Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
10 October 2014
Jesup, GA Siblings Plead Guilty in Multi-Million Dollar Stolen Identity and Tax Fraud SchemeRead the Press Release
Savannah, GA: Gregory Allen, 31, and Leisha Allen, 33, brother and sister from Jesup, Georgia, pled guilty on Monday before the United States District Court Chief Judge Lisa Godbey Wood for their roles in a stolen identity and tax fraud scheme operating in Wayne County, Georgia.
Evidence presented at the guilty plea hearings showed that Gregory and Leisha Allen were operators of a fraudulent tax preparer business, B & C Superior Tax Services. Gregory and Leisha Allen were members of a conspiracy that filed hundreds of fraudulent tax returns in order to illegally obtain tax refund checks. The fraudulent tax returns were electronically filed using the stolen names and social security numbers of others, including people who were incarcerated or deceased. Members of the conspiracy filed returns seeking over $2 million in fraudulent tax refunds.
United States Attorney Edward J. Tarver said, “These defendants were part of a criminal organization that tried to steal over two million dollars from the American people. The United States Attorney’s Office will continue to work with our law enforcement partners to prosecute those who steal the identities of others and to safeguard our tax dollars from fraud.”
“The Allens stole the identities of individuals who were incarcerated and those who were deceased in order to perpetuate a scheme to steal government money,” stated Veronica F. Hyman-Pillot, Special Agent in Charge, IRS Criminal Investigation. “These types of criminals must be and will continue to be pursued in order to obtain justice for our nation.”
The investigation of this case was led by the IRS Criminal-Investigation. Assistant United States Attorney Tania D. Groover is prosecuting the case on behalf of the United States. For additional information, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.
Indictment Charges Oxford Resident with Operating Ponzi SchemeRead the Press Release
Follow @USAO_CT
Deirdre M. Daly, United States Attorney for the District of Connecticut, and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, today announced that a federal grand jury in New Haven has returned an indictment charging ROBERT E. LEE, JR., 50, of Oxford, with five counts of wire fraud stemming from his alleged operation of a Ponzi scheme. The indictment was returned on October 7, 2014.
As alleged in the indictment and other court documents, LEE was employed as a broker and financial advisor for various financial investment firms until July 2013 when he was terminated by his most recent employer, Rockwell Global Capital, LLC. Between January 2011 and March 2014, LEE defrauded individuals by claiming that he was investing their money in various investment vehicles when, in fact, he was maintaining custody of their funds in his personal bank account. He then used the money to make distributions to other investors, and for personal expenses. To conceal the scheme, LEE fabricated account statements and other documents, which he delivered to his victims.
LEE was arrested on a criminal complaint on May 12, 2014. He is currently released on a $250,000 bond and is scheduled to be arraigned in Bridgeport federal court on October 14 at 11 a.m. before Magistrate William I. Garfinkel. Each count of wire fraud carries a maximum term of imprisonment of 20 years.
The indictment also seeks the forfeiture of $358,077.17 that LEE held in an online trading account at the time of his arrest, and which has been seized by the government.This matter has been assigned to U.S. District Judge Michael P. Shea in Hartford.
U.S. Attorney Daly stressed that an indictment is not evidence of guilt. Charges are only allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorneys David T. Huang and Christopher M. Mattei.
Citizens with information that may be helpful to this ongoing investigation are encouraged to contact the FBI at (203) 777-6311.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]- Houston Man Charged with Trafficking in Counterfeit Beats by Dr. Dre
Harvard Student Charged with Making Hoax Bomb ThreatRead the Press Release
BOSTON – Eldo Kim, 21, of Allston has been charged in an Information in U.S. District Court in Boston with e-mailing several bomb threats to offices associated with Harvard University, including the Harvard University Police Department and the Harvard Crimson, the student-run daily newspaper.
Kim was previously charged by complaint and has been under pretrial supervision since his arrest. It is alleged that on Dec. 16, 2013, at approximately 8:30 a.m., the Harvard University Police Department, two officials of Harvard University, and the president of the Harvard Crimson, received identical e-mail messages bearing a subject line that read “bombs placed around campus.” The bomb threats specified four buildings on the Harvard campus – the Science Center, Sever Hall, Emerson Hall, and Thayer Hall.
Federal agencies, along with the Harvard University Police, Cambridge Police, Boston Police and Massachusetts State Police Departments, along with numerous other law enforcement and first responders, immediately went to the vicinity of the buildings specified in the e-mail messages. In addition, each of the Harvard buildings named in the threatening e-mails was immediately evacuated. Over the course of the next several hours, bomb technicians and hazardous materials officers conducted thorough sweeps of each of the four buildings. Law enforcement personnel ultimately concluded that no explosive devices had been placed in any of the four buildings.
In addition to filing the Information, the government requested that the court defer the prosecution for 18 months while Kim completes a pretrial diversion program, in which the Probation Department and Pretrial Services Office will supervise Kim and enforce various conditions, including home confinement for four months, payment of restitution to agencies that responded to Kim’s bomb hoax, and 750 hours of community service. Kim has also agreed to make a public apology.
If the court agrees to defer prosecution, and Kim successfully abides by all the terms of pretrial diversion, the government will dismiss the Information in 18 months. If Kim fails to abide by the conditions of the pretrial diversion program or fails to complete it successfully, the government will not dismiss the Information and the criminal prosecution will proceed.
United States Attorney Carmen M. Ortiz and Vincent Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being handled by Assistant U.S. Attorney John A. Capin.
Founder of Liberty Reserve Arthur Budovsky Extradited from Spain to Face Charges in Manhattan Federal CourtRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Leslie R. Caldwell, Assistant Attorney General for the Justice Department’s Criminal Division, today announced the extradition of ARTHUR BUDOVSKY from Spain to face charges related to his alleged operation of Liberty Reserve, a virtual currency that was used by cybercriminals around the world to launder the proceeds of their illegal activity. BUDOVSKY, 40, a citizen of Costa Rica, was arrested in Spain in May 2013, as a result of an Indictment filed in Manhattan federal court. Following his extradition by Spanish authorities, BUDOVSKY arrived in New York this afternoon. BUDOVSKY will be arraigned before U.S. District Judge Denise L. Cote on October 14, 2014, at 12:45 p.m.
Manhattan U.S. Attorney Preet Bharara stated: “As alleged, Arthur Budovsky founded Liberty Reserve to enable criminals in the United States and around the world to process illegal payments and to launder billions of dollars in crime proceeds anonymously and beyond the reach of U.S. law enforcement. Budovsky allegedly operated Liberty Reserve from Costa Rica and renounced his United States citizenship to evade the authorities. Now, thanks to the cooperative efforts of our law enforcement partners here and in Spain, Arthur Budovsky has been apprehended and will face justice in an American courtroom.”
Assistant Attorney General Leslie R. Caldwell stated: “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. 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.”
According to allegations contained in the Indictment filed against Liberty Reserve, BUDOVSKY, and six other individual defendants, 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 billed itself as the Internet’s “largest payment processor and money transfer system.” Liberty Reserve was created, structured, and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. 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. 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 pled 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.
Mr. Bharara praised the outstanding work of the United States Secret Service, the Internal Revenue Service-Criminal Investigation, and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, which worked together in this case as part of the Global Illicit Financial Team. Mr. Bharara also thanked the United States Secret Service’s New York Electronic Crimes Task Force for its extraordinary assistance with the investigation. Additionally, Mr. Bharara specially thanked all the international law enforcement agencies that assisted in the investigation, in particular, Interpol, the Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor’s Office.
This case is being prosecuted jointly with the Department of Justice’s Asset Forfeiture and Money Laundering Section (“AFMLS”), which is overseen by Assistant Attorney General Leslie R. Caldwell. Mr. Bharara thanked AFMLS for its partnership and also thanked the Department of Justice’s Office of International Affairs and Computer Crime and Intellectual Property Section for their support.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Asset Forfeiture Unit. Assistant United States Attorneys Serrin Turner, Andrew Goldstein, and Christine Magdo of the Southern District of New York and Trial Attorney Kevin Mosley of AFMLS are in charge of the prosecution, and Assistant United States Attorney Christine Magdo is in charge of the forfeiture aspects of the case.
The charges contained in the Indictment against BUDOVSKY and certain of BUDOVSKY’s co-defendants remain pending and are merely accusations. Those defendants are presumed innocent unless and until proven guilty.
Former TD Bank Vice President Indicted in Connection with Rothstein CaseRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce that an indictment was unsealed today charging Frank Spinosa, 53, of Ft. Lauderdale, with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and five counts of wire fraud, in violation of 18 U.S.C. § 1343. If convicted, the defendant faces a maximum sentence of twenty years in prison and a $250,000 fine on each count.
The indictment, which was returned by a grand jury in Ft. Lauderdale on October 9, 2014, charges that the defendant was a Regional Vice President of TD Bank who, from in or about 2008 through in or about November 2009, conspired to defraud various investors. In 2009, it was discovered that Rothstein, Rosenfeldt and Adler, P.A. was being utilized by its Chairman and Chief Executive Officer, Scott W. Rothstein, to commit a massive Ponzi scheme stemming from the sale of fictitious confidential settlements.
The indictment charges that Spinosa and Rothstein agreed to utilize the prestige and legitimacy of TD Bank, and Spinosa’s position as Regional Vice President, to give investors in the scheme a false sense of security and induce them into investing in the confidential settlements by fraudulently creating documents that made it appear that certain investment funds were being held in restricted accounts at TD Bank, when they were not, and by fraudulently asserting that certain balances were being held within specified accounts at TD Bank, when they were not.
Mr. Ferrer commended the investigative efforts of the IRS-CI and the FBI. This case is being prosecuted by Assistant U.S. Attorneys Lawrence D. LaVecchio, Paul F. Schwartz, and Jeffrey N. Kaplan.
An indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Former New Orleans Traffic Court Chief Financial Officer, Vandale Thomas, Found Guilty After TrialRead the Press Release
U.S. Attorney Kenneth A. Polite announced that, after a week-long jury trial, VANDALE THOMAS, age 40, a resident of Prairieville, Louisiana, was convicted on all 11 counts of theft, money laundering, and structuring transactions to evade reporting requirements. Seventeen witnesses testified for the United States, establishing that THOMAS knowingly embezzled over $680,000 during his three-year tenure as the Chief Financial Officer at New Orleans Traffic Court (“Traffic Court”).
THOMAS was found guilty of three counts of theft concerning programs receiving federal funds resulting from his employment at Traffic Court. Evidence presented at trial established that on November 24, 2008, THOMAS and his accounting firm, Thomas & Thomas Accounting Services, LLC, were hired by Traffic Court to provide accounting and bookkeeping services. THOMAS’s initial agreement with Traffic Court allowed him to bill at a rate of $75.00 an hour and his contract was not to exceed $75,000 for a twelve month period. THOMAS’s billings exceeded $75,000 within the first few months of his agreement. On six additional occasions between November 24, 2008, and April 13, 2011, THOMAS received written authorization from the City of New Orleans and Traffic Court to expand the amount that he could bill. In total, the City and Traffic Court authorized THOMAS to submit invoices and receive compensation for accounting services in an amount not to exceed $627,000. However, subsequent audits by the Louisiana Legislative Auditor’s Office and the Office of the Inspector General for the City of New Orleans, and an investigation by the Federal Bureau of Investigation revealed that THOMAS submitted 174 invoices and was issued 173 checks totaling $1,311,065.53.
THOMAS was also found guilty of three counts of laundering illegal funds obtained from Traffic Court. The jury found that on September 14 and September 24, 2010, THOMAS used illegally obtained money from Traffic Court to purchase casino chips in excess of $10,000 at a New Orleans casino and THOMAS used illegally obtained money from Traffic Court to make a down payment on an $80,000 Bentley GT Coupe.Additionally, THOMAS was found guilty of five counts of structuring transactions to evade reporting requirements. According to the evidence and testimony presented during the trial, THOMAS used numerous bank branches in order to evade federal currency transaction reporting requirements. Specifically, THOMAS went to multiple bank locations in New Orleans and Baton Rouge to structure cash withdrawals in order to evade the currency transaction reporting requirement that all transactions over $10,000 be reported by financial institutions to the Internal Revenue Service.
The maximum penalty THOMAS may receive for Counts 1 through 6 (Theft from Programs Receiving Federal Funds and Money Laundering) is ten years imprisonment and a $250,000 fine per count. The maximum penalty for Counts 7 through 11 (Structuring Transactions to Evade Reporting Requirements) is five years imprisonment and a $250,000 fine per count.
Sentencing in this matter is scheduled for January 14, 2015, before U.S. District Judge Stanwood R. Duval, Jr.
U.S. Attorney Polite stated, “Vandale Thomas defrauded the City of New Orleans out of hundreds of thousands of dollars in taxpayer dollars. He then blatantly flaunted his fraudulent conduct on gambling sprees and expensive cars. Today’s guilty verdict ensures that Thomas will be held accountable for his corrupt conduct. Moreover, this case should send a message to those public officials who are engaging in corruption, or are even contemplating doing so. Everyone in this community – the U.S. Attorney’s Office, our law enforcement partners, average residents, your co-workers, even those who you believe are trusted co-conspirators – will eventually work together to turn a spotlight on your criminality.”
IRS-CI Special Agent in Charge, Gabriel L. Grchan, stated, "All of the facts set forth in this trial proved that what Vandale Thomas did was nothing more than common thievery. The residents of New Orleans and the surrounding areas are fed up with seeing individuals like Thomas steal public funds to support their personal lifestyles of extravagance. The jury echoed that sentiment today with their verdict. IRS-CI will continue to aggressively pursue individuals who engage in the theft of public funds, and will seek to have them prosecuted to the fullest extent of the law."
New Orleans Inspector General Ed Quatrevaux stated, “The conviction today of the former Traffic Court accountant began with an evaluation of Traffic Court by the New Orleans Office of Inspector General, and shows what happens to those who steal from the City today. OIG staff assisted our federal law enforcement partners and prosecutors in building the case against Vandale Thomas. This partnership has resulted in the City of New Orleans being much better protected from those who would prey upon it, and we thank our federal partners for their efforts.”
U.S. Attorney Polite praised the work of the Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigations Division, and the New Orleans Office of Inspector General in investigating this matter. Assistant United States Attorneys Brian M. Klebba, Matthew Payne, and Marquest Meeks are in charge of the prosecution.
