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Thursday 11 September 2014
Two New Jersey Construction Employees Admit Tax Charges and Other Fraudulent SchemesRead the Press Release
TRENTON, N.J. – Two employees of related Parsippany, New Jersey,-based construction companies today admitted underreporting significant amounts of cash income on their tax returns, U.S. Attorney Paul J. Fishman announced.
Joseph Carsillo, 46, of East Hanover, New Jersey, pleaded guilty to an information charging him with one count of subscribing to a false personal federal income tax return for calendar year 2010, and one count of bankruptcy fraud. Carl J. Corso, 59, of Hamilton Township, New Jersey, pleaded guilty to an information charging him with one count of subscribing to a false personal federal income tax return in calendar year 2010, and one count of engaging in a mail fraud scheme to defraud the state of New Jersey with respect to unemployment compensation benefits.
The defendants were previously charged in separate complaints in November 2013. Both of the pleas were entered today before U.S. District Judge Michael A. Shipp in Trenton federal court. Charges against a third defendant, Frank Chimento, III, 46, of Verona, New Jersey, remain pending.
According to the documents filed in this case and statements in court:
Chimento Construction, Chimento Construction Services, and FAC Construction, were commingled companies specializing in commercial masonry and concrete work (the “Chimento Companies”). From 2008 through 2011, the Chimento Companies’ primary construction job was the Palmer Square project in Princeton, New Jersey. Chimento Companies operated a cash payroll for a significant portion of the wages paid to employees during the period 2006 through 2011.
Carsillo started working for the Chimento Companies in 2007 and was the project superintendent at Palmer Square. He admitted that he received cash wages from the Chimento Companies of $66,865 in 2010, which he failed to include on his tax return. He also admitted in court that he failed to include cash wages of $58,161 on his 2009 return and $42,440 on his 2011 return.
Carsillo also admitted that he made false statements at a bankruptcy hearing on April 28, 2011, regarding his combined current monthly income and his monthly gross wages for the prior six-month period.Corso started working for the Chimento Companies on Aug. 12, 2009 and worked through 2011. In addition to payroll checks, Corso requested and received cash wages from the Chimento Companies. He disclosed to his return preparer only the wages he received by payroll check and deliberately omitted the cash payments and certain supplemental paychecks from his personal tax returns despite knowing that these payments should have been included on these returns.
Corso received unreported cash income of $52,780 in 2010, as well as unreported income of $10,074 in 2009, and $34,492 in 2011.
Corso further admitted that on Nov. 1, 2009, he falsely advised the N.J. Department of Labor and Workforce Development that he was no longer working and reactivated an earlier application for unemployment benefits. He collected $19,988 in unemployment benefit checks through the U.S. mail.
As part of their guilty pleas, the two defendants agreed to make full restitution to the IRS for all losses resulting from the filing of false tax returns. Corso agreed to make restitution to the NJDOL-WD with regard to his fraudulent unemployment compensation claim.The charge of subscribing to a false tax return is punishable by a maximum potential penalty of three years in prison; the charge of mail fraud is punishable by a maximum potential penalty of twenty years in prison; and the charge of bankruptcy fraud is punishable by a maximum potential penalty of five years in prison. All charges are punishable by a maximum $250,000 fine. Sentencing for both defendants is scheduled for Dec. 18, 2014.
U.S. Attorney Fishman praised the special agents of the U.S. Department of Labor, Office of Inspector General, under the direction of Special Agent in Charge Cheryl Garcia New York Regional Office; and special agents of IRS-Criminal Investigation, under the leadership of Acting Special Agent in Charge Jonathan D. Larsen; for investigation leading to today’s guilty pleas. He also thanked the N.J. Department of Labor and Workforce Development, under the leadership of Commissioner Harold J. Wirths, for its assistance in the investigation.The government is represented by Senior Litigation Counsel Leslie Faye Schwartz of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
The charges and allegations in the complaint against Chimento are merely accusations, and he remains innocent unless and until proven guilty.
14-321Defense counsel:
Carsillo: Lorraine S. Gauli-Rufo Esq., Assistant Federal Public Defender, Newark
Corso: Lisa Mack Esq., Assistant Federal Public Defender, NewarkCarsillo, Joseph Information
Corso, Carl InformationTwo More Guilty Pleas Entered in Vallejo-Based Drug Trafficking IndictmentsRead the Press Release
SACRAMENTO, Calif. — Andre Cawthorne, 40, of Vallejo, and Eileen Knight, 43, of Los Angeles, entered guilty pleas to drug trafficking charges arising out of a wide-ranging investigation into the distribution MDMA, popularly known as the drug “Ecstasy,” crack cocaine, heroin, Oxycodone, and marijuana in the Vallejo area, United States Attorney Benjamin B. Wagner announced.
According to court documents, the DEA-led investigation uncovered a network of drug distributors working in the “Crest” neighborhood of Vallejo along with individuals transporting large quantities of drugs outside of California to realize a larger profit. A number of the participants, including Major Norton and Gaylord Franklin, performed as rappers under the entertainment label known as “Thizz Entertainment.” In many of songs by artists on the Thizz Entertainment label, the lyrics glorify and promote the use and distribution of MDMA pills. In April 2012, agents arrested a total of 25 individuals in Vallejo, Stockton, Fairfield, Oakland, Los Angeles, New York, and Oklahoma City. During the investigation, agents seized approximately 45,000 MDMA pills, four pounds of crack cocaine, two pounds of heroin, and $200,000 in suspected drug proceeds. Agents also forfeited 230 acres of property valued at approximately $1 million as part of the investigation. Agents also seized a 2010 Audi A6 with an estimated value of $60,000.
Cawthorne and Knight are scheduled to be sentenced on December 11, 2014. Cawthorne faces a maximum statutory sentence of four years in prison and a $250,000 fine. Knight face a maximum statutory penalty of 20 years in prison and a $1 million fine. The actual sentences, 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.
Other defendants indicted in this investigation have recently entered guilty pleas:
Michael Lott, 50, pleaded guilty to conspiracy to distribute MDMA and crack cocaine;
Major Norton, 39, pleaded guilty to conspiracy to distribute MDMA;
Gaylord Franklin, 34, pleaded guilty to conspiracy to distribute MDMA;
Dante Barbarin, 43, pleaded guilty to using a phone to facilitate drug dealing;
Clifford Bullock, 37, pleaded guilty to conspiracy to distribute marijuana;
Ung Duong, 48, pleaded guilty to conspiracy to distribute MDMA;
Phat Nguyen, 43, pleaded guilty to conspiracy to distribute MDMA;
Narco McFarland, 46, pleaded guilty to using a phone to facilitate drug trafficking;
Damian Peterson, 37 pleaded guilty to using a phone to facilitate drug trafficking; and
Mikel Brown, 51 pleaded guilty to using a phone to facilitate drug trafficking.This case is the product of an investigation by the DEA Sacramento District Office, the Vallejo Police Department, El Dorado County Sheriff’s Office, and the Sacramento FBI Safe Streets Task Force. Assistant United States Attorney Jason Hitt is prosecuting the two related cases. It was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF Program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
Two Area Men Sentenced for Growing Marijuana on Federal Land in Highland CountyRead the Press Release
CHARLOTTESVILLE, VIRGINIA – A pair of men, previously convicted of operating one of the largest marijuana grow operations encountered in the area, were sentenced yesterday afternoon in the United States District Court for the Western District of Virginia in Charlottesville.
Joaquin Gonzalez Vicencio, 30, and Joaquin Berumen Cortes, 24, both Mexican citizens who had been living locally in Harrisonburg, Va., were convicted of four counts related to a conspiracy to grow marijuana within the George Washington and Jefferson National Forests in Highland County following a three-day jury trial in December 2013. Cortes was also convicted of illegally reentering the United States. Yesterday District Court, Vicencio was sentenced to 134 months of federal incarceration to be followed by five years of supervised release. Cortes was sentenced to 120 months of federal incarceration to be followed by five years of supervised release.
“The misuse of federal land to cultivate marijuana remains an enforcement priority of the Department of Justice,” United States Attorney Timothy J. Heaphy said today. “These defendants operated one of the largest outdoor marijuana growing sites we have encountered in this or many other districts, conduct for which they have now been held accountable.”
According to evidence presented at trial by Assistant United States Attorney Elizabeth G. Wright, Cortes and Vicencio conspired together to grow at least 4,571 marijuana plants in the George Washington and Jefferson National Forests in Highland County until they were caught on July 2, 2013. Both defendants planted and cultivated the marijuana plants, which were contained in four gardens that were connected by footpaths. Cortes and Vicencio resided in a camp at the grow site and routinely used fertilizer, insecticides, pesticides and rat poison around the area to protect their crop.
The investigation of the case was conducted by the U.S. Forest Service and the Alleghany Highlands Drug Task Force, with assistance from the Drug Enforcement Administration. The Alleghany Highlands Drug Task Force includes officers from the counties of Alleghany, Highland and Bath, as well as the City of Covington and the Virginia State Police. Assistant United States Attorney Elizabeth G. Wright prosecuted the case for the United States.
Three More Sentenced for Theft from Union FundRead the Press Release
Orlando, Florida – Senior U.S. District Judge G. Kendall Sharp sentenced three individuals yesterday for their roles in stealing from an employee benefit plan of a local union. Two of the individuals, Brandon Alfonso (28, Orange City) and Marta Blackmer (71, Orange City) previously pleaded guilty. Alfonso was sentenced to three years in federal prison and ordered to pay $109,497.82 in restitution. Blackmer was sentenced to three months in federal prison and ordered to pay $106,291.14 in restitution. A third individual, Phillip Simmons (50, Orange City), was convicted by a federal jury on June 3, 2014. He was sentenced to 18 months in federal prison and ordered to pay $44,194.15 in restitution.
According to court documents, Angela Deleon worked at Advance Administration, Inc. (AAI), which was the third-party administrator of an employee benefit plan for the Ironworkers Local 808. As the third-party administrator for the Ironworkers Local 808 Annuity Fund, AAI was responsible for processing members’ payment applications, paying the Fund’s bills, and speaking with union members. Deleon’s duties at AAI included data entry and the processing of payments.
Over a period of about 14 months, Deleon wrote 46 checks from the Fund, totaling more than $427,000, to individuals who were not members of the Local 808 or participants in the Fund, including the individuals sentenced today. Alfonso, Simmons, and Blackmer cashed some of those checks and split some of the proceeds with Deleon.
In total, ten individuals have been charged in connection with this case. Six were previously sentenced. James McCall (32, Orange City) was sentenced to two years and six months in federal prison and ordered to pay $93,405.89 in restitution. Angela Deleon (50, Winter Springs) was sentenced to two years in federal prison and ordered to pay $594,000 in restitution. Ian Chase Dove (26, Orange City) and Jason Wesson (37, Orange City) were each sentenced to 13 months in federal prison. Dove was ordered to pay $18,662.70 in restitution and Wesson was ordered to pay $19,975.32 in restitution. Michael Giesinger (36, Deltona) was sentenced to one year of probation, six months of home confinement, and was ordered to pay $20,009.62 in restitution. Shane Riley (32, Deland) was sentenced to three years of probation and ordered to pay $18,374.64 in restitution.
Jason Ferrari (33, Orange City) pleaded guilty on July 23, 2014, to theft from an employee benefit plan. His sentencing is set for September 24, 2014. Ferrari faces a maximum penalty of five years in federal prison.
“Theft of employee benefit assets jeopardizes the benefits of workers. This case reaffirms the Labor Department’s commitment to protect workers’ benefits by identifying criminal activity wherever and whenever it occurs,” said Isabel Colon, Regional Director of Employee Benefits Security Administration’s Atlanta Regional Office and Miami District Office.
These cases were investigated by the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, and the U.S. Department of Labor’s Employee Benefits Security Administration. They are being prosecuted by Assistant United States Attorney Roger B. Handberg.
Statement by the U.S. Department of Justice and the Office of the Director of National Intelligence on the Declassification of Documents Related to the Protect America Act LitigationRead the Press Release
On January 15, 2009, the U.S. Foreign Intelligence Surveillance Court of Review (FISC-R) published an unclassified version of its opinion in In Re: Directives Pursuant to Section 105B of the Foreign Intelligence Surveillance Act, 551 F.3d 1004 (Foreign Intel. Surv. Ct. Rev. 2008). The classified version of the opinion was issued on August 22, 2008, following a challenge by Yahoo! Inc. (Yahoo!) to directives issued under the Protect America Act of 2007 (PAA). Today, following a renewed declassification review, the Executive Branch is publicly releasing various documents from this litigation, including legal briefs and additional sections of the 2008 FISC-R opinion, with appropriate redactions to protect national security information. These documents are available at the website of the Office of the Director of National Intelligence (ODNI), www.dni.gov; and ODNI’s public website dedicated to fostering greater public visibility into the intelligence activities of the U.S. Government, IContheRecord.tumblr.com. A summary of the underlying litigation follows.
FISC Proceedings
In Re: Directives Pursuant to Section 105B of the Foreign Intelligence Surveillance Act involved a challenge by Yahoo! to directives issued by the Director of National Intelligence (DNI) and the Attorney General under the PAA. The PAA was the predecessor to the Foreign Intelligence Surveillance Act (FISA) Amendments Act of 2008 (FISA Amendments Act of 2008 or FAA). The directives issued to Yahoo! under the PAA required it to assist the U.S. Government in acquiring foreign intelligence information through the surveillance of targets reasonably believed to be located outside the United States. Yahoo! refused to comply with the directives, and the U.S. Government initiated proceedings in the FISC to compel compliance.
Yahoo! opposed the U.S. Government’s motion to compel compliance with the directives primarily on the ground that the directives violated the Fourth Amendment rights of its customers. On April 25, 2008, following extensive briefing by the parties, the FISC held that the directives were lawful and ordered Yahoo! to comply.
- The FISC held that there is a foreign intelligence exception to the warrant requirement, and that the exception applied to surveillance conducted pursuant to the directives, including surveillance targeting U.S. persons located outside the United States.
- The FISC held that the U.S. Government has sufficient procedures in place “to ensure that the Fourth Amendment rights of targeted U.S. persons are adequately protected and that the acquisition of foreign intelligence to be obtained through the directives issued to Yahoo!, as to these individuals, is reasonable under the Fourth Amendment.” It further held, based on prior case law and noting the applicable minimization procedures, that “any incidental acquisition of the communications of non-targeted persons located in the United States and of non-targeted U.S. persons, wherever they may be located, is also reasonable under the Fourth Amendment.”
Yahoo! then appealed to the FISC-R.
