribution of quantities of heroin and cocaine with others to individuals who were transporting the drugs to Rochester and distributing them. At least 40 kilograms of cocaine and a kilogram of heroin were involved in this conduct.
The defendant, who has been appearing recently as a cast member of the VH-1 television show, Love and Hip Hop, New York, agreed to forfeit all of his income from that show and personal appearances while he is awaiting sentencing in this case. Harris agreed to forfeit all of that income, amounting to at least $100,000 cash, as well as a 2011 Audi R8 vehicle, as substitute assets representing proceeds of his illegal activities.
The plea is the culmination of an investigation on the part of Special Agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge James J. Hunt, New York Field Division, investigators with the Rochester Police Department, under the direction of Chief Michael Ciminelli, and Special Agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of Shantelle P. Kitchen, Special Agent in Charge, New York Field Office.
Sentencing is scheduled for August 31, 2015, at 3:00 p.m. before Judge Geraci.
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051
ROCHESTER, N.Y.- U.S. Attorney William J. Hochul, Jr. announced today that Mendeecees Harris, 36, of the Bronx, NY, pleaded guilty before U.S. District Judge Frank P. Geraci, Jr. to conspiracy to distribute and possess with intent to distribute 100 grams or more of heroin and 500 grams or more of cocaine. The charges carry a mandatory minimum penalty of five years in prison, a maximum 40 years, a fine of $5,000,000.00, or both. The defendant also agreed to the forfeiture of assets totaling at least $100,000 which represents proceeds from the drug trafficking conspiracy.Assistant U.S. Attorney Frank H. Sherman, who is handling the case, stated that the defendant participated in a conspiracy to distribute heroin and cocaine from 2005 until August 2012. Harris admitted that, from at least 2006 through 2008, in New York City, he participated in the distribution of quantities of heroin and cocaine with others to individuals who were transporting the drugs to Rochester and distributing them. At least 40 kilograms of cocaine and a kilogram of heroin were involved in this conduct.
The defendant, who has been appearing recently as a cast member of the VH-1 television show, Love and Hip Hop, New York, agreed to forfeit all of his income from that show and personal appearances while he is awaiting sentencing in this case. Harris agreed to forfeit all of that income, amounting to at least $100,000 cash, as well as a 2011 Audi R8 vehicle, as substitute assets representing proceeds of his illegal activities.
The plea is the culmination of an investigation on the part of Special Agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge James J. Hunt, New York Field Division, investigators with the Rochester Police Department, under the direction of Chief Michael Ciminelli, and Special Agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of Shantelle P. Kitchen, Special Agent in Charge, New York Field Office.
Sentencing is scheduled for August 31, 2015, at 3:00 p.m. before Judge Geraci.
Last of 20 Defendants Sentenced in Large-Scale Meth Distribution RingRead the Press Release
BOISE – David Echevarria, 51, of Boise, Idaho, was sentenced today to 110 months in prison followed by five years of supervised release for possession with intent to distribute methamphetamine, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge also ordered the defendant to pay a $2,500 fine. Echevarria pleaded guilty on January 30, 2015.
The distribution ring involved two distribution cells in the Treasure Valley: one led by Jason Holmberg now serving a prison term of 180 months, the other by Andrew Polney now in federal prison on a 130-month sentence. Co-defendant, Kenneth Jones, in Sacramento, California, supplied multi-pound shipments of methamphetamine, which was transported to the Treasure Valley for distribution. Jones is serving a prison term of 130 months. The group operated from about June 2012, through the time of the various arrests on April 18, 2013, and May 23, 2013. On April 9, 2013, Echevarria was stopped with approximately 55 grams of methamphetamine which he had obtained from Polney.
“Investigation and prosecution of large distribution organizations such as this are very demanding, but the effort is essential for keeping our communities safe and reducing this destructive substance in our area,” said Olson. “For many of these defendants, facing prosecution, accepting responsibility, admitting guilt, and being sentenced has been very beneficial in helping them to return to a productive life free of destructive drugs.”
The case is the result of a joint investigation of the Organized Crime and Drug Enforcement Task Force (OCDETF), which included the cooperative law enforcement efforts of the Drug Enforcement Administration (DEA), U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Internal Revenue Service-Criminal Investigation (IRS-CI), Boise Police Department, Meridian Police Department, Ada County Sheriff’s Office, Canyon County Sheriff’s Office, and Nampa Police Department. Other federal agencies participating in the OCEDTF program include the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Federal Bureau of Investigation (FBI), and U.S. Marshals Service.
The OCDETF program is a federal, multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Laredo Co-Conspirators Receive Significant Sentences for Selling Drugs and Guns in A School ZoneRead the Press Release
LAREDO, Texas – Luis Macias-Molinas, 32, Ricardo Rosas Jr., 27, and Manuel Aguilar, aka Chino, 25, all of Laredo, have been ordered to federal prison following their convictions for drug trafficking and gun related charges, announced U.S. Attorney Kenneth Magidson. Macias and Rosas pleaded guilty Oct. 17, 2013, while Aguilar was convicted Sept. 10, 2013.
Today, U.S. District Judge Marina Garcia Marmolejo ordered Macias to serve 156 months for conspiracy to sell methamphetamine within a school zone as well as felon in possession of firearm charges. Rosas was also convicted of the school zone methamphetamine charges and will serve a 151-sentence. Both were further ordered to serve five years of supervised release following completion of their sentences. Aguilar received a 40-month sentence for being a felon in possession of a firearm to be followed by three years of supervised release. At the hearing today, Macias and Rosas admitted to organizing a methamphetamine trafficking organization within Laredo. In handing down this sentence, Judge Marmolejo stated she was doing taxpayers a favor by imposing lengthy prison terms and keeping the community safe.
These individuals were involved in a large drug and firearm trafficking Investigation in Laredo and San Antonio. Between May 24, 2013, and June 28, 2013, Macias and Rosas sold more than 600 grams of methamphetamine to undercover federal agents, including multiple sales within a school zone. On June 28, 2013, Macias attempted to sell 118.5 grams of methamphetamine for six semi-automatic firearms. He purchased the firearms from federal agents and intended to sell the weapons to Aguilar. Macias and Rosas were arrested before Aguilar received the weapons. Subsequently, agents searched their respective residences and discovered a variety of drugs and guns within the premises.
Rosas admitted to employing Macias, who then distributed the narcotics throughout the community.
The case was investigated by the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Laredo Police Department. Assistant U.S. Attorneys Sanjeev Bhasker and Homero Ramirez prosecuted the case.
Kuna Man Sentenced for False Statement Involving Social Security BenefitsRead the Press Release
BOISE - Del E. Weech, 59, of Kuna, Idaho, was sentenced today in United States District Court to six months in prison followed by three years of supervised release for making false statements involving social security benefits, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge also ordered Weech to pay $13,004 in restitution. Weech pleaded guilty to the charge on February 9, 2015.
According to the plea agreement, Weech admitted that he signed a statement, under penalty of perjury, that his stepdaughter had not received her $14,929 benefits check from the Social Security Administration (SSA), causing the SSA to issue a partial payment in the amount of $9,838. In fact, Weech had already cashed the check. On two other occasions, Weech lied to the SSA, stating that he had not received his own monthly social security benefits, causing repayments to be generated. Weech then cashed his original checks and collected the repayments. In total, Weech stole $13,004 from the SSA.
The case was investigated by the Social Security Administration Office of Inspector General. The case was prosecuted by a Special Assistant U.S. Attorney as part of a partnership venture between the Social Security Administration Office of General Counsel and the United States Attorney’s Office to prosecute social security fraud.
Kingdom City Man Sentenced for Robbing Postal EmployeeRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kingdom City, Mo., man was sentenced in federal court today for robbing an employee at the Kingdom City post office.
Lucas Wayne Branstetter, 39, of Kingdom City, was sentenced by U.S. District Judge Stephen R. Bough to seven years in federal prison without parole. Branstetter was sentenced as a career offender due to his prior felony convictions.
