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19 March 2015
Manhattan U.S. Attorney and New York State Attorney General Announce $714 Million Proposed Settlement with the Bank of New York Mellon over Fraudulent Foreign Exchange Trading PracticesRead the Press Release
Bank Agrees to Terminate Employment Relationship with Responsible Executives
Preet Bharara, the United States Attorney for the Southern District of New York, Eric T. Schneiderman, the Attorney General for the State of New York, Thomas E. Perez, the U.S. Secretary of Labor (“DOL”), and Andrew J. Ceresney, Director of the Division of Enforcement for the Securities and Exchange Commission (“SEC”), announced today proposed settlements of civil lawsuits against and investigations of THE BANK OF NEW YORK MELLON (“BNYM” or the “Bank”) alleging that BNYM engaged in fraud and other misconduct when providing foreign exchange (“FX”) services to its customers. Specifically, BNYM agreed to pay a total of $714 million to settle lawsuits brought by the United States and New York State, private class action lawsuits brought by BNYM customers, and investigations by the SEC and DOL, all of which concern BNYM’s misconduct in connection with its standing instruction (“SI”) FX product. As part of the proposed settlement with the United States and the settlement with New York State, BNYM admits to and accepts responsibility for conduct alleged in the civil fraud lawsuits, including that contrary to representations to clients that it provided “best rates” and “best execution,” the Bank actually gave clients the worst reported interbank rates of the trading day. BNYM must terminate its employment relationship with certain executives with responsibilities related to the SI product, including DAVID NICHOLS (“NICHOLS”), who is a defendant in the United States’ lawsuit, and must reform its practices further to improve and increase the information provided to customers. NICHOLS also admits and accepts responsibility for conduct alleged in the United States’ complaint. The proposed settlement of the United States’ civil fraud lawsuit and proposed settlements of the customer class action lawsuits are subject to court approval. The United States submitted its proposed settlement to United States District Judge Lewis A. Kaplan today for review and approval.
Manhattan U.S. Attorney Preet Bharara said: “The Bank of New York Mellon’s custody clients, many of whom are public pension funds and non-profit organizations, trusted the Bank to be honest about the financial services it was providing and to deal with them fairly. BNYM and its executives, motivated by outsized profits and bonuses, breached this trust and repeatedly misled clients to believe that the pricing they were getting on foreign exchange was far better than it actually was. The Bank, after three years of litigation, has finally admitted what was always clear from the evidence – contrary to its various representations, including a claim of ‘best rates,’ the bank in fact gave clients prices at or near the worst interbank rates reported during the trading day. The bank repeatedly deceived its customers and is paying a heavy penalty for it. We will not hesitate to pursue and punish financial institutions and their executives who exploit their customer base to improve their bottom lines.”
Attorney General Schneiderman said: “Investors count on financial institutions to tell them the truth about how their investments are being managed. The Bank of New York Mellon misled customers and traded at their expense. Today’s settlement shows that institutions and individuals responsible for defrauding investors will be held accountable and will face serious consequences for their wrongdoing. This excellent outcome also shows what can be achieved when law enforcement agencies collaborate on an important matter such as this one.”
U.S. Secretary of Labor Thomas E. Perez said: “This case is a reminder that financial institutions charged with safeguarding retirement plan assets sometimes put the institution’s interests ahead of those of the investors they represent. Today’s settlement offers more proof that when they do so, we at the department along with our colleagues at federal and state agencies will hold them accountable.”
SEC Division of Enforcement Director Andrew J. Ceresney said: “BNYM misled registered investment company clients regarding its pricing of their foreign currency transactions. The bank said that it priced transactions according to ‘best execution standards’ and at market rates at the times of the trades, but in fact priced these transactions near the end of the day at or near the worst rates reported during the entire trading day.”
On October 4, 2011, the United States and New York State each filed civil fraud lawsuits against BNYM, one of the world’s largest custody banks, alleging that BNYM engaged in a scheme to defraud custodial clients who used BNYM’s FX services since at least 2001. The United States amended its complaint in 2012 to add as a defendant NICHOLS, a Managing Director at BNYM who had responsibilities with respect to BNYM’s representations to clients about the SI product.
The United States’ lawsuit was brought under the Financial Institutional Reform, Recovery and Enforcement Act of 1989 ("FIRREA”), which authorizes the United States to recover civil penalties for frauds involving or affecting financial institutions. This Office has pioneered the use of FIRREA to civilly prosecute financial institutions and their executives for engaging in fraud. Judge Kaplan issued a landmark decision in April 2013 endorsing the Government’s use of FIRREA in this case to pursue a financial institution for engaging in fraudulent conduct affecting its own federally insured deposits by putting them at risk. Two other Southern District of New York judges have followed Judge Kaplan’s decision in other financial fraud cases brought by this Office.
New York State’s lawsuit was brought pursuant to the Martin Act, which permits the State to seek damages and other relief for fraud.
As outlined in the lawsuits, BNYM offers FX services to its custodial clients, for whom it holds domestic and international financial assets, including currency. In particular, BNYM offers the SI product, pursuant to which BNYM automatically provides currency exchange on an as-needed basis when, for example, the client buys or sells foreign assets.
The complaints allege that BNYM provided its clients with very limited information about how it determined what currency exchange rates or prices would be used for standing instruction FX, and that what little information BNYM did provide to clients about pricing was false, incomplete, and/or misleading. For example, the complaints allege that BNYM’s FX executives, including NICHOLS, misled clients by representing that the product offered “best execution,” which is commonly understood to mean that the client receives the best available market price at the time that the currency trade is executed. As explained in the complaints, instead of providing clients with the most favorable prices available at the time the trades were executed, BNYM actually gave its SI clients the worst prices -- ones at the outer margins of the interbank daily range. According to the complaints, BNYM generated enormous profits based on the difference or “spread” between the actual interbank rate at the time of execution and the less favorable rates it gave to SI clients.
In January 2012, the United States entered into a partial settlement with BNYM resolving the Government’s injunctive claims and requiring the Bank to reform its business practices. In particular, BNYM was required, among other things, to disclose how SI transactions were priced, to make certain pricing data available to custodial clients, and to stop describing the SI product as “free” or claiming that it offered “best execution.”
Pursuant to the proposed settlements and other agreements, BNYM will pay a total of $714 million, of which $335 million will collectively be paid to the United States and New York State. Pursuant to the proposed settlement with the United States, BNYM will pay a civil penalty of $167.5 million. BNYM will similarly pay $167.5 million to the State of New York, nearly all of which will be directed to a fund that will compensate BNYM’s customers who were victims of BNYM’s misconduct. Two New York State agencies – the New York State Deferred Compensation Plan and the State University of New York (“SUNY”) – were among the victims and will be compensated for their losses.
BNYM will also pay $335 million to resolve private class action lawsuits filed by the Bank's customers.
To resolve DOL’s claims under the Employee Retirement Income Security Act (“ERISA”), BNYM will pay $14 million to the Bank’s ERISA plan customers (in addition to approximately $70 million that will be distributed to ERISA plan customers through the other settlements).
The SEC’s Division of Enforcement has reached a preliminary agreement with BNYM to recommend to the Commission a settlement of the SEC’s investigation concerning BNYM’s SI product. The settlement will include an administrative order finding that, in violation of Sections 31(a) and 34(b) of the Investment Company Act, BNYM prepared and provided its registered investment company clients with trade confirmations and monthly transaction reports that were misleading in light of the representations made because they did not specify the time the standing instruction transactions were executed or provide information about how specific rates were assigned. The proposed settlement is subject to finalization, review and approval by the Commission. Under the terms of the proposed settlement, BNYM will pay $30 million to the SEC.
In connection with the proposed settlements of the United States’ lawsuit and the settlement of New York State’s lawsuit, BNYM admits, acknowledges, and accepts responsibility for committing conduct alleged in the federal and state complaints, including the following:
How BNYM Priced Standing Instruction Foreign Exchange Transactions
1) If the client was purchasing foreign currency, the client received a price at or close to the highest reported interbank rate for that day or session (at or near the least favorable interbank price for the client reported during the trading day or session), and if the client was selling foreign currency, the client received a price at or close to the lowest reported interbank rate of the day or session (also at or near the least favorable interbank price for the client reported during the trading day or session).
2) Because SI clients received pricing at or near the high end of the reported interbank range for their currency purchases and at or near the low end of the reported interbank range for their sales, the Bank was generally buying low from, and selling high to, its own clients. The Bank recorded the difference or “spread” between the rates it gave clients and the interbank market price at the time the SI transactions were priced as “sales margin.”
BNYM’s Representations to Its Clients
1) The Bank made numerous representations to existing and potential clients concerning the SI product, including:
(i) The service provided “benefits” to its clients, including “FX execution according to best execution standards.”
(ii) The Bank “ensures best execution on foreign exchange transactions through the following mechanisms: As a major market participant, the Bank is actively engaged in making markets and taking position in numerous currencies so that we can provide the best rates for our clients.”
(iii) “Understanding the fiduciary role of the fund manager, it is our goal to provide best execution for all foreign exchange executed in support of our clients’ transactions.”
(iv) “We price foreign exchange at levels generally reflecting the interbank market at the time the trade is executed by the foreign exchange desk.”
(v) The Bank’s “primary focus is on securing the best possible rates for our clients rather than on trading for the bank’s own account.”
BNYM Did Not Provide Its SI Clients with the Best Price
1) Contrary to the representations set forth above, including that BNYM offered “best rates,” the Bank gave SI clients prices that were at or near the worst interbank rates reported during the trading day or session.
2) The Bank generally did not disclose its SI FX pricing methodology discussed above to its custodial clients or their investment managers.
3) The Bank was aware that many clients did not fully understand the Bank’s pricing methodology for SI transactions.
4) The Bank was aware that many market participants equated “best execution” with best price, or considered best price to be one of the most important factors in determining best execution.
As part of the proposed settlement with the United States, NICHOLS also admits, acknowledges and accepts responsibility for conduct alleged in the United States’ complaint, including the following:
1) From 2002 through 2011, NICHOLS was a Managing Director at the Bank who, among other duties, participated in the drafting and dissemination of the Bank’s description of “best execution” and the SI product. The description was disseminated to certain existing and prospective custody clients through responses to requests for proposals (“RFP”) and in other communications, and included the following statements:
(i) “Understanding the fiduciary role of the fund manager, it is our goal to provide best execution for all foreign exchange executed in support of our clients’ transactions.”
(ii) “Since The Bank of New York Mellon is one of the largest global custodians, our clients gain the ongoing benefit of aggregation of transactions across our broad customer base; accordingly, we price foreign exchange at levels generally reflecting the interbank market at the time the trade is executed by the foreign exchange desk.”
(iii) “Best execution encompasses a variety of services designed to maximize the proceeds of each trade, while containing inherent risks and the total cost of processing.”
2) NICHOLS had oversight of the Global Markets website and approved the content, which included the following statement: the Bank’s SI clients “benefit from . . . FX execution according to best execution standards.”
3) NICHOLS understood how the Bank priced SI transactions and also knew:
(i) The Bank generally did not disclose its SI FX pricing methodology discussed above to its custodial clients or their investment managers.
(ii) Many clients did not fully understand the Bank’s pricing methodology for SI transactions.
(iii) Many market participants equated “best execution” with best price, or considered best price to be one of the most important factors in determining best execution.
As part of the proposed U.S. and State settlement, BNYM must terminate its employment relationship with executives involved in the conduct alleged in the lawsuit, including NICHOLS. BNYM must also make further reforms to its business practices by providing clients additional pricing information about new standing instruction services BNYM currently offers to clients.
Mr. Bharara thanked the New York Attorney General's Office as well as counsel for the private litigants with whom this Office cooperated to litigate the multiple FX cases against the Bank and bring them to a successful conclusion.
The United States' FIRREA lawsuit arose in part from a whistleblower who filed a declaration pursuant to FIRREA.
The United States’ case has been handled by the Office's Civil Frauds Unit. Mr. Bharara established the Civil Frauds Unit in March 2010 to bring renewed focus and additional resources to combating financial fraud.
Assistant U.S. Attorneys Pierre G. Armand, Lawrence H. Fogelman, Jeffrey K. Powell, and Arastu Chaudhury are in charge of the case.
U.S. v. Bank of New York Mellon et al. Stipulation & Settlement
Man Sentenced to Serve A Total of Five Years in Federal Prison for Theft of Public Funds and Aggravated ID TheftRead the Press Release
DALLAS — A man who admitted to federal felony offenses stemming from his conspiracy to obtain tax refunds by filing fraudulent tax returns using stolen names and Social Security information was sentenced yesterday, announced John Parker, Acting U.S. Attorney for the Northern District of Texas.
Roberto Boris Fernandez was sentenced by U.S. District Judge Ed Kinkeade to a total of 60 months in federal prison and ordered to pay $466,405 in restitution to the IRS. Fernandez pleaded guilty in November 2014 to one count of conspiracy to commit theft of public funds and one count of aggravated identity theft. Specifically, Judge Kinkeade sentenced him to 36 months on the conspiracy conviction and 24 months on the identity theft conviction, to run consecutively.
According to the factual resume filed, during January 2012, Fernandez conspired with others to engage in a scheme to obtain tax refunds by electronically filing fraudulent income tax returns using stolen names and social security information. The returns falsely represented that the taxpayers were entitled to a refund because of a falsely created Earned Income Credit. The returns were filed through Turbo Tax, an online tax preparation service, and directed the IRS to deposit the refunds onto Turbo Tax debit cards that were mailed to coconspirators’ addresses. Fernandez and the coconspirators used the debit cards at automatic teller machines (ATMs) to withdraw cash.
In fact, according to the factual resume filed, for several hours during the evening and early morning hours of January 30-31, 2012, Fernandez and another co-conspirator traveled in a limousine Fernandez had rented to conduct multiple withdrawals from the Turbo Tax debit cards at various ATMs. However, the Little Elm Police Department stopped the limousine for a traffic violation. At the time, Fernandez was the sole passenger. While searching the limousine, officers seized Fernandez’s backpack, a cell phone, an air card, several Turbo Tax envelopes and debit cards, $8,295 in cash, and ATM receipts. Inside the backpack, officers found handwritten personal identifying information (PII) for approximately 200 individuals, together with notations as to refund amounts, personal identification numbers (PINs), and dates on which refunds were expected. Eight additional unopened Turbo Tax envelopes containing Turbo Tax debit cards issued in third party names were also found in the backpack.
IRS Criminal Investigation, according to the factual resume, identified 84 fraudulent income tax returns for the 2011 tax year with refund claims totaling $435,219 that were associated with the debit cards and identifying information located in the backpack.
IRS Criminal Investigation investigated. Assistant U.S. Attorney Christopher Stokes prosecuted the case.
Man Convicted in Holiday Shooting of Dorchester Postal CarrierRead the Press Release
BOSTON – Following a two-week trial, a federal jury convicted a Dorchester man yesterday in connection with the shooting, robbing, and kidnapping of a U.S. Postal letter carrier days before Christmas in 2013.
