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2 October 2014
Illegal Alien from Honduras, Dayron Otoniel Madrid-guillen, Pleads Guilty to Illegally Possessing A HandgunRead the Press Release
U.S. Attorney Kenneth Polite announced that DAYRON OTONIEL MADRID-GUILLEN, 28, a Honduran national illegally residing in the United States, pled guilty today to possession of a handgun by a person illegally present in the United States, in violation of 18 U.S.C. Section 922(g)(5)(A).
According to court documents, MADRID-GUILLEN was spotted by a New Orleans Police Officer riding a bicycle in an erratic manner. The officer continued to observe MADRID-GUILLEN as MADRID-GUILLEN got off the bicycle and walked away from the officer. The officer saw what appeared to be the outline of a handgun completely concealed in MADRID-GUILLEN’s rear pocket. The officer stopped MADRID-GUILLEN, patted him down, and found a fully loaded handgun and six small bags of marijuana in his possession. MADRID-GUILLEN was later questioned by agents from Homeland Security Investigations and admitted that is a Honduran national who had entered the United States illegally.
U.S. District Judge Carl J. Barbier set sentencing for January 8, 2015.
U.S. Attorney Polite praised the work of the Homeland Security Investigations and the New Orleans Police Department in investigating this matter. Assistant United States Attorney Gregory M. Kennedy is in charge of the prosecution.
High-Frequency Trader Indicted for Manipulating Commodities Futures Markets in First Federal Prosecution for "Spoofing"Read the Press Release
CHICAGO ― In the first federal prosecution of its kind, a high-frequency trader was indicted for allegedly manipulating commodities futures prices and illegally profiting nearly $1.6 million as a result of trading orders he placed through CME Group and European futures markets in 2011. The defendant, MICHAEL COSCIA, was the manager and sole owner of the former Panther Energy Trading LLC, of Red Bank, N.J., which he formed in 2007.
Coscia, 52, of Rumson, N.J., a registered commodities trader since 1988, was charged with six counts of commodities fraud and six counts of “spoofing” in a 12-count indictment returned yesterday by a federal grand jury, Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, announced today.
The indictment marks the first federal prosecution nationwide under the anti-spoofing provision that was added to the Commodity Exchange Act by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
Coscia will be arraigned on a date to be determined in U.S. District Court in Chicago.
“Traders and investors deserve a level playing field, and when the field is tilted by market manipulators, regardless of their speed or sophistication, we will prosecute criminal violations to help ensure fairness and restore market integrity,” Mr. Fardon said. “This case reflects the reasons why, earlier this year, we established a Securities and Commodities Fraud Section, which is dedicated to protecting markets and preserving investors’ confidence,” he added.
According to the indictment, high-frequency trading is a form of automated trading that uses computer algorithms for decision-making and placing a high volume of trading orders, quotes, or cancelation of orders in milliseconds. Coscia designed two computer programs he allegedly used in 17 different CME Group markets and three different markets on the London-based ICE Futures Europe exchange, including gold, soybean meal, soybean oil, high-grade copper, Euro FX and Pounds FX currency futures, to implement his fraudulent strategy. It was illegal for traders to place orders in the form of “bids” to buy or “offers” to sell a futures contract with the intent to cancel the bid or offer before execution.
Between August and October 2011, Coscia allegedly defrauded participants in the CME Group and ICE Futures Europe markets. In August 2011, Coscia began a high-frequency trading strategy in which he entered large-volume orders that he intended to immediately cancel before they could filled by other traders, the indictment alleges.
Coscia devised this strategy to create a false impression regarding the number of contracts available in the market, and to fraudulently induce other market participants to react to the deceptive market information he created, the indictment states. His strategy moved the markets in a direction favorable to him, enabling him to purchase contracts at prices lower than, or sell contracts at prices higher than, the prices available in the market before he entered and canceled his large-volume orders, it adds. Coscia then allegedly repeated this strategy in the opposite direction to immediately obtain a profit by buying futures contracts at a lower price than he paid for them, or by selling contracts at a higher price than he paid for them. Each such trade allegedly occurred in a matter of milliseconds. As a result of the aggregate of those fraudulent high-frequency trades, Coscia illegally profited approximately $1,592,867 over approximately three months, the indictment alleges.
As part of the scheme, Coscia’s trading programs looked for market conditions such as price stability, low volume at the best prices, and a narrow difference between the prices at which prospective purchasers were willing to buy and prospective sellers were willing to sell because his allegedly fraudulent trading strategy worked best under these conditions. His trading programs sometimes placed a “ping order” of one contract to test the market and ensure that conditions would allow his strategy to work well.
Coscia allegedly designed his trading programs to place a “trade order” on one side of the market, intending that the trade order be filled. He profited from his fraudulent strategy by filling the “trade order,” the charges allege.
He also designed his programs to place several layers of “quote orders” on the other side of the market from his trade orders ― either to buy contracts at a price higher than the prevailing offer, or to sell contracts at a price lower than the prevailing bid ― to create the illusion of market interest. The quote orders would typically be the largest orders in the market within three ticks (the minimum price increment at which a futures contract could trade) of the best bid or offer price, usually doubling or tripling the total quantity of contracts within the best bid or offer price.
The indictment alleges that Coscia designed his programs to cancel the quote orders within a fraction of a second automatically, without regard to market conditions, even if the market moved in a direction favorable to the quote orders. He programmed the quote orders to cancel because he did not intend for them to be filled, but instead intended to trick other traders into reacting to the false price and volume information, it adds. Further, Coscia designed his programs to cancel all fraudulent and misleading quote orders immediately if any of them were even partially filled, because he intended them only to trick other traders into reacting to what appeared to be a substantial change in the market.
After Coscia filled his trade order through the use of fraudulent and misleading quote orders, he immediately entered a second trade order on the other side of the market and repeated his steps with misleading quote orders, causing the second trade order to be filled. As a result, Coscia allegedly profited on the difference in price between the first and second trade orders.
The indictment details an example through trades that Coscia placed milliseconds apart in the Euro FX market during the early morning on Sept. 1, 2011. By entering large orders that he intended to cancel at the time he placed them, and caused to be canceled before other traders could fill them, Coscia made a profit by buying 14 contracts at 14288 ticks and selling them at 14289 ticks less than one second later.
The government is being represented by Assistant U.S. Attorney Renato Mariotti.
Each count of commodities fraud carries a maximum sentence of 25 years in prison and a $250,000 fine, and each count of spoofing carries a maximum penalty of 10 years in prison and a $1 million fine. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Indictment
Gulfport Man Sentenced for Deepwater Horizon Oil Spill FraudRead the Press Release
Gulfport, Miss. – Brian K. Lee, 40, of Gulfport, was sentenced today by U.S. District Judge Sul Ozerden to thirty-four months in federal prison followed by three years of supervised release for mail fraud in connection with the Deepwater Horizon Oil Spill, U.S. Attorney Gregory K. Davis announced today. Lee was also ordered to pay a $2,500.00 fine and restitution in the amount of $47,083.76.
Lee knowingly devised a scheme to defraud the Gulf Coast Claims Facility established by BP Exploration and Production, Inc., to administer, process, and settle certain claims of individuals and businesses that had been impacted by the Deepwater Horizon Oil Spill. Lee made false representations in a claim form, and in various documents submitted in support of his claim, that he lost earnings and profits from his employment as a customer service representative at Gulf South Seafood as a result of the Deepwater Horizon Oil Spill. The investigation revealed no such company ever existed. Lee received $47,083.76 as a result of his fraudulent claim.
This case was investigated by agents of the United States Secret Service and prosecuted by Assistant U.S. Attorney Andrea Jones. It was brought as part of this District’s partnership with the National Center for Disaster Fraud (NCDF), a nationwide initiative to protect available funds and assistance for those victims of both natural and man-made disasters such as hurricanes, floods, tornadoes and the recent Gulf oil spill. If you have knowledge of fraud, waste, abuse, or allegations of mismanagement involving disaster relief operations, you can contact the NCDF by either calling the hotline at (866) 720-5721, faxing (225) 334-4707, emailing at [email protected] or in writing to National Center for Disaster Fraud, Baton Rouge, LA 70821-4909.If you believe you have been a victim of fraud from a person or an organization soliciting relief funds on behalf of storm victims, contact the National Center for Disaster Fraud toll free at:
(866) 720-5721
You can also fax information to:
(225) 334-4707
or e-mail it to:
Making sure that victims of federal crimes are treated with compassion, fairness and respect.
Training and seminars for Federal, State, and Local Law Enforcement Agencies.
Help us combat the proliferation of sexual exploitation crimes against children.
Gregg County Man Guilty of Dealing Cocaine in East TexasRead the Press Release
Department of Justice
Office of Public AffairsTYLER, Texas – A35-year-old Longview, Texas man has pleaded guilty to drug trafficking charges in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Antonio Cortez Gonzales pleaded guilty to conspiracy to distribute and possession with intent to distribute cocaine and marijuana today before U.S. Magistrate Judge John D. Love.
According to information presented in court, on Aug. 19, 2013, law enforcement officers executed a search warrant at Gonzales’ Longview residence. The search revealed 150 grams of cocaine, 6.5 kilograms of marijuana, empty wrappers for kilogram quantities of cocaine, guns and ammunition. Further investigation revealed kilograms of cocaine were being transported from Houston to Gonzales in Longview for distribution to others. A federal grand jury returned a 30-count indictment on Apr. 23, 2014, charging Gonzales and 17 others with drug trafficking violations.
Gonzales faces up to life in federal prison. A sentencing date has not been set.
This case is the result of an ongoing Organized Crime Drug Enforcement Task Force (OCDETF) joint investigation. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
This case is being investigated by the Drug Enforcement Administration and prosecuted by Assistant U.S. Attorney Mary Ann Cozby.
Government Files Notice of Intent to Seek the Death Penalty in United States of America V. Jessie Con-UiRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced today that it filed a Notice of Intent to Seek the Death Penalty in United States of America v. Jessie Con-Ui.
Geographic Targeting Order Issued by FinCEN Aims at Money Laundering for Drug Cartels in Los Angeles Fashion DistrictRead the Press Release
LOS ANGELES – Federal authorities today announced that the Financial Crimes Enforcement Network (FinCEN) has issued a Geographic Targeting Order (GTO) that imposes additional reporting and recordkeeping obligations on most of the businesses located in the Los Angeles Fashion District. The GTO will enhance law enforcement’s ongoing efforts to identify and pursue cases against persons and businesses engaged in money laundering that benefits international drug cartels.
The GTO, which will go into effect on October 9, was sought by the United States Attorney’s Office for the Central District of California as part of a sweeping investigation targeting the illicit movement of U.S. currency to Mexico and Colombia on behalf of prominent drug trafficking organizations. The Justice Department is working with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the Internal Revenue Service’s Criminal Investigation Division to fight money laundering schemes designed to allow international drug cartels in Central America and South America to reach drug proceeds generated in the United States.
A series of investigations have revealed evidence that money laundering activities and violations of the Bank Secrecy Act (BSA) are pervasive throughout the Los Angeles Fashion District, which includes more than 2,200 businesses. Much of the money laundering is conducted through Black Market Peso Exchange schemes – also known as trade-based money laundering – in which drug money in the United States is converted into goods that are shipped to countries such as Mexico, where the goods are sold and money in the form of local currency goes to the drug trafficking organizations.
There are approximately 2,300 businesses that are being served with notice of today’s order, including garment and textile stores, transportation companies, travel agencies, perfume stores, electronic stores (including those that only sell cell phones), shoe stores, lingerie stores, flower/silk flower stores, beauty supply stores, and stores bearing “import” or “export” in their name.
On September 10, more than 1,000 federal, state and local law enforcement officials were in the Fashion District, where they executed dozens of search warrants and arrest warrants linked to businesses suspected to be engaged in money laundering schemes (see: http://www.justice.gov/usao/cac/Pressroom/2014/117.html). Criminal investigations have uncovered evidence that many of these businesses are routinely accepting bulk cash Black Market Peso Exchange schemes on behalf of drug trafficking organizations based in Mexico and Colombia. During last month’s enforcement action, authorities seized more than $90 million in currency. The cash was found at various residences and businesses stored in file boxes, duffel bags, backpacks and even in the trunk of a Bentley. Another approximately $45 million was seized in the form of property and bank accounts.
“This order requires nearly every business in the Fashion District to report any instance in which they receive at least $3,000 in cash, and failure to comply with the order could lead to a criminal indictment,” said Acting United States Attorney Stephanie Yonekura. “My office sought the unprecedented order from FinCEN with the goal of shutting down the flow of dirty money to foreign drug cartels – a huge problem that has contaminated the Fashion District."
Claude Arnold, special agent in charge for HSI Los Angeles, commented: “Last month, in a matter of hours, HSI special agents seized tens of millions of dollars in cash from individuals with business interests in L.A.’s garment district. That’s a mindboggling amount of money and it makes it abundantly clear the scale of criminal activity we’re up against. International drug cartels generate billions of dollars a year in profits, but all that cash is virtually worthless unless traffickers can find a way to funnel it clandestinely back into the monetary system. Unscrupulous companies that help the cartels cover their financial tracks are contributing in a major way to the devastation wrought by the international drug trade and they will be held to answer for their actions.”
Richard Weber, Chief of IRS - Criminal Investigation, said: "Individuals who laundered money through the fashion industry will now be hard pressed to continue their criminal activities. The issuance of this Geographic Targeting Order will assist law enforcement agencies in ferreting out money launderers from this trade industry and will help to preserve a strong local economy."
FinCEN Director Jennifer Shasky Calvery stated: “This GTO illustrates that FinCEN will not shy away from using each and every one of its authorities to disrupt drug cartel activity. FinCEN’s expertise goes far beyond collecting the BSA data. Our own analysis of thousands of BSA filings played a critical role in the recent takedown, as well as ongoing law enforcement operations. And the additional information collected through FinCEN’s GTO will only increase our ability to track and dismantle these criminal organizations.”