On Sept. 18, 2014, Branstetter pleaded guilty to robbing a postal employee. Branstetter entered a postal facility in Kingdom City on July 19, 2014, and presented a note to a postal employee that stated, “This is a robbery.” The postal employee placed $310 from the cash drawer into Branstetter’s backpack and he drove away from the post office on a motorcycle.
According to court documents, Branstetter was identified by a confidential source on July 21, 2014. On the same day, Branstetter was arrested for possessing stolen property after Laclede County, Mo., Sheriff’s Department deputies responded to a call regarding a suspicious person sleeping behind a local church. A stolen motorcycle was also parked behind the church. Branstetter had an active arrest warrant for forgery from the Blue Springs, Mo., Police Department.
Branstetter has been convicted of at least 12 felonies, including four prior felony convictions for burglary and a prior felony conviction for robbery, as well as numerous misdemeanors.
This case was prosecuted by Assistant U.S. Attorney Jim Lynn. It was investigated by the U.S. Postal Inspection Service, the Callaway County, Mo., Sheriff’s Department and the Laclede County, Mo., Sheriff’s Department.
Justice Department announces Ville Platte Police Department, Evangeline Sheriff’s Office investigationRead the Press Release
WASHINGTON – The Justice Department announced today that it has opened pattern or practice investigations into the use of investigative holds by the Ville Platte Police Department (VPPD) and the Evangeline Parish Sheriff’s Office (EPSO).
The investigations will focus on allegations that VPPD and EPSO officers use “investigative holds” to detain individuals without proper cause, and on the adequacy of VPPD and EPSO’s training, supervision and accountability mechanisms to prevent unlawful seizures. The Justice Department’s investigations will determine whether VPPD and EPSO officers engage in a pattern or practice of using investigative holds in violation of the Constitution and federal law.
“No individual should be detained without proper cause or arrested in violation of his or her civil rights,” said Attorney General Eric Holder. “As these investigations move forward, the Department of Justice will work to ensure that the actions of the Ville Platte Police Department and the Evangeline Parish Sheriff’s Office are in service of our shared mission, consistent with our common values, and in accordance with the Constitution that we are sworn to uphold.”
The Justice Department has contacted officials at VPPD, EPSO, the city of Ville Platte and Evangeline Parish, and will continue to work closely with these law enforcement agencies and municipalities as the investigations progress.
“Police officers across the country are called upon regularly to use their law enforcement authority to protect and safeguard members of their communities by investigating criminal activity,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “It is imperative that officers use their authority within the boundaries of the law and the Constitution. We are eager to work together with the Ville Platte Police Department, Evangline Parish Sheriff’s Office and the local municipalities to help ensure that their officers are engaged in law enforcement practices that are consistent with the Constitution.”
“All of us who work in law enforcement should be focused on due process every day,” said U.S. Attorney Stephanie A. Finley of the Western District of Louisiana. “Each citizen deserves to be treated with respect and in accordance with the Constitution. We will continue to work with all of our local partners to ensure that arrests and detentions are proper and legal, with the goal of having safeguards in place to make sure that similar violations do not occur in the future.”
The Violent Crime Control and Law Enforcement Act of 1994 prohibits state and local governments from engaging in a pattern or practice of misconduct by law enforcement officers that deprives individuals of federally-protected rights. The act also allows the Justice Department to remedy such misconduct through civil litigation. The Justice Department has conducted similar investigations and has obtained important reforms in police departments and law enforcement agencies across the country.
The Special Litigation Section of the Justice Department’s Civil Rights Division in Washington, D.C., is conducting the investigations. Individuals with relevant information are encouraged to contact the Justice Department by phone at 1-877-218-5228.
Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
Click here for the Special Litigation Section’s police accomplishments fact sheet
Justice Department Honors Federal Team That Identified More Than 60,000 Victims and $100 Million in Financial FraudRead the Press Release
The Department of Justice will honor a federal team with the Crime Victims Financial Restoration Award for identifying 60,000 financial fraud victims and more than $100 million in financial losses, during the National Crime Victims’ Rights Service Awards ceremony Tuesday, April 21, in Washington, D.C.
From 2004 to 2009, the company MoneyGram International (MGI) processed a myriad of transactions associated with international marketing schemes, on behalf of scammers who conned victims out of thousands of dollars. The U.S. Attorney’s Office for the Middle District of Pennsylvania, the U.S. Department of Justice Asset Forfeiture Money Laundering Section and the U.S. Postal Inspection Service in Harrisburg worked together to investigate and prosecute MGI on behalf of the victims of these mass marketing fraud schemes.
MGI executives ignored victim complaints when first confronted by internal fraud investigators and federal law enforcement. By collaborating with the Better Business Bureau, the Federal Trade Commission and the media, who informed victims of their right to file claims to recover financial losses, this team returned $62.2 million to 22,377 victims or their families as of March 2015. Cross-border fraud investigations continue, resulting in the indictment, arrest and prosecution of more than 25 MGI agents and associates.
At the April 21 ceremony the Justice Department will also recognize 11 other individuals and programs for their outstanding efforts on behalf of crime victims. Descriptions of the honorees are available at the Office for Victims of Crime’s Gallery: https://ovcncvrw.ncjrs.gov/Awards/AwardGallery/gallerysearch.html.
The Department’s Office for Victims of Crime leads communities across the country in observing National Crime Victims’ Rights Week and hosts an award ceremony each year to bring greater awareness and sensitivity to the rights and needs of victims. President Reagan proclaimed the first Victims’ Rights Week in 1981, calling for greater sensitivity to the rights and needs of victims. This year’s observance takes place April 19-25, with the theme Engaging Communities. Empowering Victims.
About the Office of Justice Programs (OJP)
The Office of Justice Programs (OJP), headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims. OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking. More information about OJP can be found at www.ojp.gov.
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The Assistant U.S. Attorneys from the Middle District of Pennsylvania honored today are Kim Daniel and Christy Fawcett, who have prosecuted cases against international marketing fraud schemes that use financial services network for the past 10 years. As a result of these efforts approximately 35 individuals have been successfully prosecuted; including extraditions to the United States from foreign countries; other defendants have been corrupt agents of financial services businesses. In 2013 MoneyGram International, a major provider of financial services in the U.S. and around the world, entered into a settlement agreement that resulted in a $100 million being set up to make restitution to victims. (see the link to a 2014 MoneyGram settlement announcement).
The investigation of such schemes by the U.S. Postal Inspection Service and the U.S. Attorney’s Office is continuing.
Justice Department Honors 12 Individuals and Teams for Advancing Rights and Services for Crime VictimsRead the Press Release
Attorney General Eric Holder will preside over the National Crime Victims’ Rights Service Awards ceremony at 2:00 p.m. on Tuesday, April 21. The event honors 12 individuals and programs for their extraordinary actions to bring positive and lasting changes in the lives of crime victims.
“The Department of Justice is proud to recognize the tremendous contributions of dedicated colleagues, passionate advocates and extraordinary partners in the field of victim services,” said Attorney General Eric Holder. “From safeguarding survivors of sexual violence to assisting victims of mass marketing fraud, the recipients of today’s awards have been instrumental in our nationwide effort to protect the most vulnerable among us, to prevent and combat crime, and to help victims find hope and seek justice.”
The department’s Office for Victims of Crime leads communities across the country in observing National Crime Victims’ Rights Week and hosts an award ceremony each year. President Reagan proclaimed the first Victims’ Rights Week in 1981, calling for greater sensitivity to the rights and needs of victims. For 2015, the week is observed from April 19 through 25, with the theme Engaging Communities. Empowering Victims.
Following is a list of the award recipients, who were nominated by their colleagues in the field and selected by the Attorney General:
The Allied Professional Award recognizes an individual or organization outside the victim assistance field for services or contributions to the victims’ field. Recipients: Mary Kay Inc. of Addison, Texas, and Assistant District Attorney Norman A. Gahnof the Milwaukee County District Attorney’s Office.
