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14 October 2014
Former Senior Finance Analyst at Pharmaceutical Company Charged in Manhattan Federal Court with Insider TradingRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that ZACHARY ZWERKO was arrested on securities fraud charges stemming from his involvement in an insider trading scheme. Specifically, ZWERKO passed material nonpublic information about potential merger and acquisition activity related to certain pharmaceutical companies to a co-conspirator, who then traded on the information, resulting in profits of approximately $722,000. ZWERKO was arrested on Friday, October 10, 2014, in Cambridge, Massachusetts, and is expected to be presented today in Boston federal court before a United States Magistrate Judge.
Manhattan U.S. Attorney Preet Bharara said: “Today we announce charges against yet another individual for alleged insider trading. As alleged, Zachary Zwerko was a spy in the camp of his own company who passed secret merger and acquisition information to his co-conspirator so that lucrative illegal trades could be made. Those with access to inside information who contemplate releasing it for financial profit should understand that this Office and our law enforcement partners will track them down and prosecute them.”
FBI Assistant Director-in-Charge George Venizelos said: “Zwerko is charged, like so many others, with insider trading. This is a crime that undermines the public’s faith in our financial markets and puts companies at risk. The FBI remains committed to curbing corruption to better ensure fairness in the marketplace.”
According to the allegations contained in the Complaint unsealed in Manhattan federal court:
From at least 2012 through the present, ZWERKO was engaged in an insider trading scheme related to the acquisitions of certain pharmaceutical companies. ZWERKO, a Senior Finance Analyst in the Financial Evaluation and Analysis Group of a pharmaceutical company that operates in New Jersey (the “Pharma Company”), performed work in connection with numerous potential and actual corporate transactions, including acquisitions. As a Financial Evaluation and Analysis Group employee, ZWERKO had access to a computer directory maintained by the Pharma Company that contained material, nonpublic information related to the Pharma Company’s potential acquisitions.
On multiple occasions, ZWERKO passed to another person (“CC-1”) material, nonpublic information related to future acquisitions by the Pharma Company, including the identities of companies that were in negotiations with the Pharma Company for potential acquisitions (the “Target Companies”). CC-1 then traded in the securities of the Target Companies. The Target Companies were later acquired, in one instance by the Pharma Company, and the prices of the shares of the Target Companies increased after the acquisitions were announced publicly. CC-1 then sold CC-1’s positions in the shares of the Target Companies, thereby profiting from the movement in stock price. From this illegal trading, CC-1 earned profits of at least approximately $722,000.
ZWERKO, 32, is charged with one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
The U.S. Securities and Exchange Commission (“SEC”) announced civil charges against ZWERKO in a separate action.
Mr. Bharara praised the work of the Federal Bureau of Investigation, and thanked the SEC for its assistance. He added that the investigation is continuing.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jessica Masella and Edward Kim are in charge of the prosecution.
The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Former Charlotte Mayor Patrick D. Cannon Sentenced to 44 Months in PrisonRead the Press Release
CHARLOTTE, N.C. – Today, Chief U.S. District Judge Frank D. Whitney sentenced former Charlotte Mayor Patrick D. Cannon, 47, to 44 months in prison followed by two years of supervised release for accepting more than $50,000 in bribes while serving in office, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division. Judge Whitney also ordered Cannon to pay a $10,000 fine and forfeiture in the amount of $50,500.
U.S. Attorney Tompkins stated, “Patrick Cannon betrayed the public’s trust and embarrassed the city he was elected to serve. Cannon accepted more than $50,000 in bribes, but the social injury to this community is far deeper. While the perception of rampant public corruption can slowly tear a community apart, justice can bind us together and restore our faith in our government. Today, Cannon was held accountable for using his official position for personal gain. His sentence is also a reminder that my office will prosecute those who put personal interests ahead of the people they were elected to serve.”
“Patrick Cannon sold his oath of office, violated the integrity of our government, and betrayed the citizens of Charlotte. Public corruption will not be tolerated; no matter the position or names of those involved. As outlined in the criminal complaint, the FBI is uniquely positioned to dedicate whatever resources necessary to expose even the most deeply entrenched and secretive pay to play schemes," said John Strong, Special Agent in Charge of the FBI in North Carolina.
According to filed court documents and today’s sentencing hearing, from 2009 to March 2014, while serving as City Council Member and/or Mayor Pro Tem, and later as the Mayor of Charlotte, Cannon solicited and accepted bribes such as gifts, cash and other things of value totaling over $50,000, in exchange for a pattern of official actions. Court records show that Cannon accepted the bribes from a Charlotte business owner and two undercover agents posing as investors interested in opening businesses in Charlotte, in exchange for use of his official position on an “as needed” basis. Court records indicate that Cannon promised to use his influence with city and county officials and others to assist his payors’ with business projects and to intervene with any zoning, permitting and transportation issues, among others. In June 2014, Cannon pleaded guilty to one count of honest services wire fraud.
In announcing today’s sentence, Judge Whitney commented on the seriousness of the offense, stating that public corruption undermines the legitimacy of government and the public’s faith in its elected leaders and it feeds the cynics who believe that all government is corrupt.
Following the sentencing hearing, Cannon was released on bond. The court rejected the defendant’s request for a later reporting date and he will be ordered to self- report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by the Charlotte Division of the FBI. Assistant United States Attorneys Michael E. Savage and Craig D. Randall of the U.S. Attorney’s Office in Charlotte prosecuted the case.
Federal Jury Finds Tarpon Springs Woman Guilty of Tax EvasionRead the Press Release
Tampa, Florida – United States Attorney A. Lee Bentley, III announces that a federal jury has found Nova A. Montgomery guilty of five counts of tax evasion and five counts of failure to file an income tax return. She faces a maximum penalty of five years’ imprisonment for each tax evasion count, and one year in prison for each count of failing to file a tax return. The jury returned the verdict on October 10, 2014, and a sentencing hearing is scheduled for January 12, 2015.
According to testimony and evidence presented at trial, Montgomery was self-employed as a distributor for a multi-level marketing company that sold nutritional and other products. Between 2002 and 2012, she received commissions and other income exceeding $2.7 million. Montgomery set up a complex corporate structure that made it appear that she personally received virtually none of the income from the commissions and sales. Further, on February 12, 2009, in the midst of an Internal Revenue Service audit, Montgomery filed false and fraudulent federal income tax returns claiming that she had no income for 2002 through 2006. In addition, she failed to file personal income tax returns for 2008 through 2012.
This case was investigated by the Internal Revenue Service – Criminal Investigation. It is being prosecuted by Assistant United States Attorney Mark E. Bini.
Federal Court Bars Alabama Tax Return Preparer from Preparing Returns for OthersRead the Press Release
A federal court in Montgomery, Alabama, has permanently barred a Montgomery tax preparer from preparing federal tax returns for others, the Justice Department announced today.
The complaint alleged that Jenika Williams prepared returns that falsely claimed or inflated taxpayers’ income tax refunds by using social security numbers and other identifying information of third parties to falsely claim dependents in order to overstate the taxpayers’ claim to the Earned Income Tax Credit.
Williams, the suit alleges, previously pleaded guilty to conspiracy to defraud the United States, wire fraud and aggravated identity theft. Altogether, the loss to the U.S. Treasury from Williams’ activities may exceed $1 million. The permanent injunction was entered by U.S. District Judge W. Keith Watkins for the Middle District of Alabama after Williams failed to respond to the lawsuit.
Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2014. The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Related Materials:
United States v. Tonja Renee Toney, et al.
Permanent Injunction Against Jenika WilliamsEmployees and Manager of La Bodega Yakimex Sentenced for Food Stamp Fraud SchemeRead the Press Release
Spokane – Today, Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Roberto Medina and Benjamin Soberanes, two former employees of La Bodega Yakimex, a business operated in Yakima, Washington, were sentence for their roles in a food stamp fraud scheme. United States District Judge Thomas O. Rice sentenced Medina to a 13 month term of imprisonment and Soberanes to a six month term. Both will be under court supervision for three years following their release from Federal prison. Manpreet Singh, the manager of La Bodega Yakimex, was sentenced on September 23, 2014 to a 24 month term of imprisonment to be followed by a one year term of court supervision upon his release from prison.
Under the SNAP (Supplemental Nutrition Assistance Program) program, authorized recipients are issued a certain amount of benefits each month, which they may use to purchase eligible food items. SNAP recipients typically receive their benefits in the form of a credit on their personal electronic benefit transfer (“EBT”) card. SNAP benefits may not be used to purchase items other than food, and they cannot be redeemed for cash.
The Defendants participated in a scheme whereby SNAP recipients took their EBT cards to La Bodega Yakimex and, instead of purchasing food items, would say they wanted cash. Defendants would run the card as though food items had been purchased but, in fact, they would simply give the SNAP recipient half of the value in cash and the store would keep or “pocket” the other half. The scheme resulted in a total estimated loss of $315,382.77. Defendants Singh and Medina have been ordered to pay restitution to the United States Department of Agriculture (USDA) in this amount.
Michael C. Ormsby said, “Food stamps are essential to supplement the income of members of our community and ensure families can afford the groceries they need. When opportunistic retailers defraud the system, as happened in this case, those families, particularly children who have no say in how food stamps are utilized, suffer, and our community suffers as a result.” The U.S. Attorney indicated this will not be an isolated prosecution and that other retailers engaged in this practice should be advised these cases are being aggressively investigated.
The investigation was conducted by the USDA Office of Inspector General and the Washington State Department of Social and Health Services Office of Fraud and Accountability. The case was prosecuted by Alison L. Gregoire and Mary K. Dimke, Assistant United States Attorneys for the Eastern District of Washington.
2:13-CR-02054-TOR-2
Drug Courier Convicted of Delivering Kilogram of CocaineRead the Press Release
OAKLAND – Frank Anthony Morton, was convicted of two federal drug trafficking offenses, conspiracy to distribute and possess with intent to distribute cocaine, and possession with intent to distribute and distribution of cocaine, by a federal jury on Oct. 10, 2014, announced United States Attorney Melinda Haag and Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick.
The jury found that Morton, 26, of Pittsburg, worked with his uncle, Miguel Nunez, to deliver a kilogram of cocaine on Aug. 28, 2013 in Oakland, Calif. Nunez, 46, of San Leandro previously pleaded guilty to the cocaine trafficking offenses and is awaiting sentencing. The guilty verdict against Morton followed a four-day jury trial before the Honorable Phyllis J. Hamilton, United States District Court Judge. Following the jury’s guilty verdict, Morton was remanded to the custody of the United States Marshals.
Evidence at trial showed that Morton and Nunez arrived to a Walmart shopping center parking lot, located at 8400 Edgewater Drive in Oakland, at approximately 1:00 p.m. Recorded telephone calls introduced at trial showed that Nunez had previously arranged to meet a cocaine buyer at this location and agreed to sell a kilogram of cocaine in exchange for $18,000. Agents testified that Nunez and Morton arrived in a large white box truck and were observed exiting the truck and entering a nearby video game store. Inside, Morton and Nunez were captured on security cameras as they stood at the storefront windows overlooking the parking lot. The government’s drug trafficking expert testified that their behavior was consistent with counter-surveillance techniques. The video game store security camera also captured Nunez handing Morton a white paper bag, later determined to contain the kilogram brick of cocaine. Morton and Nunez exited the video game store and were again captured on exterior security cameras as they walked towards the cocaine buyer’s vehicle. Morton entered the buyer’s car and placed the kilogram of cocaine on the floorboard while his uncle went into a nearby juice store. DEA agents arrested Nunez and Morton immediately after the cocaine delivery.
Later the same afternoon, Nunez was due in federal court on a separate drug trafficking case. In April of 2013, Nunez was arrested in possession of approximately five kilograms of cocaine. Nunez was subsequently indicted and released on bond while his case was pending. Later, DEA received a tip that Nunez was continuing to distribute cocaine while on pre-trial release. DEA agents resumed their investigation into Nunez, which lead to the arrests of Nunez and Morton in August of 2013.
Morton’s sentencing hearing is scheduled for Jan. 28, 2014 before Judge Hamilton in Oakland. Nunez’s sentencing hearing is scheduled for Nov. 5, 2014. The maximum statutory penalty for each count of the convicted offenses, in violation of 21 U.S.C. §§ 841(a)(1),(b)(1)(C) and 860 is a twenty year term of imprisonment and a fine of $1,000,000. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Aaron Wegner and Katie Burroughs Medearis are the Assistant U.S. Attorneys prosecuting the case, with the assistance of Ana Guerra and Vanessa Vargas. The prosecution is the result of an investigation by DEA.
(Morton second superseding indictment )
Driver Stopped with A Pound of Heroin Pleads Guilty in Wichita Federal CourtRead the Press Release
WICHITA, KAN. – An Oklahoma man who was stopped with a pound of heroin hidden in the car pleaded guilty Tuesday to a federal drug charge, U.S. Attorney Barry Grissom said.
Nestor D. Duenas-Vazquez, 26, Glenpool, Okla., pleaded guilty to one count of possession with intent to distribute heroin. In his plea, he admitted that on June 26, 2014, a Wichita police officer stopped a car in which Duenas-Vazquez was a passenger. In the trunk, officers found a bucket of detergent with a broken seal. Hidden in the detergent they found a package containing 496 grams (more than a pound) of heroin.
Investigators learned that Duenas-Vazquez was on the way back to Oklahoma after traveling to Denver to obtain the heroin.
Sentencing is set for Jan. 5. He faces a penalty of not less than five years and not more than 40 years. Co-defendant Kyndal Upson is set for sentencing Dec. 8.
Grissom commended the Wichita Police Department, the Drug Enforcement Administration and Special Assistant U.S. Attorney Michelle Jacobs for their work on the case.
Detroit Man Sentenced for Role in Huntington Heroin ConspiracyRead the Press Release
HUNTINGTON, W.Va. – A Detroit man was sentenced today for his participation in a conspiracy to distribute heroin in Huntington, West Virginia announced U.S. Attorney Booth Goodwin. Steven Edward Lewis, also known as “Rico,” 27, who previously pleaded guilty in July of 2014 to conspiring to distribute 100 grams or more of heroin, was sentenced to five years in federal prison by Chief Judge Robert C. Chambers.
From at least the summer of 2013 to December 31, 2013, Lewis conspired to distribute heroin with Christopher Lamarr-Shawn Harris, Denzell Lamar Bunkley, Jakaiser Wesley Jackson, and Brandon S. Keaton. Harris recruited Lewis and other co-conspirators to distribute heroin, mostly in the West Huntington area, and frequently arranged for the transportation of heroin from Detroit, Michigan, to Huntington. Lewis used multiple locations to store, prepare and distribute heroin, including the Red Roof Inn Hotel on Route 60 in Huntington and an apartment at 1416 Jefferson Avenue in West Huntington. Lewis, Bunkley, Jackson, and Keaton, Harris also recruited local residents to assist with drug distributions.