Former Kirtland Hills Police Chief Charged with Fraud and FalsificationRead the Press Release
The former police chief of Kirtland Hills was charged with defrauding the village out of at least $80,000 by making unauthorized purchases of clothing, tools and goods for his own personal use, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland office.
A two-count criminal information was filed in federal court charging Gerald Smith, Jr., 57, of Kirtland, with one count of mail fraud and one count of destruction, alteration or falsification of records in a federal investigation.
“This defendant stole from the people he swore to serve,” Dettelbach said. “He used the public coffers to furnish his condo and pay for his meals. There will be consequences for public officials who violate the public’s trust.”
“To serve others and pursue justice is the oath all law enforcement promise to abide by,” Anthony said. “Unfortunately, this chief's self-interest and greed overrode his ethical conscious and his commitment to serve his community.”
Smith joined the Kirtland Hills police department in 1978 and served as chief from 1988 until April 4, 2014. In this capacity, Smith was authorized to reimburse officers for work-related expenses and use village funds to procure necessary supplies, including the use of several village credit cards or lines of credit, according to the information.
The department also had petty cash fund, maintained in Smith’s office, in which employees submitted receipts with their name and the purpose of the expense written on it, for which they were then reimbursed, according to the information.
Smith made approximately $80,000 in personal expenditures using village credit cards between 2007 and 2014. Some of the items were used to partially furnish his Florida condominium. Items purchased include ceiling fans, plumbing supplies, vacuum cleaners, children’s lunch boxes and story books, clothing, televisions, book shelves, personal hygiene items, firearms, car repairs and more, according to the information.
Smith concealed these purchases by making false entries on receipts to make it appear they were made by others or made for official police business. By spreading the purchases out among different funds, he prevented the village from readily noticing large amounts of expenditures from one particular fund, according to the information.
For example, Smith went on a hunting trip to Pennsylvania in 2007. While on vacation, he made the following purchases on a Kirtland Hills credit card: knife sharpening ($70), items at an Army Navy store ($269.96), and items at a sporting goods store, including Pro Hunter pants and jacket and a shirt ($209.97). He then falsely wrote on the receipt that the sporting goods clothing was SWAT clothing for a Kirtland Hills officer, according to the information.
In 2007, Smith ordered several items online, including a $107.96 pair of women’s tan Ugg boots with the village Mastercard. Smith falsely wrote on the receipt “Road Dept Boots and Boots for (a Kirtland Hills police officer),” knowing the officer did not receive the boots, according to the information.
Smith also obtained Kirtland Hills money by submitting false claims to the petty cash fund. When Kirtland Hills officers went out to lunch, or when Smith took personal trips with officers and the group stopped for food, Smith at times asked for the receipts. He then submitted the receipts for petty cash reimbursement under the officers’ names but without their knowledge, taking the cash for himself, according to the information.
On March 17, 2014, Smith was placed on leave by Kirtland Hills and required to surrender his access badges, keys and all village property. He was also served by FBI agents with a federal grand jury subpoena, which required the production of certain documents and items.
On March 20, 2014, Smith secretly brought more than 50 items from his residence to a village storage shed and placed the items on the shelves, to give the appearance that these items belonged to the Village of Kirtland Hills. Among the items Smith returned were a drill, heater, dehumidifier, air purifier, camouflage tarps, socket set, channel locks, extension cords, hammer, hand saw and other items, according to the information.
The case is being prosecuted by Assistant United States Attorney Antoinette T. Bacon following an investigation by the Federal Bureau of Investigation.
An information 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.
Former Financial Administrator at Bureau of Prisons Is Sentenced for Submitting False DocumentRead the Press Release
FORT WORTH, Texas — A former financial administrator at the Bureau of Prisons (BOP), who admitted submitting a false document to the U.S., was sentenced this morning in federal court in Fort Worth, Texas, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Cary J. Hudson, 49, of Mansfield, Texas, was sentenced by U.S. District Judge John McBryde to three years’ probation and fined $5,000.00, following his guilty plea in June 2014 to one count of submitting a false document to an agency of the U.S.
According to documents filed in the case, Hudson was employed as a financial administrator by the BOP since 1999, having worked at the Federal Correctional Institutions in Fort Worth and Seagoville, Texas, and at the Federal Medical Center Carswell in Fort Worth.
Hudson knew that BOP employees with fiduciary and management responsibilities were required to file annual reports disclosing any outside positions, employment and income. These disclosures are made through an Office of Government Ethics (OGE) Form 450. Government officials review these forms to identify conflicts of interests that may exist between BOP employees and private entities doing business with the BOP or seeking business with the BOP. For instance, a conflict of interest could, among other things, provide a BOP contractor an economic advantage over others and defeat the government’s attempt to secure a competitive contract.
In or around 2006, while employed by the BOP, Hudson entered into a business relationship as a consultant with Integrated Medical Solutions (IMS), a private, for-profit federal contractor that competes for BOP-administered contracts for inmate health care services at BOP institutions nationwide. IMS paid Hudson for these consulting services, but Hudson failed to disclose that relationship and the money paid to him to the BOP on the OGE Form 450 he submitted in February 2013.
The Department of Justice Office of the Inspector General investigated. Assistant U.S. Attorney Chris Wolfe prosecuted.
Former Businessman Sentenced in Manhattan Federal Court to 34 Months in Prison for Fraud in Connection with the Financing of “Rebecca – The Musical”Read the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that one-time Long Island businessman MARK HOTTON was sentenced in Manhattan federal court to 34 months in prison for defrauding the producers of the Broadway show “Rebecca – The Musical” (“Rebecca”) through an elaborate scheme involving fictitious overseas “investors,” and for carrying out a separate scheme to defraud a Connecticut-based real estate company through many of the same deceptions employed in the “Rebecca” fraud. HOTTON pled guilty in July 2013 before U.S. District Judge John G. Koeltl, who also imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Mark Hotton scripted not one, but two intricate and multifaceted schemes to bilk his victims out of hundreds of thousands of dollars. I would especially like to thank the Federal Bureau of Investigation for their work on this complicated fraud case.”
According to the Complaint, the Indictment, and statements made in Manhattan federal court:
HOTTON once worked for a prominent investment bank and financial services firm, and is a former stockbroker with ties to numerous corporate entities. From September 2011 to October 2012, he engaged in two separate schemes involving fictitious individuals and entities he created to defraud his victims – the producers of “Rebecca,” a musical based on the novel by Daphne du Maurier, and a Connecticut-based real estate company.
As of late January 2012, the producers of “Rebecca” (the “Producers”) were trying to raise an additional $4 million in order to mount the musical on Broadway. The budget for Rebecca was between $12 million and $14 million, and in late January 2012, the producers realized they were at least $4 million short of their minimum capitalization goal. To raise additional funds, in February 2012, the Producers’ company entered into an agreement with TM Consulting, Inc., a company HOTTON controlled. Under the agreement, HOTTON undertook to raise money for “Rebecca” in return for a fee of $7,500, plus 8% of any funds raised in excess of $250,000, and tiered percentages of “Rebecca’s net profits.”
Over the course of the next few months, HOTTON led the Producers into believing that he had secured $4.5 million from four overseas investors – “Paul Abrams,” of Hawthorne, East Victoria; “Roger Thomas,” of St. Peter Port, Guernsey; “Julian Spencer,” of Crocker Hill, Chichester, Sussex, and “Walter Timmons,” of London (the “HOTTON Investors”). HOTTON provided the Producers with purported email contact information for these individuals and also furnished the Producers with investment agreements purportedly signed by them. These individuals also purportedly wrote emails to the Producers. For example, in April 2012, “Paul Abrams” wrote one of the Producers an email saying, “Mr. Hotton has spoken so highly about you… I look forward to meeting you and if any further participation in the musical is attainable outside of what I’m doing personally, please let Mr. Hotton know so he can organize it thru my kids Trust.”
Between February and June 2012, the Producers made a number of payments to HOTTON. Not only did they pay the $7,500 fee in February 2012, they also paid HOTTON more than $17,000 between February and June 2012. Furthermore, in April 2012, HOTTON demanded and was paid an “advance” against his 8% commission, claiming that he needed the money to cover the costs of a purported safari he had taken with “Paul Abrams” and Abrams’s eldest son.
In fact, the HOTTON Investors did not even exist. For example, some of the IP addresses used to access the email accounts of the HOTTON Investors trace back to a Manhattan location where HOTTON did business, and the businesses associated with some of the email address for the HOTTON Investors have websites whose domain names were registered to HOTTON and that he apparently created shortly before and during the fraud. HOTTON used the decoy email addresses to fabricate email correspondence between himself and the HOTTON Investors, which he then forwarded to the Producers. In some instances, he used the email addresses to communicate directly with the Producers.
In July 2012, as the Producers pressed for the HOTTON Investors to wire the money they had promised to send by July 31, 2012, HOTTON orchestrated the false illness, hospitalization, and subsequent untimely “death” of one of the main HOTTON Investors, “Paul Abrams.” HOTTON thereupon fabricated correspondence with a man named “Wexler,” who had purportedly been named the executor of the estate of “Paul Abrams.” HOTTON claimed to be meeting with “Wexler” in England in August 2012 in an effort to make sure the contribution to Rebecca was still made. However, travel records indicate that HOTTON had not left the United States since April 2012. Further, the email address used by “Wexler” was associated with a domain that was set up and registered to HOTTON.
As it became increasingly apparent that the commitments of the HOTTON Investors would fall through, HOTTON purported to try to broker a $1.1 million loan for the Producers, even offering up his own real estate and brokerage account as collateral for the loan. But there was no real loan or lender. Rather, HOTTON had simply created a second set of apparently fictional characters and entities to generate payments for himself. Among other things, HOTTON created the domain name of the title company he said could assist the Producers in obtaining the loan; invented the business purportedly making the loan; used decoy emails to fabricate correspondence with individuals who purportedly worked for the lender; and invented a company that would facilitate his hollow offer to put up collateral for the loan. Through this part of the “Rebecca” scheme, HOTTON was able to defraud the Producers into paying in excess of $35,000 to him and companies he controlled, including $10,000 paid to him personally, as half of a fee for helping to broker the loan, and $23,000 paid to a bank account for the “lender” but which was really controlled by HOTTON’s sister and administrative assistant.
The Connecticut Real Estate Fraud
HOTTON employed a similar set of deceptive devices – including some of the same email addresses and fictitious companies used to defraud Rebecca’s Producers – in order to defraud a Connecticut-based real estate company (the “Real Estate Company”) into paying hundreds of thousands of dollars to him and companies he controlled.
Beginning in September 2011, HOTTON agreed to help the president of the Real Estate Company (the “President”) obtain financing for various business ventures. HOTTON promised that a California-based group called “Pacific Ventures” and its affiliate “Mezzanine Capital” would assist in providing a $20 million loan. HOTTON provided as an email address for a contact at “Pacific Ventures” the same email address he told the Producers was used by “Paul Abrams” and which was then purportedly used by “Walter Timmons” as well as the assistants of “Paul Abrams” in the “Rebecca” scheme. Meanwhile, HOTTON provided as an email address for a contact at “Mezzanine Capital” the same email address he told the Producers was used by “Roger Thomas,” one of the HOTTON Investors.
In March 2012, HOTTON told the President that a third company, “CPS Equity,” would be able to process the loan, but required a $200,000 upfront fee, which the President paid. CPS Equity was the company associated with, among other things, the email address used by “Paul Abrams” when communicating with Rebecca’s Producers. Following the initial $200,000 payment, HOTTON further instructed the President to make additional payments in order to secure the loan.
In addition to the prison sentence, HOTTON, 48, of West Islip, New York, was ordered to forfeit $500,000 and to pay restitution of $68,000.
Mr. Bharara praised the outstanding investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Edward B. Diskant and Sarah McCallum are in charge of the prosecution.
Forest Place Apartments’ Arsonist Sentenced to 16 Years in Federal PrisonRead the Press Release
LITTLE ROCK – Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced that Lacey Rae Moore, 44, who pleaded guilty to intentionally starting fires at Forest Place Apartments, including one that destroyed an entire building, was sentenced to 16 years in prison and ordered to pay more than $12 million in restitution on Friday.
Today, the Honorable Billy Roy Wilson sentenced Moore to nine years on Count 4 and seven years on Count 7, and then ordered that sentences be run consecutively for a total of 16 years, with five years of supervised release to follow. In addition, Judge Wilson ordered Moore to pay $12,558,802.82 in restitution, which accounts for the property damage to Forest Place as well as personal property insurance claims from multiple victims.
“Today’s sentence shows just how serious Lacey Moore’s crimes were and the harm it caused to the residents of Forest Place Apartments,” stated Thyer. “I hope today’s sentence will give some measure of closure to the many families that were impacted by these fires.”
On August 1, 2014, Moore pleaded guilty to Counts 4 and 7 of an eight-count indictment that charged her with the seven fires, plus the use of an unregistered explosive device in another fire at a Little Rock residence. Count 4 was for a May 16, 2013, fire at Forest Place Apartments in Little Rock that completely destroyed the North Building and forced the evacuation of 350-400 people. As a result of that fire at least 79 people were permanently displaced. A Little Rock Firefighter was injured suppressing the fire. Count 7 was for a June 28, 2013, fire in the South Building the forced the evacuation of 100 people and permanently displaced another 11.
The investigation was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, with substantial assistance from the Little Rock Fire Department, the Arkansas State Police and the Little Rock Police Department. The case is being prosecuted by Assistant United States Attorney Chris Givens.
Floridian Pleads Guilty to Tax EvasionRead the Press Release
JOHNSTOWN, Pa. - A resident of Winter Garden, Fl., pleaded guilty in federal court to charges of income tax evasion, United States Attorney David J. Hickton announced today.
Walter C. Pruchnik, Jr., pleaded guilty to one count before United States District Judge Kim R. Gibson.
According to the indictment presented to the court, from April 15, 2008, until April 15, 2011, Pruchnik owed substantially more federal income tax for the calendar years 2007 through 2010 than he declared on his income tax returns. Specifically, Pruchnik stated his taxable income for the calendar year 2007 was the sum of $66 and the amount of tax he owed was $5,316, when, in actuality, his taxable income for that year was $198,713, upon which he owed to the United States of America income tax of $66,079. For the calendar year 2008, Pruchnik stated his taxable income was -$3,638 and the amount of tax he owed was $4,380. However, in actuality, his taxable income for that year was $180,595, upon which he owed to the United States of America income tax of $58,890. For the calendar year 2009, Pruchnik stated his taxable income was $55,998 and the amount of tax he owed was $18,677. However, in actuality, his taxable income for that year was $110,630, upon which he owed to the United States of America income tax of $35,125. For the calendar year 2010, Pruchnik stated his taxable income was $35,447 and the amount of tax he owed was $12,197. However, in actuality, his taxable income for that year was $50,795, upon which he owed to the United States of America income tax of $16,833.
