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Tuesday 17 February 2015
Two Kansas Men Sentenced for Trafficking in Designer DrugsRead the Press Release
TOPEKA, KAN. - A father and son from Kansas who launched a global sales and supply network for smokable synthetic cannabinoids – also called synthetic marijuana -- and other designer drugs were sentenced Tuesday to federal prison for violating the federal Food, Drug and Cosmetic Act, U.S. Attorney Barry Grissom said.
Clark Sloan, 55, Tonganoxie, Kan., was sentenced to 87 months in federal prison. His son, Jonathan Sloan, 34, Lawrence, Kan., was sentenced to 96 months in federal prison. In September 2014, they were convicted in a federal jury trial on 20 counts including one count of conspiracy, two counts of misbranding, 15 counts of mail fraud, one count of smuggling and one count of money laundering.
During trial, prosecutors presented evidence that the men conspired to manufacture and sell designer drugs, including a marijuana substitute called K2 that was named after the second-highest mountain in the world. The business, which began in a shop in Lawrence, Kan., grew to encompass a chain of suppliers, retailers, wholesalers and business associates with locations in Kansas, California, Massachusetts, New Jersey, Oregon, Nevada and Indiana, as well as in other nations including Argentina, Latvia, Germany, Lithuania, the United Kingdom, Ukraine, the Netherlands, Canada, Sweden, Singapore, Thailand and Uruguay. The defendants made at least $3.3 million from the sale of the drugs
Prosecutors presented evidence that Jonathan Sloan was co-owner of two businesses, Persephone's Journey, a retail store in Lawrence, Kan., and Bouncing Bear Botanicals, ostensibly a wholesaler of herbs and botanical products, with co-defendant Bradley Miller of Wichita, Kan. Bouncing Bear Botanicals was located in the basement of Persephone's Journey and then moved to a warehouse in Oskaloosa, Kan. Clark Sloan, who was Miller’s brother, developed and monitored the Web site for Bouncing Bear Botanicals and worked in marketing and Internet technologies.
Miller developed recipes for K2 and manufactured it. During trial, prosecutors presented evidence that:
- The defendants manufactured and distributed K2 as an "all natural product" but it contained synthetic chemicals called JWH Compounds that mimic the effects of the THC in marijuana. Their products also contained solvents, either the alcohol Everclear or acetone, as well as other additives.
- They manufactured and sold at least four types of K2 products: Standard, Citron, Blonde and Summit, with Standard being the least potent and Summit being the most potent, depending on the amount of JWH Compounds that were mixed with herbs.
- The defendants manufactured the K2 without quality controls, resulting in inconsistent potencies. They intended K2 products to be smoked like marijuana by recreational drug users, but they falsely referred to K2 products as aromatic incense and falsely labeled them as "not for consumption."
“Consumers must always be aware that they put their health at risk when they buy drugs from unknown sources online and in stores,” said Catherine Hermsen, Special Agent in Charge, FDA’s Office of Criminal Investigations. “OCI is committed to working to protect the U.S. public health.”
Co-defendant Bradley Miller is set for sentencing March 16.
Grissom commended the Food and Drug Administration, Assistant U.S. Attorney Tanya Treadway and Assistant U.S. Attorney Tony Mattivi for their work on the case.
Three Perry County Residents Charged with Methamphetamine ConspiracyRead the Press Release
Follow @SDILNewsThree Perry County residents were indicted on February 3, 2015, for conspiracy to manufacture methamphetamine, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
Skyler A. Elder, 25, Joseph D. Smith, 41, and Jamie L. Smith, 33, all of Pinckneyville, are charged in a one-count indictment charging conspiracy to manufacture methamphetamine. The indictment alleges that the offense occurred between 2012 and December 2014, in Perry, Jackson, and Randolph Franklin Counties. The Smiths made their initial appearances in federal court in Benton on February 9, 2015. They are currently on bond, pending an April 2015, jury trial. Elder made his initial appearance in federal court on February 13, 2015. He is currently being held without bond pending a February 17, 2015, detention hearing.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge until proved guilty beyond a reasonable doubt to the satisfaction of a jury.
The methamphetamine offense carries a maximum penalty of up to 20 years in prison, to be followed by 3 years’ supervised release, and a $1,000,000 fine.
The ongoing investigation is being conducted by the Perry County Sheriff’s Office, Jackson County Sheriff’s Office, Perry County Drug Task Force, Murphysboro Police Department, and DuQuoin Police Department. The Pinckneyville Police Department and Illinois State Police Methamphetamine Response Team assisted in the investigation.
The case is assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
Three Jefferson City Men Charged with Distributing MethRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that three Jefferson City, Mo., men have been charged in federal court following a police chase that resulted in the seizure of a large quantity of methamphetamine.
David E. Rodebaugh, 40, Michael Pearson, 31, and Hernan Hurtado, 23, all of Jefferson City, were charged in separate, but related, criminal complaints filed in the U.S. District Court in Jefferson City, Mo., on Saturday, Feb. 14, 2015. All three defendants had their initial court appearances today and remain in federal custody pending detention hearings.
Rodebaugh and Pearson were each charged with one count of possessing methamphetamine with the intent to distribute and one count of participating in a conspiracy to possess methamphetamine with the intent to distribute. Hurtado was charged with one count of distributing methamphetamine.
According to affidavits filed in support of the federal criminal complaints, law enforcement officers were conducting surveillance of Rodebaugh on Friday, Feb. 13, 2015 as part of an ongoing drug-trafficking investigation. Rodebaugh and Pearson met with Hurtado in the parking lot at the Capital Mall in Jefferson City, the affidavit says, where Pearson took a plastic bag from the back cab area of Hurtado’s pickup and placed it in the back seat of the Acura he and Rodebaugh had driven to the mall.
Pearson drove the Acura, with Rodebaugh in the front passenger seat, as they left the mall. Police attempted to stop Pearson, the affidavit says, but he refused to stop and led officers in pursuit. The Acura was eventually rendered inoperable and Pearson fled on foot. Rodebaugh remained inside the Acura and was detained. Pearson was later located and arrested.
According to the affidavit, law enforcement officers found the plastic bag, which Rodebaugh later admitted he had thrown out the vehicle’s window during the pursuit, about 75 yards from where the Acura was stopped. Inside the plastic bag were two large bundles that contained approximately five pounds of methamphetamine.
Later that same afternoon, Hurtado called the Jefferson City, Mo., Police Department to report he had been robbed of $6,000 while at his home in Jefferson City. Hurtado voluntarily came to the police station, where he was questioned and arrested.
Dickinson cautioned that the charges contained in these complaints are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Jim Lynn. It was investigated by the Drug Enforcement Administration and MUSTANG (the Mid-Missouri Unified Strike Team and Narcotics Group).
Tennessee Resident Charged with Defrauding Contributors to Sandy Hook-related CharityRead the Press Release
Follow @USAO_CT
Deirdre M. Daly, United States Attorney for the District of Connecticut and Kevin J. Kline, Acting Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, today announced that a federal grand jury in New Haven has returned an indictment charging ROBERT TERRY BRUCE, 34, of Nashville, Tennessee, with defrauding contributors to an organization he established after the December 14, 2012 school shootings in Newtown.
The indictment was returned under seal on February 4, 2015, and BRUCE was arrested on Friday in Tennessee.
“This arrest serves as a warning to anyone who attempts to profit from the tragedy at Sandy Hook,” stated U.S. Attorney Daly. “With the assistance of the FBI, we will continue to prioritize the investigation of fraudulent schemes that exploit the generosity of donors responding to this tragedy.”
“Creating a fraudulent charity to exploit a tragedy for personal gain is unconscionable,” stated FBI Acting Special Agent in Charge Kline. “These investigations will continue to be a priority for the Federal Bureau of Investigation.”
According to the indictment, BRUCE founded 26.4.26, an organization that began soliciting charitable donations after the December 14, 2012 school shootings in Sandy Hook, Connecticut. In early 2013, BRUCE solicited and received contributions to 26.4.26 in connection with a charity athletic event in Gilford, New Hampshire called the Schools 4 Schools run. BRUCE promoted the event via social media, and solicited contributions to 26.4.26 through an online PayPal account by representing to potential donors that the purpose of the event was “to help raise funds for increased school safety, families of victims, memorials to teacher heroes, awareness and prevention in schools across America.” BRUCE further represented to potential donors that “all proceeds will go to the 26.4.26 Foundation.”
The indictment further alleges that, in early 2013, BRUCE also solicited contributions to 26.4.26 in connection with a charity athletic event in Tennessee called CrossFit Cares. As he had in the New Hampshire event, BRUCE promoted the event via social media, and solicited contributions to 26.4.26 through PayPal by representing to potential donors that “all proceeds will go to the 26.4.26 Foundation” and that the “mission of 26.4.26 is to provide funding for the families of victims, memorials for teacher heroes and to increase safety in schools across the country.”
Rather than using the funds raised to support his purported mission, the indictment alleges that BRUCE used most of the funds to enrich himself and to support his personal training business. Several of the victim donors are from Connecticut.
The indictment charges BRUCE with six counts of wire fraud, a charge that carries a maximum term of imprisonment of 20 years on each count.
Following his arrest on February 13, BRUCE appeared in federal court in Nashville and was released on a $20,000 bond. His arraignment in the District of Connecticut is scheduled for February 23 at 10:00 a.m. in Hartford.
U.S. Attorney Daly stressed that an indictment is only a charge and is not evidence of guilt. Charges are only allegations and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Susan Wines. U.S. Attorney Daly also acknowledged the critical assistance provided by the U.S. Attorney’s Office for the Middle District of Tennessee.
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[email protected]Springfield Man Sentenced to 17 Years for Child PornRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Springfield, Mo., man who was part of a nationwide e-mail network was sentenced in federal court today for receiving and distributing child pornography.
Joseph Allen High, 44, of Springfield, was sentenced by U.S. District Judge M. Douglas Harpool to 17 years in federal prison without parole.
On Sept. 17, 2014, High pleaded guilty to receiving and distributing child pornography over the Internet.
High’s e-mail address was discovered by federal agents in Illinois during an investigation into a national e-mail network that exchanged child pornography among its members. More than 1,000 individuals utilized their e-mail accounts to trade images of child pornography with one another. Agents determined that High had received 17 videos and 72 images of child pornography between Dec. 17, 2012, and Feb. 16, 2013. The videos included children as young as three or four years old, and children being sexually assaulted by adults.
According to court documents, High sexually abused an 8-year-old girl on multiple occasions. Agents discovered Internet images of the child victim, clothed and asleep, by typing High’s e-mail address into the Google search engine.
This case was prosecuted by Assistant U.S. Attorney Patrick Carney. It was investigated by the FBI and the Springfield, Mo., Police Department.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Springfield Business Owner Sentenced for Filing False Tax ReturnsRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the owner of a Springfield, Mo., business was sentenced in federal court today for filing false tax returns on more than $1.9 million of income over a five-year period.
Stephen J. Schroff, 53, of Springfield, was sentenced by U.S. District Judge Beth Phillips to two years in federal prison without parole. The court also ordered Schroff to pay $600,023 in restitution to the Internal Revenue Service.
Schroff was the owner and operator of Stephen Schroff, Inc., doing business as ABC Roofing in Springfield.
On Sept. 25, 2014, Schroff pleaded guilty to filing a materially false tax return. Schroff admitted that he filed false federal income tax returns for the years 2005 through 2009 by failing to report $1,925,622 of income.
According to court documents, during the commission of this offense, Schroff moved from a 3,000-square-foot home into a 4,000-square-foot home. Schroff also owned a Cadillac Escalade, a Chevy Corvette, a lake house, and a boat. Schroff invested money in a partnership that acquired rental property and began the development of a residential subdivision.
Schroff admitted that he concealed income from his business. In 2007 Schroff began diverting business receipts from ABC Roofing by cashing roofing customers’ checks instead of depositing them in the business bank account, and by depositing roofing customers’ checks into secret accounts at other banks. Schroff did not claim any of the embezzled business receipts as income when he filed federal tax returns in 2007, 2008 and 2009. In total, Schroff failed to report $1,223,572 of income from the embezzlement scheme.
Schroff’s actions resulted in a total tax loss to the federal government of $600,023.
This case was prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. It was investigated by IRS-Criminal Investigation and the IRS-Special Enforcement Program.
Santa Fe Man Pleads Guilty to Federal Crack Cocaine Trafficking ChargesRead the Press Release
ALBUQUERQUE – Matthew J. Holmes, 30, of Santa Fe, N.M., entered a guilty plea today in federal court in Albuquerque, N.M., to crack cocaine trafficking charges. Under the terms of his plea agreement, Holmes will be sentenced to a prison term within the range of nine to twelve years in federal prison followed by a term of supervised release to be determined by the court.
Holmes was arrested on Feb. 24, 2015, and charged in a criminal complaint with possession of crack cocaine with intent to distribute. According to the complaint, on Feb. 24, 2014, the Santa Fe Police Department (SFPD) received information that Holmes had an outstanding state arrest warrant. Based on that information, SFPD officers initiated a traffic stop on Holmes’ vehicle. After a brief foot pursuit, the officers were able to apprehend Holmes. At the time of his arrest, Holmes possessed a distribution quantity of crack cocaine and drug paraphernalia. Holmes subsequently was indicted and charged with possession of crack cocaine with intent to distribute.
During today’s proceedings Holmes pled guilty to the indictment and admitted that on Feb. 24, 2014, he possessed approximately 74.3 grams of crack cocaine in three plastic bags and $4,146.00 in cash. Holmes further admitted that he possessed the crack cocaine with the intent to distribute it to others.
Holmes has been in federal custody since his arrest and remains detained pending his sentencing hearing, which has yet to be scheduled.
This case was investigated by the Santa Fe office of the FBI and the HIDTA Region III Narcotics Task Force. The case is being prosecuted by Assistant U.S. Attorneys David M. Walsh and Norman Cairns.
The HIDTA Region III Narcotics Task Force is comprised of officers from the New Mexico State Police, the Santa Fe County Sheriff’s Office and the Santa Fe Police Department. The High Intensity Drug Trafficking Areas (HIDTA) program was created by Congress with the Anti-Drug Abuse Act of 1988. HIDTA is a program of the White House Office of National Drug Control Policy (ONDCP) which provides assistance to federal, state, local and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States and seeks to reduce drug trafficking and production by facilitating coordinated law enforcement activities and information sharing.
