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15 December 2014
Reisterstown Couple Sentenced for Filing False Tax ReturnsRead the Press Release
Failed to Report Over $875,000 in Income for Tax Years 2006 through 2009
Baltimore, Maryland – U.S. District Judge Richard D. Bennett sentenced Alexsander Korotitsky, age 54, of Reisterstown, Maryland today to six months in prison followed by six months of home detention as part of one year of supervised release, for filing false income tax returns. Judge Bennett sentenced Alexsander’s wife, Luba Korotitsky, age 50, also of Reisterstown, to one year of probation on the same charge. Judge Bennett also ordered the Korotitskys to pay restitution of $272,268.67.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Special Agent in Charge William P. McMullan of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division.
According to their plea agreements, the Korotitskys each received income from separate sources that they deposited into their jointly held personal account, as well as other accounts, and failed to disclose that income to their income tax return preparer. As a result, the Korotitskys filed false income tax returns for tax years 2006 through 2009.Luba Korotitsky is a 50% owner of a hair salon business. She diverted gross receipts from the hair salon business into the couple’s joint bank account, as well as an account in her name. Luba Korotitsky admitted that she provided the return preparer with the business bank account statements, but not with her personal bank statements.
Alexsander Korotitsky failed to report income he received from an installment sale contract related to the sale of his business, A&A Medical Supply, in 2006. He also failed to report substantial income he received from an associate through an account the associate controlled in the name of A&A International. Alexsander Korotitsky invested money in A&A International for the purchase and subsequent sale of vehicles abroad, and kept the profits of the sales. He also received income in the A&A International bank account from foreign owned businesses, wrote himself checks from the A&A International account, and used the account to pay personal expenses, such as the couple’s mortgage.
The investigation of the Korotitskys began during an investigation of an arson at the home of Saleh Fakhoury, when law enforcement learned that Korotitsky was a possible business partner of Fakhoury in a local pizzeria business. Korotitsky’s name appeared as an owner on the bank account for Fakhoury Enterprises. Over $215,000 was deposited in the Fakhoury Enterprises account from June 3, 2008 to February 2009, mostly checks from or for the benefit of the Korotitskys.
A search of the Korotitskys home on May 5, 2010, recovered over $70,000 in cash, as well as their 2008 and 2009 tax returns, which reflected that they had only $4,192 in taxable income in 2008 and no taxable income in 2009. A financial investigation by the IRS followed for tax years 2006 through 2009.
Investigation showed that the Korotitskys lived a lavish lifestyle, which was inconsistent with their reported income. The Korotitskys took cruises to Europe in 2006 and 2007; purchased expensive jewelry, including a $29,000 Patek Phillipe watch; and purchased luxury automobiles including a BMW and two Lexus. Alexsander Korotitsky used other people’s personal and business bank accounts to pay for his living expenses, cars, jewelry and vacations, and during the investigation maintained some level of control over at least eight companies’ business checking accounts.
A bank deposit analysis indicated that the Korotitskys had a total of $875,382.48 in unreported income for tax years 2006 through 2009. In April 2013, the couple filed amended tax returns for those years, which included checks totaling $66,184 as restitution to the IRS. However, the amended tax returns reflected that Alexsander Korotitsky earned the income from his wife’s beauty salon, not from any of the businesses which he was associated with, so the amended returns were also false.
The federal tax loss is approximately $230,688 and the Maryland tax loss is $41,580.67, resulting in a total of $272,268.67 owed by the defendants.
United States Attorney Rod J. Rosenstein praised the IRS-CI and ATF for their work in the investigation and thanked Assistant U.S. Attorney Sandra Wilkinson, who prosecuted the case.Porcupine Man Sentenced for EscapeRead the Press Release
United States Attorney Brendan V. Johnson announced that a Porcupine, South Dakota, man convicted of Escape was sentenced on December 4, 2014, by Chief Judge Jeffrey L. Viken, U.S. District Court.
Jesse Miller, age 27, was sentenced to time served and ordered to pay a $100 special assessment to the Federal Crime Victims Fund.
A criminal complaint charging the Escape was filed against Miller on July 23, 2014. He pled guilty to the Escape charge on August 21, 2014.
The conviction related to Miller being in Porcupine without permission on July 18, 2014, as he was assigned to home confinement in Rapid City.
This case was investigated by the U.S. Marshals Service. Assistant U.S. Attorney Eric Kelderman prosecuted the case.
Pimp Arrested by DPS in Wilbarger County Is Sentenced to 41 Months in Federal Prison for Transporting A Woman from Wyoming and Colorado to Texas to Engage in ProstitutionRead the Press Release
WICHITA FALLS, Texas — A man who admitted transporting a woman from Wyoming and Colorado to Texas to engage in prostitution was sentenced this morning in federal court in Wichita Falls, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Matthew Ross Cummings, 24, most recently of Aurora, Colorado, was sentenced to 41 months in federal prison by U.S. District Judge Reed C. O’Conner. One week before his trial was to begin, Cumming pleaded guilty to an indictment charging one count of transportation of an individual to engage in prostitution.
According to documents filed in the case, on March 20, 2013, a Trooper with the Texas Department of Public Safety (DPS) initiated a traffic stop of a Budget rental truck travelling eastbound on Highway 287 in Wilbarger County. The Trooper also noticed that the rental truck was travelling in unison with a silver Chevrolet sedan. The driver of the rental truck was identified as Cummings. He was arrested after controlled substances were found in the passenger and storage areas of the truck.
An iPad located in the rental truck contained a journal written by a female who indicated in the journal that she was a prostitute and Cummings was her pimp. When confronted, Cummings admitted he was a pimp and made all the money. He also admitted that the Budget truck was rented on March 19, 2013 in Denver, Colorado, and was due to be returned to Budget in Houston, Texas on March 25, 2013.
Another DPS Trooper located the silver sedan travelling east in Clay County, Texas. After a traffic stop, the female passenger said she was travelling with Cummings and the car she was travelling in belonged to Cummings, who was driving a Budget rental truck. She confirmed that she wrote the journal that law enforcement found on the iPad. She advised that she had worked as a prostitute for Cummings for approximately one year and that she gave Cummings all of the money she earned.
The female said that she and Cummings went on trips to make money. Cummings admitted that on February 6, 2013, he checked into a hotel in Casper, Wyoming, and that same day, created an online advertisement for the female’s prostitution services in Casper. That advertisement was renewed/modified approximately 10 times from February 6 – February 10, 2013. The female’s prostitution services were offered in Casper as recently as March 17, 2013.
Texas DPS investigated. Assistant U.S. Attorney Mary Walters prosecuted.
Owner of Parsippany-Based Diagnostic Testing Facility Pleads Guilty to Health Care FraudRead the Press Release
NEWARK, N.J. - A Morris County, New Jersey, man pleaded guilty today to health care fraud in a scheme to bill for diagnostic testing services he did not render and to enable a cardiologist to evade the Medicare program’s pre-payment review of his claims, U.S. Attorney Paul J. Fishman announced.
Vijay Patel, 57, of Parsippany, New Jersey, pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an information charging him with one count of health care fraud.
According to documents filed in this case and statements made in court:
From 2009 to the present, Patel has been the owner of a diagnostic testing facility in Parsippany called Mobile Diagnostic Testing of NJ LLC (Mobile Diagnostic). He was also a participant in Medicare.
Patel had an associate identified as “S.A.,” who was a cardiologist and also a participant in the Medicare program. From around 2009 through 2012, S.A.’s Medicare contractor had placed him on so-called “pre-payment review,” which was initiated to ensure that S.A. was submitting claims within established rules and regulations and consistent with appropriate medical decision-making, and which required S.A. to submit medical and other documentation to support the services being billed to Medicare. Under pre-payment review, claims for reimbursement that did not have the documentation necessary to support the services being billed are rejected by the Medicare contractor.
From November 2009 through October 2012, Patel and S.A. engaged in a scheme to defraud Medicare whereby S.A. paid Patel substantial sums of money to enable S.A. to evade Medicare’s prepayment review. Patel admitted in court that he submitted claims to Medicare for diagnostic testing services that S.A. had performed as if Mobile Diagnostic had performed the services instead of S.A. Once Medicare paid Patel and Mobile Diagnostic for diagnostic testing services that S.A. had actually provided, Patel then transferred a portion of the payment to S.A. and kept a substantial portion for himself.
The charge to which Patel pleaded guilty carries a maximum potential penalty of 10 years in prison and a maximum $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is scheduled for March 23, 2015.U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services, Office of the Inspector General, under the direction of Special Agent in Charge Tom O’Donnell, for the investigation leading to the guilty plea.
The government is represented by Assistant U.S. Attorney Scott B. McBride, Deputy Chief of the U.S. Attorney’s Office’s Economic Crimes Unit.
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Defense counsel: Richard M. Asche Esq., New York
Patel, Vijay Information
Northern California Attorney Sentenced for Attempted Tax EvasionRead the Press Release
SACRAMENTO, Calif. — Orion Douglas Memmott, 75, formerly of Willows, was sentenced today by United States District Judge Kimberly J. Mueller to 18 months in prison for attempted tax evasion and subscribing to a false tax document, United States Attorney Benjamin B. Wagner announced.
According to testimony presented at trial, Memmott, a Stanford Law School graduate and tax attorney, stole hundreds of thousands of dollars from investors and law firm clients to spend on his own expenses, including failed day trading, travel, and personal trainers. Some of this money was removed from a client’s medical trust, leaving her destitute and homeless. Memmott concealed the embezzled money through the use of nominee accounts and false statements to investors, clients, and the IRS. Memmott also concealed his real estate holdings and rental income from IRS collection agents who were seeking to collect more than $650,000 in unpaid taxes for tax years 1993-1999.
“For years, Mr. Memmott acted as if his law license placed him beyond the reach of the law,” said U.S. Attorney Wagner. “Today, in sentencing Mr. Memmott to prison, the Court made clear that attorneys who commit crimes should not expect special treatment.”
“Mr. Memmott misused his position and defrauded friends, clients and the government out of hundreds of thousands of dollars,” said IRS-Criminal Investigation Acting Special Agent in Charge Thomas McMahon. “Attorneys are trusted with the confidence of others and are expected to uphold the law and pursue justice with integrity. Those who intentionally cheat by not paying their taxes should know that they will not go undetected and will be held accountable.”
This case was the product of an investigation by the Internal Revenue Service, Criminal Investigation. Assistant United States Attorneys Michael D. Anderson and Kevin Khasigian prosecuted the case.
New Iberia Man Sentenced to 24 Months in Prison for Theft of Government FundsRead the Press Release
LAFAYETTE, La. – United States Attorney Stephanie A. Finley announced today that a New Iberia man was sentenced to 24 months in prison for lying in order to receive more than $350,0000 in Social Security Administration (SSA) benefits.
Buddy Estelle, 53, of New Iberia, La., was sentenced by U.S. District Judge Elizabeth E. Foote for one count of making a false statement to the Social Security Administration. He was also sentenced to three years of supervised release and ordered to pay $352,937.20 in restitution. According to evidence presented at the September 12, 2013 guilty plea, Estelle started receiving SSA disability payments in 1984. While attending a routine meeting concerning his benefit eligibility on Feb. 8, 2011, he told SSA staff members at the New Iberia office that he had not worked since 2000. During the guilty plea, Estelle admitted that he has been self-employed since 2000. He owns a business that buys and crushes cars for scrap. Estelle admitted to improperly receiving $352,937.20 of benefits to which he was not entitled.
The Social Security Administration and the Louisiana State Police conducted the investigation. Assistant U.S. Attorney Kelly P. Uebinger prosecuted the case.
New Hampshire Man Pleads Guilty to Firearms ChargesRead the Press Release
CONCORD, NEW HAMPSHIRE – Johnathon Irish, 28, of Brentwood, New Hampshire, has entered a guilty plea in the United States District Court for the District of New Hampshire to one count of aiding and abetting the making of a material false statement in connection with the acquisition of a firearm, and one count of lying to a federal law enforcement agent, announced United States Attorney John P. Kacavas.
In February 2013, Irish was interviewed by a Special Agent with the Federal Bureau of Investigation, pursuant to an open FBI investigation into Irish’s firearms activities. During that interview, when asked about the status of his personal firearms, Irish falsely stated that he had sold all of his firearms to a friend, when they had in fact been concealed from authorities. Several months later, in September of 2013, Irish instructed another individual to purchase a firearm for him in that individual’s name, thereby circumventing the legally required background check. Irish will be detained pending sentencing, which is presently scheduled for February 23, 2015.
This prosecution arose from an investigation by the Federal Bureau of Investigation, which was assisted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Brentwood Police Department. The case is being prosecuted by the United States Attorney for the District of New Hampshire, John P. Kacavas, and Assistant United States Attorney Nick Abramson.Navajo Man from Colorado Pleads Guilty to Federal Child Abuse Charge in New MexicoRead the Press Release
ALBUQUERQUE – Staffred Kai Begay, 42, of Durango, Colo., pleaded guilty today to a federal child abuse charge under a plea agreement with the U.S. Attorney’s Office.
Begay was arrested on Aug. 12, 2014, on a criminal complaint charging him with child abuse. According to the criminal complaint, on Aug. 7, 2014, a Navajo Indian juvenile (victim) called the authorities to report that Begay was assaulting the victim’s mother at a residence located on the Navajo Nation Indian Reservation in San Juan County, N.M. Officers of the Navajo Nation Division of Public Safety responded to the call, but found no one at the residence. The officers responded to a second call in the early morning hours of Aug. 8, 2014, and learned that Begay struck the victim with an axe and broke the victim’s arm.
Today Begay pled guilty to an indictment charging him with abuse of a child resulting in serious bodily injury. In entering the guilty plea, Begay admitted that on Aug. 7, 2014, he put a child in a situation that endangered the child’s life and resulted in serious bodily injury to the child.
At sentencing, Begay faces a statutory maximum penalty of three years in prison. His sentencing hearing has yet to be scheduled.
This case was investigated by the Shiprock office of the Navajo Nation Division of Public Safety and the Farmington office of the FBI and is being prosecuted by Assistant U.S. Attorney Kyle T. Nayback.
Mexican National Convicted of Illegal ReentryRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-0100 ● Contact: Tara Tighe, Public Affairs SpecialistMARTINSBURG, WEST VIRGINIA – Mexican national Rogelio Portillo Vasquez, 38, was convicted of illegal reentry after authorities discovered that he was in the U.S. unlawfully, United States Attorney William J. Ihlenfeld, II, announced today.
Portillo Vasquez was previously deported to Mexico in May 2012. In September 2014, authorities discovered that he was in Jefferson County, West Virginia without permission.
Portillo Vasquez pled guilty to a criminal Information charging him with one count of “Re-entry by a Removed Alien.” He faces up to two years in prison and a fine of up to $250,000.00. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Paul Camilletti is prosecuting the case on behalf of the government. U.S. Immigration and Customs Enforcement is investigating.
U.S. Magistrate Judge Robert W. Trumble presided.