Keyon Taylor, 22, was found guilty of assault on a federal employee, robbery of a U.S. Postal worker, kidnapping, attempted kidnapping, and use of a firearm in a crime of violence. Taylor and a co-defendant Maurice Williams Miner-Gittens, 24, also of Dorchester, were charged in January 2014. Gittens pleaded guilty to robbery and conspiracy, and possession of a firearm in February 2015.
On Dec. 20, 2013, Taylor and Gittens rented a U-Haul van and followed a U.S. Postal delivery truck as a letter carrier was delivering holiday packages. When the letter carrier returned to his truck after making a delivery, Taylor confronted him with a gun pointed inches away from his head and demanded his wallet. While handing Taylor his wallet, the victim tried to move the gun away from his temple and was shot. The bullet entered his wrist, shattering a bone, and lodging in his forearm.
Taylor then repeatedly demanded the “drawer,” presumably in reference to a cash drawer. When the letter carrier told Taylor that the truck had no cash drawer, Taylor repeatedly pistol-whipped him. Taylor struck the victim so hard that a piece of the pistol grip broke off. Taylor then ordered the letter carrier into the back of the truck, and continued to beat him. He demanded the keys to the postal truck and the letter carrier’s postal uniform which Taylor then used to try to wipe up some of the victim’s blood.
Taylor, who was partially disguised, told the letter carrier not to look at him and threatened to kill him if the carrier did so. Moments later, frightened for his life, the letter carrier jumped out of the moving postal truck through the back cargo door. At the time, Taylor had carjacked the postal truck with the bleeding carrier inside. The victim ran for his life, in long johns and stocking feet. Civilians in the area provided assistance and called the police.
While the assault took place, Gittens was in the U-Haul van right behind the postal truck. In fact, Gittens got out and was directing traffic around the van and postal truck while Taylor was assaulting the letter carrier and then followed closely in the U-Haul van when Taylor drove off in the postal truck.
When the letter carrier jumped out of the postal truck, Taylor lost control of the truck, drove up onto the sidewalk and crashed the truck into a snowbank. Taylor then fled through four backyards, carrying the victim’s pants and vest, as well as the revolver. His flight path, which led to two chair link fences, was marked by a trail of boot prints in the snow. While jumping over one of the fences, Taylor punctured his hand leaving blood and a piece of a purple nitrile glove on the top of the fence. He also left more blood on a second fence and on the handle of a recycling bin. The blood was matched to Taylor by DNA analysis. Taylor dumped the victim’s pants and vest in the bin; further DNA analysis showed that both the letter carrier and Taylor had bled on the uniform. The victim’s blood was also found on a black jacket which Taylor wore. The jacket was recovered days later from a coat closet outside Taylor’s mother’s house in Attleboro, some 34 miles away from where the shooting took place.
Around 10:00 p.m. on the night of the robbery, Gittens was stopped in the U-Haul van. Inside were two pairs of purple nitrile gloves that matched the one found on the fence along Taylor’s escape path. On the outside of the van was a smear of the victim’s blood.
The charge of assault on a federal employee provides for a sentence of no greater than 25 years in prison and five years of supervised release.The charge of robbery of a U.S. Postal Worker provides for a sentence of no greater than 25 years in prison and three years of supervised release.The charge of kidnapping and attempted kidnapping provides for a sentence of no greater than life in prison and five years of supervised release.The charge of conspiracy provides for a sentence of no greater than five years in prison and three years of supervised release.For Taylor, the charge of use of a firearm in a violent crime provides for a mandatory minimum sentence of 10 years and three years of supervised release.Each charge also provides for a fine of no greater than $250,000.
U.S. Attorney Carmen M. Ortiz; Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service; and Boston Police Commissioner William Evans, made the announcement today. The U.S. Attorney’s Office wishes to thank the Boston Police Department’s Forensic Crime Laboratory for their exceptional assistance in analyzing forensic evidence. The case was prosecuted by William F. Bloomer and Thomas E. Kanwit of Ortiz’s Major Crimes Unit.
Mississippi Man Pleads Guilty to Assault with Intent to MurderRead the Press Release
Jackson, Miss –Ruben Cruz, 24, from Philadelphia, Mississippi, pled guilty today before Senior U.S. District Judge David C. Bramlette III to assault with the intent to commit murder and use of a firearm during a crime of violence, U.S. Attorney Gregory K. Davis announced.
Cruz admitted to his participation in the shooting of an individual in the Pearl River Community of the Choctaw Indian Reservation. The shooting occurred on June 1, 2014. Cruz will be sentenced by Senior U.S. District Judge David C. Bramlette III on July 14, 2015 and faces a maximum penalty of thirty years in federal prison and a $500,000 fine.
Luzerne County Man Pleads Guilty to Drug Trafficking and Illegal Gun PossessionRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that a 32-year-old Kingston man pleaded guilty today before U.S. District Court Judge Malachy E. Mannion in Scranton, to distributing Oxycontin (oxycodone) and unlawfully possessing a firearm as an illegal drug user.
According to United States Attorney Peter Smith, the defendant, Shawn Jenks, age 32, admitted to unlawfully possessing the firearm during September through November 2014, while he was also using heroin, and illegally distributing Oxycontin pills on November 22, 2014, in Luzerne County.
Jenks was charged in a criminal Information filed by the United States Attorney on March 17, 2015. The charges stem from an investigation by special agents of the Federal Bureau of Investigation and Kingston Police.
Judge Mannion ordered a pre-sentence investigation by the U.S. Probation office. Sentencing will be scheduled after the completion of that investigation.
Assistant U.S. Attorney Francis P. Sempa is prosecuting the case.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is 20 years imprisonment and a $1 million fine for the drug charge, and 10 years imprisonment and a $250,000 fine for the gun charge. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
Leader of Large Drug Conspiracy in Northern Kentucky ConvictedRead the Press Release
COVINGTON — The leader of a massive drug conspiracy that distributed large quantities of heroin and marijuana in northern Kentucky and southern Ohio has been convicted by a jury of multiple drug charges and other related offenses.
On Thursday, March 12, a federal jury convicted Alberto Lara-Chavez, 45, of Planada, Calif., of conspiracy to distribute 100 grams or more of heroin and 100 kilograms or more of marijuana, distribution of heroin and marijuana, possession of a firearm in furtherance of drug trafficking, possession of a firearm by an illegal alien, conspiracy to launder money, and engaging in a continuing criminal enterprise.
Felix Agundiz-Montes, 30, of Walton, Ky., was also convicted, of conspiracy to distribute 100 grams or more of heroin and 100 kilograms or more of marijuana, attempted distribution of marijuana, and conspiracy to launder money; and Jose Alberto-Lara, 23, of Planada, Calif., was convicted of conspiracy to distribute 100 kilograms or more of marijuana.
The jury returned the verdict after nine days of trial. The evidence established that from October 2012 through May 16, 2014, the defendants were members of a larger group that conspired to distribute heroin and marijuana in Kenton, Boone, Campbell, Gallatin, and Grant Counties in Kentucky as well as Hamilton, Brown, and Clermont counties in Ohio.
Evidence at trial established that the group shipped marijuana to this area from Texas and California and operated a large marijuana field in Sardinia, Ohio. The group brought heroin to this area from Columbus, Ohio for distribution. Evidence and court records showed that many of the members of the group were not legally present in the United States and had been brought here by other conspiracy members to sell narcotics. Many of them possessed firearms to protect the drugs and drug proceeds. The leaders of the group conspired to launder funds from the drug operation through bank deposits, wire transfers, and casino activity.
Lara-Chavez was the leader of the group and directed its local activities. Group members identified themselves as associates of a Mexican drug cartel.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Joseph Reagan, Special Agent in Charge, Detroit Field Division, Drug Enforcement Administration, jointly made the announcement.
The investigation was conducted by the Drug Enforcement Administration, the United States Postal Investigation Service, and the Internal Revenue Service. The United States was represented in the trial by Assistant United States Attorneys Tony Bracke and Jason Denney.
The defendants are scheduled to appear for sentencing before Judge Amul Thapar, in Covington, on July 1, 2015. Lara-Chavez faces a potential sentence of life imprisonment. Agundiz-Montes and Alberto-Lara face a maximum sentence of 40 years in prison. However, the sentences will be imposed by the court after consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of sentences.
Lansing Man Sentenced to 12 Months in Prison for Defrauding the Government of More Than $46,000Read the Press Release
Ahmad Elbast Lied that He Was Caring for His Father to Receive Benefits for Over Six Years after His Father Had Returned to his Native Lebanon
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick A. Miles, Jr. announced today that Ahmad Jamil Elbast of Lansing, Michigan was sentenced to 12 months in prison for Supplemental Security Income (“SSI”) representative payee fraud. Elbast was also ordered to pay restitution of $46,625. Following Elbast’s release from prison, he will serve a 36-month term of supervision by the Court. Elbast pleaded guilty to the charge before U.S. District Judge Robert J. Jonker on October 1, 2014.
Ahmad Elbast’s father qualified for Supplemental Security Income benefits and Ahmad Elbast served as his father’s representative payee starting in April 2006, promising to accept the payments on his father’s behalf. In fact, Elbast’s father left the country in March 2006, but Ahmad Elbast continued to certify that his father lived with him and that the SSI payments were being used to care for his father. Elbast’s fraud cost the taxpayers approximately $46,625.
The case was investigated by the Social Security Administration’s Office of Inspector General. Assistant U.S. Attorney Clay M. West prosecuted the case.
Land bank defendants found guilty in fraud schemeRead the Press Release
City employees received kickback payments for assisting in fraudulent land deals
PRESS RELEASE
INDIANAPOLIS – United States Attorney Josh J. Minkler, announced this morning the conviction of two defendants who were involved in a fraud scheme at the Indianapolis Land Bank. Reginald T. Walton 31, and David Johnson 48, both of Indianapolis were found guilty of multiple fraud and bribery charges after a two-week jury trial before U. S. District Judge William T. Lawrence.
“Public servants must understand that they serve the public and not themselves,” said Minkler. “Mr. Walton tried to sell our local government in Indianapolis through a scheme involving power, secrecy and greed. Our local government is not for sale and this verdict sends that message.”
The purpose of the Indianapolis Land Bank is to acquire abandoned and tax delinquent properties in Indianapolis and return them to productive and economically viable use. Properties are made available for sale to non-profit and for-profit real estate developers. For-profit investors interested in purchasing real estate from the Land Bank must pay at least the appraised value of the property. Non-profit purchasers, however, may bypass the auction process, purchasing real estate for a price between $1,000 and $2,500 per parcel, regardless of the appraised value of the property.
Walton and Johnson accepted bribes and “kick-backs” to facilitate fraudulent property sales to non-profit entities that would then sell the property to for-profit businesses. After these “pass-through” transactions had taken place, Walton and Johnson would receive kickback payments from the non-profit organizations from the proceeds of the property sales. The investigation into the pair also included the use of an undercover agent, and Walton accepted $500 from that agent in return for his agreement to fraudulently transfer at least ten parcels of land to the agent for $1,000 each.
“This type of fraud poses a fundamental threat to our way of life,” said FBI Special Agent in Charge W. Jay Abbott. “It takes a significant toll on resources, wasting billions in tax dollars every year. Citizens are owed integrity at all levels of government. The FBI is committed to pursuing those individuals who violate the public’s trust.”
“When a public official violates the trust of the citizens they are charged to serve, as was the case with Reggie Walton, it disparages the service and sacrifice of all government employees,” said Indiana State Police Superintendent Doug Carter. “The four years of investigative work put forth by state police Det. Shank helps restore lost faith and clearly conveys that criminal acts by public servants will be vigorously investigated, vigorously prosecuted and the guilty will be appropriately punished.”
Three other defendants have pleaded guilty in this case and are awaiting sentencing. They include Aaron Reed, John Hawkins and Randall Sargent.
Today’s indictment comes as the U.S. Attorney’s Office has prioritized the investigation and prosecution of fraud, waste and abuse on the part of public officials and those in positions of trust. As part of this effort, in 2012 the Office created a Public Integrity Working Group to assist in the investigation and prosecution of cases involving public corruption and white collar crimes. This case is the result of an investigation by the Federal Bureau of Investigation and the Indiana State Police, both active members of the Working Group.
According to Special Litigation Counsel Bradley A. Blackington and Cynthia Ridgeway, who prosecuted this case for the government, wire fraud charges carry a maximum penalty of twenty years in prison, and the bribery-related charges carry a maximum penalty of ten years in prison.
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Kirkland Resident Sentenced for Interstate Threats to KillRead the Press Release
A Kirkland, Washington resident was sentenced today in U.S. District Court in Seattle to two months in prison, announced Acting U.S. Attorney Annette L. Hayes. JALEEL TARIQ ABDUL-JABBAAR, 46, was arrested December 2, 2014, after he made threats on Facebook against a former Ferguson, Missouri Police Officer. ABDUL-JABBAAR pleaded guilty on February 2, 2015 and was released from custody. At sentencing U.S. District Judge Robert S. Lasnik recognized that everyone involved in the case has worked hard to obtain a just outcome that ensures public safety. Judge Lasnik noted that the U.S. Supreme court is considering a case concerning Facebook threats. “It is an area of the law that is in a state of flux,” Judge Lasnik said. Judge Lasnik emphasized that ABDUL-JABBAAR had to comply with a series of conditions as part of his court supervision and specifically ordered that ABDUL-JABBAAR’s internet use be monitored by probation and law enforcement during his three year term of supervised release.
According to records in the case, ABDUL-JABBAAR started posting threats on his Facebook page shortly after the August 9, 2014 shooting of Michael Brown. The threats continued through late November. ABDUL-JABBAAR posted various statements about killing police officers and traveling to Ferguson, Missouri. Among others, ABDUL-JABBAAR stated: “We need to kill (the officer) and anything that has a badge on.” ABDUL-JABBAAR also used Facebook communications to discuss acquiring a firearm.
The case was investigated by the FBI and was prosecuted by Assistant United States Attorney Todd Greenberg.
Justice Department Highlights Ongoing Efforts to Protect the Public and the Fisc from Fraudulent Tax Return Preparers and Tax Scheme PromotersRead the Press Release
During this tax-filing season, the Justice Department announced today the results of its ongoing efforts to combat fraudulent tax return preparers and promoters of tax fraud schemes. The department’s Tax Division has an active program to stop fraudulent return preparers and promoters from violating federal tax laws, particularly where the fraudulent activity can harm individual customers or drain the U.S. Treasury.
According to available Internal Revenue Service (IRS) statistics, taxpayers filed approximately 145 million individual income tax returns in 2014, with more than 84 million individuals using a paid tax return preparer. The division’s civil enforcement efforts have been directed against both large-scale return preparation franchises and smaller, independent return preparers and promoters. Last year, the Tax Division obtained permanent injunctions against more than 40 preparers, promoters and businesses operating all over the United States.
