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6 November 2014
Three Face Federal Charges in A Military Procurement Fraud Scheme Involving Helicopters That Support the PresidentRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announces that a federal grand jury in Raleigh, North Carolina returned a 5 count indictment charging CRAIG KOLHAGEN, DENNIS PENNINGTON, and JAMES BOWLING with conspiracy to commit wire fraud, wire fraud, major fraud against the government, and procurement fraud.
The Grand Jury charges that, from 2011 until December 2013, KOLHAGEN, PENNINGTON, and BOWLING engaged in a conspiracy to defraud the United States in connection with a bid proposal for a contract to perform maintenance work on helicopters in Marine Helicopter Squadron One (HMX-1). The HMX-1 squadron is tasked with providing helicopter transport to the President of the United States, among other duties.
KOLHAGEN, who is a Chief Warrant Officer in the United States Marine Corps, had been the Contracting Officer’s Representative for the HMX-1 squadron. BOWLING and PENNINGTON are retired Marine Corps senior non-commissioned officers, who served as helicopter mechanics during their military careers. Currently, PENNINGTON is Chief Executive Officer and BOWLING is President of Valour, LLC, a Louisiana-based defense contractor engaged in the business of helicopter repair for the military.
The Indictment alleges that KOLHAGEN illegally leaked confidential information regarding the cost of a proposed contract for the maintenance of HMX-1 helicopters. In turn, PENNINGTON and BOWLING unlawfully colluded with KOLHAGEN to artificially inflate the cost estimate of the bid proposal, and to draft the proposed contract’s statement of work and technical requirements in a way to favor Valour over other potential bidders, according to the indictment.
Mr. Walker remarked, “This investigation highlights the unwavering determination of the Department of Justice to root out corruption in the military contracting process and to safeguard taxpayer dollars.”
"We are committed to protecting Navy and USMC personnel and materiel assets, extending to ethical and equitable contracting practices" stated Andrew Traver, Director of the Naval Criminal Investigative Service.These comments were underscored by Special Agent in Charge John F. Khin of the Defense Criminal Investigative Service, who said, “DCIS remains committed to working with its law enforcement partners to investigate individuals who attempt to manipulate the procurement process for their own gain.”
The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty in a court of law. The case is being investigated by the Naval Criminal Investigative Service (NCIS) and the Defense Criminal Investigative Service (DCIS). Assistant United States Attorney Evan Rikhye is prosecuting the case for the government.
Thornton Woman Sentenced to Federal Prison for Fraud Against the GovernmentRead the Press Release
DENVER – Paula King (aka Paula Pfeiffer), age 69 of Thornton, Colorado, was sentenced on November 4th, 2014 by U.S. District Court Judge Philip A. Brimmer to serve 9 months in federal prison, followed by 3 years on supervised release for defrauding the United States of over one hundred thirty thousand dollars, the U.S. Attorney’s Office, the Social Security Administration Office of Inspector General and the Railroad Retirement Board Office of Inspector General announced. King was ordered to pay a total of $131,443 in restitution ($89,205 to the Social Security Administration and $42,238 to the Railroad Retirement Board), and to report to a Bureau of Prisons facility within 15 days of designation.
According to the stipulated facts contained in the plea agreement, beginning in 1994, King obtained Social Security Supplemental Income benefits to which she was not entitled, and continued to receive them for 17 years. She also obtained widow’s benefits from the U.S. Railroad Retirement Board to which she was not entitled. In order to obtain these benefits, King failed to disclose to the agencies that she had remarried and certified that she had not been remarried, knowing that her remarriage would make her ineligible for the benefits. She used two sets of names, dates of birth, and social security numbers to conceal her fraud.
During the sentencing hearing, the defendant argued that due to her age and poor health, she should receive a sentence to probation or in-home detention. The court found that the fact that King is now in poor health does not mitigate her criminal culpability, and that a sentence to prison was necessary in this case, adding that such a sentence would send a message to others who may believe that being in ill health precludes a sentence of incarceration despite the one’s criminal conduct.
The investigation was conducted by the Social Security Administration Office of the Inspector General and the Railroad Retirement Board Office of the Inspector General.
This case was prosecuted by Assistant U.S. Attorney Linda Kaufman.
Tax Preparer Sentenced to Federal Prison for Her Role in Fraudulent Tax Return SchemeRead the Press Release
BATON ROUGE, LA – United States Attorney Walt Green announced that Chief U.S. District Judge Brian A. Jackson sentenced MALETICA V. FERGUSON, age 37, of Geismar, Louisiana, to serve ten (10) months in federal prison, and an additional eight (8) months in community confinement, for her role in a fraudulent tax return scheme. Following her release from custody, FERGUSON will be placed on supervised release for one (1) year. She has also been ordered to pay $263,769 in restitution to the IRS.
FERGUSON’s sentence follows her conviction for scheming to defraud the IRS during the 2010 and 2011 tax years by submitting dozens of false tax returns, seeking refunds totaling more than $300,000. In the returns, by misrepresenting the taxpayers’ incomes and falsely claiming various credits, among other means, FERGUSON fraudulently claimed that the taxpayers were entitled to significant tax refunds. As a result of her scheme, FERGUSON caused a loss of $263,769 to the taxpayers of the United States.
U.S. Attorney Green stated: “This sentence should send another clear message that the U.S. Attorney’s Office and the IRS are serious about combating tax fraud. We will continue to aggressively pursue those criminals who seek to defraud the American taxpayer.”
IRS Criminal Investigations Special Agent-in-Charge Gabriel Grchan stated: “We are pleased with today’s announcement regarding the sentence of Ms. Ferguson, who prepared income tax returns that sought over $260,000.00 in fraudulent refunds. The tax system is built on the premise that taxpayers file accurate and timely tax returns. Willfully aiding or assisting in the preparing of false tax returns is a serious crime, punishable under federal law. To ensure confidence in our tax system, Special Agents of IRS Criminal Investigation are committed to the aggressive pursuit and prosecution of individuals who intentionally abuse the nation’s tax system.”
This case was the result of an initiative by the United States Attorney’s Office, the Internal Revenue Service’s Criminal Investigations Division, and the United States Department of Justice’s Tax Division, to combat tax fraud schemes. The case is being prosecuted by Assistant United States Attorney Cam T. Le.
Sutter County Woman Pleads Guilty to Participation in Large-Scale EDD Benefit Fraud SchemeRead the Press Release
SACRAMENTO, Calif. —Iqila Begum Khan, 34, of Live Oak, pleaded guilty today to conspiring to commit mail fraud in a fictitious employer scheme, United States Attorney Benjamin B. Wagner announced.
Iqila Khan is one of 28 defendants charged in a long-running Yuba City-based scheme that involves several family members. She is the daughter of defendant Mohammad Nawaz Khan, sister of Mohammad Adnan Khan, and niece of Mohammad Shahbaz Khan and Mohammad Riaz Khan. To date, 15 defendants have pleaded guilty to various charges. A jury trial for Mohammad Nawaz Khan and five others is scheduled for January 12, 2015.
According to court documents, the defendants set up farm labor contracting businesses that purported to provide labor to harvest various crops in Sutter and Yuba Counties. They registered the businesses with the California Employment Development Department and reported employees and their wages to EDD. The organizers of the scheme sold fraudulent paystubs to other people and reported the wages to EDD. The purchasers of the fake wages could then subsequently file for unemployment or disability benefits with EDD based on their fictitious “employment.” Because the amount of the benefit that EDD pays is based on the claimant’s prior earnings, customers were charged more for documents reflecting higher wages.
According to her plea agreement, Iqila Khan sold fake wages on behalf of the companies at a rate of $250 for every $1,000 of reported “wages.” Iqila Khan generally sold these fraudulent wages at an office on Palora Avenue in Yuba City. During the investigation, Iqila Khan was secretly recorded making a sale, where she explained to the undercover buyer how and when to file for unemployment benefits based on the fake wages and what to say if the buyer was contacted by the state. Law enforcement later executed a search warrant at the Palora Avenue office and found a black ledger providing lists of names and amounts that were to be listed as fictitious wages with EDD as well as hundreds of fraudulent paystubs associated with the scheme.
Over the course of the conspiracy, it is alleged that the defendants reported false wages for over 1,000 separate individuals that resulted in more than 2,000 fraudulent claims for unemployment benefits. The scheme is alleged to have defrauded EDD of more than $14 million.
The prosecution of this fraud scheme has consisted of two indictments in 2012, two in 2013, and a fifth indictment in 2014. The last indictment charges one of the original defendants and another man with a new scheme to sell false wages and two other individuals with committing perjury before the federal investigating grand jury.
This case is the product of an investigation by the Federal Bureau of Investigation, the Department of Labor, Office of Inspector General, and the California Employment Development Department, Investigation Division. Assistant United States Attorneys Jared C. Dolan and Sherry D. Haus are prosecuting the case.
Iqila Khan is scheduled to be sentenced by Chief United States District Judge Morrison C. England Jr. on January 29, 2015, and faces a maximum statutory penalty of 20 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.
Suisun City Man Charged with Federal Firearm ChargeRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned a single-count indictment today against Frank Gowans III, 26, of Suisun City, charging him with felon in possession of a firearm, United States Attorney Benjamin B. Wagner announced.
According to court documents, Gowans was arrested by Vallejo police officers on October 12, 2014. The officers had observed Gowans walking with a black object in his hand. When the officers approached, Gowans discarded the object. An officer went to the area where Gowans had discarded the object and found a 9 mm handgun. Gowans was on parole at the time of arrest and is a convicted felon.
This case is the product of an investigation by the FBI and the Vallejo Police Department. Assistant United States Attorney Olusere Olowoyeye is prosecuting the case.
If convicted, Gowans faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. Any sentence, however, would 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. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Stoughton Man Pleads Guilty in Trade Association ScamRead the Press Release
BOSTON – A Stoughton man pleaded guilty yesterday to engaging in a fraud scheme involving the creation of phony invoices for annual dues that purported to come from legitimate business and trade associations.
Darren Stokes, 42, pleaded guilty yesterday to eight counts of wire fraud and seven counts of mail fraud. U.S. District Judge Richard G. Stearns scheduled sentencing for Feb. 5, 2015.
From 2008 to 2012, Stokes caused tens of thousands of fraudulent invoices to be faxed to businesses throughout the United States which purported to be from business or trade associations and sought payment for annual membership dues. In fact, Stokes had no authorization from the business and trade associations to collect such payments. Stokes caused invoices to be sent to members of associations including the American Dental Association, the National Association of Manufacturers, the Automotive Parts Remanufacturers Association, the American Trucking Association, the Associated General Contractors of America, and the National Hospital Association. In response to the fraudulent invoices, hundreds of businesses mailed checks to addresses controlled by Stokes who then cashed many of the checks.
The maximum sentence under the statutes is 20 years in prison, three years of supervised release and a $250,000 fine or twice the gross gain or loss, whichever is greater. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service in Boston, made the announcement. The case is being prosecuted by Assistant U.S. Attorneys Mark J. Balthazard of Ortiz’s Economic Crimes Unit and Doreen M. Rachal of Ortiz’s Asset Forfeiture Unit.
- Spring Man Handed Significant Sentence in Large Scale Meth Conspiracy
South King County Man Convicted of Sex Trafficking Juveniles Across State LinesRead the Press Release
A 42-year-old man, who trolled neighborhoods in south King County looking for teen-age girls to recruit into prostitution, was convicted today in U.S. District Court in Seattle of four criminal counts related to sex trafficking, announced Acting U.S. Attorney Annette L. Hayes. NATHAN BONDS was convicted of two counts of sex trafficking of a juvenile and two counts of transportation of a juvenile to engage in prostitution. The jury deliberated for five hours following a four day trial. U.S. District Judge John C. Coughenour scheduled sentencing for February 10, 2015, at 9:00 a.m.
According to records in the case and testimony at trial, in April 2013, BONDS was parked outside a Kent convenience store when he spotted and befriended a 15-year-old girl who had run away from home. BONDS let the girl borrow his cell phone, and then let her sit in his car, out of the rain. BONDS manipulated the girl into accompanying him to a hotel room where he raped her. Over the next few days, BONDS coerced the girl into working for him as a prostitute, convincing her she had no other options. BONDS advertised the girl on Backpage.com and made her give him all of the money she earned from prostitution acts. He also recruited the girl’s 17-year-old friend to work for him as a prostitute. On April 19, 2013, BONDS transported the 15-year-old girl and her 17-year-old friend, as well as a drug-addicted, homeless adult woman that he had also manipulated into working for him as a prostitute, to Portland to engage in prostitution. BONDS forced the two teens to take sexually explicit photographs, and then used some of those photographs to advertise them on Backpage.com.
Ultimately, both teens returned to their families and law enforcement identified BONDS as a sex trafficker. He was arrested June 5, 2013, and law enforcement recovered the computer and cell phone he used to conduct the prostitution business, both of which contained evidence establishing BONDS’s longtime involvement in prostitution.
Sex trafficking of juveniles is punishable by a mandatory minimum sentence of ten years, and up to life imprisonment.
The case was investigated by the North-Central Sound Child Exploitation Task Force which includes officers and agents from the Kent Police Department and FBI. The King County Prosecutors Office contributed substantial assistance to the prosecution. The case was prosecuted federally by Assistant United States Attorneys Kate Crisham and Ye-Ting Woo.