Russian National Charged in Largest Known Data Breach Prosecution Extradited to United StatesRead the Press Release
Defendant Brought From Netherlands
After Fighting Extradition for Over Two Years
A Russian national appeared in federal court in Newark today after being extradited from the Netherlands to face charges that he conspired in the largest international hacking and data breach scheme ever prosecuted in the United States, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Secretary Jeh Johnson of the Department of Homeland Security, U.S. Attorney Paul J. Fishman of the District of New Jersey and Acting Director Joseph P. Clancy of the U.S. Secret Service.
Vladimir Drinkman, 34, of Syktyykar and Moscow, Russia, was charged for his alleged role in a data theft conspiracy that targeted major corporate networks, stole more than 160 million credit card numbers, and caused hundreds of millions of dollars in losses. Prior to his extradition, he had been detained by the Dutch authorities since his arrest in the Netherlands on June 28, 2012.
Drinkman appeared today before U.S. Magistrate Judge James B. Clark and entered a plea of not guilty to all 11 counts charged in the indictment and was ordered detained without bail. Trial before U.S. District Judge Jerome B. Simandle was scheduled for April 27, 2015.
“Cyber criminals conceal themselves in one country and steal information located in another country, impacting victims around the world,” said Assistant Attorney General Caldwell. “Hackers often take advantage of international borders and differences in legal systems, hoping to evade extradition to face justice. This case and today's extradition demonstrates that through international cooperation, and through great teamwork between the Department of Justice and the Department of Homeland Security, we are able to bring cyber thieves to justice in the United States, wherever they may commit their crimes.”
“Drinkman’s extradition on the indictment this office brought more than a year and a half ago shows how relentlessly we will pursue those who are charged with these serious crimes,” said U.S. Attorney Fishman. “The incredibly sophisticated work with our partners at the U.S. Secret Service to uncover this enormous, far-reaching scheme demanded an equal effort by our colleagues at the Department of Justice Criminal Division in Washington and our law enforcement partners overseas to bring the defendant back to face these charges.”
“This case demonstrates our commitment to fulfilling an important part of our integrated mission; that of protecting our Nation’s critical financial infrastructure,” said Acting Director Clancy. “Our success in this investigation and other similar investigations is a credit to our skilled and relentless cyber investigators. Our determination, coupled with our network of foreign law enforcement partners, ensures that our investigative reach can expand beyond the borders of the United States.”
According to the second superseding indictment, unsealed on July 25, 2013, and other court filings, Drinkman and four co-defendants each served particular roles in the scheme. Drinkman and Alexandr Kalinin, 28, of St. Petersburg, Russia, each allegedly specialized in penetrating network security and gaining access to the corporate victims’ systems. Roman Kotov, 33, of Moscow, allegedly specialized in mining the networks Drinkman and Kalinin compromised to steal valuable data. According to allegations in the indictment, the hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 27, of Odessa, Ukraine. Dmitriy Smilianets, 31, of Moscow, then allegedly sold the stolen information and distributed the proceeds of the scheme to the participants.
Drinkman and his co-defendants are charged with attacks on NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard. It is not alleged that the NASDAQ hack affected its trading platform.
Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 33, of Miami, in connection with five corporate data breaches, including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: one charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.
Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012. Smilianets was extradited on Sept. 7, 2012, and remains in federal custody. Kalinin, Kotov and Rytikov remain at large. All of the defendants are Russian nationals except for Rytikov, who is a citizen of Ukraine.
The Attacks
According to allegations in the indictment, the five defendants conspired with others to penetrate the computer networks of several of the largest payment processing companies, retailers and financial institutions in the world, stealing the personal identifying information of individuals. They allegedly took user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. The conspirators allegedly acquired at least 160 million card numbers through hacking.
The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programming language designed to manage data held in particular types of databases. The hackers allegedly identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants allegedly placed malicious code, or malware, on the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network. In some cases, the defendants lost access to the system due to companies’ security efforts, but were allegedly able to regain access through persistent attacks.
Instant message chats obtained by law enforcement reveal that the defendants allegedly targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway, sometimes leaving malware implanted for more than a year.
The defendants allegedly used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then allegedly used an array of computers located around the world to store the stolen data and ultimately sell it to others.
Selling the Data
After acquiring the card numbers and associated data—which they referred to as “dumps”—the conspirators allegedly sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was allegedly in charge of sales, selling the data only to trusted identity theft wholesalers. He allegedly charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data, offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by either withdrawing money from ATMs or making purchases with the cards.
Covering Their Tracks
The defendants allegedly used a number of methods to conceal the scheme. Rytikov allegedly allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.
Over the course of the conspiracy, the defendants allegedly communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators allegedly attempted to meet in person.
To protect against detection by the victim companies, the defendants allegedly altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also allegedly worked to evade existing protections by security software.
As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses—including more than $300 million in losses reported by just three of the corporate victims—and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges.
The charges and allegations contained indictments are merely accusations and the defendants are presumed innocent unless and until proven guilty.
The ongoing investigation is being conducted by the U.S. Secret Service. The case is being prosecuted by Trial Attorney Rick Green of the Criminal Division’s Computer Crime and Intellectual Property Section, Chief Gurbir S. Grewal of the District of New Jersey’s Economic Crimes Unit, and Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section of the District of New Jersey’s Economic Crimes Unit.
The Criminal Division’s Office of International Affairs assisted with the case, as did public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.
Drinkman et al Indictment
Russian National Charged in Largest Known Data Breach Conspiracy Extradited to Face Indictment in New JerseyRead the Press Release
Defendant Brought From the Netherlands After Fighting Extradition for Over Two Years
NEWARK, N.J. – A Russian national appeared in Newark federal court today after being extradited from the Netherlands to face charges that he conspired in the largest international hacking and data breach scheme ever prosecuted in the United States, New Jersey U.S. Attorney Paul J. Fishman, U.S. Secret Service Acting Director Joseph P. Clancy and Assistant Attorney General Leslie Caldwell and announced.
Vladimir Drinkman, 34, of Syktyykar and Moscow, Russia, was arrested in the Netherlands on June 28, 2012, and charged in a scheme that targeted major corporate networks, stole more than 160 million credit card numbers, and resulted in hundreds of millions of dollars in losses. He had been detained by the Dutch authorities pending the resolution of the extradition proceedings.
He appeared today before U.S. Magistrate Judge James B. Clark III, entered a plea of not guilty to all 11 counts charged in the indictment and was ordered detained. Trial before U.S. district Judge Jerome B. Simandle is scheduled for April 27, 2015.
“Drinkman’s extradition on the indictment this office brought more than a year and a half ago shows how relentlessly we will pursue those who are charged with these serious crimes,” U.S. Attorney Fishman said. “The incredibly sophisticated work with our partners at the U.S. Secret Service to uncover this enormous, far-reaching scheme demanded an equal effort by our colleagues at the Department of Justice Criminal Division in Washington and our law enforcement partners overseas to bring the defendant back to face these charges.”
“This case demonstrates our commitment to fulfilling an important part of our integrated mission; that of protecting our Nation’s critical financial infrastructure,” Secret Service Acting Director Joseph P. Clancy said. “Our success in this investigation and other similar investigations is a credit to our skilled and relentless cyber investigators. Our determination, coupled with our network of foreign law enforcement partners, ensures that our investigative reach can expand beyond the borders of the United States.”
“Cyber criminals conceal themselves in one country and steal information located in another country, impacting victims around the world,” Assistant Attorney General Caldwell said. “Hackers often take advantage of international borders and differences in legal systems, hoping to evade extradition to face justice. This case and today's extradition demonstrates that through international cooperation, and through great teamwork between the Department of Justice and the Department of Homeland Security, we are able to bring cyber thieves to justice in the United States, wherever they may commit their crimes.”
Drinkman and four co-defendants allegedly sought corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information they could exploit for profit. The defendants are charged with attacks on NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard. It is not alleged that the NASDAQ hack affected its trading platform.
According to the second superseding indictment, unsealed in Newark federal court July 25, 2013, and other court filings:
The five defendants each served particular roles in the scheme. Drinkman and Alexandr Kalinin, 28, of St. Petersburg, Russia, each specialized in penetrating network security and gaining access to the corporate victims’ systems. Roman Kotov, 33, of Moscow, also a hacker, specialized in mining the networks Drinkman and Kalinin compromised to steal valuable data. The hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 27, of Odessa, Ukraine. Dmitriy Smilianets, 31, of Moscow, sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.
Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 33, of Miami, in connection with five corporate data breaches – including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: One charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second indictment charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.
Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012. Smilianets was extradited Sept. 7, 2012, and remains in federal custody. Kalinin, Kotov and Rytikov remain at large. All of the defendants are Russian nationals except for Rytikov, who is a citizen of Ukraine.
The Attacks
The five defendants conspired with others to penetrate the computer networks of several of the largest payment processing companies, retailers and financial institutions in the world, stealing the personal identifying information of individuals. They took user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. Conservatively, the conspirators unlawfully acquired more than 160 millioncard numbers through hacking.The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programing language designed to manage data held in particular types of databases; the hackers identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants placed malicious code, or malware, on the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network. In some cases, the defendants lost access to the system due to companies’ security efforts, but were able to regain access through persistent attacks.
Instant message chats obtained by law enforcement revealed the defendants often targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway. The defendants had malware implanted in multiple companies’ servers for more than a year.The defendants used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then used an array of computers located around the world to store the stolen data and ultimately sell it to others.
Selling the Data
After acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was in charge of sales, selling the data only to trusted identity theft wholesalers. He would charge approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by either withdrawing money from ATMs or making purchases with the cards.
Covering Their Tracks
The defendants used a number of methods to conceal the scheme. Unlike traditional Internet service providers, Rytikov allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.
Over the course of the conspiracy, the defendants communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators attempted to meet in person.
To protect against detection by the victim companies, the defendants altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also worked to evade existing protections by security software.
* * *
As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges.
The maximum potential penalties for each defendant per count are as follows:
Count(s)Defendants
Violation
Maximum Penalty/Count
All
Conspiracy to gain unauthorized access to computers
5 years; $250,000 fine or twice the gain or loss from the offense
2
All
Conspiracy to commit wire fraud
30 years; $1 million fine or twice the gain or loss from the offense
3-8
Drinkman
Kalinin
Kotov
SmilianetsUnauthorized access to computers
5 years; $250,000 fine or twice the gain or loss from the offense
9-11
Drinkman
Kalinin
Kotov
SmilianetsWire fraud
30 years; $1 million fine or twice the gain or loss from the offense
U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Criminal Investigations, under the direction of Acting Director Joseph P. Clancy, and special agents from the Newark Division, under the direction of Special Agent in Charge Carl Agnelli, for the ongoing investigation.
The government is represented by Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit, Trial Attorney Rick Green of the Criminal Division’s Computer Crime and Intellectual Property Section, and Judith Friedman of the Office of International Affairs.
U.S. Attorney Fishman thanked the Department’s Office of International Affairs in Washington for their extraordinary support, as well as public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.
The charges and allegations contained in the indictment are merely accusations and the defendants are considered innocent unless and until proven guilty.
15-060
Defense counsel:
Vladimir Drinkman: Florian Miedel Esq., New York; Bart Stapert Esq., Amsterdam, Netherlands
Dmitriy Smilianets: Andrey Tikhomirov Esq., Brooklyn, N.Y.Real Estate Agent Sentenced to Prison for Fraudulent Short Sale SchemeRead the Press Release
FRESNO, Calif. —Minerva Sanchez, 48, of Fremont, was sentenced today by Senior U.S. District Judge Anthony W. Ishii to 21 months in prison for conspiring to commit bank fraud, United States Attorney Benjamin B. Wagner announced. Sanchez also was ordered to pay restitution to financial institutions in the amount of $421,372.
According to court documents, Sanchez was a licensed real estate agent who, beginning in or around March 2010, represented the seller of a home in Patterson, California. Sanchez recommended that the seller undertake a short-sale of his home using Sanchez’s son as the straw buyer. The seller, acting on Sanchez’s advice, submitted to Tri Counties Bank and Freddie Mac false and fraudulent short-sale applications, and caused these financial institutions to approve the charge-off of funds for the short-sale of the seller’s home.
With Sanchez’s knowledge, the seller provided the straw buyer with the full purchase price of the home ($355,000). Sanchez provided the seller with a “hardship letter” for him to use in connection with the short-sale application, which misrepresented the seller’s inability to make his monthly mortgage payments. In fact, Sanchez knew that the seller could make his monthly mortgage payments with proceeds from a pending sale of other real property he owned.
Sanchez, along with the seller and straw buyer, made other misrepresentations to the financial institutions in connection with the short-sale, including false statements that the transaction was “arm’s length,” and false statements concerning the parties’ hidden agreement that the seller would provide the straw buyer with the purchase money for the short-sale and ultimately regain ownership of his home following the short-sale. In her plea agreement, Sanchez admitted that her criminal conduct caused the financial institutions to lose more than $316,000.
This case was the product of an investigation by the Federal Housing Finance Agency-Office of Inspector General and the Internal Revenue Service-Criminal Investigation. Assistant United States Attorney Christopher Baker prosecuted the case.
On June 10, 2013, the seller of the Patterson property, Agustin Simon, 52, of Gustine, pleaded guilty to conspiring to commit bank fraud in connection with this scheme. He is scheduled to be sentenced on February 23, 2015, before U.S. District Judge Lawrence J. O’Neill.
Proprieter of "sowet" Website Indicted for Promoting Massage Parlors That Offered Sexual ServicesRead the Press Release
DEFENDANT USED INTERNET AND CREDIT CARDS VIA INTERSTATE COMMERCE TO PROMOTE PROSTITUTION BUSINESSES FOR HIS PERSONAL FINANCIAL GAIN
DENVER – David A. Warmack, of Adams County, Colorado, was arrested on February 13, 2015, based on a sealed indictment returned by a federal grand jury in Denver on February 11, 2015, on charges of Use of a Facility in Interstate Commerce to Promote a Business Enterprise Involving Prostitution, the U.S. Attorney’s Office, the FBI, and the Colorado State Patrol announced. Warmack is scheduled to appear before a U.S. Magistrate Judge in Denver this afternoon, where he will be advised of his rights and the charges pending against him.According to the indictment, beginning in August 2011 and continuing through July 2014, Warmack owned and operated a website business named “Sowet.com”. The website promoted and facilitated prostitution that was taking place at various massage parlors across Metro Denver. The massage parlors offered not only massages but also unlawful sexual services.