The GTO will take effect on October 9, 2014 and will remain in effect for 180 days. Affected businesses in the Los Angeles Fashion District should review the Order to understand their reporting obligations. Covered businesses with questions about today’s order should contact the FinCEN Resource Center at 800-767-2825.
Release No. 14-132
Gardiner Man Sentenced to over 3 Years for Pharmacy RobberyRead the Press Release
Contact: Craig M. Wolff
Assistant United States Attorney
Tel: (207) 780-3257Bangor, Maine: United States Attorney Thomas E. Delahanty II announced that Ryan
McLaughlin, 27, of Gardiner, Maine, was sentenced today in U.S. District Court by Judge D.
Brock Hornby to 37 months in prison and three years of supervised release for pharmacy robbery. McLaughlin pleaded guilty on April 17, 2014.According to court records, on November 13, 2013, McLaughlin entered the Shaw’s
Osco pharmacy in Augusta and handed a note to a pharmacy employee demanding two bottles of
Oxycodone. He was agitated as he spoke with the pharmacy staff, stating that he was in a hurry and demanding that they move faster. He also kept one of his hands in his pocket during the incident, as if he were concealing something. Pharmacy personnel provided him with two bottles of Oxycodone and he left the store. In an interview after his arrest, McLaughlin admitted robbing the store and said he had committed the robbery to obtain pills to feed his severe addiction.The investigation was conducted by the Augusta Police Department and the Federal
Bureau of Investigation.Fremont Man Sentenced to 5 years in Prison for Possession with the Intent to Distribute MethamphetamineRead the Press Release
United States Attorney Deborah R. Gilg announced that Kurt Hansen, 34, of Fremont, Nebraska, was sentenced on October 2, 2014, to 5 years in prison by United States District Judge Joseph F. Bataillon. Hansen had previously pled guilty after he was caught with 12 grams of methamphetamine outside of a Fremont residence where agents were conducting a search warrant. Because Hansen possessed more than 5 grams of actual methamphetamine, he faced a mandatory minimum sentence of 5 years. After serving his sentence Hansen will be required to serve a Term of Supervised Release of 5 years.
This case was the result of an investigation by the III CORPS Drug Task Force.
Four Arrested and Charged with Participating in A Marijuana Trafficking ConspiracyRead the Press Release
BOSTON – Louis J. Dinunzio, 27, of Medford, Joseph Spagnuolo-Kazonis, 29, of Boston, John Woodman, 42, of Braintree, and Robert Fitzpatrick, 40, of Quincy, were charged with conspiracy to distribute and possess with intent to distribute 50 kilograms or more of marijuana.
All four men were arrested today and will appear in U.S. District Court in Boston.
The charge of marijuana distribution conspiracy carries a maximum sentence of 20 years in prison, a mandatory minimum of three years of supervised release and a maximum $1 million fine. 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.
In a separate indictment returned on Wednesday, brought as part of a related ongoing federal investigation of organized crime in Massachusetts, two members of the New England Family of La Cosa Nostra (NELCN) were charged with conspiring to collect extortionate protection payments from a video poker machine company based in Revere. Anthony “Spucky” Spagnolo, 72, whom the indictment alleges to be the acting boss of the NELCN, and Pryce “Stretch” Quintina, 74, both of Revere, were each charged with one count of conspiring to interfere with commerce through extortion.
Spagnolo and Quintina were also arrested this morning and will appear later today in U.S. District Court in Boston.
The charge of extortion affecting commerce carries a maximum sentence of 20 years in prison, three years of supervised release and a $250,000 fine. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; 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; and Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police made the announcement today. The cases were investigated with the assistance of the Boston, Medford, and Quincy Police Departments and the Massachusetts Department of Corrections. The cases are being prosecuted by Assistant U.S. Attorney’s Timothy E. Moran of Ortiz’s Strike Force Unit and Seth B. Kosto of Ortiz’s Computer Crimes Unit.
The details contained in the indictments are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Former State of Alabama Employee Pleads Guilty to Stealing Identities from State Databases that were used to Request over $7 Million in Tax RefundsRead the Press Release
Montgomery, Alabama - Tamika Floyd (30), a resident of Salem, Ala., pled guilty to one count of conspiracy to defraud the United States and one count of aggravated identity theft for her involvement in a Stolen Identity Tax Refund Scheme (SIRF), announced Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.
According to court documents, between 2006 and 2014, Floyd worked at two different state agencies located in Opelika, Alabama. At both jobs, she had access to identification information for numerous individuals. Beginning in 2012, Floyd was approached about getting the names and other information of individuals from her employer to be used to file false tax returns. Floyd agreed to steal the names and then provide them to a co-conspirator. Most of the names stolen were of teenagers. Using the information provided by Floyd, her co-conspirators filed over 3,000 fraudulent federal income tax returns that claimed over $7.5 million in refunds.
A sentencing date has not been scheduled. Floyd faces a maximum sentence of ten years in prison for the conspiracy to defraud the United States count, and a mandatory sentence of two years in prison for aggravated identity theft. She is also subject to a fine of up to $250,000.00 in addition to restitution.
The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation. Trial Attorney Michael Boteler of the Department's Tax Division and Assistant United States Attorney Todd Brown of U.S. Attorney’s Office for the Middle District of Alabama are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax
PRESS CONTACT: Clark Morris
Email: [email protected]
Telephone: (334) 551-1755
Fax: (334) 223-7617Former Maryland Licensed Counselor Indicted for Sexually Exploiting an Infant in CaliforniaRead the Press Release
Federal Search Warrant for Email and Analysis of Cell Phone Lead to Charges for Abuse of Helpless Infant; Sent Videos and Images Using Messaging App
Baltimore, Maryland – A federal grand jury indicted Stephen H. Schaffner, age 34, of Greensboro, Maryland, yesterday on charges arising from the sexual abuse of a six week old baby who was born prematurely. The indictment alleges that Schaffner conspired with Michael Lutts, age 50, of San Diego, California, to abuse a six-week-old foster child and transmit recorded images and videos of the abuse to Schaffner. Lutts is facing federal charges in San Diego related to his conduct and the investigation is continuing.Anyone who may have information related to the investigation of Stephen Schaffner is asked to contact the FBI at 410-265-8080.
The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; United States Attorney for the Southern District of California Laura E. Duffy; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation - Maryland; Acting Special Agent in Charge Robert Howe of the Federal Bureau of Investigation – San Diego Division; Colonel Marcus L. Brown, Superintendent of the Maryland State Police; Chief Jeff A. Jackson of the Greensboro Police Department and Chief David A. Spencer of the Easton Police Department.“Thankfully, most technology companies continue to honor federal search warrants and most cellular phones can be searched with a warrant,” said U.S. Attorney Rod J. Rosenstein. “If telecommunications companies provide software and hardware that is immune from federal search warrants, pedophiles will be free to commit such egregious crimes with little risk of detection.”
According to the 10 count indictment, Schaffner was a licensed clinical professional counselor in Maryland until his license was suspended on June 14, 2014. Schaffner was also a licensed associate counselor in Arizona until his Arizona license expired in 2011.
The indictment alleges that Michael Lutts lived in San Diego, California and worked as a pediatric nurse at a hospital in San Diego County. Lutts was also a foster parent. On August 4, 2014, Lutts brought to his home a six week old baby boy, born prematurely, who was placed in his care as a foster child. That evening, Lutts, in California, texted Schaffner, in Maryland, images of the infant. Over the next several hours, Schaffner allegedly exchanged numerous graphic and sexually explicit messages with Lutts about Lutts engaging in sexually explicit conduct with the infant. Lutts sent Schaffner videos with the infant, including images of an adult performing oral sex on the infant. Schaffner is alleged to have directed Lutts to sexually abuse the infant in order to produce sexually explicit images and videos and send them to Shaffner.A criminal complaint filed in California alleges that authorities obtained a federal search warrant in April 2014 for an email address of a person who was distributing child pornography, which led them to other suspects who were transmitting child pornography. On August 26, 2014, authorities obtained a search warrant for Lutts’s residence and seized a cell phone that contained images and videos of Lutts allegedly sexually molesting the infant.
Schaffner faces a minimum mandatory sentence of 15 years in prison and a maximum of 30 years in prison for the conspiracy and for each of nine counts of sexually exploiting a child, followed by up to lifetime supervised release,. On October 1, 2014, Schaffner had his initial appearance in U.S. District Court in Baltimore and was detained.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc. For more information about internet safety education, please visit www.justice.gov/psc and click on the "resources" tab on the left of the page.
United States Attorney Rod J. Rosenstein commended the FBI’s Baltimore and San Diego offices, the Maryland State Police Interstate Crimes Against Children Task Force (ICAC), the San Diego, California ICAC, Greensboro Police Department, and Easton Police Department for their work in the investigation and prosecution. Mr. Rosenstein thanked Assistant U.S. Attorney Alessandra P. Serano from the Southern District of California who is prosecuting the case against Michael Lutts, and Assistant U.S. Attorney Zachary A. Myers from Maryland, who is prosecuting the case against Stephen Schaffner.Former HUD Employee Pleads Guilty to Federal Charge in Theft of $843,000 of Government MoneyDefendant Sold HUD Properties, Kept A Portion of the Proceeds for HimselfRead the Press Release
WASHINGTON – Brian E. Thompson, 53, a former loan guarantee specialist for the U.S. Department of Housing and Urban Development, pled guilty today to a charge stemming from a scheme in which he stole $843,000 of government money.
The plea was announced by U.S. Attorney Ronald C. Machen Jr., Gary R. Barksdale, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service, and Cary A. Rubenstein, Special Agent in Charge of the Mid-Atlantic Region of the Office of the Inspector General of the U.S. Department of Housing and Urban Development (HUD-OIG).
Thompson, of Washington, D.C., pled guilty in the U.S. District Court for the District of Columbia to one count of wire fraud. The Honorable Senior Judge Paul L. Friedman scheduled sentencing for Jan. 7, 2015. The charge carries a statutory maximum of 20 years in prison and potential financial penalties. Under federal sentencing guidelines, the parties have agreed that Thompson faces a likely range of 33 to 41 months in prison and a fine of up to $75,000. The plea agreement calls for Thompson to pay $843,000 in restitution to the federal government. He also is subject to a forfeiture money judgment in the amount of $645,700.
According to a statement of offense, signed by the defendant as well as the government, Thompson carried out his scheme from May 2013 until March 2014, while he was working for HUD’s Office of Loan Guarantee for Native American programs. This Office handles the reselling of properties that have been acquired by HUD after borrowers defaulted on their HUD-guaranteed mortgages. Thompson was a loan guarantee specialist. His duties included selling these HUD real estate owned properties for the best possible price in order to reimburse the government for the payments made to the mortgage lender for the insured loan. He advised supervisors of the progress of reselling properties, and he also coordinated with the title and escrow agents at settlements.
From June 2013 until March 2014, Thompson sold parcels of such real estate properties on behalf of HUD. For five of those parcels, he made materially false misrepresentations to third parties and diverted $843,000 of the sales proceeds to bank accounts under his control. In order to conceal these thefts from HUD, Thompson used and submitted fictitious settlement statements that falsely listed the buyer, and/or the contract sales prices, and/or the seller proceeds.
“Brian Thompson exploited his government job to rob the American taxpayer of more than $800,000,” said U.S. Attorney Machen. “This crooked HUD employee diverted the proceeds of real estate sales from the U.S. Treasury to his own pockets through lies and trickery. He now faces serious prison time as a result of criminal breach of the public trust.”
“Postal Inspectors are proud to join with our federal law enforcement partners at HUD-OIG to bring this case to a successful resolution,” said Inspector in Charge Barksdale. “By joining forces, we are able to bring justice to those who would misuse the U.S. mail in order to defraud the US government.”
“The United States Department of Housing and Urban Development, Office of the Inspector General is tasked with investigating allegations of waste, fraud, and abuse in HUD-sponsored programs,” said Special Agent in Charge Rubenstein. “When we learn of HUD employees who engage in fraud, and in this instance elect to enrich themselves at the expense of a HUD program designed to ensure that Native Americans are provided the American dream of home ownership, we vigorously investigate these allegations in order to bring the employees to justice and remove them from current and future employment with HUD and the Federal Government. We wish to thank our law enforcement partners at the U.S. Postal Inspection Service and United States Attorney’s Office for their steadfast efforts, hard work and dedication. This was a truly collaborative effort that led to the guilty plea earlier today.”
In announcing the plea, U.S. Attorney Machen, Inspector in Charge Barksdale, and Special Agent in Charge Rubenstein commended the work of those who investigated the case from the U.S. Postal Inspection Service and HUD’s Office of the Inspector General. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Kristy Penny, the Asset Forfeiture Section’s staff, and Assistant U.S. Attorneys Diane Lucas and Virginia Cheatham.
14-223Former Financial Advisor, Jabari Ragas, Sentenced to 42 Months for Money Laundering and Tax FraudRead the Press Release
U.S. Attorney Kenneth A. Polite announced that JABARI RAGAS, age 40, a resident of New Orleans, Louisiana, was sentenced today for one count of money laundering and one count of tax fraud. RAGAS previously pled guilty to embezzling nearly $1,700,000 from clients, and failing to pay nearly $260,000 in tax due and owing to the Internal Revenue Service.
U.S. District Judge Eldon E. Fallon sentenced RAGAS to serve 42 months of incarceration, to be followed by 3 years of supervised release. RAGAS was also ordered to pay nearly $1,700,000 in restitution for the money laundering count, and $259,210 for the tax fraud count.