Sentencing for October 31, 2014Read the Press Release
Henry Agustin Aguilera, 30, of Honduras, was sentenced by Federal District Court Alan B. Johnson on October 31, 2014, for illegal re-entry of a previously deported alien into the United States. Aguilera was arrested in Cheyenne, Wyoming. He received time served, plus ten days, was ordered to pay a $100.00 special assessment, and is subject to deportation upon release from custody. This case was investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement.
Securities Attorney Arrested in Boston-Based Market Manipulation SchemeRead the Press Release
BOSTON – A securities attorney based in California was arrested this morning on securities fraud charges arising out of his participation in a scheme to manipulate the stock of a Boston-based company.
Richard Weed, 52, was charged with conspiracy, securities fraud and wire fraud based on his involvement in the manipulation of the stock of CitySide Tickets, Inc., a Boston-based ticket reseller.
According to the complaint, Weed, along with at least two others, conspired to create the appearance that CitySide was a growing company when, in fact, it was in dire financial straits. Weed, who served as CitySide’s Secretary and as one of two members of CitySide’s Board, was responsible for drafting false and misleading legal opinion letters so that his co-conspirators could obtain free trading stock. Weed also helped his co-conspirators to conceal their control and ownership of CitySide by directing the stock to be distributed to different entities that they controlled. This allowed the conspirators to manipulate CitySide’s stock and sell their shares at artificially high prices. In addition to assisting with the manipulation itself, Weed was also charged with responding to any inquiries from investors or securities regulators.
Two Boston-based stock promoters, Coleman Flaherty and Thomas Brazil, also were charged with conspiracy, securities fraud, and wire fraud arising from their participation in the stock manipulation.
The Securities and Exchange Commission (SEC) filed suit today against Weed, Flaherty and Brazil based on the CitySide market manipulation scheme.
“The prosecution of corporate and securities fraud is a top priority of the Department of Justice and a top priority for this Office,” said United States Attorney Carmen M. Ortiz. “Securities attorneys are the gatekeepers, entrusted with the responsibility of the fair and efficient functioning of our markets. We are committed to working with our regulatory and law enforcement partners to detect and prosecute those engaged in market abuse.”"Attorney Weed joins more than a dozen CEOs, traders, fund managers, equities analysts, lawyers and publicists caught in the FBI's long-running undercover investigation of the manipulation of micro-cap stocks,” said Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “We expect that our ongoing undercover operations to find people like Mr. Weed will continue to return high yields far into the future."
The charges follow a multi-year investigation focusing on preventing fraud in the microcap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies per share. Fraud in the microcap markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse. This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the SEC.
The latest charges follow a series of cases filed by the SEC and the U.S. Attorney for the District of Massachusetts in which 27 individuals have been criminally charged, and 20 convicted, for using kickbacks and other schemes to trigger investment in, or manipulate the stock of, thinly-traded stocks.
The statutory maximum penalties for the securities and wire fraud charges are 20 years in prison, and three years of supervised release. The maximum fine for securities fraud is $5 million and the maximum fine for wire fraud is $250,000, or twice the gross loss to the victim. The statutory maximum penalties for the conspiracy charge is five years in prison, three years of supervised release, and a fine of $250,000, or twice the gross loss to the victim. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Ortiz and FBI SAC Lisi made the announcement today. The criminal case is being prosecuted by Assistant U.S. Attorney Sarah E. Walters, Chief of Ortiz’s Economic Crimes Unit and SEC Attorney Eric A. Forni, who was appointed as a Special Assistant U.S. Attorney.The details contained in the complaint are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Sanford Man Sentenced to 10 Years in Prison for Transporting Child PornographyRead the Press Release
Contact: Craig M. Wolff
Assistant United States Attorney
Tel: (207) 780-3257Portland, Maine: United States Attorney Thomas E. Delahanty II announced that
Richard M. Moulton, Jr., 31, of Sanford, Maine, was sentenced today in U.S. District Court by
Judge Nancy Torresen to 10 years in prison and 10 years of supervised release for transporting child pornography. Moulton pleaded guilty to the charge on May 21, 2014.According to court records, in February 2014, Moulton sent an email message to the undercover email account of a federal agent, attaching four video files depicting minors engaged in sexually explicit activity and asking: “Can u send 4 back also.” Evidence presented at the sentencing hearing showed that Moulton frequently used his email account to solicit child pornography from others and to send child pornography videos and images.
In imposing sentence, Judge Torresen noted the seriousness of the crime Moulton had committed and the lasting impact that such offenses have on the children depicted in the images traded online. Judge Torresen also stated that each person who possesses or distributes such images bears some responsibility for the sexual exploitation of these children.
The investigation was conducted by U.S. Immigration and Customs Enforcement’s
Homeland Security Investigations and the Sanford Police Department. This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S.
Attorneys’ 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 exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.govRevere Bank Manager Sentenced to Federal Prison for Stolen Identity Fraud SchemeRead the Press Release
BOSTON – A Revere man was sentenced today in U.S. District Court in Boston for his role in a stolen identity refund fraud scheme.
Carlos Mauricio Gonzalez, 30, was sentenced by U.S. District Judge Nathaniel M. Gorton to 30 months in prison, and ordered to pay $326,802 in restitution to the Internal Revenue Service. On Nov. 13, 2013, Fernandez pleaded guilty to a one count of conspiracy to convert public money.
Gonzalez, who worked as a supervisor at a Citizens Bank branch in Stoneham, agreed to open business and personal bank accounts that were to receive proceeds from stolen identity refund fraud (SIRF) by which conspirators obtain refunds by filing fraudulent income tax returns using the identities of other people. Gonzalez opened bank accounts himself, and also directed other bank employees to open accounts although he did not inform these employees about the scheme. Gonzalez withdrew and directed other employees to withdraw the SIRF proceeds in cash amounts below $10,000. Between December 2011 and April 2012, Gonzalez facilitated the opening of 32 bank accounts, which received 75 deposits totaling $402,897. For his actions, Gonzalez received $14,000.United States Attorney Carmen M. Ortiz and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case was prosecuted by Special Assistant United States Attorney Sean R. Delaney of Ortiz’s Economic Crimes Unit.
Philadelphia Man Charged with Two Counts of Bank RobberyRead the Press Release
Leroy Townsend, 59, of Philadelphia, PA, was charged today by indictment with two counts of bank robbery, announced United States Attorney Zane David Memeger.
If convicted the defendant faces a maximum possible sentence of 40 years imprisonment, a $500,000 fine, not more than 3 years supervised release and a $200 special assessment.
The case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Linwood C. Wright, Jr.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Click here to view indictment.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Palm Beach County Residents Convicted for Sex Trafficking of MinorsRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce that a federal jury in West Palm Beach returned guilty verdicts on all counts against Dontavious M. Blake, 32, and Tara Jo Moore, 26, both of Palm Beach County.
This case stemmed from an investigation into the production of child pornography. During the investigation, a juvenile victim revealed that she had engaged in prostitution, at the age of 15, beginning in August of 2011 and continuing until December 2011. She had approximately 10 – 15 regular clients and worked in hotels in the Palm Beach County area. After further investigation, a second juvenile victim was identified and revealed that she had also engaged in prostitution, at the age of 16, beginning in July 2011 and continuing through October 2012. They worked for a pimp who they identified as Blake and his girlfriend Moore. Blake would post online escort advertisements with photographs of the minors on Backpage.com, which postings included a telephone number that belonged to him. Moore would answer the calls from the clients and negotiate a price for prostitution services and schedule a “date.” Once the negotiated price had been agreed upon, Blake would contact the minors and drive them to the hotel or location for the “date.” At the conclusion of the date, the minor would pay a portion of the proceeds to Blake including payment for a portion of the hotel room.
Blake and Moore were each found guilty of two counts sex trafficking of children and one count of conspiracy to commit sex trafficking of children, in violation of Title 18, United States Code, Sections 1591 and 594. Sentencing is set for January 23, 2015. Blake and Moore face a mandatory minimum statutory sentence of ten years imprisonment and maximum statutory sentence of life in prison on the sex trafficking of children counts. Blake and Moore face a statutory sentence of life in prison on the conspiracy to engage in sex trafficking of children.
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 the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Mr. Ferrer commended the investigative efforts of the FBI. The case is being prosecuted by Assistant U.S. Attorney Lothrop Morris.
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.
Operator of “Silk Road 2.0” Website Charged in Manhattan Federal CourtRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Peter Edge, Executive Associate Director of Homeland Security Investigations (“HSI”), announced today the arrest of BLAKE BENTHALL, a/k/a “Defcon,” in connection with his operation and ownership of the Silk Road 2.0 website, a hidden website designed to enable its users to buy and sell illegal drugs and other unlawful goods and services anonymously and beyond the reach of law enforcement. BENTHALL was arrested yesterday in San Francisco, California. He will be presented later today in federal court in San Francisco before Magistrate Judge Jaqueline Scott Corley.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Blake Benthall attempted to resurrect Silk Road, a secret website that law enforcement seized last year, by running Silk Road 2.0, a nearly identical criminal enterprise. Let’s be clear – this Silk Road, in whatever form, is the road to prison. Those looking to follow in the footsteps of alleged cybercriminals should understand that we will return as many times as necessary to shut down noxious online criminal bazaars. We don’t get tired.”
FBI Assistant Director-in-Charge George Venizelos said: “It’s been more than a year since the FBI made an arrest of the administrator of the black-market bazaar, Silk Road, and here we stand again, announcing the arrest of the creator and operator of Silk Road 2.0. Following a very close business model to the first, as alleged, Blake Benthall ran a website on the Tor network facilitating supposedly anonymous deals of drugs and illegal services generating millions of dollars in monthly sales. Benthall should have known that those who hide behind the keyboard will ultimately be found. The FBI worked with law enforcement partners here and abroad on this case and will continue to investigate and bring to prosecution those who seek to run similar black markets online.”
HSI Executive Associate Director Peter Edge said: “Blake Benthall’s arrest ends his status as the alleged administrator of a website that allows illicit black-market activities to evolve and expand, and provides a safe haven for illegal vices. HSI will continue to work in partnership with its federal and international law enforcement partners around the world to hold criminals who use anonymous internet software for illegal activities who seek to hide behind the anonymity of the Internet to carry out illegal activities accountable for their actions.”
According to the Complaint unsealed today in Manhattan federal court:
Since about December 2013, BENTHALL, a/k/a “Defcon,” has secretly owned and operated an underground website known as “Silk Road 2.0” – one of the most extensive, sophisticated, and widely used criminal marketplaces on the Internet today. The website has operated on the “Tor” network, a special network of computers on the Internet, distributed around the world, designed to conceal the true IP addresses of the computers on the network and thereby the identities of the network’s users. Since its launch in November 2013, Silk Road 2.0 has been used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to buyers throughout the world, as well as to launder millions of dollars generated by these unlawful transactions. As of September 2014, Silk Road 2.0 was generating sales of at least approximately $8 million per month and had approximately 150,000 active users.
Silk Road 2.0 was created in the wake of the Government’s October 2013 seizure of the website known as “Silk Road” and the arrest of its alleged owner and operator, Ross William Ulbricht, a/k/a “Dread Pirate Roberts.” The original Silk Road website had been designed to enable people anywhere in the world to buy and sell illegal drugs and other illegal goods and services anonymously and beyond the reach of law enforcement. Before its seizure in October 2013, Silk Road was used extensively to facilitate such transactions.
In November 2013, approximately five weeks after the Government shut down Silk Road and arrested Ulbricht, Silk Road 2.0 was launched. Designed to fill the void left by the Government’s seizure of Silk Road, Silk Road 2.0 was virtually identical to the original Silk Road website in the way it appeared and functioned. In particular, like its predecessor, Silk Road 2.0 operated exclusively on the “Tor” network and required all transactions to be paid for in Bitcoins in order to preserve its users’ anonymity and evade detection by law enforcement. Likewise, the offerings on Silk Road 2.0 consisted overwhelmingly of illegal drugs, which were openly advertised as such on the site. As of October 17, 2014, Silk Road 2.0 had over 13,000 listings for controlled substances, including, among others, 1,783 listings for “Psychedelics,” 1,697 listings for “Ecstasy,” 1,707 listings for “Cannabis,” and 379 listings for “Opioids.” Besides illegal narcotics, other illicit goods and services were openly advertised for sale on Silk Road 2.0 as well, including fraudulent identification documents and computer-hacking tools and services.
When Silk Road 2.0 was launched, it was controlled for a short time by a co-conspirator using the same online moniker as that allegedly used by Ross Ulbricht in operating the original Silk Road website – “Dread Pirate Roberts.” In late December 2013, however, BENTHALL, using the moniker “Defcon,” took over administration of the site and has owned and operated it continuously since that time. In that role, BENTHALL has controlled and overseen all aspects of Silk Road 2.0, including, among other things: the computer infrastructure and programming code underlying the website; the terms of service and commission rates imposed on vendors and customers of the website; the small staff of online administrators and forum moderators who have assisted with the day-to-day operation of the website; and the massive profits generated from the operation of the illegal business.
During the Government’s investigation, which was conducted jointly by the FBI and HSI, an HSI agent acting in an undercover capacity (the “HSI-UC”) successfully infiltrated the support staff involved in the administration of the Silk Road 2.0 website, and was given access to private, restricted areas of the site reserved for BENTHALL and his administrative staff. By doing so, the HSI-UC was able to interact directly with BENTHALL throughout his operation of the website.