“In 2014, the Tax Division continued its pursuit of tax return preparers and promoters who violate the tax laws through abusive schemes and scams, and take advantage of their customers,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Tax Division. “The division’s attorneys and staff, along with our colleagues in the IRS, are committed to identifying, enjoining, and where appropriate, prosecuting those individuals who engage in such conduct.”
Preparers
As in past years, the IRS has again designated return preparer fraud as one of the “Dirty Dozen” tax scams to avoid during return filing season. The Tax Division took action in 2014 against preparers to curb some of the most common types of return preparation fraud:
Your refund should never be deposited directly into a preparer’s bank account.
In United States v. Nevers (E.D. La), the court barred a return preparer from preparing returns after she deposited refunds into her own account and took a cut before remitting the balance to customers, among other things.
Do not use a preparer who is willing to electronically file your return using your last pay stub instead of your W-2.
In United States v. Instant Tax Service, et al. (S.D. Ohio) the Court of Appeals for the Sixth Circuit affirmed the favorable district court judgment that shut down ITS Financial LLC, because of its pay stub filing and other predatory and fraudulent practices. Before being shut down, the Instant Tax Service franchise claimed it was the fourth largest tax-return-preparer franchisor in the United States. In affirming the district court’s relief, the Sixth Circuit noted “that Congress provided a broad grant of authority” to stop predatory and other harmful tax preparation practices.
Do not use a preparer who fabricates business expenses or deductions, or who claims bogus credits you may not be entitled to claim (i.e. Earned Income Tax Credit (EITC), child care, education credits).
The Tax Division secured injunctions in many cases, including United States v. Almanza (E.D. Pa.) in which the preparer claimed bogus additional child tax credit on returns and United States v. Branson (S.D. Miss.) in which the preparer claimed false EITCs and education credits. In Branson, more than 99 percent of the 2,400 returns prepared sought a refund, and 97 percent of the returns audited understated the customer’s tax liability by an average of $5,000.
Some other fraudulent schemes and practices that have been stopped through injunction orders entered by federal courts throughout the country include:
• preparing phony tax-return forms with fabricated businesses and income;
• claiming false education and homebuyer credits;
• claiming false and inflated deductions;
• claiming false filing status and false dependents;
• filing tax returns without customer consent or authorization;
• preparing bogus W-2 Forms based on information from employee paystubs;
• falsifying return information to claim inflated EITCs;
• preparing tax returns but failing to sign them as required; and
• defrauding customers by charging exorbitant fees.
Federal courts across the country — in Florida; Pittsburgh; Philadelphia; Memphis, Tennessee; Fresno, California; Waco and San Antonio, Texas; Montgomery, Alabama; New Orleans; Mississippi, and Georgia — have similarly stopped abusive tax return preparers from continuing their harmful conduct.
In September 2014, the division filed eight injunction suits in Florida to bar Walner G. Gachette, the founder of Orlando-based tax preparation company LBS Tax Services, seven LBS Tax Services franchisees and three LBS Tax Services managers from owning, operating or franchising a tax return preparation business and preparing tax returns for others. These cases also seek disgorgement from the defendants of the tax-preparation fees they charged their customers. According to the complaints, in 2013, LBS Tax Services operated at least 239 stores (192 owned by the named defendants) in Alabama, Georgia, Florida, Mississippi, North Carolina, South Carolina, Tennessee and Texas. In February 2015, a federal court in Orlando permanently barred two managers from preparing tax returns for others and from owning or operating a tax return preparation business.
Promoters
In addition to combating fraudulent return preparation, the division also filed suits in 2014 to enjoin promoters of fraudulent tax schemes, including Kenneth Elliott and Sea Nine Associates Inc., who promoted a purportedly legal welfare benefit plan. According to the division’s complaint, Elliott promoted plans that illegally permitted customers to claim substantial tax deductions for their plan contributions, then later access the full cash value of their plan contributions by taking out loans against the life insurance policies purchased with plan contributions, costing the U.S. Treasury in the process. The division obtained injunctions against Elliott and Sea Nine from promoting and selling the welfare benefit scheme.
In July 2014, the division filed suit in Chicago against Victor Crown and his various business entities to enjoin them from promoting false withholding and net-operating-loss tax schemes. According to the complaint, Crown prepares federal income tax returns and other documents that claim false amounts of income tax withheld from his customers’ earnings, and that they are entitled to claim bogus net-operating-losses because his customers sought, but did not receive, full award amounts for a separate class-action suit. Crown’s claims lack merit, according to the suit, because an employee is not entitled to claim an income tax withholding credit for more than the amount of income taxes actually withheld from their wages, and because nothing in the Internal Revenue Code permits a taxpayer to deduct the amount of a denied claim as a net operating loss.
In the past decade, the Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the division’s website.
As noted, in addition to the civil enforcement through injunctions that stop their illegal actions, many return preparers and promoters also face prosecution. Examples of those investigations can be found for fiscal years 2014 and 2015.
The IRS advises taxpayers who may select a tax professional to prepare their return to be careful in their selection. The IRS offers some basic tips and guidelines to assist taxpayers in choosing a reputable tax professional and is also offering taxpayers a number of instructional YouTube videos to help them prepare their own taxes for the upcoming filing season. Several options, including free assistance with preparation and electronic filing for the elderly and individuals making $50,000 or less, are available to help taxpayers prepare for the current tax season and receive their refunds as easily as possible.
Jury Convicts Cahokia Man of Possessing Cocaine with Intent to DistributeRead the Press Release
Antwon Jenkins, 27, of Cahokia, Illinois, was convicted of possession of cocaine with intent to distribute following a two day trial held in federal district court, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
Evidence showed that in late 2011 through early 2012, Jenkins had been in contact with another cocaine distributor and met with that cocaine distributor on January 28, 2012. Surveillance teams observed Jenkins leave the meeting, and an Illinois State Police trooper subsequently stopped Jenkins’ vehicle. A resulting search revealed Jenkins to be in possession of 81.5 grams of cocaine.
Jenkins faces up to twenty years in prison for this offense. Sentencing is scheduled for July 17, 2015. Jenkins had previously been convicted in 2014 by a federal jury for kidnapping and using or carrying a firearm during or in relation to the kidnapping. Jenkins was sentenced to a total of 308 months on that offense.
This case was investigated by the Drug Enforcement Administration. The case was prosecuted by Assistant United States Attorney Laura Reppert and Special Assistant United States Attorney Jonathan Drucker.
Illinois Woman Appears in Court on Charges of Providing Material Support to TerroristsRead the Press Release
St. Louis, MO – JASMINKA RAMIC of Rockford, Illinois, was arrested in Germany and extradited to the United States to face charges. She appeared in federal court earlier today in St. Louis for an initial appearance. She is set for an arraignment/detention hearing Monday, March 23, 2015.
The United States Attorney’s Office for the Eastern District of Missouri announced the indictment February 6 upon the arrests of the other five defendants on terrorist related crimes. Charged in the indictment are: Ramic, Ramiz Zijad Hodzic, his wife Sedina Unkic Hodzic, and Armin Harcevic, all of St. Louis County, Missouri; Nihad Rosic of Utica, New York; and Mediha Medy Salkicevic of Schiller Park, Illinois. All defendants are charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists. Ramiz Zijad Hodzic and Nihad Rosic are also charged with conspiring to kill and maim persons in a foreign country.
If convicted, the crimes of conspiring to provide material support carry penalties ranging up to 15 years imprisonment for each count and/or fines up to $250,000. The crime of conspiring to kill and maim persons in a foreign country carries a penalty of up to life in prison. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the St. Louis FBI’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), U.S. Postal Inspection Service, St. Louis Metropolitan and St. Louis County Police Departments, with assistance from multiple law enforcement agencies. The case is being prosecuted by Assistant U.S. Attorneys Matthew Drake, Howard Marcus and Kenneth Tihen of the Eastern District of Missouri and Mara Kohn, a Trial Attorney in the Counterterrorism Section of the Department of Justice.As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Illinois Woman Appears in Court on Charges of Providing Material Support to TerroristsRead the Press Release
St. Louis, MO – JASMINKA RAMIC of Rockford, Illinois, was arrested in Germany and extradited to the United States to face charges. She appeared in federal court earlier today in St. Louis for an initial appearance. She is set for an arraignment/detention hearing Monday, March 23, 2015.
The United States Attorney’s Office for the Eastern District of Missouri announced the indictment February 6 upon the arrests of the other five defendants on terrorist related crimes. Charged in the indictment are: Ramic, Ramiz Zijad Hodzic, his wife Sedina Unkic Hodzic, and Armin Harcevic, all of St. Louis County, Missouri; Nihad Rosic of Utica, New York; and Mediha Medy Salkicevic of Schiller Park, Illinois. All defendants are charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists. Ramiz Zijad Hodzic and Nihad Rosic are also charged with conspiring to kill and maim persons in a foreign country.If convicted, the crimes of conspiring to provide material support carry penalties ranging up to 15 years imprisonment for each count and/or fines up to $250,000. The crime of conspiring to kill and maim persons in a foreign country carries a penalty of up to life in prison. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the St. Louis FBI’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), U. S. Postal Inspection Service, St. Louis Metropolitan and St. Louis County Police Departments, with assistance from multiple law enforcement agencies. The case is being prosecuted by Assistant U.S. Attorneys Matthew Drake, Howard Marcus and Kenneth Tihen of the Eastern District of Missouri and Mara Kohn, a Trial Attorney in the Counterterrorism Section of the Department of Justice.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Houston Man Convicted in Brownsville of Importing MethamphetamineRead the Press Release
BROWNSVILLE, Texas – A federal jury has found Derrick Hargrove, 34, guilty on all four counts as charged related to the trafficking of 4.99 kilograms of methamphetamine, announced U.S. Attorney Kenneth Magidson. The verdict was returned today following three days of trial.
Hargrove, of Houston, was convicted of conspiracy to possess with intent to distribute, possession with intent to distribute, conspiracy to import and importation of methamphetamine.
The jury heard that Hargrove crossed from Mexico into the U.S. on Oct. 9, 2014, at the Gateway Port of Entry pedestrian lane with a suitcase. Upon inspection, a Customs and Border Protection (CBP) officer felt something in the suitcase, x-rayed it and observed two packages inside. A search revealed 4.99 kilograms of pure crystal methamphetamine.
Hargrove initially claimed ownership of the suitcase, but later claimed a stranger in Mexico gave it to him on the streets of Mexico. He claimed the stranger asked him to deliver the suitcase to a person he knew who was helping Hargrove get a liquor license for a nightclub he was allegedly opening in Matamoros.Hargrove is from Houston but had been living in Matamoros after losing his job.
U.S. District Judge Andrew S. Hanen, who presided over trial, set sentencing for June 22, 2015. At that time, Hargrove faces a minimum of 10 years and up to life in federal prison as well as a possible $10 million fine. He will remain in custody pending sentencing.
The case was investigated by Homeland Security Investigations and CBP. Assistant U.S. Attorneys Karen Betancourt and Justin Dinsdale prosecuted the case.
Guatemalan National Sentenced for Illegal ReentryRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ESWIN ESTUARDO MARTINEZ-REYES, age 42, a citizen of Guatemala, was sentenced today after previously pleading guilty to a one-count Bill of Information for illegal reentry of a removed alien.
U.S. District Judge Sarah S. Vance sentenced MARTINEZ-REYES to time served and a $100 special assessment. MARTINEZ-REYES will be surrendered to the custody of the U.S. Immigration and Customs Enforcement for removal proceedings.
According to court documents, MARTINEZ-REYES was found in the United States on December 2, 2014, after having been officially deported and removed on or about June 7, 2013.
U.S. Attorney Polite praised the work of the United States Department of Homeland Security, U.S. Border Patrol in investigating this matter. Assistant United States Attorney Spiro G. Latsis is in charge of the prosecution.
Garland County Jail Escapee Sentenced to 32 Years in Prison on Firearms Charges in Connection with Robbery and CarjackingRead the Press Release
Texarkana, Arkansas – Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that Derrick Estell, age 35, of Hot Springs, was sentenced today on two counts of Use of a Firearm in Furtherance of a Crime of Violence. Estell pleaded guilty on December 1, 2014 to charges in connection with a Bank Robbery that occurred in Hot Springs on March 1, 2013 and a Carjacking that occurred on March 7, 2013. Estell was sentenced on one count to 84 months in prison and on the other count to 300 months in prison; the sentences are to run consecutive for a total of 384 months. He was also sentenced to five years of supervised release on each count to run concurrent and was ordered to pay restitution in the amount of $12,478.00. The Honorable Susan O. Hickey presided over the sentencing hearing in The United States District Court in Texarkana.
U.S. Attorney Eldridge commented, “Armed and dangerous, this defendant terrorized multiple innocent victims during his reckless crime spree. Thanks to the dedicated work of several law enforcement agencies, he was apprehended and has now been held accountable for this criminal activity that threatened the Hot Springs community. Our office remains committed to ensuring that justice is served on behalf of all of the residents of the Western District of Arkansas by prosecuting violent crimes to the fullest extent of the law.”
"Estell is a criminal who terrorized and victimized people and businesses," stated Special Agent in Charge David T. Resch with the Little Rock Federal Bureau of Investigation, "He will now go to federal prison. This demonstrates the commitment between the United States Attorney, Garland County Sheriff’s Office, the Hot Springs Police Department, the ATF, and the FBI to work together and should send a strong message to anyone who would use intimidation and violence against the people of Arkansas.”
“We should all applaud the hard work of the investigators and deputies of the Garland County Sheriff’s Office in coordination with federal and state law enforcement agencies that Derrick Estell will spend a great deal of his life behind bars,” said Garland County Sheriff Mike McCormick. “The people of Garland County have spoken by saying that lawlessness will no longer be tolerated in their communities. His sentencing should send a message to other criminals that they will receive the same punishment if they plan to prey on the people of Garland County.”
According to court records, on March 1, 2013, Estell, wearing a dark colored hooded sweatshirt, a black ski mask, brown gloves and brandishing a small dark revolver, entered the Hot Springs Bank & Trust in Hot Springs, Arkansas and pointed the firearm at a customer, ordering the customer to the floor. Estell then announced the hold up, demanded money, pointed his weapon at the branch manager, and produced a paper bag demanding the money to be placed in it. Once money had been placed in the bag, Estell retrieved it and fled the bank. As 911 was called, employees of the bank observed Estell drive away in a vehicle that had been reported stolen from the surrounding area the previous day. The loss to the bank was over $11,000.
On March 7, 2013, officers with the Garland County Sheriff’s Office established surveillance on the Super 8 Motel in Hot Springs where they believed Estell to be staying. Officers were able to confirm the room Estell was staying in, the car he was driving, and that he was armed with at least three firearms. While investigators were attempting to isolate Estell in the motel, he emerged from a back door and fled on foot with officers in pursuit. Estell then carjacked a motor vehicle at gunpoint and took possession of the victim’s truck to continue his flight. According to the victim, Estell brandished a pistol, put it next to his side and demanded the keys. While fleeing from the officers at a high rate of speed, Estell struck at least three other vehicles before wrecking the stolen truck and running into nearby woods.