FISC-R Proceedings
On August 22, 2008, following briefings and oral argument, the FISC-R issued a classified opinion, affirming the FISC’s decision that the directives were lawful. In its decision, the FISC-R first held that Yahoo! had standing to challenge the directives based on the Fourth Amendment interests of its customers that Yahoo! was alleging. Turning to the merits of the case, the FISC-R rejected Yahoo!’s Fourth Amendment challenge to the directives.
- First, the FISC-R held that a traditional warrant was not required. Basing its opinion on a line of U.S. Supreme Court cases recognizing “special needs” exceptions to the Fourth Amendment’s warrant requirement, the FISC-R held that the U.S. Government’s collection of foreign intelligence information pursuant to the directives addressed a special need that justified an exception to the warrant requirement.
- Second, the FISC-R held that the surveillance at issue met the reasonableness requirement of the Fourth Amendment, in light of the national security interests at issue and the “matrix of safeguards” required by the PAA and implemented by multiple branches of the Government. Those safeguards included:
- Targeting procedures reviewed by the FISC and designed to ensure that the U.S. Government targets someone only if the Government has a valid foreign intelligence purpose and reasonably believes that person is located outside of the United States.
- Minimization procedures designed to limit the retention and dissemination of information about U.S. persons.
- Procedures that require the Attorney General to find, before the U.S. Government conducts surveillance of any U.S. person located outside the United States, that the targeted U.S. person is a foreign power or an agent of a foreign power. These procedures were not required by the PAA. Rather, the U.S. Government included them as a requirement in the certifications for the surveillance of U.S. persons located outside the United States, consistent with its practice since 1981 under Section 2.5 of Executive Order 12333.
No rehearing or further review in the U.S. Supreme Court was sought.
The FISA Amendments Act
The PAA expired in February 2008 and was ultimately replaced with the FISA Amendments Act of 2008, codified as Title VII of FISA. The FISA Amendments Act incorporates many of the provisions and procedures that the FISC-R found important to its holding that the U.S. Government’s surveillance was constitutional. The FISA Amendments Act also builds in additional safeguards that did not exist in the PAA. For example:
- The FISA Amendments Act goes beyond the PAA and imposed, for the first time, the requirement for a judicial finding that a U.S. person located outside the United States targeted for surveillance or search is a foreign power, agent of a foreign power, or officer or employee of a foreign power. This finding is made by the FISC under the FISA Amendments Act; as noted above, under the PAA and prior to the PAA this finding was made exclusively by the Attorney General.
- The FISA Amendments Act requires FISC approval of the targeting and minimization procedures. Under the PAA, the FISC reviewed only the targeting procedures.
The FISA Amendments Act, by requiring those and other safeguards, is even more protective of the Fourth Amendment rights of U.S. persons than the statute upheld by the FISC-R as constitutional.
Stamford Man Pleads Guilty to Defrauding Investment Clients of $191kRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that MICHAEL LOMBARDO, Jr., 38, of Stamford, waived his right to indictment and pleaded guilty today in Hartford federal court to one count of wire fraud in connection with a scheme to defraud more than 20 of his investment clients.
According to court documents and statements made in open court, LOMBARDO worked for David Lerner Associates, Inc., a Westport-based company that provided investment services. LOMBARDO provided financial advice to the company’s clients with respect to their retirement savings and other investments. From approximately September 2011 to February 2014, LOMBARDO defrauded more than 20 clients by diverting more than $190,000 in client funds for his personal use. As part of his scheme, LOMBARDO submitted fraudulent requests to disburse a portion of the retirement accounts of clients. LOMBARDO would request that a disbursement check be sent, typically by overnight mail, to him at his Westport office. After he received the check, he would forge the client’s signature on the back of the check and then cause the check to be deposited into his personal bank account.
LOMBARDO is scheduled to be sentenced by Senior U.S. District Judge Alfred V. Covello on December 4, 2014, at which time he faces a maximum term of imprisonment of 20 years and a fine of up to $250,000. As part of his plea agreement, LOMBARDO will be required to pay $191,068.73 in restitution.
This matter is being investigated by the Westport Police Department, the United States Secret Service and the Connecticut Financial Crimes Task Force. The case is being prosecuted by Assistant U.S. Attorney Ray Miller.PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]Spokane, Washington Man Sentenced to Five Years in Federal Prison for Receipt of Child Pornography ImagesRead the Press Release
SPOKANE, Wash. – Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Ryan Raymond Joseph Comerford, age 26, of Spokane, Washington, was sentenced today after having previously pleaded guilty on May 5, 2014 to Receipt of Child Pornography. United States District Court Judge Thomas Rice sentenced Comerford to a five year term of imprisonment, to be followed by a 20 year term of court supervision after he is released from Federal prison. In addition, Comerford was ordered to pay a $1,000 fine, forfeit his computers and digital storage media and will be required to register as a sex offender.
According to court records, between November 30, 2012 and February 19, 2013, Comerford used Peer to Peer file sharing software to distribute images of child pornography on the Internet. As a result of an online undercover investigation conducted by the United States Secret Service, on March 27, 2013 a federal search warrant was executed at a Spokane south hill residence where Comerford was living. Comerford’s computers and digital media were seized. On these devices a computer forensic examiner discovered in excess of 10,000 sexually explicit images and videos of minors, some under the age of 3 years.
Michael C. Ormsby said, “Prosecuting offenders who are collecting and distributing child pornography using Peer to Peer file sharing software is a priority of the United States Attorney’s Office in the Eastern District of Washington. This Office, together with its Federal and state law enforcement partners, is and will continue to be committed to prosecuting aggressively and seeking appropriate punishment for child pornography crimes.”
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the United States 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. The Project Safe Childhood Initiative (“PSC”) has five major components:
- Integrated federal, state, and local efforts to investigate and prosecute child exploitation cases, and to identify and rescue children;
- Participation of PSC partners in coordinated national initiatives;
- Increased federal enforcement in child pornography and enticement cases;
- Training of federal, state, and local law enforcement agents; and
- Community awareness and educational programs.
For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
This investigation was conducted by the United States Secret Service. The case was prosecuted by Stephanie J. Lister, an Assistant United States Attorney and PSC Coordinator for the Eastern District of Washington.CR-13-00145-TOR
South Hills Bookkeeper Pleads Guilty to Fraud ChargeRead the Press Release
PITTSBURGH – A resident of Allegheny County, Pennsylvania, pleaded guilty yesterday in federal court to a charge of wire fraud, United States Attorney David J. Hickton announced today.
Mary L. Schneir, 42, of Bethel Park, Pa., pleaded guilty to one count before United States District Judge Cathy Bissoon.
In connection with the guilty plea, the court was advised that Schneir was employed as the bookkeeper and office manager at Karna C. Goldsmith, C.P.A., an accounting firm located at Summerfield Commons Office Park, Suite 611, 2555 Washington Road, in Pittsburgh, Pa. Schneir devised and executed a fraud scheme during her tenure as an employee of Goldsmith, whereby she used funds of Goldsmith clients to make online payments to her personal credit card and mortgage accounts. To hide her activity, Schneir would regularly move money between the bank accounts of Goldsmith’s clients, to which she had access. Specifically, on Feb. 28, 2013, Schneir caused an electronic transfer of funds in the amount of $54,145.36, from the account of Cybergenetics Corporation, to an A.L. Brourman Associates, Inc., account maintained at Citizen’s Bank. At the time Schneir’s scheme was detected, Cybergenetics accounts were the only ones remaining affected. The total loss to the business was in excess of $270,000.
Judge Bissoon scheduled sentencing for Feb. 19, 2015, at 10 a.m. The law provides for a total sentence of 20 years in prison, a fine of $250,000.00, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Carolyn J. Bloch is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation and detectives of the Allegheny County District Attorney’s Office conducted the investigation that led to the prosecution of Schneir.
Sixteen Indicted in North Texas Bank Fraud ConspiracyRead the Press Release
Department of Justice
Office of Public AffairsSHERMAN, Texas - U.S. Attorney John M. Bales announced today that 16 individuals have been indicted on federal charges involving bank fraud and aggravated identity theft in the Eastern District of Texas.
Robert Aaron Green, Christopher Henry Cosby, Mallori Lee Moss, Wendi Lee Wren and Katherine Jones Reynolds made initial appearances today before U.S. Magistrate Judge Amos Mazzant on charges of conspiracy to commit bank fraud and aggravated identity theft. The defendants were named, along with 12 others, in a 76-count indictment returned by a federal grand jury on Aug. 13, 2014, charging them with federal violations that are alleged to have caused over $1.3 million in losses to banks. Those charged are:
- Robert Aaron Green, 27, of Lauderdale Lakes, FL
- Christopher Henry Cosby, 25, of Fort Lauderdale, FL
- Dianna Leigh Painton, 23, of Fort Lauderdale, FL
- Shelton Jerrod Green, 23, of Casselberry, FL
- Demetris Jerome Cunnigham, 28, of Fort Lauderdale, FL
- Mallori Lee Moss, 25, of Port Orange, FL, and Dallas, Texas
- Benny Lee Doe, Jr., 30, of Fort Lauderdale, FL
- Steven Taurus Green, 23, of Fort Lauderdale, FL
- Christina Lynn Gallo, 34, of Coral Springs, FL
- David Lee Brown, 26, of Fort Lauderdale, FL
- Johnthavias Keon Brown, 26, of Lauderhill, FL
- Kamesha Nycole Brown, 24, of Fort Lauderdale, FL
- Moses George Freelove, 23, of Fort Lauderdale, FL
- Wendi Lee Wrenn, 47, of Port Orange, FL
- Christian Dominique Scott, 28, of Dallas, Texas, and
- Katherine Jones Reynolds, 51, of Mesquite, Texas
According to the indictment, members of the conspiracy are alleged to have broken into vehicles at various locations such as public parks, daycare facilities, gyms and neighborhood pools, stealing purses, wallets, bank checks, bank cards, drivers’ licenses, and other personal identifying information. The defendants then transferred the stolen items to other members of the conspiracy for use at the banks. Certain members of the conspiracy disguised themselves as theft victims often through the use of wigs, and drove into the drive-thru teller lanes of the banks using rented vehicles. Other members of the conspiracy were usually hidden in the back seat of the rented vehicles so as to remain out of sight of bank personnel; they provided the disguised drivers with the stolen checks made payable from one victim to another, and the corresponding stolen drivers’ licenses and bank cards. When the banks cashed the checks, the payee victims’ banks suffered the loss when the checks were returned from the maker victims’ banks as stolen. While the banks were processing the checks, other members of the conspiracy provided surveillance for the rental vehicles used to present the stolen checks, typically in other rented vehicles. The conspirators often used stolen Texas license plates to conceal the true license plates of the rental vehicles used in the scheme. While the alleged criminal conduct was concentrated in the Dallas Metroplex, the conspiracy also extended to other states such as South Carolina, Alabama, Arkansas, Oklahoma and Florida.
If convicted of the conspiracy to commit bank fraud, the defendants each face up to 30 years in federal prison. If convicted of the aggravated identity theft charges, each defendant faces up to a mandatory 2 additional years in federal prison for each count charged to run consecutive to the bank fraud punishment.
In a related case, another 11 individuals were indicted by a federal grand jury on Aug. 15, 2013, and charged with using the same scheme in the Dallas area. Several defendants have already pleaded guilty and been sentenced to federal prison, including:
- Melvin Donnell Ferrell, 29, of Fort Lauderdale, sentenced to 70 months in federal prison on Sep. 8, 2014 and ordered to pay $28,281 in restitution;
- Craig Dwayne Tobias, 34, of Fort Lauderdale, sentenced to 46 months in federal prison on Sep. 3, 2014 and ordered to pay $6,673.37 in restitution;
- Atamian Rajuan Johnson, 32, of Riviera Beach, Florida, sentenced to 37 months in federal prison on Sep. 8, 2014, and ordered to pay $6,673.37 in restitution;
- Makeisha Ann Williams, 37, of Dallas, sentenced to 27 months in federal prison on Sep. 8, 2014, and ordered to pay $4,010 in restitution;
- Misty Dawn Hendrix, 38, of Dallas, sentenced to 37 months in federal prison on Sep. 3, 2014, and ordered to pay $2,313.37 in restitution; and
- Marc Anthony Booker, 25, of Austin, Texas, sentenced to 54 months in federal prison and ordered to pay $63,951.73 in restitution.
This case is being investigated by the Federal Bureau of Investigation, the Plano Police Department, the Richardson Police Department, the Dallas Police Department, the Cedar Hills Police Department, the McKinney Police Department, the Arlington Police Department, and the Grapevine Police Department. This case is being prosecuted by Assistant U.S. Attorney Christopher A. Eason.
An indictment or arrest is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Shreveport Woman Pleads Guilty to Health Care Fraud, Wire FraudRead the Press Release
SHREVEPORT, La. – The owner and operator of a Shreveport intensive outpatient program company pleaded guilty to charging Medicare for services never rendered, U.S. Attorney Stephanie A. Finley announced today.
Sharon Monroe, 43, of Shreveport, pleaded guilty before U.S. District Judge S. Maurice Hicks Jr. to one count of health care fraud and one count of wire fraud. According to evidence presented at the guilty plea, Monroe, owner of Monroe Medical Management LLC, submitted approximately $6 million in claims to Medicare for Part B psychotherapy services from 2007 to 2011. As a result of the fraudulent claims, she improperly received $2 million in payments from Medicare. Monroe filed claims for psychotherapy services that were never performed. She also used physicians’ Medicare provider numbers to submit claims without the physicians’ knowledge. In some cases, she claimed her employees rendered services in excess of 24 hours a day, that some of her employees were qualified to perform services when they were not, and that some of the services were performed at medical offices when they were not.
The FBI and Health and Human Services, Office of Inspector General, conducted the investigation. Assistant U.S. Attorney Earl M. Campbell is prosecuting the case.
Monroe faces up to 10 years in prison and three years of supervised release for the health care fraud count, and up to 20 years in prison and five years of supervised release for the wire fraud count. She also faces a $250,000 fine and restitution for both counts. A sentencing date of January 8, 2015 was set.Sentencings for September 5-11, 2014Read the Press Release
Brian Hayden Allen, 42, of Cheyenne, Wyoming, was sentenced by Federal District Court Judge Scott W. Skavdahl on September 11, 2014, for being a felon in possession of a firearm and ammunition. Allen was arrested in Cheyenne, Wyoming. He received 114 months imprisonment, to be followed by three years of supervised release, and was ordered to pay a $100.00 special assessment and a $500.00 fine. This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Joseph Matthew Colvin, 44, of Gillette, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on September 5, 2014, for conspiracy to possess with intent to distribute, and distribution of methamphetamine and heroin. Colvin was arrested in Gillette, Wyoming. He received 120 months imprisonment, to be followed by four years of supervised release, and was ordered to pay a $100.00 special assessment and a $500.00 fine. This case was investigated by the Wyoming Division of Criminal Investigation.