BENTHALL, 26, of San Francisco, California, is charged with one count of conspiring to commit narcotics trafficking, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison; one count of conspiring to commit computer hacking, which carries a maximum sentence of five years in prison; one count of conspiring to traffic in fraudulent identification documents, which carries a maximum sentence of 15 years in prison; and one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the outstanding joint efforts of the FBI and its New York Cyber Branch and HSI and its Cyber Crimes Center and Chicago-O’Hare Field Office. He also thanked the Drug Enforcement Administration’s New York Organized Crime Drug Enforcement Strike Force, which comprises agents and officers of the DEA, the Internal Revenue Service, the New York City Police Department, HSI, the New York State Police, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Secret Service, the U.S. Marshals Service, Office of Foreign Assets Control, and New York Department of Taxation. Mr. Bharara also thanked the Department of Justice’s Computer Crime and Intellectual Property Section for its assistance and support, the Department of Justice’s Criminal Division Office of International Affairs, and the law enforcement authorities of France, Germany, Lithuania, the Netherlands, and the United Kingdom. Mr. Bharara also noted that the investigation remains ongoing.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Asset Forfeiture Unit. Assistant United States Attorneys Serrin Turner, Timothy Howard, and Daniel Noble are in charge of the prosecution. Assistant United States Attorney Margaret Graham is in charge of the forfeiture aspect of the case.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
U.S. v. Blake Benthall Complaint
North Tonawanda Man Sentenced for Identity TheftRead the Press Release
BUFFALO, N.Y. – U.S. Attorney William J. Hochul, Jr. announced today that David Johnson, 42, of North Tonawanda, N.Y., who was convicted of aggravated identity theft, was sentenced to 12 months in prison by U.S. District Court Judge Richard J. Arcara. The defendant was also ordered to pay restitution totaling $28,512.78.
Assistant U.S. Attorney Marie P. Grisanti, who handled the case, stated that between September 2012 and March 2013, Johnson and co-defendant, Calvina Myles, used the names and personal identification information of two individuals to apply for two Capital One credit cards in those names. The defendants, and a third co-conspirator, Avery Gill, purchased merchandise and gift cards from retail stores using the credit cards. Johnson also accompanied Gill who made ATM withdrawals using the credit card. As a result of this conduct, Capital One suffered a loss of $29,429.16.
Calvina Myles, who was convicted of bank fraud, was sentenced to 12 months in prison. Avery Gill was also convicted of bank fraud and sentenced to time served.
The sentencing is the culmination of an investigation on the part of the U.S. Postal Inspection Service, Boston Division, currently under the direction of Inspector in Charge, Shelly A. Binkowski.Nine Individuals Indicted in November Federal Grand JuryRead the Press Release
Muskogee, Oklahoma - The United States Attorney’s Office announced today the results of the November 2014 Federal Grand Jury.
“The following named individuals have been charged with a federal crime or crimes by the return of an indictment by the Grand Jury. A grand jury Indictment does not constitute evidence of guilt. A grand jury Indictment is a method of bringing formal charges against the defendant. A defendant is presumed innocent of the charges and may not be found guilty unless evidence establishes guilt beyond a reasonable doubt. Statutory maximum punishments are in parentheses. United States Sentencing Guidelines may be considered, upon conviction, by the sentencing court. Federal prison sentences are non-parolable.”
LINDA LUE ADAMS, age 68, of Eufaula, OK a/k/a LINDA CORLEY a/k/a LINDA MARTIN
Theft Of Government Funds
Concealment Of A Material FactThe Indictment alleges that beginning in or about November 2011, and continuing until in or about November, 2013, within the Eastern District of Oklahoma, the defendant, did knowingly and willfully embezzle, steal, and purloin money of the Social Security Administration, namely Social Security Disability Income and Social Security Disabled Widow payments, to which she knew she was not entitled, having a value in excess of $1,000.00. It further alleges that the defendant intentionally concealed her conviction and incarceration for a crime in order to receive and continue to receive and spend Disability Income and Disabled Widow payments made by the Social Security Administration to her. By such action, the defendant took approximately $22,867.80 in Social Security Disability Income and Disabled Widow payments to which she was not entitled. The charges arose from an investigation by the Social Security Administration, Office of Inspector General.
The charges are in violation of Title 18, United States Code, Sections 641 and 2, punishable by not more than 10 years imprisonment and/or up to a $250,000.00 fine and Title 42, United States Code, Section 408(a)(4), punishable by not more than 5 years imprisonment and/or up to a $250,000.00 fine.
Assistant United States Attorney Rob Wallace
HANK JOSHUA BELL, age 34, of Muskogee, OK
Felon In Possession Of A Firearm
The Indictment alleges that on or about October 8, 2014, within the Eastern District of Oklahoma, the defendant, having been convicted of a crime punishable by imprisonment for a term exceeding one year, did knowingly possess in and affecting commerce firearms which had been shipped and transported in interstate commerce.
The charges arose from an investigation by the Muskogee Police Department and the Federal Bureau of Investigation. The charges are in violation of Title 18, United States Code, Section 922(g)(1), punishable by not more than 10 years imprisonment and/or up to a $250,000.00 fine.
Assistant United States Attorney Kyle Waters
ARICA ROSE BRISCOE, age 21, of Decatur, GA
NATHANIEL DENNIS, Jr., age 23, of Ellenwood, GAPossession Of A Counterfeit Security
The Indictment alleges that on or about August 5, 2014, within the Eastern District of Oklahoma, ARICA ROSE BRISCOE and NATHANIEL DENNIS, JR., defendants herein, knowingly possessed counterfeit securities, to wit: counterfeit checks drawn accounts of organizations which operate in interstate commerce, with intent to deceive another.
The charges arose from an investigation by the Oklahoma Highway Patrol and the United States Secret Service. The charges are in violation of Title 18, United States Code, Sections 513(a) and 2, punishable by not more than 10 years imprisonment and/or up to a $250,000.00 fine.
Assistant United States Attorney Melody Nelson
LADONNA JANE BURNS, age 44, of Tulsa, OK
Embezzlement
Theft From An Indian Tribal OrganizationThe Indictment alleges that from on or about April 1, 2013, until on or about September 17, 2013, in the Eastern District of Oklahoma, the defendant, being an employee of the Checotah Muscogee Indian Community, an Indian Tribal Organization, did embezzle, steal, willfully misapply and willfully and knowingly convert to her own use more than $1,000.00 of the moneys, funds and credits belonging to the said Indian Tribal Organization.
The charges arose from an investigation by the Creek Nation Lighthorse Police and the Federal Bureau of Investigation. The charges are in violation of Title 18, United States Code, Section 1163, punishable by not more than 5 years imprisonment and/or up to a $250,000.00 fine.
Assistant United States Attorney Rob Wallace
KENNETH EDWARD DAY, age 37, of Hartshorne, OK
Felon In Possession Of Firearm
The Indictment alleges that on or about August 20, 2014, within the Eastern District of Oklahoma, the defendant having been convicted of a crime punishable by imprisonment for a term exceeding one year, did knowingly possess in and affecting commerce, firearms which had been shipped and transported in interstate commerce.
The charges arose from an investigation by the Drug Enforcement Administration. The charges are in violation of Title 18, United States Code, Sections 922(g)(1) and 924(e), punishable by not less than 15 years imprisonment and/or up to a $250,000.00 fine.
Assistant United States Attorney Chris Wilson
KENNETH WAYNE RABORN, age 64, of Ardmore, OK
PATRICIA ANN RABORN age 56, of Ardmore, OKTheft Of Government Funds
Concealment Of A Material Fact
False StatementThe Indictment alleges that beginning in or around July 2006, and continuing until in or around February, 2014, within the Eastern District of Oklahoma, the defendants did knowingly and willfully embezzle, steal, and purloin money of the Social Security Administration, namely, Social Security Disability Income payments to which they knew they were not entitled, having a value in excess of $1,000.00. The Indictment further alleges that beginning in or around March 2005, and continuing until in or around October, 2012, the defendants had knowledge of the occurrence of an event affecting the right to receive or continue to receive Social Security Disability Income payments. KENNETH WAYNE RABORN concealed and failed to disclose such event with the intent to fraudulently secure payment when no payment was authorized. Specifically, defendant KENNETH WAYNE RABORN intentionally concealed his securing gainful employment in order to receive and continue to receive and spend Disability Income payments made by the Social Security Administration to him. By such action, defendant KENNETH WAYNE RABORN took approximately $86,289.50 in Social Security Disability Income payments to which he was not entitled.
The charges arose from an investigation by the Social Security Administration, Office of Inspector General. The charges are in violation of Title 18, United States Code, Sections 641 and 2, punishable by not more than 10 years imprisonment and/or up to a $250,000.00 fine; Title 18, United States Code, Section 408(a)(4), punishable by not more than 5 years imprisonment and/or up to a $250,000.00 fine and Title 18, United States Code, Section 1001(a)(2), punishable by not more than 5 years imprisonment and/or up to a $250,000.00 fine.
Assistant United States Attorney Rob Wallace
MICHAEL GLENN VALLES, age 47, of Calera, OK
False Statement
The Indictment alleges that on or about January 22, 2010, within the Eastern District of Oklahoma, the defendant knowingly made a false statement for the purpose of influencing the action of the United States Department of Agriculture, Farm Service Agency in connection with a security agreement in which the defendant listed $80,739.19 in value of cattle that he had purchased in August and September 2009 when in truth and in fact, as the defendant well knew, he had only purchased $27,178.91 worth of cattle during that time period.
The charges arose from an investigation by the United States Department of Agriculture. The charges are in violation of Title 18, United States Code, Section 1014, punishable by not more than 5 years imprisonment and/or up to a $250,000.00 fine.
Assistant United States Attorney Melody Nelson
New York City Man Charged with Drug Trafficking OffenseRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced today the filing of criminal charges against Timothy Smart, age 31, New York City resident. A criminal Information filed in the United States District Court in Scranton yesterday alleges that Smart distributed cocaine hydrochloride, cocaine base, (crack), and heroin in Luzerne and Lackawanna Counties on numerous occasions between 2012 and September 20, 2013.
The government also filed a plea agreement in the case which is subject to the approval of the Court.
United States Attorney Peter Smith noted that the charges are the result of an investigation by the Federal Bureau of Investigation and the Pennsylvania State Police into the sale of drugs at motels in Luzerne and Lackawanna Counties.
Prosecution is assigned to Assistant United States Attorney John Gurganus.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this particular case, the maximum penalty under the federal statute is twenty years’ imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
New Orleanian, Lionel Thomas, Indicted for Violations of the Federal Controlled Substances ActRead the Press Release
U.S. Attorney Kenneth A. Polite announced that LIONEL THOMAS, age 30, a resident of New Orleans, was charged today in a one count indictment for violations of the federal controlled substances act.
According to the indictment, THOMAS possessed with the intent to distribute one kilogram or more of a mixture or substance containing a detectable amount of heroin, a Scheduled I drug controlled substance.
If convicted, THOMAS faces a maximum term of imprisonment of ten years to life, a fine of $10,000,000 and five years of supervised release following any term of imprisonment.
U. S. Attorney Polite reiterated that the indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of the Drug Enforcement Administration (DEA) and the Federal Bureau of Investigation (FBI) in investigating this matter. Assistant United States Attorney David Haller is in charge of this prosecution.
(Download Indictment )
New Mexico Man Pleads Guilty to Charges of Sexual Assault of Female Inmates in His CustodyRead the Press Release
John Greene, 70, a former captain at the Gallup-McKinley Adult Detention Center (GMADC), entered a guilty plea to charges related to the sexual assaults of female inmates in his custody. Greene pleaded guilty to three counts of violating each of the victim’s right to bodily integrity by engaging in sexual contact against their will. Greene also pleaded guilty to two counts of making material false statements to the FBI when he denied both touching the breasts of one female inmate and having personal contact with another female inmate.
According to court documents, Greene admitted that in his capacity as a captain at GMADC, he had regular access to female inmates when he accompanied them to court hearings, transported them to other facilities, and had them brought to his office. This regular access gave him the opportunity to engage in unwanted sexual contact with three different women in December 2008 and January 2009. Greene committed these acts, knowing it was wrong, against the law and without the victims’ consent, but he did so anyway for his own gratification.
Greene also admitted that he lied to the FBI about his conduct on two occasions.
Under the terms of the plea agreement, Greene will be sentenced to five years of probation. As part of the plea agreement, Greene will forfeit his law enforcement certification and must comply with sex offender registration requirements.
A sentencing hearing has not yet been set.
This case is being investigated by the Gallup Resident Agency of the Albuquerque Division of the FBI and is being prosecuted by Assistant U.S. Attorney Holland S. Kastrin for the District of New Mexico and Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
Mortgage Fraud Ring SentencedRead the Press Release
ATLANTA – Patrice Hairston, Bonnie Rose, Sarah Hyldahl, and Ronnika Allen have been sentenced for their roles in a scheme to defraud mortgage lenders of over $2 million in mortgage loans.
“Mortgage fraud has dragged down our economy, blighted our communities, and put in jeopardy the financial security of many Americans. We will diligently pursue those who misuse the dream of home ownership to line their own pockets by fraud and deceit,” said United States Attorney Sally Quillian Yates.
“The U. S. Postal Inspection Service is committed to protecting the American Public from individuals who make misrepresentations to prey on innocent victims,” said Thomas L. Noyes II, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service. “The collaborative effort between federal agencies in this case is an excellent example of the partnerships that focus on bringing those to justice who violate the law and defraud hardworking citizens.”