Judge Gibson scheduled sentencing for April 2, 2015, at 10:00 a. m. The law provides for a maximum total sentence of 20 years in prison and a fine of $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the criminal history, if any, of the defendant.
Assistant United States Attorney Stephanie L. Haines is prosecuting this case on behalf of the government.
The Internal Revenue Service Criminal Investigation conducted the investigation that led to the prosecution of Pruchnik.
Federal Jury Finds Port Charlotte Man Guilty in Sexual Exploitation CaseRead the Press Release
Fort Myers, Florida – United States Attorney A. Lee Bentley, III announces that a federal jury yesterday found Quinton Paul Handlon (44) guilty of production of child pornography, possession of child pornography, and coercion and enticement of a minor to engage in sexual activity. He faces a maximum penalty of life in federal prison. His sentencing hearing is scheduled for January 12, 2015.
According to testimony and evidence presented at trial, Handlon sexually abused a family member over an approximately four-year period, while she was between the ages of 11 and 15. He provided her with money and other items in exchange for sexual activity. Handlon took sexually explicit photographs of the child, filmed her engaged in sexual activity with him, and coerced her to take photographs and videos of herself for his sexual gratification. A search warrant executed at Handlon’s residence recovered the electronic devices containing the victim’s images and videos.
This case was investigated by the FBI Child Exploitation Unit. It is being prosecuted by Assistant United States Attorneys Tama Koss Caldarone and Stacie B. Harris.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Extendicare Health Services Inc. Agrees to Pay $38 Million to Settle False Claims Act Allegations Relating to the Provision of Substandard Nursing Care and Medically Unnecessary Rehabilitation TherapyRead the Press Release
Extendicare Health Services Inc. (Extendicare) and its subsidiary Progressive Step Corporation (ProStep) have agreed to pay $38 million to the United States and eight states to resolve allegations that Extendicare billed Medicare and Medicaid for materially substandard nursing services that were so deficient that they were effectively worthless and billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services, the Justice Department and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) jointly announced today. This resolution is the largest failure of care settlement with a chain-wide skilled nursing facility in the department’s history.
As part of this settlement, Extendicare has also been required to enter into a five year chain-wide Corporate Integrity Agreement with HHS-OIG. Extendicare is a Delaware corporation that, through its subsidiaries, operates 146 skilled nursing facilities in 11 states. ProStep provides physical, speech, and occupational rehabilitation services.
“Our seniors rely on the Medicare and Medicaid programs to provide them with quality care, ensuring that they are treated with dignity and respect when they are most vulnerable,” said Acting Associate Attorney General Stuart F. Delery. “It is critically important that we confront nursing home operators who put their own economic gain ahead of the needs of their residents. Operators who bill Medicare and Medicaid while failing to provide essential services or bill for services so grossly substandard as to be effectively worthless will be pursued for false claims.”
This settlement resolves allegations that between 2007 and 2013, in 33 of its skilled nursing homes in eight states, Extendicare billed Medicare and Medicaid for materially substandard skilled nursing services and failed to provide care to its residents that met federal and state standards of care and regulatory requirements. The government alleges, for example, that Extendicare failed to have a sufficient number of skilled nurses to adequately care for its skilled nursing residents; failed to provide adequate catheter care to some of the residents and failed to follow the appropriate protocols to prevent pressure ulcers or falls. The eight states involved in this component of the settlement are Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington and Wisconsin.
“The continued viability of Medicare depends, in large part, on the honesty and integrity of the program participants,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “Health care providers must make decisions regarding the level of services to be provided based solely on their patients’ clinical needs, and not corporate financial targets.”
“This investigation and settlement highlights the importance of leveraging the joint resources and expertise of the states and federal government,” said Ohio Attorney General Mike DeWine. “Working together allowed us to focus our efforts nationally on protecting the most vulnerable in our population who rely on quality care in our nursing homes.”
Additionally, this settlement resolves allegations that between 2007 and 2013, in 33 of its skilled nursing homes, Extendicare provided medically unreasonable and unnecessary rehabilitation therapy services to its Medicare Part A beneficiaries, particularly during the patients’ assessment reference periods, so that it could bill Medicare for those patients at the highest per diem rate possible.
As a result of today’s settlement, the federal government will receive $32.3 million and the eight state Medicaid programs will receive $5.7 million. The Medicaid program is funded jointly by the federal and state governments.
“The United States remains committed to demanding the highest quality of care for nursing home and skilled facility residents,” said U.S. Attorney Carter M. Stewart for the Southern District of Ohio. “We are proud of our efforts to work cooperatively with our partners at the Ohio Attorney General’s Medicaid Fraud Control Unit, as well as with other U.S. Attorney’s offices across the country. We will remain vigilant in our efforts to combat healthcare fraud, especially when it impacts the most vulnerable in our society, including seniors and others requiring significant long term care.”
“Nursing home residents should not be subject to unreasonable or unnecessary rehabilitation therapy that is dictated by a company’s profits rather than patient needs,” said U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania. “It is critical to the integrity of a system that benefits millions of Americans that we do as much as possible to hold accountable those who commit fraudulent acts. The Eastern District of Pennsylvania will continue its efforts to prevent Medicare fraud and protect government beneficiaries.”
In addition, as part of this resolution, Extendicare and ProStep are required to enter into a five year chain-wide Corporate Integrity Agreement. It is a priority of the OIG to investigate and pursue cases involving abuse or grossly deficient care of Medicare or Medicaid beneficiaries and to recommend improvements to the systems intended to promote quality of care. To protect the Federal healthcare programs and its beneficiaries, OIG required Extendicare to agree to a Corporate Integrity Agreement under which Extendicare must have a comprehensive compliance program with systems to address the quality of resident care. Extendicare’s compliance program must include, among other things, corporate-level committees to address compliance and quality, including a committee to assess staffing, and an internal audit program to assess the quality of care provided to its residents. Extendicare must retain an independent monitor, selected by the OIG, who will regularly visit Extendicare’s facilities and report to the OIG. In addition, an independent review organization will perform annual reviews of Extendicare’s claims to Medicare.
“This case demonstrates that the government will aggressively pursue allegations of abuse and grossly deficient care,” said Inspector General Daniel R. Levinson of the U.S. Department of Health and Human Services. “Our five-year corporate integrity agreement with Extendicare requires a government-selected quality of care monitor be retained by Extendicare, and additional rigorous provisions designed to ensure Extendicare provides appropriate staffing and monitors the quality of care provided to its residents.”
Under the False Claims Act, private citizens, known as relators, can bring suit on behalf of the United States and share in any recovery. Two relators brought separate cases against Extendicare. Relator Tracy Lovvron will receive more than $1.8 million as her share of the recovery in the RUGS upcoding case, and Relator Donald Gallick will receive more than $250,000 as his share of the recovery in the Ohio worthless services case.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.5 billion through False Claims Act cases, with more than $14.3 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement was the result of a coordinated federal and state effort by the Civil Division, the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the U.S. Attorney’s Office for the Southern District of Ohio, HHS-OIG and the Attorneys General for the states of Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington and Wisconsin. This investigation was also supported by the department’s Elder Justice Initiative, which coordinates the department’s activities combating elder abuse, neglect and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid and other federal health care programs. Learn more about the Justice Department’s Elder Justice Initiative at http://www.justice.gov/elderjustice/.
The two qui tam cases are docketed as United States ex rel. Lovvorn v. EHSI, et. al. C.A. 10-1580 (E.D. Pa) and United States ex rel. Gallick et al., v. EHSI et al., C.A. 2:13cv-092 (S.D. Ohio). The claims resolved by the settlement are allegations only; there has been no determination of liability.
Extendicare Health Services Inc. Agrees to Pay $38 Million to Settle False Claims Act Allegations Relating to the Provision of Substandard Nursing Care and Medically Unnecessary Rehabilitation TherapyRead the Press Release
Company Also Required to Enter Five Year Chain-wide Corporate Integrity Agreement
WASHINGTON – Extendicare Health Services Inc. (Extendicare) and its subsidiary Progressive Step Corporation (ProStep) have agreed to pay $38 million to the United States and eight states to resolve allegations that Extendicare billed Medicare and Medicaid for materially substandard nursing services that were so deficient that they were effectively worthless and billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services, the Justice Department and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) jointly announced today. This resolution is the largest failure of care settlement with a chain-wide skilled nursing facility in the department’s history.
As part of this settlement, Extendicare has also been required to enter into a five year chain-wide Corporate Integrity Agreement with HHS-OIG. Extendicare is a Delaware corporation that, through its subsidiaries, operates 146 skilled nursing facilities in 11 states. ProStep provides physical, speech, and occupational rehabilitation services.
“Our seniors rely on the Medicare and Medicaid programs to provide them with quality care, ensuring that they are treated with dignity and respect when they are most vulnerable,” said Acting Associate Attorney General Stuart F. Delery. “It is critically important that we confront nursing home operators who put their own economic gain ahead of the needs of their residents. Operators who bill Medicare and Medicaid while failing to provide essential services or bill for services so grossly substandard as to be effectively worthless will be pursued for false claims.”
This settlement resolves allegations that between 2007 and 2013, in 33 of its skilled nursing homes in eight states, Extendicare billed Medicare and Medicaid for materially substandard skilled nursing services and failed to provide care to its residents that met federal and state standards of care and regulatory requirements. The government alleges, for example, that Extendicare failed to have a sufficient number of skilled nurses to adequately care for its skilled nursing residents; failed to provide adequate catheter care to some of the residents and failed to follow the appropriate protocols to prevent pressure ulcers or falls. The eight states involved in this component of the settlement are Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington and Wisconsin.
“The continued viability of Medicare depends, in large part, on the honesty and integrity of the program participants,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “Health care providers must make decisions regarding the level of services to be provided based solely on their patients’ clinical needs, and not corporate financial targets.”
“This investigation and settlement highlights the importance of leveraging the joint resources and expertise of the states and federal government,” said Ohio Attorney General Mike DeWine. “Working together allowed us to focus our efforts nationally on protecting the most vulnerable in our population who rely on quality care in our nursing homes.”
Additionally, this settlement resolves allegations that between 2007 and 2013, in 33 of its skilled nursing homes, Extendicare provided medically unreasonable and unnecessary rehabilitation therapy services to its Medicare Part A beneficiaries, particularly during the patients’ assessment reference periods, so that it could bill Medicare for those patients at the highest per diem rate possible.
As a result of today’s settlement, the federal government will receive $32.3 million and the eight state Medicaid programs will receive $5.7 million. The Medicaid program is funded jointly by the federal and state governments.
“The United States remains committed to demanding the highest quality of care for nursing home and skilled facility residents,” said U.S. Attorney Carter M. Stewart for the Southern District of Ohio. “We are proud of our efforts to work cooperatively with our partners at the Ohio Attorney General’s Medicaid Fraud Control Unit, as well as with other U.S. Attorney’s offices across the country. We will remain vigilant in our efforts to combat healthcare fraud, especially when it impacts the most vulnerable in our society, including seniors and others requiring significant long term care.”
“Nursing home residents should not be subject to unreasonable or unnecessary rehabilitation therapy that is dictated by a company’s profits rather than patient needs,” said U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania. “It is critical to the integrity of a system that benefits millions of Americans that we do as much as possible to hold accountable those who commit fraudulent acts. The Eastern District of Pennsylvania will continue its efforts to prevent Medicare fraud and protect government beneficiaries.”
In addition, as part of this resolution, Extendicare and ProStep are required to enter into a five year chain-wide Corporate Integrity Agreement.It is a priority of the OIG to investigate and pursue cases involving abuse or grossly deficient care of Medicare or Medicaid beneficiaries and to recommend improvements to the systems intended to promote quality of care. To protect the Federal healthcare programs and its beneficiaries, OIG required Extendicare to agree to a Corporate Integrity Agreement under which Extendicare must have a comprehensive compliance program with systems to address the quality of resident care. Extendicare’s compliance program must include, among other things, corporate-level committees to address compliance and quality, including a committee to assess staffing, and an internal audit program to assess the quality of care provided to its residents. Extendicare must retain an independent monitor, selected by the OIG, who will regularly visit Extendicare’s facilities and report to the OIG. In addition, an independent review organization will perform annual reviews of Extendicare’s claims to Medicare.
“This case demonstrates that the government will aggressively pursue allegations of abuse and grossly deficient care,” said Inspector General Daniel R. Levinson of the U.S. Department of Health and Human Services. “Our five-year corporate integrity agreement with Extendicare requires a government-selected quality of care monitor be retained by Extendicare, and additional rigorous provisions designed to ensure Extendicare provides appropriate staffing and monitors the quality of care provided to its residents.”
Under the False Claims Act, private citizens, known as relators, can bring suit on behalf of the United States and share in any recovery. Two relators brought separate cases against Extendicare. Relator Tracy Lovvron will receive more than $1.8 million as her share of the recovery in the RUGS upcoding case, and Relator Donald Gallick will receive more than $250,000 as his share of the recovery in the Ohio worthless services case.This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.5 billion through False Claims Act cases, with more than $14.3 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement was the result of a coordinated federal and state effort by the Civil Division, the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the U.S. Attorney’s Office for the Southern District of Ohio, HHS-OIG and the Attorneys General for the states of Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington and Wisconsin. This investigation was also supported by the department’s Elder Justice Initiative, which coordinates the department’s activities combating elder abuse, neglect and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid and other federal health care programs. Learn more about the Justice Department’s Elder Justice Initiative at http://www.justice.gov/elderjustice/.
The two qui tam cases are docketed as United States ex rel. Lovvorn v. EHSI, et. al. C.A. 10-1580 (E.D. Pa) and United States ex rel. Gallick et al., v. EHSI et al., C.A. 2:13cv-092 (S.D. Ohio). The claims resolved by the settlement are allegations only; there has been no determination of liability.El Paso Man Sentenced in Malicious Destruction of A BuildingRead the Press Release
In El Paso yesterday, 22-year-old Kevin Rodriguez was sentenced to 60 months in federal prison followed by three years of supervised release and ordered to pay restitution for his role in maliciously causing destruction to the Coronado Tower Building announced United States Attorney Robert Pitman and Special Agent in Charge Robert R. Champion, Bureau of Alcohol, Tobacco, Firearms and Explosives, Dallas Field Division.