The Crime Victims Financial Restoration Award recognizes individuals, programs, organizations or teams that developed innovative ways of funding services for crime victims or instituted innovative approaches for securing financial restoration for crime victims. Recipient: A team of representatives from the U.S. Attorney’s Office of the Middle District of Pennsylvania, the department’s Asset Forfeiture Money Laundering Section and U.S. Postal Inspection Service for Harrisburg, Pennsylvania.
The National Crime Victim Service Award honors extraordinary efforts in direct service to crime victims. Recipients: Karen Kalergis, a victim advocate from Austin, Texas, and Executive Director Alecia “Lisa” Thompson-Heth of Wiconia Wawokiya Inc., of the Crow Creek Sioux Indian Reservation, Fort Thompson, South Dakota.
The Crime Victims’ Rights Award honors those whose efforts to advance or enforce crime victims’ rights have benefited crime victims at the state, tribal or national level. Recipient: Laurel Wemhoff, a survivor and advocate from Washington, D.C.
The Ronald Wilson Reagan Public Policy Award honors leadership, innovation and vision that leads to noteworthy changes in public policy that benefit crime victims. Recipients: Dr. Marcus Smith and attorney Matthew Smith, of Little Rock, Arkansas, and Director of Victim Services Suzanne Breedlove of the District Attorneys Council in Oklahoma City.
The Professional Innovation in Victim Service Award recognizes a program, organization or individual who has helped to expand the reach of victims’ rights and services. Recipient: Judge Paul M. Herbert of the Franklin County Municipal Court in Columbus, Ohio.
The Special Courage Award recognizes extraordinary bravery in the aftermath of a crime or courageous act on behalf of a victim or potential victim. Recipients: Ronald Cotton and Jennifer Thompson, of Chapel Hill, North Carolina.
The Vision 21 Crime Victims Research Award recognizes individual researchers or research teams that make a significant contribution to the nation’s understanding of crime victims’ issues. Recipient: Rebecca Campbell, of Michigan State University in East Lansing, Michigan.
The Volunteer for Victims Award honors individuals for their extraordinary and selfless efforts resulting in positive and lasting changes in the lives of crime victims. Recipient: LaWanda Hawkins, of San Pedro, California.
Descriptive narratives and videos of the contributions of recipients are available at Office for Victims of Crime’s Gallery.
About the Office of Justice Programs (OJP)
OJP, headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims. OJP has six components: the Bureau of Justice Assistance, the Bureau of Justice Statistics, the National Institute of Justice, the Office of Juvenile Justice and Delinquency Prevention, the Office for Victims of Crime and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking. More information about OJP can be found at www.ojp.gov.
Justice Department Announces Investigations of the Ville Platte, Louisiana, Police Department and the Evangeline Parish Sheriff's OfficeRead the Press Release
The Justice Department announced today that it has opened pattern or practice investigations into the use of investigative holds by the Ville Platte Police Department (VPPD) and the Evangeline Parish Sheriff’s Office (EPSO). The investigations will focus on allegations that VPPD and EPSO officers use “investigative holds” to detain individuals without proper cause, and on the adequacy of VPPD and EPSO’s training, supervision and accountability mechanisms to prevent unlawful seizures. The Justice Department’s investigations will determine whether VPPD and EPSO officers engage in a pattern or practice of using investigative holds in violation of the Constitution and federal law.
“No individual should be detained without proper cause or arrested in violation of his or her civil rights,” said Attorney General Eric Holder.” As these investigations move forward, the Department of Justice will work to ensure that the actions of the Ville Platte Police Department and the Evangeline Parish Sheriff's Office are in service of our shared mission, consistent with our common values, and in accordance with the Constitution that we are sworn to uphold.”
The Justice Department has contacted officials at VPPD, EPSO, the city of Ville Platte and Evangeline Parish, and will continue to work closely with these law enforcement agencies and municipalities as the investigations progress.
“Police officers across the country are called upon regularly to use their law enforcement authority to protect and safeguard members of their communities by investigating criminal activity,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “It is imperative that officers use their authority within the boundaries of the law and the Constitution. We are eager to work together with the Ville Platte Police Department, Evangeline Parish Sheriff’s Office and the local municipalities to help ensure that their officers are engaged in law enforcement practices that are consistent with the Constitution.”
“All of us who work in law enforcement should be focused on due process every day,” said U.S. Attorney Stephanie A. Finley of the Western District of Louisiana. “Each citizen deserves to be treated with respect and in accordance with the Constitution. We will continue to work with all of our local partners to ensure that arrests and detentions are proper and legal, with the goal of having safeguards in place to make sure that similar violations do not occur in the future.”
The Violent Crime Control and Law Enforcement Act of 1994 prohibits state and local governments from engaging in a pattern or practice of misconduct by law enforcement officers that deprives individuals of federally-protected rights. The act also allows the Justice Department to remedy such misconduct through civil litigation. The Justice Department has conducted similar investigations and has obtained important reforms in police departments and law enforcement agencies across the country.
The Special Litigation Section of the Justice Department’s Civil Rights Division in Washington, D.C. is conducting the investigations. Individuals with relevant information are encouraged to contact the Justice Department by phone at 1-877-218-5228.
Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
Jury Finds Man Guilty of Motor Home Theft Conspiracy and Related ChargesRead the Press Release
GRAND RAPIDS, MICHIGAN –United States Attorney Patrick Miles announced today that a federal jury returned guilty verdicts on all counts against Ronald Bruce Myers, 56, a Nevada resident charged with conspiring with others to steal, transport, and sell motor homes throughout the United States, including the theft of three motor homes from businesses in Western Michigan. The jury also convicted him of transporting the stolen motor homes out of Michigan. Myers stole a Country Coach motor home from Holland Bus and Motor Homes on March 28, 2012. Myers returned to Michigan in early May 2012, at which time he stole two more motor homes from Midway RV Center of Kentwood. He faces up to 35 years in prison for the conspiracy and theft of the motor homes. Myers also stole two motor homes in Alabama, one in Missouri, one in North Carolina, and one in Florida.
The jury also convicted Myers of three counts related to money laundering. The evidence at trial showed that Myers used a series of aliases to obtain false title documents, open bank accounts and to forward mail as part of his criminal scheme. He moved hundreds of thousands of dollars through the bank accounts opened under false names and/or using purported corporations. IRS records showed that Myers and his corporations did not file tax returns from 2008 to 2012. He faces up to an additional sixty years in prison for the money laundering convictions. Myers had already been convicted in four previous federal prosecutions involving stolen vehicles.
Myers remains in custody pending his sentencing, which has been set for August 21, 2015 before the Honorable Robert Holmes Bell, United States District Court Judge.
ENDJasper County Man Sentenced for Distributing CocaineRead the Press Release
BEAUMONT, Texas – A 28-year-old Jasper, Texas man has been sentenced to federal prison for drug violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Shane Dwayne Hadnot pleaded guilty on Dec. 10, 2014, to possession with intent to distribute cocaine and was sentenced to 87 months in federal prison today by U.S. District Judge Marcia Crone.
According to information presented in court, on Nov. 7, 2013, Alfred Wright, of Jasper, Texas, was reported missing by his family after his truck broke down in rural Sabine County, Texas. Articles of Wright’s clothing were found on private land, approximately a mile from where Wright was last seen. After searchers initially failed to locate Wright, his body was found on Nov. 25, 2013 in brush near where his clothing had been found. An investigation into the cause of Wright’s disappearance and death revealed his involvement with Shane Hadnot. Phone records, witness statements, and drug evidence located during the search of Shane Hadnot’s car, indicated that Hadnot was selling cocaine to Alfred Wright.
During the two-day period before Wright’s death, Hadnot and Wright exchanged 20 text messages. The indictment alleges that on Nov. 7, 2013, Wright sent a text message to Hadnot at 12:36 pm requesting to purchase cocaine and other illegal narcotics from Hadnot. Wright went missing approximately five hours later. An autopsy was performed on Wright’s body and toxicology testing revealed that Wright’s blood contained cocaine, methamphetamine and Xanax. The final autopsy report, and other experts in the fields of pathology, toxicology, and anthropology concluded that Wright’s cause of death was an accident due to combined drug intoxication. Hadnot was indicted by a federal grand jury on Aug. 6, 2014 and charged with drug trafficking violations.