McLaughlin Man Acquitted of Assault ChargesRead the Press Release
United States Attorney Brendan V. Johnson announced that a McLaughlin, South Dakota, man was acquitted by a federal jury in Pierre on December 9, 2014, on two counts of Assault with a Dangerous Weapon and one count of Assault Resulting in Serious Bodily Injury.
Justin Walking Elk was indicted by a federal grand jury on April 15, 2014.
The charges stemmed from events which were alleged to have occurred in October 2013.
The investigation was conducted by the Bureau of Indian Affairs, Standing Rock Agency. The U.S. Attorney's Office prosecuted the case.
Martinsburg Man Convicted for Cocaine TraffickingRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-0100 ● Contact: Tara Tighe, Public Affairs SpecialistMARTINSBURG, WEST VIRGINIA – Courtney Lamar Jenkins, 26, of Martinsburg, West Virginia, was convicted in federal court today for his role in a conspiracy to distribute crack cocaine, United States Attorney William J. Ihlenfeld, II, announced.
From July 2012 through January 2013, Jenkins and others collaborated to sell crack cocaine throughout Northern West Virginia. He pled guilty today to one count of “Drug Conspiracy” following an investigation by the Eastern Panhandle Drug and Violent Crime Task Force, a HIDTA-funded initiative.
Assistant U.S. Attorney Jarod Douglas is prosecuting the case on behalf of the government.
U.S. Magistrate Judge Robert W. Trumble presided.
Lancaster Women Sentenced in Tax Fraud SchemeRead the Press Release
Contact Person: DeWayne Pearson (803) 929-3000
Lancaster, South Carolina ----United States Attorney Bill Nettles stated thatAisha J. Craig, age 35, and Ebony N. Eddie, age 34, both of Lancaster, were sentenced in Federal Court for their involvement in a scheme to submit fraudulent tax returns to the Internal Revenue Service. According to facts presented in court, Craig and Eddie used stolen identities to receive over $100,000 in fraudulent tax returns. Both women entered guilty pleas to charges of presenting false claims to the United States in violation of Title 18, United States Code, Section 286, and aggravated identity theft, a violation of Title 18 United States Code, Section 1028A. Craig was sentenced to 48 months and Eddie was sentenced to 54 months imprisonment for their roles in the scheme.
“Investigating refund fraud and identity theft is a top priority of IRS Criminal Investigation”, said IRS-CI Special Agent in Charge Thomas J. Holloman III. “Stealing identities and filing false tax returns is a serious crime that hurts innocent taxpayers. Today’s sentencing’s should serve as a strong warning to those considering similar conduct. Law enforcement and the US Attorney’s Office will vigorously pursue these crimes and will hold those accountable who would defraud the government.” The case was assigned to Assistant United States Attorney T. DeWayne Pearson of the Columbia office for prosecution.Justice Department Seeks to Shut Down California Tax Return PreparersRead the Press Release
Tax Return Preparers Allegedly Claimed False Deductions and Credits on Tax Returns
The Justice Department announced today that it has asked a federal court in California to permanently bar Vida Farley and AJV Bookkeeping Inc. from preparing tax returns for others.
According to the complaint, the government alleges that, for the past several years, the defendants engaged in a pattern of claiming false education credits and false or grossly inflated Schedule A deductions for charitable contributions, unreimbursed employee business expenses and other expenses on behalf of their customers.
According to the suit, which was filed in the U.S. District Court for the Eastern District of California, Farley has been a tax return preparer for more than 20 years and since 2008, has operated a tax return preparation business through AJV Bookkeeping Inc. The defendants’ practices of claiming false deductions and education credits have resulted in significant lost tax revenues as they understate tax liabilities and claim improper refunds, according to the suit.
Specifically, the suit alleges that the Internal Revenue Service (IRS) examined more than 200 returns the defendants prepared between 2010 and 2014, and that more than 96 percent of these returns have resulted in adjustments to tax, with the proposed deficiencies averaging roughly $4,000 per return. The complaint alleges that the defendants prepared more than 17,000 returns between 2010 and 2014.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014. The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Jury Returns Guilty Verdicts Against Members of Violent Loan Sharking and Illegal Gambling RingRead the Press Release
A federal jury today returned guilty verdicts against four defendants charged in a loan sharking and illegal gambling ring that was run out of several Philadelphia businesses, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania.
Ylli Gjeli, 49, Fatimir Mustafaraj, aka “Tony,” 42, Gezim Asllani, aka “Sam,” 35, Rezart Rahmi Telushi, aka “Luigi,” 41, all of Philadelphia, were found guilty following a six-week jury trial of engaging in a racketeering conspiracy, racketeering collection of unlawful debts, making extortionate extensions of credit, collections of extensions of credit by extortionate means. Additionally, Gjeli, Mustafaraj and Aslanni were convicted of counts involving extortionate extension of credit. Finally, Gjeli and Mustafaraj were convicted of illegal gambling. U.S. District Judge William H. Yohn Jr. scheduled sentencing hearings for March 2015.
According to evidence presented at trial, the defendants’ enterprise used businesses in Philadelphia, including the Lion Bar & Grill, Blackbird Café and “Ylli’s 2 Brothers,” to conduct the illegal loan sharking and gambling activities. The enterprise generated money by making and collecting on loans with usurious rates of interest, and making loans to customers whose debts were incurred through the enterprise’s illegal gambling business. The evidence established that from October 2011 to 2013 alone, the enterprise extended 125 usurious loans totaling $1.78 million with annual interest rates ranging from 104 percent to 395 percent. Further, the evidence established that from February 2007 to August 2013, the organization’s online sports betting website contributed more than $2.9 million in gross profits.
Members and associates of the enterprise cultivated their reputations within the organization by threatening customers with dangerous weapons such as firearms and a hatchet, and threating to kill, assault or “break the legs” of delinquent customers if they did not pay their debts, and also by physically assaulting subordinate members and associates who stole from the organization.
The evidence at trial demonstrated that Gjeli was a “boss” of the organization, Mustafaraj served as “muscle” to forcefully collect debts owed to the organization, and Asllani and Telushi served as “collectors,” both making loans and collecting the weekly payments from customers. Gjeli and Mustafaraj directed the other members in the loan sharking activities and illegal gambling business, financed loans and the gambling operation, used intimidation and threats of violence against customers to collect loan payments, and physically assaulted subordinate members and associates who stole from the organization. Asllani and Telushi assisted Gjeli and Mustafaraj in making loans, and regularly collected weekly loan payments from customers.
The evidence also demonstrated that the defendants attempted to conceal the existence and operations of the enterprise from law enforcement by limiting their discussions of criminal activities when on the phone, using cryptic and coded language to describe criminal activities, conducting pat-downs and body searches of customers to check for weapons and recording devices, and conducting the enterprise’s transactions primarily in cash.
The case was investigated by the FBI, Pennsylvania State Police, New Jersey State Police, Montgomery County Detectives, and the Internal Revenue Service-Criminal Investigation. It is being prosecuted by Trial Attorney Margaret Vierbuchen of the Justice Department’s Organized Crime and Gang Section and Assistant U.S. Attorney Salvatore L. Astolfi of the Eastern District of Pennsylvania.
Jury Returns Guilty Verdicts Against Members of Violent Loan Sharking and Illegal Gambling RingRead the Press Release
PHILADELPHIA – A federal jury today returned guilty verdicts against four defendants charged in a loan sharking and illegal gambling ring that was run out of several Philadelphia businesses. Ylli Gjeli, 49, Fatimir Mustafaraj, 42, Gezim Asllani, 35, Rezart Rahmi Telushi, 41, all of Philadelphia, were found guilty of racketeering conspiracy, racketeering collection of unlawful debt, and collections of extensions of credit by extortionate means. Gjeli, Mustafaraj, and Asllani were also convicted of making extortionate extensions of credit; and Gjeli and Mustafaraj were also convicted of operating an illegal gambling business. U.S. District Court Judge William Yohn scheduled sentencing hearings as follows: Gjeli, March 18, 2015; Mustafaraj, March 19, 2015; Asllani, March 25, 2015; and Telushi, March 26, 2015.
Gjeli was a leader and “boss” of the organization; Mustafaraj, a/k/a “Tony,” was a leader and “muscle.” Both directed other members in the loan sharking activities and illegal gambling business, approved loans, used intimidation and threats of violence against customers, collected weekly loan payments, physically assaulted subordinate members and associates, supervised the illegal gambling business, provided cash to pay customer’s gambling wins and otherwise financed the gambling business, collected gambling debts, and made loans to customers whose debts were incurred through the illegal gambling business. Defendants Asllani, a/k/a “Sam,” and Telushi, a/k/a “Luigi,” were “collectors” who assisted Gjeli and Mustafaraj in making loans and regularly collected weekly loan payments from customers. The defendants generated money by making and collecting on loans with usurious rates of interest; using intimidation, threats, and violence to make and collect on loans; and making loans to betting customers whose debts were incurred through the enterprise’s illegal gambling business. The enterprise used businesses in Philadelphia - including the Lion Bar & Grill, Blackbird Café, “Ylli’s 2 Brothers,” and First England Pizza - to conduct the criminal activities.
Members and associates of the enterprise cultivated their reputation for violence by threatening customers with dangerous weapons such as a firearm and hatchet; using implied threats and intimidation; telling customers that if they did not pay their debts someone would kill them, “break your legs,” or physically harm them or their family members in some other way; and physically assaulting subordinate members and associates.
The defendants attempted to conceal the existence and operations of the enterprise from law enforcement by: limiting their discussions of criminal activities when on the phone using cryptic and coded language to describe criminal activities; conducting pat-downs and body searches of customers to check for weapons and recording devices; and conducting the enterprise’s transactions primarily in cash.
Defendant Gjeli faces a maximum possible sentence of 185 years in prison; Mustafaraj faces a maximum possible sentence of 205 years in prison; Asllani faces a maximum possible sentence of 140 years in prison; Telushi faces a maximum possible sentence of 80 years in prison.
The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigations, Pennsylvania State Police, Montgomery County Detectives, and the New Jersey State Police. It is being prosecuted by Assistant United States Attorney Salvatore L. Astolfi and Trial Attorney Margaret Vierbuchen from the Department of Justice Organized Crime & Gang Section.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Judge Sentences Beaver County Prescription Drug Dealer to 24 Years in Federal PrisonRead the Press Release
PITTSBURGH – A convicted drug dealer has been sentenced in federal court to 24 years in prison for his April, 2014, conviction for 11 counts related to the unlawful distribution of oxycodone and Opana, both of which are Schedule II controlled substances, United States Attorney David J. Hickton announced today.
United States District Court Judge Arthur Schwab imposed the sentence on David Best, 28. On April 10, 2014, a federal jury had convicted Best, after a 10-day trial, of conspiracy to distribute oxycodone and Opana, as well as multiple counts related to that large-scale drug trafficking conviction.
Specifically, according to Assistant United States Attorney Eric S. Rosen, who prosecuted the case, the evidence presented at trial established that Best conspired together with others, from in and around July 2011, and continuing thereafter to in and around May 2013, to distribute and possess with intent to distribute large quantities of oxycodone and Opana. Additionally, on April 18, 2013 and April 30, 2013, Best distributed oxycodone and oxymorphone, in the form known as Opana to a confidential informant.
Further, on three separate occasions, Dec. 1, 2011, Sept. 26-27, 2012, and Feb. 15, 2013, Best burglarized the MedFast pharmacy in Baden, Pa., and from that pharmacy, stole a number of Schedule II controlled substances, including: fentanyl, oxymorphone, including in the form known as Opana, Ritalin, oxycodone, including in the form known as Oxycontin, methylphenidate, Vyvanse, morphine sulfate, Roxicet, Focalin, methylphenidate, hydromorphone, methadone, and meperidine. On two occasions, Best chiseled through the wall of the neighboring China Garden restaurant into the pharmacy, and on the third occasion, Best broke into the Bo-Rics hair salon, and from there, burrowed directly into the MedFast controlled substances cabinet. Best stole these controlled substances in order to distribute them.
Last, the evidence at trial demonstrated that Best, on June 20, 2012, carried and brandished a loaded revolver during and in relation to his drug trafficking conspiracy. In that regard, Best held two men hostage at gunpoint after he lured them to his Economy Township home under the guise that he had a large stash of drugs and drug proceeds in his room. Best suspected that these two men were conspiring to steal his drug proceeds, so he preemptively attacked and held them hostage at gunpoint.
Prior to imposing sentence, Judge Schwab highlighted the seriousness of Best’s many crimes and the damage that Best’s drug dealing did to those in Western Pennsylvania. Further, although Best had argued that his drug dealing resulted from his own drug addiction, the Court determined that the scope of his massive drug conspiracy went far beyond that of an ordinary addict looking to feed their addiction.
Assistant United States Attorney Eric S. Rosen prosecuted this case on behalf of the government.
The Drug Enforcement Administration and the Economy Borough and Cranberry Township Police Departments conducted the investigation that led to the successful prosecution and conviction of David Best.
Irving, Texas, Man Sentenced to 132 Months in Federal Prison for Transporting and Shipping Child PornographyRead the Press Release
DALLAS — An Irving, Texas, man was sentenced this morning by U.S. District Judge Sam A. Lindsay to 132 months in federal prison on a child pornography conviction, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas
Benito Agramon Castro, 50, pleaded guilty in February 2014 to one count of possession of prepubescent child pornography. He has been in custody since his arrest in December 2013.
According to documents filed in the case, an officer with the Plano Police Department, working online in an undercover capacity to identify persons participating in the distribution of child pornography and the sexual exploitation of children through peer-to-peer file sharing, identified a specific IP address that was making images of child pornography available for sharing. That IP address made approximately 559 files available for download to the undercover officer. The majority of the file names were indicative of child pornography.
The investigation revealed that the IP address belonged to Castro. A federal search warrant was executed at Castro’s residence on December 11, 2013, and child pornography was found on his computer as well as on a flash drive and on compact discs. Castro admitted that some of the images and videos he possessed depicted sadistic and/or violent content and some of the files depicted infants and toddlers.
The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 2006 by the Department of Justice, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/. For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”
U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Plano Police Department investigated. Assistant U.S. Attorney Camille Sparks prosecuted.
Information: Federal Court ArraignmentsRead the Press Release
The United States Attorney’s Office announced that those persons listed below were arraigned before the U.S. Magistrate and the indictments handed down by the Grand Jury unsealed.
The United States Attorney’s Office announced that those persons listed below were arraigned before the U.S. Magistrate and the indictments handed down by the Grand Jury unsealed. Appearing before U.S. Magistrate Judge Ostby in Billings on December 12, 2014, and entering pleas of Not Guilty were:
• PRESTON DAVID BELL, a 21-year-old resident of Wyola, appeared on charges of uttering counterfeit obligations. If convicted of the most serious charges contained in the indictment, BELL faces 20 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the U.S. Secret Service. PACER Case Reference: 14-114
• JAMES MICHAEL CARROLL, a 32-yeard-old resident of Columbus, appeared on charges of felon in possession of a firearm. If convicted of the most serious charge contained in the indictment, CARROLL faces 10 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives. PACER Case Reference: 14-70
• HAYDEN ONEIL LOWRY, a 20-year-old resident of Miles City, appeared on charges of possession of stolen firearms and robbery involving motor vehicles. If convicted of the most serious charges contained in the indictment, LOWRY faces life in prison, $250,000 in fines and 5 years supervised release. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives. PACER Case Reference: 14-57
If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system so that you stay current and not miss any important developments in the case. To establish a PACER account, which will allow you to review documents filed in the case, please go to, http://www.pacer.gov/register.html. To access the district court’s calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.