According to court records, in April 2013, Rodriguez caused a fire to be started in the Coronado Tower Building located at 6006 North Mesa in El Paso. An individual working in the building saw Rodriguez in close proximity to the fire and started chasing Rodriguez. Rodriguez fled from the building and was shortly apprehended by a chef at a restaurant located in the Coronado Towers. Rodriguez was then placed in police custody.
In July 2014, Rodriguez pled guilty to one count of maliciously damaging a building and admitted he started the fire using tissue and a lighter. The fire caused some tenants of the building to close their business or to relocate to other offices in the building.
This case was investigated by Special Agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives and Investigators from the El Paso Fire Department Arson Unit.
East St. Louis Man Gets Tough Sentence in UPS Truck RobberyRead the Press Release
Follow @SDILNewsStephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today that Anthony T. Moore has been sentenced to 235 months in federal prison for the armed robbery of a UPS truck on December 17, 2012. Moore was sentenced in U.S. District Court in East St. Louis, Illinois on October 10, 2014.
Moore’s federal sentence of nearly 20 years will be consecutive to a 34-year state sentence he received for Attempted Murder.
Moore, age 22, was found guilty of the federal Armed Robbery charge on June 11, 2014, following a 3-day jury trial.
According to evidence presented at trial, Moore hijacked a UPS truck in East St. Louis at gunpoint and forced the driver to move the truck to a deserted dead-end street in Washington Park, Illinois. Moore and two accomplices then stole the packages which were inside the truck.
At trial, the UPS driver testified that “I thought it was the last day of my life, and that I would never see my kids again. I just asked the Lord to receive my soul. I was that sure he was going to kill me.”
After the robbery, Moore shot a 15-year-old acquaintance in the back of the head, because Moore believed the juvenile could implicate him in the UPS truck robbery. Moore was convicted last year in St. Clair County Circuit Court for that shooting.
At Moore’s federal sentence hearing on Friday, Chief U.S. District Judge David R. Herndon described the testimony which he had heard at Moore’s trial as “harrowing.” Judge Herndon also stated that, “There is no question in my mind that the public would be in danger if you were walking the streets.” He described Moore as “a career criminal in my view.”
The Armed Robbery charge of which Moore was convicted is a federal “Hobbs Act Robbery.” The Hobbs Act makes it a crime to obstruct, delay, or affect interstate commerce by robbery, and is used by United States Attorney Wigginton’s office as a way to combat armed robbery in the Southern District of Illinois. “This conviction is just the latest in a series of federal prosecutions I have initiated, as part of our efforts to send a clear message to these extraordinarily dangerous gunmen who commit armed robberies, that they will face harsh federal penalties for their crimes.” said Wigginton. “I will continue to use every available federal resource to try to ensure the safety of the citizens of Southern Illinois.”
The investigation which resulted in Moore’s arrest and conviction was conducted by the FBI and the Illinois State Police.
The case was tried by Assistant United States Attorneys Steven Clark and Robert Garrison.
Defendant Pleads Guilty to Defrauding Investors for More Than $19 Million in Small Appliance Resale SchemeRead the Press Release
United States Attorney Andrew M. Luger today announced the guilty plea of TYRONE HERMAN, 55, of St. Anthony, Minn., for defrauding investors for more than $19 million. HERMAN, who was charged by information on September 9, 2014, pleaded guilty today before Untied States District Judge Joan N. Ericksen.
“Investment fraud takes all forms – even sophisticated investors can be victims,” said U.S. Attorney Luger. “Working closely with our colleagues from the Minnesota Department of Commerce and the Federal Bureau of Investigation, today we are protecting more people than ever before, by removing from the market place those who are stealing clients’ money by investment fraud.”
Minnesota Department of Commerce Commissioner Mike Rothman said: “We will continue to fight investment fraud and criminal Ponzi schemes. After a concerned citizen gave a tip to our securities investigators, our agents from the Commerce Fraud Bureau and the FBI collaborated to investigate and stop Mr. Herman from committing any more criminal financial abuse.”
Special Agent in Charge of the Federal Bureau of Investigation Minneapolis Division Richard Thornton said: “The FBI remains steadfast in its commitment to prevent financial fraud. This guilty plea serves as a reminder to those who commit financial fraud that no safe harbor exists.”
According to his guilty plea and documents filed in court, HERMAN, from 1998 through December 2013, operated Executive Marketing Group (EMG) and Ty Herman & Associates, which he claimed had business relationships with manufacturers and wholesalers from whom he could purchase small appliances and other inventory at below-retail market rates. HERMAN told the victims that he could re-sell the inventory in which they invested for a profit of 35 percent, and that victims would receive their money back, with a 30 percent rate of return, within 90 days of the sale of inventory.
According to his guilty plea and documents filed in court, HERMAN created false invoices to demonstrate to victims that had sold the inventory. When they demanded return of their investments, HERMAN provided fake bank statements showing that, while he had the money in his bank account, the Internal Revenue Service had frozen the account so that he could not access the victims’ money. HERMAN repaid some investors with Ponzi-type payments, not from the sale of inventory.
According to HERMAN’S guilty plea and documents filed in court, he stole more than $19 million from at least 25 separate victims.
This case is the result of an investigation conducted by the Minnesota Department of Commerce and the Federal Bureau of Investigation.
Assistant U.S. Attorney Karen Schommer prosecuted the case.
Defendant Information: TYRONE R. HERMAN, 55
St. Anthony, Minn.
Convicted: • Wire Fraud, 1 count###
Chiropractor Pleads Guilty to Bribing IRS AuditorRead the Press Release
BOSTON – A Lowell chiropractor pleaded guilty today for bribing an IRS auditor.
Steven Jacobs, 56, of Lowell, pleaded guilty to bribery of a public official. Jacobs paid an IRS auditor $5,000 in cash to favorably end an audit and ignore two deductions Jacobs improperly took on his 2011 and 2012 income tax returns. These deductions were in fact payments Jacobs made to two different women after they accused him of touching them inappropriately during medical treatments during 2011 and 2012. He was arrested on federal charges in February of this year.U.S. District Judge William G. Young scheduled sentencing for Jan. 13, 2014 at 2:00 pm.
United States Attorney Carmen M. Ortiz and Robert O’Malley, Special Agent in Charge of the Treasury Inspector General for Tax Administration, made the announcement today. The case is being prosecuted by Eugenia M. Carris of Ortiz’s Public Corruption Unit.
Chicago Man Convicted of Conspiracy to Violate U.S. Sanctions by Providing Services to Zimbabwean President Mugabe and OthersRead the Press Release
CHICAGO — A Chicago man was convicted today by a federal jury of conspiracy to violate U.S. sanctions from late 2008 through early 2010 by agreeing to assist Zimbabwe President Robert Mugabe and others in an effort to lift economic sanctions against Zimbabwe. The defendant, C. GREGORY TURNER, met multiple times in the United States and in Africa with Zimbabwean government officials, including President Mugabe and Gideon Gono, governor of the Reserve Bank of Zimbabwe, who were individually subject to U.S. sanctions. A November 2008 “consulting agreement” provided for total payment of $3.4 million in fees for Turner and a co-defendant to engage in public relations, political consulting, and lobbying efforts to have sanctions removed by meeting with and attempting to persuade federal and state government officials, including Illinois members of Congress and state legislators, to oppose the sanctions.
Turner, 72, also known as “Greg Turner,” of Chicago and Israel, was found guilty of violating the International Emergency Economic Powers Act (IEEPA), following a trial that began Sept. 29 in U.S. District Court. The jury, which began deliberating on Wednesday, acquitted Turner of one count each of conspiracy and acting as an agent in the United States of a foreign government without providing prior notification to the Attorney General.
Turner remains free on bond while awaiting sentencing, which U.S. District Judge Elaine Bucklo, set for Jan. 9, 2015. He faces a maximum penalty of 20 years in prison and a $1 million fine. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
Turner’s co-defendant, PRINCE ASIEL BEN ISRAEL, 73, of Chicago, was sentenced in August to seven months in prison after pleading guilty to violating the Foreign Agents Registration Act (FARA).
The sanctions against President Mugabe and other specially designated individuals in Zimbabwe ― for human rights abuses ― were initially imposed in 2003 by President George W. Bush, and have been continued annually by President Obama, starting in March 2009. President Mugabe and his ruling ZANU-PF party have governed Zimbabwe since its independence in 1980. The sanctions neither bar travel to Zimbabwe nor prohibit public officials from meeting with specially designated nationals to discuss removing the sanctions, but individuals may not provide services on behalf of or for the benefit of specially designated nationals.
According to the evidence at trial, in early November 2008, Turner and Ben Israel began having discussions with Mugabe, Gono, and other ZANU-PF leaders regarding the influence Turner and Ben Israel could wield to have the sanctions removed. The defendants discussed with Mugabe, Gono, and others their association with many public officials who purportedly had close connections with then President-Elect Obama. Turner violated IEEPA by conspiring to engage in public relations, political consulting, and lobbying efforts on behalf of President Mugabe and other Zimbabwe officials. In early December 2008, Ben Israel’s U.S. bank blocked a wire transfer of $89,970 into his account from a Zimbabwe official affiliated with ZANU-PF, and Ben Israel later traveled to Africa and personally withdrew $90,000 from the bank account of that same Zimbabwe official.
Turner and Ben Israel arranged for trips by federal and state government officials to meet with President Mugabe and other Zimbabwean officials, including in November and December 2008, and January and December 2009; attempted to have Gono and other Zimbabwean officials speak at an issues forum in Washington, D.C., sponsored by a then U.S. Representative from California, and to assist those officials in obtaining visas to travel to the U.S. to attend the event; arranged for President Mugabe to meet with federal and state government officials in New York; lobbied a caucus of state legislators on behalf of Zimbabwean officials; and failed to apply to the Treasury Department for a license to engage in transactions and services on behalf of specially designated nationals.
In early December 2008, Turner and Ben Israel arranged for a delegation to travel to Zimbabwe. After members of the delegation returned, President-Elect Obama’s transition team forwarded information about contact from a member of the delegation to the FBI based on its concerns that sanctions may have been violated sanctions by traveling to Zimbabwe, which was not itself prohibited.
Throughout 2009, Turner and Ben Israel continued to pass communications between Zimbabwean leaders and, purportedly, U.S. public officials while seeking payment for their services from Gono. Turner led an effort to have Gono speak at an issues forum hosted by a then U.S. Representative from California in September 2009. Turner attempted to assist Gono, as well as two other Zimbabwean officials, obtain visas to ensure that they could attend and participate in the forum.
The guilty verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John Carlin, Assistant Attorney General for the National Security Division; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The Justice Department’s Counterespionage Section assisted in the investigation.
The government is being represented by Assistant U.S. Attorneys Barry Jonas and Georgia Alexakis, and David Recker, a trial attorney with the Justice Department’s Counterespionage Section.
Charleston Restaurant Owners Sentenced to PrisonRead the Press Release
Contact Person: Dean Secor (843) 727-4381
Columbia, South Carolina ---- United States Attorney Bill Nettles stated today that Dao Ping Lin (LIN), age 52, and Jin Xian Yang (YANG), age 52, both of Charleston, South Carolina were sentenced today in federal court in Charleston, South Carolina regarding the guilty pleas they entered on October 22, 2013. United States District Judge Richard M. Gergel of Charleston sentenced LIN to one (1) year and a day in prison and three (3) years of supervised release for Willful Failure to Truthfully Collect and Pay over Withholding Taxes, a violation of 26 U.S.C. § 7202, and six (6) months in prison for Pattern or Practice of Hiring Illegal Aliens, in violation of 8 U.S.C §§1324a(a)(1)(A) and 1324a(f)(1). LIN’s sentences are to run concurrently. Judge Gergel sentenced YANG to eighteen (18) months in prison and 3 years of supervised release for Structuring Bank Transactions of $10,000 or less, in violation of 31 U.S.C §§ 5324(a)(3) and 5324(d)(2).
Evidence presented at the change of plea hearing established that between February 2009 and March 2009, LIN and YANG, a married couple, purchased or caused to be purchased $85,885 of U.S. Postal Service money orders in increments totaling slightly less than the $3,000 reporting requirement for such instruments. The postal money order structuring activity led to a joint investigation by the Postal Inspection Service (USPIS) and the Internal Revenue Service-Criminal Investigation (IRS-CI). The U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) joined the investigation after receiving information from an anonymous source that LIN was employing illegal aliens and paying such workers under the table.
Income taxes and Federal Insurance Contributions Act (FICA) taxes collected from employees are collectively known as “trust fund taxes” and must be reported on quarterly Employment tax returns (Forms 941). Employers are also required to pay over a matching portion of FICA taxes and report that on the Forms 941 as well. The employer’s matching portion of FICA taxes is not a “trust fund tax.” It is a direct tax. 26 U.S.C. § 7202 only applies to “trust fund taxes,” but the tax loss due to failure to truthfully account for and pay over the employer’s matching portion of FICA taxes can be considered as relevant conduct for sentencing purposes.
The joint investigation revealed that LIN has owned and operated Healthy Inc., d/b/a Osaka Restaurant in Charleston since 2006. Most of LIN’s employees were illegal aliens. Osaka’s payroll returns reported the wages paid by check to LIN’s family and other legal workers. The illegal aliens’ wages, all paid in cash, were not included on Forms 941. The investigation further revealed that LIN was the responsible party for collecting, truthfully accounting for, and paying over “trust fund taxes” for Osaka Restaurant. For the 1st quarter 2007 through the 4th quarter 2010, LIN filed false Form 941s. The modus operandi was to only give the outside accountant payroll information related to the employees paid by check. The unremitted “trust fund taxes” totaled $228,912, and the unpaid employer taxes totaled $46,512. As for the guilty plea tax count (4th Quarter 2010), LIN underreported wages in the amount of $38,000, which resulted in unpaid “trust fund taxes” of $14,307.