This case was investigated by the Texas Rangers, the Federal Bureau of Investigation, and the U.S. Drug Enforcement Administration. This case was prosecuted by Assistant U.S. Attorneys Brit Featherston and John B. Ross.
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Jamaican national charged with illegally reentering the countryRead the Press Release
Andrew Parker, 40, a Jamaican national living in Cleveland, was indicted by a federal grand jury for illegally reentering the United States after having been deported, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.
The indictment alleges that the defendant was found in the Akron area after having been deported from the United States in 1997 and without having received permission to reenter the United States.
The United States Immigration and Customs Service conducted the investigation. The case is being prosecuted by Assistant United States Attorney Miranda E. Dugi.
If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense, and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial, in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Houston Man Arrested Following Social Media PostsRead the Press Release
HOUSTON – Frederick Ramon Robinson, 45, a Houston resident and convicted felon, has been arrested and is set to make his initial appearance on charges of unlawfully possessing a firearm, announced U.S. Attorney Kenneth Magidson.
Robinson was arrested today and is set to make his initial appearance before U.S. Magistrate Judge Frances H. Stacy at 2:00 p.m.
The criminal complaint alleges that authorities initiated an investigation into Robinson after he publicly posted several messages on various social media sites such as Twitter. Those alleged posts claimed such comments as “if white people hate ISIS so much, then I like ISIS. The enemy of my enemy is my friend. #chopthemheadsoff Amerikkka is the Black Man’s Foe.” The complaint further alleges he tweeted such statements as “I say, don’t hesitate – start shooting in their cars. empty whole clips. find them at home and fire bomb it. anything., do something.”
According to the charges, Robinson posted pictures of firearms he owned and allegedly demonstrated how to load firearms in videos he posted online.
As a convicted felon, he is prohibited from possessing firearms per federal law. If convicted, he faces up to 10 years in prison.
The charges are the result of investigation conducted by a joint State and federal task force that includes the Bureau of Alcohol Tobacco, Firearms and Explosives and the FBI. Assistant U.S. Attorney Alamdar S. Hamdani is prosecuting the case.
A criminal complaint is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.Guatemalan Man SentencedRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051BUFFALO, N.Y.-U.S. Attorney William J. Hochul Jr. announced today that Josue Joel Castaneda-Cuyuch, 31, a citizen of Guatemala, who was convicted of illegal reentry after having been previously deported and removed from the United States, was sentenced to time served (seven months) by U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Marie P. Grisanti, who handled the case, stated that on September 11, 2014, the defendant, an alien who had previously been deported and removed from the United States on August 20, 2010, was found in the United States without having obtained the consent of the Attorney General of the United States.
The sentencing is the result of an investigation by the United States Border Patrol, under the direction Steven J. Oldman, Patrol Agent in Charge.
Government Sues Skilled Nursing Chain HCR Manorcare for Allegedly Providing Medically Unnecessary TherapyRead the Press Release
The government has intervened in three False Claims Act lawsuits and filed a consolidated complaint against HCR ManorCare alleging that ManorCare knowingly and routinely submitted false claims to Medicare and Tricare for rehabilitation therapy services that were not medically reasonable and necessary, the Department of Justice announced today. ManorCare is one of the nation’s largest healthcare providers, operating approximately 281 skilled nursing facilities (SNFs) in 30 states.
“The Department of Justice is committed to ensuring that healthcare providers who pressure their employees to provide medically unnecessary services to Medicare beneficiaries and Tricare recipients solely to increase their own profits are held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will not relent in our efforts to stop these false billing schemes and recover funds for federal healthcare programs.”
The government’s complaint alleges that ManorCare, which is owned by The Carlyle Group, exerted pressure on SNF administrators and rehabilitation therapists to meet unrealistic financial goals that resulted in the provision of medically unreasonable and unnecessary services to Medicare and Tricare patients. ManorCare allegedly set prospective billing goals designed to significantly increase revenues without regard to patients’ actual clinical needs and threatened to terminate SNF managers and therapists if they did not administer the additional treatments necessary to qualify for the highest Medicare payments. ManorCare also allegedly increased its Medicare payments by keeping patients in its facilities even though they were medically ready to be discharged.
“We strive for a system whereby health care providers provide reasonable and necessary services without overbilling Medicare for unreasonable and unnecessary services” said U.S. Attorney Dana J. Boente of the Eastern District of Virginia. “We will continue our robust investigations of the companies operating in this important sector of our economy.”
“We want to ensure that taxpayer dollars are used to pay for health care for Americans that need it, not to unjustly enrich health care companies,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan. “Medical providers will be held accountable when they exploit patients for profit by subjecting them to therapies they don’t need and then billing Medicare for reimbursement.”
“Today’s action is the result of a robust investigation into alleged false billings submitted to Medicare and Tricare for rehabilitation therapy services that were not necessary for patients,” said Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington, D.C., Field Office. “Healthcare fraud is a top priority for the FBI and we will continue to work closely with federal, state and local law enforcement partners to address vulnerabilities, fraud and abuse in the healthcare industry.”
The three consolidated lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The False Claims Act permits the government to intervene in such lawsuits, as it has done in these cases. A defendant that violates the False Claims Act is liable for three times the government’s losses plus civil penalties.
The government’s intervention in these matters illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, including the conduct described in the United States’ complaint, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Offices for the Northern and Southern Districts of Iowa, Eastern and Western Districts of Michigan, Northern and Southern Districts of Ohio, Eastern District of Pennsylvania and Eastern District of Virginia; the Department of Health and Human Services’ Office of Inspector General; the Department of Defense’s Office of Inspector General; the Defense Health Agency; the Medicaid Fraud Control Units of the California Attorney General’s Office, Delaware Department of Justice, the Florida Attorney General’s Office, Illinois State Police, Iowa Department of Inspections and Appeals, the Maryland Attorney General’s Office, the Michigan Attorney General’s Office, the Ohio Attorney General’s Office and the Virginia Attorney General’s Office; the National Association of Medicaid Fraud Control Units; and the FBI.
The cases are captioned United States ex rel. Ribik v. ManorCare, Inc., et al., Case No. 1:09cv13-CMH-HCB (E.D. Va.); United States ex rel. Slough v. HCR ManorCare, et al., Case No. 1:14cv1228 (E.D. Va.); and United States ex rel. Carson v. HCR ManorCare, et al., Case No. 1:11cv1054 (E.D. Va.).
The claims asserted against ManorCare are allegations only, and there has been no determination of liability.
Government Sues Skilled Nursing Chain HCR Manorcare for Allegedly Providing Medically Unnecessary TherapyRead the Press Release
WASHINGTON – The government has intervened in three False Claims Act lawsuits and filed a consolidated complaint against HCR ManorCare alleging that ManorCare knowingly and routinely submitted false claims to Medicare and Tricare for rehabilitation therapy services that were not medically reasonable and necessary, the Department of Justice announced today. ManorCare is one of the nation’s largest healthcare providers, operating approximately 281 skilled nursing facilities (SNFs) in 30 states.
“The Department of Justice is committed to ensuring that healthcare providers who pressure their employees to provide medically unnecessary services to Medicare beneficiaries and Tricare recipients, solely to increase their own profits, are held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will not relent in our efforts to stop these false billing schemes and recover funds for federal healthcare programs.”
The government’s complaint alleges that ManorCare, which is owned by The Carlyle Group, exerted pressure on SNF administrators and rehabilitation therapists to meet unrealistic financial goals that resulted in the provision of medically unreasonable and unnecessary services to Medicare and Tricare patients. ManorCare allegedly set prospective billing goals designed to significantly increase revenues without regard to patients’ actual clinical needs and threatened to terminate SNF managers and therapists if they did not administer the additional treatments necessary to qualify for the highest Medicare payments. ManorCare also allegedly increased its Medicare payments by keeping patients in its facilities even though they were medically ready to be discharged.