According to court documents, RAGAS was employed by Ameriprise Financial Services, Inc. (“Ameriprise”) as a registered broker and investment adviser from 2005 - 2009. RAGAS previously pled guilty to embezzling nearly $1,400,000 from clients, and failing to pay nearly $260,000 in tax due and owing to the Internal Revenue Service.
In early 2006, a client of RAGAS indicated to him that he wished to open a Simplified Employee Pension (“SEP”) account to allow him to contribute towards retirement. The client made contributions from 2006 – 2009. Without authorization, RAGAS began moving money from the Ameriprise SEP account, into an account controlled by RAGAS. The client later checked the account balance and inquired as to why the account balance was lower than it should have been and was told by RAGAS that the funds had been transferred to a different financial institution located in Texas. RAGAS was later asked by the client to supply him with written account statements showing the balance, account number, and institution name. RAGAS then supplied the client with a fraudulent account statement for an account that did not exist, along with a fraudulent balance. After using the interstate wire to embezzle funds from the client’s Ameriprise account, RAGAS then committed money laundering by further transferring $20,000 into a different account that he controlled. Additionally, on October 12, 2008, RAGAS signed and filed a 2007 U.S. Individual Income Tax Return (Form 1040) with the Internal Revenue Service. The tax return allegedly did not report approximately $288,000 in income.
U.S. Attorney Polite stated, “Ragas defrauded the government out of tax revenue and his clients out of nearly $1.7 million in investments. Today’s sentence ensures that he pays for his fraudulent conduct by serving a lengthy prison sentence and paying full restitution to make his victims whole.”
U.S. Attorney Polite praised the work of the Internal Revenue Service and the United States Secret Service in investigating this matter. Assistant United States Attorney Jon Maestri is in charge of the prosecution.
Former Deputy Director of the Largest State Agency in Arkansas Pleads Guilty to Bribery SchemeRead the Press Release
A former deputy director of the Arkansas Department of Human Services (ADHS), a multi-billion dollar state agency, pleaded guilty today for providing official assistance in exchange for bribes from the owner of two mental health companies.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and First Assistant United States Attorney Patrick C. Harris of the Eastern District of Arkansas made the announcement.
Steven B. Jones, 49, of Marion, Arkansas, pleaded guilty to a two-count information charging him with conspiracy and bribery concerning programs receiving federal funds. A sentencing hearing is scheduled for April 2, 2015, before U.S. District Judge Billy Roy Wilson of the Eastern District of Arkansas.
According to his plea agreement, Jones served as deputy director of ADHS from approximately April 2007 until July 2013. While serving in that capacity, Jones solicited and accepted multiple cash payments and other things of value from the owner of two businesses that provided inpatient and outpatient mental health services to juveniles. This individual provided the cash payments and other things of value to Jones through the use of two intermediaries, a local pastor and a former county probation officer and city councilman.
As part of his plea, Jones admitted that in return for the bribes, he provided official assistance, including providing internal ADHS information about the individual’s businesses. Jones further admitted that he and other members of the conspiracy concealed their dealings by, among other things, holding meetings at restaurants in Memphis, Tennessee, or rural Arkansas, where they would not be easily recognized; funneling the cash payments through the pastor’s church; providing the bribe payments in cash so that the transactions would not be easily traceable; and speaking in code during telephone conversations.
The case was investigated by the FBI’s Little Rock Field Office, and is being prosecuted by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Patricia S. Harris and Angela S. Jegley of the Eastern District of Arkansas.
Former Deputy Director of the Largest State Agency in Arkansas Pleads Guilty to Bribery SchemeRead the Press Release
Washington – A former deputy director of the Arkansas Department of Human Services (ADHS), a multi-billion dollar state agency, pleaded guilty today for providing official assistance in exchange for bribes from the owner of two mental health companies.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and First Assistant United States Attorney Patrick C. Harris of the Eastern District of Arkansas made the announcement.
Steven B. Jones, 49, of Marion, Arkansas, pleaded guilty to a two-count information charging him with conspiracy and bribery concerning programs receiving federal funds. A sentencing hearing is scheduled for April 2, 2015, before U.S. District Judge Billy Roy Wilson of the Eastern District of Arkansas.
According to his plea agreement, Jones served as deputy director of ADHS from approximately April 2007 until July 2013. While serving in that capacity, Jones solicited and accepted multiple cash payments and other things of value from the owner of two businesses that provided inpatient and outpatient mental health services to juveniles. This individual provided the cash payments and other things of value to Jones through the use of two intermediaries, a local pastor and a former county probation officer and city councilman.
As part of his plea, Jones admitted that in return for the bribes, he provided official assistance, including providing internal ADHS information about the individual’s businesses. Jones further admitted that he and other members of the conspiracy concealed their dealings by, among other things, holding meetings at restaurants in Memphis, Tennessee, or rural Arkansas, where they would not be easily recognized; funneling the cash payments through the pastor’s church; providing the bribe payments in cash so that the transactions would not be easily traceable; and speaking in code during telephone conversations.
The case was investigated by the FBI’s Little Rock Field Office, and is being prosecuted by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Patricia S. Harris and Angela S. Jegley of the Eastern District of Arkansas.
Former Chief Information Officer of Foundry Networks Found Guilty in Manhattan Federal Court of Participating in Insider Trading Scheme That Reaped over Tens of Millions in Unlawful GainsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that DAVID RILEY, former Chief Information Officer of Foundry Networks, Inc. (“Foundry”), a California-based technology company that was acquired by Brocade Communications, Inc. (“Brocade”), in 2008, was found guilty today of crimes related to his participation in an insider trading scheme that yielded over $27 million in ill-gotten gains. Following a 13-day trial conducted before U.S. District Judge Valerie E. Caproni, a jury found that RILEY passed inside information about Foundry’s acquisition by Brocade and about Foundry’s earnings for the first quarter of 2008 to Matthew Teeple, a former analyst for San Francisco-based hedge fund Artis Capital Management, L.P. (“Artis”). Teeple pled guilty to related charges on May 28, 2014.
Manhattan U.S. Attorney Preet Bharara said: “As the jury unanimously found, David Riley exploited his position and access to information at Foundry Networks, a publicly traded technology company. What Riley forged at Foundry was a pipeline of material, nonpublic information that enabled others to engage in illegal insider trading and reap a windfall of more than 27 million dollars. What Riley got out of the arrangement is a felony conviction and the prospect of losing his liberty. He becomes the 87th defendant convicted of insider trading after trial or by guilty plea in this District in the last five years.”
According to the Superseding Indictment filed February 20, 2014, other court documents, and the evidence presented at trial:
As CIO and a Vice President at Foundry, RILEY had access to monthly and quarterly financial reporting, along with other sensitive, nonpublic information (the “Inside Information”) relating to Foundry, well before such information became public. RILEY provided this Inside Information to Teeple – sometimes by telephone and sometimes during meetings the two arranged in the San Jose, California, area. On several occasions, RILEY spoke with Teeple while logged into the database that Foundry used to maintain sensitive financial information. The Inside Information that RILEY passed to Teeple included quarterly financial performance numbers during the first quarter of 2008 and information regarding Brocade’s intended acquisition of Foundry in July 2008.
Teeple passed the Inside Information he got from RILEY on to others, including others at Artis. From the Inside Information Teeple provided about Foundry, Artis ultimately reaped gains of over $27 million in 2008.
RILEY, 48, of San Jose, California, was convicted of one count of conspiracy to commit securities fraud and two counts of securities fraud. The conspiracy count carries a maximum sentence of five years in prison and a fine of the greater of $250,000 or twice the gross gain or loss from the offense. Each of the securities fraud counts carries a maximum sentence of 20 years in prison and a fine of $5 million or twice the gross gain or loss from the offense. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. RILEY is scheduled to be sentenced on February 6, 2015.
The jury was unable to reach a verdict with respect to the remaining count of the Superseding Indictment, which charged RILEY with substantive securities fraud related to passage of inside information concerning negative developments with the Brocade-Foundry deal on October 16, 2008.
Mr. Bharara praised the investigative work of the FBI and thanked the Securities and Exchange Commission, which has filed civil charges in a separate action.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Telemachus P. Kasulis and Sarah E. McCallum, and Special Assistant U.S. Attorney Michael P. Holland, are in charge of the prosecution.
Former California News Helicopter Pilot SentencedRead the Press Release
SACRAMENTO, Calif. — John Michael Dial, 58, of Skaneateles, New York, was sentenced today by United States District Judge Morrison C. England Jr. to two years in prison for aggravated identity theft, United States Attorney Benjamin B. Wagner announced.
According to court documents, Dial used the names of actual persons to commit violations of federal law such as false statements to the FAA and forgery of a U.S. passport.
According to court documents:
- From December 16, 2009, to August 4, 2010, Dial was hired as a television news helicopter pilot and operated news helicopters in the Bay Area without a pilot’s license.
- Dial worked for an air ambulance service in Susanville and provided numerous false identification documents to his employer. From July 3, 2011, to November 7, 2011, he operated a helicopter approximately 63 times without having a valid pilot certificate.
- On March 15, 2012, Dial was hired to work as a television news helicopter pilot in Sacramento. Dial used his real name but the FAA certificates he provided were fraudulent. He flew two times without having a valid pilot certificate.
- Dial used the identity of a former co-worker to gain employment with an air ambulance service in New York, and he created a fraudulent United States passport using that person’s identity.
Dial’s identity theft became clear when he was stopped in Idaho for a traffic violation and produced falsified ID from Vermont. Dial pleaded guilty on July 31, 2014.
“The sentencing today of John Michael Dial for aggravated identity theft is a clear signal that the safety of the Nation’s air transportation system remains a high priority for both the Office of Inspector General and the Department of Transportation,” said William Swallow, DOT OIG regional Special Agent-In-Charge. “We will continue to work with our prosecutorial and law enforcement colleagues to prevent and detect violations of federal laws designed to ensure the safety of the public and the Nation’s transportation systems, and punish those who would seek to compromise that safety.”
“Dial stole identities, creating and forging numerous counterfeit documents to conceal his identity and criminal history as he moved from state to state to outrun his past. His crime presented a threat to public safety as his true identity and criminal history precluded him from obtaining access to aircraft and the certification necessary for employment as a commercial helicopter pilot,” said Special Agent in Charge Monica Miller of the FBI’s Sacramento field office. “Despite his efforts to evade law enforcement, Dial was pursued across numerous state lines and was ultimately apprehended in Skaneateles, New York.”
This case was the product of an investigation by the U.S. Department of Transportation, Office of Inspector General, the Federal Bureau of Investigation, and the United States Secret Service with the assistance of the Cascade, Idaho, and McCall, Idaho Police Departments. Assistant United States Attorneys Kyle Reardon and Andre Espinosa prosecuted the case.
Former Alabama State Employee Pleads Guilty to Stealing Identities from State Databases Used to Request over $7 Million in Tax RefundsRead the Press Release
Today, Tamika Floyd pleaded guilty to one count of conspiracy to defraud the United States and one count of aggravated identity theft for her involvement in a Stolen Identity Refund Fraud Scheme (SIRF), announced Deputy Assistant Attorney General Ronald A. Cimino for the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.
According to the court documents, between 2006 and 2014, Floyd worked at the State of Alabama Department of Public Health and the Alabama Department of Human Resources, both located in Opelika, Alabama. At both jobs, she had access to the identification information of individuals. Beginning in 2012, Floyd was approached to obtain names from her employer that would be used to file false tax returns. Floyd agreed to steal the names and in turn provided them to her co-conspirator. Most of the names stolen belonged to teenagers. Floyd’s co-conspirators used the names she provided to file more than 3,000 fraudulent federal income tax returns that claimed more than $7.5 million in refunds.
A sentencing date has not been scheduled.
The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation. Trial Attorney Michael Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown for the Middle District of Alabama are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at the division's website.
Foreign Subsidiary of Texas Oil Firm Pleads Guilty to Illegally Exporting Drilling Equipment to SyriaRead the Press Release
John P. Carlin, Assistant Attorney General for National Security, Ronald C. Machen Jr., U.S. Attorney for the District of Columbia, and Eric L. Hirschhorn, U.S. Department of Commerce Under Secretary for Industry and Security announced today that Robbins & Myers Belgium S.A., a wholly-owned subsidiary of Robbins & Myers Inc., pleaded guilty today to four counts of violating the International Emergency Economic Powers Act and the Export Administration Regulations.
The guilty plea stemmed from actions by Robbins & Myers Belgium that, in 2006, caused four illegal exports, reexports and/or transshipments of stators—important components of oil extraction equipment—that had made from steel that had been milled in the United States to a customer operating oil fields in Syria.
As part of its plea agreement Robbins & Myers Belgium agreed to pay a total of $1 million in criminal fines ($250,000 for each violation) and to serve a term of corporate probation. The gross proceeds received by Robbins & Myers Belgium for these four illegal exports was $31,716. As part of its plea agreement, Robbins & Myers Belgium has forfeited the entire $31,716 to the government. Robbins & Myers Belgium has also entered into a civil settlement with the Department of Commerce requiring the company to pay $600,000 in civil penalties.
Robbins & Myers Belgium entered the guilty plea this afternoon and was sentenced this afternoon in accordance with the terms of the plea agreement by the Honorable Judge Beryl A. Howell in U.S. District Court for the District of Columbia.
“This case shows that the United States will vigorously enforce its export laws against companies doing business with Syria, a state-sponsor of terrorism and home to one of the most brutal regimes on earth,” said U.S. Attorney Machen. “The Department of Justice will hit companies that do business with Syria where it hurts most: the bottom line. This company will pay fines, penalties, and forfeitures more than 50 times greater than the proceeds of its sales.”
“The significant civil and criminal penalties in this case show our resolve to pursue and prosecute those who flout our export control laws,” said Under Secretary of Commerce Hirschhorn. “We will continue to work in concert with our partner agencies to ensure that U.S. technology stays out of the wrong hands.”