The defendant charged the owners of the massage parlors for advertisements on his “Sowet” website. He visited some of the businesses, getting unlawful sexual services in exchange for writing a review of the parlor and the specific prostitute that he posted on his site. Further, Warmack posted sexually suggestive photographs of the women in an effort to attract business to the massage parlors.
In his attempt to drive business to the massage parlors, the defendant:
- Personally visited a site, obtained a massage and sexual services so he could give personal testimonials
- Giving internet reviews of the individual sites, including details of the women at each location
- Providing reviews of the physical location of the massage parlor, including the inside cleanliness and other conditions
- Posting advertisements with information about location, hours of operation, names of workers, and cost of services for each location
- Operational procedures of the individual massage parlors, including “door fees”
Warmack also ran a forum on his “Sowet” website where website users could discuss topics on bulletin boards related to the massage parlors. The defendant served as the administrator for these bulletin boards. He also counseled those using the massage parlors on how to handle any law enforcement questioning which they might encounter should law enforcement inspect a massage parlor while they are present.
The defendant received a monthly fee from each of the massage parlors, collecting anywhere from $150 to $400 per location. For some massage parlors, Warmack went further, promoting the businesses by paying for and arranging for additional advertising on other websites, such as “backpage.com” and “craigslist.com”. He collected fees for his additional promotional services.
The main massage parlors Warmack promoted included:
- Happy Feet, in Golden, from 2011 to 2012
- Sunday Spa, in Aurora, from 2012 to 2013
- Jewell Spa, in Lakewood, from 2012 to 2013
- Abalone Spa, in Wheat Ridge, in 2013
- Maize Spa, in Aurora, from 2013 to 2014
- Hill Relaxation Spa, in Parker, in 2014
The indictment includes 20 counts of Use of a Facility in Interstate Commerce to Promote a Business Enterprise Involving Prostitution, including credit card transactions, use of the internet for advertising purposes, and flying in workers to Colorado from other states to work at the various Metro Denver locations.
If convicted, Warmack faces not more than 5 years in federal prison per count. He also faces up to $250,000 fine per count.
“Thanks to the hard work of the Colorado Trafficking and Organized Crime Coalition, we were able to help put five illicit massage parlors out of business, and prosecute an individual who was helping those illegally run businesses make money,” said U.S. Attorney John Walsh.
“The arrest of David Warmack illustrates the FBI’s commitment to work with its partners to address individuals and businesses that promote and facilitate illegal prostitution and venues for human trafficking,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “Thanks to the hard work of our law enforcement partners, the defendant’s illegal activity was identified, he was arrested, and is now being prosecuted.”
This case was investigated by the FBI and the Colorado State Patrol. Additional investigative assistance was provided by members of the Colorado Trafficking and Organized Crime Collation (CTOCC) to include the Arvada Police Department, Arapahoe County Sheriff’s Office, Aurora Police Department, Commerce City Police Department, Douglas County Sheriff’s Office, Jefferson County Sheriff’s Office, Lakewood Police Department, and the Wheat Ridge Police Department.
The defendant is being prosecuted by Assistant U.S. Attorney Tim Neff.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
- NOTE: CTOCC: In March 2012, a non-funded Task Force/Coalition named the Colorado Trafficking and Organized Crime Coalition (CTOCC) was created. Its mission is to tackle the emergent problem of involuntary servitude of adults and international victims (to include labor exploitation and commercial sex) within the State of Colorado. CTOCC investigates predicated venues that support human trafficking including the internet, restaurants, hotels, bars, labor camps, and businesses associated with prostitution. CTOCC’s goal is to investigate, dismantle, and prosecute groups and individuals that hide and launder illicit proceeds from criminal activity such as human trafficking. Currently the FBI partners with over twenty-five local, state, and federal partners that compose CTOCC.
Perry County Resident Pleads Guilty to Methamphetamine OffenseRead the Press Release
Follow @SDILNewsOn February 12, 2015, Donald K. Brown, Jr., a/k/a “DJ,” 31, DuQuoin, Illinois, pled guilty to a one-count indictment charging conspiracy to manufacture methamphetamine, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
The indictment alleges that the offense occurred between 2012 and September 2014, in Perry, Jackson, Randolph, Williamson, and Franklin Counties. Evidence at the plea hearing established that Brown was involved with others in the manufacture of methamphetamine. In addition to manufacturing methamphetamine, Brown also allowed others to manufacture methamphetamine at his residence. Three co-defendants have previously pled guilty to their role in the methamphetamine conspiracy. Three co-defendants have pled not guilty and are awaiting jury trial. Brown is currently being held without bond pending a June 11, 2015, sentencing hearing.
The offense carries a penalty of a term in federal prison of up to 20 years, to be followed by 3 years’ supervised release, and a $1,000,000 fine.
The ongoing investigation is being conducted by the Jackson County Sheriff’s Office, Perry County Sheriff’s Office, Perry County Drug Task Force, Murphysboro Police Department, and DuQuoin Police Department. The Pinckneyville Police Department and Illinois State Police Methamphetamine Response Team assisted in the investigation.
The case is assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
Owner of Miami Home Health Company Pleads Guilty for Lead Role in $13 Million Medicare Fraud SchemeRead the Press Release
An owner of a Miami home health care company pleaded guilty today in connection with a $13 million Medicare fraud scheme that involved paying kickbacks and bribes to Medicare beneficiaries, doctors’ offices, medical clinics and others in exchange for patient referrals and fraudulent prescriptions to support fraudulent billings to Medicare.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.
Alexander Lara, 46, of Hollywood, Florida, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. Magistrate Judge Chris M. McAliley of the Southern District of Florida. A sentencing hearing is scheduled for May 14, 2015.
According to his plea documents, Lara was an owner and operator of Longcare Home Health Corporation (Longcare Home Health), a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries. In connection with his guilty plea, Lara admitted that he and his co-conspirators actually operated Longcare Home Health for the purpose of billing the Medicare program for, among other things, expensive physical therapy and home health care services that were not medically necessary or not provided at all.
As an organizer and leader of the schemes at Longcare Home Health, Lara admitted that he personally paid kickbacks and bribes to patient recruiters and Medicare beneficiaries in exchange for patient referrals. Lara also admitted that he paid kickbacks and bribes to doctors’ offices and clinics in exchange for fraudulent prescriptions for medically unnecessary therapy and home health services for Medicare beneficiaries. These false prescriptions and recruited patients were used to fraudulently bill the Medicare program for home health care services, and Lara admitted that he personally oversaw the submission of these fraudulent claims. From approximately January 2009 through November 2014, Medicare paid approximately $13.7 million for the fraudulent claims submitted by Longcare Home Health.
The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Trial Attorney Anne P. McNamara of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 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 Action Team (HEAT), go to: www.stopmedicarefraud.gov.
North Highlands Woman Receives 2 Years and 8 Months in Federal Prison for Agravated Identity Theft, Bank Fraud, and Possession of Stolen U.S. MailRead the Press Release
SACRAMENTO, Calif. — Elise Elizabeth Perez, 42, of North Highlands, California, was sentenced today by United States District Court Judge John A. Mendez to a total term of 32 months in prison for her convictions on four counts of bank fraud, a single count of aggravated identity theft, and two counts of possession of stolen U.S. Mail, United States Attorney Benjamin B. Wagner announced.
This case was investigated by the Sacramento Office of the United States Postal Inspection Service. The Sacramento County Sheriff's Office also assisted in the investigation. Assistant United States Attorney Michelle Rodriguez is prosecuting the case.
According to court documents, from April 2014 through May 2014, Perez executed a plan to steal from federally insured financial institutions. Perez executed her scheme by obtaining identification and financial information stolen U.S. Mail and other sources. Perez used that information to pose as victims, take over victims' bank accounts, write checks drawn on those accounts, and obtain cash and goods at the expense of various financial institutions. Perez pleaded guilty on August 19, 2014.Perez was remanded into federal custody after imposition of her sentence.
New Haven Man Sentenced to 3 Years in Federal Prison for Illegally Possessing FirearmRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that JEROME T. WALKER, also known as “Ratchet,” 26, of New Haven, was sentenced today by U.S. District Judge Alvin W. Thompson in Hartford to 36 months of imprisonment, followed by three years of supervised release, for illegally possessing a firearm. WALKER also was ordered to perform 300 hours of community service.
According to court documents and statements made in court, on October 14, 2014, officers from the New Haven Police Department conducted a traffic stop of WALKER, who was driving with a suspended license, in the vicinity of Norton Street and Elm Street. After initially pulling over, WALKER accelerated from the scene at high rate of speed. A short time later, New Haven and Hamden Police officers found WALKER’s vehicle parked at a residence on Warner Street in Hamden. Officers then observed WALKER walking in front of the residence and he was placed under arrest. In the vicinity, officers found a duffel bag containing a Smith and Wesson .38 caliber revolver and a set of car keys belonging to the vehicle that WALKER had been driving.
WALKER has previously been convicted of multiple felony offenses. It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.
WALKER has been detained since his arrest. On November 17, 2014, he pleaded guilty to possession of a firearm by a previously convicted felon.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the New Haven Police Department and the Hamden Police Department. The case was prosecuted by Assistant U.S. Attorneys Anthony Kaplan and Jennifer Laraia.
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[email protected]Nederland Man Receives Life Sentence for Drug Trafficking CrimesRead the Press Release
Department of Justice
Office of Public AffairsBEAUMONT, Texas – A 40-year-old Nederland, Texas man has been sentenced to life in federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Stephen Shane Hall, also known as Shane Hall, was found guilty by a jury on Aug. 21, 2014, of conspiracy to possess with intent to distribute methamphetamine, possession with intent to distribute methamphetamine, and being a felon in possession of a firearm. Hall was sentenced to a mandatory life in federal prison today by U.S. District Judge Marcia Crone.
According to information presented in court, from February to August 2013, law enforcement officers investigated Hall and others regarding the distribution of methamphetamine in the Orange County area. On Aug. 31, 2013, a search warrant was executed at a residence on Spooner Road in Orange County, Texas. During the search, 57 grams of methamphetamine were discovered as well as many items relating to the distribution of narcotics. Officers also located three firearms inside the residence and garage area. A federal grand jury returned an indictment on Nov. 6, 2013, charging Stephen Shane Hall, Misty Hall, Kevin Trent Portie, and Scott Robicheaux with federal drug trafficking violations. Misty Hall, Portie, and Robicheaux pleaded guilty and have been sentenced.
The case was investigated by the Orange County Sheriff’s Office, the Jefferson County Sheriff’s Office, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the U.S. Drug Enforcement Administration, and the Beaumont Police Department. This case was prosecuted by Assistant U.S. Attorney Michelle Englade and Special Assistant U.S. Attorney Russell James.
Navajo Woman from Colorado Sentenced for Federal Child Abuse Conviction in New MexicoRead the Press Release
ALBUQUERQUE – Lorrena Ann Yazzie, 27, an enrolled member of the Navajo Nation who resides in Durango, Colo., was sentenced this morning in federal court to three years of probation for her child abuse conviction.
Yazzie was arrested on April 7, 2014, on a criminal complaint alleging an assault charge. According to the criminal complaint, Yazzie injured an infant who was a passenger in a vehicle she was driving when Yazzie caused a single-car collision by falling asleep at the wheel. Yazzie allegedly was intoxicated at the time of the collision. The collision occurred on April 2, 2014, south of Shiprock, N.M., which is located within the Navajo Indian Reservation. Yazzie subsequently was indicted and charged with assault resulting in serious bodily injury and child abuse.
On Nov. 7, 2014, Yazzie entered a guilty plea to the child abuse charge and admitted placing a child in a situation that endangered the child’s life or health.
This case was investigated by the Farmington office of the FBI and the Shiprock office of the Navajo Nation Division of Public Safety. Assistant U.S. Attorney Kyle T. Nayback prosecuted the case.
Manhattan U.S. Attorney Announces Charges Against Former Investment Management Firm Employee for Obstruction of Justice and PerjuryRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that STEVEN HART was charged last Friday with obstruction of justice and perjury relating to an investigation by the U.S. Securities and Exchange Commission (the “SEC”) into potential violations of the federal securities laws. HART, who was employed at an investment management firm headquartered in Englewood Cliffs, New Jersey (the “Investment Firm”), lied in sworn testimony to the SEC that he had obtained consent from the president of the Investment Firm (the “Investment Firm President”) to conduct match trades between a fund managed by the Investment Firm and a fund controlled and owned in part by HART. Moreover, when representatives of the SEC called the Investment Firm in an attempt to speak with the Investment Firm President, HART, on three occasions, answered the phone and pretended to be either the Investment Firm President or another employee. The case is assigned to United States District Judge Katherine P. Failla.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Steven Hart obstructed the SEC’s investigation into his conduct by lying to the SEC in sworn testimony. Even more audaciously, in phone calls from SEC attorneys seeking to speak to the investment firm’s president about Hart, Hart allegedly pretended to be the president. This alleged conduct merely delayed the inevitable: discovery of Steven Hart’s deception and the filing of criminal charges.”
According to the Information filed on February 13, 2015, in Manhattan federal court:
At all times relevant to this Information, HART worked at the Investment Firm, which managed several funds. HART, who reported directly to the Investment Firm President, served as a portfolio manager at the firm and, in that capacity, exercised trading authority over the brokerage accounts for one of the funds managed by the Investment Firm (the “Fund”). At the same time, HART also controlled and directed Octagon Capital Partners, LP (“Octagon”), a private investment fund with its principal place of business in New York, New York. Through Octagon, HART invested his own money and the money of several of his associates.
In or about 2009, the SEC was investigating HART’s trading activities at the Investment Firm (the “SEC Investigation”). First, the SEC was investigating whether HART, in his capacity as a portfolio manager at the Investment Firm, had conducted improper “match trades” or “cross trades” between his personal fund, Octagon, and the Fund. The SEC was also investigating whether HART had traded in securities based on material nonpublic information (“MNPI”) relating to confidentiallymarketed securities offerings – information that HART had obtained while being solicited to invest in these offerings.
As part of this investigation, SEC officials, among other things, issued a subpoena to the Investment Firm, directed to the Investment Firm President, seeking the production of several different categories of documents. HART received the subpoena at the Investment Firm before it was seen by any other employee and produced documents to the SEC in New York, New York, without (1) informing anyone else at the Investment Firm about the subpoena, or (2) informing the SEC that it was HART alone who responded to the subpoena.