“We strive for a system whereby health care providers provide reasonable and necessary services without overbilling Medicare for unreasonable and unnecessary services” said U.S. Attorney Dana Boente of the Eastern District of Virginia. “We will continue our robust investigations of the companies operating in this important sector of our economy.”
“We want to ensure that taxpayer dollars are used to pay for health care for Americans that need it, not to unjustly enrich health care companies,” said U.S. Attorney Barbara McQuade of the Eastern District of Michigan. “Medical providers will be held accountable when they exploit patients for profit by subjecting them to therapies they don’t need and then billing Medicare for reimbursement.”
“Today’s action is the result of a robust investigation into alleged false billings submitted to Medicare and Tricare for rehabilitation therapy services that were not necessary for patients,” said Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington, D.C., Field Office. “Healthcare fraud is a top priority for the FBI and we will continue to work closely with federal, state and local law enforcement partners to address vulnerabilities, fraud and abuse in the healthcare industry.”
The three consolidated lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The False Claims Act permits the government to intervene in such lawsuits, as it has done in these cases. A defendant that violates the False Claims Act is liable for three times the government’s losses plus civil penalties.
The government’s intervention in these matters illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, including the conduct described in the United States’ complaint, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Offices for the Northern and Southern Districts of Iowa, Eastern and Western Districts of Michigan, Northern and Southern Districts of Ohio, Eastern District of Pennsylvania, and Eastern District of Virginia; the Department of Health and Human Services’ Office of Inspector General; the Department of Defense’s Office of Inspector General; the Defense Health Agency; the Medicaid Fraud Control Units of the California Attorney General’s Office, Delaware Department of Justice, the Florida Attorney General’s Office, Illinois State Police, Iowa Department of Inspections and Appeals, the Maryland Attorney General’s Office, the Michigan Attorney General’s Office, the Ohio Attorney General’s Office, and the Virginia Attorney General’s Office; the National Association of Medicaid Fraud Control Units; and the FBI.
The cases are captioned United States ex rel. Ribik v. ManorCare, Inc., et al., Case No. 1:09cv13-CMH-HCB (E.D. Va.); United States ex rel. Slough v. HCR ManorCare, et al., Case No. 1:14cv1228 (E.D. Va.); and United States ex rel. Carson v. HCR ManorCare, et al., Case No. 1:11cv1054 (E.D. Va.).
The claims asserted against ManorCare are allegations only, and there has been no determination of liability.
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Government Sues Skilled Nursing Chain HCR ManorCare for Allegedly Providing Medically Unnecessary TherapyRead the Press Release
ALEXANDRIA, Va. – The government has intervened in three False Claims Act lawsuits and filed a consolidated complaint against HCR ManorCare alleging that ManorCare knowingly and routinely submitted false claims to Medicare and Tricare for rehabilitation therapy services that were not medically reasonable and necessary, the Department of Justice announced today. ManorCare is one of the nation’s largest healthcare providers, operating approximately 281 skilled nursing facilities (SNFs) in 30 states.
“The Department of Justice is committed to ensuring that healthcare providers who pressure their employees to provide medically unnecessary services to Medicare beneficiaries and Tricare recipients, solely to increase their own profits, are held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will not relent in our efforts to stop these false billing schemes and recover funds for federal healthcare programs.”
The government’s complaint alleges that ManorCare, which is owned by The Carlyle Group, exerted pressure on SNF administrators and rehabilitation therapists to meet unrealistic financial goals that resulted in the provision of medically unreasonable and unnecessary services to Medicare and Tricare patients. ManorCare allegedly set prospective billing goals designed to significantly increase revenues without regard to patients’ actual clinical needs and threatened to terminate SNF managers and therapists if they did not administer the additional treatments necessary to qualify for the highest Medicare payments. ManorCare also allegedly increased its Medicare payments by keeping patients in its facilities even though they were medically ready to be discharged.
“We strive for a system whereby health care providers provide reasonable and necessary services without overbilling Medicare for unreasonable and unnecessary services” said U.S. Attorney Dana Boente of the Eastern District of Virginia. “We will continue our robust investigations of the companies operating in this important sector of our economy.”
“We want to ensure that taxpayer dollars are used to pay for health care for Americans that need it, not to unjustly enrich health care companies,” said U.S. Attorney Barbara McQuade of the Eastern District of Michigan. “Medical providers will be held accountable when they exploit patients for profit by subjecting them to therapies they don’t need and then billing Medicare for reimbursement.”
“Today’s action is the result of a robust investigation into alleged false billings submitted to Medicare and Tricare for rehabilitation therapy services that were not necessary for patients,” said Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington, D.C., Field Office. “Healthcare fraud is a top priority for the FBI and we will continue to work closely with federal, state and local law enforcement partners to address vulnerabilities, fraud and abuse in the healthcare industry.”
The three consolidated lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The False Claims Act permits the government to intervene in such lawsuits, as it has done in these cases. A defendant that violates the False Claims Act is liable for three times the government’s losses plus civil penalties.
The government’s intervention in these matters illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, including the conduct described in the United States’ complaint, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Office for the Eastern District of Virginia, the Northern and Southern Districts of Iowa, Eastern and Western Districts of Michigan, Northern and Southern Districts of Ohio, and the Eastern District of Pennsylvania; the Department of Health and Human Services’ Office of Inspector General; the Department of Defense’s Office of Inspector General; the Defense Health Agency; the Medicaid Fraud Control Units of the California Attorney General’s Office, Delaware Department of Justice, the Florida Attorney General’s Office, Illinois State Police, Iowa Department of Inspections and Appeals, the Maryland Attorney General’s Office, the Michigan Attorney General’s Office, the Ohio Attorney General’s Office, and the Virginia Attorney General’s Office; the National Association of Medicaid Fraud Control Units; and the FBI.
The cases are captioned United States ex rel. Ribik v. ManorCare, Inc., et al., Case No. 1:09cv13-CMH-HCB (E.D. Va.); United States ex rel. Slough v. HCR ManorCare, et al., Case No. 1:14cv1228 (E.D. Va.); and United States ex rel. Carson v. HCR ManorCare, et al., Case No. 1:11cv1054 (E.D. Va.).
The claims asserted against ManorCare are allegations only, and there has been no determination of liability.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.
Futures Trader Charged with Illegally Manipulating Stock Market, Contributing to the May 2010 Market ‘Flash Crash’Read the Press Release
A futures trader was arrested in the United Kingdom today on U.S. wire fraud and commodities fraud and manipulation charges in connection with his alleged role in the May 2010 “Flash Crash,” when the Dow Jones Industrial Average plunged 600 points in five minutes, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Robert J. Holley of the FBI’s Chicago Division.
Navinder Singh Sarao, 36, of Hounslow, United Kingdom, was arrested today in the United Kingdom, and the United States is requesting his extradition. Sarao was charged in a federal criminal complaint in the Northern District of Illinois on Feb. 11, 2015, with one count of wire fraud, 10 counts of commodities fraud, 10 counts of commodities manipulation, and one count of “spoofing,” a practice of bidding or offering with the intent to cancel the bid or offer before execution.
According to allegations in the complaint, which was unsealed today, Sarao allegedly used an automated trading program to manipulate the market for E-Mini S&P 500 futures contracts (E-Minis) on the Chicago Mercantile Exchange (CME). E-Minis are stock market index futures contracts based on the Standard & Poor’s 500 Index. Sarao’s alleged manipulation earned him significant profits and contributed to a major drop in the U.S. stock market on May 6, 2010, that came to be known as the “Flash Crash.” On that date, the Dow Jones Industrial Average fell by approximately 600 points in a five-minute span, following a drop in the price of E-Minis.
According to the complaint, Sarao allegedly employed a “dynamic layering” scheme to affect the price of E-Minis. By allegedly placing multiple, simultaneous, large-volume sell orders at different price points—a technique known as “layering”—Sarao created the appearance of substantial supply in the market. As part of the scheme, Sarao allegedly modified these orders frequently so that they remained close to the market price, and typically canceled the orders without executing them. When prices fell as a result of this activity, Sarao allegedly sold futures contracts only to buy them back at a lower price. Conversely, when the market moved back upward as the market activity ceased, Sarao allegedly bought contracts only to sell them at a higher price.