The illegal aliens employed by Osaka Restaurant lived in a house that LIN owned. LIN and Osaka Restaurant owned passenger vans used to transport the illegal aliens to and from the employee house and the restaurant. After conducting surveillance and a traffic stop of an Osaka Restaurant van that contained illegal alien workers, search warrants were executed at LIN and YANG’s residence, the employee house, and Osaka Restaurant. Evidence seized during the searches included payroll sheets itemizing the amounts employees were paid by checks and the amounts employees were paid in cash. When agents searched the employee house they found two individuals on the premises. One individual had a pending asylum petition and the other individual was an illegal alien. Four additional illegal alien workers were found on the restaurant’s premises. ICE administratively arrested the five illegal aliens, who were later deported.
Agents also determined that YANG intentionally structured currency withdrawals in amounts of $10,000 or less (mostly in $9,800 increments) for the purpose of evading the filing of Currency Transaction Reports (CTRs). During the years 2007, 2008, and 2009, YANG conducted 102 structured cash withdrawal transactions totaling $999,600. She made the series of withdrawals from various branches of Bank of America, where the business bank account for LIN’s restaurant was maintained. YANG had signature authority of the account.
During the course of the joint investigation, agents seized $399,619 in currency from LIN and YANG as well as a 2008 Infinity automobile. LIN and JIN agreed to the forfeiture of those seized assets, and Judge Gergel entered an order of forfeiture for those assets at the sentencing hearing.
The case was investigated by agents of the U.S. Internal Revenue Service-Criminal Investigation (IRS-CI), the U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), and the U.S. Postal Inspection Service (USPIS). Assistant United States Attorney Dean H. Secor of the Charleston office prosecuted the case.Cape Cod Brothers Convicted in Oxycodone Trafficking SchemeRead the Press Release
BOSTON – After a month-long federal trial, brothers Stanley D. Gonsalves and Joshua M. Gonsalves were convicted on multiple charges arising from a three-year conspiracy involving hundreds of thousands of 30-milligram oxycodone pills which were distributed on Cape Cod and generated over $5 million in proceeds.
Stanley Gonsalves, 36, of Sandwich, Mass., was convicted of an oxycodone trafficking conspiracy, a money laundering conspiracy, and 17 substantive money laundering charges. The money laundering charges relate to his purchase of two Mercedes vehicles and property located on Hoover Road in West Yarmouth. He was also convicted of possessing a firearm in furtherance of the oxycodone trafficking conspiracy.Joshua M. Gonsalves, 34, of Dennisport, Mass., was convicted of an oxycodone trafficking conspiracy, a money laundering conspiracy, and a substantive money laundering charge in connection with his purchase of a Cadillac.
The jury also required the forfeiture of the property in West Yarmouth and issued money judgments totaling $5,074,575.
During the trial, witnesses testified that the conspiracy’s couriers transported multi-thousand-pill loads of 30-milligram oxycodone pills from South Florida up to New England, first by plane and later by car. Once the pills were brought to numerous area hotels or conspirators’ homes and apartments in Dorchester, Quincy, and Onset, Mass., the conspirators would divide them into 100-pill packs and then take the pills to Cape Cod for sale to the dealer-level customers.
The primary object of the related money laundering conspiracy was to use the millions of dollars in drug proceeds to purchase fresh supplies of oxycodone pills and to pay the ongoing expenses of the oxycodone conspiracy. During the trial, witnesses testified about seizures from the Gonsalves Brothers’ co-conspirators of two attempted south-bound cash shipments totaling $140,000, and an attempted north-bound pill shipment of 5,700 pills. Other large pill seizures occurred in Fort Lauderdale (8,000 pills), in Volusia County, Fla. (900 pills), along Route 6 in Barnstable (280 pills), and along Route 3 Southbound in Kingston, Mass (4,000 pills). Other related cash seizures from co-conspirators totaled $167,000.The trial evidence also included extensive testimony about a car chase and rollover incident which occurred on Route 3 Northbound on May 13, 2011, in which the Gonsalves Brothers allegedly rammed their Mercedes SUV into a Volvo station wagon which they believed (incorrectly) contained the $225,000 in cash drug proceeds which had just been taken from them in a Bourne robbery. The men in the Volvo, who allegedly were only assisting the primary robbers (who were watching these events unfolding from a different car) managed to survive the rollover crash and then fled into the woods. In a recorded call a few days later, which was played at the trial, Stanley Gonsalves told a criminal associate about the robbery, boasting that the robbers “didn’t expect us to do what we did” in retaliation.
The four-year investigation that resulted in this case originated in Boston’s Chinatown, and initially focused on John (White Devil) Willis, a Cantonese-speaking Caucasian who is now serving a 20 year sentence, arising from his role as the Gonsalves Brothers’ primary oxycodone supplier between late 2009 and May 27, 2011.
The convicted charges carry statutory maximum sentences of 20 years for oxycodone trafficking conspiracy, money laundering conspiracy and concealment laundering charges, 10 years for unlawful monetary transaction laundering, and a mandatory consecutive sentence of five years on the firearm charge. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
U.S. District Chief Judge Patti B. Saris scheduled sentencing for Jan. 16, 2015.
United States Attorney Carmen M. Ortiz; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; Michael J. Ferguson, Acting Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division; and Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police, made the announcement today. Significant assistance was also provided by the DEA Cape Cod Drug Task Force, the Barnstable, Boston, Quincy, Dennis, Plymouth, Sandwich, Yarmouth, Bourne, and Bristol County Police Departments, the Florence County (South Carolina) Sheriff’s Office, the Broward County (Florida) Sheriff’s Department, the Volusia County (Florida) Sheriff’s Office, and the Dillon and Ridgeland (South Carolina) Police Departments.
The case was prosecuted by Assistant U.S. Attorneys Richard L. Hoffman and Timothy E. Moran of Ortiz’s Organized Crime Strike Force Unit.
Canadian Man Found Guilty by a Federal Jury of Assault on a Federal OfficerRead the Press Release
BUFFALO, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that a federal jury in Buffalo has convicted Jordan Hidalgo, 23, of Fort Erie, Canada, of assault on a federal officer with physical contact causing bodily injury. The defendant faces a maximum penalty of 20 years in prison, a fine of $250,000 or both when sentenced.
Assistant U.S. Attorneys Wei Xiang and George C. Burgasser, who handled the prosecution of the case, stated that the defendant was initially indicted in April 2011 along with five others and charged with violent crimes in aid of racketeering and other charges. This indictment centered upon the defendant’s activities on behalf of Cheko’s Crew/7th Street Gang, alleged to have operated on the West Side of Buffalo. Hidalgo was arrested in Canada in 2011 and extradited to the United States in August 2013.
On September 17, 2013, the defendant was being held at the Buffalo Federal Detention Facility in Batavia, NY. On that day, two deputy United States Marshals went to the facility to transfer Hidalgo to another facility. The defendant refused to leave his jail cell and began cursing and threatening the deputies. As the deputies went inside the jail cell to remove Hidalgo, the defendant punched one of the deputies multiple times in the head causing several cuts and a broken nose.
The verdict is the culmination of an investigation on the part of the U.S. Marshals Service, under the direction of Charles Salina, Immigration and Customs Enforcement, Enforcement and Removal Operations, under the direction Michael Phillips, Buffalo Field Office Director, and the Federal Bureau of Investigation. The Valley Metro-Barbosa Group also assisted in this case.
Sentencing is scheduled for January 26, 2015 at 12:30 p.m. in Buffalo before U.S. District Judge Richard J. Arcara who presided over the trial of the case.Boeing Pays $23 Million to Resolve False Claims Act AllegationsRead the Press Release
The Boeing Company paid $23 million to resolve allegations that it submitted false claims for labor charges on maintenance contracts with the U.S. Air Force for the C-17 Globemaster aircraft, the Justice Department announced today. Boeing, an aerospace and defense industry giant, is headquartered in Chicago.
“Today’s settlement demonstrates that the Justice Department vigilantly ensures that companies meet their contractual obligations and charge the government appropriately,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “Government contractors who seek illegal profit at the expense of taxpayers will face serious consequences.”
The government alleged that Boeing improperly charged labor costs under contracts with the Air Force for the maintenance and repair of C-17 Globemaster aircraft at Boeing’s Aerospace Support Center in San Antonio, Texas. The C-17 Globemaster aircraft, which is both manufactured and maintained by Boeing, is one of the military’s major systems for transporting troops and cargo throughout the world. The government alleged that the company knowingly and improperly billed a variety of labor costs in violation of applicable contract requirements, including for time its mechanics spent at meetings not directly related to the contracts.
“Defense contractors are required to obey strict accounting standards when submitting billing for work performed on government contracts,” said U.S. Attorney Robert Pitman for the Western District of Texas. “The pursuit and favorable settlement of this civil litigation was the result of effective teamwork between the Justice Department and the investigative agencies.”
The settlement resolves allegations originally brought in a lawsuit by present and former Boeing employees Clinton Craddock, Fred Van Shoubrouek, Anthony Rico and Fernando de la Garza in federal court in San Antonio under the False Claims Act. The act permits private parties to sue for false claims on behalf of the United States and to share in any recovery. The individuals who filed the suit will receive $3,910,000 as their share of the settlement.
The settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the Western District of Texas, the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Defense Contract Audit Agency and the Defense Contract Management Agency.
The case is United States ex rel. Craddock v. Boeing, Case No. SA-07-CA-0880FB (W.D. Tex.). The claims resolved by the settlement are allegations only; there has been no determination of liability.
Baltimore School Police Officer Sentenced to Two Years in Prison in Drug Trafficking ConspiracyRead the Press Release
Baltimore, Maryland – Chief U.S. District Judge Catherine C. Blake sentenced Napoleon McLain, Jr., age 31, of Randallstown, Maryland today to two years in prison followed by three years of supervised release for conspiring to distribute and possess with intent to distribute cocaine base. McLain was an officer with the Baltimore City School Police Force (BCSPF). BCSPF officers are granted police privileges to carry firearms and conduct arrests within the City of Baltimore.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.“It is shocking when a police officer is caught selling illegal drugs,” said U.S. Attorney Rod J. Rosenstein. “Fortunately there is no evidence that the defendant distributed drugs to school students.”
According to his plea agreement, from no later than December 2012 to August 2013, while he was employed as a BCSPF officer, McLain was a member of a conspiracy to distribute cocaine base. McLain bought multiple ounces of cocaine base at a time from his suppliers, which he sold to others. On four occasions between December 2012 and August 2013, McLain sold a total of approximately 150 grams of cocaine base to a confidential source for $9,800.
United States Attorney Rod J. Rosenstein praised the FBI for its work in the investigation and thanked Assistant U.S. Attorney David I. Sharfstein, who prosecuted the case.
9 October 2014
Year Old Hysham Meth Distributor Gets Five Years Without ParoleRead the Press Release
BILLINGS -- The United States Attorney's Office announced that Thomas Edward VanHaele, a 73 year-old resident of Hysham, Montana, was sentenced to 60 months in federal prison during a sentencing hearing in Billings, on October 9, 2014, before U.S. District Judge Susan P. Watters. VanHaele was also given five years of supervision once he is released from custody. VanHaele had earlier pleaded guilty to two counts of distributing methamphetamine.
The Drug Enforcement Administration (DEA) in Billings, Montana had been investigating Thomas Van Haele for the distribution of methamphetamine in the Billings area since May of 2012. On June 13, 2012, an undercover agent purchased methamphetamine from Van Haele in the Lee's Saloon parking lot in Billings. The methamphetamine was sent to the DEA Laboratory for testing, and the results indicate that the amount was 9.5 grams of pure methamphetamine. On June 15, 2012, a second undercover purchase was made from VanHaele at the same location. This methamphetamine was sent to the DEA Laboratory for testing, and the results indicate that the amount was 11.3 grams of pure methamphetamine.
The term pure methamphetamine refers to the purity contained in the transacted amount which is usually "cut" with inert ingredients that make the actual product less pure but more profitable as drugs are generally sold based on quantity not quality.
Parole has been abolished in the federal system so VanHaele will be required to serve the entire sentence although federal prisoners are given some days off their sentence for complying with prison rules and not committing any infractions or causing disruption inside the prison.
Wilkes-Barre Man Pleads Guilty to Possessing Firearm in Connection with Drug TraffickingRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that a 31-year-old Wilkes-Barre man pleaded guilty today before Senior U.S. District Court Judge Edwin M. Kosik to carrying and possessing a firearm in furtherance of a drug trafficking felony.
According to United States Attorney Peter Smith, the defendant, Tristan Somers, admitted to committing the crime in Wilkes-Barre on May 28, 2014.
Somers was indicted by a federal grand jury on June 3, 2014, following an investigation by special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Wilkes-Barre Police, and Kingston Police.
Somers faces a mandatory minimum five-year prison sentence and a potential maximum sentence of life in prison. Judge Kosik ordered a pre-sentence investigation. Sentencing will be scheduled after the completion of the pre-sentence report.
The case is being prosecuted by Assistant U.S. Attorney Francis P. Sempa.
Wichita Woman Pleads Guilty to Operating A Prostitution BusinessRead the Press Release
WICHITA, KAN. – A Wichita woman pleaded guilty Wednesday to operating a prostitution business, U.S. Attorney Barry Grissom said.
Saundra J. Lacy, 60, Wichita, Kan., pleaded guilty to one count of engaging in interstate commerce in furtherance of prostitution. In her plea, she admitted Jessie’s Primetime Entertainment was a prostitution business that employed at least 20 women escorts. Customers would pay $160 for a half-hour date or $185 for an hour date with an escort. During dates, escorts engaged in sexual contact customers.
Lacy accepted cash, credit card and checks for escort services. The credit card transactions were processed by Merrick Bank in Utah. Payment was deposited into her account at Bank of America in Wichita.
Sentencing is set for Dec. 29. Both parties have agreed to recommend 24 months on federal probation. Grissom commended the FBI, the Wichita Police Department and Assistant U.S. Attorney Matt Treaster for their work on the case.
Westminster Man Arrested for Orchestrating A Scheme to Defraud ClientsRead the Press Release
DENVER – Timothy J. Tucker, age 51, of Westminster, Colorado, was arrested today without incident for wire fraud and money laundering, United States Attorney John Walsh, Federal Bureau of Investigation Special Agent in Charge Thomas Ravenelle, and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Tucker appeared in court for his initial appearance this afternoon before U.S. Magistrate Judge Craig B. Shaffer, where he was advised of his rights and the charges pending against him. Tucker was indicted by a federal grand jury in Denver on October 7, 2014. The indictment remained sealed pending his arrest.