On December 31, 2013, officers with the Huntington Police Department’s Special Investigations Unit executed a search warrant at the Jefferson Avenue apartment. Officers seized approximately 413 grams of heroin and $12,349 in cash during the search. Officers also arrested Harris, Bunkley, and Lewis who were inside the apartment.
Harris was arrested again on February 20, 2014, in Ohio by the Ohio State Highway Patrol while travelling from Huntington to Detroit. During his arrest, officers seized another $24,930 from Harris.
Harris was arrested for a third time on April 2, 2014, after officers received information that he was selling heroin from the Red Roof Inn in Huntington. Officers executed a search warrant for two rooms at the hotel and seized approximately 192 grams of heroin and $3,000 in cash. Harris and Jackson, had arranged to bring the heroin from Detroin to Huntington just days prior to the search.
Keaton was sentenced to 15 months in federal prison in July 2014. Harris was sentenced to 147 months and Bunkley was sentenced to 37 months in federal prison, both on October 6, 2014. Jackson is scheduled to be sentenced on October 27, 2014.
The Huntington Police Department Special Investigations Unit, the West Virginia State Police, the United States Drug Enforcement Administration, and the United States Marshals Service all participated in the investigation. Assistant United States Attorney Joseph F. Adams handled the prosecution.
This case was brought as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of heroin and prescription drugs. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiates and heroin in communities across the Southern District.
Department of Justice Reaches Settlement Agreement with Colorado School District to Address Racial Harassment and DiscriminationRead the Press Release
The Justice Department announced that it has entered into a comprehensive settlement agreement with the Falcon School District 49 in Colorado Springs, Colorado, to resolve complaints about the district’s response to racial harassment and discrimination in its schools.
The agreement will continue for at least three years and replaces a settlement agreement reached by the parties in 2010 which addressed similar issues. The agreement requires the district to take affirmative steps to eliminate and prevent racial harassment and discrimination in schools. Specifically, the district agrees to:
- revise its policies and procedures on harassment and discrimination;
- maintain adequate records of all incidents of racial harassment and discrimination;
- analyze incidents of racial harassment and discrimination to ensure that all incidents are properly identified, investigated, and resolved;
- train staff in preventing and responding to harassment and discrimination;
- provide training to students to prevent and address harassment and discrimination;
- include restorative justice techniques and positive behavior interventions and supports in the district’s disciplinary responses to incidents of harassment and discrimination; and
- hire a consultant to identify any additional measures the district should take to effectively address, prevent, and respond to harassment and discrimination.
“We applaud the Falcon School District 49 for working cooperatively with the Department of Justice to resolve this matter and ensure that all students can attend school without fear of harassment or discrimination from their peers,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division.
The enforcement of Title IV of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color, national origin, sex and religion in public schools, is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.
Defendant Previously Convicted of Sexual Assault Sentenced for Failing to Register as A Sex OffenderRead the Press Release
ALBANY, NEW YORK – ANDRE NADEAU, age 55, of New Haven, Connecticut, was sentenced yesterday by the Honorable Thomas J. McAvoy to 18 months in federal prison followed by 20 years of supervised release for failing to comply with the Sex Offender Registration and Notification Act (“SORNA”). The sentence follows NADEAU’s May 1, 2014 guilty plea.
SORNA, also known as the Adam Walsh Protection and Safety Act, requires that a convicted sex offender register where he or she resides, is employed, or is enrolled as a student, and to keep any registrations current.
NADEAU, who was convicted of sexual assault and designated a sex offender by Connecticut, registered with Connecticut in 2001. In 2005, NADEAU was found in Mississippi and convicted by a Mississippi court for failing to register as a sex offender. In 2012, NADEAU registered as a sex offender in Mississippi and signed documents acknowledging his duty to register. In 2013, NADEAU was found living in Albany, New York, and he had not registered or updated his sex offender registration with New York, Mississippi, or Connecticut.
This case was investigated by the U.S. Marshals Service and prosecuted by Assistant United States Attorney Wayne A. Myers.
Defendant Indicted for Attempt to Kill A Federal Officer and for Discharge and Use of A Firearm During A Federal Crime of ViolenceRead the Press Release
United States Attorney Michael J. Moore announced today that a federal grand jury returned a two-count Indictment in the United States District Court for the Middle District of Georgia, Athens Division, charging Steven Maurice McKinley, also known as “Stevo,” aged 21, of Athens, Georgia, with Attempt to Kill a Federal Officer (Count One) and Discharge and Use of a Firearm during a Federal Crime of Violence (Count Two).
If convicted, McKinley faces a maximum term of incarceration of twenty years for Count One and life in prison for Count Two. By law, any term of incarceration for Count Two must be imposed consecutive to any term of incarceration for Count One. In addition, McKinley faces a maximum fine of $250,000 for each count.The indictment is only an allegation and the accused are presumed innocent until and unless proven guilty.
This indictment stems from the intentional and unlawful shooting of an agent of the Bureau of Alcohol, Tobacco, Firearms and Explosives who was engaged in his official duties on September 30, 2014, in Athens, Georgia. The case is being investigated by the Federal Bureau of Investigation and the Georgia Bureau of Investigation. Assistant United States Attorneys Tamara A. Jarrett and Danial E. Bennett are prosecuting the case for the government.
Inquiries regarding this case should be directed to Pamela Lightsey, United States Attorney’s Office at (478) 621-2603.
Decatur Among Pilot Sites for DOJ-Funded Intensive Probation Supervision ProgramRead the Press Release
DECATUR – The Department of Justice has awarded the Alabama Board of Pardons and Paroles $370,000 through a Bureau of Justice Assistance grant to develop four intensive supervision pilot programs across Alabama, announced U.S. Attorney Joyce White Vance and Pardons and Paroles Executive Director Cynthia Dillard.
The pilot programs will take place in local Pardons and Paroles offices in Mobile, Montgomery, Decatur and Greenville. Those cities are in counties that collectively contribute more than 20 percent of inmates annually admitted to the Department of Corrections. Within the four pilot programs, individuals deemed moderate- to high-risk to reoffend will receive intensive supervision by local Pardons and Paroles officers and will be subject to swift, certain sanctions if they violate the terms and conditions of release.
Swift and certain sanction programs are intended to: (a) improve supervision strategies that reduce recidivism; (b) promote and increase collaboration among agencies and officials who work in community corrections and related fields; (c) enhance the offender's perception that the supervision decisions are fair, consistently applied and consequences are transparent; and (d) improve the outcomes of individuals participating in these initiatives.
Alabama’s program will be based upon Hawaii’s Opportunity Probation and Enforcement program. Within three months of its implementation, the HOPE program led to an 83 percent reduction in failed drug tests, 71 percent reduction in missed appointments with probation officers, and a 70 percent reduction in the revocation rate for participating probationers.
“Programs like HOPE have led to lower recidivism rates around the country by taking action before a probationer becomes a repeat offender," Vance said. "Swift and certain sanctions ensure that probationers and parolees receive prompt attention and additional supervision at the first indication of misconduct.”
As nearly 40 percent of inmates coming into Alabama prisons each year are individuals who were unsuccessful in their probation or parole supervision, the Alabama Prison Reform Taskforce is currently examining methods to improve the success rates of parolees and probationers. State Sen. Cam Ward, R-Alabaster, chairman of the Prison Reform Task Force, said, "The reform efforts underway in Alabama seek to develop programs such as this, that are proven to reduce recidivism in corrections systems. By making community supervision work better, we will make our communities safer and save taxpayer dollars."
State Sen. Arthur Orr, a member of the Prison Reform Taskforce, and whose district includes Decatur, said, "We are appreciative of the Department of Justice’s support to help us reduce recidivism among our inmates under community supervision. By working together, we not only help our prison overcrowding situation in Alabama but also, and more importantly, we help newly released individuals get on the right path through the improved supervision measures funded by this grant."
Compounding Pharmacist Admits Paying Kickbacks for Referrals, Health Care FraudRead the Press Release
CAMDEN, N.J. – A pharmacist with a compounding pharmacy in Lakewood, New Jersey, admitted today to paying tens of thousands of dollars in cash bribes to physicians for referring pain cream prescriptions, defrauding health care benefit programs out of hundreds of thousands of dollars, U.S. Attorney Paul J. Fishman announced.
The president and pharmacist-in-charge of Prescriptions R US – Vladimir Kleyman, 43, of Lakewood, New Jersey – pleaded guilty to an information charging him with conspiracy to pay kickbacks and to commit health care fraud. Kleyman, who originally was charged by complaint in January of 2014, entered his guilty plea before U.S. District Judge Joseph H. Rodriguez in Camden federal court.
According to documents filed in this case and statements made in court:
From January 2013 through January 2014, Kleyman provided another individual with tens of thousands of dollars in cash and checks to provide bribes to physicians for referring prescriptions for a compounded pain cream to Prescriptions R US. Compounding pharmacies prepare medication, using different types and dosages of drugs, in order to provide more personalized medications for patients. The compounded pain cream prepared by Prescriptions R US in this case contains several components, including ketamine (a Schedule III non-narcotic), lidocaine and diclofenac.
During his guilty plea proceeding, Kleyman admitted that in a series of meetings in November and December 2013 alone, he arranged for the middleman to receive more than $40,000 in cash or checks with the understanding it would be used to pay bribes for the referral of pain cream prescriptions.
Kleyman also admitted he knew certain health insurance carriers, including federal health care benefit programs, did not cover compounded pain cream, but he nevertheless dispensed the pain cream to these patients and obtained payment from their insurance carriers by falsely representing the pain cream to be other covered items. Kleyman also acknowledged he defrauded health insurance carriers by making false and misleading representations about the quantity of the pain cream that he dispensed and the frequency with which he dispensed it. As a result, private insurance payors paid the pharmacy hundreds of thousands of dollars.
The conspiracy count with which Kleyman is charged carries a maximum potential penalty of five years in prison and a $250,000 fine. The government is also seeking Kleyman’s forfeiture of any proceeds derived from his offense. Sentencing is currently scheduled for Jan. 20, 2015.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; and IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the ongoing investigation.The government is represented by Assistant U.S. Attorney Jane H. Yoon and Senior Litigation Counsel Andrew Leven of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $540 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
14-367
Defense counsel: Alain Jeff Ifrah, Esq., Washington
Kleyman, Vladimir Information
Columbia Station Man Sentenced to 20 Years in Prison for Child Pornography and Related CrimesRead the Press Release
A Columbia Station man was sentenced to 20 years in prison for production of child pornography, child exploitation, extortion, identity theft and related crimes, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation's Cleveland office.
William T. Koch, age 25, previously pleaded guilty to 18 counts, including sexual exploitation of children, extortion, identity theft, receipt and distribution of minors engaged in sexually explicit conduct and unauthorized distribution of live musical performance.
Koch attempted to coerce more than a dozen minors to engage in sexually explicit conduct between 2010 and 2013 for the purpose of producing visual depictions of such conduct; knowing and having reason to know that such visual depictions would be transmitted, using any means or facility of interstate and foreign commerce, and in and affecting interstate and foreign commerce, according to court documents.
Koch used, persuaded, induced, enticed, and coerced a minor to engage in sexually explicit conduct for the purpose of transmitting a live visual depiction of such conduct, knowing and having reason to know that such visual depiction would be transmitted, using any means or facility of interstate and foreign commerce, and in and affecting interstate and foreign commerce, according to court documents.
Koch attempted to coerce a minor to engage in sexually explicit conduct with his 10-year-old brother, for the purpose of transmitting a live visual depiction of such conduct, knowing and having reason to know that such visual depiction would be transmitted, using any means or facility of interstate and foreign commerce, and in and affecting interstate and foreign commerce, according to court documents.
Koch distributed, in and affecting interstate and foreign commerce, by computer, any material in a manner that reflected the belief and was intended to cause another to believe that the material was a visual depiction of an actual minor engaging in sexually explicit conduct, according to court documents.
Koch, with the intent to extort a thing of value from some of the aforementioned minors, transmitted in interstate and foreign commerce, communications threatening to injure the reputations of said minors. He knowingly used, without lawful authority, in and affecting interstate and foreign commerce, a means of identification of another person, with the intent to commit, and in connection with, the offenses charged in the indictment.
This case is being prosecuted by Assistant United States Attorney Michael A. Sullivan.
The case was investigated by the Federal Bureau of Investigation and the Department of Homeland Security, Homeland Security Investigations.
Chateauguay man sentenced to 90 years for producing child pornographyRead the Press Release
Former karate instructor receives maximum penalty
ALBANY, NY – United States Attorney Richard S. Hartunian announced a 90 year sentence imposed upon RYAN STAPLES, 37 years old, of Chateauguay, NY. The sentence was imposed today by U.S. District Court Senior Judge Thomas J. McAvoy.
On May 1, 2014, Staples pled guilty to three counts of production of child pornography involving three different minor victims. He admitted that he videotaped and took photographs of himself engaged in sexually explicit conduct with the victims between July and October 2010.
The Court imposed the maximum sentence of imprisonment for thirty years on each of the three counts and ordered the sentences on each count to run consecutively. The Court also imposed a lifetime term of supervised release and an order of forfeiture. The United States Attorney’s Office dismissed Count 4 of the indictment, Possession of Child Pornography. The defendant was remanded to the custody of the U.S. Marshals.
“Sexual exploitation crimes are among the most heinous, imposing a ‘life-time’ sentence on the minor victims involved,” stated United States Attorney Richard S. Hartunian. “It is fitting this defendant received a life-time of imprisonment as well. The damage done to these children is tragic. The most we can do is make sure this defendant will never be near another child again.”
U.S. Attorney Hartunian praised the collaborative work of law enforcement agencies in the north country of New York. “The cooperative work of the Department of Homeland Security, Homeland Security Investigations, Rouses Point and the Clinton County Sheriff’s Office was vital in this case. They did an outstanding investigative job.”
“These types of crimes are appalling and made worse when their perpetrators have ready access to young people," said HSI Special Agent in Charge James Spero. "However, the significant sentencing handed down today ensures Mr. Staples will never victimize another child. The sentencing should also serve as a stark reminder of the severe penalties that await those who engage in this type of depraved activity. The Clinton County Sheriff provided invaluable assistance in the investigation by conducting all of the forensic examinations."
This case was investigated by Homeland Security Investigations, Rouses Point and the Clinton County Sheriff Office. Prosecuting the case was Assistant United States Attorney Katherine Kopita.