San Antonio Man Sentenced to 220 Months in Federal Prison for Distribution of Child PornographyRead the Press Release
In San Antonio today, U.S. District Judge Orlando Garcia sentenced 23-year-old Michael Douglas Glasenapp was sentenced to 220 months in federal prison followed by a 30 years of supervised release for distribution of child pornography announced United States Attorney Robert Pitman and FBI Special Agent in Charge Christopher H. Combs.
On March 21, 2013, federal authorities executed a search warrant at the defendant’s residence. A forensics examination of computer related equipment revealed the presence of more than 400 images and 48 videos depicting child pornography some of which the defendant shared with others, including an undercover officer, via the Internet. On April 17, 2014, Glasenapp pleaded guilty to the distribution charge.
This investigation was conducted by the Federal Bureau of Investigation. Assistant United States Attorneys Sarah Wannarka and Tracy Thompson prosecuted this case on behalf of the Government.
Rutland Women Charged in Crack Cocaine ConspiracyRead the Press Release
The Office of the United States Attorney for the District of Vermont stated that Sherry Flower, 48, of Rutland, Vermont has been charged in a three-count Indictment with one count of conspiring to distribute crack cocaine and two counts of distributing crack cocaine in the Rutland area. At an arraignment in Burlington before Magistrate Judge John Conroy, Flower pled not guilty to the charges. Magistrate Judge Conroy ordered her detained without bail in light of her criminal record and substance abuse issues. In 2003 Flower was convicted in U.S. District Court of conspiring to distribute cocaine base and was sentenced to 36 months imprisonment by Judge William K. Sessions III.
The United States Attorney emphasizes that the charges contained in the Indictment are merely accusations and that the defendant is presumed innocent unless and until she is proven guilty. If she is convicted, Flower faces a maximum possible term of imprisonment of twenty years.
The United States is represented in this matter by Assistant U.S. Attorney Joseph Perella and Flower is represented by Lisa Shelkrot, Esq. The investigation was conducted by the Vermont State Police Drug Task Force, the Federal Bureau of Investigation, and the Drug Enforcement Administration.
Rhode Island Builder Pleads Guilty to Filing False Claims, Making False Statements to Collect More Than $500,000 in Federal Stimulus FundsRead the Press Release
PROVIDENCE, R.I. – Donald F. Ihlefeld, 71, of Cranston, R.I., owner of Alhambra Building Company of Warwick, R.I., pleaded guilty in federal court in Providence on Wednesday to filing false claims and false documents in order to collect more than $500,000 in federal stimulus funds during a renovation project of a former textile mill building in West Warwick, announced United States Attorney Peter F. Neronha and Phillip Coyne, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General (HHS OIG).
An investigation by the Department of Health and Human Services, Office of Inspector General and the United States Attorney’s Office determined that Ihlefeld falsely represented that he paid employees locally prevailing wages for work performed during the renovation project of the former mill building into a walk-in health center. The construction project, known as the Cotton Shed Project, was funded by the American Recovery and Reinvestment Act of 2009, through grants provided by the U.S. Department of Health and Human Services, Health Resources and Services Administration.
According to court documents and information presented to the court, in October 2010, Thundermist Health Center, a non-profit community health center, awarded a contract to Alhambra Building Company as construction manager for the Cotton Shed Project. As a condition of payment, as required by the Stimulus Program pursuant to the Davis-Bacon Act, Alhambra Building Company was required to pay laborers no less than locally prevailing wages plus benefits. In bidding on the project, Alhambra noted its prior experience working on Davis-Bacon projects.
According to information presented to the court, in February 2011, Ihlefeld submitted an invoice for $521,022.60 for payment for construction work performed by his company from December 2010 through January 2011, knowing that he and his company failed to pay employees local prevailing wages. Further, between January 1, 2011 and April 13, 2011, Ihlefeld and his company submitted false certified payroll reports to Thundermist which misrepresented the identity of employees working on the project, total hours worked by employees and that it was paying Davis-Bacon wages to employees working on the project. According to information presented to the court, the employees to whom Alhambra failed to pay the appropriate wages were non-citizen Spanish speaking employees hired by Alhambra. Those employees were paid substantially less than the prevailing wage of approximately $34 per hour.
U.S. Attorney Peter F. Neronha commented, “Federal stimulus funds are intended to benefit both employers and employees, and through them, the broader economy. Here, the defendant/employer wanted the benefit largely for himself, at the expense of his workers. To make matters worse, the defendant pocketed federal funds at the expense of those employees who perhaps were least able to make meaningful protest. Such conduct cannot stand.”
"What Donald Ihlefeld did is not only reprehensible, it’s illegal: he underpaid laborers, billed the federal government as if he had paid prevailing wages, and then pocketed the difference for his own personal use,” said Special Agent in Charge Coyne, HHS OIG. “We will continue to protect the integrity of federal grant dollars and hold those accountable for such fraudulent schemes.”Filing a false claim and filing false documents are punishable by statutory penalties of up to 5 years in federal prison; a fine of up to $250,000; and a term of supervised release of up to 3 years.
Ihlefeld is scheduled to be sentenced by U.S. District Court Judge John J. McConnell, Jr., on December 2, 2014.
The case is being prosecuted by Assistant U.S. Attorney Dulce Donovan.
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To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/
Contact: 401-709-5357
[email protected]Postal Employee Charged with Stealing Cash, Gift Card from Mail ItemRead the Press Release
PITTSBURGH - A resident of Butler, Pa., has been indicted by a federal grand jury in Pittsburgh on a charge of theft of mail by postal employee, United States Attorney David J. Hickton announced today.
The one-count indictment, returned on Sept. 9, named Kasy N. Bell, 27, as sole defendant.
According to the indictment, Bell, being an employee of the United States Postal Service, did steal, abstract and remove from a greeting card on or about Feb. 4, 2014 articles or things contained therein, that is two $20 bills and one WalMart gift card.
The law provides for a maximum total sentence of five years in prison, a fine of $250,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
The United States Postal Service Office of Inspector General conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Permian Basin Businessman Pleads Guilty to Federal Wire Fraud ChargesRead the Press Release
James Edward “Jasper” Jones, age 44, of Midland, TX, faces up to 20 years in federal prison after pleading guilty to two wire fraud charges in connection with a cattle purchasing scheme announced United States Attorney Robert Pitman and FBI Special Agent in Charge Douglas E. Lindquist.
According to court records, for approximately one year beginning in March 2011, Henry Resources retained Jones, doing business as Stampede Ranch and Lease Management (Stampede), to manage several of its ranching properties in West Texas. One such entity was JJB Lands, LLC (JJB Lands).
In approximately April 2011, Jones agreed with JJB Lands that he would purchase $250,000 worth of cattle for a ranch near Eldorado, TX, and that amount was subsequently wire transferred to a Stampede bank account. Jones’ representations to JJB Lands concerning how he would use these funds were material in JJB Lands’ decision to transfer them. In subsequent months, Stampede would invoice JJB Lands for additional purchases of cattle for this ranch, and JJB Lands paid those invoices.
In pleading guilty last Friday, Jones admitted that he did not actually use all of the money designated by JJB Lands for cattle purchases for that purpose, even though he had promised and represented otherwise. Instead, Jones diverted a large portion of the funds for other purposes, including personal expenses. When a cattle inventory was conducted in early March 2012 at the Eldorado ranch, approximately 120 head of cattle, which Jones represented to JJB Lands that he had purchased, could not be located. The Government estimates the resulting loss to JJB lands exceeded $400,000.
Jones remains on bond pending sentencing which is scheduled for 9:30am on December 5, 2014, before United States District Judge Robert A. Junell in Midland.
This investigation was conducted by the Federal Bureau of Investigation. Assistant United States Attorney John Klassen is prosecuting this case on behalf of the Government.
Owner of Tax Return Preparation Franchise and Health Provider Business Sentenced to Prison for Tax Fraud, Healthcare Fraud and Money LaunderingRead the Press Release
A man formerly of Raleigh, North Carolina, and now of Miami, was sentenced today to serve 135 months in prison for tax fraud, healthcare fraud and money laundering crimes in two separate cases in federal court, announced Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand for the Middle District of North Carolina.
Claude Arthur Verbal II was also ordered to serve three years of supervised release following his prison term, to pay restitution of $4,078,584 to the Internal Revenue Service (IRS) and to pay $2,382,378 to the North Carolina Department of Health and Human Services. On April 9, Verbal pleaded guilty to one count of conspiracy to defraud the United States, one count of aiding and assisting the preparation of false tax returns, one count of healthcare fraud and one count of money laundering.
“Mr. Verbal’s sentence sends a clear message to those who operate fraudulent tax return businesses,” said Deputy Assistant Attorney General Ronald A. Cimino of the department’s Tax Division. “The Justice Department will continue to prosecute and seek just punishment against those who prepare fraudulent tax returns.”
The Tax Case
Verbal was the owner of Nothing But Taxes (NBT), a tax return preparation franchise with 10 branches throughout the state of North Carolina that operated from 2005 to at least 2012. Verbal personally prepared false tax returns for clients of NBT and taught and encouraged his employees to do so as well. Verbal and NBT employees frequently offered clients a dramatically larger tax refund if the client agreed to make a cash payment to their tax preparer. These cash payments were over and above the flat return preparation fee that NBT charged every client, whether or not their return was falsified.
From 2005 to 2007, Verbal personally prepared dozens of false tax returns on a computer at NBT’s location on Fayetteville Street in Durham, North Carolina. One such return was a 2006 tax return for an NBT client that falsely reported the client had a Schedule C business and a dependent, which Verbal knowingly prepared and electronically filed with the IRS.
The most common types of falsifications at NBT were false dependents, false Schedule C businesses, false tip income, false Earned Income Tax Credits and false education credits. Verbal falsified returns using these items and taught his managers and line employees how to do so as well. Verbal and many of his employees facilitated the purchase and sale of false dependents at NBT by purchasing the names, dates of birth and social security numbers of individuals from the community for use as false dependents on other clients’ tax returns.
“Mr. Verbal’s fraudulent schemes victimized taxpayers in multiple ways, damaged the Medicaid program and the many patients who rely on it,” said U.S. Attorney Ripley Rand for the Middle District of North Carolina. “We will continue to work with law enforcement and the victimized agencies to shut down these types of fraud schemes, hold the fraudsters accountable, and return the ill-gotten gains to the programs for which they were intended.”
In November 2010, one of Verbal’s employees informed a U.S. probation officer of the fraudulent practices at NBT’s location on Fayetteville Street. The probation officer informed Verbal of this fraud and he falsely denied knowledge of it. Afterward, Verbal took steps to keep the profitable Fayetteville Street location open and to continue operating as usual, but to also further distance himself from the fraudulent practices. In order to do this, Verbal transferred the electronic filing privileges for that NBT branch to a nominee. Verbal and others jointly persuaded a relative of Verbal who allowed Verbal to use their name to apply for new electronic filing privileges for the Fayetteville Street location. In exchange, Verbal and his wife paid the relative $10,000, and the relative had no role in operating NBT, no professional tax experience and no knowledge of the fraud that was occurring at NBT.
Later, in 2012, the IRS shut down electronic filing privileges at all 10 NBT branches due to persistent fraud. Verbal re-applied for electronic filing privileges twice for all NBT locations, first in the name of the relative and, when that attempt failed, in the name of another relative who had no knowledge of NBT’s business.
The Healthcare Fraud Case
According to court documents, Verbal was the owner and operator of Infinite Wellness Concepts (IWC), a Medicaid behavioral health provider with locations in Burlington, Durham and Greensboro, North Carolina. IWC was contracted to provide group therapy, intensive in-home services, and enhanced mental health and substance abuse services. Verbal acquired at least $1 million in fraudulently obtained funds from the Medicaid program. The fraudulent activities included:
· changing diagnosis codes so that codes with higher reimbursement rates could be billed;
· falsely inflating the number of clients treated during group therapy;
· billing for services not rendered and submitting false treatment notes in support of the services not rendered using forged signatures from counselors and therapists;
· unqualified personnel conducting therapy; and
· creating fraudulent clinical assessments and creating clinical assessments prepared and signed by unqualified preparers.
Verbal used the proceeds of the tax and healthcare fraud schemes to make extensive purchases of luxury cars, homes and jewelry. The money laundering charge to which Verbal pleaded guilty relates to the purchase of a $52,000 diamond ring with the proceeds of healthcare fraud.
“It is both despicable and illegal when scammers like Claude Verbal cheat the Medicaid program and its beneficiaries by billing for badly needed services for poor and mentally ill patients – services that were never actually provided or were provided by unqualified staff -- just so that Verbal could build a $700K+ bank account and go on a diamond-encrusted shopping spree with the ill-gotten money,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG), Atlanta Regional Office. “Verbal’s audacious, greed-fueled fraud cheated both taxpayers and needy patients; now, thanks to our hard working investigators and our law enforcement partners, Verbal will pay dearly for his reprehensible crimes.”
“Today’s sentence is the strongest type of affirmation that criminals such as Mr. Verbal, who commit tax fraud and engage in other criminal activities, will be forced to bear the consequences of their actions,” said Special Agent in Charge Thomas J. Holloman for IRS-Criminal Investigation. “We, along with our law enforcement partners are committed to working together in bringing individuals such as Mr. Verbal to justice.”
In the course of the healthcare fraud investigation, law enforcement authorities seized $765,917 from bank accounts controlled by Verbal, a 2011 Toyota Camry and four pieces of diamond jewelry, including a 7-carat diamond ring. The United States initiated a civil forfeiture action alleging the properties constituted proceeds traceable to the healthcare fraud and on Sept. 19, 2013, U.S. District Judge Catherine C. Eagles entered an order forfeiting the property to the government.
The tax case against Verbal was investigated by agents of IRS - Criminal Investigation and was prosecuted by Assistant U.S. Attorney Frank Chut for the Middle District of North Carolina and Trial Attorney Jonathan Marx of the Tax Division. The healthcare fraud case against Verbal was investigated by agents of HHS-OIG, the North Carolina State Bureau of Investigations, the North Carolina Department of Justice’s Medicaid Investigations Division and IRS – Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Robert Hamilton for the Middle District of North Carolina.
Owner of Tax Return Preparation Franchise and Health Provider Business Sentenced to Prison for Tax Fraud, Healthcare Fraud and Money LaunderingRead the Press Release
WASHINGTON – A man formerly of Raleigh, North Carolina, and now of Miami, was sentenced today to serve 135 months in prison for tax fraud, healthcare fraud and money laundering crimes in two separate cases in federal court, announced Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand for the Middle District of North Carolina.