Information: Federal Court ArraignmentsRead the Press Release
The United States Attorney’s Office announced that those persons listed below were arraigned before the U.S. Magistrate and the indictments handed down by the Grand Jury unsealed.
Appearing before U.S. Magistrate Judge Lynch in Missoula on December 17, 2014, and entering pleas of Not Guilty were:
• DONALD MITCHELL JOHNSON, a 48-year-old resident of Alhambra, California, appeared on charges of conspiracy to commit access device fraud and fraud and related activity in connection with access devices. If convicted of the most serious charges contained in the indictment, LIU faces 10 years in prison, $250,000 in fines and 5 years supervised release. The case was investigated by the U.S. Secret Service. PACER Case Reference: 14-28
• EDWARD EARL WERNER, a 42-year-old resident of Hot Springs, appeared on charges of felon in possession of firearms. If convicted of the charge contained in the indictment, WERNER faces 10 years in prison, $250,000 in fines and 3 years supervised release. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Sanders County Sheriff’s Office. PACER Case Reference: 14-46
Appearing before U.S. Magistrate Judge Strong in Great Falls on December 17, 2014, and entering pleas of Not Guilty were:
• JOSE LUIS ALVARADO, a 27-year-old citizen of Mexico appeared on charges of conspiracy to possess with intent to distribute methamphetamine and conspiracy to commit money laundering. If convicted of the most serious charge contained in the indictment, ALVARADO faces life in prison, $10,000,000 in fines and 5 years supervised release. The case was investigated by the Drug Enforcement Administration, Russell Country Drug Task Force, and Homeland Security Investigations. PACER Case Reference: 14-96
• BRANDON MICHAEL JACKSON, a 29-year-old resident of Wolf Point appeared on charges of burglary. If convicted of the charge contained in the indictment, JACKSON faces 20 years in prison, $50,000 in fines and 3 years supervised release. The case was investigated by Fort Peck Tribes Department of Law and Justice PACER Case Reference: 14-78
Appearing before U.S. Magistrate Judge Ostby in Billings on December 17, 2014, and entering pleas of Not Guilty were:
• ZHE LIU, a 23-year-old resident of Alhambra, California, appeared on charges of conspiracy to commit access device fraud and fraud and related activity in connection with access devices. If convicted of the most serious charges contained in the indictment, LIU faces 10 years in prison, $250,000 in fines and 5 years supervised release. The case was investigated by the U.S. Secret Service. PACER Case Reference: 14-119
If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system so that you stay current and not miss any important developments in the case. To establish a PACER account, which will allow you to review documents filed in the case, please go to, http://www.pacer.gov/register.html. To access the district court’s calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.
Hudson County Gang Leader Pleads Guilty to Murder Conspiracy after Obtaining Approval from Gang’s National LeadershipRead the Press Release
NEWARK, N.J. – A Hudson County, N.J., man today admitted to trying to kill a rival gang member, U.S. Attorney Paul J. Fishman announced.
Carlos Valdez, a/k/a “Catracho,” 27, was indicted in July 2014 with numerous other top-ranking members of the international criminal street gang, Mara Salvatrucha (also known as “MS” or “MS-13”), for racketeering crimes, including conspiracy to commit murder. Valdez, who admitted to being the leader of an MS-13 set, or “clique,” operating in Hudson County, known as “Hudson Locotes Salvatruchas,” pleaded guilty today before U.S. District Court Judge Stanley R. Chesler in Newark federal court to Count One of the indictment, engaging in a racketeering conspiracy, and Count Five, conspiring to possess firearms in furtherance of a crime of violence.
According to documents filed in this case and statements made in court:
In autumn 2013, Valdez was recruited by Joel Antonio Cortez, a/k/a “Pee Wee,” a high-ranking member of Mara Salvatrucha’s national leadership, to join the “national program,” a scheme to consolidate the gang’s cliques under a single, nationwide organization devoted to violence, extortion, and drug trafficking. At the time, Cortez was incarcerated in a California state prison and used a contraband cellular phone to remain in contact with Mara Salvatrucha members on the East Coast. Cortez served as a top deputy for Jose Juan Rodriguez-Juarez, a/k/a “Sacerdote,” the leader of Mara Salvatrucha in the United States and the primary organizer of the new “national program.”
In November 2013, Valdez and other gang leaders in northern New Jersey hatched a plot to murder two brothers in Hudson County, New Jersey. Before carrying out the plot, Valdez and others sought authorization from high-ranking members in the gang’s national and international leadership, including Cortez and incarcerated members of the gang in El Salvador. Law enforcement learned of the murder plot during the course of its investigation and arrested certain gang members, including Valdez, before it could be completed.
Both of the charges to which Valdez pleaded guilty carry a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for March 16, 2015.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford. The investigation involved multiple FBI Field Offices, with substantial assistance provided by the FBI Field Office in Los Angeles. Fishman also thanked the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano T. Gregory, and the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace Park, for their work on this case. He also acknowledged the U.S. Attorney’s Office for the Central District of California for its assistance in the ongoing investigation.
The government is represented by Assistant U.S. Attorneys James M. Donnelly and Andrew J. Bruck of the U.S Attorney’s Office Organized Crime/Gangs Unit in Newark.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
14-440
Defense counsel: Scott Finckenauer Esq., Fairview, N.J.
Valdez, Carlos Indictment
Hudson County Gang Leader Pleads Guilty to Murder Conspiracy After Obtaining Approval from Gang’s National LeadershipRead the Press Release
A Hudson County, New Jersey, man today admitted to trying to kill a rival gang member, U.S. Attorney Paul J. Fishman announced.
Carlos Valdez, aka “Catracho,” 27, was indicted in July 2014 with numerous other top-ranking members of the international criminal street gang, Mara Salvatrucha (also known as “MS” or “MS-13”), for racketeering crimes, including conspiracy to commit murder. Valdez, who admitted to being the leader of an MS-13 set, or “clique,” operating in Hudson County, known as “Hudson Locotes Salvatruchas,” pleaded guilty today before U.S. District Court Judge Stanley R. Chesler in Newark federal court to Count One of the indictment, engaging in a racketeering conspiracy, and Count Five, conspiring to possess firearms in furtherance of a crime of violence.
According to documents filed in this case and statements made in court:
In autumn 2013, Valdez was recruited by Joel Antonio Cortez, aka “Pee Wee,” a high-ranking member of Mara Salvatrucha’s national leadership, to join the “national program,” a scheme to consolidate the gang’s cliques under a single, nationwide organization devoted to violence, extortion, and drug trafficking. At the time, Cortez was incarcerated in a California state prison and used a contraband cellular phone to remain in contact with Mara Salvatrucha members on the East Coast. Cortez served as a top deputy for Jose Juan Rodriguez-Juarez, aka “Sacerdote,” the leader of Mara Salvatrucha in the United States and the primary organizer of the new “national program.”
In November 2013, Valdez and other gang leaders in northern New Jersey hatched a plot to murder two brothers in Hudson County, New Jersey. Before carrying out the plot, Valdez and others sought authorization from high-ranking members in the gang’s national and international leadership, including Cortez and incarcerated members of the gang in El Salvador. Law enforcement learned of the murder plot during the course of its investigation and arrested certain gang members, including Valdez, before it could be completed.
Both of the charges to which Valdez pleaded guilty carry a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for March 16, 2015.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford. The investigation involved multiple FBI Field Offices, with substantial assistance provided by the FBI Field Office in Los Angeles. Fishman also thanked the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano T. Gregory, and the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace Park, for their work on this case. He also acknowledged the U.S. Attorney’s Office for the Central District of California for its assistance in the ongoing investigation.
The government is represented by Assistant U.S. Attorneys James M. Donnelly and Andrew J. Bruck of the U.S Attorney’s Office Organized Crime/Gangs Unit in Newark.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Hattiesburg Man Pleads Guilty to Conspiracy to Embezzle and Commit Mail FraudRead the Press Release
Hattiesburg, Miss. – Jerry Wayne Woodland, 52, of Hattiesburg, pled guilty today in U.S. District Court to conspiracy to steal food and food-related items from the Forrest County Detention Center and conspiracy to commit mail fraud to cover it up, announced U.S. Attorney Gregory K. Davis and FBI Special Agent in Charge Don Alway.
Woodland, a former kitchen employee with the Forrest County Detention Center, was charged in a Criminal Information, filed on November 24, 2014, with conspiracy to steal over $5,000 worth of items from a local governmental agency and to commit mail fraud. Woodland worked for the Detention Center from at least 2002 through 2014. During that time, he conspired with others to embezzle food or food-related items from the jail by transporting or having such items transported to the homes or businesses of Woodland or his co-conspirators.
Woodland and others also conspired to commit mail fraud in order to accomplish their theft by ordering food from various vendors and concealing the purchase of the food by drafting and submitting Forrest County purchase requisition forms that contained fraudulent entries hiding the items. As a result, invoices were mailed and payments were made for the stolen food.
Woodland will be sentenced by U.S. District Judge Keith Starrett on March 9, 2015 at 10:15 a.m. The maximum penalty for conspiracy is five years in prison and a $250,000 fine.
This case was investigated by the Federal Bureau of Investigation and the Mississippi State Auditor’s Office. Assistant U.S. Attorney Mike Hurst is prosecuting the case.Gloversville Man Sentenced to 18 Months for Growing MarijuanaRead the Press Release
ALBANY, NEW YORK – DAVID M. GAMBUZZA, age 41, of Gloversville, was sentenced on December 12, 2014, by U.S. District Judge Mae A. D’Agostino, to 18 months in prison for manufacturing marijuana, announced United States Attorney Richard S. Hartunian and New York State Police Bureau of Criminal Investigations Captain Scott P. Coburn.
GAMBUZZA, who pleaded guilty in July 2014, admitted to growing marijuana plants inside a two-story building that he owned in Montgomery County. GAMBUZZA had installed grow lights and sophisticated watering and ventilation systems inside the building. In September 2013, investigators searched the building and seized approximately 280 marijuana plants.
This case was investigated by the New York State Police and was prosecuted by Assistant United States Attorney Jeffrey C. Coffman.
Gaston Man Convicted of Trafficking in Counterfeit MedicationsRead the Press Release
Contact Person: DeWayne Pearson (803) 929-3000
Columbia, South Carolina ----William N. Nettles, United States Attorney for the District of South Carolina announced that Arthur Fleming Moler, age 51, of Gaston, was found guilty after a jury trial of trafficking in counterfeit goods, smuggling illegal medications and theft of government services. Facts presented during the trial showed that Moler sold and shipped counterfeit goods and medications, including illegal replicas of Viagra and Cialis, from his Columbia based business, South Carolina Liquidations
According to testimony presented during the case, United States Customs agents discovered counterfeit golf equipment being shipped from China to South Carolina Liquidations at 1215 Shop Road in Columbia, South Carolina. When investigators entered the warehouse, they discovered hundreds of counterfeit designer handbags, sunglasses, electronic equipment and over 2 million dollars’ worth of counterfeit erectile dysfunction medications. Sentencing in the case has not yet been scheduled but Moler faces a possible sentence of 20 years imprisonment and a fine of $2,000,000.
The case was investigated by the Department of Homeland Security - Immigration and Customs Enforcement and the United States Postal Service and was prosecuted by Assistant United States Attorney T. DeWayne Pearson of the Columbia office.Four Sentenced in Federal Student Aid Fraud RingRead the Press Release
PHOENIX – Jardon Laforcarde, 28, of Phoenix, was sentenced by U.S. District Judge Susan Bolton to 30 months’ imprisonment, followed by three years of supervised release, for his role in a federal student aid fraud ring that included three others. Laforcarde pleaded guilty to charges of conspiring to defraud the U. S. Department of Education of $369,589 in student aid funds. The three other participants pleaded guilty to the same conspiracy and were also recently sentenced: Ramon Meneses, 25, of Phoenix, received 54 months’ imprisonment, followed by three years of supervised release; his wife, Bobbie Robertson-Meneses, 31, of Phoenix, received five years of probation with 12 months of home incarceration; and Dorothy Taylor, 50, of Phoenix, received 24 months’ imprisonment, followed by three years of supervised release.
“Federal student loan programs are seriously undermined every year by fraudulently-obtained student aid funds,” said John S. Leonardo, United States Attorney for the District of Arizona. “The prison sentences imposed in this case reflect the seriousness of the offenses committed by these fraud rings and should serve as a warning to others who are contemplating the same type of fraudulent activity.”
Laforcarde, Meneses, Robertson-Meneses, and Taylor all conspired to enroll fictitious students in online college courses and submit fraudulent online applications for federal student aid in the names of those fictitious students. Laforcarde and Meneses, who were serving sentences in state prison at the time, obtained the personal identifying information of other prison inmates whose identities could then be used as the fictitious students. Robertson-Meneses and Taylor, who both have prior convictions but were not in prison at the time, used that information to complete the on-line enrollment forms. The fictitious students were awarded $369,589 in federal loan funds and Pell grants, and $254,891 was disbursed before the fraud was detected and stopped. The funds went to Robertson-Meneses and Taylor, who shared them with Laforcarde and Meneses. All four were ordered to pay restitution to the U.S. Department of Education.
The investigation in this case was conducted by the Department of Education, Office of Inspector General. The prosecution was handled by Monica Klapper, Assistant U.S. Attorney, District of Arizona, Phoenix.
CASE NUMBER: CR-13-0291-PHX-SRB
RELEASE NUMBER: 2014-073_ Laforcarde et alFor more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.Four Employees of Bernard L. Madoff’s Fraudulent Investment Advisory Business Sentenced in Manhattan Federal Court for Their Roles in the Massive FraudRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that ANNETTE BONGIORNO, the manager of the fraudulent investment advisory business at Bernard L. Madoff Investment Securities LLC, JOANN CRUPI, a/k/a “Jodi,” who managed hundreds of millions of dollars in fictitious investments, and JEROME O’HARA and GEORGE PEREZ, who worked as computer programmers designing and maintaining the proprietary software that enabled the fraud, were sentenced in Manhattan federal court. BONGIORNO was sentenced last Tuesday to six years in prison, and ordered to forfeit more than $155 billion. O’HARA, who was sentenced last Tuesday, and PEREZ, who was sentenced on Wednesday, were each sentenced to two-and-a-half years in prison, and ordered to forfeit more than $19 billion. CRUPI, who was sentenced today, was sentenced to six years in prison, and ordered to forfeit more than $33 billion. After a nearly six-month trial before U.S. District Judge Laura Taylor Swain, BONGIORNO, CRUPI, O’HARA, and PEREZ were convicted in March 2014 of, respectively, ten, thirteen, eight, and eight counts of securities fraud, falsifying the books and records of Madoff Securities, and conspiracy; BONGIORNO and CRUPI were also convicted of tax fraud, and CRUPI was convicted of bank fraud.