Cambridge Pharmacy Robber Imprisoned 7 YearsRead the Press Release
The Office of the United States Attorney for the District of Vermont stated that on September 29, 2014, Russell John Thaxton, 48, of Morrisville, was sentenced by United States District Judge J. Garvan Murtha to eighty-four months imprisonment on his guilty plea to a charge of pharmacy robbery. Judge Murtha also ordered Thaxton to serve two years on supervised release after his incarceration ends, and to pay restitution for the controlled substances he stole during the robbery.
According to court records, on August 29, 2013, Thaxton, Jennifer Stancliff, 30, of Morrisville, and Amanda Tetreault, 31, of Eden, traveled from Morrisville to Cambridge to rob the Kinney Drugs pharmacy. Shortly after entering the store, Thaxton pulled a black ski mask over his face, and approached the pharmacy counter. He brandished an airsoft gun, which had the appearance of a semi‑automatic pistol. Pointing the weapon at the pharmacist, Thaxton shouted that he wanted Aall your opiates and stimulants.@ The pharmacist complied with the demands, and defendant departed the store with 1,102 controlled substance pills with a wholesale value of more than $5,000. Thaxton joined his accomplices in a vehicle, and was arrested shortly thereafter by Vermont State Police (VSP). Lamoille County State=s Attorney Joel Page charged all three in state court. After further investigation by VSP and the Drug Enforcement Administration (DEA), a federal grand jury indicted Thaxton and Stancliff for robbing the pharmacy. Stancliff is scheduled for sentencing on December 15, 2014. Tetreault entered a guilty plea to a related charge in state court.
United States Attorney Tristram J. Coffin commended the investigation by VSP and DEA, and thanked State=s Attorney Page for his cooperation. Coffin added, AThis office will continue to work closely with federal, state and local law enforcement to investigate and prosecute violent crimes, including robberies of pharmacies and other commercial establishments.@ Thaxton was represented by Assistant Federal Defender David McColgin. The case is being prosecuted by Assistant U.S. Attorney Craig S. Nolan.Bioscan Principal Pleads Guilty in Multi-Million Dollar Health Care Fraud and Money Laundering SchemeRead the Press Release
A Florida managing member of a shell company pleaded guilty today in federal court in Tampa, Florida, for his role in a multi-million dollar health care fraud and money laundering scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III of the Middle District of Florida, Acting Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office and Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office made the announcement.
Gregory J. Sylvestri, 44, formerly of Lake Worth, Florida, pleaded guilty in the U.S. District Court for the Middle District of Florida to two charges related to money laundering of health care fraud proceeds. His sentencing date will be set by the court at a later date. In his plea agreement, Sylvestri agreed to the forfeiture of a $60,000 platinum and diamond engagement ring that he purchased with health care fraud proceeds.
According to his plea agreement, from June 2010 through April 2014, Sylvestri’s co-conspirators submitted over $12 million in fraudulent claims to Medicare through three purported health clinics, Cornerstone Health Specialists of Lakeland, Florida, Summit Health Specialists P.L. of Tampa, and Coastal Health Specialists LLC of Lakeland and Melbourne, Florida. These fraudulent claims included claims resulting from illegal kickback arrangements and claims for radiology, audiology, neurology and cardiology services that were never rendered. In fact, some of the services were purportedly provided to Medicare beneficiaries who had died before the supposed date of service. Medicare paid over $2,500,000 in reimbursement on the fraudulent claims.
Sylvestri admitted that he and his co-conspirators used bank accounts for the clinics and shell companies, including his shell company, BONB LLC, aka BioScan, to conceal and disburse the fraud proceeds.
Four other defendants were indicted in this case on health care fraud and money laundering charges. In addition to Sylvestri, one of the other defendants has pleaded guilty. The remaining three defendants are scheduled for a jury trial in April 2015. An indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case is being investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Trial Attorney Christopher J. Hunter of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
Beaver County Man Found Guilty of Selling Merchandise Stolen in PA at Ohio Flea MarketRead the Press Release
PITTSBURGH - After deliberating for approximately four hours, a federal jury found Terry L. Sempf guilty of two counts of conspiracy and Interstate transportation of stolen goods, United States Attorney David J. Hickton announced today.
Terry L. Sempf, 58, of New Brighton, Pa., was tried before United States District Judge David S. Cercone in Pittsburgh.
According to Assistant United States Attorney Shaun E. Sweeney, who prosecuted the case, the evidence presented at trial established that from between 2006 and September of 2010, Sempf paid professional thieves to steal merchandise from various retail stores in Western Pennsylvania. The evidence further established that after purchasing the stolen goods from the thieves, Sempf transported the items to the Rogers Community Auction in Rogers, Ohio, where he then resold the stolen items.
Judge Cercone scheduled sentencing for Feb. 23, 2014, at 11:30 a.m. The law provides for a total sentence of 15 years in prison, a fine of $500,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based on the seriousness of the offenses and the prior criminal history, if any, of the defendant.
The Federal Bureau of Investigation and the New Brighton Police Department conducted the investigation that led to the prosecution of Sempf.
Baltimore Couple Plead Guilty to Armed Robbery of A Convenience StoreRead the Press Release
Also Admitted to Robbing Three More Convenience Stores at Gunpoint
Baltimore, Maryland – Brandon Ferrell, age 23, and Stephanie Amber Smith, age 24, both of Baltimore, pleaded guilty today to an armed robbery of a convenience store on September 27, 2013, and possession of a firearm in furtherance of a crime of violence. The couple admitted that they also committed three other armed convenience store robberies two days later.The guilty pleas were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Commissioner Anthony W. Batts of the Baltimore Police Department; and Baltimore City State’s Attorney Gregg L. Bernstein.
According to their plea agreements, on September 27, 2013, Ferrell and Smith stole approximately $160 from a convenience store located in the 3500 block of Boston Street in Baltimore. Ferrell entered the store first, grabbed an iced-tea and walked to the counter. Then Smith entered the store, pointed a semi-automatic pistol at the clerk, and demanded money. Ferrell removed the money from the cash drawer located behind the counter. Ferrell and Smith then fled the store.
Ferrell and Smith robbed three other convenience stores at gunpoint on September 29, 2013.
Ferrell, Smith and the government have agreed that if the Court accepts their plea agreements, Ferrell will be sentenced to 22 years in prison, and Smith will be sentenced to 13 years in prison. U.S. District Judge William D. Quarles, Jr. has scheduled sentencing for Ferrell on December 17 and Smith on December 18, 2014, both at 10:00 a.m.
United States Attorney Rod J. Rosenstein commended the FBI, Baltimore Police Department and Baltimore City State’s Attorney’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney James G. Warwick, who is prosecuting the case.
Attorney General Holder Announces New Policy to Enhance Justice Department's Commitment to Support Defendants' Right to CounselRead the Press Release
Attorney General Eric Holder, along with Deputy Attorney General James M. Cole, announced today that the Department of Justice will no longer ask criminal defendants who plead guilty to waive their right to bring future claims of ineffective assistance of counsel. The new policy bolsters the department’s commitment to ensuring that individuals are ably represented as they face criminal charges and marks the Attorney General’s latest step to reform the criminal justice system.
“Everyone in this country who faces criminal legal action deserves the opportunity to make decisions with the assistance of effective legal counsel,” said Attorney General Holder. “Under this policy, no defendant will have to forego their right to able representation in the course of pleading guilty to a crime. I am confident in the ability of our outstanding prosecutors to ably and successfully perform their duties without the use of these waivers, as the vast majority of them already do. Moving forward, I am certain that this more consistent policy will help to bring our system of justice closer in line with our most fundamental values and highest ideals.”
“This new policy reaffirms the commitment by the department’s prosecutors to protecting the right to counsel and enhancing due process,” said Deputy Attorney General Cole. “As reflected in our recent intervention to secure greater public defender services in New York, the criminal justice system is best served when parties have competent and unbiased legal representation.”
Deputy Attorney General Cole unveiled the new policy through a memorandum to all federal prosecutors and through a conference call today. Prior to today’s action, 35 of the department’s 94 U.S. Attorney’s Offices sought waivers of future claims that included claims of ineffective assistance of counsel. While the department believes such waivers are legal and ethical, the new policy will create a uniform policy for all U.S. Attorneys to follow.
The memo directs federal prosecutors to no longer ask defendants to waive future claims of ineffective assistance of counsel in plea agreements. It also instructs prosecutors to decline to enforce waivers that have already been signed in cases where defense counsel provided ineffective assistance resulting in prejudice or where the defendant’s ineffective assistance claim raises a serious issue that a court should resolve.
Armed Career Offender Sentenced to Fifteen Years in Prison for Violating Federal Firearms LawsRead the Press Release
ALBUQUERQUE – Alfonso Thompson, 38, of Albuquerque, N.M.., was sentenced today in federal court to 15 years in federal prison followed by three years of supervised release for being an armed career offender. The sentence was announced by U.S. Attorney Damon P. Martinez, 2ndJudicial District Attorney Kari E. Brandenburg and Special Agent in Charge Thomas Atteberry of the Phoenix Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives and Chief Gorden Eden of the Albuquerque Police Department.
U.S. Attorney Damon P. Martinez said that Thompson was prosecuted as part of a federal anti-violence initiative that targets “the worst of the worst” offenders for federal prosecution. Under this initiative, the U.S. Attorney’s Office and federal law enforcement agencies work with New Mexico’s District Attorneys and state, local and tribal law enforcement agencies to target violent or repeat offenders for federal prosecution with the goal of removing repeat offenders from communities in New Mexico for as long as possible.
Thompson was federally indicted on Nov. 27, 2012, and subsequently arrested in Dec. 2012 for unlawfully possessing a handgun and ammunition in Bernalillo County, N.M., on July 12, 2012. According to court filings, Thompson was prohibited from possessing firearms and ammunition in July 2012 because he was a convicted felon. Despite numerous prior felony convictions, Thompson possessed thirteen firearms and approximately 474 rounds of ammunition in July 2012.
Thompson entered a guilty plea to an indictment charging him with being a felon in possession of a firearm and ammunition on Jan. 14, 2014. Thompson received an enhanced sentence of 15 years in prison due to his status as an armed career offender.
Thompson’s criminal history consists of nine convictions, including seven felony convictions, accumulated since 1997, of which three were drug-related, five involved violence (including two for attempted murder), and four involved the presence of a firearm. Thompson currently is facing charges in state court for a double homicide and the non-fatal shooting of a third victim. Thompson has entered a not guilty plea in the state case and is presumed innocent of those charges unless found guilty in a court of law.
Thompson’s federal conviction in this case arose from facts separate from his pending state charges. If Thompson is convicted on the pending state charges, any sentence imposed on Thompson in the state case must be served consecutive to the sentence imposed in this federal case.
This case was investigated by the Albuquerque office of ATF, the Albuquerque Police Department, and was prosecuted by Assistant U.S. Attorney C. Paige Messec of the U.S. Attorney’s Office.
Armed Career Criminal Sentenced to 25 Years in Federal PrisonRead the Press Release
NEW BERN – United States Attorney Thomas G. Walker announced that in federal court, United States District Judge Louise W. Flanagan sentenced gary starkie , 52, of Greenville to 25 years in federal prison, followed by 5 years of supervised release.
STARKIE had been indicted by a federal grand jury for being a felon in possession of a firearm. These charges stemmed from an incident on June 28, 2012, when two patrol officers with the Greenville Police Department intercepted STARKIE as he was about to commit an armed robbery of a convenience store and sweepstakes location in Greenville. Upon arresting STARKIE, the arresting officers found him in possession of a semiautomatic pistol.
STARKIE pleaded not guilty to the charge, and the matter went to trial. After a trial in January 2014, before Judge Flanagan, a jury found STARKIE guilty of being a felon in possession of a firearm.
As an Armed Career Criminal, with prior convictions for first degree rape and first degree kidnapping, STARKIE faced a mandatory minimum sentence of 15 years imprisonment. After carefully reviewing STARKIE’S history and characteristics, as well as assessing the nature and circumstances of his offense, Judge Flanagan sentenced STARKIE to serve 300 months (25 years) in federal prison.
“Gary Starkie has a criminal history, punctuated by acts of violence and sexual violence perpetrated against women,” said Assistant United States Attorney Evan Rikhye. “We are grateful to the jury in New Bern that convicted him and we believe that the tough sentence meted out by Judge Flanagan will ensure that the residents of Greenville and Pitt County will no longer have to suffer the depredations of this violent felon.”
Investigation of this case was conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and the Greenville Police Department. Assistant United States Attorney Evan Rikhye represented the government. United States Attorney Walker commended the work of Keith Sawyer and Brian Negue, the Greenville Police Department officers who apprehended STARKIE.
Anderson County Man Guilty of Child Pornography ViolationsRead the Press Release
Department of Justice
Office of Public AffairsTYLER, Texas – A 25-year-old Palestine, Texas man has pleaded guilty to child pornography charges in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Joshua Quick pleaded guilty to receiving child pornography today before U.S. Magistrate Judge K. Nicole Mitchell.According to information presented in court, on Sep. 14, 2013, Quick received child pornography on a computer after using the computer to solicit the participation of a minor to engage in sexually explicit conduct persuading the minor to produce images depicting child pornography. Quick was indicted by a federal grand jury on Feb. 26, 2014.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Quick faces a minimum of five years and up to 20 years in federal prison. A sentencing date has not been set.
This case is being investigated by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Anderson County Sheriff’s Office and the Urbandale, Iowa Police Department and prosecuted by Assistant U.S. Attorney Nathaniel C. Kummerfeld.Ahmed Abu Khatallah Indicted on Additional Charges for September 2012 Attack in Benghazi, LibyaRead the Press Release
A federal grand jury in the District of Columbia returned a superseding indictment today charging Ahmed Abu Khatallah, aka Ahmed Mukatallah, with numerous additional offenses arising from his alleged participation in the Sept. 11 through 12, 2012, terrorist attacks in Benghazi, Libya, which resulted in the deaths of Ambassador J. Christopher Stevens and U.S. government personnel Sean Smith, Tyrone Woods and Glen Doherty.
Khatallah, 43, a Libyan national, was initially indicted on June 26, 2014, on the charge of conspiracy to provide material support and resources to terrorists resulting in death. That charge, which is included in the superseding indictment, carries a potential life sentence. The superseding indictment includes a total of 17 new charges, including some that could be punishable by death.
“These additional charges reflect Ahmed Abu Khattalah’s integral role in the attack on U.S. facilities in Benghazi, which led to the deaths of four brave Americans,” said Attorney General Eric Holder. “We will never relent in pursuing justice against those who commit heinous acts of terrorism against the United States. Those who would do harm to our citizens—no matter how far away—should understand that our nation’s memory is long and our reach is far.”