The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
This case is being investigated by the FBI’s Chicago Division. The case is being prosecuted by Assistant Chief Brent S. Wible and Trial Attorney Michael T. O’Neill of the Criminal Division’s Fraud Section, with assistance provided by the U.S. Attorney’s Office for the Northern District of Illinois, the Criminal Division’s Office of International Affairs and the International Assistance Unit of the Metropolitan Police Service of London, United Kingdom. The Department of Justice appreciates the substantial assistance of the Commodity Futures Trading Commission’s Division of Enforcement, which referred this matter to the department.
Sarao Criminal Complaint
Four Men Arrested in Scheme to Sell Stolen Material from Fort CarsonRead the Press Release
DENVER – Four individuals, including two active duty members of the U.S. Army, have been arrested based on Criminal Complaints, charging each with one count of conspiracy to commit theft of government property. If convicted of this crime, each defendant faces not more than 5 years in federal prison, and up to a $250,000 fine. All four defendants (listed below), are scheduled to appear before U.S. Magistrate Judge Michael J. Watanabe today, Tuesday, April 21, 2015 at 10:00 a.m. for detention hearings.
Those arrested:
Daniel Francis, age 50, of Colorado Springs
Staff Sergeant Benjamin Thomas Cardwell, age 41, of Fort Carson
Sergeant Johnny Dominic Herrera, age 29, of Fort Carson
Todd Crow, age 34, of Colorado Springs“Dedicated investigative work by a team of federal law enforcement agents led to the identification of a ring of thieves who are alleged to have stolen government property, selling it through a co-conspirator,” said U.S. Attorney John Walsh. “The stolen goods covered the gamut, from batteries, to MREs, to sensitive technology, and was mostly sold on eBay. This investigation is ongoing as we seek to track what was taken, where it went, and what was sold, and then follow the money.”
“The FBI and our partners will thoroughly investigate the misappropriation of U.S. government resources,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “Such conduct undermines the intended use of taxpayer dollars, and we encourage anyone who suspects this type of activity to immediately report their information to law enforcement.”
"This is a prime example of our special agents working shoulder to shoulder with unit commanders and our fellow law enforcement agencies to root out crime affecting the U.S. Army and helping to bring those responsible to justice," said Chris Grey, spokesman for the U.S. Army Criminal Investigation Command.
“Fort Carson is unable to comment on the specifics of the ongoing investigation. Fort Carson is collaborate fully with all involved agencies,” said Lt. Colonel Armando Hernandez,” Fort Carson Spokesperson.
This case was investigated by the FBI, the Army Criminal Investigative Division (CID) and Naval Criminal Investigative Service (NCIS), with support from U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), the U.S. Postal Inspection Service (USPIS), and the Colorado Springs Police Department.
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 grand jury.
The charges contained in the four individual Criminal Complaints are allegations, and the defendants are presumed innocent unless and until proven guilty.
This case is being prosecuted by Assistant U.S. Attorney Beth Gibson.
Four Arrested on Federal Drug ChargesRead the Press Release
JOHNSTOWN, Pa. – Three Altoona men and a Johnstown resident have been arrested and charged in federal court with violating the federal drugs laws, United States Attorney David J. Hickton announced today.
The criminal complaint charges Shavoun Berry, aka Anthony, 39, of Altoona, Pa.; Terrance Sitton, 42 of Johnstown, Pa.; Darrin Canaan, aka Dirt, 35, of Altoona, Pa.; and Matthew Fee, 32, of Altoona, Pa., with conspiracy to distribute and possess with the intent to distribute 500 grams or more of cocaine and conspiracy to distribute and possess with the intent to distribute 100 grams or more of heroin.
“With the arrest of these individuals, we have disrupted a significant drug trafficking organization that has been distributing significant quantities of illegal substances in Blair and Cambria counties over the last several months,” stated U.S. Attorney Hickton. “In fact, this case involves the largest seizure of packaged heroin in this part of Western Pennsylvania.”
“This case demonstrates the continued successful partnership of federal, state and local law enforcement in Western Pennsylvania,” said Special Agent in Charge Scott S. Smith of the FBI’s Pittsburgh Field Office. “Like our partners, the Pittsburgh Division of the FBI is committed to stopping the flow of heroin and improving the quality of life in the communities we serve.”
According to USA Hickton, the complaint alleges that, between January 2015 and April 17, investigating agents intercepted dozens of drug-related telephone calls and text messages on phones used by the defendants, conducted physical surveillance and employed other investigative tools. Agents determined that Berry is the leader of a large-scale illegal drug distribution operation in the Cambria and Blair Counties, and elsewhere, and conspired with Sitton, Canaan and Fee to distribute large quantities of illegal drugs in the Western District of Pennsylvania.
According to the complaint, in the past few days, Berry arranged for Sitton to travel to Berry’s supplier in New York and retrieve a large quantity of illegal drugs. On April 17, at approximately 5:40 a.m., Sitton traveled from Western Pennsylvania to New York to retrieve what was believed to be a large quantity of cocaine. During the search of the suspect vehicle pursuant to the search warrant, an extremely well-concealed false compartment, or “trap,” was located in the rear portion of the Jeep. Upon entry into the trap, in excess of 300 bricks of heroin (more than 15,000 stamp bags) were located.
Berry was previously convicted in the United States District Court for the Western District of Pennsylvania on drug trafficking charges. He is currently on federal supervised release.
The defendants will appear in federal court in Johnstown on Wednesday for detention hearings before Federal Magistrate Judge Keith A. Pesto.
The law provides for a maximum total sentence at each count of at least five years and up to 40 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
A criminal complaint is only a charge and is not evidence of guilt. A defendant may not be prosecuted unless, within 30 days, a grand jury has found probable cause to believe that he is guilty of an offense.
Assistant United States Attorney Stephanie Haines is prosecuting this case. Special agents of the FBI, and member of the Pennsylvania Attorney General’s Office, the Cambria County Drug Task Force, the Altoona Police Department and the Cambria County District Attorney’s Office, conducted the investigation that led to the complaint against these individuals.
Former U.S. Border Patrol Agent Sentenced to Prison for Child Pornography ConvictionRead the Press Release
ALBUQUERQUE – Abel Michael Quiroz, 27, a former U.S. Border Patrol Agent who resides in Las Cruces, N.M., Quiroz was sentenced yesterday afternoon in federal court to 30 months in prison for his child pornography conviction. Quiroz will be on supervised release for five years after completing his prison sentence. He also will be required to register as a sex offender.
Quiroz was arrested on April 29, 2014, on a criminal complaint charging him with receiving and possessing visual depictions of minors engaged in sexually explicit conduct. According to the criminal complaint, Homeland Security Investigations (HSI) initiated an investigation into Quiroz after receiving information that an adult male, later confirmed to be Quiroz, was having inappropriate communications with a 15-year-old child (victim).
The complaint asserted that execution of a search warrant for the contents of an email address belonging to Quiroz revealed numerous sexually explicit communications between Quiroz and the victim as well as nude and sexually explicit photographs of the victim. On April 29, 2014, HSI special agents executed a federal search warrant at Quiroz’s residence where they seized digital media and arrested Quiroz. There was no evidence suggesting that Quiroz’s criminal activities were conducted with government-owned equipment or technology.
On Sept. 3, 2014, Quiroz entered a guilty plea to a felony information charging him with possession of child pornography. In entering his guilty plea, Quiroz admitted that from Feb. 2013 through Oct. 2013, he communicated with the victim, whom he knew to be a minor residing in a state other than New Mexico, through online chats, mail, email, telephone conversations and text messages. Quiroz also admitted receiving sexually explicit photographs of the victim via email and unlawfully possessing the photographs in his email account.