Manhattan U.S. Attorney Preet Bharara said: “Earlier this year, a jury unanimously found Annette Bongiorno, Joann Crupi, Jerome O’Hara, and George Perez guilty of every crime with which they were charged as a result of their willful participation in Bernard Madoff’s historic Ponzi scheme. As the Court acknowledged today and last week, each of them knowingly agreed to defraud thousands of victims, leading to billions of dollars in losses and unspeakable hardship. Although the sentences imposed by the Court cannot adequately compensate their many, many victims, time in prison for Bongiorno, Crupi, O’Hara, and Perez is a measure of justice.”
According to the allegations in the Superseding Indictment filed in Manhattan federal court, other court documents, and the evidence presented at trial:
BONGIORNO, an employee in the investment advisory business for 40 years, managed hundreds of investment advisory accounts purportedly having a cumulative balance of approximately $8.5 billion as of November 30, 2008. BONGIORNO also supervised employees who worked for the investment advisory business, and was for many years the head of the fraudulent investment business.
CRUPI, an employee in the investment advisory business for 25 years, managed several Madoff Securities investment advisory accounts purportedly having a cumulative balance of approximately $900 million as of November 30, 2008. CRUPI also, like BONGIORNO before her, tracked the daily activity of the bank account into which billions of dollars of investment advisory client money was deposited, and from which investment advisory client redemptions were paid.
During the course of managing investment advisory accounts, BONGIORNO and CRUPI “executed” trades in the investment advisory clients’ accounts only on paper, based on historically reported prices of securities that they researched in the Wall Street Journal and Bloomberg. Those trades achieved annual rates of return that had been pre-determined by Madoff. BONGIORNO and CRUPI also backdated the purchase dates of purported trades so that they could control the amount of gains reflected in the investment advisory accounts. For example, on at least one occasion, BONGIORNO back-dated a trade by more than twelve years in the account of her co-defendant, Daniel Bonventre (who was sentenced last Monday to 10 years in prison). On another occasion, in the fall of 2008, BONGIORNO back-dated sales of Lehman Brothers shares in her own investment advisory account, after Lehman Brothers had in reality filed for bankruptcy. Similarly, CRUPI caused backdated, losing trades to be placed in her own investment account for tax purposes.
Further, BONGIORNO processed exceptional gains in certain investment advisory accounts that purportedly occurred months before the investment advisory accounts had been established. BONGIORNO also asked certain investment advisory clients to return previously issued Madoff Securities account statements so that she could alter them, and often include additional backdated trades.
CRUPI handled the receipt of funds sent to Madoff Securities by its clients for investment; transferred clients’ funds between and among various Madoff Securities bank accounts; handled client requests for redemptions sent to Madoff Securities by clients; monitored, on a daily basis, funds transferred into and out of the Madoff Securities bank account that was principally used to perpetrate the fraud; and prepared and assisted in the preparation of fabricated documents designed to deceive regulators and outside auditors. Further, CRUPI provided banks with false information in connection with mortgage loans for other Madoff Securities employees.
BONGIORNO and CRUPI also filed false Income Tax Returns on their own behalf, in which they failed to report income that they received from Madoff Securities. Specifically, BONGIORNO was convicted for failing to report thousands of dollars in cash that she withdrew from two “Bernard L. Madoff Special” accounts over a period of many years. Similarly, CRUPI was convicted for failing to report thousands of dollars in personal expenditures on a corporate credit card, including for food, wine, personal travel, and home improvement projects.
O’HARA and PEREZ were employed as computer programmers at Madoff Securities beginning in 1990 and 1991, respectively. They were responsible for developing and maintaining computer programs that supported the operation of the Madoff Securities investment advisory business. For example, O’HARA and PEREZ created special programs that, among other things: created books and records for a small subset of Madoff Securities investment advisory clients to help hide the scope and nature of the investment advisory business; changed the names of account holders to help explain why the SEC would not find investment advisory client securities at the Depository Trust Company (“DTC”); altered details about the number of shares, execution times, and transaction numbers for trades reported on Madoff Securities trade blotters, by employing algorithms that produced false and random results; created false and fraudulent order entry and execution reports that included fictitious times at which orders for equities transactions purportedly were placed; generated fraudulent commission reports; and created fraudulent investment advisory client account statements in a format different from those sent to clients.
Between 2004 and 2008, Madoff Securities was subject to at least five reviews by the United States Securities and Exchange Commission (“SEC”) and a European accounting firm that was conducting a review of Madoff Securities’ operations on behalf of investment advisory clients. As part of a concerted effort overseen by Madoff to deceive both the SEC and the European accounting firm, CRUPI, O’HARA, and PEREZ participated in creating numerous false and fraudulent books and records. O’HARA and PEREZ knew that the special programs they developed contained fraudulent information and that they were used in connection with the SEC and European accounting firm reviews. Similarly, O’HARA created false books and records – including by inserting fictitious securities positions – for the Madoff Securities market making and proprietary trading businesses, in order to deceive auditors from the Internal Revenue Service and New York State taxing authorities.
In imposing the sentences, Judge Swain observed that BONGIORNO’s “work was integral to the success of the unspeakable fraud perpetrated by Bernard Madoff,” and thereby “destroyed or at least chipped away at the foundation of innocent investors’ dreams.” Similarly, Judge Swain noted that O’HARA and PEREZ’s “work kept in place the essential backbone of the infrastructure through which the [] fraud was perpetrated,” and that through their conduct, “so many innocent lives were irreversibly upended.” Judge Swain observed that CRUPI was “the reassuring voice of Madoff Securities to at least one victim” (who had written a letter to the Court) and that she caused “staggering and continuing harm.”
In addition to the six-year prison term, BONGIORNO, 66, was also ordered to forfeit more than $155 billion, including specific bank accounts and real estate, representing property traceable to the massive Ponzi scheme. Judge Swain also imposed a term of two years of supervised release following BONGIORNO’s completion of this sentence. O’HARA, 51, and PEREZ, 48, were each ordered to forfeit more than $19 billion, and each was sentenced to three years of supervised release following the completion of his sentence. In addition to her prison sentence, CRUPI, 53, was ordered to forfeit $33.9 billion, and to serve four years of supervised release.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission, the Internal Revenue Service, and the U.S. Department of Labor for their assistance.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Assistant United States Attorneys Matthew L. Schwartz, John T. Zach, and Randall W. Jackson are in charge of the prosecution. Assistant United States Attorneys Matthew L. Schwartz and Paul M. Monteleoni are in charge of the forfeiture aspects of the case.
Fort Washington Man Exiled to 10 Years for Drug Distribution and Illegal Possession of a GunRead the Press Release
As a Result of Previous Felony Convictions Was Prohibited From Possessing Guns or Ammunition
Greenbelt, Maryland – U.S. District Judge Roger W. Titus sentenced Leonard Eugene King, age 35, of Fort Washington, Maryland, today to 10 years in prison, followed by four years of supervised release, for being a felon in possession of a firearm, and for possession with intent to distribute controlled substances, including powder and crack cocaine and marijuana.The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William P. McMullan of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Chief Mark A. Magaw of the Prince George’s County Police Department; and Maryland Attorney General Douglas F. Gansler.
According to King’s plea agreement, on October 9, 2013, Prince George’s County Police officers executed a search warrant at King’s residence. Officers recovered two handguns, approximately 60 grams of cocaine and crack cocaine, four grams of marijuana, scales, baggies, drug paraphernalia and approximately $6,000 in cash. Some of the cocaine was found in the pocket of a pair of King’s pants, packaged for distribution. Additional cocaine, also packaged for distribution, was found in an air duct. A 9mm pistol, loaded with 17 rounds of ammunition was located in the basement wall and a .32 caliber pistol was located in the master bedroom.
King had two previous felony convictions for drug offenses and a conviction for a crime of violence, and was prohibited from possessing guns or ammunition.
United States Attorney Rod J. Rosenstein commended the ATF and Prince George’s County Police Department for their work in the investigation. Mr. Rosenstein thanked Special Assistant United States Attorney Gerald A. A. Collins, a cross designated Maryland Assistant Attorney General assigned to Exile cases, who prosecuted the case.
Fort Totten Woman Sentenced for Child Abuse or NeglectRead the Press Release
FARGO – U. S. Attorney Timothy Q. Purdon announced that on Dec.15, 2014, Alesia Stana Shaw, 31, Fort Totten, N.D. was sentenced before U. S. District Judge Ralph R. Erickson to serve eight months in prison for child abuse or neglect.
On June 7, 2013, Shaw was arrested at the Spirit Lake Casino on the Spirit Lake Indian Reservation related to a search warrant executed by Bureau of Indian Affairs and North Dakota Bureau of Criminal Investigation on reports of drug activity. Shaw was found in the room with her one year old child and was observed “roughly grabbing him and placed him on the couch in a hard manner.” Shaw tested positive for several drugs. On May 30, 2014, Shaw was arrested for driving a motor vehicle while intoxicated with her child in the vehicle. Shaw had previously been convicted in 2006 of Involuntary Manslaughter for an incident in which she lost control of her vehicle while driving under the influence of alcohol and killed one of her children, a 17 month old, in the crash.
Judge Erickson sentenced Shaw to serve 36 months supervised release upon her release from confinement and pay a $100 special assessment to the Crime Victims Fund.
The case was investigated by the Bureau of Indian Affairs and North Dakota Bureau of Criminal Investigation -Drug Enforcement.
Assistant U. S. Attorney Jan Morley prosecuted the case.
Fort Mill Woman Sentenced to 24 Months Imprisonment for Lying to Federal AgentsRead the Press Release
Contact Person: Stacey Haynes (803) 929-3000
Columbia, South Carolina ---- United States Attorney Bill Nettles stated today that Kirstie Elaine Philome Barratt, age 22, of Fort Mill, South Carolina was sentenced to 24 months imprisonment today after earlier pleading guilty to making a false statement to a federal agent, in violation of Title 18, United States Code, Section 1001. United States District Judge Joseph F. Anderson, Jr. imposed the term of imprisonment, which will be followed by a 3 year term of supervised release. In October, Barratt plead straight up to the charge without a plea agreement. Barratt also may face deportation as a result of her guilty plea. During the sentencing hearing, Judge Anderson granted the government’s motion for an upward departure from the federal guidelines sentencing range of 0 to 6 months, noting that this was a “rare” case and that Barratt “knowingly placed a law enforcement officer’s life in jeopardy” by her false statement.
Evidence presented at the earlier change of plea hearing established that during the early morning hours of January 7, 2014, deputized task force agents with the Federal Bureau of Investigation’s (FBI) Charlotte Safe Streets Task Force/Violent Crime Apprehension Team were in Fort Mill, South Carolina searching for a subject (hereinafter “Subject”) who was wanted for an armed robbery of a restaurant in North Carolina. Agents, in police attire and accompanied by York County Sheriff’s Department officers in marked units, approached the residence of the Subject’s girlfriend, Barratt, in an attempt to determine if the Subject was in the residence. After approximately 15 minutes of the agents knocking on the door and announcing their presence with a loud speaker, Barratt came to the door. Barratt, who was advised by agents that it was a crime to make a false statement to federal agents, told the agents that her boyfriend was not in the home, that she had not seen him for two (2) months because they had broken up, and that the only other persons in the residence were her parents. Barratt gave the agents consent to search the residence. Upon completing a sweep of the residence, agents located Barratt’s parents asleep in one upstairs bedroom and noticed the door shut to another upstairs bedroom. Agents could hear a dog barking in that other upstairs bedroom, so they asked Barratt to secure the dog so they could search the bedroom. Barratt went into the bedroom and came out with the dog, but did not tell agents that Subject was in the room armed with a firearm. Agents then went into the bedroom and found the Subject crouched in the corner with his firearm drawn. Gunfire ensued and an FBI task force agent, as well as the Subject, were shot. Both Barratt and the Subject were taken into custody. Barratt later advised agents that she knew her boyfriend was in the residence, that she thought he was going to hide, and that when she entered the bedroom to retrieve the dog, she saw him with the firearm, but did not tell the agents before allowing them to enter the bedroom.
The case was investigated by the FBI, the York County Sheriff’s Department, and the South Carolina Law Enforcement Division (SLED), and was prosecuted as part of the joint federal, state and local Project CeaseFire initiative, which aggressively prosecutes firearm cases. Assistant United States Attorney Stacey D. Haynes of the Columbia office handled the case.Forrester Construction Company Agrees to Pay $2.15 Million, Admits Abuse of Certified Business Enterprise ProgramCompany Also Agrees to Extensive Corporate Remediation and Compliance MeasuresRead the Press Release
WASHINGTON Forrester Construction Company has agreed to pay $2.15 million to the United States and implement internal reforms to resolve a criminal investigation into alleged fraud committed by the company in connection with the use of Certified Business Enterprises (CBEs) in the procurement of more than $145 million in District of Columbia government contracts. The internal reforms will be subject to independent review and reporting.
As part of the resolution, Forrester Construction admitted that it improperly entered into written letter agreements and “Action of Management Committee” memoranda with the CBE participants to joint ventures that were not disclosed to the District of Columbia during the contract procurement process. As a result, the company admitted, both Forrester Construction and the CBE partners failed to follow the required CBE rules and regulations.
The resolution was announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office; Daniel W. Lucas, Inspector General for the District of Columbia, and Peggy E. Gustafson, Inspector General of the U.S. Small Business Administration (SBA-OIG).
The announcement concludes a two-year investigation into Forrester Construction, a firm based in Rockville, Md., as well as its CBE partners on the joint venture projects.
Under the terms of a non-prosecution agreement reached with the U.S. Attorney’s Office for the District of Columbia, Forrester Construction agreed to pay $2.15 million to the United States and accepted and acknowledged responsibility for its improper conduct, as described in a Statement of Facts. The company also agreed to undertake various remedial measures to ensure compliance with the requirements of the District of Columbia’s CBE program (or any such equivalent on federal government projects) and the U.S. Small Business Administration’s 8(a) program, insofar as the company undertakes projects involving CBEs or 8(a) companies in the future.
Both the District of Columbia's CBE program and SBA’s 8(a) program are meant to help small, disadvantaged businesses access government procurement markets.
The remedial measures include the hiring or designation of a CBE and 8(a) Compliance Officer, as well as an Ethics Officer; the implementation of a comprehensive training program for all company personnel regarding compliance with the CBE and 8(a) programs; maintaining an effective compliance and ethics program, and continuing cooperation with law enforcement. Significantly, individual employees directly associated with the inappropriate conduct are no longer employed by the company.
Additionally, the company agreed to undertake community service intended to develop improvements in the CBE and 8(a) programs going forward. Forrester Construction agreed to offer workshops, either individually or in collaboration with an industry trade association, aimed at providing training with respect to the rules and regulations of the CBE and 8(a) programs, among other topics relating to the construction industry.