While officers were attempting to establish a perimeter around the woods, Estell was spotted running into an adjacent apartment complex where he broke into an apartment by kicking open the back door. The Garland County SWAT team and the Hot Springs Police Department officers isolated Estell in the apartment and after he refused commands to surrender, deployed gas to drive him out and ultimately took him into custody.
At the scene, officers recovered a loaded .38 revolver which was used by Estell during the carjacking and that matched the description of the firearm used in the bank robbery. In addition, officers obtained a search warrant for Estell’s motel room, in which they recovered a black hooded shirt, black neoprene ski mask, dark colored gloves that matched the clothing worn during the robbery, three other loaded pistols, and an assortment of ammunition.
This case was investigated by the Garland County Sheriff’s Office, the Hot Springs Police Department, the Federal Bureau of Investigation, and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant U.S. Attorney David Harris prosecuted the case for the United States.
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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
Four sentenced for drug traffickingRead the Press Release
CLARKSBURG, WEST VIRGINIA – Four individuals were sentenced today for drug trafficking, United States Attorney William J. Ihlenfeld, II, announced.
Arthur Sean Warner, 43, of Morgantown, West Virginia, was sentenced today to 151 months in prison for crack cocaine trafficking in Monongalia County, West Virginia in October 2014. He pled guilty in December 2014 to one count of “Possession with Intent to Distribute Cocaine Base” following an investigation by the Mon Valley Drug and Violent Crime Task Force.
John Howard Goff, Jr., 43, and Brian Michael Barnes, 33, both of Clarksburg, each pled guilty in November 2014 to one count of “Distribution of Methamphetamine – Aiding and Abetting.” Goff was sentenced today to 30 months in prison. Barnes was sentenced today to two years of probation.
Rodney Wayne Swiger, 46, of Clarksburg, pled guilty in November 2014 to one count of “Distribution of Controlled Substance Analogue – Aiding and Abetting.” They sold bath salts known as “Power X Energy Soak.” The bath salts contained a controlled substance known as “α-Pyrrolidinovalerophenone” or “α-PVP.” Swiger was sentenced today to two years of probation.
The Bureau of Alcohol, Tobacco, Firearms and Explosives and the Greater Harrison County Drug and Violent Crime Task Force, a HIDTA-funded initiative, investigated Goff, Barnes, and Swiger.
Assistant U.S. Attorney Zelda Wesley prosecuted Warner and Assistant U.S. Attorney Shawn Morgan prosecuted the remaining defendants on behalf of the government.
U.S. District Judge Irene M. Keeley presided.
Former University of Rochester Employee Sentenced on Fraud ChargesRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051ROCHESTER, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that Debra Bulter, 54, of Penfield, NY, who was convicted of conspiracy to commit mail fraud and to money laundering, was sentenced to 36 months in prison and three years supervised release by Chief U.S. District Judge Frank P. Geraci, Jr. The defendant was also ordered to pay restitution totaling $4,285,637.33; $1,875,622.33 to the University of Rochester and $2,410.015 to CGF Anesthesia Associates, P.C.
Assistant U.S. Attorney Richard A. Resnick, who handled the case, stated that the defendant worked as the Program Administrator for the Department of Anesthesiology at the University of Rochester in Rochester. The Department of Anesthesiology provides anesthesia services to patients undergoing surgery or other procedures at Strong Memorial Hospital, Highland Hospital and other medical facilities in Rochester. A physician, known as the Chair, oversees the Anesthesiology Department's management and operations. The Program Administrator oversees administrative duties and reports to the Chair.
From 2001 through 2012, an anesthesia medical group, CGF Anesthesia Associates, P.C., contracted with the Department of Anesthesiology to provide anesthesiologists at medical facilities served by the Department of Anesthesiology. Between 2003 to 2008, two doctors from CGF Anesthesia Associates, P.C. individually contracted with the Department of Anesthesiology purportedly to provide additional administrative services to the Department of Anesthesiology.
From 2007 through 2012, the defendant participated in several schemes to defraud the Department of Anesthesiology and the CGF Anesthesia Associates, P.C. One scheme involved deceiving the Department of Anesthesiology from 2007 to 2009 into making fraudulent payments to the two doctors and the CGF Anesthesia Associates, P.C. Misusing her position of trust, the defendant provided the Department of Anesthesiology with fraudulent documents, including fraudulent requisition forms and invoices, which made it appear that the two doctors and the CGF Anesthesia Associates, P.C. had provided adequate services to the Department of Anesthesiology for such payments. As a result of an unsuspecting U of R official signing the fraudulent documents, the Department of Anesthesiology was deceived into paying the two doctors $930,000 and CGF Anesthesia Associates, P.C. $530,000 to which they were not entitled. To compensate the defendant for her participation in the scheme, CGF Anesthesia Associates, P.C. was deceived into paying the fraudulent money it received from the Department of Anesthesiology to a business started by the defendant, DJA Solutions, Inc.
From January 2010 to September 2012, the Department of Anesthesiology and CGF Anesthesia Associates, P.C. were deceived into causing a large portion of the compensation earned by CGF Anesthesia Associates, P.C. from the Department of Anesthesiology to be diverted to the two doctors. As a part of the scheme, the two doctors each executed fraudulent contracts with the Department of Anesthesiology for the fiscal years 2010 through 2013 which stated that they intended to provide additional administrative services to the Department of Anesthesiology worth more than $3,000,000. These contracts were improperly signed by the defendant on behalf of the Department of Anesthesiology and concealed from the Chair of the Department of Anesthesiology and the other anesthesiologists at CGF Anesthesia Associates, P.C. The two doctors also caused invoices in their own names to be submitted to the Department of Anesthesiology which falsely represented that they had provided the services listed on such invoices. The scheme caused the Department of Anesthesiology to divert compensation actually earned by CGF Anesthesia Associates, P.C. to the two doctors in the total amount of $2,410,015. To compensate the defendant for her role in this scheme, CGF Anesthesia Associates, P.C. was deceived into to paying the defendant’s business, DJA Solutions, LLC, more than it was entitled. For the years 2010 through 2012, DJA Solutions, LLC received $1,169,606 from CGF Anesthesia Associates, P.C.
Another of the defendant's schemes involved causing the Department of Anesthesiology to make a fraudulent and unauthorized loan to a doctor working for the Department of Anesthesiology. The defendant disguised various payments to the doctor as extra compensation earned by the doctor. The defendant did this by preparing fraudulent payroll documents, which were submitted to the Chair of the Department of Anesthesiology for authorization to pay the extra compensation to the doctor. The Chair signed such forms believing that the doctor was entitled to such extra compensation and was unaware that such payments were actually an improper loan to the doctor. The total amount of the fraudulent payments to the doctor was $510,726.
From October 2012 to May 2012, the defendant also caused the Department of Anesthesiology to pay a former employee of the Department of Anesthesiology $7,168 by disguising the payments as compensation earned by the former employee, when in fact, the former employee was no longer working for the Department of Anesthesiology.
Finally, from March 2009 to June 2012, the defendant submitted expense reimbursement forms totaling $4,809.37 to the Department of Anesthesiology for expenses which she either had already been reimbursed for or were not actual business expenses.
Doron Feldman, 54, of Williamsville, NY, one of the two doctors with CGF Anesthesia Associates, P.C., was also convicted in this case and sentenced to 24 months in prison. The defendant was also ordered to pay restitution to the University of Rochester totaling $1,460,000. In addition, Feldman must pay $157,000 in restitution to the Internal Revenue Service.
The sentencing is the culmination of a joint investigation on the part of the Internal Revenue Service, under the direction of Shantelle P. Kitchen, Special Agent in Charge, New York Field Office, and the United States Postal Inspection Service, under the direction of Shelly Binkowski, Inspector in Charge, Boston Division, United States Postal Inspection Service.
Former Tribal Police Chief Indicted for Embezzling Tribal FundsRead the Press Release
The former Police Chief of the Swinomish Tribe was indicted today by the grand jury for six counts of wire fraud and four counts of theft of tribal funds, announced Acting United States Attorney Annette L. Hayes. THOMAS J. SCHLICKER, 57, of Stanwood, Washington, served as the Swinomish Police Chief from 1997 until September 2014, when his employment was terminated. SCHLICKER is scheduled to appear for arraignment next week.
According to the indictment, between 2008 and 2014, SCHLICKER is alleged to have embezzled more than $30,000 from the tribe. SCHLICKER allegedly set up a secret bank account in the name of the Swinomish Police Department without the knowledge of the tribal accounting department. The indictment alleges that SCHLICKER then deposited checks made out to the tribal police into the secret account and withdrew the proceeds in cash, which he then used for his own purposes. Some of the money deposited in the account came from the sale of vehicles seized and sold by the Tribal Police. The indictment also alleges SCHLICKER used the Tribe’s Chevron/Texaco credit card to purchase gas for his and his family members’ personal vehicles. Finally, the indictment alleges that SCHLICKER turned in paperwork asking to be reimbursed for the purchase of a uniform shirt, when in fact the charge was for an entry fee at a golf tournament.
Wire fraud is punishable by up to twenty years in prison and a $250,000 fine. Theft of tribal funds is punishable by up to five years in prison and a $250,000 fine.
The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the FBI and the Washington State Patrol. The case is being prosecuted by Assistant United States Attorneys Seth Wilkinson and Ye-Ting Woo.
Former Traffic Court Judge Sentenced for Lying to the FBIRead the Press Release
PHILADELPHIA – Willie Singletary, 33, of Philadelphia, was sentenced today to 20 months in prison for lying to the FBI when questioned about ticket fixing at the former Philadelphia Traffic Court. A federal jury found Singletary guilty of the charge in July 2014 following a trial. Three of Singletary’s co-defendants – Michael Lowry, Robert Mulgrew, and Thomasine Tynes – were convicted of committing perjury before the federal grand jury; and co-defendants H. Warren Hogeland, Kenneth Miller, Fortunato Perri, William Hird, and Henry P. Alfano pleaded guilty prior to trial.
In addition to the prison term, U.S. District Court Judge Lawrence Stengel ordered one year of supervised release, a fine of $1,500, and a special assessment of $100.
This case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys Denise S. Wolf and Anthony J. Wzorek.
Former Office Manager of Hobbs Business Pleads Guilty to Federal Tax ChargesRead the Press Release
ALBUQUERQUE – Connie C. Sims, 43, of Eunice, N.M., pled guilty late yesterday afternoon to federal tax evasion charges in federal court in Las Cruces, N.M., for violating the federal tax laws, announced U.S. Attorney Damon P. Martinez and Special Agent in Charge Dawn Mertz of the Phoenix Field Office of IRS Criminal Investigation.
Sims was charged with four counts of federal tax evasion in an indictment filed in Sept. 2014. The indictment charged Sims with evading her federal tax obligations during tax years 2009, 2010, 2011 and 2012 by failing to report her true income. At the time the offenses were committed, Sims was employed as the office manager of a surveillance equipment company located in Hobbs, N.M.
During yesterday’s proceedings, Sims pled guilty to all four counts of the indictment and admitted that she knowingly evaded approximately $120,366.00 in federal taxes by failing to report an aggregate of $482,890.00 in income during tax years 2009, 2010, 2011 and 2012. In her plea agreement, Sims admitted that from 2010 through 2013, she wrote checks to herself on the company’s bank accounts and did not report the money as compensation when she filed her federal tax returns. Sims acknowledged deriving an aggregate amount of $482,890.00 by writing checks to herself, which resulted in a loss of $120,366.00 to the IRS when she failed to report the income in her federal tax returns.
At sentencing, Sims faces a statutory maximum penalty of five years in federal prison on each of the four tax evasion counts. Under the terms of the plea agreement, Sims will be required to pay $120,336.00 in restitution to the IRS. Sims remains on conditions of release and under pretrial supervision pending her sentencing hearing, which has yet to be scheduled.
This case was investigated by the Las Cruces office of IRS Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Amanda Gould of the U.S. Attorney’s Las Cruces Branch Office.
Former Jailer Arraigned on Bribery and Drug Charges After Attempting to Smuggle Cocaine into Hall County JailRead the Press Release
GAINESVILLE, Ga. - Austin Herring has been arraigned on federal charges of accepting bribes and conspiring to possess with intent to distribute cocaine in relation to his efforts to smuggle cocaine into the Hall County Jail. Herring was indicted by a federal grand jury on March 3, 2015.
“This former corrections officer allegedly accepted bribes on two occasions to smuggle what he believed to be cocaine into the Hall County Jail,” said Acting U.S. Attorney John Horn. “We are committed to doing what we can to eradicate drugs and other contraband from jails. Jails are the single place above all others where citizens should have confidence that the inmates are no longer breaking the law.”
J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated: “The FBI takes all allegations of public corruption within law enforcement very seriously and acted on its investigation involving former Hall County Detention Officer Herring promptly. While these cases are disheartening to those working them, it should be noted that the vast majority of those in law enforcement are dedicated to their sworn oaths of office. The FBI would like to thank Hall County Sheriff Gerald Couch and his staff for their understanding and cooperation during this investigation.”
According to Acting U.S. Attorney Horn, the charges, and other information presented in court: Herring was employed as a jailer with the Hall County Sheriff's Office. On two occasions in February 2015, Herring was paid $500 to take a package he was told contained cocaine to an inmate inside the jail. After Herring delivered each package to the inmate who was cooperating with the investigation, the inmate then turned the package over to investigators. Herring did not open or tamper with either package, but on each occasion he was specifically told by the person who gave it to him that the package contained cocaine from Mexico. In actuality, neither package contained a controlled substance.
Herring, 19, of Murrayville, Georgia, was arraigned March 16, 2015, before United States Magistrate Judge J. Clay Fuller. He was arrested on these charges on February 20, 2015.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the Federal Bureau of Investigation with assistance from the North Georgia Major Offenders Task Force and the Hall County Sheriff's Office.
Assistant United States Attorney William L. McKinnon, Jr. is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Gainesville Division is http://www.justice.gov/usao/gan/.
Former Illinois State Representative Keith Farnham Sentenced to Ninety Six Months for Transporting Child PornographyRead the Press Release
CHICAGO — Former Illinois State Rep. KEITH FARNHAM was sentenced to ninety six months in prison today by U.S. District Court Judge Edmond E. Chang as a result of his conviction of transporting child pornography via computers in his office and residence in Elgin last year. Farnham resigned his seat in the Illinois General Assembly in March 2014, less than a week after federal agents seized computers from his home and office.
Farnham, 67, of Elgin, was also ordered to pay a $30,000 fine. Farnham was ordered by Judge Chang to report to prison on May 19, 2015. Farnham will remain on a bond that restricts him to his home and requires around-the-clock electronic monitoring. "This is a despicable crime." said District Court Judge Chang while imposing sentence. "The sex assaults of children in each of the 2700 images represent their own nightmare."