According to the facts contained in the Indictment, beginning in February 2010 and continuing until late 2013, Tucker devised a scheme to defraud by obtaining advanced fees from individuals and entities who were seeking multimillion-dollar loans. During the course of the scheme, Tucker operated Assured Venture Group (“AVG”) and The Financial Group, LLC, (“TFG”), which purported to be in the business of finding funding for multimillion-dollar loans for investment projects through the issuance of corporate bonds.Tucker told people and entities seeking multimillion-dollar loans that they were required to pay AVG/TFG fees in advance of AVG/TFG performing work to find funding for the requested loans and that the fees would be spent only on underwriting, due diligence, and closing costs related to the requested loans. For some of these loans, Tucker promised that the advanced fees would be placed in an escrow account to falsely reassure the people and entities seeking the multi-million dollar loans that the advanced fees would be spent only on underwriting, due diligence, and closing costs related to the requested loan, as promised.
Between February 2010 and March 2013, AVG/TFG was paid over $1.8 million in fees on twenty-one different projects, both by individuals and entities. Tucker did not secure funding for any of those twenty-one projects and didn’t return any fees on nineteen of the twenty-one projects. The majority of the fees received by AVG/TFG were used on things unrelated to the requested loans, including Tucker’s other businesses.
Tucker was charged with ten counts of wire fraud, which carries a penalty of not more than 20 years in federal prison and a fine of up to $250,000 per count, and six counts of money laundering, which carries a penalty of not more than 10 years in federal prison and a fine of up to $250,000 per count.
This case was investigated by the Federal Bureau of Investigation (FBI) and IRS Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Pegeen D. Rhyne.The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
U.S. Labor Department Settles Unfair Labor Practices Lawsuit Against St. James TearoomRead the Press Release
ALBUQUERQUE – The U.S. Department of Labor has entered into a settlement agreement with the St. James Tearoom, Inc. and its owners, Mary Alice and Daniel Higbie, which resolves an unfair labor practices lawsuit filed in Dec. 2014. The lawsuit alleged that St. James Tearoom and its owners violated the Fair Labor Standards Act (FLSA) by failing to pay required minimum and overtime wages to its employees.
Under the terms of the settlement agreement, which was filed as a court order today in the U.S. District Court for the District of New Mexico, the St. James Tearoom agrees to comply with the FLSA by paying its employees the required minimum hourly rate for workweeks of 40 hours or less, and by paying its employees at a rate not less than one and one-half times the regularly rate for work in excess of 40 hours per week. The agreement also requires that the St. James Tearoom keep accurate records of its employees, hours worked, wages paid, and other employment conditions and practices. The St. James Tearoom also will pay $25,286.
70 in backwages for the period of Dec. 2011 through Feb. 2013, plus an additional $25,286.70 in liquidated damages for a total amount of $50,573.40, to 42 employees.The Labor Department’s lawsuit was filed after investigators from the Wage and Hour Division’s Albuquerque District Office found that St. James Tearoom required that its dishwashers and serving staff join a tip pool, resulting in minimum wage violations. The mandatory tip pool included salaried managers, shift leaders, dishwashers, and other employees who are not eligible for tip pools, making the St. James Tearoom’s entire tip pool arrangement invalid. The St. James Tearoom also failed to keep accurate records of hours worked by employees, resulting in record-keeping violations.
Under the FLSA, the employer may consider tips as part of wages, but the employer must pay at least $2.13 per hour in direct wages. The employer who elects to use the tip credit provision must inform the employee in advance and must show that the employee receives at least the applicable minimum wage of $7.25 when direct wages and tip credit are combined. If an employee’s tips, combined with the employer’s direct wages of at least $2.13 an hour do not equal the minimum hourly wage, the employer must make up the difference. Employees must retain all their tips, except to the extent that they participate in a valid tip pool of sharing arrangement.
“When employers fail to pay the required minimum and overtime wages, it negatively impacts not just the workers and their families, but also other businesses and the community. Underpaying workers gives this business an unfair competitive edge against employers who abide by the law,” said Cynthia Watson, regional administrator for the Labor Department’s Wage and Hour Division in the Southwest. “This settlement agreement ensures that the employees of the St. James Tearoom will receive the backwages they are due and that they will continue to be properly compensated for their work.”
Colleen B. Nabhan of the Office of the Solicitor, U.S. Department of Labor, and Assistant U.S. Attorney Michael H. Hoses of the District of New Mexico litigated the case on behalf of the U.S. Labor Department.
U.S. Attorney, Shreveport Mayor and Police Chief Attend Shreveport/Bossier Night OutRead the Press Release
SHREVEPORT, La. –United States Attorney Stephanie A. Finley, and members of her office, Mike Campbell, Law Enforcement Community Coordinator (LECC), and Robert Gillespie, Jr., an Assistant U.S. Attorney/Project Safe Neighborhoods Coordinator, joined Shreveport Mayor Cedric Glover, Shreveport Police Chief Willie Shaw, Caddo Parish Sheriff Steve Prator’s Office, Bossier Parish Julian Whittington’s Office, Bossier City Police Chief Shane McWilliams’ Office and other local law enforcement and community leaders in neighborhoods throughout Caddo and Bossier parishes Tuesday as part of their annual National Night Out crime and drug prevention event.
Residents unlocked their doors, turned on porch lights and spent the evening outside with family, friends, neighbors, emergency response personnel and city officials. Many neighborhoods throughout Caddo and Bossier parishes hosted a variety of special events such as block parties, cookouts, parades, flashlight walks, contests, youth activities and anti-crime rallies. The Shreveport/Bossier Night Out is designed to heighten crime and drug prevention awareness, generate support for local anti-crime efforts, strengthen neighborhood spirit and police community partnerships, and send a clear message that neighbors are organized and fighting back.
“The Shreveport/Bossier Night Out is a way for neighbors to join with their law enforcement and community partners to demonstrate that crime does not rule the night and that criminals have no safe haven when the sun goes down,” Finley stated. “The ‘Night Out’ is also a great way to acknowledge the accomplishments of neighborhood organizations that keep communities safe. We are all in this effort together. I really enjoyed having the opportunity to visit with residents of the Shreveport/Bossier City area to discuss concerns and ways to improve law enforcement within our communities.”
“This is a very important event because it reaffirms our commitment to the community,” Shaw stated. “This is a new day to bond with the public. We want the people to know that law enforcement will work together as a team to solve crimes in our region.”
As the District’s Law Enforcement Community Coordinator, Mike Campbell acts as a liaison between the U.S. Attorney's Office and local, state, and federal law enforcement. He assists with grants, coordinates and provides law enforcement training, and assists law enforcement agencies with special and community needs. The mission of the Law Enforcement Coordinating Committee is to develop coordination, communication, and cooperation between local, state, and federal law enforcement agencies throughout the Western District of Louisiana by providing education, training, and technical assistance to all federal, state, and local law enforcement agencies in the district.
Assistant U.S. Attorney Robert W. Gillespie, Jr. is the District’s Coordinator for the Project Safe Neighborhoods Program. Project Safe Neighborhoods (“PSN”), is the anti-gang, anti-gun violence initiative of the United States Department of Justice. It is a comprehensive, strategic approach to reducing gun violence and promoting safe communities around the country. PSN combats gun violence by bringing together local, state, and federal law enforcement officials, prosecutors, and community leaders to implement a multi-faceted strategy to deter and punish gun violence.
Thousands of communities across the United States took part in the 31st Annual National Night Out starting in August. To find out more about National Night Out visit the National Association for Town Watch at http://www.natw.org.
U.S. Attorney, Law Enforcement, Community Groups to Convene Forum Seeking Public's Help Against East Side CrimeRead the Press Release
BUFFALO, N.Y.—U.S. Attorney William J. Hochul, Jr. announced today the convening of a public forum to address violent crime on the East Side of Buffalo. The forum – dubbed “Take Back our Streets” – will share information about crime in East Side neighborhoods and seek information about who is committing it.
“Because of the partnership among all levels of law enforcement, residents have seen many successes in fighting crime across the region,” said U.S. Attorney Hochul. “But as long as even one person lives in fear of property or personal harm, law enforcement will not rest. From experience, the best way to remove those who would hurt others is for residents to speak out. This forum will be an opportunity for those on the East Side of Buffalo who have seen something to say something.”
One of the recent successes of law enforcement was the successful prosecution of 44 members of the 10th Street Gang. Assisted by community participation, this prosecution contributed to the revival of the West Side of Buffalo.
The Take Back our Streets - East Side Community Forum will be held on Tuesday, October 14, 2014 at 6:00 p.m. at the Frederick Law Olmsted School at 319 Suffolk St. in Buffalo. Residents will be able to share their specific concerns about crime on their streets and information in a safe and anonymous setting. ALL information will remain strictly confidential.
In addition to meeting with U.S. Attorney Hochul, residents will meet the leaders of other federal agencies including the Federal Bureau of Investigation, Drug Enforcement Administration, Bureau of Alcohol, Tobacco, Firearms and Explosives and the U.S. Marshals Service. Representatives of the Buffalo Police Department, New York State Police and Erie County Sheriff’s Department will also be in attendance. Members of the Buffalo Peacemakers Organization, area clergy, elected officials, and the Buffalo Municipal Housing Authority will also be present.
U.S. Attorney Hochul is asking for the media’s assistance in helping to spread the word about this important forum. He is available for interviews today regarding these efforts. For more information, please contact Barbara Burns at 716-843-5817.U.S. Attorney Announces more than $161,000 in Grants Awarded to Shreveport, Bossier City Police DepartmentsRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley and the Project Safe Neighborhoods Task Force announced today that the Shreveport and Bossier City police departments have been awarded more than $161,000 in grants through a Department of Justice (DOJ), the Office of Justice Programs (OJP), and the Bureau of Justice Assistance (BJA), under the Violent Gang and Gun Crime Reduction Program, also known as Project Safe Neighborhoods (PSN).
The Shreveport Police Department will receive $132,984. The police department and the Caddo Parish Sheriff’s Office will use the funds to purchase law enforcement equipment and supplies. The Shreveport Police Department will act as fiscal agent. The goals are to improve criminal justice services and enhance police officer safety.
The Bossier City Police Department will receive $28,856. The police department and the Bossier Parish Sheriff’s Office will use the funds to purchase law enforcement equipment and supplies. The Bossier City Police Department will act as fiscal agent. The goal is to improve criminal justice initiatives.
The funds were made available through the Edward Byrne Memorial Justice Assistance Grant (JAG) program, which is a BJA grant program under DOJ that allows states and units of local government to support a broad range of activities to prevent and control crime based on their own state and local needs and conditions. This program furthers DOJ's mission and violent crime reduction strategy by providing support to state, local and tribal efforts to reduce gun and gang-related violent crime.
Various types of single or multi-grantee grant applications are allowed under the grant program that addresses the following:
- Gang violence and gun violence reduction, deterrence, prevention, community outreach and education;
- Enforcement, adjudication, and supervision programs;
- Prisoner reentry programs; or
- Other innovative related projects.
“These grants mean that law enforcement in our community will be better equipped to protect and serve,” Finley stated. “I want to congratulate the police departments for being awarded these funds. It is through partnerships and grants like these that the mission of law enforcement agencies can be enhanced.”
“The working relationships we have forged with our law enforcement partners are one of the cornerstones of our crime reduction strategies and they have paid tremendous dividends for the citizens of Shreveport,” said Shreveport Police Chief Willie Shaw. “Working together we can accomplish anything and the dramatic decreases in crime across the board in our city are a testament to the importance of those collaborative partnerships.”
“We appreciate the assistance of the U.S. Department of Justice in securing these funds to help keep our city safe,” said Bossier City Police Chief Shane McWilliams. “These monies will enable our officers to increase enforcement in a number of areas including DWI saturation patrols and community policing initiatives including monitoring operations of registered sex offenders in our city.”
Information about the FY2014 PSN Competitive Grant and links to other grants available, and information on the PSN Program can be found at the U.S. Attorney’s web site www.justice.gov/usao/law/ as well as www.justice.gov/usao/law/psn.html or at www.psn.gov and www.bja.gov/Funding/14PSNsol.pdf.
For more information, contact Western District of Louisiana Assistant U.S. Attorney and PSN and Anti-Gang Coordinator Robert W. Gillespie Jr. at (318) 676-3600.
Two Perry County Residents Charged with Methamphetamine ConspiracyRead the Press Release
Follow @SDILNewsTwo Perry County residents were indicted on October 7, 2014, in an indictment, charging conspiracy to manufacture methamphetamine, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
Brant A. Sizemore, 38, and Stephanie A. Ellis, 36, both of DuQuoin, are charged in a one-count indictment charging conspiracy to manufacture methamphetamine. The indictment alleges that the offense occurred between 2012 and September 2014, in Perry, Jackson, Randolph, Williamson, and Franklin Counties. Sizemore and Ellis made their initial appearances in federal court in Benton on October 9, 2014. They are both currently being held without bond pending an October 14, 2014, detention hearing.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge until proved guilty beyond a reasonable doubt to the satisfaction of a jury.
If convicted, Sizemore and Ellis face a term of up to 20 years in federal prison, to be followed by 3 years’ supervised release, and a $1,000,000 fine.
The ongoing investigation is being conducted by the Jackson County Sheriff’s Office, Perry County Sheriff’s Office, Perry County Drug Task Force, Murphysboro Police Department, and DuQuoin Police Department. The Pinckneyville Police Department and Illinois State Police Methamphetamine Response Team assisted in the investigation.
The case is assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
Torreon Man Pleads Guilty to Federal Involuntary Manslaughter ChargeRead the Press Release
ALBUQUERQUE – Isaac Gordo, 30, an enrolled member of the Navajo Nation who resides in Torreon, N.M., entered a guilty plea this morning to an involuntary manslaughter charge. Under the terms of his plea agreement, Gordo will be sentenced to 37 months if federal prison followed by a term of supervised release to be determined by the court.
During today’s proceedings, Gordo pled guilty to a felony information charging him with killing another man on July 17, 2013, while operating a vehicle under the influence of alcohol and driving recklessly. According to the information, the offense occurred on the Navajo Indian Reservation in Sandoval County, N.M.,
In his plea agreement, Gordo admitted killing the victim while driving under the influence of liquor. Gordo acknowledged that he had been drinking alcohol before he driving his vehicle off the roadway, over correcting and flipping the vehicle so that it came to rest on its roof.
Gordo is in federal custody and remains detained pending his sentencing hearing, which has yet to be scheduled.
This case was investigated by the Albuquerque office of the FBI, the Navajo Nation Division of Public Safety and the New Mexico State Police, and is being prosecuted by Assistant U.S. Attorney Jacob A. Wishard.