“This superseding indictment charges Ahmed Abu Khatallah for his role in the attacks on U.S. facilities in Benghazi, Libya that resulted in the deaths of four U.S. government personnel,” said Assistant Attorney General for National Security John Carlin. “This case reminds us of the continued threat the United States faces abroad from terrorism, but it also highlights our resolve to find and hold terrorists accountable wherever they may hide.”
“We have no higher priority than bringing to justice terrorists who kill U.S. citizens serving our country on foreign soil,” said U.S. Attorney Ronald C. Machen Jr. for the District of Columbia. “With this 18-count indictment, a grand jury in our nation’s capital has charged Ahmed Abu Khatallah with the murders of four brave Americans in Benghazi. We will press forward with our efforts to hold accountable all those who are responsible for this cowardly act.”
“With additional charges being announced today, Ahmed Abu Khatallah’s role in the Benghazi attack is even clearer,” said Assistant Director in Charge George Venizelos of the FBI’s New York Field Office. “As the charges allege, he was the leader of an extremist militia group who carried out this brutal act of violence that took the lives of four honorable Americans. The Benghazi investigation remains one of the FBI’s top priorities and we will work tirelessly until all of those responsible are brought to justice.”
The superseding indictment describes Khatallah’s alleged role in the attacks at a U.S. diplomatic mission in Benghazi and a second U.S. facility there, known as the annex. According to the superseding indictment, Khatallah was a leader of an extremist militia group and he conspired with others to attack the facilities, kill U.S. citizens, destroy buildings and other property, and plunder materials, including documents, maps and computers containing sensitive information.
The offenses that could carry death sentences include one count of murder of an internationally protected person; three counts of murder of an officer and employee of the United States; four counts of killing a person in the course of an attack on a federal facility involving the use of a firearm and a dangerous weapon; and two counts of maliciously damaging and destroying U.S. property by means of fire and an explosive causing death.
The seven other new charges in the superseding indictment include one count of providing material support and resources to terrorists resulting in death; three counts of attempted murder of an officer and employee of the United States; two counts of maliciously destroying and injuring dwellings and property, and placing lives in jeopardy within the special maritime and territorial jurisdiction of the United States, and attempting to do the same; and one count of using, carrying, brandishing and discharging a firearm during a crime of violence, which carries a mandatory minimum sentence of 30 years in prison.
Khatallah will be arraigned on the new charges at a hearing Oct. 20, 2014, before the Honorable Christopher R. Cooper in the U.S. District Court for the District of Columbia. At an earlier hearing, he pleaded not guilty to the terrorism conspiracy charge.
The investigation is continuing.
According to the superseding indictment, Khatallah was the commander of Ubaydah Bin Jarrah (UBJ), an Islamist extremist militia in Benghazi, which had the goal of establishing Sharia law in Libya. In approximately 2011, UBJ merged with Ansar al-Sharia (AAS), another Islamist extremist group in Libya with the same goal of establishing Sharia law in the country. Khatallah was a Benghazi-based leader of AAS.
The attack at the diplomatic mission, which took place on the night of Sept. 11, 2012, led to the deaths of Ambassador Stevens and Smith, who was an Information Management Officer for the U.S. Department of State; a second State Department employee was injured in this violence. The attack at the annex took place early Sept. 12, 2012. Woods and Doherty, who were security officers working on the U.S. government’s behalf, were killed in the attack at the annex, and another security officer and a State Department employee were wounded in the violence there.
In June 2014, Khatallah was taken into custody, and he initially was charged in a criminal complaint that was filed under seal on July 15, 2013, which became public on June 17, 2014. The earlier indictment became public on June 28, 2014, the date of his first court appearance.
An indictment is merely a formal allegation that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until, and unless, proven guilty.
The case is being investigated by the FBI New York Field Office's Joint Terrorism Task Force with substantial assistance from various other government agencies. The case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Counterterrorism Section of the National Security Division.
Ahmed Abu Khatallah Indicted on Additional Charges for September 2012 Attack in Benghazi, LibyaRead the Press Release
WASHINGTON – A federal grand jury in the District of Columbia returned a superseding indictment today charging Ahmed Abu Khatallah, aka Ahmed Mukatallah, with numerous additional offenses arising from his alleged participation in the September 11 through 12, 2012, terrorist attacks in Benghazi, Libya, which resulted in the deaths of Ambassador J. Christopher Stevens and U.S. government personnel Sean Smith, Tyrone Woods and Glen Doherty.
Khatallah, 43, a Libyan national, was initially indicted on June 26, 2014, on the charge of conspiracy to provide material support and resources to terrorists resulting in death. That charge, which is included in the superseding indictment, carries a potential life sentence. The superseding indictment includes a total of 17 new charges, including some that could be punishable by death.
“These additional charges reflect Ahmed Abu Khattalah’s integral role in the attack on U.S. facilities in Benghazi, which led to the deaths of four brave Americans,” said Attorney General Eric Holder. “We will never relent in pursuing justice against those who commit heinous acts of terrorism against the United States. Those who would do harm to our citizens—no matter how far away—should understand that our nation’s memory is long and our reach is far.”
“This superseding indictment charges Ahmed Abu Khatallah for his role in the attacks on U.S. facilities in Benghazi, Libya that resulted in the deaths of four U.S. government personnel,” said Assistant Attorney General for National Security John Carlin. “This case reminds us of the continued threat the United States faces abroad from terrorism, but it also highlights our resolve to find and hold terrorists accountable wherever they may hide.”
“We have no higher priority than bringing to justice terrorists who kill U.S. citizens serving our country on foreign soil,” said U.S. Attorney Ronald C. Machen Jr. for the District of Columbia. “With this 18-count indictment, a grand jury in our nation’s capital has charged Ahmed Abu Khatallah with the murders of four brave Americans in Benghazi. We will press forward with our efforts to hold accountable all those who are responsible for this cowardly act.”
“With additional charges being announced today, Ahmed Abu Khatallah’s role in the Benghazi attack is even clearer,” said Assistant Director in Charge George Venizelos of the FBI’s New York Field Office. “As the charges allege, he was the leader of an extremist militia group who carried out this brutal act of violence that took the lives of four honorable Americans. The Benghazi investigation remains one of the FBI’s top priorities and we will work tirelessly until all of those responsible are brought to justice.”
The superseding indictment describes Khatallah’s alleged role in the attacks at a U.S. diplomatic mission in Benghazi and a second U.S. facility there, known as the annex. According to the superseding indictment, Khatallah was a leader of an extremist militia group and he conspired with others to attack the facilities, kill U.S. citizens, destroy buildings and other property, and plunder materials, including documents, maps and computers containing sensitive information.
The offenses that could carry death sentences include one count of murder of an internationally protected person; three counts of murder of an officer and employee of the United States; four counts of killing a person in the course of an attack on a federal facility involving the use of a firearm and a dangerous weapon; and two counts of maliciously damaging and destroying U.S. property by means of fire and an explosive causing death.
The seven other new charges in the superseding indictment include one count of providing material support and resources to terrorists resulting in death; three counts of attempted murder of an officer and employee of the United States; two counts of maliciously destroying and injuring dwellings and property, and placing lives in jeopardy within the special maritime and territorial jurisdiction of the United States, and attempting to do the same; and one count of using, carrying, brandishing and discharging a firearm during a crime of violence, which carries a mandatory minimum sentence of 30 years in prison.
Khatallah will be arraigned on the new charges at a hearing Oct. 20, 2014, before the Honorable Christopher R. Cooper in the U.S. District Court for the District of Columbia. At an earlier hearing, he pleaded not guilty to the terrorism conspiracy charge.
The investigation is continuing.
According to the superseding indictment, Khatallah was the commander of Ubaydah Bin Jarrah (UBJ), an Islamist extremist militia in Benghazi, which had the goal of establishing Sharia law in Libya. In approximately 2011, UBJ merged with Ansar al-Sharia (AAS), another Islamist extremist group in Libya with the same goal of establishing Sharia law in the country. Khatallah was a Benghazi-based leader of AAS.
The attack at the diplomatic mission, which took place on the night of Sept. 11, 2012, led to the deaths of Ambassador Stevens and Smith, who was an Information Management Officer for the U.S. Department of State; a second State Department employee was injured in this violence. The attack at the annex took place early Sept. 12, 2012. Woods and Doherty, who were security officers working on the U.S. government’s behalf, were killed in the attack at the annex, and another security officer and a State Department employee were wounded in the violence there.
In June 2014, Khatallah was taken into custody, and he initially was charged in a criminal complaint that was filed under seal on July 15, 2013, which became public on June 17, 2014. The earlier indictment became public on June 28, 2014, the date of his first court appearance.
An indictment is merely a formal allegation that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until, and unless, proven guilty.
The case is being investigated by the FBI New York Field Office's Joint Terrorism Task Force with substantial assistance from various other government agencies. The case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Counterterrorism Section of the National Security Division.
14-230- 3 Charged in A Conspiracy to Traffic Minors for Sex
10 October 2014
Week in Review – South BendRead the Press Release
South Bend, Indiana — The United States Attorney’s Office announced the following activity in Federal Court:
DISPOSITIONS
- Willie Long, 23, of Elkhart, Indiana was sentenced to 51 months imprisonment with 18 months supervised release after pleading guilty to the felony offense of being a felon in possession of a firearm. According to documents filed in this case, Long was driving an automobile in St. Joseph County, Indiana with a Smith & Wesson handgun in the car. Long had been convicted of a felony in Elkhart County in 2007 in Circuit Court. This case was the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives. This case was prosecuted by Assistant United States Attorney Frank Schaffer.
- John Carlisle, 50, of New Haven, Indiana was sentenced to 37 months imprisonments to be followed by two years of supervised release after pleading guilty to the felony offense of making false statements in connection with a mortgage loan and mortgage insurance. According to documents filed in this case, during the period 2008 through 2010, John Carlisle was a licensed loan originator in Fort Wayne, Indiana. Ryan Webb, in conjunction with Johnny Stine and others, purchased low-end homes in the Fort Wayne area, often using an entity called Sunset Properties of NI, LLC. Through the use of advertising and a website, Webb and Stine attracted buyers for these properties. Webb and Stine would then sell these low end homes to these buyers, most often for a sales price of two or three times what had been paid for the homes. Oftentimes, the purchasers of the homes were of very modest financial means and could not, on their own, qualify for the needed mortgage loan. As part of a fraud scheme, Webb and Stine provided monies to the home buyers/borrowers to cover loan closing costs and to give the appearance that the buyers had assets in reserve. To hide the fact that all of the monies for closing and reserves had come from Webb/Stine (monies that were supposed to come from the buyers/borrowers or persons who were relatives of them but in fact came from the seller/real estate broker), Webb and Stine with the knowledge and help of Carlisle prepared phony “gift letters” documenting falsely that the monies Webb and Stine provided had come from family or relatives of the buyers/borrowers. These sham gift letters with false representations violated applicable HUD/FHA mortgage insurance regulations and in fact deceived HUD/FHA. Because these buyers/borrowers could not on their own qualify for the mortgage loans, they frequently defaulted soon after getting the mortgage loans and the homes went into foreclosure, which caused substantial losses to the mortgage lenders and mortgage insurance provider HUD/FHA. This case was the result of an investigation by the FBI. This case was prosecuted by Assistant United States Attorney Donald Schmid.
Week in Review – HammondRead the Press Release
Hammond, Indiana — The United States Attorney’s Office announced the following activity in Federal Court:
PLEAS
- Dexter Eugene Howard, 38, of Gary, Indiana pled guilty to the felony offense of bank robbery by force or violence. The magistrate judge is recommending that the district court accept the tendered guilty plea. Parties have 14 days in which to object to the magistrate judge’s recommendation. This charge was filed as a result of an investigation by Federal Bureau of Investigation. Sentencing has been set for 1/14/2015. This case is being prosecuted by Assistant United States Attorney Jennifer Chang-Adiga.
- Elbert Johnson, 37, of Crown Point, Indiana pled guilty to the felony offenses of conspiracy to commit identity theft, false claims, aggravated identity theft, and filing a false tax return. This charge was filed as a result of an investigation by Internal Revenue Service. Sentencing has not been set. This case is being prosecuted by Assistant United States Attorney Toi Houston.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
Week in Review – Fort WayneRead the Press Release
Fort Wayne, Indiana — The United States Attorney’s Office announced the following activity in Federal Court:
PLEA
- Korean Daniels, 38, of Fort Wayne, Indiana pled guilty to the felony offense of being a felon in possession of a firearm. The magistrate judge is recommending that the district court accept the tendered guilty plea. Parties have 14 days in which to object to the magistrate judge’s recommendation. This charge was filed as a result of an investigation by Bureau of Alcohol, Tobacco, Firearms & Explosives and the Fort Wayne Police Department. Sentencing will be set by separate order by the district court. This case is being prosecuted by Assistant United States Attorney Anthony W. Geller.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
DISPOSITIONS
- Nathan Hasty, 36, of Huntington, Indiana was sentenced to 180 months imprisonment, 5 years supervised release after pleading guilty to the felony offense of sexual exploitation of children. According to documents filed in this case, Hasty had been using fake identities in Facebook posing as a female and flirting with boys in attempt to gain their trust and began to talk sexually with them. Hasty admitted to being a Campus Life Director for Youth for Christ and admitted to using false Facebook accounts in which he posed as a juvenile female to communicate with the boys in his youth group. Hasty admitted to having sexual conversations with the young boys, asked them to send nude pictures of themselves, and to skype in a one way conversation. This case was the result of an investigation by the Federal Bureau of Investigation-Cyber Squad. This case was prosecuted by Assistant United States Attorney Lesley J. Miller Lowery.
- Jose A. Soto, 31, of Fort Wayne, Indiana was sentenced to 92 months imprisonment, 4 years supervised release, and ordered to pay a $100 special assessment after pleading guilty to the felony offense of knowingly or intentionally conspiring to distribute and possess with the intent to distribute controlled substances. According to documents filed in the case, this investigation began with controlled buys of powder and crack cocaine and progressed with wiretaps of several cocaine suppliers. Jose Soto was identified as distributor of one of the conspiracies. This case was the result of an investigation by Federal Bureau of Investigation, Fort Wayne Safe Streets Task Force, G-Net, Indiana State Police, Fort Wayne Police Department, Allen County Police Department, Allen County Drug Task Force, and the New Haven Police Department. This case was prosecuted by Assistant United States Attorney Anthony W. Geller.
- Charley J. Gonzalez, III, 43, of Fort Wayne, Indiana, was sentenced to 300 months imprisonment with 10 years of supervised release after pleading guilty to the felony offenses of knowingly conspiring to distribute and possess with intent to distribute cocaine, and possessing a firearm in furtherance of a drug trafficking crime. According to documents filed in this case, this investigation began with controlled buys of powder and crack cocaine and progressed with wiretaps of several cocaine suppliers. Charley Gonzalez was identified as the leader of one of the drug supply networks. This case was the result of an investigation by Federal Bureau of Investigation, Fort Wayne Safe Streets Task Force, Indiana State Police, Fort Wayne Police Department, Allen County Police Department, Allen County Drug Task Force and the New Haven Police Department. This case was prosecuted by Assistant United States Attorney Anthony W. Geller.