Moreover, in the course of providing sworn testimony to the SEC, HART made several materially false statements. He falsely testified that the Investment Firm President had agreed that HART should conduct match trades involving the Fund as part of an investment strategy for the Fund. HART also falsely testified that he and the Investment Firm President had discussed the SEC Investigation, and that the Investment Firm President was aware that HART had been subpoenaed to testify before the SEC.
On multiple occasions, HART impersonated other employees of the Investment Firm during telephone conversations with the SEC. Specifically, on or about December 8, 2009, an SEC attorney called the Investment Firm to speak with the firm’s President about the SEC Investigation. HART received the phone call and pretended to be another employee of the Investment Firm. The SEC attorney asked HART, who was pretending to be another employee, to ask the Investment Firm President to return the call, which HART failed to do. The following day, the same SEC attorney again called the Investment Firm to speak with the firm’s President. HART again received the phone call and, on this occasion, pretended to be the Investment Firm President. During that call, HART, speaking as the Investment Firm President, falsely stated that: (1) the Investment Firm President was aware that HART had engaged in improper trading activity, but nevertheless wanted HART to remain an employee of the Investment Firm; and (2) the Investment Firm President was aware of, and had approved, Hart’s match trading activity as a means for the Fund to dispense of restricted shares of stock.
Finally, on December 11, 2009, the same SEC attorney, along with a second SEC attorney, called the Investment Firm to speak with the firm’s President. HART again received the phone call and again pretended to be the Investment Firm President. During that call, HART, speaking as the Investment Firm President, falsely stated to the SEC attorneys that: (1) HART’s match trading activity was an intentional strategy of the Investment Firm to take a loss on the trading in exchange for the ability to sell otherwise restricted shares of stock; (2) HART was still a valued employee of the Investment Firm who had earned the Investment Firm far more than whatever amount HART had gained through match trading; and (3) HART had fully disclosed to the Investment Firm President that HART had traded based on MNPI and that this was a one-time mistake that would not happen again. Each of these statements was false.
HART, 42, of New York, New York, faces a maximum sentence of 10 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the Judge.
The charges contained in the Information are merely accusations and the defendant is presumed innocent unless and until proven guilty.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Jason H. Cowley is in charge of the prosecution.
U.S. v. Steven Hart Information
Man Sentenced to over 20 Years in Prison for Armed Robbery of Farmers & Merchants Bank in Hoyleton, IllinoisRead the Press Release
Follow @SDILNewsDonald Ridley, 33, was sentenced to 246 months in prison on February 13, 2015, on a six-count indictment charging him with Bank Robbery, Carrying Using, and Brandishing a Firearm in Relation to a Crime of Violence, Making a False Statement to a Federal Law Enforcement Officer, and Obstruction of Justice, Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced. Following his prison sentence, Ridley will be on federal supervised release for 5 years. Ridley was also ordered to pay restitution in the amount of $115,098, as well as a $500 special assessment. The sentencing hearing follows a four-day jury trial in federal court in East St. Louis, Illinois, where Ridley was found guilty on all counts.
Ridley and co-defendant Johnson entered Farmers & Merchants Bank both armed with firearms, masked, and wearing gloves. They ordered the employees and a customer to the ground and Donald Ridley emptied the tellers’ drawers and the bank vault while co-defendant Johnson pointed a firearm at the employees and customer inside the bank. The robbers left the bank in a stolen truck carrying a plastic bag containing $115,098 of Federally Insured Deposits (bank money). Unbeknownst to the robbers, Ridley had also taken dye packs when he emptied the bank teller drawers. The dye packs exploded while the robbers were in route to their getaway vehicle and the tear gas caused Ridley to spit out the truck’s driver side window. This same truck had been seen by two Washington County farmers the day before. The farmers also noticed a white Mitsubishi parked in the same place the truck was parked on the day of the robbery. The farmers were highly suspicious and recorded the license plate of the car. The farmers called the police when they saw that the truck had been returned and the white Mitsubishi was speeding away. The robbery truck was processed by a crime scene technician and saliva was found on the driver’s side weather strip. This stain was the sputum of defendant Ridley and contained his DNA. The bank robbery proceeds were never recovered and both robbers have been ordered to pay restitution.
At Ridley’s sentencing hearing, the District Judge stated that armed robberies are one of the most serious federal offenses and victims of bank robberies have psychological scars that last well beyond the day of the robbery. The judge determined that a maximum guideline sentence of 246 months (20.5 years) was needed to protect the public from Donald Ridley and to provide deterrence to others. The United States Attorney for the Southern District of Illinois noted that the crime would not have been solved without the quick thinking of the local farmers in remembering the license plate of the car and reporting the location of the robbery truck. “These men provided the first lead and the most important link which enabled law enforcement to solve this robbery. Sometimes it takes more than police work to solve crimes---it takes a watchful community.” said United States Attorney Wigginton.
This case was investigated by the Washington County Sherriff’s Department, the Illinois State Police and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Deirdre A. Durborow.
Lynn Gang Member Sentenced to Ten Years in Prison for Heroin TraffickingRead the Press Release
BOSTON – A Lynn gang member was sentenced today to 10 years in prison for heroin trafficking.
Jairo Fernandez, 27, was sentenced by U.S. District Court Judge Denise J. Casper to ten years in prison and four years of supervised release. In November 2014, Fernandez pleaded guilty to conspiracy to distribute heroin and distributing heroin. At that hearing, Fernandez admitted responsibility for over 100 grams of heroin.
The case was part of Operation Whiplash, an investigation of several street gangs in and around Lynn and Revere. Over the past two years, Operation Whiplash has resulted in federal and state charges against 47 leaders, members and associates of gangs, including Money Over Broken Bitches (MOBB), the Crips and Deuce Boyz in Lynn and the Bloods in Revere. As part of the investigation, law enforcement identified Fernandez as a member of the Deuce Boyz gang.
United States Attorney Carmen M. Ortiz; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police; and Lynn Police Chief Kevin F. Coppinger, made the announcement. Operation Whiplash was investigated by members of the FBI’s North Shore Gang Task Force, which includes members of the FBI; Massachusetts State Police; Essex County Sheriff’s Office; and Chelsea, Lynn and Revere Police Departments. The case was prosecuted by Assistant U.S. Attorneys Timothy E. Moran and Peter K. Levitt of Ortiz’s Organized Crime and Gang Unit.
Louisiana Man Receives Life Sentence for Orange County Drug ConspiracyRead the Press Release
Department of Justice
Office of Public AffairsBEAUMONT, Texas – A 38-year-old Vinton, Louisiana man has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Jeremy James Wimberly was found guilty by a jury on Sep. 5, 2014 of conspiracy to possess with intent to distribute methamphetamine, possession with intent to distribute methamphetamine, use of a firearm during a drug trafficking crime and being a felon in possession of a firearm. Wimberly was sentenced to life in federal prison today by U.S. District Judge Ron Clark.
According to information presented in court, in September and October 2013, Wimberly made two controlled deliveries of a large amount of methamphetamine to an individual in Orange County, Texas. After the drug transaction on Oct. 23, 2013, law enforcement officers attempted to make a traffic stop on Wimberly. However, he led them on a 23-mile high speed chase at speeds reaching approximately 135 mph in Orange County before running out of gas in south Newton County and fleeing on foot. Wimberly was found to have discarded a gun and a large quantity of methamphetamine during the chase. Further investigation revealed he was a convicted felon and prohibited from owning or possessing a firearm or ammunition. Wimberly was indicted by a federal grand jury on Nov. 6, 2013 and charged with federal drug and gun violations.
The case was investigated by the Orange County Sheriff’s Office, Orange Police Department, Bureau of Alcohol, Tobacco, Firearms, and Explosives, U.S. Drug Enforcement Administration, and the Beaumont Police Department. This case was prosecuted by Assistant U.S. Attorneys Michelle Englade and Baylor Wortham.
Local Physician Convicted of Health Care Fraud ChargesRead the Press Release
St. Louis, MO – DR. DEVON GOLDING has been convicted of multiple health care fraud related charges for billing for services not rendered and false statements involving a health care benefit plan. The five-day trial was held before United States District Judge John A. Ross. The verdict was returned late Friday evening, February 13, 2015.
According to testimony presented at trial, Dr. Golding billed for services on multiple occasions when he was actually out of town. Dr. Golding employed a registered nurse, who, at various times during her employment from September 2009 to November 2011, took the examination to become certified as a nurse practitioner. Each time, she failed the examination and advised Dr. Golding that she had failed the examinations. She worked five days a week and saw patients on these days. Dr. Golding typically came to the office 2-3 days a week. In Dr. Golding’s absence, the registered nurse examined and diagnosed patients, prescribed narcotic medications and ordered lab tests for the patients. The registered nurse also completed progress notes for the patients, which Dr. Golding signed upon his return to the office and thereby falsely indicated that he had seen the patients. Dr. Golding directed the registered nurse to provide these services, although he knew these services were beyond the scope of her license as a registered nurse.
Golding, St. Louis, Missouri, was convicted of three felony counts of health care fraud and two felony counts of making false statements related to health services. Sentencing has been set for May 21, 2015.
Each count of health care fraud carries a maximum penalty of ten years in prison and/or fines up to $250,000 and each count of making false statements carries a maximum of five years in prison and/or fines up to $250,000. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.This case was investigated by the United States Department of Health and Human Services-Office of the Inspector General, the Federal Bureau of Investigation and the Medicaid Fraud Control Unit of the Missouri Attorney General’s Office. Assistant United States Attorneys Dorothy McMurtry and Gwen Carroll are handling the case for the U.S. Attorney’s Office.
Leader of Sports Betting Ring Sentenced to 20 Months for Racketeering and Related ChargesRead the Press Release
PHILADELPHIA – Joseph Vito Mastronardo, Jr., 64, of Meadowbrook, PA, was sentenced today to 20 months in prison, to be served in a Level IV Bureau of Prisons Medical Facility. The sentence follows his guilty plea on January 31, 2014, for conspiring to participate in a racketeering enterprise (RICO), conducting an illegal gambling business, conducting four conspiracies to launder money, interstate travel in aid of racketeering, transmitting wagering information, and aggravated structuring of cash deposits. The defendant was the leader of the Mastronardo Bookmaking Organization, a multi-million dollar sports betting operation with bettors throughout the U.S. In addition to the prison term, U.S. District Court Judge Jan E. DuBois ordered the forfeiture of approximately $3.7 million, a fine in the amount of $100,000, and three years of supervised release.
Mastronardo, Jr., was one of 16 defendants indicted in case, 15 of whom were charged with conspiring to participate in a racketeering enterprise (RICO) and conducting an illegal gambling business. All of Mastronardo, Jr.’s co-defendants pleaded guilty and are awaiting sentencing; charges against Joanna Mastronardo will be dismissed.
At its peak, the Mastronardo Bookmaking Organization had more than 1,000 bettors and was generating millions of dollars a year. Between January 1, 2005 and January 1, 2011, the organization utilized internet websites (www.betroma.com and www.betrose.com) and telephone numbers that allowed bettors to place sports bets on football, baseball, basketball, golf, horse racing, and other sporting events. Residents of Costa Rica staffed the internet websites and answered the telephones. In 2006 and 2010, law enforcement seized over $2.1 million of cash that Mastronardo hid in and around his home, including in specially-built secret compartments and in PVC pipes that were buried in his backyard.
Joseph Vito Mastronardo, Jr., ran the organization by using the internet, telephone, Skype, e-mail, United States mail, and in-person communication. The Mastronardo Bookmaking Organization laundered the gambling proceeds by using a check cashing agency, two private bank accounts, and numerous international bank accounts. On occasion, Mastronardo, Jr., also provided instructions so that a losing bettor could pay a gambling debt through a charitable donation.
Other indicted defendants who pleaded guilty and are awaiting sentencing include: Mastronardo=s brother, John, who managed a number of bettors and collected gambling debts; Mastronardo’s son, Joseph F. Mastronardo, who worked as an office employee, collected debts, and performed other financial duties; Eric Woehlcke, who worked as an office employee, collected debts, and was a sub-agent; Joseph and Anna Rose Vitelli, who owned J & A Check Cashing, which was used to launder the gambling proceeds; and Patrick Tronoski, Schuyler Twaddle, Michael Loftus, and Ronald Gendrachi.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigations, the Montgomery County Detective Bureau, and the Montgomery County District Attorney=s Office. It is being prosecuted by Assistant United States Attorney Jason P. Bologna and Department of Justice Trial Attorney Kelly Pearson.
Lake Mary Man Sentenced to 10 Years for Receiving Child PornographyRead the Press Release
Orlando, Florida – Chief United States District Judge Anne C. Conway today sentenced Samuel Dunn (22, Lake Mary) to 10 years in federal prison for receiving child pornography. The Court also ordered him to serve a 15-year term of supervision following his release from prison and to forfeit the electronic devices that he had used to commit the crime. Dunn pleaded guilty on November 19, 2014.
According to court documents, an undercover FBI investigation determined that Dunn was making child pornography available for download by others using an Internet peer-to-peer file sharing program. On June 6, 2014, agents executed a federal search warrant at Dunn’s Lake Mary residence, where they recovered Dunn’s laptop computer and a thumb drive. A subsequent forensic examination revealed that the computer and thumb drive contained approximately 200 images and 21 videos depicting child pornography, including images of young children being sexually abused. Agents also interviewed Dunn, who told them that he had used the file sharing program to download child pornography for the last four to five years.
This case was investigated by the Federal Bureau of Investigation and the Seminole County Sheriff’s Office. It was prosecuted by Assistant United States Attorney Shawn P. Napier.
This is another case 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 United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to 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.justice.gov/psc.
Kansas Man Pleads Guilty to Two Bank RobberiesRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Kan., man who was still on supervised release for a 2009 bank robbery conviction pleaded guilty in federal court today to robbing two more banks.
Antonio P. Gaitan, 36, of Kansas City, Kan., pleaded guilty before U.S. Chief District Judge Greg Kays to one count of bank robbery in an indictment returned in the Western District of Missouri and to a second count of bank robbery in an indictment returned in the District of Kansas.
By pleading guilty today, Gaitan admitted that he stole $4,114 from Country Club Bank, 1 Ward Parkway, Kansas City, Mo., on April 2, 2014. Gaitan also admitted that he stole $5,130 from Truity Credit Union in Lawrence, Kan., on April 5, 2014.
Gaitan was identified from surveillance photos from the Country Club Bank robbery. Investigators learned that Gaitan was traveling to Nebraska, and he was arrested by authorities in that state.