J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated: “Today's sentencing of this group engaged in mortgage fraud represents the federal government's commitment toward combatting such criminal activities. The FBI will continue to work with its various law enforcement partners in identifying such individuals engaged in this activity.”
According to United States Attorney Yates, the charges and other information presented in court: Hairston, a licensed real estate agent, and Rose were long time business partners, operating an office rental business on Covington Highway in DeKalb County, Ga. In late 2007 or 2008, Hyldahl and Allen began working out of Hairston and Rose’s office space.
Beginning in 2008, Hairston, Rose, Hyldahl, and Allen worked together to locate properties, recruit straw borrowers, and obtain mortgage loans using false information about the borrowers’ employment, income, and assets. Hairston created false W-2s and pay stubs (or earning statements) that were submitted to the lenders to obtain mortgage loans, along with fake bank statements that the co-conspirators obtained from other sources. The false documents represented that the straw borrowers earned significant salaries working for a company owned by Hairston and Rose. When lenders attempted to verify the straw borrower’s employment by contacting the company, Hairston, Rose, or their co-conspirators falsely verified the straw borrower’s employment, posing as a human resources manager or other high-level employee of Hairston and Rose’s company.
In addition to helping obtain fraudulent loans for straw borrowers, Rose and Allen purchased homes for themselves to live in using the same kind of false qualifying information that they used for straw borrowers. Hairston helped a straw borrower obtain and close a loan for a home based on false qualifying information, and then moved into the straw borrower’s home.
For certain loans, the co-conspirators induced the mortgage lender and seller to pay a “marketing fee” to companies owned by the co-conspirators that ranged from $58,000 to $75,000 per property. When the lender questioned the purpose of the “marketing fee” for one such property Hairston created a fake invoice for Hyldahl to submit to the lender that falsely portrayed the fee as having been paid for legitimate services. When the loans closed, the co-conspirators split the proceeds among themselves. Hairston, a licensed real estate agent, also received real estate commissions in the range of $7,000 to $9,000 on three of the properties.
The co-conspirators also used the funds obtained as “marketing fees” to pay the straw borrowers kickbacks as much as $15,000 after closing. In addition, for certain loans, the co-conspirators advanced straw borrowers the down payment which they were supposed to make from their own funds. Rose provided a cashier’s check which enabled the loan to close and then was paid back plus a small profit out of the “marketing fee” when the loan closed.
On January 22, 2009, federal and state law enforcement agents stopped a loan closing for a straw borrower that was based on false qualifying information and arrested Hyldahl, who was present for the closing. The closing paperwork for this loan reflected that the co-conspirators were attempting to obtain over $75,000 as a false “marketing fee.” Hairston was arrested when she arrived at the closing with the straw borrower’s down payment check, which she had obtained from Rose before coming to the closing.
Before the fraud ring was broken, the co-conspirators obtained over $2.7 million in total loans. Lenders suffered an actual loss to date of $1.1 million on these loans, and may incur additional losses in the future as a result of these loans. In addition to the properties that three co-defendants moved into, the co-conspirators obtained or attempted to obtain over $220,000 in cash from these closing (i.e., the “marketing fees”) and an additional approximately $23,000 in real estate commissions.
The defendants were sentenced as described below:
- Hairston, 52, of Lawrenceville, Ga., was convicted at trial earlier this year on multiple charges of conspiracy and mail and wire fraud, and has been sentenced to five years, four months in prison to be followed by three years of supervised release, and restitution will be determined.
- Hyldahl, 32, of Marietta, Ga., pleaded guilty to conspiracy and cooperated with the Government, and has been sentenced to one year and one day in prison to be followed by three years of supervised release, and ordered to pay $798,299 in restitution.
- Rose, 54, of Jonesboro, Ga., pleaded guilty to conspiracy and cooperated with the Government, and has been sentenced to three years of probation, the first eight months of which will be served in home confinement, and ordered to pay $339,531 in restitution.
- Allen, 30, of Powder Springs, Ga., pleaded guilty to conspiracy and cooperated with the Government, and has been sentenced to two years of probation, the first 60 days of which are home confinement, and restitution of $192,458.
This case was investigated by the U.S. Postal Inspection Service and the Federal Bureau of Investigation.
Assistant United States Attorneys Doug Gilfillan and Christopher Huber prosecuted the case.
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. 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.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao/gan/.
Montgomery County Woman Pleads Guilty to Transportation and Possession of Child PornographyRead the Press Release
Greenbelt, Maryland – Katherine Noelle Nash, age 26, of Burtonsville, Maryland, pleaded guilty today to transportation and possession of child pornography.The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Chief J. Thomas Manger of the Montgomery County Police Department; and Montgomery County State’s Attorney John McCarthy.
According to Nash’s plea agreement, on September 8 and 9, 2013, Nash distributed nine videos depicting prepubescent minors engaged in sexually explicit conduct, to an undercover officer using a file sharing program. On October 23, 2013, a search warrant was executed at Nash’s residence and law enforcement seized two computers and other digital media.
A subsequent forensic examination of one of the computers revealed 12 images and a video file documenting Nash’s sexual abuse of a prepubescent female child, as well as sexually explicit conversations with another individual regarding the child. In addition, Nash possessed 37 files containing child pornography, including the files Nash distributed to the undercover officer. Nash had downloaded the files from the internet and many of the images were identified by the National Center for Missing and Exploited Children as depicting known victims. A preliminary analysis of the second computer revealed approximately 190 images and videos depicting children engaged in sexually explicit conduct.
As part of her plea agreement, Nash must register as a sex offender in the place where she resides, where she is an employee, and where she is a student, under the Sex Offender Registration and Notification Act (SORNA).
Nash and the government have agreed that if the Court accepts the plea agreement Nash will be sentenced to eight years in prison followed by a lifetime of supervised release. U.S. District Judge Deborah K. Chasanow has scheduled sentencing for February 2, 2015 at 1:30 p.m.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc. For more information about internet safety education, please visit www.justice.gov/psc and click on the "resources" tab on the left of the page.
United States Attorney Rod J. Rosenstein commended the FBI, Montgomery County Police Department and Montgomery County State’s Attorney’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Kelly O. Hayes and Kristi N. O’Malley, who are prosecuting the case.
Montgomery County Resident Sentenced to 70 Months in Prison for Possession of a Firearm by a Convicted FelonRead the Press Release
COUNCIL BLUFFS, IA - On November 5, 2014, Bill Joe Gillespie, a 32 year-old resident of Red Oak, Iowa, was sentenced by United States District Court Judge John Jarvey to 70 months in prison, to be followed by three years of supervised release, for possession of firearm by a convicted felon, announced United States Attorney Nicholas Klinefeldt.
An investigation revealed that Gillespie had broken into a Shell gas station in Red Oak, Iowa, during the early morning hours of December 15, 2013, and had taken, among other items, two shotguns. The shotguns were recovered from Gillespie a short time later. Gillespie pled guilty to the charge on May 8, 2014.
The investigation was conducted by the Red Oak, Iowa, Police Department, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
(Download Press Release)
Montana Pharmacist Sentenced for Drug DeathRead the Press Release
BILLINGS - Ben Hunn, a 47-year-old licensed retail pharmacist in Sidney, Montana, was sentenced for the distribution of Vicodin resulting in death. Hunn was sentenced to 48 months in prison followed by 3 years supervised release.
Assistant U.S. Attorney Paulette Stewart told the court that on October 19, 2013, Ben Willard Hunn, a Sidney pharmacist, distributed Vicodin (hydrocodone), Soma, Ambien, and Xanax to a Sidney, Montana resident. Later that night, the victim died of a drug overdose. When Drug Enforcement Agency (DEA) agents interviewed Hunn, he admitted that he diverted hundreds of prescription pills to the victim and the victim's parents over the course of a year, from October 2012 through October 2013.
Hunn admitted that he did not know which prescriptions were legitimate and which were not; he simply printed duplicate labels from another prescription, placed them on the prescription bottles, and dispensed the controlled substances. On the date the victim died, Hunn admitted that he "stocked up the whole family." The investigation showed that on that date, Hunn distributed Vicodin (hydrocodone), Soma, Ambien, and Xanax to the deceased victim. The autopsy report listed the probable cause of death as a mixed drug overdose (carisoprodol and meprobamate). The medical examiner and toxicologists in the case also concluded that the amount of Vicodin (hydrocodone) in the victim's system was toxic/fatal by itself.
The prosecution was part of Project Safe Bakken, a cooperative effort between federal and state prosecutors and federal, state, local, and tribal law enforcement agencies in Montana and North Dakota. The investigation was conducted by the DEA Tactical Diversion Squad, which is comprised of law enforcement from DEA, Montana Division of Criminal Investigation, Billings Police Department; also the Sidney Police Department and the Montana Crime Lab.
Middlebury Fire Chief Charged with Embezzling FundsRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, today announced that a federal grand jury sitting in New Haven has returned an indictment charging PAUL PERROTTI, 47, of Middlebury, with three counts of theft concerning programs receiving federal funds. PERROTTI is the Fire Chief for the Town of Middlebury.
PERROTTI was arrested this morning at his residence. He appeared before U.S. Magistrate Judge Holly B. Fitzsimmons in Bridgeport and was released on a $250,000 bond.
According to the indictment, PERROTTI has been the Fire Chief of the Middlebury Volunteer Fire Department, Inc. (“MVFD”) since 1997. PERROTTI also is a licensed electrical contractor and, since approximately 2010, has operated Paul Perrotti Electric, LLC (“PPE”). The indictment alleges that between 2011 and 2013, PERROTTI used MVFD operating accounts to pay for unauthorized personal expenses and for expenses associated with PPE. These payments included checks paid directly to PERROTTI, checks paid directly to PPE, checks made directly payable to employees of PPE, checks made to various vendors of PPE for PPE-related supplies, and checks made to reimburse third parties for personal loans owed by PERROTTI. PERROTTI also submitted invoices to the Town of Middlebury for expenses that he falsely claimed were incurred by MVFD but, in fact, were expenses related to the business of PPE, including bills for various vendors of PPE.
The indictment further alleges that PERROTTI opened a Home Depot credit card account in the name of the MVFD and used it to purchase items related to his business, including electrical wires, breakers and wire. In addition, he used an MVFD debit card to withdraw cash for himself and to make purchases not related to the MVFD, including purchases for food and gas.
In total, it is alleged that PERROTTI embezzled more than $70,000 from the MVFD.
The charge of theft concerning programs receiving federal funds carries a maximum term of imprisonment of 10 years.
U.S. Attorney Daly stressed that an indictment is not evidence of guilt. Charges are only allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Sarah Karwan.
The case is assigned to U.S. District Judge Jeffrey Alker Meyer in Bridgeport.
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(203) 821-3722 [email protected]Mexican National Pleads Guilty to Growing Marijuana in Lassen National ForestRead the Press Release
SACRAMENTO, Calif. —Daniel Gomez-Gonzalez, 32, of Mexico, pleaded guilty today to cultivating marijuana plants, United States Attorney Benjamin B. Wagner announced.
According to court documents, on July 11, 2014, United States Forest Service agents and Tehama County Sheriff’s deputies raided a marijuana cultivation site near the North Fork Antelope Creek in Tehama County in Lassen National Forest. Law enforcement counted and eradicated a total of 5,287 marijuana plants at the cultivation site. They also found a Remington shotgun, more than 1,000 pounds of trash and various types of fertilizers, insecticides, and animal poisons in the grow site. Gomez-Gonzalez was arrested on a forest trail west of the site. He told law enforcement that he was responsible for spraying, watering, and fertilizing the marijuana plants and that he expected to earn a portion of the profits generated from the marijuana grown at the site. Co-defendant Eric Perez was arrested the same day in the marijuana cultivation site.
This case is the product of an investigation by the United States Forest Service and Tehama County Sheriff’s Office. Assistant United States Attorney Christiaan Highsmith is prosecuting the case.
Gomez-Gonzalez is scheduled to be sentenced by United States District Judge Troy L. Nunley on January 22, 2015. He faces a maximum statutory penalty of 20 years in prison and a $1 million 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.
Co-defendant Eric Perez has already pleaded guilty to manufacturing marijuana. He will be sentenced by Judge Troy L. Nunley on January 8, 2015.
Mexican Man Sentenced for Conspiracy to Distribute MethamphetamineRead the Press Release
On November 6, 2014, Alejandro Memije-Fuentes, 33, a citizen of Mexico, was sentenced to 10 years and one month (121 months) in prison for conspiracy to distribute and possess with the intent to distribute 500 grams or more of methamphetamine in Lincoln. Memije-Fuentes was ordered to serve five years on supervised release following the prison term. However, it is likely that he will be deported upon completion of his prison sentence.
In April of 2014, Memije-Fuentes contacted an informant who was working with the Lincoln/Lancaster County Drug Task Force and made arrangements for the delivery of two pounds of methamphetamine to the informant. An associate of Memije-Fuentes was supposed to make the delivery to the informant, but the associate was contacted by officers on April 4, 2014, consented to a search of his car, and was found in possession of approximately two pounds of methamphetamine.
Despite his associate’s arrest, Memije-Fuentes stayed in contact with the informant and made arrangements for the delivery of five pounds of methamphetamine to the informant. Memije-Fuentes told the informant that the methamphetamine was being transported to Lincoln in a truck. On the evening of April 21, 2014, officers saw Memije-Fuentes and at least one other person meet with the driver of a semi-tractor trailer truck near Memije-Fuentes’s Lincoln motel. After this meeting, Memije-Fuentes returned to his motel room. In the early morning hours of April 22, 2014, officers executed a search warrant on that motel room. Memije-Fuentes and two other individuals were found in the room along with an air compressor in which approximately 6 ¼ pounds or 2.8 kilograms of methamphetamine had been hidden.