- Julius W. Lawson, 36, of Fort Wayne, Indiana was sentenced to 84 months imprisonment after being found guilty by a jury of the felony offenses of attempted robbery of a person having custody of mail matter, money or property of the United States and interfering with the performance of the official duties of a postal employee which sentence is to run consecutively to 60 months for the felony offense of using a firearm during and in relation to the robbery offense. A 3 year term of supervised release was also imposed. According to documents filed in this case, on December 19, 2012, Lawson and an unknown accomplice entered the United States Postal Office located in Diplomat Plaza wearing hoodies. A postal employee, while hidden in the manager’s office, watching the surveillance monitor, observed Lawson jump the counter located behind the window of the clerks’ stations where cash money, bonds and other valuables were kept. Lawson’s cell phone and fingerprint were recovered from the customer counter in the postal station and his accomplice was observed in possession of a firearm while inside the station that was pointed at a customer. One of the individuals in the post office called 911 to report the crime after Lawson and his accomplice had fled the building. This case was the result of an investigation by the United States Postal Inspection Service, and the Fort Wayne Police Department. This case was prosecuted by Assistant United States Attorney Lovita Morris King.
- Korean Daniels, 38, of Fort Wayne, Indiana pled guilty to the felony offense of being a felon in possession of a firearm. The magistrate judge is recommending that the district court accept the tendered guilty plea. Parties have 14 days in which to object to the magistrate judge’s recommendation. This charge was filed as a result of an investigation by Bureau of Alcohol, Tobacco, Firearms & Explosives and the Fort Wayne Police Department. Sentencing will be set by separate order by the district court. This case is being prosecuted by Assistant United States Attorney Anthony W. Geller.
U.S. Attorney Names First Assistant, Criminal Division AppointmentsRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced several leadership and supervisory appointments within the U.S. Attorney’s Office.
Michael J. Gustafson has been named First Assistant U.S. Attorney. Mr. Gustafson has been with the U.S. Attorney’s Office since 1997. For the last four years, he served as Chief of the Criminal Division, and previously as Supervisor of the District’s Hartford Office and Chief of the Organized Crime Strike Force. Prior to joining the Department of Justice, Mr. Gustafson was in private practice for eight years, and served as a law clerk to both Senior U.S. District Judge T. Emmet Clarie and U.S. Magistrate Judge F. Owen Eagan. Mr. Gustafson is a 1983 graduate of Amherst College and a 1986 graduate of the University of Connecticut School of Law.
“In his long tenure in the Office, Mike has distinguished himself as someone with excellent judgment and outstanding character,” stated U.S. Attorney Daly. “A terrific prosecutor and enormously dedicated public servant, Mike is an invaluable asset to me and everyone who works here. Never seeking credit or recognition, Mike works tirelessly to help others while also prosecuting some of our most important and challenging cases. In his new role, we will have the benefit of his advice and counsel on all significant matters within the Office.”
William J. Nardini has been named Chief of the Criminal Division. Mr. Nardini joined the U.S. Attorney’s Office in 2000, and previously served as Chief of Appeals. He recently completed a four-year assignment as the Department of Justice Attaché at the U.S. Embassy in Rome where he coordinated requests for extradition and mutual legal assistance in criminal matters between American and Italian legal authorities. Prior to joining the U.S. Attorney’s Office, Mr. Nardini served as a law clerk for Justice Sandra Day O’Connor of the U.S. Supreme Court as well as Judges José Cabranes and Guido Calabresi of the U.S. Court of Appeals for the Second Circuit. Mr. Nardini is a 1990 graduate of Georgetown University and a 1994 graduate of Yale Law School. He also received an LL.M from the European University Institute in 1999 as a Fulbright Scholar.
“We are excited and very fortunate to have Bill returning to the Office after his distinguished service as the Justice Department’s Attaché in Italy,” stated U.S. Attorney Daly. “Bill’s legal acumen, wise counsel and management skills make him a great fit for the critically important position of Criminal Chief. We are confident that he will provide valuable guidance to our talented AUSAs.”
The Criminal Division, which is responsible for enforcing federal criminal laws, comprises three program-based units: National Security and Major Crimes, Violent Crimes and Narcotics, and Financial Fraud and Public Corruption.
The National Security and Major Crimes Unit is responsible for prosecuting matters involving international and domestic terrorism, civil rights and hate crimes, human trafficking and child exploitation, cybercrime and identity theft, organized crime, immigration and customs enforcement, government program and defense contractor fraud, and environmental crimes. Raymond F. Miller is the Chief of the Unit. Stephen B. Reynolds and Krishna R. Patel are the Deputy Chiefs. AUSA Reynolds also supervises the Office’s national security work and coordinates the District’s Anti-Terrorism Advisory Committee (ATAC).
The Violent Crimes and Narcotics Unit includes the District’s Organized Crime and Drug Enforcement Task Force (OCDETF), Project Safe Neighborhoods (PSN) prosecutions, and violent crime, gangs and narcotics investigations. S. Dave Vatti is the Chief of the Unit, and AUSAs Robert M. Spector and Brian P. Leaming are the Deputy Chiefs. AUSA Spector is the District’s OCDETF Coordinator, which targets major drug trafficking operations responsible for the distribution of large quantities of narcotics by violent drug organizations, and AUSA Leaming serves as PSN Coordinator, overseeing firearms prosecutions that seek to deter the illegal possession of guns and reduce gun and gang violence.
The Financial Fraud and Public Corruption Unit includes securities, commodities and investor fraud, public corruption, bank fraud and embezzlement, mortgage fraud, tax fraud, health care fraud, bankruptcy fraud and Foreign Corrupt Practices Act violations. Christopher M. Mattei is the newly appointed Chief of the Unit, and Michael S. McGarry and David E. Novick are the Deputy Chiefs. This Unit includes the Connecticut Securities Fraud Task Force.
In addition, The District of Connecticut’s Appellate Unit is led by Sandra S. Glover, who serves as Chief of Appeals, and Marc H. Silverman, who serves as Deputy Chief.
John H. Durham continues to serve as Counsel to the United States Attorney, John B. Hughes remains the longstanding Chief of the Civil Division and Peter S. Jongbloed continues as the Executive United States Attorney.
“This supervisory team is a talented and experienced group of public servants who are driven by the cause of justice,” stated U.S. Attorney Daly. “Their dedicated efforts make Connecticut a safer and more secure place to live. I am fortunate and proud to be working by their side.”
The U.S. Attorney’s Office is charged with enforcing federal criminal laws in Connecticut, and with representing the federal government in civil litigation in the District. The District is composed of approximately 64 Assistant U.S. Attorneys and approximately 60 staff members at offices in New Haven, Hartford and Bridgeport.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Three Florida Residents Are Charged with Health Care Fraud, Money Laundering and Drug TraffickingRead the Press Release
Three Miami residents have been charged in a superseding indictment with health care fraud violations stemming from a $23 million Medicare fraud scheme. Two of the defendants are also charged with drug trafficking for submitting fraudulent prescriptions for oxycodone and other drugs to pharmacies.
U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (OIG-HHS) Miami Regional Office made the announcement.
On Oct. 9, 2014, a grand jury sitting in the Southern District of Florida returned a 16-count superseding indictment, charging Guillermo Delgado, 45; Gabriel Delgado, 42; and Emerson Carmona, 43, with conspiracy to pay and receive health care kickbacks and the receipt of kickbacks. Guillermo Delgado and Gabriel Delgado were also charged with conspiracy to commit money laundering, and Gabriel Delgado was charged with four money laundering counts. In addition, Guillermo Delgado and Emerson Carmona were charged with conspiracy to commit health care fraud and conspiracy to possess with intent to distribute a controlled substance.
The superseding indictment alleges that Jose Carlos Morales, 57, co-owned two pharmacies, Pharmovisa Inc., Pharmovisa Limited, and PharmovisaMD Inc. Between March 2006 and September 2012, Morales paid kickbacks to brothers Guillermo Delgado and Gabriel Delgado, as well as Carmona, for Medicare beneficiary information, which Morales then used to submit more than $23 million in fraudulent claims to Medicare and Medicaid. The Delgado brothers allegedly concealed the kickbacks by disguising them as legitimate payments for services purportedly provided by shell companies under their control.
The superseding indictment also alleges that from June 2010 through September 2011, Guillermo Delgado and Carmona delivered or caused the delivery of fraudulent prescriptions for oxycodone, oxymorphone and other prescription drugs to Morales’s pharmacies. Morales filled the fraudulent prescriptions and submitted fraudulent claims for reimbursement to Medicare. Guillermo Delgado and Carmona allegedly gave the drugs to other co-conspirators for resale.
On Dec. 7, 2012, Morales pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and pay illegal health care kickbacks. On Feb. 26, 2013, he was sentenced to serve 14 years in prison.
The charges contained in the superseding indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
This case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Trial Attorney Allan J. Medina of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
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.
Taiwanese Businessman Pleads Guilty to Conspiring to Violate U.S. Laws Preventing Proliferation of Weapons of Mass DestructionRead the Press Release
A former resident of Taiwan, who the United States has linked to the supply of weapons manufacturing machinery to North Korea, pleaded guilty today to conspiracy to violate U.S. regulations regarding the proliferation of weapons of mass destruction, announced Assistant Attorney General John Carlin for the National Security Division and U.S. Attorney Zachary T. Fardon for the Northern District of Illinois. The defendant, Hsien Tai Tsai, admitted that he engaged in illegal business transactions involving the export of U.S. origin goods and machinery.
Tsai, 69, also known as “Alex Tsai,” was arrested in May 2013 in Tallinn, Estonia, and later was extradited to the United States, where he remains in federal custody.
Tsai pleaded guilty to conspiracy to defraud the United States in its enforcement of regulations targeting proliferators of weapons of mass destruction before U.S. District Judge Charles Norgle in Federal Court in Chicago. Sentencing was set for Dec. 5, 2014. Tsai faces a maximum sentence of five years in prison and a $250,000 fine. Under the terms of his plea agreement, the government will recommend a sentence of approximately 30 months in prison provided Tsai continues to fully cooperate with the United States.
According to court documents, Tsai was associated with at least three companies based in Taiwan – Global Interface Company Inc., Trans Merits Co. Ltd., and Trans Multi Mechanics Co. Ltd. – that purchased and then exported, and attempted to purchase and then export, from the United States and other countries machinery used to fabricate metals and other materials with a high degree of precision.
In January 2009, under Executive Order 13382 which sanctions proliferators of weapons of mass destruction and their supporters, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated Tsai, Global Interface, and Trans Merits as proliferators of weapons of mass destruction, isolating them from the U.S. financial and commercial systems and prohibiting any person or company in the United States from knowingly engaging in any transaction or dealing with them.
The Treasury Department said at the time that Tsai was designated for providing, or attempting to provide, financial, technological, or other support for, or goods or services in support of the Korea Mining Development Trading Corporation (KOMID), which was designated as a proliferator by President George W. Bush in June 2005. The Treasury Department asserted that Tsai “has been supplying goods with weapons production capabilities to KOMID and its subordinates since the late 1990s, and he has been involved in shipping items to North Korea that could be used to support North Korea’s advanced weapons program.” The Treasury Department further said that Global Interface was designated “for being owned or controlled by Tsai,” who was a shareholder of the company and acted as its president. Tsai was also the general manager of Trans Merits Co. Ltd., which was designated for being a subsidiary owned or controlled by Global Interface Company Inc. http://www.treasury.gov/press-center/press-releases/Pages/hp1359.aspx
After the OFAC designations, Tsai and others allegedly continued to conduct business together, but attempted to hide Tsai’s and Trans Merit’s involvement in those transactions by conducting business under different company names, including Trans Multi Mechanics. For example, by August 2009 – approximately eight months after the OFAC designations –Tsai and others allegedly began using Trans Multi Mechanics to purchase and export machinery on behalf of Trans Merits and Tsai.
In pleading guilty, Tsai admitted that in September 2009 he was involved in the purchase of a Bryant center hole grinder from a U.S. company based in suburban Chicago, and exported it to Taiwan using the company Trans Multi Mechanics. A Bryant center hole grinder is a machine tool used to grind a center hole, with precisely smooth sides, through the length of a material. Tsai also admitted a role in Trans Merits’ transaction involving LED road lights and an oil pump.
Charges remain pending against Tsai’s son, Yueh-Hsun Tsai, 37, of Glenview, Ill., also known as “Gary” Tsai. He was released on bond after he was arrested in May 2013 and has pleaded not guilty.
The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Gary Hartwig, Special Agent-in-Charge of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in Chicago; and Ronald B. Orzel, Special Agent-in-Charge for the Chicago Field Office of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement. The Justice Department’s National Security Division and Office International Affairs assisted with the investigation. The Estonian Internal Security Service and the Estonian Prosecutor’s Office cooperated with the United States.
The government is being represented by Assistant U.S. Attorney Brian Hayes and Justice Department Trial Attorney Brandon L. Van Grack.
Taiwanese Businessman Pleads Guilty to Conspiring to Violate U.S. Laws Preventing Proliferation of Weapons of Mass DestructionRead the Press Release
CHICAGO — A former resident of Taiwan, who the United States has linked to the supply of weapons manufacturing machinery to North Korea, pleaded guilty today to conspiracy to violate U.S. regulations regarding the proliferation of weapons of mass destruction. The defendant, HSIEN TAI TSAI, admitted that he engaged in illegal business transactions involving the export of U.S. origin goods and machinery.
Tsai, 69, also known as “Alex Tsai,” was arrested in May 2013 in Tallinn, Estonia, and later was extradited to the United States, where he remains in federal custody.
Tsai pleaded guilty to conspiracy to defraud the United States in its enforcement of regulations targeting proliferators of weapons of mass destruction before U.S. District Judge Charles Norgle in Federal Court in Chicago. A sentencing status hearing was set for Dec. 5. Tsai faces a maximum sentence of five years in prison and a $250,000 fine. Under the terms of his plea agreement, the government will recommend a sentence of approximately 30 months in prison provided Tsai continues to fully cooperate with the United States.
According to court documents, Tsai was associated with at least three companies based in Taiwan – Global Interface Company, Inc., Trans Merits Co., Ltd., and Trans Multi Mechanics Co., Ltd. – that purchased and then exported, and attempted to purchase and then export, from the United States and other countries machinery used to fabricate metals and other materials with a high degree of precision.