Gaitan recently had escaped from custody at Heartland Center for Behavioral Change after being sentenced to five years in prison and three years of supervised release for a 2009 bank robbery. His supervised release was revoked by the court.
Under the terms of today’s plea agreement, Gaitan will be sentenced to 10 years in federal prison without parole for the bank robberies, plus a consecutive revocation sentence of 24 to 31 months for violating his supervised release. Gaitan must pay $9,244 in restitution.
This case is being prosecuted by Special Assistant U.S. Attorney Leena Ramana. It was investigated by the FBI, the Kansas City, Mo., Police Department, the Lawrence, Kan., Police Department and the Omaha, Neb., Police Department.
Jury Convicts Connecticut Man for Responding to Craigslist Ad for Sexual Relationship with MinorRead the Press Release
BOSTON – A Connecticut man was convicted today in U.S. District Court in Boston for traveling to Watertown in response to an advertisement on Craigslist in which a woman sought an adult male that might be interested in a relationship with her minor daughter. The Craigslist advertisement was place by undercover Homeland Security Investigation agents.
Paul R. Hinkel, 57, of Chester, Conn. was convicted following a three-day jury trial for using the Internet to lure a minor to engage in sex. U.S. District Court Judge William G. Young scheduled sentencing for May 5, 2015. In March 2014, Hinkel was arrested and charged via criminal complaint.
In February 2014, undercover federal agents placed an advertisement on Craigslist posing as a mother purporting to seek an adult male interested in a sexual relationship with her daughter. Hinkel responded to the advertisement, and was not deterred when it was revealed that the daughter was only 15-years-old. Hinkel proceeded to engage in hundreds of emails with the undercover agents, detailing the sexual activities in which he would engage with the teen. On March 19, 2014, Hinkel traveled from his home in Chester, Conn. to Watertown to meet and have sex with the fictional minor daughter. He carried a bag to the door with him, which agents later discovered contained sexual paraphernalia, men’s cologne and a stuffed animal. Hinkel was arrested by federal agents upon his arrival at the site in Watertown.
The charging statute provides a mandatory minimum sentence of 10 years and no greater than a lifetime in prison, and a lifetime of supervised release. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Bruce Foucart, Special Agent in Charge of Homeland Security Investigation in Boston, made the announcement today. Homeland Security Investigations, New Haven, Conn. Field Division; Customs & Border Protection, New York Air Unit; Watertown Police Department; and Massachusetts State Police also assisted with the investigation. The case was tried by Assistant U.S. Attorneys Eve A. Piemonte Stacey and Jordi de Llano of Ortiz’s Major Crimes Unit.
This case is brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
Jury Convicts Cleveland Man of Running 'Pill Mills'Read the Press Release
CINCINNATI – A United States District Court jury convicted Christopher Stegawski, 65, of Cleveland, of conspiracy to distribute and dispense prescription drugs, namely oxycodone.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Ohio Attorney General Mike DeWine; Kathy Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), A.J. Groeber, Executive Director of the State Medical Board of Ohio; and Steven W. Schierholt, Executive Director, Ohio Board of Pharmacy, announced the verdict reached Friday, which was returned following a trial that began on February 5 before U.S. District Judge Michael R. Barrett.
According to court testimony, beginning about November 2009 until May 2012, Stegawski worked at a business initially known as Eastside Medical Specialist in Dayton, Ohio. In February 2010, the business moved to Lucasville, Ohio and the name was changed to Lucasville Medical Specialist. Stegawski took over the ownership of Lucasville Medical Specialist and listed his partner and co-conspirator, John Randy Callihan, as an employee.
Stegawski represented himself as a chronic pain management doctor at these clinics and an unnamed clinic located in Southpoint, Ohio. The clinics operated as “pill mills” by selling prescriptions for controlled substances, primarily oxycodone, without a legitimate need for the prescriptions. There was no valid doctor-patient relationship and many of the prescriptions were openly sold and diverted.
Stegawski had a DEA registration number that allowed him to order controlled substances for the clinics. Stegawski received a medical degree in Warsaw, Poland in 1977 and was purportedly trained to specialize in anesthesiology.
As many as 40 patients would visit the clinics each weekday. In some cases, customers traveled in excess of 200 miles roundtrip to obtain prescriptions from the doctor. Stegawski knowingly prescribed large amounts of prescription drugs to drug abusers and addicts, who were charged $200 cash per visit and received at most a cursory examination.
During the tenure of the pain clinics, many local pharmacies refused to honor any prescriptions written by Stegawski due to the “large quantities of narcotics” and his “catering to customers with prior drug abuse and arrest histories.”
“A majority of the patients interviewed admitted they had no legitimate pain to be prescribed the narcotics,” Criminal Chief Kenneth L. Parker told the court. “They were only going to the pain clinics to easily obtain prescriptions because they were addicted to pain pills, or because they were drug dealers themselves, selling the prescription pills on the street.”
The jury convicted Stegawski of one count of conspiracy to distribute and dispense prescription drugs, one count of conspiracy to launder money and two counts of maintaining a place for illegal distribution of drugs.
Conspiracy to distribute and dispense prescription drugs carries a maximum sentence of 20 years in prison and a $1 million fine; maintaining a place for the purpose of distributing carries a maximum of 20 years imprisonment and a $500,000 fine; money laundering is a crime punishable by up to 20 years in prison and a $500,000 fine.
Stegawski also faces potential forfeiture of a money judgment in his case.
Stegawski was indicted by a grand jury on May 16, 2012, charging him and co-defendant John Randy Callihan in an 11-count indictment. Callihan pleaded guilty to conspiracy to distribute and dispense prescription drugs and money laundering.
Stewart commended the cooperative investigation by agents and officers of the agencies named above including IRS Special Agent Robert Mullins, Ohio Board of Pharmacy Agent Jesse Wimberly, the Ohio Bureau of Criminal Investigation in Attorney General DeWine’s Office, the DEA, the Lawrence County Sheriff Jeff Lawless and the Sheriff’s Drug Task Force, Scioto County Sheriff Marty Donini, and the Riverside Police Department, as well as Criminal Chief Kenneth L. Parker and Assistant U.S. Attorney Timothy D. Oakley, who prosecuted the case.
Judge Increases Prison Sentence for Mercer County Drug Dealer from 78 to 90 MonthsRead the Press Release
PITTSBURGH - A Mercer County man has been re-sentenced in federal court to 90 months imprisonment, to run consecutive with his state court sexual assault sentence, on his conviction of violating federal narcotic laws, United States Attorney David J. Hickton announced today.
United States District Judge Mark R. Hornak imposed the sentence on Raymond Anthony Napolitan, 52, of Farrell, Pa.,
According to information presented to the Court, on Sept. 27, 2012, a federal jury found Napolitan guilty of possession with the intent to distribute 500 grams or more of cocaine on June 29, 2007. Judge Arthur Schwab then sentenced Napolitan to 78 months imprisonment. Both parties appealed from the judgment, and in August, 2014, the Third Circuit Court of Appeals affirmed the conviction but vacated the judgment, thereby remanding the case for re-sentencing before Judge Hornak. After extensive argument from both sides, Judge Hornak increased Napolitan’s sentence from 78 to 90 months.
Assistant United States Attorney Eric S. Rosen prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Southwest Mercer County Regional Police Department, the Pennsylvania Office of Attorney General Bureau of Narcotics Investigation and Drug Control, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Federal Bureau of Investigation, the Mercer County Sheriff's Office, and the Mercer County Drug Task Force for the investigation leading to the successful prosecution of Raymond Anthony Napolitan.
Joplin Sex Offender Sentenced to 15 Years for Child PornRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Joplin, Mo., man who is a convicted sex offender was sentenced in federal court today for receiving and distributing child pornography over the Internet.
Donnie Ray Sumner, 44, of Joplin, was sentenced by U.S. District Judge Beth Phillips to 15 years in federal prison without parole. Sumner has a prior state felony conviction for possessing child pornography.
On April 23, 2014, Sumner pleaded guilty to receiving and distributing child pornography. Law enforcement officers executed a search warrant at Sumner’s residence on Jan. 21, 2013, and seized a desktop computer and a laptop computer that contained images of child pornography.
This case was prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the Southwest Missouri Cyber Crime Task Force.
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."
Jefferson County Man Sentenced for Child PornographyRead the Press Release
Department of Justice
Office of Public AffairsBEAUMONT, Texas – A 53-year-old Port Arthur, Texas man has been sentenced to federal prison for child pornography violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
John “Johnny” Anthony Sassine pleaded guilty on Nov. 4, 2014 to attempting to transfer obscene material to a minor and was sentenced to 78 months in federal prison today by U.S. District Judge Ron Clark.According to information presented in court, in March 2013, an undercover officer in Jefferson County, Colorado, was working in an undercover capacity on a social networking sight posing as a 13-year-old female. The undercover officer received an unsolicited message from Sassine. The undercover officer and Sassine began an online chat conversation which became sexually explicit in nature. The undercover officer provided Sassine with a birthdate which would have made the minor 15 years of age. Sassine sent the undercover officer two sexually explicit photos and requested naked photos of the minor. Officials in Colorado coordinated with authorities in Port Arthur, Texas to identify and apprehend Sassine. On Apr. 12, 2013, a federal search warrant was executed at Sassine’s residence. At first Sassine denied having any computers in the home before admitting there were three laptops and a notebook computer in the residence. When asked if he knew why authorities were there, Sassine speculated it was because he had been to talking to someone “illegally” and admitted sending the sexually explicit photos of himself to someone he thought was under 16 years of age.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was investigated by the Department of Homeland Security HSI-ICE, Jefferson County Colorado District Attorney’s Office, Port Arthur Police Department and Beaumont Police Department. This case was prosecuted by Assistant U.S. Attorney Randall L. Fluke.In Milestone for Sentencing Reform, Attorney General Holder Announces Record Reduction in Mandatory Minimums Against Nonviolent Drug OffendersRead the Press Release
New Data Revealed by Justice Department Shows Rate at Which Feds Pursued Mandatory Minimum Penalties in Drug Trafficking Cases Has Hit Record Low
In One of His Final Speeches Before Stepping Down, Holder Lauds Progress In Sentencing Reform Initiative He Launched in ‘13
In a major advance for the sentencing reform project that has been one of his signature initiatives, Attorney General Eric Holder on Tuesday announced that federal drug prosecutors have shifted away from seeking mandatory minimums at record rates, while reserving stricter sentences for more serious offenders.
Speaking at the National Press Club, Attorney General Holder revealed that in the first full year since he imposed reforms to the Justice Department’s charging policies in nonviolent drug trafficking cases, federal prosecutors not only prosecuted fewer such cases overall, but also pursued mandatory minimum sentences at a dramatically lower rate than the year prior. In fact, according to the U.S. Sentencing Commission, in FY2014, federal drug prosecutors pursued mandatory minimums at the lowest rate on record.
“For years prior to this administration, federal prosecutors were not only encouraged – but required – to always seek the most severe prison sentence possible for all drug cases, no matter the relative risk they posed to public safety. I have made a break from that philosophy,” said Attorney General Holder. “While old habits are hard to break, these numbers show that a dramatic shift is underway in the mindset of prosecutors handling nonviolent drug offenses. I believe we have taken steps to institutionalize this fairer, more practical approach such that it will endure for years to come.”
The figures announced Tuesday were compiled by the U.S. Sentencing Commission at the request of the Justice Department to measure the impact of several reforms implemented in 2013 through Attorney General Holder’s “Smart on Crime” initiative. Those reforms—aimed at restoring fairness to the criminal justice system and at confronting the problem of America’s overcrowded prison system—instructed federal prosecutors to exercise greater discretion in selecting drug cases to bring to federal court. The data suggests prosecutors heeded that call, as the overall number of federal drug trafficking cases dropped by six percent in FY2014.
While the sheer number of drug cases went down, the data also showed that federal prosecutors have prioritized more serious cases. Holder pointed to a rise in the average guideline minimum sentence, from 96 months in FY2013 to 98 months this past year. That suggests the severity of offenses prosecuted in FY2014 was slightly higher.
Most important of all, Holder said, was the trend observed with respect to mandatory minimums. After several years in a row that saw federal prosecutors pursue such mandatory sentences in roughly two-thirds of drug cases, last year’s rate dropped to one-in-two. The Attorney General said this showed that the department was succeeding in reserving these strict sentences for the worst types of offenders rather than imposing indiscriminately.
“This figure, perhaps more than any other, shows the significant impact that our policy reforms are having,” said Attorney General Holder. “These are extremely encouraging results.”
Holder also presented statistics rebutting past criticisms of the “Smart on Crime” initiative. For instance, though some warned that the reduced application of mandatory minimums would remove the incentive for defendants to act as government witnesses, the Sentencing Commission’s data showed that defendants provided cooperation at the same rate as in years past.
Houston Woman Charged in Sister's Murder-for-hire SchemeRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Houston, Mo., woman has been charged in federal court with attempting to hire someone to murder her sister.
Leta Faye Douglas, of Houston, was charged in a criminal complaint filed in the U.S. District Court in Springfield, Mo., on Friday, Feb. 13, 2015. Douglas remains in federal custody pending her detention hearing on Thursday, Feb. 19, 2015.
Douglas allegedly asked her ex-husband to help her hire someone to kill her sister for $2,000.
According to an affidavit filed in support of the federal criminal complaint, Douglas sent a letter asking for help to her ex-husband in Nebraska. They have been divorced for 18 years, the affidavit says, and have not maintained contact.
Douglas’s ex-husband called her, the affidavit says, and during their telephone conversation, she told him she needed him to help her “take care of” her sister. According to the affidavit, Douglas’s parents were in a home for the elderly and her sister was in charge of their finances. Douglas claimed her sister would not handle their parents’ finances correctly, the affidavit says, but her ex-husband believed that Douglas wanted to have access to her parent's financial estate. Douglas told her ex-husband that she wanted her sister killed.
Douglas’s ex-husband initially told her that he did not want to help her. He believed she was serious, the affidavit says, so he reported the incident to the Nebraska State Patrol. Investigators then recorded a telephone call made to Douglas by her ex-husband on Jan. 27, 2015. During the telephone conversation, the affidavit says, he told her that he knew someone who would murder her sister. They allegedly agreed that Douglas would pay $2,000 after she received her tax return to have her sister killed.
On Feb. 2, 2015, Douglas allegedly called her ex-husband and told him she really wanted this done. Douglas allegedly told him that, if he took care of this, she would let him see his daughter (whom he has not had contact with in many years). He told Douglas to send him a picture of her sister and a map to her house, the affidavit says, which she did.