According to court documents, in or about May 2006 an internal auditor with Robbins & Myers Inc. (the U.S. parent company of Robbins & Myers Belgium which was acquired by National Oilwell Varco in 2013) discovered that the company’s Belgian subsidiary had shipped stators made from U.S.-origin steel to a customer in Syria. The internal auditor informed senior management at Robbins & Myers Inc. of the shipments; management then confirmed that those shipments had occurred and that they were likely in violation of U.S. law which prohibited trade in U.S.-origin goods with Syria. Although the U.S.-based parent directed Robbins & Myers Belgium to stop such shipments, the subsidiary continued to make shipments of stators to Syria between August 2006 and October 2006. Following those illegal shipments, employees of the Belgian subsidiary attempted to hide documents related to those shipments from the government’s investigators.
In announcing the guilty plea and sentencing, U.S. Attorney Machen and Under Secretary Hirschhorn commended Special Agents Richard Jereski and Joseph Bankins, who worked under the direction of Special Agent in Charge Nasir Khan, as well as Attorney Advisor R. Elizabeth Abraham of the Department of Commerce's Bureau of Industry and Security. They also thanked Special Assistant U.S. Attorney John W. Borchert and the Counterespionage Section of the Justice Department's National Security Division for their roles in prosecuting this matter.
Foreign Subsidiary of Texas Oil Firm Pleads Guilty to Illegally Exporting Drilling Equipment to SyriaRead the Press Release
WASHINGTON – Robbins & Myers Belgium, S.A., a wholly-owned subsidiary of Robbins & Myers, Inc., pled guilty today to four counts of violating the International Emergency Economic Powers Act and the Export Administration Regulations.
The plea was announced by John P. Carlin, Assistant Attorney General for National Security, Ronald C. Machen Jr., U.S. Attorney for the District of Columbia, and Eric L. Hirschhorn, U.S. Department of Commerce Under Secretary for Industry and Security.
The guilty plea stemmed from actions by Robbins & Myers Belgium that, in 2006, caused four illegal exports, reexports and/or transshipments of stators—important components of oil extraction equipment—that had been made from steel that had been milled in the United States to a customer operating oil fields in Syria.
As part of its plea agreement Robbins & Myers Belgium agreed to pay a total of $1 million in criminal fines ($250,000 for each violation) and to serve a term of corporate probation. The gross proceeds received by Robbins & Myers Belgium for these four illegal exports was $31,716. As part of its plea agreement, Robbins & Myers Belgium has forfeited the entire $31,716 to the government. Robbins & Myers Belgium has also entered into a civil settlement with the Department of Commerce requiring the company to pay $600,000 in civil penalties.
Robbins & Myers Belgium entered the guilty plea this afternoon and was sentenced this afternoon in accordance with the terms of the plea agreement by the Honorable Judge Beryl A. Howell in U.S. District Court for the District of Columbia.
“This case shows that the United States will vigorously enforce its export laws against companies doing business with Syria, a state-sponsor of terrorism and home to one of the most brutal regimes on earth,” said U.S. Attorney Machen. “The Department of Justice will hit companies that do business with Syria where it hurts most: the bottom line. This company will pay fines, penalties, and forfeitures more than 50 times greater than the proceeds of its sales.”
“The significant civil and criminal penalties in this case show our resolve to pursue and prosecute those who flout our export control laws,” said Under Secretary of Commerce Hirschhorn. “We will continue to work in concert with our partner agencies to ensure that U.S. technology stays out of the wrong hands.”
According to court documents, in or about May 2006 an internal auditor with Robbins & Myers, Inc. (the U.S. parent company of Robbins & Myers Belgium which was acquired by National Oilwell Varco in 2013) discovered that the company’s Belgian subsidiary had shipped stators made from U.S.-origin steel to a customer in Syria. The internal auditor informed senior management at Robbins & Myers, Inc., of the shipments; management then confirmed that those shipments had occurred and that they were likely in violation of U.S. law which prohibited trade in U.S.-origin goods with Syria. Although the U.S.-based parent directed Robbins & Myers Belgium to stop such shipments, the subsidiary continued to make shipments of stators to Syria between August 2006 and October 2006. Following those illegal shipments, employees of the Belgian subsidiary attempted to hide documents related to those shipments from the government’s investigators.
In announcing the guilty plea and sentencing, U.S. Attorney Machen and Under Secretary Hirschhorn commended Special Agents Richard Jereski and Joseph Bankins, who worked under the direction of Special Agent in Charge Nasir Khan, as well as Attorney Advisor R. Elizabeth Abraham of the Department of Commerce's Bureau of Industry and Security. They also thanked Special Assistant U.S. Attorney John W. Borchert and the Counterespionage Section of the Justice Department's National Security Division for their roles in prosecuting this matter.
14-224Florida Correctional Officer Sentenced to Prison for Tax Fraud Using Inmates’ IdentitiesRead the Press Release
Tampa, FL – U.S. District Judge James S. Moody, Jr. has sentenced Jerry St. Fleur (26, Tampa) to four years and three months in federal prison for wire fraud and aggravated identity theft. The Court also ordered him to forfeit $61,704, which is traceable to proceeds of the offense. He pleaded guilty on July 9, 2014.
According to the plea agreement, beginning no later than January 2011, and continuing until May 2014, St. Fleur, in his capacity as a correctional officer at the Zephyrhills Correctional Facility, unlawfully accessed and stole the personal identifying information (PII) of former and current inmates within the Florida Department of Corrections (FDOC). St. Fleur would “screen scrape” (cut and paste) inmates’ PII, without their knowledge or permission, from FDOC databases and then use that information to file false tax returns. As part of this scheme, St. Fleur filed approximately 182 fraudulent income tax returns. The government estimates that the total amount of fraudulent refunds requested from these returns was more than $500,000.
This case was investigated by the Federal Bureau of Investigation, Internal Revenue Service – Criminal Investigation, and the Hillsborough County Sheriff’s Office. It was prosecuted by Assistant United States Attorney Matthew Jackson.
Felon Who Fled from Crim Scene Sent to Federal Prison on Gun ChargeRead the Press Release
A felon who discarded a gun while fleeing from police was sentenced on October 1, 2014 to over six years in federal prison.
Harris Ceaser III, from St. Louis, Missouri, received the prison term after a June 5, 2014 guilty plea to one count of possession of a firearm as a felon.
In a plea agreement, Ceaser admitted he possessed a loaded 9mm handgun in Cedar Rapids on March 24, 2014. According to a criminal complaint, Ceaser came to the attention of law enforcement on that date while they were responding to a report of a stabbing at the 1800 block of A Avenue. The victim was located on the ground with a knife mark in his chest. While canvassing the area for evidence, a woman reported to law enforcement that an individual—later identified as Ceaser—had run from the scene. An officer located Ceaser nearby. Upon seeing the officers, Ceaser fled on foot. The foot chase was captured on a patrol car video, which showed Ceaser throwing a handgun over a fence during the chase. The handgun was then recovered by law enforcement. The handgun had been reported stolen.
Ceaser had been convicted in federal court in Cedar Rapids in 2008 of the felony offense of possessing a firearm as an unlawful drug user. Ceaser remained on supervised release from this conviction at the time of the March 2014 incident.
Ceaser was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Ceaser was sentenced to 78 months’ imprisonment, which was ordered to run consecutive to a 24-month supervised release revocation sentence that was imposed on April 25, 2014 in the 2008 case. A special assessment of $100 was imposed. He must also serve a 3-year term of supervised release after the prison term. There is no parole in the federal system.
Ceaser is being held in the United States Marshal’s custody until he can be transported to a federal prison.
Ceaser has not been charged in connection with the stabbing.
The case was prosecuted by Assistant United States Attorney Justin Lightfoot and investigated by the Federal Bureau of Investigation (FBI), the Bureau of Alcohol, Tobacco, and Firearms (ATF), and the Cedar Rapids Police Department.
Court file information is available at https://ecf.iand.uscourts.gov/ cgi-bin/login.pl. The case file number is 14-CR-50. The case file for the criminal complaint is 14-MJ-94. The case file for Ceaser’s 2008 conviction is 07-CR-96.
Federal Court Sentences Bettendorf Owner of Whitehall Funding, Inc. on Wire Fraud ChargesRead the Press Release
DAVENPORT, IA - On October 2, 2014, Thomas Richard Jager, age 66, of Bettendorf, Iowa, was sentenced by United States Chief District Court Judge James E. Gritzner to 97 months imprisonment, after pleading guilty to four counts of wire fraud, announced United States Attorney Nicholas A. Klinefeldt. McDaniel was also ordered to serve five years of supervised release following imprisonment, and pay $400 towards the Crime Victims Fund. Jager was also ordered to pay restitution to victims and forfeit personal property.
Thomas Richard Jager, was the owner and managing employee of Whitehall Funding, Inc., a mortgage servicing company located in Davenport, Iowa. In this capacity, Jager was responsible as sub-servicer to certain Department of Housing and Urban Development (HUD) insured mortgages pools to collect mortgage principal and interest payments and required escrow payments. Additionally, Jager was responsible for providing accurate remittance reports and remittance payments to the investors of certain mortgage backed securities secured by the loans in these pools, for making escrow payments and holding the remaining balances for escrow accounts of the mortgagors making payments, and for forwarding all funds received for the prepayment of any mortgages held in these same pools.
During a time period which included 2008 through 2010, Jager failed to forward monthly remittance payments to investors and provided false reports, failed to distribute lump sum payoffs of mortgages to investors, and then transferred money held in escrow to his personal bank account. Jager admitted to being responsible for over $7 million in total losses. Information at sentencing established that during the time of 2007 through 2010, Jager should have legitimately received approximately $18,000 in fees for servicing the loans in these pools. Instead, during this same time period, Jager transferred funds owed to investors and property owners to his personal bank account of $1,182,650. Evidence showed that he spent funds obtained as part of the fraud on credit card purchases, a hot tub for his home, purchase of vehicles, maid service, a Hilton Head time share, country club memberships, and other personal items, taxes and fees.
This case was investigated by the Federal Bureau of Investigation, the United States Department of Housing and Urban Development, and the case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
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Fast Train Owner and Three Admissions Representatives Arrested for Theft of Federal Student AidRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Yessyka Santana, Special Agent in Charge, Department of Education, Office of Inspector General (ED-OIG), and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce that Alejandro Amor, 56, of Coral Gables, Jose W. Gonzalez, 53, of Port Orange, Michael Grubbs, 37, of Jacksonville, and Anthony Mincey, 57, of Jacksonville, have been charged in a fifteen count indictment with conspiracy to steal government funds, in violation of Title 18, United States Code, Section 371, and theft of government funds, in violation of Title 18, United States Code, Section 641. If convicted, the defendants face up to five years in prison, three years of supervised release, a $250,000 fine, and restitution, on the conspiracy count, and up to ten years in prison, three years of supervised release, a $250,000 fine, and restitution on each substantive count. The case has been assigned to United States District Judge Joan A. Lenard.
Defendant Amor made his initial appearance before United States Magistrate Judge Chris M. McAliley. Defendant Gonzalez made his initial appearance before United States Magistrate Judge David A. Baker, in Orlando. Defendants Grubbs and Mincey made their initial appearances before United States Magistrate Judge Patricia D. Barksdale, in Jacksonville.
According to the indictment, from approximately August 2008 through May 2012, Alejandro Amor, the owner of a for-profit proprietary college called Fast Train, directed his admissions representatives, including Jose W. Gonzalez, Michael Grubbs, and Anthony Mincey, among others, to defraud the United States Department of Education, by recruiting students who were not eligible for federal student aid and falsifying student aid applications in order to obtain federal Pell Grants and Direct Loans. As a result of these fraudulent recruiting practices, Alejandro Amor, Jose W. Gonzalez, Michael Grubbs, Anthony Mincey, and others, caused Fast Train students to submit approximately 1300 fraudulent student aid applications, which yielded approximately $6.5 million in fraudulently obtained Pell Grant and Direct Loan funds.
Mr. Ferrer commended the investigative efforts of ED-OIG and the FBI. This case is being prosecuted by Assistant U.S. Attorney Amanda Perwin.
An indictment is only an accusation and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
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.
Elkton Drug Dealer and Philadelphia Supplier Each Sentenced to 10 Years in PrisonRead the Press Release
Heroin Organization Operated in Cecil County, Maryland, and in Delaware, Pennsylvania and New York
Baltimore, Maryland – U.S. District Judge Catherine C. Blake sentenced Michael Roberts, a/k/a “Spook,” age 27, of Elkton, Maryland today to 10 years in prison followed by four years of supervised release for conspiring to distribute and possess with intent to distribute heroin.Yesterday, Judge Blake sentenced co-defendant Jorge Ayala-Pizzaro, age 24, of Philadelphia, Pennsylvania, to 10 years in prison followed by five years of supervised release for the same charge.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Assistant Special Agent in Charge Gary Tuggle of the Drug Enforcement Administration, Baltimore District Office; Special Agent in Charge David G. Dongilli, Philadelphia Division of the DEA; Cecil County Sheriff Barry A. Janney, Sr.; Chief Matthew Donnelly of the Elkton Police Department; Colonel Marcus L. Brown, Superintendent of the Maryland State Police; Cecil County State’s Attorney Ellis Rollins; and Colonel Nathaniel McQueen, Jr. of the Delaware State Police.