Claude Arthur Verbal II was also ordered to serve three years of supervised release following his prison term, to pay restitution of $4,078,584 to the Internal Revenue Service (IRS) and to pay $2,382,378 to the North Carolina Department of Health and Human Services. On April 9, Verbal pleaded guilty to one count of conspiracy to defraud the United States, one count of aiding and assisting the preparation of false tax returns, one count of healthcare fraud and one count of money laundering.
“Mr. Verbal’s sentence sends a clear message to those who operate fraudulent tax return businesses,” said Deputy Assistant Attorney General Ronald A. Cimino of the department’s Tax Division. “The Justice Department will continue to prosecute and seek just punishment against those who prepare fraudulent tax returns.”
The Tax Case
Verbal was the owner of Nothing But Taxes (NBT), a tax return preparation franchise with 10 branches throughout the state of North Carolina that operated from 2005 to at least 2012. Verbal personally prepared false tax returns for clients of NBT and taught and encouraged his employees to do so as well. Verbal and NBT employees frequently offered clients a dramatically larger tax refund if the client agreed to make a cash payment to their tax preparer. These cash payments were over and above the flat return preparation fee that NBT charged every client, whether or not their return was falsified.
From 2005 to 2007, Verbal personally prepared dozens of false tax returns on a computer at NBT’s location on Fayetteville Street in Durham, North Carolina. One such return was a 2006 tax return for an NBT client that falsely reported the client had a Schedule C business and a dependent, which Verbal knowingly prepared and electronically filed with the IRS.
The most common types of falsifications at NBT were false dependents, false Schedule C businesses, false tip income, false Earned Income Tax Credits and false education credits. Verbal falsified returns using these items and taught his managers and line employees how to do so as well. Verbal and many of his employees facilitated the purchase and sale of false dependents at NBT by purchasing the names, dates of birth and social security numbers of individuals from the community for use as false dependents on other clients’ tax returns.
“Mr. Verbal’s fraudulent schemes victimized taxpayers in multiple ways, damaged the Medicaid program and the many patients who rely on it,” said U.S. Attorney Ripley Rand for the Middle District of North Carolina. “We will continue to work with law enforcement and the victimized agencies to shut down these types of fraud schemes, hold the fraudsters accountable, and return the ill-gotten gains to the programs for which they were intended.”
In November 2010, one of Verbal’s employees informed a U.S. probation officer of the fraudulent practices at NBT’s location on Fayetteville Street. The probation officer informed Verbal of this fraud and he falsely denied knowledge of it. Afterward, Verbal took steps to keep the profitable Fayetteville Street location open and to continue operating as usual, but to also further distance himself from the fraudulent practices. In order to do this, Verbal transferred the electronic filing privileges for that NBT branch to a nominee. Verbal and others jointly persuaded a relative of Verbal who allowed Verbal to use their name to apply for new electronic filing privileges for the Fayetteville Street location. In exchange, Verbal and his wife paid the relative $10,000, and the relative had no role in operating NBT, no professional tax experience and no knowledge of the fraud that was occurring at NBT.
Later, in 2012, the IRS shut down electronic filing privileges at all 10 NBT branches due to persistent fraud. Verbal re-applied for electronic filing privileges twice for all NBT locations, first in the name of the relative and, when that attempt failed, in the name of another relative who had no knowledge of NBT’s business.
The Healthcare Fraud Case
According to court documents, Verbal was the owner and operator of Infinite Wellness Concepts (IWC), a Medicaid behavioral health provider with locations in Burlington, Durham and Greensboro, North Carolina. IWC was contracted to provide group therapy, intensive in-home services, and enhanced mental health and substance abuse services. Verbal acquired at least $1 million in fraudulently obtained funds from the Medicaid program. The fraudulent activities included:
• changing diagnosis codes so that codes with higher reimbursement rates could be billed;
• falsely inflating the number of clients treated during group therapy;
• billing for services not rendered and submitting false treatment notes in support of the services not rendered using forged signatures from counselors and therapists;
• unqualified personnel conducting therapy; and
• creating fraudulent clinical assessments and creating clinical assessments prepared and signed by unqualified preparers.
Verbal used the proceeds of the tax and healthcare fraud schemes to make extensive purchases of luxury cars, homes and jewelry. The money laundering charge to which Verbal pleaded guilty relates to the purchase of a $52,000 diamond ring with the proceeds of healthcare fraud.
“It is both despicable and illegal when scammers like Claude Verbal cheat the Medicaid program and its beneficiaries by billing for badly needed services for poor and mentally ill patients – services that were never actually provided or were provided by unqualified staff -- just so that Verbal could build a $700K+ bank account and go on a diamond-encrusted shopping spree with the ill-gotten money,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG), Atlanta Regional Office. “Verbal’s audacious, greed-fueled fraud cheated both taxpayers and needy patients; now, thanks to our hard working investigators and our law enforcement partners, Verbal will pay dearly for his reprehensible crimes.”
“Today’s sentence is the strongest type of affirmation that criminals such as Mr. Verbal, who commit tax fraud and engage in other criminal activities, will be forced to bear the consequences of their actions,” said Special Agent in Charge Thomas J. Holloman for IRS-Criminal Investigation. “We, along with our law enforcement partners are committed to working together in bringing individuals such as Mr. Verbal to justice.”
In the course of the healthcare fraud investigation, law enforcement authorities seized $765,917 from bank accounts controlled by Verbal, a 2011 Toyota Camry and four pieces of diamond jewelry, including a 7-carat diamond ring. The United States initiated a civil forfeiture action alleging the properties constituted proceeds traceable to the healthcare fraud and on Sept. 19, 2013, U.S. District Judge Catherine C. Eagles entered an order forfeiting the property to the government.
The tax case against Verbal was investigated by agents of IRS - Criminal Investigation and was prosecuted by Assistant U.S. Attorney Frank Chut for the Middle District of North Carolina and Trial Attorney Jonathan Marx of the Tax Division. The healthcare fraud case against Verbal was investigated by agents of HHS-OIG, the North Carolina State Bureau of Investigations, the North Carolina Department of Justice’s Medicaid Investigations Division and IRS – Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Robert Hamilton for the Middle District of North Carolina.
Orlando Man Sentenced to 14 Years in Prison for Robbing Credit UnionRead the Press Release
Orlando, FL – Chief U.S. District Judge Anne C. Conway today sentenced Raulier Rivas Lopez (28, Orlando) to 14 years in federal prison for one count of credit union robbery with assault and one count of possessing a firearm in furtherance of the robbery. As part of his sentence, the Court also ordered Lopez to pay over $7,000 in restitution. Lopez pleaded guilty on June 10, 2014.
According to court documents and testimony at sentencing, on the morning of January 25, 2012, Lopez, along with three co-conspirators, robbed the American Eagle Credit Union located at 7007 SeaWorld Drive, in Orlando. Lopez and two of his co-conspirators, all wearing masks, entered the credit union and demanded money from the credit union employees. Lopez pointed a firearm at the employees as his co-conspirators pepper-sprayed the employees so that they would not be able to identify the robbers. Lopez and his co-conspirators stole approximately $7,000 during the robbery.
To date, one other individual, Joseph Cotto-Diaz, has been arrested for his role in this robbery. Cotto-Diaz was charged in a superseding indictment on March 19, 2014. He is scheduled for trial in October 2014.
This case was investigated by the Federal Bureau of Investigation and the Orange County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney Joseph M. Schuster.
Orange Park Man Pleads Guilty to Possessing Child PornographyRead the Press Release
Jacksonville, Florida – United States Attorney A. Lee Bentley, III announces that Ronald Boike (50, Orange Park) has pleaded guilty to possession of child pornography. Boike faces a maximum penalty of 10 years in federal prison. A sentencing date has not yet been set.
According to the plea agreement, Boike was involved in an online relationship with a minor child for at least two years. He used a cell phone chat application to communicate with the minor. Boike sent sexually explicit pictures of himself to the minor in order to encourage and coax her to produce and send him pornographic pictures or videos of herself. During ongoing conversations with the minor, Boike saved pornographic pictures and videos of the minor on his family’s computer. Boike’s wife learned of his relationship with the minor after finding the videos on the family’s computer. Boike’s wife subsequently filed a complaint with the Federal Bureau of Investigation.
This case was investigated by Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Malisa Chokshi.
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 United States 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.gov.
Northwest MO, KC Residents Sentenced for Meth, Illegal FirearmsRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a mother and son in northwest Missouri and a Kansas City, Mo., man have been sentenced in federal court for their roles in a conspiracy to distribute methamphetamine and for illegally possessing firearms.
Carlos Olivas, also known as “Chuco,” 40, of Kansas City, was sentenced by U.S. Chief District Judge Greg Kays today to 15 years in federal prison without parole.
On Wednesday, Sept. 10, 2014, co-defendant John B. Carr, also known as “Brandon,” 25, of Galt, Mo., and his mother, Onis R. Eads, also known as Onis Regina Jones, 47, of Humphreys, Mo., were sentenced. Carr was sentenced to eight years and 11 months in federal prison without parole. Eads was sentenced to three years and 11 months in federal prison without parole.
On April 7, 2014, Olivas pleaded guilty to participating in a conspiracy to distribute methamphetamine from April 2012 to Feb. 11, 2013. He also pleaded guilty to possessing firearms in furtherance of a drug-trafficking crime. Olivas admitted that he was in possession of a Smith and Wesson .380-caliber semi-automatic pistol, a Springfield Armory .40-caliber semi-automatic pistol and a Taurus 9mm semi-automatic pistol in furtherance of the drug-trafficking conspiracy.
Law enforcement officers executed a federal search warrant at Olivas’s residence on Jan. 25, 2013. Officers found methamphetamine and numerous firearms in the house. An officer searched Olivas and discovered two small plastic bags – one bag with approximately 19 grams of crack cocaine and the other bag with approximately .91 grams of methamphetamine – and $1,080 in cash.
Carr pleaded guilty on March 11, 2013, to his role in the drug-trafficking conspiracy and with possessing firearms in furtherance of a drug trafficking crime. Carr admitted that he was in possession of a Hi-Point Firearms .45-caliber pistol and a Calwestco .22-caliber pistol in furtherance of the drug-trafficking conspiracy. Carr admitted that he obtained methamphetamine from Olivas, and had been selling methamphetamine for 18 months, working up to selling a quarter pound of methamphetamine each week. Carr admitted that, for several months, he paid Olivas $2,500 per week for a quarter pound of methamphetamine.
Eads pleaded guilty to her role in the drug-trafficking conspiracy on April 7, 2014. She admitted that she purchased methamphetamine from Olivas. In December 2012 and January 2013, Eads purchased approximately one-half ounce of methamphetamine from Olivas three times per week, paying approximately $550 for each half ounce.
This case was prosecuted by Assistant U.S. Attorney Rudolph R. Rhodes, IV. It was investigated by the Kansas City, Mo., Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Trenton, Mo., Police Department.Norristown Resident Charged with Illegal ReentryRead the Press Release
Josue Isaias-Rosales, 24, of Norristown, PA, was charged today by indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger. The indictment alleges that on or about August 6, 2014, Isaias-Rosales, an alien, and native and citizen of Guatemala, was found in the United States after having been deported from the United States on or about March 31, 2008, July 3, 2008, and July 21, 2009.
If convicted the defendant faces a maximum possible sentence of two years.
The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Mary Kay Costello.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Click here to view the indictment.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Nine Lawyers in Manhattan U.S. Attorney’s Office Recognized at Annual U.S. Attorney Awards CeremonyRead the Press Release
PREET BHARARA, the United States Attorney for the Southern District of New York, announced that the Department of Justice held its 30th annual Executive Office for United States
Attorneys (EOUSA) Director’s Awards Ceremony yesterday, during which 243 award recipients from 44 districts were recognized for their dedication to carrying out the mission of the Department of Justice. Among the award recipients were Arlo Devlin-Brown, Antonia M. Apps, John T. Zach, Sharon Cohen Levin, Christine Magdo, Micah Smith, Daniel Filor, Ellen London, and Carina H. Schoenberger from the U.S. Attorney’s Office for the Southern District
of New York. Attorney General Eric Holder and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson presided at yesterday’s ceremony in the Great Hall at the Robert F. Kennedy Department of Justice Building in Washington, D.C.
In his prepared remarks to awardees, Attorney General Holder said, “Locally, nationally, and internationally, you represent the very best that this Department has to offer. Your work embodies our ongoing commitment – not merely to win cases, but to do justice; to protect our fellow citizens from crime, violence, and terrorism; to empower the most vulnerable among us; and to uphold the rule of law.”
EOUSA Director Monty Wilkinson echoed those sentiments, saying to the recipients, “You have persevered, and remained focused and motivated – achieving remarkable results in work that makes a difference in the lives of citizens across our great country. The vast scope of your collective accomplishments is nothing short of exceptional.”
Manhattan U.S. Attorney Preet Bharara said: "This year’s Director’s Award winners exemplify the extraordinary intellect, determination, and dedication that are the hallmarks of this Office. I congratulate them for this well-deserved recognition. Their commitment to justice serves the interests of the citizens of New York and the entire country.”
Arlo Devlin-Brown, Antonia M. Apps, John T. Zach, Sharon Cohen Levin, Christine Magdo, and Micah Smith, working with Federal Bureau of Investigation Special Agents Matthew Callahan, B.J. Kang, James Hinkle, Matt Thoresen, Ronan Byrne, and David Makol, were recognized for Superior Performance by a Litigative Team for their successful investigation and prosecution of the entities managing the hedge fund SAC Capital, in an insider trading scheme that was on a scale without known precedent in the hedge fund industry. The criminal charges against SAC Capital, and a related civil money laundering and forfeiture action, were based on insider trading committed by numerous SAC Capital employees (eight of whom have been individually prosecuted) that was, as charged, “made possible by institutional practices that encouraged the widespread solicitation and use of insider information.” The SAC entity defendants pleaded guilty to all charges pursuant to a plea agreement, requiring the SAC Capital hedge fund to cease operating as investment advisers and to pay a historic financial penalty of $1.8 billion, the largest ever imposed in an insider trading prosecution.
Daniel Filor, Ellen London, and Carina H. Schoenberger were recognized for Superior Performance as an Assistant United States Attorney - Civil for their work in representing the United States in the In re Ambac bankruptcy proceeding, which culminated in a substantial recovery for the government. The United States had challenged Ambac's accounting for its credit default swap losses during the financial crisis, which allowed Ambac to obtain a $700 million tax refund from the Internal Revenue Service. AUSAs Filor, London, and Schoenberger led efforts to recover $101.9 million in cash and secured a $1 billion reduction of Ambac's net operating losses.
EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.