Farnham pled guilty in December 2014, admitting that on November 25, 2013, he sent an email from a computer in his Elgin office with the following message: "do you trade. This is what I lik." Farnham attached two files to the email that he knew contained child pornography. In addition, he possessed images and videos depicting child pornography on computers and electronic storage devices in his residence, car, and offices.
During the course of the investigation, agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) executed federal search warrants at Farnham’s state office and residence in Elgin and seized computers and electronic storage devices. On the day the warrant was executed in March 2014, Farnham possessed no fewer than 2,765 images of real minors engaged in sexually explicit acts, including sexual intercourse, with prepubescent children. Some of the images involved sadistic or masochistic conduct and depictions of violence, according to Farnham’s guilty plea. According to the court documents, HSI agents were investigating information received from the HSI Cyber Crimes Center that an email address, later linked to Farnham, was being used to trade child pornography on the Internet.
"The defendant’s criminal conduct extends far beyond simply viewing sexually explicit photographs online. The defendant actively traded and bartered images and videos depicting child pornography, bragged to others about his own hands-on sexual abuse and exploitation of a six-year-old girl, and actively hid his tracks from law enforcement in order to continue his criminal conduct," the government stated in its sentencing memorandum. "As an elected official, the defendant held himself out as being concerned about ‘protecting your children on the internet’ at the same time, however, he led another life, surfing the internet and message boards for sexually explicit images and further victimizing children of sexual abuse and exploitation."
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Gary Hartwig, Special Agent-in-Charge of HSI in Chicago.
The government was represented by Assistant U.S. Attorneys Timothy Storino and Michelle Petersen.
Former Head of Operations at New York Brokerage Firm Pleads Guilty to Tax Evasion and Filing False Tax ReturnRead the Press Release
A former resident of North Bellmore, New York, pleaded guilty today in the U.S. District Court for the Eastern District of New York in Long Island to one count of tax evasion and one count of filing a false federal income tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to the indictment, Dominick Pannitti, 38, was head of operations at a securities brokerage firm located in Syosset, New York. The brokerage firm used an automated system designed to adjust customers’ trading accounts for amounts less than $1,000. During 2005 and 2006, Pannitti used the automated system to credit his own trading accounts–set up in the name of a corporation that he owned–more than 850 times in increments of less than $1,000. Pannitti was not entitled to most of these credits, which totaled more than $570,000. Pannitti failed to report the income on his 2005 and 2006 federal income tax returns.
Pannitti faces a statutory maximum sentence of five years in prison and up to a $250,000 fine for the tax evasion count and a statutory maximum sentence of three years in prison and up to a $250,000 fine for the false return count at his sentencing before U.S. District Judge Arthur D. Spatt.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation and the FBI, who investigated the case, and Trial Attorneys Mark Kotila and Jeffrey Bender of the Tax Division, who are prosecuting the case. Ciraolo also thanked the U.S. Attorney’s Office for the Eastern District of New York for their substantial assistance.
Former Hawaii Couple Indicted on Tax and Prostitution-Related ChargesRead the Press Release
HONOLULU – A federal grand jury indicted Michael Paul Ernst, age 43, and Khemwika Ernst, age 38, former residents of Oahu, on March 11, 2015, for one count of conspiring to use interstate commerce to distribute proceeds of prostitution, two counts of using interstate commerce to distribute proceeds of prostitution, one count of conspiracy to defraud the United States in the collection of income taxes, and two counts of filing a false tax return.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said the indictment alleges that Khemwika Ernst earned money as a prostitute working in Hawaii and deposited her earnings into an account which she jointly controlled with Michael Paul Ernst, her husband. He would then transfer the funds to a mainland bank he controlled. Khemwika Ernst also sent the money she earned via a package delivery service to New Jersey, where the funds were deposited into bank accounts Michael Paul Ernst controlled.
The indictment further alleges that in 2009, 2010, 2011, 2012, 2013, and 2014, Michael Paul Ernst and Khemwika Ernst filed joint federal income tax returns that did not disclose the income earned by Khemwika Ernst. They were specifically charged for filing false returns for substantially underreporting their income on federal tax returns for 2008 and 2009.
If convicted, Michael Paul Ernst and Khemwika Ernst, face up to five years imprisonment for each count of conspiracy and up to three years imprisonment for filing false returns. The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.
The investigation of this case was jointly conducted by the Internal Revenue Service -- Criminal Investigation, Homeland Security Investigations, Naval Criminal Investigative Service, and the Defense Criminal Investigative Service. The prosecution is being handled by Assistant U.S. Attorneys Leslie E. Osborne, Jr. and Andrea W. Hattan.
Former Essex Junction Woman, Tammy Nguyen, Convicted in Federal Court for Defrauding State’s Vermont Health Access Program and Filing A False Tax ReturnRead the Press Release
Eugenia A.P. Cowles, the Acting United States Attorney for the District of Vermont, stated that Tammy Nguyen, 35, of Naples, Florida (formerly of Essex Junction, Vermont), was sentenced today by Chief United States District Court Judge Christina Reiss, to one year of probation, restitution of approximately $41,000.00, and a fine of $10,000.00.
According to Court records, Tammy Nguyen, then employed by the Social Security Administration in Burlington, Vermont, submitted applications for health insurance coverage to the Vermont’s Vermont Health Access Program (VHAP), a program designed for low income Vermonters. Over the course of several years, she submitted applications including false statements regarding her income, child care costs, and other items. Nguyen also drafted and submitted, on Social Security Administration letterhead, a fraudulent letter to VHAP, stating that her income was less than her actual income. As a result, Nguyen paid far less than market rates for health care coverage through VHAP.
Nguyen also made private loans to members of the local Vietnamese community at exorbitant interest rates and did not report the interest income to the Internal Revenue Service (IRS). She submitted false tax returns to the IRS. Further, Nguyen concealed from the Burlington Housing Authority, the fact that her domestic partner, Tam Lai, was living with her at Hillside Terrace, in Burlington, Vermont, for a number of years and, thus, she paid less rent than was actually due. As part of the resolution of the criminal case, she voluntarily agreed to pay restitution to the United States Department of Housing and Urban Development (HUD), in connection with public housing fraud.Nguyen was indicted by a federal grand jury on March 27, 2014 for making false statements in connection with a welfare benefit plan. The grand jury handed down a Superseding Indictment on July 15, 2015 that added a charge of conspiring to defraud HUD. On November 25, 2014, Nguyen pled guilty to filing a false tax return and to welfare benefit fraud. She was released on her own recognizance pending sentencing.
This case was investigated by the Federal Protective Service, the IRS, the Social Security Administration’s Office of Inspector General, the United States Secret Service, and by HUD. Acting United States Attorney Cowles commends those agencies for their work. The case was prosecuted by Assistant United States Attorney Nancy J. Creswell. The defendant was represented by Attorney Mark Kaplan
Former Campbell Resident Sentenced to A Three-Year Prison Term for Participation in Fraudulent Investment SchemeRead the Press Release
SAN JOSE – A founder of the S3 Partners was sentenced March 17, 2015 to 36 months on investment fraud charges, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Sam Stafford, 59, formerly a resident of Campbell, CA now living in Temecula, CA., pleaded guilty on Oct. 17, 2013, to Conspiracy to Commit Wire Fraud, Mail Fraud, and Bank Fraud, in violation of 18 U.S.C. § 1349. Stafford admitted in his plea agreement that from 2006 to 2009, he and his co-defendants Melvin Russell “Rusty” Shields and Michael Sims conspired to defraud individual investors and banks in connection with various real estate development projects. The three defendants used the name “S3 Partners” and conducted business out of a variety of locations including San Jose, CA; Campbell, CA; Hickory, NC; and Valrico, FL.
Shields, Sims, and Stafford collectively obtained more than $21 million from individual investors and banks. Ultimately, all the S3 Partners’ real estate development projects failed and, as a result of the defendants’ illegal conduct, many of the investors sustained a near total loss of their investments.
Stafford admitted in his plea agreement that he, Shields and Sims knowingly created and maintained the false appearance that both private individual investor and bank funds were being used for sound, secured real estate development projects that offered high rates of return. Nevertheless, Stafford admitted in his plea agreement that he, Shields, and Sims did not use the majority of S3 investment monies on the specific real estate projects promised to investors. Instead, they diverted substantial portions of investor monies to other projects, company overhead and other unauthorized uses, including to their personal use. Stafford also admitted in his plea agreement that in many instances he knowingly obtained substantial funds from banks as a result of forged or fraudulent documents. Further, Stafford admitted he knowingly submitted to banks invoices falsely claiming capital improvements on certain S3 Partners projects. Stafford admitted in his plea agreement that his offense conduct harmed more than 10 victims and caused an actual loss to investors and banks of more than $2,500,000.
U.S. District Judge Ronald M. Whyte imposed the 36 month prison term on March 17, 2015 and ordered Stafford to self-surrender by Apr. 21, 2015. Stafford has been out of custody on home electronic monitoring since his May 2012 arrest. In addition to the prison term, Stafford also likely will be ordered to pay some amount of restitution to his victims.
Judge Whyte stated that within 90 days he will issue an order regarding the amount of restitution Stafford will have to pay.
A jury previously convicted Shields and Sims on investment fraud charges on Dec. 23, 2013 following a seven week trial. Judge Whyte on Nov, 17, 2014, previously sentenced Shields to 78 months in prison and Sims to 30 months in prison.
Assistant U.S. Attorneys Joseph Fazioli and Timothy Lucey prosecuted the case with the assistance of Lakisha Holliman and Laurie Worthen. This prosecution is the result of an investigation by the FBI.
Former Bellevue Developer Sentenced to 4+Years in Prison for Tax EvasionRead the Press Release
A former Bellevue based developer and lender who spent millions on personal luxuries while evading a tax obligation of over half a million dollars, was sentenced today in U.S. District Court in Seattle to 54 months in prison and three years of supervised release announced Acting United States Attorney Annette L. Hayes. Instead of paying his taxes, THOMAS R. HAZELRIGG, III, 68, spent millions on gambling, thoroughbred horse racing, private aircraft, country club fees, a Bellevue penthouse, and two homes in the Palm Springs, California area by hiding his income and assets in the names of other people. HAZELRIGG was indicted in July 2013. In December 2014, a jury found HAZELRIGG guilty following a nine-day trial. U.S. District Judge Thomas S. Zilly ordered HAZELRIGG to pay $1,082,249 in restitution to the IRS which includes taxes, interest and penalties. “You went to extremes to keep money from the IRS,” Judge Zilly said. “You manipulated family members and friends to accomplish this goal.”
“This defendant used family members and friends in a wide ranging scheme of deceit and manipulation all to avoid paying taxes he knew he owed,” said Acting United States Attorney Annette L. Hayes. “His greed was enormous – he had all the means to pay but instead chose to embark on a sophisticated effort to evade his obligation to pay taxes. As we approach April 15th, this case serves as a reminder that everyone has an obligation to pay their fair share of taxes and those who don’t – no matter how devious their attempts at evasion are – will be held accountable.”
“We are all taught from a young age that the lie is often worse than the original offense,” said Special Agent in Charge Teri Alexander of IRS Criminal Investigation. “Thomas Hazelrigg cheated on his taxes and then spent many years and a great deal of effort trying to cover it up. The truth finally caught up with him.”
Evidence presented at trial described how HAZELRIGG first agreed to pay $533,454 in taxes owed for tax years 1989, 1990 and 1991 and then failed to pay the tax debt while living a lavish lifestyle that included multi-million dollar property purchases and remodels, and expensive artwork. HAZELRIGG also evaded payment of his taxes owed for 1994, for which he had filed a return showing tax owed, but for which he made no payments. According to testimony at trial, between 1997 and 2007, HAZELRIGG illegally funneled income from his businesses into accounts that he controlled but that he kept secret from the IRS. HAZELRIGG used these accounts to pay for the multi-million dollar purchase and remodel of a Bellevue penthouse, two Chihuly glass chandeliers worth more than $460,000, and two luxury homes in Palm Springs, California. He also used these secret accounts to pay various household expenses including the services of a butler.
HAZELRIGG hid his assets for ten years, until the IRS collection statutes expired. After one of the IRS liens were removed, HAZELRIGG sent an email saying he was “legit again.” Following that email, HAZELRIGG once again took out loans in his own name, and purchased property in his own name.
In their sentencing memo prosecutors noted that HAZELRIGG’s tax evasion scheme “is particularly egregious because he was convicted of evading an agreed obligation that he could well afford to pay. In 1997, after litigating the issue with the IRS for several years, Hazelrigg settled the IRS audit for less than a third of what the IRS initially assessed through its audit. Realizing that he got a good deal, Hazelrigg… pledged to pay what he owed. By 2005, there is no question that Hazelrigg had enough money to easily pay what he had promised the IRS. But instead, Hazelrigg went back on his promise and continued to evade and cheat the IRS out of what he owed.”
The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI). The case was prosecuted by Assistant United States Attorneys Matthew Diggs and Brian Werner.
Five Members of Synthetic Drug Distribution Conspiracy Indicted for Selling Millions of Dollars of Illegal CannabinoidsRead the Press Release
Drugs manufactured by owner of “Smokes 4 Less” smoke shopsUnited States Attorney Andrew M. Luger today announced an indictment charging OMAR ZIAD WAZWAZ, 33, and four others with conspiring to distribute synthetic cannabinoids. The defendants are charged with conspiracy to distribute and possession with intent to distribute controlled substance analogues, conspiracy to commit offenses against the United States, and conspiracy to commit money laundering. WAZWAZ is additionally charged with conspiracy to distribute controlled substances. The defendants are making initial appearances in U.S. District Court in St. Paul, Minn.
“Synthetic and designer drugs are both illegal and dangerous,” said U.S. Attorney Luger. “As alleged, these defendants created a criminal enterprise they believed would stay one step ahead of synthetic drug laws. It didn’t, and today they stand charged with conspiracy to sell illegal cannabinoids throughout Minnesota. The investigators who brought down this conspiracy are tireless, and this indictment should give pause to anyone who thinks they can get away with selling drugs by another name.”
According to the indictment and documents filed in court, beginning in approximately January 2010, OMAR ZIAD WAZWAZ owned and operated several smoke shops throughout Minnesota, including “Smokes 4 Less” in Mankato. WAZWAZ sold smokable synthetic cannabinoids (SSCs) in his smoke shops. Beginning in 2011, WAZWAZ began to manufacture his own brand of SSC called, “Kyptonite.” He branded the SSCs sold in his stores with such names as “Kush,” “Tiger’s Blood,” “Grape,” “Kronik,” “Man of Steel,” “Pine-apple,” “Juicy Fruit,” “Kottonmouf King,” “Tropic Thunder,” “Rain of Fire,” “O-Zone,” and others. Through the manufacture and sale of SSCs, WAZWAZ earned millions of dollars.