This case is the latest example of law enforcement efforts to protect the integrity of CBE programs. Michael A. Brown, a former member of the Council of the District of Columbia, pled guilty in 2013 to a federal bribery charge stemming from an undercover investigation in which he accepted $55,000 from FBI agents posing as employees of a company that purportedly wanted CBE approval and contracting opportunities. Brown is serving a 39-month prison term.
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“Forrester won lucrative D.C. construction contracts by exploiting a program designed to help disadvantaged local businesses,” said U.S. Attorney Machen. “Forrester entered secret side deals that wrested control of those contracts away from their historically under-represented partners and undermined the purpose of the CBE program. In addition to paying $2.15 million, Forrester has agreed to implement and fund industry-leading compliance programs within the company and provide training to other participating corporations on the rules and regulations of the CBE and 8(a) programs. This prosecution, along with the investigation and conviction of former D.C. Council member Michael Brown, highlights law enforcement’s efforts to prevent fraud and abuse in programs intended to promote fairness and equality in the awarding of city government contracts.”
“By changing the terms of joint ventures with small disadvantaged businesses and not reporting them to the D.C. government, Forrester Construction circumvented the foundation of the CBE program and used their proceeds to increase their own bottom line,” said Assistant Director in Charge McCabe. “By doing so, Forrester did a grave disservice to the D.C.-based CBE certified companies that work to support local job creation and grow our local economy. The FBI, along with the SBA, will continue to investigate companies that abuse procurement laws.”
“The agreement to settle this criminal investigation demonstrates this Office’s commitment along with our federal partners, the SBA-OIG, the FBI, and the United States Attorney’s Office, to ensure that businesses which receive District of Columbia government contracts and participate in programs designed to help small and disadvantage businesses, like the District’s CBE program and the federal SBA 8(a) program, are expected to comply fully with program requirements,” said Inspector General Lucas of the District of Columbia.
“These joint ventures principally served the interests of Forrester Construction Company to make money and to obtain contracting opportunities otherwise unavailable to them,” said SBA Inspector General Gustafson. “Joint ventures involving SBA program participants should be structured and executed to give the small business an opportunity to gain experience and technical knowledge and to further develop their business. I want to thank the U.S. Attorney’s Office for its leadership in reaching this agreement.”
According to the Statement of Facts agreed to by the company, between 2008 and 2009, Forrester Construction formed multiple joint ventures with CBEs for the purpose of bidding on construction contracts in the District of Columbia.
Three joint ventures formed by Forrester Construction and one of the CBEs, EEC of D.C., Inc., were awarded construction contracts from the District of Columbia. These contracts, including change order amounts, totaled approximately $64 million for construction of a new headquarters building for the Department of Employment Services; approximately $5.4 million for construction of a Senior Wellness Center in Ward 1, and approximately $56 million for the renovation and modernization of the existing Anacostia Senior High School building.
Forrester Construction also formed joint ventures with another CBE, and those joint ventures were also awarded construction contracts from the District of Columbia, which were, over a period of approximately three years, in an aggregated amount in excess of $20 million.
In each of these various projects, the joint venture formed by Forrester Construction and the respective CBE partner received the maximum amount of contracting preferences for which the CBE partner was eligible, which provided Forrester Construction and the respective CBE partner with a competitive advantage during the bidding process.
As part of its joint venture submissions to the District of Columbia Department of Small and Local Business Development (DSLBD), Forrester Construction and its respective CBE partner represented that the CBE partner would be the majority partner and maintain a 51% interest in the joint venture, entitling the CBE partner to 51% of the net operating profits of the joint venture. Each joint venture agreement also established a “Management Committee,” consisting of two representatives from the CBE partner and one representative from Forrester Construction, which provided the CBE partner with majority control of the joint venture.
After each joint venture for the projects was submitted to, and certified by, the DSLBD, however, Forrester Construction and the respective CBE partner signed a memorandum entitled “Action of Management Committee” or signed a letter agreement, which related to the operations of each joint venture. The memoranda and/or letter agreements effectively increased Forrester Construction’s control over the day-to-day operations of the projects and reduced the CBE partner’s share of the profits or losses in the projects -- notwithstanding the requirements of the joint venture agreements and the CBE rules and regulations. Forrester Construction and the CBE partner did not disclose these “Action of Management Committee” memoranda or the letter agreements to the District of Columbia government during the procurement process.
The “Action of Management Committee” memoranda also revised the respective scope of work and services that Forrester Construction and the CBE partner would provide to certain of the projects. In each instance, the “Action of Management Committee” memorandum applicable to the particular project identified a small scope of work for the CBE partner to complete and provided that Forrester Construction would provide all remaining general conditions, subcontract work, and all other work required to fulfill the requirements of the project.
For example, with respect to the Anacostia Senior High School joint venture, the applicable “Action of Management Committee” memorandum provided that the scope of work for the CBE equated to approximately $2.75 million, while the scope of work for Forrester Construction equated to approximately $46 million. The “Action of Management Committee” memoranda also established a pre-determined profit for the joint venture that specifically excluded any profits earned or losses sustained by either Forrester Construction or the CBE partner for their respective scope of work. Moreover, Forrester Construction and the CBE partner agreed that only the pre-determined profit, exclusive of each partner’s individual “scope of work,” would be split in the proportions agreed to in the joint venture agreement (i.e., 51% for the CBE partner and 49% for Forrester Construction). All other profits or losses generated through an individual scope of work would belong to the respective entity.
All of the work was performed under the various contracts. However, as a result of the letter agreements and “Action of Management Committee” memoranda, the CBE participant for each of the projects did not maintain majority control of the projects and did not receive 51% of the profits or losses associated with the projects, as required by the joint venture agreements and in accordance with the CBE rules and regulations.
This investigation was conducted by the FBI’s Washington Field Office; the Criminal Investigation Unit of the U.S. Attorney’s Office for the District of Columbia; the District of Columbia’s Office of the Inspector General, and the SBA Office of Inspector General.
The prosecution is being handled by Assistant U.S. Attorneys David A. Last, Richard DiZinno, and Michael K. Atkinson, of the U.S. Attorney’s Office for the District of Columbia.
Assistance is being provided by Criminal Investigators Juan Juarez and Stephen Cohen; Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Angela Lawrence, and Heather Sales; Litigation Technology Specialist Leif Hickling, and Assistant U.S. Attorney Anthony Saler, all of the U.S. Attorney’s Office for the District of Columbia.
14-275Former Wells Fargo Employee Sentenced to 24 Months for Bank Fraud ConspiracyRead the Press Release
RICHMOND, Va. – Jeannetta Matthews, 27, of Upper Darby, Pennsylvania, was sentenced today to 24 months in prison, followed by 3 years of supervised release, for conspiracy to commit bank fraud. She was also ordered to pay $457,967 in restitution to Wells Fargo Bank.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Douglas F. Mease, Special Agent in Charge of the United States Secret Service, Richmond Field Office, made the announcement after sentencing by Senior U.S. District Judge Robert E. Payne.
Matthews pleaded guilty on July 31, 2014. According to court documents, Matthews was a Customer Sales and Service Representative at a Wells Fargo bank branch in Bala Cynwyd, Pennsylvania. In October 2012, she agreed to use her position at the bank to access and sell customer account and personal identifying information for a fee of approximately $7,000. Between October and December 2012, Matthews accessed the accounts of and sold information related to over 20 Wells Fargo customers, to include account numbers, social security numbers, and dates of birth. Using the information provided by Matthews, co-conspirators obtained false identification documents and credit cards in the names of the customers and impersonated the customers at Wells Fargo branches in Virginia, South Carolina, California, Georgia, and New Jersey. As a result of the scheme, co-conspirators withdrew over $450,000 from customer accounts between November 2012 and February 2013.
Two other co-conspirators, Anthony Romey Carter, of Elk Grove, California; and Jacquis Depree Nelson, of Atlanta, Georgia, were previously sentenced to 61 months and 51 months in prison, respectively, for their roles in the scheme.
This case was investigated by the United States Secret Service. Assistant U.S. Attorney Dominick S. Gerace is prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 3:14CR00094.
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Former Utica Resident Pleads Guilty to Aggravated Identity Theft and Theft of Fraudulent Tax RefundsRead the Press Release
SYRACUSE, NEW YORK – United States Attorney Richard S. Hartunian announced today that ANAS K. WILSON, 32, a former resident of Utica, New York, has pled guilty to one count of theft of government property, in violation of 18 U.S.C. § 641 and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1). Mr. Wilson faces up to ten years in prison on the theft of government property count and a two-year mandatory minimum sentence on the aggravated identify theft count. Sentencing is scheduled for April 14, 2015, before Senior District Judge Frederick, J. Scullin, Jr.
At a change of plea hearing on December 4, 2014, Mr. Wilson admitted that he electronically filed fraudulent U.S. Individual Income Tax Returns on behalf of victims who were not entitled to tax refunds, and that he directed the tax refunds received to bank accounts that he had established. Mr. Wilson directed other individuals to withdraw the funds from the accounts and provide him the money, in exchange for a fee. To execute the scheme, Mr. Wilson illegally utilized personal identifying information (including Social Security numbers and names) of the victims. Mr. Wilson was responsible for submitting fraudulent tax returns to the IRS that resulted in the release of more than $400,000 in false tax refunds by the IRS.
United States Attorney Richard S. Hartunian said, “Filing fraudulent tax returns with stolen identities is one of the fastest growing crimes in the country. It is estimated our nation is losing hundreds of millions of dollars a year in bogus refunds – money that is meant to be used to make American lives safer and better. Theft of tax refunds is a crime against the American people. Our office continues to work diligently with the IRS to stop this crime.”
Shantelle P. Kitchen, Acting Special Agent in Charge of the New York Field Office of IRS-Criminal Investigation, stated, “The investigation of tax refund schemes that involve the theft of taxpayers’ identities is a top priority for IRS-Criminal Investigation. We are committed to stopping individuals who seek to use our nation’s tax system for personal profit, especially at the expense of law abiding taxpayers.” Craig W. Rupert, Special Agent in Charge, Defense Criminal Investigative Service (“DCIS”) Northeast Field Office stated, “This guilty plea demonstrates the continued commitment of DCIS and fellow agencies in pro-actively identifying individuals and groups intent on perpetrating schemes which defraud the American taxpayer. The exploitation of government programs by way of identity theft or any other scheme will not be tolerated.”
This case was investigated by the IRS Criminal Investigation Division, the U.S. Treasury Inspector General for Tax Administration, and DCIS, and it is being prosecuted by Assistant United States Attorney Michael F. Perry.
For additional information, contact Executive Assistant U.S. Attorney John G. Duncan at 315-448-0672.
Former University Professor Sentenced to Prison for Engaging in Sexual Conduct with a MinorRead the Press Release
A former university professor was sentenced today to five years in prison for traveling in foreign commerce to engage in sexual conduct with a minor, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.
Walter Lee Williams, 66, of Palm Springs, California, was charged with engaging in sexual conduct with minors in the Philippines, and arrested in Mexico in 2013 after being placed on the FBI’s “Ten Most Wanted Fugitives” list. In connection with his guilty plea, Williams admitted that he traveled from Los Angeles to the Philippines to engage in sex acts with minor boys. Prior to his travel, Williams engaged in sexual activity via Internet webcam sessions with minors and expressed a desire to visit them in the Philippines to have sex.
In addition to the prison sentence, U.S. District Judge Philip S. Gutierrez of the Central District of California sentenced Williams to ten years of supervised release, and ordered him to pay $25,000 in restitution and to register as a sex offender for life.
The case was investigated by the FBI’s Los Angeles Field Office, and prosecuted by Trial Attorneys Ravi Sinha and Herbrina Sanders from the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
Former Special Agent in Charge of the Department of Homeland Security's Office of Inspector General Sentenced to More Than Three Years in PrisonRead the Press Release
A former Special Agent in Charge of the Department of Homeland Security - Office of Inspector General (DHS-OIG) was sentenced to 37 months in prison today for a scheme to falsify records and obstruct an internal DHS-OIG inspection, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Christopher Combs of the FBI’s San Antonio Field Office. The sentence was imposed by U.S. District Judge Andrew S. Hanen of the Southern District of Texas.
“While leading an office responsible for investigating misconduct at other government agencies, Pedraza sought to impede and obstruct the investigation of his own office,” said Assistant Attorney General Caldwell. “Pedraza’s criminal conduct resulted in the premature closing of criminal cases without resolution, potentially endangering our national security and allowing others to escape justice. We will root out and prosecute corruption wherever it may be found, including within the ranks of federal law enforcement.”
Former DHS-OIG Special-Agent-in-Charge Eugenio Pedraza, 50, of McAllen, Texas, was found guilty following a four-day jury trial on March 14, 2014, of conspiring with three other special agents to falsify criminal investigative reports to impede an internal DHS-OIG inspection and obstruct the underlying criminal investigations. The jury also found Pedraza guilty of five counts of falsifying records.
DHS-OIG is responsible for investigating alleged criminal activity by DHS employees, including corruption by Customs and Border Protection (CBP) and Immigration and Customs Enforcement personnel affecting the integrity of the U.S. borders. Pedraza headed DHS-OIG’s McAllen Field Office (MCA) from January 2009 to January 2012.
According to evidence presented at trial, in September 2011, DHS-OIG conducted an internal inspection of the MCA to evaluate whether the agency’s investigative standards and policies were being followed. In anticipation of the internal inspection, Pedraza and at least three other DHS-OIG agents, including Special Agent Wayne Ball, engaged in a scheme to falsify investigative documents to make it appear that criminal investigations were being conducted in a timely fashion and in accordance with DHS-OIG standard operating procedures. The scheme’s purpose was to conceal severe lapses in DHS-OIG’s investigative standards and policies at the MCA and Pedraza’s failure to properly supervise agents and investigations. Court documents reflect that Pedraza, Ball, and other special agents wrote and signed false criminal investigative reports. Pedraza then approved the reports for inclusion in the official investigative case files.
For example, the evidence at trial showed that, at Pedraza’s direction, a special agent drafted false memoranda of activity (MOAs) to fill gaps of inactivity in a criminal investigation to which he was assigned. The criminal investigation had been initiated in March 2010 and concerned allegations that a CBP officer was assisting the unlawful smuggling of undocumented aliens and narcotics into the United States. Because the MOAs were intended to describe investigative activities that occurred when the drafting agent was either not present at the MCA or not employed by DHS-OIG at all, Pedraza directed the agent to attribute the investigative activity to Ball. Ball then signed and backdated the false MOAs. Pedraza also signed and backdated the false MOAs, which were then placed in the investigation’s case file in advance of the internal inspection. Upon discovery of the falsified reports, the criminal investigation had to be closed without resolution. According to evidence presented at trial, Pedraza similarly directed other special agents to falsify records related to at least four other criminal investigations.