This case was investigated by the Lincoln/Lancaster County Drug Task Force.
Medicare Beneficiaries Charged in Ambulance Health Care Fraud SchemeRead the Press Release
Two Brotherly Love Ambulance Employees and Four Four Medicare Beneficiaries Charged
PHILADELPHIA - Fritzroy Brown, 37, and Thael Kuran, 22, both of Philadelphia, PA, were charged today by indictment with conspiracy to commit health care fraud and making false statements in connection with health care matters, arising from their operation of Brotherly Love Ambulance, Inc., announced United States Attorney Zane David Memeger. Fritzroy Brown was also charged with theft of government funds and wire fraud for obtaining unemployment benefits while working full time at Brotherly Love Ambulance.
The indictment charges four other individuals with taking illegal kickbacks from Brotherly Love Ambulance and its employees. According to the indictment, Craig Brown, 46, Derrick Brown, 44, William Conner, 61, and Keisha Regusters, 37, all of Philadelphia, PA, received kickbacks from the company to induce them to ride with Brotherly Love Ambulance or to induce other Medicare beneficiaries to ride with Brotherly Love Ambulance. Craig Brown is also charged with making false statements in connection with health care matters; Derrick Brown and William Conner are charged with making false statements to federal agents.
The indictment alleges that the scheme involved more than $4 million in fraudulent claims submitted to Medicare. The defendants allegedly conspired to defraud Medicare by recruiting patients who were able to walk, and could travel safely by means other than ambulance, and who, therefore, were not eligible for ambulance transportation under Medicare requirements. The defendants, and others acting on their behalf, allegedly falsified reports to make it appear that the patients needed to be transported by ambulance when the defendants knew that the patients could be transported safely by other means and that many of them walked to the ambulance for transport, were driven in privately owned vehicles, or drove themselves to their destinations. According to the indictment, the defendants, themselves, or through others, paid illegal kickbacks to the patients as part of the scheme. The indictment charges that the defendants billed Medicare for these ambulance services as if those services were medically necessary and, as a result of the fraudulent billing, the Medicare program sustained losses of more than $2 million for this medically unnecessary method of transportation.
It is further alleged that Craig Brown, Derrick Brown, William Conner, and Keisha Regusters each received payments in the form of cash, checks, or other valuable items, in order to induce them to ride Brotherly Love ambulances or allow Brotherly Love to bill for ambulance services that were never provided, or to recruit other patients for the same purpose. The indictment also alleges that Craig Brown signed paperwork indicating that he had been provided with ambulance services that he did not actually receive, and that Derrick Brown and William Conner made false statements to federal investigators about receiving money from Brotherly Love to ride Brotherly Love ambulances.
The company’s president, Feda Kuran, and a manager, Neel Jackson, have pleaded guilty in connection with their conduct related to the company.
The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, the Federal Bureau of Investigation, and the U.S. Department of Labor Office of the Inspector General. It is being prosecuted by Assistant United States Attorneys Matthew J.D. Hogan and Paul W. Kaufman.
An Indictment is an accusation. The defendants are presumed innocent unless and until proven guilty.
Click here to view indictment.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Manhattan U.S. Attorney Settles Civil Fraud Claims Against Visiting Nurse Service for Obtaining Millions in Medicaid Payments by Enrolling Ineligible Individuals in Its Managed Long-Term Care Plans and for Providing Substandard Services at Social AdultRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Thomas O'Donnell, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s (“HHS-OIG”) New York Region, announced today that the United States has settled civil fraud claims under the False Claims Act against VISITING NURSE SERVICE OF NEW YORK, VNS CHOICE, and VNS CHOICE COMMUNITY CARE (collectively, “VNS”) related to the enrollment of ineligible members in the VNS Choice managed long-term care plan (“Choice MLTCP”). VNS improperly billed the Medicaid program for 1,740 members whose needs did not qualify for the managed care plan. These members were improperly referred by social adult day care centers (“SADCCs”), or received services primarily from SADCCs, many of which provided substandard and minimal care.
Under the terms of the settlement approved today by United States District Judge Ronnie Abrams, VNS must pay a total of $34,994,428 to the Medicaid Program, $13,997,771 of which will go to the United States. In addition, VNS is required to:
- Credential only SADCCs that are properly certified and capable of providing community-based personal care services consistent with regulatory requirements
- Ensure that SADCCs provide the community-based personal care services called for under Choice MLTCP member care plans
- Monitor SADCCs in its provider network to ensure compliance with applicable regulations
- Prohibit marketing practices specifically directed at enrolling Choice MLTCP members through SADCCs
Manhattan U.S. Attorney Preet Bharara said: “VNS collected millions of dollars in Medicaid payments by enrolling ineligible persons into its managed care plan who clearly did not meet the criteria for long-term care. The company developed a network of social adult day care centers that were ill-equipped to provide the required level of care and instead served merely as a conduit to induce Medicaid beneficiaries to enroll.”
HHS-OIG Special Agent in Charge Thomas O'Donnell said: “VNS’s conduct compromised the integrity of the Medicaid program. HHS-OIG is committed to holding providers accountable for the quality of care they deliver and the manner in which that care is provided.”
Pursuant to the Medicaid managed long-term care program, health care providers, such as VNS, are responsible for arranging and managing long-term health care services offered to Medicaid beneficiaries. In exchange, providers receive a monthly capitation payment of approximately $3800 for each beneficiary enrolled in the health care plan. In order to qualify for enrollment in the Choice MLTCP, Medicaid beneficiaries need to be eligible for a nursing home level of care and require at least 120 days of community-based long-term care, which includes a wide range of health care services such as personal care services. VNS contracted with SADCCs to provide care, including personal care services, to Choice MLTCP members.
In the settlement agreement, VNS admits that 1,740 Choice MLTC members who had been referred by SADCCs or used SADCC services were not eligible to be members of the plan. These members were eventually unenrolled, beginning in August 2013. Although the SADCCs were supposed to be providing care to VNS Choice members, VNS admits that, during 2012 and 2013, various SADCCs in its provider network did not provide services that qualified as personal care services under the terms of its Medicaid contract. The settlement also resolves claims that VNS Choice improperly received referrals from SADCCs and induced members to use SADCCs as the members’ primary source of personal care services.
In April 2013, New York State had suspended enrollment in the Choice MLTCP based on concerns regarding the relationship between VNS and SADCCs. This suspension remained in effect until the Government reached an agreement in principle to resolve its investigation.
Mr. Bharara thanked the Medicaid Fraud Control Unit of the New York State Attorney General’s Office for its investigative efforts and extensive work on the case. Mr. Bharara also thanked HHS’s Office of the Inspector General for its assistance.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Jeffrey K. Powell is in charge of the case.
Visiting Nurse Service Settlement
Manhattan U.S. Attorney and FBI Assistant Director Announce Securities and Wire Fraud Charges Against Texas Man for Running Bitcoin Ponzi SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that TRENDON SHAVERS, a/k/a “pirateat40,” was arrested this morning on securities fraud and wire fraud charges stemming from his involvement in a Bitcoin-related Ponzi scheme. SHAVERS was the founder and operator of Bitcoin Savings and Trust (“BCS&T”), which offered and sold Bitcoin-based investments through the Internet. In total, SHAVERS raised at least 764,000 Bitcoin in BCS&T investments, which amounted to more than $4.5 million based on the average price of Bitcoin during the period of the scheme. SHAVERS is expected to be presented today in the Eastern District of Texas, Sherman Division, before a United States Magistrate Judge.
Bitcoin are a decentralized form of electronic currency, existing entirely on the Internet and not in any physical form. The currency is not issued by any government, bank, or company, but rather is generated and controlled automatically through computer software operating on a “peer-to-peer” network. Bitcoin transactions are processed collectively by the software-enabled computers composing the network.
U.S. Attorney Preet Bharara said: “As alleged, Trendon Shavers managed to combine financial and cyber fraud into a Bitcoin Ponzi scheme that offered absurdly high interest payments, and ultimately cheated his investors out of their Bitcoin investments. This case, the first of its kind, should serve as a warning to those looking to make a quick buck with unsecured currency.”
FBI Assistant Director-in-Charge George Venizelos said: “Shavers used a new currency, but the same old reprehensible tricks. He claimed to offer a Bitcoin market-arbitrage strategy. In reality, it was nothing more than an insidious scheme motivated by greed. Today, Shavers’ jig is up. He finds himself under arrest and charged in Manhattan federal court.”
According to the two-count Complaint unsealed today in Manhattan federal court:
From at least September 2011 up through and including September 2012, SHAVERS operated a Ponzi scheme. Specifically, SHAVERS solicited investments in BCS&T on the “Bitcoin Forum” – a public, Internet-based forum where, among other things, Bitcoin investment opportunities were posted. SHAVERS’s offer to investors was straightforward: investors who lent Bitcoin to BCS&T would be paid up to seven percent interest weekly – an annualized interest rate of 3,641% per year – and investors could withdraw their investments in BCS&T at any time. SHAVERS claimed that the Bitcoin invested by BCS&T investors would be used to support a Bitcoin market-arbitrage strategy, which included (i) lending Bitcoin to others for a fixed period of time; (ii) trading Bitcoin via online exchanges; and (iii) selling Bitcoin locally via private, off-markets transactions – i.e., “over-the-counter transactions.” SHAVERS also personally guaranteed to cover any losses in the event of a market change. In truth, SHAVERS largely failed to execute the claimed market arbitrage strategy, failed to honor all of his investors’ redemption requests as well as his personal guarantee, and failed to deliver the agreed upon rates of interest.
In the end, BCS&T was a Ponzi scheme in which SHAVERS used Bitcoin from new investors to make purported interest payments to existing investors and to cover investors’ requests to withdraw Bitcoin from existing BCS&T accounts. In addition, SHAVERS diverted investors’ Bitcoin for day trading in his own account on a Bitcoin currency exchange, and exchanged investors’ Bitcoin for U.S. dollars to pay certain of his personal expenses. At the peak of the scheme, SHAVERS raised, and had in his possession, about seven percent of all the Bitcoin that were then in public circulation. In the end, at least 48 of approximately 100 investors lost all or part of their investment in BCS&T.
SHAVERS, 32, was arrested this morning at his home in McKinney, Texas. He is charged with one count of securities fraud and one count of wire fraud. The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The wire fraud count carries a maximum sentence of 20 years in prison and maximum fine of $250,000, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
On September 18, 2014, in a separate civil action brought by the Securities and Exchange Commission (“SEC”), the United States District Court for the Eastern District of Texas entered final judgment against both SHAVERS and BCS&T, and ordered SHAVERS to pay more than $40 million in disgorgement and prejudgment interest, and a civil penalty of $150,000 related to BCS&T.
Mr. Bharara praised the work of the FBI, and thanked the SEC for its invaluable assistance. He added that the investigation is continuing.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Benjamin Naftalis, Daniel S. Goldman, and Michael Ferrara are in charge of the prosecution.
The allegations contained in the Complaint are merely accusations, and the defendant is
presumed innocent unless and until proven guilty.
The United States Attorney’s Office for the Southern District of New York is committed to protecting the rights of crime victims. If you are a victim of an offense being prosecuted by our Office, our Victim/Witness Unit can make sure that you are notified of important stages of the case to help you exercise your rights. In addition, our Victim/Witness Unit can help refer you to agencies that provide other services to witnesses, such as compensation and counseling. For information or assistance with referrals, please contact:
Wendy Olsen Clancy
Victim/Witness Coordinator
United States Attorney's Office
One St. Andrew’s Plaza
New York, New York 10007
(866) 874-8900
U.S. v. Trendon Shavers Complaint
Man Pleads Guilty to Possessing Child Pornography for the Second TimeRead the Press Release
BUFFALO, N.Y.–U.S. Attorney William J. Hochul, Jr. announced today that Michael Kemp, 37, of Buffalo, NY, pleaded guilty before U.S. District Court Judge Richard J. Arcara to possessing child pornography. The charge carries a mandatory minimum penalty of 10 years in prison, a maximum of 20 years, and a fine of $250,000.
Assistant U.S. Attorney Marie P. Grisanti, who is handling the case, stated that on October 15, 2013, Kemp’s U.S. probation officer found a computer and hard drive hidden between the defendant’s mattress and box spring in his bedroom. The computer contained over 50 images and eight videos of child pornography. The defendant was on supervised release following his July 2008 release from prison for a previous conviction of possession of child pornography.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The plea is the culmination of an investigation on the part of officers of the United States Probation Department, under the direction of Anthony SanGiacomo, Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge James C. Spero, and the Regional Computer Forensic Laboratory.
Sentencing is scheduled for February 25, 2015 at 1:00 p.m. before Judge Arcara. Kemp will be sentenced on November 24, 2014 at 12:00 p.m. for violating his supervised release.Lincoln Couple Sentenced in Conspiracy to Distribute MethamphetamineRead the Press Release
United States Attorney Deborah R. Gilg announced that Benjamin Martin, 26, of Lincoln, Nebraska, and Audrey Glenn, 26, of Lincoln, were sentenced on November 6, in Lincoln, Nebraska, by United States District Judge John M. Gerrard, for conspiracy to distribute methamphetamine. Martin was also convicted of possession of a firearm in furtherance of a drug trafficking crime. Martin received a sentence of 135 months imprisonment on Count 1 and a consecutive 60 months imprisonment for Count 2, and Glenn received a sentence of 120 months in prison. Both will be required to serve 5 years of supervised release following their prison terms.