On Feb. 6, 2015, an undercover employee of the Missouri State Highway Patrol called Douglas and they arranged to meet at the Walmart in Houston. Douglas allegedly met with the undercover employee on Feb. 9, 2015, and they had a conversation while sitting in her vehicle. According to the affidavit, she gave the undercover employee a photograph of her sister and a hand-drawn map to her sister’s residence. She allegedly told him how to find her sister’s house and gave him a brief description of the interior layout of the house. Douglas told him that her sister’s husband would also be home and that they had two dogs inside the house, according to the affidavit. Douglas allegedly handed him an envelope that contained $2,000.
Dickinson cautioned that the charge contained in this complaint is simply an accusation, and not evidence of guilt. Evidence supporting the charge must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the FBI, the Missouri State Highway Patrol and the Nebraska State Patrol.
Houston Man Convicted in Million Dollar Fraud Scheme Targeting Dozens of Elderly VictimsRead the Press Release
HOUSTON – Michael Irving, 33, has entered a guilty plea to one count of conspiracy to commit wire fraud and one count of aggravated identity theft, announced U.S. Attorney Kenneth Magidson.
Between Jan. 1, 2013, and Nov. 30, 2013, Irving engaged in a wire fraud conspiracy to unlawfully obtain cash and defraud Compass Bank, a FDIC insured institution. Irving and his co-conspirators unlawfully obtained, shared and busted out multiple credit cards for cash and shared the proceeds with each other.
Irving owned and operated Majix Studio - a business used in the conspiracy - and had a PayPal account for it. Irving would swipe, and authorize his co-conspirators to swipe, fraudulently obtained credit cards through his business terminal using credit card processors PayPal had provided. After the cards were swiped, the funds were deposited into bank accounts or onto debit cards under the care, custody and control of Irving and his co-conspirators.
Irving admitted to processing multiple illegitimate transactions through his business during the course of the conspiracy.
Irving knew the credit cards were fraudulent because they had been applied for and obtained through the use of stolen identities. There were at least 70 victims whose identities had been stolen, all senior citizens between the ages of 70 and 95, living throughout the country.
Irving also knew the transactions going through his processors were illegitimate as there was no exchange of goods for services. Typically, the conspirators ran the fraudulently obtained credit cards for $1,000 to $5,000 until they reached their limits. When necessary, Irving and his co-conspirators would fabricate and submit false information, receipts, invoices and other documentation to PayPal regarding the fraudulent transactions to further facilitate the fraud.
In total, the co-conspirators stole approximately $1.1 during the conspiracy.
U.S. District Judge Lynn Hughes, who accepted the guilty plea today, has set sentencing for May 18, 2015. At that time, Irving faces up to 30 years in prison and a possible $1 million fine for the conspiracy as well as a mandatory 24-month for the identity theft which must be served consecutively to any other sentence imposed.
Co-conspirator Raymond Goffney, 38, also of Houston, previously pleaded guilty to conspiracy and aggravated identity theft. He faces the same penalties and will be sentenced April 27, 2015.
Both were permitted to remain on bond pending sentencing.
The charges are the result of an investigation conducted by the U.S. Secret Service and U.S. Postal Inspection Service. Assistant U.S. Attorney Julie Searle is prosecuting the case.
Henderson County Woman Sentenced for EmbezzlementRead the Press Release
Department of Justice
Office of Public AffairsTYLER, TEXAS – A 55-year-old Murchison, Texas woman has been sentenced to federal prison for embezzlement in the Eastern District of Texas, announced U.S. Attorney John M. Bales.
Deborah Cornett pleaded guilty on June 9, 2014 to embezzlement by a bank employee and was sentenced to 41 months in federal prison today by U.S. District Judge Leonard Davis. Cornett was also ordered to pay restitution in the amount of $365,988.43.
According to information presented in court, from November 2007 to May 2013, Cornett was an officer and employee of the First State Bank of Ben Wheeler. During that time, Cornett embezzled from bank payroll accounts, the bank Christmas Club account, certificates of deposit, and from fraudulently issued bank loans.
This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Nathaniel C. Kummerfeld.
Gila River Woman Sentenced to 5 Years in Prison for Robbery at the Wild Horse Pass CasinoRead the Press Release
PHOENIX – Today, Prima Shalis Mendoza, 36, a member of the Gila River Indian Community, was sentenced by U.S. District Judge John J. Tuchi to 60 months in prison as a result of pleading guilty on Dec. 4, 2014, to robbery.
On June 26, 2014, the victim was parked outside the Wild Horse Pass Casino, on the Gila River Indian Community, when Mendoza approached her and threatened to shoot her if she did not hand over her purse. Mendoza fled with the victim’s purse, but she was later arrested after a thorough investigation.
The investigation in this case was conducted by the Gila River Police Department, the Security and Surveillance Departments of the Wild Horse Pass Casino, and the Chandler Police Department. The prosecution was handled by Raynette Logan, Assistant U.S. Attorney, District of Arizona, Phoenix.
CASE NUMBER: CR-14-01065-PHX-JJT
RELEASE NUMBER: 2015-017_Mendoza
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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.
Getaway Driver Sentenced to 68 Months in Prison for Armed Robbery of Belleville Liquor StoreRead the Press Release
Case is one of many brought as a result of the United States Attorney Stephen R. Wigginton’s Metro-East Armed Robbery Initiative
Follow @SDILNewsCharmonequette Reynolds, 22, was sentenced on February 13, 2015, in the U.S. District Court to 68 months in prison on a three-count indictment charging her with Conspiracy to Interfere with Commerce by Robbery, Interference with Commerce by Robbery, and Use of a Firearm During a Crime of Violence, Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today. Following her prison sentence, Reynolds will be on federal supervised release for 3 years. Reynolds was also ordered to pay restitution in the amount of $10,465. Reynolds has been in custody since her arrest on July 12, 2013.
Documents filed in U.S. District Court establish that on July 12, 2013 Reynolds drove her two co-defendants, Timothy Collier and Roderick Taylor, to Arena Liquor located at 105 S. Belt E, Belleville, Illinois to commit a robbery. While Reynolds waited in her vehicle, Collier and Taylor entered Arena Liquor armed with two firearms. Collier and Taylor pointed the firearms at the two individuals in the store and demanded money from the cash registers as well as their personal belongings. Collier and Taylor left the liquor store with approximately $15,000 of United States Currency, entered Reynolds’ vehicle, and the three fled from the scene. Reynolds was identified and apprehended a short time after the robbery and interviewed by law enforcement. During the interview, Reynolds admitted to her involvement in the planning and participation in the armed robbery and named Collier and Taylor as her two accomplices.
This case was investigated by the Belleville Police Department and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Ali Summers.
Former Pennsylvania Treasurer Robert M. McCord Pleads Guilty to Two Counts of Attempted ExtortionRead the Press Release
The United States Attorney's Office for the Middle District of Pennsylvania announced that former Pennsylvania State Treasurer Robert M. McCord pleaded guilty to two counts of attempted extortion in violation of Title 18, United States Code Section 1951(a).
Each count is punishable by up to 20 years’ imprisonment and fine of up to $250,000. U.S. District Court Judge John E. Jones, III, accepted the guilty plea and scheduled a pre-sentence conference for June 29, 2015.Mr. McCord admitted that he attempted to extort campaign contributions from a law firm and a property management company while he was running for Governor by threatening economic harm to the potential donors if they failed to make sufficient campaign contributions. In particular, McCord threatened to use his position as State Treasurer to interfere with the business that the law firm and property management firm were conducting with the state if they did not make the contributions.
First Assistant U.S. Attorney Dennis C. Pfannenschmidt was designated United States Attorney for this case because United States Attorney Peter J. Smith recused himself. Mr. Smith previously worked for Mr. McCord for a short period of time at the Pennsylvania Treasury Department.
Mr. Pfannenschmidt stated that “public corruption cases are some of the most serious cases our office handles and this case indicates a serious breach of the public trust. Our office is committed to working with our law enforcement partners in holding public officials responsible for their violation of the public trust.”
“The citizens of the Commonwealth expect and deserve public officials who perform their duties free of deceit, favoritism, bias, self-enrichment, concealment and conflict of interest,” said Special Agent in Charge Edward J. Hanko of the Philadelphia Division of the FBI. “Public corruption is an erosion of the public’s trust in our system of government, and the FBI stands committed to holding public officials accountable when they violate their oaths of office and betray that trust.”
"The abuse of power by elected officials tears at the fabric of society, undermines the rule of law and weakens public confidence in government," said Major Andrew Ashmar, Pennsylvania State Police, Bureau of Criminal Investigation. "The Pennsylvania State Police is steadfast in our commitment to bring to justice those who use the power of their office for personal gain rather than serving the best interest of the public."
“When our public officials fail to uphold the integrity of the office to which they were elected, the Internal Revenue Service, Criminal Investigation Division is committed to working with our fellow law enforcement agencies to restore the public’s trust,” said Special Agent in Charge Akeia Conner.
The case was investigated by the Federal Bureau of Investigation, the Pennsylvania State Police, and the Internal Revenue Service, Criminal Investigation Division. The prosecution is assigned to Assistant United States Attorneys Michael A. Consiglio, William S. Houser, and Gordon A. D. Zubrod.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is 20 years’ imprisonment, 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.
Former Oakland Accountant Pleads Guilty to Identity Theft Tax Fraud SchemeRead the Press Release
OAKLAND – Robert Thomas Doyle pleaded guilty in federal court on February 13, 2015, to wire fraud and aggravated identity theft, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the plea agreement, during 2011, 2012, and 2013 Doyle, 64, of Oakland, implemented an identity theft and tax fraud scheme in which he caused the filing of a number of tax returns claiming fraudulent refunds. As part of his scheme, Doyle, created false businesses and claimed false income and expenses for his clients in order to maximize the Earned Income Tax Credit to obtain a larger refund. Doyle did not ask his clients about any income earned or current or past employment history. Doyle also used the names and Social Security numbers of former clients to prepare and file false tax returns without these victims' knowledge or consent. On many of the tax returns, Doyle directed the refunds to be mailed to addresses where he could retrieve them or have the refunds direct deposited into bank accounts that he controlled. Doyle kept a portion of the refund as his fee.
Doyle was a Certified Public Accountant until 1987. On February 20, 2014, he was charged in a sixteen count indictment with mail fraud, wire fraud, and aggravated identity theft. Doyle pleaded guilty to one count of wire fraud and one count of aggravated identity theft. He is scheduled to be sentenced on June 19, 2015, before the Honorable Jon S. Tigar, United States District Judge, in Oakland.
The maximum statutory penalty for each count of wire fraud, in violation of Title 18, U.S.C § 1341 and 1343, is 20 years in prison and a fine of $250,000. The maximum penalty for aggravated identity theft, in violation of Title 18, U.S.C § 1028A, is two years in prison, consecutive to the underlying felony and a fine of $250,000.
Assistant US Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Former Hospital Employee Sentenced for HIPAA ViolationsRead the Press Release
Department of Justice
Office of Public AffairsTYLER, TEXAS – A former employee of an East Texas hospital has been sentenced to federal prison for criminal HIPAA violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales.
Joshua Hippler, 30, formerly of Longview, Texas, pleaded guilty on Aug. 28, 2014, to wrongful disclosure of individually identifiable health information and was sentenced to 18 months in federal prison today by U.S. District Judge Leonard Davis.
According to information presented in court, from December 2012 through January 2013, Hippler was an employee of a covered entity under HIPAA, the Health Insurance Portability and Accountability Act. During this time, Hippler obtained protected health information with the intent to use it for personal gain. Hippler was indicted by a federal grand jury on Mar. 26, 2014.
This case was investigated by the U.S. Department of Health and Human Services – Office of Inspector General (HHS-OIG) and the U.S. Postal Inspection Service and prosecuted by Assistant U.S. Attorney Nathaniel C. Kummerfeld.
Former Garland, Texas, Man Admits Aiming A Laser Pointer at HelicopterRead the Press Release
DALLAS — A former resident of Garland, Texas, appeared in federal court this morning, before U.S. Magistrate Judge Irma C. Ramirez, and admitted aiming a laser pointer at a helicopter, announced John Parker, Acting U.S. Attorney for the Northern District of Texas.
Steven Alexander Chavez, Jr., 23, pleaded guilty to an indictment charging one count of aiming a laser pointer at an aircraft. He faces a maximum statutory penalty of five years in federal prison and a $250,000 fine. Sentencing is set for June 3, 2015, before Chief U.S. District Judge Jorge A. Solis.
According to documents filed in the case, in August 2013, Chavez knowingly aimed the beam of a laser at a Texas Department of Public Safety (DPS) helicopter. Chavez aimed the laser at the helicopter from the backyard of a friend, while the helicopter was flying overhead.
A few days later, special agents with the FBI arrested Chavez in Lubbock, Texas, where he had recently relocated from Garland. Following his initial court appearance, he was released on bond.
The FBI, Texas DPS and Garland Police Department are investigating. Special Assistant U.S. Attorney Lara Burns is prosecuting.
Former Employee Convicted in Scheme to Defraud Garden RidgeRead the Press Release
HOUSTON – Sandra Johnson, 48, of Katy, has admitted to receiving kickbacks in a money laundering conspiracy that targeted home décor retailer Garden Ridge Pottery, now known as At Home, announced U.S. Attorney Kenneth Magidson.
Johnson was employed as a claims manager at Garden Ridge. In that role, she was responsible for reviewing and approving payment on injury claims filed against the store by its customers, commonly referred to as “slip and fall” claims. Johnson and others conspired to submit fraudulent claims against Garden Ridge for injuries which were either faked or never occurred.
In all, 26 false claims were filed against Garden Ridge which resulted in the issuance of $2,063,436 in settlement proceeds. The fraudulent settlement proceeds were split amongst the alleged injury victims and other co-conspirators, with most of the funds kicked back to Johnson. She admitted to laundering the kickbacks she received by having her co-conspirators pay her either in cash or with cashier’s checks which had been purchased under nominee names.
Natalie Jeng, 42, of Katy, Darlene Drummer, 43, of Fresno, and Niesha Hall, 36, of Houston, have all also pleaded guilty to their respective roles in the scheme. Jeng, Johnson’s sister, was employed as a claims adjuster at a third-party administrator hired by Garden Ridge to administer and investigate claims. Thus, many of the fraudulent claims that were allegedly reviewed by Johnson at Garden Ridge were then reviewed and approved by her sister. Jeng also received a portion of some settlements for her role in the scheme. Drummer and Hall, in addition to filing false claims against Garden Ridge in their own names, also recruited other complicit claimants into the scheme.