On Jan. 17, 2013, Ball pleaded guilty to one count of conspiring with Pedraza and at least two other special agents to falsify records in federal investigations and obstruct an agency proceeding. Ball is scheduled to be sentenced on Jan. 7, 2015, by U.S. District Judge Hilda G. Tagle of the Southern District of Texas.
This case was investigated by the FBI’s San Antonio Field Office and is being prosecuted by Trial Attorneys Eric Gibson, Brian Kidd and J.P. Cooney of the Criminal Division’s Public Integrity Section.
Former School Janitor Sentenced to Eight Years in Prison for Possession and Distribution of Child PornographyRead the Press Release
EUGENE, Ore. – Bryan Cramer, 37, of Springfield, Oregon, was sentenced to eight years in prison following his plea of guilty to distribution of child pornography. At the sentencing hearing, U.S. District Judge Michael McShane sentenced Cramer to 96 months in prison, followed by a 21-year term of supervised release. Cramer will be subject to stringent conditions of supervision and will be required to register as a sex offender.
The Federal Bureau of Investigation determined that Cramer made child pornography available for download on a file sharing site. Following the execution of a search warrant on Cramer’s residence in 2012, it was determined that he possessed over 900 images of child pornography on his computer. He carried on his possession and distribution activities while serving as a custodian in a local school, and admitted to authorities that he sexually abused two relatives many years ago.
The nature of the offense – possessing and trading images of child sexual abuse – supported the significant sentence in this case. Possession and distribution of child pornography is a serious offense involving real children who have been subject to horrific abuse.
This case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant U.S. Attorney Amy Potter.
Former Online Mortgage Broker Employee and Mortgage Broker Conspirator Sentenced to Prison for Computer TheftRead the Press Release
CHARLOTTE, N.C. – Today, U.S. District Judge Robert J. Conrad, Jr. sentenced to prison a former online mortgage broker employee and his California-based mortgage broker conspirator, for their roles involving computer theft from a nation-wide online mortgage broker (the “victim company”), announced the U.S. Attorney’s Office for the Western District of North Carolina and John A. Strong, Special Agent in Charge for the Federal Bureau of Investigation, Charlotte Division.
Jarrod Beddingfield, 38, of Waxhaw, N.C., was sentenced to 15 months in prison, followed by two years of supervised release. Steve Rosene, 43, of Newport Beach, Calif. was sentenced to 27 months in prison and three years of supervised release. Judge Conrad also entered forfeiture money judgments of $1.9 million for Rosene and $60,000 for Beddingfield. Both defendants were ordered to pay restitution to the company, the amount of which will be determined by the court at a later date.
According to filed court documents, court proceedings and today’s sentencing hearing: Beddingfield, a former employee of the victim company, sold company-employee log-in credentials to California-based Rosene. Rosene then used the stolen log-in credentials to access the victim company’s database and downloaded approximately 41,435 mortgage leads for use by two mortgage companies associated with Rosene. Rosene also sold the stolen log-in credentials to two other California mortgage brokers, Brian Rich and Marcus Avritt, co-owners of Chapman Capital, Inc., a mortgage broker firm that also did business as “Home Loan Consultants.” Rich and Avritt used their unauthorized access to the victim company’s database to steal approximately 14,137 mortgage leads. The mortgage leads were stolen in 2007 prior to the victim company’s change of all employee log-in credentials in early January 2008.
The stolen mortgage leads consisted of data on consumers who had used the victim company’s online mortgage lending exchange network to apply for new and refinanced mortgage loans. Mortgage loan consumers used the internet to access the company’s network and to complete online mortgage application forms containing contact, non-public financial data and other information necessary to complete the application process. Court records indicate that the information submitted through this online process comprised the company’s mortgage referral information, known individually as “mortgage leads.” The mortgage referral information, which contained thousands of such individual mortgage leads, was valuable information because it consisted of mortgage loan consumers who were ready, willing and financially-able to close on mortgage loans, refinancing loans and home equity loans. By obtaining this information without paying the requisite fees and dues, Rosene avoided paying the victim company an estimated $1.9 million for the stolen mortgage leads. Rich and Avritt avoided paying the victim company an estimated $745,152 for the stolen mortgage leads.
Beddingfield and Rosene pleaded guilty in July 2013 to one count of conspiracy to illegally access and use the victim company’s customer database. Rosene also pleaded guilty to an additional count of illegally accessing and using the victim company’s database. The other two co-defendants, Avritt and Rich, were sentenced to 15 months and 24 months in prison respectively for conspiracy to illegally access and use the victim company’s customer database.
Beddingfield and Rosene have been released on bond and will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by the FBI. This prosecution is handled by Assistant United States Attorneys Tom O’Malley, Ben Bain-Creed and Tiffany Mallory of the U.S. Attorney’s Office in Charlotte.
Former Newark Watershed Conservation and Development Official Indicted in Kickback Scheme, Money LaunderingRead the Press Release
One Contractor Who Paid Kickbacks Also Charged
NEWARK, N.J. – A former high ranking employee of the Newark Watershed Conservation and Development Corp. (NWCDC) and a contractor from whom he allegedly received kickbacks were indicted by a federal grand jury today in connection with a scheme to solicit and accept payments for work by outside contractors, U.S. Attorney Paul J. Fishman announced.Donald Bernard Sr., 67, of Newark, is charged in the indictment with six counts of defrauding the corporation of his honest services, four counts of violating the Travel Act, three counts of extortion under color of official right affecting interstate commerce, two counts of wire fraud and three counts of money laundering.
Giacomo (Jack) DeRosa, 58, of Clinton Township, New Jersey, was indicted separately on two counts of wire fraud, one count of violating the Travel Act and three counts of money laundering.
According to the documents filed in this case and statements made in court:
During the time that Bernard was a consultant to NWCDC (2008 through 2009), as well as when he worked there as manager of Special Projects (January 2010 through March 2013), he devised scheme to accept a stream of concealed and undisclosed bribes and kickbacks from contractors. Bernard agreed to accept, and did accept, at least $730,000 in kickbacks directly and indirectly from various contractors, including DeRosa. Bernard assisted the contractors in financing the payments to him by causing certain contractors to submit fraudulent and inflated invoices to the NWCDC, which contained materially false representations and half-truths, in many instances billing the NWCDC for work that was never performed.
For example, from August 2008 to January 2011, Bernard accepted approximately $136,000 in kickbacks from a Newark company (Company 1) that performed printing work for the NWCDC. At times, due to the physical ailments suffered by the proprietor of the company, Bernard obtained blank checks from the company signed by the proprietor, which Bernard filled out payable to himself or his consulting company, Bernard & Associates (B&A), with the proprietor’s consent.
The maximum potential penalties per count are detailed in the chart below:Counts of Indictment
Defendant
Charge
Maximum Penalty per Count
Bernard
18 U.S.C. §§ 1343 and 1346
(Wire Fraud)20 years
Counts 1 and 2
DeRosa
Counts 7 to 11
Bernard
18 U.S.C. § 1952(a)(3) (the Travel Act)
5 years
Count 3
DeRosa
Counts 12 to 15
Bernard
18 U.S.C. § 1951(a) (extortion under color of official right affecting interstate commerce)
20 years
Counts 16 and 17
Bernard
18 U.S.C. § 1343
(Wire Fraud)20 years
Counts 18 to 20
Bernard
18 U.S.C. § 1956(a)(1)(B)(i) (Money Laundering)
20 years
Counts 4 to 6
DeRosa
The maximum fines for all of the above violations except the money laundering charges are $250,000 or twice the gain or loss resulting from the offense. The maximum fines for the money laundering charges are: $500,000, or twice the value of the property involved in the money laundering transactions, or twice the gain or loss resulting from the offense, whichever is greatest.
The Bernard indictment also seeks forfeiture of $1.4 million to $1.8 million in connection with the fraudulent schemes and forfeiture of $20,000 in connection with the money laundering charges. The DeRosa indictment seeks forfeiture of between $200,000 and $360,000 in connection with the fraudulent scheme and forfeiture of at least $20,000 in connection with the money laundering charges.U.S. Attorney Fishman credited special agents of the FBI’s Newark Field Office, under the direction of Special Agent in Charge Aaron T. Ford; IRS – Criminal Investigation, Newark Field Office, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and the U.S. Department of Housing and Urban Development Office of Inspector General, Newark office, under the direction of Special Agent in Charge Christina Scaringi, as well as criminal investigators of the U.S. Attorney’s Office, for the investigation leading to the charges.
The government is represented by Assistant U.S. Attorneys Jacques S. Pierre and Mala Ahuja Harker of the U.S. Attorney’s Office Special Prosecutions Division.
The charges and allegations contained in the indictments are merely accusations and the defendants are considered innocent unless and until proven guilty.
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Defense counsel: Bernard Sr.: Thomas Ashley Esq., Newark
DeRosa: Anthony Pope Esq., NewarkBernard, Donald Indictment
DeRosa, Giacomo IndictmentFormer Fed-Ex Driver Convicted in Manhattan Federal Court of Using Truck to Assist Two Separate Drug Rings, and of Witness Tampering and ExtortionRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that EDGAR ENCARNACION, a/k/a “Edgar Encarnacion-Lafontaine,” a/k/a “Tapon,” 47, was convicted on December 11 in Manhattan federal court of conspiring to distribute marijuana, conspiring to distribute cocaine, conspiring to commit extortion, extortion, and conspiring to commit witness tampering. As a result of his conviction, ENCARNACION faces a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.
Manhattan U.S. Attorney Preet Bharara said: “A jury convicted Edgar Encarnacion of conspiring with a massive marijuana trafficking ring, and using his FedEx truck to transport large amounts of cocaine from California to the New York City area. While he was on pretrial release for the marijuana charges, Encarnacion threatened family members of another FedEx driver. Witness tampering and extortion will not be tolerated, and the jury has properly held Encarnacion accountable for his crimes.”
ENCARNACION’s charges initially arose out of a multi-year investigation titled “Operation Green Venom,” a coordinated multi-agency investigation that was led by Homeland Security Investigations, Immigration and Customs Enforcement (“ICE HSI”), and first announced in October 2010. More than 60 defendants have been convicted in United States v. Manuel Geovanny Rodriguez-Perez, et al., 10 Cr. 905 (LTS), and related cases. Those defendants include former Rock-a-fella music founder Kareem Burke, a/k/a “Biggs,” who received a sentence of five years in prison, High Times Magazine editor Matthew Woodstock Stang, a/k/a “Magazine Guy,” and Oscar Rodriguez, the cousin of the organization’s leader, who was convicted of racketeering and marijuana related charges and sentenced to 20 years in prison earlier this year.
According to the complaints, Indictments, and the evidence at trial, in 2010, EDGAR ENCARNACION agreed to use his FedEx truck to smuggle marijuana for Manuel Geovanny Rodriguez-Perez, a/k/a “Manuel Rodriguez,” a/k/a “Shorty,” the leader of a Washington Heights-based marijuana trafficking organization. During that same period, ENCARNACION was working with a separate cocaine-trafficking organization. ENCARNACION smuggled up to multi-kilogram quantities of cocaine in the sleeper area of his truck as he drove cross-country from California to Woodbridge, New Jersey. In December 2010, a man who was assigned to drive with ENCARNACION (the “Co-Driver”) stole $30,000 of several hundred thousand dollars of drug money that ENCARNACION had agreed to transport for the cocaine organization. About a week later, ENCARNACION was arrested in connection with the marijuana-trafficking investigation, Operation Green Venom. ENCARNACION was released on bail on those charges.
In early 2012, ENCARNACION began a campaign intended to force the Co-Driver to return the drug money he had stolen. ENCARNACION employed Facebook accounts set up in women’s names – including the name of one of the Co-Driver’s family members – to reach out to the Co-Driver’s in-laws. In these messages, ENCARNACION warned that the cocaine trafficking organization was “equipped with dangerous people who will do anything for money,” and threatened that the Co-Driver’s family in the Dominican Republic was “the most vulnerable, but nobody will be spared.” ENCARNACION posted photographs of the Co-Driver and his family members, including his three young daughters, on one of the Facebook accounts. In addition to using these Facebook accounts to threaten the Co-Driver’s family members, ENCARNACION used them to send disparaging messages about his ex-wife to her current in-laws.
During the same period in which he was making the Facebook threats, ENCARNACION also caused a telephone call to be made to one of the Co-Driver’s relatives in the Dominican Republic, during which she was warned that if the Co-Driver did not return the money, “blood was going to be spilled.” When these efforts did not cause the Co-Driver to return the money, ENCARNACION then went to the Co-Driver’s mother’s house, and demanded that she tell her son to call him about the money. During this visit, ENCARNACION also showed her a photograph of her son and grand-daughters. A week later, ENCARNACION left a threatening letter in front of the Co-Driver’s mother’s door, which reported that there would be violent retaliation if the Co-Driver did not return the money and warned, “Avoid the ‘law,’ otherwise the family in the [Dominican Republic] will not be saved.”
The Co-Driver’s family used an Internet search to discover that ENCARNACION was on pretrial release in connection with Operation Green Venom, and contacted federal authorities. The Co-Driver then agreed to assist the investigation by recording telephone conversations with ENCARNACION and his associate, co-defendant Juan Peralta, a/k/a “Johnny Jay,” who pled guilty to threats-related charges. After approximately six additional weeks of investigation – during which the threats continued through Superstorm Sandy – ENCARNACION was arrested at his residence on new charges, and remanded.
ENCARNACION, 47, was convicted of one count of cocaine conspiracy, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; one count of marijuana conspiracy, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 40 years in prison; one count of conspiracy to commit extortion, which carries a maximum sentence of five years in prison; one count of extortion, which carries a maximum sentence of 20 years in prison; and one count of witness tampering, which carries a maximum sentence of 20 years in prison. Because the defendant was on pretrial release for all but one of the counts, he faces a potential additional penalty of 40 years – 10 years for each count. The maximum potential sentences in this case are prescribed by Congress and are provided for informational purposes only, as any sentencing of the defendant will be determined by the Court.
Mr. Bharara praised the outstanding investigative work of ICE HSI.
The prosecution of the cases arising from “Operation Green Venom” is being overseen by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Amie N. Ely and Emil Bove conducted the trial.
Former Builder Sent Back to Prison for Fraud While on Federal ReleaseRead the Press Release
TOPEKA, KAN. – Former Kansas City builder F. Jeffrey Miller has been sentenced to three years in federal prison for violating the terms of his release when he became involved in a new real estate scam, U.S. Attorney Barry Grissom said.
Miller, 53, was sentenced to 72 months in federal prison in August 2012 after a jury convicted him of bank fraud, money laundering and criminal contempt. On Jan. 10, 2014, he entered supervised release.
In a 16-page order issued last month, U.S. District Judge Julie A. Robinson cited evidence that Miller lied to his probation officer about his involvement with his son, Brandon, in a company called Tri-States Holding, LLC (TSH). She cited “substantial evidence about the fraudulent practices and transactions” by the company.
During sentencing hearings, prosecutors submitted evidence that Miller began planning a new business while he was in prison. He formed the new company with his 23-year-old son, Brandon. Although Brandon Miller was represented as the owner, his father controlled the company. The Millers claimed to be in business to buy, refurbish and sell houses. In fact, Judge Robinson said in her order, the business was engaged in a “contract for deed scam.”