This case was investigated by the Child Exploitation Unit of HSI’s office in Las Cruces pursuant to Project iGuardian, an HSI initiative designed to reach children, parents and teachers and share information about the dangers of online environments, how to stay safe online and how to report abuse and suspicious activity. The Las Cruces Police Department assisted in the investigation of this case.
The case is being prosecuted by Assistant U.S. Attorney Alexander Shapiro of the U.S. Attorney’s Las Cruces Branch Office as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice (DOJ) to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and DOJ’s Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.
The Operation also was brought as a part of the New Mexico Internet Crimes Against Children (ICAC) Task Force’s mission, which is to locate, track, and capture Internet child sexual predators and Internet child pornographers in New Mexico. There are 74 federal, state and local law enforcement agencies associated with the New Mexico ICAC Task Force, which is funded by a grant administered by the NMAGO. Anyone with information relating to suspected child predators and suspected child abuse is encouraged to contact federal or local law enforcement.
Former North Chicago School Board Member Sentenced to 30 Months in Federal Prison for Bus Contracts Fraud SchemeRead the Press Release
CHICAGO ― A former North Chicago school board member, and the last defendant of five, was sentenced today to 30 months in federal prison for receiving at least $566,000 in kickbacks from three co-defendants who controlled several different transportation companies that received more than $21 million in student bus contracts over nearly a decade.
The defendant, ALICE SHERROD, 63, of North Chicago, pleaded guilty in September 2013 to one count each of wire fraud and filing a false federal income tax return. Sherrod admitted that between 2001 and 2010 she schemed to deprive the approximately 4,000-student North Chicago Community Unit School District 187 (NCSD) of her honest services. Sherrod, who was the school district’s Director of Transportation, participated in the fraud scheme with four co-defendants, including Gloria Harper, who was the former President of the North Chicago school board. The three co-defendants funneled kickbacks totaling at least $800,000 to Harper and Sherrod and made more than $9.6 million in profits.
“Unlike three of her co-defendants, she was in a position of public trust that affected poor children. She did not think about who she was hurting. And this went on for more than five years.” U.S. District Judge Sharon Johnson Coleman said in imposing the sentence today. Judge Coleman ordered Sherrod to serve her sentence beginning August 31, 2015. The judge also ordered Sherrod to pay approximately $7.2 million in restitution.
“The North Chicago School District has one of the highest low-income populations in the state. But rather than looking out for the interests of the district’s taxpayers and the children who depended on the schools for education, Sherrod selfishly used her position to enrich herself, and then filed false tax returns,” Assistant U.S. Attorney Matthew Getter argued in the government’s sentencing memorandum.
All five defendants pled guilty last year and have been sentenced. In addition to Sherrod’s sentence of 30 months imposed today, Gloria Harper, 64, of Berwyn and formerly of Gurnee, received a 10 year sentence, Tommie Boddie, 69, of Harvest, Ala., and formerly of Wadsworth received a one-day term of imprisonment followed by a three year term of supervised release including nine months’ home confinement; Derrick Eubanks, 50, of Lake Villa received six months’ imprisonment; and Barrett White, 55, of Matteson, received a one day term of imprisonment followed by a one year term of supervised release during which White will spend the first six months of supervised release serving weekend imprisonment.
Sherrod, who was District 187's transportation director from 2001 to July 2010, used her position, along with Harper, to enrich themselves secretly by soliciting and accepting gifts and cash from their three co-defendants in exchange for favorable official action regarding student transportation contracts. Initially, Harper and Sherrod received kickbacks of approximately $4,000 to $5,000 a month but, by 2003, they were collecting approximately $20,000 a month.
From the late 1990s until mid-2003, the NCSD contracted with various companies to provide student transportation, including T&M Transportation, which was owned in part and controlled by Boddie, and Eubanks Transportation, which was owned in part and controlled by Eubanks. In 2001, Harper and Sherrod met with Boddie and agreed they would arrange for the NCSD to increase the number of students that T&M transported in exchange for kickback payments.
In May 2003, Harper suggested to Boddie and Eubanks that they join together to form one company ― Safety First Transportation, Inc., which won the NCSD’s transportation contract in 2003, and Harper, Sherrod, Boddie, and Eubanks agreed that they would split the profits from the contract. After an IRS audit of Safety First in 2006-2007, White, who had been acting as the “bagman” for the kickbacks, began receiving funds from Safety First as both an employee and a contractor, even though he provided little service other than being the bagman.
In April 2008, the defendants agreed to set up a new company, Quality Trans, LLC, to replace Safety First and to assume its contracts with the school district. All five agreed to continue splitting profits from Quality Trans, and Boddie, Eubanks and White continued making cash payments to Harper and Sherrod.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Stephen Boyd, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The North Chicago School District cooperated with the investigation.
Former Executive of Nuclear Power Company Pleads GuiltyRead the Press Release
BOISE - Jennifer R. Ransom, 40, of Meridian, Idaho, pleaded guilty today to one count of securities fraud, U.S. Attorney Wendy J. Olson announced. Her guilty plea was to Count Five of the pending indictment. The grand jury returned the indictment against Ms. Ransom on November 14, 2014.
According to the plea agreement, Ransom was the Senior Vice President of Administration of Alternate Energy Holdings, Inc. (“AEHI”). AEHI was a development stage company headquartered in Eagle, Idaho that planned to construct and operate a nuclear power plant in Payette County, Idaho.
According to the plea agreement, Ransom joined AEHI in late 2007. Prior to joining AEHI, Ransom took and passed the Series 63 examination, one of the tests required to become a licensed Securities Agent, and knew it was wrongful and unlawful to engage in conduct that was designed to defraud or deceive investors by artificially controlling or fraudulently affecting the price of securities. Notwithstanding, she agreed with her co-defendant, Donald L. Gillispie, the former President and CEO of AEHI, and other “nominees” to a scheme to defraud or deceive AEHI investors.
According to the plea agreement, the scheme involved Gillispie and Ransom recruiting nominees to make purchases of AEHI stock on the market for the express purpose of artificially inflating the market price of AEHI stock. Ransom personally helped recruit one of the nominees. Without investors’ knowledge, Gillispie and Ransom provided AEHI funds, obtained almost exclusively from investors, to two of the nominees to fund their market purchases of AEHI stock.
According to the plea agreement, investors who purchased AEHI stock directly from AEHI, through Private Placement Memoranda (PPM), were offered a price discounted from the market price that nominees were attempting to inflate. However, PPM investors could only purchase restricted AEHI stock, which they could not sell for six months to one year. On September 9, 2009 through September 11, 2009, Ransom assisted a nominee in making purchases of AEHI stock on the market. The purpose of these purchases was to artificially increase the market price of AEHI stock, which was trading above the PPM price. During the next two months, private investors bought approximately $516,885 worth of AEHI restricted stock at the lower PPM price.
According to the plea agreement, Ransom received shares of AEHI stock as executive compensation. From June of 2010, through September of 2010, a period during which attempts were being made to artificially inflate the market price of AEHI stock, Ransom sold approximately 1,000,000 of her shares and received approximately $675,326 in return, of which approximately $580,780 was the proceeds of securities fraud.
As part of the plea agreement, Ransom agreed to forfeit $580,780, the proceeds of the securities fraud offense she pleaded guilty to, and to pay restitution.
The charge of securities fraud is punishable by up to five years in prison, a maximum fine of $250,000, and up to three years of supervised release.
Sentencing is set for July 27, 2015, before U.S. District Judge Edward J. Lodge at the federal courthouse in Boise.
"This defendant personally gained by deceiving investors,” said Olson. “Her guilty plea both acknowledges the wrongfulness of her conduct and sends the clear message to others that the U.S. Department of Justice and its investigating partners will take strong actions to identify and prosecute those who manipulate securities markets for personal gain.”
The case was investigated by the Internal Revenue Service, Criminal Investigation Division, and the Federal Bureau of Investigation.