According to the indictment and documents filed in court, TALEB AWAD, VLADIMIR BRIK, STEVEN LYKE, and DANIEL LYKE conspired with WAZWAZ to manufacture and sell SSCs. The defendants manufactured SSCs by combining synthetic cannabinoids such as “AM-2201,” “UR-144,” and “XLR-11,” with leafy plant material like damiana or marshmallow leaves. The synthetic cannabinoids, which are often sold in powder form, were liquefied with the use of a solvent like acetone or grain alcohol so that the chemicals could be sprayed onto the leafy plant material. This manufacturing process allows users to ingest the drug in the same manner as one would ingest marijuana. WAZWAZ instructed employees of “Smoke 4 Less” to smoke SSCs and report back to him on the effects so that he could adjust the formula as needed.
According to the indictment and documents filed in court, BRIK, WAZWAZ and other co- conspirators also imported synthetic cannabinoids from China. On or about April 5, 2011, BRIK sent a wire transfer of $110,000 to a bank in the country of Liechtenstein to pay for an order of approximately 20 kilograms of synthetic cannabinoid that BRIK requested be sent to WAZWAZ’S store in Mankato, Minn.
The indictment is the result of an investigation conducted by the Minnesota River Valley Drug Task Force, Drug Enforcement Administration, Internal Revenue Service – Criminal Investigation Division, Homeland Security Investigations, U.S. Food and Drug Administration, and U.S. Customs and Border Protection.
This case is being prosecuted by Assistant U.S. Attorney Surya Saxena.
Defendant Information: OMAR ZIAD WAZWAZ, 33
New Brighton, Minn.
Charges: • Conspiracy to Distribute and Possession with Intent to Distribute Controlled Substance Analogues, 1 count
• Conspiracy to Distribute Controlled Substances, 1 count
• Conspiracy to Commit Offenses against the United States: Misbranded Drugs, 1 count
• Money Laundering Conspiracy, 1 count
VLADIMIR VLADIMIROVIC BRIK, 25
Duluth, Minn.
Charges: • Conspiracy to Distribute and Possession with Intent to Distribute Controlled Substance Analogues, 1 count
• Conspiracy to Commit Offenses against the United States: Misbranded Drugs, 1 count
• Money Laundering Conspiracy, 1 count
TALEB JAMAL AWAD, 32
Unknown
Charges: • Conspiracy to Distribute and Possession with Intent to Distribute Controlled Substance Analogues, 1 count
• Conspiracy to Commit Offenses against the United States: Misbranded Drugs, 1 count
• Money Laundering Conspiracy, 1 count
STEVEN JAU LYKE, 25
Brookston, Minn.
Charges: • Conspiracy to Distribute and Possession with Intent to Distribute Controlled Substance Analogues, 1 count
• Conspiracy to Commit Offenses against the United States: Misbranded Drugs, 1 count
• Money Laundering Conspiracy, 1 count
DANIEL LEE LYKE, 26
Brookston, Minn.
Charges: • Conspiracy to Distribute and Possession with Intent to Distribute Controlled Substance Analogues, 1 count
• Conspiracy to Commit Offenses against the United States: Misbranded Drugs, 1 countThe charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Federal Grand Jury Indicts Three on Felony Offenses Related to December 2014 Armored Car Heist in AmarilloRead the Press Release
AMARILLO, Texas — A federal grand jury in Amarillo, Texas, returned an eight-count indictment this afternoon charging three men with various felony offenses stemming from an alleged heist of money from an armored car last year in Amarillo, announced John Parker, Acting U.S. Attorney for the Northern District of Texas.
Trent Michael Cook, 24, Britt Michael Gresham, 24, and Brian Keith Hodge, 43, are each charged with one count of conspiracy to interfere with commerce by robbery, one count of attempting to interfere with commerce by robbery, and one count of possessing firearms in furtherance of a violent crime. Cook and Gresham are each charged with one count of conspiracy to commit bank theft, and Cook is charged with three counts and Gresham with one count, of bank theft. Hodge is charged with one count of being an accessory after the fact. Hodge is Cook’s father.
All three defendants are in custody and each is expected to make his initial appearance in federal courts sometime next week.
According to the indictment, as part of the conspiracy, Cook purchased firearms to use in a plan to rob the vault of Rochester Armored in Amarillo. The plan involved Cook using his status as an employee of Rochester Armored to gain access to the company vault containing millions of dollars in U.S. currency so that the three defendants could commit the armed robbery of Rochester Armored, using the firearms to threaten force, violence and fear of injury against Rochester Armored employees. Cook and Gresham purchased a van to load and transport bags of U.S. currency taken from Rochester Armored. Hodge attempted to obtain a location in Colorado for the defendants to hide after the robbery. The indictment further alleges that on December 22, 2014, Cook and Gresham took money from an armored car belonging to Rochester Armored.
A federal indictment is an accusation by a grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. Upon conviction, however, the conspiracy count and the substantive count of attempting to interfere with commerce by robbery each carry a maximum statutory penalty of 20 years in federal prison and a $250,000 fine. The firearms offense carries a mandatory five-year penalty and a $250,000 fine. The conspiracy to commit bank theft count and the accessory after the fact count each carry a maximum statutory penalty of five years in federal prison and a $250,000 fine. Each of the bank theft counts carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine.
The Amarillo Police Department, the Colorado Springs Police Department, the Potter County District Attorney’s Office and the FBI were the investigating agencies. Assistant U.S. Attorney Tim Hammer is in charge of the prosecution.
Essex County, New Jersey, Man Charged with Taking Cellphone Photos of his sexual abuse of childrenRead the Press Release
NEWARK, N.J. – An Essex County, New Jersey, man was charged today with sexually abusing two children and recording the abuse on his cell phone, U.S. Attorney Paul J. Fishman announced.
Justin Kinney, 26, of Newark, was indicted by a federal grand jury in Newark on two counts of producing child pornography. Kinney was previously arrested and charged by federal complaint on April 20, 2014, and is currently in state custody on related charges. He will be arraigned at a later date.
According to the indictment, other documents filed in this case and statements made in court:
On Oct. 25, 2012, law enforcement officers executed a search warrant on Kinney’s laptop computer and cell phone, which revealed several files depicting child sexual abuse, which appeared to be self-produced and were taken with the same type of cell phone seized from Kinney at the time of his arrest.
Each count of production of child pornography carries a mandatory minimum penalty of 15 years in prison, a maximum potential penalty of 30 years in prison, and a $250,000 fine.U.S. Attorney Fishman credited special agents of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Acting Special Agent in Charge Kevin Kelly and the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorneys Danielle M. Corcione and Danielle Alfonzo Walsman of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense counsel: John Yauch Esq., Assistant Federal Public Defender, Newark
Doctor and Clinic Owner Sentenced for Drug Trafficking and Money Laundering ConspiraciesRead the Press Release
U.S. Attorney Kenneth A. Polite announced that JOSEPH J. MOGAN, III, M.D., age 48, formerly of New Orleans, and TIFFANY MILLER, age 43, of Metairie, were sentenced yesterday for conspiring to dispense prescription drugs illegally through “pill mill” clinics operated as Omni Pain Management in Metairie, Louisiana, and Omni Pain Management Plus in Slidell, Louisiana, and related money laundering charges.
U.S. District Judge Susie Morgan sentenced MOGAN and MILLER each to a term of imprisonment of 97 months, a term of supervised release of 3 years, a $200 special assessment, and asset forfeiture of criminal proceeds and property.
According to court documents, MOGAN and MILLER owned and operated the two clinics and conspired to prescribe narcotics and other controlled substances without a legitimate medical purpose and outside the bounds of professional medical practice to drug seekers and drug abusers.
U.S. Attorney Polite praised the work of the Drug Enforcement Administration in investigating this matter. First Assistant United States Attorney Richard W. Westling and Assistant United States Attorneys Harry “Bill” McSherry and Michael B. Redmann were in charge of the prosecution.
Departments of Justice and Health and Human Services Announce over $27.8 Billion in Returns from Joint Efforts to Combat Health Care FraudRead the Press Release
Administration Recovers $7.70 for Every Dollar Spent on Health Care-Related Fraud and Abuse
More than $27.8 billion has been returned to the Medicare Trust Fund over the life of the Health Care Fraud and Abuse Control (HCFAC) Program, Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Sylvia M. Burwell announced today. The government’s health care fraud prevention and enforcement efforts recovered $3.3 billion in taxpayer dollars in Fiscal Year (FY) 2014 from individuals and companies who attempted to defraud federal health programs, including programs serving seniors, persons with disabilities or those with low incomes. For every dollar spent on health care-related fraud and abuse investigations in the last three years, the administration recovered $7.70. This is about $2 higher than the average return on investment in the HCFAC program since it was created in 1997. It is also the third highest return on investment in the life of the program.
“As the innovative and collaborative work of the Health Care Fraud and Abuse Control Program proceeds, more taxpayer money is being recovered, more criminals are facing justice, and more fraud is being punished, prevented and deterred,” said Attorney General Eric Holder. “The extraordinary return on investment we've obtained speaks to the skill, the tenacity, and the inspiring success of the hardworking men and women fighting on behalf of the American people. And with these outstanding results, we are sending the unmistakable message that we will not waver in our mission to pursue fraud, to protect vulnerable communities, and to preserve the public trust.”
“Eliminating fraud, waste and abuse is a top priority for the Department of Health and Human Services,” said HHS Secretary Sylvia Burwell. “These impressive recoveries for the American taxpayer demonstrate our continued commitment to this goal and highlight our efforts to prosecute the most egregious instances of health care fraud and prevent future fraud and abuse. New enrollment screening techniques and computer analytics are preventing fraud before money ever goes out the door. And together with the continued support of Congress and our partners at the Department of Justice, we’ve cracked down on tens of thousands health care providers suspected of Medicare fraud – all of which are helping to extend the life of the Medicare Trust Fund.”
The recoveries announced today reflect a two-pronged strategy to combat fraud and abuse. Under new authorities granted by the Affordable Care Act, the administration continues to implement programs that move away from “pay and chase” to preventing health care fraud and abuse in the first place. In addition, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), run jointly by the HHS Office of the Inspector General and the Justice Department, is changing how the federal government fights certain types of health care fraud. These cases are being investigated through "real-time" data analysis in lieu of a prolonged subpoena and account analyses, resulting in significantly shorter periods of time between fraud identification, arrest and prosecution.
Increased funding from the administration and Congress has allowed HHS and the Justice Department to build on early successes of the Medicare Strike Force by expanding into nine geographic territories – Miami, Los Angeles, Detroit, Houston, Brooklyn, New York, Southern Louisiana, Tampa, Florida, Chicago and Dallas. Since its inception, Strike Force prosecutors filed more than 963 cases charging more than 2,097 defendants who collectively billed the Medicare program more than $6.5 billion; 1,443 defendants pleaded guilty and 191 others were convicted in jury trials; and 1,197 defendants were sentenced to imprisonment for an average term of approximately 47 months. Through the Strike Force and other efforts, in FY 2014 alone, the Justice Department opened 924 new criminal health care fraud investigations. Federal prosecutors filed criminal charges in 496 cases involving 805 defendants. A total of 734 defendants were convicted of health care fraud‑related crimes during the year.
Another powerful tool in the effort to combat health care fraud is the federal False Claims Act. In 2014, the Justice Department’s Civil Division and the U.S. Attorneys’ Offices obtained $2.3 billion in settlements and judgments from civil cases involving fraud and false claims against federal health care programs such as Medicare and Medicaid. Since January 2009, the Justice Department has recovered more than $15.2 billion in cases involving health care fraud. These amounts reflect federal losses only. In many of these cases, the department was instrumental in recovering additional billions of dollars for state health care programs. In FY 2014, the department continued its enforcement of the civil False Claims Act and the Federal Food, Drug and Cosmetic Act, and opened 782 new civil health care fraud investigations.
The Centers for Medicare & Medicaid Services (CMS) is also adopting a number of preventive measures to combat fraud and abuse. Provider enrollment is the gateway to billing the Medicare program, and CMS has put critical safeguards in place to make sure that only legitimate providers are enrolling in the program. The Affordable Care Act required a CMS revalidation of all existing 1.5 million Medicare suppliers and providers under new screening requirements. CMS will have requested revalidations by March 2015. As a result of this and other proactive initiatives, CMS has deactivated 450,000 enrollments and revoked nearly 27,000 enrollments to prevent certain providers from re-enrolling and billing the Medicare program. Both of these actions immediately stop billing. A provider with deactivated billing privileges can reactivate at any time, and a revoked provider is barred from re-entry into Medicare for a period ranging from one to three years. CMS has also issued a regulation requiring prescribers of Part D drugs to enroll in Medicare and undergo screening.
CMS also continued the fiscal 2014 temporary moratoria on the enrollment of new home health or ambulance service providers in six fraud hot spots: Miami, Chicago, Dallas, Houston, Detroit and Philadelphia (which includes some counties in New Jersey). This extension will allow CMS to continue its actions to suspend payments or remove providers from the program before allowing new providers into potentially over-supplied markets.
Similar to the technology used by credit card companies, CMS is using its Fraud Prevention System to apply advanced analytics to all Medicare fee-for-service claims on a streaming, national basis. The Fraud Prevention System identifies aberrant and suspicious billing patterns which in turn trigger actions that can be implemented swiftly to prevent payment of fraudulent claims. In the second year, the system saved $210.7 million, almost double the amount identified during the first year of the program.
The HCFAC annual report is available at www.oig.hhs.gov/publications/hcfac.asp.
For more information on the joint Justice Department-HHS Strike Force activities, visit: www.StopMedicareFraud.gov/.
For more information on the fraud prevention accomplishments under the Affordable Care Act visit: www.healthcare.gov/news/factsheets/2012/02/medicare-fraud02142012a.html.
Defense Attorneys Held in Contempt for Violating Protective OrderRead the Press Release
Following a hearing before United States Magistrate Judge Timothy R. Rice, the Honorable Juan R. Sanchez today held attorneys J. Michael Farrell and Stephen P. Patrizio in civil contempt of court for providing discovery disks to their clients, contrary to a protective order entered by Judge Sanchez in United States v. Whitfield, Parnell, et al., Criminal No. 12-418, announced United States Attorney Zane David Memeger. Attorneys Farrell and Patrizio, and the government, agreed in writing to the contempt sanctions which the Court then imposed after considering the terms of the agreement.
In the case of United States v. Whitfield, Parnell, et al., Mr. Farrell was retained to represent Robert Lamar Whitfield, and Mr. Patrizio was appointed to represent Kenneth Parnell. Defendants Whitfield and Parnell were charged with conspiracy, robbery, and cocaine distribution offenses. The discovery in the case included videos taken by an undercover agent, which disclosed the identities of both the undercover agent and a confidential informant. To protect those identities, the government filed a request for, and the Court granted, a protective order, prohibiting counsel from duplicating the discovery or providing copies to defendants who were in custody awaiting trial. Contrary to the terms of the protective order, attorneys Farrell and Patrizio provided multiple disks of discovery to their clients, including the disks containing the videos recorded by the undercover officer. Ultimately, one of those videos was provided by one of their clients to a Philadelphia television news station, and was played during a television news broadcast.