The company purchased more than 40 houses at Jackson County, Mo., tax sales and then advertised the houses for sale to low-income people in the urban core of Kansas City. The company advertised home ownership for just $500 down, sweat equity of no more than $2,000 in the form of cosmetic repairs including painting and clean up, and then monthly payments of $399. The buyers signed contracts for purchase prices in the $35,000 range.
Prosecutors presented evidence the company failed to complete promised repairs, performing shoddy repairs or virtually no repairs at all and then harassed and threatened buyers who ceased to make payments.
Judge Robinson ruled Miller violated four conditions of his supervised release by:
- Controlling the new company even though he was prohibited from working in any capacity involving authority in financial matters.
- Telling his probation officer that that he was a mere laborer at the new company when in fact he controlled the company.
- Making false monthly reports to the probation office that he was not committing any federal crimes.
- Making threats of bodily harm to a woman who purchased a house from the new company.
Grissom commended the Internal Revenue Service – Criminal Investigation and Assistant U.S. Attorney Richard Hathaway for their work on the case.
Florida Man Pleads Guilty to Structuring More Than $2.5 Million in Proceeds of Drug TraffickingRead the Press Release
FRESNO, Calif. — Chad Allen Riffle, 22, of Citrus Springs, Florida, pleaded guilty today to one count of conspiring to structure cash transactions, United States Attorney Benjamin B. Wagner announced.
According to the plea agreement and court documents, Riffle and seven co-defendants opened and maintained bank accounts for the purpose of funneling cash proceeds of drug trafficking from Florida and other states back to California. Riffle made the cash deposits in amounts of $10,000 or less to attempt to prevent Currency Transaction Reports from being filed by the banks on his cash deposits. Currency Transaction Reports are prepared by banks for any transaction involving more than $10,000 in cash. These reports are filed with the Department of Treasury and are made available to law enforcement.
Riffle also waived his interest in numerous assets seized by law enforcement, including a Land Rover, two Bentleys, two Mercedes Benzes, and a 30-foot motorboat.
This case is being brought as part of Operation Footprint, a nationwide law enforcement initiative led by the U.S. Attorney's Offices, the Internal Revenue Service- Criminal Investigation, the Drug Enforcement Administration, and the United States Postal Inspection Service. Operation Footprint targets large drug trafficking organizations by identifying the transfer of drug proceeds through financial institutions, bulk cash smuggling and other forms of money transfers. Operation Footprint is focused on bringing criminal charges based on Bank Secrecy Act violations in addition to violations of the Controlled Substances Act and the Money Laundering Control Act.
This case is also the product of the Organized Crime Drug Enforcement Task Force (OCDETF), a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies. Assistant U.S. Attorneys Grant B. Rabenn, Patrick R. Delahunty, and Jeffrey Spivak are prosecuting the case.
Riffle is scheduled to be sentenced by United States District Judge Lawrence J. O'Neill on March 9, 2015. The maximum statutory penalty for conspiracy to structure is five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.Florida Keys Resident Sentenced for Illegally Trafficking in Marine LifeRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Tracey Dunn, Assistant Director, NOAA Fisheries Office of Law Enforcement, and David Pharo, Resident Agent in Charge, U.S. Fish & Wildlife Service, Office of Law Enforcement, Miami Office, announced that Charles R. Jamison, 75, of Little Torch Key, Florida, was sentenced today in Key West for conspiring with others to commit certain offenses against the United States, that is conspiracy to transport, sell, receive, acquire, and purchase any fish and wildlife, that is juvenile bonnethead sharks (Sphyrna tiburo), with a fair market value in excess of $350.00, and attempt to do the same, knowing that said fish were taken, possessed, transported, sold, and intended to be sold in violation of the laws and regulations of the State of Florida, in violation of Title 16, United States Code, Sections 3372(a)(2)(A), 3372(a)(4)and 3373(d)(1) and (2), all in violation of Title 18, United States Code, Section 371.
United States District Court Judge Jose Martinez sentenced Jamison to a term of probation of 18 months, a criminal fine of $2,000, and imposed a special condition precluding Jamison from engaging in the marine wildlife industry during the period of probation. The Court also ordered the forfeiture of Jamison’s vessel, engine, trailer, tackle, and gear used in the commission of the Lacey Act violations.
According to the allegations of the Information filed against him, a Joint Factual Statement filed by the parties, and statements in court, Jamison was a resident of Monroe County, active for many years in the harvest and sale of bonnethead sharks (Sphyrna tiburo). At no time did Jamison, directly or as a third party contractor, possess or hold any State of Florida special activities license to collect, harvest, or transport any shark species, nor did he possess and hold a valid federal annual vessel permit for sharks issued pursuant to 50 C.F.R. 635.4 to harvest, collect, or take shark species as required by the laws of the State of Florida.
The Information further alleges that between approximately June 2012 and October 2012, at Monroe County, Jamison and others known to the U.S. Attorney’s Office, harvested bonnethead sharks from Florida state waters in the Florida Keys, thereafter negotiating the purchase, sale, transportation, and transfer of the bonnethead sharks in interstate commerce. The bonnethead sharks would then be shipped by individuals associated with Jamison in interstate commerce by a variety of means, including rental truck and as commercial air cargo.
The Information, in a series of “overt acts”, describes multiple instances when specific numbers of sharks were harvested, the transfer of sharks from Jamison to a commercial marine life facility on Big Pine Key, and specific payments received by Jamison for sharks sold in interstate commerce.
Mr. Ferrer commended the joint investigative efforts of the NOAA Office of Law Enforcement and the Fish & Wildlife Service, Office of Law Enforcement who participated in the long-term investigation into the illegal harvesting and sale of marine life resources from the Florida Keys known as Operation Rock Bottom, and noted the assistance of Refuge Officers from the Florida Keys National Wildlife Refuges and the U.S. Customs and Border Protection Air Marine Branch in the development of the case. This matter was prosecuted by Assistant U.S. Attorneys Thomas Watts-FitzGerald and Antonia Barnes.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Final DBSI Executive SentencedRead the Press Release
BOISE – Gary Wayne Bringhurst, 47, of Highland, Utah, was sentenced today to five years of probation, a condition of which is 60 days of intermittent imprisonment, for conspiracy to commit securities fraud, U.S. Attorney Wendy J. Olson announced. Bringhurst is the former Chief Operating Officer of DBSI Housing, Inc. Chief United States District Judge B. Lynn Winmill also ordered Bringhurst to pay restitution in an amount to be determined. Bringhurst pleaded guilty on April 8, 2013.
According to the plea agreement, in 2007 and 2008, he conspired with Douglas Swenson, Mark Ellison, David Swenson, and Jeremy Swenson to mislead DBSI investors by: (i) converting for DBSI’s use Accountable Reserve funds belonging to investors in contravention of representations that they would be used for tenant improvements, leasing improvements, and capital improvements to the investors’ properties; (ii) misrepresenting DBSI Housing, Inc.’s financial strength by “netting” millions of dollars of uncollectible accounts receivables from technology company affiliates against accounts payable that were actually paid; (iii) failing to disclose to investors that the DBSI Master Lease portfolio of properties was losing millions of dollars and was not sustainable, in contravention of representations that the Master Lease portfolio was profitable; (iv) failing to disclose that DBSI was reliant on new investor funds to make Master Lease payments and to sustain its overall operations.
Bringhurst is the final DBSI defendant to be sentenced. Previously, in August of 2014, Douglas Swenson, CEO and President of DBSI, was sentenced to 240 months in prison; Mark Ellison, General Counsel of DBSI was sentenced to 60 months in prison; David Swenson, Assistant Secretary of DBSI, was sentenced to 36 months in prison; Jeremy Swenson, Assistant Secretary of DBSI, was sentenced to 36 months in prison. All four men were convicted on April 14, 2014, after trial before a federal jury, of 44 counts of securities fraud. Douglas Swenson was convicted of an additional 34 counts of wire fraud. Their cases are pending appeal.
This case was investigated by IRS Criminal Investigation and the Federal Bureau of Investigation.
Federal and Local Law Enforcement Along with Michigan Department of Corrections Officials Meet with State Parolees to Improve Prisoner ReentryRead the Press Release
Officials encourage parolees to take advantage of services and make smart choices in leading law abiding lives or risk returning to prison
GRAND RAPIDS, MICHIGAN – In an effort to reduce the risk and rate of repeat offenses by recently released prisoners, U.S. Attorney for the Western District of Michigan Patrick Miles launched a new program called “Facing Choices” in collaboration with the Michigan Department of Corrections (MDOC) earlier this year. As part of the Facing Choices Program, state and federal law enforcement officials met today with state parolees in the Grand Rapids area. Representatives of service providers and programs available to parolees were also in attendance. This is the second in a series of such meetings to be held throughout Western Michigan.
The program is intended to help parolees make decisions that keep them on a law-abiding path and away from offending again. “The goal of the Facing Choices program is to reduce recidivism. That means less crime which means fewer victims as well as lessening the burden on law enforcement, the judicial and prison systems, and taxpayers,” U.S. Attorney Miles stated. “Nationally, approximately two-thirds of ex-offenders are rearrested within three years of release and almost half are re-incarcerated. In Michigan, the recidivism rate is 28 percent. According to one report I read, if 93 percent of prisoners in the U.S. did not commit another offense, American taxpayers would save between $17.3 billion and $1.1 trillion.”
U.S. Attorney Miles, Grand Rapids Police Chief David Rahinsky, other law enforcement representatives and MDOC officials reminded the parolees that law enforcement, prosecutors, and the MDOC are prepared to see them sent back to jail if they make poor choices and re-offend. But, they prefer seeing them become productive members of society and succeed. A parolee who re-offends is a high priority target for law enforcement. “But the point of this meeting is not just to remind you that we’ll hold you accountable if you do wrong,” U.S Attorney Miles explained. “We’re here to remind you that parole is an opportunity for you. Take advantage of the resources and the contacts that your parole status affords you.”MDOC Deputy Administrator Brian Shipman noted: “The mission of the Department of Corrections is to hold offenders accountable while promoting their success. The MDOC envisions the placement of an offender into the community as a carefully planned process. It is guided by a case plan which is meant to prepare him or her for a legally and socially acceptable adjustment to life in the community. Supported by experienced professionals in the public and private sectors, the offender will have the resources and guidance necessary to support successful community adjustment.”
Approximately 80 parolees attended the event. Following the talks from law enforcement and MDOC representatives, the parolees were directed to the attending service providers.
Representatives of the Kent County Sheriff’s Office, Kent County Prosecutor’s Office and Federal Bureau of Alcohol, Tobacco, Firearms and Explosives also spoke and shared in the message to the parolees. U.S. Attorney Miles praised the cooperation and collaboration that are critical to the Facing Choices program, “I am pleased that local, state, and federal law enforcement as well as County Prosecutors are working together to reduce recidivism,” he said. “I believe it is the mission of law enforcement and prosecutors to protect the public and that efforts to prevent repeat offenses are part of that duty.”
END
Federal Marijuana Case UpdateRead the Press Release
FRESNO, Calif. — Baltazar Rodriguez was sentenced to 46 months in prison and Jose Cisneros Garcia was sentenced to eight months in prison today for their involvement in separate large-scale marijuana cultivation operations, U.S. Attorney Benjamin B. Wagner announced.
Sentencing in Terra Bella Cultivation Operation (1:12-cr-318 LJO)
Following his guilty plea in October, Baltazar Rodriguez, 45, of Terra Bella, was sentenced to three years and 10 months in prison for conspiring to cultivate, distribute and possess with intent to distribute marijuana grown on an agricultural parcel in Terra Bella. According to court records, law enforcement officers seized 1,313 marijuana plants from 39.6 acres of farm land in Terra Bella where Rodriguez resided with his family. Inside Rodriguez’s residence, officers found a loaded, unregistered revolver in Baltazar Rodriguez’s bedroom, a digital scale commonly used to weigh controlled substances, and documents showing wire transfers of cash to Mexico.
Rodriguez; his son, Jose Guadalupe Rodriguez, 20; Carlos Adan Lupian-Lua, 26; Jose Guadalupe Zavala-Ramos, 34; Juan Carlos Perez-Gonzales, 45, all of Michoacàn, Mexico; and Hector Quintero-Mercado, 36, of Jalisco, Mexico; were originally charged with narcotics and immigration offenses and entered guilty pleas. Baltazar Rodriguez was the last of these defendants to be sentenced. A defendant in a related case, Martin Rojas-Cuamba, 46, of Escondido, also previously pleaded guilty in a separate case to smuggling bulk cash derived from the Terra Bella operation. Rojas-Cuamba’s sentencing is set for January 20, 2015. Upon completion of his prison sentence, Baltazar Rodriguez is subject to deportation to Mexico.
This case was the product of an investigation by the U.S. Forest Service, the U.S. Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the sheriff’s offices of Tulare, Kern, San Luis Obispo, and Ventura Counties, and the Escondido Police Department.
Sentencing in Modesto Cultivation Operation (1:11-cr-339 AWI)
Jose Cisneros Garcia, (Cisneros), 55, of Modesto, was sentenced to eight months in prison for smuggling bulk cash derived from a marijuana cultivation operation on two residential parcels in Modesto that Cisneros owned. In sentencing Cisneros, Senior U.S. District Judge Anthony W. Ishii considered evidence that the cultivation operation involved 549 marijuana plants weighing over 3,000 pounds. Agents of the DEA and Stanislaus Drug Enforcement Agency, a multi-agency drug task force in Modesto, conducted the investigation and seized not only marijuana but an assault weapon with 124 rounds of ammunition from an open detached garage at one of the two residential properties.
Assistant United States Attorney Karen Escobar is handling the above prosecutions.
Federal Law Enforcement Leaders Meet to Support the U.S. Attorney's Guardians ProjectRead the Press Release
GREAT FALLS – Dozens of senior federal law enforcement officials will meet in Great Falls this week to consult with the United States Attorney about his office’s anti-corruption strike-force known as the Guardians. The Guardians Project was launched in 2011 by U.S. Attorney Mike Cotter as a collaborative law enforcement effort to investigate and prosecute public corruption and fraud involving federal grants and contracts in the aftermath of the American Recovery and Reinvestment Act—also known as the Stimulus Bill—which provided for significant increases in federal funding in Indian Country.
The Guardians Project created a partnership that merged the extensive resources of the Federal Bureau of Investigation and the Internal Revenue Service with the expertise and experience of the various Offices of Inspector General, whose departments had provided significant grants and contracts to Indian tribes for the benefit of those communities. Agents working for the Inspectors General specialize in the investigation of fraud and corruption, and other forms of abuse of taxpayer monies, and possess specialized knowledge of federal programs. This week’s meeting of senior officials seeks to review the work of the Guardians and to coordinate with federal prosecutors about the future direction of the initiative.