Former Agape Employees Convicted on All Counts by Jury in Massive Ponzi SchemeRead the Press Release
Earlier today, after four weeks of trial, a federal jury in Central Islip, New York, returned guilty verdicts against Diane Kaylor and Jason Keryc, former employees of Hauppauge-based Agape World, Inc. (Agape), on charges of securities fraud, conspiracy, mail fraud, and wire fraud. The charges arose out of the defendants’ participation in a huge Ponzi scheme. When sentenced by United States District Judge Denis R. Hurley, the defendants face a maximum sentence of 20 years’ imprisonment on each count. Keryc was remanded.
The verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS).
“Kaylor and Keryc convinced thousands of hard-working, middle class Americans to invest their life savings, their children’s college funds, or their retirement money in Agape, knowing that Agape was a Ponzi scheme,” stated United States Attorney Lynch. “The defendants’ motive was simple and all too common today: greed. The more money the defendants pried out of investors’ pockets, the larger their commission checks. The defendants gained the trust of their investors and then betrayed that trust to feed their insatiable appetites for money.” Ms. Lynch expressed her grateful appreciation to the United States Securities and Exchange Commission for their assistance in the case.
“What was intended as a get-rich-quick scheme was, in fact, a cowardly plan. A plan that deceived unwitting investors and lured them into a false sense of security, while promising unrealistic returns on their investments. Unlike those convicted today, the FBI and our partners intend to keep the promises we make to those who invest their faith in us. Those who employ schemes to capitalize on the pain and suffering of others will most certainly be brought to justice,” stated FBI Assistant Director-in-Charge Rodriguez.
“The Postal Inspectors are committed to protecting the American Consumers from falling victims to these types of frauds. We have a robust program in fraud prevention and when warranted, as such as this case, prosecuting defendants through the efforts of the United States Attorney’s Office,” stated Postal Inspector-in-Charge Bartlett.
Nicholas Cosmo founded Agape in August 2000. Earlier, Cosmo spent 21 months in a federal prison for defrauding investors. Kaylor and Keryc were aware of Cosmo’s prior fraud conviction, but, not surprisingly, did not disclose this information to their investors. Between October 2005 and January 2009, the defendants, who worked as account representatives or brokers for Cosmo, played critical roles in the operation of the Ponzi scheme by soliciting and obtaining hundreds of millions of dollars from investors. To induce investments and discourage withdrawals, the defendants misled the investors by (1) assuring investors that their investments would only be used to fund specific, short-term secured bridge loans to commercial borrowers, or to make short-term loans to small businesses; (2) promising to pay investors unusually high rates of returns; and (3) representing that investing in Agape carried little or no risk of loss. The defendants raised significantly more money than was needed for the loans, and lied to the investors by assuring them that their money would specifically be used to fund only a particular loan. For their efforts, Kaylor and Keryc made approximately $3.4 million and $8.9 million, respectively.
Cosmo and the defendants paid returns to Agape investors, not from any profits earned on investments, but rather from existing investors’ deposits or money paid by new investors. The defendants and their coconspirators took more than $370 million from approximately 5,000 investors. Of that $370 million, only $22 million actually went to fund bridge loans. Unbeknownst to investors, approximately $113 million of their money was used to trade high risk futures and commodities.
As the fraudulent scheme began to unravel, Kaylor and Keryc continued to deceive investors about Agape’s financial health and the status of various Agape bridge loans. In the summer of 2008, Agape stopped paying commissions to the defendants and asked them not to cash checks for fear that the checks would bounce. On November 3, 2008, the defendants learned that all of Agape’s 2007 bridge loans were in default or on extension but once again did not disclose this information to existing or new investors. Rather, they actively continued to solicit money from investors, obtaining an additional $13 million. As a result of the Ponzi scheme, approximately 3,800 investors sustained actual losses totaling approximately $147 million.
On October 14, 2011, Cosmo was sentenced to a term of imprisonment of 25 years in United States v. Nicholas Cosmo, 09 CR 255 (DRH), for his role in the scheme. In addition to the convictions of Cosmo, Kaylor, and Keryc, the government’s investigation led to the conviction of six other defendants for their roles in this scheme, who are pending sentence before Judge Hurley.
The government’s case is being prosecuted by the Office’s Long Island Criminal and Civil Divisions. Assistant United States Attorneys Christopher C. Caffarone, Bradley T. King, Grace M. Cucchissi and Vincent Lipari are in charge of the prosecution.
The Defendants:
DIANE KAYLOR
Age: 39
Bethpage, New York
JASON KERYC
Age: 38
Wantagh, New York
E.D.N.Y. Docket No. 12-CR-357 (S-4)(DRH)
Federal Indictment Alleges Former Southwest Kansas Banker Conspired in Money LaunderingRead the Press Release
TOPEKA, KAN. – The former president of a bank in Plains, Kan., has been indicted along with two customers of the bank on federal money laundering charges, U.S. Attorney Barry Grissom said today. Two former bank employees also are charged in the case.
The Kansas case is part of a larger investigation that has resulted in more than 20 indictments with defendants in Indianapolis, Ind.; Seminole, Texas; Boston, Mass.; El Paso, Texas; Atlanta, Ga.; Oklahoma City, Okla.; Tulsa, Okla.; Denver, Colo.; and Mexico. The investigation in Kansas resulted in the seizure of more than 5,000 pounds of marijuana and more than $2 million in cash.
An indictment unsealed today in U.S. District Court alleges a couple from Meade funneled drug proceeds through their account at Plains State Bank while the former banker failed to report on the suspicious activity, even as millions of dollars flowed through the couple’s account. The bank is located at 411 Grand Ave. in Plains, Kan.
In a 37-count indictment, the following defendants are charged:
- George Enns, 69, and his wife, Agatha Enns, 67, both of Meade, Kan., co-owners of Southwest Windmill and Waterwell, Inc.: one count of money laundering conspiracy, 34 counts of money laundering and one count of attempted money laundering.
- James Kirk Friend, 52, Plains, Kan., who was appointed President of Plains State Bank in 2005, and replaced as president in 2013 when he was made senior vice president: one count of money laundering conspiracy, one count of failing to file a Suspicious Activity Report and 29 counts of money laundering.
- Matthew Thomas, 37, Plains, Kan., loan officer and officer of Plains State Bank until he left in 2014: one count of failing to file a Suspicious Activity Report.
- Kathey F. Shellman, 57, Plains, Kan., a cashier and IT officer at Plains State Bank until she left in 2014: one count of failing to file a Suspicious Activity Report.
The indictment alleges that:
- From 2011 to August 2014 deposits to the Enns’ account were more than $6.8 million, including more than $1.6 million in cash.
- The Enns also had an account at a Bank of America branch in El Paso, Texas. From 2011 to August 2014, more than $900,000 was transferred from the Enns’ account at Bank of America to their account at Plains State Bank.
- The activity in the Enns’ two accounts was not produced by Southwest Windmill and Waterwell, Inc. The monies flowing through these accounts was not reported to the Enns’ accountant or reported on their tax returns.
- From Jan. 11, 2012, to Aug. 12, 2014, the Enns crossed the U.S. border to and from Mexico at least 25 times. On at least four occasions they were stopped by customs officials and found to be in possession of large amounts of cash. For instance, on July 26, 2013, they were stopped at the Columbus, N.M., port of entry carrying $317,500 in a black trash bag.
- Defendant George Enns told law enforcement officers that the U.S. currency was to be used to buy seeds for his seed business in Mexico.
- Defendant Friend knew the Enns were bringing bulk currency from Mexico to the United States.
- Bank officials did not require the Enns to provide proof that any of the currency transported from the United States was declared at the border and did not look into the source of the currency. They did not fill a SAR report on any transactions conducted on the Enns’ account.
Upon conviction, the alleged crimes carry the following penalties:
Conspiracy to commit money laundering: A maximum penalty of 20 years and a fine up to $250,000.
Failing to file a report: A maximum penalty of five years and a fine up to $250,000.
Money laundering: A maximum penalty of 20 years and a fine up to $500,000 on each count.
The following agencies investigated: The Drug Enforcement Administration, the Federal Deposit Insurance Corporation and the Internal Revenue Service. Assistant U.S. Attorney Debra Barnett is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.