According to his plea agreement, since at least December 2012, Roberts worked with Rachine Garnett to distribute the bulk quantities of heroin that Garnett obtained from sources in Philadelphia and New York, including co-defendants Jorge Ayala-Pizarro and Luis Lugo-Santiago. Law enforcement intercepted numerous calls between Roberts and Garnett. Generally, Garnett would contact Roberts to let him know he was ready to resupply Roberts with heroin. In addition to discussing drug transactions, Garnett and Roberts would discuss the location of police officers in the area to help avoid detection by law enforcement.According to Ayala-Pizzaro’s plea agreement, he obtained kilograms of heroin, then took the bulk heroin to an apartment rented by Lugo-Santiago, where he and his co-conspirators cut it and repackaged it for further distribution. The heroin was sold to customers in Maryland and Delaware, including Rachine Garnett. Garnett would contact Lugo-Santiago to obtain heroin or provide cash for prior heroin purchases. Lugo-Santiago arranged a meeting with Ayala-Pizzaro or another associate. Garnett would meet Ayala-Pizzaro and others in Philadelphia where he would obtain a new supply of heroin and/or drop off the cash. Garnett and Ayala-Pizzaro had vehicles with hidden compartments where they could store either heroin or money. Often to exchange drugs, money or both, they would simply switch vehicles when they met. Over the course of a seven month wiretap, investigators identified 59 money deliveries from Garnett totaling $1,668,510, for the purchase of approximately 8.98 kilograms of heroin.
Ayala-Pizzarro also handled the transport of heroin and money to and from customers in Delaware, and was overheard by law enforcement discussing drug transactions and the finances of the organization.
On August 15, 2013, investigators executed a search warrant at Ayala-Pizzaro’s apartment and recovered drug paraphernalia, packaging material and $5,329 in cash. A search of Ayala-Pizzaro’s vehicle recovered over a kilogram of heroin packaged in a number of clear plastic baggies from a hidden compartment.
Roberts and Ayala-Pizzaro admitted that over the course of the conspiracy they were responsible for the distribution of at least 400 grams and 10 kilograms of heroin, respectively.
Seven defendants have pleaded guilty to their participation in the heroin conspiracy. Judge Blake sentenced Rachine Huron Garnett, a/k/a “Sheen,” “Red,” “Ray,” and “Blockhead,” age 38, of Elkton, Maryland, to 10 years in prison and sentenced Abel Nunez-Reyes, age 30, of Philadelphia, and Barry Jenkins, Jr., age 24, of Elkton, each to two years in prison. Orlando Nunez De Leon, age 37, of New York, New York, is scheduled to be sentenced on October 31, 2014, and Luis Lugo-Santiago, a/k/a “Papi,” and “Andres Galvez,” age 39, also of New York, is scheduled to be sentenced on December 5, 2014.
United States Attorney Rod J. Rosenstein praised the DEA, Cecil County Drug Task Force, and Delaware State Police for their work in the investigation. Mr. Rosenstein also recognized the U.S. Attorney’s Offices in the District of Delaware, Southern District of New York and the Eastern District of Pennsylvania, the Office of the Special Narcotics Prosecutor for the City of New York and the New York Police Department for their assistance. Mr. Rosenstein thanked Assistant United States Attorneys Kenneth S. Clark and James G. Warwick, who prosecuted this Organized Crime Drug Enforcement Task Force case.Eagle River Counterfeiters SentencedRead the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that two Eagle River residents were sentenced in federal court in Anchorage for conspiring to manufacture and pass counterfeit money at local businesses in Eagle River.
Matthew Daley, 29, and Christa Speiser, 30, were sentenced on October 1, by United States District Court Judge Timothy M. Burgess. Daley was sentenced to a year in prison and Speiser received probation.
According to Assistant U.S. Attorney Aunnie Steward, Daley and Speiser were manufacturing counterfeit $100 bills that they were passing at local businesses including Tesoro, Walmart, and Carrs, as well as others in the Eagle River area.
Over the course of three days Daley and Speiser passed counterfeit $100 bills at local businesses purchasing small items and receiving genuine currency in return. They were stopped when a Tesoro employee recognized a $100 bill as fake and called APD. Daley and Speiser left the Tesoro but were contacted nearby on a routine traffic stop. The officer conducting the traffic stop heard the call over the radio regarding the attempted passing of counterfeit money at Tesoro and recognized Daley and Speiser as the suspects described in the incident. Daley also had a pending warrant for his arrest on a separate matter. Daley lied to the officer about his identity and tried to escape from the officer’s vehicle when he was taken into custody. Several more counterfeit bills were found in their car and in Speiser’s wallet. A search of the trailer where Daley and Speiser were staying by APD and the U.S. Secret Service established that Daley had set up a system of manufacturing the counterfeit money that he and Speiser had been passing at local businesses.
Ms. Loeffler commends the Anchorage Police Department and the Secret Service for the investigation of this case.Duval County Man Sentenced to Federal Prison for Passing Counterfeit MoneyRead the Press Release
Jacksonville, Florida – U.S. District Judge Brian J. Davis yesterday sentenced Deryck Dean Barcous (26, Duval County) to one year and four months in federal prison for passing counterfeit Federal Reserve notes. Barcous was indicted on March 27, 2014, and pleaded guilty on July 16, 2014.
According to court documents, in November 2013, Barcous answered an ad on Craigslist advertising computer equipment. After finalizing the price, Barcous met with the victim and paid her with what was later determined to be counterfeit $10 and $20 bills.
This case was investigated by the Jacksonville Sheriff’s Office and the United States Secret Service. It was prosecuted by Assistant United States Attorney Kevin C. Frein.
Delaware Man Convicted of Child Exploitation Involving Social MediaRead the Press Release
PHILADELPHIA – A federal jury, yesterday, returned guilty verdicts, on all three counts, against Christopher Steele, a/k/a/ “Mike Dozor,” 34, of Newark, DE, in a child exploitation case. Steele was indicted on March 6, 2014 for use of an interstate commerce facility to entice a minor to engage in sexual conduct, interstate travel with intent to engage in illicit sexual conduct with a minor, and receipt of child pornography. He faces a mandatory minimum of 10 years in prison with a maximum sentence of life. A sentencing date is not yet scheduled.
Steele found his victim, Minor #1, through a social networking cell phone application. He used that media to entice the victim into having sex. He then traveled from Delaware to Pennsylvania for the purpose of engaging in illicit sexual conduct with that minor. Steele also received a visual depiction showing a minor engaged in sexually explicit conduct and participated in a scheme to sexually exploit minor victims.
“Child sexual exploitation crimes are among HSI’s highest priorities,” said John P. Kelleghan, special agent in charge of HSI Philadelphia. “We will continue to relentlessly pursue predators who sexually abuse children, whether that abuse is physical in nature or if it's accomplished by exploiting their images.”
The case was investigated by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), the Montgomery County District Attorney’s Office, and the Limerick Township Police Department. It is being prosecuted by Assistant United States Attorney Michelle Rotella.
The public is encouraged to report suspected child predators and any suspicious activity by calling 1-866-DHS-2-ICE. Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Defendants Sentenced in Tax Fraud SchemeRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announce that Scarlet Veres, 45, and Steven M. Veres, III, 49, both of Clermont, formerly of Broward County, were sentenced today before U.S. District Judge Robert N. Scola, Jr. for their participation in a scheme to evade paying taxes on income received through their construction company following the 2004 and 2005 hurricanes. Scarlet Veres was sentenced to 18 months in prison, to be followed by three years of supervised release. Steven Veres was sentenced to 24 months in prison, to be followed by three years of supervised release. Additionally, each defendant was ordered to pay $600,000.00 in restitution.
Scarlet and Steven Veres each previously pled guilty to one count of conspiracy to defraud the United States, in violation of Title 18, United States Code, Section 371.
According to court documents, Scarlet Veres and Steven M. Veres III, who was then a licensed general contractor, were the sole shareholders of Superior Contracting, Inc., a Broward County-based construction company. In 2005, Superior Contracting, Inc. received millions of dollars from contracts to make hurricane-related repairs, including a contract to make repairs at a condominium development in Fort Pierce. During 2005, the defendants diverted corporate receipts of Superior Contracting, Inc. for their own use. In order to conceal their diversion of corporate funds, the defendants falsified the profit and loss statement of Superior Contracting, Inc. by characterizing personal expenses, including the purchase of property in Parkland, the construction of their personal residence on the Parkland property, the purchase of a residence in Osceola County, and a $550,000 personal real estate investment as business expenses. The defendants further falsified the profit and loss statement by claiming that a $400,000 personal real estate investment was a repayment of a fictitious loan previously made to Superior Construction, Inc. Pursuant to their plea agreements, the defendants agreed to pay restitution to the Internal Revenue Service in the amount of $600,000.
Mr. Ferrer commended the investigative efforts of IRS-CI. The case was prosecuted by Assistant U.S. Attorney Stephanie Evans.
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.
Danville Real Estate Agent Charged in Bank Fraud and Money Laundering SchemeRead the Press Release
OAKLAND – Anthony Keslinke was charge today by superseding indictment in a scheme involving short sale mortgage fraud, announced U.S. Attorney Melinda Haag, Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the superseding indictment, Keslinke used straw buyers to purchase real estate throughout Northern California. Keslinke identified properties, including his own properties, that were potential candidates for a “short sale.” A “short sale” is a sale of real estate in which the sale proceeds are less than the balance owed on the mortgage loan pertaining to the property and often occurs when a borrower cannot pay the mortgage loan. In furtherance of the scheme, Keslinke allegedly submitted offers to the financial institutions on behalf of straw buyers. In order to induce a bank to accept a short sale offer, Keslinke would draft fraudulent financial hardship letters and submit them on behalf of the seller of a property. In addition, Keslinke often altered engineering and pest reports associated with the properties in order to give the appearance to the financial institutions that the properties were worth significantly less than true fair market value. Additionally, according to the superseding indictment, Keslinke often altered bank account documents to create the appearance that the straw buyers had sufficient funds to purchase the properties in cash. Once a financial institution accepted a particular property for a short sale, Keslinke used his own funds to purchase the property in the name of the straw buyer. After a short sale was completed on a particular property, Keslinke maintained control of the property and often sold the property for a significant financial gain. Keslinke is charged in the superseding indictment with using this mortgage fraud scheme to orchestrate the short sale of properties in Danville, California; Walnut Creek, California; and Kings Beach, California.
The indictment also alleges that between August of 2013 and February of 2014, Keslinke met with an undercover agent purporting to be a drug dealer on multiple occasions. On five separate occasions, Keslinke accepted a total of $550,000 from the undercover agent. In an attempt to conceal the true source of the funds, Keslinke repeatedly deposited the money received from the undercover agent into business bank accounts under Keslinke's control. Keslinke then attempted to launder the money by wiring it from his business bank accounts to an account controlled by the undercover agent. During the investigation, Keslinke routinely kept 8-10% of the money provided to him from the undercover agent as a fee for his services.
Upon a conviction on any of the bank fraud or wire fraud charges, alleged in counts one through six, Keslinke shall forfeit any property, real or personal, which constitutes or is derived from proceeds traceable to the offense.
Upon a conviction of any of the money laundering charges, alleged in counts seven through twelve, Keslinke shall forfeit $320,000 cash seized from Keslinke’s residence, approximately $1.4 million from bank accounts, 500 American Silver Eagle coin, and a Tiffany diamond solitaire ring, all of which allegedly constitutes or is derived from the proceeds traceable to the offenses.
The maximum statutory penalty for each count of Conspiracy to Commit Bank Fraud and Bank Fraud, in violation of 18 U.S.C. § 1349 and 18 U.S.C. §§ 1344, is 30 years in prison and a $1,000,000 fine. The maximum statutory penalty for each count of Wire Fraud, in violation of 18 U.S.C. §§ 1343, is 20 years in prison and a $250,000 fine. The maximum statutory penalty for each count of Conspiracy to Commit Money Laundering and Money Laundering, in violation of 18 U.S.C. § 1956(h) and 18 U.S.C. § 1956(a)(3)(B), is 20 years in prison and a $250,000 fine.
Assistant U.S. Attorney Aaron Wegner is prosecuting the case with the assistance of Vanessa Vargas. The prosecution is the result of an investigation by the Drug Enforcement Administration and Internal Revenue Service. The Contra Costa Sheriff’s Office and Livermore Police Department have also provided assistance during the investigation. The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force, a multi-agency task force that coordinates long-term narcotics trafficking investigations.
Please note, an indictment contains only allegations. Therefore, as with all defendants, Anthony Keslinke must be presumed innocent unless and until proven guilty.
(Keslinke superseding indictment )
Colombian Man Sentenced to Three Years in Prison for Burglary SpreeRead the Press Release
ALEXANDRIA, Va. – Roger Mina-Cuero, 29, a Colombian national, was sentenced today to three years in prison, followed by three years of supervised release, for interstate transportation of Stolen Property and Illegal Reentry to the United States by a removed alien. Mina-Cuero’s sentence also included restitution in the amount of $371,760 and forfeiture in the amount of $311,340.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia, made the announcement after sentencing by U.S. District Judge James C. Cacheris.
Mina-Cuero pleaded guilty on June 23, 2014. According to court documents, Mina-Cuero was part of aColumbian burglary crew based in Houston, Texas, that traveled as far as Virginia and Maryland to conduct at least 12 residential burglaries in which they stole jewelry, cash and electronic items. The co-conspirators cased neighborhoods to identify residences where no one was home, then broke windows in the rear of the houses to gain entry. Mina-Cuero and his co-conspirators brought stolen jewelry and cash from the burglaries back to Houston for sale and forwarded some of the proceeds of the burglaries to Columbia.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations directorate in cooperation with police departments in Montgomery County and Howard County, Maryland; and Loudon County, Virginia. Assistant U.S. Attorney Kimberly Riley Pedersen and Special Assistant United States Attorney Christopher Van Horne prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:14-cr-131.