In January 2009, under Executive Order 13382 which sanctions proliferators of weapons of mass destruction and their supporters, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated Tsai, Global Interface, and Trans Merits as proliferators of weapons of mass destruction, isolating them from the U.S. financial and commercial systems and prohibiting any person or company in the United States from knowingly engaging in any transaction or dealing with them.
The Treasury Department said at the time that Tsai was designated for providing, or attempting to provide, financial, technological, or other support for, or goods or services in support of the Korea Mining Development Trading Corporation (KOMID), which was designated as a proliferator by President George W. Bush in June 2005. The Treasury Department asserted that Tsai “has been supplying goods with weapons production capabilities to KOMID and its subordinates since the late 1990s, and he has been involved in shipping items to North Korea that could be used to support North Korea’s advanced weapons program.” The Treasury Department further said that Global Interface was designated “for being owned or controlled by Tsai,” who was a shareholder of the company and acted as its president. Tsai was also the general manager of Trans Merits Co. Ltd., which was designated for being a subsidiary owned or controlled by Global Interface Company Inc. www.treasury.gov/press-center/press-releases/Pages/hp1359.aspx
After the OFAC designations, Tsai and others allegedly continued to conduct business together, but attempted to hide Tsai’s and Trans Merit’s involvement in those transactions by conducting business under different company names, including Trans Multi Mechanics. For example, by August 2009 – approximately eight months after the OFAC designations –Tsai and others allegedly began using Trans Multi Mechanics to purchase and export machinery on behalf of Trans Merits and Tsai.
In pleading guilty, Tsai admitted that in September 2009 he was involved in the purchase of a Bryant center hole grinder from a U.S. company based in suburban Chicago, and exported it to Taiwan using the company Trans Multi Mechanics. A Bryant center hole grinder is a machine tool used to grind a center hole, with precisely smooth sides, through the length of a material. Tsai also admitted a role in Trans Merits’ transaction involving LED road lights and an oil pump.
Charges remain pending against Tsai’s son, YUEH-HSUN TSAI, 37, of Glenview, Ill., also known as “Gary” Tsai. He was released on bond after he was arrested in May 2013 and has pleaded not guilty.
The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Gary Hartwig, Special Agent-in-Charge of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in Chicago; and Ronald B. Orzel, Special Agent-in-Charge for the Chicago Field Office of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement. The Justice Department’s National Security Division and Office International Affairs assisted with the investigation. The Estonian Internal Security Service and the Estonian Prosecutor’s Office cooperated with the United States.
The government is being represented by Assistant U.S. Attorney Brian Hayes and Justice Department Trial Attorney Brandon L. Van Grack.
Plea Agreement
Springfield Man Pleads to Firearms and Drug Charges Agrees to 10 Year Prison SentenceRead the Press Release
BOSTON – A Springfield man pleaded guilty on Oct. 8, 2014 in U.S. District Court in Worcester with conspiring to illegally possessing a firearm and ammunition and with conspiring to distribute cocaine.
Kevin Sligar, 30, pleaded guilty to a superseding information charging him with conspiring to possess a firearm and ammunition after being previously convicted of a crime punishable by more than one year in prison and with conspiring to possess with the intent to distribute, and to distribute cocaine.
According to the facts agreed to by the parties, from approximately April 1, 2012 through July 21, 2012, Sligar operated a narcotics distribution operation, in and around Springfield, with three co-conspirators in which they distributed at least 300 grams of cocaine and an indeterminate amount of marijuana. In furtherance of their narcotics distribution operation, Sligar and a co-conspirator (“co-conspirator A”) jointly possessed a Hi-Point Model C9, 9mm pistol, even though both Sligar and the co-conspirator A had been convicted of a crime punishable by more than one year in prison.
During the evening of July 21, 2012, Sligar and his co-conspirators traveled to the Polish Festival in Ludlow in a Dodge Neon (the “Neon”). After leaving the festival, they encountered another car occupied by three individuals who were later identified by the police. While both cars were stopped at a traffic light, an argument broke out between the occupants of the other car and the occupants of the Neon. During the course of the argument, Sligar brandished the pistol. Shortly thereafter, the other car drove away, and the occupants called 911. The Neon attempted to escape the Springfield Police by driving at very high rates of speed, but ultimately crashed at an intersection, injuring Sligar and all of his co-conspirators A, B and C. During the search of the Neon, the SPD pistol, which was fully loaded with 9mm ammunition, was recovered.
According to Sligar’s Plea Agreement, Sligar has also agreed to plead guilty to assault with a dangerous weapon in a related case in Hampden Superior Court.
Sligar is scheduled to be sentenced on Jan. 12, 2015. According to the Plea Agreement, Sligar has agreed to be sentenced to 10 years in prison to be followed by six years of supervised release.
United States Attorney Carmen M. Ortiz, Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Boston Field Office, and Springfield Police Department Commissioner William John Barbieri made the announcement. The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz's Springfield Branch Office.
Sixty People Indicted, 110 Firearms Seized as Part of Summer Enforcement Action in Greater ClevelandRead the Press Release
Sixty people were indicted and 110 firearms were seized as part of a months-long enhanced enforcement initiative targeting the criminal possession, use and sale of firearms in Greater Cleveland, law enforcement officials announced.
The indictments were announced by ATF Director B. Todd Jones, U.S. Attorney Steven M. Dettelbach, Cleveland Mayor Frank G. Jackson, ATF Special Agent in Charge Michael Boxler, Cleveland Police Chief Calvin Williams and Cuyahoga County Prosecutor Timothy J. McGinty.
Forty-two people were indicted in federal court while 18 people were indicted in state court. Charges include engaging in the business of dealing firearms without a license, being a felon in possession of firearms and ammunition, possession of unregistered firearms that had been modified (sawed-off shotguns), possession and sale of firearms with obliterated serial numbers and related drug counts.
The indictments are the result of “Operation Samson II,” a summer-long initiative organized around three operational groups. The first used undercover operations to investigate people known to criminally possess, use and sell firearms, as well as people possessing firearms while conducting drug activities. The second group, referred to as the “Follow the Gun Group,” used firearms trace data and ballistics information from the National Ballistics Information Network (NIBIN) to pursue leads related to firearms that have been diverted from legal commerce to criminal use. Many of those investigations remain ongoing. The third group involved ATF Industry Operations conducting inspections at Cleveland-area federal firearms licensees to ensure that dealers are selling firearms in accordance with federal law and regulations.
This initiative was a cooperative effort between the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Cleveland Division of Police, the Ohio Adult Parole Authority, the U.S. Marshals Service, the U.S. Attorney’s Office and the Cuyahoga County Prosecutor’s Office.
“Preventing violent crime and apprehending violent offenders are vital components of ATF’s commitment to public safety because firearms-related violence should not be considered part of everyday life. This collective operation is helping make that possible for the citizens of Cleveland,” Director Jones said.
“Gun crime is far too prevalent in our community, and the Department of Justice is working with the City to not just talk about that problem, but to do something about it,” U.S. Attorney Dettelbach said. “This summer, our office and the ATF have doubled down on that commitment here, by targeting some of Cleveland's most violent felons and working with our local partners to take them, and some of their considerable weaponry, off our streets. We need an all-of-the-above approach to fighting gun violence, and today's announcement reminds us that targeted enforcement remains and important part of that approach.”
“Gun violence in Cleveland is often the result of guns in the hands of felons who do not have the right to have a gun. I’d like to thank the Bureau of Alcohol, Tobacco, Firearms and Explosives for working with our Cleveland police this year to take a significant number of these illegal firearms off our streets,” said Mayor Jackson.
“These arrests will destabilize the market in the illegal gun trade,” Prosecutor McGinty said. “These weapons are constantly found to be used by those who deal in illegal drugs and commit other violent offenses. This program is a step toward a safer community.”
Below are details of selected cases:
United States v. Kali Alexander et. al.: An 11-count indictment was filed charging five people with using firearms as part of a drug conspiracy, conspiracy to distribute cocaine and felons in possession of firearms.
Alexander, 24, of Willoughby Hills, recruited Rasheam Nichols, 24, Justin Maxwell, 26, Terrance Chappell, 22, and Kenneth Flowers, 21, all of Cleveland, to steal up to nine kilograms of cocaine from a stash house in Cleveland. The group planned to rob the stash house, then Alexander would sell the stolen cocaine and split the profits, according to the indictment.
Alexander met with an undercover ATF agent in August and expressed an interest and willingness to commit the robbery. “I promise you, I know what I’m doing, I’m about to holler at my big brother, then we going to orchestrate it from there.” On September 3, Alexander, Nichols, Maxwell, Chappell and Flowers met with the ATF undercover and discussed the strategy for the robbery. Then the five men drove to agreed-upon location in anticipation of acquiring a specific vehicle to use during the robbery, at which point they were arrested, according to the indictment.
United States v. Juan Davis: Davis, 25, of Cleveland, was not a licensed firearms dealer but sold five firearms on three dates in August – a Ruger .40-caliber pistol, an HS 9mm pistol, a Chinese SKS 7.62-caliber rifle, a Firearms International .22-caliber pistol and a Bersa .45-caliber pistol, according to the indictment.
United States v. Jesse Pawlak: Pawlak, 32, of Parma, has prior convictions for drug trafficking and burglary, but in July possessed an AK-47 7.62-caliber rifle, a Sar Arms 9mm pistol and a Bersa .380-caliber pistol, and in August possessed a Professional Ordnance 5.56-caliber rifle, according to the indictment.
United States v. Moises Perez: Perez, 45, of Cleveland, had a Ruger 9 mm pistol and H&R .22-caliber revolver and assorted ammunition in August, despite prior felony convictions for burglary, attempted felonious assault, unlawful sexual conduct with a minor, attempted felonious assault with a firearm, attempted intimidation, drug trafficking, robbery and being a felon in possession of a firearm. Perez was indicted as an armed career criminal, which would carry a mandatory minimum sentence of 15 years in prison if convicted, according to the indictment.
United States v. James Smith et. al.: A seven-count indictment was filed charging James Smith, 25, of Cleveland, Brandon Talley, 32, of Garfield Heights, and Lorenzo White, 22, of Cleveland, with multiple offenses. Talley possessed a 12-gauge shotgun in August, despite a previous conviction for rape and aggravated robbery with firearms specifications. Talley, Smith and White aided and abetted each other in the possession of unlicensed shotguns which had been modified (sawed-off), according to the indictment.
United States v. Gilberto Torres, et. al: A six-count indictment was filed charging Gilberto Torres, 33, Juan Hernandez, 23, both of Cleveland, and Antonio Turner, 33, of Shaker Heights, with firearms offenses. All three men at various times sold firearms without a license. Torres and Turner did so despite felony convictions – aggravated assault for Torres and attempted felonious assault, burglary, abduction and robbery with a firearm for Turner. Hernandez also sold a HiPoint .40-caliber pistol with an obliterated serial number, according to the indictment.
State of Ohio v. Michael Lukach: Lukach, 24, of Cleveland, was charged in state court with two counts of carrying a concealed weapon, fourth-degree felonies; two counts of improperly handling firearms in a motor vehicle, also fourth-degree felonies; and unlawful possession of dangerous ordnance, a fifth-degree felony. These charges stem from undercover investigations in which Lukach, also known as “Russian Mike,” sold eight firearms to an agent – six semiautomatic pistols and two shotguns, according to the indictment.
The federal cases were presented for indictment by Assistant U.S. Attorney Kelly Galvin.
An indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial in which it will be the government’s burden to prove guilty beyond a reasonable doubt.
Sharon Felon Gets 41-Month Federal Prison Sentence for Illegally Possessing PistolRead the Press Release
PITTSBURGH - A resident of Sharon, Pennsylvania, has been sentenced in federal court to 41 months for his conviction of possession of a firearm by a convicted felon, United States Attorney David J. Hickton announced today.
Senior United States District Judge Terrence McVerry imposed the sentence on Ralph Samuels, 50.
According to information presented to the court, during the early morning hours of Oct. 3, 2012, Samuels engaged in a shootout with Daniel Odem, Jr., a resident of Farrell. This shootout, which occurred on the 500 block of Emerson Avenue in Farrell took place because of a fight that had occurred earlier that evening at Rockabilly’s Bar. Both Samuels, who, at that time, was a convicted felon and therefore illegally possessed the firearm he utilized in the shootout, and Odem, Jr., were injured in the shootout. Police later recovered Samuels’ DNA on the firearm he utilized, which was a .45 caliber Firestorm pistol.
Prior to imposing sentence, Judge McVerry declined Samuels’ request for a downward variance and instead imposed a sentence within the Sentencing Guidelines. Judge McVerry noted the danger that Samuels’ actions posed to himself, Odem, Jr., and the general community.
Assistant United States Attorney Eric S. Rosen prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Southwest Mercer County Regional Police, the Federal Bureau of Investigation, and the Bureau of Alcohol, Tobacco, Firearms and Explosives for the investigation leading to the successful prosecution of Samuels.
Sewickley Man Defrauded Investors to Support His LifestyleRead the Press Release
PITTSBURGH – An Allegheny County resident pleaded guilty in federal court to a charge of wire fraud, United States Attorney David J. Hickton announced today.
Daniel Hoey, 49, of Sewickley, Pa., pleaded guilty to one count before Chief United States District Judge Joy Flowers Conti.
In connection with the guilty plea, the court was advised that Hoey participated in a scheme to defraud through an entity named Trilliant that purportedly offered mortgage services to entities as an employee benefit. Hoey used a series of false representations and falsified documents to solicit investments and loans from the victims of his fraud scheme. He provided false documents to the victims to induce them to invest, and then he spent the investors’ money to support his lifestyle.
Judge Conti scheduled sentencing for Feb. 6, 2015, at 10 a.m. The law provides for a total sentence of 20 years in prison, a fine of $250,000, 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 Attorney Brendan T. Conway is prosecuting this case on behalf of the government.
The United States Postal Inspection Service conducted the investigation that led to the prosecution of Hoey.
Serial Armed Robber Exiled to 30 Years in PrisonRead the Press Release
Perpetrator of 13 Robberies or Attempted Robberies Has “Committed his Last Robbery”
Baltimore, Maryland – U.S. District Judge George L. Russell, III sentenced John Joseph Wilson, age 54, of Dundalk, Maryland today to 30 years in prison followed by five years of supervised release for armed robbery of a bank and post office, and the use of a firearm during a robbery. Judge Russell also ordered Wilson to pay restitution of $48,818.01.The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Postal Inspector in Charge Gary R. Barksdale of the U.S. Postal Inspection Service - Washington Division; Colonel Marcus L. Brown, Superintendent of the Maryland State Police; Chief James W. Johnson of the Baltimore County Police Department; Harford County Sheriff L. Jesse Bane; Commissioner Anthony W. Batts of the Baltimore Police Department; Baltimore City State’s Attorney Gregg L. Bernstein; Baltimore County State’s Attorney Scott Shellenberger; and Harford County State’s Attorney Joseph I. Cassilly.