The attorneys have asserted that this dissemination was inadvertent and not done with willful intent to violate the Court’s protective order. Nonetheless, they have taken full responsibility for having violated the Court’s order. For disclosing this discovery in violation of the Court’s protective order, attorneys Farrell and Patrizio were found in civil contempt of court and ordered to pay $5,000 each. This sum serves both as a penalty for the attorneys’ violation and to induce compliance with the Court’s protective orders in the future.
The United States Attorney’s Office recognizes its obligation to protect victims, agents, and witnesses while providing discovery to defendants and their counsel. To honor these obligations, this office will continue to seek protective orders that limit disseminating discovery materials, and will pursue appropriate sanctions against those individuals, including attorneys, who violate protective orders.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and was handled by Assistant U.S. Attorney Arlene Fisk.
Cardiac Monitoring Company to Pay $6.4 Million for Alleged Overbilling of Government Health Care ProgramsRead the Press Release
BioTelemetry Inc., a heart monitoring company headquartered in Malvern, Pennsylvania, has agreed to pay $6.4 million to resolve allegations made under the False Claims Act (FCA) that its subsidiary, CardioNet, overbilled Medicare and other federal health programs for Mobile Cardiac Outpatient Telemetry (MCOT) services when those services were not reasonable or medically necessary, the Justice Department announced today.
“Billing for a higher-level service that is not necessary to treat a patient’s condition to receive higher reimbursement from federal health care programs will not be tolerated,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”
“Today’s settlement is another example of how we will act to stop abusive billing practices and hold companies accountable for conduct that raises everyone’s healthcare costs,” said Acting U.S. Attorney Annette L. Hayes for the Western District of Washington. “This settlement should send a message to all providers: do not misuse federal billing systems to improperly gouge the healthcare system upon which so many Americans rely.”
An MCOT monitor provides real-time, outpatient cardiac monitoring. MCOT monitors are worn by patients for a period of time during which the device continuously records the activities of the patient’s heart, including any irregular rhythms or other cardiac event, and transmits data to CardioNet’s diagnostic center using cell phone technology. Traditional, less expensive event monitors only download patient data periodically over a landline.
The government alleges that CardioNet was aware that MCOT services were not eligible for Medicare reimbursement when provided to patients who had experienced only mild or moderate heart palpitations, since less expensive monitors could effectively collect data about those patients’ conditions. Nonetheless, CardioNet allegedly submitted claims to Medicare for those patients containing the billing code for the more expensive MCOT services along with an inaccurate diagnostic code that misrepresented the true condition of the patients and their need for MCOT services.
“Sticking taxpayers with a hefty bill for unneeded medical care will never be tolerated,” said Special Agent in Charge Ivan Negroni of the U.S. Health and Human Services, Office of Inspector General (HHS-OIG), Regional Office including Washington. “Working in close coordination with our law enforcement partners we will tirelessly pursue these suspected violators.”
“Federal employees deserve health care providers, including remote monitoring companies, that meet the highest standards of ethical and professional behavior,” said Inspector General Patrick E. McFarland of the U.S. Office of Personnel Management. “Today's settlement reminds all providers that they must observe those standards, and reflects the commitment of federal law enforcement organizations to pursue improper and illegal billings that increase the cost of medical care.”
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.8 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.
This investigation was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Washington and HHS-OIG.
The claims resolved by this agreement are allegations only and there has been no determination of liability.
Canadian Man Sentenced for Making False StatementsRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
BUFFALO, N.Y.–U.S. Attorney William J. Hochul, Jr. announced today that Christian Dean Reid, 39, a citizen of Canada and the United Kingdom, who was convicted of making false statements, was sentenced to 24 months in prison by U.S. District Judge Richard J. Arcara.Assistant U.S. Attorney Marie P. Grisanti, who handled the case, stated that on October 12, 2014, Reid, a native of England, told an officer of the U.S. Customs and Border Protection that he had not previously been arrested, even though the defendant knew this statement was false. Reid was arrested and convicted of a drug trafficking offense which affects his admissibility into the United States.
The sentencing is the culmination of an investigation on the part of the United States Customs and Border Protection, under the direction of Rose Hilmey, Acting Director of Field Operations.
Bellevue Man who Sold Drugs on ‘Silk Road’ Internet Site Sentenced for Drug Distribution ConspiracyRead the Press Release
A 40-year-old Bellevue, Washington man who was a prolific drug dealer on the online marketplace “Silk Road,” was sentenced today in U.S. District Court in Seattle to five years in prison and four years of supervised release for conspiracy to distribute illegal drugs, announced Acting U.S. Attorney Annette L. Hayes. STEVEN SADLER sold nearly a million dollars’ worth of cocaine, heroin and methamphetamine to people who ordered over the internet via the Silk Road site. He shipped the drugs through the mail. At sentencing U.S. District Judge Ricardo S. Martinez said he is “troubled by this new method, new frontier of drug dealing that is creating a new crop of victims.”
“This defendant thought he could use the internet to spread the poison of illegal drugs far and wide,” said Acting U.S. Attorney Annette L. Hayes. “We will not allow internet connectivity to be blatantly misused to harm public safety. Moreover, as this and other prosecutions demonstrate, attempts to hide in the “dark net” will not succeed.”
According to records in the case, SADLER, under the screen name NOD, began selling illegal drugs on Silk Road in 2012. The internet site was dubbed an anonymous marketplace, where the majority of the business was the sale of illegal drugs. SADLER was selling as much as $70,000 worth of cocaine each month as a dealer on the internet site. When police searched his apartment on July 31, 2013, they found more than a kilogram of cocaine and heroin each, as well as 400 grams of methamphetamine. They also found a .45 caliber semi-automatic pistol hidden under the mattress in his bedroom. SADLER is also forfeiting a 2007 BMW 525 and $4,200 cash seized the day the search warrants were served.
“Sadler transformed himself into one of the top Silk Road drug distributors and profited from the destruction of untold lives,” said Brad Bench, special agent in charge of Homeland Security Investigations in Seattle. “Criminals who operate digital black markets and those who trade their illicit goods on them believe they are above the law. They are mistaken. HSI and its partners are dedicating considerable resources to infiltrating and dismantling underground Internet sites such as the former Silk Road.”
The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the U.S. Postal Inspection Service. The case is being prosecuted by Assistant United States Attorney Thomas Woods.
Bay Area Woman Sentenced to Prison for Real Estate Loan Fraud SchemeRead the Press Release
SAN FRANCISCO – Joyce Esther De Armero was sentenced yesterday to twelve months and one day in prison, and ordered to pay restitution for mail fraud, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
De Armero, 37, of San Jose, pleaded guilty on December 4, 2014, to mail fraud. According to the plea agreement, De Armero admitted that she devised a scheme to defraud investors by convincing them to invest in high-interest real estate loans between July 2008 and January 2010. She told the investors that she would invest their money in real estate loans with guaranteed returns. De Armero never made the investments and instead used the funds for her own personal expenses. She also used some of the funds from later investments to pay what she claimed were returns on earlier investments, and thereby perpetuated her fraud scheme. Altogether, she obtained no less than $180,000 from her victims. On October 31, 2013, De Armero was indicted by a federal grand jury; she was charged with mail fraud in connection with her real estate loan investment fraud scheme.
The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge, following a guilty plea on one count charging a violation of 18 U.S.C. § 1341. Judge Breyer also sentenced the defendant to a three year period of supervised release. The defendant will begin serving the sentence on May 29, 2015.
Assistant United States Attorneys Robert Rees, Philip Kopczynski, and Acadia Senese are prosecuting the case with the assistance of Beth Margen and Trina Khadoo. The prosecution is the result of a referral from the United States Trustee’s Office of the Northern District of California and an investigation by the San Mateo County District Attorney’s Office and the Federal Bureau of Investigation.
Baltimore Felon Exiled to over 24 Years in Prison for Armed Robbery of A Couple at A Glen Burnie HotelRead the Press Release
Baltimore, Maryland – U.S. District Judge William D. Quarles, Jr. sentenced Rodney Sylvester Wiggins, age 28, of Baltimore, today to 292 months in prison, followed by five years of supervised release, for robbery, brandishing a gun during the robbery and being a felon in possession of a gun and ammunition.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William P. McMullan of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Anne Arundel County Police Chief Tim Altomare; and Anne Arundel County State’s Attorney Wes Adams.
“Rodney Wiggins did not get the message that we have zero tolerance for gun crime after his previous state armed robbery convictions, and now he will be exiled to federal prison for the next 24 years,” said U.S. Attorney Rod J. Rosenstein. “Hopefully others will get the message before it is too late.”
According to evidence presented at his bench trial and other court documents, on February 2, 2013, a husband and wife checked into a Glen Burnie hotel before embarking on a vacation cruise. Wiggins rode up the same elevator as the couple. Shortly after, Wiggins knocked on their room door claiming to be a maintenance employee. Wiggins pointed a gun at the husband and demanded money, keys, credit cards and cell phones. Wiggins threatened to shoot the couple. The husband handed Wiggins $200 and Wiggins left.
The husband reported the robbery to the hotel’s front desk. A hotel employee saw Wiggins on a security monitor walking down a stairwell and leaving the hotel. The employee called 911, walked outside, saw Wiggins crossing a highway toward another hotel, and gave Wiggin’s location to 911. Minutes later, police arrived, arrested Wiggins and seized a loaded handgun and $210.
Wiggins had previously been convicted of a felony and was prohibited from possessing a gun and ammunition.
United States Attorney Rod J. Rosenstein commended the ATF, Anne Arundel Police Department and Anne Arundel State’s Attorney’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Bonnie S. Greenberg and Scott A. Lemmon, who prosecuted the case.
Alton Man Found Guilty of Drug and Firearm ChargesRead the Press Release
Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today that Miles "Lou" Musgraves, 31, of Alton, Illinois was found guilty on March 19, 2015, after a 4-day jury trial in federal district court in East St. Louis of one count of Maintaining a Drug-Involved Premises Near a School, one count of Conspiracy to Distribute Cocaine, one count of Felon in Possession of Ammunition, one count of Felon in Possession of a Firearm, and one count of Distribution of Cocaine Near a School.
Sentencing has been set for June 26, 2015 at Federal Court in East St. Louis, Illinois. At that time Musgraves faces statutory penalties of 15 years to life. He will also be subject to fines, supervised release after his prison sentence and a $100 special assessment on each count.
The case was investigated by the Alton, Illinois Police Department. The case was prosecuted by Assistant United States Attorney Donald S. Boyce.
Adventist Health System to Pay $5.4 Million to Resolve False Claims Act AllegationsRead the Press Release
Adventist Health System Sunbelt Healthcare Corporation (Adventist) has agreed to pay $5,412,502 to resolve claims that it violated the False Claims Act by providing radiation oncology services to Medicare and TRICARE beneficiaries that were not directly supervised by radiation oncologists or similarly qualified persons, the Department of Justice announced today. Adventist is a non-profit healthcare organization operating a large network of hospitals in the South and the Midwest, and doing business in Florida as Florida Hospital.
“Today’s settlement demonstrates our continued vigilance to ensure that federal health care beneficiaries receive the highest quality of patient care,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “It is critical that health care providers adequately supervise the services they provide to their patients.”
Radiation oncology services provided to patients served by Medicare and TRICARE, the Department of Defense’s health care program, must be directly supervised by a radiation oncologist or similarly qualified personnel. The United States alleged that, from Jan. 1, 2010, through Dec. 31, 2013, Adventist violated this supervision requirement for radiation oncology services provided to federal health care program beneficiaries at several Florida locations, including in Altamonte Springs, Daytona Beach, Deland, Kissimmee, Orange City, Orlando, Palm Coast and Winter Park. These services included radiation simulation, dosimetry, radiation treatment delivery and devices, and intensity-modulated radiation therapy.
“Medicare and TRICARE patients deserve high quality health care,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida. “We will not tolerate providers recklessly cutting corners, particularly when furnishing such critical medical services as radiation oncology.”
The settlement partially resolves allegations made in a qui tam lawsuit under the False Claims Act filed in Tampa, Florida, by Dr. Michael Montejo, a radiation oncologist and former employee of Florida Oncology Network P.A., a radiation oncology group. The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery. Dr. Montejo will receive $1,082,500 as his share of the recovery.
“Providing proper supervision of radiation oncology services is an important requirement in federal health care programs such as Medicare,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services Office of Inspector General. “Our agency will continue to hold health care providers accountable for meeting the requirements in these taxpayer-funded programs.”
This settlement illustrates the government’s emphasis on combating healthcare fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused on efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.8 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement was the result of a coordinated investigation between the U.S. Attorney’s Office for the Middle District of Florida, the Civil Division’s Commercial Litigation Branch and the U.S. Department of Health and Human Services’ Office of Inspector General.
The case is captioned United States ex rel. Montejo v. Adventist Health System Sunbelt Healthcare Corp., Case No. 8:13-CV-206-T-23AEP (M.D. Fla.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Adventist Health System to Pay $5.4 Million to Resolve False Claims Act AllegationsRead the Press Release
Orlando, FL – Adventist Health System Sunbelt Healthcare Corporation (Adventist) has agreed to pay $5,412,502 to resolve claims that it violated the False Claims Act by providing radiation oncology services to Medicare and TRICARE beneficiaries that were not directly supervised by radiation oncologists or similarly qualified persons, the Department of Justice announced today. Adventist is a non-profit healthcare organization operating a large network of hospitals in the South and the Midwest, and doing business in Florida as Florida Hospital.
“Today’s settlement demonstrates our continued vigilance to ensure that federal health care beneficiaries receive the highest quality of patient care,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “It is critical that health care providers adequately supervise the services they provide to their patients.”
Radiation oncology services provided to patients served by Medicare and TRICARE, the Department of Defense’s health care program, must be directly supervised by a radiation oncologist or similarly qualified personnel. The United States alleged that, from Jan. 1, 2010, through Dec. 31, 2013, Adventist violated this supervision requirement for radiation oncology services provided to federal health care program beneficiaries at several Florida locations, including in Altamonte Springs, Daytona Beach, Deland, Kissimmee, Orange City, Orlando, Palm Coast and Winter Park. These services included radiation simulation, dosimetry, radiation treatment delivery and devices, and intensity-modulated radiation therapy.
“Medicare and TRICARE patients deserve high quality health care,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida. “We will not tolerate providers recklessly cutting corners, particularly when furnishing such critical medical services as radiation oncology.”
The settlement partially resolves allegations made in a qui tam lawsuit under the False Claims Act filed in Tampa, Florida, by Dr. Michael Montejo, a radiation oncologist and former employee of Florida Oncology Network P.A., a radiation oncology group. The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery. Montejo will receive $1,082,500 as his share of the recovery.