Collin County Photographer Guilty of Sexually Exploiting ChildrenRead the Press Release
Department of Justice
Office of Public AffairsTYLER, Texas – A 54-year-old McKinney, Texas photographer has pleaded guilty to child exploitation charges in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Todd Fleming pleaded guilty to sexual exploitation of children today before U.S. Magistrate Judge K. Nicole Mitchell.According to information presented in court, from 1999 to 2007, Fleming coerced minors to engage in sexually explicit conduct for the purpose of producing child pornography. Fleming was indicted by a federal grand jury on Apr. 17, 2013 and charged with child exploitation violations.
“This criminal case should serve as a wake-up call to all parents to regularly monitor their children’s friends and Internet behavior, and to educate their children of the potential dangers of online predators,” said David M. Marwell, special agent in charge of HSI Dallas. “For years, this school photographer assumed the online identities of many young girls to entice other girls to produce child pornography for him. At the same time, he groomed still other young girls to produce his own child pornography.”
“Thank goodness that Todd Fleming will no longer be able to prey on unsuspecting children,” said U.S. Attorney Bales. “Kudos to the investigative team who successfully brought Fleming to his well-deserved appointment with justice. And I agree with SAC Marwell – the most important takeaway from this case is the need for parental vigilance and communication with their children. For our part, we will continue to have zero tolerance for child pornographers.”
This case is being investigated by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Texas Department of Public Safety – Criminal Investigations Division and prosecuted by Assistant U.S. Attorney Nathaniel C. Kummerfeld.
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.
Fleming faces a minimum of 15 years and up to 30 years in federal prison. A sentencing date has not been set.Cleveland Man Indicted for Violating the Clean Air Act, Illegally Dumping Garbage and Defrauding Company out of $1.2 MillionRead the Press Release
A federal indictment was filed charging Christopher L. Gattarello and another Cleveland man with violating the Clean Air Act by failing to remove asbestos prior to demolishing a former factory in Cleveland, law enforcement officials said.
Gattarello and another conspirator were also charged with defrauding a Louisiana company out of nearly $1.2 million.
At the same time, state charges were filed in Cuyahoga County Common Pleas Court against Gattarello and two men, charging them with illegally dumping garbage in Cleveland.
Indicted in federal court are Gattarello, 50, of Cleveland; Willam S. Jackson, Jr., 44, of Cleveland, and Robert A. Shaw, Sr., 74, of Ypslanti, Michigan.
The indictments were announced by Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, Ohio Attorney General Mike DeWine, Cuyahoga County Prosecutor Timothy McGinty, Ohio EPA Director Craig W. Butler and Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.
“We will not allow our neighborhoods to be used as garbage dumps,” Dettelbach said. “Mr. Gattarello’s actions show his total disdain for the law and for the people who live near the factory. He will be held accountable for his actions.”
“Thousands of tons of garbage were dumped illegally near a residential neighborhood,” Attorney General DeWine said. “This behavior is inexcusable. Residents have to deal with this significant environmental and health threat, and they deserved to see those accountable brought to justice.”
“Dumping waste in our county is criminal, reprehensible and makes it harder for the people of Cuyahoga County to beautify our region,” said Adrienne Linnick, assistant Cuyahoga County prosecutor. “But dumping roughly 29 million pounds of assorted waste — as was found on the old National Acme site—attracts so many pests and produces so many odors that it can contribute to the demise of a neighborhood. Nobody wants to do business next to trash heaps, let alone live next to one where they might want to jog, bike, walk a dog or take their children for a stroll.”
Butler said: “I commend the hard work put into this case by Ohio EPA’s special investigations staff and our partnering agencies to bring about this indictment. Ohio EPA will not tolerate reckless disregard for the health and welfare of Ohio citizens.”
“IRS-Criminal Investigation is committed to unravelling complex financial schemes and following the money to ensure those who profit from crime are held accountable,” Enstrom said.
Gattarello owned and controlled several municipal garbage-hauling businesses in greater Cleveland, including Reach Out Disposal, All Points Rubbish Disposal and Axelrod Rubbish Recycling. Shaw worked for Gattarello at those companies, while Jackson operated a Cleveland building demolition company.
Gattarello and Jackson were each charged with two counts of violating the Clean Air Act.According to the four-count federal indictment:
In June 2011, Gattarello, on behalf of All Points, leased the former National Acme facility at 170 East 131st Street in Cleveland. The 570,000 square-foot facility was built in 1917 and was used for manufacturing for nearly a century. It is located near many homes and a school. Gattarello represented to the lessor that paper and cardboard waste would be recycled at the facility.
In July 2011, a company estimated removing asbestos from the facility would cost $1.5 million.
Around August 2011, Gattarello directed paper and cardboard waste, as well as municipal garbage, be delivered to the facility for recycling. Over the next several months, more garbage, paper and cardboard were delivered than could be handled, and Gattarello had the waste moved inside. By April 2012, most of the facility was filled with garbage.In May 2012, Gattarello, on behalf of Reach Out, entered into a contract to purchase the facility. Gattarello intended to demolish the facility and sell any metal removed as scrap.
In July 2012, Jackson submitted a notice of demolition with the Cleveland Division of Air Quality stating there was no asbestos in the National Acme facility. About 10 days later, the CDAQ rejected Jackson’s notice because it was incomplete and stated demolition “may not begin” until a proper notice was submitted and approved. About 10 days after that, on July 21, 2012, Jackson began demolition at Gattarello’s direction.
Asbestos fibers were released into the environment during demolition. Debris accumulated outside the facility from demolition and asbestos in the piles were exposed to the wind and elements.
In the state’s case, Christopher Gattarello, Axelrod Recycling, and Reachout Disposal each were indicted on the same five counts — two counts of illegal open dumping, two counts of operating a solid waste landfill without a license, and one count of operating a solid waste transfer facility without a license. The charges stem from alleged solid waste violations at the former National Acme facility and at 965 Wayside Avenue in Cleveland.
Also in the state’s case, Christopher Gattarello’s brother, Anthony Gattarello, 48, of Highland Heights, was indicted on one count of illegal open dumping and one count of operating a solid waste disposal facility without a license. Jackson was indicted on one count of illegal open dumping. The charges relate to alleged violations at the former National Acme facility.
Additionally, Christopher Gattarello was charged with in federal court with one count each of conspiracy to commit wire fraud and money laundering. Shaw faces one count of conspiracy to commit wire fraud.
AIM Business Capital LLC is a financial company based in Louisiana that specializes in “factoring” – a practice in which AIM purchases accounts receivable, such as invoices billed to customers for goods and services. Businesses that factored their receivables with AIM received immediate cash. AIM, like other factoring companies, purchase the receivables at a percentage discount of the invoice. AIM made a profit by collecting the full amount of the invoice from the business’s customers, according to the federal indictment.In 2011 and 2012, Shaw, on behalf of Reach Out and Axelrod, entered into contracts with AIM for the purchase of receivables from Reach Out and Axelrod. Gattarello directed the creation of false and fraudulent invoices for the companies and directed that they be submitted to AIM. In some cases, Gattarello and Shaw directed other employees to create false letters attesting to the validity of the invoices, which Shaw forwarded to AIM. The loss to AIM was nearly $1.2 million, according to the federal indictment.
The federal case is being prosecuted by Assistant United States Attorneys Brad Beeson and James V. Moroney following an investigation by the Federal Bureau of Investigation, the U.S. and Ohio Environmental Protection Agencies, the Ohio Bureau of Criminal Investigation and the Internal Revenue Service.
The state case is being prosecuted by the Ohio Attorney General’s Office in cooperation with the Cuyahoga County Prosecutor’s Office.
An indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial in which it will be the government’s burden to prove guilty beyond a reasonable doubt.
Centre County Museum Official Indicted Federally and Arrested on Child Exploitation and Child Pornography ChargesRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that a federal grand jury in Harrisburg, Pennsylvania returned an indictment yesterday against Christopher G. Lee, age 65, a resident of Boalsburg, Pennsylvania. The indictment charges Lee with alleged use of facilities in interstate commerce, specifically the internet and telephone, to coerce and entice a minor to engage in unlawful sexual activity, transportation of a minor with the intent to engage in sexual activity, receipt of child pornography, and possession of child pornography.
Lee was taken into custody this morning by the FBI and the State College Police Department on the basis of an arrest warrant issued yesterday by United States Magistrate Judge Susan E. Schwab in Harrisburg. He appeared today before Magistrate Judge William I. Arbuckle, III, in Williamsport. After a hearing, Lee was ordered to be detained in federal custody.
According to United States Attorney Peter Smith, the alleged unlawful conduct took place between January and June 2014 in Boalsburg at the premises of the Boal Mansion Museum which conducts activities including educational summer programs, known as “docent” programs, using students recruited from the United States and other countries as volunteer tour guides at the Museum.
Lee is the chief executive officer of the Boal Manison Museum. Alleged child pornography was found in connection with a search by State College Police during the investigation, which is continuing.
If convicted, Lee faces a maximum sentence of up to life imprisonment, a mandatory minimum sentence of 10 years’ imprisonment on the transportation offense, and a 5 year mandatory minimum on the receipt offense, as well as a $1 million fine.
This investigation is being conducted by the Federal Bureau of Investigation, the State College Police Department and the Centre County District Attorney’s Office and is being prosecuted by Assistant United States Attorney Meredith A. Taylor.
Persons with information regarding this case or the continuing investigation should contact Special Agent Clifton Vikara, FBI, at (814) 234-0341 or the State College Police Department at (814) 234-7150.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
Canton and Gulfport Awarded Doj Hiring Grants to Help Reduce Violence and Protect SchoolsRead the Press Release
WASHINGTON, DC— This week the U.S. Department of Justice, Office of Community Oriented Policing Services (COPS) announced nearly $124 million in funding awards across the nation. These awards are aimed at creating, and in some cases protecting, local law enforcement positions.
In the Southern District of Mississippi, this year’s grantees are the Canton Police Department which received an award of $127,191, and the Gulfport Police Department which was awarded $494,768.
“The COP grants awarded to Gulfport and Canton demonstrate the Department of Justice’s commitment to the efforts of local law enforcement in the Southern District of Mississippi,” said U. S. Attorney Gregory K. Davis. “This program is specifically designed to advance public safety through the implementation of community policing strategies to reduce crime in our neighborhoods.”
“The COPS Office is pleased to assist local law enforcement agencies throughout the country in addressing their most critical public safety issues,” said Ronald L. Davis, Director of the COPS Office. “Funding from this year’s program will allow many cities and counties to apply new sworn personnel to issues related to violent crime, property crime, and school safety.”
The COPS Hiring Program offers grants to state, local and tribal law enforcement agencies to hire or rehire community policing officers. The program provides salaries and benefits for officer and deputy hires for three years.
Grantees for the 2014 hiring program were selected based on their fiscal needs, local crime rates, and community policing plans.
The COPS Office is a federal agency responsible for advancing community policing nationwide. Since 1995, COPS has awarded over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of approximately 125,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance.
For the entire list of grantees and additional information about the 2014 COPS Hiring Program, visit the COPS website at www.cops.usdoj.gov.
California Man Arrested on Drug and Money Laundering ChargesRead the Press Release
BUFFALO, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that James Parish, 30, of Carlsbad, California, was arrested and charged by criminal complaint with possession with intent to distribute marijuana, conspiracy to distribute marijuana and money laundering conspiracy. The charges carry a maximum penalty of 20 years in prison.
Assistant U.S. Attorney Frank T. Pimintel, who is handling the case, stated that according to the complaint, on August 21, 2014, the Drug Enforcement Administration seized a package that a person was attempting to ship at a local shipping company. The package contained $66,705 in United States currency. On that same date, the DEA seized a second package containing $77,000 in United States currency that was shipped to a shipping company in Carlsbad, California. An account belonging to the defendant was billed for each of the transactions.
On September 18, 2014, Parish dropped off two large boxes at the shipping company in Carlsbad, CA to be shipped to the Buffalo area. On September 19, 2014, the boxes were seized by the DEA. According to the complaint, the boxes contained a total of 30 pounds of marijuana.
On September 30, 2014, the defendant traveled from California to Buffalo to collect approximately $600,000 in payments for the marijuana. Parish was arrested at the Buffalo Niagara International Airport. According to the complaint, the defendant was planning to stay at a hotel on Genesee St. in Cheektowaga. The investigation revealed that Parish shipped a box to the hotel in his name. That box contained an AirSoft Gun, a taser, a bullet proof vest, a knife, handcuffs, a flashlight, a tourniquet strap, bandage kit and a GPS tracking device.
A second defendant in this case, Benjamin Golembiewski, 27, of Buffalo, NY, was arrested on September 26, 2014 and charged with conspiracy to distribute marijuana and money laundering.
Parish made an initial appearance this afternoon before U.S. Magistrate Judge Jeremiah J. McCarthy. He is being held pending a detention hearing on October 3, 2014 at 2:00 p.m. before U.S Magistrate Judge Hugh B. Scott.
The criminal complaint is the culmination of an investigation on the part of Special Agents of the Drug Enforcement Administration, under the direction of James J. Hunt, Acting Special Agent in Charge, New York Field Division and the Niagara Frontier Transportation Authority Police, under the direction of Chief George Gast.
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.Buffalo Man Sentenced for Robbery and ExtortionRead the Press Release
BUFFALO, N.Y.—U.S. Attorney William J. Hochul, Jr. announced today that Kashika Speed, 42, of Buffalo, NY, who was convicted of robbery and extortion, was sentenced to 16 years in prison by U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorneys Joseph M. Tripi and Joel L. Violanti, who handled the case, stated that sometime before February 23, 2005, the defendant and others conspired to commit the robbery of cocaine and U.S. currency from an individual involved in the distribution of cocaine on the Buffalo area. On February 23, 2005, the defendant and others went to the victim’s residence in Buffalo, restrained the victim, brandished a firearm, abducted the victim, and threatened to kill the victim unless the individual provided the defendant and his accomplices with cocaine.