U.S. District Judge Kenneth Hoyt has set sentencing for May 11, 2015, at which time Johnson faces up to 20 years in prison and a fine of $250,000. The other three women convicted in the scheme will also be sentenced on that date.
The investigation was conducted by Internal Revenue Service – Criminal Investigation and U.S. Postal Inspection Service. Assistant U.S. Attorney Jay Hileman is prosecuted the case.
Felon Admits to Firearm Charge, Violating Supervised ReleaseRead the Press Release
PROVIDENCE, R.I. – Sarunn N. Phan, 27, of Providence, pleaded guilty in federal court today to being a felon in possession of a firearm, announced United States Attorney Peter F. Neronha and Providence Police Chief Colonel Hugh T. Clements, Jr.
Phan faces a statutory sentence of up to 10 years in federal prison when he is sentenced by U.S. District Court Judge Mary M. Lisi on May 7, 2015. Phan also faces a consecutive sentence of up to 2 years in prison for being in violation of federal supervised release. In June 2011, Phan was sentenced to 48 months in federal prison to be followed by 3 years supervised release for being a felon in possession of a firearm.
According to information presented to the court, late in the evening of April 9, 2014, Providence Police responded to shots fired in the vicinity of Oakland and Dickens Street. Upon arrival, officers found eleven .9mm shell casings on the ground and noticed a Jeep Grand Cherokee in the vicinity. About an hour later, officers observed the same vehicle at Douglas Avenue and Eaton Street. After observing a traffic violation, the officers affected a traffic stop.
While pulling in behind the vehicle, officers observed an individual in a rear passenger seat toss a large black box into the rear cargo area. Upon arriving at the vehicle, the officers observed an open box with a firearm inside in the rear cargo area. Upon further inspection, officers discovered a .9mm handgun with an empty magazine. They also located a black plastic bag with ten .380mm rounds and a Glock 40 caliber magazine with 8 rounds of ammunition.
After being placed inside a police cruiser, Phan told an officer, “It is my car and everything in it is mine.” At the police station, Mr. Phan admitted that the Jeep was registered to him, the weapon was his, and told officers “it was self-defense.” Phan told police that he had been shot at earlier in the evening.
Phan has been detained since his arrest.The Bureau of Alcohol, Tobacco, Firearms and Explosives assisted Providence Police in the investigation of this matter.
The case is being prosecuted by Assistant U.S. Attorney Richard W. Rose.###
To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/
Contact: 401-709-5357
[email protected]Fairmont, WV man convicted of stealing government moneyRead the Press Release
CLARKSBURG, WEST VIRGINIA – Former United States Forest Service employee Kwaku A. Akomah, 41, of Fairmont, West Virginia, was convicted today in federal court of stealing government money, United States Attorney William J. Ihlenfeld, II, announced today.
A Forest Service investigation revealed that Akomah made repeated unauthorized purchases using government funds. He made a variety of unauthorized personal purchases, including the use of a government issued fuel card to procure more than $1,000.00 in gasoline for his personal vehicle.
Akomah pled guilty today to one count of “Theft of Government Money.” He faces up to 10 years in prison and a fine of up to $250,000.00. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Stephen Warner is prosecuting the case on behalf of the government.
U.S. Magistrate Judge John S. Kaull presided.
Facilities Director Sentenced for Bribery in Connection with Building ContractsRead the Press Release
BOSTON – The facilities director of two non-profits which provide support services for developmentally disabled adults and their families was sentenced today in connection with soliciting bribes.
Charles Feeney, 60, of Billerica, was sentenced by U.S. Senior District Judge Mark L. Wolf to six months in prison, three years of supervised release, and ordered to pay $142,927 in restitution. In May 2012, Feeney pleaded guilty to two counts of soliciting bribes.
Feeney was the facilities director for Community Alternative Residential Environments, Inc. (CARE) and Walnut Street Center (WSC), two Massachusetts based non-profits which provide support services for developmentally disabled adults and their families. When CARE/WSC purchased a building which was to be renovated and turned into administrative offices and a day facility, it was Feeney’s job to solicit bids for the general contract and oversee the renovation process. Instead, Feeney made an agreement with a general contractor he knew to get the contract and in exchange, Feeney would get the electrical subcontract for his business, C.T. Feeney & Sons Electrical Services. In so doing, Feeney falsely assured both the then-executive director and the finance director of CARE/WSC that he had received three bids for the project when, in fact, there were no bids.
In 2006 and 2007, the renovations were done in two phases. During the second phase, Feeney told the general contractor that he wanted a bucket truck for use in his own business and the two agreed that the contractor would pay for Feeney’s bucket truck in purported project rental fees to reimburse Feeney for the truck. Feeney’s net benefit from the electrical subcontract was more than $139,000. After Feeney’s role in the renovation was discovered, the non-profit also incurred more than $142,000 in attorney’s fees in the effort to determine whether the renovations had been properly performed and in assisting the government in the investigation of the offense.
United States Attorney Carmen M. Ortiz; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Glenn A. Cunha, Inspector General of the Commonwealth of Massachusetts made the announcement. The case was prosecuted by Assistant U.S. Attorney Sandra S. Bower of Ortiz’s Economic Crimes Unit.
District Court Judge Sentences St. Thomas Man to 10 Years in PrisonRead the Press Release
St. Croix, USVI – Senior District Court Judge Raymond L. Finch today sentenced Calieb Webster, 32, of St. Thomas, to 10 years in prison for conspiracy to possess with intent to distribute cocaine, announced United States Attorney Ronald W. Sharpe and U.S. Department of Homeland Security Homeland Security Investigations Special Agent-in-Charge Angel Melendez.
Judge Finch also sentenced Webster to five years of supervised release, and ordered him to pay a $100 special assessment.
On August 5, 2013, Webster pleaded guilty to conspiracy to possess with intent to distribute cocaine. Court records show that on February 27, 2012, Webster and his girlfriend presented themselves for primary inspection at the Henry E. Rohlsen Airport on St. Croix for travel to New York via Miami. They were referred to a baggage control secondary inspection, and a search of Webster’s checked bag yielded a black plastic bag covered with clothing and aluminum foil. Upon further inspection, the Customs and Border Protection officer observed 15 rectangular-shaped objects wrapped in plastic. Six additional rectangular-shaped objects were found in Webster’s carry-on bag, and several in the girlfriend’s. The rectangular-shaped objects were analyzed and confirmed to contain 36.32 kilograms of cocaine.
U.S. Attorney Sharpe commended the efforts of the U.S. Department of Homeland Security Homeland Security Investigations who investigated the case, and Assistant U.S. Attorney Rhonda Williams-Henry who prosecuted the case.
Co-Owner of Overland Park Hotel Sentenced to Prison for Employing Undocumented WorkersRead the Press Release
KANSAS CITY, KAN. - The co-owner of an Overland Park hotel was sentenced Tuesday to 21 months in federal prison for employing undocumented workers, who were paid less than other employees, U.S. Attorney Barry Grissom said. She also agreed to forfeit her interest two hotels and funds derived from the crime.
Rhonda R. Bridge, 42, and her husband, Munir Ahmad Chaudary, 53, both of Overland Park, Kan., pleaded guilty to one count of conspiracy to harbor undocumented aliens for personal gain. In their pleas, they admitted employing undocumented workers at two hotels they owned: A Clarion Hotel at 7000 W. 108th in Overland Park, and a Clarion Hotel at 11828 NW Plaza Circle in Kansas City, Mo. Chaudary and Bridge lowered their hotels’ operating costs and put themselves at a competitive advantage by not paying Social Security, Workers Compensation and unemployment insurance for the undocumented workers.
According to court records, the investigation began in December 2011 when the U.S. Department of Homeland Security (DHS) and the Kansas Department of Revenue (KDOR) received information that the owners of the hotels were employing foreign nationals who not lawfully present in the United States. In June 2012, an undercover agent posing as an undocumented worker got a job at the Overland Park Hotel. He was hired even though he told his employers he was not authorized to work in the United States.
In 2011 and 2012 the defendants filed false and fraudulent Quarterly Wage Reports and Unemployment Tax Returns with the Kansas Department of Labor in which they under-reported the number of employees at the Overland Park hotel, the amount of total wages paid and the amount of unemployment taxes due.
Bridge is the third person to be sentenced in the case. Judith Vanzant, a hotel manager, and Syed Naqvi, a Pakistani native who worked as a desk clerk, already were sentenced. Co-defendant Munir Ahmad Chaudary is awaiting sentencing.
Grissom commended Homeland Security Investigations (HSI), the Kansas Department of Revenue (KDOR), the Overland Park Police Department, the U.S. Department of Labor and Assistant U.S. Attorney Brent Anderson for their work on the case.
Biogenesis Founder Sentenced Today for his Role in Conspiracy to Distribute Testosterone and Human Growth Hormones to Underage High School and Professional AthletesRead the Press Release
Anthony Bosch, 50, of Key Biscayne, was sentenced today to four years imprisonment, to be followed by three years of supervised release for his role in administering testosterone and human growth hormone to underage high school and professional athletes. The court also ordered Bosch to perform 200 hours of community service and prevented him from working in the medical field in the future.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and A.D. Wright, Acting Special Agent in Charge, Drug Enforcement Administration (DEA), Miami Field Division, made the announcement.
The charges stem from a DEA investigation, which focused on the illegal distribution of testosterone by the charged defendants in Miami-Dade County, and elsewhere. In August 2014, seven defendants, including Yuri Sucart, Juan Carlos Nuñez, and Lazaro Daniel Collazo, were charged with conspiracy to distribute testosterone. Bosch, Carlos Javier Acevedo, Jorge Augustine Velazquez, Christopher Benjamin Engroba, Paulo Berejuk, and Juan Carlos Nuñez plead guilty. Acevedo, Velazquez, and Engroba have been sentenced in connection with this conspiracy. Sentencing for Berejuk is scheduled for February 25, 2015 at 8:30 a.m. before U.S. District Judge Cecilia M. Altonaga. Sentencing for Nuñez is scheduled for March 3, 2015 at 8:30 a.m. before Judge Altonaga.
The charges, filed in August 2014, focused on the illegal distribution of testosterone by the operators of several anti-aging clinics in Miami, Florida, recruiters for these clinics, and a black market distributor of testosterone. These anti-aging clinics were incorporated under several different corporate names: Biogenesis of America, LLC; Biokem, LLC; Revive Miami, LLC; and others by the same group of people who occasionally worked together in the time period 2008 through 2012. One of the original founders of these clinics was Anthony Bosch.
Bosch and his co-conspirators were all charged with one count of conspiracy to distribute a Schedule III controlled substance, that is, the anabolic steroid testosterone, in violation of Title 21, United States Code, Section 846.
Mr. Ferrer thanked the DEA for their work on this investigation. This case was prosecuted by Senior Litigation Counsel Michael P. Sullivan and Assistant U.S. Attorney Sharad A. Motiani.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Attorney General Holder Delivers Remarks at the National Press ClubRead the Press Release
Remarks as prepared for delivery
Thank you, President [John] Hughes, for that kind introduction – and for your leadership, and stewardship, of this venerable institution. I’d also like to thank past President Donna Leinwand Leger, of USA Today, for inviting me to be here this afternoon; the National Press Club’s officers, and your entire Board of Governors, for their critical work; and all of the journalists, both in and beyond this crowd, who contribute so much to our national discourse.
It is a pleasure to stand today among so many distinguished members of the Fourth Estate. And I am humbled to follow in the footsteps of the remarkable men and women who have addressed this organization since its founding, over a century ago. Before we open the floor for questions this afternoon, I’d like to take a few minutes to discuss the latest developments in the Justice Department’s ongoing efforts in the field of criminal justice reform – as well as the significant and extremely promising results we’re beginning to see just 18 months after the launch of our Smart on Crime initiative.
When I took office as Attorney General, a little over six years ago, I came to the job having seen America’s justice system from a number of angles – primarily as a prosecutor, but also as a judge, and as an attorney in private practice. I’d had the great honor of serving alongside – and learning from – countless dedicated lawyers, brave men and women in law enforcement, and leading criminal justice experts of all stripes. I’d served under Administrations led by presidents of both political parties. I knew that, despite the laudable progress we’d brought about – over the past two decades – in lowering the overall crime rate, real and daunting challenges remained before us. And I understood that few of these challenges were more pressing than the need to strengthen the federal criminal justice system – and reduce America’s overreliance on incarceration.
After all, although the United States comprises just five percent of the world’s population, we incarcerate almost a quarter of its prisoners. While the entire U.S. population has increased by about a third since 1980, the federal prison population has grown by almost 800 percent over the same period. And on the day I took office, as a result of often well-intentioned policies designed to be “tough” on drugs, nearly half of all federal inmates were serving time for drug-related offenses.
As many of you have so thoroughly reported, this state of affairs not only had serious financial ramifications for our country – occupying roughly a third of the Justice Department’s budget in recent years; it exacted a human and moral toll that’s impossible to calculate. Studies showed that the policies that imposed these costs had not had a significant impact in making our communities measurably safer. And the persistence of this status quo demanded that national criminal justice leaders closely examine our institutions and reorient our practices to create the more perfect Union that our founders imagined – and the more just society that all Americans deserve.
With these aims in mind, under President Obama’s leadership, we began to push for serious changes. In 2010, as the result of our efforts – and the close partnership of leaders from both parties on Capitol Hill – the President was able to sign the Fair Sentencing Act, which reduced the inappropriate and unjust 100-to-1 sentencing disparity between crack and powder cocaine. Over the years, we’ve also worked to strengthen reentry policies aimed at reducing recidivism – and to advance a host of other targeted improvements like drug courts. In early 2013, I took these efforts to a new level by initiating an unprecedented, exhaustive and targeted Justice Department review of the federal criminal justice system as a whole – to identify obstacles, inefficiencies, and inequities, and to address ineffective policies.
This review culminated, about 18 months ago, with the launch of our groundbreaking criminal justice reform initiative known as Smart on Crime. Smart on Crime was a catch-all term for a range of reforms we implemented simultaneously in the summer of 2013, each significant in its own right. Among other steps, we made major changes to the department’s charging policies related to nonviolent drug offenses; we put sensible limits on when it was appropriate to seek stiffer sentences based on a defendant’s prior criminal record; and we took steps to improve reentry processes in order to reduce the chances that incarcerated individuals reoffend after they exit prison. Taken together, these reforms reflect the department’s age-old commitment to a criminal justice system that is fair; that deters serious criminal conduct; that holds people accountable for their crimes; and that utilizes incarceration wisely – to punish, deter, and rehabilitate - not merely to confine and forget.