“Providing proper supervision of radiation oncology services is an important requirement in federal health care programs such as Medicare,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services Office of Inspector General. “Our agency will continue to hold health care providers accountable for meeting the requirements in these taxpayer-funded programs.”
This settlement illustrates the government’s emphasis on combating healthcare fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused on efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.8 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement was the result of a coordinated investigation between the U.S. Attorney’s Office for the Middle District of Florida, the Civil Division’s Commercial Litigation Branch and the U.S. Department of Health and Human Services’ Office of Inspector General.
The case is captioned United States ex rel. Montejo v. Adventist Health System Sunbelt Healthcare Corp., Case No. 8:13-CV-206-T-23AEP (M.D. Fla.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.
18 March 2015
Williamson County Resident Sentenced for Methamphetamine OffenseRead the Press Release
On March 17, 2015, Shannon L. Connett, 37, of Marion, IL, was sentenced for a methamphetamine violation, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
Connett, who had previously pled guilty to a one-count indictment charging conspiracy to manufacture methamphetamine, was sentenced to 78 months in federal prison, with credit for 10 months served on a related-state case. Connett was also placed on 3 years’ supervised release and fined $400.00. The offense occurred between 2012 and March 2014, in Union, Williamson, and Jackson Counties. Evidence at the plea and sentencing hearings established that Connett was involved with co-defendant Jonathan E. Merydith and others in the manufacture of methamphetamine. At sentencing, the district court determined that Connett was responsible for the possession of more than 132 grams of pseudoephedrine. Three co-defendants were previously sentenced for their roles in the methamphetamine conspiracy.
The ongoing investigation is being conducted by the Union County Sheriff’s Office, Jackson County Sheriff’s Office, Illinois State Police, Williamson County Sheriff’s Office, Marion Police Department, Carbondale Police Department, Illinois State Police Methamphetamine Response Team and Drug Enforcement Administration. The 19
th Judicial District Drug Task Force (Tennessee) assisted in the investigation.
The case was assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
Warren County, Kentucky, Woman Sentenced to 72 Months for Setting Fire to the Horse Cave, Kentucky, Dollar General StoreRead the Press Release
BOWLING GREEN, Ky. – A Warren County, Kentucky, woman was sentenced to 72 months in prison followed by 3 years of supervised release by Chief District Judge Joseph H. McKinley, Jr., for maliciously damaging and destroying and attempting to damage and destroy, by means of fire, the Dollar General Store, and the personal property, located in Hart County, Kentucky, announced Acting U.S. Attorney John E. Kuhn, Jr.
Debra Fowler Kessinger, age 58, of Smiths Grove, Kentucky, was convicted on November 21, 2014, of setting a fire on June 27, 2011, that destroyed the Dollar General Store located at 1015 East Main Street in Horse Cave, Kentucky. Following the week-long trial, the federal jury in Bowling Green, deliberated for a little over two hours before reaching its unanimous verdict.
“This defendant not only devised a scheme to defraud her employer, but then attempted to torch a commercial building in order to cover her tracks. The Jury’s conviction and today’s sentence is the result of outstanding collaborative work of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and the Western Kentucky Arson Task Force,” stated Acting U.S. Attorney John E. Kuhn, Jr.
“Arson is a violent crime that causes millions of dollars in property damage and puts the safety of the general public and fire service personnel at great risk. Investigating Arson is a top priority of ATF. Today, a dangerous criminal was removed from this community and imprisoned for several years based on the heroic fire suppression efforts of the Bowling Green Fire Department and the investigative efforts of the Kentucky State Police, the Western Kentucky Arson Task Force and ATF,” said ATF Special Agent in Charge Stuart Lowrey.
This case was prosecuted by Assistant United States Attorneys Joshua Judd and Marisa Ford and was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and the Western Kentucky Arson Task Force composed of members from the Bowling Green Fire Department and the Kentucky State Police.
United States District Court Orders Convicted Cigarette Tax Evaders to Pay Municipality of Anchorage over Two Million Dollars in RestitutionRead the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that United States District Court Judge Sharon L. Gleason ordered Michael Butler, 44, along with Sun Sims, 52, Kyong Hee Kim, 57, Jae Ho Lee, 60, Jae Gak Lee, 62, and Jerry Lee, 60, to pay a total of $2,007, 250, plus interest, in restitution to the Municipality of Anchorage following their convictions on charges that they were participants in a conspiracy to defraud the Municipality of Anchorage (MOA) by evading the payment of cigarette excise tax. The conspirators were indicted on July 18, 2013, on charges including mail fraud, conspiracy to commit money laundering, and conspiracy to make false statements regarding the distribution of cigarettes. Kyong Hee Kim, Sun Sims, Kimberly Sims, Jae Ho Lee, Jae Gak Lee, and Jerry Lee previously pleaded guilty in U.S. District Court for their roles in the conspiracy and other criminal violations. Michael Butler was convicted at trial in November 2014.
According to the court documents, Michael Butler and Sun Sims operated and managed Up in Smoke, located in the MOA, and Golden Eagle Tobacco and Longmere Lake Grocery and Liquor, both located outside the MOA. Because they owned Golden Eagle Tobacco and Longmere Lake Grocery and Liquor, Butler and Sims could legitimately purchase MOA excise tax exempt cigarettes from tobacco wholesale distributors located in the MOA, but only if those cigarettes were actually transported outside of the MOA and offered for sale at those two stores. However, cigarettes that they purchased within the MOA and intended to sell at Up in Smoke or distribute to others within the MOA were not excise tax exempt.
Between 2009 and October 10, 2012, Michael Butler and Sun Sims used their Golden Eagle Tobacco and Longmere Lake Grocery and Liquor store accounts with tobacco wholesale distributors within the MOA to purchase excise tax exempt cigarettes that they intended to sell and distribute within the MOA. Thus, they avoided paying the MOA excise tax and increased their own profits.
The other co-conspirators paid a fee to Michael Butler and Sun Sims for the purchase of excise tax exempt cigarettes. They paid this fee for the tax exempt cigarette in an effort to avoid paying the tax owed to the MOA. Butler and Sims would collect payment from Kyong Hee Kim and other retailers. They would then convert the money collected into cashier’s checks that appeared to be purchased by either Golden Eagle Tobacco or Longmere Lake Grocery and Liquor. They then used these cashier’s checks to purchase more tax exempt cigarettes, which they then delivered to the following retail stores within the MOA:
- Up in Smoke, owned and operated by Michael Butler and Sun Sims and managed by Kimberly Sims
- Mini Stop, owned and operated by Kyong Hee Kim
- Party Time Liquor, owned and operated by Jae Gak Lee
- Cheap Smokes, owned and operated by Jae Ho Lee
- Lucky Seven Foodmart, owned and operated by Jerry Lee
The defendants received the following sentences:
- Michael Butler sentenced on 3/13/15 to 36 months incarceration, 3 years supervised release.
- Sun Sims sentenced on 2/4/15 to 34 months incarceration, 3 years supervised release, $18,000 fine.
- Jae Gak Lee sentenced on 2/2/15 to 16 months incarceration, 3 years supervised release, $100,000 fine.
- Jae Ho Lee, sentenced on 1/21/15 to 16 months incarceration, 3 years supervised release.
- Kimberly Crandell, sentenced on 1/21/15 to 3 years’ probation, $1,500 fine.
- Jerry Lee, sentenced on 1/20/15 to 9 months incarceration, 3 years supervised release.
- Kyong Hee Kim sentenced 12/4/14 to 5 years’ probation.
“Tax evasion unfairly shifts the burden to honest American taxpayers,” said Special Agent in Charge Teri Alexander. “IRS Criminal Investigation together with the Department of Justice will continue to work vigorously to protect our national and local tax systems.”
Municipal Treasurer Daniel Moore added, “On behalf of Anchorage taxpayers who stood as the collective victims in this case, the Municipality appreciates the successful efforts of DOJ, APD, and the IRS in obtaining felony convictions, appropriate jail terms, and restitution. The Municipality expects the results of this case will send a strong deterrent message to white collar criminals who seek to scheme and defraud the government in taxes owed and then expect all other local taxpayers to cover the shortage in revenue to fund city services.”
Assistant U.S. Attorney Stephan A. Collins of the U.S. Attorney’s Office, District of Alaska, prosecuted the case. The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), Alcohol Tobacco and Firearms (ATF), and the Anchorage Police Department.
Undocumented Alien Sentenced for Illegally ReentryRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ISIDRO OROZCO-LOPEZ, age 34, a citizen of Guatemala, was sentenced today after previously pleading guilty to a one-count Bill of Information for illegal reentry of a removed alien.
U.S. District Judge Sarah S. Vance sentenced OROZCO-LOPEZ to time served and a $100 special assessment. OROZCO-LOPEZ will be surrendered to the custody of the U.S. Immigration and Customs Enforcement for removal proceedings.
According to court documents, OROZCO-LOPEZ was found in the United States on November 8, 2014 after having been officially deported and removed on or about November 25, 2013.
U.S. Attorney Polite praised the work of the United States Department of Homeland Security, U.S. Border Patrol in investigating this matter. Assistant United States Attorney Irene González was in charge of the prosecution.
U.S. Attorney's Office Will Not Pursue Charges Against Man Whose Errant Drone Landed at White HouseRead the Press Release
WASHINGTON – The U.S. Attorney’s Office for the District of Columbia announced today that it will not pursue criminal charges against the man who lost control of a drone that landed on the grounds of the White House early Jan. 26, 2015.
The decision was made following an investigation by the United States Secret Service and a review of applicable law. The Federal Aviation Administration has begun a review of the incident for possible administrative action.
The investigation determined that the man had borrowed the quadcopter drone from a friend and had it at his apartment in downtown Washington, D.C. According to an interview with the man, he flew it around his apartment and outside his window late Jan. 25 and early Jan. 26, 2015. Around 3 a.m., the drone was outside over 10th Street when he saw it ascend to an altitude of about 100 feet and head in a westerly direction. He tried to regain control over it, but to no avail. He called his friend, who was unable to advise him how to gain control over the drone.
The man knew that the drone’s battery was nearing the end of its charge and expected that it would crash somewhere over the Mall. He went to sleep not knowing where the drone had gone. After he awoke to news reports of the crash on the White House grounds, he self-reported the incident to the Secret Service.
A forensic analysis of the drone determined that it was not operating under the direction of its controller when it crashed at the White House.
Two more former Freedom Industries officials plead guilty to environmental crimesRead the Press Release
Charleston, W.Va. – Two former Freedom Industries officials, Michael E. Burdette and Robert J. Reynolds, pleaded guilty in federal court in Charleston today to environmental crimes in connection with the January 2014 Elk River chemical spill, U.S. Attorney Booth Goodwin announced. Both men pleaded guilty to negligently discharging MCHM into the Elk River without a permit. Sentencing is set for June 24, 2015.
The case is being investigated by the Federal Bureau of Investigation and the Environmental Protection Agency – Criminal Investigation Division.
Burdette’s and Reynolds’ plea agreements, which include stipulations of facts in which they admit their criminal conduct, are linked below.
Two Morgantown residents convicted of oxycodone traffickingRead the Press Release
CLARKSBURG, WEST VIRGINIA – Brett Ehrhardt, 29, and Loren Delaney, 23, both of Morgantown, West Virginia, were convicted in federal court today for prescription painkiller trafficking in Monongolia County, West Virginia, United States Attorney William J. Ihlenfeld, II, announced.An investigation by the West Virginia State Police Bureau of Criminal Investigation, the Federal Bureau of Investigation, and the Mon Valley Drug and Violent Crime Task Force revealed that Ehrhardt and Delaney were involved in a Philadelphia, Pennsylvania to Morgantown, West Virginia heroin and prescription painkiller distribution operation.
Ehrhardt admitted to selling oxycodone near West Virginia University when he pled guilty today to one count of “Distribution of Oxycodone within 1,000 Feet of a Protected Location.” He faces between one and forty years in prison and a fine of up to $2,000,000.00. Delaney, also known as “Lo,” pled guilty today to one count of “Aiding and Abetting Distribution of Oxycodone.” She faces up to 20 years in prison and a fine of up to $1,000,000.00. 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 defendants.
Assistant U.S. Attorney Zelda Wesley is prosecuting the case on behalf of the government.
U.S. Magistrate Judge John S. Kaull presided.
Three Metro Denver Individuals Charged for Large Wells Fargo Bank RobberyRead the Press Release
DENVER – Two individuals from the Metro Denver area were arrested this morning by special agents and task force officers from the FBI led Rocky Mountain Safe Streets Task Force (RMSSTF) on charges of armed bank robbery, U.S. Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. The defendants were arrested without incident. A third defendant also charged with bank robbery was already in custody on an unrelated matter. One of the two arrested today made his initial appearance this afternoon, where he was advised of his rights and the charges pending against him. The other defendant arrested will make his initial appearance tomorrow.
Gabriel Archuleta, age 19, of Denver, Thomas Lucero, age 21, of Denver, and Thomas McQuonwn, age 48, of Lakewood, have each been charged with one count of armed bank robbery. If convicted of armed bank robbery, each defendant faces not more than 25 years in federal prison, and up to a $250,000 fine. The charges stem from the June 17, 2014 armed robbery of the Wells Fargo Bank at 6000 West 44th Avenue in Wheat Ridge, Colorado. McQuonwn was the defendant who appeared in court today. Archuleta is expected to appear in court tomorrow. Lucero is currently in state custody on unrelated charges.
“The message from these arrests could not be more clear: Federal and state law enforcement does not rest until violent takeover bank robberies of this kind are solved, and the perpetrators behind bars,” said U.S. Attorney John Walsh. “Through relentless, implacable investigation, the FBI Rocky Mountain Safe Streets Task Force and federal prosecutors put together the many pieces of the puzzle in the case, ultimately turning it into the picture framed by today’s Criminal Complaint.”
“Today’s arrests illustrate the FBI’s commitment to work with its partners to address all violent crime including bank robberies,” said FBI Special Agent in Charge Thomas Ravenelle. “This investigation, which spanned many months, was truly a collaborative effort between local and federal law enforcement. The suspects have demonstrated they were willing to meticulously plan every detail of the robbery. The community is safer with these suspects behind bars as they would certainly have committed other violent robberies. We are confident that today’s arrests send a message to those contemplating bank robbery that they will be aggressively investigated and prosecuted to the full extent of the law.”
This case was investigated by the FBI, the Rocky Mountain Safe Streets Task Force, the Wheat Ridge Police Department, the Denver Police Department, and the Lakewood Police Department.
The defendants are being prosecuted by Assistant U.S. Attorney Robert Brown.
A Criminal Complaint is a probable cause charging document. Anyone accused of committing a felony violation of federal law has a Constitutional right to be indicted by a federal grand jury.
Those charged are presumed innocent unless and until proven guilty.