New York City Employee Pleads Guilty in Manhattan Federal Court to Million-Dollar Medicaid FraudRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, announced today that AKIM MURRAY, an employee of the Medicaid Reimbursement Unit of the New York City Human Resources Administration (“HRA”), pled guilty before U.S. District Judge Richard M. Berman to a Medicaid fraud scheme in which MURRAY, whose job involved issuing reimbursements for Medicaid-eligible expenses, manipulated the system in order to have over one million dollars’ worth of checks issued to his friends and criminal associates. Those co-conspirators, in turn, gave MURRAY a substantial cut of the proceeds.
Manhattan U.S. Attorney Bharara said: “For over a year, Akim Murray used his job within New York City government to essentially embezzle funds intended to benefit low-income people entitled to reimbursements for certain of their health care payments. He stole from a program for people in need and gave the money to his friends and himself. Today, what Murray has earned is a felony conviction and the prospect of serious prison time."
According to the allegations in the Information, a previously filed Complaint, other documents filed in Manhattan federal court, and statements made at today’s guilty plea:
Medicaid is a federally funded program designed to provide low-income families with affordable health care. The HRA oversees the program and processes applications from New York City residents. Under Medicaid, individuals who successfully apply for Medicaid coverage can be reimbursed for eligible expenses submitted in the approximate three-month period prior to the application (“Pre-Enrollment Services”). In order to be reimbursed for Pre-Enrollment Services, the successful Medicaid applicant requesting reimbursement must provide proof that he or she made eligible health care payments out of pocket before applying for Medicaid. City employees known as Eligibility Specialists, working for HRA’s Medicaid Reimbursement Unit, receive and process requests for reimbursement using a computer system, and make recommendations for HRA supervisors as to whether a request should be approved.
From at least July 2009 until September 2010, MURRAY, an HRA Eligibility Specialist, exploited loopholes in HRA’s systems to both recommend and then separately approve the issuance of Medicaid reimbursement checks without meaningful oversight. MURRAY used the personal identifying information of his co-conspirators to create and unilaterally approve requests for reimbursement checks in their names. When the checks were sent to his friends and other associates, MURRAY demanded that they cash the checks and give him a substantial portion of the proceeds, often between 50 and 70 percent. MURRAY approved over $1.3 million in illicit Medicaid reimbursement requests during the course of the fraud.
MURRAY, 52, of New York, New York, pled guilty to one count of conspiracy to commit health care fraud, which carries a maximum sentence of 10 years. Sentencing is scheduled for December 17, 2014, before Judge Berman.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the investigative work of the FBI’s Health Care Fraud Task Force and the DOI for their assistance in this investigation, which he noted remains ongoing. The New York FBI Health Care Fraud Task Force was formed in 2007 in an effort to combat health care fraud in the greater New York City area. The task force comprises agents, officers, and investigators from the FBI, NYPD, the New York State Insurance Fraud Bureau, U.S. Department of Labor, U.S. Office of Personnel Management Inspector General, U.S. Food and Drug Administration, New York State Attorney General’s Office, New York State Office of Medicaid Inspector General, New York State Health and Hospitals Inspector General, and the National Insurance Crime Bureau.
This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorney Martin S. Bell is in charge of the prosecution.
U.S. v. Akim Murray Complaint
Native of Dominican Republic Charged with Illegal ReentryRead the Press Release
Roberto Garcia-Duran, 38, of Philadelphia, PA, was charged today by Indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger. The indictment alleges that on or about August 6, 2014, Garcia-Duran, an alien, and native and citizen of the Dominican Republic, was found in the United States after having been deported from the United States on or about December 19, 2001 and December 21, 2007.
If convicted the defendant faces a maximum possible sentence of 20 years.
The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Virgil B. Walker.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Click here to view the indictment.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Missouri Man Sentenced to 54 Months in Prison for Failing to Update Sex Offender RegistrationRead the Press Release
SHREVEPORT, La. –A man from Missouri was sentenced Wednesday to 30 months in prison and five years of supervised release for moving to Shreveport without updating his sex offender registration, U.S. Attorney Stephanie A. Finley announced.
John Mark Phillips, 50, of Springfield, Mo., was sentenced to the 30-month prison term by U.S. District Judge S. Maurice Hicks Jr. for one count of failing to update his sex offender registration. Hicks also revoked Phillips’ supervised release for a previous offense, which added 24 months to Phillips’ prison term for a total of 54 months. According to evidence presented at the May 19, 2014 guilty plea, Phillips was convicted in Christian County Missouri on September 22, 1995, for sexual abuse of a victim under the age of 14, which requires 25 years of sex offender registration. In 2006, he updated his sex offender registration to reflect a move to Wisconsin. In May of 2011, he failed to report that he had moved back to Missouri. In August of 2011, he pleaded guilty to failure to register as a sex offender in the Western District of Missouri. He was sentenced to serve 18 months in prison and five years of supervised release. After the prison term ended, U.S. Probation Officers discovered on April 30, 2013, that Phillips had left his Springfield, Mo., housing complex. Probation officers were unable to locate him and issued a warrant for his arrest. Shreveport Police arrested Phillips the same day the warrant was issued.The U.S. Marshals Service, the U.S. Office of Probation - Western District of Missouri, and the Shreveport Police Department conducted the investigation. Assistant U.S. Attorney Seth D. Reeg prosecuted the case.
Minnesota Sex Offender Indicted for Traveling to Engage in Unlawful Sexual Activity with A Tampa MinorRead the Press Release
Tampa, FL – United States Attorney A. Lee Bentley, III announces the return of an indictment charging Matthew William McLean (25, Minneapolis, Minnesota) with the attempted transportation of a minor with the intent to engage in criminal sexual activity, interstate travel to meet a minor with the intent to engage in illicit sexual conduct, and committing a felony sex offense as a registered sex offender. If convicted on all counts, McLean faces a maximum penalty of life in federal prison.
According to court documents, McLean, a registered sex offender from Minnesota, traveled to Tampa to meet a minor female he was corresponding with online. McLean picked up the minor from her house and transported her to the Greyhound bus station, where he purchased two bus tickets from Tampa to Brownsville, Texas.
An indictment is merely a formal charge that a defendant has committed a violation of federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by the Hillsborough County Sheriff’s Office, the Tallahassee Police Department, and the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorney Stacie B. Harris.
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.projectsafechildhood.gov.
Miami-Dade County Resident Sentenced for Her Role in Massive Stolen Identity Income Tax Refund Fraud SchemeRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Donnell Young, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Ronald J. Verrochio, Inspector in Charge, U.S. Postal Inspection Service (USPIS), announce that Crystal Booker, 31, of Miami-Dade County, was sentenced today before U.S. District Judge James I. Cohn to 36 months in prison, to be followed by three years of supervised release.
Booker previously pled guilty to one count of filing a false claim with the IRS, in violation of Title 18, United States Code, Section 287.
According to court documents, defendant Orlando Cairo, 32, of Miami-Dade County, was involved in a massive stolen identity income tax refund fraud scheme where he obtained the names, social security numbers, and other personal identifying information of individuals and unlawfully used this information to file and cause to be filed fraudulent income tax returns with the IRS. The returns reported false withholdings and requested refunds based on fraudulent IRS Forms W2-G, purportedly issued by the Florida Lottery Commission when an individual has gambling income exceeding a certain threshold amount.
Court documents state that Booker assisted Cairo in this scheme by opening approximately eighteen bank accounts at financial institutions located in Broward and Miami-Dade counties. The fraudulent refunds that the IRS paid out were deposited into these bank accounts. Cairo filed and caused to be filed 378 returns identifying one of Booker’s accounts as the account where the refund should be deposited. The returns requested $2,128,841 in fraudulent refunds. In furtherance of the scheme, Cairo, with Booker’s assistance, presented to the IRS a fraudulent tax return, which claimed an income tax refund of $7,064. The refund was paid into one of the bank accounts that Booker opened.
On May 14, 2014, Cairo was sentenced to 120 months in prison, to be followed by three years of supervised release, and was ordered to pay $277,133.58 in restitution. He pled guilty to one count of wire fraud, in violation of Title 18, United States Code, Section 1343, and one count of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A.
Mr. Ferrer commended the investigative efforts of IRS-CI and USPIS. The case was prosecuted by Assistant U.S. Attorney Bertha R. Mitrani.
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.
Miami Attorney Sentenced for Not Filing Income Tax ReturnsRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Donnell Young, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announce that Steven E. Siff, 56, of Davie, was sentenced today before U.S. District Judge William P. Dimitrouleas to 13 months in prison, to be followed by one year of supervised release.
Siff previously pled guilty to three counts of failing to file an income tax return, in violation of Title 26, United States Code, Section 7203. As part of his plea agreement, Siff agreed to pay restitution to the IRS of $924,684.
According to court documents, since at least 1982, Siff worked as an attorney in the Miami office of an international law firm, first as an associate, then as a partner. Siff failed to file personal United States income tax returns since at least tax year 1997. Between 2001 and 2011, Siff earned approximately $8,248,401 in partnership profits. For tax years 2009 through 2011, Siff failed to make an income tax return reporting gross partnership income of $716,464, $705,967, and $694,449, respectively.
Mr. Ferrer commended the investigative efforts of IRS-CI. The case was prosecuted by Assistant U.S. Attorney Bertha R. Mitrani.
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.
Longmeadow Tax Preparer Sentenced for 29 Counts of Preparing False Tax ReturnsRead the Press Release
BOSTON – A Longmeadow tax preparer was sentenced today in U.S. District Court in Springfield for filing false tax returns for customers of his business, JLF Tax Group, Inc.
Jonathan Fein, 55, of Longmeadow, Mass., was sentenced by U.S. District Judge Michael A. Ponsor to six months in prison, six months in a community corrections center, and six months in home confinement. The court also ordered Fein to repay $138,474 to the IRS and $29,000 to the Massachusetts Department of Revenue. Fein is permanently enjoined from preparing tax returns. In December 2012, Fein pleaded guilty to twenty-nine counts of falsely preparing tax returns.
Fein operated a tax preparation business called JLF Tax Group, Inc., d/b/a American Tax or American Tax Service (JLF), which was located in Springfield and Greenfield. Fein prepared individual federal income tax returns for various JLF customers, most of whom were unfamiliar with the Internal Revenue laws and relied upon Fein to prepare correct, accurate, and complete returns. Between January 2007 and April 2012, Fein prepared numerous tax returns that he knew were fraudulent, so that his customers could receive larger tax refunds from the IRS. Fein generally deducted his tax preparation fee from the fraudulently obtained tax refunds. In November 2010, Fein falsely stated to federal agents that he did not fraudulently prepare any tax returns in order to conceal his fraud.
United States Attorney Carmen M. Ortiz and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, made the announcement today. The case was prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz’s Springfield Branch Office.
Lead Defendant Pleads Guilty to Using Hundreds of Stolen Identities to Steal More Than $1.5 Million from U.S. TreasuryRead the Press Release
Federal Authorities continue to focus on the growing problem of identity theft
SAN DIEGO – Arthur Grigorian admitted in federal court today that he defrauded the Internal Revenue Service of over $1.5 million by filing false tax returns in the names of stolen identities. Grigorian’s plea was the 27th conviction obtained by prosecutors since charges were filed in four related cases as part of a joint investigation by the FBI and IRS, dubbed “Operation Trillion Troubles,” in September, 2013.
Grigorian, the lead defendant in one indictment, admitted stealing personal identity information from unwitting victims in order to file false tax returns in their names. These false returns generated well over $1.5 million in fraudulent tax refunds that should never have been taken from the U.S. Treasury. According to the indictment, Grigorian and his conspirators falsely claimed refunds in the names of the victims in a number of ways, all of which involved some form of falsified income and withholdings. Most commonly, the conspirators claimed that the victims – many of whom were elderly and had not filed federal income tax returns in years – made tens of thousands of dollars in gambling winnings before losing nearly the identical amount.
The “losses” effectively canceled out the fabricated winnings, thus entitling the conspirators to a refund for the amount allegedly withheld on the initial winnings. As part of this scheme, Grigorian and his fellow conspirators directed the IRS to send the ill-gotten refunds to postal addresses and/or bank accounts under their control. The conspirators then would often circulate the money through several other accounts before withdrawing it and distributing the money amongst the group.
For his part, Grigorian admitted in court today that he stole the identities of people to use on the fraudulent tax returns, provided this personal information to conspirators, obtained fraudulent identification documents in the names of the stolen identity theft victims, facilitated the receipt of the ill-gotten funds, and enforced discipline on others related to the conspiracy. In all, Grigorian admitted to participating in filing false tax returns in the names of hundreds of victims. According to his plea agreement, Grigorian personally profited from his role in the organization’s activities.
Grigorian faces a maximum potential sentence of five years in prison. He is also required by the terms of his plea to make full restitution to the IRS for the losses caused by his criminal conduct, which totaled nearly $1.5 million.
Grigorian’s plea is the latest of 27 convictions following the September 2013 arrests of dozens of people in “Operation Trillion Troubles.” The four related cases charged the individuals with multiple tax fraud conspiracies and several schemes to defraud American banks. In all, over 58 defendants have been charged and 28 remain as international fugitives.
United States Attorney Laura E. Duffy praised the hard work of the agents from the FBI and IRS on their continued success in these related cases. "Today's guilty plea marks the culmination of the investigation and prosecution of a network of individuals whose scope of criminal actions was only exceeded by their brazen disregard for the sanctity of victims’ personal identity information. Our citizens’ identities are not commodities for criminals to trade and exploit for their own personal gain. Our office will continue to prosecute those who illegally take advantage of others at the expense of the American taxpayer."
FBI Acting Special In Charge Robert Howe commented, “Today's conviction is an example of the FBI's commitment to root out sophisticated fraudulent schemes by criminal enterprises. In this case, the defendant and his co-conspirators were involved in an elaborate scheme using Visa holders and stolen personal information to steal millions of dollars from American taxpayers. The FBI will continue to work with our law enforcement partners to protect American citizens from aggravated identity theft and protect our precious tax dollars from waste, fraud and abuse.”
Erick Martinez, Special Agent in Charge for IRS Criminal Investigation commented: “Identity theft and tax refund fraud was the lifeblood that Arthur Grigorian and his conspirators used to further their multi-million dollar fraud scheme. Operation Trillion Troubles exhibits the efforts of the IRS Criminal Investigation and the U.S. Attorney’s Office to protect the integrity of the federal tax administration system. Today’s guilty plea by Arthur Grigorian, the leader of the crime ring, demonstrates IRS Criminal Investigation’s commitment to holding accountable those individuals who victimize others through identity theft and tax refund fraud.”
DEFENDANT Case Number: Arthur Grigorian Age: 33 Glendale, CA CHARGESConspiracy to Commit Mail and Wire Fraud – Title 18, U.S.C., Section 371
Maximum penalty: 5 years’ imprisonment and $250,000 fine
PROGRESS OF CASES CHARGED AS PART OF
"OPERATION TRILLIONS TROUBLE"Summary: As of September 11, 2014, 27 (non-fugitive) defendants have been convicted.