Over the last year and a half – as my colleagues and I have implemented new crime prevention efforts, more effective community policing policies, and promising diversion and reentry strategies – I’ve spoken extensively about the changes we’ve made and the vision that is driving us forward. I’ve pointed to the favorable results we’ve seen on the state level – in places like Kentucky, Texas, Ohio and Pennsylvania – where governors and legislatures of both parties have provided a model for others to emulate by directing funding away from prison construction and toward programs designed to reduce recidivism. And I have placed particular emphasis on two of the most vital reforms at the heart of our Smart on Crime initiative: the prioritization of cases within each U.S. Attorney’s Office and a critical change to the Justice Department’s charging policies.
Late last year, we began compiling data to help us measure the impact of our criminal justice reforms. This data is preliminary. But it shows that the Smart on Crime initiative is working exactly as intended. It is having a real and measurable impact on the decisions made by federal prosecutors from coast to coast. The changes we’ve implemented are firmly taking hold. And our key reforms appear to be successful by every measure we’ve seen so far.
The numbers are particularly encouraging in three areas.
First, among the central components of Smart on Crime is an effort to reduce unnecessary incarceration by asking federal prosecutors to exercise discretion – and make smart and targeted decisions – about which cases warrant federal prosecution. As I said in a speech to the American Bar Association, in August of 2013, not every drug case should be brought in a federal court. Accordingly, I directed our United States Attorneys to develop specific, locally-tailored guidelines – consistent with national priorities – for determining when federal charges should be filed, and when cases should be handled at the state or local level. Today, I am pleased to report that our federal prosecutors are heeding that call. And they are being more selective in bringing certain drug prosecutions. Between 2013 and 2014, the number of defendants charged with drug trafficking offenses declined by nearly 1,400 individuals – a reduction of more than six percent.
Second, I instructed our prosecutors that, in the course of weighing which types of drug cases merit federal prosecution, they should focus on the worst offenders and offenses. The data from last year proves that, as a result of this shift, today, our prosecutors are focusing their attention – and their resources – on the most serious cases. In 2013, before Smart on Crime was implemented, the average guideline minimum for federal drug prosecutions – in other words, the average suggested minimum prison term for an individual being charged for a drug crime – was 96 months. A year later, while the number of drug trafficking prosecutions has dropped, the average guideline minimum has actually risen to 98 months. This demonstrates that the most serious drug crimes are now attracting the highest scrutiny – and that our limited resources are being used in ways that provide the greatest possible benefit to public safety.
Third, in August 2013, I also ordered a modification of the Justice Department’s charging policies to ensure that people accused of certain low-level, nonviolent federal drug crimes will face sentences appropriate to their individual conduct – rather than excessive mandatory minimum sentences that may be better suited to violent criminals or drug kingpins. This change was founded on the belief that, by reserving mandatory minimums for cases where they are warranted, we could better promote public safety, deterrence and rehabilitation, while making our expenditures smarter and more productive. Today, it’s clear that we are making significant progress toward this goal. In the year before our Smart on Crime charging policy took effect, roughly 64 percent of federally-charged drug trafficking offenses carried a mandatory minimum sentence. Last year, the new policy brought that number down to approximately 51 percent – a reduction of 20 percent relative to the prior year. Put another way, we have gone from seeking a mandatory minimum penalty in two out of every three drug trafficking cases, to doing so in one out of two. That’s a major reduction. In fact, it is historic. The Sentencing Commission confirms that these numbers show that federal prosecutors sought mandatory minimum penalties at a lower rate in 2014 than in any other year on record.
This figure, perhaps more than any other, shows the significant impact that our policy reforms are having. While other factors may play a role in the drop we are seeing in the overall number of drug cases, a decline this pronounced in the rate at which our prosecutors pursue mandatory minimum sentences can only be attributed to the changes we announced in 2013.
These are extremely encouraging results. And they demonstrate that, since we launched the Smart on Crime initiative, the federal criminal justice system has begun to operate more efficiently, by reducing its involvement in low-level criminal activity; more effectively, by targeting the most serious crimes, and more fairly – by ensuring that those who are convicted of crimes receive sentences that are commensurate with their conduct.
Now, some have suggested – since I announced these important reforms – that reducing our reliance on mandatory minimums might negatively impact the ability of our prosecutors to elicit cooperation from federal defendants. They asserted that, without the threat of a mandatory minimum sentence, a defendant in a drug case would have substantially less incentive to provide information or testimony about others who might be engaged in criminal enterprise. Some critics even worried that prosecutors would be less able to obtain guilty pleas, and that court dockets would overflow with defendants who might previously have pleaded guilty to avoid a mandatory minimum sentence but suddenly had less incentive to shorten the process.
I never considered these concerns persuasive. Like anyone who served as a prosecutor in the days before sentencing guidelines existed and mandatory minimums took effect, I knew from experience that defendant cooperation depends on the certainty of swift and fair punishment, not on the disproportionate length of a mandatory minimum sentence. With or without the threat of a mandatory minimum, it will always be in the interest of defendants to cooperate with the government. And I am gratified – but by no means surprised – to announce today that our Smart on Crime approach has been vindicated by the data we’ve gathered.
Even though mandatory minimums have been charged significantly less frequently under our new policies, the percentage of cases in which we receive substantial cooperation from defendants has remained exactly the same. This also holds true of the ability of our prosecutors to secure guilty pleas in these cases. In the year before Smart on Crime took effect, our prosecutors won guilty pleas in approximately 97 percent of drug trafficking cases. A year later, despite significant reductions in our uses of mandatory minimums, this percentage stands at 97.5. So the notion that the Smart on Crime initiative has somehow robbed us of an essential tool is contradicted not only by our history – but by clear and objective facts.
This newly unveiled data shows we can confront over-incarceration at the same time that we continue to promote public safety. Already, in Fiscal Year 2014, we saw the first reduction in the federal prison population in 32 years. Meanwhile, since President Obama took office, we’ve presided over a continued decline in the overall crime rate. This marks the first time that any administration has achieved side-by-side reductions in both crime and incarceration in more than 40 years.
All of this progress is remarkable, and all of it is noteworthy. These concrete results illustrate the tremendous – and very real – promise of the work that Smart on Crime is making possible. They signal a potential paradigm shift in the way our nation approaches vital questions of fairness and justice. And in the preliminary data we’ve seen – and the growing, bipartisan consensus surrounding the work that’s underway – they prove unequivocally that criminal justice reform is an idea whose time has finally come.
Remember: for years prior to this administration, federal prosecutors were not only encouraged – but required – to always seek the most severe prison sentence possible for all drug cases, no matter the relative risk they posed to public safety. I have made a break from that philosophy. While old habits are hard to break, these numbers show that a dramatic shift is underway in the mindset of prosecutors handling nonviolent drug offenses. I believe we have taken steps to institutionalize this fairer, more practical approach such that it will endure for years to come.
We can all be proud of these efforts, and encouraged by the steps that we’re taking every day to strengthen America’s justice system across the board. Thanks to the work of my dedicated colleagues; the valor of our brave men and women in law enforcement; the thoughtful leadership of bodies like the Judicial Conference of the United States and the United States Sentencing Commission; and the partnership of Republicans and Democrats in Congress and in so many state governments, the goals and the values of the Smart on Crime initiative have been codified and put into practice at every stage of the criminal justice process – from prosecution, to sentencing, to rehabilitation and reentry.
The work we have done is nothing short of groundbreaking. But this is no time to rest on our laurels. Significant challenges remain before us. And a great deal of work remains to be done.
Our prisons are still overcrowded. Across the country, far too many people remain trapped in cycles of poverty, criminality, and incarceration. Unwarranted disparities are far too common. Law enforcement is distrusted in far too many places and cops are not appreciated for the tough job they do so well. And if we hope to build on the record we’ve established so far – and to make the Smart on Crime initiative not only successful, but permanent – it will be incumbent upon all Americans—most especially our Congress—to work together to ensure that all of this is just the beginning. From critical improvements to the juvenile justice system, to a range of back-end criminal justice reforms, we must continue to advance promising, bipartisan legislation to make our communities safer, treat individuals more justly and allow more efficient use of law enforcement resources.
Our efforts over the last six years have laid a strong foundation for a new era of American justice. Congress can help us build on this foundation by passing important, bipartisan legislation like the Smarter Sentencing Act, which would give judges more discretion in determining sentences for people convicted of certain federal drug crimes. And going forward – with measures like this one, and with the tireless work of our United States Attorneys and their colleagues, the strong leadership of our outstanding new Attorney General and Deputy Attorney General, and the robust engagement of the American people – I believe there’s good reason for confidence in where this work will lead us.
In the coming weeks, as you know, my time in the Obama Administration – and my formal career in public service – will draw to a close. But even now, as I prepare to open a new chapter in my life – with pride in all that my colleagues and I have accomplished, and deep gratitude for the opportunities I’ve been afforded – I know that, for me, this effort will continue. Whatever I do next, and wherever my own journey may take me, I will keep seeking new ways to contribute, to remain engaged in the effort to improve our institutions, and to build trust in those who serve them. And although I will soon leave the Justice Department, I will never leave the work that has become the mission – and the single greatest honor – of my professional life: advancing the cause of justice and building a brighter future for the country I love.
I want to thank you all, once again, for the opportunity to speak with you this afternoon – and for the work you do every day to strengthen our democracy and inform our national dialogue. I look forward to your questions.
Area Men Sentenced for Healthcare Fraud CrimesRead the Press Release
Follow @SDILNewsStephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today, that Quincy O. Gamble, 39, of Cahokia, Illinois, and Lawrence Thigpen, 53, of Collinsville, Illinois, were sentenced on Friday, February 13, 2015, for engaging in a scheme to commit health care fraud by defrauding the Home Services Program, which is a Medicaid Waiver Program designed to allow individuals to stay in their homes instead of entering a nursing home.
The district court sentenced Gamble to five years of probation; two years of supervised release, and a $100 special assessment. Gamble was also ordered to pay $6,704.89 in restitution to the Illinois Department of Human Services and to the Center for Medicare and Medicaid Services. During his plea hearing, Gamble admitted that he had submitted false and fraudulent bills in relation to his alleged performance of personal assistant services for his girlfriend, April Hayes, totaling 711 hours over an eleven month period. He even admitted to submitting claims for six months after his girlfriend had passed away. As a result, Gamble improperly billed $7,836.56 in payments for services not performed.
In a separate matter, the district court sentenced Thigpen to 15 months in federal prison, three years of supervised release, and to pay a special assessment of $100.00. Restitution was also ordered in the amount of $4,591.15. Facts brought out in Court showed that Thigpen was falsifying time sheets in order for his girlfriend, who was also his personal assistant, to receive payments for time periods when she was actually in jail.
The investigation was conducted by the U.S. Department of Health and Human Services, Office of Inspector General and the Illinois State Police, Medicaid Fraud Control Bureau. The cases were prosecuted by Assistant United States Attorneys, Ranley R. Killian, William E. Coonan, and Michael Hallock.
If you suspect or know of an individual or company that is not complying with healthcare laws or public aid programs, you may report this activity to the local office of the U.S. Department of Health and Human Services, Office of Inspector General, or you may call 1.800.447.8477.
18 Named in Superseding Indictment Charging Conspiracy, Aggravated ID TheftRead the Press Release
ERIE, Pa. - Eighteen individuals from around the United States have been indicted by a federal grand jury in Erie on charges of conspiracy to commit wire fraud and aggravated identity theft, United States Attorney David J. Hickton announced today.
The thirteen-count superseding indictment named Doherty Kushimo, 53, of Providence, Rhode Island; Saburi Adeyemi, 57, of Memphis, Tennessee; Abiodun Bakre, 50, of Ozone Park, New York; Adetunji Gbadegeshi, 57, of Rosedale, New York; Adebola Mejule, 55, of Hempstead, New York; Michael Idowu Olugbade, 43; Xerxes Shevar, 47, of Brooklyn, New York; Gcobisa Kehle, 37, of Brooklyn, New York; Loyiso Kula, 43, of New York City; Abiodun Tijani, 44, of Staten Island, New York; Funmilayo Aliyu, 53, of Laurelton, New York; Bola Peters, 43, of New York City; Samuel Sobaloju, 52, of Far Rockaway, New York; Daniel Freeman, 49, of Danbury, Connecticut; Nana Baffour, 38, of Bronx, New York; Kwame Asamoah, 35, of Brooklyn, New York; Robert Wireko, 47, of Brooklyn, New York; and Alaire Sanya, 47, of Far Rockaway, New York, as defendants.
According to the indictment presented to the court, the eighteen defendants conspired to commit wire fraud by submitting fraudulent federal tax returns in the names of individuals whose identities the conspirators stole. The conspirators then opened bank accounts using stolen identities and used those accounts as repositories for their fraudulently obtained federal tax refunds. The conspirators obtained stolen identity information on the Internet and then traded that information among themselves using email accounts and other means of communication. All told, the indictment alleges that, for the tax years 2010 to 2013, approximately $38 million in fraudulent tax refunds was sought from the IRS by the conspirators, causing the IRS to pay at least $10 million in fraudulent refunds. The indictment also alleges that approximately 3,493 bank accounts were opened using stolen identities, affecting approximately 443 financial institutions, and that approximately 4,563 credit cards were obtained using stolen identities. Approximately 11,468 individuals are alleged in the indictment to have been victimized.
The law provides for a maximum total sentence of 20 years in prison for Saburi Adeyemi, Adetunji Gbadegeshi, Adebola Mejule, Michael Idowu Olugbade, Xerxes Shevar, Gcobisa Kehle, Loyiso Kula, Abiodun Tijani, Funmilayo Aliyu, Bola Peters, Samuel Sobaloju, Daniel Freeman, Nana Baffour, Kwame Asamoah, Robert Wireko, and Alaire Sanya. Doherty Kushimo faces 38 years in prison and Abiodun Bakre faces 36 years in prison. All eighteen defendants are subject to a maximum fine of $250,000 or twice the amount of loss to the victims. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendants.
Assistant United States Attorney Christian A. Trabold is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation conducted the investigation leading to the indictment in this case.
An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.