- Three Ft. Hood Soldiers and Another Charged in Alien Transporting Conspiracy
Three Eagle Butte Men Charged with Assault and Aiding and AbettingRead the Press Release
United States Attorney Brendan V. Johnson announced that three Eagle Butte, South Dakota, men have been indicted by a federal grand jury for Assault with a Dangerous Weapon, Assault Resulting in Serious Bodily Injury, and Aiding and Abetting the two assaults.
Lawrence Mexican, age 23, Todd Johns, age 26, and Joshua Heiedeman, age 21, were indicted on September 16, 2014. They have all appeared before U.S. Magistrate Judge Mark A. Moreno and each pled not guilty to the Indictment.
The maximum penalty upon conviction is 10 years in custody and/or a $250,000 fine, 3 years of supervised release, and a $100 special assessment. Restitution may also be ordered.
The Indictment charges that on July 19, 2014, in Eagle Butte, Mexican, Johns and Heideman unlawfully assaulted the victim with shod feet, metal crutches, and wooden clubs. The assault is alleged to have caused serious bodily injury to the victim.
The charges are merely accusations and Mexican, Johns and Heideman are presumed innocent until and unless proven guilty.
The investigation is being conducted by the Cheyenne River Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Mikal Hanson is prosecuting the case.
All three defendants were remanded to the custody of the U.S. Marshals Service pending trial. Trial has been set for November 18, 2014.
Tax Preparer Guilty of Defrauding the Irs to Obtain Several Thousand Dollars of Tax RefundsRead the Press Release
United States Attorney Andrew M. Luger today announced the guilty plea of TYMONIA SHAFAY WILLIAMS, 33, to one count of filing False, Fictitious and Fraudulent Claims. WILLIAMS was indicted on August 11, 2014 for filing False, Fictitious and Fraudulent Claims against the government, and pleaded guilty on October 6, 2014 before United States District Court Judge Richard H. Kyle.
According to the defendant’s guilty plea and documents filed in court, in February 2010, WILLIAMS devised a scheme in which she prepared and electronically filed false tax returns on behalf of her friends, family and acquaintances. As part of the scheme, WILLIAMS collected personal information from the individuals for whom she was preparing tax returns, including addresses, social security numbers and Form W-2 or 1099s.
Additionally, for each false return, WILLIAMS completed a Schedule C claiming that the individuals earned self-employment income from various jobs such as “hairdresser,” “dancer,” or “entertainer.” By including false amounts of self-employment income on the tax returns, WILLIAMS was able to apply certain credits to fraudulently generate large tax refunds. The total amount of the tax loss for all returns is at least $100,000.
“Investigating refund fraud is a top priority for IRS Criminal Investigation,” said IRS Criminal Investigation Acting Special Agent in Charge Karl Stiften. “Filing false tax returns is a serious crime that hurts innocent taxpayers. Law enforcement and the United States Attorney’s Office are serious about investigating these crimes and holding accountable those who defraud the government and taxpayers.”
This case is the result of an investigation by the Internal Revenue Service-Criminal Investigation Division.
Assistant United States Attorney John E. Kokkinen prosecuted the case.
Defendant Information: TYMONIA SHAFAY WILLIAMS, 33
West St. Paul, Minn.
Charges: • False, Fictitious and Fraudulent Claims, 1 count###
St. Thomas Man Arraigned on Charges of Possession of Firearm with Obliterated Serial NumberRead the Press Release
St. Thomas, USVI- Carlos Norman, 22, appeared today in District Court on St. Thomas for arraignment after his arrest for possession of a firearm with an obliterated serial number, announced United States Attorney Ronald W. Sharpe. Norman was released on an unsecured $20,000 bond.
Norman was arrested Friday pursuant to a warrant issued after he was indicted by a federal grand jury on August 7, 2014 in a one-count indictment charging him with possession of an obliterated firearm on April 28, 2014.
Under federal law, a person convicted of possession of a firearm with the manufacturer’s serial number removed faces a sentence of not more than 10 years in prison and a $250,000 fine.
The public is reminded that an indictment is merely a charging document and is not evidence of guilt. A defendant is presumed innocent until proven guilty.
This case is being investigated by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and the Virgin Islands Police Department. It is being prosecuted by Assistant U.S. Attorney Ishmael Meyers, Jr.
St. Tammany Man, Darrell Morris, Pleads Guilty to Charges Related to Filing Fraudulent Claims for Oil Spill CompensationRead the Press Release
U.S. Attorney Kenneth A. Polite announced that DARRELL MORRIS, age 55, a resident of Slidell, Louisiana, pled guilty today to one count of conspiracy to commit wire fraud relating to a fraudulent application he made or caused to be made to the Gulf Coast Claims Facility (GCCF) for financial assistance during the aftermath of the Deepwater Horizon oil spill.
According to court documents, the GCCF made disaster assistance money available to individuals and businesses affected by the oil spill resulting from the Deepwater Horizon explosion. The GCCF required individuals to verify loss of income. On or about October 1, 2010, MORRIS applied for disaster assistance funds, representing that he was employed in a commercial fishing business before the oil spill. However, MORRIS had never worked in the commercial fishing business, and he submitted or caused to be submitted false documentation to establish his false earnings. Based on his fraudulent application, MORRIS received approximately $75,000 to which he was not entitled.
MORRIS faces a maximum term of imprisonment of five years, a $250,000 fine, and three years of supervised release following imprisonment. U.S. District Judge Nannette Jolivette Brown set sentencing for February 12, 2015.
U.S. Attorney Polite praised the work of the U.S. Postal Inspection Service and the U.S. Secret Service in investigating this matter. Assistant U. S. Attorney Julia K. Evans is in charge of the prosecution.
(Download Factual Basis )
St. Clair County Woman Sentenced for Theft of Government Social Security BenefitsRead the Press Release
Follow @SDILNewsStephen R, Wigginton, United States Attorney for the Southern District of Illinois, announced today that Tara Star Johndrow, 30, of Belleville, Illinois, was sentenced on one count of Theft of Government Funds in the United States District Court in East St. Louis, Illinois. The district court sentenced Johndrow to five years’ probation with the first six months in home detention. The court also ordered her to pay restitution to the Social Security Administration in the amount of $14,560.48 and pay a special assessment of $100.
On June 16, 2014, Johndrow pled guilty to the charge. During the plea, Johndrow admitted that between August of 2010 and August of 2012, she received approximately $14,500 in Supplemental Social Security Payments from the Social Security Administration, when she falsely claimed to the government agency that she did not work, when she, in fact, was working.
The investigation was conducted by the Social Security Administration, Office of the Inspector General, and is being prosecuted by Assistant United States Attorney Ranley R. Killian.
Spokane, Washington Man Sentenced to Five Years in Federal Prison for Distribution of Child Pornography ImagesRead the Press Release
SPOKANE, Wash. – Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Brian Frank Richardson, age 23, of Spokane, Washington, was sentenced, after having previously pleaded guilty on July 14, 2014, to Distribution of Child Pornography. Senior United States District Court Judge Justin L. Quackenbush sentenced Richardson to a five year term of imprisonment, to be followed by a life term of court supervision after he is released from Federal prison. In addition, Richardson will be required to register as a sex offender.
According to court records, in February through September of 2013, Richardson used a peer to peer file sharing network on the Internet to distribute child pornography images. Some of the individuals Richardson distributed to were law enforcement officers, working online in an undercover capacity. As a result of Richardson’s distribution of child pornography images, investigation was conducted by the Spokane County Sheriff’s Office and the United States Secret Service. In October of 2013, a federal search warrant was executed at Richardson’s residence in Spokane, Washington and Richardson’s laptop computer was seized. A forensic examination of the laptop revealed that Richardson was in possession of approximately 6,751 child pornography images.
Michael C. Ormsby said, “Safety of our children is paramount to safe communities. Therefore, prosecuting offenders who are distributing child pornography is a big priority of the United States Attorney’s Office in the Eastern District of Washington. This Office, together with its Federal and state law enforcement partners, is and will continue to be committed to investigating, prosecuting, and seeking appropriate punishment for child pornography crimes.”
This case was prosecuted as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the United States Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. The Project Safe Childhood Initiative (“PSC”) has five major components:
- Integrated federal, state, and local efforts to investigate and prosecute child
exploitation cases, and to identify and rescue children; - Participation of PSC partners in coordinated national initiatives;
- Increased federal enforcement in child pornography and enticement cases;
- Training of federal, state, and local law enforcement agents; and
- Community awareness and educational programs.
For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
This investigation was conducted by the Spokane County Sherriff’s Office and United States Secret Service. The case was prosecuted by Stephanie J. Lister, an Assistant United States Attorney and PSC Coordinator for the Eastern District of Washington.CR-14-00040-JLQ
- Integrated federal, state, and local efforts to investigate and prosecute child
Sentencings for October 2 - October 8, 2014Read the Press Release
Juan Roberto Andrade-Andrade, 40, of Mexico, was sentenced by Federal District Court Judge Alan B. Johnson on October 8, 2014, for illegal re-entry of a previously deported alien into the United States. Andrade-Andrade was arrested in Jackson, Wyoming. He received time served, plus ten days, was ordered to pay a $100.00 special assessment, and is subject to deportation upon release from custody. This case was investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement.
Santiago Piucana-Mendez, 38, of Mexico, was sentenced by Chief Federal District Court Judge Nancy D. Freudenthal on October 8, 2014, for illegal re-entry of a previously deported alien into the United States. Piucana-Mendez was arrested in Laramie, Wyoming. He received time served, plus ten days, was ordered to pay a $100.00 special assessment, and is subject to deportation upon release from custody. This case was investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement.
Jamie Sanchez-Garcia, 31, of Mexico, was sentenced by Chief Federal District Court Judge Nancy D. Freudenthal on October 8, 2014, for illegal re-entry of a previously deported alien into the United States. Sanchez-Garcia was arrested in Laramie, Wyoming. He received six months imprisonment, was ordered to pay a $100.00 special assessment, and is subject to deportation upon release from custody. This case was investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement.
Marvin Iverson, 66, of Burlington, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on October 8, 2014, for bank fraud. Iverson was arrested in Burlington, Wyoming. He received 33 months imprisonment, to be followed by three years of supervised release, and was ordered to pay a $100.00 special assessment and restitution in the amount of $29,358.29. This case was investigated by the Big Horn County Sheriff’s Office, the Cody Police Department and the Federal Bureau of Investigation.
Senacia Jamie Mert, 23, of Cheyenne, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on October 3, 2014, for conspiracy to possess with intent to distribute, and to distribute 608 grams of methamphetamine. Mert was arrested in Cheyenne, Wyoming. She received 92 months imprisonment, to be followed by four years of supervised release, and was ordered to pay a $100.00 special assessment and a $200.00 fine. This case was investigated by the Wyoming Division of Criminal Investigation and the U.S. Drug Enforcement Administration.
Magen Nichole Stuart, 26, of Cheyenne, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on October 3, 2014, for conspiracy to possess with intent to distribute, and to distribute 718 grams of methamphetamine. Stuart was arrested in Cheyenne, Wyoming. She received 84 months imprisonment, to be followed by five years of supervised release, and was ordered to pay a $100.00 special assessment and a $500.00 fine. This case was investigated by the Wyoming Division of Criminal Investigation and the U.S. Drug Enforcement Administration.
Steven Paul Burns, 26, of Rock Springs, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on October 2, 2014, for possession of stolen mail. Burns appeared pursuant to a summons. He received one year of supervised probation and was ordered to pay restitution in the amount of $3,098.58. This case was investigated by the U.S. Postal Service Office of Inspector General.
Sentencing Complete for Leaders of Interstate Contraband Cigarette Trafficking ConspiracyRead the Press Release
PROVIDENCE, R.I. – Wissam Khalil, 41, of Central Falls, R.I., and his brother, Bassam Nazir Khalil 49, of Pawtucket, R.I., were sentenced in U.S. District Court in Providence today for their roles as leaders of a complex interstate conspiracy that transported more than 6 million contraband cigarettes from Virginia to Rhode Island. The sale of the contraband cigarettes in Rhode Island resulted in the loss to the State of nearly $1.1 million dollars in tax stamp revenue.
U.S. District Court Chief Judge William E. Smith sentenced Wissam Khalil to 42 months in federal prison to be followed by 3 years supervised release; Bassam Nazir was sentenced to 33 months in federal prison to be followed by 3 years supervised release.
The sentences are announced by Peter F. Neronha, United States Attorney for the District of Rhode Island; Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police; Vincent B. Lisi, Special Agent in Charge of the Boston field office of the FBI; William P. Offord, Special Agent in Charge of the Boston field office of IRS Criminal Investigation; Bruce M. Foucart, Special Agent in Charge of Homeland Security Investigations for New England; Scott E. Antolik, Special Agent in Charge of the Boston field office of the Social Security Administration, Office of the Inspector General/Office of Investigations; and William G. Squires, Special Agent in Charge of the northeast region of the U.S. Department of Agriculture Office of Inspector General.
A federal court jury trial in July 2014 was halted when Wissam Khalil pleaded guilty to one count each of transporting, possessing or selling in excess of 10,000 contraband cigarettes; structuring; and conspiracy to defraud the Supplemental Nutrition Assistance Program. Bassam Khalil pleaded guilty to one count of transporting, possessing or selling in excess of 10,000 contraband cigarettes and one count of conspiracy to commit social security fraud.
A third brother, Najd C. Khalil, 26, of Pawtucket, surrendered to the court on Monday, having been removed from an outbound Boston flight to Paris Saturday night and detained during an alleged attempt to flee the country prior to self-surrendering to begin serving a 24 month federal prison sentence imposed for his role in the conspiracy. Najd Khalil pleaded guilty in September 2014 to one count each of conspiracy to traffic contraband cigarettes, structuring and food stamp fraud.
According to information presented to the court, between July 2011 and May 2013, more than 30-thousand cartons (6 million) of cigarettes valued at more than $1.2 million dollars were purchased in Virginia and shipped to Rhode Island via truck. The cigarettes were distributed and sold at various locations in Rhode Island at or near full-retail price. No state tax stamp was affixed to the packages of cigarettes and no tax payments were made to the State of Rhode Island, resulting in a loss of nearly $1.1 million dollars of tax revenue.
Four other individuals charged as a result of this investigation pleaded guilty and were sentenced previously to various terms of probation.