“If we are serious about reducing gun crime, we need to be serious about sentencing armed criminals to long terms in prison,” said U.S. Attorney Rod J. Rosenstein. “Hopefully John Joseph Wilson has committed his last armed robbery.”
According to his plea agreement, from July 2010 to October 2013, Wilson robbed or attempted to rob: four banks on eight occasions, one post office on three occasions and a supermarket on two occasions. These robberies occurred primarily in Harford and Baltimore Counties, and total $49,046.17. In all but one robbery, Wilson pointed a firearm at an employee. During his final robbery, Wilson shot at a citizen who was chasing him.
Beginning on July 22, 2010, Wilson stole $6,883.50 from the Mars Supermarket located on Philadelphia Road in Baltimore, after pointing a semi-automatic handgun at a clerk and taking money from her cash drawer. Wilson returned to the same store on August 27, 2010 and robbed the same clerk with the same gun, stealing $6,064.01.
On September 30, 2010, Wilson pointed a pistol at a bank clerk and stole $8,297 from a cash drawer at Madison Square Federal Savings Bank in Fallston, Maryland. When Wilson returned to the bank on October 9th, the employees recognized him from the earlier robbery and refused to let him enter the bank. Wilson pointed a handgun at the employees before fleeing.
A couple years later, on November 5, 2012, Wilson used a short-barreled shotgun to steal $4,116.66 from the BB&T Bank in Fallston.
Wilson used the revolver or shotgun to steal $490 from the Benson Post Office on Connolly Road in Fallston on December 12, 2012; $8,684 from Sovereign Bank on Emmorton Road in Bel Air, Maryland on December 17, 2012; and $8,960 from the same Sovereign Bank on January 4, 2013.
Wilson returned to the same BB&T Bank in Fallston on February 4, 2013 and stole $930. This time, instead of displaying a gun, Wilson showed a bank clerk his cell phone to display his demands for “Large bills” and “no dye pack.”
On April 27, 2013, after initially being thwarted from entering the Sovereign Bank on Emmorton Road in Bel Air, Wilson returned to the Benson Post Office. Using a revolver, he forced a postal clerk to open a safe. He took $821 from the safe and cash drawers.
On September 6, 2013, Wilson stole $3,800 from the Liberty Federal Savings and Loan Association Bank on Belair Road in Bel Air, after pointing a gun at an employee.
Finally, on October 5, 2013, Wilson again robbed the Benson Post Office. When the postal clerk saw Wilson’s gun, she fled to a business next door. The proprietor of that business chased Wilson, who turned and fired one shot toward the proprietor before fleeing away from the area. Postal Inspectors and Maryland State Police processed the crime scene at the Benson Post Office and developed evidence that assisted in the identification of Wilson as a suspect.
Wilson was arrested on October 9, 2013. The revolver and shotgun used in all but one of the robberies were recovered.United States Attorney Rod J. Rosenstein commended the FBI, U.S. Postal Inspection Service, Maryland State Police, Baltimore County Police Department, Harford County Sheriff’s Office, Baltimore Police Department and the Baltimore City, County and Harford County State’s Attorney’s Offices for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney P. Michael Cunningham, who prosecuted the case.
Second Vice President of Equatorial Guinea Agrees to Relinquish More Than $30 Million of Assets Purchased with Corruption ProceedsRead the Press Release
The Department of Justice has reached a settlement of its civil forfeiture cases against assets in the United States owned by the Second Vice President of the Republic of Equatorial Guinea Teodoro Nguema Obiang Mangue that he purchased with the proceeds of corruption.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting Director Thomas S. Winkowski of U.S. Immigration and Customs and Enforcement made the announcement after the settlement was signed and lodged with the U.S. District Court for the Central District of California.
“Through relentless embezzlement and extortion, Vice President Nguema Obiang shamelessly looted his government and shook down businesses in his country to support his lavish lifestyle, while many of his fellow citizens lived in extreme poverty,” said Assistant Attorney General Caldwell. “After raking in millions in bribes and kickbacks, Nguema Obiang embarked on a corruption-fueled spending spree in the United States. This settlement forces Nguema Obiang to relinquish assets worth an estimated $30 million, and prevents Nguema Obiang from hiding other stolen money in the United States, fulfilling the goals of our Kleptocracy Asset Recovery Initiative: to deny safe haven to the proceeds of large-scale foreign official corruption and recover those funds for the people harmed by the abuse of office.”
“While this settlement is certainly gratifying for the many investigators and prosecutors who worked tirelessly to bring it to fruition, it is undoubtedly even more rewarding for the people of Equatorial Guinea, knowing that at least some of the money plundered from their country’s coffers is being returned to them,” said Acting ICE Director Winkowski. “ICE remains steadfast in its resolve to combat foreign corruption when the spoils of these crimes come to our shores and we are committed to seeking justice and compensation for the often impoverished victims.”
According to court documents, Nguema Obiang, the son of Equatorial Guinea’s President Teodoro Obiang Nguema Mbasogo, received an official government salary of less than $100,000 but used his position and influence as a government minister to amass more than $300 million worth of assets through corruption and money laundering, in violation of both Equatoguinean and U.S. law. Through intermediaries and corporate entities, Nguema Obiang acquired numerous assets in the United States that he is agreeing to relinquish in a combination of forfeiture and divestment to a charity for the benefit of the people of Equatorial Guinea.
Under the terms of the settlement, Nguema Obiang must sell a $30 million mansion located in Malibu, California, a Ferrari automobile and various items of Michael Jackson memorabilia purchased with the proceeds of corruption. Of those proceeds, $20 million will be given to a charitable organization to be used for the benefit of the people of Equatorial Guinea. Another $10.3 million will be forfeited to the United States and will be used for the benefit of the people of Equatorial Guinea to the extent permitted by law.
Under the agreement, Nguema Obiang must also disclose and remove other assets he owns in the United States. Nguema Obiang must also make a $1 million payment to the United States, representing the value of Michael Jackson memorabilia already removed from the United States for disbursement to the charitable organization. The agreement also provides that if certain of Nguema Obiang’s other assets, including a Gulfstream Jet, are ever brought into the United States, they are subject to seizure and forfeiture.
Next week, the parties will request that the court enter appropriate orders to implement and enforce this agreement.
This case was brought under the Kleptocracy Asset Recovery Initiative by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected].
The investigation was conducted by ICE, Homeland Security Investigation’s (HSI) Foreign Corruption Investigations Group and the HSI Asset Identification and Removal Group in Miami, with the assistance of the HSI Office of the Special Agent in Charge for Los Angeles, the HSI Attaché Office in Rome, HSI Attaché Office in Madrid, HSI Attaché Office in London and the HSI Attaché Office in Paris. HSI established the FCIG in 2003 to conduct investigations into the laundering of proceeds emanating from foreign public corruption, bribery and embezzlement. The cases are worked jointly with representatives of the victimized foreign governments. The FCIG’s goal is to prevent foreign-derived, ill-gotten gains from entering the U.S. financial infrastructure; to seize assets identified in the U.S.; and to repatriate these funds to the victimized governments. Since the initiative’s launch, HSI has effected 220 seizures involving more than $146 million worth of property and assets.
The case was handled by Trial Attorneys Woo S. Lee, Stephen A. Gibbons, and Della G. Sentilles and Assistant Deputy Chief Daniel Claman of the Criminal Division’s Asset Forfeiture and Money Laundering Section, with substantial assistance from Assistant U.S. Attorney Steven Welk of the Central District of California. The Criminal Division’s Office of International Affairs also provided significant assistance
The department appreciates the extensive assistance provided by the Government of France in this investigation and prosecution.
Obiang Settlement Agreement
Ringleader of Fraud Conspiracy Sentenced to PrisonRead the Press Release
OAKLAND – Kyle Edward Moore was sentenced, today to 37 months in prison, and was ordered to pay $520,904 in restitution for carrying out two conspiracies to commit financial aid fraud and wire fraud, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Moore pleaded guilty on Feb. 14, 2014, to two counts of conspiracy to commit financial aid fraud and one count of wire fraud. According to the plea agreement, Moore conspired to obtain federal student aid funds offered under the Title IV Federal Student Assistance Program. Moore and his co-defendants obtained the aid by preparing and transmitting fraudulent Free Applications for Federal Student Aid (FAFSAs) to the U.S. Department of Education.
In carrying out the fraud scheme, Moore and his co-defendants recruited third-parties to serve as “straw students” and then assisted the straw students in preparing, signing, and transmitting fraudulent FAFSAs. Moore knew that many of the straw students were not eligible to obtain Title IV funds because, among other things, the straw students had not obtained high school diplomas or a recognized equivalent and had no intention of attending school or using the funds for educational purposes. After receiving the student loan funds, Moore and his co-defendants shared the fraudulently obtained funds among themselves and sometimes with the straw students.
Moore admitted to intending to steal $771,268 and to successfully stealing $520,904.
Moore, 29, of Hayward, and three co-defendants were indicted by a federal grand jury on Aug. 15, 2013. They were charged with conspiracy to commit financial aid fraud, in violation of 18 U.S.C. § 371, and with multiple counts of wire fraud, in violation of 18 U.S.C. § 1343.
The sentence was handed down by the Honorable John S. Tigar, United States District Court Judge, in Oakland, following a guilty plea on two counts in violation of 18 U.S.C. § 371, and on one count of 18 U.S.C. § 1343. Judge Tigar also sentenced the defendant to a three-year period of supervised release and to forfeit $520,904 in the form of a money judgment. The defendant will begin serving the sentence on Jan. 12, 2015.
Wade M. Rhyne is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Janice Pagsanjan and Patty Lau. The prosecution is the result of an investigation by the U.S. Department of Education, OIG; the FBI; and the U.S. Department of Housing and Urban Development, OIG.
(Moore indictment )
Pittsburgh Man Pleads Guilty to Possessing Sexually Explicit Images and Videos of MinorsRead the Press Release
PITTSBURGH- A Pittsburgh resident pleaded guilty in federal court to a charge of child pornography, United States Attorney David J. Hickton announced today.
Zachary Roth, 38, pleaded guilty to one count before Chief United States District Judge Joy Flowers Conti.
In connection with the guilty plea, the court was advised that on or about March 21, 2007, Roth did knowingly possess visual depictions, namely, images and videos contained in computer graphics files, the production of which involved the use of minors engaging in sexually explicit conduct.
Judge Conti scheduled sentencing for Feb. 20, 2015, at 11 a.m. The law provides for a total sentence of 10 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Amy L. Johnston is prosecuting this case on behalf of the government.
The United States Department of Homeland Security, Immigration and Customs Enforcement (ICE) and the Pennsylvania State Police conducted the investigation that led to the prosecution of Roth.
Passenger Indicted for Disrupting Transalantic FlightRead the Press Release
BOSTON – A Haitian national was indicted yesterday for interfering with flight crew members on a flight from Miami to Paris, which caused the flight to be diverted to Boston.
Edmond Alexandre, 60, a Haitian national residing in Paris, France, was indicted for interference with flight crew members and attendants. On Aug. 27, 2014, approximately two hours after takeoff, Alexandre allegedly began to argue with other passengers over a reclined seat. A flight crew member intervened. In response, Alexandre chased the crew member down the aisle of the plane and grabbed the crew member’s arm. Federal Air Marshals intervened and subdued Alexandre. The captain of the flight diverted the plane to Boston’s Logan International Airport where Alexandre was arrested.
The charging statute provides a sentence of no greater than 20 years in prison and three years of supervised release. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Dwain G. Troutt, Supervisory Air Marshal in Charge of the Transportation Security Administration, Office of Law Enforcement, Federal Air Marshal Service, Boston Field Office; Bob Allison, Federal Security Director for the Transportation Security Administration for the District of Massachusetts; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Colonel Timothy P. Allen, Superintendent of the Massachusetts State Police, made the announcement. The case is being prosecuted by Assistant United States Attorney Kenneth G. Shine of Ortiz’s Major Crimes Unit.
Owner of Mountain Pure Water Found Guilty of Wire Fraud and Money Laundering ViolationsRead the Press Release
LITTLE ROCK, AR – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, Christopher A. Henry, Special Agent in Charge of the IRS-Criminal Investigation, and Scott Dennis, Special Agent in Charge of the Small Business Administration Office of Inspector General announced that John B. Stacks, owner of Mountain Pure Water, was found guilty on Thursday, October 9, 2014, by a jury on three counts of wire fraud, one count of submitting a false claim, and three counts of false statements. The jury was unable to reach a unanimous verdict concerning the three counts of money laundering. The Honorable J. Leon Holmes presided over the seven day trial and three days of jury deliberation in the United States District Court in Little Rock.
“In times of recovery after the destruction caused by recent tornados, people have depended on the help provided through Small Business Administration loans to rebuild their businesses,” stated Thyer. “Unfortunately, there are some who lie, cheat and steal from, essentially, their neighbors to obtain funds that should go toward recouping legitimate business losses. I am grateful that this jury has weighed the evidence in this case and found Mr. Stacks guilty of wire fraud, submitting a false claim and making false statements. This verdict is the culmination of many hours of investigation by the IRS and SBA OIG. Their efforts have brought this injustice to light and have righted a wrong perpetrated on local business owners.”
"Today's verdict is a direct result of the excellent partnership the IRS, the U.S. Attorney’s office and our law enforcement partners have in combating violations of Federal law," said Christopher A. Henry, Special Agent in Charge, IRS-Criminal Investigation. "Stealing from the government is not a victimless crime; it is a crime against the American public. This verdict should serve as a deterrent to those who might contemplate similar fraudulent actions."
“Today’s verdict sends a strong message that taxpayers have zero tolerance for fraud in disaster assistance programs,” said Special Agent-in-Charge Scott Dennis. “SBA disaster assistance loans are for persons and businesses that have suffered damage, not for persons seeking personal gain. I want to thank the U.S Attorney's Office and our law enforcement partners for their dedication and hard work throughout this investigation.”
Stacks was originally indicted on December 3, 2013, and charged with 3-counts of wire fraud, 3-counts of money laundering, 1-count of submitting a false claim to the Small Business Administration (SBA), and 4-counts of making a false statement.
According to evidence presented at trial, in 2009, Stacks obtained an SBA loan for $703,300 under false pretenses. Stacks claimed he had over $500,000 worth of Mountain Pure Water equipment at his farm in Damascus, Arkansas, that was destroyed when a tornado touched down in the area in May 2008. The wire fraud and money laundering charges stem from three transfers of money from the SBA in Kansas City, Missouri to Stacks’ General Account at Home Bank of Arkansas in Greenbrier. The false claim and statement charges are related to the Loan Authorization and Agreement and other related documents and statements Stacks submitted to the SBA to induce the SBA to make the loan.