Martin distributed large quantities of methamphetamine to others in the Lincoln area. That ended December 20, 2013, when Lincoln Police were dispatched to the Walmart located at 2501 Grainger Parkway due to reports that there was a man passed out in a vehicle that was running. When officers arrived, Martin was slumped over in the vehicle with his pants unbuttoned and pulled down off his hips. Clearly visible were several rifle rounds lying in Martins lap. A rifle was located concealed under a blanket on the passenger seat next to Martin. The vehicle was searched and seized were another rifle, 2 pistols, 200 rounds of ammunition, a large capacity clip for one of the rifles, 15.5 grams of methamphetamine and cash. At the jail, more money was found in Martin’s possession, making the total seized over $48,000. After Martin was lodged in jail, he made a phone call to his girlfriend, Audrey Glenn. Glenn told Martin she was collecting money to get Martin out of jail. She was followed to a storage unit used by Martin and found in it was 4 ounces of methamphetamine.
This case was investigated by the Lincoln/Lancaster County Drug Task Force.
Leading Experts to Discuss New Approaches to Keeping Guns from Those People at Elevated Risk of ViolenceRead the Press Release
United States Attorney James L. Santelle announced today that on Friday, November 7th, the Office of the United States Attorney for the Eastern District of Wisconsin will co-host with Josh Horwitz, Executive Director of the Educational Fund to Stop Gun Violence, and Jeri Bonavia, Executive Director of WAVE Educational Fund, a program entitled “From Virginia Tech to the Azana Spa: New Approaches to Keeping Guns from Dangerous People.”
This community education program will begin at 1:00 p.m. at the Joseph Zilber School of Public Health of the University of Wisconsin-Milwaukee located at 1240 N. 10th Street and will include reporting on evidence-based proposals for identifying and stopping the destructive, firearms-related behaviors of the most dangerous people in our communities. The program will feature a panel of national mental health, public health and gun violence prevention experts from the Consortium for Risk-Based Firearm Policy, together with local leaders to discuss new approaches to keeping guns out of the hands of potentially dangerous individuals. The approaches are detailed in a report the Consortium released late last year.
Among the panelists will be Josh Horwitz, Executive Director of the Educational Fund to Stop Gun Violence, Dr. Garen Wintemute, Professor of Emergency Medicine at the University of California at Davis, Dr. Shannon Frattorili, Associate Professor of the Johns Hopkins School of Public Health, Dr. Jeffrey Swanson, Professor in Psychiatry at Duke University, and Dr. Amy Barnhorst, Assistant Clinical Professor, Department of Psychiatry and Behavioral Sciences at the University of California. United States Attorney James L. Santelle, Milwaukee’s Assistant Police Chief, James Harpole, Nina Vinik, Joyce Foundation Program Director, Gun Violence Prevention Program, Sandy Pasch, Wisconsin State Assembly State Representative, 10th District, Rev. Jerry Hancock, First Congregational Church of Christ, Madison, and Ralph Hollmon, Milwaukee Urban League President and CEO, will be among the presenters.
Friday’s panel is an evidence-based component of a nationwide and local strategic effort by the U.S. Department of Justice and other state, local, and tribal law enforcement entities to combat gun violence and its impact on our communities by highlighting the value of practical, new tools and research-based methods available to government officials, investigators and prosecutors, health care providers, educators, business representatives, legislators, and community leaders. Among other aspects of the concepts to be described and discussed, these policies would prevent individuals from acquiring and possessing guns when they are at elevated risk of harming themselves and others.
In announcing the program, United States Attorney Santelle said: “In this thoughtful, practical discussion with researchers and educators who have devoted their academic careers to identifying the true geneses of firearm-related violence in our nation, we will be drafting a new design – an innovative blueprint – for keeping our residents safer and more secure here in Eastern Wisconsin and elsewhere. We know the sources of and reasons for violence, and our community gathering will focus on using that information and knowledge to save lives, prevent injury, diminish crime, and promote the well-being of our communities.”
“This country needs an evidenced-based, rational approach to curbing gun violence,” said Josh Horwitz, Executive Director of the Educational Fund to Stop Gun Violence. “While it is common to suggest that guns should be kept out of the hands of the ‘mentally ill,’ that category is too vague to be effective and can wrongly stigmatize a group of individuals who are in fact no more likely to be violent than the rest of us. The Consortium’s recommendations will save lives because they are tailored to remove firearms from those most at risk for future violence.”The Consortium’s epidemiological research identified behaviors associated with an increased risk of future violence, including – among others – prior acts of violence, threats of violence, and a history of substance and/or alcohol abuse.
“The evidence is strong: The recommended policy reforms can prevent gun violence here in Wisconsin,” said Jeri Bonavia, Executive Director of WAVE Educational Fund. “But the only way we will actually save lives is if we move these recommendations from paper to practice – a goal we believe every elected official in our state should embrace.”
Friday’s panel is open to media, and coverage is welcome. Interview opportunities with panelists and hosts are available ahead of time, as well as on the day of the event.Kentucky Man Sentenced to 12.5 Years in Prison for A String of Bank Robberies in Minnesota and Two Other StatesRead the Press Release
United States Attorney Andrew M. Luger today announced the sentencing of GEORGE RICHARD GAUNT, 26, to 150 months in federal prison for robbing banks in three states, including Virginia, Iowa, and Minnesota. GAUNT was charged with one count of Bank Robbery in the District of Minnesota, one count of Bank Robbery in the Northern District of Iowa, and two counts of Bank Robbery in the Western District of Virginia. GAUNT pleaded guilty to all charges on April 7, 2014, in United States District Court in St. Paul, Minn. He was sentenced on November 5, 2014.
“This case is the result of successful efforts by multiple law enforcement agencies and federal prosecutors across three districts,” said Assistant U.S. Attorney Katharine Buzicky. “Working together, law enforcement officers apprehended a defendant who committed violent crimes across the country.”
According to the indictment and documents filed in court, in the fall of 2013, GAUNT disappeared from a halfway house in Kentucky and went on a bank robbery spree in Virginia, Iowa, and Minnesota. During each of the four bank robberies, GAUNT intimidated bank employees using a black BB gun that was designed to look exactly like a handgun. The defendant also passed to tellers violent and threatening notes. GAUNT handed a bank teller in Center Point, Iowa, a note that read, “I have a gun Give me $ No dye, trackers, or alarms I’ll kill everyone!”
According to documents filed in court, on October 15, 2013, GAUNT robbed a bank in Eagle Lake, Minnesota, using a BB gun and passing a threatening note that read, “I have a gun, this is no joke, I will kill you! Act normal, no alarms, trackers, or dye packs. PS this aint my first bank. So don’t make me kill again.” Later that day, law enforcement agents apprehended GAUNT with a BB gun and a bag with approximately $7,472 in cash that he had taken from the bank in Eagle Lake, Minnesota.
This case is the result of an investigation by the Federal Bureau of Investigation, the Augusta County Sheriff’s Office and the Henry County Sheriff’s Office in Virginia, the Linn County Sheriff’s Office in Iowa, the Minnesota State Patrol, the Eagle Lake Police Department, the Blue Earth County Sheriff’s Office and the Waseca County Sheriff’s Office in Minnesota.
This case was prosecuted by Assistant U.S. Attorney Katharine T. Buzicky.
Defendant Information: GEORGE RICHARD GAUNT, 26
Louisville, KY
Convicted: • Bank Robbery, 4 counts
Sentenced: • 150 months in prison###
Jackson, Mississippi, Man Sentenced to 24 Months in Prison for the Attempted Online Extortion of the University of Louisville Athletic AssociationRead the Press Release
LOUISVILLE, Ky. – A Jackson, Mississippi, man was sentenced to 24 months in prison by Chief Judge Joseph H. McKinley Jr, in United States District Court Monday, November 3, 2014, following his conviction for the attempted online extortion of the University of Louisville Athletic Association, announced David J. Hale, United States Attorney for the Western District of Kentucky.
Thomas E. Ray, age 36, of Jackson Mississippi was convicted of a single count of extortion, by means of threatening communication, by a federal jury in Louisville, on August 13, 2014. The jury deliberated less than two hours before reaching a guilty verdict.
According to evidence presented at trial, Ray used the alias “Melinda White” when he knowingly sent an email communication from his home in Jackson, to the Commonwealth of Kentucky, on April 23, 2013. Ray’s email was sent to two University of Louisville employees with a threat to injure the reputation of the University of Louisville Athletic Association and a demand for $3.5 million.
Ray was indicted by a federal grand jury in Louisville, on October 16, 2013. The indictment was unsealed on October 24, 2013, following Ray’s arrest in Mississippi, by the U.S. Marshal Service.
Ray faced no more than two years in prison, a maximum fine of $250,000 and a one year period of supervised release.
This case was prosecuted by Assistant United States Attorney A. Spencer McKiness and was investigated by the Federal Bureau of Investigation (FBI), Louisville Metro Police Department, and Office of the Kentucky Attorney General.
Hurricane Man Pleads Guilty to Drug, Firearm Charges; Plea Agreement Includes Recommended 144-Month SentenceRead the Press Release
ST. GEORGE, UT - A Feb. 3, 2015, sentencing date has been set for Chad Eugene Devaughn, age 42, of Hurricane, Utah, after he entered guilty pleas to possession of methamphetamine with intent to distribute and possession of a firearm in furtherance of a drug trafficking offense in federal court in St. George earlier this week. Devaughn was charged in a Felony Information filed Oct. 28, 2014.
The plea agreement includes a stipulated sentence of 144 months, which is subject to court approval. As a part of the plea agreement, Devaughn also agreed to forfeit property acquired from or traceable to his criminal offenses and any property that was used to facilitate his criminal conduct, including $4,500 in currency; eight firearms; and magazines and ammunition in various calibers seized with the firearms. Several of the firearms were confirmed stolen, federal prosecutors said.
U.S. District Judge Ted Stewart will impose a sentence in the case at 10:30 a.m. Feb. 3, 2015, in federal court in St. George.
As a part of the plea agreement, Devaughn stipulated that on about Aug. 26, 2014, he possessed methamphetamine with the intent to distribute it. Washington County Drug Task Force officers and agents executing a search warrant at his residence recovered approximately 220 grams of methamphetamine. He also admitted that he possessed firearms, including a Kel Tec 9mm caliber handgun, in furtherance of the drug trafficking offense. Law enforcement officers recovered the firearms and methamphetamine from his residence.
Honduran Man, Jason Guzman-urquia, Charged with Immigration OffenseRead the Press Release
U.S. Attorney Kenneth A. Polite announced that JASON GUZMAN-URQUIA, age 36, a native of Honduras, was indicted today by a federal grand jury for reentering the United States without permission, after previously having been deported.
According to court documents, on August 2, 2007, GUZMAN-URQUIA was previously removed from the United States. On October 22, 2014, GUZMAN-URQUIA was found in the Eastern District of Louisiana and had not received permission from the Attorney General of the United States or the Secretary of the Department of Homeland Security to reenter.
If convicted, GUZMAN-URQUIA faces a maximum term of two years imprisonment, as well as a fine of $250,000.
U.S. Attorney Polite reiterated that the indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of the Immigration and Customs Enforcement in investigating this matter. Assistant United States Attorney Jon Maestri is in charge of the prosecution.
(Download Indictment )
Harold Henthorn Arrested for First Degree Murder Related to Death of Wife at Rocky Mountain National ParkRead the Press Release
DENVER – Harold Henthorn, age 58, of Highlands Ranch, Colorado, was arrested without incident this morning by Special Agents with the National Park Service (NPS) and the Federal Bureau of Investigation (FBI), with substantial support from the Douglas County Sheriff’s Office, following his indictment on First Degree Murder, the agencies announced. The indictment was returned by a federal grand jury in Denver yesterday, November 5, 2014. Henthorn is scheduled to make his initial appearance before U.S. Magistrate Judge Kathleen M. Tafoya at 2:00 p.m. today, where he will be advised of his rights and the charges pending against him.
According to the indictment, on or about September 29, 2012, in the State and District of Colorado, and within the jurisdiction of the United States, namely the Rocky Mountain National Park, Henthorn willfully, deliberately, maliciously, and with premeditation and malice aforethought did unlawfully kill his wife, Toni Henthorn.
If convicted, Henthorn faces a mandatory term of life in federal prison without the possibility of parole, as well as a fine of up to a $250,000.
“The indictment charges Henthorn with the first degree murder of his wife in Rocky Mountain National Park,” said U.S. Attorney John Walsh. “The United States Attorney’s Office will work tirelessly with the National Park Service and the FBI to ensure that justice is done for the victim and her family.”
“The National Park Service is always concerned for the protection of our visitors,” said Mark Magnuson, Rocky Mountain National Park Chief Ranger. “When a violent crime such as this occurs in a national park, one of our nation’s most treasured places, we work hard to ensure that those responsible are held accountable and the victim and the victim’s family are afforded justice. In this case, we will continue to work closely with the FBI and the U.S. Attorney’s Office toward a just resolution.”
“Working with our partners from Douglas County and the National Park Service, FBI agents took Henthorn into custody this morning,” said FBI Denver Division Special Agent in Charge Thomas Ravenelle. “As with all defendants, Henthorn will now be afforded his day in court after an extensive investigation.”