13CR3479-BTM B Convictions (Conspiracy to commit wire fraud – All defendants)
Ernest Soloian
Harout Gevorgyan
Yvonne Mihailescu
Yermek Dossymbekov
Yelena Sklyarova
Vyacheslav Tsoy13CR3480-BTM B Conviction
Arman Eritsian – Conspiracy to commit wire fraud13CR3481-BTM B Convictions (Conspiracy to commit bank fraud – All defendants)
Karen Galstian
Vahag Stepanyan
George Karapetian
Christopher Buckely
Carlos Ferrufino
Akop Galstian
Farbob Golhassani
Paul Gonnelly
Tatyana Kabachinskya
David Megurian
Ashot Mnatsakanyan
Sedrak Movesyan
Robert Rodriguez
Christopher Ruiz13CR3482-BTM B Convictions (Conspiracy to commit bank fraud – All defendants)
INVESTIGATING AGENCIES
Hovakim Sogomonian
Harout Gevorgyan
Tigran Eritsyan
Konstantin Yugay
Mae Barbara WeissbergerFederal Bureau of Investigation
Internal Revenue Service
Los Angeles Police Department*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Lakewood Business Man Is Sentenced for Failing to File Income Tax Returns and Pays the IRS Approximately $2.9 MillionRead the Press Release
DENVER – Jeremy J. Shull, age 36, of Lakewood, CO, was sentenced earlier this week by U.S. District Court Judge William J. Martinez to serve 4 months in federal prison for failure to file tax returns, United States Attorney John F. Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Following his prison sentence, Shull was ordered to serve one year on supervised release. Shull was charged by an information on September 3, 2013 and plead guilty before Judge Martinez on October 7, 2013. As part of the plea agreement, he agreed to pay $1,268,478 in taxes, over $975,000 in penalties, and nearly $700,000 in interest. Shull paid these amounts in full prior to his sentencing hearing.
According to documents filed with the courts, the defendant’s relevant conduct began in January of 2002. From August 2004, Shull has been the sole owner and operator of Independent Roofing Specialists, LLC, ("Independent") a business which is and has been active in commercial and residential roofing in Colorado since 1999. Prior to August 2004, Shull operated Independent with another individual, first as a partnership and then as a two-member LLC.
During the calendar years 2002 through 2009, Independent was a profitable business that brought in substantial revenues. Shull knew his business had significant gross income for each of the calendar years that required him to file personal federal income tax returns with the Internal Revenue Service ("IRS"). As a result of his income from Independent from 2002 through 2009, Shull had federal income taxes due and owing totaling approximately $1,268,478, in the amounts of approximately: $34,807 for 2002; $46,636 for 2003; $113,422 for 2005; $215,708 for 2006; $548,780 for 2007; $205,538 for 2008; and $103,587 for 2009.
Particularly, for calendar year 2007, Independent had gross income of approximately $4,840,683, requiring Shull to file a personal income tax return on or before April15, 2008 with the IRS. Shull had approximately $548,780 in federal income tax due and owing for calendar year 2007. As part of the plea agreement, Shull agreed to file, and has filed, tax returns for all of the years in question.
“Failing to file income tax returns can come with criminal consequences,” said U.S. Attorney John Walsh. “In Mr. Shull’s case, he intentionally failed to report his income to the IRS. By hiding his income the court held him accountable for not paying his fair share of income taxes.”
The defendant is being prosecuted by Assistant U.S. Pegeen Rhyne.
“Income tax fraud is based on greed; individuals who commit tax fraud are merely stealing money and creating an unfair tax burden on honest tax paying citizens,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
This case was investigated by IRS Criminal Investigation with assistance from the Special Enforcement Program of the Internal Revenue Service.Lafayette Man Indicted for Tax Evasion, Making a False Tax ReturnRead the Press Release
LAFAYETTE, La. –A federal grand jury indicted a Lafayette man Wednesday for not listing more than $350,000 on an income tax return, U.S. Attorney Stephanie A. Finley announced.
Donald Domingues, 56, of Lafayette, was charged by a federal grand jury with one count of tax evasion and one count of making a false tax return. According to the indictment, when Domingues filed his U.S. Individual Income Tax Return, Form 1040 for calendar year 2007, he reported $259,725 as income and paid $64,909 in taxes. Domingues is accused of intentionally leaving out a $351,000 sales commission, which would have made his correct gross income $610,725 and his payment to the IRS 185,959.
If convicted, Domingues faces five years in prison and three years of supervised release for tax evasion, and he faces three years in prison and one year of supervised release for making a false statement in a tax return. He also faces up to a $100,000 fine and restitution.The IRS investigated the case. Assistant U.S. Attorney Howard C. Parker is prosecuting the case.
An indictment is merely an accusation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
Kuna Man Sentenced on Child Pornography ChargeRead the Press Release
BOISE - Ian Quincy Winn, 48, of Kuna, Idaho, was sentenced today to 60 months in prison, followed by ten years of supervised release for receipt and attempted receipt of sexually explicit images of minors, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge also ordered Winn to undergo sex offender treatment, and forfeit the computer equipment used in the crime. He pleaded guilty to the charge on April 7, 2014.
According to the plea agreement, Winn engaged in online chats with an undercover Homeland Security Investigations (HSI) special agent between October 2012 and July 2013. During these chats, Winn spoke extensively about his interest in the torture, rape and murder of a (fictitious) six-year-old child whom the undercover agent claimed was his niece. Winn did not know the child was fictitious. In June, Winn asked the undercover agent to send him a photo of the fictitious six-year-old performing a sexual act.
HSI special agents obtained a search warrant and served it at Winn’s home in Kuna on August 12, 2013. They seized several computers and electronic storage devices containing child pornography, including sexually explicit images of prepubescent females. Agents sent the images to the National Center for Missing and Exploited Children (NCMEC), which maintains a database of previously identified victims of abuse. The NCMEC reported that the images found on Winn’s computer included known victims from California, Texas, Belgium, Missouri, Indiana, Washington, the Republic of Moldova and Ukraine. Winn confessed that he had been conducting online searches for erotic and sexually explicit images of young girls for about three to four years. Judge Lodge ordered Winn to pay $2,000 in restitution to an identified child found within his child pornography collection.
The case was investigated by agents from the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), in Boise and North Platte, Nebraska, assisted by investigators from the United States Postal Inspection Service and the Kuna Police Department.
Homeland Security Investigations and the United States Postal Inspection Service are members of the Idaho Internet Crimes Against Children (ICAC) Task Force, a statewide coalition of local, state and federal law enforcement and prosecution agencies, focused on apprehending and prosecuting individuals who use the Internet to criminally exploit children. For more information about the Idaho ICAC Task Force and a list of all the participating agencies, visit www.icacidaho.org.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
Investigators, Prosecutors Combat Financial FraudRead the Press Release
International Audience of Professionals Meet and Discuss Strategies Fighting Crimes of Financial FraudSALEM, Ore. – For the 14th consecutive year, a unique financial crimes conference was held in Oregon this week. The Financial Crimes Digital Evidence Conference has become international in scope, attracting participants in past years from Europe and Asia. It brings together law enforcement investigators and prosecutors, financial institution fraud investigators, and corporate fraud investigators to learn how to apply the most recent technology to combat financial fraud. Financial fraud results in billions of dollars of losses annually in the United States and law enforcement officers in Oregon are determined to reduce the harm to consumers and to hold more offenders accountable.
Beginning on Tuesday, September 9, through Thursday, September 11, law enforcement investigators, prosecutors, financial institution fraud investigators, corporate fraud investigators and auditors have gathered at the Salem Convention Center to learn how to better investigate and prosecute financial fraud. The conference provides investigators and prosecutors who handle financial crimes, and private-sector personnel who assist them in doing so, tools to assist in the detection, investigation and prosecution of financial fraud. The conference is open to all city, county, state, and federal law enforcement officers and prosecutors; fraud investigators and security officers for financial institutions; internal auditors for public agencies; and private-sector personnel who assist law enforcement in the investigation of financial crimes.
The seminar address a variety of topics, including: (1) trends in online fraud; (2) the emerging role of law enforcement in response to data breaches; (3) social media investigations; (4) mortgage fraud; (5) digital and virtual currency; (6) consumer fraud schemes; (7) credit card fraud; (8) social security disability fraud, (9) financial exploitation of elders; and (10) state and federal search and seizure legal updates.
“The value of the Financial Crimes Digital Evidence Conference is reflected in its international audience,” said U.S. Attorney Amanda Marshall. “It supports a continuous need for training in the increasingly sophisticated area of financial fraud and reflects our desire to hold accountable those who victimize our citizens. The combined training of investigators and prosecutors fosters a team approach and provides immediate tools to better detect, investigate, and prosecute those who commit financial fraud.”
The 2014 Financial Crimes Digital Evidence Conference is sponsored by the United States Attorney’s Office, the Oregon Department of Justice, and the Oregon Department of Public Safety Standards and Training.
For further information, please contact Donna Maddux at 503-727-1000 or visit www.financialcrimesconference.com.
Hyde Park Man Sentenced to More Than 10 Years in Sex Trafficking CaseRead the Press Release
BOSTON – A Hyde Park man was sentenced today for transporting a woman from Massachusetts to New Jersey, Vermont and Pennsylvania for the purpose of prostituting her.
Darrell B. Graham, a/k/a Diamond, 52, was sentenced by U.S. District Judge Nathaniel M. Gorton to 150 months in prison, five years of supervised release, and $58,403 in restitution. In April 2014, Graham pleaded guilty to transporting a woman to engage in prostitution.
Graham promised a vulnerable, 19-year-old victim money and dreams of a better life. Instead, Graham took the victim’s identification documents, posted her picture on the Internet, instructed her to cut ties with her family and friends, and for the next two months prostituted her in hotel rooms in several states. Graham never paid the victim, and instead coerced her to engage in commercial sex through a scheme that included placing her in fear by using violence and threats of violence. Graham ultimately pleaded guilty to transporting the victim from Massachusetts to New Jersey on Aug. 18, 2011, from Massachusetts to Vermont on Sept. 19, 2011, and from Massachusetts to Pennsylvania on Sept. 24, 2011 for the purpose of engaging in prostitution.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case was prosecuted by Kristina E. Barclay and S. Theodore Merritt of Ortiz’s Civil Rights Enforcement Team.
- Houston Store Owner Sentenced for Identity Theft and Multiple Counts of Wire Fraud
Honduran Native Charged with Illegal ReentryRead the Press Release
Wilson Donaldo Cruz-Arias, 30, of Norristown, PA, was charged today by indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger. The indictment alleges that on or about August 12, 2014, Cruz-Arias, an alien, and native and citizen of Honduras, was found in the United States after having been deported from the United States on or about October 14, 2008 and August 26, 2010.
If convicted the defendant faces a maximum possible sentence of ten years.
The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Andrew J. Schell.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Click here to view the indictment.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Hewlett-Packard Russia Pleads Guilty to and <br /> Sentenced for Bribery of Russian Government OfficialsRead the Press Release
ZAO Hewlett-Packard A.O. (HP Russia), an international subsidiary of the California technology company Hewlett-Packard Company (HP Co.), pleaded guilty today to felony violations of the Foreign Corrupt Practices Act (FCPA) and was then sentenced for bribing Russian government officials to secure a large technology contract with the Office of the Prosecutor General of the Russian Federation.
Principal Deputy Assistant Attorney General Marshall L. Miller of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.
HP Russia pleaded guilty this morning before U.S. District Judge D. Lowell Jensen of the Northern District of California to conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA. According to the plea agreement, HP Russia executives created a multimillion dollar secret slush fund, at least part of which was used to bribe Russian government officials who awarded the company a contract valued at more than € 35 million.
At the conclusion of the plea proceeding, the court sentenced HP Russia to pay a $58,772,250 fine.
“In a brazen violation of the FCPA, Hewlett Packard’s Russia subsidiary used millions of dollars in bribes from a secret slush fund to secure a lucrative government contract,” said Principal Deputy Assistant Attorney General Miller. “Even more troubling was that the government contract up for sale was with Russia’s top prosecutor’s office. Tech companies, like all companies, must compete on a level playing field, not resort to secret books and sham transactions to hide millions of dollars in bribes. The Criminal Division has been at the forefront of this fight because when corruption takes hold overseas, American companies and the rule of law are harmed. Today’s conviction and sentencing are important steps in our ongoing efforts to hold accountable those who corrupt the international marketplace.”
“Today’s conviction and sentence of HP Russia demonstrates that the United States Attorney’s Office is dedicated to aggressively prosecuting all forms of corporate fraud that touch our district, wherever they may occur,” said U.S. Attorney Haag. “HP’s cooperation during the investigation is what we expect of major corporate leaders facing the challenges of doing business around the world.”
“For more than a decade HP Russia business executives participated in an elaborate scheme that involved paying bribes to government officials in exchange for large contracts,” said FBI Assistant Director in Charge McCabe. “There is no place for bribery in any business model or corporate culture. Along with the Department of Justice, the IRS and international law enforcement partners, the FBI is committed to investigating corrupt backroom deals that threaten our global commerce.”“HP Russia thought that they could play by a different set of rules than the rest of the international business community,” said IRS-CI Chief Weber. “Unfortunately, they are not alone. For other companies out there conducting business in this way, let the message be very clear—we will relentlessly follow the money trail. IRS-CI is a trusted leader in the pursuit of corporations and executives who circumvent the law. CI is committed to maintaining fair competition, free of corrupt. practices, through a potent synthesis of global teamwork and our dynamic financial investigative talents.”
According to the statement of facts filed with the plea agreement, HP Russia created excess profit margins to finance the slush fund through an elaborate buy-back deal scheme. HP subsidiaries first sold the computer hardware and other technology products called for under the contract to a Russian channel partner, then bought the same products back from an intermediary at a nearly €8 million mark-up and an additional €4.2 million in purported services, then sold the same products to the Office of the Prosecutor General of the Russian Federation at the increased price. The payments to the intermediary were then largely transferred through multiple layers of shell companies, some of which were directly associated with government officials. Proceeds from the slush fund were spent on travel services, luxury automobiles, expensive jewelry, clothing, furniture and various other items.
To keep track of and conceal these corrupt payments, the conspirators inside HP Russia kept two sets of books: secret spreadsheets that detailed the categories of bribe recipients, and sanitized versions that hid the bribes from others outside of HP Russia. They also entered into off-the-books side agreements to further mask the bribes. As one example, an HP Russia executive executed a letter agreement to pay €2.8 million in purported “commission” fees to a U.K.-registered shell company, which was linked to a director of the Russian government agency responsible for managing the Office of the Prosecutor General of the Russian Federation project. HP Russia never disclosed the existence of the agreement to internal or external auditors or management outside of HP Russia.