As a result, the victim made a phone call to one of his associates, who placed a bag containing two kilograms of cocaine on the porch of a residence in Buffalo. After the defendant and his accomplices secured the bag containing the kilograms of cocaine, they released the victim.
Speed was arrested along with three others in this case. Charges are pending against Thamud Eldridge, Kevin Allen, and Galen Rose. 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.
The sentencing is the culmination of an investigation on the part of the Federal Bureau of Investigation, the Buffalo Police Department, under the direction of Commissioner Daniel Derenda, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge James S. Higgins, New York Field Division.Buffalo Man Pleads Guilty to Possession of Child PornographyRead the Press Release
BUFFALO, N.Y.–U.S. Attorney William J. Hochul, Jr. announced today that Jason Zaifert, 33, of Buffalo, NY, pleaded guilty before U.S. District Court Judge Richard J. Arcara to possession of child pornography. The charge carries a maximum penalty of 10 years in prison, a fine of $250,000 or both.
Assistant U.S. Attorney Marie P. Grisanti, who is handling the case, stated that on November 21, 2013, Zaifert possessed child pornography on computers, hard drives and thumb drives in his residence in Buffalo. The defendant possessed over 1,000 image and video files. Some of the images included depictions of violence and some of the children were under 12 years old. Zaifert used peer to peer software to download and view the child pornography.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The plea is the culmination of an investigation on the part of Special Agents of Immigration and Customs Enforcement, Homeland Security Investigations under the direction of Special Agent-In-Charge, James C. Spero.
Sentencing is scheduled for January 22, 2015 at 12:30 p.m. before Judge Arcara.Brownstown Township Man Sentenced for Role in Scheme to File False Tax Returns Using Stolen IdentitiesRead the Press Release
A resident of Brownstown Township, Michigan, was sentenced today for his involvement in a scheme to file fraudulent tax returns with the Internal Revenue Service, United States Attorney Barbara McQuade announced today.
McQuade was joined in the announcement by Jarod Koopman, Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation.
Receiving the sentence from U.S. District Judge Gershwin Drain was Shane Bateman, 42. Bateman pleaded guilty before Judge Drain in May 2014. Judge Drain sentenced Bateman to one year and one day in prison and two years of supervised release, and he ordered Bateman to pay restitution to the IRS in the amount of $185,828.
According to court records, from September 2011 through April 2012, Bateman obtained mailing addresses and personally identifiable information of numerous individuals and provided the information to others, who used the information to prepare and file false tax returns with the Internal Revenue Service. The returns requested tax refunds, and the refunds were loaded onto Turbo Tax Visa debit cards. Bateman and others used the cards at ATMs in the Detroit area to collect cash via ATM withdrawals. Bateman’s cash withdrawals totaled $185,828. The entire scheme involved approximately 180 false tax returns, many using stolen identities. The returns requested a total of approximately $1.7 million in refunds.
“Stealing identities and filing false tax returns is a serious crime that hurts innocent taxpayers,” said Acting Special Agent in Charge Jarod Koopman. “IRS-CI will continue to aggressively investigate refund fraud and identity theft.”
The case was investigated by special agents of the IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney Stephen Hiyama.
Bolingbrook Man Pleads Guilty to Illegally Exporting Carbon Fiber and Other Controlled Items to PakistanRead the Press Release
CHICAGO ― A Bolingbrook man pleaded guilty today to violating U.S. export laws, admitting that he shipped carbon fiber and microwave laminates, and attempted to ship a thermal imaging camera, from his company in Schaumburg to Pakistan without obtaining licenses from the U.S. Commerce Department, federal law enforcement officials announced today.
The defendant, BILAL AHMED, 34, was the president, agent, and owner of Trexim Corp., which used the address of a virtual office in Schaumburg. He pleaded guilty to one count of violating the International Emergency Economic Powers Act (IEEPA). Ahmed was arrested in March and remains free on a $100,000 secured bond pending sentencing on Jan. 15, 2015, in U.S District Court.
He faces a maximum penalty of 20 years in prison and a $1 million fine. His plea agreement anticipates an advisory United States Sentencing Guidelines range of 57 to 71 months in prison.
In pleading guilty, Ahmed admitted that in 2009, he shipped carbon fiber ― Tenax-E HTS40 F13 12K 800 tex ― to Pakistan’s Space and Upper Atmosphere Research Commission (SUPARCO), believing that it would be used to make bullet-proof vests. Ahmed knew that designated “dual use” goods required a license from the Commerce Department to be exported and that no goods could be shipped to certain entities, such as SUPARCO, without first receiving a U.S. export license.
Ahmed knew that the carbon fiber was subject to export regulation. Specifically, the material was controlled for nuclear nonproliferation and anti-terrorism reasons and required a license from the Commerce Department’s Bureau of Industry and Security to be exported to Pakistan. Neither Ahmed nor Trexim ever applied for or obtained the necessary license.
Ahmed also admitted that in 2103, he shipped microwave laminate ― RT/duroid 5870 High Frequency Laminates ― to SUPARCO in Pakistan without applying for or obtaining the required export license.
Ahmed was arrested in March as he attempted to ship to Pakistan a FLIR HRC-U thermal imaging camera, which was on a Commerce Department list of controlled export goods for reasons of national security and regional stability.
The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, and Edward Holland, Supervisory Special Agent, U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Chicago Field Office. The Justice Department’s National Security Division provided assistance in the case.
The government is being represented by Assistant U.S. Attorney Bethany Biesenthal.
Plea
Austin Man Sentenced to Two Years in Federal Prison for Laser Strike IncidentRead the Press Release
In Austin today, 25–year-old Gabriel Soza Ruedas, Jr., was sentenced to two years in federal prison followed by three years of supervised release for pointing a laser at an aircraft flying overhead announced United States Attorney Robert Pitman and FBI Special Agent in Charge Christopher Combs, San Antonio Division.
“Laser strikes can pose serious risks to flight crews, passengers, and even individuals on the ground. They are a serious public safety hazard and will be treated as such by law enforcement officials,” stated United States Attorney Robert Pitman.
On July 7, 2014, Ruedas pleaded guilty to one count of pointing a laser at an aircraft--a federal violation under the FAA Modernization and Reform Act of 2012.
According to court records, on February 15, 2014, Ruedas admittedly aimed the beam of a laser pointer at a helicopter flying overhead. That aircraft happened to be an Austin Police Department helicopter (Air1) on approach to land at Austin Bergstrom International Airport (ABIA). All of this occurred after Air1 had been cleared by air traffic control to land. Air1 delayed its landing to investigate the source of the laser. Austin Air Traffic Control issued a general warning to all pilots in the area where the laser incident occurred, which was the flight path of arriving aircraft on short final approach to ABIA.
The laser Ruedas used was strong enough to reflect inside the cockpit of Air1 causing the pilot to turn his head and avert his eyes from the laser, distracting him from normal flight operations.
The crew of Air1 communicated to ground units from the Austin Police Department (APD) information about the source of the laser strikes, enabling APD units to identify and apprehend Ruedas. Ruedas was found with the laser pointer in his sweatshirt pocket and arrested. He has since remained in federal custody.
“The sentence handed down today reinforces our message to the public: Shining a hand-held laser at an aircraft is a serious, illegal act that exposes both air crew and the public on the ground to severe risk,” said Special Agent in Charge Christopher Combs of the San Antonio Division of the FBI. “Hand-held lasers are well labeled to inform owners of their potential risk to health and safety. Ignorance or curiosity is no excuse for such reckless action, and we are committed to working with our law enforcement partners to locate and identify individuals who have total disregard for life and safety.”
This case resulted from an investigation conducted by agents with the Federal Bureau of Investigation together with the Austin Police Department and the Texas Attorney General’s Office. Assistant United States Attorney Gregg Sofer prosecuted this case on behalf of the Government.
Armed Drug Dealer Sentenced to 70 Months in Federal PrisonRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that MICHAEL STANLEY, 25, of New Haven, was sentenced today by U.S. District Judge Michael P. Shea in Hartford to 70 months of imprisonment, followed by three years of supervised release, for illegally possessing a firearm.
According to court documents and statements made in court, on February 1, 2014, New Haven police officers observed STANLEY walking on Kensington Street in New Haven. At the time, STANLEY was wanted by the State of Connecticut Division of Parole. When the officers approached STANLEY in their marked car, STANLEY reached into his waistband, pulled his hood over his head, and walked in the opposite direction. After police stopped and exited the car, STANLEY ran, reached into his waistband area and threw an object. Officers apprehended STANLEY a short distance away.
A search of the area where STANLEY discarded an object revealed a fully-loaded Glock semi-automatic pistol that had been reported stolen in New Haven. In addition, a search of STANLEY’s person revealed crack cocaine packaged for sale.
Subsequent forensic analysis of the firearm revealed DNA consistent with STANLEY’s DNA.
STANLEY has multiple prior felony convictions. It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.
STANLEY has been detained since his arrest on February 1. On July 15, 2014, he pleaded guilty to one count of possession of a firearm by a previously convicted felon.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the New Haven Police Department. The case was prosecuted by Assistant U.S. Attorney Anthony E. Kaplan.PUBLIC AFFAIRS CONTACT:
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(203) 821-3722 [email protected]American Commercial Colleges, Inc. and Its President Sentenced on Federal ChargesRead the Press Release
LUBBOCK, Texas — The president of American Commercial Colleges, Inc. (ACC), Doyle Brent Sheets, 58, of Lubbock, Texas, who pleaded guilty, personally and on behalf of ACC, to federal charges, was sentenced this morning, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
U.S. District Judge Sam R. Cummings sentenced Sheets, who pleaded guilty to an Information charging one count of misprision of a felony, to 24 months in federal prison, restitution in the amount of $972,794.70 and a $5,000.00 fine.
Authorized by corporate resolution, Sheets pleaded guilty to one count of theft of government funds and aiding and abetting, on behalf of ACC. Today, Judge Cummings sentenced ACC to 5 years probation, restitution in the amount of $972,794.70 and a $1,200,000.00 fine.
According to Sheets’ plea agreement with the government, ACC stole government funds by converting Federal Student Aid (FSA) program funds, and thus caused a loss to the government of approximately $972,794. Sheets admitted that he knew about the theft but did not report it, and he agreed that he would be personally, individually, jointly and severally liable for the total loss amount.
According to ACC’s plea agreement with the government, ACC is excluded, directly and indirectly from participating in any FSA programs. This voluntary exclusion is also a voluntary debarment, and ACC will not contest any actions taken to execute the debarment. ACC agrees that it will not have any ownership or interest in, or serve as an officer, director or any legal entity acting as a post-secondary educational institution participating in any FSA program.
Two others associated with ACC have also pleaded guilty to federal charges. Michael James Otto, 61, of Lubbock, who served as the Chief Operating Officer and Campus Director for ACC’s Lubbock campus, pleaded guilty in May 2014 to one count of misprision of a felony. He was sentenced last week to 3 years probation, restitution in the amount of $66,606.48 and a $5,000.00 fine. Bruce Alan Reed, 64, of San Angelo, Texas, who served as the Campus Director for ACC’s San Angelo campus, pleaded guilty to the same offense and was also sentenced last week to 3 years probation, restitution in the amount of $66,606.48 and a $5,000.00 fine.
ACC is a proprietary institution with corporate office in Lubbock. At one time, ACC operated five campuses in Texas — Lubbock, Abilene, Odessa, San Angelo and Wichita Falls — and one in Shreveport, Louisiana. ACC admitted that it knowingly converted FSA program funds from its students solely for its benefit to represent falsely to the U.S. Department of Education that it was in compliance with the requirement that a proprietary institution may not derive more than 90% of its revenue from the FSA program to remain eligible to participate in the FSA program. The remaining 10% of revenue must come from other sources. This is known as the 90/10 Rule, and if an institution did not satisfy it, it would lose its eligibility to participate in the FSA programs.
In 2007, 2008 and 2009, ACC failed to meet the requirements of the 90/10 Rule, however, as early as 2003, ACC had devised a scheme to represent falsely to the Department of Education that it had met the requirements. From 2007-2009, ACC had students obtain private loans from a private bank in San Angelo, Texas, with whom ACC had made arrangements, of approximately $953,897. ACC recorded the loan funds received from the private bank as “good cash,” thus falsely representing to the Department of Education that ACC complied with the 90/10 Rule. By obtaining the loans from the private bank and delaying the students’ FSA program funds, ACC lowered their total FSA program funds revenue for the 90/10 Rule. ACC repaid and intended to repay those loans with approximately $972,794 of FSA program funds to give the appearance of complying with the 90/10 Rule. The private short-term loans were obtained entirely to benefit ACC so that it could falsely represent its compliance. To further the scheme, ACC employees advised students that the school would close if they did not satisfy the 90/10 Rule, and this would jeopardize the students’ education at ACC.
The investigation was conducted by the United States Department of Education, Office of Inspector General. Assistant U.S. Attorney Paulina Jacobo prosecuted.
Alabama Woman, Brittany Bauer, Pleads Guilty to Possession and Transportation of Stolen FirearmsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that BRITTANY BAUER, age 23, of Huntsville, Alabama, pleaded guilty today to conspiracy to possess and transport stolen firearms in interstate commerce and transportation of stolen firearms in interstate commerce. A five-count superseding indictment was returned on October 3, 2014, charging BAUER and co-defendants BRITTEN PARSONS and ALEX BRASINGTON with conspiracy, possession and transportation of stolen firearms in interstate commerce.