Sentencing will be scheduled by the Court at a later date. Stacks faces a statutory maximum penalty for Wire Fraud of not more than 20 years; a statutory penalty for False Claim of not more than 5 years; and a statutory penalty for false statement of not more than 5 years of imprisonment.
The case was investigated by IRS-Criminal Investigation and the SBA Office of Inspector General. Assistant United States Attorney Angela Jegley and First Assistant United States Attorney Pat Harris prosecuted the case for the United States.
Northampton County Doctor and Son Charged with Tax FraudRead the Press Release
PHILADELPHIA - Francis J. Cinelli, Sr., M.D., 87, and Francis J. Cinelli, Jr.,49, of Wind Gap, PA were each charged separately, by information, with one count of tax fraud stemming from false tax returns filed by Cinelli Jr., announced United States Attorney Zane David Memeger.
Cinelli Jr. is charged with filing a false tax return, stemming from his alleged filing of a 2007 false tax return with the IRS on which he failed to declare approximately $163,000 in income he had earned during that year.
Cinelli Sr. is charged with aiding and abetting Cinelli Jr.’s filing of a false tax return. According to the information, Cinelli Jr. filed a 2008 false tax return with the IRS on which Cinelli Jr. failed to declare approximately $109,000 in income that Cinelli Sr. had paid to Cinelli Jr. during that year.
Each of the defendants faces a maximum sentence of three years in prison, a one year term of supervised release, a $100,000 fine, and a $100 special assessment.
The cases were investigated by the Internal Revenue Service Criminal Investigation Division and the Federal Bureau of Investigation and are being prosecuted by Assistant United States Attorney Michael S. Lowe.
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Click here to view the information for Cinelli, Sr.
Click here to view the information for Cinelli, Jr.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525New Jersey Man Found Guilty in Manhattan Federal Court of Perpetrating Multimillion-Dollar Investment FraudRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that CHARLES HUGGINS was found guilty in Manhattan federal court of perpetrating a multimillion-dollar investment fraud against dozens of victims across the United States. HUGGINS was convicted following a two-week jury trial before U.S. District Judge Sidney H. Stein.
According to the Complaint and other filings in Manhattan federal court, and the evidence presented at trial:
From 2008 through at least September 2011, HUGGINS and others solicited millions of dollars from various investors through companies known as JYork Industries Inc. (“JYork”) and Urogo Inc. (“Urogo”) with false and misleading representations that he would use the investors’ money exclusively to mine gold and diamonds from Sierra Leone and Liberia. HUGGINS falsely promised investors, among other things, high rates of return on their investments, which he represented were based upon the profits generated by the sale of the gold and diamonds in the United States.
In fact, from 2008 through at least September 2011, HUGGINS and his co-conspirators misappropriated millions of dollars of investors’ funds and used those funds for their own purposes or to repay other investors. Contrary to the representations of HUGGINS and his co-conspirators, the vast majority of the investment funds was used to pay HUGGINS’s personal expenses and for purposes entirely unrelated to what was represented to investors. For example, hundreds of thousands of dollars in investor funds were diverted to Orpheus Inc., a record label owned by HUGGINS, and used to pay, among other expenses, HUGGINS’s $7,200 monthly apartment rent in the Sutton Place section of Manhattan, for upkeep of HUGGINS’s Mercedes Benz, restaurant tabs, clothes from expensive boutiques, and personal credit card bills. HUGGINS personally received hundreds of thousands of dollars in cash and gave tens of thousands of dollars in cash to other members of his family. A portion of the funds was used to make payments to other investors, as in a classic Ponzi scheme.
Dozens of victims across the United States lost their money in the scheme. When certain investors complained that they had not received the investment return that they were promised, HUGGINS gave those investors small repayments from funds invested by others, or claimed that he converted their investment into restricted shares of Oraco Resources, a publicly traded company of which Huggins was a majority shareholder, that were nearly worthless.
HUGGINS, 68, of Edgewater, New Jersey, was convicted of one count of conspiracy to commit wire fraud and one count of wire fraud. Each of those counts carries a maximum potential penalty of 20 years in prison and a fine of the greater of $250,000 or twice the gross gain or loss derived from the offense. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. HUGGINS is scheduled to be sentenced in January 2015 before Judge Stein.
Mr. Bharara praised the work of the FBI in the investigation of this case. He added that the investigation is continuing.
The case is being handled by the General Crimes Unit of the United States Attorney's Office. Assistant United States Attorneys Edward A. Imperatore and Andrea L. Surratt are in charge of the prosecution.
New Jersey Man Enters Guilty Plea on Firearms ViolationsRead the Press Release
Prosecution is part of Project Safe Neighborhoods Initiative
JOHNSTOWN, Pa. – A resident of Tuckertown, NJ, pleaded guilty in federal court in Johnstown to a charge of violating federal firearms laws, United States Attorney David J. Hickton announced today.
Abdur Rahmen Abdullah, 32, pleaded guilty to the indictment before United States District Judge Kim R. Gibson.
In connection with the guilty plea, on Jan. 10, 2013, Abdullah possessed a Remington, Model 870 Wingmaster, 12 gauge shotgun. On July 1, 2008, Abdullah was convicted in the United States District Court for the District of NJ of being a felon in possession of a firearm, which is a crime punishable by imprisonment for a term exceeding one year. Federal law prohibits persons who have been convicted of a crime punishable by a term of imprisonment exceeding one year from possessing firearms or ammunition.
Judge Gibson scheduled sentencing for Feb. 26, 2015, at 10:00 a.m. The law provides for a maximum total sentence of 10 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 offense and the prior criminal history of the defendant.
Assistant United States Attorney Stephanie L. Haines is prosecuting this case on behalf of the government.
The Laurel Highlands Resident Agency of the Federal Bureau of Investigation and the Johnstown Police Department conducted the investigation that led to the prosecution of Abdullah.
According to Mr. Hickton, Abdur Rahmen Abdullah is being prosecuted as part of Project Safe Neighborhoods, a collaborative effort by federal, state and local law enforcement agencies, prosecutors and communities to prevent, deter and prosecute gun crime.
- McAllen Man Using USDA Vehicle Attempts to Deliver Cocaine
Massena Woman Pleads Guilty to Identity Theft FraudRead the Press Release
Involved false income tax returns of over $200,000
SYRACUSE, NEW YORK –United States Attorney Richard S. Hartunian and IRS-Criminal Investigations, New York Field Office, Special Agent in Charge Shantelle P. Kitchen announced that Lacey Jane Hollinger, 27, of Massena, New York pled guilty yesterday in federal court in Syracuse, New York to mail fraud and aggravated identity theft in a case involving false federal income tax returns that resulted in the theft of over $200,000.00 from the IRS. Hollinger admitted that in 2011 and 2012 she contacted Massena area residents via Facebook and other electronic media to tell them they were eligible for a tax refund even though they were unemployed and had no income as part of a U.S. Government “stimulus program.” No such program existed. Several dozen responded, giving Hollinger their personal identification information (date of birth, social security number, etc.). Hollinger forwarded this information to others who used it to create false and fraudulent tax returns that generated over $200,000.00 in tax refunds. Hollinger, and others involved in the fraudulent scheme, stole these funds after they were electronically deposited in bank accounts they controlled in Arizona.
The Massena area residents never saw the tax returns, which falsely represented that they were self-employed and entitled to a refund. Some did get pre-paid debit cards that Hollinger and others caused them to receive in the mail. Many got nothing, with Hollinger and the other fraudsters keeping most of the refund money.
“Identify theft and false income tax filings are two crimes that are increasingly affecting the public,” stated United States Attorney Richard S. Hartunian. “The most important thing for citizens to remember is to never give their personal identifying information out to people they don’t know or who shouldn’t need that information.”
At sentencing on February 6, 2015, Lacey Jane Hollinger faces a maximum sentence of up to twenty (20) years for her conviction for mail fraud and a fine of up to $250,000.00 as well as restitution. She faces an additional maximum sentence of up to twenty (20) years for her plea of guilty to aggravated identity theft, with a mandatory minimum term of two (2) years imprisonment to be served consecutively to her mail fraud sentence. She faces up to three (3) years of supervised release following her release from prison.
The case was investigated by Special Agents of the Internal Revenue Service, Criminal Investigations (Syracuse, New York Field Office), under the direction of Special Agent in Charge Shantelle P. Kitchen. It is being prosecuted by Assistant United States Attorney Richard Southwick.
Malden Man Sentenced to 15 Years for Sex TraffickingRead the Press Release
BOSTON – A Malden man was sentenced yesterday to 15 years in prison for sex trafficking a 15-year-old girl.
David Minasian, 25, was sentenced by U.S. District Judge William G. Young to 15 years in prison, five years of supervised release, a fine of $250,000 and ordered to pay $4,000 in restitution to the victim. Minasian will be required to register as a sex offender upon his release from prison. In May 2014, Minasian pleaded guilty sex trafficking of a minor.
In 2012, Minasian and others photographed the 15 year-old victim wearing revealing lingerie and posing in provocative positions, and then posted these photographs to the adult section of Backpage.com, a site commonly used for advertising commercial sex activity, soliciting customers for “escort services.” Customers who responded to the advertisements were directed to where Minasian was staying with the victim to have sex with her for a fee. Minasian and his co-defendant also transported the victim to motels inside Massachusetts where they paid for rooms to prostitute her.
At the sentencing hearing, the victim’s mother addressed the Court on behalf of the victim, who was not present. The mother explained that Minasian had given the victim heroin and prostituted her once she became addicted. The victim is still battling her addiction. In imposing a 15 year sentence, Judge Young chastised the defendant for preying on a particularly vulnerable victim.
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. The case was investigated by the Federal Bureau of Investigation’s Boston Child Exploitation Task Force, which is comprised of members from the FBI, Massachusetts State Police, and the Malden and Arlington Police Departments. It was being prosecuted by Assistant U.S. Attorney Leah Foley on Ortiz’s Civil Rights Enforcement Team.Liberty Reserve Founder Extradited from SpainRead the Press Release
The founder of Liberty Reserve, a virtual currency used by cybercriminals around the world to launder proceeds of their illegal activity, was extradited from Spain and arrived in the United States this afternoon.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement.
Arthur Budovsky, 40, a citizen of Costa Rica, was arrested in Spain in May 2013 after being indicted by a grand jury in the Southern District of New York. Following his extradition by Spanish authorities, Budovsky arrived in New York this afternoon and will be presented before U.S. Magistrate Judge James C. Francis IV on Oct. 11, 2014, at 2:00 p.m. Budovsky will be arraigned before U.S. District Judge Denise L. Cote on Oct. 14, 2014, at 12:45 p.m.
“Arthur Budovsky allegedly built Liberty Reserve overseas to provide the international underworld with a crime-friendly digital currency and elude the scrutiny of American authorities. He even renounced his U.S. citizenship to try to escape facing justice in an American courtroom,” said Assistant Attorney General Caldwell. “With the cooperation of our foreign partners in Spain and elsewhere, this case and extradition are a clear example that money launderers can run, but they cannot hide from the Department of Justice.”
“For years, Arthur Budovsky allegedly enabled criminals in the United States and around the world to process illegal payments and to launder billions of dollars in crime proceeds through Liberty Reserve,” said U.S. Attorney Bharara. “Budovsky operated Liberty Reserve from Costa Rica, hoping to evade the reach of U.S. law enforcement. Thanks to the cooperative efforts of our law enforcement partners here and in Spain, he was apprehended and extradited to the United States where he will now face justice.”
According to allegations contained in the indictment and statements made in related court proceedings, Liberty Reserve was born out of Budovsky’s unsuccessful experience running a third-party exchange service, called Gold Age Inc., for another digital currency, called E-Gold. In or about 2006, Budovsky was convicted in New York State of operating Gold Age Inc. as an unlicensed money transmitting business. In 2007, the operators of E-Gold were also charged with criminal offenses, including money laundering and operating an unlicensed money transmitting business, and subsequently ceased doing business. In the wake of his own criminal conviction, Budovsky set about building a digital currency that would succeed in eluding law enforcement where E-Gold had failed, by, among other ways, locating the business outside the United States. Accordingly, Budovsky emigrated to Costa Rica, where he and other defendants began operating Liberty Reserve.
Liberty Reserve, which billed itself as the Internet’s “largest payment processor and money transfer system,” was created, structured and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. The indictment alleges that Budovsky devoted himself to building and expanding Liberty Reserve so that the company could profit from attracting more and more criminal customers, all while seeking to evade the scrutiny and reach of U.S. law enforcement authorities. At all relevant times, Budovsky directed and supervised Liberty Reserve’s operations, finances, and corporate strategy.
Liberty Reserve emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity. Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals to conduct anonymous and untraceable financial transactions. The indictment alleges that Budovsky was so committed to evading U.S. law enforcement that he formally renounced his U.S. citizenship in 2011 and became a Costa Rican citizen, telling U.S. immigration authorities that he was concerned that the “software” his “company” was developing “might open him up to liability in the U.S.”
Before being shut down by the U.S. government in May 2013, Liberty Reserve had more than one million users worldwide, including more than 200,000 users in the United States, who conducted approximately 55 million transactions through its system totaling more than $6 billion in funds. These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, narcotics trafficking, and other crimes.
Budovsky is among seven individuals charged in the indictment, which was unsealed on May 28, 2013. Four co-defendants – Vladimir Kats, Azzeddine el Amine, Mark Marmilev, and Maxim Chukharev – have pleaded guilty and await sentencing before U.S. District Judge Denise L. Cote. Charges against Liberty Reserve and two individual defendants who have not been apprehended remain pending.
The charges contained in the indictment remain pending and are merely accusations. The defendants are presumed innocent unless and until proven guilty.
This case is being investigated by the U.S. Secret Service, the Internal Revenue Service-Criminal Investigation and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, with assistance from the Secret Service’s New York Electronic Crimes Task Force. The Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Financial and Economic Crime Unit of the Spanish National Police, the Cyber Crime Unit at the Swedish National Bureau of Investigation and the Swiss Federal Prosecutor’s Office also provided assistance.
This case is being prosecuted jointly by the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and the U.S. Attorney’s Office’s Complex Frauds Unit and Asset Forfeiture Unit in the Southern District of New York, with assistance from the Criminal Division’s Office of International Affairs and Computer Crime and Intellectual Property Section.
Trial Attorney Kevin Mosley of AFMLS and Assistant U.S. Attorneys Serrin Turner, Andrew Goldstein and Christine Magdo of the Southern District of New York are in charge of the prosecution, and Assistant U.S. Attorney Christine Magdo is in charge of the forfeiture aspects of the case.