This case was investigated by the National Park Service and the Federal Bureau of Investigation. The Douglas County Sheriff’s Office provided assistance during the investigation and arrest.
The charge in the indictment is an allegation, and the defendant is presumed innocent unless and until proven guilty.
Georgia Woman Sentenced for Role in Nigerian "Mystery Shopper" ScamRead the Press Release
PITTSBURGH - A resident of Lilburn, Georgia, has been sentenced in federal court to three years probation, the first eight months of which shall be served in home detention; restitution in the total amount of $47,815.15 and special assessment of $100 on her conviction of fraud conspiracy, United States Attorney David J. Hickton announced today.
United States District Judge Cathy Bissoon imposed the sentence on Monica Mason, 49.
According to the information presented to the court, Mason was involved in a Nigerian "Mystery Shopper" scam whereby her coconspirator Shawn Foote knowingly prepared and addressed fraudulent mail containing counterfeit instruments to victims, who believed they were acting as mystery shoppers. The victims unwittingly received the counterfeit commercial and Postal money orders and checks and cashed them to make small purchases for purposes of evaluating the commercial services provided. They then wire transferred excess funds back to Mason, Foote, and others. After these transactions, the money orders and checks were returned as counterfeit by the victims’ banks and they were left to repay the bank from their own funds.
Assistant United States Attorney Paul E. Hull prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the United States Postal Inspection Service and Homeland Security Investigations for the successful prosecution of Mason.
Georgia Couple Arraigned on Federal Methamphetamine ChargesRead the Press Release
Defendants Allegedly Conspired to Manufacture and Distribute Meth in
Clinton CountyPLATTSBURGH, NEW YORK – Billy Slick and Danielle Trombly Slick appeared in federal court in Plattsburgh, NY this morning and pleaded not guilty to charges related to the manufacture and distribution of methamphetamine, announced United States Attorney Richard S. Hartunian, Drug Enforcement Administration Special Agent in Charge James J. Hunt, and New York State Police Troop B Headquarters Bureau of Criminal Investigations Captain Robert S. LaFountain. The two-count indictment alleges that they conspired to manufacture, to possess with intent to distribute, and to distribute 50 grams or more of methamphetamine in Clinton County and elsewhere from approximately 2011 through June 2013. The indictment also charges Billy Slick with possession of methamphetamine with intent to distribute it. The defendants were detained pending trial, which is currently scheduled for January 5, 2014, in Syracuse, NY.
United States Attorney Richard Hartunian said, “The scourge of drugs like methamphetamine is devastating to individuals, their families and our neighborhoods. We continue to do everything possible to keep these drugs out of our communities. I commend the collaborative law enforcement efforts in this case.”
“Not only did law enforcement locate, arrest and bring back Mr. and Mrs. Slick to New York to face drug charges, they identified how the couple used the one-pot method to produce and distribute methamphetamine throughout the North Country,” stated DEA Special Agent in Charge James J. Hunt. “Simply put- methamphetamine use and production result in explosions, fires, hazardous waste, addiction and associated crimes. I would like to thank our federal, state and local law enforcement partners whose relentless efforts led to their arrest, extradition and arraignment.”
New York State Police Captain Robert LaFountain said, “The New York State Police extends our sincere gratitude to United States Attorney Richard Hartunian and our law enforcement partners for their efforts in this investigation. The Slicks' criminal manufacturing and distribution of methamphetamine in Clinton County resulted in numerous area residents becoming addicted to this devastating drug. This will hopefully send a clear message to drug dealers that law enforcement will work diligently to investigate and apprehend those that engage in this criminal behavior.” If convicted of Count 1, the conspiracy charge, the maximum penalties the Slicks each face include: a mandatory minimum term of imprisonment of 5 years; a maximum term of imprisonment of 20 years; a fine of $5,000,000; and up to lifetime supervised release. If convicted of Count 2, possession with the intent to distribute, the maximum penalties Billy Slick faces include: a term of imprisonment of 20 years; a $1,000,000 fine, and lifetime supervised release.
The case is being investigated by the Drug Enforcement Administration, New York State Police, the High Intensity Drug Trafficking Areas Program of New York and New Jersey, the Plattsburgh Police Department, the Clinton County District Attorney’s Office, and the Essex County District Attorney’s Office. Assistant United States Attorney Katherine Kopita is prosecuting the case.
All charges are merely accusations and all defendants are presumed innocent unless and until proven guilty in a court of law.
Ft. Lauderdale, Florida - Man Sentenced to Five Years Imprisonment, to be Followed by Three Years of Supervised Release. He was Ordered to Pay a Fine of $250,000 and Restitution of $8,204,328.49Read the Press Release
SYRACUSE, NEW YORK - United States Attorney Richard S. Hartunian announced today the sentencing of Walid Osmond Turk.
Turk, 41, formerly of Ft. Lauderdale, Florida, had pled guilty on April 30, 2014 to Conspiracy to Traffic in Counterfeit Goods. From 2003 through 2008, Turk imported millions of dollars worth of counterfeit exercise equipment from China which he sold on the internet representing it as genuine from such manufacturers as Nautilis, BowFlex and Fitness Quest. He had been an international fugitive since his indictment in May 2009. He surrendered to United States authorities in April 2014.
On November 5, 2014, Turk was sentenced to five years imprisonment, to be followed by three years of supervised release. He was ordered to pay a fine of $250,000 and restitution of $8,204,328.49.
The case was investigated by the United States Secret Service, Homeland Security Investigations and the United States Postal Inspection Service.
The case was prosecuted by Assistant United States Attorney Edward R. Broton
Freeland Man Sentenced to Prison for His Role in Drug Trafficking ConspiracyRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that a 34-year-old Freeland resident was sentenced yesterday to 37 months in prison by U.S. District Court Judge Robert D. Mariani for his role in a drug trafficking conspiracy that operated in Monroe and Berks Counties during 2010 to 2013.
According to United States Attorney Peter Smith, the defendant, Arnando Diaz-DeJesus, previously pleaded guilty to conspiracy to distribute heroin, cocaine, cocaine base (“crack”), and Oxycodone.
Diaz-DeJesus was indicted by a federal grand jury sitting in Scranton in June 2013, as a result of an investigation by the Drug Enforcement Administration, Department of Homeland Security (DHS), Homeland Security Investigations (HSI), the Pennsylvania State Police, the Pennsylvania Attorney General’s Office, and Berks County Detectives.
Judge Mariani also ordered that Diaz-DeJesus spend three years on supervised release following his prison sentence and pay a $100 special assessment.
The case was prosecuted by Assistant U.S. Attorney Francis P. Sempa.
Founder of Bankrupt O.C. Real Estate Investment Firm Pleads Guilty in Fraud Scheme That Resulted in $110+ Million BankruptcyRead the Press Release
SANTA ANA, California – One of the owners of a now-defunct Southern California real estate investment firm pleaded guilty today to perpetrating a fraudulent scheme that ended with the bankruptcy of the company, in which investors and banks collectively lost more than $110 million.
John Packard, 64, of Long Beach, pleaded guilty to one count of mail fraud before United States District Judge Cormac J. Carney.
During today’s hearing, Packard admitted bilking investors in Pacific Property Assets (PPA), which had offices in Long Beach and Irvine. Packard and his co-defendant, Phoenix resident Michael J. Stewart, created PPA in 1999 to purchase, renovate, operate and resell or refinance apartment complexes in Southern California and Arizona. Typically, PPA financed property acquisitions through mortgages, and it raised money from private investors to pay for renovations to the properties. After several years, PPA would usually refinance (or sometimes sell) each property.
Although PPA’s apartment rental operations were not profitable, it was able to raise cash through refinancing and selling properties. As real estate values were generally increasing until approximately 2007, the properties were refinanced at ever-higher values, which enabled PPA to use the extra refinancing proceeds to not only pay off the original mortgages, but also to make payments on other loans, make payments to investors, and to pay Stewart and Packard. In its 10 years of operations, PPA acquired more than 100 real estate properties and raised tens of millions of dollars from hundreds of investors.
By the end of 2007, when the real estate market began to decline and credit became scarce, PPA’s business model was no longer feasible. To keep PPA afloat, from late 2007 through April 2009, Stewart admitted today that he and Packard continued to raise tens of millions of dollars from new investors. The defendants used those new funds to pay earlier investors, mortgage lenders, other company expenses, and Stewart and Packard themselves. Packard admitted that by October 2008, he and Stewart knew that PPA was dependent on these investor loans to make its monthly debt payments and continue operating, and was unable to raise money through other means.
Packard also admitted that during the course of this continued fundraising effort, Stewart – with Packard’s knowledge and consent – misrepresented PPA’s financial condition, claiming that its business model was still working, and that PPA was still financially stable and able to raise money through refinancing. Stewart and Packard concealed from investors the fact that the business had effectively become a Ponzi scheme, using new investors’ funds to pay back earlier investors. Moreover, following PPA’s final investor offering in 2009, virtually none of the investors’ approximately $9.23 million in funds were used to invest in new property purchases, as had been promised to investors; instead, the money was used to pay earlier investors and banks, to pay Stewart and Packard, and to pay PPA’s bankruptcy attorney.
PPA and a group of related companies filed for bankruptcy in June 2009. When the bankruptcy was filed, PPA owed 647 private investors more than $91 million, and it owed banks approximately $100 million. In the bankruptcy proceedings, the private investors received nothing, while banks lost an estimated $24 million.
Packard faces a statutory maximum sentence of 20 years in federal prison when he is sentenced by Judge Carney on May 18, 2015.
Stewart is scheduled to go on trial on April 14, 2015.
The investigation in this case was conducted by the Federal Bureau of Investigation, which received assistance from the United States Trustee’s Office.
Release No. 14-146
Former Studio Money Man Sentenced to Federal Prison for EmbezzlementRead the Press Release
LOS ANGELES – A former finance manager of a television production studio was sentenced this morning to two years in federal prison for embezzling approximately $2.5 million from the Culver City company.
Nolan Mitchell Ransdell, 41, of Canyon Country, was sentenced by United States District Judge George Wu. In addition to the prison term, Judge Wu ordered Ransdell to pay $2,458,589 in restitution.
Ransdell previously pleaded guilty to bank fraud and admitted that he stole money from his employer, Studio Lambert USA, which is now known as All3Media America. Ransdell embezzled the money in several ways, including forging an executive’s signature on checks Ransdell had made out to himself. Ransdell also took checks that the executive had pre-signed for “emergency” use and made himself the payee. In addition, Ransdell made checks payable to a subordinate, and then instructed that employee to cash the checks and return the money to him. Ransdell also made unauthorized cash withdrawals from Studio Lambert’s bank accounts.
Studio Lambert USA, a subsidiary of a British studio, produced television shows for distribution in the United States, including Undercover Boss. Studio Lambert’s parent company noticed that the accounting for the production accounts was not consistent with the accounting for the corporate accounts. When asked to explain the differences, Ransdell made up excuses, for instance, saying that discrepancies were the result of payment delays in connection with prepaid debit cards. Once it realized it was the victim of embezzlement, Studio Lambert contacted the FBI and assisted in the investigation.
The case against Ransdell is the result of an investigation by the Federal Bureau of Investigation.
Release No. 14-145
Former PA Turnpike Commission Employee Sentenced to 200 Months in Prison for Producing Child PornographyRead the Press Release
PITTSBURGH - A Fayette County resident was sentenced on Nov. 5, 2014, in federal court to 200 months imprisonment, to be followed by 15 years supervised release, on her conviction of production of material depicting the sexual exploitation of a minor, United States Attorney David J. Hickton announced today.
United States District Judge Nora Barry Fischer imposed the sentence on Lisa A. Renze, 49, of Uniontown, Pa.
According to information presented to the court, on Jan. 30, 2010, Renze used and coerced a 12-year-old minor female to engage in sexually explicit conduct for the purpose of producing digital photographs of the conduct. The sexually explicit digital photographs taken on Jan. 30, 2010, and other occasions between 2009 and 2011, were then distributed by Renze to her friend and Pennsylvania Turnpike Commission co-worker, John Longo. Longo entered a guilty plea to a similar charge of production of child pornography on Aug. 28, 2014. The sentencing for John Longo is scheduled for Jan. 22, 2015. Longo has been detained pending that sentencing proceeding.
The defendant was remanded to the Bureau of Prisons.
Assistant United States Attorney Carolyn J. Bloch prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the United States Department of Homeland Security, Immigration and Customs Enforcement, and the Pennsylvania State Police for the investigation leading to the successful prosecution of Renze.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Former New York State Inspector Sentenced for Negligent Dangerment Under the Clean Air ActRead the Press Release
BUFFALO, N.Y. – U.S. Attorney William J. Hochul announced today that Theodore Lehmann, 67, Buffalo, NY, who was convicted of a misdemeanor charge of negligent endangerment under the Clean Air Act, was sentenced to one year probation by U.S. District Court Judge Richard J. Arcara.
“Today’s sentencing brings to an end the government’s investigation into this community health hazard,” said U.S. Attorney Hochul. “But let this case also serve as a warning to any other companies or individuals who deliberately harm our community or environment. Our Office stands ready to protect the public through vigorous enforcement of federal law.”