A federal arrest warrant has been issued for an eighth defendant, Nazir Khalil, 76, of Central Falls, R.I., father of Wissam, Bassam and Najd Khalil. It is believed that Nazir Khalil has remained outside of the United States since the arrest warrant was issued in September 2013.
Additionally, the government has moved to forfeit items seized from the defendants as a result of the investigation, including a Mercedes Benz SUV, Sierra pick-up truck, Chevrolet Tahoe, Toyota Camry and $121,956.08 in cash.
The case was prosecuted by Assistant U.S. Attorneys William F. Ferland and Ly T. Chin.
The matter was investigated by the Rhode Island State Police, Federal Bureau of Investigation, Internal Revenue Service Criminal Investigations, United States Social Security Administration Office of Inspector General – Office of Investigations, Homeland Security Investigations and the U. S. Department of Agriculture Office of Inspector General.
United States Attorney Peter F. Neronha also acknowledges and thanks the Virginia State Police, the Virginia Department of Attorney General, the Virginia Division of Taxation, the Northern Virginia Cigarette Tax Board, the Rhode Island Division of Taxation – Excise Tax Compliance Unit, the Rhode Island Department of Attorney General, and the Cranston and Providence Police Departments for their assistance in this investigation.###
To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/
Contact: 401-709-5357
[email protected]Sand Springs Man Sentenced for Fraudulently Receiving over $16,000 in Unemployment Benefits While EmployedRead the Press Release
TULSA, Okla. — A Sand Springs man was sentenced in Federal court today for providing false information to the Oklahoma Employment Security Commission resulting in the receipt of over $16,000 in unemployment insurance benefits, announced United States Attorney Danny C. Williams Sr., for the Northern District of Oklahoma. A Federal grand jury charged Hansen by indictment on June 5, 2014.
United States District Chief Judge Gregory K. Frizzell sentenced Laverne Robert Hansen, 50, of Sand Springs, to serve five years of Probation and ordered him to pay $16,051.70 in restitution. Previously, Hansen received unemployment insurance benefits while falsely claiming he was unemployed. In fact, he was working and earning money.
The case was investigated by the Department of Labor’s Office of the Inspector General and prosecuted by Assistant U.S. Attorney Jeffrey A. Gallant on behalf of the United States.
San Antonio Businessman Pleads Guilty in Maverick County Bribery, Kickback and Bid-Rigging SchemeRead the Press Release
In Del Rio, 54-year-old German Garcia Cano faces up to ten years in federal prison after pleading guilty this afternoon to a bribery charge in connection with a bribery, kickback and bid-rigging scheme in Maverick County announced United States Attorney Robert Pitman and FBI Special Agent in Charge Christopher Combs.
Appearing before United States Magistrate Judge Collis White this afternoon, the owner of GGC Enterprises, Inc., pleaded guilty to one count of paying a bribe to an agent of an organization receiving federal funds. According to the court records, Maverick County paid GGC hundreds of thousands of dollars between 2009 and 2012 for leasing heavy equipment used in construction projects in Maverick County. By pleading guilty, Cano admittedly paid bribes to two Maverick County employees to insure that GGC secured those leasing contracts with Maverick County and to receive his checks from the county.
Cano, who is the 16th defendant convicted in connection with this Maverick County corruption investigation, remains on bond pending sentencing. Eagle Pass businessman Hipolito Amaya is the only defendant who has been sentenced. In March 2014, Amaya was sentenced to 41 months in federal prison followed by three years of supervised release and ordered to pay approximately $35,000 restitution for paying a bribe. The remaining defendants are scheduled for sentencing in February 2015.
This investigation is being conducted by the Federal Bureau of Investigation and the Texas Department of Public Safety. Individuals who have first-hand information about corruption, fraud, or bribery related to Maverick County are urged to contact the FBI at (210) 225-6741. Assistant United States Attorney Bryan Reeves, Katherine Griffin and Michael Galdo are prosecuting this case on behalf of the Government.
Russian National Receives 18 Month Prison Sentence for Smuggling High-Tech Night Vision Technology to RussiaRead the Press Release
WILMINGTON, Del. - Dmitry Ustinov, of Moscow, Russia, 53, was sentenced in U.S. District Court to 18 months in prison and 3 years supervised release, for conspiracy to export high-tech military technology, in violation of federal law, including the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR), announced Charles M. Oberly, III, U.S. Attorney for the District of Delaware yesterday afternoon. Ustinov will be deported from the United States upon his release from federal prison.
Ustinov has been incarcerated since April 15, 2013, when he was arrested at the request of the U.S. Government in Vilnius, Lithuania after entering the country from Russia. On August 23, 2013, Lithuania extradited Ustinov to the United States. On July 10, 2013, Ustinov pled guilty to the conspiracy offense listed above.
According to court documents, between July 2010 and April 2013, Ustinov caused or attempted to cause the export of approximately seventeen different night vision devices and thermal imaging scopes, which are designated on the United States Munition List (USML) as defense articles, and are prohibited from export outside the United States. The defense articles at issue, including Insight Mini Thermal Monoculars, D-740 night vision scopes, and Flir Tau 640 thermal imaging cameras, are primarily used as weapons’ mounted or helmet mounted night vision devices, and in the case of the Flir Tau 640s, can even be mounted to fast moving vehicles or aircrafts, such as unmanned aerial vehicles.
Given the sensitive nature of the defense articles at issue, Ustinov’s scheme was designed to avoid detection by law enforcement at each step in the process. First, Ustinov worked closely with a United States-based straw purchaser to conceal his involvement at the point of sale. Second, once a specific defense article was identified for purchase, Ustinov wired money to the straw purchaser to buy the defense article from front companies located in off-shore accounts in Cyprus. Finally, Ustinov also caused the packages containing USML defense articles to be falsely labeled so that customs officials from the United States and other countries would be less likely to search the package. Moreover, Ustinov also discussed using less traditional methods to obtain and export these night vision devices outside the United States, such as establishing a phony front company in the United States, and placing these high-tech devices inside chopped up car parts to conceal them from customs officials. At no time, however, did Ustinov ever apply for or receive a license to export these devices from the U.S. Department of State.
U.S. Attorney Oberly thanked U.S. Immigration and Customs Enforcement’s Homeland Security Investigations for their hard work, and stated, “No matter the distance we must travel or the nationality of the defendant, those individuals that want to profit themselves by unlawfully obtaining and exporting items designated by the United States as defense articles will be prosecuted. It is important that we take all necessary steps to prevent our military technology from being exported and possibly used against our service members and our allies overseas.”
“HSI will continue to deter individuals putting America's national security at risk by illegally exporting technology to prohibited countries,” said John P. Kelleghan, Special Agent in Charge of HSI Philadelphia. “Our longstanding commitment with our federal law enforcement partners to stop the illegal export of technology to prohibited countries underscores HSI’s determination to dismantle and disrupt any illegal scheme involving the illegal export of controlled military equipment.”
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. It was prosecuted by Assistant United States Attorney Jamie M. McCall and Trial Attorney Mariclaire Rourke of the Counterespionage Section of the U.S. Department of Justice, National Security Division. For further information, please contact AUSA McCall at 302-573-6079.
###
Rochester Man Arrested, Charged with Attempting to Entice a Minor and Attempted Production of Child PornographyRead the Press Release
ROCHESTER, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that Todd Glenn Dean, 50, of Rochester, N.Y, was arrested and charged by criminal complaint with attempting to entice minor to engage in sexual acts, and attempting to produce child pornography. The charges carry a minimum penalty of 25 years in prison and a maximum of life.
Assistant U.S. Attorney John J. Field, who is handling the case, stated that Dean approached a minor in September 2014. The minor notified his mother who then contacted law enforcement. According to the complaint, the Federal Bureau of Investigation’s Child Exploitation Task Force initiated undercover communications with the defendant, posing as a 15 year-old boy named “Tyrell.” During chats with “Tyrell,” Dean promised to buy “Tyrell” a phone if he had sex with him. Eventually, an arrangement was made to meet at the Genesee Valley Park for sex. Anticipating the meeting, Dean wrote, “have a great day at school . . . can’t wait to hookup.”
The defendant is being detained pending a detention hearing on October 16, 2014 at 2:30 p.m.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The criminal complaint is the culmination of an investigation by Special Agents of Federal Bureau of Investigation.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.Ringling Man Pleads Guilty to Illegal Receipt of FirearmRead the Press Release
Muskogee, Oklahoma - The United States Attorney’s Office for the Eastern District of Oklahoma, announced today that CODY BRANSON BARNES, age 22, of Ringling, Oklahoma, pled guilty to Illegal Receipt of a Firearm by a Person Under Felony Indictment or Information, in violation of Title 18, United States Code, Sections 922(n) and 924(a)(1)(D).
The charge arose from an investigation by the Ardmore Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The defendant was indicted in July, 2014.
The Indictment alleged that on or about January 31, 2014, within the Eastern District of Oklahoma, the defendant, who was then under indictment and information for a crime punishable by imprisonment for a term exceeding one year, namely, Assault and Battery with a Dangerous Weapon, in the District Court of Jefferson County, Case No. CF-13-37, willfully received a firearm which had been shipped and transported in interstate commerce.
The Honorable Kimberly E. West, Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, accepted the guilty plea and ordered the completion of a presentence report.
The statutory range of punishment is not more than 5 years imprisonment and/or up to a $250,000.00 fine. The defendant will remain in the custody of the United States Marshal Service pending sentencing.
Assistant United States Attorney Chris Wilson represented the United States.
Renton Man Sentenced to a Year in Prison for Illegally Collecting Nearly $220,000 in Social Security BenefitsRead the Press Release
A 67-year-old Renton, Washington man who illegally collected his father’s Social Security benefit checks for 17 years after his father’s death was sentenced today to a year in prison, announced Acting U.S. Attorney Annette L. Hayes. PATRICK M. DERRICK pleaded guilty to theft of public funds in May 2014, admitting that for 17 years following his father’s death he continued to collect and spend the Social Security payments that were wrongly deposited in his father’s bank account. In order to execute the fraud, DERRICK repeatedly forged his father’s signature on bank documents. At sentencing U.S. District Judge Ricardo S. Martinez noted that Social Security funds are public money set aside for the needy and disabled. DERRICK “stole from the most vulnerable who need these benefits to survive,” Judge Martinez said.
According to records filed in the case, DERRICK’s father died in November 1996. DERRICK never informed the Social Security Administration (SSA) of his father’s death. Monthly benefits continued to be paid into the father’s bank account, and DERRICK would withdraw the money by writing a check to himself and forging his father’s signature. He stole 201 monthly Social Security payments totaling $219,032. In September 2013, SSA learned of the father’s death. When interviewed by federal agents, DERRICK initially denied knowing about the payments to his father’s account and denied taking the money. DERRICK had a 21-year military career, followed by a 17-year career with Boeing. Prosecutors argued that this was not a case where the defendant was living on the margins and needed the extra money to survive.
Addressing the court, DERRICK said he started taking the money to “make ends meet” between his military and Boeing careers, and never seemed to be able to catch up with the bills. He admitted using the money to pay college tuition for his daughter and to make donations to his church. He said it is a relief that the “wait for the knock on the door is over.”
The Western District of Washington is a national leader in pursuing fraud on Social Security benefit programs. Eight other defendants have been charged over the last 18 months with theft of government funds for fraudulently collecting Social Security benefits for years after their parents’ death. As a result of the prosecutions, courts in this district have ordered in excess of $1 million in restitution to the United States. The following are the longest running of these frauds:
RAYMOND C. O’DELL, 70, who now resides in Arizona, was sentenced to six months in federal prison, six months of home detention, $188,436 in restitution and a $20,000 fine for theft of government funds. O’DELL’s mother died in November 1989, but he failed to notify Social Security and benefits continued to be paid into their joint account. On at least two occasions between November 1989 and June 2012, O’DELL contacted the Social Security Administration to update his mother’s contact information and never informed anyone of her death.
PATTY BUCHANAN, 57, is one of the largest Social Security benefit fraud cases prosecuted as part of the initiative in the Western District of Washington. BUCHANAN’s father died in May 1993, but she continued to receive and cash his benefit checks using a check cashing business. She told the outlet her father was infirm and homebound and that she had power of attorney. Every month for 19 years she cashed the checks – in all, 235 checks for a total of $239,083. When one of the tellers at the check cashing business became suspicious, BUCHANAN forged a fraudulent power of attorney document. When staffers at the outlet called to try to speak with BUCHANAN’s father, BUCHANAN had a male friend pretend to be her father. Ultimately, an anonymous tip to Social Security ended the fraud in December 2012. BUCHANAN was sentenced to 18 months in prison in June 2013.
DENNIS JAY GORIN, 76, of Eatonville, fraudulently collected about $100,000 in Social Security benefits belonging to his mother following her death in around 2003. GORIN did not notify federal or state authorities of his mother’s death and personally disposed of his mother’s body on property in a rural area. Between 2003 and 2013, GORIN forged his mother’s signature to embezzle an estimated $100,000 worth of Social Security benefits. GORIN pleaded guilty on May 21, 2013, and was sentenced in September 2013 to ten months in prison.
CLAUDIA RUTH GREENAMYER, 72, of University Place, fraudulently collected $219,960 following the death of her mother in 1996 and her father in 2000. The payments were made to bank accounts GREENAMYER held jointly with her parents. GREENAMYER continued to use the money without telling Social Security her parents were deceased. She forged signatures to continue the theft, and when confronted by agents in February 2013, she claimed to have seen her parents one month earlier. GREENAMYER pleaded guilty to theft of government funds on May 15, 2013 and was sentenced in September 2013 to three months in prison.
DAVID MICHAEL COSTA, 77, of Sammamish, fraudulently collected $297,948 of his mother’s Social Security benefits following her death in 1989. While COSTA originally thought the payments coming to the joint bank account were from an annuity, in 1992 he learned they were Social Security payments. Rather than alert authorities and pay back the $40,000 that had wrongly been paid, COSTA continued to collect the benefits for more than 15 years. COSTA forged his mother’s name on documents and substituted his address for hers on all records, updating it three different times over the years. COSTA pleaded guilty on June 3, 2013, and was sentenced in September 2013 to ten months in prison.
These cases were investigated by the Social Security Administration Office of Inspector General (SSA-OIG) and are being prosecuted by Assistant United States Attorney Seth Wilkinson as part of a partnership venture between the Social Security Administration Office of General Counsel and the United States Attorney’s Office.