Department of Justice Inspector General Michael Horowitz will attend the meeting along with senior national officials from Offices of Inspector General for the Departments of Interior, Health and Human Services, Education, Housing and Urban Development, and the Environmental Protection Agency. Guardians’ case agents and regional officials from those departments will also be in Great Falls to discuss the progress and future direction of the Guardians Project. Management officials from the FBI and IRS will join the Inspectors General at the meeting on Thursday and have informal meetings with the U.S. Attorney on Wednesday afternoon.
Those management officials attending the Great Falls meeting are:
Department of Justice – Office of the Inspector General
- Michael Horowitz, Inspector General
- Norman Lau, Special Agent in Charge - Denver Region
Department of Justice – Federal Bureau of Investigation
- Mary Rook, Special Agent in Charge - Salt Lake City Division
- Scott Vito, Assistant Special Agent in Charge
- Travis Burrows, Supervisory Senior Resident Agent
Department of Interior – Office of Inspector General
- Stephen Hardgrove, Chief of Staff
- Matthew Elliott, Deputy Assistant Inspector General for Investigations
- Don Crook, Special Agent in Charge - Denver Region
Department of Health and Human Services – Office of Inspector General
- Joanne Chiedi, Principal Deputy Inspector General
- Gary Cantrell, Deputy Inspector General - Investigations
- Gerry Roy, Special Agent in Charge - Kansas City Division
Department of Treasury – Internal Revenue Service
- Stephen Boyd, Special Agent in Charge - Denver Field Office
- Steven Osborne, Assistant Special Agent in Charge
Department of Education – Office of Inspector General
- Aaron Jordan, Acting Assistant Inspector general for Investigations
- Natalie Forbort, Special Agent in Charge - Long Beach Regional Office
Environmental Protection Agency – Office of Inspector General
- Patrick Sullivan, Assistant Inspector General
- Alan Mito, Special Agent in Charge - Denver Region 8
Department of Housing and Urban Development – Office of Inspector General
- David Barnes, Assistant Special Agent in Charge, Denver Field Office
Since the Guardians Project began obtaining indictments from the federal grand jury in late 2012, thirty two indictments and two informations have been filed charging 76 defendants and resulting in 35 felony convictions. The convictions are for conspiracy, bribery, fraud, embezzlement, extortion, obstruction of justice, money laundering and tax evasion.
Notable Guardians prosecutions are the convictions of six defendants associated with the Po’Ka Program for disadvantaged youth on the Blackfeet reservation, the prosecution and conviction of Tony Belcourt, Chief Executive Officer of the Chippewa Cree Construction Corporation, and former tribal Chairmen John Chance Houle and Bruce Sunchild of the Rocky Boy’s reservation. Eight members of the Dale Old Horn family were convicted in 2012 and 2013 for their role in a scheme to defraud the Crow Tribe using positions with the Crow Tribe Historic Preservation Office.
Federal Jury Finds Tampa Pill Mill Pharmacist GuiltyRead the Press Release
Tampa, Florida – United States Attorney A. Lee Bentley, III announces that a federal jury has found Brian C. Weiler (56, Melbourne) guilty of conspiracy to distribute and dispense Oxycodone. Weiler, a pharmacist of 32 years, faces a maximum penalty of 20 years in federal prison and the forfeiture of his Florida Pharmacist License. His sentencing hearing is scheduled for March 13, 2015. Weiler was indicted in October 2011.
According to evidence presented at trial, from an unknown date through October 26, 2011, Weiler worked at two Tampa pharmacies, VIP Pharmacy on Martin Luther King, Jr. Boulevard; and New Tampa Pharmacy on Waters Avenue. During that time, he filled hundreds of prescriptions for very large doses of Oxycodone. The recipients included drug addicts and members of doctor shopping organizations who traveled from Ohio, Kentucky, and Tennessee. During the course of the conspiracy, Weiler dispensed more than 100,000 pills from the two pharmacies. Owners and operators of the VIP Pharmacy and New Tampa Pharmacy have previously been convicted of federal conspiracy charges.
This case was investigated by a joint task force, including the Drug Enforcement Administration, the Pasco County Sheriff's Office, and the Temple Terrace Police Department. It is being prosecuted by Assistant United States Attorney Maria Chapa Lopez.
Federal Contractors Eyak Technology LLC and Eyak Services LLC Resolve False Claims Act and Anti-Kickback Act AllegationsRead the Press Release
Alaska and Virginia-based technology contractors Eyak Technology LLC (EyakTek) and Eyak Services LLC (ESL) have agreed to pay $2.5 million and relinquish any rights to additional payments from the United States to resolve allegations that they submitted false claims to the U.S. Army Corps of Engineers, the Justice Department announced today. EyakTek and its sister company, ESL, provide healthcare, information technology, communications and infrastructure services to the U.S. government. Both are subsidiaries of The Eyak Corporation, headquartered in Anchorage, Alaska.
“Federal government contractors and their employees must adhere to high standards in their dealings with the government,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “We will vigorously pursue those who pay kickbacks or otherwise engage in conduct that undermines the integrity of the contracting process.”
From 2005 to 2011, EyakTek held a $1 billion prime contract with the U.S. Army Corps of Engineers known as the Technology for Infrastructure, Geospatial, and Environmental Requirements contract.
The government alleged that, between Sept. 12, 2007, and Oct. 4, 2011, EyakTek’s then-director of contracts, Harold Babb, accepted kickbacks from several subcontractors of EyakTek and ESL in return for using his position to direct subcontracts to them. EyakTek and ESL allegedly submitted invoices to the Army Corps that included charges for work that was never performed by the subcontractors and lacked internal controls to detect the improper charges.
In March 2012, Babb pleaded guilty to bribery and kickback charges. The U.S. District Court for the District of Columbia sentenced him to serve 87 months in prison, to be followed by 36 months of supervised release and more than $9 million in restitution for his role in the kickback scheme.
The Army Corps stopped payments to EyakTek and ESL when the alleged scheme came to light. As part of the settlement, EyakTek and ESL will withdraw any appeals seeking the return of those funds, and relinquish all rights to any payments that have been withheld.
“This settlement demonstrates our willingness to use every tool of civil and criminal law in our arsenal to defend the American taxpayer from corruption in contracting,” said U.S. Attorney Ronald C. Machen Jr. for the District of Columbia. “The criminal investigation into this wide-ranging bribery and kickback scheme has now resulted in the convictions of 20 individuals, including EyakTek’s former contracts director. We have aggressively pursued asset forfeitures in the criminal proceedings to make the taxpayer whole and to deprive wrongdoers of their ill-gotten gains. This civil settlement sends a message to contractors who try to cheat in the competition for government funds.”
“This is yet another prime example of our commitment, along with other fellow law enforcement agencies to hold people and companies accountable for each and every detail of their contracts with the U.S. government and the U.S. Army,” said Director Frank Robey of the U.S. Army Criminal Investigation Command's Major Procurement Fraud Unit. “Our agents will continue to aggressively investigate and identify any potential abuses that arise in regard to the contracting process.”
“Manipulations of the Department of Defense procurement process will not be tolerated,” said Special Agent in Charge Robert Craig for the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office. “Today’s settlement demonstrates the commitment by DCIS and its partner agencies to hold accountable companies who attempt to bypass federal contracting laws.”
Today’s settlement is the result of a coordinated effort among the department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia, the U.S. Army Corps of Engineers, DCIS, the Defense Contract Audit Agency, the Army’s Major Procurement Fraud Unit and the Small Business Administration.
The claims settled by this agreement are allegations only, and there has been no determination of liability.
Federal Contractors Eyak Technology LLC and Eyak Services LLC Resolve False Claims Act and Anti-Kickback Act AllegationsClaims Were Submitted to the U.S. Army Corps of EngineersRead the Press Release
WASHINGTON – Alaska and Virginia-based technology contractors Eyak Technology LLC (EyakTek) and Eyak Services LLC (ESL) have agreed to pay $2.5 million and relinquish any rights to additional payments from the United States to resolve allegations that they submitted false claims to the U.S. Army Corps of Engineers, the Justice Department announced today.
EyakTek and its sister company, ESL, provide healthcare, information technology, communications and infrastructure services to the U.S. government. Both are subsidiaries of The Eyak Corporation, headquartered in Anchorage, Alaska.
“This settlement demonstrates our willingness to use every tool of civil and criminal law in our arsenal to defend the American taxpayer from corruption in contracting,” said U.S. Attorney Ronald C. Machen Jr. “The criminal investigation into this wide-ranging bribery and kickback scheme has now resulted in the convictions of 20 individuals, including EyakTek’s former contracts director. We have aggressively pursued asset forfeitures in the criminal proceedings to make the taxpayer whole and to deprive wrongdoers of their ill-gotten gains. This civil settlement sends a message to contractors who try to cheat in the competition for government funds.”
“Federal government contractors and their employees must adhere to high standards in their dealings with the government,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “We will vigorously pursue those who pay kickbacks or otherwise engage in conduct that undermines the integrity of the contracting process.”
From 2005 to 2011, EyakTek held a $1 billion prime contract with the U.S. Army Corps of Engineers known as the Technology for Infrastructure, Geospatial, and Environmental Requirements contract.
The government alleged that, between Sept. 12, 2007, and Oct. 4, 2011, EyakTek’s then-director of contracts, Harold Babb, accepted kickbacks from several subcontractors of EyakTek and ESL in return for using his position to direct subcontracts to them. EyakTek and ESL allegedly submitted invoices to the Army Corps that included charges for work that was never performed by the subcontractors and lacked internal controls to detect the improper charges.
In March 2012, Babb pled guilty in the U.S. District Court for the District of Columbia to bribery and kickback charges. He later was sentenced by the Honorable Emmet G. Sullivan to 87 months in prison, to be followed by 36 months of supervised release and more than $9 million in restitution for his role in the kickback scheme.
The Army Corps stopped payments to EyakTek and ESL when the alleged scheme came to light. As part of the settlement, EyakTek and ESL will withdraw any appeals seeking the return of those funds, and relinquish all rights to any payments that have been withheld.
“This is yet another prime example of our commitment, along with other fellow law enforcement agencies to hold people and companies accountable for each and every detail of their contracts with the U.S. government and the U.S. Army,” said Director Frank Robey of the U.S. Army Criminal Investigation Command's Major Procurement Fraud Unit. “Our agents will continue to aggressively investigate and identify any potential abuses that arise in regard to the contracting process.”
“Manipulations of the Department of Defense procurement process will not be tolerated,” said Special Agent in Charge Robert Craig for the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office. “Today’s settlement demonstrates the commitment by DCIS and its partner agencies to hold accountable companies who attempt to bypass federal contracting laws.”
Today’s settlement is the result of a coordinated effort among the department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia, the U.S. Army Corps of Engineers, DCIS, the Defense Contract Audit Agency, the Army’s Major Procurement Fraud Unit and the Small Business Administration.
The claims settled by this agreement are allegations only, and there has been no determination of liability.
14-276Essex County, New Jersey, Man Pleads Guilty in Multimillion-Dollar Real Estate Investment Fraud SchemeRead the Press Release
NEWARK, N.J. – An Essex County, N.J., man today admitted his role in a real estate investment scheme that bilked victims out of more than $5 million, U.S. Attorney Paul J. Fishman announced today.
Abbe Edelman, 50, of Livingston, New Jersey, pleaded guilty before U.S. District Judge Susan Wigenton in Newark federal court to an information charging him with wire fraud.
According to documents filed in this case and statements made in court: Beginning in 2004, Edelman operated through several companies alleged to be in the business of buying and selling real estate. He allegedly engaged in a real estate investment fraud in which he obtained millions of dollars from victims who invested in his scheme. Edelman told investors that he had significant past real estate experience, including a purported history of successfully buying and selling numerous bank-foreclosed properties, and an MBA degree from NYU in real estate finance. Edelman claimed that he had long-standing relationships with banks that provided him with unique access to purchase foreclosed properties below market prices and, in fact, already had negotiated with the banks to purchase certain properties at agreed-upon prices that would guarantee an easy resale and profit for investors.
Edelman promised investors that any investment would be used solely for the purchase and renovation of specific investment properties in, among other places, New York, New Jersey, California, and Florida. Edelman represented to his investors that he could obtain extraordinary returns – as much as 25 percent – in as little as eight to 12 months. Edelman allegedly told some victims he had received from other investors, including professional athletes and celebrities, the majority of the capital needed to purchase the investment properties. He also said he provided cash deposits to the financial institutions to secure the right to purchase the investment properties and invested his own money in the deals.
In reality, neither Edelman nor any of his real estate companies had a history of purchasing any bank-foreclosed properties. Edelman also did not possess even an undergraduate degree. He did not have any deals lined up involving any investment properties, did not have his own money invested in any such deals, and did not have any money from celebrity investors. Edelman induced investors to give him $4 million and used little, if any, of it to fund any real estate acquisitions or renovations, instead diverting the funds for his own use.
He allegedly used the funds for his home mortgage and day-to-day living expenses, such as restaurants, telephone, and gas bills, purchased merchandise from high-end retailers, such as Gucci and Neiman Marcus, repaid existing investors in Ponzi-scheme fashion and paid his legal expenses in connection with victims seeking repayment of their investment.
When investors later inquired about the status of their investments, Edelman offered additional misrepresentations, including emails sent from a fake email account he had created, falsely assuring investors that he and his company had closed on the foreclosed properties, sometimes telling them buyers for the properties already had been identified.
In some cases, to allow the scheme to continue undetected, Edelman made “lulling” payments to investors, ranging from $100 to tens of thousands of dollars, to permit the scheme to continue. When payments were made to any investors, Edelman generally represented that the money was from the sale of investment properties, when, in fact, it came from a new investor.
The wire fraud count to which he pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for March 23, 2015.
U.S. Attorney Fishman credited criminal investigators with the U.S. Attorney’s Office and postal inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates, with the investigation leading to today’s arrest.
Today’s plea is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky and Lakshmi Srinivasan Herman of the Economic Crimes Unit, and Evan S. Weitz of the Asset Forfeiture and Money Laundering Unit.
14-441Defense Counsel: William Rush Esq., Wayne, N.J.
Edelman, Abbe Information
Erie Man Sentenced to More Than 8 Years in Prison for Unlawfully Possessing A Firearm as A Convicted FelonRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that a 43-year-old Erie, Pennsylvania resident was sentenced today in Scranton by Senior U.S. District Court Judge James M. Munley to serve 100 months in federal prison for unlawfully possessing a firearm and ammunition as a convicted felon.
According to United States Attorney Peter Smith, the defendant, James Presley, previously admitted to possessing a 9mm handgun and ammunition while driving a vehicle on Interstate 80 near Hazleton on May 15, 2014. At the time he possessed the firearm and ammunition, Presley had prior felony convictions, including a conviction for murder in 1992 in Philadelphia. Presley served 13 years in prison for the murder.
Presley was charged in an Information filed by the United States Attorney on July 15, 2014, as a result of an investigation by Special Agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Pennsylvania State Police.
Judge Munley also ordered Presley to spend two years on supervised release following his prison sentence, and to pay a $100 special assessment.
The case was prosecuted by Assistant U.S. Attorney Francis P. Sempa.