According to court documents, in January and February 2013, BAUER, PARSON and BRASINGTON, transported nine stolen firearms in interstate commerce, from Alabama to Louisiana. The investigation revealed that the firearms had been stolen during residence burglaries in Huntsville, Alabama. On February 14, 2013, agents conducted a search of BAUER’s New Orleans apartment and found five stolen firearms and approximately 1700 rounds of ammunition. Court documents reflect that agents also recovered four stolen firearms and ammunition that BAUER, PARSONS and BRASINGTON sold to individuals in New Orleans.U.S. District Judge Jane Triche Milazzo set sentencing for January 8, 2015.
U.S. Attorney Polite stated, “Today’s guilty plea underscores our Office’s continued commitment to prosecuting those who illegally transport stolen firearms into our District.”
U.S. Attorney Polite praised the work of the ATF New Orleans Division Office, New Orleans Police Department, Pearl River (LA) Police Department, Pearl River County (MS) Sheriff’s Office, and Huntsville Police Department in investigating this matter. Assistant United States Attorney Nolan D. Paige is in charge of the prosecution.
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Alabama Tax Return Preparer Sentenced to Jail for Preparing False Tax Returns for ClientsRead the Press Release
An Alabama tax return preparer was sentenced to serve 36 months in prison for aiding in the preparation of false tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.
Russell Burroughs was also ordered to pay restitution in the amount of $211,960.
According to court documents, during the 2008 through 2010 tax seasons, Burroughs owned and operated Computer Services, a tax return preparation business, located in Montgomery, Alabama. Burroughs admitted that he deliberately falsified information on client tax returns in order to illegally generate higher tax refunds. He intentionally included false items such as false business income and losses, false Schedule A deductions, false real estate rental losses, false education credits and false energy credits in order to inflate his client’s refunds. At his sentencing hearing, the court found that the tax loss associated with the false returns Burroughs filed exceeded $2.9 million.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Katherine Reinhart, Charles M. Edgar Jr. and Michael Boteler of the Justice Department’s Tax Division are prosecuting the case.
21 Year Fugitive Sentenced on 1992 Tax Fraud ChargesRead the Press Release
SAN FRANCISCO – Francisco R. Legaspi was sentenced today to 21 months for aiding and assisting in the preparation and presentation of false tax returns and for failing to appear for his sentencing on the tax charges originally scheduled to take place on Jan. 28, 1993, U.S. Attorney Melinda Haag and IRS-CI Special Agent in Charge José M. Martinez, announced.
According to the plea agreement, Legaspi was indicted on August 19, 1992, on three counts of aiding and assisting in the preparation and presentation of false tax returns. He was released from custody with the condition that he appear in court for all hearings. He pleaded guilty on November 5, 1992, to one count of preparing a false tax return. Legaspi’s attorney told him that his sentencing was set for January 28, 1993. On January 27, 1993, IRS employees went to Legaspi’s business to collect unpaid withholding payroll taxes. During the visit an IRS employee and Legaspi discussed the fact that he was scheduled to appear in court the next day for his criminal case. The next day, January 28, 1993, Legapsi intentionally did not appear for sentencing and fled to Mexico and later to Canada to avoid prison time for his tax crime.
Legaspi, 61, formerly of Daly City, was located in Canada in 2012, after the State Department Bureau of Diplomatic Security researched social media websites and found Legaspi’s Facebook page. The Royal Canadian Mounted Police used the information to apprehend Legaspi. Thereafter, he was extradited from Canada to the United States with the assistance of the U.S. Justice Department’s Office of International Affairs and the United States Marshals Service. Legaspi made his initial appearance in federal court in San Francisco On July 1, 2014.
The sentence was handed down by the Honorable William H. Orrick, United States District Court Judge, in San Francisco. Judge Orrick also sentenced Legaspi to a 1-year period of supervised release.
Assistant U.S. Attorney Thomas Moore is prosecuting the case with the assistance of Paralegal Specialist Edward Solis. The prosecution is the result of an investigation by the IRS, Criminal Investigation with assistance from the State Department Bureau of Diplomatic Security, the Royal Canadian Mounted Police, the United States Marshals Service, and United States Department of Justice, Office of International Affairs.
1 October 2014
Winchester Man Sentenced for Distributing Heroin That Lead to Two DeathsRead the Press Release
HARRISONBURG, VIRGINIA – A Winchester, Va., man, who previously admitted to distributing the heroin that caused the overdose deaths of his father and his father’s girlfriend in June 2013, was sentenced this morning in the United States District Court for the Western District of Virginia in Winchester.
Following an investigation by members of the Northwest Virginia Regional Drug Task Force, and the Drug Enforcement Administration, Thomas Allen Breeden, 27, pled guilty to one count of distributing heroin. Today in District court, Breeden was sentenced to 14 years in federal prison and five years of supervised release thereafter.
“This case is another tragic example of the rising tide of heroin abuse we are experiencing in this district and around the country,” United States Attorney Timothy J. Heaphy said today. “Law enforcement agencies have combined resources to more effectively target and prosecute the distribution of this dangerous drug. But enforcement alone won’t be enough to reverse this dangerous trend. As we bring these cases, we must also educate the community about the dangers of heroin and provide viable treatment solutions to those struggling with addiction. A comprehensive approach to the problem is essential to impact change and reverse the trend of destruction we have seen.”
Breeden previously admitted to driving to Baltimore, Md., on June 10, 2013 and purchasing 1 gram of heroin for $125. He took that heroin to the Winchester Budget Motel where he met his father and his father’s girlfriend. All three used the heroin purchased by Breeden. After leaving the motel room for a short period of time, Breeden returned to find both his father and the girlfriend unconscious. Breeden attempted to revive both parties by splashing cold water on their faces and wrapping cold, wet towels around their necks. With no success, Breeden called 911 at 10:06 p.m. First responders arrived and declared both parties dead at 10:17 p.m. It was later determined that both parties died from “adverse effects of heroin.”
The investigation of this case was conducted by the Northwest Virginia Regional Drug Task Force, which includes the Virginia State Police, and the Drug Enforcement Administration. The Task Force includes law enforcement from the counties of Frederick, Clarke, Shenandoah, Warren and Page as well as the cities and towns of Winchester, Front Royal and Strasburg. Assistant United States Attorney Donald Wolthuis prosecuted the case for the United States.
Wilkinsburg Man Sentenced to Prison for Stolen Credit Card SchemeRead the Press Release
PITTSBURGH – An Allegheny County resident has been sentenced in federal court to six months imprisonment to be followed by six months home detention and three years supervised release on his conviction of conspiracy, United States Attorney David J. Hickton announced today.
United States District Judge Terrence F. McVerry imposed the sentence on Richard Gerald Davenport, Jr., 26, of Wilkinsburg, Pa.
According to the information presented to the court, the court was advised that Davenport conspired with another individual to steal credit card numbers, which he and others used to buy gift cards and merchandise at Rite-Aid stores and others.
Assistant United States Attorney Gregory C. Melucci prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the United States Secret Service for the investigation leading to the successful prosecution of Richard Gerald Davenport. Davenport was taken immediately into custody by the United States Marshal’s to begin serving his sentence.
U.S. Attorney Announces Successful Training for Law Enforcement on Human TraffickingRead the Press Release
– Collaborative Efforts To Aggressively Investigate And Prosecute The Illegal Trafficking of Persons into Forced Labor
LOUISVILLE, Ky. – David J. Hale, United States Attorney for the Western District of Kentucky announced the successful completion of a law enforcement training session aimed at fostering continued collaborative investigations and prosecutions of those who illegally traffic persons through forced labor.
During the training session, members of Louisville Metro Police heard from the FBI, Homeland Security Investigations, Assistant United States Attorneys, and victim resource coordinators on trends in human trafficking, strategies for multi-agency investigations, common misconceptions of human trafficking and special considerations for child victims.
“This partnership and commitment to training is taking the fight against human trafficking to a new level,” stated David J. Hale, United States Attorney for the Western District of Kentucky. “The victims of forced labor often go unseen and are unable to seek help. For this reason, it will take a continued, collaborative effort to identity and successfully prosecute these crimes,” concluded U.S. Attorney Hale.
“Human Trafficking is a crime that escapes the public conscience due to the nature of how it is perpetrated. Victims of Human Trafficking are the most vulnerable of victims. Addressing this crime takes dedication and expertise on the part of FBI Agents and the courage of witnesses and victims to make it known,” said FBI Special Agent in Charge Howard S. Marshall
“Human trafficking is a growing problem in our communities and the Louisville Metro Police Department welcomes the opportunity to train and work with our law enforcement partners to identify and rescue victims of this terrible crime and pursue justice for them,” stated Louisville Metro Police Chief Steve Conrad.
According to the Trafficking Victims Protection Act (TVPA), human trafficking includes the recruitment, harboring, transportation, provision, or obtaining of a person for labor or other services, through the use of force, fraud, or coercion, for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery. It includes sex trafficking, in which a commercial sex act is induced by force, fraud, or coercion, or in which the victim is under 18 years of age.
Public outreach efforts in the United States over the last decade have significantly increased the level of awareness of human trafficking in its various forms. While sex trafficking is currently the most recognized form of human trafficking, labor trafficking is found in almost every industry including: agricultural, construction, domestic servitude, escort services, factories, hotels, restaurants, prostitution and strip clubs.
The U.S. Attorney’s Office for the Western District of Kentucky is currently prosecuting two alleged human trafficking cases: one in Owensboro (U.S. v Jathar Williams) and another in Louisville (U.S. v Christopher).
For more information on human trafficking see the Department of Justice Civil Right Division at http://www.justice.gov/crt/about/crm/htpu.php.
Two Serra Nissan Managers and Three Salesmen Charged in Loan Fraud ConspiracyRead the Press Release
BIRMINGHAM -- A third sales manager, a finance manager, and three salesmen who work, or previously worked at Serra Nissan face federal charges in connection with a conspiracy at the Birmingham car dealership to fraudulently boost loan approvals and car sales, announced U.S. Attorney Joyce White Vance, IRS Criminal Investigation Special Agent in Charge Veronica Hyman-Pillot, and FBI Special Agent in Charge Richard D. Schwein Jr.
A federal grand jury last week indicted D. SCOTT BURTON, 36, of Odenville, MICHAEL J. WILKINSON, 56, of Moody, DWIGHT A. PERRY, 44, of Birmingham, TERRY W. HENDERSON, JR., 39, of Pleasant Grove, and ROLAND W. RILEY, 28, of Birmingham, on conspiracy, bank fraud, wire fraud, and aggravated identity theft charges. A federal judge unsealed the indictment after the defendants were arrested today and appeared in court.
"As managers and salesmen in a car dealership, these defendants falsified customer information used to make loans, defrauding the banks who trusted the dealership to present truthful information during the vehicle financing process, and harming customers by fraudulently inflating the value of the vehicles they purchased," she said. "This type of fraud is the auto-industry equivalent of the mortgage fraud that contributed to the financial meltdown, and could threaten the security of our financial markets," Vance said.
"Today's arrest clearly illustrates that individuals who engage in these types of illegal activities will be held accountable for their actions," Hyman-Pillot said. "These defendants clearly took advantage of the people in their community, as well as financial institutions. They manipulated the system and falsified documents with the intention of increasing profits at the expense of others."
“This case is significant to the FBI not merely because of the loss amounts, but also because of the many victims left in the wake of this scheme who had trusted the defendants with handling their vehicle financing,” Schwein said
The 11-count indictment charges the defendants with conspiring with others at the dealership, between August 2010 and October 2013, to defraud financial institutions, Nissan North America and Serra Nissan customers by fraudulently increasing vehicle sales in order to boost personal profits.
The indictment also charges Wilkinson, Burton, Perry and Riley with bank fraud for fraudulent loan information submitted to financial institutions in October 2012. Defendants Wilkinson, Perry and Henderson also are charged with wire fraud for fraudulent information submitted to automotive financing companies such as Nissan Motor Acceptance Corporation and Santander Consumer USA.
The final count of the indictment charges Perry and Henderson with aggravated identity theft for the unlawful use of a customer's Alabama-issued personal identification card during the commission of the bank and wire fraud, and the conspiracy to commit those crimes.
The indictment of these five defendants follows federal charges earlier this year against two other sales managers at Serra Nissan, Abdul Islam Mughal and Gerald R. Shepard. Mughal, 48, of Trussville, pleaded guilty in July to conspiring with others, including Serra Nissan salesmen, general managers, sales managers and finance managers, to sell more cars by falsifying loan documents in order to defraud customers, Nissan North America and financial institutions. Mughal also pleaded guilty to one count of bank fraud for submitting falsified loan documents to financial institutions between January 2012 and October 2013. Mughal is scheduled for sentencing May 5, 2015.
According to the indictment against the five defendants, they and other members of the conspiracy participated in various means to carry out their fraud and obtain auto loans that, otherwise, would not have been approved. Those means included the following:
• Creating or altering documents to submit to financial institutions to show inflated income for prospective buyers.
• Directing finance managers and salesmen to submit fraudulent documents to financial institutions to misrepresent proof of a customer's residency.
• Listing accessories not actually included on a vehicle so a financial institution would increase its loan amount. The defendants and others had a financial incentive to increase a loan amount in order to increase commissions paid to certain employees.
• Presenting straw buyers, who could qualify for a loan, to financial institutions when the actual buyer could not qualify.The defendants and others also defrauded customers and financial institutions by quoting a customer an inflated monthly vehicle loan payment so that a finance manager could add a warranty and gap insurance without the customer realizing it, according to the indictment.
The maximum penalty for the conspiracy count is five years in prison and a $250,000 fine. The maximum penalty for bank fraud is 30 years in prison and a $1 million fine. The maximum penalty for wire fraud is 20 years in prison and a $250,000 fine. The minimum penalty for aggravated identity theft is 2 years in prison.
The IRS and the FBI investigated the case, which Assistant U.S. Attorney Amanda S. Wick is prosecuting.
The public is reminded that an indictment contains only charges. Defendants are presumed innocent unless and until proven guilty.