Assistant U. S. Attorney Aaron J. Mango, who is handling the case, stated that the defendant was employed by JMD Environmental, Inc. (JMD) as an air sampling technician and a project monitor, and was certified by the New York State Department of Health to conduct asbestos project monitor and air sampling duties. From June 9, 2009 to January 11, 2010, co-defendants Johnson Contracting of WNY, Inc. (Johnson Contracting), Ernest Johnson, and Rai Johnson, conducted asbestos abatement activities at six buildings at the Kensington Towers Apartment Complex in Buffalo. During the abatement process, co-defendant Rai Johnson created daily project logs to document the progress at Kensington Towers. The logs are documents required to be maintained under the Clean Air Act.
At the conclusion of the abatement for building B-2 by Johnson Contracting, Rai Johnson wrote in his daily project log that all material containing asbestos had been removed from the boiler room, when in truth, all asbestos had not been removed. Thereafter, on August 25, 2009, the defendant conducted a visual inspection of the boiler room at building B-2 and issued a satisfactory visual inspection, when in truth, the defendant was aware that all asbestos had not been removed. In doing so, the defendant acted as an accessory after the fact to the false statement made by the Johnson defendants.
This is the final defendant to be sentenced as part of the Kensington Towers asbestos abatement project. In addition to Ernest and Rai Johnson, other defendants who have been convicted include JMD project monitors Evan Harnden and Brian Scott; and current and former public officials responsible for certifying the project’s compliance with applicable laws and regulations, including Donald Grzebielucha and William Manuszewski.
The sentencing is the culmination of an investigation on the part of Special Agents of the U.S. Environmental Protection Agency - Criminal Investigation Division, under the direction of Special Agent-In-Charge, Vernesa Jones-Allen; Special Agents of the Federal Bureau of Investigation; Special Agents of the U.S. Department of Housing and Urban Development - Office of Inspector General, under the direction of Special Agent-In-Charge Christina D. Scaringi; and Investigators of the New York State Department of Environmental Conservation Police, BECI, under the direction of Captain Frank Lauricella. Additional assistance was provided by the New York State Department of Labor, Asbestos Control Bureau.Former Fresno Business CFO Charged with Embezzling and Money LaunderingRead the Press Release
FRESNO, Calif. — Anthony Lester, 51, of Fresno, was indicted today by a federal grand jury, charging him with mail fraud and money laundering, United States Attorney Benjamin B. Wagner announced.
According to court documents, Lester was the controller at Century Builders in Fresno, and later the Chief Financial Officer. During his employment, he had access to the financial accounts of another Fresno business, Highlands Energy Services. Between November 2010 and December 2011, Lester used this access to divert money from bank accounts and credit cards held by Highlands Energy Services into other financial accounts, including Lester’s own PayPal Inc. account. He attempted to conceal the embezzled funds by transferring them into his personal bank account. In total, Lester embezzled approximately $300,000 from Highlands Energy Services.
According to the indictment, employees of Highlands Energy Services and Century Builders questioned Lester about payments to some vendors because they were inconsistent with company practices. One of the questionable vendors was American Products, which was in fact a fictitious company invented by Lester to conceal his embezzlement. In response to such questions, Lester attempted to make it appear that American Products was a legitimate vendor. First, he visited a local supply company near Fresno claiming to be from “Valley Builders” (also a fictitious company). Then, he purchased weather stripping, dead bolts, spring hinges and thresholds. He packaged the goods for delivery to Highlands and labeled them as coming from American Products in New York. Then Lester sent the goods from a Fresno UPS facility.
This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Fresno Police Department. Assistant United States Attorney Patrick R. Delahunty is prosecuting the case.
If convicted of mail fraud, Lester faces a maximum penalty of 20 years in prison, a $250,000 fine, and three years of supervised release. If convicted of money laundering, he faces a maximum penalty of 20 years in prison, and a fine of $500,000 or twice the value of the property involved, whichever is greater, and three years of supervised release. Any sentence, however, would 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. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Former Corrections Supervisor Pleads Guilty to Charges of Sexual Assault of Female Inmates in His CustodyRead the Press Release
ALBUQUERQUE – John Greene, 70, a former captain at the Gallup-McKinley Adult Detention Center (GMADC), entered a guilty plea to charges related to the sexual assaults of female inmates in his custody. Greene pleaded guilty to three counts of violating each of the victim’s right to bodily integrity by engaging in sexual contact against their will. Greene also pleaded guilty to two counts of making material false statements to the FBI when he denied both touching the breasts of one female inmate and having personal contact with another female inmate.
According to court documents, Greene admitted that in his capacity as a captain at GMADC, he had regular access to female inmates when he accompanied them to court hearings, transported them to other facilities, and had them brought to his office. This regular access gave him the opportunity to engage in unwanted sexual contact with three different women in December 2008 and January 2009. Greene committed these acts, knowing it was wrong, against the law and without the victims’ consent, but he did so anyway for his own gratification.
Greene also admitted that he lied to the FBI about his conduct on two occasions.
Under the terms of the plea agreement, Greene will be sentenced to five years of probation. As part of the plea agreement, Greene will forfeit his law enforcement certification and must comply with sex offender registration requirements.
A sentencing hearing has not yet been set.
This case is being investigated by the Gallup Resident Agency of the Albuquerque Division of the FBI and is being prosecuted by Assistant U.S. Attorney Holland S. Kastrin for the District of New Mexico and Fara Gold of the Civil Rights Division of the U.S. Department of Justice.Final Conspirator Pleads Guilty in Scheme to Embezzle over $1 Million from Co-Conspirator’s EmployerRead the Press Release
Greenbelt, Maryland – Brian Hooper, age 42, of Woodbridge, Virginia, pleaded guilty today to conspiring to commit wire fraud in connection with a scheme to steal over $1 million from a consulting company.The plea agreement was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.
According to his plea agreement, co-defendant Janice McCumbie worked for a global consulting business that had offices in Maryland and elsewhere. Clients paid large retainers to secure consulting services. The consulting company would issue refund checks to the clients in certain circumstances, including when a client’s retainer exceeded the amount of work that the consulting company actually performed or when the client made duplicate payments to the consulting company. McCumbie’s duties included coordinating client refunds.
In 2008, Hooper introduced McCumbie to a co-conspirator, who was not a client of the consulting company. Between June and December 2008, McCumbie caused the consulting company to issue six fraudulent refund checks totaling $121,081.22 to the co-conspirator in exchange for a share of the check proceeds. The co-conspirator shared the proceeds from five of these fraudulent checks with Hooper and McCumbie.
In 2009, Hooper introduced McCumbie to defendant Leonard Smedley, who was also not a client of the consulting company. From February 2009 to October 2013, McCumbie caused the consulting company to issue 42 false refund checks totaling $910,490.74 to Smedley in exchange for Smedley sharing the check proceeds with Hooper and McCumbie.
Hooper has agreed to forfeit and pay restitution of $1,031,571.96, the loss resulting from his conduct.
Hooper faces a maximum sentence of 20 years in prison. U.S. District Judge George J. Hazel scheduled his sentencing for February 2, 2015, at 9:30 a.m.
Leonard Smedley II, age 35, of Capitol Heights, Maryland; Amber Gayleard, age 29, of Schuylkillhaven, Pennsylvania; and Janice McCumbie, age 45, of Marydel, Maryland; previously pleaded guilty to the conspiracy and are scheduled to be sentenced on January 15, 20 and 27, 2015, respectively.
United States Attorney Rod J. Rosenstein praised the FBI for its work in the investigation and thanked Assistant United States Attorneys Leah Jo Bressack and David Salem, who are prosecuting the case.
Federal Grand Jury Criminal Indictments AnnouncedRead the Press Release
TULSA, Okla. — The results of the November 2014 Federal Grand Jury were announced today by Danny C. Williams Sr., United States Attorney for the Northern District of Oklahoma.
The following individuals have been charged with violations of United States law in indictments returned by the Grand Jury. The return of an indictment is a method of informing a defendant of alleged federal crimes which must be proven in a court of law beyond a reasonable doubt to overcome a defendant’s presumption of innocence.
Juan Carlos Andrado-Morillo. Alien in the United States After Deportation. Andrado-Morillo, 41, was arrested in Tulsa County and is charged with having returned to the United States unlawfully after being deported in November 2012 near Harlingen, Texas. If convicted, the statutory maximum penalty is 20 years in prison and a $250,000 fine. The U.S. Immigration and Customs Enforcement is the investigative agency.
Mary Elizabeth Beaty. Theft of Government Property. Beaty, 57, of Tulsa, is charged with stealing approximately $49,778.93 in Social Security Funds from December 2009 to August 2012. If convicted, the statutory maximum penalty is 10 years in prison and a $250,000 fine. Upon conviction, a criminal forfeiture money judgment would also be entered in the amount of $49,778.93. The Social Security Administration-Office of Inspector General is the investigative agency.
Tony D’Marco Cato. Felon in Possession of a Firearm and Ammunition, Possession of Marijuana with Intent to Distribute, and Possessing a Firearm in Furtherance of a Drug Trafficking Crime. Cato, 31, of Tulsa, is charged with possessing a .380 caliber pistol and ammunition after prior felony convictions. Cato is also charged with possessing marijuana with intent to distribute and possessing a firearm in furtherance of a drug trafficking crime. If convicted, the statutory maximum penalty is 10 years in prison and a $250,000 fine for being a felon in possession of a firearm and ammunition; up to five years in prison and a $250,000 fine for possession of marijuana with intent to distribute; and not less than five years in prison and up to life in prison, to run consecutively with any other term of imprisonment, and a $250,000 fine for possessing a firearm in furtherance of a drug trafficking crime. Upon conviction, Cato would also forfeit the pistol and ammunition. The Oklahoma Bureau of Narcotics and Dangerous Drugs is the investigative agency.
Juan Pablo Charre and Alejandro Cabrera Charre. Drug Conspiracy and Possession of Methamphetamine with Intent to Distribute. Juan Charre, 34, and Alejandro Charre, 23, both of Austin, Texas, are charged with conspiracy and possessing 500 grams or more of methamphetamine with intent to distribute. If convicted, the statutory maximum penalty for drug conspiracy and possession of methamphetamine with intent to distribute is not less than 10 years and up to life in prison, and a $10,000,000 fine. Upon conviction, a criminal forfeiture money judgment would also be entered in the amount of $46,000 and seized currency would be forfeited. The Drug Enforcement Administration and the Tulsa Police Department are the investigative agencies.
Isaias Gonzalez-Rosales. Alien in the United States After Deportation. Gonzalez-Rosales, 28, was arrested in Tulsa County and is charged with having returned to the United States unlawfully after being deported in September 2011 near Del Rio, Texas. If convicted, the statutory maximum penalty is 20 years in prison and a $250,000 fine. The U.S. Immigration and Customs Enforcement is the investigative agency.
Kari Ann Hunt. Embezzle, Steal, Purloin and Knowingly Convert Public Monies. Hunt, 39, of Ramona, Oklahoma, is charged with stealing on a recurring basis from April to July 2014, money and objects of value in excess of $1,000 belonging to the United States Postal Service. If convicted, the statutory maximum penalty would be not more than 10 years in prison and a $250,000 fine. The Office of Inspector General U.S. Postal Service is the investigative agency.
Teri Dean Maloney. Theft of Government Property. Maloney, 51, of Wyandotte, Oklahoma, is charged with stealing approximately $49,913 in Social Security Funds from January 2010 to June 2013. If convicted, the statutory maximum penalty is 10 years in prison and a fine up to $250,000. Upon conviction, a criminal forfeiture money judgment would also be entered in the amount of $49,913. The Social Security Administration-Office of Inspector General is the investigative agency.
Jesus Parra-Lopez. Alien in the United States After Deportation. Parra-Lopez, 37, was arrested in Tulsa County and is charged with having returned to the United States unlawfully after being deported in August 2013 near Laredo, Texas. If convicted, the statutory maximum penalty is 20 years in prison and a $250,000 fine. The U.S. Immigration and Customs Enforcement is the investigative agency.
Andrew Scott Pierson. Felon in Possession of Firearms. Pierson, 39, of Jay, Oklahoma, is charged with possessing firearms after prior felony convictions. If convicted, the statutory maximum sentence is not more than 10 years in prison and a $250,000 fine. The Bureau of Alcohol, Tobacco, Firearms and Explosives is the investigative agency.Timothy Jason Sumner. Failure to Register as a Sex Offender. Sumner, 30, is charged with failing to register as a sex offender as required under the Sex Offender Registration and Notification Act after a 2011 conviction. If convicted, the maximum statutory penalty would be 10 years in prison and a $250,000 fine. The U.S. Marshals Service is the investigative agency.
Ronald Dean Tiger. Failure to Register as a Sex Offender. Tiger, 47, is charged with failing to register as a sex offender as required under the Sex Offender Registration and Notification Act after a 2001 conviction. If convicted, the maximum statutory penalty would be 10 years in prison and a $250,000 fine. The U.S. Marshals Service is the investigative agency.
Tayler Marie Marvina Warren. Possession of Methamphetamine with Intent to Distribute and Possession of Firearms in Furtherance of a Drug Trafficking Crime. Warren, 23, of Vinita, Oklahoma, is charged with two counts of possessing methamphetamine with intent to distribute and two counts of possessing a firearm in furtherance of a drug trafficking crime. If convicted for possession of methamphetamine with intent to distribute, Warren faces a statutory maximum penalty of up to 20 years in prison and a $1,000,000 fine. The statutory minimum sentence for possession of firearm in furtherance of a drug trafficking crime is not less than 5 years in prison and a $250,000 fine. Upon conviction, Warren would also forfeit seized currency, the firearms, and ammunition. The Bureau of Indian Affairs and the Delaware County Sheriff are the investigative agencies.