On April 9, 2014, the government also announced criminal resolutions with HP subsidiaries in Poland and Mexico which violated the FCPA in connection with contracts with Poland’s national police agency and Mexico’s state-owned petroleum company, respectively. Pursuant to a deferred prosecution agreement, the department filed a criminal information charging Hewlett-Packard Polska, Sp. Z o.o. with violating the accounting provisions of the FCPA. Hewlett-Packard Mexico, S. de R.L. de C.V. entered into a non-prosecution agreement with the government pursuant to which it has agreed to forfeit proceeds and has admitted and accepted responsibility for its misconduct. In total, the three HP entities will pay $76,760,224 in criminal penalties and forfeiture.
In a related FCPA matter, the U.S. Securities and Exchange Commission (SEC) filed a proposed final judgment in April 2014 to which HP Co. consented. Under the terms of the proposed final judgment, HP Co. has paid $31,472,250 in disgorgement, prejudgment interest and civil penalties, bringing the total amount of U.S. criminal and regulatory penalties against HP Co. and its subsidiaries to more than $108 million.
Court filings acknowledge HP Co.’s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department. Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees, and enhancing HP Co.’s internal accounting, reporting, and compliance functions.
The case is being investigated by the FBI’s Washington Field Office with assistance from the FBI’s New York Field Office and FBI Legal Attaché offices in Mexico City, Moscow, Berlin and Warsaw, and the IRS-CI’s Oakland Field Office. The case is being prosecuted by Trial Attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Adam A. Reeves of the Northern District of California. The Criminal Division’s Office of International Affairs also provided significant assistance in this matter.
The Justice Department expresses its deep appreciation for the significant assistance provided by the SEC’s Division of Enforcement, the Polish Anti-Corruption Bureau, the Polish Appellate Prosecutor’s Office, the Public Prosecutor’s Office in Dresden, Germany, and our law enforcement partners in Mexico, the United Kingdom, Lithuania, Latvia, Italy, Spain and Hungary.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa .Hewlett-Packard Russia Pleads Guilty to and Sentenced for Bribery of Russian Government OfficialsRead the Press Release
SAN FRANCISCO – ZAO Hewlett-Packard A.O. (HP Russia), an international subsidiary of the California technology company Hewlett-Packard Company (HP Co.), pleaded guilty today to felony violations of the Foreign Corrupt Practices Act (FCPA) and was then sentenced for its role in bribing Russian government officials to secure a large technology contract with the Office of the Prosecutor General of the Russian Federation.
U.S. Attorney Melinda Haag of the Northern District of California, Principal Assistant Attorney General Marshall L. Miller of the Justice Department’s Criminal Division, Acting Assistant Director in Charge Timothy A. Gallagher of the FBI’s Washington Field Office and Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.
HP Russia pleaded guilty this morning before U.S. District Judge D. Lowell Jensen of the Northern District of California to conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA. According to the plea agreement, HP Russia executives created a multimillion dollar secret slush fund, at least part of which was used to bribe Russian government officials who awarded the company a contract valued at more than €35 million.
At the conclusion of the plea proceeding, the court sentenced HP Russia to pay a $58,772,250 fine.
“Today’s conviction and sentence of HP Russia demonstrates that the United States Attorney’s Office is dedicated to aggressively prosecuting all forms of corporate fraud that touch our district, wherever they may occur,” said U.S. Attorney Haag. “HP’s cooperation during the investigation is what we expect of major corporate leaders facing the challenges of doing business around the world.”
“In a brazen violation of the FCPA, Hewlett Packard’s Russia subsidiary used millions of dollars in bribes from a secret slush fund to secure a lucrative government contract,” said Principal Deputy Assistant Attorney General Miller. “Even more troubling was that the government contract up for sale was with Russia’s top prosecutor’s office. Tech companies, like all companies, must compete on a level playing field, not resort to secret books and sham transactions to hide millions of dollars in bribes. The Criminal Division has been at the forefront of this fight because when corruption takes hold overseas, American companies and the rule of law are harmed. Today’s conviction and sentencing are important steps in our ongoing efforts to hold accountable those who corrupt the international marketplace.”
“For more than a decade HP Russia business executives participated in an elaborate scheme that involved paying bribes to government officials in exchange for large contracts,” said Assistant Director in Charge McCabe. “There is no place for bribery in any business model or corporate culture. Along with the Department of Justice, the IRS and international law enforcement partners, the FBI is committed to investigating corrupt backroom deals that threaten our global commerce.”
“HP Russia thought that they could play by a different set of rules than the. rest of the international business community,” said Chief Richard Weber, IRS Criminal Investigation. “Unfortunately, they are not alone. For other companies out there conducting business in this way, let the message be very clear—we will relentlessly follow the money trail. IRS-CI is a trusted leader in the pursuit of corporations and executives who circumvent the law. CI is committed to maintaining fair competition, free of corrupt. practices, through a potent synthesis of global teamwork and our dynamic financial investigative talents.”
According to the statement of facts filed with the plea agreement, HP Russia created excess profit margins to finance the slush fund through an elaborate buy-back deal scheme. HP subsidiaries first sold the computer hardware and other technology products called for under the contract to a Russian channel partner, then bought the same products back from an intermediary at a nearly €8 million mark-up and an additional €4.2 million in purported services, then sold the same products to the Office of the Prosecutor General of the Russian Federation at the increased price. The payments to the intermediary were then largely transferred through multiple layers of shell companies, some of which were directly associated with government officials. Proceeds from the slush fund were spent on travel services, luxury automobiles, expensive jewelry, clothing, furniture and various other items.
To keep track of and conceal these corrupt payments, the conspirators inside HP Russia kept two sets of books: secret spreadsheets that detailed the categories of bribe recipients, and sanitized versions that hid the bribes from others outside of HP Russia. They also entered into off-the-books side agreements to further mask the bribes. As one example, an HP Russia executive executed a letter agreement to pay €2.8 million in purported “commission” fees to a U.K.-registered shell company, which was linked to a director of the Russian government agency responsible for managing the Office of the Prosecutor General of the Russian Federation project. HP Russia never disclosed the existence of the agreement to internal or external auditors or management outside of HP Russia.
On April 9, 2014, the government also announced criminal resolutions with HP subsidiaries in Poland and Mexico which violated the FCPA in connection with contracts with Poland’s national police agency and Mexico’s state-owned petroleum company, respectively. Pursuant to a deferred prosecution agreement, the department filed a criminal information charging Hewlett-Packard Polska, Sp. Z o.o. with violating the accounting provisions of the FCPA. Hewlett-Packard Mexico, S. de R.L. de C.V. entered into a non-prosecution agreement with the government pursuant to which it has agreed to forfeit proceeds and has admitted and accepted responsibility for its misconduct. In total, the three HP entities will pay $76,760,224 in criminal penalties and forfeiture.
In a related FCPA matter, the U.S. Securities and Exchange Commission (SEC) filed a proposed final judgment in April 2014 to which HP Co. consented. Under the terms of the proposed final judgment, HP Co. has paid $31,472,250 in disgorgement, prejudgment interest and civil penalties, bringing the total amount of U.S. criminal and regulatory penalties against HP Co. and its subsidiaries to more than $108 million.
Court filings acknowledge HP Co.’s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department. Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees, and enhancing HP Co.’s internal accounting, reporting, and compliance functions.
The case is being prosecuted by Assistant U.S. Attorney Adam A. Reeves of the Northern District of California, Trial Attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s Fraud Section with the assistance of Phillip Villanueva, Maryam Beros and Bridget Kilkenny of the Northern District of California. The Criminal Division’s Office of International Affairs also provided significant assistance in this matter. The case is being investigated by the FBI’s Washington Field Office with assistance from the FBI’s New York Field Office and FBI Legal Attache offices in Mexico City, Moscow, Berlin and Warsaw, and the IRS-CI’s Oakland Field Office.
The Justice Department expresses its deep appreciation for the significant assistance provided by the SEC’s Division of Enforcement, the Polish Anti-Corruption Bureau (CBA), the Polish Appellate Prosecutor’s Office, the Public Prosecutor’s Office in Dresden, Germany, and our law enforcement partners in Mexico, the United Kingdom, Lithuania, Latvia, Italy, Spain and Hungary.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
(HP Russia plea agreement )
(HP Russia information )
(HP Poland information )
(HP Poland DPA )
(HP Mexico NPA )
Harrisburg Man Indicted on Cocaine and Firearm ChargesRead the Press Release
The United States Attorney's Office for the Middle District of Pennsylvania announced that Reginald Barton, Jr., 28, of Harrisburg, Pennsylvania was indicted yesterday by a federal grand jury in Harrisburg on charges of Possession of a Firearm by a Convicted Felon, Possession of a Firearm in furtherance of Drug Trafficking, and Possession With Intent to Distribute a Controlled Substance.
According to United States Attorney Peter Smith, the charges are a result of an incident in which Barton allegedly shot at a Harrisburg Police officer during a traffic stop, fled, and was ultimately apprehended after discarding a firearm and a bag containing crack cocaine.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Harrisburg Police Bureau as part of a joint continuing effort to curb violent crime. This case is being prosecuted by Assistant United States Attorney Meredith A. Taylor.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is life 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.
Habitual Domestic Assault Offender from Zuni Pueblo Sentenced to Forty Months in Federal PrisonRead the Press Release
ALBUQUERQUE – Bobby Concho, 53, was sentenced this morning to 40 months in federal prison followed by two years of supervised release for his conviction on assault and domestic assault by a habitual offender charges. The sentence was announced by U.S. Attorney Damon P. Martinez and Chief Timothy Trimble of the Zuni Pueblo Tribal Police Department.
Concho, a member and resident of Zuni Pueblo, N.M., was arrested on Feb. 25, 2014, on a two-count indictment charging him with assault with a dangerous weapon and domestic assault by a habitual offender. The indictment alleged that Concho assaulted his intimate partner with a metal folding chair on June 23, 2013, in Indian Country in McKinley County, N.M. Concho was charged as a habitual offender because he previously had been convicted on domestic assault charges in the Zuni Tribal Court in 2006 and in the McKinley County Magistrate Court in 2004.
On May 2, 2014, Concho entered a guilty plea to both counts of the indictment. In entering his guilty plea, Concho admitted assaulting his intimate partner on June 23, 2013, by striking her in the face multiple times with a closed fist and hitting her with a metal folding chair with the intention of causing bodily harm. Concho acknowledged committing the assault within Zuni Pueblo.
This case was investigated by the Zuni Pueblo Tribal Police Department and was prosecuted by Tribal Special Assistant U.S. Attorney David Adams. The case was brought pursuant to the Tribal Special Assistant U.S. Attorney (Tribal SAUSA) Pilot Project in the District of New Mexico which is sponsored by the Justice Department’s Office on Violence Against Women under a grant administered by the Pueblo of Laguna. The Tribal SAUSA Pilot Project seeks to train tribal prosecutors in federal law, procedure and investigative techniques to increase the likelihood that every viable violent offense against Native women is prosecuted in either federal court or tribal court, or both. The Tribal SAUSA Pilot Project was largely driven by input gathered from annual tribal consultations on violence against women, and is another step in the Justice Department's on-going efforts to increase engagement, coordination and action on public safety in tribal communities.
Georgia Resident Sentenced to 78 Months in Federal Prison for Role in Investment Fraud SchemeRead the Press Release
Persuaded Investors To Invest Ira Funds In Residential Real Estate Project In Vernal, UtahSALT LAKE CITY - Martin A. Pool, age 44, of Atlanta, Georgia, who pleaded guilty in May to securities fraud and money laundering in connection with an investment fraud scheme related to a real estate project in Vernal, Utah, will serve 78 months in federal prison. Pool also must pay restitution of $8,066,596.88. U.S. District Judge Dale Kimball imposed the sentence Wednesday afternoon in U.S. District Court in Salt Lake City.
Pool will self-surrender to begin serving his federal sentence on Dec. 1, 2014.
Pool and a co-defendant, Armand R. Franquelin, age 57, of Liberty, Utah, were charged in a three-count felony information filed in April. As a part of a plea agreement reached with federal prosecutors, Pool and Franquelin admitted that from 2006 to 2010, they participated in persuading investors to convert their traditional IRAs to self-directed IRA accounts and invest their funds in a residential real estate project known as Haven Estates in Vernal, Utah. This was accomplished by inducing the investors to direct their funds to their company, The Elva Group, in return for promissory notes from Elva with a promise of monthly interest payments at annual rates between 8 percent and 20 percent. Pool and Franquelin admitted they told investors that their funds would be used to develop Haven Estates and promised to secure their loans with first lien positions in property at Haven Estates. In fact, no investors ever received any collateral or any interest in real property in Haven Estates or anywhere else.
In reality, the plea agreement says, investors’ funds were used for purposes other than the development of Haven Estates. Investors were not told of encumbrances already in place on Haven Estates. When Elva began defaulting on the mortgage loan for Haven Estates, investors were not immediately informed. Eventually, Haven Estates was foreclosed.
Pool and Franquelin admitted that these actions were taken in connection with the investors’ purchase of securities, namely the promissory notes and loan agreements. They also admitted that these representations were made for the purpose of defrauding investors.
According to the plea agreement, investors’ funds were used by Pool and Franquelin and their associates for their personal benefit and to pay interest to earlier investors as Ponzi payments. The Ponzi payments had the effect of lulling the earlier investors, persuading them to leave their funds in the company and inducing them to renew their promissory notes from time to time. The payments also enticed new investors to invest.
Pool and Franquelin each pled guilty to one count of securities fraud and one count of money laundering. Sentencing for Franquelin is set for Sept. 22, 2014, at 2:30 p.m. before Judge Kimball.
As a part of the plea agreement, Pool and Franquelin agreed to pay restitution of $$8,066,596.88 to victims of the fraud, including victims of uncharged relevant conduct. Alabama victims invested more than $500,000 in this scheme.
“The U.S. Attorney’s Office in Utah has a long standing commitment to aggressively prosecuting fraudsters who target residents of our state and others around the country. These successful prosecutions serve as a deterrent to this criminal conduct. Most importantly, however, they vindicate the rights of victims who are harmed by the conduct of those involved in fraudulent schemes,” Acting U.S. Attorney for Utah Carlie Christensen said today.
The case was a multi-jurisdictional investigation by special agents of the FBI and IRS-Criminal Investigation; the Utah Department of Commerce, Division of Securities; and the Alabama Securities Commission with assistance from the office of Baldwin County, Alabama, District Attorney Hallie S. Dixon (28th Judicial Circuit). Alabama victims of the scheme invested more than $500,000.
Alabama Securities Commission Director Joseph Borg, said, "This Commission is proud to have joined the collaborative efforts of the federal and state law enforcement agencies and their professional staff members to see that justice is served for the victims in this important case. The outcome resulted from a team approach between the U.S. Attorney's Office in Utah, the Utah Department of Commerce's Division of Securities, the FBI, the IRS, and the ASC Enforcement and Legal Divisions to send a message that this financial crime, and others like it, will not be tolerated and will be prosecuted to the fullest extent of the law."
“This sentence demonstrates that taking money from investors under false pretenses and using it for your own personal benefit as Pool did won’t be tolerated. IRS Criminal Investigation is proud to bring our forensic accounting skills to this investigation and, working side-by-side with our law enforcement partners and prosecutors, help put a stop to this and other types of white collar crime,” said John Collins, IRS Criminal Investigation Special Agent in Charge of Utah.
Galax Woman Sentenced on Social Security Fraud ChargesRead the Press Release
ABINGDON, VIRGINIA – A former sponsored residential services provider, who pled guilty in May to charges that she illegally converted Social Security disability benefits for her own use, was sentenced yesterday in the United States District Court for the Western District of Virginia in Abingdon.
Tamara Rochelle Cox Parnell, 36, Galax, Virginia, waived her right to be indicted on May 13, 2014 and pled guilty to two counts of knowingly and willfully converting to her own use Social Security disability payments to another for which she was representative payee. Yesterday in District Court, Parnell was sentenced to four months imprisonment and three years of supervised release. She was also ordered to pay $34,899 in restitution.
Parnell has admitted that while serving as a sponsored residential services provider for Victim 1, a mentally disabled adult, she willfully and without the knowledge of Victim 1, converted $29,715 of Social Security disability benefits paid to Victim 1 to her own personal use.
The investigation of the case was conducted by the Galax Police Department and the United States Secret Service. Assistant United States Attorney Jennifer Bockhorst prosecuted the United States.
Gaffney Man Sentenced to 78 Months on Child Porn ChargesRead the Press Release
Contact Person: Bill Watkins (864) 282-2100
Columbia, South Carolina ---- United States Attorney Bill Nettles stated today that Donald Howard Smiley, age 38, of Gaffney, was sentenced today in federal court in Anderson, for possession of child pornography, a violation of Title 18, United States Code, Section 2255A. Senior United States District Judge G. Ross Anderson, Jr. of Anderson sentenced Smiley to 78 months imprisonment and ordered that he be on supervised release for five years.
Evidence presented at the change of plea hearing established that law enforcement discovered that a cell phone in the Gaffney area was being used to store and receive child pornography. Further investigation revealed that the mobile device belonged to Smiley. A search of the device led to the discovery of 138 still images and 26 videos of child pornography. After being confronted with the evidence, Smiley waived his Miranda rights and admitted to his involvement with child pornography.
The case was investigated by agents of the Gaffney Police Department, the Cherokee County Sheriff’s Department, and the Federal Bureau of Investigation. Assistant United States Attorney Bill Watkins of the Greenville office handled the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys Offices, 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 identify and rescue victims. For more information, please visit www.projectsafechildhood.gov.Former TD Bank Employee and Co-Defendant Sentenced in Identity Theft Tax Fraud SchemeRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Donnell Young, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Paula Reid, Special Agent in Charge, U.S. Secret Service (USSS), announce that Tenisha Nkesha Francis, 32, of Lake Worth, and Ryan Michael Francis, 27, of Riviera Beach, were sentenced today before Senior U.S. District Judge Kenneth L. Ryskamp for their participation in a stolen identity tax refund scheme. Tensiha Francis was sentenced to 42 months in prison, three years of supervised release and ordered to pay $117,002 in restitution. Ryan Francis was sentenced to 57 months in prison, three years of supervised release and ordered to pay $202,720 in restitution.
The defendants each previously pled guilty to one count of aggravated identity theft, in violation of Title 18, United States Code, Sections 1028A(a)(1) and 2, and one count of theft of government funds, in violation of Title 18, United States Code, Sections 641 and 2.
According to court documents, Tenisha Francis worked as a Financial Services Representative at TD Bank. Tenisha Francis opened seven fraudulent accounts at the bank with stolen identification information obtained from co-defendant Ryan Francis. She was paid between $200 and $500 to open each fraudulent account. After opening the accounts, Tenisha Francis performed maintenance on these accounts and changed certain identifiers associated with the accounts, such as customers’ dates of birth, addresses and telephone numbers. Stolen U.S. Treasury checks were deposited into the accounts, and funds were withdrawn via check card purchases, ATM withdrawals and checks payable to third parties including Ryan Francis and his wife, Vanessa Brown, and Ryan Francis’ company, J.A. Kingz Automotive, LLC.
Mr. Ferrer commended the investigative efforts of IRS-CI and the USSS. The case was prosecuted by Assistant U.S. Attorney Rinku Tribuiani.
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.
Former Federal Employee Who Stole Government Property for Home Improvement Projects Is SentencedRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that VENITA GODFREY-SCOTT, 48, of New Haven, was sentenced today by U.S. District Judge Robert N. Chatigny in Hartford to four years of probation, the first six months of which GODFREY-SCOTT must spend in home confinement with electronic monitoring, for stealing government property that she used for various home improvement projects. GODFREY-SCOTT was also ordered to perform 120 hours of community service and to pay restitution in the amount of $15,000.
According to court documents and statements made in court, GODFREY-SCOTT was employed by the U.S. Department of Veterans Affairs (“VA”) at the Medical Center in West Haven as a supervisor in the Facilities Management Service, which is responsible for carpentry, paint, locks, doors, and other minor construction projects at the Medical Center. From approximately 2010 until 2013, GODFREY-SCOTT directed VA employees that she supervised to perform home improvement projects at her private residence, including a deck in her backyard, carpet installation, and various kitchen, bathroom and basement improvements. GODFREY-SCOTT directed the employees to use materials, supplies, tools, and vehicles belonging to the VA, and also had the employees purchase necessary materials at local stores using her government-issued credit card. She sometimes directed the employees to work on her home improvement projects during their regular work hours while they were being paid by the VA. The total loss to the government as a result of GODFREY-SCOTT’s criminal conduct is estimated to be between $15,000 and $20,000.
On May 14, 2014, GODFREY-SCOTT pleaded guilty to one count of theft of government property.
This matter was investigated by the Department of Veterans Affairs Office of Inspector General, the Department of Veterans Affairs Police and the General Services Administration Office of Inspector General Northeast Regional Investigations Office. The case was prosecuted by Assistant U.S. Attorney Neeraj N. Patel.PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]Former Federal Corrections Officer Pleads Guilty to Bribery ChargeRead the Press Release
Ocala, Florida – United States Attorney A. Lee Bentley, III announces that Jason Monroe Epstein (29, Orlando) has pleaded guilty to a one-count indictment charging him with receipt of a bribe by a public official. Epstein faces a maximum penalty of 15 years in federal prison. A sentencing date has not yet been set.
According to the plea agreement, Epstein was employed as a Corrections Officer by the Federal Bureau of Prisons at the Coleman Federal Correctional Complex in Sumter County. Based on information from inmates at the facility, agents discovered that Epstein had been smuggling marijuana and tobacco products into the prison. In exchange for these items, the inmates had arranged for third parties to send Epstein numerous wire transfers under false names.
During the course of the investigation, Epstein was interviewed by agents and admitted that he had smuggled marijuana and tobacco into the prison over a two-year period, from April 2012 to April 2014. Epstein also admitted that he had received “hundreds of dollars” in illegal payments for his actions.
This case was investigated by Federal Bureau of Investigation and the Department of Justice, Office of the Inspector General. It is being prosecuted by Assistant United States Attorney Robert E. Bodnar, Jr.
Former Defense Contractor Sentenced to Prison for Theft of Employee Payroll Taxes and Pension Plan ContributionsRead the Press Release
The former head of a Virginia-based defense contracting company was sentenced today to serve 18 months in prison for failing to collect and pay more than $2.2 million in employee payroll taxes and engaging in theft of more than $186,000 from an employee pension plan.
Deputy Assistant Attorney General Ronald Cimino for the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia, Special Agent in Charge Thomas J. Kelly for the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington, D.C., Field Office and Assistant Secretary Phyllis C. Borzi of the U.S. Department of Labor-Employee Benefits Security Administration made the announcement after sentencing.
William P. Danielczyk Jr., 53, formerly of Oakton, Virginia, was additionally ordered to serve three years of supervised release after his prison sentence and to pay more than $1.6 million in restitution to the IRS. U.S. District Judge James C. Cacheris delivered the sentence and it will be served consecutively to the 28 months in prison the defendant is already serving for committing campaign finance violations during the 2008 presidential primary and a 2006 U.S. Senate campaign.
Danielczyk pleaded guilty on June 10. According to court documents, from March 2009 until December 2011, Danielczyk was the executive chairman of Innolog Holdings Corporation, which acquired Innovative Logistics Technology Inc. in March 2009. Innovative operated in the government services industry and provided technology-supported logistics services to the U.S. military and various defense organizations. The principal offices for Innovative and Innolog were located in McLean, and later in Fairfax, Virginia.
From mid-2009 through the end of 2011, Danielczyk was responsible for collecting, accounting for and paying appropriate payroll tax amounts to the IRS. Although payroll taxes were withheld from the wages of Innovative’s employees, Danielczyk failed to pay both the employee withholdings amounts and the employer’s matching portions to the IRS. The total tax loss during this time period was $2,232,781.
According to court documents, Innovative’s employees were allowed to contribute money from their bi-weekly paychecks to a qualified pension plan that was administered by an asset custodian (initially Prudential Bank & Trust and later Fidelity Investments). Under the 401(k) plan, Innovative withheld its employees’ elected contribution amounts from their regular paychecks, and the employee withholdings were to be sent to Prudential or Fidelity. Danielczyk, however, was the person responsible for authorizing payments to the asset custodian, and he failed to send these payments over the course of three years. From 2009 through 2011, this conduct led to a total loss of $186,263.
According to court records, instead of paying Innovative’s employment taxes and pension plan contributions, Danielczyk made a variety of purchases from company accounts. Those purchases included $505,871 for the use of an executive suite in the FedEx Field football stadium in Landover, Maryland, along with $40,000 to sponsor the Virginia Gold Cup, a series of Steeple Chase horse races held in northern Virginia.
Danielczyk was sentenced in Alexandria, Virginia, federal court on May 31, 2013, to serve 28 months in prison for engaging in a campaign finance scheme in which he conspired to illegally reimburse more than $186,000 in contributions to the senate and presidential campaign committees of a candidate for federal office, engaged in obstruction of justice, and caused the candidate’s campaign committee to unwittingly file Federal Election Commission reports that contained false information. Court records show that Danielczyk continued to fail to pay Innovative’s employee taxes and pension plan contributions even after he was indicted in the campaign finance case in February 2011.
The tax and pension fraud case was investigated by IRS-CI and the U.S. Department of Labor-Employee Benefits Security Administration’s Philadelphia Regional Office. Assistant U.S. Attorney Mark D. Lytle for the Eastern District of Virginia and Trial Attorney Tracy L. Gostyla of the Tax Division prosecuted the case. Additional information about the Tax Division and its enforcement efforts may be found at the division website.
Former Defense Contractor Sentenced to Prison for Theft of Employee Payroll Taxes and 401(k) ContributionsRead the Press Release
ALEXANDRIA, Va. – The former head of a Virginia-based defense contracting company was sentenced today to serve 18 months in prison for failing to collect and pay more than $2.2 million in employee payroll taxes and engaging in theft of more than $186,000 from an employee pension plan.
U.S. Attorney Dana J. Boente for the Eastern District of Virginia; Deputy Assistant Attorney General Ronald Cimino for the Justice Department’s Tax Division; Special Agent in Charge Thomas J. Kelly for the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington, D.C. Field Office; and Assistant Secretary Phyllis C. Borzi of the U.S. Department of Labor-Employee Benefits Security Administration made the announcement after sentencing.
William P. Danielczyk Jr., 53, formerly of Oakton, Virginia, was ordered to serve three years of supervised release after his prison sentence and to pay more than $1.6 million in restitution to the IRS. U.S. District Judge James C. Cacheris imposed the sentence, and it will be served consecutively to the 28 months in prison the defendant is already serving for committing campaign finance violations during the 2008 presidential primary and a 2006 U.S. Senate campaign.
Danielczyk pleaded guilty on June 10, 2014. According to court documents, from March 2009 until December 2011, Danielczyk was the executive chairman of Innolog Holdings Corporation, which acquired Innovative Logistics Technology Inc. in March 2009. Innovative operated in the government services industry and provided technology-supported logistics services to the U.S. military and various defense organizations. The principal offices for Innovative and Innolog were located in McLean, and later in Fairfax, Virginia.
From mid-2009 through the end of 2011, Danielczyk was responsible for collecting, accounting for and paying appropriate payroll tax amounts to the IRS. Although payroll taxes were withheld from the wages of Innovative’s employees, Danielczyk failed to pay both the employee withholdings amounts and the employer’s matching portions to the IRS. The total tax loss during this time period was $2,232,781.
According to court documents, Innovative’s employees were allowed to contribute money from their bi-weekly paychecks to a qualified pension plan that was administered by an asset custodian (initially Prudential Bank & Trust and later Fidelity Investments). Under the 401(k) plan, Innovative withheld its employees’ elected contribution amounts from their regular paychecks and the employee withholdings were to be sent to Prudential or Fidelity. Danielczyk was the person responsible for authorizing payments to the asset custodian, and he failed to send these payments over the course of three years. From 2009 through 2011, this conduct led to a total loss of $186,263.
According to court records, instead of paying Innovative’s employment taxes and pension plan contributions, Danielczyk made a variety of purchases from company accounts. Those purchases included $505,871 for the use of an executive suite in the FedEx Field football stadium in Landover, Maryland, along with $40,000 to sponsor the Virginia Gold Cup, a series of Steeple Chase horse races held in northern Virginia.
Danielczyk was sentenced in Alexandria federal court on May 31, 2013 to serve 28 months in prison for engaging in a campaign finance scheme in which he conspired to illegally reimburse more than $186,000 in contributions to the senate and presidential campaign committees of a candidate for federal office, engaged in obstruction of justice, and caused the candidate’s campaign committee to unwittingly file Federal Election Commission reports that contained false information. Court records show that Danielczyk continued to fail to pay Innovative’s employee taxes and pension plan contributions even after he was indicted in the campaign finance case in February 2011.
The tax and pension fraud case was investigated by IRS-CI and the U.S. Department of Labor-Employee Benefits Security Administration’s Philadelphia Regional Office. Assistant U.S. Attorney Mark D. Lytle for the Eastern District of Virginia and Trial Attorney Tracy L. Gostyla of the Tax Division prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the U.S. District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:14-cr-146.